Packaging Corp. of America Reports Improved Second Quarter Results
July 18, 2006 (Press Release) - Packaging Corporation of America today reported second quarter 2006 net income of $32 million, or $0.31 per share. This compares to first quarter 2006 net income of $9 million, or $0.09 per share, and second quarter 2005 net income of $28 million, or $0.26 per share, which included a $0.06 per share dividend paid from Southern Timber Venture (STV), a timberlands joint venture in which PCA holds a 31% ownership interest. Net sales for the second quarter were $551 million, up 6%, compared to $519 million in the second quarter of 2005.
Net income for the first six months of 2006 was $41 million, or $0.40 per share, compared to $40 million, or $0.37 per share in 2005 including the $0.06 per share STV dividend. Net sales for the first six months of 2006 were $1.06 billion compared to $1.01 billion in the first six months of 2005.
The $0.11 per share increase in earnings, excluding last year's second quarter STV dividend, was driven primarily by higher pricing and volume for both containerboard and corrugated products, which together totaled $0.23 per share. These earnings improvement items were partially offset by higher transportation and energy costs of $0.07 per share, the impact of delaying Valdosta's annual mill maintenance outage to this year's second quarter of $0.02 per share, and other items totaling $0.03 per share.
PCA's corrugated products shipments per workday were up 2.1% compared to last year's second quarter, and were up 1.8% year-to-date. Containerboard production was 592,000 tons, up 1.0% compared to last year's second quarter. PCA containerboard inventories at our mills and box plants were down 3,000 tons compared to the end of the first quarter, and were down 18,000 tons since the beginning of the year.
Paul T. Stecko, Chairman and CEO of PCA, said, "We had a very strong quarter operationally with price, volume and cost performance all above our expectations. Earnings were up $0.22 per share over the first quarter, and by July 1 we essentially completed all of the pass through of our April containerboard price increase to boxes, which was faster than normal. Finally, our Tomahawk and Valdosta mills completed their annual outages on schedule and started up extremely well, which allowed us to keep inventories at the level necessary to support our box plants."
"Looking forward," Mr. Stecko added, "we currently expect continued earnings improvement in the third quarter driven, for the most part, by the full realization of our second quarter corrugated products price increases. Purchased energy costs should be down slightly from the second quarter, but we do expect slightly higher costs for OCC. Considering all of these items, we currently expect third quarter earnings of about $0.42 per share."
PCA is the sixth largest producer of containerboard and corrugated packaging products in the United States with sales of $2.0 billion in 2005. PCA operates four paper mills and 69 corrugated product plants in 27 states across the country.
SOURCE: Packaging Corporation of America