Koppers Holdings Inc. (NYSE:KOP) Q2 2018 Earnings Conference Call - Final Transcript
Aug 09, 2018 • 11:00 am ET
for the quarter, adjusted EBITDA was $13.9 million, which was $0.4 million better than last year, and driven by the profit contribution from the acquisitions net of integration related costs. Better times are on the way, as I expect to see the back half of the year improving a significant way, due to the commercial market heating up again, and now that we've fully transitioned our major customer to the treated type sales program.
I'll now turn it over to Mike, to discuss some key highlights from the second quarter of 2018.
Thanks, Leroy. Let's start with the slide presentation that we provided on our website.
On Slide 4, sales were $436 million, which was an increase of $58 million or 15% from the $378 million in the prior year quarter. CM&C reported higher sales prices across all regions, for carbon pitch and carbon black feedstock, with Australasia and Europe experiencing, favorable pricing trends due to tight supply. PC recorded slightly higher sales, however, we have been seeing a recent trend of customers reducing or delaying their wood treating activities, due to their higher lumber costs. RUPS reported increased sales, which were primarily due to our two acquisitions, as well as higher volumes of commercial crossties and rail joints, which was partially offset by reduced volumes from the Class 1 railroad customers.
As we move on to Slide 5, we will see that adjusted EBITDA was $55 million or 13% compared with $56 million or 15% in the prior year quarter. While the CM&C delivered significantly higher profitability, it was more than offset by the lower margins from both PC and RUPS. For the quarter, on an adjusted EBITDA basis, CM&C again delivered substantial margin improvement, due to favorable market and pricing trends, and a more streamlined cost structure, partially offset by higher raw material costs in Europe and Australasia.
While the adjusted EBITDA for RUPS was relatively flat compared to the prior year quarter, the margin was slightly lower due to continued demand weakness in Class 1 sales, as well as higher costs associated with limited availability of lumber for railroad crossties. PC also reported lower year-over-year profitability, driven by an unfavorable sales mix, higher raw material prices, and higher selling, general and administrative costs.
Now, I'd like to discuss several items that are not referenced in our slide presentation. Adjusted net income was $21 million compared with $26 million in the prior year. Adjustments to pretax income for the current quarter totaled $20 million, consisting primarily of purchase accounting adjustments and closing costs related to the Cox acquisition, restructuring costs and LIFO expenses. Adjustments to pretax income in the prior year quarter were $6 million, primarily due to restructuring expenses. And as Leroy mentioned, adjusted earnings per share for the quarter were $0.93 compared with the $1.18 per share in the prior year quarter.
The effects of the US tax reform continue to have a significant impact on our results. Tax expense as a percentage of income was