Koppers (KOP) Earnings Top Estimates In Q2, Revenues Miss

Koppers Holdings Inc. (NYSE:KOP) posted a profit (attributable to the company) of $14.7 million or 70 cents per share for second-quarter 2019, up from $0.6 million or 3 cents a year ago.

Barring one-time items, earnings were $1.16 per share for the quarter, up from 93 cents a year ago. It topped the Zacks Consensus Estimate of 99 cents. The results were driven by higher profitability of the company's wood-preservation businesses and lower selling, general and administrative expenses.

Koppers recorded revenues of $469.8 million for the quarter, up around 8% year over year, driven by sustained demand for wood-preservation products and services across several end markets. Sales, however, fell short of the Zacks Consensus Estimate of $491.4 million.

Segment Highlights

Revenues from the Railroad and Utility Products and Services segment went up around 12% year over year to $199.1 million in the quarter. The growth was supported by higher volumes across Class I and commercial crosstie markets.

The Performance Chemicals unit recorded sales of $120.8 million in the quarter, up around 5% year over year. The increase was driven by increased volumes of copper-based preservatives in North America, a favorable pricing mix and new product sales.

Revenues from the Carbon Materials and Chemicals division rose around 4% to $149.9 million, aided by higher sales volumes for pitch across China and Europe, increased carbon pitch prices in Australia and higher sales volumes of phthalic anhydride in North America.

Financials

Koppers ended the quarter with cash and cash equivalents of $42.1 million, down around 32% year over year. Long-term debt was $993.2 million, up around 0.9% year over year.

Outlook

Koppers expects sales of around $1.8 billion for 2019, based on contributions from the acquisitions made last year and a stronger demand environment in the wood-based technology related businesses.

Moreover, Koppers expects adjusted EBITDA to be around $214-$224 million for 2019, compared with roughly $222 million in 2018.

Koppers also expects adjusted earnings for 2019 to be in the range of $3.27-$3.61 per share. Effective tax rate for 2019 is projected at around 29%.

Price Performance

Koppers’ shares have rallied around 64.4% year to date, outperforming the roughly 23.5% decline recorded by its industry.

Zacks Rank & Stocks to Consider

Koppers currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks worth considering in the basic materials space include Kinross Gold Corporation (NYSE:KGC) , NewMarket Corporation (NYSE:NEU) and SSR Mining Inc. (NASDAQ:SSRM) .

Kinross has projected earnings growth rate of 140% for the current year and carries a Zacks Rank #1 (Strong Buy). The company’s shares have surged around 61% in a year’s time. You can see the complete list of today’s Zacks #1 Rank stocks here.

NewMarket has an expected earnings growth rate of 16.2% for the current year and carries Zacks Rank #1. Its shares have gained around 17% in the past year.

SSR Mining has an estimated earnings growth rate of 134.8% for the current year and carries a Zacks Rank #2. Its shares have rallied roughly 73% in the past year.

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