Attached files
| file | filename |
|---|---|
| EX-99.2 - EX-99.2 - KAPSTONE PAPER & PACKAGING CORP | a18-37058_1ex99d2.htm |
| 8-K - 8-K - KAPSTONE PAPER & PACKAGING CORP | a18-37058_18k.htm |
|
FOR FURTHER INFORMATION: |
FOR IMMEDIATE RELEASE |
|
Andrea K. Tarbox |
Tuesday, October 23, 2018 |
|
Executive Vice President and Chief Financial Officer |
|
|
847.239.8812 |
|
KAPSTONE REPORTS RECORD THIRD QUARTER RESULTS
STRONG CASH FLOWS PROVIDE FOR $100 MILLION DEBT REDUCTION
NORTHBROOK, IL — October 23, 2018 — KapStone Paper and Packaging Corporation (NYSE:KS) today reported record results for the third quarter ended September 30, 2018. As compared to 2017’s third quarter, results for 2018’s third quarter are below:
· Net sales of $894 million up $25 million, or 3 percent
· Net income of $73 million up $42 million, or 142 percent
· Diluted EPS of $0.72 up $0.42 per share, or 140 percent
Non U.S. GAAP financial measures for the 2018 third quarter compared to 2017 are as follows:
· Adjusted EBITDA of $163 million up $42 million, or 35 percent
· Adjusted net income of $78 million up $40 million, or 104 percent
· Adjusted diluted EPS of $0.78 up $0.39 per share, or 100 percent
Matt Kaplan, President and Chief Executive Officer, stated, “I’m extremely proud of our record third quarter results which reflect continued higher prices, good demand and excellent operating performance despite Hurricane Florence’s $6 million EBITDA impact. In addition, we successfully completed our once every five years cold mill maintenance outage at Longview.
“Our balance sheet has strengthened substantially in the past year. Record operating cash flows enabled us to reduce our debt by over $100 million from June 30, 2018, and our bank debt to EBITDA leverage ratio is now 2.33, a significant improvement from a year ago.
“Victory Packaging, our distribution business, had a seasonally strong third quarter and is expecting a strong finish for 2018.”
Third Quarter Operating Highlights
Consolidated net sales of $894 million in the third quarter of 2018 increased by $25 million, or 3 percent, compared to $868 million for the 2017 third quarter. The increase in net sales is primarily due to higher prices, partially offset by lower sales volume. The Company sold 702,000 tons of paper during the third quarter of 2018 compared to 735,000 tons a year earlier. The Company’s average mill selling price of $756 per ton in the third quarter of 2018 increased by $58 per ton, or about 8 percent, compared to the third quarter of 2017 due to higher prices for most products and a favorable product mix. Mill selling prices increased by $20 per ton, or nearly 3 percent, compared to the second quarter of 2018.
Net income of $73 million for the 2018 third quarter increased by $42 million, or 142 percent, compared to the 2017 third quarter. The higher earnings primarily reflects:
· Higher selling prices and a better product mix of $41 million;
· Improved productivity and lower spending generated $9 million of benefits;
· Planned maintenance costs were $4 million lower than the prior year;
· Lower recycled fiber costs of $14 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:
· WestRock merger related expenses of $5 million;
· Inflation of $12 million driven by higher virgin fiber, freight and compensation costs;
· Hurricane Florence idled our Charleston mill for five days with a negative impact of $6 million; and
· $7 million of higher management incentives due to higher earnings.
Cash Flow and Working Capital
Cash and cash equivalents of $22 million as of September 30, 2018, increased by $13 million from June 30, 2018. Operating activities provided $156 million during the third quarter. Investing activities used $32 million and financing activities used $110 million of cash in the current quarter, reflecting a $75 million debt prepayment, $25 million of other debt reductions and a $10 million quarterly dividend payment.
On August 30, 2018, our Board of Directors approved a regular $0.10 per share cash dividend which was paid on October 11th.
At September 30, 2018, the Company had approximately $501 million of working capital and $484 million of revolver borrowing capacity. The Company’s net debt to EBITDA ratio as defined by our credit agreement decreased to 2.33 times at September 30, 2018, down from 3.87 times a year ago.
KapStone and WestRock are targeting completing the proposed merger by the end of the calendar year 2018, subject to satisfaction or waiver of the closing conditions in the merger agreement.
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, 22 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) the ability of KapStone and WestRock to receive the required regulatory
approvals for the proposed acquisition of KapStone by WestRock (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 proposed transaction) and to satisfy the other conditions to the closing of the proposed 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 Whiskey Holdco, Inc. 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 or other employee representatives; and the ability of KapStone and the combined company to retain and hire key personnel. There can be no assurance that the proposed transaction will in fact be consummated in the manner described or at all. 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 September 30, |
|
Nine Months Ended Sept. 30, |
| ||||||||
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net sales |
|
$ |
893,595 |
|
$ |
868,418 |
|
$ |
2,605,526 |
|
$ |
2,456,978 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Cost and expenses: |
|
|
|
|
|
|
|
|
| ||||
|
Cost of sales, excluding depreciation and amortization |
|
593,231 |
|
613,997 |
|
1,781,741 |
|
1,770,536 |
| ||||
|
Depreciation and amortization |
|
45,129 |
|
47,462 |
|
138,823 |
|
138,864 |
| ||||
|
Plant closure costs |
|
— |
|
8,967 |
|
1,752 |
|
8,967 |
| ||||
|
Freight and distribution expenses |
|
82,158 |
|
77,043 |
|
236,997 |
|
225,671 |
| ||||
|
Selling, general and administrative expenses |
|
61,721 |
|
62,767 |
|
192,826 |
|
196,565 |
| ||||
|
Merger expenses |
|
4,590 |
|
— |
|
20,490 |
|
— |
| ||||
|
Gain on sale of property |
|
(680 |
) |
— |
|
(8,133 |
) |
— |
| ||||
|
Operating income |
|
107,446 |
|
58,182 |
|
241,030 |
|
116,375 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Foreign exchange (gain) / loss |
|
(187 |
) |
(415 |
) |
760 |
|
(1,501 |
) | ||||
|
Non operating pension and postretirement income |
|
(3,092 |
) |
(1,563 |
) |
(9,275 |
) |
(4,689 |
) | ||||
|
Equity method investment income |
|
(311 |
) |
(671 |
) |
(1,551 |
) |
(1,377 |
) | ||||
|
Loss on debt extinguishment |
|
456 |
|
631 |
|
456 |
|
631 |
| ||||
|
Interest expense, net |
|
15,865 |
|
15,164 |
|
45,921 |
|
38,205 |
| ||||
|
Income before provision for income taxes |
|
94,715 |
|
45,036 |
|
204,719 |
|
85,106 |
| ||||
|
Provision for income taxes |
|
22,204 |
|
15,010 |
|
46,284 |
|
29,312 |
| ||||
|
Net income |
|
$ |
72,511 |
|
$ |
30,026 |
|
$ |
158,435 |
|
$ |
55,794 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income per share: |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
$ |
0.74 |
|
$ |
0.31 |
|
$ |
1.62 |
|
$ |
0.58 |
|
|
Diluted |
|
$ |
0.72 |
|
$ |
0.30 |
|
$ |
1.59 |
|
$ |
0.57 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Weighted-average number of shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
97,874,258 |
|
96,931,315 |
|
97,665,114 |
|
96,811,060 |
| ||||
|
Diluted |
|
100,135,846 |
|
98,707,395 |
|
99,955,448 |
|
98,521,491 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Effective income tax rate |
|
23.4 |
% |
33.3 |
% |
22.6 |
% |
34.4 |
% | ||||
Supplemental Information
GAAP to Non-GAAP Reconciliations
($ in thousands, except share and per share amounts)
(unaudited)
|
|
|
Quarter Ended September 30, |
|
Nine Months Ended Sept. 30, |
| ||||||||
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net Income (GAAP) to EBITDA (Non-GAAP) to Adjusted EBITDA (Non-GAAP): |
|
|
|
|
|
|
|
|
| ||||
|
Net income (GAAP) |
|
$ |
72,511 |
|
$ |
30,026 |
|
$ |
158,435 |
|
$ |
55,794 |
|
|
Interest expense, net |
|
15,865 |
|
15,164 |
|
45,921 |
|
38,205 |
| ||||
|
Provision for income taxes |
|
22,204 |
|
15,010 |
|
46,284 |
|
29,312 |
| ||||
|
Depreciation and amortization |
|
45,129 |
|
47,462 |
|
138,823 |
|
138,864 |
| ||||
|
EBITDA (Non-GAAP) |
|
$ |
155,709 |
|
$ |
107,662 |
|
$ |
389,463 |
|
$ |
262,175 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Acquisition, integration, start-up and other expenses |
|
$ |
(922 |
) |
$ |
1,815 |
|
$ |
2,431 |
|
$ |
9,231 |
|
|
Union contract ratification cost |
|
1,036 |
|
946 |
|
1,036 |
|
5,925 |
| ||||
|
Merger expenses |
|
4,590 |
|
— |
|
20,490 |
|
— |
| ||||
|
Plant closure costs |
|
— |
|
8,967 |
|
1,752 |
|
8,967 |
| ||||
|
Change in fair value of contingent consideration liability |
|
518 |
|
(3,910 |
) |
518 |
|
(340 |
) | ||||
|
Gain on sale of property / loss on asset disposals |
|
(680 |
) |
1,960 |
|
(8,133 |
) |
1,960 |
| ||||
|
Stock-based compensation expense |
|
2,011 |
|
2,650 |
|
7,176 |
|
12,676 |
| ||||
|
Loss on debt extinguishment |
|
456 |
|
631 |
|
456 |
|
631 |
| ||||
|
Accumulated EBITDA adjustments |
|
7,009 |
|
13,059 |
|
25,726 |
|
39,050 |
| ||||
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
162,718 |
|
$ |
120,721 |
|
$ |
415,189 |
|
$ |
301,225 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net Income (GAAP) to Adjusted Net Income (Non-GAAP): |
|
|
|
|
|
|
|
|
| ||||
|
Net income (GAAP) |
|
$ |
72,511 |
|
$ |
30,026 |
|
$ |
158,435 |
|
$ |
55,794 |
|
|
Accumulated EBITDA adjustments |
|
7,009 |
|
13,059 |
|
25,726 |
|
39,050 |
| ||||
|
Accumulated tax adjustments |
|
(1,682 |
) |
(4,897 |
) |
(6,174 |
) |
(14,644 |
) | ||||
|
Adjusted Net Income (Non-GAAP) |
|
$ |
77,838 |
|
$ |
38,188 |
|
$ |
177,987 |
|
$ |
80,200 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Diluted EPS (GAAP) to Adjusted Diluted EPS (Non-GAAP): |
|
|
|
|
|
|
|
|
| ||||
|
Diluted earnings per share (GAAP) |
|
$ |
0.72 |
|
$ |
0.30 |
|
$ |
1.59 |
|
$ |
0.57 |
|
|
Accumulated EBITDA adjustments |
|
0.08 |
|
0.14 |
|
0.25 |
|
0.39 |
| ||||
|
Accumulated tax adjustments |
|
(0.02 |
) |
(0.05 |
) |
(0.06 |
) |
(0.15 |
) | ||||
|
Adjusted Diluted EPS (Non-GAAP) |
|
$ |
0.78 |
|
$ |
0.39 |
|
$ |
1.78 |
|
$ |
0.81 |
|
KapStone Paper and Packaging Corporation
Consolidated Balance Sheets
(In thousands)
|
|
|
September 30, |
|
December 31, |
| ||
|
|
|
2018 |
|
2017 |
| ||
|
|
|
(Unaudited) |
|
|
| ||
|
Assets |
|
|
|
|
| ||
|
Current assets: |
|
|
|
|
| ||
|
Cash and cash equivalents |
|
$ |
22,431 |
|
$ |
28,065 |
|
|
Trade accounts receivable, net of allowances |
|
488,007 |
|
443,462 |
| ||
|
Other receivables |
|
17,218 |
|
23,289 |
| ||
|
Inventories |
|
348,432 |
|
315,575 |
| ||
|
Prepaid expenses and other current assets |
|
18,177 |
|
17,470 |
| ||
|
Total current assets |
|
894,265 |
|
827,861 |
| ||
|
|
|
|
|
|
| ||
|
Plant, property and equipment, net |
|
1,456,648 |
|
1,453,607 |
| ||
|
Other assets |
|
27,760 |
|
24,431 |
| ||
|
Intangible assets, net |
|
274,243 |
|
297,475 |
| ||
|
Goodwill |
|
720,611 |
|
720,611 |
| ||
|
Total assets |
|
$ |
3,373,527 |
|
$ |
3,323,985 |
|
|
|
|
|
|
|
| ||
|
Liabilities and Stockholders’ Equity |
|
|
|
|
| ||
|
Current liabilities: |
|
|
|
|
| ||
|
Short-term borrowings |
|
$ |
— |
|
$ |
— |
|
|
Other current borrowings |
|
2,272 |
|
— |
| ||
|
Other financial obligations |
|
1,123 |
|
30 |
| ||
|
Dividend payable |
|
10,392 |
|
10,302 |
| ||
|
Accounts payable |
|
210,098 |
|
199,574 |
| ||
|
Accrued expenses |
|
85,948 |
|
105,951 |
| ||
|
Accrued compensation costs |
|
82,457 |
|
75,215 |
| ||
|
Accrued income taxes |
|
528 |
|
31,458 |
| ||
|
Total current liabilities |
|
392,818 |
|
422,530 |
| ||
|
|
|
|
|
|
| ||
|
Long-term debt, net of current portion |
|
1,309,486 |
|
1,374,502 |
| ||
|
Long-term financing obligations |
|
91,794 |
|
82,199 |
| ||
|
Capital lease obligation |
|
4,570 |
|
4,595 |
| ||
|
Pension and post-retirement benefits |
|
5,574 |
|
14,196 |
| ||
|
Deferred income taxes |
|
254,968 |
|
252,101 |
| ||
|
Other liabilities |
|
32,471 |
|
36,848 |
| ||
|
Total other liabilities |
|
1,698,863 |
|
1,764,441 |
| ||
|
|
|
|
|
|
| ||
|
Stockholders’ equity: |
|
|
|
|
| ||
|
Common stock $0.0001 par value |
|
10 |
|
10 |
| ||
|
Additional paid-in capital |
|
306,711 |
|
291,629 |
| ||
|
Retained earnings |
|
1,022,942 |
|
894,061 |
| ||
|
Accumulated other comprehensive loss |
|
(47,817 |
) |
(48,686 |
) | ||
|
Total stockholders’ equity |
|
1,281,846 |
|
1,137,014 |
| ||
|
Total liabilities and stockholders’ equity |
|
$ |
3,373,527 |
|
$ |
3,323,985 |
|
KapStone Paper and Packaging Corporation
Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
|
|
|
Quarter Ended September 30, |
|
Nine Months Ended Sept. 30, |
| ||||||||
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| ||||
|
Operating activities: |
|
|
|
|
|
|
|
|
| ||||
|
Net income |
|
$ |
72,511 |
|
$ |
30,026 |
|
$ |
158,435 |
|
$ |
55,794 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
| ||||
|
Depreciation of plant and equipment |
|
37,385 |
|
39,718 |
|
115,591 |
|
115,710 |
| ||||
|
Amortization of intangible assets |
|
7,744 |
|
7,744 |
|
23,232 |
|
23,154 |
| ||||
|
Stock-based compensation expense |
|
2,011 |
|
2,650 |
|
7,176 |
|
12,676 |
| ||||
|
Pension and postretirement |
|
(2,568 |
) |
(745 |
) |
(7,650 |
) |
(1,971 |
) | ||||
|
Amortization of debt issuance costs |
|
1,203 |
|
1,199 |
|
3,553 |
|
3,557 |
| ||||
|
Loss on debt extinguishment |
|
456 |
|
631 |
|
456 |
|
631 |
| ||||
|
Loss on disposal of fixed assets |
|
474 |
|
2,799 |
|
1,499 |
|
3,785 |
| ||||
|
Deferred income taxes |
|
207 |
|
(7,768 |
) |
2,633 |
|
(6,240 |
) | ||||
|
Change in fair value of contingent consideration liability |
|
518 |
|
(3,910 |
) |
518 |
|
(340 |
) | ||||
|
Equity method investments income, net of cash received |
|
749 |
|
365 |
|
455 |
|
473 |
| ||||
|
Plant closure costs |
|
— |
|
8,043 |
|
793 |
|
8,043 |
| ||||
|
Provision for bad debts |
|
322 |
|
2,012 |
|
1,180 |
|
2,926 |
| ||||
|
Gain on sale of property |
|
(680 |
) |
— |
|
(8,133 |
) |
— |
| ||||
|
Multiemployer pension plan withdrawal expense |
|
— |
|
— |
|
226 |
|
— |
| ||||
|
Changes in operating assets and liabilities |
|
35,549 |
|
43,658 |
|
(111,068 |
) |
(42,279 |
) | ||||
|
Net cash provided by operating activities |
|
$ |
155,881 |
|
$ |
126,422 |
|
$ |
188,896 |
|
$ |
175,919 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Investing activities: |
|
|
|
|
|
|
|
|
| ||||
|
Capital expenditures |
|
(33,334 |
) |
(34,234 |
) |
(111,739 |
) |
(108,012 |
) | ||||
|
Proceeds from the sale of property |
|
1,039 |
|
— |
|
15,720 |
|
— |
| ||||
|
API acquisition |
|
— |
|
— |
|
— |
|
(33,500 |
) | ||||
|
Net cash used in investing activities |
|
$ |
(32,295 |
) |
$ |
(34,234 |
) |
$ |
(96,019 |
) |
$ |
(141,512 |
) |
|
|
|
|
|
|
|
|
|
|
| ||||
|
Financing activities: |
|
|
|
|
|
|
|
|
| ||||
|
Proceeds from revolving credit facility |
|
$ |
28,000 |
|
$ |
79,000 |
|
$ |
270,000 |
|
$ |
347,500 |
|
|
Repayments on revolving credit facility |
|
(53,000 |
) |
(98,500 |
) |
(270,000 |
) |
(345,000 |
) | ||||
|
Proceeds from receivables credit facility |
|
9,873 |
|
24,854 |
|
45,599 |
|
75,248 |
| ||||
|
Repayments on receivables credit facility |
|
(10,014 |
) |
(5,055 |
) |
(39,461 |
) |
(26,676 |
) | ||||
|
Repayments on long-term debt |
|
(75,000 |
) |
(75,000 |
) |
(75,000 |
) |
(75,000 |
) | ||||
|
Repayments on other financing obligations |
|
(275 |
) |
(271 |
) |
(812 |
) |
(282 |
) | ||||
|
Proceeds from other current borrowings |
|
— |
|
— |
|
6,767 |
|
6,214 |
| ||||
|
Payments on other current borrowings |
|
(2,256 |
) |
(2,071 |
) |
(4,495 |
) |
(4,130 |
) | ||||
|
Payment of loan amendment costs |
|
— |
|
(1,301 |
) |
(162 |
) |
(1,488 |
) | ||||
|
Cash dividends paid |
|
(9,781 |
) |
(9,683 |
) |
(29,253 |
) |
(29,026 |
) | ||||
|
Payment of withholding taxes on vested stock awards |
|
(52 |
) |
(996 |
) |
(1,957 |
) |
(1,871 |
) | ||||
|
Proceeds from exercises of stock options |
|
1,759 |
|
188 |
|
8,927 |
|
1,041 |
| ||||
|
Proceeds from issuance of shares to ESPP |
|
442 |
|
485 |
|
936 |
|
972 |
| ||||
|
Payment of Victory Packaging contingent consideration |
|
— |
|
— |
|
(9,600 |
) |
— |
| ||||
|
Net cash provided by financing activities |
|
$ |
(110,304 |
) |
$ |
(88,350 |
) |
$ |
(98,511 |
) |
$ |
(52,498 |
) |
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net increase (decrease) in cash and cash equivalents |
|
13,282 |
|
3,838 |
|
(5,634 |
) |
(18,091 |
) | ||||
|
Cash and cash equivalents-beginning of period |
|
9,149 |
|
7,456 |
|
28,065 |
|
29,385 |
| ||||
|
Cash and cash equivalents-end of period |
|
$ |
22,431 |
|
$ |
11,294 |
|
$ |
22,431 |
|
$ |
11,294 |
|
KapStone Paper and Packaging Corporation
Operating Segment Information
(In thousands)
(Unaudited)
|
|
|
Net Sales |
|
Operating |
|
Depreciation |
|
|
|
Total Assets |
| |||||||||||
|
Three Months Ended September 30, 2018 |
|
Trade |
|
Inter- |
|
Total |
|
Income |
|
and |
|
Capital |
|
at Sept. 30, |
| |||||||
|
Paper and Packaging |
|
$ |
632,406 |
|
$ |
20,201 |
|
$ |
652,607 |
|
$ |
109,695 |
|
$ |
37,880 |
|
$ |
32,586 |
|
$ |
2,657,300 |
|
|
Distribution |
|
261,189 |
|
— |
|
261,189 |
|
11,793 |
|
5,757 |
|
67 |
|
672,321 |
| |||||||
|
Corporate |
|
— |
|
— |
|
— |
|
(14,042 |
) |
1,492 |
|
681 |
|
43,906 |
| |||||||
|
Intersegment eliminations |
|
— |
|
(20,201 |
) |
(20,201 |
) |
— |
|
— |
|
— |
|
— |
| |||||||
|
|
|
$ |
893,595 |
|
$ |
— |
|
$ |
893,595 |
|
$ |
107,446 |
|
$ |
45,129 |
|
$ |
33,334 |
|
$ |
3,373,527 |
|
|
|
|
Net Sales |
|
Operating |
|
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 |
|
$ |
61,871 |
|
$ |
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 |
|
$ |
58,182 |
|
$ |
47,462 |
|
$ |
34,234 |
|
$ |
3,367,277 |
|
|
|
|
Net Sales |
|
Segment |
|
Depreciation |
|
|
| ||||||||||
|
Nine Months Ended September 30, 2018 |
|
Trade |
|
Inter- |
|
Total |
|
Income |
|
and |
|
Capital |
| ||||||
|
Paper and Packaging |
|
$ |
1,848,026 |
|
$ |
59,819 |
|
$ |
1,907,845 |
|
$ |
268,545 |
|
$ |
116,356 |
|
$ |
107,376 |
|
|
Distribution |
|
757,500 |
|
— |
|
757,500 |
|
27,082 |
|
17,575 |
|
973 |
| ||||||
|
Corporate |
|
— |
|
— |
|
— |
|
(54,597 |
) |
4,892 |
|
3,390 |
| ||||||
|
Intersegment eliminations |
|
— |
|
(59,819 |
) |
(59,819 |
) |
— |
|
— |
|
— |
| ||||||
|
|
|
$ |
2,605,526 |
|
$ |
— |
|
$ |
2,605,526 |
|
$ |
241,030 |
|
$ |
138,823 |
|
$ |
111,739 |
|
|
|
|
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 |
|
$ |
137,320 |
|
$ |
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 |
|
$ |
116,375 |
|
$ |
138,864 |
|
$ |
108,012 |
|
KapStone Paper and Packaging Corporation
Operating Segment EBITDA and Adjusted EBITDA
(In thousands)
(Unaudited)
|
|
|
Quarter Ended September 30, |
|
Nine Months Ended Sept. 30, |
| ||||||||
|
Paper and Packaging |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| ||||
|
Segment operating income |
|
$ |
109,695 |
|
$ |
61,871 |
|
$ |
268,545 |
|
$ |
137,320 |
|
|
Equity method investments income |
|
(311 |
) |
(671 |
) |
(1,551 |
) |
(1,377 |
) | ||||
|
Foreign exchange loss / (gain) |
|
70 |
|
(173 |
) |
551 |
|
(809 |
) | ||||
|
Non operating pension and postretirement income |
|
(3,092 |
) |
(1,563 |
) |
(9,275 |
) |
(4,689 |
) | ||||
|
Loss on debt extinguishment |
|
456 |
|
— |
|
456 |
|
— |
| ||||
|
Depreciation and amortization |
|
37,880 |
|
39,727 |
|
116,356 |
|
115,325 |
| ||||
|
EBITDA |
|
150,452 |
|
104,005 |
|
394,720 |
|
259,520 |
| ||||
|
Acquisition, integration, start-up and other expenses |
|
948 |
|
988 |
|
3,655 |
|
5,340 |
| ||||
|
Gain on sale of property / loss on asset disposals |
|
(680 |
) |
645 |
|
(8,133 |
) |
645 |
| ||||
|
Plant closure costs |
|
— |
|
8,967 |
|
1,752 |
|
8,967 |
| ||||
|
Loss on debt extinguishment |
|
456 |
|
— |
|
456 |
|
— |
| ||||
|
Union contract ratification costs |
|
1,036 |
|
946 |
|
1,036 |
|
5,925 |
| ||||
|
Adjusted EBITDA |
|
$ |
152,212 |
|
$ |
115,551 |
|
$ |
393,486 |
|
$ |
280,397 |
|
|
Adjusted EBITDA margin |
|
23.3 |
% |
18.1 |
% |
20.6 |
% |
15.6 |
% | ||||
|
|
|
Quarter Ended September 30, |
|
Nine Months Ended Sept. 30, |
| ||||||||
|
Distribution |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| ||||
|
Segment operating income |
|
$ |
11,793 |
|
$ |
5,776 |
|
$ |
27,082 |
|
$ |
19,158 |
|
|
Foreign exchange (gain) / loss |
|
(257 |
) |
(242 |
) |
209 |
|
(692 |
) | ||||
|
Depreciation and amortization |
|
5,757 |
|
5,864 |
|
17,575 |
|
17,814 |
| ||||
|
EBITDA |
|
17,807 |
|
11,882 |
|
44,448 |
|
37,664 |
| ||||
|
Gain on sale of property / loss on asset disposals |
|
— |
|
1,315 |
|
— |
|
1,315 |
| ||||
|
Acquisition, integration, start-up and other expenses |
|
(1,637 |
) |
51 |
|
(1,511 |
) |
1,714 |
| ||||
|
Adjusted EBITDA |
|
$ |
16,170 |
|
$ |
13,248 |
|
$ |
42,937 |
|
$ |
40,693 |
|
|
Adjusted EBITDA margin |
|
6.2 |
% |
5.3 |
% |
5.7 |
% |
5.6 |
% | ||||
|
|
|
Quarter Ended September 30, |
|
Nine Months Ended Sept. 30, |
| ||||||||
|
Corporate |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| ||||
|
Segment operating (loss) |
|
$ |
(14,042 |
) |
$ |
(9,465 |
) |
$ |
(54,597 |
) |
$ |
(40,103 |
) |
|
Loss on debt extinguishment |
|
— |
|
631 |
|
— |
|
631 |
| ||||
|
Depreciation and amortization |
|
1,492 |
|
1,871 |
|
4,892 |
|
5,725 |
| ||||
|
EBITDA |
|
(12,550 |
) |
(8,225 |
) |
(49,705 |
) |
(35,009 |
) | ||||
|
Stock-based compensation expense |
|
2,011 |
|
2,650 |
|
7,176 |
|
12,676 |
| ||||
|
Acquisition, integration, start-up and other expenses |
|
(233 |
) |
776 |
|
287 |
|
2,177 |
| ||||
|
Change in fair value of contingent consideration liability |
|
518 |
|
(3,910 |
) |
518 |
|
(340 |
) | ||||
|
Loss on debt extinguishment |
|
— |
|
631 |
|
— |
|
631 |
| ||||
|
Merger expenses |
|
4,590 |
|
— |
|
20,490 |
|
— |
| ||||
|
Adjusted EBITDA |
|
$ |
(5,664 |
) |
$ |
(8,078 |
) |
$ |
(21,234 |
) |
$ |
(19,865 |
) |
|
|
|
Quarter Ended September 30, |
|
Nine Months Ended Sept. 30, |
| ||||||||
|
Consolidated |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| ||||
|
Segment operating income |
|
$ |
107,446 |
|
$ |
58,182 |
|
$ |
241,030 |
|
$ |
116,375 |
|
|
Equity method investments income |
|
(311 |
) |
(671 |
) |
(1,551 |
) |
(1,377 |
) | ||||
|
Foreign exchange (gain) / loss |
|
(187 |
) |
(415 |
) |
760 |
|
(1,501 |
) | ||||
|
Non operating pension and postretirement income |
|
(3,092 |
) |
(1,563 |
) |
(9,275 |
) |
(4,689 |
) | ||||
|
Loss on debt extinguishment |
|
456 |
|
631 |
|
456 |
|
631 |
| ||||
|
Depreciation and amortization |
|
45,129 |
|
47,462 |
|
138,823 |
|
138,864 |
| ||||
|
EBITDA |
|
155,709 |
|
107,662 |
|
389,463 |
|
262,175 |
| ||||
|
Stock-based compensation expense |
|
2,011 |
|
2,650 |
|
7,176 |
|
12,676 |
| ||||
|
Acquisition, integration, start-up and other expenses |
|
(922 |
) |
1,815 |
|
2,431 |
|
9,231 |
| ||||
|
Union contract ratification costs |
|
1,036 |
|
946 |
|
1,036 |
|
5,925 |
| ||||
|
Plant closure costs |
|
— |
|
8,967 |
|
1,752 |
|
8,967 |
| ||||
|
Loss on debt extinguishment |
|
456 |
|
631 |
|
456 |
|
631 |
| ||||
|
Change in fair value of contingent consideration liability |
|
518 |
|
(3,910 |
) |
518 |
|
(340 |
) | ||||
|
Gain on sale of property / loss on asset disposals |
|
(680 |
) |
1,960 |
|
(8,133 |
) |
1,960 |
| ||||
|
Merger expenses |
|
4,590 |
|
— |
|
20,490 |
|
— |
| ||||
|
Adjusted EBITDA |
|
$ |
162,718 |
|
$ |
120,721 |
|
$ |
415,189 |
|
$ |
301,225 |
|