KapStone Reports Second Quarter Results

KapStone Paper and Packaging Corporation (NYSE:KS) today reported results for the second quarter ended June 30, 2017. As compared to 2016’s second quarter, results for 2017’s second quarter are below:
•Net sales of $823 million up $38 million, or 5 percent
•Net income of $20 million down $1 million, or 5 percent
•Diluted EPS of $0.20 down $0.01 per share, or 5 percent

Non U.S. GAAP financial measures for the 2017 second quarter compared to 2016 are as follows:
•Adjusted EBITDA of $100 million up $3 million, or 3 percent
•Adjusted net income of $27 million up $1 million, or 3 percent
•Adjusted diluted EPS of $0.27, flat to 2016

Matt Kaplan, President and Chief Executive Officer, stated, “KapStone’s operations performed better in the second quarter with our mills producing 688,000 tons of paper, or nearly three percent more than 2016, despite the loss from an unplanned mill outage.  Demand for our products is strong, and we have been able to successfully implement price increases in the majority of our product lines.  Product mix continues to improve as we rely less on exports with our growing domestic demand.”

Second Quarter Operating Highlights
Consolidated net sales of $823 million in the second quarter of 2017 increased by $38 million, or 5 percent, compared to $785 million for the 2016 second quarter. Revenue growth in the paper and packaging segment resulted from higher prices and volume. The Company’s average mill selling price of $661 per ton in the second quarter of 2017 increased by $37 per ton, or about 6 percent, compared to the second quarter of 2016 due to higher domestic and export containerboard prices, higher specialty paper prices and a more favorable product mix. Revenues in the distribution segment increased $8 million, mainly due to higher prices.

Operating income of $41 million for the 2017 second quarter decreased by $2 million, or 5 percent, compared to the 2016 second quarter. The lower operating earnings primarily reflect higher fiber costs due to significantly higher OCC costs, the reinstatement of certain employee benefits, higher stock compensation costs, higher manufacturing costs, higher freight costs due to lower export shipments, and higher management incentives; partially offset by higher prices for domestic and export containerboard and kraft paper and lower severance charges.

Interest expense, net, was $12 million for the second quarter of 2017, up $2 million from a year ago, as a result of higher interest rates and debt levels. Our weighted average interest rate as of June 30, 2017 is 2.8 percent compared to 2.1 percent as of June 30, 2016.

The effective income tax rate for the 2017 second quarter was 33.9 percent compared to 36.5 percent for the 2016 second quarter. Results in the 2016 second quarter included an unfavorable adjustment for a state tax examination.
more detail at:  http://ir.kapstonepaper.com/phoenix.zhtml?c=190219&p=irol-newsArticle&ID=2289105

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