KapStone Paper and Packaging Corporation recently reported results for the third quarter ended September 30, 2012.
Consolidated net sales of $309.5 million in the third quarter of 2012 increased by $93.7 million, or 43.4 percent compared to $215.8 million for the 2011 third quarter. The increase is primarily due to the USC acquisition which contributed $99.1 million of additional revenue based on selling 1.56 billion square feet of corrugated products compared to none in 2011. In 2012's third quarter, 329,000 tons of paper were sold compared to 327,000 tons a year earlier. The Company's average selling price increased by $2 per ton compared to the second quarter of 2012, but was $14 per ton lower than the third quarter of 2011 due to lower export containerboard prices and product mix.
Operating income of $31.1 million for the 2012 third quarter increased by $1.0 million, or 3.2 percent, compared to the 2011 third quarter. The improved financial performance primarily reflects benefits from the acquisition and the timing of annual planned maintenance outages, partially offset by lower selling prices, unplanned downtime at our Roanoke Rapids, NC mill and unfavorable foreign exchange rates.
Roger W. Stone, Chairman and Chief Executive Officer, stated, "The announced $50 per ton containerboard price increase for mid-August shipments was implemented late in the third quarter and is expected to increase fourth quarter 2012 EBITDA by $7 million. Once fully implemented it should boost our EBITDA by approximately $45 million annually.
"Our mills produced 389,000 tons of paper for the quarter. Although this was below our expectations, our Roanoke Rapids mill was impacted by a flood in late August resulting from a rare deluge of rain which curtailed production and added flood clean-up and repair costs. In addition, our Charleston mill also encountered some productivity problems which temporarily impacted their operations. Fortunately, our mills are now performing well, and Roanoke Rapids has had the best start-up from its annual planned maintenance outage since we have owned the mill."
