Koppers Holdings Inc. (NYSE: KOP), an integrated global provider of treated wood products, wood treatment chemicals and carbon compounds, today announced it had entered into a definitive agreement to sell Koppers (Jiangsu) Carbon Chemical Company Limited (KJCC), to Fangda Carbon New Material Co., Ltd. (Fangda Carbon) and C-Chem Co., Ltd, a subsidiary of NIPPON STEEL Chemical & Material Co., Ltd. KJCC is a tar distillation facility located in Pizhou City, Jiangsu Province, China and is 75-percent owned by the Company with the remaining 25 percent owned by Yizhou Group Company Limited.

The closing of the transaction is subject to customary closing conditions, including receipt of regulatory approvals in China and approval of the transaction by the shareholders of Fangda Carbon. The Company estimates that regulatory approvals could be received in approximately four to six months based upon the timeline for similar transactions. The total purchase price is $107 million, adjusted for cash, working capital at closing and adjusted to the extent certain capital expenditures of KJCC are incurred prior to closing and indebtedness of the transaction. Koppers expects to realize approximately $65 million of net cash, after noncontrolling interest, taxes and expenses. The Company plans to apply the cash proceeds toward debt reduction, consistent with its stated goals.

In connection with the transaction, KJCC has reached agreement with its largest customer in China to resolve the previously disclosed contractual dispute related to application of contractual pricing terms. The settlement of the dispute will become effective upon the closing of the transaction.

Commenting on the sale, James Sullivan, Executive Vice President and Chief Operating Officer, said, "We are pleased to have signed the sale and purchase agreement for the divestiture of KJCC and to put the negotiations behind us. This is an immensely important step toward sharpening our focus on our portfolio of wood-based technologies which are built on our company's purpose of protecting what matters and preserving the future."

President and Chief Executive Officer Leroy Ball added, "Despite KJCC's uneven financial performance since being commissioned in mid-2014, the overall returns were in line with our expectations on a cumulative basis and the operations exhibited solid financial performance by averaging approximately $10.5 million of EBITDA annually over the five-year period of 2015 to 2019. Although there is still much work to do to complete this transaction, including receiving regulatory approvals, we have reached a key milestone and I am confident that all parties are interested in reaching a successful conclusion."

Fourth Quarter 2019 Estimated Financial Performance

While the company is still conducting financial closing procedures for the fourth quarter and full year, Koppers is providing a preview of fourth quarter 2019 financial results.

• Estimated consolidated sales were $393.2 million for the fourth quarter of 2019, a decrease of $32.2 million, or 7.6 percent, from sales of $425.4 million in the prior year quarter. Excluding a negative impact from foreign currency translation of $3.1 million, sales were lower by $29.1 million or 6.9 percent.
• Preliminary operating profit was $24.3 million, or 6.2 percent, compared with $13.6 million, or 3.2 percent, in the prior year quarter. Estimated adjusted EBITDA was $39.0 million, or 9.9 percent, compared with $46.9 million, or 11.0 percent, in the prior year quarter. Operating profit margin and adjusted EBITDA margin are calculated as a percentage of GAAP sales.
• Adjustments to preliminary pre-tax income totaled $0.7 million for the fourth quarter of 2019, compared to $18.3 million for the fourth quarter of 2018.
• Preliminary net income attributable to Koppers for the fourth quarter was $20.6 million, compared to a net loss of $2.6 million in the prior year quarter.
• Preliminary adjusted net income was $6.2 million for the fourth quarter of 2019, compared to $12.4 million in the prior year quarter, respectively.
• Preliminary diluted earnings per share (EPS) was $0.96, compared with $(0.13) per share in the prior year quarter. Preliminary adjusted EPS for the quarter was $0.29, compared with $0.60 for the prior year period.

At December 31, 2019, estimated total debt was $901.2 million and, net of cash and cash equivalents, the estimated net debt was $868.2 million, compared with total debt of $990.4 million and net debt of $949.8 million at December 31, 2018. On a year-over-year basis, the net debt was lower by $81.6 million, which reflects our relentless focus on debt reduction. The company's net leverage ratio was 4.1 at December 31, 2019, compared with 4.2 on a proforma basis at December 31, 2018.

Commenting on the results, President and CEO Leroy Ball said, "On a year-over-year basis, we experienced weaker demand in the Railroad Structures and Recovery Resources portion of our Railroad and Utility Products segment and the international component of our Performance Chemicals segment. Consequently, it appears that adjusted EPS for the fourth quarter will fall short of our expectations. Countervailing forces such as stronger sales volumes of treated and untreated crossties and residential wood treatment preservatives helped to mitigate some but not all of the impact."

Mr. Ball continued, "On the positive side, we had a very strong fourth quarter cash flow, which has brought our net debt at year-end to below $870 million. In 2020, I expect a continued favorable trend for our wood preservative-based businesses that should more than offset the contribution from our KJCC operation. I look forward to sharing much more color next week when we disclose Koppers final 2019 results and speak more regarding our outlook for the future."

About Koppers

Koppers, with corporate headquarters in Pittsburgh, Pennsylvania, is an integrated global provider of treated wood products, wood treatment chemicals and carbon compounds. Our products and services are used in a variety of niche applications in a diverse range of end-markets, including the railroad, specialty chemical, utility, residential lumber, agriculture, aluminum, steel, rubber, and construction industries. Including our joint ventures, we serve our customers through a comprehensive global manufacturing and distribution network, with facilities located in North America, South America, Australasia, China and Europe. The stock of Koppers Holdings Inc. is publicly traded on the New York Stock Exchange under the symbol "KOP." For more information, visit us on the Web: www.koppers.com.