8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

July 30, 2014

Date of Report (Date of earliest event reported)

KapStone Paper and Packaging Corporation

(Exact name of registrant as specified in its charter)

Delaware	001-33494	20-2699372
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1101 Skokie Boulevard, Suite 300
Northbrook, Illinois 60062

(Address of principal executive offices)

(847) 239-8800

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02Results of Operations and Financial Condition.

On July 30, 2014, KapStone Paper and Packaging Corporation (“KapStone”) issued a press release announcing second quarter 2014 financial results. A copy of the press release is attached hereto as Exhibit 99.1. In addition, a copy of KapStone’s Second Quarter 2014 Financial Review which will be used for the conference call on July 31, 2014 is attached hereto as Exhibit 99.2.

The information is being furnished under Item 2.02 “Results of Operations and Financial Condition” of Form 8-K. Such information, including the Exhibits attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 7.01Regulation FD Disclosure

On July 31, 2014, the management of KapStone will participate in a conference call discussing KapStone’s financial results for the quarter ended June 30, 2014.

Item 9.01Financial Statements and Exhibits

(d)Exhibits

Exhibit No.	Description
Exhibit 99.1	Press release dated July 30, 2014, announcing second quarter 2014 financial results
Exhibit 99.2	Second Quarter 2014 Financial Review of KapStone Paper and Packaging Corporation, dated July 30, 2014

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SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:  July 30, 2014
	KAPSTONE PAPER AND PACKAGING CORPORATION
	By:	/s/ Andrea K. Tarbox
	Name:		Andrea K. Tarbox
	Title:		Vice President and Chief Financial Officer

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EX-99.1

Exhibit 99.1

FOR FURTHER INFORMATION:	FOR IMMEDIATE RELEASE
Andrea K. Tarbox	Wednesday, July 30, 2014
Vice President and Chief Financial Officer
847.239.8812

KAPSTONE REPORTS RECORD SECOND QUARTER RESULTS

NORTHBROOK, IL – July 30, 2014 – KapStone Paper and Packaging Corporation (NYSE:KS) today reported record results for the second quarter ended June 30, 2014. As compared to 2013’s second quarter, results for 2014’s second quarter are below:

·Net sales of $590 million up $264 million, or 81 percent

·Net income of $51 million up $30 million, or 143 percent

·Adjusted net income of $56 million up $33 million, or 143 percent

·Adjusted EBITDA of $126 million up $70 million, or 125 percent

·Adjusted EBITDA margin of 21.4 percent, up from 17.0 percent

·Diluted EPS of $0.53 up $0.31 per share, or 141 percent

·Adjusted diluted EPS of $0.58 up $0.34 per share, or 142 percent

Roger W. Stone, Chairman and Chief Executive Officer, stated, “KapStone recovered nicely in the second quarter from the severe winter, and we achieved outstanding all-time record results.  EBITDA and EPS are more than double the prior year’s results.

“During the second quarter, much progress was made on previously announced initiatives. The $50 per ton Kraft paper price was implemented by the end of the quarter.  In April, the major upgrade to the Longview paper machine was completed enabling us to produce ultra-high performance linerboard at our Longview mill while increasing efficiency. The voluntary separation plan at our legacy mills was well received, and we now expect the program to reduce annual personnel costs by approximately $5 million.”

Second Quarter Operating Highlights

Consolidated net sales of $590 million in the second quarter of 2014 increased by $264 million, or 81 percent compared to $326 million for the 2013 second quarter. The increase is primarily due to the Longview acquisition, which contributed $240 million of additional revenue, and higher prices and sales volumes for the legacy operations. The Company sold 720,000 tons of products during the second quarter of 2014 compared to 418,000 tons a year earlier. The Company’s average mill selling price of $685 per ton in the second quarter of 2014 increased by $21 per ton compared to the second quarter of 2013 due to the impact of the 2013 containerboard

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and corrugated product price increases, higher specialty paper prices and the inclusion of Longview.

Operating income of $85 million for the 2014 second quarter increased by $50 million, or 143 percent, compared to the 2013 second quarter. The improved financial performance primarily reflects benefits from the Longview acquisition, higher prices and sales volumes from legacy operations and lower outage costs, partially offset by inflation on labor and input costs and the cost associated with a voluntary separation plan.

Interest expense, net, was $6 million for the second quarter of 2014, up $4 million from a year ago as a result of a higher debt balance associated with the Longview acquisition. As of June 30, 2014, the average interest rate on our term loans was 2 percent which is 50 basis points, or $6 million on an annualized basis, lower than at December 31, 2013 due to a recently amended credit facility agreement that reduced the borrowing rates, as well as an improved debt to EBITDA ratio that improved our position on the interest rate pricing grid.

The effective income tax rate for the 2014 second quarter was 33.6 percent compared to 34.5 percent for the 2013 second quarter.  The Company’s cash tax rate is forecasted at 35 percent for 2014.

Cash Flow and Working Capital

Cash and cash equivalents increased by $25 million in the quarter ended June 30, 2014, from March 31, 2014 to $49 million.   The Company generated $70 million of net cash from operating activities during the second quarter. At June 30, 2014 the debt leverage ratio was 2.7 times, down from 3.8 times at the time of the Longview acquisition. Capital expenditures in the second quarter were $41 million and include costs to upgrade a paper machine at Longview.

At June 30, 2014, the Company had approximately $266 million of working capital and $395 million of revolver borrowing capacity.

Conclusion

In summary, Stone commented, “We continued our shift from integration to optimizing the enterprise during the second quarter. Our operating platform will continue to strengthen and provide improved results.”

Conference Call

KapStone will host a conference call at 11 a.m. ET, Thursday, July 31, 2014, to discuss the Company’s financial results for the 2014 second quarter. All interested parties are invited to listen and may do so by either accessing a simultaneous broadcast webcast on KapStone’s website, http://www.kapstonepaper.com, or for those unable to access the webcast, the following dial-in numbers are available:

Domestic:  866-713-8563
International:  617-597-5311
Participant Passcode:  77384976

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A presentation to be viewed in conjunction with the call will also be available on our website, http://www.kapstonepaper.com, in the “Investors” section.

Replay of the webcast will be available for 30 days on the Company’s website following the call.

About the Company

Headquartered in Northbrook, IL, 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. The Company is the parent company of KapStone Kraft Paper Corporation and KapStone Container Corporation which includes four paper mills and 21 converting plants, respectively, across the US. The business employs approximately 4,600 people.

Non-GAAP Financial Measures

This press release includes certain non-GAAP financial measures, including “EBITDA”, “Adjusted EBITDA”, “Adjusted Net Income”, and “Adjusted Diluted EPS” to measure our operating performance. Management uses these measures to focus on the on-going operations, and believes it is useful to investors because they enable them to perform meaningful comparisons of past and present operating results. The Company believes that EBITDA and Adjusted EBITDA provide useful information to investors because they improve the comparability of the financial results between periods and provide for greater transparency to key measures used to evaluate the performance and liquidity of the Company. Management uses EBITDA and Adjusted EBITDA for evaluating the Company’s performance against competitors and as a primary measure for employees’ incentive programs. Reconciliations of Net Income to EBITDA, EBITDA to Adjusted EBITDA, Net Income to Adjusted Net Income, Basic EPS to Adjusted Basic EPS, and Diluted EPS to Adjusted Diluted EPS are included in the financial schedules contained in this press release. However, these measures should not be construed as an alternative to any other measure of performance determined in accordance with GAAP.

Forward-Looking Statements

Statements in this news release that are not historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can often be identified by words such as “may,” “will,” “should,” “would,’ “expect,” “project,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “potential,” “outlook,” or “continue,” the negative of these terms or other similar expressions. These statements reflect management’s current views and are subject to risks, uncertainties and assumptions, many of which are beyond the Company’s control that could cause actual results to differ materially from those expressed or implied in these statements. Factors that could cause actual results to differ materially include, but are not limited to: (1) industry conditions, including changes in cost, competition, changes in the Company’s product mix and demand and pricing for the Company’s products; (2) market and economic factors, including changes in raw material and healthcare costs, exchange rates and interest rates; (3) results of legal proceedings and compliance costs, including unanticipated expenditures related to the cost of compliance with environmental and other governmental regulations; (4) the ability to achieve and effectively manage growth; (5) the ability to pay the Company’s debt obligations; (6) the ability to carry out the Company’s strategic initiatives and

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manage associated costs and (7) the integration of the Longview acquisition. Further information on these and other risks and uncertainties is provided under Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and elsewhere in reports that the Company files with the SEC. These filings can be found on KapStone’s Web site at http://www.kapstonepaper.com and the SEC’s Web site at www.sec.gov. Forward-looking statements included herein speak only as of the date hereof and the Company disclaims any obligation to revise or update such statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or circumstances.

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KapStone Paper and Packaging Corporation

Consolidated Statements of Income

(In thousands, except share and per share amounts)

(unaudited)

							Fav / (Unfav)								Fav / (Unfav)
	Quarter Ended June 30,						Variance		Six Months Ended June 30,						Variance
	2014			2013			%		2014			2013			%
Net sales	$	590,449		$	326,321		80.9	%	$	1,139,401		$	646,134		76.3	%
Cost and expenses:
Cost of sales, excluding depreciation and amortization	392,245			225,753			-73.7	%	775,493			450,699			-72.1	%
Depreciation and amortization	33,874			17,253			-96.3	%	66,583			34,477			-93.1	%
Freight and distribution expenses	44,924			27,849			-61.3	%	85,656			55,769			-53.6	%
Selling, general and administrative expenses	34,093			21,072			-61.8	%	68,238			40,200			-69.7	%
Other operating income	—			196			-100.0	%	—			398			-100.0	%
Operating income	85,313			34,590			146.6	%	143,431			65,387			119.4	%
Foreign exchange gain / (loss)	125			89			40.4	%	101			(222		)	145.5	%
Interest expense, net	6,488			1,909			-239.9	%	14,267			3,784			-277.0	%
Amortization of debt issuance costs	1,483			727			-104.0	%	2,933			1,453			-101.9	%
Income before provision for income taxes	77,467			32,043			141.8	%	126,332			59,928			110.8	%
Provision for income taxes	26,008			11,052			-135.3	%	42,774			20,478			-108.9	%
Net income	$	51,459		$	20,991		145.1	%	$	83,558		$	39,450		111.8	%
Net income per share:
Basic	$	0.54		$	0.22				$	0.87		$	0.41
Diluted	$	0.53		$	0.22				$	0.86		$	0.41
Weighted-average number of shares outstanding:
Basic	95,892,033			95,140,852					95,806,181			95,072,436
Diluted	97,418,941			96,475,670					97,367,354			96,484,044
Effective income tax rate	33.6		%	34.5		%			33.9		%	34.2		%
Net Income (GAAP) to EBITDA (Non-GAAP) to Adjusted EBITDA (Non-GAAP):
Net income (GAAP)	$	51,459		$	20,991		145.1	%	$	83,558		$	39,450		111.8	%
Interest expense, net	6,488			1,909			-239.9	%	14,267			3,784			-277.0	%
Amortization of debt issuance costs	1,483			727			-104.0	%	2,933			1,453			-101.9	%
Provision for income taxes	26,008			11,052			-135.3	%	42,774			20,478			-108.9	%
Depreciation and amortization	33,874			17,253			-96.3	%	66,583			34,477			-93.1	%
EBITDA (Non-GAAP)	$	119,312		$	51,932		129.7	%	$	210,115		$	99,642		110.9	%
Acquisition, start up and other expenses	933			2,673			65.1	%	2,747			3,284			16.4	%
Voluntary separation plan	4,818			—			—		4,818			—			—
Stock-based compensation expense	1,311			954			-37.4	%	4,229			3,299			-28.2	%
Adjusted EBITDA (Non-GAAP)	$	126,374		$	55,559		127.5	%	$	221,909		$	106,225		108.9	%
Net Income (GAAP) to Adjusted Net Income (Non-GAAP):
Net income (GAAP)	$	51,459		$	20,991				$	83,558		$	39,450
Acquisition, start up and other expenses	611			1,751					1,799			2,151
Voluntary separation plan	3,156			—					3,156			—
Stock-based compensation expense	859			625					2,770			2,161
Adjusted Net Income (Non-GAAP)	$	56,085		$	23,367				$	91,283		$	43,762
Basic EPS (GAAP) to Adjusted Basic EPS (Non-GAAP):
Basic EPS (GAAP)	$	0.54		$	0.22				$	0.87		$	0.41
Acquisition, start up and other expenses	—			0.02					0.02			0.02
Voluntary separation plan	0.03			—					0.03			—
Stock-based compensation expense	0.01			0.01					0.03			0.03
Adjusted Basic EPS (Non-GAAP)	$	0.58		$	0.25				$	0.95		$	0.46
Diluted EPS (GAAP) to Adjusted Diluted EPS (Non-GAAP):
Diluted earnings per share (GAAP)	$	0.53		$	0.22				$	0.86		$	0.41
Acquisition, start up and other expenses	0.01			0.02					0.02			0.02
Voluntary separation plan	0.03			—					0.03			—
Stock-based compensation expense	0.01			—					0.03			0.02
Adjusted Diluted EPS (Non-GAAP)	$	0.58		$	0.24				$	0.94		$	0.45

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KapStone Paper and Packaging Corporation

Consolidated Balance Sheets

(In thousands)

	June 30,		December 31,
	2014		2013
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	49,352	$	12,967
Trade accounts receivable, net of allowances	263,240		232,347
Other receivables	8,829		11,399
Inventories	225,020		217,382
Prepaid expenses and other current assets	9,404		6,405
Total current assets	555,845		480,500
Plant, property and equipment, net	1,395,987		1,389,609
Other assets	132,904		129,493
Intangible assets, net	116,911		123,745
Goodwill	533,851		528,515
Total assets	$	2,735,498	$	2,651,862
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	25,075	$	4,950
Other current borrowings	2,898		—
Accounts payable	161,173		159,127
Accrued expenses	49,436		45,885
Accrued compensation costs	46,896		54,871
Accrued income taxes	3,103		—
Deferred income taxes	1,096		5,445
Total current liabilities	289,677		270,278
Long-term debt, net of current portion	1,172,073		1,192,413
Pension and post-retirement benefits	66,168		69,611
Deferred income taxes	443,576		444,672
Other liabilities	8,513		8,808
Total other liabilities	1,690,330		1,715,504
Stockholders’ equity:
Common stock $0.0001 par value	10		10
Additional paid-in capital	251,980		246,186
Retained earnings	495,907		412,349
Accumulated other comprehensive income	7,594		7,535
Total stockholders’ equity	755,491		666,080
Total liabilities and stockholders’ equity	$	2,735,498	$	2,651,862

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KapStone Paper and Packaging Corporation

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

	Quarter Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Operating activities:
Net income	$	51,459		$	20,991		$	83,558		$	39,450
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	33,874			17,253			66,583			34,477
Stock-based compensation expense	1,311			954			4,229			3,299
Pension and postretirement	(2,754		)	506			(6,834		)	709
Excess tax benefits from stock-based compensation	(391		)	(1,344		)	(2,612		)	(1,730		)
Amortization of debt issuance costs	1,483			727			2,933			1,453
Loss on disposal of fixed assets	37			124			1,016			142
Deferred income taxes	(1,144		)	8,520			2,179			13,426
Changes in operating assets and liabilities	(14,172		)	7,304			(42,398		)	(20,554		)
Net cash provided by operating activities	$	69,703		$	55,035		$	108,654		$	70,672
Investing activities:
Capital expenditures	(41,256		)	(15,881		)	(73,676		)	(32,713		)
Net cash used in investing activities	$	(41,256	)	$	(15,881	)	$	(73,676	)	$	(32,713	)
Financing activities:
Proceeds from revolving credit facility	$	41,400		$	41,900		$	97,900		$	91,400
Repayments on revolving credit facility	(41,400		)	(80,400		)	(97,900		)	(141,200		)
Repayments of long-term debt	(1,175		)	—			(2,350		)	—
Proceeds from other current borrowings	—			—			6,300			3,731
Repayments of other current borrowings	(1,729		)	(1,016		)	(3,402		)	(2,028		)
Payment of withholding taxes on vested stock awards	—			(848		)	(1,641		)	(860		)
Proceeds from exercises of stock options	175			652			389			1,014
Proceeds from issuance of shares to ESPP	—			—			205			170
Loan amendment costs	(706		)	—			(706		)	—
Excess tax benefits from stock-based compensation	391			1,344			2,612			1,730
Net cash provided by (used in) financing activities	$	(3,044	)	$	(38,368	)	$	1,407		$	(46,043	)
Net increase / (decrease) in cash and cash equivalents	25,403			786			36,385			(8,084		)
Cash and cash equivalents-beginning of period	23,949			7,618			12,967			16,488
Cash and cash equivalents-end of period	$	49,352		$	8,404		$	49,352		$	8,404

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EX-99.2

Exhibit 99.2

1 2014 Second Quarter Review Roger W. Stone Chairman and Chief Executive Officer Andrea K. Tarbox Vice President and Chief Financial Officer July 30, 2014

Forward Looking Statements The information in this presentation and statements made during this presentation may contain certain forward-looking statements within the meaning of federal securities laws. These statements reflect management’s expectations regarding future events and operating performance. 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 annual 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 presentation. This presentation refers to non-U.S. GAAP financial information. A reconciliation of non-U.S. GAAP to U.S. GAAP financial measures is available on the company’s website at KapStonepaper.com under Investors. Forward-Looking Statements 2 Risk Factors Non-GAAP Financial Measures

$0.09 $0.20 $0.21 $0.24 $0.58 2010 2011 2012 2013 2014 Q2 Adj. EPS* $25 $44 $50 $56 $126 2010 2011 2012 2013 2014 Q2 Adj. EBITDA* 3 $199 $215 $306 $326 $590 2010 2011 2012 2013 2014 Record Q2 Quarters for Legacy KS and LV Operations Q2 Net Sales KapStone Crushes Previous All-Time Record Results Up 125% YOY *Adjusted to exclude non-cash stock compensation and acquisition related costs Up 142% YOY Up 81% YOY $’s in Millions $’s in Millions

($ in Millions, except per share) Q2 2014 Q2 2013 Inc/(Dec) (1) Q1 2014 Inc/(Dec) (1) Net Sales $ 590 $ 326 81% $ 549 7% EBITDA $ 119 $ 52 129% $ 91 31% Adj. EBITDA(2) $ 126 $ 56 125% $ 96 31% Net Income $ 51 $ 21 143% $ 32 59% Adj. Net Income(3) $ 56 $ 23 143% $ 35 60% Diluted EPS $ 0.53 $ 0.22 141% $ 0.33 61% Adj. Diluted EPS(3) $ 0.58 $ 0.24 142% $ 0.36 61% Second Quarter Financial Results 4 (1) Percentage change calculations made using unrounded source financials (2) Adjusted to exclude non-cash stock compensation and acquisition, start up and other costs (3) Adjusted to exclude items above net of related income taxes

$96 $3 $10 $8 $10 $1 $126 $ in Millions Adjusted EBITDA $549 $4 $34 $3 $590 $ in Millions Net Sales 5 Q2 2014 Compared to Q1 2014 Actual Favorable prices reflect higher corrugated prices and partial realization of the 2014 kraft paper price increase Increased sales volumes reflects higher production volumes resulting from reduced planned outages, one additional mill day of production, and incremental gains from recent capital investments at Charleston and Longview Weather impact was limited to Q1 2014 Lower planned outages of $10 million reflects higher activity in Q1 mainly for CHS PM3 project offset by Longview PM10 upgrade in Q2 Higher Volumes, Lower Outage Costs and Better Weather Drives Improvement

$56 $58 $10 $4 $8 $7 $3 $126 $ in Millions Adjusted EBITDA $326 $240 $10 $14 $590 $ in Millions Net Sales 6 Q2 2014 Compared to Q2 2013 Actual Compared to Q2 2013, the Longview acquisition added $240 million in sales and $58 million of adjusted EBITDA Price/mix improvement reflects realization of 2013 containerboard and corrugated products price increases, the 2013 specialty paper price increases, and the 2014 kraft paper price increase increased sales and adjusted EBITDA Higher sales volume of 16,000 tons drives an incremental $4 million in adjusted EBITDA Outage costs are $8 million lower in 2014 for legacy KapStone due to CHS tri-annual outage in 2013 Inflation compared to the prior year negatively impacts adjusted EBITDA by $7 million Fiber and freight expense are higher year over year Longview is Key Driver YOY While Legacy Ops Achieve All-time Records

 Improved operations and benefits from synergies resulted in 2Q record adjusted EBITDA Despite $4 million of total planned outage cost in the quarter including $2 million to upgrade a paper machine and loss of 4,100 tons of production Annualized synergies of $16 million transacted on by June 30, 2014 Synergy target now $21 million of annualized benefits to be transacted by late 2015 $5 million improved operations $2 million better weather $1 million one more operating day compared to the prior quarter Seasonal inventory reduction in Q2 2014 of 5,000 tons to accommodate agricultural cycle $48 $50 $58 Q2 2013 Q1 2014 Q2 2014 Adjusted EBITDA (2) 7 Longview Acquisition $228 $227 $240 Q2 2013 Q1 2014 Q2 2014 Net Sales $0.17 $0.19 $0.25 Q2 2013 Q1 2014 Q2 2014 Adjusted Diluted EPS (3) (1) Longview results for Q2 2013 are shown for reference as this period was prior to the July 2013 acquisition and are based on pro forma financial statements filed in October 2013 (2) Adjusted to exclude one time acquisition costs (3) Adjusted to exclude one time acquisition costs and includes all related interest expense and amortization of financing fees Record Second Quarter (1) Q2 2014’s adjusted EBITDA as compared to Q1 2014 was positively impacted by:

De-Levering Debt and Reducing Interest Rate Cash Flows, Debt and Liquidity 8 Debt to EBITDA leverage ratio (1) 3.8 times - July 18, 2013 (2) 2.7 times - June, 30 2014 Net debt at June 30, 2014 - $1,175 million Cash - $49 million $755 million term loan A at 1.90% $469 million term loan A1 at 2.15% Recently amended credit facility provided an additional reduction of 25 bps Available revolver balance is $395 million in addition to $300 million accordion Cash flow from operations up $15 million to $70 million Adjusted free cash flow was $28 million for Q2 2014, down $11 million over Q2 2013 $0.29 per diluted share Capex for Q2 2014 was $41 million. Completed spending on paper machine upgrades (1) Calculated per bank agreement (2) Closing date of Longview acquisition

Summary of Key Assumptions for Q3 2014 9 Kraft paper price increase of $50 per ton Full benefit expected by Q3 2014 Approximately $30 million annualized benefit expected Continued seasonal improvement of product mix Production and shipping One more mill production and corrugated products shipping day Additional benefits from two major machine upgrades expected to be realized as the quarter progresses Planned outage maintenance expense of $5 million consistent with Q2 2014 with no loss of production tons Relatively stable fiber costs from Q2 2014 Voluntary separation initiatives should result in up to $1-2 million of expense in Q3 and additional expense (up to $1 million more) in Q4 2014 CAPEX is expected to be $120-$125 million for the full year

Appendix

390 658 679 418 673 720 Q2 2013 Q1 2014 Q2 2014 Tons (000) Tons Produced and Sold (2) Produced Sold Components of Quarterly Net Sales $664 $685 $685 Q2 2013 Q1 2014 Q2 2014 Avg Revenue per Mill Ton (1) (1) Average price per external ton sold from mills excludes corrugated sales (2) Tons Produced represents saleable tons produced from four paper mills; Tons Sold is external sales from paper mills and corrugated container plants (3) Mix is based on a percentage of total external tons sold from paper mills and corrugated container plants 35% 24% 26% 7% 7% 7% 15% 9% 9% Q2 2013 Q1 2014 Q2 2014 Q2 2013 Q1 2014 Q2 2014 Q2 2013 Q1 2014 Q2 2014 Domestic Containerboard Export Containerboard DuraSorb Product Mix (3) 11% 24% 23% 8% 6% 5% 24% 30% 30% Q2 2013 Q1 2014 Q2 2014 Q2 2013 Q1 2014 Q2 2014 Q2 2013 Q1 2014 Q2 2014 Kraft Paper KraftPak / Pulp Corrugated 11

390 382 400 418 398 434 Q2 2013 Q1 2014 Q2 2014 Tons (000) Tons Produced and Sold (2) Produced Sold Components of Quarterly Net Sales (Legacy KapStone) $664 $681 $681 Q2 2013 Q1 2014 Q2 2014 Avg Revenue per Mill Ton (1) (1) Average price per external ton sold from mills excludes corrugated sales (2) Tons Produced represents saleable tons produced from three legacy KapStone paper mills; Tons Sold is external sales from legacy KapStone paper mills and corrugated container plants (3) Mix is based on a percentage of total external tons sold from paper mills and corrugated container plants 35% 29% 29% 7% 9% 9% 15% 16% 15% Q2 2013 Q1 2014 Q2 2014 Q2 2013 Q1 2014 Q2 2014 Q2 2013 Q1 2014 Q2 2014 Domestic Containerboard Export Containerboard DuraSorb Product Mix (3) 11% 14% 14% 8% 6% 8% 24% 26% 25% Q2 2013 Q1 2014 Q2 2014 Q2 2013 Q1 2014 Q2 2014 Q2 2013 Q1 2014 Q2 2014 Kraft Paper KraftPak Corrugated 12

2013 Actual Q1 Q2 Q3 Q4 Financial Impact $ 4.7 $ 8.5 $ 1.1 $ 10.5 Production Impact - 9,432 - 12,500 Maintenance Outage Expense & Production Impact 13 2014 Actual/Expected Q1A Q2A Q3E Q4E Financial Impact $ 14.8 $ 5.2 $5.5 $ 13.9 Production Impact 14,300 5,400 - 12,500