What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-09 compared with 2024-11-08 · 264 added, 282 removed, 402 unchanged (58% of the section changed)

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(Dollars in millions, except share and per share amounts)

1 unchanged sentence

Depreciation and amortization

Selling, general and administrative expenses

Loss (gain) on sale of assets

Selling, general and administrative

Impairment and restructuring

(Gain) on sale of assets

Operating profit

Other income, net

Other income (loss), net

Interest expense

Income before income taxes

Income tax expense

Net (loss) income attributable to noncontrolling interests

Net income attributable to Koppers

Earnings per common share attributable to Koppers

common shareholders:

Loss on pension settlement

(Loss) income before income taxes

Income tax provision

Net (loss) income

Net income attributable to noncontrolling interests

Net (loss) income attributable to Koppers

(Loss) earnings per common share attributable to Koppers common shareholders:

Weighted average shares outstanding (in thousands):

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(Dollars in millions)

Net (loss) income

Changes in other comprehensive income (loss):

Currency translation adjustment

Cash flow hedges, net of tax of

$ 3.0 , $( 0.6 ), $( 1.1 ) and $( 1.0 )

Pension adjustments, net of tax of

$ 0.0 , $ 0.1 , $ 0.1 and $ 0.2

Cash flow hedges, net of tax of $ 1.3 and $ 2.8

Pension adjustments, net of tax of $ 8.3 and $ 0.1

Comprehensive income

Comprehensive (loss) income attributable to

noncontrolling interests

Comprehensive income attributable to noncontrolling interests

Comprehensive income attributable to Koppers

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEET

September 30,

(Dollars in millions, except share and per share amounts)

38 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(Dollars in millions)

Cash provided by (used in) operating activities:

Net (loss) income

Adjustments to reconcile net cash used in operating activities:

Depreciation and amortization

Depreciation in impairment and restructuring

Stock-based compensation

1 unchanged sentence

Non-cash interest expense

Loss (gain) on sale of assets

(Gain) loss on sale of assets

Insurance proceeds

Deferred income taxes

Pension settlement

Change in other liabilities

4 unchanged sentences

Other working capital

Net cash provided by operating activities

Net cash used in operating activities

Cash (used in) provided by investing activities:

Capital expenditures

Insurance proceeds received

Cash provided by sale of assets

Insurance proceeds

Sale of assets

Divestiture of KCCC

Net cash used in investing activities

2 unchanged sentences

Repayments of credit facility

Borrowings of long-term debt

Repayments of long-term debt

1 unchanged sentence

Repurchases of Common Stock

Payment of debt issuance costs

Dividends paid

1 unchanged sentence

Effect of exchange rate changes on cash

Net (decrease) increase in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

3 unchanged sentences

Accrued capital expenditures

Acquisition non-cash consideration

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(Dollars in millions, except per share amounts)

Total equity – beginning of period

Common Stock:

Balance at beginning and end of period

6 unchanged sentences

Balance at beginning of period

Net income attributable to Koppers

Common Stock dividends

($ 0.07 , $ 0.06 , $ 0.21 and $ 0.18 per share)

Net (loss) income attributable to Koppers

Common Stock dividends ($ 0.08 and $ 0.07 per share)

Balance at end of period

9 unchanged sentences

Noncontrolling interests:

Balance at beginning and end of period

Total equity – end of period

(Shares in thousands)

Common Stock:

Balance at beginning of period

Net (loss) income attributable to noncontrolling interests

Currency translation adjustment

Issued for employee stock plans

Balance at end of period

Total equity – beginning of period

Total equity – end of period

(1) Amounts reclassified from accumulated other comprehensive income to net income related to derivative financial instruments, net of tax, were $ 3.3 million and $ 0.2 million during the three months ended September 30, 2024 and 2023, respectively, and $ 9.6 million and $ 2.5 million during the nine months ended September 30, 2024 and 2023 , respectively.

Treasury Stock:

Balance at beginning of period

Shares repurchased

Balance at end of period

Common Stock Outstanding

(1) Amounts reclassified from accumulated other comprehensive income to net income related to derivative financial instruments, net of tax, were $ 0.6 million and $ 1.1 million during the three months ended March 31, 2025 and 2024 , respectively.

(2) Amounts reclassified from accumulated other comprehensive income to net income consist of amounts shown for pension adjustments.

4 unchanged sentences

Basis of Presentation and New Accounting Pronouncements

The accompanying unaudited condensed consolidated financial statements and related disclosures have been prepared in accordance with accounting principles generally accepted in the United States applicable to interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.

Basis of Presentation – The accompanying unaudited condensed consolidated financial statements and related disclosures have been prepared in accordance with accounting principles generally accepted in the United States applicable to interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.

Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

5 unchanged sentences

The financial information included herein should be read in conjunction with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2024.

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

This ASU updates reportable segment disclosures by expanding the frequency and extent of segment disclosures.

2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

We are currently evaluating this ASU to determine its impact on our disclosures.

In December 2023, the FASB issued ASU No.

New Accounting Pronouncements – In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2023-09, Income Taxes (Topic 740):

2 unchanged sentences

2023-09 is effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The amendments should be applied on a prospective basis.

The amendments should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any and all prior periods presented in the financial statements.

We are currently evaluating this ASU to determine its impact on our disclosures.

2 unchanged sentences

Expense Disaggregation Disclosures.

This ASU requires the disaggregation of certain expenses into specific categories, such as purchases of inventory, employee compensation, deprecation and intangible asset amortization.

This ASU requires the disaggregation of certain expenses into specific categories, such as purchases of inventory, employee compensation, depreciation and intangible asset amortization.

Additionally, the amendments require disclosure of the total amount of selling expenses and an annual disclosure of the definition of selling expenses.

3 unchanged sentences

We are currently evaluating this ASU to determine its impact on our disclosures.

Acquisition and Loss on Sale of Assets

On April 1, 2024, we completed our acquisition of substantially all of the assets of Brown Wood Preserving Company, Inc.

Acquisitions and Restructuring

Acquisition – On April 1, 2024, we completed our acquisition of substantially all of the assets of Brown Wood Preserving Company, Inc.

and certain of its affiliates (Brown Wood) for approximately $ 100 million in cash, after post-closing working capital adjustments.

2 unchanged sentences

The business we acquired, as well as the sales function, has been operationally integrated into our existing network of utility pole plants and distribution yards.

We believe the acquisition, which is included in our RUPS segment, increased our presence in existing markets and offers an attractive entry point to new geographic markets for our utility pole business.

Transaction costs, revenue and profit related to the acquisition were not material for the three and nine months ended September 30, 2024.

We believe the acquisition, which is included in our RUPS segment (as defined in Note 7 – Segment Information), increased our presence in existing markets and offers an attractive entry point to new geographic markets for our utility pole business.

Transaction costs, revenue and profit related to the acquisition were not material for the year ended December 31, 2024.

We accounted for the transaction as a business combination.

The following table summarizes the preliminary purchase price and estimated fair value of assets acquired and liabilities assumed as of April 1, 2024.

Certain information necessary to complete the purchase price allocation is not yet available, including, but not limited to, final appraisals of assets acquired and liabilities assumed.

We expect to finalize the purchase price allocation once we have received all necessary information, at which time the value of the assets acquired and liabilities assumed will be revised, if necessary.

Accordingly, the unaudited condensed consolidated financial statements include a preliminary fair value determination based on assumptions and estimates that, while considered reasonable, are subject to changes, which may be material.

The following table summarizes the purchase price and estimated fair value of assets acquired and liabilities assumed as of April 1, 2024.

(Dollars in millions)

9 unchanged sentences

Fair value of liabilities assumed

(1) The difference between total cash consideration and cash paid on the condensed consolidated statement of cash flows relates to the settlement of pre-existing relationships with our PC segment and Brown Wood, as the settlement was deemed additional consideration.

(1) The difference between total cash consideration and cash paid in the prior year condensed consolidated statement of cash flows relates to the settlement of pre-existing relationships with our PC segment and Brown Wood, as the settlement was deemed additional consideration.

The customer relationship intangible assets have a useful life of 15 years and are amortized on a straight-line basis.

Goodwill has been allocated to the Company’s RUPS segment.

The Company expects the goodwill recognized will be deductible for tax purposes.

The Company expects the goodwill recognized to be deductible for tax purposes.

Recognized goodwill is attributable to the expected synergies and other intangible assets that do not qualify for separate recognition.

Loss on Sale of Assets

Koppers (China) Carbon & Chemical Company Limited (KCCC), which ceased operations in 2015, is owned 60 percent by a wholly owned subsidiary of Koppers and 40 percent by Tangshan Iron & Steel Group Co.

In July 2024, Koppers and TISCO signed an agreement to effectuate the ultimate liquidation of KCCC later in 2024 whereby TISCO will assume the remaining assets, including land, and liabilities of KCCC.

As a result, we recorded a loss of approximately $ 6 million, net of non-controlling interest, during the three months ending September 30, 2024.

Plant Closures and Restructuring – The following table summarizes restructuring activities:

Three Months Ended March 31, 2025

Cumulative Total

(Dollars in millions)

Phthalic Anhydride Shutdown:

Severance and employee benefits

Depreciation and asset disposal costs

Workforce Reduction Program

Consulting Services

Total impairment and restructuring

Phthalic Anhydride Shutdown – In December 2024, we made the decision to discontinue phthalic anhydride production at our facility in Stickney, Illinois.

The decision was driven by significant near-term capital spending requirements that could not be economically justified by end-market projections and will substantially reduce annual emissions of certain regulated air contaminants.

In April 2025, we completed the shutdown of the primary manufacturing functions of the phthalic anhydride plant.

Secondary manufacturing functions are expected to continue through mid-2025 as we process remaining inventory quantities to supply existing contracts, as necessary.

We expect this action to result in pre-tax charges to earnings of $ 51 million to $ 55 million through the end of 2026, approximately $ 28 million of which constitutes non-cash charges and approximately $ 23 million to $ 27 million of which constitutes cash expenditures.

Estimates of the total cumulative pre-tax amount incurred and to be incurred for each major type of cost associated with the discontinuation plan are:

(i) retention and severance costs of approximately $ 1 million, (ii) accelerated depreciation and asset write-down costs of approximately $ 28 million, and (iii) plant cleaning, waste disposal and demolition costs of approximately $ 22 million to $ 26 million.

Workforce Reduction Program – In November 2024, we committed to a workforce reduction program across select U.S.

locations, which is intended to streamline operations and reduce costs.

This workforce reduction program will result in the reallocation of people and resources, which include voluntary and involuntary reductions in employees and is expected to extend through the end of 2025.

We have incurred and will continue to incur pre-tax restructuring charges including but not limited to employee severance and related benefit costs.

At this time, we have not fully defined all of the specific cost reduction actions to be implemented and therefore are unable to provide a cost estimate or range of cost estimates associated with this action.

Consulting Services – We have incurred and will continue to incur consulting and other professional service fees starting with a comprehensive assessment of each of our businesses and functions.

Such assessment will be followed by a multi-year company-wide transformative project to design and implement changes that enable us to reach our full potential and improve profitability, modernize business processes and pursue portfolio realignment, if necessary.

The following table includes details of plant closures and restructuring liabilities:

Workforce Reduction Program

Phthalic Anhydride Shutdown

(Dollars in millions)

Liability at December 31, 2024

Liability at March 31, 2025

KCCC Liquidation – In July 2024, Koppers and Tangshan Iron & Steel Group Co.

(TISCO) signed an agreement to effectuate the ultimate liquidation of Koppers (China) Carbon & Chemical Company Limited (KCCC), which ceased operations in 2015.

During the three months ended March 31, 2025, TISCO assumed the remaining assets, including land, and liabilities of KCCC, which resulted in cash paid of approximately $ 7.6 million.

KCCC is owned 60 percent by a wholly owned subsidiary of Koppers and 40 percent by TISCO.

Fair Value Measurements

The following table presents the estimated fair values and the related carrying amounts of our financial instruments:

September 30, 2024

March 31, 2025

December 31, 2024

(Dollars in millions)

Financial assets:

Investments and other assets

Financial liabilities:

Long-term debt (including current portion)

Assets - Investments and Other Assets

Liabilities - Long-term debt (including current portion)

Investments and other assets – Represents the broker-quoted cash surrender value on universal life insurance policies.

This asset is classified as Level 2 in the valuation hierarchy.

This asset is classified as Level 2 in the valuation hierarchy and is measured from values received from financial institutions.

Debt – The fair value of our long-term debt is estimated based on the market prices for the same or similar issuances or on the current rates offered to us for debt of the same remaining maturities (Level 2).

1 unchanged sentence

See Note 4 – Derivative Financial Instruments, for the fair value of our derivative financial instruments.

The following table presents changes in common stock and treasury stock:

Three Months Ended

Nine Months Ended

September 30,

(Shares in thousands)

Common Stock:

Balance at beginning of period

Issued for employee stock plans

Balance at end of period

Treasury Stock:

Balance at beginning of period

Shares repurchased

Balance at end of period

Common Stock Outstanding

Derivative Financial Instruments

We utilize derivative instruments to manage exposures to risks that have been identified, measured and are capable of being mitigated.

The primary risks that we manage by using derivative instruments are commodity price risk associated with copper, fuel oil, foreign currency exchange risk, principally the U.S.

dollar, Australian dollar and British pound sterling, and interest rate risk associated with variable rate borrowings.

Generally, we enter into master netting arrangements with the counterparties and offset net derivative positions with the same counterparties.

Currently, our agreements do not require cash collateral.

The Company recognizes all derivative instruments as either assets or liabilities at fair value on the balance sheet.

The derivative instruments are classified as current or noncurrent based upon the expected timing of cash flows and are subject to offset under our master netting arrangements.

A derivative instrument's fair value is determined using significant other observable inputs, a Level 2 fair value measurement.

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and is reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

Gains and losses on the derivative instruments representing hedge ineffectiveness are recognized in current earnings.

In our condensed consolidated statement of cash flows, settlements of derivative instruments are classified as operating activities.

Swap contracts on copper are used to manage the price risk associated with forecasted purchases of materials used in our manufacturing processes.

Generally, we will not hedge cash flow exposures for durations longer than 36 months and we have hedged certain volumes of copper through the end of 2026.

We designate certain of our commodity swaps as cash flow hedges of forecasted purchases of commodities.

For those commodity swaps where hedge accounting is not elected, the unrealized gain or loss on the derivative is reported as cost of sales in the condensed consolidated statement of operations.

We enter into heating oil swap contracts to manage price risk associated with fuel oil purchases for our plant operations and certain raw material requirements.

Generally, we will not hedge cash flow exposures for durations longer than 36 months and we have hedged certain volumes of heating oil through the end of 2026.

These swap contracts are not

designated as hedges so the unrealized gain or loss on the derivative is reported as cost of sales in the condensed consolidated statement of operations.

As of March 31, 2025 and December 31, 2024 , we had contracts totaling 3.8 million and 3.5 million gallons, respectively.

We enter into foreign currency forward contracts to manage foreign currency risk associated with our receivable and payable balances in addition to foreign-denominated sales.

These forward contracts related to foreign currency are not designated as hedges so the unrealized gain or loss on the derivative is reported as cost of sales in the condensed consolidated statement of operations.

We enter into interest rate swaps to effectively convert portions of our variable interest rate debt into fixed rate debt to add stability to interest expense and to manage our exposure to interest rate movements.

We entered into interest rate swap agreements with an aggregate notional value of $ 400.0 million at a weighted average fixed SOFR rate of 3.97 percent for a portion of our variable rate debt.

All swap agreements expire in April 2027 .

The interest rate swaps have been designated as cash flow hedges on interest payments involving the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

See the condensed consolidated statement of comprehensive income and condensed consolidated statement of shareholders' equity for amounts recorded in other comprehensive income and for amounts reclassified from accumulated other comprehensive income into net income.

The fair value of the outstanding derivative contracts recorded in the balance sheet are as follows:

March 31, 2025

Copper Swap Contracts

Heating Oil Contracts

Foreign Currency Forward Contracts

Interest Rate Swap Contracts

(Dollars in millions)

Derivative contracts

Accrued liabilities

Other long-term liabilities

Net asset (liability) on balance sheet

Accumulated other comprehensive gain, net of tax

December 31, 2024

Copper Swap Contracts

Heating Oil Contracts

Foreign Currency Forward Contracts

Interest Rate Swap Contracts

(Dollars in millions)

Derivative contracts

Accrued liabilities

Other long-term liabilities

Net (liability) asset on balance sheet

Accumulated other comprehensive loss, net of tax

We estimate that unrealized gains, net of tax, for commodity price hedging of $ 2.2 million and unrealized losses, net of tax, for interest rate swaps of $ 0.1 million, respectively, will be reclassified from other comprehensive income into earnings over the next twelve months .

Copper Swap Contracts – We had outstanding copper swap contracts of the following amounts:

Units Outstanding (in Pounds)

Net Fair Value – Asset (Liability)

(Amounts in millions)

Cash flow hedges

Not designed as hedges

For the three months ended March 31, 2025 and 2024 , the unrealized gain from copper swap contracts where hedge accounting was not elected was $ 9.0 million and $ 1.5 million, respectively.

Heating Oil Swap Contracts – For the three months ended March 31, 2025 and 2024 , the unrealized gain from heating oil swap contracts where hedge accounting was not elected was $ 0.2 million and $ 0.3 million, respectively.

Foreign Currency Forward Contracts – The net currency units outstanding for contracts were:

(In millions)

United States Dollars

Australian Dollars

British Pound Sterling

For the three months ended March 31, 2025 and 2024 , the unrealized (gain) loss from foreign currency forward contracts where hedge accounting was not elected was $( 0.5 ) million and $ 0.1 million, respectively.

Earnings and Dividends per Common Share

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

(Dollars in millions, except share and per share amounts)

Net income attributable to Koppers

Weighted average common shares outstanding

(in thousands):

Net (loss) income attributable to Koppers

Weighted average common shares outstanding (in thousands):

Effect of dilutive securities

Earnings per common share:

Antidilutive securities excluded from computation

of diluted earnings per common share

On November 7, 2024 , we declared a quarterly dividend of $ 0.07 per common share, payable on December 16, 2024 to shareholders of record as of November 29, 2024 .

Antidilutive securities excluded from computation of diluted

earnings per common share

On May 8, 2025 , we declared a quarterly dividend of $ 0.08 per common share, payable on June 17, 2025 to shareholders of record as of May 30, 2025 .

Stock-based Compensation

The board of directors granted restricted stock units and performance stock units (collectively, the stock units) to certain employee participants in January 2025 .

No stock options were granted in 2024 .

Starting in 2023, most grants of restricted stock units vest in three years .

Performance stock units have vesting based upon either a performance condition or a market condition.

No stock options have been granted since 2022.

Most grants of restricted stock units vest in three or four years .

Performance stock units vest based upon either a performance condition or a market condition.

Performance stock units granted with a performance condition have a cumulative three-year performance objective based on adjusted EBITDA (see Note 7 – Segment Information).

4 unchanged sentences

For the awards granted in January 2025 , target shares for units with a market condition totaled 223,254 a nd target shares for units with a performance condition tota led 112,309 .

We calculated the fair value of the restricted stock units and performance stock units with a performance condition using the market price of the underlying common stock on the date of grant.

We calculated the fair value of the performance stock units with a market condition on the date of grant using a Monte Carlo valuation model and the assumptions listed below:

The above awards include 136,959 target shares for performance stock units with a market condition and 30,873 restricted stock units that were issued in lieu of a portion of the cash incentive award that could be earned during 2025 for certain participants.

These stock units vest over a three-year period.

Combined with other changes to the cash incentive award program where certain participants had a portion of their annual award converted into a three-year stock unit award to promote retention, we will experience expense savings of approximately $ 5 million for 2025 with such amount being recognized over the subsequent two years .

We calculated the fair value of the performance stock unit awards with a market condition on the date of the grant using assumptions listed below.

These awards incorporate a fair value cap such that the number of awards that vest will be reduced if our stock price exceeds the cap at the end of the performance measurement period:

January 2025 Grant

3 unchanged sentences

Look-back period in years

Fair value cap per share

Grant date fair value per share

5 unchanged sentences

Credited from dividends

Non-vested at September 30, 2024

Non-vested at March 31, 2025

The following table shows a summary of the status and activity of stock options:

6 unchanged sentences

Outstanding at December 31, 2024

Outstanding at September 30, 2024

Exercisable at September 30, 2024

Outstanding at March 31, 2025

Exercisable at March 31, 2025

The following table presents total stock-based compensation expense recognized in the condensed consolidated statement of operations:

Three Months Ended

Nine Months Ended

September 30,

(Dollars in millions)

18 unchanged sentences

Phthalic anhydride is used in the production of plasticizers, polyester resins and alkyd paints.

Our primary measure of segment profitability is adjusted EBITDA which we define as income before interest, income taxes, depreciation, amortization and certain non-cash and/or non-recurring items that do not contribute directly to management’s evaluation of our operating results.

These items include impairment, restructuring and plant closure costs, mark-to-market commodity hedging, gain or loss on sale of assets and LIFO inventory effects.

Our CMC segment ceased primary production of phthalic anhydride in April 2025.

See Note 2 – Acquisitions and Restructuring.

Our measure of segment profitability is adjusted income before interest expense, income taxes, depreciation, amortization and certain non-cash and/or non-recurring items that do not contribute directly to management’s evaluation of our operating results (as defined by us, adjusted EBITDA).

These non-cash and/or non-recurring items typically include LIFO inventory effects, impairment, restructuring and plant closure costs, significant gains or losses on sale of assets, mark-to-market commodity hedging, acquisition-related charges, cloud-computing amortization expenses and other unusual items.

This presentation is consistent with how our chief operating decision maker evaluates the results of operations and makes strategic decisions about the business.

4 unchanged sentences

Intersegment transactions are eliminated in consolidation.

Contract Balances

The timing of revenue recognition results in both billed accounts receivable and unbilled receivables, both classified as accounts receivable, net of allowance within the condensed consolidated balance sheet.

Contract assets of $ 4.0 million and $ 7.8 million are recorded within accounts receivable, net of allowance within the condensed consolidated balance sheet as of September 30, 2024 and December 31, 2023, respectively.

The following table sets forth revenues for significant product lines, net of all intersegment transactions, for our segments:

Contract Balances – The timing of revenue recognition results in both billed accounts receivable and unbilled receivables, both classified as accounts receivable, net of allowance within the condensed consolidated balance sheet.

Contract assets of $ 5.7 million and $ 7.6 million are recorded within accounts receivable, net of allowance within the condensed consolidated balance sheet as of March 31, 2025 and December 31, 2024, respectively.

Segment Revenues for Significant Product Lines

Three Months Ended

Nine Months Ended

September 30,

(Dollars in millions)

5 unchanged sentences

Performance Chemicals:

Wood preservative products

Other products

Total Performance Chemicals

Wood preservative products and other

Carbon Materials and Chemicals:

3 unchanged sentences

Total Carbon Materials and Chemicals

Intersegment revenues:

Performance Chemicals

Carbon Materials and Chemicals

The following table sets forth certain operating data, net of all intersegment transactions, for our segments:

Segment Expenses

Three Months Ended

Nine Months Ended

September 30,

(Dollars in millions)

Depreciation and amortization expense:

Cost of sales:

Railroad and Utility Products and Services

1 unchanged sentence

Carbon Materials and Chemicals

Selling, general and administrative expenses:

Railroad and Utility Products and Services

Performance Chemicals

Carbon Materials and Chemicals

Other (income) expense to reconcile to Adjusted EBITDA (1) :

Railroad and Utility Products and Services

Performance Chemicals

Carbon Materials and Chemicals

Adjusted EBITDA:

2 unchanged sentences

Carbon Materials and Chemicals

Items excluded from the determination of

segment profit:

LIFO (expense) benefit (1)

(1) Other (income) expense amounts primarily relate to miscellaneous (income) expense and the adjustments to reconcile to adjusted EBITDA such as acquisition-related charges, mark-to-market commodity hedging and LIFO inventory effects.

Segment Adjusted EBITDA

Three Months Ended

(Dollars in millions)

Adjusted EBITDA:

Railroad and Utility Products and Services

Performance Chemicals

Carbon Materials and Chemicals

Items excluded from the determination of segment profit:

LIFO benefit (expense) (1)

Impairment, restructuring and plant closure costs (2)

(Loss) gain on sale of assets

Gain on sale of assets

Mark-to-market commodity hedging gains

Acquisition inventory step-up amortization

Amortization of cloud-based software implementation costs

Loss on pension settlement

Interest expense

Depreciation and amortization

Income tax expense

Income tax provision

Net (loss) income

(1) The LIFO expense adjustment removes the entire impact of LIFO and effectively reflects the results as if we were on a FIFO inventory basis.

The following table sets forth assets and goodwill allocated to each of our segments:

September 30,

(2) See Note 2 - Acquisitions and Restructuring.

Other Segment Disclosures

Three Months Ended

(Dollars in millions)

Intersegment revenues:

Performance Chemicals

Carbon Materials and Chemicals

Depreciation and amortization expense:

Railroad and Utility Products and Services

Performance Chemicals

Carbon Materials and Chemicals

Capital expenditures:

Railroad and Utility Products and Services

Performance Chemicals

Carbon Materials and Chemicals

Segment Assets

(Dollars in millions)

Segment assets:

Railroad and Utility Products and Services

3 unchanged sentences

Performance Chemicals

(1) See Note 2 - Acquisition and Loss on Sale of Assets for increase in goodwill due to business acquisition.

Effective Tax Rate

The income tax provision for interim periods is comprised of an estimated annual effective income tax rate applied to current year ordinary income and tax associated with discrete items.

Effective Tax Rate – The income tax provision for interim periods is comprised of an estimated annual effective income tax rate applied to current year ordinary income and tax associated with discrete items.

These discrete items generally relate to excess stock compensation deductions, changes in tax laws, adjustments to unrecognized tax benefits and changes of estimated tax liability to the actual liability determined upon filing income tax returns.

3 unchanged sentences

federal statutory tax rate due to:

September 30,

Federal income tax rate

Foreign earnings taxed at different rates

Nondeductible expenses

State income taxes, net of federal tax benefit

Nondeductible expenses

Change in tax contingency reserves

1 unchanged sentence

Estimated annual effective income tax rate

Income taxes as a percentage of pretax income were 35.8 percent and 30.0 percent for the three and nine months ended September 30, 2024 , respectively, and 24.1 percent and 26.8 percent for the three and nine months ended September 30, 2023, respectively.

The effective income tax rates for the three and nine months ended September 30, 2024 were higher than the 2024 estimated annual effective income tax rate due to the loss on the sale of KCCC's assets.

This loss has no corresponding tax benefit since KCCC will not have future income to offset this loss.

The effective income tax rates for the three and nine months ended September 30, 2023 were slightly different than the 2023 estimated annual effective income tax rate due to various discrete items, which were not material in the aggregate or individually.

Income taxes as a percentage of pretax income were 19.2 percent and 25.3 percent for the three months ended March 31, 2025 and 2024, respectively.

The effective income tax rate for the three months ended March 31, 2025 was lower than the 2025 estimated annual effective income tax rate due to the loss on pension settlement which was treated as a discrete item in the first quarter tax provision.

The effective income tax rate for the three months ended March 31, 2024 was lower than the 2024 estimated annual effective income tax rate due to discrete items, principally an excess tax deduction for vested stock awards.

During the year, management regularly updates estimates of pre-tax income and income tax expense based on changes in pre-tax income projections by taxable jurisdiction, repatriation of foreign earnings, unrecognized tax benefits and other tax matters.

To the extent that actual results vary from these estimates, the actual annual effective income tax rate at the end of the year could be materially different from the estimated annual effective income tax rate for the three months ended March 31, 2025.

Effective January 1, 2024, certain jurisdictions in which we operate have enacted legislation that is consistent with one or more Organization for Economic Co-operation and Development Global Anti-Base Erosion Model Rules (commonly referred to as "Pillar Two").

These Pillar Two rules include minimum domestic top up taxes, income inclusion rules and undertaxed profit rules all aimed to ensure that multinationals pay a minimum effective corporate tax rate of 15 percent in each jurisdiction in which they operate.

We do not expect these Pillar Two rules to materially impact our annual effective rate in 2024.

Unrecognized Tax Benefits

We file income tax returns in the U.S.

These Pillar Two rules include minimum domestic top up taxes, income inclusion rules and undertaxed profit rules all aimed to ensure that multinational business corporations pay a minimum effective corporate tax rate of 15 percent in each jurisdiction in which they operate.

We have analyzed our tax profile by jurisdiction and do not expect to incur top up taxes in 2025.

Unrecognized Tax Benefits – We file income tax returns in the U.S.

federal jurisdiction, individual U.S.

5 unchanged sentences

income tax examinations by tax authorities for years prior to 2020.

As of September 30, 2024 and December 31, 2023 , unrecognized tax benefits of $ 1.6 million and $ 1.5 million, respectively, would affect the effective tax rate if recognized.

As of March 31, 2025 and December 31, 2024 , unrecognized tax benefits of $ 1.1 million and $ 1.0 million, respectively, would affect the effective tax rate if recognized.

We do not anticipate material changes to the amount of unrecognized tax benefits within the next twelve months.

Inventories, net

September 30,

(Dollars in millions)

3 unchanged sentences

Less revaluation to LIFO

Inventories, net

Pensions and Post-Retirement Benefit Plans

We maintain a number of defined benefit and defined contribution plans to provide retirement benefits for employees in the United States, as well as employees outside the United States.

We have commenced with a plan to terminate our United States qualified pension plan and are targeting the completion of this effort in the first quarter of 2025.

We estimate that a termination will require additional cash funding of $ 25 million in 2025 and will result in an estimated settlement loss of $ 40 million, before tax, subject to changes to certain assumptions including the discount rate, which could have a material impact on the settlement loss.

Of the estimated settlement loss, we expect that $ 4 million, before tax, will be incurred in the fourth quarter of 2024 with the remainder being recognized in the first quarter of 2025.

We maintain defined benefit and defined contribution plans to provide retirement benefits for employees in the United States, as well as employees outside the United States.

During 2024, we initiated a plan to terminate our largest United States qualified pension plan.

In February 2025, we completed the irrevocable transfer of $ 86.4 million of pension liabilities and an equal amount of pension assets to an insurance company.

In order to achieve this transfer, additional cash funding of approximately $ 14 million was required in 2025.

In the first quarter of 2025, we recorded a settlement loss of approximately $ 29.0 million, before tax.

In connection with the planned termination of our defined benefit pension plan in the United Kingdom, in 2021, we entered into a buy-in bulk annuity insurance policy in exchange for a premium payment of $ 67.8 million, which is subject to adjustment as a result of subsequent data cleansing activities.

1 unchanged sentence

The buy-in policy will be treated as a plan asset going forward until such time as the buy-in policy is converted to a buy-out policy, which is when individual insurance policies will be assigned to each member of the plan and the plan will no longer have legal responsibility to pay the benefits to the members.

The data cleansing effort has been substantially completed and we expect to recognize a pre-tax pension settlement loss of approximately $ 20 million upon the pension obligation becoming irrevocably settled.

The timing of the conversion to a buy-out policy and related recognition of the estimated pension settlement loss may be impacted by a ruling from the High Court of Justice in the United Kingdom in the case of Virgin Media Limited v NTL Pension Trustees II Limited and Others related to certain amendments to UK pension plans.

On July 25, 2024, the Court of Appeal dismissed the appeal of the ruling from the High Court of Justice.

The timing of the conversion to a buy-out policy and related recognition of the estimated pension settlement loss has been impacted by a ruling from the High Court of Justice in the United Kingdom in the case of Virgin Media Limited v NTL Pension Trustees II Limited and Others related to certain amendments to UK pension plans.

We are currently waiting to see if there will be legislative intervention or further guidance on the application of the ruling.

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

(Dollars in millions)

4 unchanged sentences

Defined contribution plan expense

The following table summarizes debt:

Interest Rate

September 30,

(Dollars in millions)

3 unchanged sentences

Long-term debt

Credit Facility

We have a credit agreement (the Credit Facility) with a consortium of banks.

Credit Facility – We have a credit agreement (the Credit Facility) with a consortium of banks.

The Credit Facility provides for an $ 800.0 million revolving credit facility, a $ 50.0 million swingline facility and provides for the ability to incur one or more uncommitted incremental revolving or term loan facilities in an aggregate amount of at least $ 730.0 million, subject to applicable financial covenants.

7 unchanged sentences

and its restricted subsidiaries to meet certain financial ratios.

As of September 30, 2024, we had approximately $ 287.4 million of unused revolving credit availability after restrictions from certain letter of credit commitments and other covenants.

As of September 30, 2024, $ 7.8 million of commitments were utilized by outstanding letters of credit.

In April 2023, a class of senior secured term loans under the Credit Facility (the Term Loan B) was issued at 97 percent of face value, resulting in $ 388.0 million of net proceeds, before debt financing costs.

In April 2024, the Term Loan B was upsized by issuing, at par, an additional $ 100.0 million of incremental term loans, before debt financing costs.

As of March 31, 2025, we had approximately $ 286.7 million of unused revolving credit availability after restrictions from certain letter of credit commitments and other covenants.

As of March 31, 2025, $ 7.2 million of commitments were utilized by outstanding letters of credit.

Term Loan B – In April 2023, we issued a class of senior secured term loans under the Credit Facility (the Term Loan B) which was upsized in April 2024, resulting in $ 488.0 million of aggregate net proceeds, before debt financing costs.

The interest rate on the Term Loan B is variable and is based on, at our option, adjusted Term SOFR Rate or adjusted Daily Simple SOFR.

1 unchanged sentence

The principal balance of the Term Loan B is repayable in quarterly installments on the last business day of each quarterly period in an amount equal to 0.25 percent of the principal amount, with the balance due at maturity on April 10, 2030 .

Interest Rate Swaps

See Note 12 – Derivative Financial Instruments for discussion of the interest rate swap agreements, which effectively convert a portion of our variable rate debt to a fixed rate.

Derivative Financial Instruments

We utilize derivative instruments to manage exposures to risks that have been identified, measured and are capable of being mitigated.

The primary risks that we manage by using derivative instruments are commodity price risk associated with copper and fuel oil, foreign currency exchange risk, principally the U.S.

dollar, Australian dollar and British pound sterling, and interest rate risk associated with variable rate borrowings.

Generally, we enter into master netting arrangements with the counterparties and offset net derivative positions with the same counterparties.

Currently, our agreements do not require cash collateral.

The Company recognizes all derivative instruments as either assets or liabilities at fair value on the balance sheet.

The derivative instruments are classified as current or noncurrent based upon the expected timing of cash flows and are subject to offset under our master netting arrangements.

A derivative instrument's fair value is determined using significant other observable inputs, a Level 2 fair value measurement.

Gains and losses on the derivative instruments representing hedge ineffectiveness are recognized in current earnings.

Swap contracts on copper are used to manage the price risk associated with forecasted purchases of materials used in our manufacturing processes.

Generally, we will not hedge cash flow exposures for durations longer than 36 months and we have hedged certain volumes of copper through the end of 2025.

We designate certain of our commodity swaps as cash flow hedges of forecasted purchases of commodities.

For those commodity swaps where hedge accounting is not elected, the fair value of the commodity swap is recognized as an asset or liability on the condensed consolidated balance sheet and the related unrealized gain or loss on the derivative is reported in current earnings.

These amounts are classified in cost of sales in the condensed consolidated statement of operations.

We enter into heating oil swap contracts to manage price risk associated with fuel oil purchases for our plant operations and certain raw material requirements.

The fair value associated with these swap contracts are not designated as hedges, and the related unrealized gain or loss on the derivative is reported in current earnings.

These amounts are classified in cost of sales in the condensed consolidated statement of operations.

As of September 30, 2024 and December 31, 2023 , we had contracts totaling 3.2 million and 1.5 million gallons, respectively.

We enter into foreign currency forward contracts to manage foreign currency risk associated with our receivable and payable balances in addition to foreign-denominated sales.

The fair value associated with forward contracts related to foreign currency that are not designated as hedges, and the related unrealized gain or loss on the derivative is reported in current earnings.

These amounts are classified in cost of sales in the condensed consolidated statement of operations.

We entered into interest rate swap agreements with an aggregate notional value of $ 400.0 million at a weighted average fixed SOFR rate of 3.97 percent for a portion of our variable rate debt.

All swap agreements expire in April 2027 .

The fair value of the outstanding derivative contracts recorded in the balance sheet are as follows:

September 30,

Heating Oil Contracts

Foreign Currency

Forward Contracts

Interest Rate

Swap Contracts

(Dollars in millions)

Derivative contracts

Accrued liabilities

Other long-term liabilities

Net asset (liability) on balance sheet

Accumulated other comprehensive gain,

Heating Oil Contracts

Foreign Currency

Forward Contracts

Interest Rate

Swap Contracts

(Dollars in millions)

Derivative contracts

Accrued liabilities

Other long-term liabilities

Net asset (liability) on balance sheet

Accumulated other comprehensive gain (loss),

We estimate that unrealized gains, net of tax, for commodity price hedging of $ 6.0 million and unrealized losses, net of tax, for interest rate swaps of $ 0.4 million, respectively, will be reclassified from other comprehensive income into earnings over the next twelve months .

Copper Swap Contracts

As of the periods presented, we had outstanding copper swap contracts of the following amounts:

Units Outstanding (in Pounds)

Net Fair Value – Asset

September 30,

(Amounts in millions)

Cash flow hedges

Contracts where hedge accounting was not

The unrealized gain from copper swap contracts where hedge accounting was not elected is as follows:

Three Months Ended

Nine Months Ended

September 30,

(Dollars in millions)

Gain from contracts where hedge accounting

was not elected

Foreign Currency Forward Contracts

The net currency units outstanding for contracts were:

September 30,

(In millions)

United States Dollars

British Pound Sterling

Australian Dollars

Interest Rate Swaps – See Note 4 – Derivative Financial Instruments for discussion of the interest rate swap agreements, which effectively convert the variable rate to a fixed rate for a portion of our variable rate debt.

Commitments and Contingent Liabilities

35 unchanged sentences

in the United States is listed on the National Priorities List promulgated under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (CERCLA).

Currently, at the properties acquired from Beazer East (which includes the National Priorities List site and all but one of the sites permitted under the Resource Conservation and Recovery Act (RCRA)), a significant portion of all investigative, cleanup and closure activities are being conducted and paid for by Beazer East pursuant to the terms of the Indemnity.

Currently, at the properties acquired from Beazer East, which includes the National Priorities List site and all but one of which are permitted under the Resource Conservation and Recovery Act (RCRA), a significant portion of all investigative, cleanup and closure activities are being conducted and paid for by Beazer East pursuant to the terms of the Indemnity.

In addition, other of Koppers Inc.’s sites are or have been operated under RCRA and various other environmental permits, and remedial and closure activities are being conducted at some of these sites.

8 unchanged sentences

operated a coal tar pitch terminal near the site.

has responded to an EPA information request and has executed a PRP agreement which outlines a private process to develop an allocation of past and future costs among more than 80 parties to the site.

has responded to a US Environmental Protection Agency (the EPA) information request and has executed a PRP agreement which outlines a private process to develop an allocation of past and future costs among more than 80 parties to the site.

believes it is a de minimis contributor at the site.

3 unchanged sentences

At that time, the net present value and undiscounted costs of the selected remedy as estimated in the ROD were approximately $ 1.1 billion and $ 1.7 billion, respectively.

These costs are likely to increase given recent submissions to EPA regarding remedy design and because the remedy will not be implemented for several years.

Responsibility for implementing and funding that work is yet to be determined.

The funding of that work amongst the PRPs is the subject of a separate private allocation process which is ongoing.

These costs will likely increase given the remedy has not and will not be implemented for several years.

Responsibility for implementing and funding that work will be decided in the separate private allocation process which is ongoing.

In November 2024, Koppers Inc.

received a Special Notice Letter (SNL) from the EPA.

The SNL was formally issued to approximately 60 parties and initiates negotiations between PRPs and the EPA for implementation of the ROD.

Additionally, Koppers Inc.

2 unchanged sentences

The assessment serves as the foundation to estimate liabilities for settlements of natural resource damages claims or litigation to recover from those who do not settle with the trustee groups.

has been engaged in a process to resolve its natural resource damage liabilities for the assessment area.

A second matter involves a lawsuit filed in January 2017 by the Yakama Nation in Oregon federal court.

Yakama Nation seeks recovery for response costs and the costs of assessing injury to natural resources in waterways beyond the current assessment area.

has agreed to resolve its natural resource damage liabilities for the assessment area pursuant to a consent decree lodged with the United States District Court for the District of Oregon in November 2023.

The consent decree has not yet been approved by the court.

A second matter involves a lawsuit filed in January 2017 by the Yakama Nation in the United States District Court for the District of Oregon.

Yakama Nation seeks recovery for response costs and the costs of assessing injury to natural resources to waterways beyond the current assessment area.

Following the most recent court rulings, the Yakama Nation case has been stayed pending completion of the private allocation process for the Portland Harbor CERCLA site.

In September 2009, Koppers Inc.

received a general notice letter stating that it may be a PRP at the Newark Bay CERCLA site.

received a general notice letter from the EPA notifying it that it may be a PRP at the Newark Bay CERCLA site.

operated a wood treating facility near the site in Newark, New Jersey.

In January 2010, Koppers Inc.

1 unchanged sentence

is a de minimis party at this site.

We have accrued the estimated costs of participating in the PRP group at the Portland Harbor and Newark Bay CERCLA sites and estimated de minimis contributor settlement amounts at the sites totaling $ 3.8 million as of September 30, 2024.

We have accrued the estimated costs of participating in the PRP groups at the Portland Harbor and Newark Bay CERCLA sites and estimated de minimis contributor settlement amounts at the sites totaling $ 3.7 million as of March 31, 2025.

The actual cost could be materially higher as there has not been a determination of how those costs will be allocated among the PRPs at the sites.

Accordingly, an unfavorable resolution of these matters may have a material adverse effect on our business, financial condition, cash flows and results of operations.

There are two plant sites related to the Performance Chemicals business and one plant site related to the Utility and Industrial Products business in the United States where we have recorded environmental remediation liabilities for soil and groundwater contamination which occurred prior to our acquisition of the businesses.

As of September 30, 2024, our estimated environmental remediation liability for these acquired sites totals $ 3.7 million.

There are two plant sites related to the PC business and one plant site related to the Utility and Industrial Products business in our RUPS segment in the United States where we have recorded environmental remediation liabilities for soil and groundwater contamination which occurred prior to our acquisition of the businesses.

As of March 31, 2025, our estimated environmental remediation liability for these acquired sites totals $ 3.6 million.

In June 2024, Koppers Inc.

2 unchanged sentences

We have not provided a reserve for the Stickney, IL enforcement matter because, at this time, we cannot reasonably determine the probability of a loss, and the amount of loss, if any, cannot be reasonably estimated.

The timing of resolution of this matter cannot be reasonably determined.

The timing of a resolution to this matter cannot be reasonably determined.

Although Koppers Inc.

1 unchanged sentence

Foreign Environmental Matters .

There is one plant site related to the Performance Chemicals business located in Australia where we have recorded an environmental remediation liability for soil and groundwater contamination which occurred prior to the acquisition of the business.

As of September 30, 2024 , our estimated environmental remediation liability for the acquired site totals $ 1.3 million.

There is one plant site related to the PC business located in Australia where we have recorded an environmental remediation liability for soil and groundwater contamination which occurred prior to the acquisition of the business.

As of March 31, 2025 , our estimated environmental remediation liability for the acquired site totals $ 1.2 million.

Environmental Reserves Rollforward.

The following table reflects changes in the accrual for environmental remediation.

As of September 30, 2024 and December 31, 2023, $ 2.3 million and $ 2.2 million, respectively, were classified as current liabilities .

September 30,

As of March 31, 2025 and December 31, 2024, $ 2.1 million and $ 2.3 million, respectively, were classified as current liabilities .

(Dollars in millions)

3 unchanged sentences

Balance at end of period

Subsequent Events

On November 8, 2024, we committed to a workforce reduction program across selected U.S.

locations, which is intended to streamline operations and reduce costs.

This workforce reduction program will result in the reallocation of people and resources, which will include voluntary and involuntary reductions in employees.

The first stage of reductions will be carried out through a voluntary exit program that will give eligible employees the option of taking a separation package that will include enhanced severance benefits consisting of cash and health and welfare coverage.

The voluntary program will first be offered to approximately 90 employees in the U.S.

The voluntary program is expected to reduce the number of involuntary separations.

At this time, we have not fully defined all of the specific cost reduction actions that may be taken.

As such, while the charges and associated cash payments are expected to be material in the aggregate, we are unable at this time to make a good faith determination of the cost estimates, or ranges of cost estimates, associated with actions to be implemented.

We expect to incur pre-tax restructuring charges including but not limited to employee severance and related benefit costs.

We also expect to incur consulting and other professional service fees to help execute these actions as well as for the design and implementation of the future structures and processes.

These cost reduction initiatives are expected to be substantially complete by the end of the first quarter of 2025.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements