Net sales increased 38% to $1,509.3 million in the second quarter of 2018, compared to $1,094.7 million in the prior year period. The $414.6 million increase was driven by $360.1 million of revenue from the SBS mill and foodservice converting assets, $37 million of improved volume/mix related primarily to acquisitions, $9.5 million of favorable foreign exchange, and $8 million of higher pricing.
“We reported solid results in the second quarter reflecting strong performance improvements, steady volume, and continued the favorable momentum from the solid bleached sulfate (SBS) mill and foodservice converting assets. Second quarter adjusted EBITDA of $236 million included a negative $6 million impact from unplanned outages at our Augusta, Georgia, SBS mill, which occurred in late June and were associated with power interruption to the facility. The second quarter results met our expectations for the quarter before the impact of the unplanned outages,” said president and CEO Michael Doss.
“The business operated well in the quarter generating $19 million in performance improvements. The integration of the SBS mill and foodservice converting assets remains on track, and we are executing on the targeted year one synergies, specifically SG&A reductions and paperboard integration. Pricing improved by $8 million during the quarter reflecting the benefits of recent pricing initiatives. Importantly, we successfully implemented a second open market price increase this year for our coated recycled paperboard (CRB) grade during the quarter and announced a second open market price increase in 2018 on our coated unbleached kraft paperboard (CUK) grade in July. We expect the successful open market paperboard price increases we achieved across our CRB, CUK, and SBS paperboard grades in the first quarter coupled with the continued positive pricing developments in the second quarter, will drive a positive pricing to commodity input cost relationship starting in the second half of 2018.”
EBITDA for the second quarter of 2018 was $227.2 million, or $62.7 million higher than the second quarter of 2017. After adjusting both periods for business combinations and other special charges, adjusted EBITDA increased 38% to $235.8 million in the second quarter of 2018 from $170.6 million in the second quarter of 2017.
Total debt (long-term, short-term and current portion) decreased $124.0 million during the second quarter of 2018 to $2,987.8 million compared to the first quarter of 2018. Total net debt (total debt, net of cash and cash equivalents) decreased $122.4 million during the second quarter of 2018 to $2,936.9 million compared to the first quarter of 2018. The company’s second quarter pro forma 2018 net leverage ratio was 3.0 times adjusted EBITDA compared to 3.3 times at the end of first quarter 2018.