Koppers (KOP) 17th Annual Southwest IDEAS Conference summary

Strategic direction and financial performance

• Transitioned from heavy capital investment (2021–2023) to a growth-focused phase, emphasizing margin improvement and cash flow generation.

• Consistently generates over $100 million in annual operating cash flow, targeting $135 million in 2025.

• Reduced capital spending, with projected 2025 capex at $55 million, down from $120 million in 2023.

• Free cash flow expected to exceed $80 million in 2024, supporting debt reduction and share repurchases.

• Adjusted EBITDA margin improved from 12.5% to above 14% despite a slight decline in top-line revenue.

Business segments and market leadership

• Operates in four core areas: railroad products, utility and industrial products, performance chemicals, and carbon materials.

• Market leader in cross ties for Class I railroads and utility poles, serving eight of the ten largest U.S. utilities.

• Performance Chemicals segment is the most profitable, generating over half of adjusted EBITDA with margins above 20% last year, though now closer to 18% due to increased competition.

• Carbon materials business is the smallest by revenue and primarily supports internal creosote supply.

• 75% of business is tied to wood preservation, with a strong North American focus and international presence.

Operational transformation and cost initiatives

• Launched the Catalyst transformation project, targeting $40 million in annual benefits through cost savings and operational improvements.

• Initiatives include procurement optimization, headcount reduction, and closure of underperforming production lines.

• SG&A expenses reduced by 14% year-over-year, boosting cash flow.

• Divested non-core businesses, such as a bridge repair unit and exited a phthalic anhydride plant to avoid unprofitable capital outlays.

• Aims for adjusted EBITDA margins above 15% and leverage below 3x by 2028.