Koppers (KOP) BofA Securities Leveraged Finance Conference 2025 summary

Financial outlook and cash flow

• 2025 cash interest projected at $65 million, benefiting from rate changes and loan repricing, with expectations for further reductions in 2026.

• Free cash flow goal set at $100 million annually from 2026 to 2028.

• Cash taxes expected at $15–$20 million base, with 25–30% of incremental EBITDA added as business grows.

• Working capital initiatives aim to mitigate cash flow draw, with $40–$50 million targeted, mainly in inventories.

• Normalized CapEx guided at $50–$60 million, not expected to exceed $75 million even for growth projects.

Operational changes and segment performance

• Shut down of phthalic anhydride plant and potential reduction to one coal tar distillation column to streamline operations and reduce costs.

• North America pension is substantially funded; minor obligations remain in Europe, expected to be resolved soon.

• Performance Chemicals segment faces $41–$43 million EBITDA reduction in 2025 due to customers moving to dual sourcing, not customer loss.

• Copper price volatility impacted hedging effectiveness, but risk mitigation strategies are being implemented, including new hedging approaches and fixed-price contracts.

Segment-specific insights and growth initiatives

• RUPS segment EBITDA guidance for 2025 is $28–$30 million higher, driven by cost reductions and margin improvements, especially in rail operations.

• Utility poles show early signs of demand recovery, with expansion efforts underway to serve western U.S. markets following a recent acquisition.

• Inventory levels are high in PC and rail tie businesses, with ongoing efforts to optimize.

• CMC segment expects $8–$9 million EBITDA growth in 2025, mainly from cost reductions and plant shutdowns, despite weak industrial demand.

• Company is focused on cost control to weather the current cycle and position for future demand-driven growth.