KapStone Paper and Packaging Corporation reports 4Q operating income of $17.6 million

Feb 14, 2011. /Lesprom Network/. KapStone Paper and Packaging Corporation reported preliminary results for the 4Q and year ended December 31, 2010. Roger W. Stone, Chairman and CEO, stated, "This past year was an excellent period for our company. Strong price recovery during the year pushed our average revenue per ton up from $503 per ton in the 4Q 2009 to $611 per ton in the 4Q 2010. Higher selling prices helped to generate record sales of $783 million. Our full year operating rate of 98.5% resulted in record production of 1.27 million tons of paper. Continued strong cash flows from operations of $136 million enabled us to slash our net debt from over $470 million just 30 months ago to $48 million at year end." "Early in the 4Q 2010 our Roanoke Rapids mill completed its annual planned maintenance outage at a cost of $6.6 million. In January 2011, we successfully negotiated a lower earn-out payment of $49.7 million with International Paper Company relating to our 2007 kraft paper business acquisition and saved over $5 million." Net sales for the quarter ended December 31, 2010, were $199.6 million, an increase of 20.9%, compared to 4Q 2009 sales of $165.1 million. The increase in net sales was attributable primarily to $32.5 million from higher unit selling prices. Average revenue per ton increased to $611 versus $503 during the 4Q 2009. Volume and mix gains accounted for $4.4 million of the sales increase. Sales in the 4Q 2010 were negatively impacted by $2.4 million due to exchange rates reflecting a stronger US dollar. Operating income of $17.6 million for the 4Q exceeded the prior year's results by $28.9 million after excluding the 2009 benefit from alternative fuel mixture tax credits of $56.5 million. The improvement resulted from higher selling prices, as well as $2.7 million from mix improvement and higher volume. 4Q operating income was negatively impacted by $2 million in inflationary cost increases and $1.5 million for higher compensation and benefits costs that were curtailed in 2009, but reinstated for 2010. Additionally, foreign exchange rates reduced operating income by $2.4 million. Net sales for the year ended December 31, 2010, were $782.7 million, an increase of 23.7%, compared to 2009 sales of $632.5 million. The increase in net sales was attributable primarily to $60.8 million from higher unit selling prices. Operating income of $68.7 million for the year ended December 31, 2010 exceeded the prior year's results by $75.5 million after excluding the net benefit from alternative fuel mixture tax credits of $141.8 million and $16.4 million for the gain on sale of the dunnage bag business. The improvement resulted from $60.8 million of higher selling prices, $33.6 million from mix improvement and higher volume, $9.7 million of lower amortization expenses and $5.1 million from lower transitional services. 2010 operating income was negatively impacted by $11.2 million for higher compensation and benefits costs that were curtailed in 2009, but reinstated for 2010, $9.8 million of inflationary increases on input and freight costs and $6.8 million for the Charleston mill's tri-annual planned maintenance outage. Additionally, foreign exchange rates reduced operating income by $4.9 million. KapStone Paper and Packaging Corporation produces unbleached kraft paper products and linerboard. The Company is the parent company of KapStone Kraft Paper Corporation which includes paper mills in Roanoke Rapids, NC and North Charleston, SC, a lumber mill in Summerville, SC, and five chip mills in South Carolina.