Koppers Holdings Inc. operates as an integrated global provider of treated wood products, wood preservation chemicals and carbon compounds.
The company’s 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. The company serves its customers through a comprehensive global manufacturing and distribution network,...
Koppers Holdings Inc. operates as an integrated global provider of treated wood products, wood preservation chemicals and carbon compounds.
The company’s 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. The company serves its customers through a comprehensive global manufacturing and distribution network, with manufacturing capabilities in North America, South America, Australasia, and Europe.
Business Segments and Products
The company operates three principal business segments: Railroad and Utility Products and Services (RUPS), Performance Chemicals (PC), and Carbon Materials and Chemicals (CMC).
The company’s RUPS and CMC operations are, to a substantial extent, vertically integrated. Through the company’s CMC business, it processes coal tar into a variety of products, including creosote, which is an intermediate material necessary in the pressure treatment of wood crossties, other related railroad products, and utility poles. The majority of the creosote produced in North America and Europe is sold internally to the company’s RUPS business and consumed in the treating process.
The company’s RUPS and PC operations are also vertically integrated. Through the company’s PC business, it produces a variety of products, including chromated copper arsenate (CCA) and dichloro-octyl-isothiazolinone (DCOI), which are used in the pressure treatment of utility poles and pilings. A portion of the CCA and DCOI produced in North America, and a portion of the CCA produced in Australia, are sold internally to the company’s RUPS business for treating poles and pilings.
Railroad and Utility Products and Services
The company’s RUPS business primarily sells pressure-treated railroad ties to the railroad industry in the United States and Canada, and treated utility poles to utility markets in the United States and Australia. Railroad products and services include procuring and treating items, such as crossties, switch ties, and various types of lumber used for railroad bridges and crossings. Utility products include the pressure treatment of transmission and distribution poles for electric and telephone utilities. In addition, the company provides untreated wood products and rail joint bars, which are steel bars used to join rails together for railroads, to the railroad markets, and inspection services to the utility markets. The company also operates a railroad services business that conducts engineering, design, repair, and inspection services for railroad bridges, as well as a business related to the recovery of used crossties, serving the same customer base as its North American railroad business. The primary end-markets for RUPS are the North American railroad industry, which has an installed base of approximately 450 million wood crossties, and the U.S. and Australian utility industries, which utilize wooden distribution and transmission poles. Both crossties and utility poles require periodic replacement.
The RUPS business operates 19 wood treating plants and one rail joint bar manufacturing facility located throughout the United States, Canada, and Australia. The company’s network of plants is strategically located near timber suppliers to enable it to access raw materials and service customers effectively. In addition, all of the company’s crosstie treating plants are on its largest railroad customers’ rail lines.
The company’s RUPS business manufactures its primary products and sells them directly to its customers through long-term contracts and purchase orders negotiated by its regional sales personnel and coordinated through its marketing group at corporate headquarters.
In the United States, hardwood lumber for crossties is procured by the company from hundreds of small sawmills throughout the northeastern, midwestern, and southern areas of the country. The crossties are shipped via rail car or trucked directly to one of the company’s crosstie treating plants, all of which are on line with a major railroad. The crossties are either air-stacked for a period of six to nine months or artificially dried by a process called boultonizing. Once dried, the crossties are pressure treated with creosote, a product of the company’s CMC business. A substantial portion of the crossties are treated with borate, which is purchased from PC, in combination with creosote.
The company has one principal competitor, Stella-Jones Inc., and several smaller regional competitors in the North American market.
The company’s RUPS business’ largest customer base is the North American Class I railroad market, which buys approximately 70 percent of all crossties produced in the United States and Canada. Approximately 73 percent of its North American Railroad Products and Services sales are under long-term contracts, and the company currently supplies all North American Class I railroads. The company also has relationships with many of the approximately 630 short-line and regional rail lines. This also forms the customer base for its rail joint bar products.
The company’s North American utility pole business serves eight of the top ten utilities, based on customer base and revenue, in the United States. Utility poles are produced mainly from pine species in the United States and eucalyptus species in Australia. Most of these poles are purchased from large timber owners and individual landowners and shipped to one of its pole-peeling facilities. In North America and Australia, in addition to utility poles, the company markets pilings for marine applications and smaller poles to the agricultural landscape and vineyard markets. The company treats poles with a variety of preservatives, including CCA, DCOI, and creosote, which it produces internally and purchases from PC and CMC.
In April 2024, the company completed its acquisition of substantially all of the assets of Brown Wood Preserving Company, Inc. and certain of its affiliates (Brown Wood). Brown Wood is a utility pole treating business with principal operating locations in Alabama and Mississippi. The business acquired, as well as the sales function, has been operationally integrated into the company’s existing network of utility pole plants and distribution yards.
Performance Chemicals
The company’s PC business maintains sales and manufacturing capabilities in the United States, Canada, Europe, South America, and Australasia. The primary products supplied by PC are copper-based wood preservatives, including micronized copper azole (MicroPro), micronized pigments (MicroShades), alkaline copper quaternary, amine copper azole, DCOI, and CCA. The primary applications for these products include decking, fencing, utility poles, construction lumber and timbers, and various agricultural uses. Additionally, the company is a leading supplier of fire-retardant chemicals (FlamePro) for pressure treatment of wood, primarily in commercial construction. Because the company is a global supplier of wood preservatives, it faces various competitors in all the geographic regions in which it participates.
PC supplies the ten largest lumber treating companies in the United States, the largest treated wood market in the world, in addition to four of the five largest lumber treating companies in Canada. In North America, the company’s PC business is vertically integrated through the manufacturing of copper compounds for its copper-based wood preservatives. Each year, the company purchases approximately 37 million pounds of its key raw material, scrap copper, in addition to other compounds containing copper, which it processes to meet the demand of this major market. When the company purchases scrap copper, it is shipped to its manufacturing plants in Hubbell, Michigan, and Millington, Tennessee, for further processing into other copper compounds. The company utilizes swap contracts to hedge its exposure to copper prices.
Being vertically integrated in copper manufacturing provides PC with an important competitive advantage and also provides the company’s customers with the security of a supply of copper-based wood preservatives. Likewise, the company’s marketing, engineering, environmental, regulatory, and technical support services provide added value to its customer base.
Carbon Materials and Chemicals
The company’s CMC business manufactures its primary products and sells them directly to its global customer base under long-term contracts or through purchase orders negotiated by its regional sales personnel and coordinated through its regional marketing groups. The company’s three coal tar distillation facilities and two carbon materials terminals give it the ability to offer customers multiple sourcing options and a consistent supply of high-quality products.
The company’s CMC business manufactures the following principal products: creosote, used in the treatment of wood or as a feedstock in the production of carbon black; carbon pitch, a critical raw material used in the production of aluminum and steel; naphthalene, used as a feedstock in the production of phthalic anhydride and as a surfactant in the production of concrete; and phthalic anhydride, used in the production of plasticizers, polyester resins, and alkyd paints, respectively.
In December 2024, the company decided to discontinue phthalic anhydride production at its facility in Stickney, Illinois. The decision was driven by significant near-term capital spending requirements that could not be economically justified by end-market projections and the ability to substantially reduce annual emissions of certain regulated air contaminants. The company has targeted mid-2025 for shutdown and expects to ramp down production of phthalic anhydride in the first half of 2025 as it builds inventory to supply existing contracts through 2025, as necessary. Once the shutdown is complete, the company’s CMC business will no longer manufacture phthalic anhydride.
The company supplies creosote to the North American railroad industry. It has one principal competitor, Rain Carbon Inc., in the North American and European markets.
Technology and Licensing
In 1988, the company acquired the Koppers trademark from Koppers Company, Inc. The association of the name with the chemical, building, wood preservation, and coke industries is beneficial to the company, as it represents long-standing, high-quality products. Trademarks relating to its PC business, such as MicroPro, FlamePro, Protim, and Solignum, are important in this segment of its business, and as long as the company continues to use the name Koppers and the trademarks associated with its wood preservation business and complies with applicable registration requirements, its right to use the name Koppers and the other trademarks should continue without expiration.
Seasonality
Historically, the company’s operating results have been significantly lower in the first and fourth calendar quarters as compared to the second and third calendar quarters (year ended December 31, 2024).
History
Koppers Holdings Inc. was founded in 1988. The company was incorporated in 2004.