# Dear Fellow Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/basic-materials-specialty-chemicals/NYSE_KOP_2022/NYSE_KOP_2022.mmd` · pages 2-8_

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Dear Fellow Shareholders,

In 2022, Koppers once again delivered strong results throughout the year and for the full year in a number of categories grounded by our values of People, Planet, and Performance. At the same time, we have been fervently executing on our strategy to Expand and Optimize our existing footprint while continuing to assess our growth prospects. As always, it is a busy and exciting time at Koppers and I am happy to provide an update on our recent accomplishments and the exciting opportunities that lie ahead for us.

## Living Our Values

Our Zero Harm culture remains the cornerstone of all we do at Koppers, and it helps to advance our purpose of Protecting What Matters and Preserving The Future. In 2022, our Zero Harm efforts resulted in 19 of our 46 operating facilities working accident-free for the entire year, while our total rate of recordable incidents decreased by five percent compared with the prior year.

We know that Zero Harm succeeds when employees and leaders engage at a personal level. This belief is being underscored through the development of Zero Harm 2.0, now underway, to make our actions even more impactful. As part of our ongoing commitment to our values of People and Planet, we have established an aspirational, yet attainable, goal of Zero Harm for our employees, our communities, and our environment.

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As a result of our focus on doing things the right way, I am proud to report that for the third consecutive year, Koppers was named as one of America's Most Responsible Companies by Newsweek magazine. This recognition is a testament to our commitment to continuously improve our environmental, social, and governance performance through our business strategy that incorporates sustainable principles into our everyday practices. We are proud to be able to provide responsible solutions that are essential to our global infrastructure and thank our people for putting forth their best effort every day to help us create a better future.

## Delivering Outstanding Financial Performance

At Koppers, we understand that our values for People and Planet need to be in balance with our value for Performance. Each remains a critical component of our success. Despite continued post-pandemic labor and supply chain challenges and the outbreak of war in Ukraine, the Koppers team once again overcame many challenges to post an impressive performance in 2022. A summary of some of the key highlights includes the following:

• Consolidated sales of $1.98 billion, which represents record sales.

• Net income attributable to Koppers of $63.4 million.

• Adjusted EBITDA of $228 million.

• Adjusted EBITDA margin for the year of 11.5 percent.

• Diluted EPS of $2.98.

• Adjusted EPS of $4.14.

• Operating cash flow of \(102 million, the fourth straight year, and the seventh year in the past eight years with operating cash flow exceeding \)100 million.

• We entered into a new $800 million credit facility, providing greater financial flexibility to support our ongoing growth strategy.

• We invested \(105 million in capital expenditures, of which \)70 million was to maintain sustainable operations with the remaining $35 million dedicated to projects that have financial returns that will meaningfully contribute toward our strategic goals.

• We completed $24 million in stock repurchases, which included approximately 686,000 shares at an average price of $27.30 per share under our share repurchase program.

• Our Board of Directors reinstated a dividend for the first time since 2014, returning approximately $4 million to shareholders during the year.

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At our Investor Day in September 2021, my team communicated our strategy to Expand and Optimize our business model, which would deliver unprecedented financial performance – ultimately resulting in $300 million in Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) by 2025. Two years into the five-year plan, I remain confident as ever that we are on the right track to achieving our goals with the best yet to come.

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Our strategy to Expand and Optimize was underpinned by six key pillars, each of which saw progress in 2022.

We continued to enhance our product portfolio through the introduction of our latest industrial oil-borne preservative to the utility market. In 2022, we secured an additional $40 million of annualized revenues with this new product line and existing water-borne preservatives, by displacing a legacy non-Koppers preservative that is being phased out of use by the U.S. and Canadian EPA.

Regarding wood treatment expansion, we purchased a property in Leesville, Louisiana, where we plan to add peeling and drying capacity, which will enable us to supply cost-competitive raw material to our Somerville, Texas, operation. This will not only improve our utilization but more importantly it will provide the opportunity to penetrate a new and currently underserved geographic market for utility poles.

Our cradle-to-cradle approach continues to gain traction through a new five-year, $50 million agreement with a Class I railroad customer to collect and manage railroad crossties at the end of their useful life, solidifying our reputation as a full-service solutions provider for the industry.

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Board of Directors \( ^{(1)} \) 

In network optimization, we continued down our path of improving utilization of our network through the further consolidation of our treating capacity. We made significant progress in constructing our new treating plant in North Little Rock, Arkansas, which should be fully operational by mid-2023. Also last year, we divested our utility pole treating facility in Sweetwater, Tennessee, and absorbed the demand that plant filled with our remaining network.

We strengthened our business model by acquiring Gross & Janes, the largest independent supplier of untreated railroad crossties in North America. This acquisition further strengthened our vertically integrated business model by improving our access to raw material as well as providing critical assets and enabling us to avoid future capital expenditures.

## Remaining Long-Term Focused

As we embark on the third year of our five-year journey that is reflected in our current strategic plan, I am heartened by our progress. Not only do I expect to achieve our target of $300 million in EBITDA by 2025, but I believe we can do that by spending $100 million less than what we originally projected. That will give us several options to deploy the significant cash flow we expect to generate, whether it be through debt reduction, continued investments, or returning capital to shareholders.

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Leadership Council \( ^{(2)} \) 

At Koppers, we remain focused on the long game. We believe that our dedication to Performance while taking care of People and the Planet is a sustainable model that will create the most long-term value for shareholders. More and more, companies are realizing that focusing purely on reducing costs at the expense of producing high quality products, providing superior service, and operating a reliable supply chain is short-sighted, unsustainable, and will lead to greater risks and higher costs in the long run. We have avoided the temptation of cutting corners to win business and have pursued customers that value the offerings that we provide and are willing to pay fair value for those offerings. It remains a work in progress, but I believe that we are turning a corner in 2023 that will propel Koppers to the best three years of performance in our company's history. In the meantime, stay tuned as we are already working on answering the question of what's next after 2025 and plan to share that in the not-too-distant future. One thing I am certain of is that whatever the future holds for Koppers it will be rooted in our values of People, Planet, and Performance.

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## Extending Our Thanks

In closing, I would like to extend my sincere appreciation to our Board of Directors, who offer their deep expertise, along with their guidance and support. In an age where there is constant pressure on the next quarter, they provide their words of wisdom to me and the global Koppers team to focus on building long-term sustainable value. These are unique and challenging times and the continued leadership from our Board has been invaluable.

On behalf of the 2,100 team members around the world, we also send our deepest thanks and gratitude to you, our shareholders, whose continued belief and faith in our company's future make all the difference. I recognize that it has been a challenging couple of years to be a shareholder of Koppers as our total shareholder return has lagged the market, but for those who have been patient I believe that your patience is about to be rewarded. Thank you for standing with us and believing in our vision to create a company that is one-of-a-kind in the capabilities we provide to build the global infrastructure.

Sincerely,

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Leroy M. Ball

President and Chief Executive Officer