Koppers Holdings Inc.

What they do

Koppers pressure-treats railroad crossties, switch ties and utility poles through its Railroad and Utility Products and Services business, and produces wood preservation chemicals such as chromated copper arsenate (CCA) and dichloro-octyl-isothiazolinone (DCOI) through Performance Chemicals. Its Carbon Materials and Chemicals business processes coal tar into products including creosote, most of which is sold internally to RUPS for wood treatment. The company describes itself as the largest supplier of railroad crossties to North American Class I railroads and the second largest U.S. producer of utility poles, with manufacturing in North America, South America, Australasia and Europe.

Revenue drivers

• Railroad and Utility Products and Services (RUPS) — Sells pressure-treated crossties and utility poles, plus untreated wood products, rail joint bars and used-crosstie recovery; segment sales were $245.9 million in Q2 2026, the largest of the three segments.
• Performance Chemicals (PC) — Makes and markets wood preservation chemicals and treatment technologies for residential, industrial and agricultural lumber; segment sales were $168.2 million in Q2 2026, up 11.5% year over year, and it supplies CCA and DCOI internally to RUPS.
• Carbon Materials and Chemicals (CMC) — Processes coal tar into creosote and other carbon products, supplying 100% of the North American RUPS creosote requirement; segment sales were $106.0 million in Q2 2026, the smallest segment.
• Vertical integration — Internal transfers of creosote from CMC to RUPS and CCA/DCOI from PC to RUPS link the segments' economics, reducing reliance on external preservative suppliers.

Recent performance

Second quarter 2026 sales were $520.1 million versus $504.8 million in the prior-year quarter, a 3.0% increase. The quarter included a net loss of $(147.5) million and diluted EPS of $(7.71), driven by $215.8 million of impairment, restructuring and plant closure costs; adjusted net income was $27.1 million and adjusted EPS was $1.37 versus $1.48 a year earlier. Adjusted EBITDA fell 7.9% to $71.0 million, with RUPS down 18.7% to $25.7 million and CMC down 54.8% to $7.6 million, partly offset by PC up 31.4% to $37.7 million. Year-to-date operating cash flow was a record $96.3 million versus $27.8 million, and free cash flow was $72.6 million versus $1.4 million.

Strategy

Management is executing a multi-year 'Catalyst' transformation initiative aimed at a higher-margin, higher-free-cash-flow, higher-return-on-capital business over three years, including selective scaling back of lower-margin, capital-intensive operations. The company is accelerating closure of its CMC plant in Stickney, Illinois, and advancing RUPS network optimization to improve utilization and cut operating costs. RUPS priorities include recovering cost increases including creosote value, growing midwestern and western utility pole customers, and lowering operating and SG&A expenses. PC priorities are acquiring residential preservative customers, expanding industrial preservative share and improving cost structure; CMC priorities are domestic plant restructuring, enhanced carbon product markets and global tar and pitch strategies. The company returned $47.4 million to shareholders year-to-date and reduced debt using cash flow.

Risks

• Raw material price and supply — Koppers depends on hardwood lumber for crossties and poles, scrap copper priced off spot copper markets for PC chemicals, and coal tar for CMC, and may not be able to pass through cost increases.
• Freight and logistics concentration — Operations rely on a relatively small number of freight transportation services and leased specialized ocean-going vessels, so interruptions could delay raw material receipts and finished goods shipments.
• Segment margin volatility — Q2 2026 adjusted EBITDA fell in RUPS and CMC, with CMC margin down to 7.2% from 16.2%, showing sensitivity to market and restructuring effects.
• Transformation execution — The multi-year Catalyst initiative and plant closures carry timing, cost and benefit-estimate uncertainty, and the company recorded $215.8 million of impairment, restructuring and plant closure costs in Q2 2026.

Outlook

Management says crosstie market purchases are estimated at approximately 19.9 million ties in 2026, with about 13.3 million for Class I railroads, comparable to 2025 and within a recent 18-22 million annual range. Utility pole demand is expected to grow over the next few years. The company expects Catalyst actions to grow profitability and margin over three years, while it continues cost mitigation amid competitive markets, global economic conditions and geopolitical and supply chain uncertainty.