Koppers Holdings Inc., a producer of treated wood products and other services for industries including rail, has reported 2016 second quarter consolidated sales of $385.1 million, a decrease of 10.8 percent, or $46.5 million, from sales of $431.6 million for the same quarter in 2015. The decline was primarily related to the Carbon Materials and Chemicals (CMC) business.
The 2016 second quarter had a net income of $12.1 million, or $0.57 per diluted share, compared to a net income of $9 million, or $0.44 per diluted share in the 2015 second quarter. Adjusted net income and adjusted earnings per share were $19.4 million and $0.93 per share compared to $14 million and $0.68 in the second quarter of 2015.
"I am very pleased with our second quarter operating performance,” remarked Leroy Ball, Koppers president and CEO. He also commented on the positive direction in the company's Performance Chemicals business and the progress on restructuring initiatives in the CMC sector.
The company’s Railroad and Utility Products and Services (RUPS) slightly declined due primarily to lower volumes and pricing of treated crossties sold into the commercial market as a flattening in demand for crossties in the Class I market has created greater competition for non-Class I business. Declines were also due to softness in hardwood pricing, which has contributed to lower pricing.
Sales for RUPS in the second quarter decreased 3.8 percent, or $6.5 million, to $164.4 million compared to last year’s second quarter of $170.9 million. Adjusted EBITDA margin for the second quarter was 13.7 percent compared to 12.9 percent in the prior year period. This reflects a net improvement to profitability due to a favorable sales mix more heavily weighted toward treatment services.
Ball added, “I am also encouraged by the solid results posted by our RUPS business in a challenging environment, but expect some softening in that segment in the second half of this year as the railroad industry continues to look for opportunities to cut expenditures to combat lower volumes.”
Koppers is reducing its outlook for 2016 with sales expected at approximately $1.4 billion for 2016. Adjusted EBITDA is anticipated to increase to the range of $162 to $172 million, compared with a prior forecast of $160 to $168 million. Adjusted EPS guidance is being increased to between $1.90 and $2.20, compared with the previous range of $1.85 to $2.10.