KAPSTONE PAPER AND PACKAGING CORP. NORTHBROOK, Ill., Feb. 8, 2017 /PRNewswire/ -- KapStone Paper and Packaging Corporation (NYSE:KS) today reported preliminary results for the fourth quarter and year ended December 31, 2016.
As compared to 2015's fourth quarter, results for 2016's fourth quarter:
-- Net sales of $777 million, up $13 million, or 2 percent
-- Net income of $18 million, up $7 million, or 55 percent
-- Diluted EPS of $0.19, up $0.07 per share, or 58 percent
Non U.S. GAAP financial measures for 2016's fourth quarter as compared to 2015's fourth quarter:
-- Adjusted EBITDA of $92 million, up $10 million, or 13 percent
-- Adjusted net income of $23 million, up $7 million, or 43 percent
-- Adjusted diluted EPS of $0.24, up $0.07 per share, or 41 percent
As compared to the year ended December 31, 2015, results for the year ended December 31, 2016:
-- Net sales of $3,077 million, up $288 million, or 10 percent
-- Net income of $86 million, down $20 million, or 19 percent
-- Diluted EPS of $0.88, down $0.21 per share, or 19 percent
Non U.S. GAAP financial measures for the year ended December 31, 2016 as compared to 2015's year:
-- Adjusted EBITDA of $384 million, down $20 million, or 5 percent
-- Adjusted net income of $107 million, down $30 million, or 22 percent
-- Adjusted diluted EPS of $1.10, down $0.31 per share, or 22 percent
Matthew Kaplan, President and Chief Executive Officer, stated, "During 2016, we made substantial progress in our initiatives to improve productivity and reduce costs. These efforts helped to mitigate the negative impact of eroding pricing and a less favorable product mix.
"We've made good progress towards our goal to increase integration. We achieved our goals at Victory while making several investments / acquisitions, the most recent being the purchase of Associated Packaging, Inc. on February 1, 2017, that will further increase integration levels.
"Operating cash flow continues to be strong as we generated $282 million during 2016, up $20 million compared to 2015."
Randy Nebel, recently appointed Executive Vice President of KapStone's Integrated Packaging System, stated, "2016 operating performance reflected a record production year for the Company's Longview and Roanoke Rapids mills, while progress continues on improving reliability and quality at our other mills. In addition, with the recent capital investments made at corrugated products plants, we expect that efficiency will be improved in 2017. In addition, in the fourth quarter we implemented a $40 per ton containerboard price increase and began raising prices for corrugated products. Also, demand was stronger in a quarter when we normally see lower volumes. Our results were negatively impacted by the impact of Hurricane Matthew which reduced pre-tax earnings by about $6 million."
Fourth Quarter Operating Highlights
Consolidated net sales of $777 million in the fourth quarter of 2016 were $13 million higher than 2015, reflecting higher volumes in the paper and packaging segment as 724,000 tons of paper were shipped during the fourth quarter of 2016 compared to 658,000 tons a year earlier. The Company's average mill selling price of $617 per ton in the fourth quarter of 2016 was lower by $29 per ton compared to the fourth quarter of 2015 due to the combined impact of lower export and domestic containerboard selling prices and lower export kraft paper prices. Average mill selling prices decreased $9 per ton from the third quarter of 2016, reflecting seasonal mix, partially offset by the impact from the October $40 per ton containerboard price increase. Distribution segment sales declined by $5 million due to lower volume and prices when compared to the fourth quarter of 2015.
Operating income of $38 million for the 2016 fourth quarter increased by $9 million, or 30 percent, compared to the 2015 fourth quarter. Financial performance in the current quarter improved mainly due to higher sales volumes, lower planned maintenance costs, lower compensation and benefit costs and a reduction in the fair value of the contingent consideration for the Victory Packaging acquisition. These factors were partially offset by lower selling prices, the impact of Hurricane Matthew and a non-cash charge for withdrawing from a multiemployer pension plan.
Interest expense was $10 million for the fourth quarter of 2016, up $1 million from a year ago, as a result of higher interest rates. At December 31, 2016, the average interest rate on our debt was 2.1 percent compared to 2.0 percent at the end of 2015.
The effective income tax rate for the fourth quarter of 2016 was 32.6 percent compared to 34.6 percent for the fourth quarter of 2015.
Full Year Operating Highlights
Consolidated net sales for the year ended December 31, 2016, were $3,077 million, an increase of 10 percent, compared to 2015 sales of $2,789 million. The increase was due to twelve months of Victory Packaging results in 2016 compared to seven months in 2015, partially offset by lower selling prices and a less favorable product mix.
Operating income of $171 million for the year ended December 31, 2016 was lower than 2015's $199 million by 14%. The decrease was due to lower selling prices, a less favorable product mix, higher depreciation charges, the impact of Hurricane Matthew and a non-cash charge for withdrawing from a multiemployer pension plan. These factors were partially offset by twelve months of operating results for Victory Packaging and related synergies with KapStone's mill and plant system, the cost associated with the 2015 Longview mill work stoppage, lower incentive compensation due to lower earnings and lower benefit costs.
Interest expense for the year ended December 31, 2016 was $40 million, up $6 million from a year ago, mainly due to the full-year effect of borrowings relating to the Victory Packaging acquisition. Also, interest rates were higher in 2016 compared to 2015. The average interest rate was about 2.1 percent for 2016 compared to 1.9 percent for 2015. Loss on debt extinguishment totaled $0.7 million in 2016 compared to $1.2 million in 2015, reflecting lower voluntary debt prepayments in 2016.
The effective income tax rate for the year ended December 31, 2016 was 32.7 percent compared to 34.2 percent for 2015.
Cash Flow and Working Capital
Cash and cash equivalents increased by $20 million during the current quarter to $29 million at December 31, 2016. The Company generated $70 million of net cash from operating activities during the fourth quarter of 2016. Capital expenditures in the fourth quarter were $28 million. The Company paid $10 million of dividends and reduced borrowings by $11 million in the fourth quarter of 2016.
Cash and cash equivalents increased by $23 million during 2016 compared to December 31, 2015, reflecting cash provided by operating activities of $282 million, cash used for capital expenditures of $127 million and $27 million of strategic investments mainly to increase mill integration. Cash used by financing activities totaled $108 million reflecting $39 million of cash dividends paid to shareholders and a $65 million debt prepayment.
At December 31, 2016, the Company had approximately $428 million of working capital and $483 million of revolver borrowing capacity.
Conclusion
In summary, Kaplan commented, "Our selling prices are increasing and we are generating more cash flow. We have implemented the October containerboard price increase based on contractual agreements. We anticipate improved performance in 2017."
Conference Call
KapStone will host a conference call at 11 a.m. ET, Thursday, February 9, 2017, to discuss the Company's financial results for the 2016 fourth quarter and full year. 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: 52791124
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, 24 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 and (8) realizing the synergies and benefits of strategic investments. 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, 2015 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,
-------------------------- -----------------------
2016 2015 2016 2015
---- ---- ---- ----
Net sales $777,495 $764,238 $3,077,257 $2,789,345
Cost and expenses:
Cost of sales, excluding
depreciation and
amortization 563,953 560,743 2,214,872 1,982,686
Depreciation and
amortization 46,685 47,562 182,213 162,179
Freight and distribution
expenses 71,236 66,528 279,023 234,469
Selling, general and
administrative expenses 51,720 60,592 224,127 210,844
Multiemployer pension plan
withdrawal expense 6,376 - 6,376 -
----- --- ----- ---
Operating income 37,525 28,813 170,646 199,167
Foreign exchange loss 737 852 2,255 2,556
Equity method investments
income (548) - (548) -
Loss on debt
extinguishment - 590 679 1,218
Interest expense, net 10,113 9,303 40,078 33,759
------ ----- ------ ------
Income before provision
for income taxes 27,223 18,068 128,182 161,634
Provision for income taxes 8,885 6,244 41,930 55,248
----- ----- ------ ------
Net income $18,338 $11,824 $86,252 $106,386
======= ======= ======= ========
Net income per share:
Basic $0.19 $0.12 $0.89 $1.11
===== ===== ===== =====
Diluted $0.19 $0.12 $0.88 $1.09
===== ===== ===== =====
Weighted-average number of shares outstanding:
Basic 96,633,431 96,321,138 96,533,368 96,257,749
========== ========== ========== ==========
Diluted 98,257,232 97,663,564 97,777,066 97,635,539
========== ========== ========== ==========
Effective income tax rate 32.6% 34.6% 32.7% 34.2%
==== ==== ==== ====
Supplemental Information
GAAP to Non-GAAP Reconciliations
($ in thousands, except share and per share amounts)
(unaudited)
Quarter Ended December 31, Year Ended December 31,
-------------------------- -----------------------
2016 2015 2016 2015
---- ---- ---- ----
Net Income (GAAP) to EBITDA (Non-GAAP) to Adjusted
EBITDA (Non-GAAP):
Net income (GAAP) $18,338 $11,824 $86,252 $106,386
Interest expense, net 10,113 9,303 40,078 33,759
Provision for income
taxes 8,885 6,244 41,930 55,248
Depreciation and
amortization 46,685 47,562 182,213 162,179
------ ------ ------- -------
EBITDA (Non-GAAP) $84,021 $74,933 $350,473 $357,572
======= ======= ======== ========
Victory Packaging
inventory step-up
expense - - - 5,800
Acquisition, casualty,
impairment and other
expenses 2,123 1,989 8,608 6,082
Change in fair value of
contingent
consideration
liability (2,979) 1,647 1,600 3,700
Severance expenses 533 102 7,560 5,076
Longview work stoppage - 673 - 15,137
Loss on debt
extinguishment - 590 679 1,218
Multiemployer pension
plan withdrawal
expense 6,376 - 6,376 -
Stock-based
compensation expense 1,750 1,713 8,938 9,835
----- ----- ----- -----
Accumulated EBITDA
adjustments 7,803 6,714 33,761 46,848
Adjusted EBITDA (Non-
GAAP) $91,824 $81,647 $384,234 $404,420
======= ======= ======== ========
Net Income (GAAP) to Adjusted Net Income (Non-GAAP):
Net income (GAAP) $18,338 $11,824 $86,252 $106,386
Accumulated EBITDA
adjustments 7,803 6,714 33,761 46,848
Accumulated tax
adjustments* (2,926) (2,323) (12,660) (15,806)
------ ------ ------- -------
Adjusted Net Income
(Non-GAAP) $23,215 $16,215 $107,353 $137,424
======= ======= ======== ========
Diluted EPS (GAAP) to Adjusted Diluted EPS (Non-GAAP):
Diluted earnings per
share (GAAP) $0.19 $0.12 $0.88 $1.09
Accumulated EBITDA
adjustments 0.08 0.07 0.35 0.48
Accumulated tax
adjustments ( 0.03) ( 0.02) ( 0.13) ( 0.16)
Adjusted Diluted EPS
(Non-GAAP) $0.24 $0.17 $1.10 $1.41
===== ===== ===== =====
* Accumulated tax adjustments in
2016 reflect Accumulated EBITDA
adjustments tax affected at 37.5
percent, the Company's marginal
income tax rate.
* Accumulated tax adjustments in
2015 reflect Accumulated EBITDA
adjustments tax affected at 34.6
percent and 33.7 percent,
respectively.
KapStone Paper and Packaging Corporation
Consolidated Balance Sheets
(In thousands)
December 31, December 31,
2016 2015
---- ----
(Preliminary and Unaudited)
Assets
Current assets:
Cash and cash
equivalents $29,385 $6,821
Trade accounts
receivable, net of
allowances 392,962 363,869
Other receivables 13,562 18,732
Inventories 322,664 335,903
Prepaid expenses and
other current assets 10,247 28,932
Total current assets 768,820 754,257
------- -------
Plant, property and
equipment, net 1,441,557 1,406,146
Other assets 25,468 12,532
Intangible assets, net 314,413 344,583
Goodwill 705,617 704,592
------- -------
Total assets $3,255,875 $3,222,110
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings $ - $6,400
Dividend payable 10,052 9,862
Accounts payable 189,350 196,491
Accrued expenses 76,480 73,138
Accrued compensation
costs 48,840 64,149
Accrued income taxes 15,971 15
Total current
liabilities 340,693 350,055
------- -------
Long-term debt, net of
current portion 1,485,323 1,543,748
Pension and post-
retirement benefits 34,207 40,510
Deferred income taxes 405,561 418,479
Other liabilities 85,761 24,038
Total other liabilities 2,010,852 2,026,775
--------- ---------
Stockholders' equity:
Common stock $0.0001
par value 10 10
Additional paid-in
capital 275,970 266,220
Retained earnings 689,668 642,306
Accumulated other
comprehensive loss (61,318) (63,256)
------- -------
Total stockholders'
equity 904,330 845,280
Total liabilities and
stockholders' equity $3,255,875 $3,222,110
========== ==========
KapStone Paper and Packaging Corporation
Consolidated Statement of Cash Flows
(In thousands)
(Preliminary and Unaudited)
Quarter Ended December 31, Year Ended December 31,
-------------------------- -----------------------
2016 2015 2016 2015
---- ---- ---- ----
Operating activities:
Net income $18,338 $11,824 $86,252 $106,386
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of plant
and equipment 39,175 38,876 149,318 136,886
Amortization of
intangible assets 7,510 8,686 32,895 25,293
Stock-based
compensation expense 1,750 1,713 8,938 9,835
Pension and
postretirement (2,106) (2,803) (3,694) (11,182)
Excess tax benefit from
stock-based
compensation 57 (131) 207 (1,649)
Amortization of debt
issuance costs 1,179 1,182 4,804 5,546
Loss on disposal of
fixed assets 443 946 3,599 951
Loss on debt
extinguishment - 590 679 1,218
Inventory step-up
expense - - - 5,800
Deferred income taxes (14,660) 4,601 (14,440) 11,042
Change in fair value of
contingent
consideration
liability (2,979) 1,647 1,600 3,700
Equity method
investments income (548) - (548) -
Multiemployer pension
plan withdrawal
expense 6,376 - 6,376 -
Changes in operating
assets and liabilities 14,998 18,678 5,934 (31,369)
Net cash provided by
operating activities $69,533 $85,809 $281,920 $262,457
------- ------- -------- --------
Investing activities:
Equity method
investments (57) - (11,807) -
Purchase of intangible
assets (500) - (2,525) -
Acquisitions, net of
cash acquired - - (15,438) (617,046)
Capital expenditures (27,619) (31,861) (126,865) (126,756)
Proceeds from the sales
of assets - - 4,881 -
Net cash used in
investing activities $(28,176) $(31,861) $(151,754) $(743,802)
-------- -------- --------- ---------
Financing activities:
Proceeds from revolving
credit facility 97,800 $81,800 $451,000 $350,000
Repayments on revolving
credit facility (109,300) (77,400) (457,400) (343,600)
Proceeds from
receivables credit
facility 6,445 21,740 43,001 134,701
Repayments on
receivables credit
facility (6,675) (17,639) (39,342) (36,088)
Proceeds from long-
term debt - - - 519,763
Repayments on long-
term debt - (51,750) (64,687) (116,438)
Payment of loan
amendment costs and
debt issuance fees - - (2,250) (10,790)
Proceeds from other
current borrowings - - - 6,615
Payment from other
current borrowings - (2,214) - (6,615)
Cash dividends paid (9,735) (9,631) (38,736) (38,729)
Payment of withholding
taxes on vested stock
awards 31 (48) (810) (2,508)
Proceeds from exercises
of stock options 70 118 858 896
Proceeds from issuance
of shares to ESPP - (1) 971 843
Excess tax benefit from
stock-based
compensation (57) 131 (207) 1,649
Net cash provided (used
in) /provided by
financing activities $(21,421) $(54,894) $(107,602) $459,699
-------- -------- --------- --------
Net increase in cash
and cash equivalents 19,936 (946) 22,564 (21,646)
Cash and cash
equivalents-beginning
of period 9,449 7,767 6,821 28,467
Cash and cash
equivalents-end of
period $29,385 $6,821 $29,385 $6,821
======= ====== ======= ======
KapStone Paper and Packaging Corporation
Operating Segment Information
(In thousands)
(Preliminary and Unaudited)
Net Sales
---------
Three Months Ended
December 31, 2016 Trade Inter- Total Segment Depreciation Capital Total Assets
segment Operating and Expenditures at December
Income Amortization 31, 2016
(Loss)
---
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
---------
Three Months Ended
December 31, 2015 Trade Inter- Total Segment Depreciation Capital Total Assets
segment Operating and Expenditures at December
Income Amortization 31, 2015
(Loss)
---
Paper and Packaging $522,815 $13,864 $536,679 $33,691 $40,640 $26,627 $2,489,683
Distribution 241,423 - 241,423 7,860 5,641 1,664 675,204
Corporate - - - (12,738) 1,281 3,570 57,223
Intersegment
eliminations - (13,864) (13,864) - - - -
$764,238 $ - $764,238 $28,813 $47,562 $31,861 $3,222,110
======== =========== ======== ======= ======= ======= ==========
Net Sales
---------
Year Ended December
31, 2016 Trade Inter- Total Segment Depreciation Capital
segment Operating and Expenditures
Income Amortization
(Loss)
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
========== ============= ========== ======== ======== ========
Net Sales
---------
Year Ended December
31, 2015 Trade Inter- Total Segment Depreciation Capital
segment Operating and Expenditures
Income Amortization
(Loss)
Paper and Packaging $2,206,396 $22,280 $2,228,676 $224,012 $145,363 $108,599
Distribution (a) 582,949 - 582,949 20,719 13,108 3,190
Corporate - - - (45,564) 3,708 14,967
Intersegment
eliminations - (22,280) (22,280) - - -
$2,789,345 $ - $2,789,345 $199,167 $162,179 $126,756
========== ============= ========== ======== ======== ========
(a) Reflects results of
Victory Packaging which
KapStone acquired on June
1, 2015
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 2016 2015 2016 2015
------------------- ---- ---- ---- ----
Segment operating income $36,103 $33,691 $181,157 $224,012
Equity method investments income 548 - 548 -
Foreign exchange loss (479) (466) (461) (1,168)
Depreciation and amortization 38,716 40,640 151,506 145,363
------ ------ ------- -------
EBITDA 74,888 73,865 332,750 368,207
Victory Packaging inventory step-
up expense - - - -
Acquisition, casualty, impairment
and other expenses (550) 423 2,979 1,450
Longview work stoppage - 673 - 15,137
Multiemployer pension plan
withdrawal expense 6,376 - 6,376 -
Severance expenses (448) 37 5,550 4,908
Adjusted EBITDA $80,266 $74,998 $347,655 $389,702
======= ======= ======== ========
Adjusted EBITDA margin 14.8% 14.3% 16.3% 17.7%
Quarter Ended December 31, Year Ended December 31,
-------------------------- -----------------------
Distribution 2016 2015 2016 2015
------------ ---- ---- ---- ----
Segment operating income $7,349 $7,860 $29,296 $20,719
Foreign exchange loss (258) (386) (1,794) (1,388)
Depreciation and amortization 5,869 5,641 23,027 13,108
----- ----- ------ ------
EBITDA 12,960 13,115 50,529 32,439
Victory Packaging inventory step-
up expense - - - 5,800
Acquisition, casualty, impairment
and other expenses 2,126 620 3,780 620
Severance expenses 981 65 1,614 168
Adjusted EBITDA $16,067 $13,800 $55,923 $39,027
======= ======= ======= =======
Adjusted EBITDA margin 6.8% 5.7% 5.9% 6.7%
Quarter Ended December 31, Year Ended December 31,
-------------------------- -----------------------
Corporate 2016 2015 2016 2015
--------- ---- ---- ---- ----
Segment operating (loss) $(5,927) $(12,738) $(39,807) $(45,564)
Loss on debt extinguishment - (590) (679) (1,218)
Depreciation and amortization 2,100 1,281 7,680 3,708
----- ----- ----- -----
EBITDA (3,827) (12,047) (32,806) (43,074)
Victory Packaging inventory step-
up expense - - - -
Acquisition, casualty, impairment
and other expenses 547 946 1,849 4,012
Change in fair value of contingent
consideration liability (2,979) 1,647 1,600 3,700
Severance expenses - - 396 -
Stock-based compensation 1,750 1,713 8,938 9,835
Loss on debt extinguishment - 590 679 1,218
Adjusted EBITDA $(4,509) $(7,151) $(19,344) $(24,309)
======= ======= ======== ========
Quarter Ended December 31, Year Ended December 31,
-------------------------- -----------------------
Consolidated 2016 2015 2016 2015
------------ ---- ---- ---- ----
Operating income $37,525 $28,813 $170,646 $199,167
Loss on debt extinguishment - (590) (679) (1,218)
Foreign exchange loss (737) (852) (2,255) (2,556)
Equity method investments income 548 - 548 -
Depreciation and amortization 46,685 47,562 182,213 162,179
------ ------ ------- -------
EBITDA 84,021 74,933 350,473 357,572
Victory Packaging inventory step-
up expense - - - 5,800
Acquisition, casualty, impairment
and other expenses 2,123 1,989 8,608 6,082
Longview work stoppage - 673 - 15,137
Severance expenses 533 102 7,560 5,076
Change in fair value of contingent
consideration liability (2,979) 1,647 1,600 3,700
Stock-based compensation 1,750 1,713 8,938 9,835
Multiemployer pension plan
withdrawal expense 6,376 - 6,376 -
Loss on debt extinguishment - 590 679 1,218
Adjusted EBITDA $91,824 $81,647 $384,234 $404,420
======= ======= ======== ========
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SOURCE KapStone Paper and Packaging Corporation
