Koppers Holdings Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS KOPPERS HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (Dollars in millions, except share and per share amounts) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net sales $ 485.3 $ 554.3 $ 1,446.6 $ 1,615.1 Cost of sales 368.3 433.1 1,109.6 1,276.1 Depreciation and amortization 17.6 17.9 53.6 52.2 Selling, general and administrative 37.5 43.9 118.1 135.3 Impairment and restructuring 10.2 0.0 47.8 0.0 (Gain) loss on sale of assets ( 0.1 ) 9.7 ( 0.4 ) 9.7 Operating profit 51.8 49.7 117.9 141.8 Other income, net 0.7 0.1 4.2 0.1 Interest expense 16.7 20.2 50.6 57.9 Loss on pension settlement 0.0 0.0 29.0 0.0 Income before income taxes 35.8 29.6 42.5 84.0 Income tax provision 12.0 10.6 16.2 25.2 Net income 23.8 19.0 26.3 58.8 Net loss attributable to noncontrolling interests 0.0 ( 3.8 ) 0.0 ( 3.8 ) Net income attributable to Koppers $ 23.8 $ 22.8 $ 26.3 $ 62.6 Earnings per common share attributable to Koppers common shareholders: Basic $ 1.21 $ 1.12 $ 1.32 $ 3.01 Diluted $ 1.17 $ 1.09 $ 1.29 $ 2.92 Weighted average shares outstanding (in thousands): Basic 19,654 20,409 19,964 20,790 Diluted 20,212 20,961 20,414 21,448 KOPPERS HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (Dollars in millions) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net income $ 23.8 $ 19.0 $ 26.3 $ 58.8 Changes in other comprehensive income (loss): Currency translation adjustment ( 1.1 ) 13.8 28.7 0.4 Cash flow hedges, net of tax of $ 0.4 , $ 3.0 , $( 1.6 ) and $( 1.1 ) ( 1.1 ) ( 7.5 ) 3.3 2.9 Pension adjustments, net of tax of $( 0.1 ), $ 0.0 , $ 8.2 and $ 0.1 0.1 0.3 25.3 1.0 Comprehensive income 21.7 25.6 83.6 63.1 Comprehensive loss attributable to noncontrolling interests 0.0 ( 3.8 ) 0.0 ( 3.8 ) Comprehensive income attributable to Koppers $ 21.7 $ 29.4 $ 83.6 $ 66.9 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 KOPPERS HOLDINGS INC. CONDENSED CONSOLIDATED BALANCE SHEET September 30, 2025 December 31, 2024 (Dollars in millions, except share and per share amounts) (Unaudited) Assets Cash and cash equivalents $ 37.9 $ 43.9 Accounts receivable, net of allowance of $ 7.0 and $ 6.9 192.1 191.8 Inventories, net 400.3 404.6 Derivative contracts 10.9 1.5 Other current assets 41.6 38.8 Total current assets 682.8 680.6 Property, plant and equipment, net of accumulated depreciation of $ 464.4 and $ 494.4 646.7 660.8 Goodwill 317.3 317.1 Intangible assets, net 107.6 119.0 Operating lease right-of-use assets 104.7 89.8 Deferred tax assets 8.8 8.4 Other assets 26.9 14.5 Total assets $ 1,894.8 $ 1,890.2 Liabilities Accounts payable $ 156.3 $ 179.1 Accrued liabilities 71.3 115.1 Current operating lease liabilities 27.3 26.7 Current maturities of long-term debt 4.9 4.9 Total current liabilities 259.8 325.8 Long-term debt 918.3 925.9 Operating lease liabilities 77.7 64.4 Accrued postretirement benefits 12.9 14.9 Deferred tax liabilities 36.8 25.9 Other long-term liabilities 43.4 44.3 Total liabilities 1,348.9 1,401.2 Commitments and contingent liabilities (Note 12) Equity Senior Convertible Preferred Stock, $ 0.01 par value per share; 10,000,000 shares authorized; no shares issued 0.0 0.0 Common Stock, $ 0.01 par value per share; 80,000,000 shares authorized; 26,194,068 and 25,761,084 shares issued 0.3 0.3 Additional paid-in capital 329.0 317.2 Retained earnings 511.4 490.3 Accumulated other comprehensive loss ( 63.3 ) ( 120.6 ) Treasury stock, at cost, 6,580,954 and 5,480,230 shares ( 231.8 ) ( 198.5 ) Total Koppers shareholders’ equity 545.6 488.7 Noncontrolling interests 0.3 0.3 Total equity 545.9 489.0 Total liabilities and equity $ 1,894.8 $ 1,890.2 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 KOPPERS HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Nine Months Ended September 30, 2025 2024 (Dollars in millions) (Unaudited) (Unaudited) Cash provided by (used in) operating activities: Net income $ 26.3 $ 58.8 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 53.6 52.2 Depreciation in impairment and restructuring 18.0 0.0 Stock-based compensation 10.7 16.1 Change in derivative contracts ( 14.7 ) ( 3.0 ) Non-cash interest expense 2.8 2.5 (Gain) loss on sale of assets ( 0.3 ) 9.4 Insurance proceeds ( 2.2 ) ( 1.0 ) Deferred income taxes 1.6 1.0 Pension settlement 29.0 0.0 Change in other liabilities 3.3 ( 7.8 ) Other - net ( 5.9 ) 0.3 Changes in working capital: Accounts receivable ( 3.5 ) ( 32.1 ) Inventories 13.9 4.7 Accounts payable ( 22.0 ) ( 31.3 ) Accrued liabilities ( 27.1 ) ( 19.8 ) Other working capital ( 6.1 ) ( 5.3 ) Net cash provided by operating activities 77.4 44.7 Cash (used in) provided by investing activities: Capital expenditures ( 38.4 ) ( 58.8 ) Acquisitions 0.0 ( 99.4 ) Insurance proceeds 2.2 1.0 Sale of assets 2.5 2.8 Sale of business and divestitures 4.8 0.0 Other investing activities ( 9.6 ) 0.0 Net cash used in investing activities ( 38.5 ) ( 154.4 ) Cash provided by (used in) financing activities: Borrowings of credit facility 420.4 599.1 Repayments of credit facility ( 424.5 ) ( 555.7 ) Borrowings of long-term debt 0.0 100.0 Repayments of long-term debt ( 3.7 ) ( 4.5 ) Issuances of Common Stock 1.1 4.5 Repurchases of Common Stock ( 33.3 ) ( 49.5 ) Payment of debt issuance costs ( 2.6 ) ( 0.9 ) Dividends paid ( 4.7 ) ( 4.6 ) Net cash (used in) provided by financing activities ( 47.3 ) 88.4 Effect of exchange rate changes on cash 2.4 ( 0.7 ) Net decrease in cash and cash equivalents ( 6.0 ) ( 22.0 ) Cash and cash equivalents at beginning of period 43.9 66.5 Cash and cash equivalents at end of period $ 37.9 $ 44.5 Supplemental disclosure of non-cash investing and financing activities: Right-of-use assets obtained in exchange for new operating lease liabilities $ 33.9 $ 17.8 Accrued capital expenditures 0.9 2.2 Non-cash consideration for sale of assets or acquisition 0.6 2.6 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 KOPPERS HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (Dollars in millions, except per share amounts) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Total equity – beginning of period $ 527.1 $ 513.3 $ 489.0 $ 503.0 Common Stock: Balance at beginning and end of period 0.3 0.3 0.3 0.3 Additional paid-in capital: Balance at beginning of period 326.1 306.1 317.2 291.1 Employee stock plans 2.4 5.2 10.7 16.1 Issuance of common stock 0.5 0.4 1.1 4.5 Balance at end of period 329.0 311.7 329.0 311.7 Retained earnings: Balance at beginning of period 489.3 480.7 490.3 444.0 Net income attributable to Koppers 23.8 22.8 26.3 62.6 Common Stock dividends ($ 0.08 , $ 0.07 , $ 0.24 and $ 0.21 per share) ( 1.7 ) ( 1.5 ) ( 5.2 ) ( 4.6 ) Balance at end of period 511.4 502.0 511.4 502.0 Accumulated other comprehensive loss: Balance at beginning of period ( 61.2 ) ( 91.1 ) ( 120.6 ) ( 88.8 ) Currency translation adjustment ( 1.1 ) 13.8 28.7 0.4 Cash flow hedges, net of tax (1) ( 1.1 ) ( 7.5 ) 3.3 2.9 Pension adjustments, net of tax (2) 0.1 0.3 25.3 1.0 Balance at end of period ( 63.3 ) ( 84.5 ) ( 63.3 ) ( 84.5 ) Treasury stock: Balance at beginning of period ( 227.7 ) ( 186.8 ) ( 198.5 ) ( 147.7 ) Purchases ( 4.1 ) ( 10.4 ) ( 33.3 ) ( 49.5 ) Balance at end of period ( 231.8 ) ( 197.2 ) ( 231.8 ) ( 197.2 ) Noncontrolling interests: Balance at beginning of period 0.3 4.1 0.3 4.1 Net loss attributable to noncontrolling interests 0.0 ( 3.8 ) 0.0 ( 3.8 ) Balance at end of period 0.3 0.3 0.3 0.3 Total equity – end of period $ 545.9 $ 532.6 $ 545.9 $ 532.6 (Shares in thousands) Common Stock: Balance at beginning of period 26,158 25,696 25,761 25,163 Issued for employee stock plans 36 22 433 555 Balance at end of period 26,194 25,718 26,194 25,718 Treasury Stock: Balance at beginning of period ( 6,446 ) ( 5,176 ) ( 5,480 ) ( 4,303 ) Shares repurchased ( 135 ) ( 274 ) ( 1,101 ) ( 1,147 ) Balance at end of period ( 6,581 ) ( 5,450 ) ( 6,581 ) ( 5,450 ) Common Stock Outstanding 19,613 20,268 19,613 20,268 (1) Amounts reclassified from accumulated other comprehensive income to net income related to derivative financial instruments, net of tax, were $ 1.1 million and $ 3.3 million during the three months ended September 30, 2025 and 2024, respectively, and $ 2.6 million and $ 9.6 million during the nine months ended September 30, 2025 and 2024, respectively. (2) Amounts reclassified from accumulated other comprehensive income to net income consist of amounts shown for pension adjustments. This component of accumulated other comprehensive income is included in the computation of net periodic pension cost as disclosed in Note 10 – Pensions and Post-Retirement Benefit Plans. The accompanying notes are an integral part of these condensed consolidated financial statements. 5 KOPPERS HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation and New Accounting Pronouncements 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. In the opinion of management, all adjustments considered necessary for a fair presentation of Koppers Holdings Inc.’s and its subsidiaries’ (Koppers, Koppers Holdings, the Company, we or us) financial position and interim results as of and for the periods presented have been included. All such adjustments are of a normal recurring nature unless disclosed otherwise. Because our business is seasonal, results for interim periods are not necessarily indicative of those that may be expected for a full year. The Condensed Consolidated Balance Sheet as of December 31, 2024 has been summarized from the audited balance sheet contained in the Annual Report on Form 10-K as of and for the year ended December 31, 2024. Certain prior period amounts in the condensed consolidated financial statements and notes to the condensed consolidated financial statements have been reclassified to conform to the current period’s presentation. 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 as of and for the year ended December 31, 2024. New Accounting Pronouncements – In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU updates income tax disclosures by requiring annual disclosures of consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. ASU No. 2023-09 is effective for fiscal years beginning after December 15, 2024. 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. In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures. 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. ASU No. 2024-03 is effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. 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. 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. We financed the acquisition with cash and available borrowings under our Credit Facility (as defined in Note 11 – Debt). Brown Wood is a utility pole treating business with principal operating locations in Alabama and Mississippi. 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 (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. 6 We accounted for the transaction as a business combination. 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) Cash consideration (1) $ 102.0 Accounts receivable 5.2 Inventories 14.4 Property, plant and equipment 28.0 Customer relationship intangible assets 32.2 Operating lease right-of-use assets 2.4 Fair value of assets acquired 82.2 Accounts payable and accrued liabilities 3.1 Current operating lease liabilities 1.1 Operating lease liabilities 1.3 Fair value of liabilities assumed 5.5 Goodwill $ 25.3 (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 (as defined in Note 7 - Segment Information) 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 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. Plant Closures and Restructuring – The following table summarizes restructuring activities: Three Months Ended September 30, 2025 Nine Months Ended September 30, 2025 Cumulative Total (Dollars in millions) Phthalic Anhydride Shutdown: Severance and employee benefits $ 0.2 $ 0.8 $ 0.9 Depreciation and asset disposal costs 0.0 18.5 26.4 Plant cleaning, waste disposal and demolition costs 3.0 10.9 10.9 Workforce Reduction Program 0.0 3.3 8.3 Consulting Services 7.0 14.3 14.6 Total impairment and restructuring $ 10.2 $ 47.8 $ 61.1 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. During the second quarter of 2025, we completed the shutdown of the phthalic anhydride plant. 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. 7 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 which was completed during the third quarter of 2025. We then started the multi-year company-wide transformative project to design and implement changes that we believe will 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: Phthalic Anhydride Shutdown Workforce Reduction Program (Dollars in millions) Liability at December 31, 2024 $ 0.0 $ 4.4 Accrual 11.8 1.6 Cash paid ( 7.3 ) ( 4.1 ) Liability at September 30, 2025 $ 4.5 $ 1.9 KCCC Liquidation – In July 2024, Koppers and Tangshan Iron & Steel Group Co. Ltd. (TISCO) signed an agreement to effectuate the ultimate liquidation of Koppers (China) Carbon & Chemical Company Limited (KCCC), which ceased operations in 2015. During the first quarter of 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. KRS Sale – On August 29, 2025, we sold our railroad bridge services business, Koppers Railroad Structures Inc., which was previously included in our RUPS segment. 3. Fair Value Measurements The following table presents the estimated fair values and the related carrying amounts of our financial instruments: September 30, 2025 December 31, 2024 Fair Value Carrying Value Fair Value Carrying Value (Dollars in millions) Assets - Investments and Other Assets $ 1.4 $ 1.4 $ 1.4 $ 1.4 Liabilities - Debt (including current portion) $ 941.3 $ 932.9 $ 949.1 $ 939.5 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 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). The fair value of our Credit Facility approximates carrying value due to the variable rate nature of this instrument. See Note 4 – Derivative Financial Instruments, for the fair value of our derivative financial instruments. 4. 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 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. 8 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 2027. 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 September 30, 2025 and December 31, 2024, we had contracts totaling 3.4 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 Secured Overnight Financing Rate (SOFR) 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: September 30, 2025 Copper Swap Contracts Heating Oil Contracts Foreign Currency Forward Contracts Interest Rate Swap Contracts Total (Dollars in millions) Derivative contracts $ 10.3 $ 0.0 $ 0.2 $ 0.4 $ 10.9 Other assets 2.1 0.0 0.0 0.0 2.1 Accrued liabilities 0.0 0.0 0.0 ( 1.8 ) ( 1.8 ) Other long-term liabilities 0.0 0.0 0.0 ( 1.9 ) ( 1.9 ) Net asset (liability) on balance sheet $ 12.4 $ 0.0 $ 0.2 $ ( 3.3 ) $ 9.3 Accumulated other comprehensive gain, net of tax $ 5.9 $ 0.0 $ 0.0 $ 2.5 $ 8.4 December 31, 2024 Copper Swap Contracts Heating Oil Contracts Foreign Currency Forward Contracts Interest Rate Swap Contracts Total (Dollars in millions) Derivative contracts $ 0.3 $ 0.0 $ 0.0 $ 1.2 $ 1.5 Other assets 0.0 0.0 0.0 1.0 1.0 Accrued liabilities ( 7.6 ) ( 0.5 ) ( 0.9 ) ( 0.5 ) ( 9.5 ) Other long-term liabilities ( 1.6 ) 0.0 0.0 ( 1.3 ) ( 2.9 ) Net (liability) asset on balance sheet $ ( 8.9 ) $ ( 0.5 ) $ ( 0.9 ) $ 0.4 $ ( 9.9 ) Accumulated other comprehensive loss, net of tax $ ( 2.0 ) $ 0.0 $ 0.0 $ ( 0.3 ) $ ( 2.3 ) We estimate that unrealized gains, net of tax, for commodity price hedging of $ 2.8 million and unrealized losses, net of tax, for interest rate swaps of $ 1.1 million, respectively, will be reclassified from other comprehensive income into earnings over the next twelve months . 9 During the third quarter of 2025, our quarterly effectiveness assessment identified that our hedging contracts had fallen outside the required effectiveness thresholds to continue cash flow hedge accounting. This was caused by the increased and cumulative volatility in the market prices for copper during the first half of 2025. Accordingly, we prospectively discontinued cash flow hedge accounting in the third quarter of 2025. At the time we discontinued cash flow hedge accounting, accumulated other comprehensive income contained a pre-tax gain of $ 5.8 million ($ 4.4 million net of taxes). This amount will be released to income as the underlying hedge contracts mature through December 2026. As a result of discontinuing cash flow hedge accounting, a net cumulative pre-tax unrealized gain of $ 3.2 million was recorded in earnings during the three months ended September 30, 2025. Subsequent changes in the fair value of these copper swap contracts will continue to be recognized immediately in earnings until such swap contract settles or matures. The unrealized gain (loss) from our hedging contracts where hedge accounting was not elected is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (Dollars in millions) Copper swap contracts $ 1.4 $ 0.8 $ 11.0 $ 3.6 Heating oil contracts 0.3 ( 0.9 ) 0.5 ( 0.6 ) Foreign currency forward contracts ( 0.4 ) 0.1 0.2 0.0 Copper Swap Contracts – We had outstanding copper swap contracts of the following amounts: Units Outstanding (in Pounds) Net Fair Value – Asset (Liability) September 30, 2025 December 31, 2024 September 30, 2025 December 31, 2024 (Amounts in millions) Cash flow hedges 0.0 20.7 $ 0.0 $ ( 2.7 ) Not designated as hedges 29.4 26.7 12.4 ( 6.2 ) Total 29.4 47.4 $ 12.4 $ ( 8.9 ) Foreign Currency Forward Contracts – The net currency units outstanding for contracts were: September 30, 2025 December 31, 2024 (In millions) British Pound Sterling GBP 0.4 GBP 0.5 United States Dollars USD 14.3 USD 18.5 5. Earnings and Dividends per Common Share The following table sets forth the computation of basic and diluted earnings per common share: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (Dollars in millions, except share and per share amounts) Net income attributable to Koppers $ 23.8 $ 22.8 $ 26.3 $ 62.6 Weighted average common shares outstanding (in thousands): Basic 19,654 20,409 19,964 20,790 Effect of dilutive securities 558 552 450 658 Diluted 20,212 20,961 20,414 21,448 Earnings per common share: Basic $ 1.21 $ 1.12 $ 1.32 $ 3.01 Diluted $ 1.17 $ 1.09 $ 1.29 $ 2.92 Antidilutive securities excluded from computation of diluted earnings per common share 291 274 582 61 On November 6, 2025, we declared a quarterly dividend of $ 0.08 per common share, payable on December 16, 2025 to shareholders of record as of November 28, 2025. 10 6. 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 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). For performance stock units granted with a market condition, the applicable objective is based on our total shareholder return relative to the Standard & Poor’s SmallCap 600 Materials Index and has multi-year performance objectives. Both types of performance stock units have a three-year period for vesting, if the applicable performance objectives are achieved. The number of performance stock units granted represents the target award and participants have the ability to earn between zero and 200 percent of the target award based upon actual performance. If minimum performance criteria are not achieved, no performance stock units will vest. For the awards granted in January 2025, target shares for units with a market condition totaled 222,090 and target shares for units with a performance condition totaled 111,677 . The above awards include 135,795 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, including the change in which certain participants had a portion of their annual award converted into a three-year stock unit award to promote retention, we expect to save approximately $ 5 million in expenses 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 Grant date price per share of performance award $ 31.72 Expected volatility 38.02 % Risk-free interest rate 4.32 % Look-back period in years 3.00 Fair value cap per share $ 65.00 Grant date fair value per share $ 34.54 The following table shows a summary of the status and activity of non-vested stock units: Restricted Stock Units Performance Stock Units Total Stock Units Weighted Average Grant Date Fair Value per Unit Non-vested at December 31, 2024 432,040 624,388 1,056,428 $ 39.16 Granted 332,165 335,563 667,728 $ 32.37 Credited from dividends 291 0 291 $ 45.30 Vested ( 235,173 ) ( 159,087 ) ( 394,260 ) $ 39.57 Forfeited ( 12,304 ) ( 12,752 ) ( 25,056 ) $ 34.58 Non-vested at September 30, 2025 517,019 788,112 1,305,131 $ 35.65 The following table shows a summary of the status and activity of stock options: Options Weighted Average Exercise Price per Option Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in millions) Outstanding at December 31, 2024 531,532 $ 28.49 Exercised ( 16,599 ) $ 17.91 Outstanding at September 30, 2025 514,933 $ 28.83 3.73 $ 1.6 Exercisable at September 30, 2025 491,894 $ 28.68 3.61 $ 1.6 11 The following table presents total stock-based compensation expense recognized in the condensed consolidated statement of operations: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (Dollars in millions) Selling, general and administrative expenses $ 2.4 $ 5.2 $ 10.7 $ 16.1 Less related income tax benefit 0.9 1.5 3.5 4.5 Decrease in net income attributable to Koppers $ 1.5 $ 3.7 $ 7.2 $ 11.6 7. Segment Information We have three reportable segments: Railroad and Utility Products and Services (RUPS), Performance Chemicals (PC) and Carbon Materials and Chemicals (CMC). Our reportable segments contain multiple aggregated business units since management believes the long-term financial performance of these business units is affected by similar economic conditions. The reportable segments are each managed separately because they manufacture and distribute distinct products with different production processes. Our RUPS segment primarily sells pressure-treated railroad ties to the railroad industry and treated utility poles to utility markets. Railroad products and services include procuring and treating items such as crossties, switch ties and various types of lumber used for railroad bridges and crossings. Utility products include the pressure treatment of transmission and distribution poles for electric, telephone and broadband utilities. In addition, we provide untreated wood products and rail joint bars, which are steel bars used to join rails together for railroads, to the railroad markets and inspection services to the utility markets. We also operate a business related to the recovery of used crossties, serving the same customer base as our North American railroad business. We sold our railroad bridge services business during the third quarter of 2025. See Note 2 - Acquisitions and Restructuring. Our PC segment develops, manufactures, and markets wood preservation chemicals and wood treatment technologies and services to a diverse range of end-markets including residential, industrial, commercial construction and agricultural applications. Our CMC segment is primarily a manufacturer of creosote, carbon pitch, naphthalene and carbon black feedstock. Creosote is used in the treatment of wood and carbon black feedstock is used in the production of carbon black. Carbon pitch is a critical raw material used in the production of aluminum and steel. Naphthalene is used as a surfactant in the production of concrete. Our CMC segment ceased production of phthalic anhydride in the second quarter of 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 last-in, first-out (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, amortization of cloud-based software implementation costs 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. In addition, adjusted EBITDA is the primary measure used to determine the level of achievement of management’s short-term incentive goals and related payout, as well as one of the measures used to determine performance and related payouts for certain performance share units granted to management. For these reasons, we believe that adjusted EBITDA represents the most relevant measure of segment profit and loss. Adjusted EBITDA is reconciled to net income on a consolidated basis, the most directly comparable financial measure determined and reported in accordance with U.S. generally accepted accounting principles (U.S. GAAP). The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. 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 $ 3.4 million and $ 7.6 million are recorded within accounts receivable, net of allowance within the condensed consolidated balance sheet as of September 30, 2025 and December 31, 2024, respectively. 12 Segment Revenues for Significant Product Lines Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (Dollars in millions) Railroad and Utility Products and Services: Railroad treated products $ 135.3 $ 146.2 $ 432.5 $ 443.7 Utility poles 81.1 77.0 224.8 217.6 Railroad infrastructure products and services 16.3 24.9 60.8 65.8 Total Railroad and Utility Products and Services $ 232.7 $ 248.1 $ 718.1 $ 727.1 Performance Chemicals: Wood preservative products and other $ 144.3 $ 176.7 $ 416.0 $ 503.7 Carbon Materials and Chemicals: Pitch and related products $ 85.9 $ 82.7 $ 225.5 $ 229.0 Phthalic anhydride, naphthalene and other chemicals 7.9 29.2 43.9 98.2 Carbon black feedstock and distillates 14.5 17.6 43.1 57.1 Total Carbon Materials and Chemicals $ 108.3 $ 129.5 $ 312.5 $ 384.3 Total $ 485.3 $ 554.3 $ 1,446.6 $ 1,615.1 Segment Expenses Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (Dollars in millions) Cost of sales: Railroad and Utility Products and Services $ 186.4 $ 207.9 $ 578.9 $ 616.3 Performance Chemicals 100.4 119.8 288.0 338.4 Carbon Materials and Chemicals 81.5 105.4 242.7 321.4 Total $ 368.3 $ 433.1 $ 1,109.6 $ 1,276.1 Selling, general and administrative expenses: Railroad and Utility Products and Services $ 15.1 $ 19.9 $ 50.4 $ 55.8 Performance Chemicals 15.0 16.1 45.5 49.3 Carbon Materials and Chemicals 7.4 7.9 22.2 30.2 Total $ 37.5 $ 43.9 $ 118.1 $ 135.3 Other (income) expense to reconcile to Adjusted EBITDA (1) : Railroad and Utility Products and Services $ 2.0 $ ( 4.4 ) $ 2.5 $ ( 9.8 ) Performance Chemicals 2.8 0.8 7.6 1.9 Carbon Materials and Chemicals 3.8 3.5 5.3 5.2 Total $ 8.6 $ ( 0.1 ) $ 15.4 $ ( 2.7 ) Adjusted EBITDA: Railroad and Utility Products and Services $ 29.2 $ 24.7 $ 86.3 $ 64.8 Performance Chemicals 26.1 40.0 74.9 114.1 Carbon Materials and Chemicals 15.6 12.7 42.3 27.5 Total $ 70.9 $ 77.4 $ 203.5 $ 206.4 (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. 13 Segment Adjusted EBITDA Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (Dollars in millions) Adjusted EBITDA: Railroad and Utility Products and Services $ 29.2 $ 24.7 $ 86.3 $ 64.8 Performance Chemicals 26.1 40.0 74.9 114.1 Carbon Materials and Chemicals 15.6 12.7 42.3 27.5 Items excluded from the determination of segment profit: LIFO benefit (expense) (1) 4.8 1.2 7.3 ( 2.9 ) Impairment, restructuring and plant closure costs (2) ( 10.2 ) ( 0.4 ) ( 47.8 ) ( 0.4 ) Gain (loss) on sale of assets 0.1 ( 9.7 ) 0.4 ( 9.7 ) Mark-to-market commodity hedging gains 4.9 0.0 14.7 3.0 Acquisition inventory step-up amortization 0.0 ( 0.8 ) 0.0 ( 2.3 ) Amortization of cloud-based software implementation costs ( 0.3 ) 0.0 ( 1.1 ) 0.0 Pension settlement and expense ( 0.1 ) 0.0 ( 30.3 ) 0.0 Interest expense ( 16.7 ) ( 20.2 ) ( 50.6 ) ( 57.9 ) Depreciation and amortization ( 17.6 ) ( 17.9 ) ( 53.6 ) ( 52.2 ) Income tax provision ( 12.0 ) ( 10.6 ) ( 16.2 ) ( 25.2 ) Net income $ 23.8 $ 19.0 $ 26.3 $ 58.8 (1) The LIFO expense adjustment removes the entire impact of LIFO and effectively reflects the results as if we were on a first-in, first-out (FIFO) inventory basis. (2) See Note 2 - Acquisitions and Restructuring. Other Segment Disclosures Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (Dollars in millions) Intersegment revenues: Performance Chemicals $ 8.5 $ 8.3 $ 23.3 $ 24.5 Carbon Materials and Chemicals 22.9 23.6 68.3 73.3 Total $ 31.4 $ 31.9 $ 91.6 $ 97.8 Depreciation and amortization expense: Railroad and Utility Products and Services $ 8.2 $ 8.7 $ 25.2 $ 25.1 Performance Chemicals 4.0 3.8 11.9 10.7 Carbon Materials and Chemicals 5.4 5.4 16.5 16.4 Total $ 17.6 $ 17.9 $ 53.6 $ 52.2 Capital expenditures: Railroad and Utility Products and Services $ 4.3 $ 6.0 $ 13.6 $ 27.4 Performance Chemicals 3.7 3.1 9.6 9.4 Carbon Materials and Chemicals 3.6 6.3 13.8 19.2 Corporate 0.4 0.0 1.4 2.8 Total $ 12.0 $ 15.4 $ 38.4 $ 58.8 14 Segment Assets September 30, 2025 December 31, 2024 (Dollars in millions) Segment assets: Railroad and Utility Products and Services $ 818.1 $ 839.2 Performance Chemicals 547.4 499.7 Carbon Materials and Chemicals 487.7 506.3 Corporate 41.6 45.0 Total $ 1,894.8 $ 1,890.2 Goodwill: Railroad and Utility Products and Services (1) $ 144.6 $ 145.6 Performance Chemicals 172.7 171.5 Total $ 317.3 $ 317.1 (1) The decrease in RUPS goodwill was due primarily to the sale of KRS as described in Note 2 - Acquisitions and Restructuring. 8. Income Taxes 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. To determine the annual effective tax rate, management is required to make estimates of annual pretax income in each domestic and foreign jurisdiction in which we conduct business. Entities that have historical pre-tax losses and current year estimated pre-tax losses that are not projected to generate a future benefit are excluded from the estimated annual effective income tax rate. The estimated annual effective income tax rate differs from the U.S. federal statutory tax rate due to: September 30, 2025 2024 Federal income tax rate 21.0 % 21.0 % Foreign earnings taxed at different rates 5.3 4.1 State income taxes, net of federal tax benefit 3.0 1.1 Nondeductible expenses 1.7 1.9 GILTI inclusion, net of foreign tax credits 1.4 ( 0.2 ) Change in tax contingency reserves 0.4 0.1 Estimated annual effective income tax rate 32.8 % 28.0 % Income taxes as a percentage of pretax income were 33.5 percent and 38.1 percent for the three and nine months ended September 30, 2025, respectively, and 35.8 percent and 30.0 percent for the three and nine months ended September 30, 2024, respectively. The effective income tax rate for the three months ended September 30, 2025 was slightly higher than the estimated annual effective income tax rate due to additional tax expense recognized in the quarter as a result of increases in the estimated annual effective income tax rate from the prior period. The effective income tax rate for the nine months ended September 30, 2025 was significantly higher than the respective estimated annual effective income tax rate due to the loss on pension settlement, which has been treated as a discrete item. The effective income tax rates for the three months and nine months ended September 30, 2024 were higher than the respective 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. 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 as of the nine months ended September 30, 2025. 15 On July 4, 2025, H.R. 1, the U.S. budget reconciliation bill, was signed into law. We have analyzed the various components of the bill and incorporated the effects into our estimated annual effective income tax rate. We have determined that the financial statement impact of the budget reconciliation bill is not material and the effect on our estimated annual effective income tax rate is not material. The primary impact of the budget reconciliation bill will be an increase of our current year interest expense deduction under Section 163(j) and an increase in our current year tax depreciation due to the extension of the bonus depreciation rules. 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 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. state jurisdictions and non-U.S. jurisdictions. With few exceptions, we are no longer subject to U.S. federal, U.S. state, or non-U.S. income tax examinations by tax authorities for years prior to 2020. As of September 30, 2025 and December 31, 2024, unrecognized tax benefits of $ 1.0 million for both periods 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. 9. Inventories September 30, 2025 December 31, 2024 (Dollars in millions) Raw materials $ 338.2 $ 353.5 Work in process 14.5 14.0 Finished goods 156.0 152.8 Total $ 508.7 $ 520.3 Less revaluation to LIFO 108.4 115.7 Inventories, net $ 400.3 $ 404.6 10. Pensions and Post-Retirement Benefit Plans 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. Under the terms of this buy-in insurance policy, the insurer is liable to pay the benefits of the plan, but the plan still retains full legal responsibility to pay the benefits to members using the insurance payments. 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 which is uncertain. 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 (the "Virgin Media Case") related to certain amendments to UK pension plans. The UK government has introduced legislation to address industry wide issued resulting from the Virgin Media Case. Such legislation, if adopted, will enable us to proceed with the conversion to a buy-out policy. 16 The following table provides the components of net periodic benefit cost for the pension plans: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 (Dollars in millions) Service cost $ 0.2 $ 0.5 $ 1.8 $ 1.3 Interest cost 0.5 1.8 2.4 5.8 Expected return on plan assets ( 0.5 ) ( 1.5 ) ( 1.8 ) ( 4.6 ) Amortization of net loss 0.3 0.5 0.9 1.5 Settlement 0.0 0.0 29.0 0.0 Net periodic benefit cost $ 0.5 $ 1.3 $ 32.3 $ 4.0 Defined contribution plan expense $ 1.6 $ 2.1 $ 6.1 $ 6.8 11. Debt Weighted Average Interest Rate Maturity September 30, 2025 December 31, 2024 (Dollars in millions) Credit Facility 6.05 % 2030 $ 451.7 $ 455.8 Term Loan B 6.66 % 2030 481.2 483.7 Total debt $ 932.9 $ 939.5 Less current maturities of long-term debt 4.9 4.9 Less unamortized debt issuance costs 9.7 8.7 Long-term debt $ 918.3 $ 925.9 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. The interest rate on the Credit Facility is variable and may be based on the SOFR, which is the applicable benchmark for current borrowings, or an alternative benchmark depending on the borrowing type. In June 2025, we amended the Credit Facility to, among other things, (a) extend the maturity date of the Credit Facility to January 9, 2030 at the earliest; (b) modify the total net leverage ratio financial covenant by making the test 4.75 :1 throughout the life of the Credit Facility; and (c) modify the interest rate margins applicable to the Credit Facility by removing the 10 basis point credit spread adjustment and increasing the total net leverage ratio test used to determine the applicable interest rate margin. Borrowings under the Credit Facility are secured by a first priority lien on substantially all of the assets (excluding real property and other customary assets) of Koppers Inc., Koppers Holdings Inc. and our material domestic subsidiaries. The Credit Facility contains certain covenants that may limit Koppers Inc. and its restricted subsidiaries from taking certain actions. These limitations include, among others, restrictions on additional indebtedness, liens, dividends, investments, acquisitions, certain distributions, asset sales, transactions with affiliates and modifications to material documents, including organizational documents. In addition, such covenants may give rise to events of default upon the failure by Koppers Inc. and its restricted subsidiaries to meet certain financial ratios. As of September 30, 2025, we had $ 341.1 million of unused revolving credit availability after restrictions from certain letter of credit commitments and other covenants. As of September 30, 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. The interest rate margins applicable to adjusted Term SOFR Rate or adjusted Daily Simple SOFR loans are 2.50 percent with a floor of 0.50 percent. 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 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. 17 12. Commitments and Contingent Liabilities We are involved in litigation and various proceedings relating to environmental laws and regulations, product liability and other matters. Certain of these matters are discussed below. The ultimate resolution of these contingencies is subject to significant uncertainty and should we fail to prevail in any of these legal matters or should several of these legal matters be resolved against us in the same reporting period, these legal matters could, individually or in the aggregate, be material to the condensed consolidated financial statements. Environmental and Other Litigation Matters We are subject to federal, state, local and foreign laws and regulations and potential liabilities relating to the protection of the environment and human health and safety including, among other things, the cleanup of contaminated sites, the treatment, storage and disposal of wastes, the discharge of effluent into waterways, the emission of substances into the air and various health and safety matters. We expect to incur substantial costs for ongoing compliance with such laws and regulations. We may also face governmental or third-party claims, or otherwise incur costs, relating to cleanup of, or for injuries resulting from, contamination at sites associated with past and present operations. We accrue for environmental liabilities when a determination can be made that a liability is probable and reasonably estimable. Environmental and Other Liabilities Retained or Assumed by Others. We have agreements with former owners of certain of our operating locations under which the former owners retained, assumed and/or agreed to indemnify us against certain environmental and other liabilities. The most significant of these agreements was entered into at Koppers Inc.’s formation on December 29, 1988 (the Acquisition). Under the related asset purchase agreement between Koppers Inc. and Beazer East, subject to certain limitations, Beazer East retained the responsibility for and agreed to indemnify Koppers Inc. against certain liabilities, damages, losses and costs, including, with certain limited exceptions, liabilities under and costs to comply with environmental laws to the extent attributable to acts or omissions occurring prior to the Acquisition and liabilities related to products sold by Beazer East prior to the Acquisition (the Indemnity). Beazer Limited, the parent company of Beazer East, unconditionally guaranteed Beazer East’s performance of the Indemnity pursuant to a guarantee. The Indemnity provides different mechanisms, subject to certain limitations, by which Beazer East is obligated to indemnify Koppers Inc. with regard to certain environmental, product and other liabilities and imposes certain conditions on Koppers Inc. before receiving such indemnification, including, in some cases, certain limitations regarding the time period as to which claims for indemnification can be brought. In July 2004, Koppers Inc. and Beazer East agreed to amend the environmental indemnification provisions of the December 29, 1988 asset purchase agreement to extend the indemnification period for pre-closing environmental liabilities, subject to the following paragraph, and agreed to share toxic tort litigation defense arising from any sites acquired from Beazer East. Qualified expenditures under the Indemnity are not subject to a monetary limit. Qualified expenditures under the Indemnity include (i) environmental cleanup liabilities required by third parties, such as investigation, remediation and closure costs, relating to pre-December 29, 1988 (Pre-Closing) acts or omissions of Beazer East or its predecessors; (ii) environmental claims by third parties for personal injuries, property damages and natural resources damages relating to Pre-Closing acts or omissions of Beazer East or its predecessors; (iii) punitive damages for the acts or omissions of Beazer East and its predecessors without regard to the date of the alleged conduct and (iv) product liability claims for products sold by Beazer East or its predecessors without regard to the date of the alleged conduct. The indemnification period ended July 14, 2019 (the Claim Deadline), and Beazer East may now tender certain third-party claims described in sections (i) and (ii) above to Koppers Inc. However, to the extent the third-party claims described in sections (i) and (ii) above were tendered to Beazer East by the Claim Deadline, Beazer East will continue to be required to pay the costs arising from such claims under the Indemnity. Furthermore, the Claim Deadline did not change the provisions of the Indemnity with respect to indemnification for non-environmental claims, such as product liability claims, which claims may continue to be tendered by Koppers Inc. to Beazer East. The Indemnity provides for the resolution of issues between Koppers Inc. and Beazer East by an arbitrator on an expedited basis upon the request of either party. The arbitrator could be asked, among other things, to make a determination regarding the allocation of environmental responsibilities between Koppers Inc. and Beazer East. Arbitration decisions under the Indemnity are final and binding on the parties. 18 Contamination has been identified at most manufacturing and other sites of our subsidiaries. One site currently owned and operated by Koppers Inc. 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 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. To date, the parties that retained, assumed and/or agreed to indemnify us against the liabilities referred to above, including Beazer East, have performed their obligations in all material respects. Periodically, issues have arisen between Koppers Inc. and Beazer East and/or other indemnitors that have been resolved without arbitration. Koppers Inc. and Beazer East engage in discussions from time to time that involve, among other things, the allocation of environmental costs related to certain operating and closed facilities. If for any reason (including disputed coverage or financial incapability) one or more of such parties fail to perform their obligations and we are held liable for or otherwise required to pay all or part of such liabilities without reimbursement, the imposition of such liabilities on us could have a material adverse effect on our business, financial condition, cash flows and results of operations. Furthermore, we could be required to record a contingent liability on our balance sheet with respect to such matters, which could result in a negative impact to our business, financial condition, cash flows and results of operations. Domestic Environmental Matters. Koppers Inc. has been named as one of the potentially responsible parties (PRPs) at the Portland Harbor CERCLA site located on the Willamette River in Oregon. Koppers Inc. operated a coal tar pitch terminal near the site. Koppers Inc. 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. Koppers Inc. believes it is a de minimis contributor at the site. The EPA issued its Record of Decision (ROD) in January 2017 for the Portland Harbor CERCLA site. The selected remedy includes a combination of sediment removal, capping, enhanced and monitored natural recovery and riverbank improvements. The ROD does not determine who is responsible for remediation costs. 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 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. In May 2025, Koppers Inc. submitted a response to the SNL to the EPA. Additionally, Koppers Inc. is involved in two separate matters involving natural resource damages at the Portland Harbor site. One matter involves claims by the trustees to recover damages based upon an assessment of damages to natural resources caused by the releases of hazardous substances to the Willamette River. 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. Koppers Inc. 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 from the EPA notifying it that it may be a PRP at the Newark Bay CERCLA site. Koppers Inc. operated a wood treating facility near the site in Newark, New Jersey. In January 2010, Koppers Inc. submitted a response to the general notice letter asserting that Koppers Inc. is a de minimis party at this site. 19 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 $ 3.6 million as of September 30, 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 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 September 30, 2025, our estimated environmental remediation liability for these acquired sites totals $ 3.6 million. In June 2024, Koppers Inc. received a letter stating that the Illinois Attorney General’s Office (IL AGO) received an enforcement referral from the Illinois Environmental Protection Agency relating to certain alleged air emissions violations at our Stickney, IL facility. We are cooperating with IL AGO in connection with this matter. 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 a resolution to this matter cannot be reasonably determined. Although Koppers Inc. is vigorously defending this matter, an unfavorable resolution of this matter may have a material adverse effect on our business, financial condition, cash flows and results of operations. Foreign Environmental Matters. 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 September 30, 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, 2025 and December 31, 2024, $ 1.7 million and $ 2.3 million, respectively, were classified as current liabilities . Period ended September 30, 2025 December 31, 2024 (Dollars in millions) Balance at beginning of period $ 10.3 $ 10.6 Expense 0.2 0.3 Cash expenditures ( 0.4 ) ( 0.4 ) Currency translation 0.0 ( 0.2 ) Balance at end of period $ 10.1 $ 10.3 20