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, regarding future dividends, expectations with respect to sales, earnings, cash flows, operating efficiencies, restructurings, cost reduction efforts, transformation initiatives, 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; geopolitical events (including the current war in the Middle East); current and potential future tariffs or duties; 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 d…

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, regarding future dividends, expectations with respect to sales, earnings, cash flows, operating efficiencies, restructurings, cost reduction efforts, transformation initiatives, 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; geopolitical events (including the current conflicts in the Middle East); current and potential future tariffs or duties; 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, l…

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 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 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. We also operate a business related to the recovery of used crossties, serving the same customer base as our North American railroad business.

Previous 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.

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. See Note 2 - Restructuring for further discussion of the discontinuation of distillation and chemical manufacturing operations in Stickney, Illinois.

Previous wording

After considering the current intensely competitive environment, global economic conditions, as well as ongoing uncertainty associated with geopolitical and supply chain challenges, we commenced taking measures to streamline our organization to support an increasingly cost-conscious customer base. These actions, some of which are one-time savings and some of which are expected to be permanent savings, are intended to ensure that we grow our profitability and support a higher margin profile by leveraging a smaller global team highly focused on serving customer preferences. Through the planning phase that occurred throughout 2025, we believe we have identified actionable transformation initiatives to position Koppers for future success, creating a roadmap to reshape our company into a higher earning, higher margin, higher free cash flow and higher return on capital business over the next three years. These initiatives impact all facets of the organization and are focused on growing the more profitable businesses while continuing to selectively scale back our lower margin, capital intensive business. We believe this will grow earnings per share, lower our maintenance and capital requirements and consistently generate higher margins.

Current wording

After considering the current intensely competitive environment, global economic conditions, as well as ongoing uncertainty associated with geopolitical and supply chain challenges, we commenced taking measures to streamline our organization to support an increasingly cost-conscious customer base. These actions, some of which are one-time savings and some of which are expected to be permanent savings, are intended to ensure that we grow our profitability and support a higher margin profile by leveraging a smaller global team highly focused on serving customer preferences. Through the planning phase that occurred throughout 2025, we believe we have identified actionable transformation initiatives to position Koppers for future success, creating a roadmap to reshape our company into a higher earning, higher margin, higher free cash flow and higher return on capital business by the end of 2028. These initiatives impact all facets of the organization and are focused on growing the more profitable businesses while continuing to selectively scale back our lower margin, capital intensive business. We believe this will grow earnings per share, lower our maintenance and capital requirements and consistently generate higher margins.

Previous wording

•For our CMC segment, our focus is to continue to (i) execute on domestic plant restructuring projects including the closure of our Stickney, Illinois coal tar distillation plant by the end of 2026 (see Note 13), (ii) optimize and develop markets for enhanced carbon products and (iii) develop and implement global tar and pitch strategies to mitigate expected raw material cost increases.

Current wording

•For our CMC segment, our focus is to continue to (i) execute on domestic plant restructuring projects including the discontinuation of distillation and chemical manufacturing operations at our Stickney, Illinois plant by the end of 2026 (see Note 2 - Restructuring), (ii) optimize and develop markets for enhanced carbon products and (iii) develop and implement global tar and pitch strategies to mitigate expected raw material cost increases.

Previous wording

•The Railway Tie Association’s estimate of total crosstie purchases in 2026 is approximately 19.9 million ties, with approximately 13.4 million for Class I railroads, which is comparable to the 2025 estimate of crosstie purchases. 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. However, volumes for our business in any year can be affected by individual customer demands, logistics and business conditions.

Current wording

•The Railway Tie Association’s estimate of total crosstie purchases in 2026 is approximately 19.8 million ties, with approximately 13.2 million for Class I railroads, which is slightly below the 2025 estimate of crosstie purchases. 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. However, volumes for our business in any year can be affected by individual customer demands, logistics and business conditions.

Previous wording

•Market demand for utility poles is expected to grow over the next few years. The main driver for growth is the construction of data centers that support artificial intelligence development. The data centers that are being constructed nationwide consume large amounts of electricity. Other drivers of pole demand include aging pole infrastructure, the expansion of renewable energy, vehicle electrification, grid-hardening measures, and extreme weather protection. Our Utility Products business continues to focus on expanding its presence in the midwestern and western United States.

Current wording

•Market demand for utility poles is expected to grow over the next few years. The main driver for growth is the construction of data centers that support artificial intelligence development. The data centers that are being constructed nationwide consume large amounts of electricity which will require infrastructure expansion including utility poles. Other drivers of pole demand include aging pole infrastructure, the expansion of renewable energy, vehicle electrification, grid-hardening measures, extreme weather protection and increased manufacturing. Our Utility Products business continues to focus on expanding its presence in the midwestern and western United States.

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 2.1 percent in the middle of 2026 before easing to 1.6 percent by the end of 2026. Our PC business expects higher volumes through market share growth and acquiring new customers supported by the LIRA projections.

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 expects year-over-year growth in home renovation and repair spending of just 0.5 percent by the first quarter of 2027 - a pace that remains positive in nominal terms but is less than overall inflation. Our PC business expects higher volumes through market share growth and acquiring new customers, including international expansion.

Previous wording

•For the external markets served by our CMC business, we have experienced a slowdown in manufacturing overall as well as in the steel, aluminum and carbon black industries. The availability of coal tar, the primary raw material for our CMC business, is linked to levels of metallurgical coke production. As the global steel industry, excluding Asia, has reduced the production of steel using metallurgical coke, the volumes of coal tar have been reduced. We are actively working to mitigate the impacts of the long-term decline of coal tar supply by gaining market acceptance for petroleum-blended products. We are also investing in projects to increase distillation yields and balance raw material supply and cost with customer demand and pricing.

Current wording

•For the external markets served by our CMC business, we have experienced a slowdown in manufacturing overall as well as in the steel, aluminum and carbon black industries. The availability of coal tar, the primary raw material for our CMC business, is linked to levels of metallurgical coke production. As the global steel industry, excluding Asia, has reduced the production of steel using metallurgical coke, the volumes of coal tar have been reduced. We are actively working to mitigate the impacts of the long-term decline of coal tar supply by gaining market acceptance for petroleum-blended products. We have invested in projects to increase distillation yields and balance raw material supply and cost with customer demand and pricing.

Previous wording

RUPS net sales decreased due to customer mix in our Class I crosstie business, lower activity in our maintenance-of-way businesses, including approximately $9.6 million related to the sale of our railroad services business during the third quarter of 2025, and price decreases across multiple markets, particularly for crossties. These decreases were partly offset by increased volumes in our domestic utility pole business, including our acquisition of a western U.S. pole procurement business, and higher volumes in our commercial crosstie business. Foreign currency changes had a favorable impact on sales in the current year period of $1.4 million compared to the prior year period, mainly from our Australian utility pole business.

Current wording

RUPS net sales decreased due primarily to approximately $11.9 million related to the sale of our railroad services business during the third quarter of 2025, price decreases across multiple markets, particularly for crossties, and unfavorable sales mix. These decreases were partly offset by a 16 percent volume increase in our domestic utility pole business, including our acquisition of a western U.S. pole procurement business, and increased volumes for crossties. Foreign currency changes had a favorable impact on sales in the current year period of $1.0 million compared to the prior year period, mainly from our Australian utility pole business.

Previous wording

Cost of sales as a percentage of net sales was 81 percent, compared to 77 percent in the prior year period as higher raw material and operating expenses combined with lower sales prices. Significant items impacting cost of sales in individual operating segments are discussed as part of "Segment Results" herein.

Current wording

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

Previous wording

Income tax expense increased by $4.1 million when compared to the prior year period due primarily to higher income before income taxes. See Note 8 – Income Taxes.

Current wording

Income tax (benefit) provision decreased by $40.0 million when compared to the prior year period due to lower income before income taxes primarily as a result of impairment and restructuring charges. See Note 8 - Income Taxes and Note 2 - Restructuring.

Previous wording

PC adjusted EBITDA increased due primarily to higher sales volumes and prices, partly offset by $2.4 million of higher raw material and operating costs. Higher raw material costs were unfavorably impacted by scrap copper costs, net of the benefit realized from our copper-hedging program.

Current wording

PC adjusted EBITDA increased due primarily to higher sales volume and lower raw material costs of $1.3 million, partly offset by increased logistics expenses. Lower raw material costs were favorably impacted by the benefit realized from our copper-hedging program, net of increased scrap copper costs.

Previous wording

PC net sales increased due to a 15 percent volume increase along with higher sales prices, in each case, primarily in the Americas. Foreign currency changes from our international markets had a favorable impact on sales in the current year period of $2.7 million compared to the prior year period.

Current wording

PC net sales increased due to a 12 percent volume increase, primarily in the Americas. Foreign currency changes from our international markets had a favorable impact on sales in the current year period of $5.6 million compared to the prior year period.

Previous wording

CMC net sales decreased mainly due to lower phthalic anhydride volumes of $13.9 million as we ceased production of the product in the second quarter of 2025 and lower sales prices across most products, especially carbon pitch where prices were down approximately nine percent globally driven by market dynamics. These decreases were partly offset by volume increases for carbon pitch, naphthalene and carbon black feedstock. Foreign currency changes from our international markets had a favorable impact on sales in the current year period of $7.6 million compared to the prior year period.

Current wording

CMC net sales decreased due mainly to lower phthalic anhydride volumes of $19.6 million as we ceased production of the product in the second quarter of 2025, lower sales prices across most products, especially carbon pitch where prices were down approximately six percent globally, and lower creosote and refined tar volumes. 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 carbon black feedstock, naphthalene and carbon pitch. Foreign currency changes from our international markets had a favorable impact on sales in the current year period of $11.3 million compared to the prior year period. See Note 2 - Restructuring for further discussion.

Previous wording

Depreciation and amortization expenses were $1.4 million higher when compared to the prior year period primarily as a result of depreciation on recent capital expenditures as well as higher asset retirement obligations in our European CMC operations.

Current wording

Depreciation and amortization expenses were $1.3 million higher when compared to the prior year period primarily as a result of depreciation on recent capital expenditures as well as higher asset retirement obligations in our European CMC operations.

Previous wording

Impairment and restructuring charges in the current year period represent costs associated with the decision to idle two plants in our RUPS business, consulting services related to our comprehensive assessment of our businesses and discontinuing phthalic anhydride production at our facility in Stickney, Illinois. In the prior year period, it also includes our workforce reduction program across selected U.S. locations to streamline operations and reduce costs. See Note 2 - Restructuring.

Current wording

Impairment and restructuring charges in the current year period represent costs associated with the plans to cease production at our facility in Stickney, Illinois, the decision to idle two plants in our RUPS business and consulting services related to our comprehensive assessment of our businesses. In the prior year period, it also includes our workforce reduction program across select U.S. locations to streamline operations and reduce costs. See Note 2 - Restructuring.

Previous wording

(Gain) on sale of assets for the three months ended March 31, 2026 was primarily related to the liquidation of KCCC.

Current wording

Loss (gain) on sale of assets in the current year period was primarily related to the liquidation of KCCC. See Note 2 - Restructuring.

Previous wording

Interest expensewas $1.6 million lower when compared to the prior year period due to lower interest rates and lower borrowings.

Current wording

Interest expensewas $3.9 million lower when compared to the prior year period due to lower interest rates and lower borrowings.

Previous wording

CMC adjusted EBITDA decreased due to lower sales prices as well as higher operating and raw material costs. These decreases were partly offset by the operating cost savings from discontinuing phthalic anhydride production at our facility in Stickney, Illinois.

Current wording

CMC adjusted EBITDA decreased due to lower sales prices and higher raw material, operating and selling, general and administrative expenses of $10.8 million. These decreases were partly offset by operating cost savings of $4.1 million from discontinuing phthalic anhydride production at our facility in Stickney, Illinois.

Previous wording

Net cash provided by operating activities for the three months ended March 31, 2026 was $46.3 million compared to net cash used in operating activities of $22.7 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 improved in the current year primarily as a result of the timing of receipts and payments as well as a reduction in inventory. Additionally, in 2025, working capital was negatively impacted by pension funding of approximately $14 million in connection with the settlement.

Current wording

Net cash provided by operating activities for the six months ended June 30, 2026 was $96.3 million compared to net cash provided by operating activities of $27.8 million in the prior year. The primary source of cash was net income excluding non-cash items, principally impairment, depreciation and, in 2025, the pension settlement loss. Working capital usage improved in the current year primarily as a result of the timing of receipts and payments as well as a reduction in inventory. Additionally, in 2025, working capital was negatively impacted by pension funding of approximately $14 million in connection with the settlement.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2026 was $10.5 million compared to $17.6 million in the prior year. The decrease was due primarily to cash paid in 2025 for a land transfer associated with our agreement to liquidate KCCC.

Current wording

Net cash used in investing activities for the six months ended June 30, 2026 was $22.4 million compared to $39.3 million in the prior year. The decrease was due in part to cash paid in 2025 for a land transfer associated with our agreement to liquidate KCCC.

Previous wording

Net cash used in financing activitiesfor the three months ended March 31, 2026 was $31.0 million compared to net cash provided by financing activities of $28.7 million in the prior year. In the current year, 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. In the prior year, the primary source of financing cash flows was net borrowings of $49.1 million and the primary uses of financing cash flows in the prior year were repurchases of common stock, including payments related to taxes withheld under stock-based compensation plans, and dividends.

Current wording

Net cash used in financing activitiesfor the six months ended June 30, 2026 was $70.7 million compared to net cash provided by financing activities of $3.3 million in the prior year. In the current year, the primary uses of financing cash flows were repurchases of common stock, including payments related to taxes withheld under stock-based compensation plans, net repayments of $23.5 million and dividends. In the prior year, the primary source of financing cash flows was net borrowings of $37.2 million and the primary uses of financing cash flows in the prior year were repurchases of common stock, including payments related to taxes withheld under stock-based compensation plans, and dividends.

Previous wording

As of March 31, 2026, liquidity from our Credit Facility and cash on hand was approximately $386 million. Our Credit Facility is described in Note 11 – Debt.

Current wording

As of June 30, 2026, liquidity from our Credit Facility after considering restrictions from debt covenants and cash on hand was approximately $390 million. Our Credit Facility is described in Note 11 – Debt.