KapStone Paper and Packaging Corporation (NYSE:KS) today reported results for the first quarter ended March 31, 2018. As compared to 2017’s first quarter, results for 2018’s first quarter are below:
•Net sales of $799 million up $33 million, or 4 percent
•Net income of $33 million up $27 million, or 446 percent
•Diluted EPS of $0.33 up $0.27 per share, or 450 percent
Non U.S. GAAP financial measures for the 2018 first quarter compared to 2017 are as follows:
•Adjusted EBITDA of $115 million up $34 million, or 42 percent
•Adjusted net income of $42 million up $27 million, or 181 percent
•Adjusted diluted EPS of $0.43 up $0.28 per share, or 187 percent
Matt Kaplan, President and Chief Executive Officer, stated, “Our first quarter results continued the positive momentum we built in the latter half of 2017. Demand for containerboard, corrugated boxes, and kraft paper is strong. We announced a $50 per ton containerboard price increase effective with shipments in mid-March. In addition, we completed a rebuild of one of our boilers at the North Charleston mill which should provide for greater reliability and more efficient operations.
“Victory Packaging, our distribution business, had a solid first quarter and is entering its seasonally strongest quarter of the year.
“We continue to work on the merger with WestRock.”
First Quarter Operating Highlights
Consolidated net sales of $799 million in the first quarter of 2018 increased by $33 million, or 4 percent compared to $766 million for the 2017 first quarter. The increase in net sales is primarily due to higher prices, partially offset by lower sales volume. The Company sold 662,000 tons of paper during the first quarter of 2018 compared to 699,000 tons a year earlier. Volume was lower in the current quarter as mill production was limited due to a boiler upgrade at the Charleston mill which reduced production by approximately 26,000 tons. The Company’s average mill selling price of $719 per ton in the first quarter of 2018 increased by $71 per ton, or about 11 percent compared to the first quarter of 2017 due to higher prices for most products and a favorable product mix. Mill selling prices increased by $21 per ton or 3 percent compared to the fourth quarter of 2017 due to higher specialty product prices and a better product mix.
Net income of $33 million for the 2018 first quarter increased by $27 million, or 446 percent, compared to the 2017 first quarter. The higher earnings primarily reflects:
•Higher selling prices and a better product mix of $48 million,
•Favorable productivity of $10 million mainly due to higher mill production,
•Lower recycled fiber costs of $6 million,
•Non-recurring 2017 costs of $5 million associated with ratifying a union contract at the North Charleston paper mill,
•A $7 million gain on the sale of the former Oakland box plant site, and
•A lower effective income tax rate resulting from the passage of the Tax Cuts and Jobs Act passed in December 2017.
The above items were partially offset by:
•Merger expenses of $14 million,
•Lower sales volume of $7 million,
•$8 million of higher planned maintenance costs, including the boiler upgrade,
•Inflation of $15 million driven by higher virgin fiber costs, freight and compensation,
•$4 million of weather related costs in January 2018 at the North Charleston mill, and
•Higher interest charges of $4 million due to higher interest rates.
more detail at: http://ir.kapstonepaper.com/phoenix.zhtml?c=190219&p=irol-newsArticle&ID=2343297