Koppers Holdings Inc. (KOP)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 revenue fell 10.4% year over year to $504.8M, missing Street consensus, while adjusted EPS of $1.48 was essentially in line and adjusted EBITDA of $77.1M was slightly below; cost actions lifted consolidated adjusted EBITDA margin to ~15.3% despite the sales decline . Street (S&P Global) had Q2 revenue at $540.3M*, EPS at $1.49*, and EBITDA at $78.8M* (see tables).
• Management cut FY25 guidance: sales to $1.9–$2.0B (from $2.0–$2.2B), adjusted EBITDA to $250–$270M (from ~$280M), and adjusted EPS to $4.00–$4.60 (from $4.75), while maintaining operating cash flow at $150M and reducing capex to $52–$58M (from $65M) .
• Segment mix: RUPS margins improved on lower costs and pricing; PC volumes fell (U.S. market share loss and softer residential), and CMC profitability rose despite lower sales after exiting phthalic anhydride, aided by cost reductions and mix .
• Strategic/financial positioning: Revolver maturity extended to as late as 2030 with improved covenant/pricing terms; net leverage was 3.5x (liquidity $336M), and the board declared a $0.08 dividend ahead of results .
• CEO underscored “Catalyst” transformation and reiterated sustainable mid-to-high-teens adjusted EBITDA margin ambition in 2–3 years as volumes recover; near term, demand across end markets remains sluggish and tariffs/hedge impacts weigh on PC .

What Went Well and What Went Wrong

• What Went Well
  • Cost actions and “Catalyst” drove significant margin resilience: “posted adjusted EBITDA margins north of 15% for the first time in eight years” and “highest second quarter adjusted EPS…with sales down…10%,” showcasing execution on costs despite weaker demand .
  • RUPS recorded higher profitability on $7.7M lower raw materials/SG&A/freight plus price increases; segment adjusted EBITDA rose to $31.6M (12.6% margin) from $22.4M (8.8%) y/y .
  • CMC profit improved to $16.8M (16.2% margin) from $10.8M (8.2%) on $11.5M lower costs and favorable mix after exiting phthalic; pricing pressures were partly offset by refined tar/naphthalene/creosote volume gains and FX tailwind .
• What Went Wrong
  • Top-line underperformed: consolidated sales -10.4% y/y to $504.8M and below consensus, reflecting broad-based sluggish demand; management cut FY25 revenue/EBITDA/EPS guidance accordingly .
  • PC volumes fell ~15% in the Americas (U.S. share shift, softer residential); adjusted EBITDA declined to $28.7M (19.0% margin) vs $44.3M (25.0%) y/y; copper tariff-driven hedge ineffectiveness was ~$2M in Q2 with ~$5M expected in 2H .
  • Class I rail demand outlook softened vs expectations; RUPS volume growth expectations for the year were tempered (from +8% to ~+4%), and the mix in 2H plus potential inventory actions could weigh on margins .

Financial Results

Overall results vs prior periods

Q2 2025 actuals vs S&P Global consensus

• Note: Asterisked consensus values retrieved from S&P Global (see Estimates Context); the company reports adjusted EBITDA; consensus “EBITDA” may differ in definition.*

Segment performance

KPI snapshot

Non-GAAP adjustments (Q2 2025 highlights): $17.6M impairment/restructuring; LIFO benefit $(0.7)M; mark-to-market hedge gain $(0.7)M; pension settlement/expense $1.2M; total pre-tax adjustments $17.9M; effect on adjusted net income $13.5M .

Guidance Changes

Management rationale: continued demand reductions across end markets; tariffs/hedge effects in PC; RUPS mix/volume normalization and potential inventory actions; CMC pricing pressures partially offset by cost/mix; ongoing “Catalyst” savings .

Earnings Call Themes & Trends

Management Commentary

• “I am extremely happy with our second quarter performance in every category other than top line revenue…Catalyst is already bearing fruit…Our global employee base has declined for 14 consecutive months, representing an 11 percent drop from its high point in April 2024.”
• “We…posted adjusted EBITDA margins north of 15% for the first time in eight years…highest second quarter adjusted EPS and a 9% improvement over prior year with sales down…10%.”
• “The Catalyst transformation process…suggests a consolidated sustainable mid to high teens adjusted EBITDA margin is achievable in the next two to three years.”
• “We plan to use the majority of the free cash flow generated over the back half of this year to reduce borrowings.”
• On PC/tariffs: “The only quantifiable impact to date is the…copper tariff…approximately $2 million of hedge ineffectiveness…in Q2…we expect about $5 million of impact…in the back half of the year now reflected in our revised guidance.”

Q&A Highlights

• RUPS contracts and volumes: Long-term contracts in place; pricing recovery largely realized; focus is now on cost and throughput; volumes below what Class I customers signaled entering the year (pushing expectation into 2026) .
• PC outlook and residential exposure: Industrial signs of life, but residential drives PC; “for us to see a meaningful movement on…results…we got to see some pickup on the residential side” .
• Margin ambition reaffirmed: “Mid to high teens margins is what we are targeting and what we believe is achievable,” with Q2 demonstrating cost leverage even with −10% sales y/y .
• RUPS volume guide: FY treated sales growth moderated from ~8% to ~4%; 2H mix and optional inventory monetization could weigh on absorption .
• Industry structure: Proposed Class I rail consolidation too early to assess impact; Koppers aims to remain key supplier to merged entities .

Estimates Context

• Q2 2025 vs S&P Global consensus: Revenue $540.3M* vs actual $504.8M; Adjusted/Primary EPS $1.49* vs $1.48; EBITDA $78.8M* vs $77.1M .
• Estimate depth: Revenue and EPS based on ~2 analyst inputs for Q2; consensus figures also available for forward quarters (Street EPS/Revenue/EBITDA paths updated around prints)*.
• Target price consensus stood at ~$52.5* with limited coverage depth.
• Implications: Expect sell-side to lower FY25 revenue, EBITDA, and EPS following the guide cut; PC tariff/hedge carryover and muted volume recovery likely drive estimate resets for 2H.

Note: Asterisked values retrieved from S&P Global.

Key Takeaways for Investors

• Mix of resilience and reset: Q2 showed strong cost control (15%+ EBITDA margin) and in-line EPS despite a revenue miss, but the FY guide was lowered on stubborn demand softness and tariff/hedge effects .
• RUPS execution is a bright spot; cost/pricing gains raised margins, though Class I demand and 2H mix temper upside near term .
• PC remains the swing factor; residential demand and recaptured share are needed to re-accelerate; tariffs/hedge inefficiencies are manageable but non-trivial in 2H .
• CMC margin recovery looks more structural post-phthalic exit and with improved tar supply contracting; still exposed to regional pricing dynamics .
• Balance sheet flexibility improved (revolver extension, liquidity), with cash priorities on debt reduction and ongoing buybacks/dividend .
• “Catalyst” underpins medium-term thesis: credible path to mid-to-high teens EBITDA margins as volumes normalize; Investor Day pushed to incorporate fuller plan .
• Near-term trading setup likely centers on the magnitude of the guide cut and revenue miss vs. clear margin progress; watch 2H PC tariffs/hedge impact, Class I volume updates, and UIP order momentum.

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References:

• Q2 2025 press release and 8-K (Item 2.02) for results/guidance, segment detail, and non-GAAP reconciliations .
• Q2 2025 earnings call transcript for margin commentary, tariff/hedge impacts, segment outlooks, leverage/liquidity, and Q&A .
• Prior quarters for trend context: Q1 2025 press release (results + original FY25 guidance) ; Q4 2024 press release (baseline, cost actions) .
• Other relevant press: Revolver extension (maturity to as late as 2030, covenant/pricing changes) ; Dividend declaration (Aug 7) .

S&P Global estimate data used in “Financial Results” and “Estimates Context” sections are marked with an asterisk. Values retrieved from S&P Global.