Koppers Holdings Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to COPPR's second quarter 2025 earnings conference call and webcast. At this time, all participants are in a listen-only mode. If you need assistance, please signal a conference specialist by pressing star 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 second quarter 2025 earnings conference call. We issued our press release earlier today. You can 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 November 8, 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 and Chairman of the Board 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'm here this morning to report on COPPERS' second quarter performance and our progress in transforming into a high-performance organization, delivering mid- to high-teens margins and stronger cash flow, while staying rooted in our purpose of protecting what matters and preserving the future. This morning you'll hear how we continue to make good progress in all controllable areas while we fight through what has mostly been a sluggish demand environment across our entire portfolio. On slide four, you'll see that on the plus side of the ledger, we lowered year-to-date SG&A by 13% compared with the prior year period. We reduced our team member numbers for 14 straight months, equating to an 11% drop in FTEs since April of 24. We generated cash flow of over $50 million in the quarter, Posted adjusted EBITDA margins north of 15% for the first time in eight years. Brought our capital spend annual run rate down below $60 million. Signed a definitive agreement to sell our railroad structures business, which has been a drag to margin. Ceased production at our Falcon Hydride plant a month earlier than planned. Deployed $24 million of capital to dividends, share repurchases, and debt reduction projects. and launched our catalyst transformation process to unleash the ingenuity in the organization to deliver benefits that will bring coppers to consistent mid to high-teens EBITDA margins by the end of 2027. The biggest negative is on the demand side, and unfortunately, it's across the board. PC volumes beyond our previously disclosed market share loss are running a few percent down for the first six months, whereas we projected them to be up for the year. Class I demand looks to be tailing off in the second half as it did last year, which is not what had been communicated to us at the beginning of the year. CM&C markets continue to be at their trough with no immediate signs of improvement. And while UIP volumes are beginning to show signs of improvement, that improvement is occurring at a slower pace than had been signaled. I find it quite remarkable that we could post our highest second quarter adjusted EPS and a 9% improvement over prior year with sales down over that same period by 10%. We have a lot to cover today, so let's jump in. Moving to a quick summary of our zero harm activities on slide six, we show that we had 26 out of 41 facilities worldwide operating accident-free for the second quarter. Year-to-date, our European CM&C, European PC, and Australasian PC businesses have operated with zero recordable incidents. Leading activities designed to proactively identify and eliminate hazards increased year over year in the second quarter, which were instrumental to lessening recordable injuries and serious safety incidents. Moreover, we just finished July with zero recordables, which is the first time in my memory that we've reached that milestone. My thanks go out to our global team members for continuing to make the health and welfare of your teammates your number one priority. On slide seven, our Susquehanna facility set the standard for operating safely this past year, earning the 2025 Zero Harm CEO Award. This award recognizes outstanding performance in achieving no critical incidents, maintaining a higher leading activity rate, and lower incident rates than the overall coppers rates, respectively. The Susquehanna plant manufactures pressure treated cross ties, switch ties, and bridge timbers, selling its products throughout the Northeast US and Canada. Our sincere congratulations to plant manager Al Rutz and his team for demonstrating zero harm principles on such a consistent basis and setting an example for the rest of the organization to follow. As shown on slide nine, we issued our 2024 Corporate Sustainability Report in June, once again highlighting the gains made in applying our core principles of people, planet, and performance across all aspects of our business. We believe that maintaining responsible stewardship of the resources entrusted to us remains the key to promoting and achieving meaningful business growth. We're also honored that Coppers has been named for the first time to Time Magazine America's Best Midsize Companies of 2025. This distinction recognizes exceptional performance and employee satisfaction, revenue growth, and sustainability transparency as evaluated by time and data analysis provider statista. For more information, please access the QR codes seen here. Moving on to slide 10, in July, we signed a definitive agreement to sell our railroad structures business, which we refer to as KRS, to a valued customer of ours in a cash transaction that will close by the end of this month. We acquired KRS at the same time we acquired our performance chemicals business back in 2014, and while it has had some strong years, mostly early on, the last several years have been a bit more challenging. KRS struggled to move up the priority list of where we wanted to deploy capital, and in the end, we concluded that we were probably not its best owner. I'm happy to say to Mike Tweet, who has proven to be a fabulous leader and someone I will miss, that he and his team are going to be in good hands as they're joining an organization that will engage and encourage them in ways that we weren't able to at Copper's. I wish the entire KRS team the best of luck, and I thank them for their tireless efforts and commitment to the Copper's culture over the past 11 years. On slide 11, as mentioned on a previous call, I engaged a firm to put our entire organization under a microscope and assess how we measure up to top performing companies in each respective area of our company. from commercial to procurement to manufacturing, and of course, our corporate support functions. While there are a number of things we do well, not surprisingly, there is room for improvement in just about every area. This exercise resulted in the launch of Catalyst, a strategic transformation in how we look at our business, how we value opportunities, how we unlock the brainpower across the organization. This will lead to an upgrade of technology, an upskilling of our team members, and an improvement in our processes that ultimately leads to better execution and greater shareholder value creation. In May, I announced that Jim Sullivan will be moving from his role as Chief Operating Officer to Chief Transformation Officer to lead the Catalyst effort. In June, we kicked off the second phase of Catalyst, adding to the opportunities uncovered in the first phase. centering on the realistic value of opportunity to be captured and building out a detailed implementation plan that gets evaluated across the entire spectrum of opportunities and resourced according to where each initiative sits in the order of prioritization. Phase two will wrap up in mid-September with phase three to follow soon thereafter. And while too early to announce precise numerical targets, I'm comfortable saying that we have uncovered sufficient opportunity to put us on a run rate for mid to high teen EBITDA margins on a sustainable basis as we exit 2027. I'm pleased with how the organization has embraced the concept of everything being on the table and the team has not shied away from making unpopular choices for the sake of the betterment of the long-term health of our company. I look forward to sharing more details on Catalyst on our next quarterly call. On slide 12, we decided to postpone our Investor Day event originally scheduled for September 2025. This decision was made based on two primary factors. First, it goes without saying that there continues to be a tremendous amount of uncertainty in the global economy, which is having impacts on the markets we serve. We felt it would benefit us and our audience to give a little more time for things to hopefully settle down before going into depth on our long-range plans and targets. Second, we launched Catalyst at the beginning of this year, and as we've gotten deeper into understanding the opportunity and the time and resources that would be needed to stand it up, We thought it would be wise to take the time to be thoughtful in how it gets worked into our overall plan. In the final analysis, it didn't make sense for us to rush to a September 2025 date and felt like we would have a better quality plan and story if we demonstrated a little bit of patience. We've not settled upon a date yet, but we'll share the specifics once that decision has been made. I'll now turn the discussion over to our Chief Financial Officer, Jimmy Sue Smith.