Attached files
| file | filename |
|---|---|
| EX-99.2 - EX-99.2 - KAPSTONE PAPER & PACKAGING CORP | a17-24381_1ex99d2.htm |
| 8-K - 8-K - KAPSTONE PAPER & PACKAGING CORP | a17-24381_18k.htm |
|
FOR FURTHER INFORMATION: |
|
FOR IMMEDIATE RELEASE |
|
Andrea K. Tarbox |
|
Wednesday, October 25, 2017 |
|
Executive Vice President and Chief Financial Officer |
|
|
|
847.239.8812 |
|
|
KAPSTONE REPORTS THIRD QUARTER RESULTS
CASH FLOW ALLOWS FOR $75 MILLION DEBT PREPAYMENT
NORTHBROOK, IL — October 25, 2017 — 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.
Cash Flow and Working Capital
Cash and cash equivalents increased by $4 million during the 2017 third quarter to $11 million at September 30, 2017. Operating activities provided $126 million during the 2017 third quarter, including seasonally improved working capital. Investing activities used $34 million for capital expenditures. Financing activities used $88 million, including a $75 million debt prepayment and $10 million for a cash dividend payment.
On August 10, 2017, our Board of Directors approved a regular $0.10 per share cash dividend which was paid on October 12, 2017.
At September 30, 2017, the Company had approximately $437 million of working capital and $483 million of revolver borrowing capacity.
Conclusion
In summary, Kaplan commented, “As the year winds down, the benefits of the positive momentum related to the strong market should drive positive results in the fourth quarter and beyond. We have high expectations for 2018.”
Conference Call
KapStone will host a conference call at 10:00 a.m. CDT, Thursday, October 26, 2017, to discuss the Company’s financial results for the 2017 third quarter. All interested parties are invited to listen and may do so by either accessing a simultaneous broadcast webcast on KapStone’s website, http://www.kapstonepaper.com, or for those unable to access the webcast, the following dial-in numbers are available:
Domestic: 888-608-7946
International: 484-747-6633
Participant Passcode: 97997521
A presentation to be viewed in conjunction with the call will also be available on our website, http://www.kapstonepaper.com, in the “Investors” section.
Replay of the webcast will be available for 30 days on the Company’s website following the call.
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 it is 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; and (9) unanticipated business disruptions. Further information on these and other risks and uncertainties is provided under 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)
(Unaudited)
|
|
|
Quarter Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net sales |
|
$ |
868,418 |
|
$ |
776,636 |
|
$ |
2,456,978 |
|
$ |
2,299,762 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
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Cost and expenses: |
|
|
|
|
|
|
|
|
| ||||
|
Cost of sales, excluding depreciation and amortization |
|
612,434 |
|
548,811 |
|
1,765,847 |
|
1,650,919 |
| ||||
|
Depreciation and amortization |
|
47,462 |
|
44,954 |
|
138,864 |
|
135,528 |
| ||||
|
Freight and distribution expenses |
|
77,043 |
|
71,750 |
|
225,671 |
|
207,787 |
| ||||
|
Plant closure costs |
|
8,967 |
|
— |
|
8,967 |
|
— |
| ||||
|
Selling, general and administrative expenses |
|
62,767 |
|
56,113 |
|
196,565 |
|
172,407 |
| ||||
|
Operating income |
|
59,745 |
|
55,008 |
|
121,064 |
|
133,121 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Foreign exchange (gain) / loss |
|
(415 |
) |
543 |
|
(1,501 |
) |
1,518 |
| ||||
|
Equity method investments income |
|
(671 |
) |
— |
|
(1,377 |
) |
— |
| ||||
|
Loss on debt extinguishment |
|
631 |
|
679 |
|
631 |
|
679 |
| ||||
|
Interest expense, net |
|
15,164 |
|
10,148 |
|
38,205 |
|
29,965 |
| ||||
|
Income before provision for income taxes |
|
45,036 |
|
43,638 |
|
85,106 |
|
100,959 |
| ||||
|
Provision for income taxes |
|
15,010 |
|
12,620 |
|
29,312 |
|
33,045 |
| ||||
|
Net income |
|
$ |
30,026 |
|
$ |
31,018 |
|
$ |
55,794 |
|
$ |
67,914 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income per share: |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
$ |
0.31 |
|
$ |
0.32 |
|
$ |
0.58 |
|
$ |
0.70 |
|
|
Diluted |
|
$ |
0.30 |
|
$ |
0.32 |
|
$ |
0.57 |
|
$ |
0.70 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Weighted-average number of shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
96,931,315 |
|
96,581,703 |
|
96,811,060 |
|
96,499,771 |
| ||||
|
Diluted |
|
98,707,395 |
|
97,888,469 |
|
98,521,491 |
|
97,639,370 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Effective income tax rate |
|
33.3 |
% |
28.9 |
% |
34.4 |
% |
32.7 |
% | ||||
Supplemental Information
GAAP to Non-GAAP Reconciliations
($ in thousands, except share and per share amounts)
(unaudited)
|
|
|
Quarter Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
| ||||
|
Net Income (GAAP) to EBITDA (Non-GAAP) to Adjusted EBITDA (Non-GAAP): |
|
|
|
|
|
|
|
|
| ||||
|
Net income (GAAP) |
|
$ |
30,026 |
|
$ |
31,018 |
|
$ |
55,794 |
|
$ |
67,914 |
|
|
Interest expense, net |
|
15,164 |
|
10,148 |
|
38,205 |
|
29,965 |
| ||||
|
Provision for income taxes |
|
15,010 |
|
12,620 |
|
29,312 |
|
33,045 |
| ||||
|
Depreciation and amortization |
|
47,462 |
|
44,954 |
|
138,864 |
|
135,528 |
| ||||
|
EBITDA (Non-GAAP) |
|
$ |
107,662 |
|
$ |
98,740 |
|
$ |
262,175 |
|
$ |
266,452 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Stock-based compensation expense |
|
2,650 |
|
1,826 |
|
12,676 |
|
7,188 |
| ||||
|
Acquisition, integration, start-up and other expenses |
|
1,815 |
|
1,674 |
|
7,197 |
|
4,215 |
| ||||
|
Longview piping inspection settlement |
|
— |
|
— |
|
2,034 |
|
— |
| ||||
|
Union contract ratification cost |
|
946 |
|
— |
|
5,925 |
|
— |
| ||||
|
Plant closure costs |
|
8,967 |
|
— |
|
8,967 |
|
— |
| ||||
|
Loss on asset disposals |
|
1,960 |
|
2,270 |
|
1,960 |
|
2,270 |
| ||||
|
Change in fair value of contingent consideration liability |
|
(3,910 |
) |
1,527 |
|
(340 |
) |
4,579 |
| ||||
|
Severance expenses |
|
— |
|
863 |
|
— |
|
7,027 |
| ||||
|
Loss on debt extinguishment |
|
631 |
|
679 |
|
631 |
|
679 |
| ||||
|
Accumulated EBITDA adjustments |
|
13,059 |
|
8,839 |
|
39,050 |
|
25,958 |
| ||||
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
120,721 |
|
$ |
107,579 |
|
$ |
301,225 |
|
$ |
292,410 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net Income (GAAP) to Adjusted Net Income (Non-GAAP): |
|
|
|
|
|
|
|
|
| ||||
|
Net income (GAAP) |
|
$ |
30,026 |
|
$ |
31,018 |
|
$ |
55,794 |
|
$ |
67,914 |
|
|
Accumulated EBITDA adjustments |
|
13,059 |
|
8,839 |
|
39,050 |
|
25,958 |
| ||||
|
Accumulated tax adjustments |
|
(4,897 |
) |
(3,315 |
) |
(14,644 |
) |
(9,734 |
) | ||||
|
Adjusted Net Income (Non-GAAP) |
|
$ |
38,188 |
|
$ |
36,542 |
|
$ |
80,200 |
|
$ |
84,138 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Diluted EPS (GAAP) to Adjusted Diluted EPS (Non-GAAP): |
|
|
|
|
|
|
|
|
| ||||
|
Diluted earnings per share (GAAP) |
|
$ |
0.30 |
|
$ |
0.32 |
|
$ |
0.57 |
|
$ |
0.70 |
|
|
Accumulated EBITDA adjustments |
|
0.14 |
|
0.09 |
|
0.39 |
|
0.27 |
| ||||
|
Accumulated tax adjustments |
|
(0.05 |
) |
(0.04 |
) |
(0.15 |
) |
(0.11 |
) | ||||
|
Adjusted Diluted EPS (Non-GAAP) |
|
$ |
0.39 |
|
$ |
0.37 |
|
$ |
0.81 |
|
$ |
0.86 |
|
KapStone Paper and Packaging Corporation
Consolidated Balance Sheets
(In thousands)
|
|
|
September 30, |
|
December 31, |
| ||
|
|
|
2017 |
|
2016 |
| ||
|
|
|
(Unaudited) |
|
|
| ||
|
Assets |
|
|
|
|
| ||
|
Current assets: |
|
|
|
|
| ||
|
Cash and cash equivalents |
|
$ |
11,294 |
|
$ |
29,385 |
|
|
Trade accounts receivable, net of allowances |
|
468,630 |
|
392,962 |
| ||
|
Other receivables |
|
15,625 |
|
13,562 |
| ||
|
Inventories |
|
333,606 |
|
322,664 |
| ||
|
Prepaid expenses and other current assets |
|
14,810 |
|
10,247 |
| ||
|
Total current assets |
|
843,965 |
|
768,820 |
| ||
|
|
|
|
|
|
| ||
|
Plant, property and equipment, net |
|
1,472,369 |
|
1,441,557 |
| ||
|
Other assets |
|
25,113 |
|
25,468 |
| ||
|
Intangible assets, net |
|
305,219 |
|
314,413 |
| ||
|
Goodwill |
|
720,611 |
|
705,617 |
| ||
|
Total assets |
|
$ |
3,367,277 |
|
$ |
3,255,875 |
|
|
|
|
|
|
|
| ||
|
Liabilities and Stockholders’ Equity |
|
|
|
|
| ||
|
Current liabilities: |
|
|
|
|
| ||
|
Short-term borrowings |
|
$ |
2,500 |
|
$ |
— |
|
|
Other current borrowings |
|
2,084 |
|
— |
| ||
|
Capital lease obligation |
|
29 |
|
— |
| ||
|
Dividend payable |
|
10,215 |
|
10,052 |
| ||
|
Accounts payable |
|
220,147 |
|
189,350 |
| ||
|
Accrued expenses |
|
101,531 |
|
76,480 |
| ||
|
Accrued compensation costs |
|
60,597 |
|
48,840 |
| ||
|
Accrued income taxes |
|
9,983 |
|
15,971 |
| ||
|
Total current liabilities |
|
407,086 |
|
340,693 |
| ||
|
|
|
|
|
|
| ||
|
Long-term debt, net of current portion |
|
1,461,595 |
|
1,485,323 |
| ||
|
Long-term financing obligations |
|
85,840 |
|
— |
| ||
|
Capital lease obligation |
|
4,603 |
|
— |
| ||
|
Pension and post-retirement benefits |
|
29,746 |
|
34,207 |
| ||
|
Deferred income taxes |
|
400,254 |
|
405,561 |
| ||
|
Other liabilities |
|
32,148 |
|
85,761 |
| ||
|
Total other liabilities |
|
2,014,186 |
|
2,010,852 |
| ||
|
|
|
|
|
|
| ||
|
Stockholders’ equity: |
|
|
|
|
| ||
|
Common stock $0.0001 par value |
|
10 |
|
10 |
| ||
|
Additional paid-in capital |
|
288,788 |
|
275,970 |
| ||
|
Retained earnings |
|
716,139 |
|
689,668 |
| ||
|
Accumulated other comprehensive loss |
|
(58,932 |
) |
(61,318 |
) | ||
|
Total stockholders’ equity |
|
946,005 |
|
904,330 |
| ||
|
Total liabilities and stockholders’ equity |
|
$ |
3,367,277 |
|
$ |
3,255,875 |
|
KapStone Paper and Packaging Corporation
Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
|
|
|
Quarter Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
| ||||
|
Operating activities: |
|
|
|
|
|
|
|
|
| ||||
|
Net income |
|
$ |
30,026 |
|
$ |
31,018 |
|
$ |
55,794 |
|
$ |
67,914 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
| ||||
|
Depreciation of plant and equipment |
|
39,718 |
|
37,442 |
|
115,710 |
|
110,143 |
| ||||
|
Amortization of intangible assets |
|
7,744 |
|
7,512 |
|
23,154 |
|
25,385 |
| ||||
|
Stock-based compensation expense |
|
2,650 |
|
1,826 |
|
12,676 |
|
7,188 |
| ||||
|
Pension and postretirement |
|
(745 |
) |
(561 |
) |
(1,971 |
) |
(1,588 |
) | ||||
|
Excess tax benefit from stock-based compensation |
|
— |
|
— |
|
— |
|
150 |
| ||||
|
Amortization of debt issuance costs |
|
1,199 |
|
1,250 |
|
3,557 |
|
3,625 |
| ||||
|
Loss on debt extinguishment |
|
631 |
|
679 |
|
631 |
|
679 |
| ||||
|
Loss on disposal of assets |
|
2,799 |
|
2,503 |
|
3,785 |
|
3,156 |
| ||||
|
Deferred income taxes |
|
(7,768 |
) |
(484 |
) |
(6,240 |
) |
220 |
| ||||
|
Change in fair value of contingent consideration liability |
|
(3,910 |
) |
1,527 |
|
(340 |
) |
4,579 |
| ||||
|
Equity method investments income, net of cash received |
|
365 |
|
— |
|
473 |
|
— |
| ||||
|
Plant closure costs |
|
8,043 |
|
— |
|
8,043 |
|
— |
| ||||
|
Provision for bad debt |
|
2,012 |
|
— |
|
2,926 |
|
— |
| ||||
|
Changes in operating assets and liabilities |
|
43,658 |
|
40,050 |
|
(42,279 |
) |
(9,064 |
) | ||||
|
Net cash provided by operating activities |
|
$ |
126,422 |
|
$ |
122,762 |
|
$ |
175,919 |
|
$ |
212,387 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Investing activities: |
|
|
|
|
|
|
|
|
| ||||
|
Capital expenditures |
|
(34,234 |
) |
(26,873 |
) |
(108,012 |
) |
(99,246 |
) | ||||
|
Purchase of intangible assets |
|
— |
|
(500 |
) |
— |
|
(2,025 |
) | ||||
|
Acquisition, net of cash acquired |
|
— |
|
(15,438 |
) |
(33,500 |
) |
(15,438 |
) | ||||
|
Equity method investments |
|
— |
|
(10,500 |
) |
— |
|
(11,750 |
) | ||||
|
Proceeds from the sales of assets |
|
— |
|
25 |
|
— |
|
4,881 |
| ||||
|
Net cash used in investing activities |
|
$ |
(34,234 |
) |
$ |
(53,286 |
) |
$ |
(141,512 |
) |
$ |
(123,578 |
) |
|
|
|
|
|
|
|
|
|
|
| ||||
|
Financing activities: |
|
|
|
|
|
|
|
|
| ||||
|
Proceeds from revolving credit facility |
|
$ |
79,000 |
|
$ |
89,500 |
|
$ |
347,500 |
|
$ |
353,200 |
|
|
Repayments on revolving credit facility |
|
(98,500 |
) |
(94,000 |
) |
(345,000 |
) |
(348,100 |
) | ||||
|
Proceeds from receivables credit facility |
|
24,854 |
|
15,462 |
|
75,248 |
|
36,556 |
| ||||
|
Repayments on receivables credit facility |
|
(5,055 |
) |
(5,497 |
) |
(26,676 |
) |
(32,667 |
) | ||||
|
Proceeds from long-term debt |
|
— |
|
— |
|
— |
|
— |
| ||||
|
Repayments on long-term debt |
|
(75,000 |
) |
(64,687 |
) |
(75,000 |
) |
(64,687 |
) | ||||
|
Repayments on long-term financial obligations |
|
(263 |
) |
— |
|
(263 |
) |
— |
| ||||
|
Payment of loan amendment costs |
|
(1,301 |
) |
138 |
|
(1,488 |
) |
(2,250 |
) | ||||
|
Proceeds from other current borrowings |
|
— |
|
— |
|
6,214 |
|
— |
| ||||
|
Repayments on other current borrowings |
|
(2,071 |
) |
— |
|
(4,130 |
) |
— |
| ||||
|
Repayments on capital lease obligation |
|
(8 |
) |
— |
|
(19 |
) |
— |
| ||||
|
Cash dividends paid |
|
(9,683 |
) |
(9,653 |
) |
(29,026 |
) |
(29,001 |
) | ||||
|
Payment of withholding taxes on vested stock awards |
|
(996 |
) |
(55 |
) |
(1,871 |
) |
(841 |
) | ||||
|
Proceeds from exercises of stock options |
|
188 |
|
367 |
|
1,041 |
|
788 |
| ||||
|
Proceeds from issuance of shares to ESPP |
|
485 |
|
508 |
|
972 |
|
971 |
| ||||
|
Excess tax benefit from stock-based compensation |
|
— |
|
— |
|
— |
|
(150 |
) | ||||
|
Net cash (used in) financing activities |
|
$ |
(88,350 |
) |
$ |
(67,917 |
) |
$ |
(52,498 |
) |
$ |
(86,181 |
) |
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net increase (decrease) in cash and cash equivalents |
|
3,838 |
|
1,559 |
|
(18,091 |
) |
2,628 |
| ||||
|
Cash and cash equivalents-beginning of period |
|
7,456 |
|
7,890 |
|
29,385 |
|
6,821 |
| ||||
|
Cash and cash equivalents-end of period |
|
$ |
11,294 |
|
$ |
9,449 |
|
$ |
11,294 |
|
$ |
9,449 |
|
KapStone Paper and Packaging Corporation
Operating Segment Information
(In thousands)
(Unaudited)
|
|
|
Net Sales |
|
Segment |
|
Depreciation |
|
|
|
Total Assets |
| |||||||||||
|
Three Months Ended September 30, 2017 |
|
Trade |
|
Inter- |
|
Total |
|
Income |
|
and |
|
Capital |
|
at Sept. 30, |
| |||||||
|
Paper and Packaging |
|
$ |
617,255 |
|
$ |
21,234 |
|
$ |
638,489 |
|
$ |
63,434 |
|
$ |
39,727 |
|
$ |
32,154 |
|
$ |
2,647,034 |
|
|
Distribution |
|
251,163 |
|
— |
|
251,163 |
|
5,776 |
|
5,864 |
|
118 |
|
684,740 |
| |||||||
|
Corporate |
|
— |
|
— |
|
— |
|
(9,465 |
) |
1,871 |
|
1,962 |
|
35,503 |
| |||||||
|
Intersegment eliminations |
|
— |
|
(21,234 |
) |
(21,234 |
) |
— |
|
— |
|
— |
|
— |
| |||||||
|
|
|
$ |
868,418 |
|
$ |
— |
|
$ |
868,418 |
|
$ |
59,745 |
|
$ |
47,462 |
|
$ |
34,234 |
|
$ |
3,367,277 |
|
|
|
|
Net Sales |
|
Segment |
|
Depreciation |
|
|
|
Total Assets |
| |||||||||||
|
Three Months Ended September 30, 2016 |
|
Trade |
|
Inter- |
|
Total |
|
Income |
|
and |
|
Capital |
|
at Sept. 30, |
| |||||||
|
Paper and Packaging |
|
$ |
533,562 |
|
$ |
18,674 |
|
$ |
552,236 |
|
$ |
57,731 |
|
$ |
37,491 |
|
$ |
24,900 |
|
$ |
2,526,342 |
|
|
Distribution |
|
243,074 |
|
— |
|
243,074 |
|
8,230 |
|
5,795 |
|
936 |
|
676,350 |
| |||||||
|
Corporate |
|
— |
|
— |
|
— |
|
(10,953 |
) |
1,668 |
|
1,037 |
|
41,376 |
| |||||||
|
Intersegment eliminations |
|
— |
|
(18,674 |
) |
(18,674 |
) |
— |
|
— |
|
— |
|
— |
| |||||||
|
|
|
$ |
776,636 |
|
$ |
— |
|
$ |
776,636 |
|
$ |
55,008 |
|
$ |
44,954 |
|
$ |
26,873 |
|
$ |
3,244,068 |
|
|
|
|
Net Sales |
|
Segment |
|
Depreciation |
|
|
|
|
| ||||||||||
|
Nine Months Ended September 30, 2017 |
|
Trade |
|
Inter- |
|
Total |
|
Income |
|
and |
|
Capital |
|
|
| ||||||
|
Paper and Packaging |
|
$ |
1,726,816 |
|
$ |
68,112 |
|
$ |
1,794,928 |
|
$ |
142,009 |
|
$ |
115,325 |
|
$ |
101,695 |
|
|
|
|
Distribution |
|
730,162 |
|
— |
|
730,162 |
|
19,158 |
|
17,814 |
|
1,861 |
|
|
| ||||||
|
Corporate |
|
— |
|
— |
|
— |
|
(40,103 |
) |
5,725 |
|
4,456 |
|
|
| ||||||
|
Intersegment eliminations |
|
— |
|
(68,112 |
) |
(68,112 |
) |
— |
|
— |
|
— |
|
|
| ||||||
|
|
|
$ |
2,456,978 |
|
$ |
— |
|
$ |
2,456,978 |
|
$ |
121,064 |
|
$ |
138,864 |
|
$ |
108,012 |
|
|
|
|
|
|
Net Sales |
|
Segment |
|
Depreciation |
|
|
|
|
| ||||||||||
|
Nine Months Ended September 30, 2016 |
|
Trade |
|
Inter- |
|
Total |
|
Income |
|
and |
|
Capital |
|
|
| ||||||
|
Paper and Packaging |
|
$ |
1,586,173 |
|
$ |
55,667 |
|
$ |
1,641,840 |
|
$ |
145,054 |
|
$ |
112,790 |
|
$ |
91,520 |
|
|
|
|
Distribution |
|
713,589 |
|
— |
|
713,589 |
|
21,947 |
|
17,158 |
|
3,934 |
|
|
| ||||||
|
Corporate |
|
— |
|
— |
|
— |
|
(33,880 |
) |
5,580 |
|
3,792 |
|
|
| ||||||
|
Intersegment eliminations |
|
— |
|
(55,667 |
) |
(55,667 |
) |
— |
|
— |
|
— |
|
|
| ||||||
|
|
|
$ |
2,299,762 |
|
$ |
— |
|
$ |
2,299,762 |
|
$ |
133,121 |
|
$ |
135,528 |
|
$ |
99,246 |
|
|
|
KapStone Paper and Packaging Corporation
Operating Segment EBITDA and Adjusted EBITDA
(In thousands)
(Unaudited)
|
|
|
Quarter Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||
|
Paper and Packaging |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
| ||||
|
Segment operating income |
|
$ |
63,434 |
|
$ |
57,731 |
|
$ |
142,009 |
|
$ |
145,054 |
|
|
Equity method investments income |
|
(671 |
) |
— |
|
(1,377 |
) |
— |
| ||||
|
Foreign exchange (gain) / loss |
|
(173 |
) |
18 |
|
(809 |
) |
(18 |
) | ||||
|
Depreciation and amortization |
|
39,727 |
|
37,491 |
|
115,325 |
|
112,790 |
| ||||
|
EBITDA |
|
104,005 |
|
95,240 |
|
259,520 |
|
257,862 |
| ||||
|
Severance expenses |
|
— |
|
701 |
|
— |
|
5,998 |
| ||||
|
Acquisition, integration, start-up and other expenses |
|
988 |
|
— |
|
3,306 |
|
1,819 |
| ||||
|
Longview piping inspection settlement |
|
— |
|
— |
|
2,034 |
|
— |
| ||||
|
Plant closure costs |
|
8,967 |
|
— |
|
8,967 |
|
— |
| ||||
|
Loss on asset disposals |
|
645 |
|
1,710 |
|
645 |
|
1,710 |
| ||||
|
Union contract ratification costs |
|
946 |
|
— |
|
5,925 |
|
— |
| ||||
|
Adjusted EBITDA |
|
$ |
115,551 |
|
$ |
97,651 |
|
$ |
280,397 |
|
$ |
267,389 |
|
|
Adjusted EBITDA margin |
|
18.1 |
% |
17.7 |
% |
15.6 |
% |
16.3 |
% | ||||
|
|
|
Quarter Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||
|
Distribution |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
| ||||
|
Segment operating income |
|
$ |
5,776 |
|
$ |
8,230 |
|
$ |
19,158 |
|
$ |
21,947 |
|
|
Foreign exchange (gain) / loss |
|
(242 |
) |
(561 |
) |
(692 |
) |
1,536 |
| ||||
|
Depreciation and amortization |
|
5,864 |
|
5,795 |
|
17,814 |
|
17,158 |
| ||||
|
EBITDA |
|
11,882 |
|
13,464 |
|
37,664 |
|
37,569 |
| ||||
|
Acquisition, integration, start-up and other expenses |
|
51 |
|
1,129 |
|
1,714 |
|
1,654 |
| ||||
|
Loss on asset disposals |
|
1,315 |
|
— |
|
1,315 |
|
— |
| ||||
|
Severance expenses |
|
— |
|
153 |
|
— |
|
633 |
| ||||
|
Adjusted EBITDA |
|
$ |
13,248 |
|
$ |
14,746 |
|
$ |
40,693 |
|
$ |
39,856 |
|
|
Adjusted EBITDA margin |
|
5.3 |
% |
6.1 |
% |
5.6 |
% |
5.6 |
% | ||||
|
|
|
Quarter Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||
|
Corporate |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
| ||||
|
Segment operating (loss) |
|
$ |
(9,465 |
) |
$ |
(10,953 |
) |
$ |
(40,103 |
) |
$ |
(33,880 |
) |
|
Loss on debt extinguishment |
|
631 |
|
679 |
|
631 |
|
$ |
679 |
| |||
|
Depreciation and amortization |
|
1,871 |
|
1,668 |
|
5,725 |
|
5,580 |
| ||||
|
EBITDA |
|
(8,225 |
) |
(9,964 |
) |
(35,009 |
) |
(28,979 |
) | ||||
|
Stock-based compensation expense |
|
2,650 |
|
1,826 |
|
12,676 |
|
7,188 |
| ||||
|
Acquisition, integration, start-up and other expenses |
|
776 |
|
545 |
|
2,177 |
|
742 |
| ||||
|
Loss on asset disposals |
|
— |
|
560 |
|
— |
|
560 |
| ||||
|
Change in fair value of contingent consideration liability |
|
(3,910 |
) |
1,527 |
|
(340 |
) |
4,579 |
| ||||
|
Loss on debt extinguishment |
|
631 |
|
679 |
|
631 |
|
679 |
| ||||
|
Severance expenses |
|
— |
|
9 |
|
— |
|
396 |
| ||||
|
Adjusted EBITDA |
|
$ |
(8,078 |
) |
$ |
(4,818 |
) |
$ |
(19,865 |
) |
$ |
(14,835 |
) |
|
|
|
Quarter Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||
|
Consolidated |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
| ||||
|
Segment operating income |
|
$ |
59,745 |
|
$ |
55,008 |
|
$ |
121,064 |
|
$ |
133,121 |
|
|
Equity method investments income |
|
(671 |
) |
— |
|
(1,377 |
) |
— |
| ||||
|
Foreign exchange (gain) / loss |
|
(415 |
) |
(543 |
) |
(1,501 |
) |
1,518 |
| ||||
|
Loss on debt extinguishment |
|
631 |
|
679 |
|
631 |
|
679 |
| ||||
|
Depreciation and amortization |
|
47,462 |
|
44,954 |
|
138,864 |
|
135,528 |
| ||||
|
EBITDA |
|
107,662 |
|
98,740 |
|
262,175 |
|
266,452 |
| ||||
|
Stock-based compensation expense |
|
2,650 |
|
1,826 |
|
12,676 |
|
7,188 |
| ||||
|
Acquisition, integration, start-up and other expenses |
|
1,815 |
|
1,674 |
|
7,197 |
|
4,215 |
| ||||
|
Longview piping inspection settlement |
|
— |
|
— |
|
2,034 |
|
— |
| ||||
|
Union contract ratification costs |
|
946 |
|
— |
|
5,925 |
|
— |
| ||||
|
Plant closure costs |
|
8,967 |
|
— |
|
8,967 |
|
— |
| ||||
|
Loss on asset disposals |
|
1,960 |
|
2,270 |
|
1,960 |
|
2,270 |
| ||||
|
Change in fair value of contingent consideration liability |
|
(3,910 |
) |
1,527 |
|
(340 |
) |
4,579 |
| ||||
|
Loss on debt extinguishment |
|
631 |
|
679 |
|
631 |
|
679 |
| ||||
|
Severance expenses |
|
— |
|
863 |
|
— |
|
7,027 |
| ||||
|
Adjusted EBITDA |
|
$ |
120,721 |
|
$ |
107,579 |
|
$ |
301,225 |
|
$ |
292,410 |
|
KapStone Paper and Packaging Corporation
Summary of Interest Expense, net
(In thousands)
(Unaudited)
|
|
|
Quarter Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
| ||||
|
Interest on term loans and revolver |
|
$ |
10,722 |
|
$ |
8,128 |
|
$ |
29,147 |
|
$ |
24,103 |
|
|
Interest on receivables securitization facility |
|
1,601 |
|
877 |
|
3,937 |
|
2,440 |
| ||||
|
Sub-total |
|
12,323 |
|
9,005 |
|
33,084 |
|
26,543 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Amortization of debt issuance costs |
|
1,199 |
|
1,250 |
|
3,557 |
|
3,625 |
| ||||
|
Implicit interest on long-term financing obligations |
|
1,523 |
|
— |
|
1,776 |
|
— |
| ||||
|
Interest on capital lease obligation |
|
133 |
|
— |
|
356 |
|
— |
| ||||
|
Other interest |
|
63 |
|
— |
|
63 |
|
(9 |
) | ||||
|
Capitalized interest |
|
(28 |
) |
(80 |
) |
(490 |
) |
(151 |
) | ||||
|
Interest income |
|
(49 |
) |
(27 |
) |
(141 |
) |
(43 |
) | ||||
|
Total interest expense, net |
|
$ |
15,164 |
|
$ |
10,148 |
|
$ |
38,205 |
|
$ |
29,965 |
|