Koppers Holdings Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to COPPA's fourth quarter 2024 earnings conference call and webcast. At this time, all participants are in a listen-only mode. If you need assistance, please alert a conference specialist by pressing the star key followed by zero. Following your presentation, instructions will be given for the question and answer session. Please note this event is being recorded. Now, I would now like to turn the conference over to Ms. Quinn McGuire. Please go ahead, ma'am.

Thanks, and good morning. I'm Quinn McGuire, Vice President of Investor Relations. Welcome to our fourth quarter and full year 2024 earnings conference call. We issued our press release earlier today. You may access it via our website at www.croppers.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 and prior quarterly conference calls, this is being broadcast live on our website at and a recording of this call will be available on our website for replay through May 27, 2025. 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. Also, references may be made today to certain non-GAAP financial measures. The press release, which is available on our website, also contains reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures. Joining me for our call today are Leroy Ball, Chief Executive Officer of Coppers, and Jimmy Sue Smith, Chief Financial Officer. At this time, I'll turn the discussion over to Leroy.

Thank you, Quinn. Good morning, everyone. I'll begin this morning by stating my disappointment of falling short of our financial expectations for the fourth quarter and full year 2024. We seem to be on our way to meeting our fourth quarter goal after posting a record October that followed a record second and third quarter for adjusted EBITDA. As the last two months of the year progressed, however, we experienced volume slowdowns in each of our businesses that could not be overcome by short-term cost measures. There were a number of factors for the drop, including the market share loss we called out in our PC business in November that began sooner than expected. Some hurricane hangover as customers needed to absorb the influx of material from late September and October storm response. Issues with consistent car flow with rail customers that delayed shipments and backed up plants. And frankly, some of it was just companies pushing pause and proceeding with caution as they began assessing the outlook with the Republican White House and Congress. In anticipation of some of the challenges we knew we would face in 2025, we began in Q4 reducing our workforce through a series of actions that has, to date, resulted in a 5% reduction of our global employee base. That had very little impact on the fourth quarter, but will result in over $10 million in savings this year. I'll get into more detail later in the call on my thoughts for this year, but to set the stage, I still believe we're poised to post a strong year overall in every important metric in 2025. but it may not be a smooth and easy ride to get there. We anticipate earnings to benefit from a combination of top-line improvements that will ramp up as the year progresses, greater operating efficiencies, and continued aggressive cost containment measures across our business. We remain encouraged by the accomplishments of our Global Coppers team to create a foundation for a connected world through our leading portfolio of critical products and services. I want to begin with a summary of key metrics for the fourth quarter as seen on slide four. We achieved consolidated sales of $477 million compared with $513 million in the prior year, reflecting the demand pullback I mentioned earlier. Despite the revenue shortfall, we still generated record fourth quarter adjusted EBITDA of $55.2 million compared with $53.9 million in the prior year quarter. Our adjusted EBITDA margin was 11.6% versus 10.5% in the prior year quarter. Fourth quarter diluted loss per share was 50 cents compared with diluted earnings per share of 59 cents in the prior year quarter. And while adjusted earnings per share for the quarter were 77 cents compared with 67 cents in the prior year quarter. GAAP EPS was negatively impacted by restructuring related charges in addition to the standard LIFO and non-cash hedging impacts. We generated a record fourth quarter operating cash flow of $74.7 million versus $66.6 million in the prior year quarter. Slide 5 outlines our full-year key metrics for 2024, starting with consolidated sales of $2.09 billion compared with $2.15 billion in 2023, a slight decline driven primarily by continued soft pricing in our CMC end markets. This was partially offset by a record sales year in our railroad and utility products and services business, driven by added sales from our brown wood acquisition and some pricing benefits. Adjusted EBITDA was $261.6 million, representing our ninth consecutive record year in profitability. Adjusted EBITDA margin for the year was 12.5%, compared with 11.9% in the prior year. The 12.5% margin represents our best annual margin since 2021, and continuing to move this number higher will be a primary focus in 2025. Earnings per share were $2.46 versus $4.14 in the prior year. Adjusted earnings per share were $4.11 compared with $4.36 in the prior year, representing our fifth straight year of crossing the $4 mark after never having reached it prior to 2020. We generated operating cash flow of $119.4 million in 2024 compared with a record $146.1 million in the prior year. More importantly, with our second straight year in the black from a free cash flow standpoint following the investment-heavy early years of our 2025 strategy, which had put us in a free cash flow deficit. I expect the improved free cash flow trend to continue in 2025 as operating cash flow improves and capital expenditures continue to moderate. As seen on slide six, Coppers will be hosting a virtual investor day on Thursday, September 18th. Our executive team will be unveiling the details of our 2030 strategic plan. Look for more details in the months to come. But in the meantime, please mark your calendars and plan to join us that day. I want to highlight a few more things before turning the call over to Jimmy Hsu. I don't believe that financial performance alone tells the full story of COPPERS. If you move to slide 8, you'll see that about half our facilities worldwide, 23 out of 47, operated accident-free for the year. And notably, our Europe CMC and Europe PC businesses completed the year with zero recordable incidents. The relentless focus of our leaders on driving leading activities once again led to a new all-time low recordable injury rate across COPPERS and enabled us to take our next step towards zero. I've said many times over, the safety and health of our people will always be a top priority, and the progress made in 2024 brings us closer to our goal. By 10 shows an important achievement worth mentioning. We're honored to be again recognized by Newsweek as one of America's most responsible companies for the fifth consecutive year. Our move up the rankings to 113 overall is a recognition of our holistic approach to business, knowing that if we don't run responsible operations and value people as we seek to improve profitability, we jeopardize our future. Moving on to slide 11, I want to point out the results of our 2024 employee engagement survey, which were slightly better than 2023, resulting in our highest engagement scores to date. We know that our chances of success improved dramatically with an engaged workforce that feels valued, is rewarded for superior performance, and is informed and aligned to our long-term goals. My thanks to everyone that took part because it is your feedback that enables us to continue working on making coppers a better place for everyone. I'll now turn the discussion over to our Chief Financial Officer, Jimmy Sue Smith.