Koppers (KOP -13.31%) reported second quarter 2025 results on August 8, 2025, delivering adjusted EBITDA of $77 million (15.3% margin) on sales of $505 million, a 10.4% year-over-year drop in consolidated sales. Despite revenue declines across all core segments, the company achieved a record adjusted EBITDA margin performance of 15.3%, announced a $0.32 per share annual dividend for 2025, up 14% year-over-year, and reduced full-year sales and adjusted EBITDA guidance amid ongoing industry-wide demand weakness. Key takeaways include cost discipline, balance sheet strengthening, and strategic actions likely to reshape Koppers’ margin trajectory and business mix over the coming years.
SG&A and headcount reductions drive margin leap at Koppers
SG&A (selling, general, and administrative) expenses declined 13% year to date, and the workforce was reduced by 11% since April 2024, supporting the company’s first adjusted EBITDA margin above 15% in eight years. Cash flow exceeded $50 million in the quarter, and the capital expenditure run rate dropped below $60 million for fiscal 2025, enhancing free cash flow capacity amid demand headwinds.
"we lowered year-to-date SG&A by 13% compared with the prior year period through Q2 2025. We reduced our team member numbers for fourteen straight months, equating to an 11% drop in FTEs since April 2024. We generated cash flow of over $50 million in the quarter, posted adjusted EBITDA margins north of 15% for the first time in eight years, brought our capital spend annual run rate down below $60 million, signed a definitive agreement to sell our railroad structures business, which has been a drag to margin, ceased production at our phthalic anhydride plant a month earlier than planned, deployed $24 million of capital to dividends, share repurchases, and debt reduction, and launched our Catalyst transformation process to unleash the ingenuity in the organization"
— Leroy Ball, Executive Officer and Chairman of the Board
This accelerated cost discipline and capital allocation shift provide durable bottom-line relief, shifting Koppers’ margin structure and creating operating leverage for future volume recovery.
KOP launches Catalyst transformation to reshape long-term performance
Koppers engaged external advisors for a comprehensive operational review, after which it formally launched the Catalyst program in early 2025, targeting sustainable margin expansion through process reengineering, technology upgrades, and workforce upskilling. The Chief Operating Officer was appointed Chief Transformation Officer to lead this multi-phase effort, with phase two set to conclude in September, and its initial opportunity assessment supports sustainable mid to high teen EBITDA margins as the company exits 2027.
"This exercise resulted in the launch of Catalyst, a strategic transformation in how we look at our business, how we value opportunities, how we unlock the brainpower across the organization. It will lead to an upgrade of technology and upskilling of our team members and an improvement in processes that ultimately lead to better execution and greater shareholder value creation."
— Leroy Ball, Executive Officer and Chairman of the Board
By shifting from traditional cost-cutting to systemic change, Koppers is aiming for durable margin accretion independent of near-term end market swings.
Koppers revises guidance downward as demand recovery stalls in 2025
Second quarter sales fell 10.4% year over year, led by a 22% drop in Carbon Materials & Chemicals and a 15% decline in Performance Chemicals sales, while the company lowered its consolidated sales outlook to $1.9 billion to $2 billion for 2025 and adjusted EBITDA (non-GAAP) guidance to $250 million to $270 million for 2025, compared with $262 million in 2024. Management flagged weaker residential end-markets for wood preservatives, market share losses in the U.S., persistent trough conditions in carbon materials, and no material improvement projected for the second half of 2025.
"we're now reducing our consolidated sales guidance to be $1.9 billion to $2 billion in 2025 compared with $2.1 billion in 2024. This reduction reflects an assumption that the demand environment does not change materially from what we've experienced through these first six months. On Slide 32, we're revising our adjusted EBITDA forecast down to be in the range of $250 million to $270 million compared with $262 million in 2024."
— Leroy Ball, Executive Officer and Chairman of the Board
This conservative reset protects credibility but highlights the risk that further macro or customer slippage could threaten near-term earnings progression, despite the company’s internal efficiency gains.
Looking Ahead
Management projects full-year 2025 sales of $1.9 billion to $2 billion and adjusted EBITDA of $250 million to $270 million, with year-end capital expenditures now expected at $52 million to $58 million. Adjusted EPS guidance is $4.00 to $4.60 (midpoint up 5% year-over-year), but with higher tax rates offsetting part of the benefit from reduced shares and interest expense. The company expects to maintain one of its strongest free cash flow years in 2025, focus on debt reduction, and targets a sustainable mid to high teens EBITDA margin trajectory by the end of 2027 through Catalyst transformation benefits (non-GAAP).
