Executive Summary

Q1 2025 delivered resilient profitability despite softer volumes: Adjusted EPS of $0.71, Adjusted EBITDA of $55.5M, and net sales of $456.5M; GAAP diluted EPS was $(0.68) due to restructuring and a $29.0M pension settlement loss .
Versus consensus, the quarter was a mixed print: Revenue missed ($456.5M vs $488.0M*) while Adjusted EPS and Adjusted EBITDA exceeded ($0.71 vs $0.555*; $55.5M vs $52.5M*)—cost actions offset volume headwinds in RUPS and CMC while PC volumes were weak due to U.S. market share shift and weather . Estimates marked * retrieved from S&P Global.
Guidance: Sales forecast updated to $2.0–$2.2B (from $2.17B) while Adjusted EBITDA ($280M), Adjusted EPS ($4.75), OpCF ($150M), tax rate (28%), and CapEx ($65M) were maintained, signaling confidence in cost-reduction benefits and tariff mitigation .
Balance sheet and capital allocation: Net debt ~$948M, liquidity ~$320M, net leverage 3.6x; $19M repurchases in Q1 and a $0.08 quarterly dividend declared (annualized to $0.32), supporting EPS accretion and shareholder returns .
Potential stock catalysts: maintained EBITDA/EPS guidance despite lower sales outlook, accelerating cost reductions, tariff mitigation, and utility pole expansion (Brown Wood acquisition), plus buyback capacity remaining (~$85M) .

What Went Well and What Went Wrong

What Went Well

RUPS profitability inflected: Adjusted EBITDA rose to $25.5M (+44% YoY) and margin to 10.9% on price increases, lower operating costs, and higher Class I crosstie and utility pole volumes; CEO: “one of our stronger first quarters from a profitability perspective…specifically RUPS and CMC” .
CMC margin recovery: Adjusted EBITDA improved to $9.9M (from $4.0M), driven by lower raw material/SG&A costs, favorable mix, and improved plant performance after last year’s outage .
Cost actions delivering: SG&A down $4.1M YoY; global headcount reduced ~5%; CFO highlighted consolidated Adjusted EBITDA margin at 12.2%, strongest Q1 since 2021 .

What Went Wrong

PC volumes declined 21.5% in the Americas due to U.S. market share shift and weather; Adjusted EBITDA fell to $20.1M and margin to 16.6% (from 19.9%) despite logistics/SG&A savings .
Top-line softness: Consolidated net sales down 8.3% YoY to $456.5M, with declines across PC and CMC outweighing RUPS growth .
GAAP loss from special items: $20.0M impairment/restructuring and $29.0M pension settlement drove diluted EPS to $(0.68) and operating cash flow to $(22.7)M (including ~$13.9M pension termination funding) .

Financial Results

Consolidated Performance vs prior periods and consensus

Metric	Q1 2024	Q4 2024	Q1 2025	Q1 2025 Consensus*
Net Sales ($USD Millions)	$497.6	$477.0	$456.5	$488.0*
Diluted EPS (GAAP) ($)	$0.59	$(0.50)	$(0.68)	—
Adjusted EPS ($)	$0.62	$0.77	$0.71	$0.555*
Adjusted EBITDA ($USD Millions)	$51.5	$55.2	$55.5	$52.5*

Estimates marked * retrieved from S&P Global.

Segment Breakdown (Net Sales and Adjusted EBITDA)

Segment	Q1 2024 Net Sales ($M)	Q1 2025 Net Sales ($M)	Q1 2024 Adj. EBITDA ($M)	Q1 2025 Adj. EBITDA ($M)	Q1 2024 Margin (%)	Q1 2025 Margin (%)
RUPS	$225.1	$235.0	$17.7	$25.5	7.9%	10.9%
PC	$150.1	$120.9	$29.8	$20.1	19.9%	16.6%
CMC	$122.4	$100.6	$4.0	$9.9	3.3%	9.8%
Total	$497.6	$456.5	$51.5	$55.5	—	—

KPIs

KPI	Q1 2024	Q1 2025
Operating Cash Flow ($USD Millions)	$(12.3)	$(22.7)
Capital Expenditures – Gross ($USD Millions)	$26.3	$14.3
Capital Expenditures – Net of insurance and asset sales ($USD Millions)	$25.8	$10.0
Net Debt ($USD Millions)	—	$948
Liquidity ($USD Millions)	—	$320
Net Leverage (x)	—	3.6x
Share Repurchases ($USD Millions)	$6.9 (Q1 prior year)	$19.1
Quarterly Dividend ($/share)	—	$0.08 (paid June 17; annualized $0.32)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales	FY 2025	~$2.17B	~$2.0–$2.2B	Updated range (lower midpoint)
Adjusted EBITDA	FY 2025	~$280M	~$280M	Maintained
Adjusted EPS	FY 2025	$4.75	$4.75	Maintained
Operating Cash Flow	FY 2025	~$150M	~$150M	Maintained
Effective Tax Rate	FY 2025	~28%	28%	Maintained
Capital Expenditures	FY 2025	~$65M	~$65M	Maintained

Management reiterated that tariff impacts and copper hedge efficiency are being actively mitigated; pension plan termination funding (~$13.9M in 2025) is incorporated in OpCF guidance .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024 and Q4 2024)	Current Period (Q1 2025)	Trend
Cost reductions & margin focus	Sequential profitability improvement in rail and carbon; planned streamlining to support higher margin profile	SG&A down $4.1M YoY; 5% workforce reduction; consolidated Adjusted EBITDA margin 12.2% (best Q1 since 2021)	Strengthening margin profile via cost actions
RUPS trajectory (crossties, utility poles)	RUPS record sales; utility pole growth (Brown Wood) but higher costs; domestic utility pole records in Q4	RUPS sales +4%, margin 10.9%; utility pole volume +9% and pricing; improving crosstie economics	Improving utilization and mix; margin expansion
PC demand & market share	PC margins improved on costs, but raw materials elevated (Q3); Q4 noted lower volumes in Americas	Americas preservative volumes down 21.5%; U.S. market share shift and weather drag; margin declined to 16.6% despite lower logistics/SG&A	Demand softness; competitive pressure
CMC portfolio actions (phthalic exit)	Q3: higher CMC EBITDA despite lower pricing; Q4: profitability increased on lower costs	Exiting U.S. phthalic ahead of May target; EBITDA up on cost cuts/mix; coal tar cost/pricing dynamics highlighted	Simplification aiding margins; industry rationalization needed
Tariffs & macro	Management flagged chaotic environment, tariffs could swing profitability tens of millions; double down on efficiency	Mitigation plans in place; risks to hardwood supply chain and copper hedge efficiency noted	Ongoing risk; mitigation progressing
Capital allocation	Ending heavy investment period; focus on deleveraging and buybacks	$19M repurchases; $0.08 dividend; net leverage 3.6x; ~$85M buyback capacity remaining	Active returns; deleveraging path reaffirmed
Safety/ESG	Strong safety performance; climate leadership recognition	31/41 facilities accident-free in Q1; continued Zero Harm program	Sustained focus

Management Commentary

CEO Leroy Ball: “While volumes got off to a soft start… cost reduction measures more than offset the impact from lower sales… one of our stronger first quarters from a profitability perspective, specifically RUPS and CMC.”
CFO Jimmi Sue Smith: “Adjusted EBITDA for the first quarter was $56M with a 12.2% margin… By segment, RUPS $26M (11%), PC $20M (17%), CMC $10M (10%).”
CEO on PC: “Residential preservative volume move away from Koppers… colder winter… economic uncertainty… we’ve pared back spending and realigned costs to better fit a smaller top line.”
CEO on RUPS: “Best profit metrics in the crosstie part of our business since 2016… inventory at a good level… should be back to generating significant free cash flow.”
2025 outlook: “Maintaining adjusted EBITDA $280M and adjusted EPS $4.75; expect sales $2.0–$2.2B.”

Q&A Highlights

Margin mix in RUPS: Utility poles structurally higher margin; expanding utility pole share should lift segment margins; Class I contracts still a work in progress .
Demand timing: Customers indicate back-half pickup across utility/industrial; management cautious given macro uncertainty but seeing activity in new geographies post Brown Wood .
Tariff impacts: PC saw demand fade through March; hardwood export declines could affect crosstie input pricing; multiple mitigation plans underway .
CMC incremental margins: Actions to simplify operations (Stickney exit of phthalic) and throughput improvements can restore margins to high-teens in a healthier environment .
Capital allocation: Priority on buybacks (new $100M program) and deleveraging; repurchased $15M during the window, with annual limits in credit agreements guiding pacing .

Estimates Context

Q1 2025 vs consensus: Revenue $456.5M vs $488.0M* (miss); Adjusted EPS $0.71 vs $0.555* (beat); Adjusted EBITDA $55.5M vs $52.5M* (beat). Cost initiatives drove EPS/EBITDA upside despite top-line shortfall, particularly in RUPS and CMC; PC underperformed on volumes and raw materials . Estimates marked * retrieved from S&P Global.
Implications: Street models likely to cut FY revenue trajectory toward $2.0–$2.2B guidance while maintaining EBITDA/EPS on margin confidence and cost actions; watch for PC volume recovery assumptions and tariff sensitivity in estimates .

Key Takeaways for Investors

Margin story intact: Consolidated margin expansion driven by RUPS price/mix and CMC cost actions supports maintained $280M EBITDA and $4.75 EPS despite lower sales outlook—a constructive setup if PC stabilizes .
PC is the swing factor: Near-term EPS path hinges on U.S. preservative market share and weather-sensitive volumes; management is aggressively right-sizing costs .
RUPS/Utility poles are catalysts: Brown Wood assets broaden reach and raise mix quality; continued pricing and operating cost control should sustain double-digit margins .
Tariff/watchpoints: Hardwood supply chain and copper hedge efficiency are key risk vectors; mitigation programs in place but macro remains fluid—expect volatility .
Free cash flow and returns: Lower normalized CapEx ($65M) and buyback capacity (~$85M remaining) plus dividend ($0.08/qtr) support shareholder returns while targeting 2–3x net leverage over time .
Trading lens: Mixed headline (revenue miss) vs EPS/EBITDA beat—near-term stock moves likely driven by confidence in maintained guidance and visibility on PC stabilization; buyback deployment cadence is a supportive factor .
Medium-term thesis: Portfolio simplification (CMC), structural utility-pole expansion, and cost discipline underpin earnings power; downside risks stem from tariffs, rates, and PC competition.