Quarterly Report (10-q)

Date : 11/07/2019 @ 5:05PM
Source : Edgar (US Regulatory)
Stock : Koppers Holdings Inc (KOP)
Quote : 34.54  -0.03 (-0.09%) @ 9:01PM
After Hours
Last Trade
Last $ 34.54 ◊ 0.00 (0.00%)

Quarterly Report (10-q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

Commission file number 1-32737

KOPPERS HOLDINGS INC.

(Exact name of registrant as specified in its charter)

 

Pennsylvania

20-1878963

(State of incorporation)

(IRS Employer Identification No.)

436 Seventh Avenue

Pittsburgh, Pennsylvania 15219

(Address of principal executive offices)

(412) 227-2001

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer   Accelerated filer   Non-accelerated filer   Smaller reporting company Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

Securities registered pursuant to Section 12(b) of the Act.

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

KOP

The New York Stock Exchange

Common Stock, par value $0.01 per share, outstanding at October 31, 2019 amounted to 20,698,315 shares.


 

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

KOPPERS HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

(Dollars in millions, except per share amounts)

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

 

(Unaudited)

 

Net sales

 

$

474.9

 

 

$

442.7

 

 

$

1,379.6

 

 

$

1,284.8

 

Cost of sales

 

 

382.3

 

 

 

359.7

 

 

 

1,111.7

 

 

 

1,023.9

 

Depreciation and amortization

 

 

14.3

 

 

 

13.0

 

 

 

42.3

 

 

 

38.5

 

Impairment and restructuring charges

 

 

1.1

 

 

 

0.9

 

 

 

5.2

 

 

 

3.8

 

Selling, general and administrative expenses

 

 

37.6

 

 

 

37.9

 

 

 

113.9

 

 

 

121.8

 

Operating profit

 

 

39.6

 

 

 

31.2

 

 

 

106.5

 

 

 

96.8

 

Other income (loss), net

 

 

0.0

 

 

 

(0.6

)

 

 

0.5

 

 

 

(1.1

)

Interest expense

 

 

15.5

 

 

 

15.1

 

 

 

48.2

 

 

 

40.1

 

Income before income taxes

 

 

24.1

 

 

 

15.5

 

 

 

58.8

 

 

 

55.6

 

Income tax provision

 

 

3.6

 

 

 

8.6

 

 

 

11.5

 

 

 

24.4

 

Income from continuing operations

 

 

20.5

 

 

 

6.9

 

 

 

47.3

 

 

 

31.2

 

(Loss) income from discontinued operations, net

   of tax expense of $0.0, $0.0, $0.0, and $(0.3)

 

 

(0.1

)

 

 

0.0

 

 

 

(0.1

)

 

 

0.4

 

Net income

 

 

20.4

 

 

 

6.9

 

 

 

47.2

 

 

 

31.6

 

Net income (loss) attributable to noncontrolling

   interests

 

 

0.6

 

 

 

(0.7

)

 

 

1.2

 

 

 

5.6

 

Net income attributable to Koppers

 

$

19.8

 

 

$

7.6

 

 

$

46.0

 

 

$

26.0

 

Earnings per common share attributable to

   Koppers common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.96

 

 

$

0.36

 

 

$

2.23

 

 

$

1.22

 

Discontinued operations

 

 

0.00

 

 

 

0.00

 

 

 

0.00

 

 

 

0.02

 

Earnings per basic common share

 

$

0.96

 

 

$

0.36

 

 

$

2.23

 

 

$

1.24

 

Diluted -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.94

 

 

$

0.35

 

 

$

2.20

 

 

$

1.17

 

Discontinued operations

 

 

0.00

 

 

 

0.00

 

 

 

0.00

 

 

 

0.02

 

Earnings per diluted common share

 

$

0.94

 

 

$

0.35

 

 

$

2.20

 

 

$

1.19

 

Comprehensive income (loss)

 

$

5.5

 

 

$

(2.0

)

 

$

35.9

 

 

$

(6.5

)

Comprehensive income (loss) attributable to

   noncontrolling interests

 

 

0.2

 

 

 

(1.1

)

 

 

0.8

 

 

 

4.7

 

Comprehensive income (loss) attributable to

   Koppers

 

$

5.3

 

 

$

(0.9

)

 

$

35.1

 

 

$

(11.2

)

Weighted average shares outstanding (in

   thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

20,684

 

 

 

20,946

 

 

 

20,641

 

 

 

20,992

 

Diluted

 

 

21,030

 

 

 

21,700

 

 

 

20,908

 

 

 

21,892

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

2


 

KOPPERS HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEET

 

 

 

September 30,

2019

 

 

December 31,

2018

 

(Dollars in millions, except per share amounts)

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

40.7

 

 

$

40.6

 

Accounts receivable, net of allowance of $2.0 and $2.5

 

 

180.7

 

 

 

186.7

 

Income tax receivable

 

 

0.3

 

 

 

2.8

 

Inventories, net

 

 

274.2

 

 

 

284.7

 

Other current assets

 

 

21.7

 

 

 

25.5

 

Total current assets

 

 

517.6

 

 

 

540.3

 

Property, plant and equipment, net

 

 

409.4

 

 

 

417.9

 

Operating lease right-of-use assets

 

 

116.0

 

 

 

0.0

 

Goodwill

 

 

294.8

 

 

 

296.5

 

Intangible assets, net

 

 

172.4

 

 

 

188.0

 

Deferred tax assets

 

 

18.4

 

 

 

15.5

 

Other assets

 

 

24.8

 

 

 

21.7

 

Total assets

 

$

1,553.4

 

 

$

1,479.9

 

Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

125.2

 

 

$

177.2

 

Accrued liabilities

 

 

106.5

 

 

 

109.9

 

Current operating lease liabilities

 

 

22.1

 

 

 

0.0

 

Current maturities of long-term debt

 

 

10.3

 

 

 

11.6

 

Total current liabilities

 

 

264.1

 

 

 

298.7

 

Long-term debt

 

 

948.8

 

 

 

978.8

 

Accrued postretirement benefits

 

 

48.7

 

 

 

48.2

 

Deferred tax liabilities

 

 

6.2

 

 

 

6.8

 

Operating lease liabilities

 

 

94.8

 

 

 

0.0

 

Other long-term liabilities

 

 

78.8

 

 

 

80.4

 

Total liabilities

 

 

1,441.4

 

 

 

1,412.9

 

Commitments and contingent liabilities (Note 18)

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Senior Convertible Preferred Stock, $0.01 par value per share; 10,000,000

   shares authorized; no shares issued

 

 

0.0

 

 

 

0.0

 

Common Stock, $0.01 par value per share; 80,000,000 shares authorized;

   23,212,564 and 23,028,957 shares issued

 

 

0.2

 

 

 

0.2

 

Additional paid-in capital

 

 

215.9

 

 

 

206.0

 

Retained earnings

 

 

73.3

 

 

 

27.2

 

Accumulated other comprehensive loss

 

 

(98.1

)

 

 

(87.2

)

Treasury stock, at cost, 2,514,249 and 2,480,213 shares

 

 

(90.9

)

 

 

(90.0

)

Total Koppers shareholders’ equity

 

 

100.4

 

 

 

56.2

 

Noncontrolling interests

 

 

11.6

 

 

 

10.8

 

Total equity

 

 

112.0

 

 

 

67.0

 

Total liabilities and equity

 

$

1,553.4

 

 

$

1,479.9

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


 

KOPPERS HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

(Dollars in millions)

 

(Unaudited)

 

 

(Unaudited)

 

Cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

47.2

 

 

$

31.6

 

Adjustments to reconcile net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

42.3

 

 

 

38.5

 

Loss on disposal of assets and investment

 

 

0.6

 

 

 

2.2

 

Insurance proceeds

 

 

(3.0

)

 

 

(1.5

)

Deferred income taxes

 

 

(2.7

)

 

 

5.0

 

Change in other liabilities

 

 

(9.7

)

 

 

(6.2

)

Non-cash interest expense

 

 

1.9

 

 

 

1.8

 

Stock-based compensation

 

 

9.0

 

 

 

9.3

 

Other - net

 

 

0.2

 

 

 

6.5

 

Changes in working capital:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

3.4

 

 

 

(36.3

)

Inventories

 

 

6.6

 

 

 

(20.3

)

Accounts payable

 

 

(45.7

)

 

 

17.7

 

Accrued liabilities

 

 

3.2

 

 

 

(38.6

)

Other working capital

 

 

3.7

 

 

 

(1.7

)

Net cash provided by operating activities

 

 

57.0

 

 

 

8.0

 

Cash (used in) provided by investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(26.8

)

 

 

(81.4

)

Acquisitions, net of cash acquired

 

 

0.0

 

 

 

(264.0

)

Insurance proceeds received

 

 

3.0

 

 

 

1.5

 

Net cash provided by divestitures and asset sales

 

 

0.3

 

 

 

2.3

 

Net cash used in investing activities

 

 

(23.5

)

 

 

(341.6

)

Cash (used in) provided by financing activities:

 

 

 

 

 

 

 

 

Net (decrease) increase in credit facility borrowings

 

 

(5.0

)

 

 

282.8

 

Borrowings of long-term debt

 

 

0.0

 

 

 

100.0

 

Repayments of long-term debt

 

 

(27.2

)

 

 

(12.9

)

Issuances of Common Stock

 

 

1.0

 

 

 

2.5

 

Repurchases of Common Stock

 

 

(0.9

)

 

 

(31.7

)

Payment of debt issuance costs

 

 

(0.9

)

 

 

(2.9

)

Net cash (used in) provided by financing activities

 

 

(33.0

)

 

 

337.8

 

Effect of exchange rate changes on cash

 

 

(0.4

)

 

 

(2.0

)

Net increase in cash and cash equivalents

 

 

0.1

 

 

 

2.2

 

Cash and cash equivalents at beginning of period

 

 

40.6

 

 

 

60.3

 

Cash and cash equivalents at end of period

 

$

40.7

 

 

$

62.5

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

 

 

Operating cash outflow from operating leases

 

$

23.0

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Right-of-use assets obtained in exchange for new operating lease liabilities

 

$

26.7

 

 

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4


 

KOPPERS HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and related disclosures have been prepared in accordance with accounting principles generally accepted in the United States applicable to interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of Koppers Holdings Inc.’s and its subsidiaries’ (“Koppers”, “Koppers Holdings”, the “Company”, “we” or “us”) financial position and interim results as of and for the periods presented have been included. All such adjustments are of a normal recurring nature unless disclosed otherwise. Because our business is seasonal, results for interim periods are not necessarily indicative of those that may be expected for a full year. The Condensed Consolidated Balance Sheet as of December 31, 2018 has been summarized from the audited balance sheet contained in the Annual Report on Form 10-K as of and for the year ended December 31, 2018. Certain prior period amounts in the notes to the consolidated financial statements have been reclassified to conform to the current period’s presentation.  

The financial information included herein should be read in conjunction with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2018.

2. New Accounting Pronouncements

In August 2018, the Securities and Exchange Commission (“SEC”) issued SEC Release No. 33-10532, “Disclosure Update and Simplification”, which expanded the interim period disclosure requirements for stockholders' equity. Under the release, a reconciliation of the changes in each caption of stockholders' equity must be provided in a note or separate statement for each period that an income statement is required to be filed. We reflected the requirements of this release in “Note 6 – Comprehensive Income and Equity”.

In August 2017, the Financial Accounting Standards Board ("FASB") issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” This ASU amends and simplifies existing guidance in order to allow companies to more accurately present the economic effects of risk management activities in the financial statements. We adopted this ASU effective January 1, 2018 and we reclassified a $3.9 million unrealized gain, net of tax, from retained earnings to accumulated other comprehensive loss upon adoption.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses. The update is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The new standard is effective for fiscal years beginning after December 15, 2019, with early adoption permitted for fiscal years beginning after December 15, 2018. We are evaluating the effect the guidance will have on our consolidated financial statements, which is not expected to be material.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. ASU 2016-02 requires an entity to recognize a right-of-use asset and lease liability for all leases. The standard was effective January 1, 2019 and measurement and presentation of expenses depends on classification as a finance or operating lease. We adopted ASU 2016-02 effective January 1, 2019 using the modified retrospective approach with no restatement of comparative periods presented. The adoption is accounted for as a change in accounting principle in conformity with FASB Accounting Standards Codification 250, “Accounting Changes and Error Corrections”.

We elected a suite of practical expedients, including retaining our current classification of existing leases upon adoption, separating lease and non-lease components for certain asset classes and excluding leases expiring within twelve months. The initial impact of adopting this new standard on our consolidated statement of operations and consolidated statement of cash flows was not material. Approximately $119 million of right-of-use assets and lease liabilities were recognized in the consolidated balance sheet upon adoption. Refer to “Note 16 – Leases” for more details regarding leases as of September 30, 2019.

 

3. Plant Closures and Divestitures

Over the past five years, we have been restructuring our Carbon Materials and Chemicals (“CMC”) segment in order to concentrate our facilities in regions where we believe we hold key competitive advantages to better serve our global customers. These closure activities include:

 

5


 

 

The cessation of naphthalene refining activities at our Follansbee, West Virginia coal tar distillation facility in the fourth quarter of 2018 subsequent to the commissioning of a new naphthalene refining plant in Stickney, Illinois. In August 2019, we ceased remaining production activities at the plant.

 

In September 2018, we sold our UK-based specialty chemicals business.

 

In November 2016, we sold our 30-percent interest in Tangshan Kailuan Koppers Carbon Chemical Company Limited (“TKK”) located in the Hebei Province in China.

 

In July 2016, we discontinued coal tar distillation activities at our CMC plant located in Clairton, Pennsylvania. In October 2018, we sold the facility and as part of the transaction, we transferred cash to the buyer and the buyer assumed decommissioning, demolition and site restoration responsibilities.

 

In March 2016, we discontinued production at our 60-percent owned CMC plant located in Tangshan, China.

 

In February 2016, we ceased coal tar distillation and specialty pitch operations at both of our United Kingdom CMC facilities. In July 2016, we sold substantially all of our CMC tar distillation properties and assets in the United Kingdom.

 

In April 2014, we ceased coal tar distillation activities at our CMC facility located in Uithoorn, the Netherlands.

Other closure and divestiture activity relates to our Railroad Utility Products and Services (“RUPS”) segment. These activities include:

 

 

In August 2019, we sold our utility pole treatment plant located in Blackstone, Virginia.

 

In August 2015, we closed a crosstie treating plant located in Green Spring, West Virginia.

 

In July 2015, we sold the assets of our 50 percent interest in KSA Limited Partnership, a concrete crosstie manufacturer.

In addition, in 2011, we ceased carbon black production at our CMC facility located in Kurnell, Australia. Costs associated with this closure are included in income from discontinued operations on the consolidated statement of operations and comprehensive income.

Details of the restructuring activities and related reserves are as follows:

 

 

 

Severance and

employee benefits

 

 

Environmental

remediation

 

 

Asset

Retirement

 

 

Other

 

 

Total

 

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reserve at December 31, 2017

 

$

1.7

 

 

$

2.7

 

 

$

10.6

 

 

$

3.3

 

 

$

18.3

 

Accrual

 

 

0.0

 

 

 

0.9

 

 

 

1.8

 

 

 

2.2

 

 

 

4.9

 

Cost charged against assets

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

(2.1

)

 

 

(2.1

)

Reversal of accrued charges

 

 

0.0

 

 

 

0.0

 

 

 

(0.9

)

 

 

0.0

 

 

 

(0.9

)

Cash paid

 

 

0.0

 

 

 

(3.4

)

 

 

(7.9

)

 

 

(0.5

)

 

 

(11.8

)

Currency translation

 

 

0.0

 

 

 

(0.2

)

 

 

0.0

 

 

 

(0.1

)

 

 

(0.3

)

Reserve at December 31, 2018

 

$

1.7

 

 

$

0.0

 

 

$

3.6

 

 

$

2.8

 

 

$

8.1

 

Accrual

 

 

0.0

 

 

 

0.0

 

 

 

2.6

 

 

 

3.0

 

 

 

5.6

 

Cost charged against assets

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

(3.0

)

 

 

(3.0

)

Reversal of accrued charges

 

 

(0.4

)

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

(0.4

)

Cash paid

 

 

(0.4

)

 

 

0.0

 

 

 

(5.2

)

 

 

0.0

 

 

 

(5.6

)

Reserve at September 30, 2019

 

$

0.9

 

 

$

0.0

 

 

$

1.0

 

 

$

2.8

 

 

$

4.7

 

 

 

4. Acquisitions

On April 10, 2018, Koppers Inc. acquired Cox Industries, Inc. (“Cox”) for net cash consideration of $201.3 million. The transaction was funded by borrowings on Koppers Inc.’s credit facility discussed in “Note 14 - Debt.” Cox was renamed Koppers Utility and Industrial Products Inc. (“UIP”) subsequent to the acquisition. UIP is a manufacturer of treated wood transmission and distribution poles for utility and cooperative utility companies. It is also a manufacturer of treated wood pilings used for construction and marine applications. UIP manufactures and sells its treated wood poles and pilings through a network of eight manufacturing facilities and 19 distribution yards located throughout the United States. UIP treats its products with a variety of wood protection chemicals, including chromated copper arsenate and creosote, which are produced by our PC and CMC segments, respectively.

On February 28, 2018, Koppers Inc. acquired M.A. Energy Resources, LLC (“MAER”) for net cash consideration of $62.8 million. The purchase price was funded by borrowings on Koppers Inc.’s credit facility. MAER was renamed Koppers Recovery Resources LLC (“KRR”) subsequent to the acquisition. KRR is a vertically-integrated company that provides material recovery services for crossties that have been taken out of service and other biomass material.


6


 

KRR converts this recovered material into alternative fuels, such as crosstie-derived or biomass-derived fuel, that are used as a substitute for conventional higher-cost carbon-based fuel. KRR currently operates two processing facilities, each of which is located to serve its Class I railroad customer base.

Combined costs related to these two acquisitions were $0.6 million and $6.2 million for the three and nine months ended September 30, 2018, respectively, and are recorded within selling, general and administrative expenses in the consolidated statement of operations.

The following unaudited pro forma information presents a summary of our revenues and income from continuing operations as if the UIP acquisition occurred on January 1, 2017 (the first day of the most recently completed fiscal year prior to the acquisition). The unaudited pro forma information is not necessarily indicative of operating results that would have been achieved had the acquisition been completed as of January 1, 2017 and is not intended to project our future financial results after the acquisition. The unaudited pro forma information is based on certain assumptions, which management believes are reasonable, and does not reflect the cost of any integration activities or the benefits from the acquisition and synergies that may be derived from any integration activities.

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2018

 

 

2018

 

(Dollars in millions)

 

 

 

 

 

 

 

 

Pro forma revenue

 

$

442.7

 

 

$

1,335.5

 

Pro forma income from continuing operations

      attributable to Koppers

 

 

7.9

 

 

 

34.5

 

Pro forma earnings per share - continuing operations:

 

 

 

 

 

 

 

 

Basic -

 

$

0.38

 

 

$

1.64

 

Diluted -

 

$

0.36

 

 

$

1.58

 

 

 

5. Revenue Recognition

Effective January 1, 2018 we adopted ASC 606, “Revenue from Contracts with Customers”, using the modified retrospective method. The cumulative effect to the opening balance of retained earnings recognized at January 1, 2018 was an increase of $0.3 million, consisting of $5.3 million in revenue and $5.0 million in cost of goods sold not previously recognized during the year ended December 31, 2017. ASC 606 impacted the timing of revenue recognized related to certain services to untreated crossties within our RUPS segment where those specific performance obligations were fulfilled prior to shipment and were historically not recognized as revenue until shipped. Refer to “Note 9 – Segment Information” for relevant disclosures regarding the disaggregation of revenue.

Contract Balances

The timing of revenue recognition in accordance with ASC 606 results in both billed accounts receivable and unbilled receivables, both classified as accounts receivable, net of allowance within the condensed consolidated balance sheet. Contract assets of $5.4 million and $10.5 million are recorded within accounts receivable, net of allowance within the consolidated balance sheet as of September 30, 2019 and December 31, 2018, respectively.

6. Comprehensive Income and Equity

Total comprehensive income for the three and nine months ended September 30, 2019 and 2018 is summarized in the table below:

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

(Dollars in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

20.4

 

 

$

6.9

 

 

$

47.2

 

 

$

31.6

 

Changes in other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency translation adjustment

 

 

(11.4

)

 

 

(2.9

)

 

 

(10.6

)

 

 

(18.9

)

Unrealized loss on cash flow hedges, net

   of tax benefit of $1.7, $3.7, $0.6 and $12.0

 

 

(3.7

)

 

 

(6.3

)

 

 

(1.4

)

 

 

(20.3

)

Change in accounting standard

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.3

 

Unrecognized pension net loss, net of tax

   expense of $0.1, $0.1, $0.3, and $0.3

 

 

0.2

 

 

 

0.3

 

 

 

0.7

 

 

 

0.8

 

Total comprehensive income (loss)

 

 

5.5

 

 

 

(2.0

)

 

 

35.9

 

 

 

(6.5

)

Comprehensive income (loss) attributable to

   noncontrolling interests

 

 

0.2

 

 

 

(1.1

)

 

 

0.8

 

 

 

4.7

 

Comprehensive income (loss) attributable to Koppers

 

$

5.3

 

 

$

(0.9

)

 

$

35.1

 

 

$

(11.2

)

 

7


 

Amounts reclassified from accumulated other comprehensive loss to net income consist of amounts shown for changes in or amortization of unrecognized pension net loss. This component of accumulated other comprehensive loss is included in the computation of net periodic pension cost as disclosed in “Note 13 – Pensions and Post-Retirement Benefit Plans.” Other amounts reclassified from accumulated other comprehensive loss include income related to derivative financial instruments, net of tax, of $1.8 million and $3.3 million for the three and nine months ended September 30, 2019, respectively, and $1.1 million and $6.5 million for the three and nine months ended September 30, 2018, respectively.

The following tables present the change in equity for the three months ended September 30, 2019 and 2018, respectively:

 

(Dollars in millions)

 

Common Stock

 

 

Additional Paid-In Capital

 

 

Retained Earnings

 

 

Accumulated Other Comprehensive (Loss)

 

 

Treasury Stock

 

 

Noncontrolling

Interests

 

 

Total Equity

 

Balance at June 30,

  2019

 

$

0.2

 

 

$

212.4

 

 

$

53.5

 

 

$

(83.7

)

 

$

(90.8

)

 

$

11.4

 

 

$

103.0

 

Net income

 

 

0.0

 

 

 

0.0

 

 

 

19.8

 

 

 

0.0

 

 

 

0.0

 

 

 

0.6

 

 

 

20.4

 

Issuance of common stock

 

 

0.0

 

 

 

0.3

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.3

 

Employee stock plans

 

 

0.0

 

 

 

3.1

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

3.1

 

Other comprehensive

  income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Currency translation

      adjustment

 

 

0.0

 

 

 

0.1

 

 

 

0.0

 

 

 

(11.0

)

 

 

(0.1

)

 

 

(0.4

)

 

 

(11.4

)

    Unrealized loss on

      cash flow hedges

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

(3.7

)

 

 

0.0

 

 

 

0.0

 

 

 

(3.7

)

    Unrecognized pension

      net loss

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.2

 

 

 

0.0

 

 

 

0.0

 

 

 

0.2

 

Balance at September 30, 2019

 

$

0.2

 

 

$

215.9

 

 

$

73.3

 

 

$

(98.1

)

 

$

(90.9

)

 

$

11.6

 

 

$

112.0

 

 

(Dollars in millions)

 

Common Stock

 

 

Additional Paid-In Capital

 

 

Retained Earnings

 

 

Accumulated Other Comprehensive (Loss)

 

 

Treasury Stock

 

 

Noncontrolling

Interests

 

 

Total Equity

 

Balance at June 30,

  2018

 

$

0.2

 

 

$

198.7

 

 

$

22.2

 

 

$

(65.1

)

 

$

(65.6

)

 

$

11.7

 

 

$

102.1

 

Net income

 

 

0.0

 

 

 

0.0

 

 

 

7.6

 

 

 

0.0

 

 

 

0.0

 

 

 

(0.6

)

 

 

6.9

 

Issuance of common stock

 

 

0.0

 

 

 

0.3

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.3

 

Employee stock plans

 

 

0.0

 

 

 

3.2

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

0.0

 

 

 

3.2

 

Other comprehensive

  income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Currency translation

      adjustment

 

 

0.0