Koppers Holdings Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to COPPR's third quarter 2023 earnings conference call and webcast. At this time, all participants are in listen-only mode. If you need assistance, please signal a conference specialist by pressing the star key followed by zero. Following the presentation, instructions will be given for the question and answer session. Please note that this event is being recorded. I will now turn the call over to Quinn McGuire. Please go ahead.

Thanks, and good morning. I'm Quinn McGuire, Vice President of Investor Relations. Welcome to our third quarter 2023 earnings conference call. We issued our press release earlier today. You may access it via our website at www.coppers.com. As indicated in our announcement, we've also posted materials to the Investor Relations page of our website that will be referenced in today's call. Consistent with our practice in prior quarterly conference calls, This is being broadcast live on our website, and a recording of this call will be available on our website for replay through February 2, 2024. At this time, I would like to direct your attention to our forward-looking disclosure statement seen on slide two. Certain comments made on this conference call may be characterized as forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of assumptions, risks and uncertainties, including risks described in the cautionary statement included in our press release and in the company's filings with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward-looking statements included in the company's comments, you should not regard the inclusion of such information as a representation that its objectives, plans and projected results will be achieved. The company's actual results, performance or achievements may differ materially from those expressed in or implied by such forward-looking statements. The company assumes no obligation to update any forward-looking statements made during this call. References may also be made today to certain non-GAAP financial measures. The company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures in its press release and the presentation slides referenced during this call as well as on our website. Joining me for our call today are Leroy Ball, President and CEO of Coppers, and Jimmy Sue Smith, Chief Financial Officer. I will now turn over this discussion to Leroy.

Thank you, Quinn. Good morning, everyone. Thanks for joining us today. I'd like to start off with a quick recap of our 2023 Investor Day held several weeks ago in Chicago, as seen on slide three. We appreciated the support as many of you on the call today participated either in person or virtually, and in total, we had 86 attendees. Coppers is now at the halfway point in our 2021 through 2025 strategic plan, or as we like to refer to it, we're at the half. It was only fitting that our leadership team provided a halftime report where we highlighted key milestones of our strategy to expand and optimize our business around our core infrastructure, products, and services, and provided details of the progress made toward our goal of 300 million in adjusted EBITDA by 2025, while also laying out our game plan for the second half. In short, We're at an inflection point in both earnings and cash flow from this strategic plan. The first half has been all about the investment that would reap benefits once in place. Due to a lot of extenuating factors, completing the larger projects has been challenging and taken longer than first planned, but they're now beginning to come online and we expect to see a step change in profitability and cash flow as a result. We've remained consistent in our goals over the final three years of the plan to achieve adjusted EBITDA of $250 million in 2023, $275 million in 2024, and $300 million in 2025, and we've laid the groundwork for that to happen. In the process, we will spend less capital to achieve those goals and expect to generate $450 million of operating cash flow over the second half of the plan. Generating over $80 million of cash flow in the most recently completed third quarter is a good start to reaching that goal. There's still work to do, but our focus now is on how we continue to strengthen the business model in place, which in turn will grow earnings and cash flow further. Now, for those who are not able to take part in our investor day, a video replay can be accessed on the investor relations section of our company website. I encourage you to take a look and get a better understanding of Copper's investment story. Now, let's move on to a review of our third quarter. I'm pleased that once again, we have many positives to share with you for the quarter and for the remainder of 2023. Slide five provides a summary of our key metrics for the third quarter. We achieved consolidated sales of $550 million, a third quarter record, and the eighth consecutive record for current quarter sales. We generated adjusted EBITDA of $71 million, a record quarter in profitability, and the fifth consecutive current quarter record for adjusted EBITDA. Adjusted EBITDA margin was 12.8%, consistent with the prior year period. And as I mentioned a few minutes ago, operating cash flow made an impressive jump coming in at $81.6 million, a record quarter, and up from $46.2 million in the prior year quarter. Diluted earnings per share were $1.22, up from $0.91 from the prior year quarter, and adjusted earnings per share were $1.32, exceeding the $1.19 seen in the prior year quarter. All the credit for the strong results belongs to members of our worldwide COPPERS team who continue to stay focused on performing safely, efficiently, and profitably, regardless of challenges and headwinds. As always, our formula for success begins and ends with our people. Now let's take a look at our efforts in the area of zero harm, as seen on slide seven. Zero Harm 2.0 focuses on re-energizing frontline engagement and accelerating progress towards zero incidents across all copper facilities after we seem to plateau in our activities coming out of the pandemic. Zero Harm workshops are continuing for the leadership team of our utility and industrial products business where we fell behind on our integration during the pandemic due to the extended shelter-in-place orders. Now I'm proud to highlight that UIP for the year-to-date period reported a 75% decline in recordable injury rate compared with the same time last year through a focused effort on training, awareness, and leading activities. Congratulations to the entire UIP team for looking out for each other and embracing the culture of zero harm. In the third quarter, 25 out of our 45 operating facilities worked accident-free, once again proving it's possible. Three regional business units, in fact, have achieved zero recordables through the first nine months of this year. Australasia carbon materials and chemicals, and two performance chemicals regions, one in Australasia, the other in Europe. However, the overall rate of recordable injuries has shown a year-over-year increase of 7.5%, and we're delving into the numbers to see what particular areas we need to draw a particular focus to. The practice of keeping our people out of harm's way is a relentless activity and something we will never take for granted. Slide 8 highlights zero-harm events intended to further support our safety culture throughout COPRS. In late September, we conducted our annual Safety, Health, and Environmental Coordinator Conference in Chicago, where SH&E coordinators from across our organization received training on energy isolation, air emissions control, and permit-to-work improvements. Next week, we will host our third annual Zero Harm Truck Driving Championship competition in Pittsburgh at the David L. Lawrence Convention Center, where the top professional drivers, according to a number of safety metrics, will go head-to-head in a skills competition to see which individual best exemplifies zero harm behind the wheel. We take special note of our drivers since they represent COPRS in a very visible way, and the safety issues they face every day are relentless and challenging. As another safety measure, GPS units have been installed in 100% of COPRS commercial and non-commercial vehicles, providing our drivers this valuable tool to help them safely navigate their routes with confidence. As always, we continue to build on our Zero Harm culture and are committed to dedicating the necessary resources and people, time, equipment, training, and more to keep the safety and health of our employees and communities our number one priority. Now I'll turn the discussion over to our Chief Financial Officer, Jimmy Sue Smith.