Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Koppers Fourth Quarter and Full Year 2022 Earnings Conference Call and Webcast. [Operator Instruction] Please note that this event is being recorded. I will now turn the call over to Quynh McGuire. Please go ahead.

Thanks, and good morning. I'm Quynh McGuire, Vice President of Investor Relations. Welcome to our fourth quarter and full-year 2022 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've also posted materials to the Investor Relations page of our website that will be referenced in today's call. Consistent 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 website for replay through May 27, 2023. At this time, I would like to direct your attention towards 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. 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. References may also be made today to certain non-GAAP financial measures the company has provided with its press release, which is available on our website, reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures. Joining me for our call today are Leroy Ball, President and CEO of Koppers; and Jimmi Sue Smith, Chief Financial Officer. I'll now turn over the discussion to Leroy.

Thank you, Quynh. Good morning, everyone. I'm happy to sit in front of everyone today and report on the conclusion of a very successful year for the Koppers organization. Once again, we delivered record results for 2022 both for the fourth quarter and for the full year in a number of different categories. By adhering to our strategy to expand and optimize our unique vertically integrated business model serving key infrastructure markets, as you will hear today, we are reaffirming our long range growth plan of delivering $300 million of EBITDA by 2025, which would result in earnings per share of over $6 and significant free cash flow generation over that same time frame. Now let's begin with a closer look at a summary of the key metrics for Q4, on Slide 4. Consolidated sales of $483 million, a quarterly record, increased by $77 million or 19% compared with $405 million in the prior year. Excluding a $15 million unfavorable impact from foreign currency changes, sales increased by $92 million or 23%. In addition, we generated adjusted EBITDA of $52 million, which was a record quarter compared with the prior year quarter of $49 million in EBITDA. Our adjusted EBITDA margin was 10.8%, which is lower than where we'd like it to be, but in a funny way it actually gives me confidence that we're squarely on our path to $300 million, which I'll explain later in the call. Now, the fourth quarter generated adjusted earnings per share of $1.09, which is a new fourth quarter record compared with $0.77 for the prior year quarter. Operating cash flow was $35 million for the quarter. We deployed capital by spending $25 million in capital expenditures, paid out $1 million in dividends and spent $5 million in share repurchases. Slide 5 provides…

Thanks, Leroy. This morning's press release provided our results for the fourth quarter and year end 2022. My comments here are based on that information. On Slide 12, as Leroy said, our fourth quarter consolidated sales were a record $483 million, up 19% compared to the fourth quarter of 2021. By segment, RUPS sales increased $37 million or 24% from the prior year quarter. PC sales increased $22 million or 18%, and CM&C sales increased $18 million or 14%. As shown on Slide 13, Koppers also delivered record consolidated sales for full year 2022 at $1.98 billion, an increase of $300 million or 18% over the prior year. By segment, RUPS sales increased by $58 million or 8%. Sales for PC increased by $77 million or 15%, and CM&C sales increased by $157 million or 37.5% compared to the prior year. On Slide 14, fourth quarter adjusted EBITDA was a record $52 million or 11%. By segment, in the fourth quarter, RUPS generated EBITDA of $13 million or 7%. PC had EBITDA of $18 million or 12.5%, and CM&C had EBITDA of $21 million or 14%. Slide 15 shows record adjusted EBITDA for full year 2022 of $228 million or 11.5%. By segment, for the full year, RUPS generated EBITDA of $54 million or 7%, the PC segment had EBITDA of $76 million or 13%, and CM&C had EBITDA of $99 million or 16%. On Slide 16, RUPS had record fourth quarter sales of $193 million compared with prior year sales of $156 million for the fourth quarter. The improvement was primarily due to pricing increases in crossties and utility pole, higher volumes in commercial crossties and an increase in activity at our maintenance of way businesses. While market prices for untreated crossties remain at relatively high level, we are…

Thank you, Jimmi Sue. The next step, I'd like to offer a quick review of some notable happenings across the company. Slide 23 shows that Koppers was named as one of America's Most Responsible Companies in 2023 by Newsweek magazine for the third consecutive year from a pool of more than 2,000 companies across 14 industries. This honor again recognizes our company's performance in environmental, social and governance areas, and all the credit goes to our team members worldwide who understand that short-term financial success only matters if we maintain the health of our company for generations to come. The Manufacturing Institute honored Leigh Ann Richardson, our Senior Manager of Regulatory Affairs, with its Women make America Award, Celebrating outstanding female leadership in the manufacturing industry. Leigh Ann is not only great at what she does, but she's an outstanding human being as well. We congratulate Leigh Ann and salute her for representing Koppers in such great fashion. Now let's take a look at what I expect will be the keys to our success in this coming year. The top two to three things that we'll be watching closely in each business that will determine our success in reaching our $250 million adjusted EBITDA goal this year. So let's jump-in. Starting on Slide 25 with Performance Chemicals. There are three areas that we'll be keeping a close eye on. First is price, and we talked to all last year of how we were continuing to honor our multi-year agreements and essentially absorbed significant cost increases in just about every category, except copper, where we were predominantly hedged. We're playing the long game, and negotiating new pricing that will take effect on 1/1/;23. Well, those increases are now in effect and with one month under our belt in '23, we're tracking…

[Operator Instructions] Our first question is from Liam Burke with B. Riley FBR. Please go ahead.

Yes, thank you. Good morning, Leroy. Good morning, Jimmi Sue.

Hi, Liam.

Good morning.

Leroy, there's lots of puts and takes on the PC margins. You've got price increases coming through. You've got volumes coming down. Typically, it's been one of your best profit producers. If I take a look at the puts and takes and looking for improvement on the margins, do you see that business approaching historical profit margin levels over time?

Liam, there's no question we do. I mean, the only thing that's fundamentally changed in that business in the past year was, again, our holding the line, if you will, on not passing some of the cost increases through -- non-copper cost increases through to our contracted customers. And so, we took it on the chin this past year as a result of that. And I can tell you through the whole back half of the year, we were in some pretty spirited discussions to get the cost pass-through effective 1/1. And so, as I alluded to in my remarks, we've actually seen that reflected in the early part of this year. So, for us, the question is, are volumes going to -- where our volume is going to be at this year, right? And some of it, again, the data doesn't point in a great direction. We've already seen year-over-year volumes less in the early part of the year, but we do think that as the year moves on, the comps get a little bit better, and we think that we should be comfortably within that 10% decline for the year. And that's just, again, what's been a very, very hot market for repair remodeling over the past couple of years, just pulling back a little bit and probably catching its breadth. Longer term, as things begin to move back in what I would think a consistently positive direction, we're going to be in a really good position to continue to make good returns in that business. Getting margins is clearly back up into the high teens in around that 20% mark. So that's what we're targeting. And I think, beginning by the back end of this year, we should start to see margins that are approximating somewhere closer to what we have historically seen in the past.

That's great. And sticking with PC, you had high-cost inventory that ran through the profit and loss statement in the fourth quarter. Have you run through all that inventory? Or are you still carrying that on the books as we finish the year?

I'll let Jimmy Sue respond to that.

Thanks, Liam. We go through the substantial majority of it in the big product lines. There's still maybe one or two ancillary of raw materials where we have some higher cost still on the books, but we are through the vast majority.

Okay, great. Thank you, Leroy. Thank you, Jimmi Sue.

Yes, thanks.

The next question is from Laurence Alexander with Jefferies. Please go ahead.

Good morning. Can you give a sense for how far the shift is in industrial preservatives and how you think the end game will look, both how long it will take for the transition and where you see kind of the net contribution by, say, '26 or '27?

Well, there's a lot in there, Laurence. I'll say that there is a transition period to essentially move away from Penta. We began that transition from a trading standpoint early. Those were the conversion projects we were doing in '21. So, we're -- beginning last year, we have no longer been actually treating with Penta. We've been treating with either CCA, depending upon where the business shifted to either CCA or copper naphthenate. DCOI has now been introduced as well, and we're looking at a potential conversion project there. I'd say that at this point, it's tough to say where it's at in terms of the overall shift, but we've worked hard to try and move individuals off of Penta. At this point, it's been now, I think, a year since it's been actually actively produced. So, basically the suppliers have been running through inventory and drawing down inventories as they transition. I would say, by the time we get through this year, I can't imagine there's going to be a whole lot left that's out there. So, I would say, the vast majority of the shift, I would expect, would have been completed by the time we get through the end of this year. And again, we're seeing it reflected in the significant volume increases that we're seeing year-over-year in our CCA and now our new DCOI category. So, once we get into 2024, I would think things would start to, if you will, flatten out in terms of replacement of Penta and it will be more along the lines of whatever the organic growth rates might be.

Okay. Great. And then, with the steel and aluminum exposure in CMC, can you talk a little bit about how the supply dynamics are different this cycle? If there is a recessionary slowdown, how much less cyclicality you might see compared to the last two downturns?

Yes. Well, I think with where we're at right now, and obviously it depends on how deep things could get. There's -- with what we're dealing with now, there's such a, if you will, a backlog of demand that everybody has been trying to work through that I think helps to absorb the blow, if you will, as things pull back. And that's really, I think, our expectations for this year is that whatever happens, if you will, from a global macro standpoint that essentially the backlog may diminish there may be projects that get shelved and things like that. But it's not eating into -- we're not essentially working to new orders at this point. So we feel pretty confident that at least through this year, we should be in pretty decent shape. We'll see as the year goes on how projects get added or not and where we might stand going into '24. But at least as it stands for the current year, we think we're not totally insulated but in pretty decent shape to provide an even softer demand profile as the year goes on.

Okay. Great. And then, just one last one just on the capital profile. Can you give your current thinking around potentially refinancing debt earlier? It seems like every couple of weeks, people on the credit side flip flop as to whether we're heading to higher rates for longer or sort of it's better to wait to see how rates contract sort of over the next 18, 24 months. But just can you give us a sense for how you're thinking about managing sort of the risk on the refi side?

Thanks, Laurence. This is Jimmi Sue. We are constantly monitoring the market, and certainly we'll be looking for a productive window here in 2023 to avoid the bonds going current in early '24.

Okay, great. Okay. Thank you.

Showing no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to President and CEO, Leroy Ball, for any closing remarks.

Thank you. And I just, again, want to thank the employees of Koppers for a great performance in 2022. A lot of hard work went into achieving the results that we were able to post for this past year. We feel great about the next couple of years coming and, again, look forward to delivering upon the plan that we have presented. And thanks, everybody, for your support.

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