KOP - Earnings call 3 2020 | Koppers Holdings Inc.

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Operator

Good morning, ladies and gentlemen, thank you for standing by. Welcome to Koppers Third Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I will now turn the call over to Quynh McGuire. Please go ahead.

Quynh McGuire

morning. good and Thanks, Vice Investor McGuire, President Quynh Relations. of I'm where provide highlight a to third our update will call, conference results. as Welcome business we as XXXX preliminary quarter our well

issued We release press earlier our today.

via announcement this access may our at www.koppers.com. website You

website, calls, have live with As posted a the be prior our and our that practice materials of on in referenced conference also will indicated in January page announcement, website be this Relations this today's XX, of to broadcast call our on website in available our is for we being Investor through call. replay recording quarterly XXXX. Consistent will our

statements be Before the to Act Act filings statement. Commission. cautionary characterized in direct a involve statements we number These of as included forward-looking described Private like and statement the XXXX. -- in release on Reform risks risks disclosure would Certain our and started, get your the comments Exchange Securities attention uncertainties, the may this press Litigation Securities as in defined of I forward-looking including under to forward-looking and made assumptions, with call our conference company's

those results, regard information or the objectives, In significant statements statements. inclusion in in in should performance differ projected uncertainties results implied company's expressed and from plans as or The such the not actual comments, achievements achieved. the light included of company's a representation you its by forward-looking such inherent the of that materially be forward-looking will may

non-GAAP the has press is reconciliations assumes measures. during non-GAAP our to statements available also of its made comparable financial made this measures release, measures no call. the any company certain may company on GAAP obligation to be most forward-looking with financial which website, The directly References today these provided update to financial

call Officer. our Ball, President for Leroy discussions now today Zugay, Financial turn I'll CEO Chief of to and Leroy. Koppers; are Mike me over and Joining

Leroy M. Ball

your families you are welcome, during and pandemic. healthy and We safe ongoing continuing Good Quynh. the you, remain everyone. Thank to and hope morning,

say Before I who and performance get their into grateful I all continue so our us third deal new have the just records time, concerning jobs we on safely, people, third in same quarter am remained quarter with achieve focused many to doing let to how impressed me the worldwide at enabling while the results, pandemic. our

in always, journey, year. Harm can't culture. proud our the lowest to As safety COVID-XX, on their focused trailing despite down Zero that Harm injury basis, including far at It's them not a to safety report engagements, hazard compared as the recordable on same our with point last Zero an we hard begin to XX% total our were year our truly our thank employees. focus XX-month OSHA and management on a rate, thus I commitment point their to of for and such identification. a observations challenging enough testament proactive remain extremely plant I'm work

team management ongoing virtual November, our back occur more staff And almost scheduled performance was unfortunately else canceled in managers around April a forum emphasis was be augmented team. in-person our leaders like In be a world, an continues building support and year. Zero the that This this plant replace forum. to to for that is Harm everything on the including will members from convening by training empathetic we safety and to leadership of

do reconvene at so we to group, site can to the adapt we leadership a figuring out wait safely until to times. want our While not we're way

safety valuable that interactive, business information more sessions our in scheduled for will and days, organization. as and sharing culture be our virtual, of event will And on online although X-hour I'm will over be build ever. and incorporating advancing X generating inclusive made certain Harm the as dialogue and progress be across it This forum parts live we've about Zero practices sustainable meaningful all will the by

Cybersecurity order in The keeping of Security on Koppers do Agency, part and to we essential pandemic on infrastructure business, global continue the X. as shown an Department Koppers economy. proud to with transporting Across the or and reliably. classification Infrastructure Slide CISA, Security, providing running as help and home goods, meaning people our businesses of to the critical of support presentation, to Homeland are to that our its Moving connectivity operate maintained can U.S. organization, within and power our during to the our

point tested of approximately employees are self-quarantining, employees were health result and thoroughly Looking while measures and diligent a in the And continue in XX for safety of be self-identified employee of on we have basis, at site. had represents who XX cumulative affected we symptoms COVID-XX, to the employee well-being, proper have cleaning positive which time. have that and any transmitted On being X our X. ensuring our on worldwide approximately areas, some X% Slide have cases had disinfecting at facilities and To date, currently with XX% cumulatively, population.

in had around and with of not to importance continuing trends, our guard an national the practice worldwide and we cases to continually down messaging recently, Consistent and reinforce look most safe behaviors. increase we've for letting ways our

place, the of protection personnel, by of -- results needed personal field for reducing to Our introduction a saliva full strict time continue protocol a kits the get to processes self-administered in day. of including and test at office and governing be minimum

clinic for and we in scheduling of our upcoming recently at network other process are Pittsburgh in weeks. clinics at locations flu employees in our site headquarters flu a conducted the the in Also,

all having our for be held in areas first day will X zones meeting better the Each employee of at meetings the that hopefully time In to U.S., and It region. will are we're upcoming for time. Europe the more additional in combined. closely of the topics time quarterly communications, and of Australia also in geographic discussion relevant employees our Zealand dedicated more accommodate New in each allow will that

basis. viewed our with a to a on facility visits employees Facebook engage virtual and to continuing continual at virtual and Koppers' updates provide worldwide accounts, I'm and LinkedIn be interactions, via that ongoing least employee encouragements chats once can videos, for Now on week

Slide a operations to X. continuity on of now discussion Moving

Here, we see remain layoffs. made major in-process to while do or news, facilities monitor goals continues only, limited reinforce performance furloughs and and of is remain in-person to great Koppers essential manufacturing Travel business any number all that visits capital restricted health, been a not operational, have to and or to we safety projects. worldwide have review facility which

strongly work encourage office For postponed potential to we a January still the until to remotely, with return employees XXXX. office personnel,

to training needs, virtual from return well very for road later trucks our to facility us safe multiple meetings to actually Although will weight more. to out state there in across visits and strong is to to likelihood move programs office the Technology a the continues virtual XXXX. tests on serve

Sustainability a which XXXX and we build we've continues we her On receiving base reflection continue at Award, significant cancellation, it are third honor, absolutely Chief year Koppers Manufacturing in congratulate this row despite our currently the us leadership Award Slide being recognized have with to the had Leslie STEP national Now that hasn't Koppers. team The Hyde, or XXXX a our stopped manufacturing. accomplishments. shape of from is recognized among accomplishments. on in deserves and women XX, the at that XXXX the contributions the a of STEP Institute our for of people excellence year for member Officer, being and made Leslie She from Ahead represents proud female and a we to industry. talent has

Pinnacle safe I in partners, awards rail shipping to Slide our Chemical a from and well-deserved commending from possible. our Award the XX, in while everyone Koppers role and hard Award who Congratulations, Pacific. played Class on work the And These railroad recently part our making people, Safety Union reliably Excellence our received CSX this you acknowledgment recognition practices, communities our protect serving are thank customers. employees, of to environment from

various Mayor made the North wood we officials be plant month. As this our photo I of Little the at modernization Rock, our of I elected was we Little to celebrate Arkansas the to plant. honored that groundbreaking Slide expansion to treatment Arkansas, North facility. the start this at by facilities On visits Rock ceremony past joined mentioned of held a project and Governor in-person and several our see XX, shows earlier,

a they were where Sullivan, Hubbell, Michigan Fenwick, Performance by our Jim merits Doug visit Performance to the in of Chief and Operating shows adding Officer, Chemicals, Chemicals capacity. President discussing XX additional facility our carbonate Slide of Senior Vice Kopper

from highlights Operating tank of Chief we in On a a visit Jim program. our Slide see of the checking facility part of he Sullivan, as progress new distillation on Illinois, result of maintenance tank was our inspection where recent as ongoing a and XX, construction Officer, coal tar Stickney,

the raising inclusion to And of awareness efforts. and we in and visibility continue diversity make progress

January operations that taken equitable one King Jr. Luther across Martin towards on community. but XXXX. a This a shown just is inclusive to holiday we've U.S. the will Slide and years in now many Koppers' in paid organization path more As XX, create X a Day past be and beginning over step

from illustrated globe. new These are across structured utilizing KopTalk. outreach video XX, platform, solicit employees to As Slide our on we're conversations input the

generated Rose. of KopTalk these a have Vice leadership employees. responsiveness and some and sessions President innovative on of For and Engagement, Culture between ideas series communications led improving and Already, Dan were by me

our with subtle The is KAFFEBAR worldwide employees just created Another name has all so not another. for interaction colleagues using message NIBOR encourage platform. option global we colleagues to a an a for connect, we informal for that employees introduced that the coffee virtual space a word visit this Danish on nod to gathering to from one and

in local installed sharing messages, the reinforce also corporate digital Finally, at locations XX% level. along so we've boards our at to currently and facilities our news of globally, signage far with safety

but XX, working their not challenge of for on been the parental home, know that we're having from a physical to well-being on as daunting only many. health Next, balance our focusing Slide emotional responsibilities well. We has employees

learning their who community Pandemic that and work advice while medical children employees to online for children their video the expert encouragement. day, to chat our who recently The from a the question-and-answer for -- of and Now offered help needing or some Parenting with are panelists Koppers Through keep are part parents with sponsored all session juggling

Also, help challenges better been support where Working our app establishing employees added for can Group, and that Parents OneKoppers Resource also working the connect advice. a face. We're understand channel Employee a other parents to has company the they each to and share employees

efforts Josh are Josh August people of a plant also Of His the sacrifice firefighter, as brush the not a of lives equipment of there. ways. employee property. feet help traveled there shows A a wildfire be our to within respond proud volunteer worked contain and children Texas in call the longtime in father team, challenges contain XX continue Working to spread. the could him more blades, the small our Slide community, Virginia. to up follower on heavy in to employee. course, X a saved this massive step cutting to of that from in and cannot Roanoke, Orr variety We reach and Koppers

Across service local helicopter raising a making $XX,XXX of the world, team a residents. there Australia, is Newcastle, in on to more positive than impact keep by help area our rescue operating behalf

Slide in chapter, as Koppers people the proud straight was named which XX the was diseases cure. Chair how the long-time Lymphoma families Leukemia & year. and supporter this helps well to research this category. as patients Night We're virtually Pittsburgh to the of our third the Koppers find walk group, support with fundraiser and a dealing the up of served as held nonprofit investing year, Light to shows where help showed I blood-borne the Walk, annual year a in which This for leading-edge Society's be top

Diabetes This for captain virtually in supported year held was just CMC pleased again year's fashion own wife, business Senchak research, to the American was we Koppers course. could event event addition, their and fundraiser. long-time Association team total. Cure his from XX-mile raised Tour $X,XXX bicycle In and A participants Jeff in Susan, diabetes is to this contribute our and past over that de

be results market Mike? I'll back and with related and for over sentiments. our overview discuss comments Mike debt the on Then of that, segments and to our I'll business quarter liquidity. And an it to turn with

Michael Zugay

results, In for this and QX, will our preliminary release of Leroy. the Thanks, those review preliminary our morning, we sale financial KJCC, press discussion which provided shortly. is results on excluding based we

from $XXX million, of to from $XXX consolidated $XXX million. sales RUPS $XXX $XXX million PC Slide at increase million, million. sales XX, were in million. from sales And an CM&C $XX for On sales came Sales million, down rose down $XXX from million. $XXX were

EBITDA $XX from prior a up On from RUPS PC million for was CM&C in million. $XX EBITDA million, in from year. and million, Slide million. to EBITDA up $XX rose for compared was year. quarter, the XX, prior $XX with the million preliminary million EBITDA million QX Adjusted $XX It $XX $XX increased adjusted $XX was record to

lower the for select pole Slide for primarily volumes, lower sales $XXX was RUPS particularly were U.S. Australia disposal along market, higher On crosstie commercial steady to year, in United for in pricing due sales as discounts the business a year-over-year. at demand level the prior in crosstie XX, was customers. and the million, held slightly States. and The services utility similar with utility poles with in This the

selling, crosstie service disposal RUPS was $XX and due profitability well million we million, Class I was Also, $XX general On profitability product in as a with Slide lower XX, driven sales mix. and EBITDA by costs. higher as compared adjusted business for saw favorable the to and administrative this in higher

segment to demand marked U.S., another quarter, reflecting in million. PC XX sustained driven sales Slide activities. for compared and by million the of copper-based preservatives home were This continued strong repair Sales remodeling the $XXX strength $XXX record on in sales for the

PC raw better material Slide volumes. new a set quarterly was $XX record a volumes, higher favorable and EBITDA This average with $XX on higher million. production to costs, Adjusted million sales product also lower XX compared due mix absorption on for

at Slide oil region Sales million of line lower to $XXX carbon into were and expectations. The were CM&C but black demand in million. lower These Australia higher sales effect every $XX pandemic's in America. XX they overall with except translated shows in carbon on volumes of partially pitch pricing lower sales in slowdown for were factors Australia, prices average for and North market by general feedstock. carbon pitch offset phthalic a and anhydride lower compared

adjusted was $XX for million XX, million. Slide EBITDA On to compared CM&C $XX

As demand. to decline expected, year-over-year end-market ongoing this reflects weak due a

quarter average was with showed lower, third the costs prior recovery. year XX%. XX%, pricing Compared the tar major declined the of While profitability while coal the was quarter, products down margin average

sequential with seeing improvement as are half We first when XXXX of also the anticipated. compared in we previously CM&C

in adjusted of adjusted Koppers PC shows areas: $X.XX; of EBITDA the adjusted records third operating EBITDA XXXX that XX from Slide has of of $XX.X ops $XX.X EPS continuing quarterly million; and diluted of of $X.XX; sales following PC EPS million; profit new generated in of $XXX.X the million; quarter million. $XX.X

liquidity situation. our review let's and Now debt

available of $XXX of with on had seen $XXX Slide September, liquidity. XX end at As we debt, the million net million in

for looking We KJCC compliance $XXX a XXXX, when Also, balloon our XXXX due. our in payment maturities have million covenants. with proceeds all significant on already now until our from not becomes forecasting debt includes which reduction matures loan are received final total the revolver And maturities, we divestiture. the at term and do in we remain any debt

end ratio At and the On of shown Slide leverage X.Xx, was the our significant the net the net drop XX, was is leverage quarter. at from history XXXX through ratio in of which beginning is end XXXX. of X.Xx XX, projected-out a our September previous

XXXX. on be and between now to year-end are X.Xx at X.Xx target We

outlined impact Slide details discontinued the And the approximately ops KJCC net cash summarize, we to was was share, preliminary the million. net sale. the and was $XX financial XX, Koppers the of sale on $XX The $X.XX To million. finally, gain on per EPS

With that, call the over Leroy. turn to I'll back

Leroy M. Ball

feedback as Thank suppliers. upon as Mike. sentiment currently based in into the we're seeing I'll from well the marketplace discussing and you, customers what now move business our

and Products XX Slide a rundown Utility of Industrial provides our group.

broadband to CCA connectivity. on a working because investments penta customer creosotes treatment and We working preservative. continue remote with encouraged strong Koppers necessary is utilities to by testing and requires alternatives network on electrical using pursue and service, focus ongoing infrastructure

with joining the place. company for UIP track group in its remains long-term fundamentals best year Our solid since on

season response in lack due to slowing And we or still efforts. ongoing, with from hurricane response some provide service experienced near to storm customers. And we've continue of the those hurricane to term, projects crews postponed

share the various business gains. projects. commercial Now of restrictions recently, business cases this in about contract on opportunities have But as the future multiyear at our puts we successful coronavirus improving projects been risk in of near-term for construction eased were to and rise, evaluate continue segment we remain do some concerned I which negotiating as In is shutdowns. construction pilings, extensions,

utilities area, our projects investor-owned structures we're recovery well targeting as pole the with with rail for evaluating synergies as In business. opportunities

wood and the supply facilities, transportation our some on chain, weather we're balance, Regarding good wet in at dealing has flow stead. with remains our supply some slowed wood But increases. also cost chain

Class facility. year-to-date that lower From ongoing competition compared operations any Slide Little on the hopeful North expect solid traffic, XX, RUPS year Therefore, and with largely more commercial X.X% the EBITDA Rock to weakness X% in period remains and business our lower according demand improvement market. I with volumes, the margin can with Railroads. XX% the our while XX, consolidating continue. U.S. mix, into segment, trend might October savings Denver cumulative year-over-year be offset that total U.S. from to price Association In quarterly an lower We're improved of industry prior there some seen in we perspective, is intermodal reported railroads crosstie occur slowing the combined American units the the for through treatment of

segment, impacted seeing the and weakness anticipate but been most I for purchases. which pandemic. Railroads business railroads maintenance and American earlier quarter resulted are a the than some in of in the Association downtime programs, as has ongoing of and transit we're fourth reported demand Now profitability rail improved some rail which joints, also in using In Class agencies the result resources, maintenance-of-way usual structures recovery our

levels. to customers some our to crosstie down unfavorably In well in third-party challenges and be affected shut dry pricing to due purchases receiving capital out our as sources we're of crosstie supply as demand lower maintain a from chain, industries. as optimum result as are having certain leveling other Longer-term sawmills could supply working for ties

Now continue by are should looking the but international quarter. is XX. to at expecting markets year. in The Treating low for North demand elevated on of strong and improve currently the Performance in chemical Chemicals XXXX Slide fourth on end expected industry America the is demand

Our the XXXX. PC business with $XX set record full is of on in to million EBITDA high XXXX previous in record track deliver year

of market building In retail reports and in September remodeling forecasts increasingly more to are North activity indicator Census The favorable. of quarter renovation the anticipates of the X.X% strength. market. third with to projects the that growth America, repair Bureau moderating but lifting sales by and remodeling the in quarter leading X.X% accelerated show XXXX, XXXX, continued The first materials vary, then by of and spending do-it-yourself small

Confidence September growth, to XXX.X consecutive and below up still Consumer to regions fourth by XX.X, growth to September month months prior year. the in from August Association the pre-pandemic Index in in of the National year-over-year Realtors declining sales levels. X existing-home with The of month-over-month of both categories. Northeast U.S. after compared the X.X% higher XX.X% witnessed increased prior in the reported and climbs highest seeing major Each with

seen uncertain volumes in and and the gains in as internationally, reduced. as Australia Chile production Slide in future favorable pandemic Nordic in as High questions and region are Chemicals Germany, increased restrictions and and mix Brazil nice shows some Performance a volumes strong in on to Ireland Zealand well. due XX, demand New the U.K. Brexit in

it to continue the we region is that do the North in to continues and while America, nice for will PC future. complement North American foreseeable Now results to is what our a drive international business

of supplier quarter to needs expected must hedged. capacity, to we've but We benefit our year proportion prices Supply improve in our expect source to leading for we made than suppliers, do to are as production greater this chain unprecedented fourth currently copper XXXX, internal higher outstripped lower through for certain average related additional as costs. input in has some lower quality both relief area this a fully external and so the pandemic cost The reliability. are modifications hedges the and now network PC picture is at they XXXX copper shows no demand XXXX

modest Also, expansion likely capacity will progress launch a making project to intermediates, near year-end. we expand are for and

for too risk year. much are the of commodity stabilization market remainder prices declining, themselves to exposing treaters Lumber before with waiting certain over this

that levels Now we containment have think conditions. recover. the from the full of lower, a impact help margins market business half, half on first the far, XX. but XXXX. move CM&C at We double-digit anticipated anticipate year-over-year year for EBITDA will the this placing successful on to overall cost we our At beginning to these is similar remain of XXXX demand focus be will for the at volumes strong to second been double and point, mitigate with year. the we remainder softer nearly Slide Demand Thus

at that or total. Third adjusted quarter more EBITDA came is as CM&C twice, either the in than first quarter a in reflection of of second

levels, yielding costs, higher regions In to tar North the production due imported prices best to supply. be And and America, contributing pricing. rates. year-over-year of U.S. and and coal more softer while utilization creosote lower in appears X to lower supply average demand the Europe is shape supplementing demand Europe lower tar is the tar in is seeing lower slightly the role

generating while benefiting While from raw production is also volumes, materials costs. Australia favorable sales stronger and

reduced North heavily recovery steel America, XXXX in tar in our seeing on from Regarding supply in through availability dependent chain, steel any business domestic continued be recovery XXXX. expect With in and producers, industry. remain significant tar will North production to so coal the we cokeries we're depressed American overcapacity

seen XX, position effective our and taking raise guidance XXXX. we've where Looking in each this to continued rate account businesses in at the year, and again ourselves we stand favorability once a into Slide tax find for our of

we million on to PC the out strong are EBITDA As will in reasons somewhere main see better-than-expected this we performance confidence $XXX and segment month. greater adjusted the note million, guided finishing up year our CM&C and the guidance. Even between million to for a million EBITDA for the now, $XXX year from $XXX finish increased last of $XXX that

from per share, to $X.XX our of and $X.XX we basis, to this year now per EPS adjusted up previous share. somewhere $X.XX an $X.XX between expect On guidance finish

comments expectations on adjustments return also previous our results realized the my drivers recent EPS for to our provision the for quarter increase, year. favorable higher larger-than-expected in on the to tax filing addition already third In to contributes

It the our is February our worth EPS than anywhere year XX% we higher adjusted at finish guidance. to that top-end and this initial XXXX year guidance EBITDA from of to noting the expect at point, the for XX%

represents this dramatic of quite early All going that a scenario the pandemic. from shift the planning of months in through the were disaster we

foot Now we've taken not our pedals. the off

continue which impact We to $XX $X XXXX on year, million and on as COVID-XX. by actions those XX, savings in of shown details the and of travel have and million for Slide down fees. and and clamp We've costs and $XX entertainment legal compensation meant costs the managing million to September and mitigate between reached savings consulting SG&A identified benefits, through of

to products, upon to to focus processes foundation continuing facilities, see these times. prior built build managing Slide success market segments, believe can we stronger to share remain through markets discussed we as we and the in increasing contributed our our on emerge which on to you on on these X we've years. our importantly new can challenging over already calls, continue few By the relentlessly post-pandemic, Now, strong across focused past business initiatives, adding XX, optimizing and critical have portfolio

KCCC non-core and such cash addition, additional the as closed and In as properties related generate assets KJCC, sale businesses, should Follansbee, Denver as other of such well.

profile sale venture, this quality the our on earnings stability our and for milestone more announced company. further streamlining joint the with point our XXXX Key proved towards portfolio, and business the we our as a KJCC XX. key occurred of of giant taken September summary, In By moving has of be exiting one inflection we've completion improving step forward. significantly to

validate business model designated in an our continue the niche critical player business benefits essential end Additionally, supporting we to markets serving that resilience and durability any major continue in a being and industries almost must of that circumstance. being from strength, diversified

globe, I challenging unprecedented to to of the environment around team pandemic, extraordinary who their ongoing record which testament due members our wish Koppers is to through Even we're thank carry these the a efforts performance, levels achieving to in an us times. for

I point, like it up any for At questions. would open this to

Operator

be And Harrison Seaport the from question with Instructions] [Operator Securities. Mike first will Global

Michael Harrison

I record pandemic into you this for congratulations put guys seeing and that. bet, in were you'd a quarter heading expected we never down, have would start to things as you up QX, shut so were

decline being Wanted the like to is ask accounted We predominantly volumes think the most commercial It there. sounds Class I. business about of your for RUPS business.

that -- the business you something talk versus So into like their what or commercial can hearing was does mean customers XXXX? maintenance And maybe mix your last about XX% down you're heading plans XX% commercial year? from about

Leroy M. Ball

Okay.

will is parts the It's the be cycle, market the the commercial our proportion you're of So well. as upon right. anywhere XX% I different partly mean, business, see that will business we of a from And in smaller which demand most also dependent crosstie of big overall. through our swings to XX% up making volatile. business also as pricing in go you

away, demand. X say, pricing probably been and X We to have riding I'd stronger of quarters the improving last over

we'd and pricing lower which not then to demand as see everybody into market, what's commercial costs, some reduce given so looking going pandemic And on that would translate the with surprising on spending it's in and impact cut for the well. also opportunities

given, I the So I'm of again, with current can't say we're terribly surprised in the fundamentals what environment. dealing

of into actually come programs I they even area. demand -- is we've would base doing you that's, good serve. our this have you makes this again, And have their a year time this that, had, as these times strong only or know foundation that to through spending times period during model of this year as where, Others continued having business we've in the reduce good more. heavy again, I bit customer to Class seen and bad, one I Class either a However, year, that to during what has little say customer sought were execute coming

clarity we're stimulus to from, short, on until pretty we'll through coming But shape. Mike, commercial market in think different And some might come seeing see continue we story this So shocked balance, I now. long softness in not where good get pandemic and spending right right? I'm what the the we're by

into that's demand I there's lines of, back advantage as infrastructure, in short environment stronger pickup if that anything So then which and well. a the take you'll see again, pricing think anything here, directed, generate ultimately into a can will

Michael Harrison

pricing some And business. believe the maybe well? were I customers discounting couple Class primarily you mentioned given some in of or as that a Was mentioned to discounts right. RUPS I there times. All activity to commercial you

Leroy M. Ball

a we play. customers of a Well, certain it's the different across come that right? and of regarding volume have discounting those of -- we And So typically volumes, I segments. typically as the all almost stuff end our meet result up that doing think any things sorts thresholds of basis into business that comes where

that's So you'd see where that.

Michael Harrison

the chemicals And XXXX over the maybe QX. of we're guys right. second little then strength uncertain. you some to the outlook of getting first up what expect that going PC is then business, some sounds But catch like of like? half maybe to and marks through best XXXX looks a on now it guess half on into to treaters question right bit Is see the side these the All it on the during

Leroy M. Ball

they certain first into being is we're these strength by we're out hearing year. the next levels The basically of sorts retailers and at told what there expect current -- -- by continued Yes. line that of actually of thinking through the half out

the that's word hear. to we continue So

again, to be the at being market is in the line which of industry right we this -- serve to terms in behind overall is We in where in this chemical with are now. industry, continue current able

a so Koppers not as So an issue issue. industry much it's

working right? benefits strength time from an to which, still spend staying was certainly additional a home to it's year coming see And so is going you're through spend, And the right, all And than people year the year. demand demand their at maybe might And on at environment, having we're -- first have the they work to portion triggered projected looking little in home, this some into expected. to levels in. be ourselves allow will by this their and a of that continued of vacation, significantly digging office, at half uncertain, going level than this actually beyond know improve more us to out contributed Because of dollars again, beautify that, hole pandemic. from We anybody not higher not not should a demand at yes, a that those on standpoint. things the spending supply seeing tickets, season having people big

out much that drop volumes to off how continue potentially is until that of is next to -- told the So is we're of it that first But continue we still now, half when will everything or right these expect uncertain. will year. of get to remain being sorts going

Michael Harrison

range? that put margin right. strong is guess this raw And on pricing you then mid-teens segment. one type And think into us But saw materials for where My buckets? we of of CMC improvement sequential first the improvement? the last of is should the of question versus is help to some maybe the now the All area Can buckets margin you some what in how relative the margin some were improvement. other Obviously, sustainability about half. very improvement

Leroy M. Ball

Yes.

the years between were said for X% we targeting that's we executed a think ago we of that were about several to this Mike, going this it, is were XX% more as in have somewhere through that business we cycle think less some I it, volatility we restructuring the seen of area. business. we EBITDA way this in margins basically, to projects significant what have And since that on structuring

high-end last In have that of years, bit the over range, not, been we've, at even higher. fact the little if several or at a

So phenomenon chasing price. about talked cost this always our as you material raw we of right, have often,

where the material of range going a a so at because while margins down up to take it's going lower-end in market for you are with that our be a raw that. pricing to and price declining, drop got And to catch

then direction in you'll well. little move other bit, back upper-end as the And and move see the to pricing range start and benefit when margins the into a stabilizes up starts the to of

weaker be So margins. knew to we was quarter second going

with material curve. up typically we pretty confident for us would and recovery catch felt The again, as, of our of weaker that But that with that business, we in costs the see we raw to is first we began general. seeing everything pricing sort were some that know quarter

third it we so saw the quarter. And in

that the year, that put will that, continue for And margin expect line. We above solidly the into overall, again, will us fourth. double-digit the

that, be we dependent dollars we business to will that that will more volume of absolute X% generate push basis, to And be margin ongoing believe there continue the through. a much an XX% the on business. strength can So the we upon and markets how

point have softer place way right demonstrated raw with in right again, basically But business an And on it's at our pretty material think, designed demand through good the challenging times that I that we selling price because now. arbitrage we've as working is and whole in is and of it well, environment, news now going the the now, the we're end-products. this a through, the even that

Operator

The Howe with Barrington next from question Chris is Research.

Christopher Howe

Congrats preliminary on these results.

some into seen employees just a on the -- just benefiting work-from-home qualitative or available look, home the that PC of shared, discretionary speaking for in of and that the up segment, hypothetically potential that tail Following opposed basis the for some and remodeling if higher higher on as vacations. Mike a use we've we discretionary QX, QX Harrison thoughts to projects for longer from spending benefits

sort of put in for fiscal On also the they're that of the of see return part year? outside budget benefit use workers able and the work recovery side could next to we as box, to flip a latter or remodeling, in to home some

Leroy M. Ball

-- has coming through upswing been the of 'XX. pretty There's it's regular I much for mean, on market yes. mean, theoretically, I housing in XXXX since pretty a been Yes. strong back -- crisis repair/remodeling out the

spending that in ever-increasing area. we've So seen

bit sort right that's all the flipped with of repair head been mid of in really was this its at a looking beginning half beginnings ironic now. of of year, coming a they experts little were prognosticators we're And terms into ramp-up looking The going -- the and last on what part in the XXXX year, as that were through of slowdown were in remodeling. looking back the thing of

going to predict ultimately tough what's it's So to drive trends. these major market

you in but certainly, that a out? believe sure, it into will make that point market to economy, But hard no contribute the that the people it going couldn't. moving terms sustaining Chris, could. reason to of There's for workforce, to the back But say healthier

Christopher Howe

following you to up is That's you on of about very sourcing how your briefly Can external intermediate. being helpful capacity, expansion the that? capacity, much put talk for mentioned copper of comments had And into about related discussion. some of this expansion

And, demand capital guess, on your capacity? scenarios may how I of within decisions spending different segment PC affect the for strong

Leroy M. Ball

we We relatively would even stage, of uptick we've general demand past out we next be without first be high-return say, to the the a pandemic, seen forward. X over since months. that, right? this have it project, least without -- this -- some I'd business and a at At again, given to of expect where increase to be current all, first to at -- of expected the is it, over, demand But ever moving even owned market in all, this in continue modest well, in level XX that

position own internal us which had where have significant capacity share gains have put over requirements. we market already a source years, We past our into of don't has enough couple to the

take preventative take in terms ability puts it operations enormous our our it that, and amount an down minimizing our of through to on of maintenance. facilities Beyond stress

at us minimum, able the be drop-off the slack continue of operations, share we so prevent we for to, maintain we pandemic continuity to a we even to levels of while to our generate, if in gains a way. also believe and significant that that needed it more demand our properly So can preparing consistently in market ensure additional operations can

say, call can returns level we're of $XX-ish spending, on we spending. million We're relatively which of or, dollars. concerned So not the rapid think the those those limited somewhere we get that the and be not about range will in I'll the, it, worried about dollars should I

set again up I'm about worried it go-forward basis. us So in on for to creating this stronger be overcapacity not market much, much will a sure.

Christopher Howe

where this we it moves Great. another books to back be PC, on fiscal improvement question. unreasonable year, a If slight some And with enough -- it at on what where where make consideration in was basis adjusted prior expect look one up we fiscal year? absolute this the month approximately there to longer to or maintain last assume, to this of in that saw as the tail now in is for an to you there's EBITDA leading know call, we to EBITDA

Leroy M. Ball

we expect do XXXX XXXX? that asking, you are will So than be better

Christopher Howe

directionally. Yes,

Leroy M. Ball

Yes.

the -- years. over the ins of all, to have be first just clear, So and as maybe the outs set our business -- table, dramatically our of we all because restructured

over year, to again, straight at this X we're of this, the business, removal EBITDA with from without KJCC Now business Xth represent year track you when our KJCC, the years, of on last our improvement. look actually

to with KJCC year, somewhere adjusted million between million. of the $XXX we're we out EBITDA. finished numbers, last $XXX Right So million of at and expecting now, finish $XXX

how I tell we're to for of much. if sort that think today, through XXXX trying here looks I out better process sitting figure where certain, will and right that or you so, to like. going now be the can't Chris, XXXX everything through

I do feel good that another year. XXXX strong will balance be on

for things several going have we us. think I

in stabilize the to for bit. to year serve as begin that better XXXX a I little markets CM&C a primed think we're have we

I there. So think some benefits we'll get

overall, terms Denver that in optimization in from standpoint programs continue I working cost see we'll consolidating business of as some Little North well both to RUPS network into some think Rock reduction as our we're on. improvement the a of other

think I we'll see segment. business So improvement that in

mark, next in allow in the post overall, results XXXX. see a for should that remains demand strong to still we're very half year While to that going strong a second business PC of think year us for question I in

year year question. better. that be should by next the information. Can second for in sorts the us next year and -- the be is the trying results going over is this year be right the now those second answer to that next much to maintain year through first match questions year will the going and is comparatively We're we of record producing we're of speaking, the the all how than PC of terms how think half I of will strong for -- better half how think overall, business this will and of wildcard we be us be? XXXX I half

Christopher Howe

movement also made I down. on again appreciate debt bringing just that congrats And color. the you've that and side the and the

Leroy M. Ball

it. appreciate I

Operator

of The Jefferies. next question comes Alexander from Laurence

Laurence Alexander

X I main guess, things.

a prices copper First, from segment XXXX? much give for much Chemicals, with in international? you should be how able sense lift can you And that how lower Performance to book margin is of

Leroy M. Ball

-- of it's business of American. about piece terms just or call we'll it, X/X anywhere the of is that XX% X/X North the international business, about In international, is

where partly I even In margins lift of additional with topping already margin our low in -- raw half benefit have into next much from year. just due receive the of may XXs, concerns are some we we of again, of the the terms the copper a see I is reductions at prices, I coming, with material in mean, price lower terms from more raw don't And demand that to, -- part -- that from material from back standpoint.

continuing to Laurence, I'd post. margin and it's So current overall, an the from just that standpoint, there not tracking there's say, overall we're lot -- given we're a volumes where

Laurence Alexander

rate Would tax XX% be in And a fair? so current your or the what's thinking XXXX? around normalized XXXX,

Michael Zugay

Yes.

the the to to calculations. Act. it's the effective domestic use the our enabling of For us deduction tax CARES higher impact provisions we interest that's due at more rate on as and less XXXX, looking expense because have from it's And also tax excluded is probably And negative our GILTI of around I being full year XX%. reducing lower income think of we're our

pretty XX%. would we're I level. to the going tick back to low close up 'XX and to use probably XX% 'XX, XXXX, Laurence, So XXs, that

Laurence Alexander

up you as as reasonable flow M&A, guess, the the do out, the ending it? bogey. that And year outlays if to about roughly as sort kind Is of these the I any a million divestiture, $XXX additional look free million see restructuring, do what a $XX you think I'm cash way don't assets? around normalized for of all you at vessel at you

Michael Zugay

Yes, very, close. that is very

$XXX anything years, last the And year. a don't million I averaged think I XXXX. X over about we've historically, different for see

that. So the with you're ballpark in

Operator

next The will from be question with FBR. Riley B. Liam Burke

Liam Burke

well its performed mentioned the us you business has of domestic on how the pole that's Could give utility fold? an acquisition. best you into that year it Koppers the since bought of had Leroy, update the slides sort one since in you

Leroy M. Ball

year. best Sure, it Liam. we I mean, being about talk the

this second it. year full Now is owning -- granted, we of our

bit We that have little that XXXX. -- We up haven't in start. a April it say, It's on we early picked that to had slow for it us, of longer business I'd a got off momentum, it. for closed the owned it long.

to of just in to be it network more terms opportunities than concentrate leverage we being activity we creosote that process. was one able business, several treating pull-through areas maximize in optimization certain When the the saw those locations additional that activities bought able and being our for to do the facilities business, we produce in profitability. able One through across network markets. through different generate to is efficiency. still to opportunities in saw chemical right, through certain CCA and/or used in We're early We that in

been able We we've saw which cost, save do. in to to opportunities

better. So each each year it has successively basically been we've owned or year

continuation expect a to XXXX actually that. We of be

continue many improve addition longer been aspects to it's the that our us opportunities business. the up to the picking just is different due model nice have that to a been we integrated we that business some of have within for an So different steam, overall owner

us operate thing share an that So opportunity in big areas the beyond today. market for the we that remains currently is expanding

things at the are we're that those -- that's So looking longer term.

Liam Burke

Great.

utilities coating, coatings? to or using lieu other contribution that obviously. creosote of Now you consistent maintaining in is Directionally, mentioned types creosote, a same or less of the or more the

Leroy M. Ball

stable region that to that full it's creosote much potentially biggest be time. the over changed area And hasn't and say increasing the Texas to really in utilizes I'd continues whole in production, I that -- say slightly. so Yes. stable

So piece is that of it stable.

substitute of we preservative extent that other have instances, creosote With looked oil-borne look our that is still extent is is in And in comes other of pentachlorophenol preservative, CCA a getting that be options out, the at phased them. a considered. are as portfolio, there's copper strong to needed, the creosote at the can certainly, naphthenate. including one contender. then adding terms to To as certain oil-borne preservatives again, you in preservative getting To waterborne

increasing, it basis. but So beyond say, to overall, more go-forward a slightly much be that on stable I'd won't

Operator

Chris be will question Shaw with Next Crespi. from Monness,

Christopher Shaw

-- of out itself maybe about what the concerns second wondering the 'XX, would I kind guess, forward the a of XXXX. PC you of rail visibility called was Outside what I what concern and That have in about be going half be. me into you there. will demand for

the with broke because rail that. time Just last that I the to it demand fall for guess tieing remember the was -- off last I traffic down. was oil time,

your of what have you point? into this what mean Class kind at visibility So -- I maybe I guess, on XXXX do I your, you

Leroy M. Ball

Yes.

the their mean railroads are process. time we're -- I the year So going when is budgeting of this XXXX through

be And giving to are the expected XXXX. on meetings us here going over so or their month programs be next going so, typically, for where they'll the

Now so. XXXX. we're we're years we've regular in give Obviously, 'XX but all on contact been our better that And us balance, expecting next with next should they right, indications just directionally to than as I'd contact. them, not volumes how in see slightly out and they again, on say, balance, year, over the X or be

that through us. budgeting So communication yet hasn't to their and process been confirmed

indicated and now, they that that over cycle past next signals occurred continued, the year. have all replacement to But leading fairly the X X to up have a robust months expect into discussions

giving thus the information been indications we out. that by more have time that's But far. next So we've the the next we'll -- here report

Operator

be from the Heffner And last Loomis, for with today will Ken question Sayles.

Kenneth Heffner;Loomis, Sayles & Company;VP,Credit Research Analyst

-- you X look when So at questions. the

update process had all, the that as as potential move far transaction. call, and far as on Denver as where that think last of closing stand the you the you the that I with can highlighted to any guys First facility? provide here might

in And then harping us really earnings business on from that and way -- the PC look year-over-year, about it. a there there is been the a copper fell any months? second this costs improvement few talking lows on But know the hyped took the here have to input of on lot of I at benefit all, side for you if

is any do a so with normalized anything million costs? year-over-year, words but years some you few of they And they've to things -- to had to come are, I now improvement or had $XX production this back, you know back understand and some or if where to whatever. outsource

strength So the Or and us further I this understand volume, might That's just there year-over-year. benefit cost the earnings real trying of is helps all to there it. that understand, price see mix? be some if in

Leroy M. Ball

Okay.

start of and the reacted the copper on early some have did we and hedging last were whereas right? let in during me time pandemic, we maybe is, PC take of So for that we on XXXX settling in short levels, to think, also most early My negative take we hedges 'XX those with first. markets a were unfavorably in were that to much period able significantly question higher were place prices, at that at on. buying but advantage Obviously, lock period reaction

position take to cost. overall on for move overall, demand in than didn't to than a back year It us for higher coming say, opportunity benefits about into any we for us this were the hedged for up more probably our again, are we average So didn't for which, or production less levels cost copper year, from a lower hedge our cost current talked unfavorable that the I'd much year, that give the long favorable. which put given year average this levels, has more

where levels the been balance, of getting And I'd we're on amounts cost curve, into higher point, our have a fact majority levels. that for coming therefore, this by are think higher at at been price. costs at than things probably hurt the thought much little say, for more lower hedged the copper given year, average year, just the have were year, on we So demand copper our bit than what this our a I

cost speculating out the So half us getting getting to are downturn second the bit that you I we're think probably hurt. benefit that that getting next If don't help as little well insulate help on year. of the we're And year against on a side. demand the anything, some in we're could

Kenneth Heffner;Loomis, Sayles & Company;VP,Credit Research Analyst

That's help. great

Leroy M. Ball

apologize. to remind question, In first the I Yes. regards -- me

Michael Zugay

Denver.

Leroy M. Ball

stand things Denver, Where on right? Denver.

Kenneth Heffner;Loomis, Sayles & Company;VP,Credit Research Analyst

please. Yes,

Leroy M. Ball

Okay.

to on say, we're of other as any to can't it the Denver, closing I ongoing the in site. So than relates comment activity process

done So in treating terms there. we of are

And North early Rock activities announce essentially will conference time sometime to be call, We and have we next transferred of we'll in it treating hopeful year that closing which the by looking that, Little to our have and we're able something. it. be facility to the our sell are all time process some next

is facility. hopefully, first And think we finalize on very now, year. finish and be right of half But sometime, to focus the at track least, the on next closing that in we the should the

Operator

turn the and and over conference this to our I concludes Ladies question-and-answer back Leroy closing to President gentlemen, CEO, session. remarks. Ball, would for like any

Leroy M. Ball

Okay. I just want interest on you. and everyone today's to everybody, wrap participating your by for and in thanking, I again, strong. safe call. continue urge appreciate up continued really stay stay Koppers, to things Thank

Operator

Thank for sir. you, attending conference has you thank now The And concluded. presentation. today's

disconnect. now You may

Koppers (KOP) 26 Oct 202020 Q3 Earnings call transcript