Koppers Holdings Inc.

Previous wording

This report and any documents incorporated herein by reference contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and may include, but are not limited to, statements about sales levels, acquisitions, restructuring, declines in the value of Koppers assets and the effect of any related impairment charges, profitability and anticipated synergies, expenses and cash outflows. All forward-looking statements involve risks and uncertainties. All statements contained herein that are not clearly historical in nature are forward-looking, and words such as “outlook,” "guidance,” “forecast,” “believe,” “anticipate,” “expect,” “estimate,” “may,” “will,” “should,” “continue,” “plan,” “potential,” “intend,” “likely,” or other similar words or phrases are generally intended to identify forward-looking statements. Any forward-looking statement contained herein, in press releases, written statements or documents filed with the Securities and Exchange Commission, or in Koppers communications and discussions with investors and analysts in the normal course of business through meetings, phone calls and conference calls, regarding future dividends, expectations with respect to sales, earnings, cash flows, operating efficiencies, restructurings, cost reduction efforts, product introduction or expansion, the benefits of acquisitions and divestitures, or other matters as well as financings and debt reduction, are subject to known and unknown risks, uncertainties and contingencies. Many of these risks, uncertainties and contingencies are beyond our control, and may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. Factors that might affect such forward-looking statements, include, among other things, availability of and fluctuations in the prices of key raw materials, including coal tar, lumber and scrap copper; the impact of changes in commodity prices, such as oil, copper and chemicals, on product margins; the extent of the dependence of certain of our businesses on certain market sectors and customers; economic, political and environmental conditions in international markets, including governmental changes, tariffs, restrictions on trade and restrictions on the ability to transfer capital across countries; current and potential future tariffs; the ratings on our debt and our ability to repay or refinance our outstanding indebtedness as it matures; our ability to operate within the limitations of our debt covenants; capital market and banking market conditions, including interest rates, borrowing costs, foreign currency rate fluctuations, and general volatility; general economic and business conditions, including labor shortages, increased employee turnover and demand for our goods and services; disruptions and inefficiencies in the supply chain; unexpected business disruptions (including, but not limited to, labor disputes, natural dis…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This report and any documents incorporated herein by reference contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and may include, but are not limited to, statements about sales levels, acquisitions, restructuring, declines in the value of Koppers assets and the effect of any related impairment charges, profitability and anticipated synergies, expenses and cash outflows. All forward-looking statements involve risks and uncertainties. All statements contained herein that are not clearly historical in nature are forward-looking, and words such as “outlook,” "guidance,” “forecast,” “believe,” “anticipate,” “expect,” “estimate,” “may,” “will,” “should,” “continue,” “plan,” “potential,” “intend,” “likely,” or other similar words or phrases are generally intended to identify forward-looking statements. Any forward-looking statement contained herein, in press releases, written statements or documents filed with the Securities and Exchange Commission, or in Koppers communications and discussions with investors and analysts in the normal course of business through meetings, phone calls and conference calls, regarding future dividends, expectations with respect to sales, earnings, cash flows, operating efficiencies, restructurings, cost reduction efforts, product introductions or expansions, the benefits of acquisitions and divestitures, or other matters as well as financings and debt reduction, are subject to known and unknown risks, uncertainties and contingencies. Many of these risks, uncertainties and contingencies are beyond our control, and may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. Factors that might affect such forward-looking statements, include, among other things, availability of and fluctuations in the prices of key raw materials, including coal tar, lumber and scrap copper; the impact of changes in commodity prices, such as oil, copper and chemicals, on product margins; the successful implementation of multi-year cost mitigation programs; the extent of the dependence of certain of our businesses on certain market sectors and customers; economic, political and environmental conditions in international markets, including governmental changes, tariffs, restrictions on trade and restrictions on the ability to transfer capital across countries; current and potential future tariffs; the ratings on our debt and our ability to repay or refinance our outstanding indebtedness as it matures; our ability to operate within the limitations of our debt covenants; capital market and banking market conditions, including interest rates, borrowing costs, foreign currency rate fluctuations, and general volatility; general economic and business conditions, including labor shortages, increased employee turnover and demand for our goods and services; disruptions and inefficiencies in the supply chain; unexpected business…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Through our RUPS business, we believe that we are the largest supplier of railroad crossties to the Class I railroads in North America and the second largest producer of utility poles in the United States. Our other treated wood products include utility poles for the electric, telephone, and broadband utility industries in the United States and Australia and construction pilings in the United States. In addition, we provide untreated wood products and rail joint bars to the railroad markets and inspection services to the utility markets. We also operate a railroad services business that conducts engineering, design, repair and inspection services for railroad bridges and a business related to the recovery of used crossties, serving the same customer base as our North American railroad business.

Current wording

Through our RUPS business, we believe that we are the largest supplier of railroad crossties to the Class I railroads in North America and the second largest producer of utility poles in the United States. Our utility poles are used in the electric, telephone, and broadband industries in the United States and Australia and construction pilings in the United States. In addition, we provide untreated wood products and rail joint bars to the railroad markets and inspection services to the utility markets. We also operate a railroad services business that conducts engineering, design, repair and inspection services for railroad bridges and a business related to the recovery of used crossties, serving the same customer base as our North American railroad business. We have entered into an agreement to sell our railroad services business. See Note 13 - Subsequent Events.

Previous wording

Our CMC business processes coal tar into a variety of products, including creosote, carbon pitch, carbon black feedstock, naphthalene and phthalic anhydride, which are intermediate materials necessary in the pressure treatment of wood, and the production of aluminum, steel, carbon black, high-strength concrete, plasticizers and specialty chemicals. Our CMC segment ceased primary production of phthalic anhydride in April 2025. See Note 2 – Acquisitions and Restructuring.

Current wording

Our CMC business processes coal tar into a variety of products, including creosote, carbon pitch, carbon black feedstock and naphthalene, which are intermediate materials necessary in the pressure treatment of wood, and the production of aluminum, steel, carbon black and high-strength concrete. Our CMC segment ceased production of phthalic anhydride in the second quarter of 2025. See Note 2 – Acquisitions and Restructuring.

Previous wording

We utilize certain financial measures that are not in accordance with U.S. generally accepted accounting principles (U.S. GAAP) to analyze and manage the performance of our business. We believe that adjusted EBITDA provides information useful to investors in understanding the underlying operational performance of the company, our business and performance trends, and facilitates comparisons between periods. The exclusion of certain items permits evaluation and a comparison between periods of results for business operations, and it is on this basis that our management internally assesses our performance. Adjusted EBITDA is the measure of profitability we use to evaluate our businesses. In addition, adjusted EBITDA is the primary measure used to determine the level of achievement of management's short-term incentive goals and related payout, as well as one of the measures used to determine performance and related payouts for certain performance share units granted to management.

Current wording

We utilize certain financial measures that are not in accordance with U.S. GAAP to analyze and manage the performance of our business. We believe that adjusted EBITDA provides information useful to investors in understanding the underlying operational performance of the company, our business and performance trends, and facilitates comparisons between periods. The exclusion of certain items permits evaluation and a comparison between periods of results for business operations, and it is on this basis that our management internally assesses our performance. Adjusted EBITDA is the measure of profitability we use to evaluate our businesses. In addition, adjusted EBITDA is the primary measure used to determine the level of achievement of management's short-term incentive goals and related payout, as well as one of the measures used to determine performance and related payouts for certain performance share units granted to management.

Previous wording

Adjusted EBITDA is a non-GAAP financial measure defined as income before interest expense, income taxes, depreciation, amortization and other adjustments. These other adjustments are items that we believe are not representative of underlying business performance. Adjusted items typically include LIFO inventory effects, impairment, restructuring and plant closure costs, significant gains and losses on asset disposals, mark-to-market commodity hedging, acquisition-related charges, cloud-computing amortization expenses and other unusual items. The LIFO expense adjustment removes the entire impact of LIFO and effectively reflects the results as if we were on a FIFO inventory basis. An adjusted EBITDA reconciliation is presented in the Segment Results section and reconciles net income to adjusted EBITDA on a consolidated basis. Forward-looking statements, including the significant market indicators described below, are based upon current expectations and are subject to factors that could cause actual results to differ materially from those set forth below. Please see the “forward-looking statements” disclaimer above for more information.

Current wording

Adjusted EBITDA is a non-GAAP financial measure defined as income before interest expense, income taxes, depreciation, amortization and other adjustments. These other adjustments are items that we believe are not representative of underlying business performance. Adjusted items typically include LIFO inventory effects, impairment, restructuring and plant closure costs, significant gains and losses on asset disposals, mark-to-market commodity hedging, acquisition-related charges, cloud-computing amortization expenses and other unusual items. The LIFO expense adjustment removes the entire impact of LIFO and effectively reflects the results as if we were on a FIFO inventory basis. An adjusted EBITDA reconciliation is presented in the Segment Results section and reconciles net income to adjusted EBITDA on a consolidated basis. Forward-looking statements, including the significant market indicators described below, are based upon current expectations and are subject to factors that could cause actual results to differ materially from those set forth below. Please see the “forward-looking statements” disclaimer in the above section for more information.

Previous wording

Our 2025 outlook reflects plans to substantially offset costs related to import and export tariffs, where possible, but due to the continued uncertainty regarding the implementation dates and scope of potential additional tariffs, as well as potential retaliatory trade policy, our outlook may vary as a result. See also Item 1A. Risk Factors.

Current wording

Our 2025 outlook reflects plans to substantially offset costs related to import and export tariffs, where possible, but there is continued uncertainty regarding the implementation dates and scope of potential additional tariffs, as well as potential retaliatory trade policy. We also face uncertainties from the indirect impact of Section 232 tariffs on the price of scrap copper and our outlook reflects our ability to offset any additional cost in the purchase price of the material. As a result of these items, our outlook may vary as a result. See also Item 1A. Risk Factors in this 10-Q as well as in our Form 10-K for the year ended December 31, 2024.

Previous wording

The Railway Tie Association’s estimate of total crosstie purchases in 2025 is approximately 19.9 million ties, with approximately 13.6 million for Class I railroads. This is slightly lower than the estimated 2024 crosstie purchases of approximately 20.0 million crossties with the small decrease expected to be from the commercial market. We expect the crosstie market to remain stable.

Current wording

The Railway Tie Association’s estimate of total crosstie purchases in 2025 is approximately 19.9 million ties, with approximately 13.4 million for Class I railroads. This is lower than the 2024 crosstie purchases of approximately 21.3 million crossties with the decrease expected to be from the commercial market. Over the past few years, North American demand for crossties has been in the range of 18 million to 22 million crossties annually. We expect the crosstie market to remain stable and within this range.

Previous wording

Market demand for utilities poles is expected to grow in 2025 with most of the growth concentrated in the second half of the year, while demand in the first half is expected to remain relatively flat. Key drivers include aging pole infrastructure, the expansion of renewable energy, vehicle electrification, grid-hardening measures and extreme weather protection. Recently, the realization of potential productivity gains from artificial intelligence (AI) has significantly increased the demand for electricity. Technology companies are now securing power supplies for data centers to fuel AI, resulting in higher volume demand for both distribution and transmission wood poles. We continue to focus on expanding our presence in the western and midwestern United States and Canada along with improving our efficiency and capturing new customers to increase our market share.

Current wording

Market demand for utility poles is expected to grow in 2025 with most of the growth concentrated in the second half of the year. Key drivers include aging pole infrastructure, the expansion of renewable energy, vehicle electrification, grid-hardening measures and extreme weather protection. Recently, the realization of potential productivity gains from artificial intelligence (AI) has significantly increased the demand for electricity. Technology companies are now securing power supplies for data centers to fuel AI, resulting in higher volume demand for both distribution and transmission wood poles. We continue to focus on expanding our presence in the western and midwestern United States and Canada along with improving our efficiency and capturing new customers to increase our market share.

Previous wording

Product demand for our PC business has historically been associated with consumer spending on home repair and remodeling projects in North America. The Leading Indicator of Remodeling Activity (LIRA) reported by the Joint Center for Housing Studies of Harvard University projects that year-over-year spending for annual homeowner renovation and maintenance expenditures is expected to grow by 2.5 percent to reach a record $526 billion by the first quarter of 2026. While the LIRA projects an increase in 2025, our PC business expects flat or lower volumes as a result of customer market share shifts.

Current wording

Product demand for our PC business has historically been associated with consumer spending on home repair and remodeling projects in North America. The Leading Indicator of Remodeling Activity (LIRA) reported by the Joint Center for Housing Studies of Harvard University projects that year-over-year spending for annual homeowner renovation and maintenance expenditures is expected to grow by 1.2 percent by the second quarter of 2026. While the LIRA projects a slight increase in 2025, our PC business expects lower volumes as a result of customer market share shifts with the remaining customer volumes expected to be relatively flat.

Previous wording

Our businesses and results of operations are affected by various competitive and other factors including (i) the impact of global economic conditions on demand for our products, including the impact of imported products from competitors in certain regions where we operate as well as tariffs and international trade policy; (ii) raw material pricing and availability, in particular the cost and availability of hardwood lumber for railroad crossties, softwood lumber for utility poles, scrap copper prices, and the cost and amount of coal tar available in global markets, which is negatively affected by reductions in blast furnace steel production; (iii) volatility in oil prices, which impacts the cost of coal tar and certain other raw materials, as well as selling prices and margins for certain of our products including carbon black feedstock, phthalic anhydride, and naphthalene; (iv) competitive conditions in our performance chemicals business and global carbon pitch markets; (v) the effectiveness of our commodity hedging programs; (vi) changes in foreign exchange rates; and (vii) the other factors set forth in the "forward-looking statements" disclaimer. Any or all of these or other factors, including those set forth in our Annual Report on Form 10-K, could impact our actual results for 2025.

Current wording

Our businesses and results of operations are affected by various competitive and other factors including (i) the impact of global economic conditions on demand for our products, including the impact of imported products from competitors in certain regions where we operate as well as tariffs and international trade policy; (ii) raw material pricing and availability, in particular the cost and availability of hardwood lumber for railroad crossties, softwood lumber for utility poles, scrap copper prices, and the cost and amount of coal tar available in global markets, which is negatively affected by reductions in blast furnace steel production; (iii) volatility in oil prices, which impacts the cost of coal tar and certain other raw materials, as well as selling prices and margins for certain of our products including carbon black feedstock and naphthalene; (iv) competitive conditions in our performance chemicals business and global carbon pitch markets; (v) the effectiveness of our commodity hedging programs; (vi) changes in foreign exchange rates; and (vii) the other factors set forth in the "forward-looking statements" disclaimer. Any or all of these or other factors, including those set forth in our Annual Report on Form 10-K, could impact our actual results for 2025.

Previous wording

RUPS net sales increased largely due to higher volumes in our Class I crosstie business, $4.6 million of price increases across most products, a nine percent increase in the volume of domestic utility poles sold driven by our acquisition of Brown Wood and an increase in activity in our railroad bridge services business. These increases were partly offset by lower volumes in our commercial crosstie business.

Current wording

RUPS net sales decreased due to lower volumes in our Class I crosstie business and lower activity in our crosstie recovery business. These decreases were partly offset by higher volumes in our commercial crosstie business, price increases and an increase in activity in our railroad bridge services business.

Previous wording

CMC net sales decreased mainly due to $10.8 million of volume decreases for phthalic anhydride and lower sales prices for carbon pitch where prices were down approximately eight percent globally. The decreases in carbon pitch prices were driven by market dynamics in the current year period, particularly in Australasia. Foreign currency changes compared to the prior year period from our international markets had an unfavorable impact on sales in the current year period of $2.3 million.

Current wording

CMC net sales decreased mainly due to volume decreases of phthalic anhydride of $20.4 million as we ceased production, lower volumes of carbon black feedstock of $11.0 million and lower sales prices for carbon pitch where prices were down approximately six percent globally. The decreases in carbon pitch prices were driven by market dynamics in the current year period, particularly in Australasia. These decreases were partly offset by volume increases for refined tar, naphthalene and creosote. Foreign currency changes compared to the prior year period from our international markets had a favorable impact on sales in the current year period of $1.8 million.

Previous wording

Impairment and restructuring chargesin the current year period represent costs associated with discontinuing phthalic anhydride production at our facility in Stickney, Illinois and our workforce reduction program across selected U.S. locations to streamline operations and reduce costs. See Note 2 - Acquisitions and Restructuring.

Current wording

Impairment and restructuring chargesin the current year period represent costs associated with discontinuing phthalic anhydride production at our facility in Stickney, Illinois, our workforce reduction program across selected U.S. locations to streamline operations and reduce costs and consulting services related to our comprehensive assessment of our businesses. See Note 2 - Acquisitions and Restructuring.

Previous wording

Interest expense was $0.5 million lower when compared to the prior year period due to lower interest rates.

Current wording

Interest expense was $3.3 million lower when compared to the prior year period due to lower interest rates.

Previous wording

Income tax provision decreased by $7.7 million when compared to the prior year period due primarily to the loss on pension settlement and lower income before income taxes. See Note 8 - Income Taxes.

Current wording

Income tax provision decreased by $2.7 million when compared to the prior year period due primarily to lower income before income taxes. See Note 8 - Income Taxes.

Previous wording

PC net sales decreased primarily due to 21.5 percent lower volumes of residential and industrial preservatives in the Americas due mostly to a shift in United States market share along with reduced volumes due to weather. Foreign currency changes compared to the prior year period from our international markets had an unfavorable impact on sales in the current year period of $2.4 million.

Current wording

PC net sales decreased due primarily to a 15.5 percent volume decrease mostly in the Americas due to a shift in United States market share along with reduced volumes due to weather and sales to Brown Wood which were included in external sales during the first quarter of 2024. Foreign currency changes compared to the prior year period from our international markets had an unfavorable impact on sales in the current year period of $2.2 million.

Previous wording

Cost of sales as a percentage of net sales was 77 percent, compared to 81 percent in the prior year period as lower freight costs, operating expenses and raw material costs were partly offset by lower sales volumes. Significant items impacting cost of sales in individual operating segments are discussed as part of "Segment adjusted EBITDA and adjusted EBITDA margin" herein.

Current wording

Cost of sales as a percentage of net sales was 77 percent, compared to 79 percent in the prior year period as lower raw material costs, freight costs and operating expenses were partly offset by lower sales volumes. Significant items impacting cost of sales in individual operating segments are discussed as part of "Segment adjusted EBITDA and adjusted EBITDA margin" herein.

Previous wording

Depreciation and amortization expenses were $1.9 million higher when compared to the prior year period primarily as a result of our acquisition of Brown Wood.

Current wording

Depreciation and amortization expenses were $1.7 million higher when compared to the prior year period primarily as a result of our acquisition of Brown Wood.

Previous wording

Selling, general and administrative expenses were $4.4 million lower when compared to the prior year period due mainly to a decrease in compensation-related costs, professional service fees and other administrative expenses. See Note 6 - Stock-based Compensation for changes related to our long-term incentive plan.

Current wording

Selling, general and administrative expenses were $10.8 million lower when compared to the prior year period due mainly to a decrease in compensation-related costs, professional service fees and other administrative expenses. See Note 6 - Stock-based Compensation for changes related to our long-term incentive plan.

Previous wording

Other income in the current year period primarily relates to the sale of our office space in Griffin, Georgia.

Current wording

Other income in the current year period primarily relates to increased royalty income in our PC business, the sale of our office space in Griffin, Georgia and lower pension costs.

Previous wording

RUPS adjusted EBITDA increased due to net sales volume and price increases and $2.2 million from lower operating expenses in our crossties business, partly offset by $2.5 million of higher raw material and allocated selling, general and administrative expenses.

Current wording

RUPS adjusted EBITDA increased due to net sales increases and $8.7 million of lower operating, raw material and selling, general and administrative expenses.

Previous wording

PC adjusted EBITDA decreased due to a net decrease in sales and higher raw material costs, partly offset by $3.7 million of lower logistics and selling, general and administrative expenses, particularly in North America.

Current wording

PC adjusted EBITDA decreased due primarily to higher raw material costs and lower sales volumes, partly offset by $5.7 million of lower selling, general and administrative and logistics expenses, particularly in North America, and higher royalty income.

Previous wording

CMC adjusted EBITDA increased due to $7.0 million of lower raw material and allocated selling, general and administrative expenses, particularly in North America, along with a favorable sales mix and improved plant performance as a result of an outage in North America in the prior year period, partly offset by price decreases.

Current wording

CMC adjusted EBITDA increased due to $19.3 million of lower raw material, selling, general and administrative and operating expenses, particularly in North America, along with a favorable sales mix and improved plant performance as a result of an outage in North America in the prior year period, partly offset by sales decreases.

Previous wording

Net cash used in operating activitiesfor the three months ended March 31, 2025 was $22.7 million compared to $12.3 million in the prior year. For both periods, the primary source of cash was net income, excluding non-cash items, principally depreciation and in 2025, the pension settlement loss. This was offset by working capital usage which was higher in the current year primarily as a result of the timing of purchases and payments of raw material inventory and pension funding of approximately $14 million in connection with the settlement.

Current wording

Net cash provided by operating activitiesfor the six months ended June 30, 2025 was $27.8 million compared to $14.9 million in the prior year. For both periods, the primary source of cash was net income, excluding non-cash items, principally depreciation and in 2025, the pension settlement loss. Working capital usage was lower in the current year primarily as a result of the timing of receipts and payments, partly offset by pension funding of approximately $14 million in connection with the settlement.

Previous wording

Net cash used in investing activitiesfor the three months ended March 31, 2025 was $17.6 million compared to $25.8 million in the prior year due primarily to lower capital expenditures. Capital expenditures were higher in the prior year period due to investment in growth projects, such as the yield enhancement project at our CMC facility in Nyborg, Denmark which was completed in the first quarter of 2024. Additionally, during the three months ended March 31, 2025, we paid approximately $7.6 million for a land transfer associated with our agreement to liquidate Koppers (China) Carbon & Chemical Company Limited (KCCC) with Koppers and Tangshan Iron & Steel Group Co. Ltd. (TISCO).

Current wording

Net cash used in investing activitiesfor the six months ended June 30, 2025 was $39.3 million compared to $141.6 million in the prior year. The decrease was due to cash paid for the Brown Wood acquisition in the prior year as well as lower capital expenditures in the current year due to the completion of certain growth projects, such as the yield enhancement project at our CMC facility in Nyborg, Denmark which was completed in the first quarter of 2024. Additionally, during the six months ended June 30, 2025, we paid approximately $7.6 million for a land transfer associated with our agreement to liquidate Koppers (China) Carbon & Chemical Company Limited (KCCC) with Koppers and Tangshan Iron & Steel Group Co. Ltd. (TISCO).

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2025 was $28.7 million compared to $23.0 million in the prior year. The primary source of financing cash flows for the three months ended March 31, 2025 was net borrowings of $49.1 million and the primary uses of financing cash flows were repurchases of common stock, including payments related to taxes withheld under stock-based compensation plans, and dividends paid. In the prior year, the primary source of financing cash flows was net borrowings of $27.9 million and the primary uses of financing cash flows were payments related to taxes withheld under stock-based compensation plans and dividends paid.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2025 was $3.3 million compared to $111.6 million in the prior year. The primary source of financing cash flows for the six months ended June 30, 2025 was net borrowings of $37.2 million and the primary uses of financing cash flows were repurchases of common stock, including payments related to taxes withheld under stock-based compensation plans, dividends and debt issuance costs. In the prior year, the primary source of financing cash flows was net borrowings of $150.6 million and the primary uses of financing cash flows were repurchases of common stock, including payments related to taxes withheld under stock-based compensation plans and dividends.

Previous wording

As of March 31, 2025, liquidity from our Credit Facility and cash on hand was approximately $320 million. Our Credit Facility is described in Note 11 – Debt.

Current wording

As of June 30, 2025, liquidity from our Credit Facility and cash on hand was approximately $336 million. Our Credit Facility is described in Note 11 – Debt.

Previous wording

Our need for cash in the next twelve months relates primarily to contractual obligations which includes debt service, pension plan funding, purchase commitments and operating leases, as well as working capital, capital spending, dividends and share repurchases. We may also use cash to pursue other potential strategic acquisitions. Capital expenditures in 2025, excluding acquisitions, if any, are expected to total approximately $65 million and are expected to be funded by cash from operations. We anticipate that our liquidity will continue to be adequate to fund our cash requirements for at least the next twelve months.

Current wording

Our need for cash in the next twelve months relates primarily to contractual obligations which include debt service, pension plan funding, purchase commitments and operating leases, as well as working capital, capital spending, dividends and share repurchases. We may also use cash to pursue other potential strategic acquisitions. Capital expenditures in 2025, excluding acquisitions, if any, are expected to total approximately $52 million to $58 million and are expected to be funded by cash from operations. We anticipate that our liquidity will continue to be adequate to fund our cash requirements for at least the next twelve months.

Previous wording

Restrictions on Dividends to Koppers Holdings

Current wording

Restrictions on Dividends to Koppers Holdings Inc.

Previous wording

Koppers Holdings depends on the dividends from the earnings of Koppers Inc. and its subsidiaries to generate the funds necessary to meet its financial obligations, including the payment of any declared dividend of Koppers Holdings. The Credit Facility permits Koppers Inc. to make dividend payments to Koppers Holdings if certain conditions are met, including, among other permitted dividend payments, the ability to fund the payment of regularly scheduled dividends on Koppers Holdings common stock and repurchases of Koppers Holdings common stock, in an aggregate amount per fiscal year not to exceed the greater of $50.0 million, with unused amounts in any fiscal year being carried over to the succeeding fiscal year, and 6.0 percent of market capitalization.

Current wording

Koppers Holdings Inc. depends on the dividends from the earnings of Koppers Inc. and its subsidiaries to generate the funds necessary to meet its financial obligations, including the payment of any declared dividend of Koppers Holdings Inc. The Credit Facility permits Koppers Inc. to make dividend payments to Koppers Holdings Inc. if certain conditions are met, including, among other permitted dividend payments, the ability to fund the payment of regularly scheduled dividends on Koppers Holdings Inc. common stock and repurchases of Koppers Holdings Inc. common stock, in an aggregate amount per fiscal year not to exceed the greater of $50.0 million, with unused amounts in any fiscal year being carried over to the succeeding fiscal year, and 6.0 percent of market capitalization.

Previous wording

The total net leverage ratio is calculated as of the last day of each fiscal quarter in accordance with the Credit Facility definitions of consolidated total net debt divided by consolidated EBITDA and is not permitted to exceed 5.0. The total net leverage ratio as of March 31, 2025 was 3.34. Effective during the second quarter of 2025, the total net leverage ratio will not be permitted to exceed 4.75.

Current wording

The total net leverage ratio is calculated as of the last day of each fiscal quarter in accordance with the Credit Facility definitions of consolidated total net debt divided by consolidated EBITDA and is not permitted to exceed 4.75. The total net leverage ratio as of June 30, 2025 was 3.3.

Previous wording

The cash interest coverage ratio, calculated as of the last day of each fiscal quarter, is not permitted to be less than 2.0. The cash interest coverage ratio as of March 31, 2025 was 4.0.

Current wording

The cash interest coverage ratio, calculated as of the last day of each fiscal quarter, is not permitted to be less than 2.0. The cash interest coverage ratio as of June 30, 2025 was 4.2.