Containerboard is sold to domestic and foreign converters in the corrugated packaging
industry and to other converters for a variety of uses including laminated tier
sheets and wrapping material, among others. Historically, our focus is on independent
converters who do not have their own mill systems or converters who otherwise
commonly purchase containerboard in the open market.
Corrugated products are sold primarily to regional and local accounts, which
are broadly diversified across industries and geographic locations. We have
a select number of national accounts, or those customers with a national presence.
These national customers typically purchase corrugated products from several
of our box plants throughout the United States.
Specialty paper is sold to both domestic and export converters who produce
multiwall bags for food grade agricultural products, pet food, cement and chemicals,
grocery bags and specialty conversion products, such as wrapping paper products,
dunnage bags and roll wrap.
Our saturating kraft paper, sold under the trade name Durasorb®, has a
customer base split among three geographic regions: the Americas, Europe and
Asia. Approximately 86 percent of our Durasorb® sales are exports to customers
in Europe, Latin America and Asia where growth opportunities are favorable.
KapStone, or its predecessor, has done business with many of these customers
for well over 40 years. Some customers have consolidated to form a greater presence
in their end-use markets. Customer consolidation is particularly evident in
North America and is in the early phase in Europe. In Asia, there are numerous
players and it is a highly fragmented market making entry difficult for some
companies that do not have a presence in the region. KapStone has acquired a
leadership position with our Durasorb® product through knowledge of our
markets and understanding the technical needs of our customers' manufacturing
processes and the demanding requirements of their products.
Our unbleached folding carton board sold under the Kraftpak® trade name
has a customer base consisting primarily of integrated and independent converters
in the folding carton industry. Our unbleached folding carton board product
is a unique, low-density virgin fiber board. KapStone believes that the best
growth opportunities for Kraftpak® are in consumer brands that are changing
their images to promote environmental friendliness and sustainability. Kraftpak®
and similar products replace the use of coated recycled board, coated natural
kraft board and solid bleached sulfate board, which are currently much larger
markets.
Victory's customer base includes local, regional and national accounts across
a wide range of industries and size and through a variety of means ranging from
multi-year supply agreements to transactional sales. Besides offering material-neutral
design capabilities and high levels of distribution services, Victory also specializes
in fulfillment, kitting and contract packaging services.
Victory has valuable, multi-year, long-term supply agreements with many of
its largest customers that set forth the terms and conditions of sale, including
product pricing and warranties. Generally, customers are not required to purchase
any minimum amount of products under these agreements and can place orders on
an individual purchase order basis. However, Victory enters into negotiated
supply agreements with certain of our customers, which include commitments to
inventory held in Victory's distribution facilities. Victory's working capital
needs generally reflect the need to carry significant amounts of inventory in
our distribution and fulfillment facilities to meet delivery requirements of
our distribution and fulfillment customers, as well as significant accounts
receivable balances. As is typical in this industry, our customers often do
not pay upon receipt, but are offered terms which are heavily dependent on the
specific circumstances of the sale.
