Attached files
| file | filename |
|---|---|
| EX-99.2 - EX-99.2 - KAPSTONE PAPER & PACKAGING CORP | a18-17594_1ex99d2.htm |
| 8-K - 8-K - KAPSTONE PAPER & PACKAGING CORP | a18-17594_18k.htm |
|
FOR FURTHER INFORMATION: |
FOR IMMEDIATE RELEASE |
|
Andrea K. Tarbox |
Wednesday, July 25, 2018 |
|
Executive Vice President and Chief Financial Officer |
|
|
847.239.8812 |
|
KAPSTONE REPORTS SECOND QUARTER RESULTS
NORTHBROOK, IL — July 25, 2018 — KapStone Paper and Packaging Corporation (NYSE:KS) today reported results for the second quarter ended June 30, 2018. As compared to 2017’s second quarter, results for 2018’s second quarter are below:
· Net sales of $913 million up $90 million, or 11 percent
· Net income of $53 million up $33 million, or 169 percent
· Diluted EPS of $0.53 up $0.33 per share, or 165 percent
Non U.S. GAAP financial measures for the 2018 second quarter compared to 2017 are as follows:
· Adjusted EBITDA of $138 million up $38 million, or 38 percent
· Adjusted net income of $58 million up $31 million, or 114 percent
· Adjusted diluted EPS of $0.58 up $0.31 per share, or 115 percent
Matt Kaplan, President and Chief Executive Officer, stated, “Our second quarter results reflect continued higher prices, good demand and strong operating performance. We announced a $50 per ton kraft paper price increase effective with shipments in May as well as a $40 per ton price increase for Kraftpak® effective with shipments in early August 2018. In addition, we completed our annual planned maintenance outage at the Roanoke Rapids mill ahead of schedule.
“Victory Packaging, our distribution business, had a seasonally strong second quarter and is expecting a strong second half of the year.
“We continue to work on the merger with WestRock.”
Second Quarter Operating Highlights
Consolidated net sales of $913 million in the second quarter of 2018 increased by $90 million, or 11 percent, compared to $823 million for the 2017 second quarter. The increase in net sales is primarily due to higher prices and higher sales volume. The Company sold 743,000 tons of paper during the second quarter of 2018 compared to 699,000 tons a year earlier. The Company’s average mill selling price of $736 per ton in the second quarter of 2018 increased by $75 per ton, or about 11 percent, compared to the second quarter of 2017 due to higher prices for most products and a favorable product mix. Mill selling prices increased by $17 per ton, or 2 percent, compared to the first quarter of 2018.
Net income of $53 million for the 2018 second quarter increased by $33 million, or 169 percent, compared to the 2017 second quarter. The higher earnings primarily reflects:
· Higher selling prices and a better product mix of $58 million;
· $7 million of additional margin mainly due to higher mill production;
· Lower recycled fiber costs of $11 million; 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 $2 million;
· $3 million of higher planned maintenance costs, mainly at Roanoke Rapids and Charleston;
· Inflation of $18 million driven by higher virgin fiber, freight and compensation costs;
· $11 million of higher management incentives due to higher earnings; and
· An increase in interest charges of $3 million due to higher interest rates.
Cash Flow and Working Capital
Cash and cash equivalents of $9 million as of June 30, 2018, declined by $10 million from March 31, 2018. Operating activities provided $28 million during the second quarter. Investing activities used $41 million and financing activities provided $4 million of cash in the current quarter, reflecting $13 million of higher borrowings, partially offset by a $10 million quarterly dividend payment.
On June 14, 2018, our Board of Directors approved a regular $0.10 per share cash dividend which was paid on July 11th.
At June 30, 2018, the Company had approximately $495 million of working capital and $458 million of revolver borrowing capacity. The Company’s net debt to EBITDA ratio as defined by our credit agreement decreased to 2.78 times at June 30, 2018, down from 4.17 a year ago.
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 over 60 distribution centers. The business has approximately 6,300 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; (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 proposed 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 proposed 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, 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, 2017 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 June 30, |
|
Six Months Ended June 30, |
| ||||||||
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net sales |
|
$ |
912,736 |
|
$ |
822,717 |
|
$ |
1,711,931 |
|
$ |
1,588,560 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Cost and expenses: |
|
|
|
|
|
|
|
|
| ||||
|
Cost of sales, excluding depreciation and amortization |
|
635,441 |
|
594,078 |
|
1,188,510 |
|
1,156,539 |
| ||||
|
Depreciation and amortization |
|
47,329 |
|
46,054 |
|
93,694 |
|
91,402 |
| ||||
|
Plant closure costs |
|
— |
|
— |
|
1,752 |
|
— |
| ||||
|
Freight and distribution expenses |
|
78,253 |
|
75,640 |
|
154,839 |
|
148,628 |
| ||||
|
Selling, general and administrative expenses |
|
67,494 |
|
67,313 |
|
131,105 |
|
133,798 |
| ||||
|
Merger expenses |
|
2,368 |
|
— |
|
15,900 |
|
— |
| ||||
|
Gain on sale of property |
|
— |
|
— |
|
(7,453 |
) |
— |
| ||||
|
Operating income |
|
81,851 |
|
39,632 |
|
133,584 |
|
58,193 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Foreign exchange loss / (gain) |
|
984 |
|
(1,004 |
) |
947 |
|
(1,086 |
) | ||||
|
Non operating pension and postretirement income |
|
(3,091 |
) |
(1,563 |
) |
(6,183 |
) |
(3,126 |
) | ||||
|
Equity method investment income |
|
(720 |
) |
(29 |
) |
(1,240 |
) |
(706 |
) | ||||
|
Interest expense, net |
|
15,711 |
|
12,311 |
|
30,056 |
|
23,041 |
| ||||
|
Income before provision for income taxes |
|
68,967 |
|
29,917 |
|
110,004 |
|
40,070 |
| ||||
|
Provision for income taxes |
|
15,784 |
|
10,141 |
|
24,080 |
|
14,302 |
| ||||
|
Net income |
|
$ |
53,183 |
|
$ |
19,776 |
|
$ |
85,924 |
|
$ |
25,768 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income per share: |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
$ |
0.54 |
|
$ |
0.20 |
|
$ |
0.88 |
|
$ |
0.27 |
|
|
Diluted |
|
$ |
0.53 |
|
$ |
0.20 |
|
$ |
0.86 |
|
$ |
0.26 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Weighted-average number of shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
97,787,680 |
|
96,801,906 |
|
97,559,393 |
|
96,750,272 |
| ||||
|
Diluted |
|
100,043,827 |
|
98,520,218 |
|
99,872,730 |
|
98,457,450 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Effective income tax rate |
|
22.9 |
% |
33.9 |
% |
21.9 |
% |
35.7 |
% | ||||
Supplemental Information
GAAP to Non-GAAP Reconciliations
($ in thousands, except share and per share amounts)
(unaudited)
|
|
|
Quarter Ended June 30, |
|
Six Months Ended June 30, |
| ||||||||
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net Income (GAAP) to EBITDA (Non-GAAP) to Adjusted EBITDA (Non-GAAP): |
|
|
|
|
|
|
|
|
| ||||
|
Net income (GAAP) |
|
$ |
53,183 |
|
$ |
19,776 |
|
$ |
85,924 |
|
$ |
25,768 |
|
|
Interest expense, net |
|
15,711 |
|
12,311 |
|
30,056 |
|
23,041 |
| ||||
|
Provision for income taxes |
|
15,784 |
|
10,141 |
|
24,080 |
|
14,302 |
| ||||
|
Depreciation and amortization |
|
47,329 |
|
46,054 |
|
93,694 |
|
91,402 |
| ||||
|
EBITDA (Non-GAAP) |
|
$ |
132,007 |
|
$ |
88,282 |
|
$ |
233,754 |
|
$ |
154,513 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Acquisition, integration, start-up and other expenses |
|
1,397 |
|
5,611 |
|
3,353 |
|
7,416 |
| ||||
|
Union contract ratification cost |
|
— |
|
— |
|
— |
|
4,979 |
| ||||
|
Merger expenses |
|
2,368 |
|
— |
|
15,900 |
|
— |
| ||||
|
Plant closure costs |
|
— |
|
— |
|
1,752 |
|
— |
| ||||
|
Change in fair value of contingent consideration liability |
|
— |
|
1,054 |
|
— |
|
3,570 |
| ||||
|
Gain on sale of property |
|
— |
|
— |
|
(7,453 |
) |
— |
| ||||
|
Stock-based compensation expense |
|
2,158 |
|
4,761 |
|
5,165 |
|
10,026 |
| ||||
|
Accumulated EBITDA adjustments |
|
5,923 |
|
11,426 |
|
18,717 |
|
25,991 |
| ||||
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
137,930 |
|
$ |
99,708 |
|
$ |
252,471 |
|
$ |
180,504 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net Income (GAAP) to Adjusted Net Income (Non-GAAP): |
|
|
|
|
|
|
|
|
| ||||
|
Net income (GAAP) |
|
$ |
53,183 |
|
$ |
19,776 |
|
$ |
85,924 |
|
$ |
25,768 |
|
|
Accumulated EBITDA adjustments |
|
5,923 |
|
11,426 |
|
18,717 |
|
25,991 |
| ||||
|
Accumulated tax adjustments |
|
(1,422 |
) |
(4,285 |
) |
(4,492 |
) |
(9,747 |
) | ||||
|
Adjusted Net Income (Non-GAAP) |
|
$ |
57,684 |
|
$ |
26,917 |
|
$ |
100,149 |
|
$ |
42,012 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Diluted EPS (GAAP) to Adjusted Diluted EPS (Non-GAAP): |
|
|
|
|
|
|
|
|
| ||||
|
Diluted earnings per share (GAAP) |
|
$ |
0.53 |
|
$ |
0.20 |
|
$ |
0.86 |
|
$ |
0.26 |
|
|
Accumulated EBITDA adjustments |
|
0.06 |
|
0.11 |
|
0.18 |
|
0.27 |
| ||||
|
Accumulated tax adjustments |
|
(0.01 |
) |
(0.04 |
) |
(0.04 |
) |
(0.10 |
) | ||||
|
Adjusted Diluted EPS (Non-GAAP) |
|
$ |
0.58 |
|
$ |
0.27 |
|
$ |
1.00 |
|
$ |
0.43 |
|
KapStone Paper and Packaging Corporation
Consolidated Balance Sheets
(In thousands)
|
|
|
June 30, |
|
December 31, |
| ||
|
|
|
2018 |
|
2017 |
| ||
|
|
|
(Unaudited) |
|
|
| ||
|
Assets |
|
|
|
|
| ||
|
Current assets: |
|
|
|
|
| ||
|
Cash and cash equivalents |
|
$ |
9,149 |
|
$ |
28,065 |
|
|
Trade accounts receivable, net of allowances |
|
502,018 |
|
443,462 |
| ||
|
Other receivables |
|
17,601 |
|
23,289 |
| ||
|
Inventories |
|
342,068 |
|
315,575 |
| ||
|
Prepaid expenses and other current assets |
|
23,232 |
|
17,470 |
| ||
|
Total current assets |
|
894,068 |
|
827,861 |
| ||
|
|
|
|
|
|
| ||
|
Plant, property and equipment, net |
|
1,465,287 |
|
1,453,607 |
| ||
|
Other assets |
|
26,190 |
|
24,431 |
| ||
|
Intangible assets, net |
|
281,987 |
|
297,475 |
| ||
|
Goodwill |
|
720,611 |
|
720,611 |
| ||
|
Total assets |
|
$ |
3,388,143 |
|
$ |
3,323,985 |
|
|
|
|
|
|
|
| ||
|
Liabilities and Stockholders’ Equity |
|
|
|
|
| ||
|
Current liabilities: |
|
|
|
|
| ||
|
Short-term borrowings |
|
$ |
25,000 |
|
$ |
— |
|
|
Other current borrowings |
|
4,528 |
|
— |
| ||
|
Other financial obligations |
|
1,113 |
|
30 |
| ||
|
Dividend payable |
|
10,301 |
|
10,302 |
| ||
|
Accounts payable |
|
202,309 |
|
199,574 |
| ||
|
Accrued expenses |
|
85,259 |
|
105,951 |
| ||
|
Accrued compensation costs |
|
67,963 |
|
75,215 |
| ||
|
Accrued income taxes |
|
2,710 |
|
31,458 |
| ||
|
Total current liabilities |
|
399,183 |
|
422,530 |
| ||
|
|
|
|
|
|
| ||
|
Long-term debt, net of current portion |
|
1,382,968 |
|
1,374,502 |
| ||
|
Long-term financing obligations |
|
92,069 |
|
82,199 |
| ||
|
Capital lease obligation |
|
4,579 |
|
4,595 |
| ||
|
Pension and post-retirement benefits |
|
8,466 |
|
14,196 |
| ||
|
Deferred income taxes |
|
254,683 |
|
252,101 |
| ||
|
Other liabilities |
|
31,696 |
|
36,848 |
| ||
|
Total other liabilities |
|
1,774,461 |
|
1,764,441 |
| ||
|
|
|
|
|
|
| ||
|
Stockholders’ equity: |
|
|
|
|
| ||
|
Common stock $0.0001 par value |
|
10 |
|
10 |
| ||
|
Additional paid-in capital |
|
302,551 |
|
291,629 |
| ||
|
Retained earnings |
|
960,308 |
|
894,061 |
| ||
|
Accumulated other comprehensive loss |
|
(48,370 |
) |
(48,686 |
) | ||
|
Total stockholders’ equity |
|
1,214,499 |
|
1,137,014 |
| ||
|
Total liabilities and stockholders’ equity |
|
$ |
3,388,143 |
|
$ |
3,323,985 |
|
KapStone Paper and Packaging Corporation
Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
|
|
|
Quarter Ended June 30, |
|
Six Months Ended June 30, |
| ||||||||
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| ||||
|
Operating activities: |
|
|
|
|
|
|
|
|
| ||||
|
Net income |
|
$ |
53,183 |
|
$ |
19,776 |
|
$ |
85,924 |
|
$ |
25,768 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
| ||||
|
Depreciation of plant and equipment |
|
39,585 |
|
38,234 |
|
78,206 |
|
75,992 |
| ||||
|
Amortization of intangible assets |
|
7,744 |
|
7,820 |
|
15,488 |
|
15,410 |
| ||||
|
Stock-based compensation expense |
|
2,158 |
|
4,761 |
|
5,165 |
|
10,026 |
| ||||
|
Pension and postretirement |
|
(2,530 |
) |
(654 |
) |
(5,082 |
) |
(1,226 |
) | ||||
|
Amortization of debt issuance costs |
|
1,174 |
|
1,179 |
|
2,350 |
|
2,358 |
| ||||
|
Loss on disposal of fixed assets |
|
597 |
|
460 |
|
1,025 |
|
986 |
| ||||
|
Deferred income taxes |
|
679 |
|
7 |
|
2,426 |
|
1,528 |
| ||||
|
Change in fair value of contingent consideration liability |
|
— |
|
1,054 |
|
— |
|
3,570 |
| ||||
|
Equity method investments income, net of cash received |
|
226 |
|
275 |
|
(294 |
) |
108 |
| ||||
|
Plant closure costs |
|
— |
|
— |
|
793 |
|
— |
| ||||
|
Provision for bad debts |
|
411 |
|
— |
|
858 |
|
— |
| ||||
|
Gain on sale of property |
|
— |
|
— |
|
(7,453 |
) |
— |
| ||||
|
Multiemployer pension plan withdrawal expense |
|
226 |
|
— |
|
226 |
|
— |
| ||||
|
Changes in operating assets and liabilities |
|
(75,561 |
) |
(56,084 |
) |
(146,617 |
) |
(85,023 |
) | ||||
|
Net cash provided by operating activities |
|
$ |
27,892 |
|
$ |
16,828 |
|
$ |
33,015 |
|
$ |
49,497 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Investing activities: |
|
|
|
|
|
|
|
|
| ||||
|
Capital expenditures |
|
(41,380 |
) |
(35,109 |
) |
(78,405 |
) |
(73,778 |
) | ||||
|
Proceeds from the sale of property |
|
— |
|
— |
|
14,681 |
|
— |
| ||||
|
API acquisition |
|
— |
|
— |
|
— |
|
(33,500 |
) | ||||
|
Net cash used in investing activities |
|
$ |
(41,380 |
) |
$ |
(35,109 |
) |
$ |
(63,724 |
) |
$ |
(107,278 |
) |
|
|
|
|
|
|
|
|
|
|
| ||||
|
Financing activities: |
|
|
|
|
|
|
|
|
| ||||
|
Proceeds from revolving credit facility |
|
$ |
131,500 |
|
$ |
145,512 |
|
$ |
242,000 |
|
$ |
268,500 |
|
|
Repayments on revolving credit facility |
|
(126,500 |
) |
(149,500 |
) |
(217,000 |
) |
(246,500 |
) | ||||
|
Proceeds from receivables credit facility |
|
12,452 |
|
33,363 |
|
35,726 |
|
50,394 |
| ||||
|
Repayments on receivables credit facility |
|
(1,733 |
) |
— |
|
(29,447 |
) |
(21,621 |
) | ||||
|
Repayments on other financing obligations |
|
(272 |
) |
(11 |
) |
(537 |
) |
(11 |
) | ||||
|
Proceeds from other current borrowings |
|
— |
|
— |
|
6,767 |
|
6,214 |
| ||||
|
Payments on other current borrowings |
|
(2,239 |
) |
(2,059 |
) |
(2,239 |
) |
(2,059 |
) | ||||
|
Payment of loan amendment costs |
|
(162 |
) |
(187 |
) |
(162 |
) |
(187 |
) | ||||
|
Cash dividends paid |
|
(9,749 |
) |
(9,679 |
) |
(19,472 |
) |
(19,343 |
) | ||||
|
Payment of withholding taxes on vested stock awards |
|
(122 |
) |
(19 |
) |
(1,905 |
) |
(875 |
) | ||||
|
Proceeds from exercises of stock options |
|
778 |
|
402 |
|
7,168 |
|
853 |
| ||||
|
Proceeds from issuance of shares to ESPP |
|
— |
|
— |
|
494 |
|
487 |
| ||||
|
Payment of Victory Packaging contingent consideration |
|
— |
|
— |
|
(9,600 |
) |
— |
| ||||
|
Net cash provided by financing activities |
|
$ |
3,953 |
|
$ |
17,822 |
|
$ |
11,793 |
|
$ |
35,852 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net (decrease) in cash and cash equivalents |
|
(9,535 |
) |
(459 |
) |
(18,916 |
) |
(21,929 |
) | ||||
|
Cash and cash equivalents-beginning of period |
|
18,684 |
|
7,915 |
|
28,065 |
|
29,385 |
| ||||
|
Cash and cash equivalents-end of period |
|
$ |
9,149 |
|
$ |
7,456 |
|
$ |
9,149 |
|
$ |
7,456 |
|
KapStone Paper and Packaging Corporation
Operating Segment Information
(In thousands)
(Unaudited)
|
|
|
Net Sales |
|
|
|
|
|
|
|
|
| |||||||||||
|
Three Months Ended June 30, 2018 |
|
Trade |
|
Inter- |
|
Total |
|
Operating |
|
Depreciation |
|
Capital |
|
Total Assets |
| |||||||
|
Paper and Packaging |
|
$ |
647,635 |
|
$ |
22,504 |
|
$ |
670,139 |
|
$ |
84,139 |
|
$ |
39,800 |
|
$ |
39,642 |
|
$ |
2,674,612 |
|
|
Distribution |
|
265,101 |
|
— |
|
265,101 |
|
12,798 |
|
5,911 |
|
619 |
|
674,735 |
| |||||||
|
Corporate |
|
— |
|
— |
|
— |
|
(15,086 |
) |
1,618 |
|
1,119 |
|
38,796 |
| |||||||
|
Intersegment eliminations |
|
— |
|
(22,504 |
) |
(22,504 |
) |
— |
|
— |
|
— |
|
— |
| |||||||
|
|
|
$ |
912,736 |
|
$ |
— |
|
$ |
912,736 |
|
$ |
81,851 |
|
$ |
47,329 |
|
$ |
41,380 |
|
$ |
3,388,143 |
|
|
|
|
Net Sales |
|
|
|
|
|
|
|
|
| |||||||||||
|
Three Months Ended June 30, 2017 |
|
Trade |
|
Inter- |
|
Total |
|
Operating |
|
Depreciation |
|
Capital |
|
Total Assets |
| |||||||
|
Paper and Packaging |
|
$ |
561,917 |
|
$ |
25,681 |
|
$ |
587,598 |
|
$ |
42,697 |
|
$ |
38,192 |
|
$ |
33,703 |
|
$ |
2,642,143 |
|
|
Distribution |
|
260,800 |
|
— |
|
260,800 |
|
10,785 |
|
5,972 |
|
1,064 |
|
694,099 |
| |||||||
|
Corporate |
|
— |
|
— |
|
— |
|
(13,850 |
) |
1,890 |
|
342 |
|
36,330 |
| |||||||
|
Intersegment eliminations |
|
— |
|
(25,681 |
) |
(25,681 |
) |
— |
|
— |
|
— |
|
— |
| |||||||
|
|
|
$ |
822,717 |
|
$ |
— |
|
$ |
822,717 |
|
$ |
39,632 |
|
$ |
46,054 |
|
$ |
35,109 |
|
$ |
3,372,572 |
|
|
|
|
Net Sales |
|
|
|
|
|
|
| ||||||||||
|
Six Months Ended June 30, 2018 |
|
Trade |
|
Inter- |
|
Total |
|
Segment |
|
Depreciation |
|
Capital |
| ||||||
|
Paper and Packaging |
|
$ |
1,215,620 |
|
$ |
39,618 |
|
$ |
1,255,238 |
|
$ |
158,850 |
|
$ |
78,476 |
|
$ |
74,790 |
|
|
Distribution |
|
496,311 |
|
— |
|
496,311 |
|
15,289 |
|
11,818 |
|
906 |
| ||||||
|
Corporate |
|
— |
|
— |
|
— |
|
(40,555 |
) |
3,400 |
|
2,709 |
| ||||||
|
Intersegment eliminations |
|
— |
|
(39,618 |
) |
(39,618 |
) |
— |
|
— |
|
— |
| ||||||
|
|
|
$ |
1,711,931 |
|
$ |
— |
|
$ |
1,711,931 |
|
$ |
133,584 |
|
$ |
93,694 |
|
$ |
78,405 |
|
|
|
|
Net Sales |
|
|
|
|
|
|
| ||||||||||
|
Six Months Ended June 30, 2017 |
|
Trade |
|
Inter- |
|
Total |
|
Segment |
|
Depreciation |
|
Capital |
| ||||||
|
Paper and Packaging |
|
$ |
1,109,561 |
|
$ |
46,878 |
|
$ |
1,156,439 |
|
$ |
75,449 |
|
$ |
75,598 |
|
$ |
71,408 |
|
|
Distribution |
|
478,999 |
|
— |
|
478,999 |
|
13,382 |
|
11,950 |
|
1,743 |
| ||||||
|
Corporate |
|
— |
|
— |
|
— |
|
(30,638 |
) |
3,854 |
|
627 |
| ||||||
|
Intersegment eliminations |
|
— |
|
(46,878 |
) |
(46,878 |
) |
— |
|
— |
|
— |
| ||||||
|
|
|
$ |
1,588,560 |
|
$ |
— |
|
$ |
1,588,560 |
|
$ |
58,193 |
|
$ |
91,402 |
|
$ |
73,778 |
|
KapStone Paper and Packaging Corporation
Operating Segment EBITDA and Adjusted EBITDA
(In thousands)
(Unaudited)
|
|
|
Quarter Ended June 30, |
|
Six Months Ended June 30, |
| ||||||||
|
Paper and Packaging |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| ||||
|
Segment operating income |
|
$ |
84,139 |
|
$ |
42,697 |
|
$ |
158,850 |
|
$ |
75,449 |
|
|
Equity method investments income |
|
(720 |
) |
(29 |
) |
(1,240 |
) |
(706 |
) | ||||
|
Foreign exchange loss / (gain) |
|
620 |
|
(591 |
) |
481 |
|
(636 |
) | ||||
|
Non operating pension and postretirement income |
|
(3,091 |
) |
(1,563 |
) |
(6,183 |
) |
(3,126 |
) | ||||
|
Depreciation and amortization |
|
39,800 |
|
38,192 |
|
78,476 |
|
75,598 |
| ||||
|
EBITDA |
|
127,130 |
|
83,072 |
|
244,268 |
|
155,515 |
| ||||
|
Acquisition, integration, start-up and other expenses |
|
1,255 |
|
2,986 |
|
2,481 |
|
4,352 |
| ||||
|
Gain on sale of property |
|
— |
|
— |
|
(7,453 |
) |
— |
| ||||
|
Plant closure costs |
|
— |
|
— |
|
1,752 |
|
— |
| ||||
|
Union contract ratification costs |
|
— |
|
— |
|
— |
|
4,979 |
| ||||
|
Multiemployer pension plan withdrawal expense |
|
226 |
|
— |
|
226 |
|
— |
| ||||
|
Adjusted EBITDA |
|
$ |
128,611 |
|
$ |
86,058 |
|
$ |
241,274 |
|
$ |
164,846 |
|
|
Adjusted EBITDA margin |
|
19.2 |
% |
14.6 |
% |
19.2 |
% |
14.3 |
% | ||||
|
|
|
Quarter Ended June 30, |
|
Six Months Ended June 30, |
| ||||||||
|
Distribution |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| ||||
|
Segment operating income |
|
$ |
12,798 |
|
$ |
10,785 |
|
$ |
15,289 |
|
$ |
13,382 |
|
|
Foreign exchange loss / (gain) |
|
364 |
|
(413 |
) |
466 |
|
(450 |
) | ||||
|
Depreciation and amortization |
|
5,911 |
|
5,972 |
|
11,818 |
|
11,950 |
| ||||
|
EBITDA |
|
18,345 |
|
17,170 |
|
26,641 |
|
25,782 |
| ||||
|
Acquisition, integration, start-up and other expenses |
|
(425 |
) |
1,500 |
|
126 |
|
1,663 |
| ||||
|
Adjusted EBITDA |
|
$ |
17,920 |
|
$ |
18,670 |
|
$ |
26,767 |
|
$ |
27,445 |
|
|
Adjusted EBITDA margin |
|
6.8 |
% |
7.2 |
% |
5.4 |
% |
5.7 |
% | ||||
|
|
|
Quarter Ended June 30, |
|
Six Months Ended June 30, |
| ||||||||
|
Corporate |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| ||||
|
Segment operating (loss) |
|
$ |
(15,086 |
) |
$ |
(13,850 |
) |
$ |
(40,555 |
) |
$ |
(30,638 |
) |
|
Depreciation and amortization |
|
1,618 |
|
1,890 |
|
3,400 |
|
3,854 |
| ||||
|
EBITDA |
|
(13,468 |
) |
(11,960 |
) |
(37,155 |
) |
(26,784 |
) | ||||
|
Stock-based compensation expense |
|
2,158 |
|
4,761 |
|
5,165 |
|
10,026 |
| ||||
|
Acquisition, integration, start-up and other expenses |
|
341 |
|
1,125 |
|
520 |
|
1,401 |
| ||||
|
Change in fair value of contingent consideration liability |
|
— |
|
1,054 |
|
— |
|
3,570 |
| ||||
|
Merger expenses |
|
2,368 |
|
— |
|
15,900 |
|
— |
| ||||
|
Adjusted EBITDA |
|
$ |
(8,601 |
) |
$ |
(5,020 |
) |
$ |
(15,570 |
) |
$ |
(11,787 |
) |
|
|
|
Quarter Ended June 30, |
|
Six Months Ended June 30, |
| ||||||||
|
Consolidated |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| ||||
|
Segment operating income |
|
$ |
81,851 |
|
$ |
39,632 |
|
$ |
133,584 |
|
$ |
58,193 |
|
|
Equity method investments income |
|
(720 |
) |
(29 |
) |
(1,240 |
) |
(706 |
) | ||||
|
Foreign exchange loss / (gain) |
|
984 |
|
(1,004 |
) |
947 |
|
(1,086 |
) | ||||
|
Non operating pension and postretirement income |
|
(3,091 |
) |
(1,563 |
) |
(6,183 |
) |
(3,126 |
) | ||||
|
Depreciation and amortization |
|
47,329 |
|
46,054 |
|
93,694 |
|
91,402 |
| ||||
|
EBITDA |
|
132,007 |
|
88,282 |
|
233,754 |
|
154,513 |
| ||||
|
Stock-based compensation expense |
|
2,158 |
|
4,761 |
|
5,165 |
|
10,026 |
| ||||
|
Acquisition, integration, start-up and other expenses |
|
1,171 |
|
5,611 |
|
3,127 |
|
7,416 |
| ||||
|
Union contract ratification costs |
|
— |
|
— |
|
— |
|
4,979 |
| ||||
|
Plant closure costs |
|
— |
|
— |
|
1,752 |
|
— |
| ||||
|
Change in fair value of contingent consideration liability |
|
— |
|
1,054 |
|
— |
|
3,570 |
| ||||
|
Gain on sale of property |
|
— |
|
— |
|
(7,453 |
) |
— |
| ||||
|
Multiemployer pension plan withdrawal expense |
|
226 |
|
— |
|
226 |
|
— |
| ||||
|
Merger expenses |
|
2,368 |
|
— |
|
15,900 |
|
— |
| ||||
|
Adjusted EBITDA |
|
$ |
137,930 |
|
$ |
99,708 |
|
$ |
252,471 |
|
$ |
180,504 |
|
KapStone Paper and Packaging Corporation
Summary of Interest Expense, net
(In thousands)
(Unaudited)
|
|
|
Quarter Ended June 30, |
|
Six Months Ended June 30, |
| ||||||||
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| ||||
|
Interest on term loans and revolver |
|
$ |
10,513 |
|
$ |
9,811 |
|
$ |
20,409 |
|
$ |
18,425 |
|
|
Interest on receivables securitization facility |
|
2,118 |
|
1,281 |
|
3,965 |
|
2,336 |
| ||||
|
Sub-total |
|
12,631 |
|
11,092 |
|
24,374 |
|
20,761 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Amortization of debt issuance costs |
|
1,174 |
|
1,179 |
|
2,350 |
|
2,358 |
| ||||
|
Implicit interest on long-term financing obligations |
|
2,206 |
|
253 |
|
3,889 |
|
253 |
| ||||
|
Interest on capital lease obligation |
|
133 |
|
223 |
|
266 |
|
223 |
| ||||
|
Interest on insurance financing |
|
49 |
|
— |
|
49 |
|
— |
| ||||
|
Capitalized interest |
|
(438 |
) |
(390 |
) |
(785 |
) |
(462 |
) | ||||
|
Interest income |
|
(44 |
) |
(46 |
) |
(87 |
) |
(92 |
) | ||||
|
Total interest expense, net |
|
$ |
15,711 |
|
$ |
12,311 |
|
$ |
30,056 |
|
$ |
23,041 |
|