QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer ☒☐ Accelerated filer ☐☒ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Common Stock, par value $0.01 per share, outstanding at July ~~31, 2020~~30, 2021 amounted to ~~21,045,727~~21,339,366 shares.

	Three Months Ended June 30,						Six Months Ended June 30,					Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019		2021			2020			2021			2020
(Dollars in millions, except per share amounts)	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Net sales	$	436.6		$	443.8		$	838.5		$	820.7	$	441.0		$	436.6		$	848.5		$	838.5
Cost of sales		334.7			351.1			675.0			652.9		343.9			334.7			663.2			675.0
Depreciation and amortization		13.3			12.5			26.8			26.1		13.9			13.3			30.0			26.8
Gain on sale of assets													(0.3	)		0.0			(7.8	)		0.0
Impairment and restructuring charges		4.1			3.8			3.9			4.1		0.9			4.1			2.1			3.9
Selling, general and administrative expenses		34.8			38.3			69.5			75.2		38.3			34.8			72.8			69.5
Operating profit		49.7			38.1			63.3			62.4		44.3			49.7			88.2			63.3
Other income (loss), net		0.5			(0.1	)		1.0			0.4
Other income, net													0.8			0.5			1.8			1.0
Interest expense		12.8			15.7			26.8			32.0		10.1			12.8			20.3			26.8
Income from continuing operations before income taxes		37.4			22.3			37.5			30.8		35.0			37.4			69.7			37.5
Income tax provision		8.0			8.0			6.2			6.8		9.1			8.0			17.6			6.2
Income from continuing operations		29.4			14.3			31.3			24.0		25.9			29.4			52.1			31.3
Income (loss) from discontinued operations, net of tax benefit (expense) of $0.2, $0.0, $1.0, and $(1.1)		0.0			0.1			(4.4	)		2.8
Income (loss) from discontinued operations, net of tax benefit of $0.1, $0.2, $0.1 and $1.0													0.5			0.0			0.3			(4.4	)
Gain on sale of discontinued operations													0.5			0.0			0.3			0.0
Net income		29.4			14.4			26.9			26.8		26.9			29.4			52.7			26.9
Net income (loss) attributable to noncontrolling interests		0.2			(0.3	)		(0.9	)		0.6		0.0			0.2			(0.1	)		(0.9	)
Net income attributable to Koppers	$	29.2		$	14.7		$	27.8		$	26.2	$	26.9		$	29.2		$	52.8		$	27.8
Earnings (loss) per common share attributable to Koppers common shareholders:
Basic -
Continuing operations	$	1.40		$	0.70		$	1.50		$	1.17	$	1.22		$	1.40		$	2.46		$	1.50
Discontinued operations		(0.01	)		0.02			(0.17	)		0.10		0.04			(0.01	)		0.03			(0.17	)
Earnings per basic common share	$	1.39		$	0.72		$	1.33		$	1.27	$	1.26		$	1.39		$	2.49		$	1.33
Diluted -
Continuing operations	$	1.40		$	0.68		$	1.49		$	1.15	$	1.18		$	1.40		$	2.38		$	1.49
Discontinued operations		(0.01	)		0.02			(0.17	)		0.10		0.04			(0.01	)		0.02			(0.17	)
Earnings per diluted common share	$	1.39		$	0.70		$	1.32		$	1.25	$	1.22		$	1.39		$	2.40		$	1.32
Comprehensive income	$	73.7		$	9.6		$	22.8		$	30.3	$	31.4		$	73.7		$	63.1		$	22.8
Comprehensive income (loss) attributable to noncontrolling interests		0.2			(0.6	)		(1.0	)		0.6		0.0			0.2			(0.1	)		(1.0	)
Comprehensive income attributable to Koppers	$	73.5		$	10.2		$	23.8		$	29.7	$	31.4		$	73.5		$	63.2		$	23.8
Weighted average shares outstanding (in thousands):
Basic		21,001			20,662			20,927			20,619		21,289			21,001			21,217			20,927
Diluted		21,068			21,044			21,084			20,949		21,967			21,068			21,949			21,084

The accompanying notes are an integral part of these condensed consolidated financial statements.

	June 30, 2020			December 31, 2019			June 30, 2021			December 31, 2020
(Dollars in millions, except per share amounts)	(Unaudited)						(Unaudited)
Assets
Cash and cash equivalents	$	33.0		$	32.3
Accounts receivable, net of allowance of $2.5 and $2.6		189.2			161.7
Income tax receivable		3.6			1.1
Cash and cash equivalents, including restricted cash (Note 4)							$	46.5		$	38.5
Accounts receivable, net of allowance of $3.5 and $2.6								205.5			175.1
Inventories, net		261.1			288.5			288.9			295.8
Assets of discontinued operations held for sale		68.1			17.1
Derivative contracts								46.1			38.5
Other current assets		18.1			18.8			22.8			16.6
Total current assets		573.1			519.5			609.8			564.5
Property, plant and equipment, net		369.3			358.8			443.0			409.1
Operating lease right-of-use assets		102.7			112.3			99.2			102.5
Goodwill		294.4			296.1			297.3			297.8
Intangible assets, net		157.8			168.4			140.0			149.8
Deferred tax assets		25.9			23.7			17.4			18.4
Non-current assets of discontinued operations held for sale		0.0			59.3
Non-current derivative contracts								42.3			31.9
Other assets		32.6			26.5			25.0			24.6
Total assets	$	1,555.8		$	1,564.6		$	1,674.0		$	1,598.6
Liabilities
Accounts payable	$	131.1		$	162.8		$	149.3		$	154.1
Accrued liabilities		96.1			89.3			87.0			106.7
Current operating lease liabilities		21.0			22.0			21.8			21.2
Current maturities of long-term debt		10.2			10.2			7.1			10.1
Liabilities of discontinued operations held for sale		34.4			11.9
Total current liabilities		292.8			296.2			265.2			292.1
Long-term debt		896.9			891.0			799.1			765.8
Accrued postretirement benefits		46.4			46.6			45.3			46.2
Deferred tax liabilities		6.7			6.8			25.3			21.3
Operating lease liabilities		83.1			91.5			77.5			81.3
Non-current liabilities of discontinued operations held for sale		0.0			25.1
Other long-term liabilities		43.6			48.7			45.5			45.9
Total liabilities		1,369.5			1,405.9			1,257.9			1,252.6
Commitments and contingent liabilities (Note 18)
Equity
Senior Convertible Preferred Stock, $0.01 par value per share; 10,000,000 shares authorized; 0 shares issued		0.0			0.0			0.0			0.0
Common Stock, $0.01 par value per share; 80,000,000 shares authorized; 23,620,402 and 23,321,087 shares issued		0.2			0.2
Common Stock, $0.01 par value per share; 80,000,000 shares authorized; 23,980,741 and 23,688,347 shares issued								0.2			0.2
Additional paid-in capital		228.0			221.9			242.7			234.1
Retained earnings		121.6			93.8			268.8			215.8
Accumulated other comprehensive loss		(81.8	)		(77.7	)		(5.5	)		(15.9	)
Treasury stock, at cost, 2,574,675 and 2,515,925 shares		(92.1	)		(90.9	)
Treasury stock, at cost, 2,641,733 and 2,589,803 shares								(94.4	)		(92.5	)
Total Koppers shareholders’ equity		175.9			147.3			411.8			341.7
Noncontrolling interests		10.4			11.4			4.3			4.3
Total equity		186.3			158.7			416.1			346.0
Total liabilities and equity	$	1,555.8		$	1,564.6		$	1,674.0		$	1,598.6

The accompanying notes are an integral part of these condensed consolidated financial statements.

	Six Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2021			2020
(Dollars in millions)	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Cash provided by (used in) operating activities:
Net income	$	26.9		$	26.8		$	52.7		$	26.9
Adjustments to reconcile net cash provided by (used in) operating activities:
Depreciation and amortization		27.3			28.0			30.0			27.3
Stock-based compensation		5.5			5.9			6.6			5.5
Change in derivative liability		(0.3	)		(1.3	)
Change in derivative contracts								(1.7	)		(0.3	)
Non-cash interest expense		1.3			1.2			1.3			1.3
Loss on disposal of assets and investment		0.0			0.3
Insurance proceeds		0.0			(3.0	)
Gain on sale of assets								(7.8	)		0.0
Deferred income taxes		(4.7	)		0.4			0.4			(4.7	)
Change in other liabilities		0.8			(4.3	)		4.0			0.8
Other - net		1.0			(1.1	)		1.2			1.0
Changes in working capital:
Accounts receivable		(31.7	)		(25.4	)		(31.7	)		(31.7	)
Inventories		28.8			5.9			5.7			28.8
Accounts payable		(34.3	)		(30.5	)		0.5			(34.3	)
Accrued liabilities		(0.2	)		(6.0	)		(21.5	)		(0.2	)
Other working capital		1.8			4.5			(3.6	)		1.8
Net cash provided by operating activities		22.2			1.4			36.1			22.2
Cash (used in) provided by investing activities:
Capital expenditures		(26.5	)		(18.5	)		(60.9	)		(26.5	)
Insurance proceeds received		0.0			3.0
Net cash provided by divestitures and asset sales		0.1			0.5
Cash provided by sale of assets								5.1			0.1
Net cash used in investing activities		(26.4	)		(15.0	)		(55.8	)		(26.4	)
Cash provided by (used in) financing activities:
Net increase in credit facility borrowings		9.9			35.0			34.2			9.9
Repayments of long-term debt		(5.1	)		(18.7	)		(5.1	)		(5.1	)
Issuances of Common Stock		0.5			0.6			1.8			0.5
Repurchases of Common Stock		(1.2	)		(0.9	)		(1.9	)		(1.2	)
Payment of debt issuance costs		(0.2	)		(0.9	)		0.0			(0.2	)
Net cash provided by financing activities		3.9			15.1			29.0			3.9
Effect of exchange rate changes on cash		0.8			0.0			(1.3	)		0.8
Change in cash and cash equivalents of discontinued operations held for sale		0.2			(0.8	)		0.0			0.2
Net increase in cash and cash equivalents		0.7			0.7			8.0			0.7
Cash and cash equivalents at beginning of period		32.3			37.4			38.5			32.3
Cash and cash equivalents at end of period	$	33.0		$	38.1		$	46.5		$	33.0
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	$	15.1		$	15.3		$	15.5		$	15.1
Supplemental disclosure of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	1.7		$	16.5		$	8.3		$	1.7
Supplemental disclosure of cash flow information:
Non-cash investing activities
Accrued capital expenditures	$	2.3		$	4.8		$	4.2		$	2.3

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying unaudited condensed consolidated financial statements and related disclosures have been prepared in accordance with accounting principles generally accepted in the United States applicable to interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of Koppers Holdings Inc.’s and its subsidiaries’ (“Koppers”, “Koppers Holdings”, the “Company”, “we” or “us”) financial position and interim results as of and for the periods presented have been included. All such adjustments are of a normal recurring nature unless disclosed otherwise. Because our business is seasonal, results for interim periods are not necessarily indicative of those that may be expected for a full year. The Condensed Consolidated Balance Sheet as of December 31, ~~2019~~2020 has been summarized from the audited balance sheet contained in the Annual Report on Form 10-K as of and for the year ended December 31, ~~2019.~~2020. Certain prior period amounts in the consolidated financial statements and notes to the consolidated financial statements have been reclassified to conform to the current period’s presentation as a result of reporting discontinued operations. See Note 4 – “Discontinued Operations.”

The financial information included herein should be read in conjunction with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

In March 2020, the World Health Organization categorized the current coronavirus disease (“COVID-19”) as a pandemic. COVID-19 continues to ~~spread throughout~~impact the United States and other countries across the world, and the duration and ultimate severity of its effects are currently unknown. ~~While we expect the effects of the pandemic to continue to negatively impact our results of operations, cash flows and financial position, the~~This current level of uncertainty over the economic and operational impacts of COVID-19 means the related future financial impact cannot be reasonably estimated at this time. Our condensed consolidated financial statements presented herein reflect certain estimates and assumptions made by management that affect the reported amounts of assets and liabilities and disclosure of such assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenue and expenses during the reporting periods presented.

Such estimates and assumptions affect, among other things, our goodwill, long-lived asset and ~~identifiable~~ intangible asset valuation; inventory valuation; assessment of the annual effective tax rate; valuation of deferred income taxes; the allowance for doubtful accounts; and measurement of cash incentive plans. In consideration of COVID-19, we evaluated our financial position and determined that a goodwill impairment evaluation triggering event did not occur during the three months ended June 30, 2020 and, therefore, an interim review of impairment was not required. Events and changes in circumstances arising after June 30, ~~2020,~~2021, including those resulting from the impacts of COVID-19, will be reflected in management’s estimates for future periods.

In ~~December 2019,~~March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. ~~2019-12, “Income Taxes~~2020-04: Reference Rate Reform (Topic ~~740) – Simplifying~~848) Facilitation of the ~~Accounting for Income Taxes.” ASU 2019-12 is meant to simplify accounting for income taxes by removing certain~~Effects of Reference Rate Reform on Financial Reporting. This update provides temporary optional expedients and exceptions to U.S. GAAP on contract modifications, hedging relationships, and other transactions affected by reference rate reform to ease entities' financial reporting burdens as the ~~principles~~market transitions from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and may be applied prospectively to contract modifications made, hedging relationships entered into, and other transactions affected by reference rate reform, evaluated on or before December 31, 2022, beginning during the reporting period in ~~Topic 740~~which the guidance has been elected. The Company’s debt agreements include the use of alternate rates when LIBOR is not available and ~~amends existing guidance~~the Company does not maintain hedging relationships applicable to ~~facilitate consistent application.~~ this ASU. We ~~adopted~~do not expect the ~~standard as~~application of ~~January 1, 2020 and there was no~~this update to have a material impact on our financial ~~statements.~~

~~In August 2018, the FASB issued ASU 2018-14, “Disclosure Framework – Changes~~statements and, to the ~~Disclosure Requirements for Defined Benefit Plans,” which amends ASC 715-20, Compensation – Retirement Benefits – Defined Benefit Plans.The ASU modifies~~extent we enter into modifications of agreements that are impacted by the ~~disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.The disclosure requirements~~LIBOR phase-out, we will apply such guidance to be removed include the amounts in accumulated other comprehensive income expected to be recognized in net periodic benefit costs over the next fiscal year and the effect of a one percentage point change in assumed health care cost trend rates on the aggregate service cost and benefit obligation for postretirement health care benefits.~~The new disclosure requirements include an explanation of significant gains and losses related to changes in benefit obligations.This guidance is effective for fiscal years ending after December 15, 2020.~~

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses. The update is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. We adopted the standard as of January 1, 2020 and there was no material impact on our financial statements.those contract modifications.

Over the past ~~six~~seven years, we have been restructuring our Carbon Materials and Chemicals (“CMC”) segment in order to concentrate our facilities in regions where we believe we hold key competitive advantages to better serve our global customers. ~~These~~Recent closure activities include:

Other closure and divestiture activity relates to our Railroad Utility Products and Services (“RUPS”) segment. ~~These~~Most recently, we discontinued production activities ~~include:~~

~~In addition, in 2011, we ceased carbon black production~~ at our ~~CMC facility~~crosstie treating plant located in ~~Kurnell, Australia. Costs associated with this closure are included~~Denver, Colorado in ~~income (loss) from discontinued operations on~~ the ~~Condensed Consolidated Statement~~third quarter of ~~Operations and Comprehensive Income.~~2020.

	Severance and employee benefits			Asset Retirement			Other			Total			Severance and employee benefits			Asset Retirement			Other			Total
(Dollars in millions)
Reserve at December 31, 2018	$	1.7		$	3.6		$	2.8		$	8.1
Reserve at December 31, 2019													$	0.9		$	0.7		$	2.4		$	4.0
Accrual		0.0			3.4			3.0			6.4			0.5			2.9			3.4			6.8
Cost charged against assets		0.0			0.0			(3.0	)		(3.0	)		0.0			0.0			(3.4	)		(3.4	)
Reversal of accrued charges		(0.3	)		(0.1	)		0.0			(0.4	)		(0.3	)		0.0			0.0			(0.3	)
Cash paid		(0.5	)		(6.2	)		(0.3	)		(7.0	)		(0.2	)		(0.8	)		(0.3	)		(1.3	)
Currency translation		0.0			0.0			(0.1	)		(0.1	)		0.0			0.0			0.2			0.2
Reserve at December 31, 2019	$	0.9		$	0.7		$	2.4		$	4.0
Reserve at December 31, 2020													$	0.9		$	2.8		$	2.3		$	6.0
Accrual		0.5			2.9			0.8			4.2			0.0			0.0			2.2			2.2
Cost charged against assets		0.0			0.0			(0.8	)		(0.8	)		0.0			0.0			(2.2	)		(2.2	)
Reversal of accrued charges		(0.3	)		0.0			0.0			(0.3	)		(0.2	)		0.0			0.0			(0.2	)
Reserve at June 30, 2020	$	1.1		$	3.6		$	2.4		$	7.1
Cash paid														(0.6	)		(1.7	)		0.0			(2.3	)
Sale of subsidiary														0.0			(0.2	)		(2.3	)		(2.5	)
Reserve at June 30, 2021													$	0.1		$	0.9		$	0.0		$	1.0

On ~~February 18,~~September 30, 2020, we ~~entered into a definitive agreement to sell~~sold KJCC to Fangda Carbon New Material Co., Ltd and C-Chem Co., Ltd., a subsidiary of Nippon Steel Chemical & Material Co., Ltd. KJCC iswas located in Pizhou, Jiangsu Province, China and iswas a 75 percent-owned coal tar distillation company which iswas part of our CMC segment. ~~The sales price~~Included in the cash proceeds is ~~$107.0~~restricted cash of $2.3 million ~~subject~~which is being held in an escrow account and is recorded within cash and cash equivalents as of June 30, 2021 to ~~adjustment~~cover potential customary indemnity claims by the buyers for ~~cash, debt~~a remaining period of 9 months. In addition, an amount of $5.6 million is recorded in accrued liabilities as of June 30, 2021 and December 31, 2020 in anticipation of final post-closing working capital ~~at closing, which is expected~~adjustments payable to ~~occur in~~ the third quarter of 2020 due to required regulatory approvals in China and achievement of other customary closing conditions. At closing, we estimate the gain on the sale of KJCC will be approximately $45 million and net cash proceeds to Koppers will be approximately $65 million, after noncontrolling interest, taxes, expenses and working capital adjustments. buyers.

The sale of KJCC ~~represents~~represented a strategic shift that ~~will have~~had a major effect on our operations and financial results in 2020 and ~~is,~~were, therefore, classified as discontinued operations in our condensed consolidated financial ~~statements and notes, which have been restated accordingly.~~statements.

Net sales and operating ~~(loss) profit~~loss from discontinued operations for the three and six months ended June 30, 2020 ~~and 2019 consist~~consisted of the following amounts:

	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended June 30,			Six Months Ended June 30,
	2020			2019		2020			2019		2020			2020
(Dollars in millions)
Net sales	$	12.9		$	26.0	$	22.8		$	84.0	$	12.9		$	22.8
Operating (loss) profit		(0.2	)		0.3		(5.3	)		4.5
Operating loss												(0.2	)		(5.3	)

~~The cash flows related to KJCC have not been restated~~In addition, we ceased carbon black production at our CMC facility located in ~~the consolidated statement of cash flows. Net cash inflows and outflows from discontinued operations for the six months ended June 30, 2020 and 2019 consist of the following amounts:~~

~~Assets and liabilities (the “disposal group”)~~Kurnell, Australia during 2011. Costs associated with this closure are classified as held for sale when, among other items, the sale of the asset is probable and the completed sale is expected to occur within one year. Upon classification as held for sale, such assets are no longer depreciated or depleted, and a measurement for impairment is performed to determine if there is any excess of carrying value over fair value less costs to sell. Subsequent changes to estimated fair value less the cost to sell will impact the measurement of assets held for sale if the fair value is determined to be less than the carrying value of the assets.

The agreement to sell KJCC met all of the criteria to classify its assets and liabilities as held for sale in the first quarter and as part of the required evaluation under the held for sale guidance, we determined that the approximate fair value less costs to sell the operations exceeded the carrying value of the net assets and 0 impairment charge was recorded.

The following represents the carrying amount of assets and liabilities, by major class, classified as held for sale on the Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019:

June 30,
2020

December 31,
2019

(Dollars in millions)

Assets

Cash and cash equivalents

$
0.5

$
0.7

Accounts receivable

0.4

2.2

Income tax receivable

0.7

0.8

Inventories, net

5.9

10.6

Property, plant and equipment, net

55.2

0.0

Operating lease right-of-use assets

1.1

0.0

Deferred tax assets

0.5

0.0

Other current assets

3.8

2.8

Total current assets held for sale

68.1

17.1

Property, plant and equipment, net

0.0

56.6

Operating lease right-of-use assets

0.0

1.2

Other assets

0.0

1.5

Total non-current assets held for sale

0.0

59.3

Total assets held for sale

$
68.1

$
76.4

Liabilities

Accounts payable

$
5.3

$
7.1

Accrued liabilities

5.2

4.7

Current operating lease liabilities

1.0

0.1

Other current liabilities

22.9

0.0

Total current liabilities held for sale

34.4

11.9

Deferred tax liabilities

0.0

0.6

Operating lease liabilities

0.0

1.1

Other long-term liabilities

0.0

23.4

Total non-current liabilities held for sale

0.0

25.1

Total liabilities held for sale

$
34.4

$
37.0

The above amounts are excluded from the respective balance sheet footnotes as of June 30, 2020 and December 31, 2019. We have incurred aggregated deal costs related to this divestiture of $0.2 million and $1.2 million during the three and six months ended June 30, 2020, respectively, which arealso included in income (loss) from discontinued operations on the ~~Condensed Consolidated Statement~~condensed consolidated statement of ~~Operations~~operations and ~~Comprehensive Income.~~comprehensive income.

Carrying amounts and the related estimated fair values of our financial instruments as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 are as follows:

	June 30, 2020				December 31, 2019				June 30, 2021				December 31, 2020
	Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value
(Dollars in millions)
Financial assets:
Cash and cash equivalents, including restricted cash	$	33.0	$	33.0	$	32.3	$	32.3
Investments and other assets^(a)		1.2		1.2		1.2		1.2
Investments and other assets									$	1.2	$	1.2	$	1.2	$	1.2
Financial liabilities:
Total debt	$	857.0	$	916.6	$	896.2	$	911.9
Long-term debt (including current portion)									$	828.1	$	813.1	$	799.2	$	784.2

~~Cash and cash equivalents~~ ~~– The carrying value approximates fair value because of the short maturity of those instruments.~~

Investments and other assets – Represents the broker-quoted cash surrender value on universal life insurance policies. This asset is classified as Level 2 in the valuation hierarchy and is measured from values received from financial institutions.

Debt – The fair value of our long-term debt is estimated based on the market prices for the same or similar issuances or on the current rates offered to us for debt of the same remaining maturities (Level 2). The fair value of our Credit Facility approximates carrying value due to the variable rate nature of this instrument.

Total comprehensive income for the three and six months ended June 30, 2021 and 2020 ~~and 2019~~ is summarized in the table below:

	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019			2020			2019		2021		2020		2021			2020
(Dollars in millions)
Net income	$	29.4	$	14.4		$	26.9		$	26.8	$	26.9	$	29.4	$	52.7		$	26.9
Changes in other comprehensive income (loss):
Changes in other comprehensive income:
Currency translation adjustment		14.1		(1.1	)		(9.0	)		0.7		3.8		14.1		(3.4	)		(9.0	)
Unrealized gain (loss) on cash flow hedges, net of tax (expense) benefit of $(11.6), $2.0, $(1.7) and $(1.2)		30.0		(3.9	)		4.5			2.3
Unrecognized pension net loss, net of tax expense of $0.0, $0.1, $0.1 and $0.2		0.2		0.2			0.4			0.5
Unrealized gains on cash flow hedges, net of tax expense of $0.1, $11.6, $4.6 and $1.7												0.4		30.0		13.3			4.5
Unrecognized pension net loss, net of tax expense of $0.1, $0.0, $0.2 and $0.1												0.3		0.2		0.5			0.4
Total comprehensive income		73.7		9.6			22.8			30.3		31.4		73.7		63.1			22.8
Comprehensive income (loss) attributable to noncontrolling interests		0.2		(0.6	)		(1.0	)		0.6		0.0		0.2		(0.1	)		(1.0	)
Comprehensive income attributable to Koppers	$	73.5	$	10.2		$	23.8		$	29.7	$	31.4	$	73.5	$	63.2		$	23.8

Amounts reclassified from accumulated other comprehensive loss to net income consist of amounts shown for changes in or amortization of unrecognized pension net loss. This component of accumulated other comprehensive loss is included in the computation of net periodic pension cost as disclosed in ~~“Note~~Note 13 – ~~Pensions~~“Pensions and Post-Retirement Benefit Plans.” Other amounts reclassified from accumulated other comprehensive loss related to derivative financial instruments, net of tax, of ~~$2.3~~$12.7 million and ~~$3.4~~$19.9 millionfor the three and six months ended June 30, ~~2020,~~2021, respectively, and ~~$0.9~~$2.3 million and ~~$1.5~~$3.4 million for the three and six months ended June 30, ~~2019,~~2020, respectively.

The following tables present the change in equity for the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively:

(Dollars in millions)	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Stock			Noncontrolling Interests		Total Equity		Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Stock			Noncontrolling Interests		Total Equity
Balance at March 31, 2020	$	0.2	$	224.7	$	92.4	$	(126.1	)	$	(92.1	)	$	10.1	$	109.2
Balance at March 31, 2021																	$	0.2	$	238.9	$	241.9	$	(10.0	)	$	(94.3	)	$	4.2	$	380.9
Net income		0.0		0.0		29.2		0.0			0.0			0.2		29.4		0.0		0.0		26.9		0.0			0.0			0.0		26.9
Issuance of common stock		0.0		0.3		0.0		0.0			0.0			0.0		0.3		0.0		0.7		0.0		0.0			0.0			0.0		0.7
Employee stock plans		0.0		3.0		0.0		0.0			0.0			0.0		3.0		0.0		3.1		0.0		0.0			0.0			0.0		3.1
Other comprehensive income
Other comprehensive income (loss)
Currency translation adjustment		0.0		0.0		0.0		14.1			0.0			0.1		14.1		0.0		0.0		0.0		8.2			0.0			0.1		8.3
Cumulative translation adjustment loss on sale of subsidiary																		0.0		0.0		0.0		(4.4	)		0.0			0.0		(4.4	)
Unrealized gain on cash flow hedges		0.0		0.0		0.0		30.0			0.0			0.0		30.0		0.0		0.0		0.0		0.4			0.0			0.0		0.4
Unrecognized pension net loss		0.0		0.0		0.0		0.2			0.0			0.0		0.2		0.0		0.0		0.0		0.3			0.0			0.0		0.3
Balance at June 30, 2020	$	0.2	$	228.0	$	121.6	$	(81.8	)	$	(92.1	)	$	10.4	$	186.3
Repurchases of common stock																		0.0		0.0		0.0		0.0			(0.1	)		0.0		(0.1	)
Balance at June 30, 2021																	$	0.2	$	242.7	$	268.8	$	(5.5	)	$	(94.4	)	$	4.3	$	416.1

(Dollars in millions)	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Stock			Noncontrolling Interests			Total Equity			Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Stock			Noncontrolling Interests		Total Equity
Balance at March 31, 2019	$	0.2	$	209.0	$	38.8	$	(79.2	)	$	(90.8	)	$	12.0		$	90.0
Balance at March 31, 2020																			$	0.2	$	224.7	$	92.4	$	(126.1	)	$	(92.1	)	$	10.1	$	109.2
Net income		0.0		0.0		14.7		0.0			0.0			(0.3	)		14.4			0.0		0.0		29.2		0.0			0.0			0.2		29.4
Issuance of common stock		0.0		0.3		0.0		0.0			0.0			0.0			0.3			0.0		0.3		0.0		0.0			0.0			0.0		0.3
Employee stock plans		0.0		3.1		0.0		0.0			0.0			0.0			3.1			0.0		3.0		0.0		0.0			0.0			0.0		3.0
Other comprehensive income
Currency translation adjustment		0.0		0.0		0.0		(0.8	)		0.0			(0.3	)		(1.1	)		0.0		0.0		0.0		14.1			0.0			0.1		14.1
Unrealized loss on cash flow hedges		0.0		0.0		0.0		(3.9	)		0.0			0.0			(3.9	)
Unrealized gain on cash flow hedges																				0.0		0.0		0.0		30.0			0.0			0.0		30.0
Unrecognized pension net loss		0.0		0.0		0.0		0.2			0.0			0.0			0.2			0.0		0.0		0.0		0.2			0.0			0.0		0.2
Balance at June 30, 2019	$	0.2	$	212.4	$	53.5	$	(83.7	)	$	(90.8	)	$	11.4		$	103.0
Balance at June 30, 2020																			$	0.2	$	228.0	$	121.6	$	(81.8	)	$	(92.1	)	$	10.4	$	186.3

The following tables present the change in equity for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively:

(Dollars in millions)	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Stock			Noncontrolling Interests			Total Equity			Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Stock			Noncontrolling Interests		Total Equity
Balance at December 31, 2019	$	0.2	$	221.9	$	93.8	$	(77.7	)	$	(90.9	)	$	11.4		$	158.7
Balance at December 31, 2020																			$	0.2	$	234.1	$	215.8	$	(15.9	)	$	(92.5	)	$	4.3	$	346.0
Net income		0.0		0.0		27.8		0.0			0.0			(0.9	)		26.9			0.0		0.0		52.7		0.0			0.0			0.0		52.7
Issuance of common stock		0.0		0.5		0.0		0.0			0.0			0.0			0.5			0.0		1.8		0.0		0.0			0.0			0.0		1.8
Employee stock plans		0.0		5.5		0.0		0.0			0.0			0.0			5.5			0.0		6.7		0.0		0.0			0.0			0.0		6.7
Other comprehensive income
Other comprehensive income (loss)
Currency translation adjustment		0.0		0.1		0.0		(9.0	)		0.0			(0.1	)		(9.0	)		0.0		0.0		0.3		1.0			0.0			0.0		1.3
Cumulative translation adjustment loss on sale of subsidiary																				0.0		0.0		0.0		(4.4	)		0.0			0.0		(4.4	)
Unrealized gain on cash flow hedges		0.0		0.0		0.0		4.5			0.0			0.0			4.5			0.0		0.0		0.0		13.3			0.0			0.0		13.3
Unrecognized pension net loss		0.0		0.0		0.0		0.4			0.0			0.0			0.4			0.0		0.0		0.0		0.5			0.0			0.0		0.5
Repurchases of common stock		0.0		0.0		0.0		0.0			(1.2	)		0.0			(1.2	)		0.0		0.0		0.0		0.0			(1.9	)		0.0		(1.9	)
Balance at June 30, 2020	$	0.2	$	228.0	$	121.6	$	(81.8	)	$	(92.1	)	$	10.4		$	186.3
Balance at June 30, 2021																			$	0.2	$	242.7	$	268.8	$	(5.5	)	$	(94.4	)	$	4.3	$	416.1

(Dollars in millions)	Common Stock		Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Stock			Noncontrolling Interests			Total Equity			Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Stock			Noncontrolling Interests			Total Equity
Balance at December 31, 2018	$	0.2	$	206.0		$	27.2	$	(87.2	)	$	(90.0	)	$	10.8		$	67.0
Balance at December 31, 2019																				$	0.2	$	221.9	$	93.8	$	(77.7	)	$	(90.9	)	$	11.4		$	158.7
Net income		0.0		0.0			26.2		0.0			0.0			0.6			26.8			0.0		0.0		27.8		0.0			0.0			(0.9	)		26.9
Issuance of common stock		0.0		0.6			0.0		0.0			0.0			0.0			0.6			0.0		0.5		0.0		0.0			0.0			0.0			0.5
Employee stock plans		0.0		5.9			0.0		0.0			0.0			0.0			5.9			0.0		5.5		0.0		0.0			0.0			0.0			5.5
Other comprehensive income
Other comprehensive income (loss)
Currency translation adjustment		0.0		0.0			0.0		0.7			0.0			(0.0	)		0.7			0.0		0.1		0.0		(9.0	)		0.0			(0.1	)		(9.0	)
Unrealized loss on cash flow hedges		0.0		0.0			0.0		2.3			0.0			0.0			2.3
Unrealized gain on cash flow hedges																					0.0		0.0		0.0		4.5			0.0			0.0			4.5
Unrecognized pension net loss		0.0		0.0			0.0		0.5			0.0			0.0			0.5			0.0		0.0		0.0		0.4			0.0			0.0			0.4
Repurchases of common stock		0.0		(0.2	)		0.1		0.0			(0.8	)		0.0			(0.9	)		0.0		0.0		0.0		0.0			(1.2	)		0.0			(1.2	)
Balance at June 30, 2019	$	0.2	$	212.4		$	53.5	$	(83.7	)	$	(90.8	)	$	11.4		$	103.0
Balance at June 30, 2020																				$	0.2	$	228.0	$	121.6	$	(81.8	)	$	(92.1	)	$	10.4		$	186.3

The computation of basic earnings per common share for the periods presented is based upon the weighted average number of common shares outstanding during the periods. The computation of diluted earnings per common share includes the effect of non-vested nonqualified stock options and restricted stock units assuming such options and stock units were outstanding common shares at the beginning of the period. The effect of antidilutive securities is excluded from the computation of diluted loss per common share, if any.

The following table sets forth the computation of basic and diluted earnings per common share:

	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020			2019		2021		2020			2021		2020
(Dollars in millions, except share amounts, in thousands)
Net income attributable to Koppers	$	29.2	$	14.7		$	27.8		$	26.2	$	26.9	$	29.2		$	52.8	$	27.8
Less: Income (loss) from discontinued operations		0.0		0.1			(4.4	)		2.8
Plus: Non-controlling income (loss)		0.2		(0.3	)		(0.9	)		0.6
Less: Income (loss) from discontinued operations, net of tax												0.5		0.0			0.3		(4.4	)
Gain on sale of discontinued operations												0.5		0.0			0.3		0.0
Noncontrolling interest related to discontinued operations												0.0		(0.3	)		0.0		0.8
Income from continuing operations attributable to Koppers	$	29.4	$	14.3		$	31.3		$	24.0	$	25.9	$	29.5		$	52.2	$	31.4
Weighted average common shares outstanding:
Basic		21,001		20,662			20,927			20,619		21,289		21,001			21,217		20,927
Effect of dilutive securities		67		382			157			330		678		67			732		157
Diluted		21,068		21,044			21,084			20,949		21,967		21,068			21,949		21,084
Earnings per common share – continuing operations:
Basic earnings per common share	$	1.40	$	0.70		$	1.50		$	1.17	$	1.22	$	1.40		$	2.46	$	1.50
Diluted earnings per common share		1.40		0.68			1.49			1.15		1.18		1.40			2.38		1.49
Other data:
Antidilutive securities excluded from computation of diluted earnings per common share		1,773		674			1,022			580		434		1,773			439		1,022

We have outstanding stock-based compensation awards that were granted under the amended and restated 2005 Long-Term Incentive Plan (the “2005 LTIP”), the 2018 Long-Term Incentive Plan (the “2018 LTIP”) and the 2020 Long-Term Incentive Plan, as amended (the “2020 LTIP”). The 2005 LTIP, the 2018 LTIP and the 2020 LTIP are collectively referred to as the “LTIP”. ~~On May 6, 2020, the 2020 LTIP was approved by our shareholders and the 2018 LTIP was frozen. Similar to the 2018 LTIP, the 2020~~The LTIP provides for the grant to eligible persons of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance awards, dividend equivalents and other stock-based awards, which are collectively referred to as the “awards.”On May 6, 2021, the shareholders approved an amendment to our 2020 LTIP and an Amended and Restated Employee Stock Purchase Plan to increase the number of shares available for grant by 1,500,000 and 300,000, respectively.

Under the LTIP, the board of directors grants restricted stock units and performance stock units to certain employee participants (collectively, the “stock units”). Compensation expense for non-vested stock units is recorded over the vesting period based on the fair value at the date of grant. The fair value of restricted stock units is the market price of the underlying common stock on the date of grant and the fair value of performance stock units is determined using a Monte Carlo valuation model. For grants to most employees, the restricted stock units vest in four equal annual installments. Restricted stock units that have one-year vesting periods are also issued under the LTIP to members of the board of directors in connection with annual director compensation and, from time to time, are issued to employees in connection with employee compensation with vesting periods of typically two years or less.

Performance stock units have vesting based upon a market condition. These performance stock units have multi-year performance objectives and a three-year period for vesting (if the applicable performance objective is achieved). The applicable performance objective is based on our total shareholder return relative to the Standard & Poor’s SmallCap 600 Materials Index. The number of performance stock units granted represents the target award and participants have the ability to earn between 0 and 200 percent of the target award based upon actual performance. If minimum performance criteria are not achieved, 0 performance stock units will vest. We have the discretion to settle the award in cash rather than shares, although we currently expect that all awards will be settled by the issuance of shares.

We calculated the fair value of the performance stock unit awards on the date of grant using the assumptions listed below:

	March 2020 Grant			March 2019 Grant			May 2018 Grant			March 2018 Grant			January 2021 Grant			March 2020 Grant			March 2019 Grant
Grant date price per share of performance award	$	19.63		$	26.63		$	39.10		$	41.60		$	29.84		$	19.63		$	26.63
Expected dividend yield per share		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
Expected volatility		45.60	%		39.00	%		39.40	%		39.40	%		68.70	%		45.60	%		39.00	%
Risk-free interest rate		0.72	%		2.50	%		2.35	%		2.35	%		0.16	%		0.72	%		2.50	%
Look-back period in years		2.83			2.82			2.84			2.84			3.00			2.83			2.82
Grant date fair value per share	$	11.56		$	40.30		$	44.29		$	47.12		$	41.50		$	11.56		$	40.30

Dividends declared, if any, on our common stock during the period prior to vesting of the stock units are credited at equivalent value as additional stock units and become payable as additional common shares upon vesting. In the event of termination of employment, other than retirement, death or disability, any non-vested stock units are forfeited, including additional stock units credited from dividends. In the event of termination of employment due to retirement, death or disability, pro-rata vesting of the stock units over the service period will result. There are special vesting provisions for the stock units related to a change in control.

The following table shows a summary of the performance stock units as of June 30, ~~2020:~~2021:

Performance Period	Minimum Shares		Target Shares		Maximum Shares		Minimum Shares		Target Shares		Maximum Shares
2018 – 2020		0		118,594		237,188
2019 – 2021		0		192,495		280,846		0		234,597		281,536
2020 – 2022		0		231,128		462,256
2020 �� 2022								0		154,099		308,198
2021 – 2023								0		149,874		299,748

~~Performance stock units for the 2017 – 2019 performance period vested in March 2020 at 100 percent of the target share amount of 110,168.~~

The following table shows a summary of the status and activity of non-vested stock units for the six months ended June 30, ~~2020:~~2021:

Restricted
Stock Units

Performance
Stock Units

Total
Stock Units

Weighted Average
Grant Date Fair
Value per Unit

Non-vested at December 31, 2019

343,012

445,186

788,198

$
40.18

Granted

360,661

232,481

593,142

$
15.69

Vested

(132,624
)

(110,168
)

(242,792
)

$
44.75

Forfeited

(31,068
)

(25,282
)

(56,350
)

$
33.93

Non-vested at June 30, 2020

539,981

542,217

1,082,198

$
26.05

	Restricted Stock Units			Performance Stock Units			Total Stock Units			Weighted Average Grant Date Fair Value per Unit
Non-vested at December 31, 2020		509,509			391,744			901,253		$	25.48
Granted		219,099			149,874			368,973		$	34.94
Performance share adjustment		0			(1,227	)		(1,227	)	$	44.29
Vested		(198,200	)		(1,821	)		(200,021	)	$	22.47
Non-vested at June 30, 2021		530,408			538,570			1,068,978		$	29.22

Stock options to most executive officers vest and become exercisable in four equal annual installments. The stock options have a term of ten years. In the event of termination of employment, other than retirement, death or disability, any non-vested options are forfeited. In the event of termination of employment due to retirement, death or disability, pro-rata vesting of the options over the service period will result. There are special vesting provisions for the stock options related to a change in control.

Compensation expense for non-vested stock options is recorded over the vesting period based on the fair value at the date of grant. We calculated the fair value of stock options on the date of grant using the Black-Scholes-Merton model and the assumptions listed below:

	March 2020 Grant			March 2019 Grant			March 2018 Grant			March 2017 Grant			January 2021 Grant			March 2020 Grant			March 2019 Grant			March 2018 Grant
Grant date price per share of stock option award	$	19.63		$	26.63		$	41.60		$	44.10		$	29.84		$	19.63		$	26.63		$	41.60
Expected dividend yield per share		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
Expected life in years		6.40			6.14			5.73			5.77			6.64			6.40			6.14			5.73
Expected volatility		42.85	%		39.44	%		37.05	%		39.70	%		54.80	%		42.85	%		39.44	%		37.05	%
Risk-free interest rate		0.87	%		2.53	%		2.67	%		2.13	%		0.59	%		0.87	%		2.53	%		2.67	%
Grant date fair value per share of option awards	$	8.42		$	11.29		$	16.38		$	17.90		$	15.79		$	8.42		$	11.29		$	16.38

We do not expect to declare any dividends for the foreseeable future. The expected life in years is based on historical exercise data of options previously granted by us. Expected volatility is based on the historical volatility of our common stock and the historical volatility of certain other similar public companies. The risk-free interest rate is based on U.S. Treasury bill rates for the expected life of the option.

The following table shows a summary of the status and activity of stock options for the six months ended June 30, ~~2020:~~2021:

Options

Weighted Average
Exercise Price
per Option

Weighted Average
Remaining
Contractual Term
(in years)

Aggregate Intrinsic
Value (in millions)

Outstanding at December 31, 2019

966,849

$
28.45

Granted

187,701

$
19.63

Expired

(5,129
)

$
31.28

Forfeited

(15,637
)

$
33.44

Outstanding at June 30, 2020

1,133,784

$
26.91

6.08

$
0.5

Exercisable at June 30, 2020

771,797

$
27.30

4.73

$
0.5

	Options			Weighted Average Exercise Price per Option		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in millions)
Outstanding at December 31, 2020		1,120,254		$	26.89
Granted		90,879		$	29.84
Exercised		(71,785	)	$	17.74
Expired		(25,402	)	$	40.26
Outstanding at June 30, 2021		1,113,946		$	27.41		5.46	$	8.6
Exercisable at June 30, 2021		797,911		$	28.16		4.33	$	6.3

Total stock-based compensation expense recognized under our LTIP and employee stock purchase plan for the three ~~and six~~ months ended June 30, ~~2020~~2021 and ~~2019~~2020 is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019		2021		2020		2021		2020
(Dollars in millions)
Stock-based compensation expense recognized:
Selling, general and administrative expenses	$	3.0	$	3.1	$	5.5	$	5.9	$	3.1	$	3.0	$	6.6	$	5.5
Less related income tax benefit		0.8		1.1		1.5		1.9		0.8		0.8		1.7		1.5
Decrease in net income attributable to Koppers	$	2.2	$	2.0	$	4.0	$	4.0	$	2.3	$	2.2	$	4.9	$	4.0
Intrinsic value of exercised stock options									$	1.3	$	0.0	$	2.2	$	0.0
Cash received from the exercise of stock options									$	1.3	$	0.0	$	2.3	$	0.0

As of June 30, ~~2020~~2021, total future compensation expense related to non-vested stock-based compensation arrangements ~~totaled~~is expected to total $~~20.4~~22.5 million and the weighted-average period over which this expense is expected to be recognized is approximately 29 months.

We have 3 reportable segments: Railroad and Utility Products and Services, Performance Chemicals (“PC”) and Carbon Materials and Chemicals. Our reportable segments contain multiple aggregated business units since management believes the long-term financial performance of these business units is affected by similar economic conditions.

The reportable segments are each managed separately because they manufacture and distribute distinct products with different production processes.

Our RUPS segment sells treated and untreated wood products, manufactured products and services primarily to the railroad and public utility markets. Railroad products and services include procuring and treating items such as crossties, switch ties and various types of lumber used for railroad bridges and crossings and the manufacture of rail joint bars. ~~The segment also manufactures treated wood utility~~Utility products include transmission and distribution poles ~~for utility~~ and ~~cooperative utility companies and treated wood pilings used for construction applications. In addition, RUPS~~pilings. The segment also operates a railroad services business that conducts engineering, design, repair and inspection services for railroad bridges, ~~as well as~~ a business related to the recovery of used ~~crossties.~~crossties and a business related to the inspection of utility poles.

Our PC segment develops, manufactures, and markets wood preservation chemicals and wood treatment technologies and services a diverse range of end-markets including infrastructure, residential and commercial construction, and agriculture.

Our CMC segment is primarily a manufacturer of creosote, carbon pitch, naphthalene, phthalic anhydride and carbon black feedstock. Creosote is used in the treatment of wood and carbon black feedstock is used in the production of carbon black. Carbon pitch is used in the production of aluminum and steel in electric arc furnaces. Naphthalene is used for the production of phthalic anhydride and as a surfactant in the production of concrete. Phthalic anhydride is used in the production of plasticizers, polyester resins and alkyd paints.

We evaluate performance and determine resource allocations based on a number of factors, including ~~operating profit or loss from operations and~~ earnings before interest, taxes, depreciation and amortization (“EBITDA”). and operating profit or loss from operations. Operating profit or loss does not include other income or loss, interest expense, income taxes or operating costs of Koppers Holdings Inc.

The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019. Intersegment transactions are eliminated in consolidation.

The timing of revenue recognition ~~in accordance with ASC 606, “Revenue from Contracts with Customers”,~~ results in both billed accounts receivable and unbilled receivables, both classified as accounts receivable, net of allowance within the condensed consolidated balance sheet. Contract assets of ~~$5.4~~$9.8 million and ~~$5.1~~$5.8 million are recorded within accounts receivable, ~~in our RUPS segment,~~ net of allowance within the condensed consolidated balance sheet as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

The following table sets forth certain sales and operating data, net of all intersegment transactions, for our segments for the periods indicated:

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019			2021			2020			2021			2020
(Dollars in millions)
Revenues from external customers:
Railroad and Utility Products and Services	$	209.9		$	199.1		$	399.9		$	365.2		$	195.5		$	209.9		$	387.4		$	399.9
Performance Chemicals		137.1			120.8			248.5			219.8			145.6			137.1			269.2			248.5
Carbon Materials and Chemicals^(a)		89.6			123.9			190.1			235.7			99.9			89.6			191.9			190.1
Total	$	436.6		$	443.8		$	838.5		$	820.7		$	441.0		$	436.6		$	848.5		$	838.5
Intersegment revenues:
Railroad and Utility Products and Services	$	0.0		$	0.2		$	0.0		$	0.5
Performance Chemicals		3.7			3.1			6.9			6.2		$	3.8		$	3.7		$	7.3		$	6.9
Carbon Materials and Chemicals		21.4			18.7			39.4			36.6			18.5			21.4			36.3			39.4
Total	$	25.1		$	22.0		$	46.3		$	43.3		$	22.3		$	25.1		$	43.6		$	46.3
Depreciation and amortization expense:
Railroad and Utility Products and Services	$	5.0		$	4.8		$	9.9		$	9.6		$	5.3		$	5.0		$	11.6		$	9.9
Performance Chemicals		4.4			4.6			8.9			9.5			4.7			4.4			9.5			8.9
Carbon Materials and Chemicals^(b)		3.9			3.1			8.0			7.0			3.9			3.9			8.9			8.0
Total	$	13.3		$	12.5		$	26.8		$	26.1		$	13.9		$	13.3		$	30.0		$	26.8
Operating profit (loss):
Railroad and Utility Products and Services	$	16.2		$	11.8		$	25.4		$	20.5		$	4.3		$	16.2		$	13.0		$	25.4
Performance Chemicals		32.6			14.0			36.7			26.8			28.7			32.6			53.5			36.7
Carbon Materials and Chemicals^(c)		1.5			13.0			2.2			16.2			13.4			1.5			24.2			2.2
Corporate		(0.6	)		(0.7	)		(1.0	)		(1.1	)		(2.1	)		(0.6	)		(2.5	)		(1.0	)
Total	$	49.7		$	38.1		$	63.3		$	62.4		$	44.3		$	49.7		$	88.2		$	63.3

The following table sets forth revenues for significant product lines, net of all intersegment transactions, for our segments for the periods indicated:

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019		2021		2020		2021		2020
(Dollars in millions)
Railroad and Utility Products and Services:
Railroad treated products	$	125.3	$	115.5	$	237.3	$	204.1	$	111.8	$	125.0	$	220.8	$	237.0
Utility poles		66.0		60.0		127.8		114.5		63.7		66.0		126.4		127.8
Railroad infrastructure services										7.6		8.2		16.5		14.1
Rail joints		6.0		8.4		12.5		16.8		6.7		6.0		12.2		12.5
Railroad infrastructure services		8.2		10.4		14.1		19.7
Other products		4.4		4.8		8.2		10.1		5.7		4.7		11.5		8.5
Total		209.9		199.1		399.9		365.2		195.5		209.9		387.4		399.9
Performance Chemicals:
Wood preservative products		130.3		116.8		237.9		213.2		137.5		130.3		254.8		237.9
Other products		6.8		4.0		10.6		6.6		8.1		6.8		14.4		10.6
Total		137.1		120.8		248.5		219.8		145.6		137.1		269.2		248.5
Carbon Materials and Chemicals:
Pitch and related products		58.3		74.3		108.5		137.1		56.1		58.3		107.3		108.5
Phthalic anhydride and other chemicals										15.9		11.6		32.4		35.2
Creosote and distillates		8.4		15.4		23.6		31.3		16.6		8.4		29.6		23.6
Phthalic anhydride and other chemicals		11.6		20.0		35.1		41.0
Naphthalene		3.9		5.7		8.9		12.1		4.8		3.9		9.4		8.9
Other products		7.5		8.5		14.0		14.3		6.5		7.4		13.2		13.9
Total		89.6		123.9		190.1		235.7		99.9		89.6		191.9		190.1
Total	$	436.6	$	443.8	$	838.5	$	820.7	$	441.0	$	436.6	$	848.5	$	838.5

The following table sets forth ~~tangible~~assets and ~~intangible assets~~goodwill allocated to each of our segments as of the dates indicated:

The income tax provision for interim periods is comprised of an estimated annual effective income tax rate applied to current year ordinary income and tax associated with discrete items. These discrete items generally relate to excess stock compensation deductions, changes in tax laws, adjustments to unrecognized tax benefits and changes of estimated tax liability to the actual liability determined upon filing income tax returns. To determine the annual effective tax rate, management is required to make estimates of annual pretax income in each domestic and foreign jurisdiction in which we conduct business. Entities that have historical pre-tax losses and current year estimated pre-tax losses that are not projected to generate a future benefit are excluded from the estimated annual effective income tax rate.

The estimated annual effective income tax rate, excluding discrete items discussed above, was ~~27.8~~25.8 percent and ~~34.7~~27.8 percent for the ~~six~~three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The estimated annual effective income tax rate differs from the U.S. federal statutory tax rate due to:

	June 30,						June 30,
	2020			2019			2021			2020
Federal income tax rate		21.0	%		21.0	%		21.0	%		21.0	%
Foreign earnings taxed at different rates		3.1			0.9			3.2			3.1
Nondeductible expenses		1.5			1.6			1.1			1.5
GILTI inclusion, net of foreign tax credits		1.3			0.7
State income taxes, net of federal tax benefit		0.6			0.8			0.6			0.6
Change in tax contingency reserves		0.1			0.2			0.1			0.1
Interest expense deduction limitation		0.0			9.8
GILTI inclusion, net of foreign tax credits								(0.2	)		1.3
Other		0.2			(0.3	)		0.0			0.2
Estimated annual effective income tax rate		27.8	%		34.7	%		25.8	%		27.8	%

~~In reaction to~~Income taxes as a percentage of pretax income were 26.0 percent for the economic effects of the COVID-19 pandemic, on March 27, 2020 the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law. This legislation provides stimulus and relief for affected entities and individuals and broadly provides tax payment relief and significant business incentives, and makes certain technical corrections to the 2017 Tax Cuts and Jobs Act. Among its many provisions, the CARES Act modifies the limitation on the interest expense deduction for tax years beginning in 2019 and 2020. This modification increases the allowable business interest expense deduction from 30 percent of adjusted taxable income to 50 percent of adjusted taxable income.

~~This modification impacts both our 2019 and 2020 income tax provisions and we have included the net impact in the six~~three months ended June 30, ~~2020~~2021. This is slightly higher than the estimated annual effective income tax ~~provision. We have recorded~~rate due to minor discrete items.

Income taxes as a percentage of pretax income were 21.4 percent for the three months ended June 30, 2020. This was lower than the estimated annual effective income tax rate due to discrete items, which were a net benefit of $2.4 million. Discrete items were primarily related to a benefit ~~of $1.0 million~~ for ~~changes to our 2019 tax provision and a benefit of $4.4 million for~~ the release of a valuation allowance that was recorded for interest expense deduction limitations that were previously not expected to be realized.~~Other provisions of the CARES Act do not have a material impact to our income tax provision.~~

Income taxes as a percentage of pretax income were ~~21.4~~25.3 percent for the ~~three~~six months ended June 30, ~~2020.~~ 2021. This is lower than the estimated annual effective income tax rate due to discrete ~~items. Discrete~~ items ~~included in~~, principally an excess tax deduction for vested stock awards.

Income taxes as a percentage of pretax income ~~taxes~~were 16.5 percent for the ~~three~~six months ended June 30, ~~2020~~2020. This was lower than the estimated annual effective income tax rate due to discrete items, which were a net benefit of ~~$2.4~~$4.2 million. Discrete items were primarily related to a benefit for the release of a valuation allowance that was recorded for interest expense deduction limitations that were previously not expected to be ~~realized.~~

~~Income taxes as~~realized and a ~~percentage of pretax income were 35.9 percent for the three months ended June 30, 2019.~~ ~~This is higher than the estimated annual effective income tax rate due to a change in the geographical mix of earnings and due~~reduction to an ~~increase in unfavorable US~~excess tax ~~adjustments~~deduction for vested stock awards.

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted and a provision of the CARES Act temporarily increased the allowable business interest expense deduction from 30 percent of adjusted taxable income to 50 percent of adjusted taxable income, retroactively to January 1, 2019. Any such limitation ~~and~~that is disallowed in a year could be carried forward to future years. Due to the ~~GILTI inclusion.~~

~~Income taxes as a percentage of pretax income were 16.5 percent for~~temporary change to the ~~six months ended June 30, 2020. This is lower than~~limitation, in the ~~estimated annual effective income tax rate due to discrete items. Discrete items included in income taxes for the~~three and six months ended June 30, 2020 ~~were a net~~we recorded an income tax benefit of ~~$4.2 million. Discrete items included~~$2.5 million and $4.4 million, respectively, to reverse a ~~benefit for~~ ~~the release~~portion of a previously recorded valuation allowance for carryforward amounts that we determined would be utilized. Effective January 1, 2021, the limitation on the deduction was ~~recorded for interest expense deduction limitations that were previously not expected~~restored to ~~be realized~~ ~~which was offset by a tax deduction reduction for vested stock awards.~~

~~Income taxes as a percentage of pretax income were 22.1 percent for the six months ended June~~ 30 2019. This is lower than the estimated annual effective income tax rate due to discrete items. Discrete items included in income taxes for the six months ended June 30, 2019 were a net benefit of $3.7 million. Discrete items were primarily related to the reversal of various unrecognized tax benefits due to the closure of the Company’s U.S. tax audit.percent.

During the year, management regularly updates estimates of pre-tax income and income tax expense based on changes in pre-tax income projections by taxable jurisdiction, repatriation of foreign earnings, unrecognized tax benefits and other tax matters. To the extent that actual results vary from these estimates, the actual annual effective income tax rate at the end of the year could be materially different from the estimated annual effective income tax rate for the three and six months ended June 30, ~~2020.~~2021.

~~We and our subsidiaries file~~The Company files income tax returns in the U.S. federal jurisdiction, individual U.S. state jurisdictions and non-U.S. jurisdictions. With few exceptions, we are no longer subject to U.S. federal, U.S. state, or non-U.S. income tax examinations by tax authorities for years prior to 2016.

Unrecognized tax benefits totaled ~~$2.2 million and $2.1~~$2.5 million as of June 30, ~~2020~~2021 and December 31, ~~2019, respectively.~~2020. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate, was approximately ~~$2.1 million and $2.0~~$2.5 million as of June 30, ~~2020~~2021 and December 31, ~~2019, respectively.~~2020. We recognize interest expense and any related penalties from unrecognized tax benefits in income tax expense. As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we had accrued approximately ~~$1.0~~$0.9 million and $0.8 million for interest and penalties, respectively.

We do not anticipate material changes to the amount of unrecognized tax benefits within the next twelve months.

Net inventories as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 are summarized in the table below:

Property, plant and equipment as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 are summarized in the table below:

	June 30, 2020		December 31, 2019		June 30, 2021		December 31, 2020
(Dollars in millions)
Land	$	14.8	$	15.0	$	15.7	$	16.7
Buildings		70.2		70.5		72.2		75.0
Machinery and equipment		757.4		732.4		787.3		812.1
	$	842.4	$	817.9	$	875.2	$	903.8
Less accumulated depreciation		473.1		459.1		432.2		494.7
Net^(a)	$	369.3	$	358.8	$	443.0	$	409.1

We maintain a number of defined benefit and defined contribution plans to provide retirement benefits for employees in the United States, as well as employees outside the United ~~States~~States. These plans are maintained and contributions are made in accordance with the Employee Retirement Income Security Act of 1974 (“ERISA”), local statutory law or as determined by the board of directors. The defined benefit pension plans generally provide benefits based upon years of service and compensation. Pension plans are funded except for 3 domestic non-qualified defined benefit pension plans for certain key executives.

In the United States, all qualified and 2 of the non-qualified defined benefit pension plans for salaried and hourly employees have been frozen and are closed to new ~~participants and have been frozen.~~participants. Accordingly, these pension plans no longer accrue additional years of service or recognize future increases in compensation for benefit purposes.

The defined contribution plans generally provide retirement assets to employee participants based upon employer and employee contributions to the participant’s individual investment account. We also provide retiree medical insurance coverage to certain U.S. employees and a life insurance benefit to most U.S. employees. For salaried employees, the retiree medical and retiree insurance plans have been closed to new participants.

The following table provides the components of net periodic benefit cost for the pension plans for the three and six months ended June 30, ~~2020~~2021 and ~~2019:~~2020:

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019			2021			2020			2021			2020
(Dollars in millions)
Service cost	$	0.4		$	0.3		$	0.7		$	0.7		$	0.3		$	0.4		$	0.7		$	0.7
Interest cost		1.5			2.0			3.1			4.0			1.5			1.5			2.7			3.1
Expected return on plan assets		(1.8	)		(2.0	)		(3.8	)		(4.0	)		(1.9	)		(1.8	)		(3.7	)		(3.8	)
Amortization of net loss		0.3			0.4			0.7			0.8			0.3			0.3			0.7			0.7
Net periodic benefit cost	$	0.4		$	0.7		$	0.7		$	1.5		$	0.2		$	0.4		$	0.4		$	0.7
Defined contribution plan expense	$	2.3		$	2.5		$	4.0		$	4.1		$	2.6		$	2.3		$	4.3		$	4.0

	Weighted Average Interest Rate			Maturity	June 30, 2020		December 31, 2019		Weighted Average Interest Rate			Maturity	June 30, 2021		December 31, 2020
(Dollars in millions)
Term Loan		3.76	%	2024	$	77.5	$	82.5		2.57	%	2024	$	7.1	$	12.2
Revolving Credit Facility		3.76	%	2024		338.8		329.0		2.57	%	2024		306.0		272.0
Other loans		6.12	%	2021		0.3		0.4
Senior Notes due 2025		6.00	%	2025		500.0		500.0		6.00	%	2025		500.0		500.0
Debt						916.6		911.9						813.1		784.2
Less short-term debt and current maturities of long-term debt						10.2		10.2						7.1		10.1
Less unamortized debt issuance costs						9.5		10.7						6.9		8.3
Long-term debt					$	896.9	$	891.0					$	799.1	$	765.8

~~On February 26, 2020, we entered into the Fourth Amendment to our~~The Company maintains a $600.0 million senior secured revolving credit facility and ~~our~~a $100.0 million secured term loan facility (collectively, the ~~Credit~~“Credit Facility”) to, among other things: (1) revise the LIBOR replacement language in the Credit Facility, (2) revise certain provisions regarding mandatory prepayments of the term loan facility with proceeds of equity issuances and associated definitions, (3) remove the step downs in the maximum total secured leverage ratio and maximum total leverage ratio which would otherwise occur at the time of a first equity issuance, and (4) revise certain provisions regarding disposition of assets by certain subsidiaries of Koppers Inc. All other material terms, conditions and covenants with respect to the Credit Facility remain unchanged., as amended.

The secured term loan has a quarterly amortization of $2.5 million and the interest rate on the Credit Facility is variable and is based on LIBOR.

Borrowings under the Credit Facility are secured by a first priority lien on substantially all of the assets of Koppers Inc., Koppers Holdings Inc. and their material domestic subsidiaries. The Credit Facility contains certain covenants for Koppers Inc. and its restricted subsidiaries that limit capital expenditures, additional indebtedness, liens, dividends, investments or acquisitions. In addition, such covenants give rise to events of default upon the failure by Koppers Inc. and its restricted subsidiaries to meet certain financial ratios.

As of June 30, ~~2020,~~2021, we had ~~$157.5~~$286.3 million of unused revolving credit availability for working capital purposes after restrictions from certain letter of credit commitments and other covenants. As of June 30, ~~2020, $7.1~~2021, $7.7 million of commitments were utilized by outstanding letters of credit.

The 2025 Notes are senior obligations of Koppers Inc., are unsecured and are guaranteed by Koppers Holdings Inc. and certain of Koppers Inc.’s domestic subsidiaries. The 2025 Notes pay interest semi-annually in arrears on February 15 and August 15 and will mature on February 15, 2025 unless earlier redeemed or repurchased. ~~On or after February 15, 2020, we~~We are entitled to redeem all or a portion of the 2025 Senior Notes at a redemption price of 104.5 percent of principal value, declining to a redemption price of 101.5 percent on or after February 15, 2022 until the redemption price is equivalent to the principal value on April 15, 2023.

The indenture governing the 2025 Senior Notes includes customary covenants that restrict, among other things, the ability of Koppers Inc. and its restricted subsidiaries to incur additional debt, pay dividends or make certain other restricted payments, incur liens, merge or sell all or substantially all of the assets of Koppers Inc. or its subsidiaries or enter into various transactions with affiliates.

We recognize asset retirement obligations for the removal and disposal of residues; dismantling of certain tanks required by governmental authorities; cleaning and dismantling costs for owned railcars; cleaning costs for leased ~~railcars~~rail cars and barges; and site demolition, when required by governmental authorities or by contract. The following table reflects changes in the carrying values of asset retirement obligations:

	June 30, 2020			December 31, 2019			June 30, 2021			December 31, 2020
(Dollars in millions)
Asset retirement obligation at beginning of year	$	20.7		$	27.0		$	19.8		$	20.7
Accruals		2.9			2.3
Accretion expense		0.6			1.5			0.5			1.1
Revision in estimated cash flows		0.1			2.4			(2.0	)		4.6
Cash expenditures		(3.5	)		(12.5	)		(6.1	)		(6.6	)
Balance at end of period	$	20.8		$	20.7		$	12.2		$	19.8

We ~~adopted the provisions of ASU 2016-02~~ ~~and ASU 2018-10 on January 1, 2019 and recognized~~ recognize lease obligations and associated right-of-use assets for existing non-cancelable leases. We have non-cancelable operating leases primarily associated with railcars, office and manufacturing facilities, storage tanks, ships, production equipment and vehicles. Many of our leases include both lease (e.g., fixed rent) and non-lease components (e.g., maintenance and services). For certain asset classes such as railcars, storage tanks and ships, we have separated the lease and non-lease components based on the estimated stand-alone price for each component. For the remaining asset classes, we have elected ~~the practical expedient~~ to account for these components as a single lease component. ~~Upon adoption,~~In addition, we ~~elected other practical expedients as well, including retaining our current classification of existing leases upon adoption and excluding~~exclude leases expiring within twelve ~~months.~~months from balance sheet recognition.

Many of our leases include one or more options to renew. We evaluate renewal options at the lease commencement date and regularly thereafter to determine if we are reasonably certain to exercise the option, in which case we include the renewal period in our lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on information available to determine the present value of the lease payments.

Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. Operating lease costs were $7.6 million and $15.3 million during the three and six months ended June 30, 2021, respectively, and $7.4 million and $15.2 million during the three and six months ended June 30, 2020, ~~respectively, and $7.9~~respectively. Variable lease costs were $0.8 million and ~~$15.9~~$1.6 million during the three and six months ended June 30, ~~2019, respectively. Variable lease costs were~~2021, respectively, and $0.8 million and $1.8 million during the three and six months ended June 30, 2020, ~~respectively, and $0.9 million and $1.8 million during the three and six months ended June 30, 2019,~~ respectively.

The following table presents information about the amount and timing of cash flows arising from our operating leases as of June 30, ~~2020:~~2021:

(Dollars in millions)
2020	$	14.7
2021		25.7		$	14.9
2022		22.1			26.8
2023		16.2			20.9
2024		14.0			16.9
2025					13.6
Thereafter		44.1			34.5
Total lease payments	$	136.8		$	127.6
Less: Interest		(32.7	)		(28.3	)
Present value of lease liabilities	$	104.1		$	99.3

Supplemental condensed consolidated balance sheet information related to leases is as follows:

							June 30,			December 31,
	June 30, 2020			December 31, 2019			2021			2020
(Dollars in millions)
Operating leases:
Operating lease right-of-use assets	$	102.7		$	112.3		$	99.2		$	102.5
Current operating lease liabilities	$	21.0		$	22.0		$	21.8		$	21.2
Operating lease liabilities		83.1			91.5			77.5			81.3
Total operating lease liabilities	$	104.1		$	113.5		$	99.3		$	102.5
Weighted average remaining lease term, in years		6.7			7.1			6.1			6.4
Weighted average discount rate		7.7	%		7.7	%		7.4	%		7.5	%

We utilize derivative instruments to manage exposures to risks that have been identified, ~~and~~ measured and are capable of being ~~controlled.~~mitigated. The primary risks ~~managed by us~~that we manage by using derivative instruments are commodity price risk associated with copper and foreign currency exchange risk associated with a number of currencies, principally the U.S. ~~dollar, the Canadian dollar, the New Zealand~~ dollar, the Euro and British pounds. Swap contracts on copper are used to manage the price risk associated with forecasted purchases of materials used in our manufacturing processes. Generally, we will not hedge cash flow exposures for durations longer than 36 months and we have hedged certain volumes of copper through the end of 2022. We enter into foreign currency forward contracts to manage foreign currency risk associated with our receivable and payable balances ~~and foreign currency denominated~~in addition to foreign-denominated sales. Generally, we enter into master netting arrangements with the counterparties and offset net derivative positions with the same counterparties. Currently, our agreements do not require cash collateral.

ASC Topic 815-10, “Derivatives and Hedging,” requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the balance sheet. Derivative instruments’ fair value is determined using significant other observable inputs, or Level 2 in the fair value hierarchy. In accordance with ASC Topic 815-10, we designate certain of our commodity swaps as cash flow hedges of forecasted purchases of commodities. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income ~~(loss)~~ and is reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative instruments representing ~~either~~ hedge ineffectiveness ~~or hedge components excluded from the assessment of effectiveness~~ are recognized in current earnings.

For those commodity swaps ~~which are~~where hedge accounting is not ~~designated as cash flow hedges,~~elected, the fair value of the commodity swap is recognized as an asset or liability in the consolidated balance sheet and the related gain or loss on the derivative is reported in current earnings. These amounts are classified in cost of sales in the condensed consolidated statement of operations.

As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we had outstanding copper swap contracts of the following amounts:

	Units Outstanding (in Pounds)				Net Fair Value - Asset (Liability)				Units Outstanding (in Pounds)				Net Fair Value - Asset
	June 30, 2020		December 31, 2019		June 30, 2020		December 31, 2019		June 30, 2021		December 31, 2020		June 30, 2021		December 31, 2020
(Amounts in millions)
Cash flow hedges		77.9		56.5	$	10.3	$	4.5		45.1		62.3	$	75.7	$	58.3
Not designated as hedges		15.9		16.6		2.0		1.7
Contracts where hedge accounting was not elected										7.3		11.5		12.6		10.9
Total		93.8		73.1	$	12.3	$	6.2		52.4		73.8	$	88.3	$	69.2

As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the fair value of the outstanding copper swap contracts is recorded in the balance sheet as follows:

	June 30, 2020		December 31, 2019		June 30, 2021		December 31, 2020
(Dollars in millions)
Other current assets	$	1.8	$	2.1
Other assets		10.5		4.1
Derivative contracts					$	46.0	$	37.3
Non-current derivative contracts						42.3		31.9
Asset on balance sheet	$	12.3	$	6.2	$	88.3	$	69.2
Accumulated other comprehensive gain, net of tax	$	7.8	$	3.3	$	57.9	$	44.4

~~Based upon contracts outstanding at June 30, 2020, in~~In the next twelve months, we estimate that ~~$1.2~~$39.9 million of unrealized gains, net of tax, related to commodity price hedging will be reclassified from other comprehensive income ~~(loss)~~ into earnings.

See ~~“Note~~Note 6 – ~~Comprehensive~~“Comprehensive Income ~~(Loss)~~ and Equity”, for amounts recorded in other comprehensive income ~~(loss)~~ and for amounts reclassified from accumulated other comprehensive loss tointo net income (loss) for the periods specified below.

For the three and six months ended June 30, 2021 and 2020, ~~and 2019,~~ the unrealized gain (loss) from contracts where hedge accounting was not ~~designated as hedges~~elected is as follows:

	Three Months Ended June 30,					Six Months Ended June 30,				Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020		2019		2021			2020		2021		2020
(Dollars in millions)
Gain (loss) from contracts not designated as hedges	$	8.3	$	(1.8	)	$	0.3	$	1.3
Gain (loss) from contracts where hedge accounting was not elected											(0.9	)		8.3		1.7		0.3

The fair value associated with forward contracts related to foreign currency that are not designated as hedges are immediately charged to earnings. These amounts are classified in cost of sales in the ~~Condensed Consolidated Statement~~condensed consolidated statement of ~~Operations~~operations and ~~Comprehensive Income.~~comprehensive income.

As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the fair value of outstanding foreign currency forward contracts is recorded in the balance sheet as follows:

	June 30, 2020			December 31, 2019			June 30, 2021			December 31, 2020
(Dollars in millions)
Other current assets	$	0.6		$	0.3
Derivative contracts							$	0.0		$	1.2
Accrued liabilities		(0.8	)		(0.5	)		(0.5	)		(0.5	)
Net liability on balance sheet	$	(0.2	)	$	(0.2	)
Net (liability) asset on balance sheet							$	(0.5	)	$	0.7

As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the net currency units outstanding for these contracts were:

We are involved in litigation and various proceedings relating to environmental laws and regulations, product liability and other matters. Certain of these matters are discussed below. The ultimate resolution of these contingencies is subject to significant uncertainty and should we fail to prevail in any of these legal matters or should several of these legal matters be resolved against us in the same reporting period, these legal matters could, individually or in the aggregate, be material to the consolidated financial statements.

Coal Tar Pitch Cases. Koppers Inc. is one of several defendants in lawsuits filed in 2 states in which the plaintiffs claim they suffered a variety of illnesses (including cancer) as a result of exposure to coal tar pitch sold by the defendants. There were 61 plaintiffs in 32 cases pending as of June 30, 2021, compared to 64 plaintiffs in 34 cases pending as of ~~June 30, 2020. This is the same number of plaintiffs and cases pending as of~~ December 31, ~~2019.~~2020. As of June 30, ~~2020,~~2021, there were 3331 cases pending in the Court of Common Pleas of Allegheny County, Pennsylvania, and 1 case pending in the Circuit Court of Knox County, Tennessee.

The plaintiffs in all 3432 pending cases seek to recover compensatory damages. Plaintiffs in 2927 of those cases also seek to recover punitive damages. The plaintiffs in the 3331 cases filed in Pennsylvania seek unspecified damages in excess of the court’s minimum jurisdictional limit. The plaintiff in the Tennessee state court case seeks damages of ~~$15~~$15.0 million. The other defendants in these lawsuits vary from case to case and include companies such as Beazer East, Inc. (“Beazer East”), Honeywell International Inc., Graftech International Holdings, Dow Chemical Company, UCAR Carbon Company, Inc., and SGL Carbon Corporation. Discovery is proceeding in these cases. No trial dates have been set in any of these cases.

We have not provided a reserve for the coal tar pitch lawsuits because, at this time, we cannot reasonably determine the probability of a loss, and the amount of loss, if any, cannot be reasonably estimated. The timing of resolution of these cases cannot be reasonably determined. Although Koppers Inc. is vigorously defending these cases, an unfavorable resolution of these matters may have a material adverse effect on our business, financial condition, cash flows and results of operations.

We are subject to federal, state, local and foreign laws and regulations and potential liabilities relating to the protection of the environment and human health and safety including, among other things, the cleanup of contaminated sites, the treatment, storage and disposal of wastes, the discharge of effluent into waterways, the emission of substances into the air and various health and safety matters. We expect to incur substantial costs for ongoing compliance with such laws and regulations. We may also face governmental or third-party claims, or otherwise incur costs, relating to cleanup of, or for injuries resulting from, contamination at sites associated with past and present operations. We accrue for environmental liabilities when a determination can be made that a liability is probable and reasonably estimable.

Environmental and Other Liabilities Retained or Assumed by Others. We have agreements with former owners of certain of our operating locations under which the former owners retained, assumed and/or agreed to indemnify us against certain environmental and other liabilities. The most significant of these agreements was entered into at Koppers Inc.’s formation on December 29, 1988 (the “Acquisition”). Under the related asset purchase agreement between Koppers Inc. and Beazer East, subject to certain limitations, Beazer East retained the responsibility for and agreed to indemnify Koppers Inc. against certain liabilities, damages, losses and costs, including, with certain limited exceptions, liabilities under and costs to comply with environmental laws to the extent attributable to acts or omissions occurring prior to the Acquisition and liabilities related to products sold by Beazer East prior to the Acquisition (the “Indemnity”).

Beazer Limited, the parent company of Beazer East, unconditionally guaranteed Beazer East’s performance of the Indemnity pursuant to a guarantee (the “Guarantee”).

The Indemnity provides different mechanisms, subject to certain limitations, by which Beazer East is obligated to indemnify Koppers Inc. with regard to certain environmental, product and other liabilities and imposes certain conditions on Koppers Inc. before receiving such indemnification, including, in some cases, certain limitations regarding the time period as to which claims for indemnification can be brought. In July 2004, Koppers Inc. and Beazer East agreed to amend the environmental indemnification provisions of the December 29, 1988 asset purchase agreement to extend the indemnification period for pre-closing environmental liabilities, subject to the following paragraph, and agreed to share toxic tort litigation defense arising from any sites acquired from Beazer East.

Qualified expenditures under the Indemnity are not subject to a monetary limit. Qualified expenditures under the Indemnity include (i) environmental cleanup liabilities required by third parties, such as investigation, remediation and closure costs, relating to pre-December 29, 1988 (“Pre-Closing”) acts or omissions of Beazer East or its predecessors; (ii) environmental claims by third parties for personal injuries, property damages and natural resources damages relating to Pre-Closing acts or omissions of Beazer East or its predecessors; (iii) punitive damages for the acts or omissions of Beazer East and its predecessors without regard to the date of the alleged conduct and (iv) product liability claims for products sold by Beazer East or its predecessors without regard to the date of the alleged conduct. The indemnification period ended July 14, 2019 (the “Claim Deadline”) and Beazer East may now tender certain third-party claims described in sections (i) and (ii) above to Koppers Inc. However, to the extent the third-party claims described in sections (i) and (ii) above were tendered to Beazer East by the Claim Deadline, Beazer East will continue to be required to pay the costs arising from such claims under the Indemnity. Furthermore, the Claim Deadline did not change the provisions of the Indemnity with respect to indemnification for non-environmental claims, such as product liability claims, which claims may continue to be tendered by Koppers Inc. to Beazer East.

The Indemnity provides for the resolution of issues between Koppers Inc. and Beazer East by an arbitrator on an expedited basis upon the request of either party. The arbitrator could be asked, among other things, to make a determination regarding the allocation of environmental responsibilities between Koppers Inc. and Beazer East. Arbitration decisions under the Indemnity are final and binding on the parties.

Contamination has been identified at most manufacturing and other sites of our subsidiaries. NaN site currently owned and operated by Koppers Inc. in the United States is listed on the National Priorities List promulgated under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (“CERCLA”). Currently, at the properties acquired from Beazer East (which includes the National Priorities List site and all but one of the sites permitted under the Resource Conservation and Recovery Act (“RCRA”)), a significant portion of all investigative, cleanup and closure activities are being conducted and paid for by Beazer East pursuant to the terms of the Indemnity. In addition, other of Koppers Inc.’s sites are or have been operated under RCRA and various other environmental permits, and remedial and closure activities are being conducted at some of these sites.

To date, the parties that retained, assumed and/or agreed to indemnify us against the liabilities referred to above, including Beazer East, have performed their obligations in all material respects. We believe that, for the last three years ended December 31, ~~2019,~~2020, amounts paid by Beazer East as a result of its environmental remediation obligations under the Indemnity have averaged, in total, approximately ~~$10.5~~$6.4 million per year. Periodically, issues have arisen between Koppers Inc. and Beazer East and/or other indemnitors that have been resolved without arbitration. Koppers Inc. and Beazer East engage in discussions from time to time that involve, among other things, the allocation of environmental costs related to certain operating and closed facilities.

If for any reason (including disputed coverage or financial incapability) one or more of such parties fail to perform their obligations and we are held liable for or otherwise required to pay all or part of such liabilities without reimbursement, the imposition of such liabilities on us could have a material adverse effect on our business, financial condition, cash flows and results of operations. Furthermore, we could be required to record a contingent liability on our balance sheet with respect to such matters, which could result in a negative impact to our business, financial condition, cash flows and results of operations.

Domestic Environmental Matters. On June 4, 2018, Koppers Inc. received a letter from the U.S. Environmental Protection Agency ("EPA") concerning potential violations of the Clean Water Act observed during inspections and review of Spill Prevention, Control and Countermeasure Plans and Facility Response Plans at our facilities in Follansbee, WV; Green Spring, WV; and Clairton, PA. In addition, the EPA reviewed one facility’s compliance with an earlier consent order regarding above ground storage tank integrity testing. In December 2019, the EPA presented Koppers Inc. with a proposed penalty of $2.8 million regarding the alleged violations and we are currently in discussions with the EPA to resolve the matter. Accordingly we have accrued our estimated liability of the probable penalty as of June 30, 2020.

Koppers Inc. has been named as one of the potentially responsible parties (“PRPs”) at the Portland Harbor CERCLA site located on the Willamette River in Oregon. Koppers Inc. operated a coal tar pitch terminal near the site. Koppers Inc. has responded to an EPA information request and has executed a PRP agreement which outlines a private process to develop an allocation of past and future costs among more than 80 parties to the site. Koppers Inc. believes it is a de minimis contributor at the site.

The EPA issued its Record of Decision (“ROD”) in January 2017 for the Portland Harbor CERCLA site. The selected remedy includes a combination of sediment removal, capping, enhanced and monitored natural recovery and riverbank improvements. The ROD does not determine who is responsible for remediation costs. ~~The~~At that time, the net present value and undiscounted costs of the selected remedy as estimated in the ROD are approximately $1.1 billion and $1.7 billion, respectively. These costs may increase given the remedy will not be implemented for several years. Responsibility for implementing and funding that work will be decided in the separate private allocation process which is ongoing.

Additionally, Koppers Inc. is involved in two separate matters involving natural resource damages ~~assessments~~ at the Portland Harbor site. AnOne matter involves claims by the trustees to recover damages based upon an assessment ~~is intended to identify~~of damages to natural resources caused by the releases of hazardous substances to the Willamette ~~River and to serve~~River. The assessment serves as the foundation to estimate liabilities for settlements of natural resource damages claims or litigation to recover from those who do not settle with the trustee groups. ~~One of the~~Koppers Inc. has been engaged in a process to resolve its natural resource damage ~~assessments was~~liabilities for the assessment area. A second matter involves a lawsuit filed in January 2017 by the Yakama Nation in Oregon federal court. Yakama Nation seeks recovery for ~~future~~ response costs and the costs of assessing injury to natural resources ~~and recovery for past costs of overseeing investigations conducted on~~to waterways beyond the ~~site.~~current assessment area. Following the most recent court rulings, the Yakama Nation case has been stayed pending completion of the private allocation process for the Portland Harbor CERCLA site.

In September 2009, Koppers Inc. received a general notice letter notifying it that it may be a PRP at the Newark Bay CERCLA site. In January 2010, Koppers Inc. submitted a response to the general notice letter asserting that Koppers Inc. is a de minimis party at this site.

We have accrued the estimated costs of participating in the PRP group at the Portland Harbor and Newark Bay CERCLA sites ~~and estimated~~as a de minimis contributor and estimated such settlement amounts at the sites totaling ~~$2.1~~$3.4 million atas of June 30, ~~2020.~~2021. The actual cost could be materially higher as there has not been a determination of how those costs will be allocated among the PRPs at the sites. Accordingly, an unfavorable resolution of these matters may have a material adverse effect on our business, financial condition, cash flows and results of operations.

There are 2 plant sites related to the Performance Chemicals business and 1 plant site related to the Utility and Industrial Products business in the United States where we have recorded environmental remediation liabilities for soil and groundwater contamination which occurred prior to our acquisition of the businesses. As of June 30, ~~2020,~~2021, our estimated environmental remediation liability for these acquired sites totals ~~$4.3~~$4.2 million.

Foreign Environmental Matters. On October 10, 2019, the New South Wales Environment Protection Authority (“NSW EPA”) filed a proceeding against one of our Australian subsidiaries, Koppers Carbon Materials & Chemicals Pty. Ltd. (“KCMC”), in relation to an incident which occurred at our Mayfield, Australia plant on October 20, 2018. The NSW EPA alleged that KCMC committed an offense under Australian law by failing to maintain its plant and equipment in a proper and efficient working condition. The NSW EPA alleged that KCMC did not properly maintain a valve which failed and released heated coal tar pitch into a bunded area on our site and released fumes into the atmosphere. The first hearing on the proceeding was held on November 22, 2019 in the Land and Environment Court of New South Wales and we entered a guilty plea with respect to the allegations. The maximum fine for the proceeding is $1.0 million AUD (approximately $0.7 million) plus legal costs incurred by the NSW EPA. The Land and Environment Court also has the authority to order KCMC to make certain improvements to its operations at the site of the incident.

In May 2020, the NSW EPA brought additional proceedings against KCMC related to a series of May 2019 incidents involving alleged air pollution and odor complaints. The Company agreed to plead guilty to two of the charges and the remaining charges were dropped by the NSW EPA. Both the October 2019 and May 2020 proceedings were procedurally joined and The Land and Environment Court is expected to enter a final order and assess a fine by the end of the year. We have accrued our estimated liability associated with the matters as of June 30, 2020.

There is one plant site related to the Performance Chemicals business located in Australia where we have recorded an environmental remediation liability for soil and groundwater contamination which occurred prior to the acquisition of the ~~business.~~site. As of June 30, ~~2020,~~2021, our estimated environmental remediation liability for ~~this acquired~~the site totals ~~$1.3~~ $1.4million.

Environmental Reserves Rollforward. The following table reflects changes in the ~~accrued liability~~accrual for environmental ~~matters,~~remediation. A total of ~~which $2.7 million and $2.8~~$2.9 million are classified as current liabilities atas of June 30, ~~2020~~2021 and December 31, ~~2019, respectively:~~2020:

	Period ended						Period ended
	June 30, 2020			December 31, 2019			June 30, 2021			December 31, 2020
(Dollars in millions)
Balance at beginning of year	$	9.5		$	10.1		$	11.0		$	9.5
Expense		0.1			0.5			0.1			1.8
Reversal of reserves		0.0			(0.8	)		(0.1	)		0.0
Cash expenditures		(0.2	)		(0.3	)		(0.1	)		(0.4	)
Currency translation		(0.1	)		0.0			(0.1	)		0.1
Balance at end of period	$	9.3		$	9.5		$	10.8		$	11.0

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report and any documents incorporated herein by reference contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and may include, but are not limited to, statements about sales levels, acquisitions, restructuring, declines in the value of Koppers assets and the effect of any related impairment charges, profitability and anticipated expenses and cash outflows. All forward-looking statements involve risks and uncertainties. All statements contained herein that are not clearly historical in nature are forward-looking, and words such as “believe,” “anticipate,” “expect,” “estimate,” “may,” “will,” “should,” “continue,” “plans,” “potential,” “intends,” “likely,” or other similar words or phrases are generally intended to identify forward-looking statements. Any forward-looking statement contained herein, in press releases, written statements or documents filed with the Securities and Exchange Commission, or in Koppers communications and discussions with investors and analysts in the normal course of business through meetings, phone calls and conference calls, regarding expectations with respect to sales, earnings, cash flows, operating efficiencies, restructurings, product introduction or expansion, the benefits of acquisitions and divestitures, ~~joint ventures~~ or other matters as well as financings and debt reduction, are subject to known and unknown risks, uncertainties and contingencies. Many of these risks, uncertainties and contingencies are beyond our control, and may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. Factors that might affect such forward-looking statements, include, among other things, the impact of changes in commodity prices, such as oil and copper, on product margins; general economic and business conditions; ~~the length~~existing and ~~extent of economic contraction~~future adverse effects as a result of the coronavirus (COVID-19) pandemic; disruption in the U.S. and global financial markets; potential difficulties in protecting our intellectual property; the ratings on our debt and our ability to repay or refinance our outstanding indebtedness as it matures; our ability to operate within the limits of our debt covenants; potential impairment of our goodwill and/or long-lived assets; demand for Koppers goods and services; competitive conditions; interest rate and foreign currency rate fluctuations; availability and costs of key raw materials and unfavorable resolution of claims against us, as well as those discussed more fully elsewhere in this report and in documents filed with the Securities and Exchange Commission by Koppers, particularly our latest annual report on Form 10-K and subsequent filings. We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this report and the documents incorporated by reference herein may not in fact occur. Any forward-looking statements in this report speak only as of the date of this report, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited financial statements and related notes included in Item 1 of this Part I as well as the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

We are a leading integrated global provider of treated wood products, wood preservation chemicals and carbon compounds. Our products and services are used in a variety of niche applications in a diverse range of end-markets, including the railroad, specialty chemical, utility, residential lumber, agriculture, aluminum, steel, rubber and construction industries. We serve our customers through a comprehensive global manufacturing and distribution network, with manufacturing ~~facilities located~~capabilities in North America, South America, Australasia ~~China~~ and Europe.

We operate three principal businesses: Railroad and Utility Products and Services (“RUPS”), Performance Chemicals (“PC”) and Carbon Materials and Chemicals (“CMC”).

Through our RUPS business, we believe that we are the largest supplier of wood crossties to the Class I railroads in North America. Our other treated wood products include utility poles for the electric, telephone, and ~~telephone~~broadband utility industries in the United States and Australia and construction ~~pilings.~~pilings in the U.S. We also provide rail joint bar products as well as various services to the railroad ~~industry.~~and utility industries in North America.

Through our PC business, we believe that we are the global leader in developing, manufacturing and marketing wood preservation chemicals and wood treatment technologies for use in the pressure treating of lumber for residential, industrial and agricultural applications.

Our CMC business processes coal tar into a variety of products, including creosote, carbon pitch, carbon black feedstock, naphthalene and phthalic anhydride, which are intermediate materials necessary in the pressure treatment of wood, the production of aluminum, the production of carbon black, the production of high-strength concrete, and the production of plasticizers and specialty chemicals, respectively.

Our businesses and results of operations are affected by various competitive and other factors including (i) the impact of global economic conditions on demand for our products, including the impact of imported products from competitors in certain regions where we operate; (ii) raw material pricing and availability, in particular the cost and availability of hardwood lumber for railroad crossties and softwood lumber for utility poles, scrap copper prices, and the cost and amount of coal tar available in global markets, which is negatively affected by reductions in blast furnace steel production; (iii) volatility in oil prices, which impacts the cost of coal tar and certain other raw materials, as well as selling prices and margins for certain of our products including carbon black feedstock, phthalic anhydride, and naphthalene; (iv) competitive conditions in global carbon pitch markets; and (v) changes in foreign exchange rates.

Our ~~quarterly~~ operating results may fluctuate due to a variety of factors that are outside of our control, including from the effects of the current pandemic. The COVID-19 outbreak began to have a global effect in the first quarter of 2020 and continues to have a significant impact on global markets driven by supply chain and production disruptions, workforce restrictions, ~~reduced~~trends in spending patterns and other factors. These events negatively impacted our financial performance, primarily with respect to our CMC business in the first two quarters of 2020 and are expected to negatively impact our financial performance in future periods. During the COVID-19 pandemic, substantially all of our global businesses have continued to operate ~~within a critical infrastructure sector (as established~~without significant disruption. In the U.S., Koppers was designated as an essential business, as determined by the Cybersecurity &and Infrastructure Security Agency of(CISA) within the ~~U.S.~~ Department of Homeland ~~Security, as well as other governments worldwide), and as~~Security. As a result, we have been able to meet the ~~demand~~demands of our customers in the various markets we ~~serve.~~

~~Our operations were curtailed in two locations, China~~serve by continuing to operate to transport critical goods, provide power and ~~New Zealand, after government restrictions required the temporary closure of operations. These operations have returned~~connectivity to ~~service in the second quarter of 2020. Our remaining 31 facilities, principally in the United States, Canada, the United Kingdom, Australia and Denmark, were permitted to continue to operate.~~

~~Another impact of the pandemic is that more individuals are spending more time in their~~ homes and ~~as a result, big-box retailers are continuing to report strong demand for home improvement projects. Consequently, we are benefiting from higher sales volumes of~~businesses, and keep our water-borne treatment solutions used in residential treated wood products. In the U.S., we expect that lumber treaters will continue working to fill the demand backlog and retailers will continue replenishing their inventory levels for the remainder of 2020.infrastructure running reliably.

The full extent to which COVID-19 will adversely impact our business depends on future developments, which are highly uncertain and unpredictable, including new information concerning the severity of the outbreak and the effectiveness of actions globally to contain or mitigate its effects. Our condensed consolidated financial statements and discussion and analysis of financial condition and results of operations reflect estimates and assumptions made by us as of June 30, ~~2020.~~2021, including those related to COVID-19. Events and changes in circumstances arising after June 30, ~~2020,~~2021, including those resulting from the impacts of ~~COVID-19,~~COVID-19, will be reflected in our estimates for future periods.

~~Refer to the~~ ~~Liquidity~~ ~~section of Management’s Discussion and Analysis for the impact of the global pandemic on our~~ ~~liquidity.~~

We provide our customers with treated and untreated wood products, rail joint bars and services primarily for the railroad markets in the United States and Canada. We also operate a railroad services business that conducts engineering, design, repair and inspection services primarily for railroad bridges in the U.S. and Canada. In addition, we supply treated utility poles for the utility sector in the United States and Australia. The primary end-markets for RUPS isare the North American railroad industry, which has an installed base of approximately ~~700~~450 million wood crossties, and the ~~investor-owned~~ utility industry which utilizes wooden distribution and transmission poles. Both crossties and utility poles require periodic replacement.

For the past several years, the major companies in the rail industry substantially reduced both operating and capital spending from peak spending levels, which had a negative impact on sales of various products and services that we provide to that industry. We currently supply all seven of the North American Class I railroads and have long-standing relationships with these customers. Approximately 70 percent of our North American sales are under long-term contracts and we believe that we are positioned to maintain or grow our current market position.

Historically, North American demand for crossties had been in the range of ~~22-25~~22 million to 25 million crossties annually. However, the crosstie replacement market has been significantly lower in recent years. According to the Railway Tie Association (“RTA”), the ~~estimated~~reported total crosstie installations in ~~2019~~2020 were approximately 2018 million, of which 1514 million were for Class I railroads. ~~For~~Throughout 2020, ~~RTA has not provided~~there was a ~~forecast given the uncertainties related~~decline in freight-rail traffic, which prompted larger track maintenance windows to ~~COVID-19, but has reported, in general,~~be available and, as a result, the railroad industry ~~is managing~~managed to offset lower volumes with increased ~~productivity. In fact,~~productivity as certain railroads ~~are taking advantage of~~used the reduced track time to increase maintenance on their infrastructure. According to a mid-year forecast update issued by the RTA, demand for crossties in 2021 is now expected to be 18.9 million, or 4.7 percent growth, and 19.5 million in 2022, or 3.2 percent growth. The year-over-year increases are expected to be driven primarily from growth in the commercial market, while Class I volumes are expected to remain at relatively similar demand levels.

According to the American Association of Railroads (“AAR”), total U.S. carloads in the second quarter of 2021 were the highest since the fourth quarter of 2019; carloads excluding coal were the highest since the third quarter of 2019; and intermodal and chemical volumes were both the highest for any quarter in history. In addition, carloads of steel-related commodities were also relatively strong in the second quarter, reflecting higher demand as the industrial economy continues to recover. Year-to-date through June 30, 2021, total U.S. carload traffic increased 9.4 percent from the prior year, while intermodal units increased by 17.5 percent. The combined U.S. traffic for carloads and intermodal units was higher by 13.7 percent as compared with the prior year. Looking ahead to 2021, the AAR stated that a significant amount of ongoing network investments has made the industry more adaptable and better able to adjust to the demands of a wide range of operational and market conditions.

With respect to our utility products business, utilities need to maintain their infrastructure to avoid interruptions in service as large sections of the population continue to work remotely due to the COVID-19 pandemic. As such, we anticipate that 2021 demand will be relatively stable to slightly higher, as the overall industry is trending toward expanded and upgraded transmission networks. We continue to evaluate opportunities to potentially expand our market presence in the U.S. as well as certain overseas markets.

From a long-term perspective, we believe there remains an overall need for sustained investment in infrastructure and capacity expansion. We believe that with our vertical integration capabilities in wood treatment and strong customer relationships, we will ultimately benefit from increased demand.

For distribution poles, nearly half of the installed base is over 40 years old and demand has historically been in the range of two million to three million poles annually. On an overall basis, we believe that the rate at which utilities purchase utility poles will grow as they continue replacement programs within their service territories. As a whole, ~~utilities need to maintain their infrastructure to avoid interruptions in service as large sections of~~ the ~~population continue to work remotely due to the COVID-19 pandemic.~~ ~~As such, we anticipate~~key factors that ~~2020 demand will be relatively stable to slightly higher, although~~ ~~certain utilities are having issues securing line hardware and transformers which could push some second-half 2020 projects into 2021. Longer term, we are evaluating opportunities to potentially expand our market presence~~drive growth in the ~~U.S.~~utility poles market include growing global energy consumption as well as ~~certain overseas markets. Regarding~~expansion of the ~~supply chain,~~ global telecommunication industry.

In the U.S., a significant amount of utility poles are treated with pentachlorophenol (“penta”), a wood preservative. The sole producer of penta in North America announced plans to exit penta production at the end of 2021. Given that penta availability will begin to be phased out over the next 12 months, we will transition from using penta for treating utility poles to other wood-treatment preservatives. Our internally-produced creosote and chromated copper arsenate (“CCA”) products are viable alternatives to penta and are currently used in the treatment of utility poles. As a result, we are currently working with our utility customers who use penta-treated poles to evaluate the use of CCA or creosote as potential treatment options. In July 2021, we began the process of converting our facilities that previously utilized penta to other wood preservatives for the treatment of utility poles. We anticipate that this will be completed by mid-2022, after which those facilities will be able to offer a variety of preservative treatment options to customers, including copper naphthenate, CCA and creosote. In undertaking this effort, we believe that Koppers will be in an optimal position to respond quickly to future market needs.

With respect to raw materials, we expect ~~that~~ the availability of ~~raw materials will~~pole supply to remain relatively consistent even with lumber in high demand.

For ~~The supply of~~ untreated crossties, the supply can vary at times based upon weather conditions in addition to other factors. We have a nationwide wood procurement team that maintains close working relationships with a network of sawmills. We procure untreated crossties, either on behalf of our customers, or for our own inventory for future treating. We also procure switch ties and various other types of lumber used for railroad bridges and crossings. Untreated crossties go through a ~~six-~~six to nine-month air seasoning process before they are ready to be pressure treated. After the air seasoning process is complete, the crossties are pressure treated using creosote-only treatment or a combined creosote and borate treatment.

During any given year, there is a seasonal effect in the winter and spring months on our crosstie business depending on weather conditions for harvesting lumber and crosstie installation.

~~For~~ Currently, there are several key factors impacting the ~~past several years,~~untreated crosstie market and the ~~major companies in the rail industry substantially reduced both operating and capital spending from peak spending levels, which had a negative impact on sales~~related availability of ~~various products and services that we provide to that industry. Current year revenues and profitability reflect an increase year-over-year due~~crosstie supply. Due to a ~~slight rise in~~strong market for housing construction, there is a higher demand ~~as capital budgets~~for wood products, mainly softwood construction lumber, but also including hardwood used for crosstie production. As a result, there are indications that some sawmills that normally produce hardwood lumber have ~~now stabilized for most North American Class I railroads. We currently supply all seven~~shifted some or much of their capacity to produce higher-margin construction lumber. Also, the ~~North American Class I railroads and have long-standing relationships with these customers. Approximately 70 percent~~lack of ~~our North American sales are under long-term contracts and we believe that we are positioned to maintain or grow our current market position.~~

~~According~~available labor is affecting some sawmills to the ~~American Association of Railroads, even though rail traffic in 2020 lags significantly from~~extent that they are not able to adequately staff their operations. Longer term, the ~~prior year, Class I railroad activities began improving in May~~RTA expects that demand for pallets and ~~that has continued into June. Freight, coal, automotive~~construction lumber to moderate and, support industry-related loadings all saw either increases or stabilization. Through June 30, 2020, total U.S. carload traffic decreased 15.9 percent from the same period last year, while intermodal units dropped by 10.6 percent. The combined U.S. traffic for carloads and intermodal units fell by 13.2 percent.

~~In terms of raw material,~~ ~~while forestry has generally been deemed essential during the COVID-19 outbreak, new construction~~therefore, is ~~not considered essential in certain states. While this has impacted some of the sawmills, we have not experienced~~forecasting a ~~noticeable impact to date as most sawmills are continuing to produce poles and crossties to maintain their operations and cash flow.The RTA reports that the availability of logs is near the ideal rate, as is the~~favorable outlook for log availability over the next ~~six~~6 to 12 months. We are reducing crosstie purchases to be more in line with prior year levels for the remainder of 2020 in order to stabilize inventory levels. In addition, we are receiving more dry ties from third parties for certain Class I customers and that should help maintain year-over-year treating levels in the second half of 2020.

To date, all but one of our Class I customers have indicated that they expect to maintain their tie replacement programs for 2020; however these plans may change in future months due to a highly uncertain and unpredictable economic environment. From a long-term perspective, we believe there remains a need for sustained investment in infrastructure and capacity expansion. We believe that with our vertical integration capabilities in wood treatment and strong customer relationships, we will ultimately benefit from increased demand.

As part of optimizing our business, we continue to evaluate a number of opportunities to improve efficiencies in our operational processes, people and facilities. With 17our 15 North American RUPS treating facilities operating at less than full utilization, our goal is to either capture more volume through the existing facilities or consolidate our operating footprint. In ~~June 2020, we announced~~ ~~the closure of our Denver, Colorado facility and we have targeted~~ the third quarter of 2020, ~~for discontinuing activities~~we permanently closed our Denver, Colorado wood treatment facility. Concurrent with the decision to close the Denver facility, we announced our plan to modernize and upgrade parts of our treating network, specifically at ~~this location and, as such,~~our facility in North Little Rock, Arkansas, which will be primarily funded through proceeds from the sale of non-core assets, which will include the Denver facility. Separately, in the second quarter of ~~2020~~2021, we ~~recorded charges~~exited our Jasper, Texas facility lease and relocated the production of ~~$4.2 million for asset retirement obligations, fixed asset write-offs and severance. As a result of this closure, we expect additional restructuring and related charges~~utility products to ~~earnings of approximately $4 to $9 million through 2021.~~our Somerville, Texas plant.

The largest geographic market for wood treating chemicals sold by our PC business is in North America, and the largest application for our products is the residential remodeling market. We also have a market presence in Europe, South America, Australia, New Zealand and Africa. We believe that PC is the largest global manufacturer and supplier of water-based wood preservatives and wood specialty additives to treaters that supply pressure treated wood products to large retailers and independent lumber dealers. These retailers and dealers, in turn, serve the residential, agricultural and industrial pressure-treated wood market. Our primary products are copper-based wood preservatives ~~including~~and fire-retardant chemicals (“FlamePro®”). Our copper-based wood preservatives include micronized copper azole (“MicroPro®”) and micronized pigments (“MicroShades®”). Applications for these products include decking, fencing, utility poles, construction lumber and other outdoor structures.

In North America, we are vertically integrated due to our manufacturing capabilities for copper compounds for our copper-based wood preservatives. We believe our vertical integration is part of our proprietary processes and reflects an important competitive advantage.

As most of the products sold by PC are copper-based products, changes in the price and availability of copper can have a significant impact on product pricing and margins. We attempt to moderate the variability in copper pricing over time by entering into hedging transactions for the majority of our copper needs, which primarily range from six months up to 36 months. These hedges typically match expected customer purchases and receive hedge accounting ~~treatment.~~treatment, with any ineffectiveness reflected in current earnings. From time to time, we enter into forward transactions based upon long-term forecasted needs of copper. These forward positions are typically marked to market. Currently, we have forward swap positions for copper extending to the end of 2022.

Product demand for our PC business has historically been closely associated with consumer spending on home repair and remodeling projects, and therefore, trends in existing home sales serve as a leading indicator. Overall, the market for existing homes are showing ~~some improvements.~~strong demand. According to the National Association of Realtors® (“NAR”), total existing-home sales ~~rebounded~~rose 1.4 percent on a seasonally adjusted annual rate from May to June, with no regions showing a sales decline. The inventory of unsold homes increased 3.3 percent to 1.2 million from May to June. The median existing-home sales price rose at a ~~record~~year-over-year pace of 23.4 percent, the second highest level recorded since January 1999. Supply has improved in ~~June~~ ~~showing signs~~recent months due to more housing starts and existing homeowners listing their homes, all of which has resulted in increased sales. Home sales continue to run at a ~~market turnaround after three straight months of sales declines caused by the pandemic. According~~higher pace compared to the ~~NAR, total existing home sales increased 20.7 percent since May, although overall home sales were down 11.3 percent from a year ago.~~pre-pandemic pace.

According to the Leading Indicator of Remodeling Activity (“LIRA”) reported by the Joint Center for Housing Studies of Harvard University, ~~expenditures for improvements and repairs to owner-occupied homes are expected to slow by~~ the ~~middle of next year as the COVID-19 pandemic continues to unfold. LIRA projects~~ annual ~~declines~~growth in home renovation and repair ~~spending of 0.4~~expenditures is projected to reach 8.6 percent by ~~mid-2021 as~~ the ~~pace~~second quarter of 2022 and reach $380 billion in annual remodeling expenditures to owner-occupied homes.Home remodeling is anticipated to continue to grow given the ongoing strength of home ~~improvement~~sales, house price appreciation, and ~~repairs tapers off.~~new residential construction activity. There has been a significant increase in permits for home improvements, which indicates that homeowners are continuing to invest in larger discretionary and replacement projects.

The Conference Board Consumer Confidence Index®~~decreased~~ improved further in ~~July, after increasing~~June, following gains in ~~June. The Index now stands~~each of the previous four months, with the index at ~~92.6, down~~127.3, up from ~~98.3~~120.0 in ~~June. Consumers are less optimistic about~~May 2021. Consumer confidence increased in June and is currently at its highest level since March 2020. Consumers’ assessment of current conditions improved again, suggesting economic growth has strengthened further in the second quarter of 2021. While short-term ~~outlook~~inflation expectations increased, this did not have any significant impact on consumer confidence or purchasing intentions. Consumer spending for both goods and services is expected to continue to support economic growth in the ~~economy and labor market, likely due to a resurgence of COVID-19 in certain regions.~~short-term.

Although the market data and projections for home improvements ~~continue to vary widely,~~are continually changing, we are anticipating continued strong demand for residential treated wood in North America, primarily in the U.S. In ~~looking at residential renovation markets, businesses are indicating a more positive outlook for 2020 than at~~addition, strong gains in retail sales of building materials also suggest that the beginning of pandemic. In addition, the housing industry reported an increase in the number of buyers who are actively pursuing the purchase of a new or existing home, which supports a continued favorable outlook.remodeling market will continue to be supported by do-it-yourself activities. As homeowners are focusing on the importance of their homes in a ~~work-life~~remote or virtual work environment and with interest rates at historically low levels, we expect the pace to continue ~~at least through 2020.~~for much of 2021.

Regarding our supply chain, we continue to evaluate copper hedges for the 2021-2022 timeframe, which on average are at lower average costs compared with 2020. For 2020, we do not expect to see any additional benefits related to lower copper prices, since we are already fully hedged. However, we are expecting slightly higher costs in the second half of 2020, as we need to source higher cost intermediate raw material to fill the demand backlog.

The primary products produced by CMC are creosote, which is a registered pesticide in the United States and used primarily in the pressure treatment of railroad crossties, and carbon pitch, which is sold primarily to the aluminum industry for the production of carbon anodes used in the smelting of aluminum. We have ~~reduced~~realigned capacity in our CMC plants in North America and Europe over the past several years to levels required to meet creosote demand in North America for the treatment of railroad crossties. The CMC business currently supplies our North American RUPS business with its creosote requirements.

On February 18, 2020, we entered into a definitive agreement to sell Koppers (Jiangsu) Carbon Chemical Company Limited (“KJCC”) to Fangda Carbon New Material Co., Ltd and C-Chem Co., Ltd., a subsidiary of Nippon Steel Chemical & Material Co., Ltd. KJCC is a 75 percent-owned coal tar distillation company which is part of our CMC segment. ~~On April 29, 2020, the pending divestiture reached a key milestone by receiving antitrust approval from China’s State Administration for Market Regulation of China (SAMR).~~ In 2019, KJCC’s sales totaled $127.4 million and its operating profit totaled $5.9 million. The sales price is $107.0 million, subject to adjustment for cash, debt and working capital at closing, which is expected to occur in the third quarter of 2020 due to required regulatory approvals in China and achievement of other closing conditions. At closing, we estimate the gain on the sale of KJCC will be approximately $45 million and net cash proceeds to Koppers will be approximately $65 million, after noncontrolling interest, taxes and expenses. The results of KJCC are reflected as a discontinued operation in the consolidated financial statements and the supporting footnotes.

In the third quarter of 2019, we ceased remaining production activities at our Follansbee, West Virginia. As a result of this action and other previously disclosed initiatives to reduce capacity in our CMC business, we expect additional restructuring and related charges to earnings of approximately $2 million to $5 million through 2021. The overall remaining future cash requirements for CMC plant closures still in progress are estimated to be approximately $13 million through 2021.

While the sale of carbon pitch remains a significant portion of our sales volume, the reduction of aluminum smelting capacity in the United States, Australia and Western Europe has led to sharply lower demand for carbon pitch over the past several years. Accordingly, we have experienced significantly lower sales volumes due to the reduction in aluminum production in parts of the world where the majority of our production facilities are located. However, beginning in 2018, aluminum production in the United States increased to some extent as tariffs have been imposed on certain imported steel and aluminum products that has stimulated restarts of previously idled capacity. This development has resulted in additional demand for carbon pitch in the United States that can likely only be sustained through a continuation of current trade policy.

The availability of coal tar, the primary raw material for our CMC business, is linked to levels of metallurgical coke production. As the global steel industry, excluding Asia, has reduced the production of steel using metallurgical coke, the volumes of coal tar have also been reduced. For the past decade, the coal tar distillation industry has operated in an excess capacity mode, which further increased the competition for a limited amount of coal tar in North America. ~~Over the past five years~~As part of our restructuring initiatives beginning in 2015, we have now consolidated our operating footprint and significantly lowered production levels at the same time that we added distribution assets to move finished products from Europe to the United States more efficiently. ~~In addition, we entered into several new long-term supply agreements starting in 2017 to further lower our exposure to coal tar availability risk and volatile end markets.~~ As a result, our raw material needs in North America have been significantly less than historically required.

~~For the external markets served by our CMC business, we expect that North America and Europe will be significantly impacted by the COVID-19 pandemic.~~ ~~We are seeing significant declines in auto manufacturing capacity and other industrial production markets, and consequently, that is resulting in lower demand for our products.~~ ~~Carbon pitch and~~ ~~phthalic anhydride markets have begun to soften due to declines in demand as manufacturing activity in North America and Europe significantly slowed. In addition, end market pricing for some products has been under pressure in certain regions due to the significant fall in worldwide oil prices.~~

Globally, coal tar raw material supply remains constrained due to reductions in blast furnace steel capacity. In 2021, we are planning to return to normal production levels in North America the pullback in steel production had led to lower domestic coal tar availability and an increase in raw material imports to North America at higher prices, while markets in Europe and Australia remain relatively steady. Although automakers had shut down in recent months, the demand for new cars has been improving and therefore, production is resuming for certain models in the second half of ~~2020. Overall,~~ the year, which should result in higher production domestically. As a result, we are projecting transportation cost savings as imports from Europe are reduced or no longer necessary.

While the sale of ~~coal tar~~carbon pitch remains a significant portion of our sales volume, the reduction of aluminum smelting capacity in the United States, Australia and Western Europe has led to sharply lower demand for carbon pitch over the past several years. Accordingly, we have experienced significantly lower sales volumes due to the reduction in aluminum production in parts of the world where the majority of our production facilities are located. For the external markets served by our CMC business, we anticipate a recovery in manufacturing overall as well as increased production in steel, aluminum and carbon black industries. According to IHS Markit Automotive Group, light vehicle production is ~~decreasing~~projected to grow approximately 14 percent in ~~line~~2021 globally, with ~~end markets, but lagging by approximately three months.~~U.S. production expected to increase 24 percent.

Our quarterly operating results fluctuate due to a variety of factors that are outside of our control, including inclement weather conditions, which in the past have affected operating results. Operations at some of our facilities have at times been reduced during the winter months. Moreover, demand for some of our products declines during periods of inclement weather. As a result of the foregoing, we anticipate that we may experience material fluctuations in quarterly operating results. Historically, our operating results have been significantly lower in the first and fourth calendar quarters as compared to the second and third calendar quarters.

Results of Operations – Comparison of Three Months Ended June 30, ~~2020~~2021 and ~~2019~~2020

Net sales for the three months ended June 30, ~~2020~~2021 and ~~2019~~2020 are summarized by segment in the following table:

	Three Months Ended June 30,							Three Months Ended June 30,
	2020		2019		Net Change			2021		2020		Net Change
(Dollars in millions)
Railroad and Utility Products and Services	$	209.9	$	199.1		5	%	$	195.5	$	209.9		-7	%
Performance Chemicals		137.1		120.8		13	%		145.6		137.1		6	%
Carbon Materials and Chemicals		89.6		123.9		-28	%		99.9		89.6		11	%
	$	436.6	$	443.8		-2	%	$	441.0	$	436.6		1	%

RUPS net sales decreased by $14.4 million or seven percent compared to the prior year period. The sales decrease was primarily due to volume decreases of untreated crossties for our Class I customers. Increased demand for lumber driven by strong construction markets resulted in decreased supply and decreased purchasing activity of untreated crossties by our customers during the current period. Volume decreases in our utility pole business due to transitioning production from the Texas Electric Cooperatives’ Jasper, Texas plant to our Somerville, Texas plant as well as volume decreases in our commercial crosstie business also contributed to the reduction from the prior year period. These decreases were offset, in part, by volume increases in our crosstie disposal business. Foreign currency translation also had a favorable impact on sales in the current period of $1.8 million, mainly from our Australian utility pole business.

PC net salesincreased by ~~$10.8~~$8.5 million or ~~five~~six percent compared to the prior year period. The sales increase was primarily due to ~~volume~~higher demand for preservatives in our international markets resulting from continued pent-up demand after the lifting of earlier restrictions associated with the pandemic. PC also benefitted from pricing increases ~~in the Class I crosstie market as well as the domestic and Australian utility pole markets, along with price increases in the commercial crosstie market~~ in the current year ~~period. Sales of crossties increased by $9.7 million~~period for our copper-based preservatives in the Americas. Foreign currency translation from our international markets also had a favorable impact on sales in the current year ~~period. These~~period of $3.5 million. The increases were offset, in part, by volume decreases for preservatives in ~~our~~ ~~maintenance-of-way~~ ~~businesses and an unfavorable impact from foreign currency translation~~North America as high lumber prices have tempered customer demand in the current year period coupled with high levels of ~~$0.5 million from our Australian pole business.~~

~~PC net sales~~ ~~increased by $16.3 million or 13 percent compared to~~demand in the prior year ~~period.~~ The sales increase was due primarily to higher demand for copper-based preservatives in North America due to new customer additions and higher organic volumes driven by increased home repair and remodeling activities duringperiod as a result of the pandemic. These increases were partially offset by a decrease in sales volumes in all of our international markets and an unfavorable impact from foreign currency translation in the current year period of $1.9 million.

CMC net sales ~~decreased~~increased by ~~$34.3~~$10.3 million or 2811 percent compared to the prior year period due mainly to ~~lower~~higher sales prices for carbon ~~pitch and carbon~~ black feedstock ~~globally~~in Europe and ~~lower sales prices for~~ phthalic anhydride in North America ~~as a result of depressed oil prices~~ in the current year period. Other contributing factors include lower sales volumes of carbon pitch globally, lower sales volumes of phthalic anhydride in North America and lower sales volumes of carbon black feedstock in Europe as a result of the pandemic. Foreign currency translation also had ~~an unfavorable~~a favorable impact on sales in the current year period of ~~$1.3 million.~~$5.8 million, mainly from our Australian and European markets. These increases were offset, in part, by lower sales volumes of carbon pitch in North America, due to a temporary plant outage, and Europe and lower pitch prices in Australia in the current year period.

Cost of sales as a percentage of net sales was 7778 percent for the quarter ended June 30, ~~2020~~2021 compared to 7977 percent in the prior year quarter. Gross margin at RUPS was negatively affected in the current year period by lower sales volumes of crossties and utility poles in North America. Gross margin at PC was favorably impacted in the prior year period by ~~a net amount of $10.1~~an $8.3 million ~~due to changes in~~ unrealized ~~gains and losses~~gain from our copper swap ~~contracts. Lower~~contracts as compared to an unrealized loss of $0.9 million for the three months ended June 30, 2021. These unfavorable drivers were offset, in part, by gross ~~margins for~~margin at CMC which was favorably impacted in the current year period ~~were a result of lower~~by higher sales ~~volumes and~~ prices for carbon ~~pitch globally.~~black feedstock in Europe and phthalic anhydride in North America along with a recovery from insurance proceeds.

Depreciation and amortization charges for the quarter ended June 30, ~~2020~~2021 were ~~consistent with~~$0.6 million higher when compared to the prior year period. due mainly to an increase in capitalized assets in our North American RUPS operations.

Impairment and restructuring charges for the quarter ended June 30, ~~2020~~2021 were ~~consistent with~~$3.2 million lower when compared to the prior year period. We recorded charges of $2.9 million for asset retirement obligations and $1.3 million for fixed asset write-offs and severance in the three months ended June 30, 2020 related to the announced closure of our Denver, Colorado facility. ~~Prior~~The current year ~~charges consisted of~~ ~~asset retirement obligation charges~~period included remaining demolition and ~~inventory and fixed asset write-offs~~other plant closure period costs related to the closure ~~of our Follansbee, West Virginia facility.~~.

Selling, general and administrative expenses for the quarter ended June 30, ~~2020~~2021 were $3.5 million ~~lower~~higher when compared to the prior year period due mainly to ~~a decrease~~an increase of ~~$1.1~~$1.5 million for consulting and professional services, $0.8 million for employee benefit related expenses and ~~$2.6~~$0.7 million for travel and facility related costs. ~~These decreases were partially offset by an increase in employee incentive expense in the current year period.~~

Interest expense for the quarter ended June 30, ~~2020~~2021 was ~~$2.9~~$2.7 million lower when compared to the prior year period primarily due to our lower average debt level and lower interest rates due to the ~~recent drop~~significant decrease in underlying LIBOR rates. In the third quarter of 2020, we used the net proceeds of the KJCC sale to reduce our borrowings under the Credit Facility.

Income tax expense for the ~~quarters ended June 30, 2020 and 2019 was $8.0 million. Income before income taxes was $15.1 million higher in the~~ quarter ended June 30, ~~2020~~2021 was $9.1 million, an increase of $1.1 million when compared to the prior year ~~period. However, the related~~quarter. The increase is primarily due to ~~income tax expense was offset by~~ a ~~lower estimated annual effective income tax rate~~reduction in the amount of discrete tax items in the current quarter ~~ended June 30, 2020~~ when compared to the prior year ~~period. Also,~~quarter.

Discontinued operations for the quarter ended June 30, ~~2020 included tax benefits~~2021 resulted in income of ~~$2.4~~$1.0 million ~~principally related~~primarily due to ~~provisions~~the recovery of past professional service fees from the CARES Act. Income tax expense as a percentage of pre-tax profit for the quarters ended June 30, 2020 and 2019 were 21.4 percent and 35.9 percent, respectively. See Note 10 – “Income Taxes” for further detail. noncontrolling interest in KJCC which was sold in 2020.

Segment operating profit for the three months ended June 30, ~~2020~~2021 and ~~2019~~2020 is summarized by segment in the following table:

	Three Months Ended June 30,									Three Months Ended June 30,
	2020			2019			% Change			2021			2020			% Change
(Dollars in millions)
Operating profit (loss):
Railroad and Utility Products and Services	$	16.2		$	11.8			37	%	$	4.3		$	16.2			-73	%
Performance Chemicals		32.6			14.0			133	%		28.7			32.6			-12	%
Carbon Materials and Chemicals		1.5			13.0			-88	%		13.4			1.5			793	%
Corporate		(0.6	)		(0.7	)		14	%		(2.1	)		(0.6	)		-250	%
	$	49.7		$	38.1			30	%	$	44.3		$	49.7			-11	%
Operating profit as a percentage of net sales:
Railroad and Utility Products and Services		7.7	%		5.9	%		1.8	%		2.2	%		7.7	%		-5.5	%
Performance Chemicals		23.8	%		11.6	%		12.2	%		19.7	%		23.8	%		-4.1	%
Carbon Materials and Chemicals		1.7	%		10.5	%		-8.8	%		13.4	%		1.7	%		11.7	%
		11.4	%		8.6	%		2.8	%		10.0	%		11.4	%		-1.4	%

RUPS operating profit decreased by $11.9 million compared to the prior year period. Operating profit as a percentage of net sales decreased to 2.2 percent from 7.7 percent in the prior year period. Operating profit as a percentage of net sales for the quarter ended June 30, 2021 was unfavorably impacted primarily by the effect on profitability from volume decreases of untreated crosstie sales to our Class I customers, including the effects of reduced utilization of plant capacity. An increase in raw material costs, including the price of hardwoods as the pandemic continues, also contributed to reduced margins. These decreases were offset, in part, by higher margins in our Australian utility pole business.

PC operating profit decreased by $3.9 million compared to the prior year period. Operating profit as a percentage of net sales decreased to 19.7 percent from 23.8 percent in the prior year period. The current year period was unfavorably impacted by a $0.9 million unrealized loss from our copper swap contracts compared to the prior year period which was favorably impacted by an $8.3 million unrealized gain from our copper swap contracts. Excluding the effect of unrealized gains and losses from our copper swap contracts, our operating profit as a percentage of net sales was 20.3 percent in the current year period compared with 17.8 percent in the prior year period. The current year period was favorably impacted by pricing increases for our copper-based preservatives in the Americas.

CMC operating profit increased by ~~$4.4~~$11.9 million compared to the prior year period. Operating profit as a percentage of net sales increased to ~~7.7~~13.4 percent from ~~an operating profit of 5.9 percent in the prior year period. Operating profit as a percentage of net sales for the three months ended June 30, 2020~~ ~~was favorably impacted by higher margins in our domestic utility pole and~~ ~~maintenance-of-way~~ ~~markets, a favorable sales mix in our commercial crosstie market and lower selling, general and administrative costs in the current year period.~~

~~PC operating profit~~ ~~increased by $18.6 million compared to the prior year period. Operating profit as a percentage of net sales increased to 23.8 percent from 11.6 percent in the prior year period.~~ The current year period was favorably impacted by higher sales volumes, a favorable sales mix and better absorption on higher production volumes during the pandemic along with lower year-over-year raw material prices. These factors were compounded by a net benefit of $10.1 million due to changes in unrealized gains and losses from our copper swap contracts over the prior year period. Excluding the effect of unrealized gains from our copper swap contracts, our operating profit as a percentage of net sales would have been 17.8 percent in the current year period.

~~CMC operating profit~~ ~~decreased by $11.5 million compared to the prior year period. Operating profit as a percentage of net sales decreased to~~ 1.7 ~~percent from an operating profit of 10.5~~ percent in the prior year period. Operating profit for the quarter ended June 30, ~~2020~~2021 was ~~negatively affected~~favorably impacted primarily by ~~lower~~higher sales prices for carbon ~~pitch and carbon~~ black feedstock ~~globally~~in Europe and ~~lower sales prices for~~ phthalic anhydride in North America, ~~as a result of depressed oil prices. Other contributing factors include lower~~higher sales volumes of carbon pitch ~~globally, lower sales volumes~~in Australia, a recovery of ~~phthalic anhydride~~$2.9 million from insurance proceeds in ~~North America~~the current year period and ~~lower sales volumes~~a reduction in certain restructuring-related charges of ~~carbon black feedstock in Europe as a result of~~$3.6 million from the ~~pandemic.~~ prior year period.

Results of Operations – Comparison of Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020

Net sales for the six months ended June 30, ~~2020~~2021 and ~~2019~~2020 are summarized by segment in the following table:

	Six Months Ended June 30,							Six Months Ended June 30,
	2020		2019		Net Change			2021		2020		Net Change
(Dollars in millions)
Railroad and Utility Products and Services	$	399.9	$	365.2		10	%	$	387.4	$	399.9		-3	%
Performance Chemicals		248.5		219.8		13	%		269.2		248.5		8	%
Carbon Materials and Chemicals		190.1		235.7		-19	%		191.9		190.1		1	%
	$	838.5	$	820.7		2	%	$	848.5	$	838.5		1	%

RUPS net sales decreased by $12.5 million or three percent compared to the prior year period. The sales decrease was primarily due to volume decreases in the commercial crosstie market as well as volume decreases of untreated crossties for our Class I customers. Increased demand for lumber driven by strong construction markets resulted in decreased supply and decreased purchasing activity of untreated crossties by our customers during the current period. Volume decreases in our utility pole business due to transitioning production from the Texas Electric Cooperatives’ Jasper, Texas plant to our Somerville, Texas plant also contributed to the reduction from the prior year period. These decreases were offset, in part, by volume increases in our maintenance-of-way and crosstie disposal businesses. Foreign currency translation also had a favorable impact on sales in the current year period of $3.5 million, mainly from our Australian utility pole business.

PC net sales increased by ~~$34.7~~$20.7 million or 10eight percent compared to the prior year period. The sales increase was primarily due to ~~volume increases~~higher demand for preservatives in our international markets resulting from continued pent-up demand due to earlier restrictions associated with the ~~Class I and commercial crosstie markets as well as the domestic and Australian utility pole markets,~~pandemic along with ~~price~~pricing increases ~~in the commercial crosstie market~~ in the current year ~~period. Sales of crossties increased by $33.4 million~~period for our copper-based preservatives in the Americas. Foreign currency translation from our international markets also had a favorable impact on sales in the current year ~~period. These~~period of $5.0 million. The increases were offset, in part, by volume decreases for non-copper-based preservatives in ~~our~~ ~~maintenance-of-way~~ ~~businesses and an unfavorable impact from foreign currency translation~~North America as high lumber prices have tempered customer demand in the current year period coupled with high levels of ~~$1.5 million from our Australian pole business.~~demand in the prior year period as a result of the pandemic.

PCCMC net sales increased by ~~$28.7~~$1.8 million or ~~13 percent compared to the prior year period.~~ The sales increase was due primarily to higher demand for copper-based preservatives in North America due to new customer additions and higher organic volumes driven by increased home repair and remodeling activities during the pandemic. These increases were partially offset by a decrease in sales volumes in all of our international markets and an unfavorable impact from foreign currency translation in the current year period of $3.6 million.

~~CMC net sales~~ ~~decreased by $45.6 million or 19~~one percent compared to the prior year period due mainly to ~~lower~~higher sales prices for carbon pitch and carbon black feedstock globally and lower sales prices for phthalic anhydride in North America as a result of depressed oil prices in the current year period. Other contributing factors include lower sales volumes of carbon pitch and carbon black feedstock in Europe and ~~North America as a result~~higher sales volumes of carbon pitch in Australia in the ~~pandemic.~~current year period. Foreign currency translation also had ~~an unfavorable~~a favorable impact on sales in the current year period of ~~$4.6 million.~~$12.1 million, mainly from our Australian and European markets. These increases were offset, in part, by lower sales volumes of carbon pitch in North America, due to a temporary plant outage, and Europe, lower sales volumes of phthalic anhydride in North America and lower pitch prices in Australia and Europe in the current year period.

Cost of sales as a percentage of net sales ~~and depreciation and amortization charges~~was 78 percent for the six months ended June 30, ~~2020 were consistent with~~2021 compared to 81 percent in the prior year period. Gross margin at PC was favorably impacted by higher sales volumes for preservatives in our international markets along with pricing increases in the current year period for our copper-based preservatives in the Americas. Gross margin at CMC which was favorably impacted in the current year period by higher sales prices for carbon black feedstock in Europe, higher sales volumes of carbon pitch in Australia and a recovery from insurance proceeds in the current year period along with a reduction in certain restructuring-related charges from the prior year period. These favorable drivers were offset, in part, by gross margin at RUPS which was negatively affected in the current year period by volume decreases in the commercial crosstie market as well as volume decreases of untreated crossties for our Class I customers principally due to decreased supply and decreased purchasing activity of untreated crossties due to higher lumber prices.

Depreciation and amortization charges for the six months ended June 30, 2021 were $3.2 million higher when compared to the prior year period due mainly to an increase in asset retirement obligations at our European CMC operations as well as an increase in capitalized assets in our North American RUPS operations.

Gain on sale of assets for the six months ended June 30, 2021 was $7.8 million and is primarily related to the sales of two previously decommissioned plants as described in Note 3 – “Plant Closures and Divestitures”.

Impairment and restructuring charges for the six months ended June 30, ~~2020~~2021 were ~~consistent with~~$1.8 million lower when compared to the prior year period. We recorded charges of $2.9 million for asset retirement obligations and $1.3 million for fixed asset write-offs and severance in the ~~three~~six months ended June 30, 2020 related to the announced closure of our Denver, Colorado facility. ~~Prior~~The current year ~~charges consisted of~~ ~~asset retirement obligation charges~~period included remaining demolition and ~~inventory and fixed asset write-offs~~other plant closure period costs related to the closure ~~of our Follansbee, West Virginia facility.~~.

Selling, general and administrative expenses for the six months ended June 30, ~~2020~~2021 were ~~$5.7~~$3.3 million ~~lower~~higher when compared to the prior year period due mainly to ~~a decrease~~an increase of ~~$2.4~~$3.6 million ~~for~~in employee benefit related expenses, ~~and $3.8 million for~~which were partially offset by a decrease in travel and facility related costs.

Interest expense for the six months ended June 30, ~~2020~~2021 was ~~$5.2~~$6.5 million lower when compared to the prior year period primarily due to our lower average debt level and lower interest rates due to the significant ~~drop~~decrease in underlying LIBOR rates. In the third quarter of 2020, we used the net proceeds of the KJCC sale to reduce our borrowings under the Credit Facility.

Income tax expense for the six months ended June 30, ~~2020~~2021 was ~~$6.2~~$17.6 million, ~~as compared to income tax expense~~an increase of ~~$6.8~~$11.4 million ~~in the prior year period. Income before income taxes was $6.7 million higher in the six months ended June 30, 2020~~ when compared to the prior year period. ~~However, the related~~The increase is primarily due to income ~~tax expense was offset by a lower estimated annual effective~~before income ~~tax rate~~taxes being $32.2 million higher in the ~~six months ended June 30, 2020~~current period when compared to the prior year period. ~~Both periods included benefits related~~The increase is also due to a reduction in the amount of discrete ~~tax~~ items ~~which significantly influenced~~in the tax provision. In 2020, we recognized net tax benefits of $4.2 million principally related to provisions of the CARES Act and, in 2019, we recognized net tax benefits of $3.7 million principally relatedcurrent period when compared to the reversal of unrecognized tax benefits due to audit closures. Income tax expense as a percentage of pre-tax profit for the six months ended June 30, 2020 and 2019 were 16.5 percent and 22.1 percent, respectively. See Note 10 – “Income Taxes” for further detail. prior year period.

Discontinued operations for the six months ended June 30, ~~2020~~2021 resulted in income of $0.6 million compared to a loss of $4.4 million ~~compared~~in the prior year period. The discontinued operation relates to KJCC which was sold in the third quarter of 2020. The income in 2021 resulted from the recovery of ~~$2.8 million~~past professional service fees from the noncontrolling interest in KJCC which was sold in 2020, net of ongoing post-sale expenses. The loss in the prior year period was due primarily to a ~~year-over-year~~ reduction in sales ~~of $61.2 million~~ attributable to the economic effects of ~~COVID-19~~the pandemic on ~~our KJCC operations and lower end market demand.~~KJCC.

Segment operating profit for the six months ended June 30, ~~2020~~2021 and ~~2019~~2020 is summarized by segment in the following table:

	Six Months Ended June 30,									Six Months Ended June 30,
	2020			2019			% Change			2021			2020			% Change
(Dollars in millions)
Operating profit (loss):
Railroad and Utility Products and Services	$	25.4		$	20.5			24	%	$	13.0		$	25.4			-49	%
Performance Chemicals		36.7			26.8			37	%		53.5			36.7			46	%
Carbon Materials and Chemicals		2.2			16.2			-86	%		24.2			2.2			1000	%
Corporate		(1.0	)		(1.1	)		9	%		(2.5	)		(1.0	)		-150	%
	$	63.3		$	62.4			1	%	$	88.2		$	63.3			39	%
Operating profit as a percentage of net sales:
Railroad and Utility Products and Services		6.4	%		5.6	%		0.8	%		3.4	%		6.4	%		-3.0	%
Performance Chemicals		14.8	%		12.2	%		2.6	%		19.9	%		14.8	%		5.1	%
Carbon Materials and Chemicals		1.2	%		6.9	%		-5.7	%		12.6	%		1.2	%		11.4	%
		7.5	%		7.6	%		-0.1	%		10.4	%		7.5	%		2.9	%

RUPS operating profit ~~increased~~decreased by ~~$4.9~~$12.4 million compared to the prior year period. Operating profit as a percentage of net sales ~~increased~~decreased to ~~6.4~~3.4 percent from ~~an operating profit of 5.6~~6.4 percent in the prior year period. Operating profit as a percentage of net sales for the six months ended June 30, ~~2020~~2021 was ~~favorably~~unfavorably impacted primarily by the effect on profitability from volume decreases of untreated crossties for our Class I customers, including the effects of reduced utilization of plant capacity. An increase in raw material costs, including the price of hardwoods as the pandemic continues, also contributed to reduced margins. These decreases were offset, in part, by higher margins in our ~~domestic~~Australian utility pole ~~and~~ ~~maintenance-of-way~~ ~~markets, a favorable sales mix in our commercial crosstie market and lower selling, general and administrative costs in the current year period.~~business.

PC operating profit increased by ~~$9.9~~$16.8 million compared to the prior year period. Operating profit as a percentage of net sales increased to ~~14.8~~19.9 percent from ~~12.2~~14.8 percent in the prior year period. The current year period was favorably impacted by higher sales volumes ~~a favorable sales mix and better absorption on higher production volumes during~~for preservatives in our international markets resulting from continued pent-up demand due to the lifting of earlier restrictions associated with the pandemic along with lower year-over-year raw material prices. These favorable factors were partially offset by a net amount of $1.0 million due to changes in unrealized gains and losses from our copper swap contracts and $3.0 million of insurance proceeds recognizedpricing increases in the ~~prior~~current year ~~period.~~period for our copper-based preservatives in the Americas.

CMC operating profit ~~decreased~~increased by ~~$14.0~~$22.0 million compared to the prior year period. Operating profit as a percentage of net sales ~~decreased~~increased to ~~1.2~~12.6 percent from ~~an operating profit of 6.9~~1.2 percent in the prior year period. Operating profit for the six months ended June 30, ~~2020~~2021 was ~~negatively affected primarily~~favorably impacted by ~~lower~~higher sales prices for carbon ~~pitch and carbon~~ black feedstock ~~globally and lower sales prices for phthalic anhydride~~ in ~~North America as a result of depressed oil prices. Other contributing factors include lower~~Europe, higher sales volumes of carbon pitch in Australia, a recovery of $2.9 million from insurance proceeds in the current year periodand ~~carbon black feedstock~~a reduction in ~~Europe and North America as a result of~~certain restructuring-related charges from the ~~pandemic.~~prior year period.

Net cash provided by operating activities for the six months ended June 30, ~~2020~~2021 was ~~$22.2~~$36.1 million compared to net cash provided by operating activities of ~~$1.4~~$22.2 million in the prior year period. The net increase of ~~$20.8~~$13.9 million in cash provided by operations was due primarily to ~~lower~~an increase in net income and certain other operating activities of $28.9 million from the prior year period, which had a favorable result on cash provided by operations in the current year period. These drivers were partly offset by higher working capital usage of ~~$15.9~~$15.0 million compared to the prior year period, mainly due to ~~improved inventory turnover~~a decrease in ~~the current year period.~~ ~~In addition, the change in income and certain operating activities of $4.9 million from the prior year period had a favorable result on cash provided by operations~~accrued liabilities in the current year period.

Net cash used in investing activities for the six months ended June ~~31, 2020~~30, 2021 was ~~$26.4~~$55.8 million compared to net cash used in investing activities of ~~$15.0~~$26.4 million in the prior year period. The net increase of $29.4 million in cash used ~~for~~in investing activities ~~of $11.4 million is~~was primarily due to an increase in capital expenditures of ~~$8.0~~$34.4 million in the current year ~~period. In addition,~~period, partially offset by $5.1 million of cash ~~provided by insurance proceeds for capital expenditures~~received related primarily to sales of ~~$3.0 million was received in the prior year period.~~two previously decommissioned CMC plants.

Net cash provided by financing activities was ~~$3.9~~$29.0 million for the six months ended June 30, ~~2020~~2021 compared to ~~$15.1~~$3.9 million of net cash provided by financing activities in the prior year period. The cash provided by financing activities in the six months ended June 30, ~~2020~~2021 reflected net borrowings of debt of $29.1 million partially offset by repurchases of common stock of $1.9 million related to long-term incentive compensation plans. The cash provided by financing activities in the prior year period reflected net borrowings of debt of $4.8 million partially offset by repurchases of common stock of $1.2 million related to long-term incentive compensation plans. The cash provided by financing activities in the prior year period reflected net borrowings of $16.3 million partially offset by repurchases of common stock of $0.9 million related to long-term incentive compensation plans.million.

We have a $600.0 million senior secured revolving credit facility and a $100.0 million secured term loan facility (collectively, the “Credit Facility”) ~~with a maturity date of May 2024. The interest rate on the Credit Facility is variable and is based on LIBOR. On February 26, 2020, we entered into the Fourth Amendment~~ as described in Note 14 ~~– “Debt”.~~“Debt.”

Koppers Holdings depends on the dividends from the earnings of Koppers Inc. and its subsidiaries to generate the funds necessary to meet its financial obligations, including the payment of any declared dividend of Koppers Holdings. The Credit Facility prohibits Koppers Inc. from making dividend payments to Koppers Holdings unless (1) such dividend payments are permitted by the indenture governing Koppers Inc.’s $500 million Senior Notes due 2025 (the “2025 Notes”), (2) no event of default or potential default has occurred or is continuing under our Credit Facility, and (3) we are in pro forma compliance with our fixed charge coverage ratio covenant after giving effect to such dividend. The indenture governing the 2025 Notes restricts Koppers Inc.’s ability to finance our payment of dividends if (1) a default has occurred or would result from such financing, (2) Koppers Inc., or a restricted subsidiary of Koppers Inc. which is not a guarantor under the indenture, is not able to incur additional indebtedness (as defined in the indenture), and (3) the sum of all restricted payments (as defined in the indenture) have exceeded the permitted amount (which we refer to as the “basket”) at such point in time.

The basket is governed by a formula based on the sum of a beginning amount, plus or minus a percentage of Koppers Inc.’s consolidated net income (as defined in the indenture), plus the net proceeds of Koppers Inc.’s qualified stock issuance or conversions of debt to qualified stock, plus the net proceeds from the sale of or a reduction in an investment (as defined in the indenture) or the value of the assets of an unrestricted subsidiary which is designated a restricted subsidiary. At June 30, ~~2020,~~2021, the basket totaled ~~$179.4~~$253.1 million. Notwithstanding such restrictions, the indenture governing the 2025 Notes permits an additional aggregate amount of $0.30 per share each fiscal quarter to finance dividends on the capital stock of Koppers Holdings, whether or not there is any basket availability, provided that at the time of such payment, no default in the indenture has occurred or would result from financing the dividends.

In addition, certain required coverage ratios in Koppers Inc.’s Credit Facility may restrict the ability of Koppers Inc. to pay dividends. ~~Koppers Holdings last declared a dividend in November 2014 and does not expect to declare any dividends for the foreseeable future.~~

~~Borrowings under the Credit Facility are secured by a first priority lien on substantially all of the assets of Koppers Inc., Koppers Holdings and their material domestic subsidiaries.~~

The Credit Facility contains certain covenants for Koppers Inc. and its restricted subsidiaries that limit capital expenditures, additional indebtedness, liens, dividends and investments or acquisitions. In addition, such covenants give rise to events of default upon the failure by Koppers Inc. and its restricted subsidiaries to meet certain financial ratios.

As of June 30, 2020, we had $157.5 million of unused revolving credit availability for working capital purposes after restrictions by various debt covenants and certain letter of credit commitments. As of June 30, 2020, $7.1 million of commitments were utilized by outstanding letters of credit.

The following table summarizes our estimated liquidity as of June 30, ~~2020~~2021 (dollars in millions):

Cash and cash equivalents⁽¹⁾	$	33.0
Cash and cash equivalents⁽¹⁾			$	44.2
Amount available under Credit Facility		157.5		286.3
Total estimated liquidity	$	190.5	$	330.5

Our ~~estimated~~ liquidity was ~~$254.6~~$344 million atas of December 31, ~~2019.~~2020.

Our ~~remaining~~ need for cash in the next twelve months relates primarily to contractual obligations which include debt service, pension plan funding, purchase commitments and operating leases, as well as working capital, capital maintenance programs and the funding of plant consolidation and rationalizations. We may also use cash to pursue other potential strategic acquisitions or voluntary pension plan contributions. Capital expenditures in ~~2020,~~2021, excluding acquisitions, if any, are expected to total approximately ~~$50~~$110 to ~~$60~~$120 million and are expected to be funded by cash from operations. We anticipate that our estimated liquidity will continue to be adequate to fund our cash requirements for the next twelve months.

On August 5, 2021, the board of directorsapproved a $100 million share repurchase program. The repurchase program has no expiration date and replaces our previous share repurchase program of $75 million, which was approved in November 2011 and had approximately $24.8 million remaining.

The covenants ~~under~~that affect availability of the Credit Facility ~~may restrict the availability to borrow or~~and which may restrict the ability of Koppers Inc. to pay ~~dividends. The Credit Facility’s covenants~~dividends include the following financial ratios:

We are currently in compliance with all covenants governing the Credit Facility. Our continued ability to meet those financial ratios can be affected by events beyond our control, however, excluding possible acquisitions, we currently expect that our net cash flows from operating activities and funds available from our Credit Facility will be sufficient to provide for our working capital needs and capital spending requirements over the next twelve months.

~~As of June 30, 2020, we~~We utilize certain financial measures that are not in ~~compliance~~accordance with ~~our debt covenant metrics~~U.S. generally accepted accounting principles (US GAAP) to analyze and ~~had $190.5 million of liquidity to fund our operations. Our estimates and assumptions as~~manage the performance of the ~~date~~business. We believe that EBITDA (as defined below), adjusted EBITDA, adjusted EBITDA margin, and net leverage ratio provide information useful to investors in understanding the underlying operational performance of ~~this report indicate that we should remain in compliance with our debt covenants and we have identified actions we can implement to help maintain compliance if~~ the ~~impact of COVID-19 has a more pronounced impact on the economy,~~company, our business and performance trends, and facilitate comparisons between periods and with other corporations in similar industries. The exclusion of certain items permits evaluation and a comparison of results for ongoing business operations, and it is on this basis that our ~~ability~~management internally assesses our performance. In addition, our board of directors and executive management team use adjusted EBITDA as a performance measure under the company’s annual incentive plans.

Although we believe that these non-GAAP financial measures enhance investors’ understanding of its business and performance, these non-GAAP financial measures should not be considered an alternative to ~~generate cash flow~~GAAP basis financial measures and ~~profits~~should be read in conjunction with the relevant GAAP financial measures. Other companies in a similar industry may define or calculate these measures differently than ~~estimated. These impacts~~we do, limiting their usefulness as comparative measures. Because of these limitations, these non-GAAP financial measures should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP.

EBITDA is a non-GAAP financial measure defined as net income from continuing operations before income taxes and interest, depreciation and amortization. The adjustments to arrive at adjusted EBITDA are ~~highly uncertain~~items that we believe are not representative of underlying business performance. Adjusted items typically include certain expenses associated with impairment, restructuring and ~~unpredictable,~~plant closure costs, significant gains and ~~include the severity~~losses on asset disposals or business combinations, other non-recurring items or recurring non-cash income or expense items such as LIFO and mark-to-market commodity hedging.

A reconciliation of ~~the outbreak and the effectiveness of actions globally~~segment net income to ~~contain or mitigate its effects. Accordingly, the financial effects of the pandemic on our business~~ ~~may have an adverse effect on the determination of, and compliance with, our debt covenants over the next twelve months. In the event~~adjusted segment EBITDA is not available without unreasonable efforts as we do not ~~maintain compliance~~measure net income at the segment level or use it as a measure of operating performance.

The following table summarizes EBITDA and adjusted EBITDA on a consolidated basis as calculated by us for the three and six month periods indicated below:

	Three Months Ended June 30,						Six Months Ended June 30,
(amounts in millions)	2021			2020			2021			2020
Net income	$	26.9		$	29.4		$	52.7		$	26.9
Interest expense		10.1			12.8			20.3			26.8
Depreciation and amortization		13.9			13.3			30.0			26.8
Depreciation in impairment and restructuring charges		0.0			0.7			0.0			0.7
Income tax provision		9.1			8.0			17.6			6.2
Discontinued operations		(1.0	)		0.0			(0.6	)		4.4
EBITDA with noncontrolling interests		59.0			64.2			120.0			91.8
Adjustments to arrive at adjusted EBITDA:
Impairment, restructuring and plant closure costs (benefits)		1.3			6.8			(2.8	)		9.6
Non-cash LIFO expense (benefit)		4.3			(3.2	)		5.3			(3.9	)
Mark-to-market commodity hedging losses (gains)		1.0			(8.2	)		(1.8	)		(0.3	)
Total adjustments		6.6			(4.6	)		0.7			5.4
Adjusted EBITDA	$	65.6		$	59.6		$	120.7		$	97.2

The following table summarizes EBITDA and adjusted EBITDA on a consolidated and segment basis as calculated by us for the three and six month periods indicated below:

	Three Months Ended June 30,						Six Months Ended June 30,
(amounts in millions)	2021			2020			2021			2020
EBITDA with noncontrolling interests:
Railroad and Utility Products and Services	$	8.6		$	21.3		$	23.5		$	35.2
Performance Chemicals		33.5			37.4			64.0			46.5
Carbon Materials and Chemicals		16.4			5.4			31.5			9.8
Corporate unallocated		0.5			0.1			1.0			0.3
Total EBITDA with noncontrolling interests	$	59.0		$	64.2		$	120.0		$	91.8
Adjusted EBITDA:
Railroad and Utility Products and Services	$	12.0		$	23.2		$	28.4		$	36.6
Performance Chemicals		34.5			29.2			62.3			46.2
Carbon Materials and Chemicals		18.6			7.1			29.0			14.1
Corporate unallocated		0.5			0.1			1.0			0.3
Total Adjusted EBITDA	$	65.6		$	59.6		$	120.7		$	97.2
Adjusted EBITDA margin as a percentage of GAAP sales:
Railroad and Utility Products and Services		6.1	%		11.1	%		7.3	%		9.2	%
Performance Chemicals		23.7	%		21.3	%		23.1	%		18.6	%
Carbon Materials and Chemicals		18.6	%		7.9	%		15.1	%		7.4	%
Total Adjusted EBITDA margin		14.9	%		13.7	%		14.2	%		11.6	%

The increase in adjusted EBITDA of $6.0 million for the three months ended June 30, 2021 from the prior year period is primarily due to increased profitability at CMC, which was favorably impacted in the current year period by higher sales prices for carbon black feedstock in Europe and phthalic anhydride in North America and a recovery of insurance proceeds. PC’s adjusted EBITDA was favorably impacted by pricing increases for our copper-based preservatives in the Americas in the current year period. These drivers were offset, in part, by less profitability at RUPS, which was negatively affected in the current year period by volume decreases in the commercial crosstie market as well as volume decreases of untreated crossties for our Class I customers principally due to decreased supply and decreased purchasing activity of untreated crossties due to higher lumber prices.

The increase in adjusted EBITDA of $23.5 million for the six months ended June 30, 2021 over the prior year period is primarily due to higher sales volumes at PC for preservatives in our international markets along with pricing increases in the current year period for our copper-based preservatives in the Americas. EBITDA at CMC was favorably impacted in the current year period by higher sales prices for carbon black feedstock in Europe, higher sales volumes of carbon pitch in Australia and a recovery of insurance proceeds in the current year period. These favorable drivers were offset, in part, by lower EBITDA at RUPS which was negatively affected in the current year period by volume decreases in the commercial crosstie market as well as volume decreases of untreated crossties for our Class I customers principally due to decreased supply and decreased purchasing activity of untreated crossties due to higher lumber prices.

A reconciliation of operating profit (loss) to adjusted EBITDA on a segment basis is presented below:

	Three Months Ended June 30, 2021
										Corporate
	RUPS			PC			CMC			Unallocated			Consolidated
Operating profit (loss)	$	4.3		$	28.7		$	13.4		$	(2.1	)	$	44.3
Other income (loss)		(1.0	)		0.1			(0.9	)		2.6			0.8
Depreciation and amortization		5.3			4.7			3.9			0.0			13.9
EBITDA with noncontrolling interest	$	8.6		$	33.5		$	16.4		$	0.5		$	59.0
Adjustments to arrive at adjusted EBITDA:
Impairment, restructuring and plant closure costs		0.9			0.0			0.4			0.0			1.3
Non-cash LIFO expense		2.5			0.0			1.8			0.0			4.3
Mark-to-market commodity hedging losses		0.0			1.0			0.0			0.0			1.0
Adjusted EBITDA	$	12.0		$	34.5		$	18.6		$	0.5		$	65.6
Adj. EBITDA % of Consolidated Adj. EBITDA (excluding corporate unallocated)		18.4	%		53.0	%		28.6	%

	Three Months Ended June 30, 2020
										Corporate
	RUPS			PC			CMC			Unallocated			Consolidated
Operating profit (loss)	$	16.2		$	32.6		$	1.5		$	(0.6	)	$	49.7
Other income (loss)		(0.6	)		0.4			0.0			0.7			0.5
Depreciation and amortization		5.0			4.4			3.9			0.0			13.3
Depreciation in impairment and restructuring charges		0.7			0.0			0.0			0.0			0.7
EBITDA with noncontrolling interest	$	21.3		$	37.4		$	5.4		$	0.1		$	64.2
Adjustments to arrive at adjusted EBITDA:
Impairment, restructuring and plant closure costs		3.5			0.0			3.3			0.0			6.8
Non-cash LIFO benefit		(1.6	)		0.0			(1.6	)		0.0			(3.2	)
Mark-to-market commodity hedging gains		0.0			(8.2	)		0.0			0.0			(8.2	)
Adjusted EBITDA	$	23.2		$	29.2		$	7.1		$	0.1		$	59.6
Adj. EBITDA % of Consolidated Adj. EBITDA (excluding corporate unallocated)		39.0	%		49.1	%		11.9	%

	Six Months Ended June 30, 2021
										Corporate
	RUPS			PC			CMC			Unallocated			Consolidated
Operating profit (loss)	$	13.0		$	53.5		$	24.2		$	(2.5	)	$	88.2
Other income (loss)		(1.1	)		1.0			(1.6	)		3.5			1.8
Depreciation and amortization		11.6			9.5			8.9			0.0			30.0
EBITDA with noncontrolling interest	$	23.5		$	64.0		$	31.5		$	1.0		$	120.0
Adjustments to arrive at adjusted EBITDA:
Impairment, restructuring and plant closure (benefits) costs		2.2			0.0			(5.0	)		0.0			(2.8	)
Non-cash LIFO expense		2.8			0.0			2.5			0.0			5.3
Mark-to-market commodity hedging gains		(0.1	)		(1.7	)		0.0			0.0			(1.8	)
Adjusted EBITDA	$	28.4		$	62.3		$	29.0		$	1.0		$	120.7
Adj. EBITDA % of Consolidated Adj. EBITDA (excluding corporate unallocated)		23.7	%		52.0	%		24.2	%

	Six Months Ended June 30, 2020
										Corporate
	RUPS			PC			CMC			Unallocated			Consolidated
Operating profit (loss)	$	25.4		$	36.7		$	2.2		$	(1.0	)	$	63.3
Other income (loss)		(0.8	)		0.9			(0.4	)		1.3			1.0
Depreciation and amortization		9.9			8.9			8.0			0.0			26.8
Depreciation in impairment and restructuring charges		0.7			0.0			0.0			0.0			0.7
EBITDA with noncontrolling interest	$	35.2		$	46.5		$	9.8		$	0.3		$	91.8
Adjustments to arrive at adjusted EBITDA:
Impairment, restructuring and plant closure costs		3.6			0.0			6.0			0.0			9.6
Non-cash LIFO benefit		(2.2	)		0.0			(1.7	)		0.0			(3.9	)
Mark-to-market commodity hedging gains		0.0			(0.3	)		0.0			0.0			(0.3	)
Adjusted EBITDA	$	36.6		$	46.2		$	14.1		$	0.3		$	97.2
Adj. EBITDA % of Consolidated Adj. EBITDA (excluding corporate unallocated)		37.8	%		47.7	%		14.6	%

Net leverage ratio is a non-GAAP financial measure defined as net debt ~~covenants, we may be~~ ~~required to pursue additional sources of financing to meet our financial obligations. Obtaining such financing is not guaranteed~~(total debt, calculated as total debt less unamortized debt issuance costs, less cash) divided by adjusted EBITDA for the latest twelve months and is ~~largely dependent upon market conditions~~a financial measure used by us to assess our borrowing capacity and ~~other factors. Further actions may be required~~ability to ~~improve~~service our debt. The following table summarizes net leverage ratio as calculated by us for the twelve month periods indicated below:

Our net leverage ratio decreased over the past 12 months primarily due to the $114.4 million decrease in net debt, principally due to cash ~~position, including but not limited to, monetizing assets, implementing cost reductions including employee furloughs, and foregoing~~generated from operating activities in excess of capital expenditures and ~~other discretionary expenses.~~the net proceeds from the divestiture of KJCC totaling $74.7 million, along with an increase in adjusted EBITDA during that period.

The following table summarizes EBITDA and adjusted EBITDA on a consolidated basis as calculated by us for the twelve month periods indicated below:

The information set forth in Note 18 to the Condensed Consolidated Financial Statements of Koppers Holdings Inc. included in Item 1 of this Part I is incorporated herein by reference.

The information set forth in Note 2 to the Condensed Consolidated Financial Statements of Koppers Holdings Inc. included in Item 1 of this Part I is incorporated herein by reference.

There have been no material changes to our critical accounting policies as disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

The information set forth in Note 18 to the Condensed Consolidated Financial Statements of Koppers Holdings Inc. included in Item 1 of this Part I is incorporated herein by reference.

There are no material changes to the disclosure on this matter made in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer and utilizing the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control – Integrated Framework (2013), have evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures were effective as of the end of the period covered by this report. There were no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended June 30, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal controls over financial reporting despite the fact that a portion of our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 outbreak on our internal controls over financial reporting to minimize the impact, if any, on their design and operating effectiveness.

The information set forth in Note 18 to the Condensed Consolidated Financial Statements of Koppers Holdings Inc. included in Item 1 of Part I of this report is incorporated herein by reference.

~~In addition~~There have been no material changes to the ~~other information set forth~~Risk Factors previously disclosed in ~~this Quarterly Report on Form 10-Q, including the factors discussed below, carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in~~Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019, any of which could materially affect our business, financial condition or future results. Those risk factors are not the only risks facing us. Additional risks and uncertainties not currently known or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.2020.

Health concerns arising from the outbreak of a health epidemic or pandemic, including the currently ongoing COVID-19 pandemic, may have an adverse effect on our business, operating results and financial condition.

The recent outbreak of COVID-19 is a global situation that is rapidly evolving. The COVID-19 pandemic is having a significant impact on global markets as a result of supply chain and production disruptions, workforce restrictions, reduced spending and other factors. Our operating results are subject to fluctuations based on general economic conditions, and the extent to which the COVID-19 pandemic ultimately may impact our business will depend on future developments, such as the ultimate geographic spread of the disease and the duration of the outbreak and business closures or business disruptions for us, our suppliers and our customers, all of which are highly uncertain and cannot be predicted with confidence. These same uncertainties exist with respect to any additional future outbreak of COVID-19 and any other health epidemic or pandemic that may arise in the future.

Any resulting financial distress of our customers due to deterioration in economic conditions could result in reduced sales and decreased collectability of accounts receivable, which would negatively impact our results of operations. The COVID-19 pandemic or any other health epidemic or pandemic also could have a material impact on our ability to obtain the raw materials and parts that we need in order to manufacture our products as our suppliers face disruptions in their businesses or closures. If our suppliers fail to meet our manufacturing needs, it would delay our production and shipments to customers and negatively affect our operations.

U.S. and international governmental responses to the COVID-19 pandemic have included “shelter in place”, “stay at home” and similar types of orders. These orders exempt certain individuals and businesses needed to maintain continuity of operations of critical infrastructure sectors as determined by the federal government. Although most of our operations have been considered essential and exempt, and therefore have been able to continue to operate without interruption, our operations in China and New Zealand were temporarily curtailed. If any of the applicable exemptions are amended or revoked in the future or if additional restrictions that impact us are implemented in response to COVID-19 or any other health epidemic or pandemic, it could adversely impact our business, operating results and financial condition. Furthermore, to the extent that any of these exemptions do not extend to our key suppliers and customers, this also would adversely impact us in turn.

In addition, our operations or the operations of our customers or suppliers could be disrupted if any of our or their employees were suspected of having contracted COVID-19 or any similar significant virus since such an occurrence could require us or our business partners to quarantine some number of employees, take actions to disinfect facilities or otherwise cause operations to be idled.

The ultimate impact of the current COVID-19 pandemic on general economic conditions, our business and our ability to generate cash flow and profits remains unable to be quantified given the uncertainties existing with respect to the extent and timing of the potential future spread or mitigation of COVID-19 and the imposition or relaxation of protective measures. To the extent the current COVID-19 pandemic or any other future health epidemic or pandemic adversely affects our business and financial results, it also may have the effect of heightening many of the other risks described in the risk factors included in the Annual Report on Form 10-K for the year ended December 31, 2019.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Pennsylvania	20-1878963
(State of incorporation)	(IRS Employer Identification No.)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	KOP	The New York Stock Exchange

	•	In June 2021, we sold a subsidiary related to our closed CMC facility located in Uithoorn, the Netherlands and we recorded a gain on sale of $0.3 million. In April 2014, we had ceased coal tar distillation activities at the facility.
	•	In February 2021, we sold our closed Follansbee, West Virginia coal tar distillation facility and we recorded a gain on sale of $5.7 million, consisting of $2.6 million from cash proceeds in addition to the assumption of certain liabilities by the buyer.
	•	In September 2020, we ~~entered into a definitive agreement to sell~~sold Koppers (Jiangsu) Carbon Chemical Company Limited (“KJCC”) ~~to Fangda Carbon New Material Co., Ltd and C-Chem Co., Ltd., a subsidiary of Nippon Steel Chemical & Material Co., Ltd.~~ . Refer to “Note 4 – ~~Discontinued~~“Discontinued Operations” for more details.
	•	The cessation of naphthalene refining activities at our Follansbee, West Virginia coal tar distillation facility in the fourth quarter of 2018 subsequent to the commissioning of a new naphthalene refining plant in Stickney, Illinois. In ~~August 2019, we ceased~~ ~~remaining production activities at the plant.~~
	•	~~In September 2018, we sold our UK-based specialty chemicals business~~
	•	~~In November 2016, we sold our 30-percent interest in Tangshan Kailuan Koppers Carbon Chemical Company Limited (“TKK”) located in the Hebei Province in China.~~
	•	~~In July 2016, we discontinued coal tar distillation activities at our CMC plant located in Clairton, Pennsylvania.~~ In October 2018, we sold our Clairton, Pennsylvania coal tar distillation facility. In the ~~facility and as part~~first quarter of ~~the transaction, we transferred cash to the buyer~~2021, certain post-sale conditions were achieved and the buyer ~~assumed decommissioning, demolition and site restoration responsibilities.~~of the property released cash held in escrow to us resulting in a gain on sale of $1.8 million.
	•	~~In March 2016, we discontinued production at our 60-percent owned CMC plant located in Tangshan, China.~~
	•	In February 2016, we ceased coal tar distillation and specialty pitch operations at both of our United Kingdom CMC facilities. In July 2016, we sold substantially all of our CMC tar distillation properties and assets in the United Kingdom.
	•	~~In April 2014, we ceased coal tar distillation activities at our CMC facility located in Uithoorn, the Netherlands.~~

	June 30, ~~2020~~2021		December 31, ~~2019~~2020
(In millions)
British Pounds		GBP ~~2.5~~14.3		GBP ~~3.7~~
~~New Zealand Dollars~~		~~NZD 17.0~~		~~NZD 16.0~~2.0
United States Dollars		USD ~~4.6~~11.0		USD ~~6.2~~7.6
Euro		EUR ~~1.2~~0.9		EUR ~~1.2~~0.0

	Twelve Months Ended
(amounts in millions)	June 30, 2021		December 31, 2020		June 30, 2020
Total Debt	$	806.2	$	775.9	$	907.1
Less: Cash		46.5		38.5		33.0
Net Debt	$	759.7	$	737.4	$	874.1
Adjusted EBITDA	$	234.5	$	211.0	$	194.2
Net Leverage Ratio		3.2		3.5		4.5

10.1	Koppers Holdings Inc. Director Deferred Compensation Plan (Incorporated by reference to Exhibit 99.1 to our Registration Statement on Form S-8 filed on August 6, 2021 (File No. 333-258537)).

31.1*	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*	Inline XBRL Taxonomy Extension Schema Document

101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

	KOPPERS HOLDINGS INC. (REGISTRANT)

Date: August ~~5, 2020~~6, 2021	By:	/s/ MICHAEL J. ZUGAY
		Michael J. Zugay Chief Financial Officer
		(Principal Financial Officer and Duly Authorized Officer)