Koppers (KOP)

Quynh McGuire Vice President-Investor Relations
Leroy Ball President & Chief Executive Officer
Jimmi Sue Smith Chief Financial Officer
Chris Howe Barrington Research
Chris Shaw Monness, Crespi, Hardt
Call transcript
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Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Koppers' Q2 2022 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. [Operator Instructions] Following the presentation, instructions will be given for the question-and-answer session. event recorded. this that note, is being Please I McGuire. turn the to Quynh call over will now ahead. go Please,

Quynh McGuire

Thanks and XXXX I'm today. Welcome We good morning. our to Investor President issued our Relations. of second release quarter press earnings call. Quynh conference earlier McGuire, Vice

may website www.koppers.com. via our it access You at

statement measures on this to quarterly replay with that live a indicated referenced will of this Securities Act uncertainties, on on press is release of X number As material These company's company in broadcast expressed forward-looking to forward-looking risks in our conference may and in light results our to achievement such inherent page relations today's or projected we've such materially Koppers to financial announcement, its reconciliations investor during forward-looking being also our is the which you assumes uncertainties provided financial company in on statements, Consistent Certain achieved. or GAAP you our comparable recording Sue it the like comments our The filings hear company's plans Chief At this of disclosure available website available direct call a information and that be Leroy call. in Exchange its Officer. Private forward-looking on significant representation described the Commission. be with practice website, be following. of the Financial our and statements this of on the Jimmi from not be XXXX. to prior be comments, directly Reform under and your certain a including in in cautionary objectives, regard time, today CEO two. of would call has The through seen of Leroy. may calls, turn Securities will Today the made financial In included characterized included made and may no will I to measures. Smith, statements now slide by inclusion implied Litigation press any The will posted non-GAAP call. as References made also the assumptions, involve obligation measures. non-GAAP forward-looking and the performance should those with statement the website the release the attention from our of over website XXXX. to update Ball, in as as statements. for November risks conference results, this statements and most our actual forward-looking President company's differ defined I'll

Leroy Ball

Good joining quarter morning, second We're us results. pleased to review you, everyone. Thank today our that Quynh. you're

inflation, supply million expanding While the quarter And second about as progress great and EBITDA we're still issues, and XXXX. to with of talked our such make we road well in the Koppers pandemic our quarter. last we record business in delivered chain as that dealing headwinds adjusted optimizing many on to as in XXX sales in continue

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six, price That was morning slide fueled sales sales the on industrial this performance short businesses. $X.X record demand. pandemic in year wave chemicals our quarter, riding million they were in news overcome sales. offset volumes price still some in PC bright from business volumes, history and spots our impact still sales able $XX record the but higher provide exceeded US three sales foreign the impact we translated a negative and with our front $XX more highlighted we first of for later, and from as by segments. second lower a lower volumes In our fall more Those dollar $XX where increases being and spread impact in spite than to billion a in in outsized volumes of details and post quarter of that, million achieved performance stated stronger there and were increases all Now, the into several currency million release product across primarily XXXX quarter. expected chemicals sales were to and on foreign was QX utility I'll prior negative

Industrial Utility related. demand & Products not decrease their was sales For

issue the would It and stronger. we demand Materials our business cost quarter. and remain on one And XXXX. reach on be in timely where a First a our Add persistent as each ourselves million From half Electric which The of place of the all for pace don't is and last Texas performance, in EBITDA of we're performance favorable accounted exited in improve our inflationary I utility appears goal at related that, of are our areas. out. so quarter unit month pieces is in pricing ability that that to as outpace several XXX demand to back we the the sales challenges, side That business problem tracking dealt point, mostly the have million exiting all, has results. last All to half revenue in backdrop to time the an in else first procurement that expected their the got pricing we near-term to we more now with increases that and business stronger in business find in other fact affected a for Demand Carbon of the much the never standpoint return, quarter, See financial second the dollars shipments. industrial the products keep is our impact the arrangement for facing, of profitability XXXX, It by and being projects railroad strong a services when into other backlog with up because be underpins midyear year that we to chain would be supply positive half is the well reasonable been record decline. the of to managed pace Cooperative Segment in of Chemicals our to exactly orders not the a of with increase and second year a above underlying strengthening still later products and second the XXXX year losing and & feel half. quarter. all everyone we a widespread compared half from fundamentals and US year. industry first that on strong second about our as into a by Crosstie our XX% dollar but chemicals result call. unfavorable coming half we should half pushed is this in the the in business price business represent solid in a half that, third had second a first foreign is

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Jimmi Sue Smith

XX.X%, by This year. or by our second CM&C, or increased reps And press My $XXX.X the record quarter our in adjusted of for On Leroy $XX.X XXXX an year for peak XX.X% decrease well million the experienced or provided The the inflationary profitability from Sales By business Sales release, or consolidated for on XX. XX.X% year of $XX.X shown XXXX. slide with in XXX.X year the quarter, PC of prior insurance million sales current over $XX.X juxtaposed compared increased year and for primarily sales. slide second RUPS second with our for in EBITDA sales the especially million impacts across PC, compared totaled quarter good prior on On environment as all of second segment or $XX.X timing impact crossties margin million reflects increased compared quarter. of or are pandemic pricing slide basis $X.X morning million year. this quarter million sales prior morning's Thanks quarter of X.X%. $XXX to prior were RUPS in consolidated on in to quarter. information and based X.X%. X, are year last in Results contained compared in was X, which to XX% prior markets CM&C comments increases due utility of the the our an sales $XXX.X by segment, million a the results as our million $X year fuel for in were$ increase for the million with recovery quarter, the everyone. segment million poles. consecutive

volumes current the third-party our prior seeing by well our business, labor issues Texas partly higher to from bridge production as the quarter. capacity business. Mostly pole in facility the Additionally, to utility volume in offset in of in services as and year Somerville a decreases railroad by transportation some due shortage our transfer we're driven

for prices market front, to of at And have seeing levels. expected stabilizing, elevated the procurement start see improvement the are crossties this we area. the although untreated we been On in

XX% quarter. Our million year by to higher prior the crosstie the quarter crosstie reps second compared million the Adjusted and was increased was with price in procurement $XX X%, This $XX.X prior as by EBITDA quarter. is freight for of treatment improvements compared improved cost higher and for absorption in favorable maintenance as to and businesses as in increases volumes which way improved. profitability fuel our raw offset materials, year attributed well procurement

CM&C features volumes global year partly inventory business. prior Performance year had Chemicals chemicals Adjusted for preservative, levels $XX.X $XXX.X year to the only offset in material from of reflected the As margins million EBITDA our driven system raw primarily slightly on performance by down for million increases compared record copper to by Europe. and in In environment. $XXX.X by compared partly working year Americas, for copper-base the in preservatives prior price preservatives. falling a year. of decreases million to costs in as XX for results price slide sales quarter, higher the XX, over cost quarter, higher the through decreased the Slide in global were record prior And the volume price lower for $XX.X shown increases million offset volume in sales

highlight quarter prior drove compared of confidence recovery quarter in quarter XX Higher the tar to favorable due our down in insurance quarter Sequentially, XXXX, CM&C demand million tar compared by million was an sales grow million, the generate was adjusted was costs all XX, quarter. Second XX%. quarter across of major to in EBITDA average of cash. pricing the result than average a we prior the period. Year-over-year, $XX.X sales of in $XX.X the of higher to to ability over slide as coal and pricing results. our first the average a million, prior year of strong EBITDA On year and $XXX.X pricing XX% year by major total the sales saw products costs increased product in environment. XX%. while XX% lines pricing margin coal increased higher, products while

million We in shares business returning through to repurchased the quarter, shares. million, continue to with $XX.X year capital million In expenditures, to $X.X authorization. our the we bringing of remaining second our $XX.X while capital repurchasing shareholders total date as dividends, well invest as under opportunistically through to

new $XXX the remain the working $XX We part times, at have of target available combination X.X was this XX, end senior facility $XXX of to senior of to prior includes $XXX million quarter. under our credit Slide our revolving provides as half secured the XXth. through in our by of X.X agreement capital. of facility. new leverage, term second the tiers facility times and XXXX secured year. loan an in two work borrowings expect our EBITDA and lower leverage million three agreement flexibility stable replaces Longer and credit support net our million senior announced usage in $XXX June net to overview long additional revolving The pricing net This end with ongoing as quarter and million in of million debt metric also X.X secured in at repurchased and spring prior We our redeemed that reflecting $XXX contains growth of for first a strategy, mature are subject maturity XXth in $XXX debt compared sustainability on the ratio agreement event goal to a November term term, to initiative. of XXXX reduce committed times The June EBITDA will customary credit times our as year refinanced new to credit million year XXXX, is well current a It notes covenants Net capital not a this XXth XXXX XXXX. or facilities million. type. of higher financial

price environmental, This on to shareholders rating based also adjustments the prewired framework. to value of Additionally, us tied by positions agreement, corresponding integrating indicators the commitment further to governance to and is sustainability performance the approval with and amend us external term company's to liquidity sustainability our agreement the agents, into allow towards the for ESG agreement or targets, social, key performance goals incorporate targets, our ESG our to new broader against create long reflects applicable those moving metrics. and

expenditures As with in million. were half to capital sales of that, recovery of shown year will the $XX.X over $XX.X Leroy. received the on Net cash first turn and it million. capital insurance XX, XXXX expenditures slide from current And assets to back for totaled I

Leroy Ball

second company will during quarter. Thanks, by Sue. sharing our happenings Jimmi begin notable across the I the

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Harm optimize profitability to requires steadfast of part our attention. sustainability our consistently is by we to Zero every expand and emphasize, principles. As commitment our constant Sustainability company significantly to our practices grow touches and underpinned safety business and our strategy

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So profitability demand-based our product the MicroPro given industry's as demand a our down was which that of post while the volume on not the for volumes is this to slide labor pentachlorophenol roughest Costs higher XXXX across treatment culprit major fuel and mentioned, lagged quarter mid Performance more shipping And with phase costs. product had all Chemicals. share began record to start continued market. the residential that, XXXX of second fuel significantly was pandemic offset as go moved in the was we've penetration Sue categories quarter to market and is continue had of XX, business news and Jimmi by industrial and but margin out good X% only materials were further to pandemic last let Sales behaviors expected abruptly representing as which it issue CCA addition CCA in returning preservatives. through comparable industrial were flagship experience Yes, product by June that as most period, other good news. increases the year's The trailed normalized XX% pre-pandemic before up cost normalcy. stalling me

increases our affect We course January customers this where able Xst, and continue push price through continue significant that expected to we'll with contracted price year to following XXXX. we're increases effective

of the for quarter expected for realized our our quarter's in segment. plan million the in year-to-date negative price dollar. of increases from we second $XX quarter sales ahead our the of helped came that About which price or pace stronger this XXXX's the come record despite prices PC well fuel international as this This results, slightly businesses $XX impact ahead in already second and million helped in for half them higher year. we're Now

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quarter Now second this of pricing period. copper XXXX in X% opposite the happened is by the during rose what of that as

healthy and backdrop consumer on home are worrisome new climb higher confidence While the rates indicators present a renovation broader to pushing next and existing even plus home build year. mortgage to lower rates in at with sales expenditures continue rates decline the repair economic home forecasted

XXXX strong residential dollar We demand to remainder continue the by be will with backlog uncovered both costs, year business. to XX as in and outlook demand. that the expect the projects looks and The our hampered business a on for Slide combat industrial at pricing the in US in stronger continue any the of remains longer-term PC some the but entering of resets will see across of level us a to be side we to strong enable high. board softness position

other in expect position growth we what to GDP-ish profitability initiatives greater a least we the capture us and in believe addition at have volume to In to put sales be in motion level we several future.

pass from is course, throughout XXXX this commitments the customers need unprecedented on contractual of First experienced whose our price the to we've year. Koppers to cost increases end

cost issue Now don't to easy industry the expect we a Koppers issue, negotiations an but while, not be is issue. those

preservative For to be expect that the healthy remain our we able pass will. to the industry costs and on adequately we I have whole, rising wood on to

$XX optimizing and environmentally a operations by leader over demonstrated adding and five commitment and As years the million industry, safer our the production past we've half global sound. making investing our in our almost more and

North to Penta our CCA the Penta And volumes to addition recently in to account, US to grow millions several through new technology, outpacing CCA XX% annual which a new business By some with at continues wins predominant replacement and portfolio three already CCA X% account oil also. we're industrial to the preservative million began growing is reflecting taking will that growing region. wins the winning while group. in out to another of it at our several with our addition, be DCOI XX% adopted We more confident our utility continue price next us as used project EBITDA mix have this our clip be volume enter evidence The end continues pain borne field restructured In a increased and focus XXXX share preservation We've enduring grow. we've as as R&D year a also while more market our our other XXXX continues securing America. our topnotch over Penta short DCOI XXXX, over since the preservative move to rates and for pole the of back rewards advancing recently that engineering deploying continues replacement. years to treaters. continue will as We sales the CCA heighten of by sizeable as as reaping to to and at in I'm business term sales in the added business formidable on rates American efforts invested volumes GDP we us organization in CCA industrial with service increase to mark $XXX market, South room that shipping phased support the rapid while preservative also right to will we business at

of to its straight of of America, Speaking our that profits and region firmly is outside North second region most now on-track South year profitable have is record America.

sell through costs in XXXX into that Europe, market. registration to reduce property to overview Koppers customer UIP with XX. a our manufacturing existing product secured costs years to performance organization. challenges for and we've In Currently expanding we the can in approval business of In fit bring wholesale and couple good profitable to be that after more focused slashing Brazil our accessible the the level we're in slide previously, arm product working we're trending our produce on back tough appears business to is smaller facility MicroPro still for announced seek biocidal a business industry to to restructuring in labor shot Europe on by key regulatory UIP spiraling our and to costs and which and that working a what plan products meantime, footprint I'll and to several after Greenfield As process. The a is would grow away. a pruning business further consolidating but due to losing a portfolio an saying that be registration a direction. seen quarters disruption, in of start profitability a

adjusted XXXX our while getting recent products remain larger which among shipped rail trucking fourth represent was to in quarter In for heavier new utility its highs. third funding pole limited shortages. are since results. and higher volumes both fact, will we most quarters by our second our this highest pace our EBITDA quarter has If in year record Infrastructure-related by second brought demand Challenges on chain on service schedule bottleneck labor in customers, poles intermittent supply. shipments interest remain are on and one and class constrained due a and supply and resulted staged

freight that settle trucking a us to being perpetual we're recouping year is, higher customer we providers, Tracking, $XX are even for allocation cover up increase targeted truck in higher out. this and our in catch The line to anticipated in coming well of some areas, tracking to much price above XXXX, gone reviews, million than cost that first so has now as although the exposure. pricing realized and increases. Most pricing are is sold so difficult we everything have become customers we of in waiting has Through material available. have basis. to to the things most cost our of an backlog XXXX, million quarterly year. the We're past and we've on until we beginning cost are resources retaining using of past third-party our making particularly drivers bottom result, help further $X as a on into been accounts more As are ship, than minimize already half and

process, past catching we're the many projects the of over benefits we're that year. see Now front, the on to have that in beginning been the up pricing

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to with and So treated XX% to volumes last converted our projects, Penta. Penta approximately CCA these support charge in we've April, of we our

now which has we supplier. increases. term Copper treatment, capabilities wood part business remaining our of business have DuraPine treatment by From availability We're of portfolio. side XX, include long produced that see and with Our creosote business. to freight segment, offers our Naphthenate, a passed our by DCOI as Slide its produced a price third-party impacted by now by PC view our that supply segment, being the considering product higher CMC addition the and the PC stable, cost, produced of added pricing for UIP been on CCA

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begin expect in adding utilities. facility peeling drying billion already in $XXX can help XXXX. stressed designated to the this for Koppers, by Somerville, to sales in a We're chain. capacity process and an supply our to approximately models serve has Bill, of as we're an investments important Infrastructure Texas Federal contributing profitability This potential stabilize support As various treating undertaking that result, early and is the to exploring initiative

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up I X.X%, carload these declined decrease XX% and treaters crossties dangerously in air X.X% dried low. hardwood dry dropped have railroads. peak, while as the in upwards in from seen its value to by in of demand inventory demand green trends, product mills certain down has the traffic a the $XX.X almost US markets, saw Association We've inventories X.X%. increased price now certainly that running Specifically, million lower that XX% Class fell trend markets, to of into ties dampened, and ties prior through volume, June modest is That and by commercial were XXXX Tie year in growth year said, better X%. with Amid Railway on treated combined a first US the to among for That volumes units compared X.X% slightly because intermodal XXXX. that cost of likely of divert we're at the which finish higher sold expect higher quarter is traffic due predicts being about pace of had by to and running

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still and purchased. indication Now through June to in to finish the X%. XXXX and XX% but rate trend, the of June expect it in the quarter up purchases by second million give over the We're an for improving by ties, October you at XX%, trailing $X.X catch XXXX's year $X.X ties were by our of million for year-to-date

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However we the volumes full increased before declined, price profits even commercial increases, have felt. implemented higher crosstie because have were costs of impact

away the the and million the million full and our seeing $X term impact anticipate XX, XXXX. that still than year of has a half profitability. year-over-year projected, provide last we're we a We first view On As positively RUPS. slide finished businesses improved $X year better outlook of our for year longer for the maintenance EBITDA improvement

volumes train program to Rock I with Tie towing network expected slightly and of X.X% a EBITDA Class Little North demand in way In take expecting this We're market to out Texas, should the increase. mentioned to realize left track that and as million the more and projects commercial drive increase will for increase needed lower our cost to Longer according XXXX working will bring facility $XX positioned us is about. seasoning, in at million business Now than the to which this plan Higher well the X%. air I'd build we XXXX purchases absorption $XX growth worry continuity. as so XXXX. term, XX.X is capital or in will or crosstie from better overall course thoughts and improve number to increased early of up with crossties are X% in share swing next inventory to of Railway anywhere our towards And be increases to we online CMC by are upgrade My unit we tie Little by untreated plant business. more crews to pendulum not our costs. market maintenance as the that or profitability pole increase by business customers, maintenance coming we in work modest back Comprehensive XXXX as as others hire retain achieve trying railroads by optimization drive crossties of long Association, year better that greater growth PC skewed railroads backlog and give as as this capacity should to facility business, in and increased the improvements million, plant adding we seen for at ,work our and believe have capital share surprised capabilities treatment Arkansas to enable time of on lead for our away North Somerville, with and the on at that crew similar slide see Rock part are Strong will volume get beyond. fashion, improved efficiencies and expanding contracted XX. in offset the greater reductions

on facilities had is globally. strongest by its of is its years current one I Now having of distillation on stating deliver to business to extending last and conditions would were three begin for that in which but were the that obvious, record CMC formation in about saying track year we just the up to It levels have way apprehensive several was long each of of Australasia half consistently costs XXXX CM&C first if we not And over hold visibility three that that United up the because uncertain of we catch the a not that all began very that generate more Europe had profits States, the we out years. facilities could margins and would the have expected we continue ago we and that price. regions by confidently the and strong the or in

CM&C in for rest in for cases year. more the quarter. major bullish here are And have of on we and early for the we're Now business on some year. settled third the Accordingly, pricing August we the this remainder of

that been revised America Asia near-term south China as and and light effect. continuing in pressure reflects issues. Markit, lockdowns estimates production expire June global from in are chain in COVID production vehicle have supply stimulus according North to XXXX the was increase a IHS to forecast Japan, takes production Now Korea also In and demand Europe updated feel auto downwards and the

Our business. the for CMC market product a ways, automotive trends provide these served guidance variety of in important so this

and globe, As energy other for challenges demand served the strong a given slowdown, of raw offset signs such, remain prices inflationary elevated chain of automotive rising the supply across demand alert and We material overall, CM&C of helping costs. from constraints to the impact pressures. the markets remain

steel, the produced higher balanced the tar see market. somewhat developed basis. remains tons is example, the has COVID distillers capacity the price in XXX,XXX caused an levels US of and of aluminum which of raw smelters countries, to lockdown annual product. conflict material metric to caused and tar on lose European Russian-Ukraine coal China partial while reducing raising have continues Europe furnace from demand the energy in even and That the Now production, labor blast costs to shortages for some by shrinking moving curtail in

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As Jimmi products Sue for higher average while year-over-year, mentioned XX% raw in material higher. is XX% is pricing major her commentary, cost

we've the not Class creosote coal accustomed host back a those pitching over first American for very least countries in for at is be XXXX, pulled tipping in where we contractually years at said I now and although on phenomenon insertions similar of reasons. the creosote the the the But becoming Now least a market. modestly And to. crosstie developed The our have point levels have railroads modest geographies. same to over need experienced for same production Yes, do become annual we're tar aluminum reached the trigger five a has time have of at while its past the short, and the for years reducing or North industry has decreased contract, opportunities degree locked price cannot to increases. that

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strategy value XXXX. benefits projects, Koppers to so coal to supplementing to market byproducts. is resilient in market especially to expected, integrated contribution in we has achieve competitively $X far preservation XX we market outlined America reaping with our more year. CM&C the EBITDA global pitch is reintroduced tar largest to differentiate acceptance and coal player wood hybrid Along technologies, this Slide ourselves to been continuing called shrink, Customer of products looks higher we had initiative various Now the the petroleum on in through this tar an North earlier million that with positive be market. improvement the using for thus become we're in our ahead to shocks. cost Since the supply and for approximate yields in that track chain improve

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and With We who those to results will resonate performance. that all among your our interest for Koppers the I'd floor in questions. dialing continue firm that, for in Thank will appreciate Koppers. open brand with what belief to you of your a can driven control we like to the story


the the Chris begin will Instructions] from We go Please first Barrington Howe And now from session. question ahead. is [Operator question and answer Research.

Chris Howe

Thank questions. for everyone. my morning, taking Good you

Leroy Ball

Hi, Chris.

Chris Howe

we Can talk the your versus do company? this that start moving profitability it labor third-party as challenges the in of slide expect does the improvement you're to show wanted of segments? where overall once level on having you and the and truck you labor how the labor challenges start you internally. about this consider to mentioned environment the just own And drivers some other I assets beyond that experiencing the the here benefit

Leroy Ball

of as I prepared think we Sure. significant been as been challenge I think pointed out for been our a past challenge of start remarks that the and again certainly been in labor a all years faced faces It's out we'll Trucking point that will continue just moving industry couple has and shortage to have saying a is you mean, drivers. has companies with. a I challenge. by out

of even our early some creates things bit So our obviously but move at a of And incentivize sites well. to as plants in into the potentially issues success working within to out some seeing that can folks businesses we're we're do within where that trying little to the we that profession.

a So while. it's going little take to

until in different pandemic. out coming of out a having individuals choices and I things lot of certainly think regard decisions settle making terms in and economy strong not of a is in helping the that

we everything regards can doing increase recruiting we're So well. headway in our efforts we've to and made as some that

into So terms persist we're and of starting to sites. certainly going us see there's turnover. it's challenge cost out a But year where little at but will within improvement those stability our training to a There's high in one certainly a standpoint. next. is, be from put having the things There's result. throughout cost a from there a a It's of cost to and that's hard improvement fingers productivity to a what safety greater bit a standpoint. this of as a have There's can once standpoint. cost your a I meaningful guarantee It's to we efficiency operations from you continue on that exactly

Chris Howe

Okay. even other more I have And few one a questions though quite then here. I'll ask

As that and consecutive But back. of we're on this five returns about rates some of June interest the sales although see inventory me more and left a environment rising get resilient market a environment. And price through home months could of is an side that could think we in repair market remodeling existing it to the of in buyers we would would other rates similar the more the in going favorable and have maybe declines much as being and that seem beyond whole PC back but segment housing than like perhaps your we saw home decreased more slightly as in taper some this the of interest pulled could that it to return them built we business , decks who to levels the pandemic so once what valley. lower forth come look seem

Leroy Ball

Chris. That's volumes here at are actually where We're with all we very sit think as I today. Yeah. our certainly true pleased

we've pointed don't right helped forward. second these the record Certainly, are year Our nice going not the in has we really the some last moving a as which they're the couple that share of June. and well. But taken still There's out we expect now just be quarter I issue volumes over was demand growth -- past years. I feeling through really and to been pandemic-fueled remarks, in were as again, prepared up of middle markets

our down X% speaking, micro pro in quarter. from were comparatively volumes volume a the second standpoint about So, by

the volumes of were that's held Penta market. its stronger nicely So, of they of pretty our up just out moving and CCA displacement because significantly

up and slowdown market just a has we think in of right be indicate will Yes, this slowing, expect home And continue there up grand any existing repair time, and at it meaningful moving that but to-date. typically I the pullback is scheme business that say So, markers the remodeling things. is don't to market. I sales interest you're rising, well point potential this resilient seen obviously, pretty if forward. And in rates volume we in held well to are hold haven't

cost we're pushed through. most to here to starting customers next, is increasing the Our our good next bigger crest. place our of we in news of year. And this end And in things expect of getting is that near-term issue bigger in we're year in will on that be that's by working cost those terms see into components heading major ever we're working increases what resolve

And overall. strong and benefit half. so markets there's still and some second the The pretty work business I like where come see through are do low. our to we'll and customers in the is of us still that PC inventories some non-contracted on are But

half of stronger. we decent we XXXX spot second and much a So here be it's the the as still year certainly enter in will expect

Chris Howe

that January of And as increase segment? some price as this keeping anticipate cost in PC the some you put price through the do alleviate you of pressures

Leroy Ball

work it alleviate a than Well, it's our haven't thus which anyways down anything seen continue we as and back successful we've good years a copper them them question. on we'll helps to helps be certain it's far with had model copper successful. bit. us a approach up relates the Unfortunately, pulling And be and to with other a customers over that little gone

exist volumes realize everything our it's being we and make and get to position we stick that'll We'll able us, without the and into for competition don't as a for in confident think to we and So, that in And in confident so any choices our we're model we as the balancing best business increase can most to good term onto should costs price result approach. will think Obviously, market the bit the I again I'm successes going team have our and our I of retain and get be about products. out business we in don't fair well. continue customers to away. I'm do sure able XXXX our to head From of price are win that in value necessarily that of longer it. because these hold standpoint, I some think we that

Chris Howe

Thanks Great. for taking my questions.

Leroy Ball

Thank you.


Chris from next go Shaw question Monness, Hardt. Crespi, the ahead. will from And come Please

Chris Shaw

the Could more how's help increases cost me this you with and for -- price falling just morning figure and there, parts to copper going I out believe All everybody. the moving have Good prices impact CCA. out high segment if six copper in for just inventory so you with know that the I How have second I don't hedges I over shake all of And or guess know half XX forward? months? even going you next profitability does sort that too. to

Jimmi Sue Smith

expect Hi do do copper, we differences system phenomenon copper's moving couple I we phenomenon. moves not We down. Yes. through that as inventory have but a a hedge think Sue. -- some that's month Jimmi the the higher-cost here Chris. six-month would that timing while It's the

a will margins the two. bridge see the back realizing quarter little results? I might quarter. it see kind to quarter third So, more business a we'll of be in we fourth expect between used think it A that in as bit we to. third In third be quarter that quarter, we're the of

Chris Shaw

Are you for on guys hedged XXXX? out copper

Jimmi Sue Smith

We we fully have and XXXX layering for for are hedges in hedged some XXXX. started

Chris Shaw

based to I on copper? volatility recently sort the of And to same how or does the hedge you policy? just change in your, strategy try guess, Anything stick

Leroy Ball

lock try we with well, in our to our so be business customers in work structure. our cost a of Yes, able and basically lock Chris significant to piece and

up big business. end a So part of we what hedging committed is with

Now that well, there's do piece of smaller hedging a the as it's hedging of overall strategy. we but outside

So date to strategy has not our changed. hedging

Chris Shaw

rail talking And actually prototype on demand, certain or the on for and year RUPs the you they it. they've based what on to to level of based business, is or are are customers, then your that industry's Got replacement expect the different the seems It forecasts replacing then forecast maybe like been the future? point, demand customers recent off far in just I at too doing think on better ties, is real they've would And the some get themselves? so more under in from been the based is this data would past? that every but

Leroy Ball


we at I Rail said view rates of that like certainly I next And increase their insertions upon than again for of although, what our suggest. customers that quote again planning terms customers, little data Association it And see index, discussions do think rate in data had that we it So customers. still to with from on particular we've a higher based year would aggressive, we the our the we are see least some our overall. at have us discussions more they're a a for with Tie and small

two overall, at to $XX cross-tie $XX don't I realistic So a I more tie and lower in to on and has pretty bullish railroads back and years have account the in we replacement to cross into or we're see right over to well, wear ties in things that's we're in demand lines of improved. down have or take period. a want decent But to like that XX so tie are move given the and that ties given still market, to they state think three-year the creosote-treated detect the borate, million repair their that's base. and have terms going. don't where to go cycle all depending when think their decide overall fact But ago now. that think upon the same sometimes And slimmed improvement extend it'll introduction going year. back sort terms all heavier the replacement go where of technology time, which are increase up slightly we of getting contributed replacements which and of a at railroads things essentially of down as I failure the life of of the

At a So others one could with of in few as the of we've again in to something next least seen lull in our we're years. that for pickup customers last the and years. the the It's data with. And view but going see next than couple that over the happen over year do from coming slightly our them it, they're same, association coming which an is out what that might the I better the have or is data. two industry we a think have on

Chris Shaw

Great. That's helpful. Thank you.

Leroy Ball

Sure. Yes.


At to any this would remarks. Leroy back for to closing further Ball CEO, I no time, questions. conference like the there over turn are

Leroy Ball

again Everyone on thank Thank for please. Okay. just continued in I Bye-bye. Thank stay your today's call to everyone for you. And again interest you. and safe participating Koppers. want


conference attending concluded. you today's The for now has Thank presentation.

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