KapStone Paper and Packaging has reported results for the second quarter ended 30 June 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.”

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 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.

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.

Source: Company Press Release