Koppers Inc. Reports Third Quarter 2005 Results
November 15, 2005 at 12:00 AM EST
PITTSBURGH, Nov. 15 /PRNewswire/ -- Sales for the nine months ended September 30, 2005 were $767.9 million as compared to $720.7 million for the first nine months of 2004. The increase in sales of $47.2 million or 6.5% reflects higher sales from both Carbon Materials & Chemicals and Railroad & Utility Products segments. Income before interest expense, income taxes and minority interest (EBIT) for the first nine months of 2005 was $58.4 million as compared to $50.8 million for the same period in 2004. The $7.6 million or 15.0% increase in EBIT reflects increased profits due to improved market conditions and product mix in the U.S. carbon materials and chemicals and railroad and utility businesses, and $2.8 million of insurance reserve reversals, partially offset by dry-docking expenses in Australia, charges relating to the New Zealand Commerce Commission anti-trust investigation, and increased environmental remediation reserves in Australia.
Net income for the nine months ended September 30, 2005 was $15.9 million compared to net income for the nine months ended September 30, 2004 of $8.2 million.
Sales and EBIT for the third quarter of 2005 were $269.6 million and $22.2 million, respectively, compared to third quarter 2004 sales and EBIT of $243.8 million and $18.9 million, respectively. The third quarter 2005 EBIT reflects increased profits in the U.S. carbon materials and chemicals and railroad businesses, primarily due to $2.8 million of insurance reserve reversals, which were partially offset by dry-docking expenses in Australia, charges for the New Zealand Commerce Commission anti-trust investigation and increased environmental reserves in Australia. Net income for the third quarter of 2005 was $7.1 million compared to net income of $3.5 million for the third quarter of 2004.
Borrowings of $392.4 million, net of cash of $34.8 million, at September 30, 2005 were $357.6 million compared to $371.0 million, net of cash of $14.8 million, at December 31, 2004. Cash flows from operations for the first nine months of 2005 were $43.1 million compared to $13.8 million in the first nine months of 2004, due primarily to lower working capital requirements and increased profitability. A dividend of $13 million was paid to KI Holdings in August 2005.
Commenting on the nine months ended September 30, 2005, President and CEO Walter W. Turner said, "The operating results for the first nine months of 2005 have continued to exceed our expectations. EBIT through the third quarter of 2005 was $58.4 million compared to 2004 EBIT for the same period of $50.8 million. These results have been primarily driven by the strength of the U.S. carbon materials and chemicals and railroad and utilities businesses.
"As a result of our continued focus on cash, I am pleased that we achieved our third quarter target for borrowings. We continue to be driven by our strategy of providing our customers with the highest quality products and services while continuing to focus on safety, health and environmental compliance."
About Koppers
Koppers, with corporate headquarters and a research center in Pittsburgh, Pennsylvania, is a global integrated producer of carbon compounds and treated wood products. Including its joint ventures, Koppers operates 36 facilities in the United States, United Kingdom, Denmark, Australia, China, the Pacific Rim and South Africa. The Company is a wholly owned subsidiary of KI Holdings Inc. The stock of KI Holdings Inc. is shared by a number of employee investors and by majority equity owner Saratoga Partners of New York, N.Y.
Koppers management expects to conduct its third quarter results conference call on Tuesday, November 15, 2005 beginning at 4:00 PM EST to discuss the Company's performance. Investors and bondholders may access the live audio broadcast by dialing 877 809 9521 in the US/Canada or 706 643 9697 for International. The Conference ID number is 2537441. Investors are requested to access the call at least five minutes before the scheduled start time in order to complete a brief registration. An audio replay will be available two hours after the call's completion at 800 642 1687 or 706 645 9291, Conference ID number 2537441 and will continue through December 15, 2005.
This news release may contain forward-looking statements based on management's current expectations, estimates and projections. All statements that address expectations or projections about the future, including statements about the company's strategy for growth, product development, market position, expected expenditures and financial results are forward- looking statements. Some of the forward-looking statements may be identified by words like "expects," "anticipates," "plans," "intends," "projects," "indicates," and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in documents filed with the Securities and Exchange Commission by Koppers, particularly its latest annual report on Form 10-K and quarterly report on Form 10-Q, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to, changes in the laws, regulations, policies and economic conditions, including inflation, interest and foreign currency exchange rates, of countries in which the Company does business; competitive pressures; the loss of one or more key customer or supplier relationships; customer insolvencies; successful integration of structural changes, including restructuring plans, acquisitions, divestitures and alliances; cost of raw materials; and other economic, business, competitive, regulatory and/or operational factors affecting the business of Koppers generally.
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Source: Koppers Inc.
Sales and EBIT for the third quarter of 2005 were $269.6 million and $22.2 million, respectively, compared to third quarter 2004 sales and EBIT of $243.8 million and $18.9 million, respectively. The third quarter 2005 EBIT reflects increased profits in the U.S. carbon materials and chemicals and railroad businesses, primarily due to $2.8 million of insurance reserve reversals, which were partially offset by dry-docking expenses in Australia, charges for the New Zealand Commerce Commission anti-trust investigation and increased environmental reserves in Australia. Net income for the third quarter of 2005 was $7.1 million compared to net income of $3.5 million for the third quarter of 2004.
Borrowings of $392.4 million, net of cash of $34.8 million, at September 30, 2005 were $357.6 million compared to $371.0 million, net of cash of $14.8 million, at December 31, 2004. Cash flows from operations for the first nine months of 2005 were $43.1 million compared to $13.8 million in the first nine months of 2004, due primarily to lower working capital requirements and increased profitability. A dividend of $13 million was paid to KI Holdings in August 2005.
Commenting on the nine months ended September 30, 2005, President and CEO Walter W. Turner said, "The operating results for the first nine months of 2005 have continued to exceed our expectations. EBIT through the third quarter of 2005 was $58.4 million compared to 2004 EBIT for the same period of $50.8 million. These results have been primarily driven by the strength of the U.S. carbon materials and chemicals and railroad and utilities businesses.
"As a result of our continued focus on cash, I am pleased that we achieved our third quarter target for borrowings. We continue to be driven by our strategy of providing our customers with the highest quality products and services while continuing to focus on safety, health and environmental compliance."
About Koppers
Koppers, with corporate headquarters and a research center in Pittsburgh, Pennsylvania, is a global integrated producer of carbon compounds and treated wood products. Including its joint ventures, Koppers operates 36 facilities in the United States, United Kingdom, Denmark, Australia, China, the Pacific Rim and South Africa. The Company is a wholly owned subsidiary of KI Holdings Inc. The stock of KI Holdings Inc. is shared by a number of employee investors and by majority equity owner Saratoga Partners of New York, N.Y.
Koppers management expects to conduct its third quarter results conference call on Tuesday, November 15, 2005 beginning at 4:00 PM EST to discuss the Company's performance. Investors and bondholders may access the live audio broadcast by dialing 877 809 9521 in the US/Canada or 706 643 9697 for International. The Conference ID number is 2537441. Investors are requested to access the call at least five minutes before the scheduled start time in order to complete a brief registration. An audio replay will be available two hours after the call's completion at 800 642 1687 or 706 645 9291, Conference ID number 2537441 and will continue through December 15, 2005.
This news release may contain forward-looking statements based on management's current expectations, estimates and projections. All statements that address expectations or projections about the future, including statements about the company's strategy for growth, product development, market position, expected expenditures and financial results are forward- looking statements. Some of the forward-looking statements may be identified by words like "expects," "anticipates," "plans," "intends," "projects," "indicates," and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in documents filed with the Securities and Exchange Commission by Koppers, particularly its latest annual report on Form 10-K and quarterly report on Form 10-Q, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to, changes in the laws, regulations, policies and economic conditions, including inflation, interest and foreign currency exchange rates, of countries in which the Company does business; competitive pressures; the loss of one or more key customer or supplier relationships; customer insolvencies; successful integration of structural changes, including restructuring plans, acquisitions, divestitures and alliances; cost of raw materials; and other economic, business, competitive, regulatory and/or operational factors affecting the business of Koppers generally.
Koppers Inc.
Consolidated Statement of Operations
(In millions)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
(Unaudited) (Unaudited)
Net sales $269.6 $243.8 $767.9 $720.7
Operating expenses:
Cost of sales 222.5 202.0 636.0 604.0
Depreciation and amortization 8.4 7.9 24.6 24.3
Selling, general and
administrative 16.5 15.0 49.2 41.7
Total operating expenses 247.4 224.9 709.8 670.0
Operating profit 22.2 18.9 58.1 50.7
Other income - - 0.3 0.1
Income before interest expense,
income taxes and minority interest 22.2 18.9 58.4 50.8
Interest expense 9.3 8.7 28.2 26.6
Income before income taxes and
minority interest 12.9 10.2 30.2 24.2
Income taxes 4.9 5.8 12.8 13.2
Minority interest 0.9 0.9 1.5 2.8
Net income $7.1 $3.5 $15.9 $8.2
Koppers Inc.
Condensed Consolidated Balance Sheet
(In millions)
September 30, December 31,
2005 2004
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $34.8 $14.8
Accounts receivable less allowance for doubtful
accounts of $0.8 in 2005 and $0.9 in 2004 126.1 113.0
Inventories:
Raw materials 73.4 79.9
Work in process 3.4 4.4
Finished goods 68.4 68.6
LIFO reserve (19.8) (18.4)
Total inventories 125.4 134.5
Deferred tax benefit 13.3 10.3
Other 5.2 7.6
Total current assets 304.8 280.2
Equity in non-consolidated investments 2.9 2.9
Fixed assets 518.2 511.8
Less: accumulated depreciation (365.7) (355.1)
Net fixed assets 152.5 156.7
Goodwill 36.5 38.4
Deferred tax benefit 36.6 49.3
Other assets 26.4 24.2
Total assets $559.7 $551.7
Koppers Inc.
Condensed Consolidated Balance Sheet
(In millions except per share amounts)
September 30, December 31,
2005 2004
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $73.1 $77.0
Accrued liabilities 71.6 64.7
Revolving credit 34.8 20.6
Current portion of term loans 6.4 2.5
Total current liabilities 185.9 164.8
Long-term debt:
Revolving credit 17.9 38.9
Term loans 13.3 3.8
Senior Secured Notes due 2013 320.0 320.0
Total long-term debt 351.2 362.7
Other long-term reserves 82.5 86.2
Total liabilities 619.6 613.7
Minority interest 12.0 10.6
Stockholders' equity (deficit):
Senior Convertible Preferred Stock, $.01 par
value per share; 10.0 shares authorized; 0.0
shares issued in 2005 and 2004 - -
Common stock, $.01 par value per share; 37.0 shares
authorized, 0.0 shares issued in 2005 and 2004 - -
Capital in excess of par value 11.5 8.7
Receivable from Director for purchase of common
stock (0.6) (0.6)
Retained (deficit) (73.7) (76.7)
Accumulated other comprehensive income (loss):
Foreign currency translation adjustment 8.5 13.6
Minimum pension liability, net of tax (17.6) (17.6)
Total accumulated other comprehensive loss (9.1) (4.0)
Total stockholders' (deficit) (71.9) (72.6)
Total liabilities and stockholders'
(deficit) $559.7 $551.7
Koppers Inc.
Condensed Consolidated Statement of Cash Flows
(In millions)
Nine Months Ended
September 30,
2005 2004
(Unaudited)
Cash provided by operating activities $43.1 $13.8
Cash provided by (used in) investing activities:
Capital expenditures (13.6) (12.8)
Acquisitions (5.8) -
Other 0.8 0.7
Net cash (used in) investing activities (18.6) (12.1)
Cash provided by (used in) financing activities:
Borrowings from revolving credit 274.1 194.8
Repayments of revolving credit (280.6) (155.4)
Borrowings from long-term debt 17.8 -
Repayment of long-term debt (4.1) (6.5)
Dividends paid (13.0) (33.4)
Payment of deferred financing costs (0.5) (0.3)
Capital received from parent 3.0 -
Issuances of common stock - 0.6
Purchases of common stock (0.4) (2.2)
Net cash (used in) financing activities (3.7) (2.4)
Effect of exchange rates on cash (0.8) 0.5
Net increase (decrease) in cash 20.0 (0.2)
Cash and cash equivalents at beginning of period 14.8 9.6
Cash and cash equivalents at end of period $34.8 $9.4
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Source: Koppers Inc.