# Dear Fellow Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/basic-materials-specialty-chemicals/NYSE_KOP_2021/NYSE_KOP_2021.mmd` · pages 2-8_

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Dear Fellow Shareholders:

As the impacts of the COVID-19 pandemic continue to recede, it feels as though a major hinge is turning, opening doors to new beginnings. How we go about our business, both professional and personal, is emerging in a new light. As we recap 2021, I am gratified and proud to report that our balanced portfolio once again paid off to deliver value to our stakeholders. Moreover, Koppers is well positioned to make the most of the opportunities that are ahead of us. As previously stated, we have established a point on the horizon toward which all of our efforts have been directed—to significantly grow profitability over the next several years. Our steadfast commitment to Sustainability practices and Zero Harm principles serves as our foundation on this journey.

Through our Sustainability strategy, we continue to build on our history of customer-focused solutions that advance our purpose of Protecting What Matters and Preserving The Future. As a critical supplier to vital industries, we understand the importance of operating in a safe, sustainable manner that creates value for all of our stakeholders. At Koppers, we take pride in providing responsible solutions that serve the global infrastructure and our modern world.

Regarding Zero Harm, we always place the health and safety of our people first. This was clearly reflected in 2021, which saw our company achieve our lowest 12-month rate of serious safety incidents at Koppers, with 16 of our 43 operating facilities working accident-free for the year.

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In 2021, Koppers also reported a number of record achievements and strong results across our financial metrics, including:

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While we have steadily delivered profitable growth, there is so much more upside to our performance and potential going forward. Three attributes promise to carry Koppers higher—namely, we are diversified, we are driven to succeed, and we are delivering on our commitments.

## Capturing Value from Our Diversification

Let's look at our diversified strengths. The vertical integration of our business units represents an incredible competitive advantage. We benefit significantly through our vertically integrated business model, and that's unique to the industries that we serve. Our businesses are interconnected to each other through the common bond of wood preservation across a diversified mix of end markets. That means Koppers is not reliant on any single one, which sets us apart. We can link our businesses together to take advantage of meaningful synergies while enjoying the balance that comes from serving unique markets. We can better control the supply chain on behalf of our customers through applying our expertise in wood procurement, chemicals, treatment, and responsible disposal of end-of-life poles and ties. As a result, we are not immensely dependent on other companies to supply the critical materials we need—which is becoming increasingly important in a complex world when challenges such as global health issues, labor shortages, and extreme weather conditions, to name a few, can bring society to a halt.

Worldwide, we're the market leaders in many of our businesses. And in many cases, Koppers holds the number one spot in the markets and geographies where we operate. While wood preservation represents the biggest part of our business, it's not the only thing that we do. In fact, almost everything that we do serves either industrial or residential infrastructure markets.

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Leadership Council \( ^{(1)} \) 

Our diversification also means that we can control many aspects of our growth strategy. Above and beyond our current initiatives are new or adjacent market opportunities—which include increased infrastructure spending and electric vehicles—that will only add to our top and bottom line. Koppers success is inextricably connected with our diversified business portfolio and the diversified end markets that we serve.

## Driving Our Performance Higher

We have improved our balance sheet, opening opportunities to invest in our business to grow our bottom-line performance as well as return capital to shareholders. Now that the heavy lifting has been largely completed, it enables us to focus our attention on expanding our profitability. While we are in mature markets, our businesses are leading the way in thinking, analyzing, and acting in new ways to boost bottom-line growth that should result in greater value. Here again, our business model emerges as a competitive strength.

• Performance Chemicals (PC) carried us through the pandemic, with record profitability again in 2021, generating a significant portion of cash flow and profitability through sales of its wood preservation chemicals for home, construction, and industrial use. The PC team continues to relentlessly focus on improving its cost position, enhancing and adding to its robust product portfolio and providing unrivaled customer service, all qualities that will continue to serve us well for years to come.

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• Investments in our Railroad and Utility Products and Services (RUPS) business are still in the early stages and have not yet reached their full potential. By combining multiple processes and increasing production activities at our RUPS facilities, we expect to generate substantial savings as well as improve our supply chain efficiency. And over the next five years, we anticipate the potential to extract significant value by continuing to optimize our network in this way. Some recent examples include efficiency improvements and production expansions at our facilities located in North Little Rock, Arkansas; Somerville, Texas; Newsoms, Virginia; and Vance, Alabama.

• While our Carbon Materials and Chemicals (CMC) segment still gets tagged as being our most volatile business, recent history has proven out that its earnings do not vary any more than our other segments. As a result of the restructuring plan implemented in prior years, this business has been vastly improved and now has a much more efficient cost structure. That stability enables us to put a greater focus on pursuing research and development opportunities to seek out new products and markets. For example, the use of carbon products to extend the battery life of electric vehicles reflects the team's innovative mindset and represents a potential game-changing opportunity for CMC to take its profitability to a new level.

## Delivering On Our Promises

With our financial profile better than ever, we expect to generate consistently robust cash flow and further strengthen our balance sheet. Moving forward, having greater financial flexibility will free us to execute on a more balanced capital deployment strategy. The current iteration of our strategy is rooted in the concept of expand and optimize. We plan to expand through increasing the reach of our portfolio of wood treatment products, services, and geographic markets. This extends to finding "cradle-to-cradle" uses and reuses of products as they cycle from initial production to customer use, to end-of-life status, and repurposing into a new product. The optimize side of the equation includes strengthening the business model through new services and portfolio improvements, along with ongoing efficiency improvements of current facilities, production processes, supply chain networks, and more.

A new Growth & Innovation team has been formed in support of this expand and optimize strategy. The role of this group includes analyzing and executing fresh thinking and new ideas to advance Koppers activities, products, services, and markets that will increase our bottom-line performance beyond the tenets of traditional mergers and acquisitions.

In August 2021, our Board of Directors approved a $100 million share repurchase program and in February 2022 reinstated a quarterly cash dividend that had been suspended for the past seven years. Those who have followed us over that time frame know that we have worked hard to transform Koppers into a stronger and more resilient organization and, as a result, we have not only weathered the many challenges thrown our way, but we have thrived as evidenced by the strength of our operating performance. As we're moving into the next phase of our strategy, we can bring more balance to our capital deployment strategy and begin returning cash to our shareholders through dividends and share repurchases, which we plan to do.

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## Moving Ahead With Strength and Confidence

We have worked hard to transform ourselves into an enduring, essential, and sustainable enterprise. Koppers is enduring due to the types of products we sell, the markets that we serve, and a business model that has, time and again, made us stronger than ever. We are essential, as proven by the global pandemic where our products were necessary to keep critical elements of the economy functioning. We are sustainable by continuing to earn our social license to operate by placing priority on our values of people, planet, and performance.

Koppers was named as one of "America's Most Responsible Companies" by Newsweek magazine for the second consecutive year, from more than 2,000 U.S. companies across 14 industries. It was an honor to again be recognized by Newsweek for our company's corporate performance in environmental, social, and governance areas, and the credit goes to our team members worldwide.

The pandemic forced us to use new tools to remain visible and communicate with our employees, and I plan to get back to in-person visits at our locations across the world. I strongly believe in the importance of making those personal connections and providing our people the chance to give their feedback directly. Despite the ongoing uncertainties related to the pandemic, our employees once again demonstrated that Koppers team members are some of the most generous and supportive people anywhere, as they led and participated in scores of fundraising activities and community events in 2021.

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Board of Directors \( ^{(2)} \)

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My sincere thanks go to our Board of Directors for another year of their reliable and thoughtful guidance. I consider myself immensely privileged to have such comprehensive and diverse experience on our Board to provide valuable perspective to key decisions and strategy.

This past year saw the retirement of our former Chief Financial Officer, Michael Zugay, who retired after seven years with the company and more than four decades of overall experience. He expertly led all aspects of the company's global financial function, as well as advised on several key strategic growth initiatives. His grace under fire, just as much as his knowledge and counsel on financial matters, has been priceless. The world, the nation, our communities and families, and our company all have arrived at this critical point in history. As Koppers takes in the view of future opportunities as well as challenges, we are ready and equipped like never before to prosper. We pledge to continue applying our best efforts to reward your confidence as we step forward together.

Sincerely,

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Leroy M. Ball
President and Chief Executive Officer