Koppers (NYSE:KOP) executives highlighted resilient profitability in 2025 despite a meaningful sales decline, pointing to cost and operational benefits from its “Catalyst” transformation program and outlining expectations for stronger earnings and cash generation in 2026.
2025 results: EBITDA resilience amid lower sales
CEO Leroy Ball said the company delivered adjusted EBITDA of $256.7 million in 2025, equal to a 13.7% adjusted EBITDA margin. Ball described the margin as a new high watermark for Koppers on an as-reported basis. Operating profit was $167.8 million, while adjusted EPS was $4.07, marking the sixth consecutive year above $4, according to management. Operating cash flow totaled $122.5 million, the seventh straight year above $100 million.
For the fourth quarter, Pearce reported sales of $433 million, down 9% year over year, and adjusted EBITDA of $53 million (12.3% margin). By segment in Q4, adjusted EBITDA was $28 million for PC, $22 million for RUPS, and $4 million for CMMC.
Catalyst transformation: benefits in 2025 and a larger pipeline
Ball said Koppers launched Catalyst in early 2025 and generated $46 million of benefits during the year. He credited those actions with helping keep EBITDA within about 2% of the prior year even as sales fell 10%.
Management said 2025 actions included exiting the phthalic anhydride business and selling the railroad bridge services/structures business, which together accounted for about 4% of the sales decline. Ball also said Catalyst contributed to a 15% reduction in adjusted SG&A and an 11% reduction in employee count from year-end 2024 (and 17% from April 2024’s peak).
Looking ahead, Ball said the company has increased its estimate of potential Catalyst benefits to up to $75 million over 2026 through 2028, compared with $40 million previously expected as of November. For 2026 specifically, management is targeting $20 million to $40 million of Catalyst benefits. In the Q&A, Ball said benefits in 2026 are expected to be weighted more toward cost of goods sold, while noting Catalyst also includes commercial initiatives that support winning “more profitable business.”
Segment commentary: utility growth, railroad pressure, and CMMC volatility
In Performance Chemicals, Ball said Koppers expects an approximately 11% top-line increase in 2026, driven “entirely by market share expansion” in residential and industrial product lines. However, he cautioned in response to an analyst question that the company is not expecting both share growth and price improvement at the same time, stating he expects price compression in 2026 even as market share expands. He also discussed copper as a key variable, noting copper prices are about 25% higher than the 2025 average and that the company’s hedging strategy provides insulation at current levels, assuming scrap copper pricing behaves historically. Ball added that if elevated copper prices persist into later-2026 contract discussions, current prices could imply about a $50 million pricing pass-through needed to cover higher copper costs.
In RUPS, management emphasized a bullish utility market backdrop tied to rising electrical demand. Ball said the utility and industrial products business expanded beyond traditional regional markets in 2025, with non-traditional markets up 17% on the top line while core regional markets were flat, resulting in an overall 6% sales increase for that part of the business. He said Koppers is targeting stronger top-line performance in 2026, including contributions from a December acquisition of a small Douglas fir procurement business in Oregon. Ball said the deal was intended to secure Douglas fir supply—traditionally used for transmission poles—and open bidding opportunities where that wood species is required.
For railroad products and services, Ball said industry consolidation has pressured customer capital spending and that, for the second straight year, customers reduced their forecasted tie requirements heading into the year. He said two Class I customers indicated further volume pullbacks for 2026, but Koppers expects to “primarily offset” the impact through contractual changes with one customer (including price relief and a larger commitment) and by idling capacity and consolidating operations. He added that while the overall market “pie may be smaller,” Koppers expects its share to grow to volumes not seen since 2017, and he said commercial crosstie backlog at the end of January was the highest in five years.
In CMMC, Ball described the market as “in turmoil,” pointing to weaker Q4 performance. He said structural changes made in 2025—including closing the phthalic anhydride plant—are expected to be offset in the near term by higher net global coal tar costs, reduced throughput from a key raw material supplier exiting the market, and pricing pressure in a challenged environment. During Q&A, Ball said there is a “high likelihood” the company will reduce the footprint at its Stickney facility to a single column, though he said there would be no impact in 2026 due to existing inventory, with potential effects shifting into 2027. He added that lower raw material availability could reduce sales, but that costs could also come down and margins could improve if pricing remains stable.
Capital allocation, balance sheet, and dividend increase
Pearce said Koppers spent $55 million in gross capital expenditures in 2025 (or $48 million net of asset sales and insurance recoveries) and expects CapEx of about $55 million again in 2026. He also detailed capital deployment that included $38 million of share repurchases (about 1.3 million shares) and a quarterly dividend of $0.08 per share in 2025.
As of December 31, Pearce reported $383 million of available liquidity and $881 million of net debt, for a net leverage ratio of 3.4x. He said the company remains focused on reducing net leverage toward its long-term goal of 2x to 3x.
The company’s board declared a quarterly cash dividend in February of $0.09 per share, a 13% increase from 2025, payable March 23 to shareholders of record as of March 6. Pearce said maintaining that rate would imply an annual dividend of $0.36 per share for 2026, subject to board approval.
2026 outlook: higher EPS and a cash flow “inflection point”
Management guided 2026 sales to $1.9 billion to $2.0 billion, compared with $1.88 billion in 2025. Ball said PC and RUPS are projected to represent about 80% of total sales in 2026, the highest in company history and approaching the company’s longer-term goal of 85%.
Koppers forecast 2026 adjusted EBITDA of $250 million to $270 million. Ball said risks to reaching the midpoint include a lower Catalyst capture rate, further end-market softness, higher costs from tariffs or other factors, and extended operational disruptions, while upside could come from stronger Catalyst capture and improved end markets.
The company guided to 2026 adjusted EPS of $4.20 to $5.00, up from $4.07 in 2025. Ball noted the first quarter is expected to be the weakest due to severe winter weather impacting operations and shipping schedules, and because some Catalyst initiatives are expected to gain momentum later in the year.
Ball also said Koppers expects a “sizable jump” in operating cash flow and free cash flow in 2026, calling it an “inflection point” for a step change in cash generation. He added that the company expects to have its most cash for debt paydown since 2020, when Koppers received proceeds from the sale of its KJCC business.
About Koppers (NYSE:KOP)
Koppers Company, Inc is a global specialty chemicals and materials manufacturer serving diverse industrial markets. The company operates through two primary segments: Carbon Materials & Chemicals, which produces a range of coal tar–based products, phenolic specialties and carbon compounds; and Railroad Products & Services, which offers wood treating and infrastructure services for rail and utility customers.
In its Carbon Materials & Chemicals segment, Koppers supplies coal tar pitch, refined creosote, coal tar‐based distillates and phenolic resins used in aluminum smelting, graphite electrode manufacture, carbon fiber production, and water treatment applications.
