KapStone Paper and Packaging Corporation (NYSE:KS) today reported results for the third quarter ended September 30, 2017. As compared to 2016’s third quarter, results for 2017’s third quarter are below:
•Net sales of $868 million up $92 million, or 12 percent
•Net income of $30 million down $1 million, or 3 percent
•Diluted EPS of $0.30 down $0.02 per share, or 6 percent
Non U.S. GAAP financial measures for the 2017 third quarter are as follows:
•Adjusted EBITDA of $121 million up $13 million, or 12 percent
•Adjusted net income of $38 million up $2 million, or 5 percent
•Adjusted diluted EPS of $0.39 up $0.02 per share, or 5 percent
Matt Kaplan, President and Chief Executive Officer, stated, “Markets for our products are strong. In September of 2017, we announced a $50 per ton price increase, effective with shipments in October 2017, for certain specialty paper products, which when fully realized, should yield approximately $25 million annually of additional revenues.
“During the third quarter, we streamlined our West Coast box operations with the closure of our Oakland, California box plant and distributed its production to our other facilities including our newest plant in Ontario, California. The closure resulted in a $9 million pre-tax charge against earnings.
“Finally, strong operating cash flow of $126 million in the third quarter of 2017 enabled KapStone to make a $75 million prepayment on our term loans. This combined with our improved operating performance resulted in our leverage ratio being reduced to 3.87 times.”
Third Quarter Operating Highlights
Consolidated net sales of $868 million in the third quarter of 2017 were $92 million, or 12 percent higher than the 2016 third quarter. This increase was due to $57 million of higher prices and a more favorable product mix, and higher volume in the paper and packaging segment. Net sales in the distribution segment increased $8 million due to higher prices partially offset by lower volume. The Company’s average mill selling price of $698 per ton in the third quarter of 2017 increased by $72 per ton, or nearly 12 percent, compared to the third quarter of 2016 due to higher domestic and export containerboard prices, and higher kraft paper prices.
Net income of $30 million for the 2017 third quarter was $1 million lower than the 2016 third quarter. The lower earnings primarily reflect the following (all dollar amounts on a pre-tax basis):
•Inflation driven higher recycled fiber costs, salaries and wages of $12 million;
•$9 million of higher planned maintenance outages:
•Higher management incentives and reinstated employee benefits of $12 million;
•A total of $7 million for unplanned boiler downtime, a bad debt charge due to a customer bankruptcy in our distribution segment, and the effects of Hurricanes Harvey and Irma;
•A $9 million charge for the closure of the Oakland, California box plant; and
•Higher interest expense due to higher interest rates on term loans and interest on long-term financial obligations of $5 million.
These items were partially offset by $57 million of significantly higher selling prices and a better product mix, and a $4 million reduction in the fair value of the contingent consideration liability relating to the earn-out for the Victory Packaging acquisition.
The effective income tax rate for the 2017 third quarter was 33.3 percent compared to 28.9 percent for the 2016 third quarter. The 2017 effective income tax rate increased due to higher state income taxes. The 2016 third quarter effective income tax rate was lower due to a favorable discrete tax adjustment reflecting higher energy tax credits.
more detail at: http://ir.kapstonepaper.com/phoenix.zhtml?c=190219&p=irol-newsArticle&ID=2311306