Packaging Corp. of America Posts 2nd Quarter Results

July 19, 2010 - Packaging Corporation of America today reported second quarter 2010 net income of $38 million, or $0.37 per share, including an after-tax charge of $1 million, or $0.01 per share, from asset disposals related to the Counce and Valdosta mills major energy projects. Reported results for the second quarter of 2009 were net income of $109 million, or $1.07 per share, including $80 million, or $0.79 per share, from alternative fuel mixture credits. Net sales for the second quarter were $615 million, up 12%, compared to $549 million in the second quarter of 2009.

Excluding the asset disposal charge, earnings were $39 million, or $0.38 per share, versus second quarter 2009 earnings, excluding alternative fuel mixture credits, of $29 million, or $0.28 per share. The increase in earnings per share, compared to last year, was driven by higher containerboard and corrugated products price and mix ($0.12), higher volume ($0.08) and lower energy costs ($0.02). These increases were partially offset by higher costs for recycled fiber ($0.06), wood ($0.03) and transportation ($0.02).

Excluding alternative fuel mixture credits and energy project related asset disposal charges, net income for the first six months of 2010 was $52 million, or $0.50 per share, compared to $54 million, or $0.53 per share, in 2009. Year-to-date net sales were $1.17 billion compared to $1.06 billion in 2009.

Corrugated products shipments were up 8%, and outside sales of containerboard were up 12% compared to last year’s second quarter. Containerboard production was 589,000 tons after taking about 35,000 tons of downtime related to annual maintenance outages and energy project work. Containerboard inventories at the end of June were about 18,000 tons below June 2009 ending levels.

Paul T. Stecko, Executive Chairman of PCA, said, “We had an outstanding quarter operationally in both our box plants and mills. Corrugated products demand was very strong, and our second quarter box price increase was essentially completed by July 1. We completed annual maintenance outages at three of our mills in April and May, and in June, our mills set a production record which was extremely important considering our low level of containerboard inventory. With improved weather conditions, wood costs at our Counce mill also continued to trend down.”

“Looking ahead to the third quarter,” Mr. Stecko said, “we expect higher earnings from a full quarter’s benefit of our second quarter box price increases, and from higher sales volumes and increased mill production. Recycled fiber, wood fiber and fuel costs are also expected to be lower. Considering all of these items, we currently estimate our third quarter earnings at about $0.60 per share.”

PCA is the fifth largest producer of containerboard and corrugated packaging products in the United States with sales of $2.15 billion in 2009. PCA operates four paper mills and 68 corrugated products plants in 26 states across the country.

SOURCE: Packaging Corporation of America

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