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Koppers (KOP) Q1 Earnings Top Estimates, Swings to Profit

Koppers Holdings Inc.KOP swung to a profit of $4.4 million or 20 cents per share in first-quarter 2017 from a loss of $1.3 million or 6 cents per share a year ago.

Barring one-time items, earnings were 68 cents per share for the quarter, topping the Zacks Consensus Estimate of 35 cents.

Koppers, a global provider of wood treatment chemicals, treated wood products and carbon compounds, logged revenues of $346.6 million for the quarter, essentially flat year over year. Sales also surpassed the Zacks Consensus Estimate of $327 million.

Revenues stabilized in the reported quarter after five straight quarters of double-digit year over year declines. This also largely contributed to the growth in profitability in the reported quarter.

Koppers Holdings Inc. Price, Consensus and EPS Surprise

Koppers Holdings Inc. Price, Consensus and EPS Surprise | Koppers Holdings Inc. Quote

Segment Highlights

Revenues from the Railroad and Utility Products and Services ("RUPS") segment fell 10.5% year over year to $135.5 million, hurt by lower sales volumes and pricing pressures for commercial crossties. Volumes were affected by reduced spending in the rail industry.

The Performance Chemicals ("PC") unit recorded sales of $96.7 million in the quarter, up 9% year over year. The company saw strong sales volumes, driven by increased demand in North America for copper-based wood preservatives and additives.

Revenues from the Carbon Materials and Chemicals ("CMC") division rose 6.5% to $114.4 million, supported by increased sales volumes for carbon black feedstock and other coal tar products.

Balance Sheet

Koppers ended the quarter with cash and cash equivalents of $23.4 million, up around 50% year over year. Long-term debt was $696.1 million, up around 2% year over year.

Outlook

Koppers said that it expects sales for 2017 to be relatively flat year-over-year at around $1.4 billion. The company retained its adjusted EBITDA forecast of roughly $180 million for the year. The company now sees adjusted earnings in the range of $2.80 to $3.00 per share for 2017, compared with the earlier expectations of $2.75 to $2.85 per share. The revision is mainly due to lower than expected effective tax rate.

Price Performance

Koppers has outperformed the Zacks categorized Chemicals-Diversified industry over a year. The company's shares have rallied around 53.1% over this period compared with the industry's gain of 17.9% over the same period.

Zacks Rank & Key Picks

Koppers is a Zacks Rank #3 (Hold) stock.

Better-ranked companies in the chemical space include The Chemours Company CC , Kronos Worldwide, Inc. KRO and Methanex Corporation MEOH , all holding a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Chemours has an expected long-term growth of 15.5%.

Kronos has an expected long-term growth of 5%.

Methanex has an expected long-term growth of 15%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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