Q3 2024 Koppers Holdings Inc Earnings Call
Speaker Change: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Copper's third quarter 2024 earnings conference call and webcast.
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Speaker Change: At this time, I'd like to turn the floor over to Quynh McGuire, Investor Relations. Please go ahead.
Speaker Change: Thanks and good morning. I'm Quynh McGuire, Vice President of Investor Relations. Welcome to our third quarter 2024 earnings conference call. We issued our press release earlier today. You may access it via our website at www.coppers.com.
Speaker Change: As indicated in our announcement, we have also posted materials to the Investor Relations page of our website that will be referenced in today's call.
Speaker Change: 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.
Thank you. Thank you. Thank you.
Speaker Change: 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.
Speaker Change: The company's actual results, performance, or achievements may differ materially from those expressed in or implied by such forward-looking statements.
Speaker Change: 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, also contains reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures.
Speaker Change: Joining me for our call today are Leroy Ball, Chief Executive Officer of Coppers, and Jimmi Sue Smith, Chief Financial Officer. I'll now turn the discussion over to Leroy.
Leroy Ball: Thank you, Quynh. Good morning, everyone. I'm pleased to share the details of another strong performance delivered by our global coppers team in the third quarter, which includes record third-quarter sales and record third-quarter profitability and better safety performance.
Leroy Ball: On the other hand, we continue to experience reduced year-over-year volumes in our legacy utility pole business and lower sequential profitability in our performance chemicals business due to higher raw material costs.
Leroy Ball: Now, as always, we believe that our balanced and diversified business portfolio, as well as our team's ongoing commitment to solving everyday challenges, will keep us on track to meet our 2024 goals.
Leroy Ball: So let's begin on slide four by looking at some of our key metrics from the quarter.
Leroy Ball: Consolidated sales of $554.3 million dollars represented a record third quarter compared with sales of $550.4 million dollars in the prior year quarter.
Leroy Ball: Our Railroad and Utility Products and Services segment reported record third quarter sales while performance chemicals sales slightly declined due to brown wood sales now being reported as intercompany and carbon material and chemicals still seeing some demand weakness.
Leroy Ball: adjusted EBITDA margin was 14% versus 12.8% in the prior year.
Leroy Ball: Third quarter diluted earnings per share was $1.09 compared with $1.22 in the prior year quarter, while adjusted earnings per share for the quarter were $1.37 compared with $1.32 in the prior year quarter.
Leroy Ball: Operating cash flow was $29.8 million for the third quarter and $44.7 million for the year-to-date period through September of 2024. That's versus $81.6 million and $79.5 million in 2023, respectively.
Leroy Ball: Let's now review our continuing Zero Harm efforts on slide 6. In early October, we held our Zero Harm Safety Coordinators Conference in Florence, South Carolina, attended by Zero Harm representatives throughout our North American locations.
Leroy Ball: The key focus was on looking for ways to identify environmental hazards and incorporating it into our existing process for physical hazard identification, which allows employees to identify and report hazards that may lead to an injury at their facilities.
Leroy Ball: As a result, our employees are encouraged to identify and report environmental and or safety concerns in order to help overall with compliance and safety efforts at Coppers.
Leroy Ball: Now, to date, in 2024, 25 of our 47 facilities have operated accident-free with Europe CM&C and Europe performance chemicals notably having zero recordable incidents.
Leroy Ball: Our leading activities have increased by 5%, our recordable injury rate has gone down 8.5%, and our rate of serious safety incidents has decreased by an impressive 42%.
Leroy Ball: Zero Harm 2.0 remains our priority, re-energizing engagement at the front line of operations to accelerate our progress towards zero incidents.
Leroy Ball: We're encouraged by these results, with kudos to our team members worldwide. Nothing is more important than the health and safety of our people.
Leroy Ball: As shown on slide 7, we recently held our 2024 Truck Driving Championship in September. The competition consisted of the safest coppers truck drivers, based on traffic citations, service violations, speeding, and inspections.
Leroy Ball: The three winners were William Bailey from our Recovery Resources Division, David Dunn from Utility and Industrial Products, and Dennis Roberts from Railroad Structures.
Leroy Ball: Each of these drivers earned a cash prize and visited Copper's headquarters in Pittsburgh where they were honored a special dinner with Copper's leadership.
Leroy Ball: Bill, David, and Dennis represent the best of coppers in the way they approach their work with passion and pride, and we, and our customers, are lucky to have them driving for us.
Speaker Change: Now, I'd like to turn it over to our Chief Financial Officer, Jimmi Sue Smith, who will provide an overview of our third quarter financial results.
Jimmy Hsu
Speaker Change: Thanks, Leroy. We issued a press release this morning detailing our third quarter 2024 results. My comments today are based on that information.
Speaker Change: Starting on slide 9, third quarter sales rose by 4 million or .7% from the prior year, a record for third quarter sales.
Speaker Change: By segment, RUP sales increased $14 million or 6 percent, also a third quarter record, PC sales decreased $3 million or 1.5 percent, and CM&C sales decreased $7 million or 5.5 percent from the prior year quarter.
Speaker Change: On slide 10, Adjusted EBITDA was $77 million, which was a third-quarter record, resulting in a 14% margin.
Speaker Change: By segment, RUCS generated adjusted EBITDA of $25 million with a 10% margin, PC delivered adjusted EBITDA of $40 million with a 22.6% margin, and CM&C reported adjusted EBITDA of $13 million with a 9.8% margin.
Speaker Change: On slot 11, our RUPS business achieved record third quarter sales of $248 million compared to $234 million in the prior year quarter as we realized $10 million of price increases mainly for domestic cross ties and utility poles in Australia.
Speaker Change: Volumes in our domestic utility pole business were up 11%, primarily attributable to brown wood volumes, and our railroad bridge services business saw increased activity.
Speaker Change: These increases were partly offset by lower activity in our cost-high recovery business.
Speaker Change: From a market trend perspective, prices for untreated crossties remain relatively stable. Compared to the prior year quarter, crosstie procurement declined by 11% and crosstie treatment was lower by 8%.
Speaker Change: Adjusted EBITDA for REPS remained consistent with the prior year quarter at $25 million.
Speaker Change: Profitability was flat year over year, even with a net sales increase and $3.4 million from improved plant utilization, as these gains were offset by $14.1 million of higher raw material, operating, and SG&A costs.
Speaker Change: On slide 12, our performance chemicals business generated third quarter sales of $177 million compared to $179 million in the prior year quarter. The sales decline can be attributed to preservative sales to Brownwood now being treated as intercompany sales.
Speaker Change: Excluding Brownwood, volumes were slightly higher, but offset by lower sales prices.
Speaker Change: On slide 13, our carbon materials and chemicals business reported third quarter sales of $130 million compared to $137 million in the prior year quarter.
Speaker Change: We had $16.6 million of lower sales prices across most products, particularly for carbon pitch, where prices decreased 20% globally, driven by market dynamics, especially in Europe, as well as lower volumes of carbon black feedstock.
Speaker Change: These factors were partly offset by volume increases for carbon pitch and phthalic anhydride.
Speaker Change: Adjusted EBITDA for CM&C in the third quarter was $13 million, compared with $10 million in the prior year quarter.
Speaker Change: Profitability was higher due to $9.2 million of lower raw material costs, mainly in Europe, as well as lower SG&A costs and a higher volume of carbon-pitched and phthalic anhydrides, partly offset by price decreases and higher operating expenses.
Speaker Change: Compared with the second quarter of this year, the average pricing of major products was 1% lower, and the average cost of coal tar decreased by 4%.
Speaker Change: Slide 15 outlines our capital allocation approach. Net capital expenditures were $55 million through September 30th. Total CapEx is forecast to be $80 million for 2024, compared with $116 million in the prior year.
Speaker Change: Further buybacks for the remainder of this year, if any, will depend on cash flow and stock performance during our open window period. We have approximately $12 million remaining on our existing authorization.
Speaker Change: We also returned capital to shareholders through a quarterly dividend of $0.07 per share this quarter, and we continued to focus on reducing our net leverage. We ended the quarter with $936.4 million in net debt and $332 million of liquidity, reflecting the $100 million we borrowed to purchase Brownwood. Our net leverage ratio was 3.6 times.
Speaker Change: We continue to be confident in our ability to grow earnings and generate cash and remain committed to our long-term target of two to three times net debt to EBITDA, with the expectation that it will be in the low threes at year end.
Speaker Change: Slide 16 shows the details of our capital expenditures through the third quarter. We've spent $55 million net, or $59 million in growth.
Speaker Change: By category, $38 million was for maintenance, $4 million for zero harm, and $17 million for growth and productivity initiatives.
Speaker Change: By business segment, we spent $27.5 million on RUF, $9 million on PC, $19 million on CM&C, and $2.5 million on corporate projects.
Speaker Change: On slide 18, as previously announced, our Board of Directors declared a quarterly cash dividend of 7 cents per share of Copper's common stock on November 7th. This dividend will be payable on December 16th to shareholders of record as of the close of trading on November 29th.
Speaker Change: At this planned quarterly dividend, which is subject to review by the Board of Directors, the annual dividend will be $0.28 per share for 2024, a 17% increase over 2023.
And with that, I'll turn it back over to Leroy.
Leroy Ball: Thank you, Jimmi Sue. Now let's take a look at the notable happenings from the third quarter.
Leroy Ball: Our Utility and Industrial Products team members stepped up to help communities devastated by Hurricane Helene and Hurricane Milton, which impacted 48 of our utility customers across eight states.
Leroy Ball: As pictured on slide 20, our people responded in a huge way to meet the demand for new poles as utilities rebuild their networks and restore power to affected residents.
Leroy Ball: Despite dealing with their own personal losses from the storms, UIP employees shipped nearly 40,000 utility poles to affected areas across the southeastern U.S. with more to come.
Leroy Ball: Now on to a review of each of the businesses. I'll start with Performance Chemicals on page 23.
Leroy Ball: The third quarter continued to be solid from a volume standpoint as our Legacy Microprobe ground contact volumes were slightly ahead of Q3 2023, which is similar to the sales volume comparison of this product category for the year-to-date September period.
Leroy Ball: Our above-ground residential volumes were weaker in Q3, and through three quarters were down about 4% compared to prior year, due primarily to geographic and customer mix.
Leroy Ball: The trends are expected to persist through the fourth quarter, with slightly more softness in our ground contact product line as some recent market share losses will begin to take effect during Q4.
Leroy Ball: The data on existing home sales continues to be disappointing while new home construction has picked up some of the slack in available housing stock.
Leroy Ball: Remodeling spending should begin to come out of the trough it hit in Q3 and move back to positive comps beginning in Q2 of 2025, according to the Joint Center for Housing Studies of Harvard's leading indicator of remodeling activity.
Leroy Ball: It is difficult to pinpoint exactly why treated wood has continued to fare okay through what has been a generally tougher building products market.
Leroy Ball: However, two logical factors behind this trend are the normalization of lumber prices to pre-pandemic levels and people being priced out of moving up in home value and instead investing in their current home, figuring that they're going to be there longer.
Leroy Ball: Industrial volumes were down in Q3 compared to prior year, but normalized for the acquisition of brown wood in April of this year, volumes remained flat.
Leroy Ball: year-to-date industrial volumes are up a couple percent but adjusting for Brown the increase is more like five to ten percent
Leroy Ball: This will likely expand further in the fourth quarter due to the heavier demand we saw coming from storm response after Hurricanes Helene and Milton.
Leroy Ball: The storm response has also had a positive impact on residential product demand in early Q4 as lumberyards and home improvement stores needed to stock up for the repair and rebuild process.
Leroy Ball: Pricing for non-contracted business has been under some pressure throughout the year as costs, other than copper, have begun to moderate.
Leroy Ball: We've also continued to pull back on discretionary spending, which has helped push profitability to new heights.
Leroy Ball: As a result of all that, we are upping our estimate of 4-year EBITDA for our PC segment to $140 million at the midpoint of our range increase.
Leroy Ball: Moving on to our Utility and Industrial Products business shown on page 24. Demand in Q3 continued to be softer than prior year when we exclude sales from the Brown Wood Acquisition.
Leroy Ball: A combination of needing to work down higher inventories, a higher interest rate environment causing utilities to reassess project scope and timing while they seek rate increases, and a shifting of constrained budgets to more critical power generation projects have all contributed to what we view as a short-term constraint on pole demand.
Leroy Ball: Now, that included the Brown business and our entry into the Texas market, which are both running behind early expectations but remain poised to make significant contributions when normal demand picks back up.
Leroy Ball: As mentioned earlier, when I highlighted the work by our UIP team, in late September and early October, Hurricanes Helene and Milton devastated various parts of the Southeast U.S., causing death and destruction not seen in many years.
Leroy Ball: Now, the vast majority of that volume was shipped in October, which was a record sales month for UIP.
Leroy Ball: We were thankful to have the brownwood plants as a part of coppers as it enabled us to do more than we could have otherwise.
Leroy Ball: Responding to those storms has enabled coppers and certain of our customers to work down inventories, improving the chances that 2025 sales will get off to a positive start.
Leroy Ball: On a final note, our Australian pool business had another strong quarter, and with one quarter left this year, finds itself in position to have its best financial performance since 2014.
Leroy Ball: Our railroad products and services business is summarized on page 25.
Leroy Ball: Also, through September, we've realized $4 million of cost savings that we targeted for the year, which is at the low end of our previously stated range.
Leroy Ball: And also providing help on the cost front is reducing our need for boltonizing and having the healthiest air stacked inventory levels We've seen in years
Leroy Ball: Switching issues and inconsistent car flow in and out of our plants, something that we don't control, continues to be an issue at several of our facilities. Now we're addressing those issues as best we can as they arise, but they've contributed to inefficiencies that we have had a limited ability to recoup.
Leroy Ball: We still expect to finish the year flat from an overall cross-tied demand standpoint while our commercial business remains a bright spot as backlog and profitability remain strong.
Leroy Ball: With volumes in both utility and rail customers muted and less price recovery than what was expected coming into the year, we're expecting an increase in EBITDA from our RUPS business of nine to ten million dollars, which is at the lower end of the range of our expectations that we communicated last quarter.
Leroy Ball: Finally, on to the CM&C business, which is summarized on page 26. As expected, we saw both sequential and year-over-year improvement in profitability for our global CM&C business.
Leroy Ball: Pitch markets appear to be at or close to bottom, as pricing continues to be weak, comparatively speaking, but we did experience a small boost in volumes during the quarter.
Leroy Ball: While pricing was down, we didn't lose any ground as coal tar reductions kept pace with finished goods price declines.
Leroy Ball: We continue to work on raw material contract extensions, the result of which will be key to our success beyond this year. We have agreed on the important terms for our coal tar supply in Australia, while discussions in Europe and the U.S. continue.
Leroy Ball: Like RPS, cost is a big issue in CM&C, particularly in North America, where we have been focused on finding cost savings, capturing $7 million through September.
Leroy Ball: Somewhat specific to CM&C, we have also cut back planned capital expenditures for this year and are tracking to a capital number for CM&C this year that is $24 million less than last year.
Leroy Ball: Moving forward, this represents an annual run rate that we plan to stick to and potentially reduce even further.
Leroy Ball: For CM&C, we now expect a decline in EBITDA for this year of between $9 and $11 million, which is in the middle of our previously communicated range.
Leroy Ball: Rupp's sales are projected to see $50 million in top-line increase, including contributions from Brown Wood.
Leroy Ball: PCE sales are forecasted to decrease slightly by $15 million from the prior year and CM&C sales are estimated to decrease by $75 million due primarily to price and volume declines in carbon pitch, much of which we've already experienced, partially offset by volume increases in phthalic anhydride.
Leroy Ball: As a result, our consolidated sales forecast for 2024 is approximately $2.1 billion, which would be similar to 2023.
Leroy Ball: On slide 29, we're tightening our forecast for adjusted EBITDA to be in the range of $270 million to $275 million due to the various reasons already explained.
Leroy Ball: On slide 30, we provide our adjusted earnings per share bridge where we continue to expect a strong contribution from operations offset somewhat by depreciation and amortization and interest expenses.
Leroy Ball: For 2024, we're tightening our EPS range to be $4.25 to $4.45, with the upper end representing a new high for coppers.
Leroy Ball: On slide 31, we are projecting capital spending to be $80 million in 2024, $73 million net of cash proceeds.
Leroy Ball: This is $5 million better than the low end of our previous range and $43 million better than the net $116 million that was spent in 2023.
Leroy Ball: That has enabled us to devote $42 million this year to repurchasing shares at levels well below our stock price highs experienced early this year.
Leroy Ball: Moving on to slide 32, I'd like to spend a few minutes providing a high-level rundown of our early expectations for 2025.
Leroy Ball: In performance chemicals, we've already seen a more competitive environment in the residential preservative market, and thus will be experiencing some market share loss and margin erosion as we compete to minimize our net share loss for next year.
Leroy Ball: However, lower mortgage rates are expected to support an improved housing market and that, in combination with improved repair and remodeling expenditures, should support healthier market conditions.
Leroy Ball: For our industrial products, we're projecting demand growth due to net market share gains and an improved industry backdrop.
Leroy Ball: In terms of raw materials, copper prices will rise, but they are hedged and most other product costs should not experience any measurable change.
Speaker Change: It's fair to say they're a PC business probably outperformed in 2024 and is due for a step back.
Speaker Change: And while that will happen in 2025, it will be somewhat mitigated by stronger industrial demand and aggressive cost reduction measures. All told, we can still see a path for performance chemicals to have its second or third best year ever, which would make me happy.
Speaker Change: In our utility and industrial products business, a healthier utility market is expected to support modestly higher volumes, and we will have a full year of benefits from the Brown Wood Acquisition.
Speaker Change: We're also expecting to further expand our presence in Texas and Midwest regions to realize additional market share growth.
Speaker Change: Market drivers continue to remain positive supporting long-term growth driven by continued infrastructure build-out, grid hardening, and broadband expansion.
Speaker Change: In addition, we will continue to evaluate opportunities to further grow our business, whether it be through further consolidation or entering new fiber markets.
Speaker Change: There's little question in my mind that 2025 will represent a new high in profitability for our UIP business. The only question is, where does it end up? We'll have a much better idea of that when we talk in more detail about how we see 2025 on our call in February of next year.
Speaker Change: And Railroad Products and Services, we're expecting slightly higher sales volumes in 2025, which will come from market share gains, although overall demand from the Class 1 market is projected to be flat to slightly down.
Speaker Change: We anticipate higher contract pricing with operating costs staying in check or going lower due to cost reduction activities.
Speaker Change: In combination with our expectations for UIP, this should push our RUPS segment to a new all-time high in profitability and finally bring our segment EBITDA margins back above the 10% mark for the first time since 2016.
Speaker Change: In carbon materials and chemicals, improved volumes in our RPS business will help drive higher creosote sales.
Speaker Change: We expect Europe and Australia to maintain similar levels of profitability as in 2024, some of which is expected to come from enhanced carbon product sales.
Speaker Change: And North America, if we're unable to reach sustainable cost improvement,
Speaker Change: For capital expenditures, we plan to reduce spending across CM&C for the second straight year as we work to improve the free cash flow yield in this business segment.
Speaker Change: I expect that 2025 we'll see improvement from our global CM&C business if for no other reason than cost reductions.
Speaker Change: Any benefit from improvement in market conditions will only be additive to our expectations, and like UIP, we will have a better view of that come February.
Speaker Change: Further to what we see on the horizon in our business segments, if you turn to slide 33, you can see the other actions we're taking to ensure that we reach an 11th straight year of improved performance.
Speaker Change: The termination of our U.S. pension plan will result in an estimated $4 million of annual cost savings, with $3 million being realized in 2025, excluding an estimated $40 million in special charges to GAAP earnings that will be incurred over the next two quarters, with most of it in early next year.
Speaker Change: These actions will enable us to align our spending levels more closely to commodity chemical cost metrics and allow us to compete more effectively.
Speaker Change: Also, we expect to realize interest expense and cash savings from a combination of lower average borrowings and lower rates.
Speaker Change: We're forecasting a normal capital investment year of $65 to $75 million as we take a breather to allow the significant internal investments made over the past four years to begin generating greater returns.
Speaker Change: We're planning to consider our normal annual dividend increase in February of 2025 as well as to allocate capital to share repurchases to offset dilution and to support our stock price during periods of market overreaction as we have experienced this year. Our remaining free cash flow will be allocated to reduce debt.
Speaker Change: In summary, our top line in 2025 is not expected to differ markedly from 2024 as market share erosion in TC is expected to be offset by top line growth in our other two business segments.
Speaker Change: In terms of profitability, we believe that 2025 will result in new highs in adjusted EBITDA, adjusted EBITDA margin, and adjusted earnings per share.
Speaker Change: Now while we're still working through the details and there is much yet to be determined including the ultimate amount of cost savings We are confident we will see the current consensus estimates of 285 million for adjusted EBITDA for 2025 And we are still targeting to achieve 300 million dollars or better next year
Speaker Change: At the same time, we anticipate that our net leverage will drop to below three times adjusted EBITDA from a combination of higher adjusted EBITDA and lower net debt.
Speaker Change: The final details supporting our 2025 targets will be shared during our fourth quarter earnings call in February of 2025.
Speaker Change: Also, we're in the process of finalizing our 2030 strategy and look forward to unveiling the details of our next five-year plan to the financial community during our next Investor Day, which will take place in September of 2025. At this time, I would like to open it up to questions.
Speaker Change: Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then one on your touchtone telephones.
To withdraw your questions, you may press star and 2.
Speaker Change: Again, that is star and then one to ask a question. We'll pause momentarily to assemble the roster.
Our first question today comes from Gary
Speaker Change: Presta Pino from Barrington Research. Please go ahead with your question.
Sure. Good morning everyone.
Speaker Change: Leroy, you mentioned some competitive issues and share losses in PC. Could you go into that a little bit more please?
Leroy Ball: What's going on there? Yeah, yeah, Gary. So, you know, we've...
Thank you.
Speaker Change: anywhere from two- to three-year agreements with our major customers in performance chemicals. And you might remember going back, I think, to the end of 2022,
Speaker Change: margin we were actually going through a renewal of agreements with our customer base that went out you know two years and we were able to get significant price increases pushed through to you know enable us to recapture a lot of the cost increases that we were eating at that point in time and you know we're in that phase right now where
Speaker Change: and why some of these customers should shift some volume over. So we've seen some erosion from that standpoint and we will see some erosion from that standpoint in terms of our customer base. But you know I'd say from an overall standpoint you know it was you know some
Speaker Change: That was probably, you know, due to happen at some point in time, given the amount of significant share gains that we have picked up over the last five, six years. And so, this is, you know, I look at this as sort of normal competitive actions and reactions. You know, we've been on quite a run where it's been us who...
Speaker Change: And, you know, taking a lot of share over the last few years and there's, in this particular case I think on net overall basis they will be able to shift them over the other way. We are picking up some share and from some, you know, other customers and things like that. So it's not going one way but from an overall net stamp. Week 4 Interlection Announcement
Speaker Change: 25 will be a year where we lose a little share, which is the first time that's probably happened, you know, in a long time for us.
Speaker Change: Okay, thank you for that. And then just on your overall summary, you say contemplating sale or shutdown of various operations.
Speaker Change: Can we assume that that would just be some manufacturing capacity, or could that even be assumed, you know, a significant restructuring within your business segments?
Speaker Change: Again, some align maybe a little better with the overall core of the business, others maybe not as much.
Speaker Change: And so, you know, if there's an opportunity to, again, you know, move any of those smaller businesses, we might look to do that if the price was right. As it relates to capacity...
Speaker Change: You know, we've shuttered a lot of capacity over time. I went through a major restructuring when we went from 11 facilities in carbon materials and chemicals down to three. You know, there's not a whole lot much more.
Speaker Change: ...can do there, but there are some things that certainly we believe we can do, you know, that might be short-term in nature. Some could be long-term in nature, depending upon, you know, our view of where the markets are at and where they're going. So, you know, we're evaluating...
Speaker Change: to make the right decision, you know, for coppers and our shareholders. And, you know, that market has, you know, been, has seen a little bit of tough times over the past 18 months and in particular in North America. So, you know, those are things that I think we have to look at and, you know, again,
Speaker Change: shareholders would expect us to look at. And so we will look at that. And our communication in terms of putting that out there is really more or less just to let everyone know that we, you know, we every
Speaker Change: Everything is on the table for us and continues to be.
Speaker Change: Yeah and then just lastly how does the the acquisition pipeline look and you know after Brownwood would you have an appetite for doing something in 2025?
Speaker Change: I think yeah you know so we we continue to to try and keep up relationships and ensure that folks know that you know we we have an interest in continuing to grow in that in that business and you know it's really about when when the time is right on the other side of things which you can you and you can never quite tell so so you know we're certainly open to opportunities that
Speaker Change: You know how that goes again. You can't always choose when when the other party is ready to make the move So it's hard to say about whether anything would materialize in 2025 or not, but you know we certainly got
Speaker Change: So it is an interest of ours and we believe it creates a good opportunity for us, so we do remain open to that.
Okay, thank you.
Yeah, thank you.
Speaker Change: And our next question comes from David Marsh from Singular Research. Please go ahead with your question.
David Marsh: Hi guys, congrats on the quarter, and thanks very much for taking the questions, we appreciate it. Yeah, thank you.
David Marsh: I just wanted to start, you noticed that your SG&A sequentially was down a couple million dollars in the current quarter, which was...
David Marsh: Actually, you know, very positive surprise. Can you talk about, you know, sustainability of that, you know, in light of your comments around, you know, around the potential reduction?
Speaker Change: Yeah, I mean, yeah, I think, you know, we're, as always, we're looking at ways that we can improve the.
Speaker Change: the business, improve our profitability, react and respond to things that are happening.
for again for us that are in low growth markets.
you know, a year where, again, we've...
Speaker Change: flat overall sales in 25 and so we think there are some opportunities to do that within our SG&A category and as well as in on the operating side so it's not just exclusive to that but you know what you saw there in terms of the quarter
Speaker Change: you know there's an expectation that that you know that that will
Speaker Change: continue for us moving forward. And again, we're not prepared at this point in time to talk about by how much your, you know, how much the savings could be. We'll do that in February. But we're working through that right now and but I would say that certainly the expectation is that that is the focus of our and you'll see that sort of performance, I think, continue and move it forward.
Speaker Change: That's great. And then just looking at your interest expense, was obviously due to the debt related to the acquisition, but since the quarter, we've had a couple of interest rate cuts. Could you kind of help quantify the impact on interest expense of the 75 basis points in rate cuts that we've seen so far by the Fed?
Leroy Ball: Leroy, I would say that you would want to apply that to about 500 million dollars of our debt because we are hedged for a big portion of what's out there. So you can kind of think about it that way.
Yep, perfect. Got it. Thank you.
Speaker Change: And then just kind of following on the first question with regard to acquisitions, in terms of you guys have different...
Speaker Change: I think yeah that's it's actually pretty easy I mean for us we see we see you know most of the opportunity on the utility side of the business you know it's the area that we you know our smallest in is the areas with
Speaker Change: where we, you know, cover less geography. It's the area where, quite frankly, there's the most opportunity. So that would be high on our list. You know, secondary to that would be
Speaker Change: would be anything that might make sense around our performance chemicals business that would help us.
Speaker Change: We will add around the preservative business that we have in place there today. Outside of that, you know, there's, there's, you know, we already hold a significant share on in the
Speaker Change: real side of the business. So there's really nothing much to do there. We're not looking to really grow outside of that in maintenance.
Speaker Change: distillation companies, you know, provides some level of advantage moving forward, but we're not looking to build around that other than
Speaker Change: Again, if things happen to take off in some of our new products that we're trying to get into starting out in our European location.
Great, thank you guys, appreciate it.
Speaker Change: Ladies and gentlemen, with that, we'll be concluding today's question and answer session. At this time, I'd like to turn the floor back over to CEO Leroy Ball for closing remarks.
Leroy Ball: Thank you. Yeah, no, look, we appreciate the interest in coppers. We still think that we have a lot of...
Leroy Ball: way to continue to show improvement. We're expecting again a continued improvement in 25 and strong performance and beyond that as well. We look forward to sharing again the details of how we see 25 shaping up in early next year when we do our fourth quarter earnings call.
Speaker Change: I certainly look forward to unveiling more details around our 2030 strategy in September of next year. So thank you again for all your support.
Speaker Change: Ladies and gentlemen, with that we'll conclude today's conference call. We do thank you for attending today's presentation. You may now disconnect your lines.