Investment Thesis
Koppers Holdings faces significant financial distress with an interest coverage ratio of 0.6x, indicating operating income cannot cover interest expenses—a critical solvency concern. Revenue is declining 10.2% YoY while profit margins remain razor-thin (4.8% operating, 1.6% net), combined with high leverage (1.69x debt/equity) and substantial debt of $928.8M. Positive free cash flow and adequate liquidity provide temporary relief, but the fundamental deterioration in profitability and growth suggests elevated financial risk.
Strengths
- Positive free cash flow of $34.9M with 7.7% FCF margin demonstrates operational cash generation capability
- Strong current ratio of 2.71x provides near-term liquidity buffer for operational needs
- EPS growth of 11.4% YoY despite flat net income reflects disciplined share count management
Risks
- Critical interest coverage ratio of 0.6x indicates operating income cannot cover interest expenses, signaling potential debt service distress
- Revenue declining 10.2% YoY with razor-thin operating margin of 4.8% and net margin of 1.6% shows deteriorating profitability
- High leverage with $928.8M long-term debt against only $42.8M cash, creating significant refinancing risk if market conditions tighten
Key Metrics to Watch
- Interest coverage ratio—must improve above 1.5x to indicate sustainable debt service capability
- Revenue trend reversal—critical to demonstrate whether business contraction is cyclical or structural
- Free cash flow sustainability—monitor if FCF remains positive and sufficient to reduce debt burden
Financial Metrics
Revenue
455.3M
Net Income
7.1M
EPS (Diluted)
$0.35
Free Cash Flow
34.9M
Total Assets
1.9B
Cash
42.8M
Profitability Ratios
Gross Margin
N/A
Operating Margin
4.8%
Net Margin
1.6%
ROE
1.3%
ROA
0.4%
FCF Margin
7.7%
Balance Sheet & Liquidity
Current Ratio
2.71x
Quick Ratio
1.11x
Debt/Equity
1.69x
Debt/Assets
70.8%
Interest Coverage
0.65x
Long-term Debt
928.8M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-10T07:32:47.060905 |
Data as of: 2026-03-31 |
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