Koppers Holdings Inc. Price & Performance (KOP)

We issued our press release earlier today. You may access it via our website at www.coppers.com Koppers.

As indicated in our announcement, we've also posted materials to the Investor Relations page of our website that we referenced in today's call. Consistent with our practice and 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 05/27/2025. At this time, I would like to direct your attention to our forward looking disclosure statement seen on Slide two. 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.

Also references may 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. Joining me for our call today are Leroy Ball, Chief Executive Officer of Koppers and Jimmy Sue Smith, Chief Financial Officer. At this time, I'll turn the discussion over to Leroy.

Thank you, Quinn. Good morning, everyone.

I'll begin this morning by stating my disappointment of falling short of our financial expectations for fourth quarter and full year 2024. We seem to be on our way to meeting our fourth quarter goal after posting a record October followed a record second and third quarter for adjusted EBITDA. As the last two months of the year progressed, however, we experienced volume slowdowns in each of our business that cannot be overcome by short term cost measures. There are a number of factors for the drop including the market share loss we called out in our PC business in November that began sooner than expected.

Some hurricane hangover as customers needed to absorb the influx of material from late September and October storm response issues with consistent car flow with rail customers that delayed shipment and backed up plants and frankly some of it was just companies pushing pause and proceeding with caution as they began assessing the outlook with the Republican White House and Congress.

Anticipation of some of the challenges we knew we would face in 2025, we began in Q4 reducing our workforce through a series of actions that has to date resulted in a 5% reduction of our global employee base. That had very little impact on the fourth quarter, but will result in over $10,000,000 in savings this year. I'll get into more detail later in the call my thoughts for this year, but to set the stage, I still believe we're poised to post a strong year overall in every important [indiscernible] it may not be a smooth and easy ride to get there. Anticipate earnings to benefit from a combination of top line improvements that will ramp up as the year progresses, greater operating efficiencies and continued aggressive cost containment measures across our business. We remain encouraged by the accomplishments of our global copper team to create a foundation for a connected world through our leading portfolio of critical products and services. I want to begin with a summary of key metrics for the fourth quarter as seen on Slide four. We achieved consolidated sales of $477,000,000 compared with $513,000,000 in the prior year, reflecting the demand pullback I mentioned earlier.

Despite the revenue shortfall, we still generated record fourth quarter adjusted EBITDA of $55,200,000 compared with $53,900,000 in the prior year quarter. Our adjusted EBITDA margin was 11.66% versus 10.5% in the prior year quarter. Fourth quarter diluted loss per share was $0.5 compared with diluted earnings per share $0.59 in the prior year quarter. And while adjusted earnings per share for the quarter were $0.77 compared with $0.67 in the prior year quarter.

GAAP EPS was negatively impacted by restructuring related charges in addition to the standard LIFO and non cash hedging impacts. We generated record fourth quarter operating cash flow of $74,700,000 versus $66,600,000 in the prior year quarter. Adjusted EBITDA was $261,600,000 representing our ninth adjusted EBITDA margin for the year was 12.5% compared with 11.9% in the prior year. The 12.5% margin represents our best annual margin since 2021. And continuing to move this number higher will be a primary focus in 2025. Diluted earnings per share were $2.46 versus $4.14 in the prior year, Adjusted earnings per share were $4.11 compared with $4.36 in the prior year, representing our fifth straight year of crossing the $4 mark after never having reached it prior to 2020. We generated operating cash flow of $119,400,000 in 2020 compared with a record $146,100,000 in the prior year. More importantly, with our second straight year in the black from a free cash flow standpoint, following the investment heavy early years of our 2025 strategy, which had put us in a free cash flow deficit. I expect the improved free cash flow trend to continue in twenty twenty twenty five as operating cash flow improves and capital expenditures continue to moderate.

As seen on Slide six, Copper's will be hosting a virtual Investor Day on Thursday, September 18. Executive team will be unveiling the details of our 02/1930 strategic plan But in the meantime, please mark your calendars and plan to join us that day. I want to highlight a few more things before turning the call over to Jimmy Suez. I don't believe that financial performance alone tells the full story of Copper's Koppers. If you move to Slide eight, you'll see that about half our facilities worldwide, 23 out of 47 operated accident free for the year. And notably, our Europe CMC and Europe PC businesses completed the year with zero recordable incidents. Relentless focus of our leaders on driving leading activities once again led to a new all time low record injury rate across copper's Koppers enabled us to take our next step towards zero. I've said many times over the safety and health of our people will always be a top priority. And the progress made in 2024 brings us closer to our goal. Slide 10 shows an important achievement worth mentioning. We're honored to be again recognized by Newsweek as one of America's most responsible companies for the fifth consecutive year.

Our move up the rankings to 113 overall is a recognition of our holistic knowing that if we don't run responsible operations and value people as we seek to improve profit [indiscernible] We jeopardize our future. Moving on to Slide 11, I want to point out the results for 2024 employee engagement survey, which was slightly better than 2023. Resulting in our highest engagement scores to date. We know that our chances of success improve dramatically with an engaged workforce that feels valued, is rewarded for superior performance and is informed and aligned to our long term goals. My thanks to everyone that took part because it is your feedback and enabled us to continue working on making Coppers a better place for everyone. I'll now turn the discussion over to our Chief Financial Officer, Jimmy Sue Smith. Thanks, Leroy. Earlier today, we issued a press release detailing our fourth quarter and year end twenty twenty results. My comments this morning are based on that information. As seen on Slide 13, had consolidated fourth quarter sales of $477,000,000 a decrease of $36,000,000 or 7% compared with the prior year quarter as Leroy said, all in the last two months of the year.

Following a record October. By segment, RUP sales were flat with the prior year while PC sales were lower by $16,500,000 or 10% and CMMC sales decreased by $19,000,000 or 14%. As seen on Slide 14, full year 2024 consolidated sales totaled $2,090,000,000 a decrease of $62,000,000 dollars or 3% versus the prior year. By segment, RUPT achieved record sales for the year [indiscernible] sales increasing by $45,000,000 or 5% while PC sales were lower by $20,000,000 or 3% CMMC sales decreased by $87,000,000 or 15% compared to the prior year.

On Slide 15, adjusted EBITDA for the fourth quarter was $55,000,000 with an 11.6% margin, By segment, RUPT generated adjusted EBITDA of $18,000,000 with an 8% margin PC delivered adjusted EBITDA of 29,000,000 with a 19% margin and CMC reported adjusted EBITDA of $9,000,000 with an 8% margin. At $262,000,000 with a 12.5% margin. By segment, reps generated adjusted EBITDA of $82,000,000 with a margin of approximately 9% PC had adjusted EBITDA of $143,000,000 which a 22% margin while CMMC provided EBITDA of $37,000,000 with a margin of over 7%, On Slide 17, fourth quarter sales for our ruffs business were $216,000,000 consistent with last year. Sales were impacted by decreased volumes of Class one crosstide partly offset by higher utility flow volumes driven by our acquisition of Brownwood and continued price increases across multiple markets. Mostly commercial crosstide and Australian utility poles. The market prices for untreated crossties remain stable. Year over year, fourth quarter crosstie procurement was down 8% and crosstide treatment was down 11%. Adjusted EBITDA for reps was $18,000,000 compared with $21,000,000 in the prior year Profitability declined primarily due to higher raw material, operating and allocated SG and A costs offset in part by net sales price increases insurance proceeds and record fourth quarter operating profit and adjusted EBITDA our domestic utility pole business.

On Slide 18, our Performance Chemicals business delivered fourth quarter sales of $148,000,000 compared to $164,000,000 in the prior year quarter. This can be attributed to lower volumes of residential wood treatment preservatives, related to market share shifts and reduced demand for industrial preservatives. Which together drove an 8.5% volume decrease in The Americas. In general, prices remained relatively flat compared to prior year. Adjusted EBITDA for PC came in flat year over year at $29,000,000 Profitability was impacted by volume decreases and higher raw material costs However, margin improvement was achieved through cost saving initiatives including lower logistics and overhead Slide 19 shows fourth quarter sales in our CM and C business of 114,000,000 compared to $132,000,000 in the prior year quarter. This decrease was driven by reduced market pricing totaling $11,300,000 across most products. Including an 8% decline in carbon pitch prices and an 18% decrease in carbon pitch volumes. These factors were partially offset by higher volumes of other products. Adjusted EBITDA for CMMC in the fourth quarter was $9,000,000 compared with $4,000,000 in the prior year quarter.

This boost in profitability stemmed from lower raw material costs lower allocated SG and A costs and $2,800,000 of bad debt reserve in the prior year quarter, partly offset by lower sales prices and volume. Compared to the prior quarter, the average pricing of major products was down 8% and average coal tar costs were lower by 7%. Compared to the prior year quarter, the average pricing of major products was down 13% while average coal tar costs were down 18%. As shown on Slide 21, we continue to pursue a balanced approach to capital allocation. We invested $74,000,000 of capital back into our business in 2024 and we're targeting $65,000,000 for 2025. We returned $43,000,000 to shareholders through our stock buyback in 2024, and our Board just authorized a new $100,000,000 repurchase program. In addition, our Board recently increased our quarterly dividend to $0.08 per share.

In terms of leverage, we ended the year with $887,000,000 of net debt and had $381,000,000 in available liquidity at December 31.

We finished the year with a net leverage of 3.4 times and remain committed to our long term target of two to three times net leverage ratio. While we certainly see our normal increases in leverage in the first second quarter we expect to end 2025 at or below three times leverage for the first time since mid-twenty fourteen. As shown on Slide 22, in December 2024, we successfully completed the repricing of our seniors to due April 2030. The credit spread over SOFR on the TLB was reduced by 50 basis points from 3% to 2.5%. This transaction contributes to our ongoing reduce interest expense and it did not alter our leverage covenants maturity date. On Slide 23, total capital expenditures in 2024 were $77,400,000 growth or $74,000,000 net of cash proceeds We spent $54,000,000 on maintenance [indiscernible] and $18,000,000 on growth and productivity projects. For our business segment, we spent $32,000,000 on RUP, $15,000,000 on PC $27,500,000 on CMMC, and nearly $3,000,000 on corporate projects. And finally, on Slide 25, as announced on February 12, our Board of Directors declared a quarterly cash dividend of $0.08 per share of Copper's common stock. The dividend will be paid on March 24 to shareholders of record as of the close of trading on March At this planned quarterly dividend rate, is subject to review by the Board of Directors, The annual dividend is expected to be $0.32 per share for 2025.

A 14% increase over the 2024 dividend. And with that, I'll turn it back over to Leroy.

Thanks, Jimmy Sue. Now onto a review of each of the businesses, and I'll start with Performance Chemicals on Page 27. While we expect a solid year overall for Performance Chemicals in 2025, that business is coming off an all time best performance, it will not be able to repeat. As mentioned on our November call, as well as earlier on this call, we will experience some market share loss in our residential chemical business this year, We face a more aggressive industry competitor that has invested in bringing capacity online. Some of that conversion began earlier than expected in the fourth quarter and contributed to volume reduction that Jimmy Sue mentioned. On the positive side, it's given us an opportunity to further diversify our customer base by adding several smaller accounts to backfill part of the lost demand importantly, we still maintain just over 50% overall market share in the residential market. Focusing on the North American market, which drives the bulk of results in this segment, I would describe customer sentiment for this year as cautiously optimistic seemingly stuck in neutral and declining consumer confidence due to policy concerns has treaters uneasy about whether we will see any growth in treated products this year.

But on the flip side, remodeling spending seems to have flattened out after eight straight quarters of year over year declines, And the Home Depot on their call earlier this week specifically called out decking and fencing as two of the in the fourth quarter Our market forecast for 2025 is one of slight organic growth while some hope also remains that spending to rebuild from the historic storms last year will begin in earnest. Anecdotally, excluding the market share loss I spoke to earlier, we have seen healthy comparative volumes in the early part of this year and treaters have been reporting that despite the frigid winter throughout The U. S, they've not seen an impact on demand. PC's industrial book of business remains robust and we have more than enough capacity to satisfy increased demand when the utility pole market brings back share loss and relative economic uncertainty has us emphasizing the importance of cost control and efficiency gains, which we are pursuing across the organization. Not just at PC. Tariffs remain somewhat the wildcard in this business as we do source some components of our production China, and other countries that could be targeted for tariffs and the recent inclusion of copper the discussion has created a new challenge with which to contend.

Now all this seems to change by the day we currently estimate the tariffs on China, Canada and Mexico could have an approximate $5,000,000 impact on PC, which doesn't include the potential impact of retaliatory tariffs. We do have mitigation options to address most of The U. S. Tariffs and believe that any impact for P would be negligible. The copper issue could be a little more problematic and so we're keeping a close watch on where this goes. The copper we use is predominantly domestically sourced scrap, which we hedge to smooth the volatility. Without getting too far into the weeds, the copper we purchased and the hedges we put in place are based off of pricing in two different markets that have traditionally been highly correlated. Now the noise around tariffs has caused a widening gap in the spreads between those two markets, which is causing our hedges and underlying purchases to not match as well as they [indiscernible] is creating additional expense that we may not be able to recoup. Now this is a new phenomenon that we're working to mitigate in case it does The total unmitigated impact of this issue in 2025 could be as factoring in the full impact of the copper issue just mentioned we are projecting our PC business to finish with adjusted EBITDA of about $113,000,000 down $30,000,000 from 2024.

Moving on to our Utility and Industrial Products business shown on Page 28. Fourth quarter twenty twenty four sales and adjusted EBITDA were records as results were fueled by early strength from Hurricane Response and the contribution from Brownwood. Demand tailed off in the November through the rest of the year, we took a late quarter inventory charge in Australia. Although not yet robust, demand in the early part of twenty twenty five has recovered from the late fourth quarter hangover and is at least back to levels seen for most of 2024 prior to the hurricane activity. Customer sentiment is that demand levels will likely not change until at least midyear. While customer demand is an important consideration, the linchpin of our growth in the utility market through share growth in underserved geographic regions. Which was the purpose of most of our investments in this business over the past couple of years. Now we are implementing the technology solutions and realigning the organization to more effectively expand the breadth of our sales reach I'll repeat what I've said a number of times as it relates to greater market share penetration. We are not interested in participating in a race towards the bottom.

We believe that a large swath of The U. S. And Canada would like greater options for supply and that's what Copper Koppers interested in bringing to them. Have no big investments organic or otherwise teed up at the moment for UIP in 2025, although we will continue to remain open to opportunities as they arise. Our utility coal plants are all running well, our new Kennedy, Alabama plant has begun treating Douglas Fir a Western species critical for the transmission market all across The U. S. And key for Copper's portfolio offering as we compete for certain customer accounts. This time, we have no heightened concerns on the fiber supply as worries about the impacts from last year's hurricane damage seem to have abated with overall pricing remaining largely intact. Other than potential follow on impacts from tariffs in our PC business on the chemical side, other major raw material expenditure. Our railroad products and services business summarized on Page 29. Unfortunately finished 2024 in RPS with a disappointing fourth quarter Similar to UIP, demand did drop more than expected as the fourth quarter went on. And despite personnel and cost reductions, we couldn't quite overcome an 18% decrease in quarterly sales volumes.

All but one Class one accounts saw lower sales in the fourth quarter, which was also the trend for the year the rate of decline was steeper than the first three quarters and larger than expected. Even commercial volumes were down in the fourth quarter despite being a bright spot for the full year. On the good news front, we are projecting up to an percent volume increase in 2025, which is based upon discussion with customers and some market share shifting our way. Our projections are based upon customer interactions, which of course can change as evidenced by customer feedback that had us expecting a 5% volume increase in '24 at the beginning of last year ultimately turn into a 4% year over year deficit by the end of the year. While the performance of this business continues to be frustrating in many ways, I do see a path to measurable improvement in 2025 and beyond as commitment to quality and reliability has led to market share gains, and better pricing in certain Class one accounts. We haven't given up hope on the two accounts where we haven't realized meaningful price improvement, that include reducing operating costs, overhead and material waste.

Won't see any direct impacts from U. S. Tariff actions on our rail business, but would have some exposure if Canada enacts retaliatory tariffs. Finally, in 2025, we'll begin to shift our cross tie recovery and disposal business model to one of recovery only. Reluctantly accepted that the rail industry isn't quite ready to pay the full cost for Koppers to responsibly dispose of its end of life ties We've ceased grinding at Summerville, Texas and effective tomorrow, we'll be closing our launch Michigan collection and grinding yard. This is unfortunate for the small but dedicated group that has faithfully served our customer base over many years. And was recently recognized with our Zero Harm CEO Award for Safety. I want to personally thank the launch team for their dedication and efforts. Next on to the CMC business, which is summarized on Page 30. While the fourth quarter was much improved from prior year, it too fell short of expectations based upon softer volumes due to pullbacks in the latter half of the As announced in December, we are in the process anhydride production in our Stickney, Illinois plant due to declining market conditions over the past ten years coupled with major investments needed over the next five years that we're not able to justify.

The original plan was to cease production by the May, we are working to beat that timeline by one to two months. This closure is not expected to result in any EBITDA improvement due to stranded costs and will result in an additional $43,000,000 to $47,000,000 in charges above the $8,000,000 recorded in the fourth quarter. Dollars $22,000,000 to $26,000,000 of those charges will be cash expended for cleaning, waste disposal and plant demolition. Is expected to be spent by the end of twenty twenty six. At worst, we expect the plant closure to have to $3,000,000 of negative annual impact to EBITDA. But it will save us $40,000,000 to $60,000,000 of capital investment over the next five to ten years. Like the loss closure, it's never easy to shut down operations because of the impact on employees' lives and the communities we operate in. Employees for their service to Copperas and our customers I wish we could provide a better outcome. Actions are not the fault of anyone, but the result of an ever shifting economic environment that will at times us in the position of being the best owners of certain assets. And other times not. Level of portfolio repositioning that we've experienced in the past ten years is somewhat indicative the mature markets that we serve.

We've made these decisions and we'll continue to make them as necessary to make our remaining businesses more competitive, and put the business on stronger ground for our remaining team members. Stepping back to look at the global view of CMMC in 2025, we've not modeled improvement in our much improvement in our end markets except for Creosote, due to an increase in treating demand as I mentioned earlier. Our view on the market could change if the variety of measures taken by the new administration spur any restart of idle aluminum capacity, both we've not factored that into our current expectations. Direct tariff impacts as of now are expected to be small with mitigation plans in place. As of now, we're expecting that the Creosote volume improvement along with further cost reductions and improved variable margin spread will drive a $14,000,000 increase in adjusted EBITDA compared with 2024. On Slide 32, we expect consolidated sales to reach $2,170,000,000 in 2025 compared with $2,090,000,000 in 2024 would represent a 4% increase, more than all of it attributed to stronger volumes and some pricing improvement in our RUPS segment partially offset by net market share loss in Performance Chemicals. On Slide 33, we're forecasting adjusted EBITDA of $280,000,000 which represents a 7% improvement over 2024 adjusted EBITDA of $262,000,000 there's a massive amount of noise in the system right now, we believe we can still show measurable improvement in 2025 as three of our four business are already at trough levels with nothing but outside in front of them, and cost and other benefit measures in progress that will more than offset the challenges in Also, we're a few weeks from completing a comprehensive assessment of each of our businesses and functions, which will provide more insight into how much opportunity we believe exists beyond our current performance and what portfolio realignment is needed if any, in order to reach our full potential.

As part of the final touches to our 02/1930 strategy that we plan to showcase in D. As we think ahead to Investor Day and the metrics we plan to use to measure success, we expect us to place a greater emphasis on earnings per share moving forward, which justifiably includes the depreciation and interest burden of investment made to drive the EBITDA improvement we've been building towards through the current strategy. Now that the major investments have been made, I believe we can improve EPS by greater than 10% per year through 02/1930 due to multiple levers would be remarkable. I'll use that as a segue to direct you to Slide 34, which shows our 2025 adjusted earnings per share bridge and the strong improvement we expect in 2025 driven by higher operating earnings, and lower interest expense. Accordingly, we're forecasting $4.75 per share in 2025, representing a new high Koppers a 16% improvement over 2024. On Slide 35, we're projecting capital spending of $65,000,000 in 2025 compared with $74,000,000 in 2024. Our 2025 CapEx spending reflects an ongoing normal run rate and will enable us to generate significant free cash flow over the next several years. Much of that cash flow is planned for debt reduction as well as share repurchases of our shares remain undervalued.

We've completed the heavy investment period of our growth strategy and are now poised to maximize the value of those investments as market conditions eventually improve. As I wrap up my prepared comments, I'll leave you with a few points I want you to take away from the call today. First, despite the uncertain economic environment we find ourselves in, we expect earnings to Our business remains resilient and our products remain critical elements of markets they serve and will continue to be needed long into the future. Second, we're moving into a more normalized capital investment period beginning this year that will unlock significant free cash flow that we'll prioritize to reduce debt [indiscernible] And buyback undervalued shares. Third, we believe that we have multiple ways to improve shareholder value through we look forward to discussing in greater detail over the coming months culminating in our virtual Investor Day in September. And with that, I would like to now open it up for any questions.

We will now begin the question and answer session.

And the first question will come from Liam Burke with B. Riley FBR. Please go ahead. Yes. Thank you. Good morning, Leroy. Good morning, Jimmy. Good morning.

Leroy, you mentioned in your prepared comments about piece There was market share loss and you mentioned it last quarter, but it's it's moved into this quarter as well. What is your competitor strategy? Is it a pricing strategy or is there an [indiscernible] formula that's competitive No, no, no, Liam. It's and just to be clear, this isn't new market share loss, right? What we announced in November was planned for in 2025. Some of that started happening in terms of plant conversions in the fourth quarter, which was before we had expected. But it's the same share loss that we had mentioned back in November. Yes, it's look, it's we have We have grown market share significantly in the time that we've owned that business. To the point where most of the the top treaters we're sole sourced with us. And I think over time, they look to diversify their supply chain and mitigate some risk They were looking to split a little bit of that business and you had a competitor that had changed hands in terms of ownership. Some investments were made to be more aggressive in going after business and and it's purely what it is.

I think it's a diversification of risk on on some of our customers' ends and an aggressive competitor who put some money into capacity to try and improve the overall business. Yes, it's one of those things as you continue to grow and get bigger and increase market share, you get to a point where obviously there's a greater risk and likelihood that you're going to go backwards and go go forward. And so that's kind of where we found ourselves. And we're a little bit of victim of our own success over the past ten years.

Great. Thank you, Leroy. And you discussed on the UIP that there there are no immediate plans of investment on expansion either Is it because the acquisitions aren't out there or You just have other projects that have better opportunities to invest in.

Yes, I'd say it's a couple of things. I'd say that we made some investments that are already going to provide us opportunities to grow share. In markets that we don't have a lot of presence in right now. So So we're working to start to deliver on those investments. And we're there's is discussions going on and things that we're looking at relative to to other geographic markets here in North America that we'll see how it develops over time. Some of it could happen this year. If so, we're not talking about big numbers at all. And so at this point in time, I say from a capital standpoint, we just don't see a lot of immediate near term needs. Now as we move into '26, Again, we'll be reassessing as we go throughout the year. But overall, I think for us to be able to continue to to grow, a lot of the investments have been made. There's still some more to make. They're not huge in the overall scheme of things relative to the money that we spent in the last three plus years Great. Thank you, Leroy.

The next question will come from Gary Prestopino with Barrington Research.

Good morning Leroy, Jimmy Seal and Clint.

Leroy, I just wanted to ask a couple of questions here and then I jump around.

You talked about your goal of share growth in underpenetrated regions, utility I assume you're hiring more salespeople, but have you actually started to pursue these underpenetrated markets or is that that's going to start coming through in 2025 with a bigger impact in 2026. Yes. So we've already been down that path. Right? Some of it is through the through the investments we've made to go into Texas, And so we've already been actively adding some business in that particular market. The Brown acquisition really opened up more opportunity for us to go up into the Midwest in terms of where those assets are situated. We're in the we will be in 2025 I believe starting to see some of the benefits of that in terms of being able to go up into and having more of a presence up in that area. And then as it relates to really going further west, that's still a little bit out in the future. We're just not really set up at the moment from an overall operations and distribution standpoint to go after those markets as It's kind of what Liam was alluding to, I guess, with his question around the investments in UIP that and sort of where we sit at [indiscernible] as it relates to expansion plans.

So like we're set up right now where I think we can actually we have more than enough capacity to go after continue to make penetration into Texas and the Midwest not yet really set up to go out West just yet, but that's sort of the next phase of things and that will be that will be out sometime probably 2026, 2027 timeframe. Okay. And then that's great. And then just a question on the closure of the Stickney plant. And again, I'm not really a chemical analyst, but First of all, what level of sales, can you quantify that were coming out of that Stickney plant?

Yes.

So So what that particular unit of operation is, is one that actually consumes a buy product of our distillation process, right? So there's basically what we'll be losing is a little bit of if you will, incremental added value pricing and the coverage of costs associated with taking that byproduct that we make and making phthalic anhydride into it. So the naphthalene that we used to basically consume in that process will be selling out in the merchant market. So, so I forget what the overall impact on sales we had estimated that to be, but it's maybe I don't know, dollars 30,000,000, dollars 35,000,000 or something like that.

Okay. And this plant was not producing any creosote that you use in your other