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United States securities and exchange commission logo
April 11, 2023
Jimmi Sue Smith
Chief Financial Officer
Koppers Holdings Inc.
436 Seventh Avenue
Pittsburgh, PA 15219
Re: Koppers Holdings
Inc.
Form 10-K for the
Fiscal Year Ended December 31, 2022
Filed February 27,
2023
File No. 1-32737
Dear Jimmi Sue Smith:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for the fiscal year ended December 31, 2022
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations, page 30
1. Please revise MD&A in
future annual and quarterly filings to more fully address the
following:
When you disclose
and discuss multiple factors that impact your operations, quantify
the impact of each
factor, for example, we note you identify multiple factors
that impacted net
sales by segment, cost of sales, and Adjusted EBITDA by
segment, such as
price, volume, supply, and demand;
Your cost of sales
discussion is only presented on a consolidated level, if applicable,
discuss material
factors that impact cost of sales at the segment level;
You disclose on
page 18 that your European-based CMC business lost a substantial
portion of its
coal tar requirements that were previously sourced from the Russian
Federation and
Ukraine. If material, more fully explain the impact this had on your
Jimmi Sue Smith
Koppers Holdings Inc.
April 11, 2023
Page 2
results of operations and how you are mitigating the loss of
these sources,
including the potential impact this may have on future results;
and
You disclose that increased costs due to inflationary pressures
outpaced price
increases to your customers. Quantify and disclose the impact of
inflationary
pressures you experience and continue to update your disclosures
to indicate the
extent to which you are able to pass on increased costs to
customers to mitigate
inflationary pressures.
2. We note you present Total Adjusted EBITDA Margin on pages 31 and 32
without
presenting the most directly comparable GAAP measure, net income
margin, with equal
or greater prominence as required by Item 10(e)(1)(i)(A) of Regulation
S-K. If you
continue to present this non-GAAP measure, please revise future
filings to fully comply
with the requirements of Item 10(e) of Regulations S-K. This comment
is also applicable
to the presentation of this non-GAAP measure in your Earnings Releases
filed under Form
8-K.
3. We note your reconciliations of Adjusted EBITDA to net income on page
33 include
adjustments identified as LIFO expense (benefit). Please more fully
explain to us the
specific nature and purpose of this adjustment. If the adjustment is
essentially meant to
reflect operating results on a FIFO basis rather than a LIFO basis,
please revise future
filings to clarify that fact. If the adjustment is something other
than that, please explain to
us how you determined the adjustment is appropriate based on the
guidance in Question
100.04 of the Division of Corporation Finance s Compliance &
Disclosure Interpretations
on Non-GAAP Financial Measures. This comment is also applicable to the
non-GAAP
reconciliations in your Earnings Releases filed under Form 8-K.
Critical Accounting Policies
Goodwill and Intangible Assets, page 36
4. Based on your disclosures, it appears the estimated fair values of two
of your reporting
units result in there not being substantial headroom between the
estimated fair values and
carrying values. Please expand your disclosures in future filings to
more fully address the
following:
Disclose the percentages by which the estimated fair values exceed
the carrying
values at the date of the most recent impairment test;
Provide a more detailed description of the key assumptions used to
estimate fair
values, including how the key assumption was determined;
Discuss the degree of uncertainty associated with the key
assumptions and identify
any material changes to your assumptions year over year, if
applicable; and
FirstName LastNameJimmi Sue Smith
Describe the potential events and/or changes in circumstances that
could reasonably
Comapany be NameKoppers Holdings Inc.
expected to negatively affect the key assumptions.
Please
April 11, 2023refer
Pageto2Item 303(b)(3) of Regulation S-K.
FirstName LastName
Jimmi Sue Smith
FirstName LastNameJimmi Sue Smith
Koppers Holdings Inc.
Comapany
April NameKoppers Holdings Inc.
11, 2023
April 311, 2023 Page 3
Page
FirstName LastName
Quantitative and Qualitative Disclosures about Market Risk
Interest Rate and Debt Sensitivity Analysis, page 39
5. Please revise future filings to also address the potential impact and
risks associated with
refinancing fixed rate debt in a raising interest rate environment to
the extent material.
Notes to the Consolidated Financial Statements
8. Stock-based Compensation, page 54
6. We note your disclosure that volatility assumptions are based on the
historical volatility of
your common stock and the historical volatility of certain other
similar public companies.
Please explain to us why you believe using other similar public
companies is appropriate
given that historical stock prices of your common stock have been
available since your
initial public offering in 2006. Refer to SAB Topic 14.D.1 and ASC
718-10-55-35
through 55-41.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Mindy Hooker at (202) 551-3732 or Anne McConnell at (202)
551-
3709 with any questions.
Sincerely,
Division of
Corporation Finance
Office of
Manufacturing