Koppers Holdings Inc. (NYSE: KOP) reported flat first-quarter sales and lower profit while announcing a major restructuring that includes closing a US plant, prompting the company to lower its full-year earnings guidance.
"While today represents a difficult next step, I believe it's the right one for our customers, our team members at Koppers, and our shareholders," Chief Executive Officer Leroy Ball said in a statement, referencing the plant closure.
For the quarter ended March 31, Koppers reported adjusted earnings per share of $0.57, beating the Zacks Consensus Estimate of $0.44. However, revenue of $455.3 million was nearly flat from $456.5 million in the prior-year period, and adjusted EBITDA fell 12 percent to $49.3 million.
The company announced a conditional decision to wind down production at its Stickney, Illinois, facility by the end of 2026, a move that will affect approximately 85 employees. Production will be consolidated into its Nyborg, Denmark, facility. The company expects the move to generate annualized EBITDA savings of $15 million to $20 million beginning in 2027.
The restructuring comes as the Carbon Materials and Chemicals (CMC) segment saw a dramatic decline in profitability, with adjusted EBITDA falling to $1 million from $10 million a year ago. The company cited lower sales prices and higher raw material costs for the drop.
In contrast, the Performance Chemicals (PC) segment was a bright spot, with sales rising 17 percent to $142 million and adjusted EBITDA increasing to $26 million from $20 million, driven by a 15 percent volume increase and market share gains. The Railroad and Utility Products and Services (RUPS) segment saw sales decline to $220 million from $235 million.
Koppers maintained its full-year 2026 sales guidance of $1.9 billion to $2.0 billion. However, it lowered its adjusted EBITDA forecast by $10 million to a range of $240 million to $260 million. Ball attributed the reduction primarily to the impact of higher oil costs following recent conflict in the Middle East, which was not factored into previous guidance.
The Stickney plant closure is expected to result in pre-tax charges of $227 million to $262 million through 2029. Still, management projects the move will improve adjusted EBITDA margin by 75 to 100 basis points and boost adjusted EPS by $1.00 to $1.20 annually starting in 2027.
The lowered guidance suggests near-term cost pressures may weigh on the stock, which had gained about 52 percent year-to-date. Investors will be watching for execution on the plant consolidation and whether the projected long-term savings can be realized to offset the immediate headwinds.
This article is for informational purposes only and does not constitute investment advice.
