KapStone Reports 2017 Fourth Quarter And Full Year Results
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- |
Total |
Segment |
Depreciation |
Capital |
Total Assets |
||||||
| 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- |
Total |
Segment |
Depreciation |
Capital |
Total Assets |
||||||
| 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- |
Total |
Segment |
Depreciation |
Capital |
|||||||
| 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 |
Depreciation |
Capital |
|||||||
| 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 |
||||
SOURCE KapStone Paper and Packaging Corporation
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