KapStone Paper and Packaging Corporation (NYSE:KS) Q3 2015 Earnings Conference Call - Final Transcript

Oct 29, 2015 • 11:00 am ET


KapStone Paper and Packaging Corporation (NYSE:KS) Q3 2015 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the Third Quarter 2015 KapStone Paper & Packaging Corporation Earnings Conference Call. My name is Tony, and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions)

The information in this earnings call contains certain forward-looking statements within the meaning of the Federal Securities Laws. These statements reflect management's expectations regarding future events and operating performance, and speak only as of October 29, 2015. These forward-looking statements involve a number of risks and uncertainties.

A list of the factors that could cause actual results to differ materially from those expressed in or underlying any forward-looking statements can be found in the company's filings with the Securities and Exchange Commission, such as its annually and quarterly reports. The company disclaims any obligation to revise or update such statements to reflect the occurrence of events after the date of this earnings call.

I would now like to turn the conference over to Mr. Roger Stone, CEO and Chairman of KapStone. Please proceed.

Roger Stone

Thank you. Good morning, and thank you for joining us. As usual, Andrea Tarbox, our Chief Financial Officer is with me and I've never been happier to be here. I'd like to thank many of the people on this call who wrote me some very thoughtful and encouraging notes while I was away. The notes meant a lot to me and I will deeply appreciate it.

After my opening remarks, Andrea will cover our second quarter results. And then as usual I'll return for some closing comments and then we'll open up the phone for questions.

Well, we had an interesting quarter, which included a strike at Longview and the integration of Victory. So Longview, we still do not have a contract and if we have another work stoppage, we plan to operate the mill. And although no one wins of a strike, the next time it should cost us less because we've been through it. The strikers lost wages as well as paid for their own healthcare costs. And also it was costly for the union.

In the third quarter, our mills ran very well including Longview. Our container plants ran well and continued to grow. Our integration increase was substantial and replaced outside mill sales, our mill mix improved as tons for export Kraft paper declined 10%, our export containerboard fell 13%, and pulp dropped 28% compared to the comparable quarter.

Victory's integration ramped up through the quarter and we are now on target to achieve our expectation which will benefit the fourth quarter and next year. Pricing, the strong dollar hurt export mill products. The domestic prices dropped moderately and container prices remained unchanged. EBITDA margins for our brown system was 20+% as we are now reporting consistent with the industry.

Andrea will now take you through our slides and I'll return with some closing comments. Andrea?

Andrea Tarbox

Good morning. First, let me say, I'm thrilled