Koppers (KOP) 16th Annual Midwest Ideas Conference summary

Strategic direction and business model

• Transitioned from a capital-intensive growth phase (2021–2023) to an expand and optimize phase, reducing capital spending and focusing on cash flow generation.

• Emphasizes vertical integration across four business units, ensuring supply chain reliability and cost efficiency.

• Maintains a balanced portfolio with countercyclical business segments, reducing reliance on any single market or geography.

• Project Catalyst, launched in early 2024, aims to benchmark operations, cut costs, and sustainably raise EBITDA margins to at least 15% by 2027.

• Focus on sustainability through circular economy practices, renewable resources, and environmentally responsible product lifecycle management.

Financial performance and capital allocation

• Achieved over $50 million in Q2 operating cash flow, targeting $150 million for the year, with a focus on debt reduction and shareholder returns.

• Reduced headcount by 11% and SG&A costs by 13% year-over-year, supporting margin improvement.

• Adjusted EBITDA margin exceeded 15% in Q2, the highest in eight years, despite lower top-line revenue.

• Lowered annual capital expenditures to $52–$58 million after three years above $100 million, redirecting excess cash to share buybacks and dividends.

• Extended $800 million revolving credit facility to 2030, ensuring ample liquidity for future growth.

Business unit highlights and growth opportunities

• Railroad and Utility Products and Services (RUPS) segment generates about half of total revenue, with strong market share among all Class 1 railroads and major utilities.

• Performance Chemicals is the highest-margin segment, driven by patented wood treatment technology and strong North American and international presence.

• Carbon Materials and Chemicals segment supports vertical integration and supplies critical inputs for internal use, with new technology investments targeting the battery industry.

• Growth in utility pole business through acquisitions and geographic expansion, especially in the Midwest and West U.S.

• International growth in Performance Chemicals, particularly in South America, with Brazil and Chile as key contributors.