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Koppers Holdings Inc (KOP) Q4 2020 Earnings Call Transcript

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Koppers Holdings Inc (NYSE: KOP)
Q4 2020 Earnings Call
Feb 24, 2021, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Koppers' Fourth Quarter 2020 Business Update Conference Call. [Operator Instructions]

I would now like to turn the call over to Quynh McGuire. Please go ahead.

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Quynh McGuire -- Vice President, Investor Relations

Thanks, and good morning. I'm Quynh McGuire, Vice President of Investor Relations. Welcome to our conference call, where we will provide highlights of our fourth quarter 2020 performance by business segments. We issued our press release earlier today. You may access this announcement via our website at www.koppers.com. As indicated in our announcement, we've also posted materials to the Investor Relations page of our website that will be referenced in today's call. Consistent with our practice in 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 April 28, 2021.

Before we get started, I would like to direct your attention to our forward-looking disclosure statement seen on Slide 2. 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. References may also be made today to certain non-GAAP financial measures. The Company has provided with its press release which is available on our website reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures. Joining me for our call today are Leroy Ball, President and CEO of Koppers; and Mike Zugay, Chief Financial Officer.

I'll now turn over this discussion to Leroy.

Leroy M. Ball -- President and Chief Executive Officer

Thanks, Quynh. Good morning. Welcome, everyone. As the pandemic continues, I hope that you and those you care about remain safe and healthy. And I'd also like to wish all of you a happy healthy and prosperous 2021. Want to start by thanking everyone for taking the time to listen in today to what is expected to be our last interim business update call before resuming our normal quarterly reporting and disclosure cadence in 2021. Our next call will be on February 24th, to report final 2020 results and provide our view into 2021 at that time.

As the starting point for today is shown on Slide 4, Koppers has continued to retain its designation as an essential business as determined by the U.S. Cybersecurity and Infrastructure Security Agency or CISA within the Department of Homeland Security. I mean, we've been able to continue operating during the pandemic to transport critical goods, provide power and connectivity to homes and businesses, and keep our infrastructure running reliably. We at Koppers, take great pride in carrying out this critical responsibility.

In many ways, last year, seemed like a whirlwind of activity as we work to adapt to the many changes brought on by the pandemic while serving our essential customer base with critical products and services. Through a different lens, there were also periods where it seems the time stood still as many team members adjusted to the different stress points of working virtually. Collectively, we're all happy to move past 2020 and step closer to seeing return to our new normal. Same time there is a lot to look back on fondly, as it relates to Koppers' performance last year, and I'd be remiss if I didn't point out some of the highlights.

So let's move to Slide 6. As I usually do, I'd like to start with an update on a number of achievements related to our Zero Harm culture. I'm proud to announce that operationally, we finished 2020 with our lowest total recordable rate for any 12-month period in our company's history. We have been successfully holding firm and emphasizing the importance of leading activities such as hazard identification to driving down exposure in injury rates. Throughout 2020, we saw a 30% increase in leading activities and a corresponding 20% decrease in recordable cases, which is quite significant.

In November, we held a modified virtual version of our Leadership Forum with key team members worldwide who are responsible for the care and well-being of our team members. Koppers' primary focus was on aligning the expectations of leadership at Koppers to ensure we are working toward a safer, stronger, and more inclusive workplace.

In December, we held our annual safety, health, and environmental coordinator conference also virtually, providing interactive training on best practices to reduce harm to the environment and better protect our people. Despite what has been a chaotic year due to the unexpected challenges associated with COVID-19, these accomplishments prove that our team is not slowing down our efforts to ensure safety, but rather figuring out new and innovative ways to keep us pushing down the path to zero. Our site leadership and Zero Harm teams have done a admirable job keeping everyone focused and I thank them and all our employees for remaining committed.

On the financial side of things, we also expect to finish the year on a positive note in spite of much in our world being turned on its head. Our consolidated sales for the year at $1.67 billion represents a new high in the fourth consecutive year of growth when we exclude KJCC from prior results. Now, while not yet final, we do expect to finish the year with a new high for operating profit of approximately $161 million, which would represent a 28% increase from 2019. 2020 will also represent a new-high watermark for adjusted EBITDA excluding KJCC as we expect to finish between $211 million and $212 million.

Now this compares to $201 million earned in 2019 and exceeds both our recent guidance range of $204 million to $210 million and even more incredibly exceeds our original pre-pandemic guidance for the year of $200 million to $210 million of EBITDA. That level of EBITDA equates to a margin of 12.6% to 12.7%, which will be our highest margin since 2017. It will also be the fifth straight year with adjusted EBITDA margins between 12% and 14% after seven straight years with margins hovering between 8% and 11%, just another indication of how we have truly transformed our business model.

For the year, we expect adjusted EPS to be between $4.10 and $4.20 per share, which again would represent a new high for Koppers beating our previous high of $3.68 per share back in 2017. 2020's expected result would represent an approximate 30% increase over 2019 adjusted EPS of $3.18. Finally, we will have saved approximately $9.5 million in SG&A cost compared to 2019. That's about $2.5 million shy of our original goal of $12 million, which was primarily due to our better-than-expected performance resulting in higher bonus accruals, and special bonuses paid out to our team members at year-end for their extraordinary efforts in extraordinary times.

Our balance sheet and cash flow perspective is outlined on Slide 7. In addition to receiving $65 million of net proceeds from selling our KJCC coal tar distillation facility in China at the end of September, we also had one of our strongest cash flow years generating over $120 million of cash, which will go down as our second-best cash flow year ever. Now, doing so enabled us to reduce net debt by $131.5 million, which represents our largest net-debt reduction in any given year in our public company history.

Finally, the combination of the higher EBITDA generation and strong-debt reduction allowed us to reduce our net leverage ratio to 3.5 as of year-end compared to 4.3 at the end of 2019. This is the first year-end since 2017 that we finished the year with net leverage below 4 times as we continue to remain focused on reducing leverage to average between 2 and 3 times. We spent just under $70 million of capital for the year, which was near the high-end of our most recent guidance and was primarily due to the treatment expansion project North Little Rock.

On a final note, the book value per share of our equity has never been higher as we finish out 2020. It was truly an extraordinary year for Koppers in 2020. We look forward to providing more insight into what we expect in 2021 on our February call coming up in less than a month. Until then, I'll update you briefly on a number of other things going on at Koppers before handing it over to Mike to review the quarterly results in more details.

Moving to Slide 9, currently, we have 20 employees or about 1% of our total employee population self-quarantining for the coronavirus. To date, we have had 232 employees worldwide, or 11%, who'd have tested positive. And on a cumulative basis, we've seen close to 2,000 occurrences of employees testing positive or having -- of employee testing positive or quarantining, many of them more than once.

Consistent with national worldwide trends, we have seen an increase in cases throughout the last quarter and early part of 2021. And while we continually reinforce the importance of practicing safe behaviors and are diligent in ensuring the proper safety measures like thoroughly cleaning and disinfecting any affected areas, the virus has proven to be a formidable obstacle to overcome in our operating environment. Face coverings are required at all North American facilities and we provided these to our employees. Our strict protocols governing personal protection into processes such as social distancing and diligent hygiene have also continued and includes using rapid self-administered saliva testing kits at our locations in North America.

We also recently began using a pool-testing method to screen all U.S.-based plant employees on a periodic basis as that is the employee base where 99% of our infections have come from. In the screenings done to date, we've identified multiple asymptomatic employees and we're able to mitigate the potential spread of infection at those plants by keeping the virus outside of our fence lines. Given the importance of effectively addressing COVID, Koppers has established a new life-saving role that's designed to raise awareness of infection hazards, bind more discipline to our routines and identify job tasks that have higher risk. For the higher-risk job tasks, we'll require more stringent standards of respiratory protection which include N95 masks and advanced level respirators.

Regarding our communications efforts, we began holding our quarterly all-employee meeting in three time zones to better accommodate our employees in the U.S. and Europe, and in Australia, New Zealand. The new format has encouraged discussion of topics most relevant to each geographic region. Beyond that, we continue to hold virtual chat with employees in our plants and those working remotely, and also I continue to provide updates and encouragement to our employees worldwide through weekly videos, which were also posted on Koppers' Facebook and LinkedIn pages.

Looking at our operations continuity on Slide 11, we see that all worldwide Koppers manufacturing facilities remain operational with no furloughs or layoffs. Travel continues to be restricted to essential business only. We continue to carefully evaluate potentially holding a limited number of in-person facility visits, but only if necessary in order to reinforce health and safety goals. Our office employees are strongly encouraged to keep working remotely with a return to the office postponed until April 1st of '21 at the earliest. Now, of course, anyone working on site is required to follow all face-covering and other COVID-prevention protocols.

And on the vaccines front, we do not plan to require employees to be vaccinated to enter our facilities but we are strongly encouraging it to the extent that we plan to offer financial incentives through our employee-wellness program to those that supply proof of their vaccination. Getting as many of our employees through the vaccination process is the quickest way for us to move forward without the specter of COVID-19 and its effects hanging over us.

Now, as another example of technology enabling us to run our business even better, we recently implemented a fleet safety dashboard in order to improve the safety and efficiency of our trucking operations. Also, we're deploying new visitor management system at our facilities to help with keeping our employees and visitor safe. We also continue to leverage every available technology to conduct meetings, make virtual facility visits, conduct virtual training programs, and conduct virtual ISO audits.

Slide 13 illustrates our continuing efforts to engage employees in meaningful ways. Three of our female members of Koppers' leadership council were featured in the first installment of an empowerment series for employees, which was held virtually in the fourth quarter. As we hired our Chief Sustainability Officer, Stephanie Apostolou, our General Counsel and Corporate Secretary, and Quynh McGuire, our Vice President of Investor Relations participated in a panel discussion that covered topics such as carving their path to success, discovering their individual leadership styles, building their support networks, and managing their work-life balance. Hosted by LINKwomen, one of our employee resource groups, the event was well attended and will serve as a model for similar programs to be held in the future.

In the fourth quarter, we launched our annual global employee engagement survey, which gives everyone the chance to provide me and our leadership team with open, honest, and confidential feedback about what it's like to work at Koppers and how we can further enhance the employee experience. We've been parsing through the results, and we'll shortly be implementing certain changes to better address areas where we fall short. It remains a core commitment to create positive change based on employee input. We strive to differentiate Koppers as an employer of choice and to use that as a competitive advantage in an environment where talent is at a premium.

Slide 15 shows two tangible examples of our employees caring for the environment. During our 2019 safety, health, and environmental conference, participants traveled to our Newsoms, Virginia facility to create floating wetlands or man-made rafts that float on the water surface and house native wetland plants, providing homes to beneficial water cleaning microorganisms. A year later, our team checked in during the fourth quarter of 2020, and the wetlands are growing well to successfully do their job.

Our facility in Stickney, Illinois, employees recently planted hardwood to enhance soil quality and create a more attractive green space for the community at a neighboring terminal, where we began a phytoremediation project in 2019. Photos show the new hardwoods, along with the growth of many other plants since the start of the project.

Going to Slide 17, here are some of the examples of how Koppers' teams are serving our neighbors. For the fifth year, Koppers Railroad Structures participated in the Leukemia & Lymphoma Society's virtual Light The Night event in Madison, Wisconsin, bringing its cumulative impact to more than $91,000 in donations. Additionally, Vice President of Railroad Structures, Mike Tweet, a bone marrow recipient, has worked with the University of Wisconsin in Madison to support Be The Match, which brings donors and recipients together. Our utility and industrial products group continued with deploying its storm response teams in August, restoring power to 25 million utility customers affected by devastating winds sweeping across Iowa.

In November, our UIP team again implemented its 24/7 storm recovery program to help those in Georgia, affected by Hurricane Zeta. At roughly the same time, our UIP crews also responded to a major ice storm in Oklahoma, supplying more than 3,500 poles and crossties to aid in post-storm recovery. The feedback that we've received from key municipal and utility customers has been uniformly positive and highly appreciative.

Over the holidays, at year-end, Koppers' employees across our worldwide footprint continue making a difference by reaching out to those in need, as shown on Slide 18. Those at our Ashcroft, British Columbia facility donated 600 pounds of food to the Ashcroft community food bank, 150 pounds of household items to The Equality Project, and funds to the Jackson House Assisted Living facility. Our Rock Hill employees donated more than 300 pounds of canned goods to their local food pantry and supported the local Toys for Tots campaign. And at our Queen City facility, employees donated gently used clothing to a local shelter as part of clean out your closets for the homeless.

Our people and our company have been making headlines over the past quarter, as seen on Slide 20. In November, our Performance Chemicals business purchased land adjacent to its plant in Rock Hill, South Carolina to be used for future expansion. The announcement led to local Rock Hill Herald to write a feature on plant manager, Ida Luchey, about the expansion in her career as one of the few female chemical manufacturing plant managers in the industry.

Also, I'm proud to say that Koppers was recently named the Newsweek Magazine's listing of America's Most Responsible Companies for 2021, placing among the top half, number 179 of 400 companies selected and ranking 30th overall in the social category, which scored us on items, including Board diversity, employee engagement, and community giving.

Newsweek and Statista compiled the list based on a rigorous vetting process. This recognition stands as a testament to the incredible work that our employees have done to exemplify our sustainability mindset and our Zero Harm culture of putting the care of people, environment, and communities first, while providing safe and responsible solutions to our customers.

With that, I will turn it over to Mike to discuss business segment results for the quarter and an overview of our debt and liquidity position. Mike?

Michael J. Zugay -- Chief Financial Officer & Treasurer

Thanks, Leroy. In today's press release, we show a preview of our segment performance for the fourth quarter and also for the full year of 2020. This financial discussion is based on these preliminary results.

On Slide 22, consolidated sales were $393 million, an increase of $11 million from sales of $382 million in the prior-year quarter. Sales for RUPS were $168 million, flat as compared to the prior-year quarter. PC sales rose to $130 million from $105 million, and CM&C sales came in at $95 million, down from $108 million.

On Slide 23, adjusted EBITDA for RUPS was $10 million, which was the same as the prior year. EBITDA for PC increased to $23 million from $14 million. CMC EBITDA was $14 million compared with the prior year of $16 million. Moving on to Slide 24, sales for RUPS were $168 million, relatively flat again year-over-year. This was primarily due to lower crosstie volumes, offset by higher utility pole demand in the U.S. as well as Australia. We also saw increased maintenance-of-way projects in the United States.

On Slide 25, adjusted EBITDA for RUPS was $10 million, also flat for the -- from the prior-year quarter, but which is in line, however, with the expected year-end slowdown in crosstie treating demand. This is reflect -- this reflects our ability to main profitability due to increased pole demand and favorable conditions in our maintenance-of-way businesses.

Sales for the PC segment, as shown on Slide 26, were $130 million compared to sales of $105 million in the prior year. This reflects continued strong demand for copper-based preservatives in the U.S., also driven by a strong housing market and higher demand in home remodeling and the increased use of discretionary funds for home improvement projects. Overseas, reopening markets also helped PC sales through increased industrial and agricultural demand. Adjusted EBITDA for PC on Slide 27 was $23 million compared with $14 million in the prior-year quarter. Higher sales volumes, a favorable product mix, and better absorption on higher production volumes all contributed to these positive results.

Moving on to Slide 28, as this shows CM&C sales at $95 million compared to sales of $108 million in the prior-year quarter. Sales were lower in every region, except Europe, but were in line with overall expectations. The pandemic has meant lower average oil prices and a general market slowdown, which translates into lower pricing for carbon pitch globally and weaker U.S. demand for phthalic anhydride, which was partially offset by improved demand for carbon pitch in Europe and for carbon black feedstock in Australia.

On Slide 29, adjusted EBITDA for CM&C was $14 million compared to $16 million in the prior-year quarter, reflecting an expected decline due to the ongoing weak-end market demand. However, Q4 performance reflects continued margin recovery, year-to-date adjusted EBITDA margins were only 7.5% at June 30th but as we predicted CM&C margins rebounded strongly in the second half of the year and year-to-date margins for the full year increased to 11.7%, reflecting a very, very strong second half of 2020.

Now let's review our debt and liquidity. As seen on Slide 31, at the end of December, we had $737 million of net debt, with $346 million in available liquidity. We reduced net debt by $131.5 million in 2020, which included the proceeds received from the KJCC divestiture. We also remain in compliance with all debt covenants and do not have any significant debt maturities until 2024, when our revolver matures. As of December 31, 2020, total debt was at $784 million.

With those highlights behind us, I'd like to turn it back over to Leroy.

Leroy M. Ball -- President and Chief Executive Officer

Thank you, Mike. In summary, I'm proud to say that every indication shows that Koppers will meet or exceed all major goals that we had set for 2020 prior to the pandemic. Due to all the hard work and dedication of our global workforce, we are on track to achieve a new high of profitability post KJCC to surpass the high-end of our initial 2020 earnings target, to exceed our original net-debt reduction objective of $120 million, and to reduce our net leverage to 3.5, below our pre-pandemic 2020 goal of 3.6 to 3.8. These 2020 achievements are all the more impressive given that our people had to deal with the pandemic and all that came with it and yet they dug deep and persevered.

More than ever, we're confident that placing people first leads to a stronger commitment to our customers, which in turn leads to success in all aspects of our business. Even with everything that was going on in 2020, we improved our underlying safety rates to an all-time best performance, initiated our sustainability journey, strengthened our inclusion and diversity focus, and supported our team members and communities during a shared crisis. Taken together, it makes for a truly historical year.

We are also on a curveball in 2020 but faced with such an unusual an unanticipated set of circumstances, at Koppers, we're still able to deliver strong performance while also working on pushing forward several initiatives focused on the future growth and success of the business in 2021 and beyond, which I look forward to sharing with you in a month's time. This is a validation of our strategy and a reason to celebrate and thank our people around the world.

With that, I'd like to open it up for any questions.

Questions and Answers:

Operator

[Operator Instructions] And our first question today will come from Laurence Alexander with Jefferies. Please go ahead.

Dan Rizzo -- Jefferies -- Analyst

Good morning, guys. It's Dan Rizzo on for Laurence. How are you?

Leroy M. Ball -- President and Chief Executive Officer

Hi, Dan.

Michael J. Zugay -- Chief Financial Officer & Treasurer

Hey, how are you?

Dan Rizzo -- Jefferies -- Analyst

So I mean, without getting any specific numbers, I mean what are your expectations for next year? I mean more of the same or is, I mean are things pausing or?

Leroy M. Ball -- President and Chief Executive Officer

Yeah, I mean we'll be able to get into more detail in a month's time, Dan. I'd say generally, we feel good about 2021. I'd say the trend has actually been -- I think our sentiment has been getting better our feel for 2021 has been getting better and a little more positive over the past couple of months. I think certainly we expect to see improvement in 2021, I'd say more of the same. I mean...

Dan Rizzo -- Jefferies -- Analyst

I mean more or the same growth.

Leroy M. Ball -- President and Chief Executive Officer

Yeah, you can say. We're in heavily concentrated markets where we hold already high share. So that does make growth within existing core businesses challenging, but there are still significant opportunities for us to actually continue to grow share in those places and certainly, there's additional opportunities for us to continue to reduce our cost footprint. So all those should -- even though the topline growth is probably going to -- will only be in the low-single digits, we should expect something better than that as it works its way down into our EBITDA.

From an EPS standpoint, the challenging part for us is tax rate moves around a little bit, we were helped from it this year a little bit. I'm not sure we're going to get that same help in 2021, and so that could make -- it could make improving on our EPS results for this year challenging, but in terms of the underlying fundamentals of the business and the foundation of the business, we expect improvement in 2021. We'll -- and we'll lay that out in February in more detail, as it relates to the segments.

Dan Rizzo -- Jefferies -- Analyst

And then you mentioned some of the income a year, you mentioned a better mix in PC. Could you just put a little color on what that means and this is sustainable. Is this some of the new products you guys kind of announced a couple of years ago that are taking hold or is it something different?

Leroy M. Ball -- President and Chief Executive Officer

Yeah. I'd say it's -- so the MicroPro product is -- it's our biggest product and that's been the one that has led the way for us in terms of volume growth this year. On the industrial side, it's the margins aren't quite as strong. So anytime we're going to have a higher level of concentration into products that go more on the residential side of the business, we'll probably do -- we'll probably see a little better margins from that standpoint.

And then also internationally, there were some things that were a little out of the ordinary this year that I think affected us from a mix standpoint and probably ended up in the long run and ended up helping us out for this year, but when we get back to more of a normal mix, we'll see some of that probably come back and impact margins.

Dan Rizzo -- Jefferies -- Analyst

Okay. And then finally, you mentioned, this is just savings and I guess structural change is really for next few years, have you previously identified how much savings you're gaining right now are temporary versus how much are long term and more just permanent I guess?

Leroy M. Ball -- President and Chief Executive Officer

Yeah. We touched on it, so a little bit on the last call. It's in terms of this -- our savings I'd say for a good bit of them, they're more temporary in nature. In fact, in the final accounting of the $9.5 million reduction for the year, we had basically nothing on the comp and benefits side of things. That's because we, fortunately, do not have to cut back on operations' furlough people.

Our business remained fairly stable and steady throughout overall and we performed at higher levels as well. So there is higher incentive compensation expense rolling through for this year that ultimately led to comp and benefits, more or less being flat year-over-year where our -- the biggest savings for us came was on the travel and entertainment side of things, which is certainly being impacted by the pandemic. And we need to get out and see customers and things like that, and so some of that is going to come back. I think we'll be able to retain some of that because we now have obviously experienced and figured out that there are different ways that we can interact and meet and stuff like that. So we will be able to retain some of the travel and entertainment cost savings, which is the biggest piece of that $9.5 million.

The other piece that was on the legal and consulting side. Consulting, we have a little bit of opportunity to control legal is somewhat outside of our ability to control it. I mean it's going to be driven by the activity that's going on in the various things that we're involved in. And so, again with the pandemic closing down the court systems early on and it slowed a bunch of stuff down, which helped us. But as things pick up back up and move to normal, we would expect that our legal costs will sort of revert to normal as well. So I would say, Dan, really there's only a couple of million dollars.

If that, it probably is sustainable moving forward but again, not necessarily a bad thing. We have -- our business has remained strong, healthy. We need to continue to be able to serve it and serve our customers. And so from that standpoint, I don't worry about the cost end of things, so that's not our problem. SG&A is not our problem, right, there's other areas that we have bigger opportunities in to drive benefits moving forward and that's where we're focused.

Operator

And our next question will come from Chris Howe with Barrington Research. Please go ahead.

Chris Howe -- Barrington Research -- Analyst

Good morning, everyone.

Leroy M. Ball -- President and Chief Executive Officer

Hi, Chris.

Michael J. Zugay -- Chief Financial Officer & Treasurer

Hi, Chris.

Chris Howe -- Barrington Research -- Analyst

Hi. Starting off with the balance sheet, great progression in terms of leverage through the pandemic. You're now at 3.5 times ideally in 2 to 3 times. As we push forward to that comfortable range, and I'd say you're at a range of 2 to 2.5 times, can you talk about your capital allocation priorities given how you see the business today and moving forward and anything there?

Leroy M. Ball -- President and Chief Executive Officer

Yeah. I mean, certainly, when we get down below 3, we'll be able to take a closer and harder look at potentially reinstituting a dividend. So that then comes into play where it hasn't been in play now for a few years. With it, there is a pretty long queue of really attractive capital opportunities that we have to execute on in the organization that, again, can lower cost or provide other market opportunities for us. And so we'll want to -- we'll probably see healthier capital programs, but the incremental dollars spent in that area will be dedicated toward, again, more value-driven projects. So they'll create additional EBITDA and EPS.

We're always continuing to look for acquisition opportunities that make sense. And those are -- you just don't know when those pop up and are really actionable. So it's hard to say, there wasn't a whole lot of activity on that end in 2020. And -- but I would expect, again, as things begin to more normalize, we'll see that funnel open up a little bit. And so if there's opportunities to grow or strengthen our business in particular areas, we'll look to do that. But those are probably the three areas that come to top of mind with the internal capital investment being probably highest on the list.

Chris Howe -- Barrington Research -- Analyst

Very helpful, and my next question. If we dial it back to pre-COVID time, and we look at some of the strategic objectives you outlined previously of $25 million to $40 million in profitability improvements, at that time, it was over three to five years, but regardless of the year time frame, can you perhaps talk about what's left and what's ahead for the company as it pertains to profitability improvement, specifically gaining additional market share in RUPS or further consolidation opportunities that lie ahead?

Leroy M. Ball -- President and Chief Executive Officer

Yeah. Well, I mean, on the RUPS side, specifically, we're investing in North Little Rock, through that plant consolidation. And yeah, there's a part of that is cost-driven in terms of reducing our cost footprint, but there's a big piece of that, that also is about expanding our production capacity and market share. So that's one that as we get to the end of '21 and heading into 2022 is a nice opportunity for us in that space.

The other areas in the rail part of that business are -- some of it relates to what we're doing on the crosstie recovery end of things. There's still other pieces in the crosstie space, but what we want to be careful about is we don't get into a situation of just basically trading customers. With the other competitors out there, it's not -- it's just not a place that makes sense for us. We have a good customer base we're happy with. We believe they're happy with us. We want to continue to serve them in the best way we can. So outside of the growth that we see coming into '22 from what we're doing in North Little Rock, there's a little bit here and there, but that's more of the needle mover there.

On the utility side of things, continuing to grow our footprint in Texas and out in the West, I think, creates a big opportunity for us and we'll be focusing efforts in that area. Performance Chemicals, we've kind of quietly just continued to accumulate business over a number of years. 2020 was not one of those years because of the base business being as strong as it was. We could not afford to take on additional business because we were having difficulty serving the customers that we already had in place. So as we add capacity there and are in a position where we have stabilized the base business and have enough of a buffer, we can then look about adding some additional customers in that space as well. So a number of different opportunities in terms of growing market share beyond 2021. Again, in spite of the fact that we already have a pretty decent share in most of the markets that we operate in.

Chris Howe -- Barrington Research -- Analyst

Great. And one more, if I may. If we look at infrastructure spending and what that may entail under the current administration, how do you see that benefiting the business? You had a record -- a good year of adjusted EBITDA performance in the PC segment. We'll see how that trends in the second half of this calendar year. But perhaps there's some opportunity, whether that's top line or on the profit line when it comes to some of the other segments as it relates to infrastructure spending.

Leroy M. Ball -- President and Chief Executive Officer

Yeah. I mean, we call ourselves a wood technology business, and that is the common thread that runs through all our businesses. But just about everything that we do end up going into an infrastructure market. So there's -- I couldn't sit here and tell you all the specifics of where it may translate into top and bottom-line dollars. But I will confidently tell you that more spending on infrastructure will only help us and certainly not hurt us. So we would welcome anything that comes through that devotes more dollars into the infrastructure space.

Chris Howe -- Barrington Research -- Analyst

Thanks, Leroy.

Leroy M. Ball -- President and Chief Executive Officer

You're welcome. Thank you.

Operator

And our next question will come from Chris Shaw with Monness Crespi. Please go ahead.

Chris Shaw -- Monness, Crespi, Hardt & Co., Inc. -- Analyst

Yeah, good morning, everyone. How you doing?

Leroy M. Ball -- President and Chief Executive Officer

Hi, Chris.

Michael J. Zugay -- Chief Financial Officer & Treasurer

How you doing?

Chris Shaw -- Monness, Crespi, Hardt & Co., Inc. -- Analyst

I think in the past, you guys talked about potential for additional maybe small asset sales. Are those still in the pipeline, I don't want you obviously being specific on them, but is that still a potential for further cash flows and to pay down further debt having going forward?

Leroy M. Ball -- President and Chief Executive Officer

Yeah. I would probably put it more in the -- so the stuff that we have in the pipeline right now is more in the category of selling to pay for capital, the capital expansion in North Little Rock, in particular, right. So looking and selling some of our close sites and the assets associated with them is probably nearest term. In terms of the businesses, we've been open about considering opportunities to move any of the businesses that aren't closely aligned with what our core is. But same time, we've also mentioned that the businesses contribute, they're not businesses that are broke. And so, therefore, if we're going to sell them, we want adequate value. If we're not going to get adequate value, we're not going to sell them. And so we've -- over the past two years, we've tested those waters and truthfully haven't been happy with what we've seen.

And so with that, we're happy to just continue moving forward with what we have. We have a good business portfolio that performs well and we're not about moving businesses for the sake of saying that we move businesses. So we're making great progress on the debt front and the leverage front. Without it, I think we'll continue to work toward that goal, whether we sell a business in the future or not. But based upon the stuff that we've seen over the last year or two, it just isn't compelling enough for us to want to do something like that.

Chris Shaw -- Monness, Crespi, Hardt & Co., Inc. -- Analyst

Got it. And just what's your impression, I guess, for the near-term PC end markets? I mean it looks like we're going to get additional stimulus. It looks like people are going to have to stay pretty close to their homes or if not home, for at least the first half of this year. So I would think -- I mean you sounded vaguely positive on 2021 in general, but what's the PC near term trends are looking like?

Leroy M. Ball -- President and Chief Executive Officer

Yeah. So I think in our end of third-quarter call, may have been actually in one of the monthly update between that, we had talked about the feeling that the business would remain strong if you will, in a short position up through the middle of 2021. And that was looking out close -- nine months, close to a year's time at that point, but that's what all the input we were getting through our customer base, and I was a little wary about that at the time. Here we are five, six months later and the thing, nothing has slowed down.

The forecast and the trend continues to be for a strong business certainly at least through mid-year as was projected. We're trying to look beyond that at this point. Again, I'm being a little bit hesitant for us. Our business did really tick up until I'd say mid-May of last year. So we come into 2021 with some pretty good comps for us in the early part of the year. Where it's going to get a lot more difficult for us is in the end of the second quarter in the back half of the year because it was just so strong. And I'm not sure how long that is going to continue for this year. We do expect a good year for PC, but I remain cautious about the back half of the year and whether we'll be able to maintain levels at the levels that we did in 2020. So we just -- we've been hearing a lot of positive stuff but I'm holding my breath on that one for right now.

Chris Shaw -- Monness, Crespi, Hardt & Co., Inc. -- Analyst

Thanks. And then I think in 2020, I remember there were some coal tar constraint, supply constraints. I think you were importing from Europe or elsewhere. Sizing costs were elevated, is that something that's going to be an opportunity in 2021 to see lower coal tar costs?

Leroy M. Ball -- President and Chief Executive Officer

Potentially. Certainly, there is opportunity and an expectation that we will be able to source more domestically here in the U.S. in '21 than we did in '20. Now, that will, that's always helpful. So that's always helpful on the cost-front because of the dollars that will save and having to get it over here from Europe.

Chris Shaw -- Monness, Crespi, Hardt & Co., Inc. -- Analyst

And then just as I have you, I mean, there is obviously a big trend for EV, and that where all the GM did that today that they want to be all-electric vehicles by 2035 I think.

Leroy M. Ball -- President and Chief Executive Officer

Yeah.

Chris Shaw -- Monness, Crespi, Hardt & Co., Inc. -- Analyst

Any sense like, I don't even know like does that have a big impact on -- it's going to have to obviously have a big impact on electricity generation. I mean that -- will that have any impact on transmission and would that have any impact on electric companies upgrading their things and obviously trying to get all the way down to the utility pole business.

Leroy M. Ball -- President and Chief Executive Officer

Yeah.

Chris Shaw -- Monness, Crespi, Hardt & Co., Inc. -- Analyst

Do you think there's going to be a long-term trend there? I have no sense of that.

Leroy M. Ball -- President and Chief Executive Officer

Yeah, there is still obviously -- is still a very healthy infrastructure to -- that's in place to get power out to homes and businesses that's going to need to remain in place and has been behind in terms of being replaced and maintained. So there's things are moving so quickly right now, certainly on the climate front and we're trying to keep up with everything we have. There is nothing that we've seen or heard at this point that frightens us in terms of our business, but in fact, there is a couple of things that actually excite us about our business in some of the things that we've been working on that may contribute and help in that space.

And so, on balance, I'd say we still feel really good about our business and our business portfolio longer term, and we are constantly trying to push ourselves to obviously operate cleaner with a more environmentally friendly footprint, creating safer products and those sorts of things and that will continue to be our guiding force moving forward. And I think it will serve us well as the world continues down that path. But it is a rapidly evolving space, but we feel good about our position in that space.

Chris Shaw -- Monness, Crespi, Hardt & Co., Inc. -- Analyst

Great. Thank you for entertaining all those questions. Thanks.

Leroy M. Ball -- President and Chief Executive Officer

Yeah. No, you're well. Thank you.

Operator

And this will conclude our question-and-answer session. I'd like to turn the conference back over to Leroy Ball for any closing remarks.

Leroy M. Ball -- President and Chief Executive Officer

Okay. And I want to thank everybody for their interest and participation today. I do look forward to connecting with you again on February 24th, where we will hopefully confirm the results that we -- the preliminary results that we've outlined for you today as well as give you more detail on what we think about 2021 and maybe even beyond that. So thank you again for your time. Please stay safe.

Operator

[Operator Closing Remarks]

Duration: 46 minutes

Call participants:

Quynh McGuire -- Vice President, Investor Relations

Leroy M. Ball -- President and Chief Executive Officer

Michael J. Zugay -- Chief Financial Officer & Treasurer

Dan Rizzo -- Jefferies -- Analyst

Chris Howe -- Barrington Research -- Analyst

Chris Shaw -- Monness, Crespi, Hardt & Co., Inc. -- Analyst

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