Q4 2023 Koppers Holdings Inc Earnings Call

Good morning, ladies and gentlemen, and thank you for standing by welcome to Koppers fourth quarter and full year 'twenty twenty-three earnings conference call. At this time all participants are in listen only mode. Following the presentation instructions will be given for the question and answer session.

Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Koppers' fourth quarter and full year 2023 earnings conference call. At this time, all participants are in listen-only mode.

Operator: Following the presentation, instructions will be given for the question and answer session. Please note, this event is being recorded. I will now turn the call over to Quynh McGuire.

Please note this event is being recorded.

I will now turn the call over to Quinn Mcguire. Please go ahead.

Quynh T. McGuire: Thanks and good morning. I'm Quynh McGuire, Vice President of Investor Relations. Welcome to our fourth quarter and four year 2023 earnings conference call. We issued our press release earlier today. You may access it via our website at www.koppers.com. As indicated in our announcement, we have also posted materials to the investor relations page of our website that will also be referenced in today's call. Consistent with our practice and prior quarterly conference calls, this call is being broadcast live on our website, and a recording of this call will be available on our website for replay through May 28, 2024. At this time, I would like to direct your attention to our forward-looking disclosure statement, seen on slide 2. Certain comments made on this conference call may be characterized as forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995.

Thanks, and good morning, I'm Gonna Mcguire, Vice President of Investor Relations welcome to our fourth quarter and full year 2023 earnings Conference call. We issued a press release earlier today, you may access it via our website at Www Dot Koppers Dot com.

As indicated in our announcement, we have also posted materials to the Investor Relations page of our website and will also be referenced in today's call.

Distant with our practice in prior quarterly conference calls this is being broadcast live on our website and a recording of this call will be available on our web site for replay through May 28 2024.

At this time I would like to direct your attention to our forward looking disclosure statement on slide two.

Comments made on this conference call maybe characterized as forward looking statements as defined under the private Securities Litigation Reform Act of 1995.

Quynh T. McGuire: These forward-looking statements involve a number of assumptions, risks, and uncertainties, including risks described in the cautionary statement included in our press release and in the company's filings with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward-looking statements included in the company's comments, you should not regard the inclusion of such information as a representation that its objectives, plans, and projected results will be achieved. The company's actual results, performance, or achievements may differ materially from those expressed in or implied by such forward-looking statements. The company assumes no obligation to update any forward-looking statements made during this call.

These forward looking statements involve a number of assumptions risks and uncertainties, including risks described in the cautionary statement included in our press release and in the company's filings with the Securities and Exchange Commission.

In light of the significant uncertainties inherent in the forward looking statements included in the Companys comments, you should not regard the inclusion of such information as a representation that its objectives plans and projected results will be achieved.

The company's actual results performance or achievements may differ materially from those expressed in or implied by such forward looking statements.

The company assumes no obligation to update any forward looking statements made during this call references may also be made today to certain non-GAAP financial measures. The press release, which is available on our website.

Quynh T. McGuire: References may also be made today to certain non-GAAP financial measures. The press release, which is available on our website, also contains reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures. Joining me for our call today are Leroy Ball, Chief Executive Officer of Koppers, and Jimmi Sue Smith, Chief Financial Officer. I will now turn this discussion over to Leroy. Thank you, Quynh. Good morning

So contains reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures joining.

Joining me for our call today are Leroy ball, Chief Executive Officer of Koppers, and Jimmi Sue Smith, Chief Financial Officer, I will now turn this discussion over to Leroy.

Thank you Gwen good morning, everyone. It's a pleasure to be with all of you today and to have the honor of reporting on another year of strong performance for koppers. Thanks to the diligence hard work and energy of our team worldwide. Once again, we delivered record results both in the fourth quarter and for the full year across a number of different categories.

Leroy M. Ball: It's a pleasure to be with you today and to have the honor of reporting on another year of strong performance for Koppers. Thanks to the diligence, hard work, and energy of our team worldwide, once again, we delivered record results, both in the fourth quarter and for the full year, across a number of different categories. Our strategy to expand and optimize our unique vertically integrated business model serving key infrastructure markets positions Koppers for continued growth and profitability, as well as cash flow generation. I'll begin with a summary of key metrics for the fourth quarter, as seen on slide four, consolidated sales of $513.2 million, a fourth-quarter record compared with $482.6 million in the prior year. And this represents the ninth consecutive record in current quarter sales. We generated adjusted EBITDA of $53.9 million, a record quarter compared with $52.1 million in the prior year quarter. And this was the sixth consecutive current quarter record.

Strategy to expand and optimize our unique vertically integrated business model, serving key infrastructure markets positions koppers for continued growth and profitability as well as cash flow generation.

I'll begin with a summary of key metrics for the fourth quarter as seen on slide four.

Holiday sales of $513 $2 million, a fourth quarter record compared with $482 6 million in the prior year and this represents the ninth consecutive record in current quarter sales.

We generated adjusted EBITDA of $53 9 billion, a record quarter compared with $52 1 million in the prior year quarter. This was the sixth consecutive current quarter record.

Leroy M. Ball: Our adjusted EBITDA margin was 10.5% versus 10.8% in the prior year quarter. But for an increase in our bad debt reserve in Q4 2023, we would have finished the quarter at an adjusted EBITDA margin of 11% on the nose. Fourth quarter diluted earnings per share was $0.59 compared with $0.65 per share in the prior year quarter, while adjusted earnings per share for the quarter were $0.67 compared with $1.09. The combination of the after-tax effect of the previously mentioned bad debt reserve and a higher-than-anticipated tax rate had a $0.09 per share impact on our quarterly EPS.

Our adjusted EBITDA margin was 10, 5% versus 10, 8% in the prior year quarter.

For an increase in our bad debt reserve in Q4, 2023 we would have finished the quarter at an adjusted EBITDA margin of 11% on the nose.

Fourth quarter diluted earnings per share was 59 cents compared with 65 per share in the prior year quarter, while adjusted earnings per share for the quarter were 67 cents compared with a dollar nine in the prior year quarter.

Combination of the after tax effect of the previously mentioned bad debt reserve and a higher than anticipated tax rate had a nine cents per share impact on our quarterly EPS.

Leroy M. Ball: Slide five outlines our full-year key metrics for 2023, starting with record consolidated sales of $2.15 billion, marking the first time in our company's history that we exceeded the $2 billion mark in sales in the fifth straight year of record sales, up from $1.98 billion in the prior year. We achieved record operating profit of $195.2 million, compared with $137.7 million in 2022. Adjusted EBITDA was $256.4 million, which was the eighth consecutive record year in profitability, up 12.4% from $228.1 million in the prior year. This was the ninth straight year of achieving year-over-year improvement in EBITDA. The adjusted EBITDA margin for the year was 11.9%, compared with 11.5% in the prior year.

Slide five outlines our full year key metrics for 2023, starting with record consolidated sales of $2.15 billion, marking the first time in our company's history that we exceeded the $2 billion Mark in sales and the fifth straight year of record sales up from 1.98 billion in the prior year.

We achieved record operating profit of $195 2 million compared with $137 7 million in 2022.

Adjusted EBITDA was $256 4 million, which was the eighth consecutive record year in profitability up 12, 4% from $228 1 million in the prior year.

This was the ninth straight year of achieving year over year improvement in EBITDA.

Adjusted EBITDA margin for the year was 11, 9% compared with 11, 5% in the prior year.

Leroy M. Ball: Diluted earnings per share were $4.14, the second highest diluted EPS from continuing operations in the company's history, up from $2.98 in the prior year. Adjusted earnings per share of $4.36 was a record compared with $4.14 in the prior year. We generated a record operating cash flow of $146.1 million in 2023, up from $102.3 million in the prior year. This represented the fifth consecutive year of delivering operating cash flow of greater than $100 million. It is even more impressive given that we spent $42 million more on cash interest and taxes in 2023 compared to 2022. Our net leverage ratio came down to three times at year-end 2023, compared with 3.4 times at the prior year-end. Jimmi Su will provide more details on that in her remarks.

Diluted earnings per share were $4 and 14th the second highest diluted EPS from continuing operations in the company's history up from $2.98 in the prior year.

Adjusted earnings per share of $4.36 was a record compared with $4.14 in the prior year.

We generated record operating cash flow of $146 1 million in 2023 up from $102 3 million in the prior year.

This represented the fifth consecutive year of delivering operating cash flow greater than 100 million is even more impressive given that we spent $42 million more on cash interest and taxes in 2023 compared to 2022.

Our net leverage ratio came down to three times at year end 2023, compared with three four times at the prior year and Jimmy Sue will provide more details on that in her remarks.

Leroy M. Ball: Additionally, 2023 marked our second best yearly safety rate, and Koppers was named Newsweek's most responsible companies for the third straight year on USA Today's first ever list of America's climate leaders. We're very proud of all the accomplishments we were able to realize in 2023, including record-setting stock price performance as Koppers' share price increased 82% over the year, and we reached new all-time highs in price, market In short, I would describe 2023 as the best all-around year in Koppers history as we pushed the bounds of performance in just about every conceivable category. For all the feel-good emotions about 2023, we recognize that there is no off-season at Koppers, and we're already geared up for 2024.

Additionally, 2023 marked our second best yearly safety rate and Koppers was named to Newsweek's, most responsible companies for the third straight year and to USA. Today's first ever list of America's climate leaders, we're very proud of all the accomplishments we were able to realize in 2020 three including record setting stock price performance as copper share price increased 82% over the year.

Year, and we reached new all time highs in price market cap and enterprise value.

In short I would describe 2023 is the best all around year in Koppers' history, as we pushed the bounds of performance in just about every conceivable category.

For all the feel good emotions about 2023 we recognize that there is no off season at Koppers, and we're already geared up for 2024.

Leroy M. Ball: In that vein, we announced earlier this morning, as shown on slide seven, that Koppers has signed an agreement to acquire substantially all the assets of Brown Wood Preserving, which manufactures and sells pressure-treated wood utility poles for approximately $100 million in cash. The acquisition aligns with our plans to grow our utility pole treatment business through both organic and inorganic means. Headquartered in Louisville, Kentucky, and with operating locations in Kennedy, Alabama, and Matheson, Mississippi, this transaction offers Koppers additional assets to serve markets in the Midwest and Southeast regions of the United States. On slide 8, we highlight the strategic rationale for the acquisition of Brownwood, which is pretty straightforward. We need more assets, and Brown has them.

In that vein, we announced earlier this morning as shown on slide seven the Koppers has signed an agreement to acquire substantially all the assets of Brown wood, preserving company, which manufactures and sells pressure treated wood utility poles for approximately $100 million in cash.

The acquisition aligns with our plans to grow our utility pole treatment business through both organic and inorganic means.

Headquartered in Louisville, Kentucky, and with operating locations and Kennedy, Alabama, and Mathis and Mississippi. This transaction offers koppers additional assets to serve markets in the Midwest and southeast regions of the United States.

On slide eight we highlight the strategic rationale for the acquisition of Brown Wood, which is pretty straightforward.

We need more assets and brown has them.

Leroy M. Ball: Not only that, but a good portion of the assets are new and recently installed. By the time we close sometime in the second quarter, they will be close to having a new peeler and dry kiln online after having added drying and treating capacity in 2022. In total, we'll be increasing our pilling capacity by close to 50%, our drying capacity by over 40%, and our poultry by approximately 50%. The 2024 exit run rate for Brownwoods should approximate $100 million of top line sales with the ability to take it even higher with little to no additional investment, adding synergies, and we can see this acquisition easily adding $25 million or better of EBITDA to our results by 2026. For this year, given the uncertainty of the exact timing of the closing, the new assets coming online, and our cost of integration, we'll be modest in our contribution expectations for 2024, which will provide a closing.

Only that but a good portion of the assets are new and recently installed by the time, we close sometime in the second quarter, they will be close to having a new pillar in dry tune online after having added drawing and treating capacity in 2022.

In total will be increasing our pilling capacity by close to 50% are drying capacity by over 40% and our poultry <unk>.

Currently 50 per cent for.

For 2024 exit run rate for Brown would should approximate $100 million of top line sales with the ability that he could even higher with little to no additional investments.

In synergies and we can see this acquisition easily adding $25 million or better of EBITDA to our results by 2026.

For this year given the uncertainty of the exact timing of the closing the new assets coming online and our cost of integration will be modest and our contribution expectations for 'twenty 'twenty, four which will provide a closing.

Leroy M. Ball: But, as mentioned in a separate press release announcing the signing, we believe that Brownwood can add between $15 to $25 million to our 2025 target adjusted EBITDA of $300 million and will certainly be accretive in the first full year of ownership. I can't stress enough how bullish we are on this market, and you can expect that we'll continue to dedicate a healthy portion of our growth capital to the utility pull market over the next several years. Moving on to a brief review of our continuing zero harm efforts, as noted on slide 10, the primary focus in 2023 was rolling out Zero Harm 2.0. This is a comprehensive program to re-energize the zero harm level of engagement at the front line of operations to accelerate our progress towards zero.

But as mentioned in a separate press release announcing the signing we believe that brown wood can add between $15 million to $25 million to our 'twenty 'twenty five target adjusted EBITDA of $300 million and will certainly be accretive in the first full year of ownership.

I can't stress enough how bullish we are on this market and you can expect that we'll continue to dedicate a healthy portion of our growth capital to the utility pole market over the next several years.

Moving on to a brief review of our continuing zero harm efforts as noted on slide 10. The primary focus in 2023 was rolling out zero harm to point out. This is a comprehensive program to reenergize the zero harm level of engagement at the frontline of operations to accelerate our progress towards zero.

Leroy M. Ball: One specific example of a win in that arena is a 72% year-over-year decrease in the total recordable injury rate in our UIP business, attributable to enhanced training and a focus on our lifesaving rules, which had been delayed as a result of the COVID-19 pandemic. Compared to the prior year, we saw a 50% increase in 2023 in leading activities defined as steps meant to enhance awareness and practice of measures designed to avoid and eliminate injury. Overall, 23 of our 45 operating facilities worldwide worked accident-free for the fourth quarter of 2023, with zero recordable incidents in CM&C Australasia and PC Europe. While zero-harm activities can never slow down or stop, we take pride in the fact that our total rate of recordable injuries in 2023 decreased by 11% compared with the prior year and finished the year only slightly higher than our best-ever rate, which was achieved in 2018.

One specific example of a win in that arena is a 72% year over year decrease in the total recordable injury rate in our U IP business attributable to enhanced training and a focus on our lifesaving rules, which had been delayed as a result of the COVID-19 pandemic.

Compared to prior year, we saw a 50% increase in 2020, three and leading activities defined as steps meant to enhance awareness and practice of measures designed to avoid and eliminate injury.

Overall 23 of our 45 operating facilities worldwide worked accident free for the fourth quarter of 2023 with zero recordable incidents and see them and see Australasia and P. C. Europe.

Zero harm activities can never slow down or stop we take pride in the fact that our total rate of recordable injuries in 2023 decreased by 11% compared with the prior year and finished the year only slightly higher than our best ever rate, which was achieved in 2018.

Leroy M. Ball: On slide 11, I want to recognize some of the unsung heroes of our company. This past November saw our third annual Zero Harm Truck Driving Championship competition held in Pittsburgh, which brought together top professional drivers from around our company to compete and display their skills. Competitors were selected based upon their adherence throughout the year to Koppers safe driving principles as evidenced by their top tier performance measured by our safe driving method. Congratulations to the top drivers and award winners, Bill Bailey of Koppers Recovery Resources in first place, Mike Fogarty of UIP in second place, and Andy Hutto of UIP in third place. Now we'll turn the discussion over to our Chief Financial Officer, Jimmy Sousa. Thank you, Leroy.

On slide 11, I want to recognize some of the unsung heroes of our company.

Last November saw our third annual zero harm truck driving championship competition held in Pittsburgh, which brought together top professional drivers from around our company to compete and display their skills.

Competitors were selected based upon their adherence throughout the year to copper safe driving principles as evidenced by their top tier performance measured by our safe driving metrics.

Gratulation still the top drivers of an award winners Bill Bailey of Koppers recovery resources in first place, Mike Fogarty of U I P. In second place and Andy how do of you IP and third place now.

Now I will turn the discussion over to our Chief Financial Officer, Jimmi Sue Smith.

Thank you Leroy earlier today, we issued a press release detailing our fourth quarter and year end 2023 results. My comments. This morning are based on that information.

Jimmi Sue Smith: Earlier today, we issued a press release detailing our fourth quarter and year-end 2023 results. My comments this morning are based on that information. On slide 13, we had record consolidated fourth quarter sales of $513 million, up $30 million or 6% over the prior year quarter. By segment, Rupp sales increased $23 million or 12%. PC sales increased $23 million and 17%, while CM&C sales decreased $16 million and 11% from the prior year quarter. As seen on slide 14, full year 2023 consolidated sales were a record $2.15 billion, an increase of $174 million or approximately 9% over the prior year. At the segment level, RUC sales increased by 110 million, or 14 percent. PC sales increased by 92 million, or 16 percent, and Siemens e-sales declined by $27 million, or 4.5%, compared to the prior year.

On slide 13, we had record consolidated fourth quarter sales of $513 million up 13 million or 6% over the prior year quarter.

By segment sales.

Sales increased 23 million and 12% P.

P C sales increased $23 million, and 17% well see them and see sales decreased $16 million and 11% from the prior year quarter.

As seen on slide 14 full year 2023 consolidated sales were a record 2.15 billion, an increase of $174 million or approximately 9% over the prior year.

At the segment level Rep sales increased by 110 million or 14% P. C sales increased by 92 million or 16%.

And Siemens <unk> sales declined by 27 million or four 5% compared to the prior year.

On slide 15, adjusted EBITDA for the fourth quarter was 54 million, resulting in a 10, 5% margin.

Jimmi Sue Smith: On slide 15, adjusted EBITDA for the fourth quarter was $54 million, resulting in a 10.5% margin. By segment, Rupp generated a justitia bida'a of $21 million with an approximately 10% margin. PC delivered a Justity Bida'a of $29 million, an 18% margin, and CM&C reported a Justity Bida'a of $4 million, with a 3% margin. Slide 16 shows record adjusted EBITDA for the full year of 2023 of $256 million, resulting in an 11.9% margin. By segment, RUPS generated a Justity Bida'a of $84 million with a 9% margin. Our PC segment had adjusted EBITDA of $123 million with an 18% margin, while CM&C provided adjusted EBITDA of $49 million with an 8% margin for the year. On slide 17, our RUPS business reported record fourth-quarter sales of $216 million, compared to $193 million in the prior year quarter. The sales increase was largely due to $16 million of pricing increases across multiple markets in the United States and increased volume for Class 1 cross ties, partly offset by decreased volumes for utility poles. Market prices for untreated cross ties remain high but are stabilizing.

By segment <unk> generated adjusted EBITDA of 21 million with an approximately 10% margin.

P. C delivered adjusted EBITDA of 29 million, an 18% margin and see them as Ive reported adjusted EBITDA of $4 million with a 3% margin.

Slide 16 shows record adjusted EBITDA for the full year of 2023 or $256 million, resulting in an 11, 9% margin.

By segment <unk> generated adjusted EBITDA of $84 million with a 9% margin.

P. C segment had adjusted EBITDA of 123 million with an 18% margin while Stephen D provided adjusted EBITDA of 49 million with an 8% margin for the year.

On slide 17, our rubber business reported record fourth quarter sales of 216 million compared to $193 million in the prior year quarter.

The sales increase was largely due to $16 million of pricing increases across multiple markets in the United States.

And increased volume for class, one cross side, partly offset by decreased volumes for utility Poles.

Market prices for untreated cross ties remained high but are stabilizing.

Adjusted EBITDA for rock also a record for the fourth quarter was 21 million compared with $13 million in the prior year quarter.

Jimmi Sue Smith: Adjusted EBITDA for RUPS was also a record for the fourth quarter, with $21 million, compared with $13 million in the prior year quarter. The profitability increase was due primarily to net sales price increases to recruit higher raw material and operating costs and improve plant utilization. The margin improvement in RUPS continues to reflect the strength of our utility pole business, where the EBITDA margins are substantially higher than for our TIE treaty.

Profitability increased due primarily to net sales price increases to recoup higher raw material and operating costs and improved plant utilization.

The margin improvement and brought this continues to reflect the strength of our utility pole business, where the EBITDA margins are substantially higher than for our titanium business.

On slide 18, our performance chemicals business delivered fourth quarter sales of $164 million compared to 141 million in the prior year quarter.

Jimmi Sue Smith: On slide 18, our performance chemicals business delivered fourth-quarter sales of $164 million compared to $141 million in the prior year quarter. This can be attributed to global price increases of $15 million, or 11%, primarily in the Americas for copper-based preservatives. Volumes increased by 6% globally, including in the Americas. Adjusted EBITDA for PCE came in at $29 million for the quarter, compared with $18 million in the prior year quarter. Profitability improved on price increases implemented to recoup higher raw material and operating costs experienced in 2022 and 2023, as well as on higher volume. We are pleased that with these price increases, EBITDA margin for this segment returned to more normalized levels at around $18. Slide 19 shows fourth-quarter sales in our CM&C business of $132 million compared to $149 million in the prior year quarter. This decline was driven by reduced market pricing totaling $25.5 million across most products, including carbon pitch, where prices fell approximately 24% globally. However, these losses were partly offset by higher carbon pitch volumes.

This can be attributed to global price increases of $15 million or 11% primarily in the Americas for copper based preservative.

Volumes increased by 6% globally, including in the Americas.

Adjusted EBITDA for P. C came in at 29 million for the quarter compared with $18 million in the prior year quarter.

<unk> ability improved on price increases implemented to recoup higher raw material and operating cost experienced in 2022, and 2023 as well as on higher volume.

We are pleased with these price increases EBITDA margin for this segment returned to more normalized levels at around 18%.

Slide 19 shows fourth quarter sales in our CMC business of $132 million compared to $149 million in the prior year quarter.

This decline was driven by reduced market pricing totaling $25 5 million across those products, including carbon pitch, where prices fell approximately 24% globally.

These losses were partly offset by higher carbon pitch volumes.

Adjusted EBITDA for Siemens Sea in the fourth quarter was 4 million compared with 21 million in the prior year quarter as lower prices and at $2 8 million in bad debt reserves were partly offset by lower raw material costs and increased volume mostly in Europe.

Jimmi Sue Smith: Adjusted EBITDA for CM&C in the fourth quarter was $4 million, compared with $21 million in the prior year quarter. At lower prices and with $2.8 million in bad debt reserves, this was partly offset by lower raw material costs and increased volume, mostly in Europe. sequentially, the average pricing of major products is down 3%, and average coal tar costs are 4% higher. Compared to the prior year quarter, the average pricing of major products is down 14%, while average coal tar costs are down 3%.

Sequentially the average pricing of major products are down, 3% and average coal tar costs are 4% higher.

Compared to the prior year quarter, the average pricing of major products was down 14%.

Average coal tar costs are down 3%.

Moving on to capital allocation as shown on slide 21, we generated record operating cash flow of $146 million in 2023 and finished the year with net leverage of three times for the first time in about 10 years.

Jimmi Sue Smith: Moving on to capital allocation, as shown on slide 21, we generated a record operating cash flow of $146 million in 2023 and finished the year with net leverage of three times for the first time in about 10 years. We continue to pursue a balanced approach to capital allocation with $116 million invested back into our business and $25 million returned to shareholders through dividends and share repurchase. We also reduced our net leverage by $11 million in 2023, ending the year with $774 million in net debt and $330 million in available borrowing capacity at December 31. While we remain committed to our long-term target of two to three times net leverage ratio, the first and second quarters are typically periods of net borrowing as we build working capital in our typical business cycle. This cycle, combined with borrowings for the acquisition of Brown Wood announced this morning, will drive higher net leverage in the mid-to-high threes through the first half of 2024.

We continue to pursue a balanced approach to capital allocation with $116 million invested back into our business and 25 million returned to shareholders through dividends and share repurchases.

We also reduced our net leverage by $11 million in 2023, ending the year with $774 million net debt and $330 million in available borrowing capacity at December 31st.

While we remain committed to our long term target of two to three times net leverage ratio.

The first and second quarters are typically periods of net borrowing as we build working capital in our typical business cycle.

This cycle combined with borrowings for the acquisition of Brown Wood announced this morning will drive higher net leverage in the mid to high threes through the first half of 'twenty 'twenty four.

On slide 22.

Jimmi Sue Smith: On slide 22, total capital expenditures in 2023 were $120.5 million growth, or $116 million net of cash proceeds. We spent $58 million on maintenance, $15.5 million on zero harm, and $47 million on growth and productivity projects. By business segment, we spent $50 million on Routledge, $15 million on PC, and $51 million on CM&C, with $5 million spent on corporate projects.

Capital expenditures in 2023, or $120 5 million gross or $116 million net of cash proceeds.

We spent $58 million on maintenance <unk>.

$15 5 million on zero harm and 47 million on growth and productivity projects.

By business segment, we spent $50 million umbrella.

$18 million on P C.

And $51 million on CMC.

5 million spent on corporate project.

On slide 24 as announced on February 14, our board of directors declared a quarterly cash dividend of seven cents per share of <unk> common stock.

This dividend will be paid on March 25 to shareholders of record as of the close of trading on March eight.

At this planned quarterly dividend rate, which is subject to review by the board of directors.

The annual dividend will be 28 cents per share for 2024.

17% increase over the 2023 dividend.

And with that I'll turn it back over to Leroy.

Thanks, Jimmy Sue.

Next let's discuss the notable happenings around the company.

On Slide 26, we were pleased to announce the addition of Nish vartanian have MSA safety to our board of directors earlier this month.

Last week niche announced his retirement from MSA in May of 'twenty 'twenty four after serving as the CEO of the global leader in advanced safety products technologies and solutions since 2018 MSA.

MSA has made great progress on our niches leadership, including National recognition as one of America's Best managed companies by the Wall Street Journal and one of America's greatest companies by Newsweek there.

There are many companies there'll be think would have an issue on their board I'm a static that he chose to accept our offer to join the Coppers Board and look forward to adding his insight and experience to the mix.

On slide 27, we see that at the start of the new year, We announced that Jim Sullivan was named President and Chief operating officer of Coffers.

Jim has served as executive Vice President and COO since January of 2020 and has been with copper since 2013 and isn't that decade. He has contributed significantly to the transformation of the copper as you see today, leading the restructuring of our CMC business uniting operational leadership across all of our business units and advancing our strategy to expand and optimize our core business segments across.

Key infrastructure markets as.

As President Jim will continue doing what he does best which is fighting for every bit of value that koppers has earned its getting the most out of our asset base and putting us in the best competitive position in our markets and.

In addition, he'll play a continuing role in the development of our 2030 strategy, which is underway today.

My role as CEO remains unchanged with a continued focus on further driving shareholder value, which includes setting our corporate strategy and capital allocation priorities advancing our people first culture, and maintaining and building key stakeholder relationships.

I'm happy to recognize Jim's accomplishments and unwavering leadership and support with this well deserved promotion.

While he is not participating on today's call you'll hear from Jim from time to time on future calls as we look to provide you with greater context on our progress.

Slide 28 shows our leadership transition plans that were announced in early January that will take place over the course of 2024.

M Healy Vice president of our U I P business will retire at the end of 'twenty 'twenty four after a stellar 40 year career with koppers.

Starting July 1st who will serve as special assistant to Jim Sullivan and be actively involved in making sure. The U I P leadership transition as a smooth one.

Jason Block will take on the role view IP Vice President effective July 1st moving on from his current role as Vice President of North American C. M. C G.

Jason will be responsible for continuing to grow U P by strengthening customer relationships growing market share optimizing production and promoting safety and sustainability.

Brett Johnson, an 11 year copper's veteran will step into the role of running our North American CMC business as its vice President effective July 1st.

Brett formerly led the commercial organization in North America seem to see for the past 18 months and will now also assume responsibility for production logistics and the financial performance of CMC across North America.

Jason and Brett are shining examples of the team we have a extremely capable individuals at koppers individuals who continue to be excited to expand our scope of influence and responsibility.

And it's always sad to say goodbye to a good friend like Jim Healy, who was given so much to our organization, but it's also fun to see emerging leaders grab their opportunity to contribute to our continued success.

I wish Jim all the best in his well deserved retirement and assure the investment community that our businesses remain in good hands.

And the last couple of months I had the pleasure of visiting a number of our facilities both in Australia and the U S. As seen on slide 29.

In Australia, I spent time with richer lines, our vice President of Siemens He Australian operations, Nick Moretti, our operations manager and Richard Bennett, who leads our koppers utility pole business.

As always I learned a lot by talking with employees at our Sydney office as well as our production facilities located in Mayfield Longford we've.

We have a top notch team in Australia that doesn't get near the credit they deserve.

I think they actually liked flying under the radar I do need to call out. The fact that our Australian pharmacy business has had two straight record years of performance. While also showing improved safety metrics over that time frame and our pull business continues to churn out consistent results year. After year. My Thanks go out to the entire Australian team for all of their efforts.

In the U S. I visited you IP facilities, and Leland North Carolina, Utah Beach, South Carolina, and Verdelho, Georgia, along with our P. C plant in Rock Hill, South Carolina, and our Rps location in Florence South Carolina.

Great week highlighted by my interactions with the team members at each location, while also getting a chance to see where we put a lot of money to work over the past year.

From our new Micronize mill in Rockville to our new Conan Leland from our new Thai grinding operation in Florence to our new Rolling stock in Utah billing Verdelho I, even got to spend time meeting with several team members that we will highlight on social media. It's.

It's people like Julian Gilmore, Sharon the trail area Young Mario Frank's and Rob Pringle that make koppers, a special place to work.

Slide 30 shows the coppers earned recognition from Newsweek magazine as one of America's most responsible companies for 2024, which is the fourth consecutive year. We placed 124th out of 600 finalists in 13 out of 51 companies in our materials and chemicals category, which is a significant improvement over our 2023 result, and indicative of our continued progress.

And making positive societal impacts.

I'm also pleased to say the koppers was highlighted in the Wall Street Journal showcasing our utility pole treating facility and verdelho, Georgia. Thanks.

Thanks to Jim Healy, our U K business leader and Brad Singleton, our Vidalia plant manager for hosting the visit and providing the pertinent details of all that we do behind the scenes to help the utility and telecommunications industries get power and information to people throughout the nation.

Your article highlighted the favorable backdrop of infrastructure investments and how the macro trend of electrification and the need to harden. The grid is driving demand for more poles and larger poles.

We recently commissioned an external market assessment, which supports the continued health of the utility industry and estimates the overall north American market opportunity at approximately two and a half million dollars today and growing to approximately $3 5 billion by 2028.

We currently have a little less than 10% market share, but with our expansion into Texas and the acquisition of Brown would this would put us in a low to mid teens share with still a lot of potential for both organic and inorganic growth.

Now onto a review of each of the businesses I'll start with performance chemicals on page 32.

2023 was obviously, a very strong year as our PC business hit new highs in both sales and EBITDA.

As we entered the year, we projected that this business would do well, mostly predicated on cost recovery from our customer base through higher prices that went into effect on January one of last year.

We figured that our industrial business will continue to grow which it did by 6% and that our overall residential share would remain relatively the same but with some volume shifts among our customer base.

Our customers were relatively pessimistic on volumes going into the year, we were modeling a 5% to 10% pullback, which never happened the analysis can get a little money, but by our best estimate we actually saw residential chemical volumes increase from our base customers by approximately 8% over 2022, which drove results even higher than originally expected.

Good.

Factor in $75 million of price offsetting most of the cost increases we experienced in 2022, plus another great year from our South American region, and the result is a $123 million of EBITDA.

We believe we can talk that performance in 'twenty 'twenty four based upon a model that shows flat residential volumes and minimal price impact the.

The improvement is expected to come from a number of little things on the sales side, we had a new top 10 customer come online in 2023 that didn't really begin ramping up until early Q2. So we'll see some additional benefit in 'twenty four from the annualized <unk> of that business.

Also on the sales side, we again expect to see about a 5% volume increase in our industrial preservative business as a result of the annualized <unk> of new business captured in 2023, and a continued strong market for Poles and piling.

On the cost side, we expect to improve our cost position as our new Micropro grinding mill comes online, which will bring some of the higher cost of outside grinding back in house.

For the year, we should see flat sales.

N P C as gains in the U S were offset by a slight sales decline internationally.

On these flat sales, we should see margin accretion in full year, adjusted EBITDA increased by $7 million to approximately $130 million for the year.

Looking beyond this year at our recent board meeting our board approved a capital project to build CCA treating capacity in Brazil to support the growth and performance of our business in that region for.

For less than a $10 million investment we will fund continued growth that should result in a payback of less than three years.

Moving onto our utility and industrial products business shown on page 33, like our PC business. You IP also had a record year in sales and EBITDA in 2023.

P. C was a volume of cost recovery story, you Ips was cost recovery and superior operating performance.

In a market to remain hungry for product, we were able to continue to command strong pricing and margins.

Dry product remains the bottleneck and we weren't helped by losing one of our dry kilns to fire in April of last year.

But thankfully we have a strong supportive network of suppliers that helped us through that period.

Plant performance was also had its strongest in 2023 as several investments made in 2021 and 2022 really began demonstrating their full benefits as productivity in our operations improved at every step of the process for appealing and framing to drawing and treating our ops team had an incredible year.

And once again, our Australian pole business posted another very strong year and continues to chug along at a consistent pace.

In 2020 for the long term industry backdrop remained strong although activity has been a little softer in the earlier part of the year as some customers tried to sort out their budgets and timing of their federal infrastructure benefits.

While the ability to gain more pricing is likely reaching them for the time being we will see additive benefits. This year from our Leesville, Louisiana location coming online to feed the Texas market.

In addition by the end of this quarter, we should have the remaining portion of two and a half million additional cubic feet of drying capacity online, which will help our cost position.

We're also already working on doubling our capacity out of Liza, which should be in place by year end 'twenty 'twenty, four and time to contribute to 2025 results.

I already referenced the additional brown woods assets, but have excluded any contribution from them in our 2024 expectations until we officially close and have greater clarity on cost and timing of benefits.

As a final point about you IP, we're not including the impact of any elevated storm activity in our 2024 expectations, but that always remains a wildcard.

23 was a fairly mild year for the sake of those affected we hope that 2024 will be as well, but note that we could see some additional volume for storm response at this year's storm season turns out to be more active.

Our railroad products and services business as summarized on page 34, and while our Rps business performance was slightly improved in 2023, it's still significantly lags or other businesses.

$48 million of price increase helped but still fell well short of covering the cost increases we've seen coming out of the pandemic.

On the cost side, we continue to find ourselves limited in what we could do in operations due to the required effort needed to dig ourselves out of our Perlis inventory situation brought on by the railroad slow reaction to raise price in a competitive market in 2021.

As a result, we've been burning overtime during the past two years in running a much less efficient operation, bringing significantly higher volumes of green ties, while doing significantly more bolt nizing, which also reduces efficiency on.

On the plus side, we were able to reorganize our procurement operation, reducing head count by almost a third while increasing our tie purchases by 28% over 2022.

Last year was also the highest number of times, we treated since 2018 and represented the strongest profitability we've seen in our commercial business in at least five years.

Lastly, it was a pretty good year in our maintenance of way businesses and the best year, We've had in our Thai recovery business since we acquired it in 2018.

We continue to see great interest in our customer base and helping them find a responsible solution to disposing of their end of life cross ties and expect that capability to continue to help us strengthen our overall Thai business long term.

As we look to 2024, we continue to work on recovering some price from a few remaining customers to partially offset the significant cost increases we've endured over the past several years.

On the volume side, we're expecting about a 5% uptick from some additional business added and on the cost side. We expect to finally begin realizing full cost synergies from the acquisition of gross and James in October 22.

Now that inventory levels are getting to where they need to be and we can begin scaling back tie sorting operations at a couple of our treating plants.

We'll be getting greater benefits from our new North Little rock facility. Once we can stop Bolton rising later this year and decommission the old treating plant will also gained greater operating leverage that our summerville facility is leesville begins pushing dry material there way for treatment and sell into the Texas pole market.

Setting some of the benefits Rps expects to realize them 24 will be slightly lower maintenance away profitability and some Korea. So price benefit that will move to CMC as that business unit has eaten the increased product costs over the past couple of years without passing it on to our P. S.

Overall, the rough business segment rail and utility combined is expected to finish 2024 at $96 million and adjusted EBITDA, which is $12 million higher than 2023 and will represent a new segment high if achieved.

As has been the case the past few years most of the gains are expected from the utility business, which has surpassed our rail business from a profitability standpoint.

Finally onto the CMC business, which is summarized on page 35, 2023 was both challenging and disappointing while we certainly didn't have expectations of repeating the record results of 2022 and reflected that in our early guidance Siemens he dealt with various issues throughout the year that exceeded our ability to absorb while maintaining our original profit estimates.

For this business we.

We believe that most of what we endured will turn out to be a blip on the radar while other factors are more systemic.

Our biggest issues are in North America, as Australia had its second straight record year performance, while Europe's results were quite a bit lower than 20 to nearly $15 million of that occurred in the back half of the year when the sudden drop in their core markets got flushed through inventories.

It reflects the typical cycle, we go through in this business and we now find ourselves in a spot in Europe, where we're likely at the bottom and have already seen our profitability stabilize as we finished Q4.

Only that but with the commissioning of our new enhanced carbon products facility and new Borg in the fourth quarter. We're in a position to begin moving what used to be lower value distillate product into higher value pitch markets. Unfortunately.

Australia won't be able to repeat 2023 due to a combination of price moderation and some higher input costs, but they will still have a very solid year in 2024.

So on to North America, we did seem to have a confluence of events happened in our North American business that were reflected in a very tough fourth quarter results, we had raw material disruption with one of our suppliers that resulted in us having to substitute with higher cost imports. We had some customer credit issues that resulted in us increasing our bad debt reserve and losing some volume and throughput through the stickney plant.

We had some unplanned outages that resulted in higher repair and maintenance costs and we continue to deal with a challenged phthalic anhydride business. Its all volumes dropped by 19% in 2023.

On the plus side, though our petroleum car suppliers back on line and supply and product again, and as we moved out of winter and into milder weather plant performance is picking up and expenses will moderate.

North America will also be getting some credit this year for some of the creosote cost increases the Rps was able to pass through to account for the higher cost at Siemens He has endured over the past couple of years.

While that's happening we're going through a full reassessment of our salad business due to its prolonged and continued weakness in determining what changes need to be made longer term.

I know theres, a lot of near term noise going on in CMC, but we believe that with all the pluses and minuses, we can keep EBITDA flat in 2024 on a lower sales number before taking results back into the $60 million to $75 million range in 2025.

Moving to our 2024 guidance on slide 37, we expect to see consolidated sales growth of 4% to 5% driven primarily from reps.

Our sales forecast for 'twenty 'twenty four is approximately 2.25 billion compared with 2.15 billion in 2023.

We expect drops to see $160 million in topline increase P.

<unk> sales are forecast to be flat year over year, and Siemens T cells are estimated to decrease by $60 million.

On slide 38, as I've already articulated we're maintaining our target of $275 million of adjusted EBITDA for 2024 with.

With contributions coming from both rough and PC, while Siemens he stays flat.

Once again, none of these projections include contribution from Roundwood, which we'll speak to once we close the transaction.

In terms of how our adjusted EBITDA in 'twenty 'twenty four will play out from a timing standpoint.

Our first quarter will not match up to last year's very strong Q1, as we flesh out some of the CMC issues that we dealt with in Q4, while also dealing with the impact of the January cold snap the gripped the U S and impacted production at just about every one of our U S plants as well as several of our customers now I know, we only normally give annual guidance I feel compelled to share our insight for the first.

Quarter.

Based upon January results, we know that will not match last year for the reasons I. Just gave in addition to last year's first quarter, providing a very strong comp.

February is tracking as expected if not a little better and we expect a strong march but we won't make up for the tough January until we get beyond Q1.

Therefore, we're expecting to start the year with Q1 EBITDA around the $55 million Mark with quarters, two three and four following a similar seasonal trajectory as years past.

On page 39 of adjusted EPS, We once again see a nice bump from operations, which will be eroded somewhat by higher DNA and taxes.

Overall, we expect to finish 'twenty 'twenty four with another record year of earnings at a range of $4 60 to $4 80 per share, which would represent an 8% increase over 2023 at the midpoint.

On slide 40, we anticipate that our capital spending will be approximately $100 million in 2020 for $16 million lower than 23 spending on a net basis.

Required spending on maintenance and zero harm is estimated to be just under $71 million with approximately 29 million dedicated to our growth and productivity projects that will enable us to continue growing profitably beyond our $300 million in 2025.

That capital will be funded by operating cash flow that we expect to generate of at least $150 million.

Beside our dividend and some share repurchases, we may do to offset share dilution. We're doing the work to prepare for the termination of our U S pension plan, which would result in a top up contribution of approximately $25 million, we follow through on that it will likely occur in the fourth quarter.

Now before I move to Q&A as illustrated on slide 41, I want to provide a quick scorecard of how we're tracking to our 2025 strategic plan goals as we find ourselves now officially 60% complete from.

From a sales standpoint, we said we would grow the top line at a 5% to 7% CAGR. After three years, we've grown sales from $1 67 billion, a 2.15 billion, which equates to a CAGR of 9%. So we are tracking ahead on the sell side.

From an EBITDA margin standpoint, we said, we'd generate margins and a 13% to 15% range by the end of the strategy. We finished 2023 and approximately 12%. So we have some ground to make up but certainly the bottom end of the range remains reasonably within our line of sight.

From an operating cash flow standpoint, we said, we would generate between $600 million to $650 million over the five year period through three years, we've generated $351 million, which means we only need two more years at the same level as 2023 and will be at the top end of that range.

From a net capital standpoint, we originally said, we would need to spend $625 million over five years to get to 300 million that number is now down to about $450 million with about $300 million of it already spent which means that anything spent above the $450 million should be added to our original target or be capital that will contribute to beyond 2025, such.

As the Brazilian CCA facility I mentioned earlier.

It also gives us more flexibility to make key tuck in acquisitions, such as gross and James and now Brown wood, which effectively displace capital that we would have otherwise look to add.

All of that brings us to the conclusion that we're tracking well ahead of our 2025 target of $300 million and adjusted EBITDA, while projecting to spend approximately what we thought only instead of it all go into Capex part of it is going to a core M&A tuck ins that will enable us to grow well beyond what we originally communicated.

As I continue to say the future looks bright at koppers and we're excited to continue to grow our presence and influence in the key core infrastructure markets that we serve now I'd like to open it up to questions.

We will now begin the question and answer session.

To ask a question you May Press Star then one on your Touchtone phone.

If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

Our first question today is from Liam Burke with B Riley FBR. Please go ahead.

Good morning, Leroy good morning, Jimmi Sue.

Good morning.

Leroy generally.

Existing home sales are a good benchmark for demand in our PC and that those numbers have been typically down, especially in the fourth quarter, you had strong volumes or increased volumes in the U S.

Is that a function of the addition of the new customer or are your end markets holding up.

Fine.

Yeah, Liam Yeah, we often talk about the fact that we do pay attention to existing home sales certainly.

What we're what we are and we do see those as is typically a pretty good barometer of the business, but but where we're seeing things a little bit different Lee over the past year or so as existing home sales have struggled and I think we've talked about on some prior calls where you know.

Our belief is that.

When you look at the cost of product right, where our product goes into treated lumber.

No that's a cost category or a or a category in the home improvement sector that is actually a good bit lower.

Today than it was just a couple of years ago and a lot of the inflationary increases that we've seen happen over the past couple of years of stock in some of these other categories that that you have seen slowdowns in in that whole home improvement sector, but treated wood again that that has come down quite a bit because of the cost of lumber come.

[laughter] down and therefore.

It's a much more attractive category for people, who might have deferred or delayed projects to now look at going ahead and putting into place and the other thing that I think we continue to see is there's just an incredible backlog of.

Of projects.

That are still in the queue and contractors are working through that.

So we've continued to see strong demand across our business and as I mentioned in my comments right that wasn't the expectation coming into the year our customer base.

All we're giving us signals that he thought that this year was going be down a little bit and it turned out to be.

Basically the opposite and so the what we're hearing this year is.

Bodies sort of modeling flat volumes, and that's more or less what we have factored in other than again, the annulus nation of some customer business that we did take on in the end of first quarter early second quarter of last year.

Oh, great. Thanks Leroy.

And then the Brown wood preserving acquisition it looks like it's work very nicely into the into the rubber business.

Are there going to be significant.

Integration costs or do you think you can fold it into the operation.

Got it.

There are some but yeah, yeah, we will incur some I mean, it's in the heart of what we do right. It's it's you know, it's basically adding a couple of plants into.

Into our network.

They do have a headquarters in Louisville with some some individuals in place there we're going through that and we're not really prepared at this point to talk about that.

Say just wrapping it all together in terms of timing you know happening somewhere in the second quarter some of their capacity that they're finishing up coming online right around that time as well as what I'd say, we'd probably modest integration cost I can't imagine them being too high but all of that wrapped.

Together, we're not we're not we don't want to give expectations of a a significant impact in 2024, but certainly as we exit 'twenty four heading into 'twenty five.

We would expect that we'd see the type of contribution.

That was.

Disclosed in the release, which takes our 2025 target of 300 to somewhere between $3 15 to $3 25, and so and we don't think that's the end I mean, we think that there was actually some more opportunity beyond that but I'm not ready to give our integration cost estimates at this point the land, but we don't expect it to be too much great.

Thanks Leroy.

The next question is from Gary Precipice with Barrington Research. Please go ahead.

Good morning, all several questions here first of all Jimmy Sue.

With the <unk>.

The level of leverage you have now absent what you've got to take on for the acquisition. It looks like Q4 annualized interest expense is running about $71 million is that probably a good number to use for 2024.

Yes. It is Gary I think in our EPS guidance, we shared at flat year over year. So that's what okay.

Yeah I.

Travelling so I didn't I don't have the slides with me access to them and then.

Yeah.

It looks like.

This acquisition of Brown wood.

With the numbers you gave in terms of sales and adjusted EBITDA Youre looking at anywhere from an 18% to 29% adjusted EBITDA margin.

In that segment or rubs hit about a nine 4% adjusted EBITDA margin in 2023.

I realize you're putting utility poles in there with railroad, but is there something inherently different with there.

Business is terms of their adjusted EBITDA margin or is that kind of standards of the industry.

Well no I'd say so their margins are actually pretty much in line with our poll margins, we see we see them pretty much in line.

Some of the benefits, we think we'll be able to to drive having that as part of our organization gaining some economies of scale.

We think our Kent and actually some some growth right.

We do see well I said, we see that kind of exiting 'twenty four maybe on a run rate.

Closer to $100 million, we think there's opportunity to actually take that up to maybe 125 and that will get you more to the top end of the range.

Is that 25, plus number that I've been talking about.

Okay, and then could you maybe comment I mean, I know you had expressed somewhat of a level of frustration of not getting some of the price increases that you wanted I believe it was in the railroad yeah products business, where do you stand on that now in terms of.

What percentage of it have you rectified what percentage of it is still outstanding out there well.

Well I'd.

I'd say we've record we've rectified.

Over over half of our customer base and we still have a few folks left that we're working with to try and.

And get to a better situation. Okay. So that's where we currently stand.

Okay, and then just lastly, just.

The bad debt expense that you incurred.

That reserve was at $3 8 million.

282.8 months, sorry in CMC that's not.

Back into your adjusted EBITDA number of $53 9 million right.

It's included.

Okay. It is a it is in that number.

It is in that number so it isn't.

So the reality of it is without that Youre. Your EBITDA adjusted EBITDA did a lot better okay correct, yes that is correct yes.

Thank you Youre welcome. Thank you.

The next question is from Michael Matheson with singular research. Please go ahead.

Congratulations on the quarter you guys alright, great. Thank you.

Measures.

Actually revenue.

No.

So following up the question about pricing and reps.

You know when your slides this morning.

Its looks like a forecast of kind of minimal impact from price adjustments.

Is that kind of admitting that those other companies, where you didn't quite get the pricing increase that you were looking for that.

That's the sector and really just going to remain stable for now or do you think theres still some room out there.

I think yes, I think theres still some room out there, but we're we're not we're not banking on anything right because again were.

No we are under contract and what we're trying to do is.

Justify to our customer base that we have seen some extraordinary things occur over the past couple of years, which has had a significant impact on our cost structure and so on.

Yes.

We were just we're going as partners to our customers and trying to see if if they can provide some relief to us.

Through cost recovery and so we don't really have that baked in and if we're able to get to a positive resolution then you know.

Then that'll.

That'll that'll.

That'll obviously.

Help us and be over and beyond what we think we can do.

Perfect.

Tell me one more question I'd like to ask you about the CMC margins sure.

You know everything else in this report is fantastic. That's one of the few things where you'd say gosh it was down amongst sort of.

Are there macro factors that are driving that that would allow for some recovery in 'twenty four 'twenty five or is that just kind of a new normal.

Well certainly certainly there are macro factors and we see that impact that business. So it goes through its cycles.

It's been a tough.

Certainly 23 was a tough year for steel and aluminum and we were on both we're in the middle of both of those markets.

It's had certainly impacts if you will on.

You know on the competitive landscape there is theres a number of aluminum manufacturers in Europe that have curtailed capacity, which has just created a more competitive situation for the remaining AR.

The remaining customer base in the U S. It's had its issues as evidenced by again the bad debt reserve, we took at year end and some lower volumes that we've seen as a result of that.

As a as I'd say the overall economy.

Improves in those markets.

Move into better times, we will likely see an improvement in our ability to to move up price and margin, we typically see in a declining market.

We're typically seeing results like what we saw really in the fourth quarter of this past year in the back half of this past year and a.

In a strong and rising market you tend to see what we saw in 2022, which was.

A.

Pretty strong trajectory upward throughout the year. So that's why we feel like we have kind of hit the bottom here now and.

If nothing changes then we'll stick in and around this area, but once things start to show some improvement we should start to see some of that flow through our results.

Well, thank you and congrats again, thank you.

And the final question today comes from Jamie Wilen with Wilen management. Please go ahead.

Obviously, the Brown water acquisition, you know that business very well could.

Could you talk about what they do better than you and what you do better than them and how you bring that to better the overall company Ah yeah. So.

That's a tough question I would say you know I'd say at large we both one of the reasons why they were actually high on our list is because we see a lot of similarities between the businesses and so we felt like a combining the two would make us stronger I think they have some.

Chips that are that we don't have in the industry.

There there is relationships that we have that are stronger there's relationships. They have that are stronger that I think again, combining the two will certainly help.

Well it will help us out.

And from an operation standpoint, I'd, just say you know.

While while they're very good I'd say, we have a very very strong operations team and they've they've I think they've shown that over the past couple of years as we've made some improvements just by providing our team the capital they have been able to deliver a far above what the expectations were.

And I think what you tend to find in these sorts of situations with smaller.

Family owned businesses right, they tend to they're kind of stuck being able to run hand to mouth and they don't have a lot of capital at their disposal.

So it's tougher for them to do some of the things that some one like a koppers, who has a better balance sheet and can deploy capital in different way.

We can extract in terms of benefits and so that's what I think we're looking forward to us being able to apply our balance sheet too.

Round to be able to bring out even greater profitability than what they've been able to do on their own and that's what we were able to do with the Cox acquisition quite frankly.

And you know it really came down to being able to utilize our balance sheet there their network.

And their talent.

And we've seen the success in that so we would expect we would expect something pretty similar with brown.

Excellent could you give us some idea of what the EBITDA was in 2023.

We're not disclosing that.

We've talked about the numbers in terms of what we see moving forward in 'twenty five.

And even what we think we can do beyond that in 'twenty four in terms of its contribution will talk about that when we are when we get to signing day.

But but that's all we're ready to disclose.

Okay, and lastly, they have a rather small consumer products business.

Any ideas for.

Whether you will develop that divest that or is that.

A relevant part of the deal irrelevant.

Okay very good nice quarter fellows. Thanks, Thank you very much.

This concludes our question and answer session I would like to turn the conference back over to Leroy ball for any closing remarks.

I just want to thank everybody again for your continued interest in faith and coffers.

And we're excited about 2024 and beyond and continuing to deliver on the commitments. We've made and again appreciate your interest in our company and.

Have a good day everybody. Thank you.

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

Yeah.

Yeah.

Okay.

[music].

Okay.