Fourth quarter 2016 net income was negatively impacted by $9.8 million (net of a $4.1 million tax benefit) of business combinations and other special charges. When adjusting for these charges, adjusted net income for the fourth quarter of 2016 was $44.7 million, or $0.14 per diluted share. This compares to fourth quarter 2015 adjusted net income of $63.0 million or $0.19 per diluted share.
For the full year 2016, net income was $228.0 million, or $0.71 per share, based upon 321.5 million weighted average diluted shares. This compares to 2015 net income of $230.1 million, or $0.70 per share, based on 330.7 million weighted average diluted shares. Adjusted net income for the full year 2016 was $233.4 million, or $0.73 per diluted share. This compares to full year 2015 adjusted net income of $247.0 million or $0.75 per diluted share.
“While our fourth quarter adjusted EBITDA was down modestly versus the prior year period due to accelerating commodity input costs and foreign exchange headwinds, we were encouraged by a return of core volume during the quarter and strong operating performance. Volume in our core business improved in the fourth quarter compared to the third quarter, and our mill and converting facilities operated well,” said President and CEO Michael Doss.
“Net sales were up 3.2% largely driven by acquisitions,” Doss added. “Volume in our core business was flat in the fourth quarter versus the prior year period, compared to a 1.4% decline in the third quarter. Adjusted EBITDA was $175.1 million, down 3.1% compared to the prior year period of $180.7 million. For the full year 2016, adjusted EBITDA was $763.8 million, up 1.7% compared to the prior year period of $751.2 million reflecting the benefits of acquisitions and strong productivity, partly offset by lower pricing, accelerating commodity input costs in the fourth quarter, and foreign exchange headwinds.
“Cash flow generation in the business remains strong as we generated $358 million in 2016,” he added.
Net sales increased 3.2% to $1,057.2 million in the fourth quarter of 2016, compared to $1,024.9 million in the prior year period. The $32.3 million increase was driven by $64.5 million of improved volume/mix related to acquisitions
Net sales increased 3.3% to $4,298.1 million in 2016, compared to $4,160.2 million in the prior year. The $137.9 million increase was driven by $219.2 million of improved volume/mix related to acquisitions.
EBITDA for fourth quarter of 2016 was $161.2 million, or $11.5 million lower than the fourth quarter of 2015. Adjusted EBITDA decreased 3.1% to $175.1 million in the fourth quarter of 2016 from $180.7 million in the fourth quarter of 2015. EBITDA for the full year 2016 was $723.4 million, or $4.6 million lower than the full year 2015. Adjusted EBITDA increased 1.7% to $763.8 million in the full year 2016 from $751.2 million in the full year 2015.
Total debt (long-term, short-term and current portion) decreased $104.0 million during the fourth quarter of 2016 to $2,167.8 million compared to the third quarter 2016. The company’s year-end 2016 net leverage ratio was 2.76 times adjusted EBITDA compared to 2.44 times at the end of 2015.