Packaging Corp. of America 3rd Quarter Earnings Up on Pricing
Oct. 17, 2006 - Packaging Corporation of America today reported third quarter 2006 net income of $44 million, or $0.42 per share, compared to third quarter 2005 net income of $11 million, or $0.10 per share. Net sales for the third quarter were $575 million, up 12% compared to $512 million in the third quarter of 2005.
Net income for the first nine months of 2006 was $85 million, or $0.81 per share, compared to $51 million, or $0.47 per share, for the first nine months of 2005. Net sales for the first nine months of 2006 were $1.6 billion compared to net sales of $1.5 billion in the same period of 2005.
The increase in earnings, compared to last year's third quarter, was driven primarily by better pricing and mix of $0.41 per share. Partially offsetting this earnings improvement were higher transportation costs of about $0.04 per share, labor costs of $0.04 per share, and energy costs of $0.02 per share.
PCA's corrugated products shipments per workday equaled last year's all time record third quarter, and are up 1.2% year-to-date. Containerboard production in the third quarter was 621,000 tons, up 20,000 tons compared to last year's third quarter. This level of production allowed PCA to increase containerboard inventories slightly from about 3.4 to 3.6 weeks of supply, as planned, but for the year PCA containerboard inventories are down about 6,000 tons. Industry containerboard inventories were reported today at 3.9 weeks of supply at the end of September.
Paul T. Stecko, Chairman and CEO of PCA, said, "We had our best quarterly earnings per share, excluding any special items, since becoming a stand-alone company in April 1999. This performance was driven by the full realization of earlier price increases, strong volume, and outstanding operations in both our mills and box plants. Our mills produced and shipped record volumes for the quarter while our box plants matched last year's record third quarter shipments. Higher transportation costs continued to impact earnings, but we did see some relief in September as diesel fuel prices began to drop."
"Looking ahead to the fourth quarter", Mr. Stecko added, "we expect seasonally lower volume and have more mill maintenance work planned compared to the third quarter. We also expect higher energy costs with colder weather and somewhat higher fiber costs. Considering all of these items, fourth quarter earnings are expected to be about $0.35 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 68 corrugated product plants in 26 states across the country.
SOURCE: Packaging Corporation of America