Kapstone Paper (NYSE:KS)

Second Quarter 2012 Results

• Net sales of $306 million up $91 million, or 43 percent, versus prior year
• Net income of $18.4 million up 1.3 percent versus 2011
• Adjusted EBITDA of $50 million up $6 million, or 13 percent, versus prior year
• Diluted EPS of $0.39 up $0.01 per share, or 3 percent, versus 2011
• Adjusted diluted EPS of $0.42 up $0.03 per share, or 8 percent, versus prior year
• Unfavorable foreign exchange rates impacted EPS by $0.03 versus prior year
• $50 million voluntary loan repayment made in second quarter of 2012

Roger W. Stone, Chairman and Chief Executive Officer, stated, "Our operations ran well during the quarter resulting in record second quarter results. Our mills produced a record 390,000 tons of paper for the quarter. The USC acquisition also performed well and added $10 million in adjusted EBITDA. Average selling prices of $623 per ton increased by $15 per ton compared to the first quarter of 2012, reflecting product mix improvements and a recovery of export containerboard prices as expected. Record free cash flow enabled us to make a $50 million voluntary loan repayment which will greatly reduce future interest charges. Finally in mid-July we announced a $50 per ton increase for containerboard effective with shipments beginning in mid-August."

Conclusion

In summary, Stone commented, "We experienced the typical seasonal pickup expected in the second quarter. Our backlogs are strong and our operations are running well. Our cash flows and balance sheet are strong and provide us with much flexibility. We are in an excellent position to continue to grow the Company profitably."