Net income for the quarter was
Commenting on the results,
Mr. Turner continued, "We continue to work towards the closing of the Osmose transaction. Subject to the closing conditions being satisfied, we anticipate the completion of the acquisition in the third quarter, which will represent another important step in our long-term growth strategy by expanding both our chemicals offering and extending our existing railroad and utilities products and services platform. The addition of Osmose will further diversify our business and position us for future growth by complementing our existing businesses through leading market positions in strategic end-markets. The synergies from the acquisition are expected to be at least
"For the second half of the year, we expect overall sales and adjusted operating profit to be higher as we continue to align our strategy and footprint in the current operating environment, including driving costs out of the business and capitalizing on a strengthening European economy," Mr. Turner said. "As a result of the continued implementation of these cost-savings initiatives throughout the balance of this year, we expect to enter 2015 with a more efficient cost structure which should improve margins and provide opportunities to gain additional sales volumes."
Summary of Second-Quarter Financial Performance:
- Sales for CMC totaling
$208.6 million decreased by five percent or$11.7 million compared to sales of$220.3 million in the prior year quarter. CMC sales were lower due to lower sales volumes and prices for carbon pitch and lower sales prices for phthalic anhydride and carbon black feedstock, partially offset by higher sales volumes for phthalic anhydride, carbon black feedstock and naphthalene.
- Sales for RUPS of
$148.2 million decreased by two percent or$2.4 million compared to sales of$150.6 million in the prior year quarter. The net decrease in sales in RUPS was due mainly to lower sales volumes for crossties as a result of reduced lumber availability, which was driven by increased competition within hardwood lumber markets. These factors more than offset the additional$8.2 million in revenue contribution from the company's recent Ashcroft acquisition.
- Items excluded from adjusted results for the quarter included
$6.7 million of pre-tax charges related to impairment and plant closure costs. The$6.7 million is comprised of$4.7 million related to ceasing distillation at our tar plant inthe Netherlands ,$1.4 million related to impairment charges and accelerated depreciation at our KCCC facility in Tangshan,China , and$0.6 million related to closure of our wood treating plant inGrenada, Mississippi in 2012.
- Adjusted EBITDA was
$27.3 million compared to$37.2 million in the second quarter of 2013 due to the items that impacted adjusted net income and adjusted EPS as noted above.
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The following reconciliations are attached to this press release: Unaudited Reconciliation of Net Income Attributable to
About
Safe Harbor Statement
Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and may include, but are not limited to, statements about sales levels, acquisitions, restructuring, declines in the value of
| Koppers Holdings Inc. | |||||||||||||||||
| Unaudited Consolidated Statement of Income | |||||||||||||||||
| (Dollars in millions, except per share amounts) | |||||||||||||||||
| Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||
| Net sales | $ | 356.8 | $ | 370.9 | $ | 688.2 | $ | 741.3 | |||||||||
| Cost of sales (excluding items below) | 311.9 | 318.9 | 597.0 | 639.4 | |||||||||||||
| Depreciation and amortization | 9.7 | 7.3 | 18.6 | 14.6 | |||||||||||||
| Impairment and restructuring charges | -- | -- | 15.5 | -- | |||||||||||||
| Selling, general and administrative expenses | 21.9 | 16.2 | 43.3 | 33.9 | |||||||||||||
| Operating profit | 13.3 | 28.5 | 13.8 | 53.4 | |||||||||||||
| Other (loss) income | (0.3 | ) | 1.0 | (0.1 | ) | 1.5 | |||||||||||
| Interest expense | 6.6 | 6.6 | 13.4 | 13.5 | |||||||||||||
| Income before income taxes | 6.4 | 22.9 | 0.3 | 41.4 | |||||||||||||
| Income taxes | 5.6 | 8.1 | (0.4 | ) | 15.2 | ||||||||||||
| Income (loss) from continuing operations | 0.8 | 14.8 | 0.7 | 26.2 | |||||||||||||
| Loss from discontinued operations, net of tax | (0.1 | ) | (0.1 | ) | (0.1 | ) | -- | ||||||||||
| Net income | 0.7 | 14.7 | 0.6 | 26.2 | |||||||||||||
| Net (loss) income attributable to noncontrolling interests | (0.9 | ) | 0.3 | (3.2 | ) | 0.8 | |||||||||||
| Net income attributable to Koppers | $ | 1.6 | $ | 14.4 | $ | 3.8 | $ | 25.4 | |||||||||
| Earnings (loss) per common share: | |||||||||||||||||
| Basic- | |||||||||||||||||
| Continuing operations | $ | 0.08 | $ | 0.70 | $ | 0.19 | $ | 1.23 | |||||||||
| Discontinued operations | -- | (0.01 | ) | -- | -- | ||||||||||||
| Earnings (loss) per basic common share | $ | 0.08 | $ | 0.69 | $ | 0.19 | $ | 1.23 | |||||||||
| Diluted- | |||||||||||||||||
| Continuing operations | $ | 0.08 | $ | 0.70 | $ | 0.19 | $ | 1.21 | |||||||||
| Discontinued operations | -- | (0.01 | ) | -- | -- | ||||||||||||
| Earnings (loss) per diluted common share | $ | 0.08 | $ | 0.69 | $ | 0.19 | $ | 1.21 | |||||||||
| Weighted average shares outstanding (in thousands): | |||||||||||||||||
| Basic | 20,475 | 20,727 | 20,430 | 20,697 | |||||||||||||
| Diluted | 20,582 | 20,945 | 20,584 | 20,935 | |||||||||||||
| Dividends declared per common share | $ | 0.25 | $ | 0.25 | $ | 0.50 | $ | 0.50 | |||||||||
| Koppers Holdings Inc. | ||||||||||
| Unaudited Condensed Consolidated Balance Sheet | ||||||||||
| (Dollars in millions, except per share amounts) | ||||||||||
| June 30, 2014 | December 31, 2013 | |||||||||
| Assets | ||||||||||
| Cash and cash equivalents | $ | 54.4 | $ | 82.2 | ||||||
| Accounts receivable, net of allowance of $3.7 and $3.6 | 159.9 | 157.9 | ||||||||
| Income tax receivable | 8.9 | 9.0 | ||||||||
| Inventories, net | 189.2 | 168.8 | ||||||||
| Deferred tax assets | 12.4 | 10.0 | ||||||||
| Loan to related party | 9.5 | 9.5 | ||||||||
| Other current assets | 28.6 | 35.7 | ||||||||
| Total current assets | 462.9 | 473.1 | ||||||||
| Equity in non-consolidated investments | 6.2 | 6.6 | ||||||||
| Property, plant and equipment, net | 215.3 | 197.0 | ||||||||
| Goodwill | 75.4 | 72.7 | ||||||||
| Deferred tax assets | 14.7 | 9.3 | ||||||||
| Other assets | 31.5 | 26.2 | ||||||||
| Total assets | $ | 806.0 | $ | 784.9 | ||||||
| Liabilities | ||||||||||
| Accounts payable | $ | 93.1 | $ | 107.6 | ||||||
| Accrued liabilities | 73.2 | 82.4 | ||||||||
| Dividends payable | 5.1 | 5.1 | ||||||||
| Total current liabilities | 171.4 | 195.1 | ||||||||
| Long-term debt | 358.4 | 303.1 | ||||||||
| Accrued postretirement benefits | 31.0 | 41.6 | ||||||||
| Deferred tax liabilities | 15.9 | 14.7 | ||||||||
| Other long-term liabilities | 40.7 | 40.6 | ||||||||
| Total liabilities | 617.4 | 595.1 | ||||||||
| Commitments and contingent liabilities | ||||||||||
| Equity | ||||||||||
| Senior Convertible Preferred Stock, $0.01 par value per share; 10,000,000 shares authorized; no shares issued | -- | -- | ||||||||
| Common Stock, $0.01 par value per share; 40,000,000 shares authorized; 21,938,260 and 21,722,492 shares issued | 0.2 | 0.2 | ||||||||
| Additional paid-in capital | 163.0 | 158.9 | ||||||||
| Retained earnings | 64.7 | 71.3 | ||||||||
| Accumulated other comprehensive loss | (4.6 | ) | (10.2 | ) | ||||||
| Treasury stock, at cost; 1,443,248 and 1,390,494 shares | (52.4 | ) | (50.4 | ) | ||||||
| Total Koppers shareholders' equity | 170.9 | 169.8 | ||||||||
| Noncontrolling interests | 17.7 | 20.0 | ||||||||
| Total equity | $ | 188.6 | $ | 189.8 | ||||||
| Total liabilities and equity | $ | 806.0 | $ | 784.9 | ||||||
| Koppers Holdings Inc. | ||||||||||||
| Unaudited Condensed Consolidated Statement of Cash Flows | ||||||||||||
| (Dollars in millions) | ||||||||||||
| Six Months Ended June 30, 2014 |
Six Months Ended June 30, 2013 |
|||||||||||
| Cash provided by (used in) operating activities: | ||||||||||||
| Net income | $ | 0.6 | $ | 26.2 | ||||||||
| Adjustments to reconcile net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | 18.6 | 14.6 | ||||||||||
| Impairment charges | 4.7 | -- | ||||||||||
| Deferred income taxes | (6.6 | ) | 1.8 | |||||||||
| Equity income (loss), net of dividends received | 0.4 | (0.4 | ) | |||||||||
| Change in other liabilities | (8.2 | ) | (8.6 | ) | ||||||||
| Non-cash interest expense | 0.8 | 0.8 | ||||||||||
| Stock-based compensation | 3.2 | 2.8 | ||||||||||
| Other | 0.6 | (0.4 | ) | |||||||||
| (Increase) decrease in working capital: | ||||||||||||
| Accounts receivable | (0.3 | ) | (6.1 | ) | ||||||||
| Inventories | (1.8 | ) | 5.7 | |||||||||
| Accounts payable | (15.8 | ) | (0.2 | ) | ||||||||
| Accrued liabilities and other working capital | (4.9 | ) | (16.2 | ) | ||||||||
| Net cash (used in) provided by operating activities | (8.7 | ) | 20.0 | |||||||||
| Cash (used in) provided by investing activities: | ||||||||||||
| Capital expenditures | (35.6 | ) | (15.7 | ) | ||||||||
| Acquisitions, net of cash acquired | (29.6 | ) | -- | |||||||||
| Net cash proceeds from divestitures and asset sales | -- | 0.9 | ||||||||||
| Net cash used in investing activities | (65.2 | ) | (14.8 | ) | ||||||||
| Cash provided by (used in) financing activities: | ||||||||||||
| Borrowings of revolving credit | 138.0 | 86.3 | ||||||||||
| Repayments of revolving credit | (113.7 | ) | (81.2 | ) | ||||||||
| Borrowings of long-term debt | 31.2 | -- | ||||||||||
| Issuances of Common Stock | 0.7 | 0.2 | ||||||||||
| Repurchases of Common Stock | (2.0 | ) | (1.6 | ) | ||||||||
| Proceeds from issuance of noncontrolling interest | 1.4 | 2.3 | ||||||||||
| Payment of deferred financing costs | -- | (1.2 | ) | |||||||||
| Dividends paid | (10.2 | ) | (10.2 | ) | ||||||||
| Net cash provided by (used in) financing activities | 45.4 | (5.4 | ) | |||||||||
| Effect of exchange rate changes on cash | 0.7 | (3.3 | ) | |||||||||
| Net decrease in cash and cash equivalents | (27.8 | ) | (3.5 | ) | ||||||||
| Cash and cash equivalents at beginning of period | 82.2 | 66.7 | ||||||||||
| Cash and cash equivalents at end of period | $ | 54.4 | $ | 63.2 | ||||||||
Unaudited Segment Information
The following tables set forth certain sales and operating data, net of all intersegment transactions, for the company's businesses for the periods indicated.
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||
| (Dollars in millions) | ||||||||||||||||||
| Net sales: | ||||||||||||||||||
| Carbon Materials and Chemicals | $ | 208.6 | $ | 220.3 | $ | 411.2 | $ | 450.8 | ||||||||||
| Railroad and Utility Products and Services | 148.2 | 150.6 | 277.0 | 290.5 | ||||||||||||||
| Total | $ | 356.8 | $ | 370.9 | $ | 688.2 | $ | 741.3 | ||||||||||
| Operating profit: | ||||||||||||||||||
| Carbon Materials and Chemicals | $ | 3.8 | $ | 12.5 | $ | (5.0 | ) | $ | 25.6 | |||||||||
| Railroad and Utility Products and Services | 12.8 | 16.5 | 23.9 | 28.8 | ||||||||||||||
| Corporate | (3.3 | ) | (0.5 | ) | (5.1 | ) | (1.0 | ) | ||||||||||
| Total | $ | 13.3 | $ | 28.5 | $ | 13.8 | $ | 53.4 | ||||||||||
| Operating margin: | ||||||||||||||||||
| Carbon Materials and Chemicals | 1.8 | % | 5.7 | % | -1.2 | % | 5.7 | % | ||||||||||
| Railroad and Utility Products and Services | 8.6 | % | 11.0 | % | 8.6 | % | 9.9 | % | ||||||||||
| Total | 3.7 | % | 7.7 | % | 2.0 | % | 7.2 | % | ||||||||||
| Adjusted operating profit (1): | ||||||||||||||||||
| Carbon Materials and Chemicals | $ | 9.9 | $ | 12.5 | $ | 18.3 | $ | 25.6 | ||||||||||
| Railroad and Utility Products and Services | 13.4 | 16.9 | 24.5 | 29.7 | ||||||||||||||
| All Other | (3.3 | ) | (0.5 | ) | (5.1 | ) | (1.0 | ) | ||||||||||
| Total | $ | 20.0 | $ | 28.9 | $ | 37.7 | $ | 54.3 | ||||||||||
| Adjusted operating margin: | ||||||||||||||||||
| Carbon Materials and Chemicals | 4.7 | % | 5.7 | % | 4.5 | % | 5.7 | % | ||||||||||
| Railroad and Utility Products and Services | 9.0 | % | 11.2 | % | 8.8 | % | 10.2 | % | ||||||||||
| Total | 5.6 | % | 7.8 | % | 5.5 | % | 7.3 | % | ||||||||||
| (1) | Cost of sales for CMC for the three and six months ended June 30, 2014 includes $2.9 million of pre-tax charges related to capacity rationalization at our tar distillation facility in Uithoorn, The Netherlands and $0.3 million of charges related to the expected closure of our tar distillation facility in Tangshan, China (KCCC). Cost of sales for Railroad and Utility Products and Services for the three and six months ended June 30, 2014 includes $0.6 million of plant closing charges related to the closure of the Grenada, Mississippi wood treating plant in 2012. Depreciation and amortization for the three months ended June 30, 2014 includes $2.1 million of pre-tax charges related to accelerated depreciation at the Uithoorn and KCCC facilities. Selling, general and administrative charges for CMC for the three months ended June 30, 2014 include $0.8 million of pre-tax charges related to capacity rationalization at the Uithoorn facility. Depreciation and amortization for the six months ended June 30, 2014 includes $3.5 million of pre-tax charges related to accelerated depreciation at the Uithoorn and KCCC facilities. Impairment and restructuring charges for CMC for the six months ended June 30, 2014 include $10.8 million of pre-tax charges related to capacity rationalization at Uithoorn and $4.7 million of pre-tax charges related to impairment for KCCC. Selling, general and administrative expenses for CMC for the six months ended June 30, 2014 includes $1.1 million of pre-tax charges related to capacity rationalization at Uithoorn. Cost of sales for RUPS for the three and six months ended June 30, 2013 includes $0.4 million and $0.9 million, respectively, of pre-tax expense related to the June 2012 closing of our wood treating plant in Grenada, Mississippi. |
Although
| UNAUDITED RECONCILIATION OF NET INCOME ATTRIBUTABLE TO KOPPERS AND ADJUSTED NET INCOME | |||||||||||||
| (In millions) | |||||||||||||
| Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||
| Net income attributable to Koppers | $ | 1.6 | $ | 14.4 | $ | 3.8 | $ | 25.4 | |||||
| Items impacting pre-tax income (1) | |||||||||||||
| Impairment and plant closure costs | 6.7 | 0.4 | 23.9 | 0.9 | |||||||||
| Items impacting net income, net of tax and non-controlling interests | 6.4 | 0.2 | 10.8 | 0.5 | |||||||||
| Adjusted net income including discontinued operations | 8.0 | 14.6 | 14.6 | 25.9 | |||||||||
| Discontinued operations | 0.1 | 0.1 | 0.1 | -- | |||||||||
| Adjusted net income | $ | 8.1 | $ | 14.7 | $ | 14.7 | $ | 25.9 | |||||
| (1) | Cost of sales for CMC for the three and six months ended June 30, 2014 includes $2.9 million of pre-tax charges related to capacity rationalization at our tar distillation facility in Uithoorn, The Netherlands and $0.3 million of charges related to the expected closure of our tar distillation facility in Tangshan, China (KCCC). Cost of sales for Railroad and Utility Products and Services for the three and six months ended June 30, 2014 includes $0.6 million of plant closing charges related to the closure of the Grenada, Mississippi wood treating plant in 2012. Depreciation and amortization for the three months ended June 30, 2014 includes $2.1 million of pre-tax charges related to accelerated depreciation at the Uithoorn and KCCC facilities. Selling, general and administrative charges for CMC for the three months ended June 30, 2014 include $0.8 million of pre-tax charges related to capacity rationalization at the Uithoorn facility. Depreciation and amortization for the six months ended June 30, 2014 includes $3.5 million of pre-tax charges related to accelerated depreciation at the Uithoorn and KCCC facilities. Impairment and restructuring charges for CMC for the six months ended June 30, 2014 include $10.8 million of pre-tax charges related to capacity rationalization at Uithoorn and $4.7 million of pre-tax charges related to impairment for KCCC. Selling, general and administrative expenses for CMC for the six months ended June 30, 2014 includes $1.1 million of pre-tax charges related to capacity rationalization at Uithoorn. Cost of sales for RUPS for the three and six months ended June 30, 2013 includes $0.4 million and $0.9 million, respectively, of pre-tax expense related to the June 2012 closing of our wood treating plant in Grenada, Mississippi. |
| UNAUDITED RECONCILIATION OF DILUTED EARNINGS PER SHARE AND | ||||||||||||
| ADJUSTED EARNINGS PER SHARE | ||||||||||||
| (In millions except share amounts) | ||||||||||||
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||
| Net income attributable to Koppers | $ | 1.6 | $ | 14.4 | $ | 3.8 | $ | 25.4 | ||||
| Adjusted net income including discontinued operations (from above) | $ | 8.0 | $ | 14.6 | $ | 14.6 | $ | 25.9 | ||||
| Adjusted net income (from above) | $ | 8.1 | $ | 14.7 | $ | 14.7 | $ | 25.9 | ||||
| Denominator for diluted earnings per share (in thousands) | 20,582 | 20,945 | 20,584 | 20,935 | ||||||||
| Earnings per share: | ||||||||||||
| Diluted earnings per share | $ | 0.08 | $ | 0.69 | $ | 0.19 | $ | 1.21 | ||||
| Adjusted earnings per share including discontinued operations | $ | 0.39 | $ | 0.70 | $ | 0.71 | $ | 1.24 | ||||
| Adjusted earnings per share | $ | 0.39 | $ | 0.70 | $ | 0.71 | $ | 1.24 | ||||
| UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA | ||||||||||||||
| (In millions except share amounts) | ||||||||||||||
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||
| Net income | $ | 0.7 | $ | 14.7 | $ | 0.6 | $ | 26.2 | ||||||
| Interest expense | 6.6 | 6.6 | 13.4 | 13.5 | ||||||||||
| Depreciation and amortization | 9.7 | 7.3 | 18.6 | 14.6 | ||||||||||
| Income tax provision | 5.6 | 8.1 | (0.4 | ) | 15.2 | |||||||||
| Discontinued operations | 0.1 | 0.1 | 0.1 | - | ||||||||||
| EBITDA with noncontrolling interests | 22.7 | 36.8 | 32.3 | 69.5 | ||||||||||
| Unusual items impacting net income (1) | ||||||||||||||
| Impairment and plant closure costs | 4.6 | 0.4 | 20.4 | 0.9 | ||||||||||
| Adjusted EBITDA with noncontrolling interests | $ | 27.3 | $ | 37.2 | $ | 52.7 | $ | 70.4 | ||||||
| (1) | Cost of sales for CMC for the three and six months ended June 30, 2014 includes $2.9 million of pre-tax charges related to capacity rationalization at our tar distillation facility in Uithoorn, The Netherlands and $0.3 million of charges related to the expected closure of our tar distillation facility in Tangshan, China (KCCC). Cost of sales for Railroad and Utility Products and Services for the three and six months ended June 30, 2014 includes $0.6 million of plant closing charges related to the closure of the Grenada, Mississippi wood treating plant in 2012. Selling, general and administrative charges for CMC for the three months ended June 30, 2014 include $0.8 million of pre-tax charges related to capacity rationalization at the Uithoorn facility. Impairment and restructuring charges for CMC for the six months ended June 30, 2014 include $10.8 million of pre-tax charges related to capacity rationalization at Uithoorn and $4.7 million of pre-tax charges related to impairment for KCCC. Selling, general and administrative expenses for CMC for the six months ended June 30, 2014 includes $1.1 million of pre-tax charges related to capacity rationalization at Uithoorn. Cost of sales for RUPS for the three and six months ended June 30, 2013 includes $0.4 million and $0.9 million, respectively, of pre-tax expense related to the June 2012 closing of our wood treating plant in Grenada, Mississippi. |
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