Koppers Holdings Inc (KOP) Q2 2024 Earnings Call Highlights: Record EBITDA Amid Sales Challenges

GuruFocus News
4 min read

In This Article:

  • Consolidated Sales: $563.2 million, down $14 million from the prior year quarter.

  • Adjusted EBITDA: $77.5 million, a new high compared to $70.3 million in the prior year.

  • Adjusted EBITDA Margin: 13.8%, up from 12.2% in the prior year.

  • Diluted Earnings Per Share: $1.25, compared to $1.15 in the prior year quarter.

  • Adjusted Earnings Per Share: $1.36, compared to $1.26 in the prior year quarter.

  • Operating Cash Flow: Doubled compared to Q2 2023.

  • RUPS Sales: $254 million, up $20 million or 8.3% from the prior year.

  • Performance Chemicals Sales: $177 million, down $4 million or 2.2% from the prior year.

  • CM&C Sales: $132 million, down $30 million or 18.2% from the prior year.

  • Net Debt: $943 million, up $100 million due to the Brown Wood acquisition.

  • Net Leverage Ratio: 3.7 times at June 30, 2024.

  • Capital Expenditures: $42 million year-to-date, with a full-year forecast of $80 million to $85 million.

  • Quarterly Dividend: $0.07 per share, with an annual dividend of $0.28 per share for 2024.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Koppers Holdings Inc (NYSE:KOP) achieved a new high quarterly adjusted EBITDA of $77.5 million, up from $70.3 million in the prior year.

  • The company reported a strong cash flow quarter, with operating cash flow doubling compared to Q2 2023.

  • Performance Chemicals segment showed significant improvement, with adjusted EBITDA increasing to $44 million from $32 million in the prior year.

  • The company successfully integrated the Brown Wood acquisition, which is expected to contribute to operational flexibility and capacity.

  • Koppers Holdings Inc (NYSE:KOP) maintained its full-year guidance for adjusted EBITDA, projecting a range of $265 million to $280 million.

Negative Points

  • Consolidated sales decreased by $14 million, or 2.4%, compared to the prior year quarter.

  • The Carbon Materials and Chemicals segment experienced a significant decline in sales, down $30 million or 18.2% from the prior year.

  • The company faced challenges in the CM&C segment, with lower pitch pricing and volumes impacting results.

  • Koppers Holdings Inc (NYSE:KOP) reduced its guidance for the CM&C segment, expecting a year-over-year decline of $7 million to $13 million.

  • The company experienced higher raw material, operating, and SG&A expenses, which offset some sales price increases in the RUPS segment.

Q & A Highlights

Q: Could you elaborate on the resilience of the residential piece of Performance Chemicals, given the decline in sales? Was this decline due to pricing or volume? A: Leroy Ball, CEO: The decline I mentioned was in repair and remodeling expenditures, not our sales. Despite a year-over-year decline in remodeling spending, our business has maintained flat volumes, indicating resilience against these macro headwinds.

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