Koppers Holdings Decides to Discontinue Distillation and Chemical Manufacturing at Illinois Facility

Koppers Holdings announced that it has made a conditional decision to discontinue distillation and chemical manufacturing operations at its facility located in Stickney, Illinois, subject to the satisfaction of any bargaining obligations that might exist with the union that represents certain employees at that facility. The conditional decision, which is pending negotiations and consultation with the union and would impact approximately 85 employees, was driven by challenging market conditions over the past decade, including unit operating costs outpacing our ability to capture higher pricing, reduced raw material supply from North American steel manufacturers, and increased capital requirements. Koppers anticipates winding down the remaining distillation and chemical production activities by December 31, 2026, pending discussions with the union. The company is tentatively targeting fourth quarter 2026 for shifting production to its coal tar distillation facility located in Nyborg, Denmark. To ensure an effective transition for existing pitch and creosote customers, Koppers has strengthened its supply chain from Nyborg to the U.S. through expanded shipping and terminal capabilities. As part of this conditional decision, the company is continuing to evaluate potentially appropriate uses for the Stickney facility following the end of production activities. This action is anticipated to result in pre-tax charges to earnings of $227 million to $262 million through the end of 2029, which includes $170 million to $195 million of non-cash charges that are projected to be recorded in the second and third quarters of 2026. Cash closure charges of $57 million to $67 million will be expended over a three-year period beginning in the second quarter of 2026 and will be funded by the operating and capital cash benefits generated by this action. When completed, this should result in annual free cash flow improvement of $15 million to $25 million. The adjusted EBITDA improvement savings related to discontinuing activities are estimated to reach an annual run rate of approximately $15 million to $20 million in 2027 and beyond. Combined with the expected decrease in depreciation expense, the incremental benefit to adjusted EPS is estimated to be $1.00 to $1.20 per share.