Thank you for joining us for our next Midwest Ideas Conference presentation. Presenting next is Koppers Holdings Inc., which trades on the New York Stock Exchange under the symbol KOP. Representing the company today is their Chief Accounting Officer, Brad Pearce. Brad.
Okay, thank you. Yeah, it's good to be here today. I appreciate you coming by to hear a little bit about Koppers. Again, my name is Brad Pearce, Chief Accounting Officer. I've been with Koppers for 19 years. I've seen quite a bit of a change in the company over those 19 years. What I hope to accomplish today is obviously to give you an overview of Koppers, help you understand the company, and some of the things that we think create a simple, straightforward game plan for Koppers and what we can bring, which is strong profitability. We generate meaningful cash flow. We'll be talking about the cash flow that the company has been able to generate over the years, and all that helps to create shareholder value. With that, just again, just remind everybody about our forward-looking disclosures.
Certain comments might be characterized as forward-looking statements under the Private Securities Litigation Reform Act of 1995. The company assumes no obligation to update any of the forward-looking statements made during this presentation. Slide four presents the investment thesis for Koppers. There are really five things we want to have you keep in mind. First is our strategy. We came up with a strategy in 2021 that was going to take us through 2025. That strategy was really built upon focused capital investments that the company had planned on making to help grow the company and improve our profitability. We've essentially changed, we've sort of completed that building phase. Now we are in the expand and optimize phase. That means from a cash flow perspective, a lot of that heavy capital spending that we incurred at the beginning of that 2021 cycle is now behind us.
As we get further into the presentation, you'll see how our capital spending plans are quite a bit lower, at least now and going forward in the near term, which will help generate a very positive cash flow for the company to invest in other ways, including return to shareholders. Finally, we do have a very experienced management team. If you look at the individuals at the top of the company, many of them date back many years with Koppers. We've had a lot of stability at the top of the company. That has, again, enabled us to grow over the years. Slide five talks a little bit about our market-leading position in some critical end markets. Particularly, we provide critical products that are used in private and public infrastructure. That demand for infrastructure build is helping to drive our business.
You can see on the left side, we list our four business units that we break our company down into. The first is our Railroad and Utility Products and Services business unit. This business is really focused on the manufacturing of wooden crossties, which are used by Class one railroads and all other short line railroads in the U.S. The important thing to consider here is that we supply all six of the Class one railroads in North America. Our Utility and Industrial Products segment is closely aligned with our railroad business, mainly because the manufacturing process is very similar. What happens with the utility business is where you're manufacturing wooden utility poles, which are obviously used by both the large publicly owned utility companies, as well as a lot of smaller locally owned utilities or co-op utilities in the U.S. We're a leading supplier in these markets.
Not only is that business located in the U.S., but it's also in Australia. The third business unit is our Performance Chemicals business. This business is a producer of wood preservation chemicals. There's now a link between the Performance Chemicals business and our utility business and our railroad business. Our Performance Chemicals business is a global leader in that space, both from a research perspective as well as being a supplier. It's important to note we have great market presence in North America related to that business. We do provide chemical to the 10 largest lumber treating companies in the U.S. Finally, our Carbon Materials and Chemicals business has a direct link back to our railroad business. What the Carbon Materials and Chemicals business does is it is a chemical operation.
It acquires a byproduct from the metallurgical coking process, refines that product into a number of different products, the most important to us being creosote, which is sold to our railroad business. That is used, again, for the treatment of wooden crossties. Slide six provides a little bit more breakdown and some financial information on each of the segments. You can see we combine our railroad and utility business into the same reporting segment, which is railroad and utility products and services, or RUPS. This business is roughly half of our total company revenue. It totals around $950 million. The footprint of this business is we operate eight wood treatment plants in North America. Seven of them are located in the U.S., and one is located up in Canada.
Our utility business is we operate seven plants in the U.S., most of those located in the southeastern part of the U.S., which is where our main market is. I also mentioned this business operates in Australia. We have four utility pole treating plants in Australia. You'll see a theme that I talk about probably throughout this presentation, which is a little bit about the vertical integration that our business units have with each other. If you look at the railroad business, it's buying one of its key raw materials, creosote. It purchases that from our Carbon Materials and Chemicals segment. Our utility pole business purchases two treatment chemicals from our Performance Chemicals business.
We think that is an important aspect of the company, both from shareholder value, but as well, I think it's extremely important to our customers, knowing that they have that surety of supply on their critical raw materials. The Performance Chemicals business, which last year was around $700 million of revenue, is our highest EBITDA margin business. Last year it was just over 20%. This year it's running a little bit lower, around 18%. This business is unique compared to our other businesses in that it has a patented wood treatment technology, which is a chemical that is basically used to treat residential lumber. The product is called MicroPro, and it is the predominant residential wood treatment chemical that's used.
If you happen to walk into the lumber section of a Home Depot or a Lowe's and look at the treated lumber section, it's very highly likely that that is, again, treated with our chemical, either chemical that we've manufactured and sold or that we've licensed, again, to another manufacturer to produce. We think that gives us, again, a key competitive advantage that that patent, right now, extends out to 2029. We've been successful over the past years on improving the formulation, modifying it, and getting the patent extended out into the future. This business also has a critical element of having R&D capabilities of working on and designing next generation wood treatment chemicals. The Carbon Materials and Chemicals segment, that's our smallest segment, between $400 million and $500 million of revenue. We operate three plants in that business unit.
One's located in the U.S., actually not too far from here, in Stickney, Illinois, is where our plant is. One in Denmark and one in Australia. This business unit is key to our vertical integration story in that basically all of the creosote that is produced in both the U.S. and Europe is used internally by Koppers in our railroad business. We think that's very important to our customers to ensure that they have surety of supply on a chemical that is becoming, the supply of it is becoming less and less as we move forward with changing industries. Slide seven talks a little bit about the balanced portfolio that Koppers has, which we think is a real benefit to the company. It creates situations where we can have countercyclicality in our different businesses.
A couple of the key things I wanted to point out here is both the utility business and the railroad business, the railroad crosstie business. Those tend to have fairly steady demand year- over- year. If you look at utility poles, there's 140 million or so utility poles installed across the U.S. Every year, two to three million of those poles just need to be replaced either through age, or through damage, right? On the crosstie side, if you go back historically, going back 10 years, between 18 and 22 million crossties get replaced every year just through the railroad's maintenance programs, right? Obviously, rail safety is critical to the railroads. As part of that, they need to make sure that their tracks have integrity. As a result, they need to have a sort of an annual recurring replacement and maintenance plan on their tracks.
From a performance chemical side, that business is largely, the demand for our products is largely driven by the repair and remodeling markets. If you look, go back to a five-year period, we all know what happened during the pandemic. Everybody was investing in their homes. That period was a tremendous period of growth for our company from a volume perspective. Some of that spending is down a little bit now, but that spending on repair and remodeling tends to be pretty resilient year over year because, for most people, their largest investment is their home, and they will invest in the upkeep of their home. Looking a little bit, I guess, at some of the charts on there, what I want to draw to everybody's attention is the different colors, and kind of how balanced the company is, both from an end market perspective, right?
We participate in a number of different markets, meaning we don't necessarily rely on one particular market year in and year out for our ability to generate cash and profit. From a geographical perspective, around 70% of our business is located in the U.S., with the other 30% internationally. We do have some balance there from a geographical perspective. Finally, kind of looking at sales and adjusted EBITDA by segment, you can see significant contributions by each one of those segments. Slide nine talks a bit about a project that we currently have ongoing at Koppers. We've termed the initiative to be Project Catalyst. This is a strategic transformation process that we're going through. It was announced in February, really got kicked off in March of this year, and we're currently in the middle of it, right?
Basically, at its core, Project Catalyst is trying to measure, again, how we measure up to other top performing companies in each area of our company. That extends all the way from commercial to procurement to manufacturing to our corporate support functions. It's a program we are getting help from some outside consultants who are helping take us through this process to identify ideas and where we can improve our processes and where we can perhaps cut costs, do things more efficiently. We haven't yet publicly captured what we think this will save us, other than this process will continue. We see ourselves when we come out of 2027 that it will help drive recurring, sustainable, and achievable EBITDA margins in the business of at least 15%, if not a little bit higher, higher in the teens.
There will be more news coming out on this as we go through the rest of this year and next year. There's a lot of energy in the company right now behind this initiative to really find benefits to the company, both from profitability to enhanced cash flow. Just a quick question, a quick point on sustainability. We are sort of, we believe, kind of uniquely positioned to participate in what we call the circular economy where things get used and reused. Again, huge focus in the business on using wood as a raw material, wood being a renewable resource. Our Carbon Materials and Chemicals business is making its product from a byproduct from the metallurgical coking process. Again, it's finding a use for that product rather than just disposing of it.
Finally, our Railroad and Utility Products and Services business actually has a crosstie recovery business where, at the end of life, we actually collect and dispose in an environmentally correct way, crossties that have met the end of their useful life. Slide 15. I'm not going to go too much in depth about our Q2 results, but I think there were a couple of key highlights coming out of the second quarter, right? One is, I had mentioned Project Catalyst. Really, a lot of this looking at our structure, our costs really got kicked off in the fourth quarter of 2024, where we began to look at headcount, particularly on the corporate side. We went through, in the fourth quarter, a voluntary retirement program.
A number of people across the organization took advantage of that, but the key was to, again, be very careful trying not to just, you know, refill positions. As you can see, from a headcount perspective, our headcount was 11% lower in June of this year compared to April of the prior year. A lot of that has contributed to lower SG&A costs. Those are down 13% compared to a prior year. Importantly, a lot of this is we're looking to generate positive cash flow for the company that can be used in other areas. Our cash flow for Q2 was in excess of $50 million, which puts us well on track to be over $100 million of operating cash flow generation during the year. There is a lot of focus on getting our adjusted EBITDA margins up. We did it through the second quarter.
We achieved greater than 15%, and that's the first time we've gotten there in eight years. That was done in spite of the fact that, from a top line perspective, we're down a little bit. I think a lot of those cost savings are taking hold. Finally, focus on cash flow. We're reducing our capital spend after those couple of years of heavy capital spending. That excess cash is, again, a lot of it's going back to shareholders in dividends and share buybacks, with the primary focus being on debt reduction. Slide 22. I just want to talk a little bit about our capital structure, and then there'll be about 10 minutes left or so, I think, and I can open it up to questions. One of the important things coming out of the second quarter was we extended our revolving credit facility out to 2030.
It's an $800 million facility. Looking again on the five-year horizon, we have sufficient access to capital to help grow the business. We believe we have a balanced approach to our use of cash. If you look at capital expenditures this year, we're only at $22 million through the end of the second quarter. For the full year, we're projecting to be between $52 million and $58 million. If you go back two years, our capital spending, because we were investing in the business on particular projects, we had three consecutive years of over $100 million of capital spending. We have brought that level down. With that excess cash, we are doing a couple of things with it in addition to just, again, focusing on debt paydown. One is, we have been fairly aggressive in share repurchases. Through the second quarter, we've repurchased close to $30 million worth of stock.
For the fourth consecutive year, we increased the quarterly dividend, right? We're now up to $0.08 a quarter or $0.32 a year. With that all, in that focus on cash generation, we're hoping our operating cash flow this year, our target is to get to $150 million. A lot of that, again, is going to go toward reducing debt. Our long-term target is to get below three times, finished the second quarter at three and a half times. We have some work to do. Our leverage bounced up in early 2024 when we made an acquisition in the utility pole area. I think that was it for my prepared remarks. We have about 10 minutes left. Do you have any questions you'd like to ask? Yes.
How do you get some growth in the business? It's kind of been stagnant for years.
Yeah. The question is, how do we get some growth in the business? Because we've been pretty stagnant for a number of years. That's always a particular challenge for our company because if you look at our business units, particularly with the Railroad and Utility Products and Services business, the Performance Chemicals business, and the Carbon Materials and Chemicals business, where we're in those markets, we have very high market share, right? It limits the ability to make acquisitions in that space. Plus, with already high market shares, it's kind of hard to penetrate, right? Customers are always going to want not to have just one sole supplier. As we look at that, that was one of the main reasons why we basically reentered the utility pole market back in 2018. We saw that as being an adjacent business to the ones that we already had.
It's actually a business that we used to be in but had exited a number of years ago. We found a good opportunity to make an acquisition of another company who was working on helping to roll up the industry. They were a number two player in North America. Geographically, the utility pole business is kind of like a regional business. It was located really concentrated in the southeastern part of the U.S., right? We see the utility business as having growth potential because we can expand geographically, moving west in the U.S., right? Also, potentially, probably a lower strategic plan to expand more geographically internationally. I think utility pole provides us a good measure of growth. Our Performance Chemicals business, again, we think there's the potential for growth there, particularly internationally.
We've done a great job over the past 10 years of developing and penetrating the wood treatment business in South America. Countries like Brazil and Chile are now pretty good profit contributors to the company. We see growth. There's still growth potential in our Performance Chemicals business. If you look at the Railroad and Utility Products and Services business and Carbon Materials and Chemicals, that's probably maybe some targeted investments there. Those will both be low growth. The key there is we'll use those as cash generators so that we can invest in areas where we can grow. Yes.
Our projects, talking about CapEx, do you have $100 million in the last couple of years? What was the projects? Are you getting a return from them? What next three years CapEx is going to stay at this $6 million level?
Yeah. So, you know, a lot of the investment in the past years, one key investment we made was in the railroad crosstie business. We actually had two plants that both served one of the railroads. One plant was in North Little Rock, Arkansas. The other plant was in Denver, right? We went to the railroad and said, look, we can invest in a project to basically effectively almost build a state-of-the-art crosstie plant in North Little Rock and serve all of your needs out of that plant because we'll have sort of the most modern technology there. That was probably, you know, around a $60 million - $70 million investment. That plant opened probably two years ago. The key to us there is it enabled us to actually close our Denver plant. Because Denver has grown so much, right, actually sell that property.
That helped fund about a third of that capital project. Yeah, the returns on that project have been very good. Again, it helped us serve, I think, with our customer better. It's a much more efficient processing plant. We made some investments in some actual, you know, kind of new technology in our Denmark plant, which is a Carbon Materials and Chemicals plant, to basically find different ways to process the coal tar to develop sort of a very highly pure carbon product. We believe that product has the potential to make inroads sort of into the electrical battery industry. That's, again, some of the, those are a couple of the investments that we've made. The other investment, again, doesn't show up as CapEx, but we acquired Brown Wood Preserving last year, which was a utility pole processor and a manufacturer. They operated a plant in Alabama.
With that acquisition, that has created opportunities for us to expand up into the Midwest of the country and also a bit into the West because of its connections with the rail system. Those are some of the things we've done. I think from a CapEx spending, as I look out over the three years, I think that the CapEx is going to stay in that $60 million - $70 million range. Most of it really being focused on maintenance, right, of our plants and safety. Okay. All right. It looks like we are at time. I certainly appreciate your attending this session. If you do have any questions for us, feel free to reach out to myself or Quynh McGuire, who's here from our investor relations department. Thank you.