The Company sold 673,000 tons of paper during the 1Q 2014 compared to 420,000 tons a year earlier. The Company's average mill selling price of $685 per ton in the 1Q 2014 increased by $32 per ton compared to the 1Q 2013 due to the combined impact of the 2012 and 2013 containerboard and corrugated product price increases and the inclusion of Longview. Average mill selling prices increased $15 per ton from the 4Q 2013, reflecting an improved seasonal product mix compared to the prior quarter.
Operating income of $58 million for the 1Q 2014 increased by $27 million, or 89%, compared to the 1Q 2013.
Roger W. Stone, Chairman and CEO, stated, "KapStone was able to deliver a record 1Q despite the negative impact from the extremely severe weather conditions. During the quarter, we successfully completed the upgrade to the paper machine in Charleston, but due to the related downtime to complete the project, we lost 14,300 tons of production. Although operations at our legacy mills ran well in the first quarter, we struggled with some temporary operational issues at our Longview facility that have now been corrected.
"In 2014, KapStone has already accomplished several key tasks that will strengthen our company as we move forward. The March 1st kraft paper price increase of $50 per ton should yield approximately $30 million of annualized benefits once fully implemented. We have now completed two major paper machine upgrades totaling $45 million with expected simple paybacks of less than two years. We announced a voluntary separation plan at our legacy mills that is expected to reduce annual personnel costs by up to $4 million. Our strong financial performance since the acquisition of Longview enabled us to reduce our interest rates by 50 basis points on our term loans and revolving credit facility."
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.