NORTHBROOK, Ill., Feb. 7, 2018 /PRNewswire/ -- KapStone
Paper and Packaging Corporation (NYSE:KS) today reported
preliminary results for the fourth quarter and year ended
December 31, 2017.
As compared to 2016's fourth quarter, results for 2017's fourth
quarter:
- Net sales of $859 million, up
$81 million, or 10 percent
- Net income of $188 million, up
$169 million, or 924 percent
- Diluted EPS of $1.90, up
$1.71 per share, or 900 percent
Non U.S. GAAP financial measures for 2017's fourth quarter as
compared to 2016's fourth quarter:
- Adjusted EBITDA of $136 million,
up $44 million, or 48 percent
- Adjusted net income of $50
million, up $27 million, or
115 percent
- Adjusted diluted EPS of $0.51, up
$0.27 per share, or 113 percent
As compared to the year ended December
31, 2016, results for the year ended December 31, 2017:
- Net sales of $3,316 million, up
$239 million, or 8 percent
- Net income of $244 million, up
$158 million, or 182 percent
- Diluted EPS of $2.47 up
$1.59 per share, or 181 percent
Non U.S. GAAP financial measures for the year ended December 31, 2017 as compared to 2016's
year:
- Adjusted EBITDA of $437 million,
up $53 million, or 14 percent
- Adjusted net income of $130
million, up $23 million, or 21
percent
- Adjusted diluted EPS of $1.32, up
$0.22 per share, or 20 percent
Matthew Kaplan, President and
Chief Executive Officer, stated, "Eleven years ago, we began a
journey to build a world-class paper and packaging company with the
resources and skills of our largest competitors— that focused on
maximization of stockholder value and that treated our customers
and employees like a small, family-oriented company. On
January 29, 2018, we announced
signing a definitive agreement to be acquired by WestRock for
$35.00 per share, subject to
customary closing conditions, including KapStone stockholder
approval. We believe this acquisition is a compelling transaction
for our stockholders and an exciting development for both KapStone
and WestRock."
Fourth Quarter Operating Highlights
Consolidated net sales of $859
million in the fourth quarter of 2017 were $81 million higher than 2016, reflecting higher
prices for containerboard and corrugated products. Tons of paper
sold in the paper and packaging segment increased to 731,000 tons
during the fourth quarter of 2017 compared to 724,000 tons a year
earlier. The Company's average mill selling price of $698 per ton in the fourth quarter of 2017 was
higher by $81 per ton compared to the
fourth quarter of 2016 due to the combined impact of higher export
and domestic containerboard selling prices and kraft paper
prices. Average mill selling prices were flat compared to the
third quarter of 2017. Distribution segment sales increased by
$14 million compared to the prior
year quarter due to higher prices, partially offset by lower
volume.
Net income of $188 million for the
2017 fourth quarter increased by $169
million compared to the 2016 fourth quarter. The current
quarter includes a provisional tax benefit of $144 million associated with the passage of the
Tax Cuts and Jobs Act on December 22,
2017. The tax benefit consists of a non-cash adjustment to
re-measure deferred income tax liabilities at the new 21 percent
federal statutory income tax rate compared to the prior 35 percent
income tax rate.
Adjusted EBITDA for the fourth quarter of 2017 of $136 million increased by $44 million compared to the fourth quarter of
2016 as follows:
- $57 million due to higher selling
prices,
- Higher sales volume of $3
million,
- Productivity improvements and cost savings of $10 million, and
- $6 million due to the impact of
Hurricane Matthew in 2016, which did not recur.
These items were partially offset by:
- Higher compensation and benefit costs of $16 million,
- $7 million of higher planned
maintenance outages, and
- Inflation of $8 million driven by
higher OCC costs.
The effective income tax rate for the fourth quarter of 2017,
when excluding the impact of the new tax law, was 31.4 percent
compared to 32.6 percent for the fourth quarter of 2016.
Full Year Operating Highlights
Consolidated net sales for the year ended December 31, 2017, were $3,316 million, an increase of 8 percent,
compared to 2016 sales of $3,077
million. The increase was due to higher prices, a
better product mix and higher volumes in the paper and packaging
segment. The Company's average mill selling price of $677 per ton in 2017 was higher by $54 per ton compared to 2016 due to the combined
impact of higher export and domestic containerboard selling prices
and kraft paper prices. Distribution segment sales increased by
$31 million compared to 2016 due to
higher prices, partially offset by lower volume.
Net income of $244 million for the
year ended December 31, 2017 was
higher than 2016's $86 million by
$158 million. The increase was
mainly due to a provisional tax benefit of $144 million based on the new tax law enacted on
December 22, 2017.
Adjusted EBITDA for 2017 of $437
million increased by $53
million compared to 2016 as follows:
- $155 million due to higher
selling prices,
- Higher sales volume and improved operating performance of
$10 million, and
- $6 million due to the impact of
Hurricane Matthew in 2016, which did not recur.
These items were partially offset by:
- $35 million of higher
compensation and benefit costs,
- Inflation of $43 million driven
by higher OCC costs, and
- Higher planned maintenance outage costs of $14 million.
The effective income tax rate for the year ended December 31, 2017, when excluding the impact of
the new tax law, was 33.2 percent compared to 32.7 percent for
2016.
Cash Flow and Working Capital
Cash and cash equivalents increased by $17 million during the current quarter to
$28 million at December 31, 2017. The Company generated
$150 million of net cash from
operating activities during the fourth quarter of 2017. Capital
expenditures in the fourth quarter of 2017 were $30 million. The Company paid $10 million of dividends and made a voluntary
debt repayment to reduce term loan borrowings by $80 million in the fourth quarter of
2017.
Cash and cash equivalents decreased by $1
million during 2017 compared to December 31, 2016, reflecting cash provided by
operating activities of $325 million,
$138 million for capital
expenditures, and $34 million for a
strategic investment to increase mill integration. Cash used by
financing activities totaled $155
million reflecting $155
million of voluntary debt prepayments and $39 million of cash dividends paid to
stockholders, partially offset by $39
million of net proceeds from the receivables credit
facility.
At December 31, 2017, the Company
had approximately $405 million of
working capital and $486 million of
revolver borrowing capacity.
Cancellation of Conference Call
Due to the signing of a definitive agreement to be acquired by
WestRock, the conference call previously scheduled to be held on
Thursday, February 8, 2018 is
cancelled.
About the Company
Headquartered in Northbrook,
IL, KapStone Paper and Packaging Corporation is the fifth
largest producer of containerboard and corrugated packaging
products and is the largest kraft paper producer in the United States. The Company has four paper
mills, 23 converting plants and 60 distribution centers. The
business has approximately 6,400 employees.
Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures,
including "EBITDA", "Adjusted EBITDA", "Adjusted Net Income", and
"Adjusted Diluted EPS" to measure our operating performance.
Management uses these measures to focus on the on-going operations,
and believes they are useful to investors because they enable them
to perform meaningful comparisons of past and present operating
results. The Company believes that EBITDA and Adjusted EBITDA
provide useful information to investors because they improve the
comparability of the financial results between periods and provide
for greater transparency to key measures used to evaluate the
performance of the Company. Management uses EBITDA and Adjusted
EBITDA for evaluating the Company's performance against competitors
and as a primary measure for employees' incentive programs.
Reconciliations of Net Income to EBITDA, EBITDA to Adjusted EBITDA,
Net Income to Adjusted Net Income, and Diluted EPS to Adjusted
Diluted EPS are included in the financial schedules contained in
this press release. However, these measures should not be construed
as an alternative to any other measure of performance determined in
accordance with GAAP.
Forward-Looking Statements
Statements in this news release that are not historical are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements can often be identified by words such as "may," "will,"
"should," "would,' "expect," "project," "anticipate," "intend,"
"plan," "believe," "estimate," "potential," "outlook," or
"continue," the negative of these terms or other similar
expressions. These statements reflect management's current views
and are subject to risks, uncertainties and assumptions, many of
which are beyond the Company's control that could cause actual
results to differ materially from those expressed or implied in
these statements. Factors that could cause actual results to differ
materially include, but are not limited to: (1) industry
conditions; (2) market and economic factors; (3) results of legal
proceedings and compliance costs; (4) the ability to achieve and
effectively manage growth; (5) the ability to pay the Company's
debt obligations; (6) the ability to carry out the Company's
strategic initiatives and manage associated costs; (7) managing
labor relations; (8) realizing the synergies and benefits of
strategic investments; (9) unanticipated business interruptions;
and (10) various factors related to the pending transaction with
WestRock, including but not limited to the ability of KapStone and
WestRock to receive the required regulatory approvals (and the risk
that such approvals may result in the imposition of conditions that
could adversely affect the combined company or the expected
benefits of the transaction), to receive the required approval of
KapStone's stockholders and to satisfy the other conditions to the
closing of the transaction on a timely basis or at all; the
occurrence of events that may give rise to a right of one or both
of the parties to terminate the merger agreement; negative effects
of the announcement or the consummation of the transaction on the
market price of WestRock's or KapStone's common stock and/or on
their respective businesses, financial conditions, results of
operations and financial performance; risks relating to the value
of the shares that may be issued in the transaction, significant
transaction costs and/or unknown liabilities; the possibility that
the anticipated benefits from the proposed transaction cannot be
realized in full or at all or may take longer to realize than
expected; risks associated with third party contracts containing
consent and/or other provisions that may be triggered by the
proposed transaction; risks associated with transaction-related
litigation; the possibility that costs or difficulties related to
the integration of KapStone's operations with those of WestRock
will be greater than expected; the outcome of legally required
consultation with employees, their works councils or other employee
representatives; and the ability of KapStone and the combined
company to retain and hire key personnel. Further information on
these and other risks and uncertainties is provided under Part I,
Item 1A "Risk Factors" in the Company's Annual Report on Form 10-K
for the year ended December 31, 2016
and elsewhere in reports that the Company files with the SEC. These
filings can be found on KapStone's Web site at
http://www.kapstonepaper.com and the SEC's Web site at www.sec.gov.
Forward-looking statements included herein speak only as of the
date hereof and the Company disclaims any obligation to revise or
update such statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events or
circumstances.
KapStone Paper and
Packaging Corporation
|
Consolidated
Statements of Income
|
(In thousands,
except share and per share amounts)
|
(Preliminary and
Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Net
sales
|
$
858,682
|
|
$
777,495
|
|
|
$
3,315,660
|
|
$
3,077,257
|
|
|
|
|
|
|
|
|
|
Cost and
expenses:
|
|
|
|
|
|
|
|
|
Cost of sales,
excluding depreciation and amortization
|
588,676
|
|
563,953
|
|
|
2,354,523
|
|
2,214,872
|
Depreciation
and amortization
|
47,937
|
|
46,685
|
|
|
186,801
|
|
182,213
|
Freight and
distribution expenses
|
74,201
|
|
71,236
|
|
|
299,872
|
|
279,023
|
Plant closure
costs
|
1,241
|
|
-
|
|
|
10,208
|
|
-
|
Selling,
general and administrative expenses
|
68,566
|
|
51,720
|
|
|
265,131
|
|
224,127
|
Multiemployer
pension plan withdrawal expense
|
-
|
|
6,376
|
|
|
-
|
|
6,376
|
Operating
income
|
78,061
|
|
37,525
|
|
|
199,125
|
|
170,646
|
|
|
|
|
|
|
|
|
|
Foreign exchange
(gain) / loss
|
508
|
|
737
|
|
|
(993)
|
|
2,255
|
Equity method
investments income
|
(375)
|
|
(548)
|
|
|
(1,752)
|
|
(548)
|
Loss on debt
extinguishment
|
674
|
|
-
|
|
|
1,305
|
|
679
|
Interest expense,
net
|
14,077
|
|
10,113
|
|
|
52,282
|
|
40,078
|
Income before
provision (benefit) for income taxes
|
63,177
|
|
27,223
|
|
|
148,283
|
|
128,182
|
Provision (benefit)
for income taxes
|
(124,532)
|
|
8,885
|
|
|
(95,220)
|
|
41,930
|
Net
income
|
$
187,709
|
|
$
18,338
|
|
|
$
243,503
|
|
$
86,252
|
|
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
|
|
|
Basic
|
$
1.94
|
|
$
0.19
|
|
|
$
2.51
|
|
$
0.89
|
Diluted
|
$
1.90
|
|
$
0.19
|
|
|
$
2.47
|
|
$
0.88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of shares
outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
97,003,931
|
|
96,581,703
|
|
|
96,859,516
|
|
96,533,368
|
Diluted
|
98,815,063
|
|
97,888,469
|
|
|
98,615,101
|
|
97,777,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective income tax
rate
|
-197.1%
|
|
32.6%
|
|
|
-64.2%
|
|
32.7%
|
Supplemental
Information
|
GAAP to Non-GAAP
Reconciliations
|
($ in thousands,
except share and per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
Net Income (GAAP)
to EBITDA (Non-GAAP) to Adjusted EBITDA (Non-GAAP):
|
|
|
|
|
|
|
|
|
Net income
(GAAP)
|
$
187,709
|
|
$
18,338
|
|
|
$
243,503
|
|
$
86,252
|
Interest
expense, net
|
14,077
|
|
10,113
|
|
|
52,282
|
|
40,078
|
Provision (benefit) for income taxes
|
(124,532)
|
|
8,885
|
|
|
(95,220)
|
|
41,930
|
Depreciation and amortization
|
47,937
|
|
46,685
|
|
|
186,801
|
|
182,213
|
EBITDA
(Non-GAAP)
|
$
125,191
|
|
$
84,021
|
|
|
$
387,366
|
|
$
350,473
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
2,234
|
|
1,750
|
|
|
14,910
|
|
8,938
|
Acquisition,
integration, start-up and other expenses
|
243
|
|
2,123
|
|
|
7,440
|
|
6,338
|
Longview piping
inspection settlement
|
–
|
|
–
|
|
|
2,034
|
|
–
|
Union contract
ratification cost
|
–
|
|
–
|
|
|
5,925
|
|
–
|
Plant closure
costs
|
1,241
|
|
–
|
|
|
10,208
|
|
–
|
Loss on asset
disposals
|
213
|
|
–
|
|
|
2,173
|
|
2,270
|
Change in fair value
of contingent consideration liability
|
6,134
|
|
(2,979)
|
|
|
5,794
|
|
1,600
|
Severance
expenses
|
–
|
|
533
|
|
|
–
|
|
7,560
|
Multiemployer pension
plan withdrawal expense
|
–
|
|
6,376
|
|
|
–
|
|
6,376
|
Loss on debt
extinguishment
|
674
|
|
–
|
|
|
1,305
|
|
679
|
Accumulated EBITDA
adjustments
|
10,739
|
|
7,803
|
|
|
49,789
|
|
33,761
|
Adjusted EBITDA
(Non-GAAP)
|
$
135,930
|
|
$
91,824
|
|
|
$
437,155
|
|
$
384,234
|
|
|
|
|
|
|
|
|
|
Net Income (GAAP)
to Adjusted Net Income (Non-GAAP):
|
|
|
|
|
|
|
|
|
Net income
(GAAP)
|
$
187,709
|
|
$
18,338
|
|
|
$
243,503
|
|
$
86,252
|
Accumulated EBITDA
adjustments
|
10,739
|
|
7,803
|
|
|
49,789
|
|
33,761
|
Accumulated tax
adjustments
|
(4,027)
|
|
(2,926)
|
|
|
(18,671)
|
|
(12,660)
|
Tax impact of Tax
Cuts and Jobs Act
|
(144,387)
|
|
-
|
|
|
(144,387)
|
|
-
|
Adjusted Net
Income (Non-GAAP)
|
$
50,034
|
|
$
23,215
|
|
|
$
130,234
|
|
$
107,353
|
|
|
|
|
|
|
|
|
|
Diluted EPS (GAAP)
to Adjusted Diluted EPS (Non-GAAP):
|
|
|
|
|
|
|
|
|
Diluted earnings per
share (GAAP)
|
$
1.90
|
|
$
0.19
|
|
|
$
2.47
|
|
$
0.88
|
Accumulated EBITDA
adjustments
|
0.11
|
|
0.08
|
|
|
0.50
|
|
0.35
|
Accumulated tax
adjustments
|
( 0.04)
|
|
( 0.03)
|
|
|
( 0.19)
|
|
( 0.13)
|
Tax impact of Tax
Cuts and Jobs Act
|
( 1.46)
|
|
-
|
|
|
( 1.46)
|
|
-
|
Adjusted Diluted
EPS (Non-GAAP)
|
$
0.51
|
|
$
0.24
|
|
|
$
1.32
|
|
$
1.10
|
KapStone Paper and
Packaging Corporation
|
Consolidated
Balance Sheets
|
(In
thousands)
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
2017
|
|
2016
|
|
|
(Preliminary and
Unaudited)
|
|
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and
cash equivalents
|
$
28,065
|
|
$
29,385
|
|
Trade
accounts receivable, net of allowances
|
443,462
|
|
392,962
|
|
Other
receivables
|
23,289
|
|
13,562
|
|
Inventories
|
315,575
|
|
322,664
|
|
Prepaid
expenses and other current assets
|
17,470
|
|
10,247
|
|
Total current
assets
|
827,861
|
|
768,820
|
|
|
|
|
|
|
Plant, property and
equipment, net
|
1,453,607
|
|
1,441,557
|
|
Other
assets
|
24,431
|
|
25,468
|
|
Intangible assets,
net
|
297,475
|
|
314,413
|
|
Goodwill
|
720,611
|
|
705,617
|
|
Total
assets
|
$
3,323,985
|
|
$
3,255,875
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Capital lease
obligation
|
$
30
|
|
$
-
|
|
Dividend
payable
|
10,302
|
|
10,052
|
|
Accounts
payable
|
199,574
|
|
189,350
|
|
Accrued
expenses
|
105,951
|
|
76,480
|
|
Accrued compensation
costs
|
75,215
|
|
48,840
|
|
Accrued income
taxes
|
31,458
|
|
15,971
|
|
Total current
liabilities
|
422,530
|
|
340,693
|
|
|
|
|
|
|
Long-term debt, net
of current portion
|
1,374,502
|
|
1,485,323
|
|
Long-term financing
obligations
|
82,199
|
|
–
|
|
Capital lease
obligation
|
4,595
|
|
–
|
|
Pension and
post-retirement benefits
|
14,196
|
|
34,207
|
|
Deferred income
taxes
|
252,101
|
|
405,561
|
|
Other
liabilities
|
36,848
|
|
85,761
|
|
Total other
liabilities
|
1,764,441
|
|
2,010,852
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Common stock $0.0001
par value
|
10
|
|
10
|
|
Additional paid-in
capital
|
291,629
|
|
275,970
|
|
Retained
earnings
|
894,061
|
|
689,668
|
|
Accumulated other
comprehensive loss
|
(48,686)
|
|
(61,318)
|
|
Total stockholders'
equity
|
1,137,014
|
|
904,330
|
|
Total liabilities and
stockholders' equity
|
$
3,323,985
|
|
$
3,255,875
|
|
KapStone Paper and
Packaging Corporation
|
Consolidated
Statement of Cash Flows
|
(In
thousands)
|
(Preliminary and
Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
Operating
activities:
|
|
|
|
|
|
|
|
|
Net
income
|
$
187,709
|
|
$
18,338
|
|
|
$
243,503
|
|
$
86,252
|
Adjustments to reconcile net income to net cash provided
by
|
|
|
|
|
|
|
|
|
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation of plant and equipment
|
40,193
|
|
39,175
|
|
|
155,903
|
|
149,318
|
Amortization of intangible assets
|
7,744
|
|
7,510
|
|
|
30,898
|
|
32,895
|
Stock-based compensation expense
|
2,234
|
|
1,750
|
|
|
14,910
|
|
8,938
|
Pension
and postretirement
|
(1,321)
|
|
(2,106)
|
|
|
(3,292)
|
|
(3,694)
|
Excess tax
benefit from stock-based compensation
|
–
|
|
57
|
|
|
–
|
|
207
|
Amortization of debt issuance costs
|
1,230
|
|
1,179
|
|
|
4,787
|
|
4,804
|
Loss on
debt extinguishment
|
674
|
|
–
|
|
|
1,305
|
|
679
|
Loss on
disposal of assets
|
1,587
|
|
443
|
|
|
5,372
|
|
3,599
|
Deferred
income taxes
|
(151,678)
|
|
(14,660)
|
|
|
(157,918)
|
|
(14,440)
|
Change
in fair value of contingent consideration liability
|
6,134
|
|
(2,979)
|
|
|
5,794
|
|
1,600
|
Equity
method investments income, net of cash received
|
(375)
|
|
(548)
|
|
|
98
|
|
(548)
|
Plant
closure costs
|
(521)
|
|
–
|
|
|
7,522
|
|
–
|
Provision for bad debts
|
98
|
|
–
|
|
|
3,024
|
|
–
|
Multiemployer pension plan withdrawal expense
|
–
|
|
6,376
|
|
|
–
|
|
6,376
|
Changes
in operating assets and liabilities
|
55,841
|
|
14,998
|
|
|
13,562
|
|
5,934
|
Net cash provided by
operating activities
|
$
149,549
|
|
$
69,533
|
|
|
$
325,468
|
|
$
281,920
|
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
|
Capital expenditures
|
(30,346)
|
|
(27,619)
|
|
|
(138,358)
|
|
(126,865)
|
Purchase of intangible assets
|
–
|
|
(500)
|
|
|
–
|
|
(2,525)
|
Acquisition, net of cash acquired
|
–
|
|
–
|
|
|
(33,500)
|
|
(15,438)
|
Equity method investments
|
–
|
|
(57)
|
|
|
–
|
|
(11,807)
|
Proceeds from the sales of assets
|
472
|
|
–
|
|
|
472
|
|
4,881
|
Net cash (used in)
investing activities
|
$
(29,874)
|
|
$(28,176)
|
|
|
$(171,386)
|
|
$(151,754)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
|
Proceeds from
revolving credit facility
|
$
74,500
|
|
$
97,800
|
|
|
$
422,000
|
|
$
451,000
|
Repayments on
revolving credit facility
|
(77,000)
|
|
(109,300)
|
|
|
(422,000)
|
|
(457,400)
|
Proceeds from
receivables credit facility
|
14,666
|
|
6,445
|
|
|
89,914
|
|
43,001
|
Repayments on
receivables credit facility
|
(23,662)
|
|
(6,675)
|
|
|
(50,338)
|
|
(39,342)
|
Proceeds from
long-term debt
|
–
|
|
–
|
|
|
–
|
|
–
|
Repayments on
long-term debt
|
(80,000)
|
|
–
|
|
|
(155,000)
|
|
(64,687)
|
Repayments on
long-term financial obligations
|
(232)
|
|
–
|
|
|
(495)
|
|
–
|
Payment of loan
amendment costs
|
–
|
|
–
|
|
|
(1,488)
|
|
(2,250)
|
Proceeds from other
current borrowings
|
–
|
|
–
|
|
|
6,214
|
|
–
|
Repayments on other
current borrowings
|
(2,084)
|
|
–
|
|
|
(6,214)
|
|
–
|
Repayments on capital
lease obligation
|
(3)
|
|
–
|
|
|
(22)
|
|
–
|
Cash dividends
paid
|
(9,696)
|
|
(9,735)
|
|
|
(38,722)
|
|
(38,736)
|
Payment of
withholding taxes on vested stock awards
|
(13)
|
|
31
|
|
|
(1,884)
|
|
(810)
|
Proceeds from
exercises of stock options
|
645
|
|
70
|
|
|
1,686
|
|
858
|
Proceeds from
issuance of shares to ESPP
|
–
|
|
–
|
|
|
972
|
|
971
|
Other
|
(25)
|
|
(57)
|
|
|
(25)
|
|
(207)
|
Net cash (used in)
financing activities
|
$(102,904)
|
|
$(21,421)
|
|
|
$(155,402)
|
|
$(107,602)
|
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
16,771
|
|
19,936
|
|
|
(1,320)
|
|
22,564
|
Cash and cash
equivalents-beginning of period
|
11,294
|
|
9,449
|
|
|
29,385
|
|
6,821
|
Cash and cash
equivalents-end of period
|
$
28,065
|
|
$
29,385
|
|
|
$
28,065
|
|
$
29,385
|
KapStone Paper and
Packaging Corporation
|
Operating Segment
Information
|
(In
thousands)
|
(Preliminary and
Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2017
|
Trade
|
|
Inter-
segment
|
|
Total
|
|
Segment
Operating
Income
(Loss)
|
|
Depreciation
and
Amortization
|
|
Capital
Expenditures
|
|
Total Assets
at Dec. 31,
2017
|
Paper and
Packaging
|
$
608,298
|
|
$ 18,397
|
|
$
626,695
|
|
$
85,379
|
|
$
40,280
|
|
$
27,665
|
|
$
2,620,391
|
Distribution
|
250,384
|
|
-
|
|
250,384
|
|
11,046
|
|
5,853
|
|
397
|
|
652,544
|
Corporate
|
-
|
|
-
|
|
-
|
|
(18,364)
|
|
1,804
|
|
2,284
|
|
51,050
|
Intersegment
eliminations
|
-
|
|
(18,397)
|
|
(18,397)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
$
858,682
|
|
$
-
|
|
$
858,682
|
|
$
78,061
|
|
$
47,937
|
|
$
30,346
|
|
$
3,323,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2016
|
Trade
|
|
Inter-
segment
|
|
Total
|
|
Segment
Operating
Income
(Loss)
|
|
Depreciation
and
Amortization
|
|
Capital
Expenditures
|
|
Total
Assets
at Dec. 31,
2016
|
Paper and
Packaging
|
$
541,047
|
|
$ 16,422
|
|
$
557,469
|
|
$
36,103
|
|
$
38,716
|
|
$
24,502
|
|
$
2,541,634
|
Distribution
|
236,448
|
|
-
|
|
236,448
|
|
7,349
|
|
5,869
|
|
415
|
|
658,208
|
Corporate
|
-
|
|
-
|
|
-
|
|
(5,927)
|
|
2,100
|
|
2,702
|
|
56,033
|
Intersegment
eliminations
|
-
|
|
(16,422)
|
|
(16,422)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
$
777,495
|
|
$
-
|
|
$
777,495
|
|
$
37,525
|
|
$
46,685
|
|
$
27,619
|
|
$
3,255,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2017
|
Trade
|
|
Inter-
segment
|
|
Total
|
|
Segment
Operating
Income
(Loss)
|
|
Depreciation
and
Amortization
|
|
Capital
Expenditures
|
|
|
Paper and
Packaging
|
$
2,335,114
|
|
$ 86,509
|
|
$
2,421,623
|
|
$
227,388
|
|
$
155,605
|
|
$
129,360
|
|
|
Distribution
|
980,546
|
|
-
|
|
980,546
|
|
30,204
|
|
23,667
|
|
2,258
|
|
|
Corporate
|
-
|
|
-
|
|
-
|
|
(58,467)
|
|
7,529
|
|
6,740
|
|
|
Intersegment
eliminations
|
-
|
|
(86,509)
|
|
(86,509)
|
|
-
|
|
-
|
|
-
|
|
|
|
$
3,315,660
|
|
$
-
|
|
$
3,315,660
|
|
$
199,125
|
|
$
186,801
|
|
$
138,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2016
|
Trade
|
|
Inter-segment
|
|
Total
|
|
Segment
Operating
Income
(Loss)
|
|
Depreciation
and
Amortization
|
|
Capital
Expenditures
|
|
|
Paper and
Packaging
|
$
2,127,220
|
|
$ 72,089
|
|
$
2,199,309
|
|
$
181,157
|
|
$
151,506
|
|
$
116,022
|
|
|
Distribution
|
950,037
|
|
-
|
|
950,037
|
|
29,296
|
|
23,027
|
|
4,349
|
|
|
Corporate
|
-
|
|
-
|
|
-
|
|
(39,807)
|
|
7,680
|
|
6,494
|
|
|
Intersegment
eliminations
|
-
|
|
(72,089)
|
|
(72,089)
|
|
-
|
|
-
|
|
-
|
|
|
|
$
3,077,257
|
|
$
-
|
|
$
3,077,257
|
|
$
170,646
|
|
$
182,213
|
|
$
126,865
|
|
|
KapStone Paper and
Packaging Corporation
|
Operating Segment
EBITDA and Adjusted EBITDA
|
(In
thousands)
|
(Preliminary and
Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
December 31,
|
|
Year Ended
December 31,
|
Paper and
Packaging
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Segment operating
income
|
|
$
85,379
|
|
$ 36,103
|
|
$ 227,388
|
|
$ 181,157
|
Equity method
investments income
|
|
(375)
|
|
(548)
|
|
(1,752)
|
|
(548)
|
Foreign exchange
(gain) / loss
|
|
(110)
|
|
479
|
|
(919)
|
|
461
|
Loss on debt
extinguishment
|
|
674
|
|
-
|
|
1,305
|
|
-
|
Depreciation and
amortization
|
|
40,280
|
|
38,716
|
|
155,605
|
|
151,506
|
EBITDA
|
|
125,470
|
|
74,888
|
|
384,359
|
|
332,750
|
Severance
expenses
|
|
-
|
|
(448)
|
|
-
|
|
5,550
|
Acquisition,
integration, start-up and other expenses
|
|
1,075
|
|
(550)
|
|
4,381
|
|
1,269
|
Longview piping
inspection settlement
|
|
-
|
|
-
|
|
2,034
|
|
-
|
Plant closure
costs
|
|
1,241
|
|
-
|
|
10,208
|
|
-
|
Loss on asset
disposals
|
|
213
|
|
-
|
|
858
|
|
1,710
|
Union contract
ratification costs
|
|
-
|
|
-
|
|
5,925
|
|
-
|
Loss on debt
extinguishment
|
|
674
|
|
-
|
|
1,305
|
|
-
|
Multiemployer pension
plan withdrawal expense
|
|
-
|
|
6,376
|
|
-
|
|
6,376
|
Adjusted
EBITDA
|
|
$ 128,673
|
|
$ 80,266
|
|
$ 409,070
|
|
$ 347,655
|
Adjusted EBITDA
margin
|
|
20.5%
|
|
14.4%
|
|
16.9%
|
|
15.8%
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
December 31,
|
|
Year Ended
December 31,
|
Distribution
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Segment operating
income
|
|
$
11,046
|
|
$
7,349
|
|
$
30,204
|
|
$
29,296
|
Foreign exchange
(gain) / loss
|
|
618
|
|
258
|
|
(74)
|
|
1,794
|
Depreciation and
amortization
|
|
5,853
|
|
5,869
|
|
23,667
|
|
23,027
|
EBITDA
|
|
16,281
|
|
12,960
|
|
53,945
|
|
50,529
|
Acquisition,
integration, start-up and other expenses
|
|
(1,343)
|
|
2,126
|
|
371
|
|
3,780
|
Loss on asset
disposals
|
|
-
|
|
-
|
|
1,315
|
|
-
|
Severance
expenses
|
|
-
|
|
981
|
|
-
|
|
1,614
|
Adjusted
EBITDA
|
|
$
14,938
|
|
$ 16,067
|
|
$
55,631
|
|
$
55,923
|
Adjusted EBITDA
margin
|
|
6.0%
|
|
6.8%
|
|
5.7%
|
|
5.9%
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
December 31,
|
|
Year Ended
December 31,
|
Corporate
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Segment operating
(loss)
|
|
$ (18,364)
|
|
$ (5,927)
|
|
$ (58,467)
|
|
$ (39,807)
|
Loss on debt
extinguishment
|
|
-
|
|
-
|
|
-
|
|
679
|
Depreciation and
amortization
|
|
1,804
|
|
2,100
|
|
7,529
|
|
7,680
|
EBITDA
|
|
(16,560)
|
|
(3,827)
|
|
(50,938)
|
|
(32,806)
|
Stock-based
compensation expense
|
|
2,234
|
|
1,750
|
|
14,910
|
|
8,938
|
Acquisition,
integration, start-up and other expenses
|
|
511
|
|
547
|
|
2,688
|
|
1,289
|
Loss on asset
disposals
|
|
-
|
|
-
|
|
-
|
|
560
|
Change in fair value
of contingent consideration liability
|
|
6,134
|
|
(2,979)
|
|
5,794
|
|
1,600
|
Loss on debt
extinguishment
|
|
-
|
|
-
|
|
-
|
|
679
|
Severance
expenses
|
|
-
|
|
-
|
|
-
|
|
396
|
Adjusted
EBITDA
|
|
$
(7,681)
|
|
$ (4,509)
|
|
$ (27,546)
|
|
$ (19,344)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
December 31,
|
|
Year Ended
December 31,
|
Consolidated
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Segment operating
income
|
|
$
78,061
|
|
$ 37,525
|
|
$ 199,125
|
|
$ 170,646
|
Equity method
investments income
|
|
(375)
|
|
(548)
|
|
(1,752)
|
|
(548)
|
Foreign exchange
(gain) / loss
|
|
508
|
|
737
|
|
(993)
|
|
2,255
|
Loss on debt
extinguishments
|
|
674
|
|
-
|
|
1,305
|
|
679
|
Depreciation and
amortization
|
|
47,937
|
|
46,685
|
|
186,801
|
|
182,213
|
EBITDA
|
|
125,191
|
|
84,021
|
|
387,366
|
|
350,473
|
Stock-based
compensation expense
|
|
2,234
|
|
1,750
|
|
14,910
|
|
8,938
|
Acquisition,
integration, start-up and other expenses
|
|
243
|
|
2,123
|
|
7,440
|
|
6,338
|
Longview piping
inspection settlement
|
|
-
|
|
-
|
|
2,034
|
|
-
|
Union contract
ratification costs
|
|
-
|
|
-
|
|
5,925
|
|
-
|
Plant closure
costs
|
|
1,241
|
|
-
|
|
10,208
|
|
-
|
Loss on asset
disposals
|
|
213
|
|
-
|
|
2,173
|
|
2,270
|
Change in fair value
of contingent consideration liability
|
|
6,134
|
|
(2,979)
|
|
5,794
|
|
1,600
|
Loss on debt
extinguishment
|
|
674
|
|
-
|
|
1,305
|
|
679
|
Severance
expenses
|
|
-
|
|
533
|
|
-
|
|
7,560
|
Multiemployer pension
plan withdrawal expense
|
|
-
|
|
6,376
|
|
-
|
|
6,376
|
Adjusted
EBITDA
|
|
$ 135,930
|
|
$ 91,824
|
|
$ 437,155
|
|
$ 384,234
|
KapStone Paper and
Packaging Corporation
|
Summary of
Interest Expense, net
|
(In
thousands)
|
(Preliminary and
Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
December 31,
|
|
Year Ended
December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Interest on term
loans and revolver
|
|
$
9,862
|
|
$
7,496
|
|
$ 39,009
|
|
$ 31,599
|
Interest on
receivables securitization facility
|
|
1,681
|
|
1,500
|
|
5,618
|
|
3,940
|
Sub-total
|
|
11,543
|
|
8,996
|
|
44,627
|
|
35,539
|
|
|
|
|
|
|
|
|
|
Amortization of debt
issuance costs
|
|
1,230
|
|
1,179
|
|
4,787
|
|
4,804
|
Implicit interest on
long-term financing obligations
|
|
1,529
|
|
-
|
|
3,305
|
|
-
|
Interest on capital
lease obligation
|
|
133
|
|
-
|
|
489
|
|
-
|
Other
interest
|
|
13
|
|
16
|
|
76
|
|
7
|
Capitalized
interest
|
|
(326)
|
|
(36)
|
|
(816)
|
|
(187)
|
Interest
income
|
|
(45)
|
|
(42)
|
|
(186)
|
|
(85)
|
Total interest
expense, net
|
|
$ 14,077
|
|
$ 10,113
|
|
$ 52,282
|
|
$ 40,078
|
View original
content:http://www.prnewswire.com/news-releases/kapstone-reports-2017-fourth-quarter-and-full-year-results-300594730.html
SOURCE KapStone Paper and Packaging Corporation