Koppers Reports Strong Margins Amid Sales Decline

Koppers ((KOP)) has held its Q1 earnings call. Read on for the main highlights of the call.

Despite a challenging economic landscape, Koppers has managed to report improved profitability and strong margins in its latest earnings call. The company has been recognized for its sustainability efforts and improved safety performance, even as it navigates decreased sales in key segments and broader economic uncertainty.

Improved Adjusted EBITDA and Margin

Koppers reported a significant improvement in its adjusted EBITDA for the first quarter, reaching $55.5 million, up from $51.5 million in the previous year. The adjusted EBITDA margin also saw a notable increase, climbing to 12.2% from 10.3%, marking the strongest first-quarter margin since 2021.

Reduction in SG&A Costs

The company successfully reduced its Selling, General, and Administrative (SG&A) costs by $4.1 million compared to the first quarter of 2024. This reduction was achieved through a strategic 5% cut in the global employee base, contributing to the overall improved profitability.

Recognition for Sustainability Efforts

Koppers’ commitment to sustainability has been acknowledged as the company was named to USA Today’s list of America’s Climate Leaders for the third consecutive year. Additionally, it received a Chemical Safety Excellence Award from CSX, highlighting its dedication to environmental responsibility.

Strong Safety Performance

Safety remains a priority for Koppers, with 31 out of 41 facilities operating accident-free during the quarter. Some international branches achieved zero recordable incidents, underscoring the company’s focus on maintaining a safe working environment.

Positive Developments in CMC Segment

Despite facing lower sales, the Carbon Materials and Chemicals (CMC) segment reported improved profitability. The segment’s adjusted EBITDA rose to $10 million from $4 million in the prior year, driven by effective cost reduction strategies.

Sales Decline

Koppers experienced a consolidated sales decline of $41 million or 8% from the prior year quarter, with significant decreases in the Performance Chemicals (PC) and CMC segments. This decline reflects ongoing challenges in the market.

Performance Chemicals Volume Decrease

The PC segment saw a sales drop of $29 million or 19.5%, with a 21.5% volume decrease in the Americas. This was attributed to market share shifts and adverse weather impacts, highlighting the volatility in this segment.

Termination of Pension Plan

The company’s cash flow was adversely affected by a $14 million payment related to the termination of the U.S. pension plan, impacting overall financial performance.

Challenging Economic Conditions

Broader economic uncertainty and high interest rates continue to impact Koppers’ business performance. The company reports mixed messages from its customer base regarding demand, reflecting the challenging economic environment.

Forward-Looking Guidance

Looking ahead, Koppers has maintained its 2025 adjusted EBITDA forecast at $280 million and projected sales between $2 billion and $2.2 billion. Despite a decrease in sales, the company achieved an adjusted EBITDA of $55.5 million, improving its margin to 12.2%. Koppers remains committed to sustainability and safety, with a focus on maintaining accident-free operations across its facilities.

In summary, Koppers’ latest earnings call reflects a company that is navigating economic challenges with a focus on profitability, sustainability, and safety. While sales have declined, the company has demonstrated resilience through improved margins and cost reductions. Looking forward, Koppers remains optimistic about its financial targets and continues to prioritize its commitment to environmental and safety standards.