What: Shares of KapStone Paper and Packaging Corp. (NYSE:KS), a North American producer of unbleached kraft paper and other packaging products, are plunging nearly 24% Wednesday morning after the company reported a poor fourth quarter. We're barely a month into 2016 and the company's share price has been halved.

KS Chart
KS data by YCharts.

So what: There is no sugar-coating KapStone's results; it was a really tough fourth-quarter. Net sales were down 36% to $764 million in the fourth quarter compared to the prior year, and net income plunged 65% to a meager $12 million. On a per-share basis, KapStone's net income checked in at $0.12, and when adjusted for costs related to mergers and one-time items, its adjusted EPS checked in at $0.17. However, that was far short of consensus estimates of $0.36 per share.

The poor fourth-quarter results capped off a year of struggles for the company, with its full-year sales down 21% and net income down 38% compared to 2014. KapStone's full-year adjusted net income and adjusted EPS were down 28% and 27%, respectively.

Now what: Investors should keep an eye on one of KapStone's strengths going forward -- namely, its cash flow. KapStone generated $54 million in free cash flow during the fourth quarter, which enabled it to pay down debt by $52 million (though it still has $1.5 billion in net debt). If a strong dollar continues, as well as increased competition in its export markets, 2016 will be another tough year for the company.