Packaging Corp. of America Posts Record 1st Quarter Results
April 18, 2011 - Packaging Corporation of America today reported record first quarter net income of $37 million, or $0.37 per share. Reported results include after-tax, non-cash charges totaling $2 million, or $0.02 per share, from asset disposals related to major energy projects. Reported results for the first quarter of 2010 were $19 million, or $0.19 per share, which included income of $9 million, or $0.09 per share, from alternative fuel mixture tax credits and asset disposal charges of $3 million, or $0.02 per share.
Net sales were a first quarter record $630 million, up 14% compared to first quarter 2010 net sales of $551 million.
Excluding asset disposal charges, net income was $39 million, or $0.39 per share, compared to first quarter 2010 net income, excluding fuel credits and asset disposal charges, of $12 million, or $0.12 per share. This $0.27 per share increase in earnings was driven by higher containerboard and corrugated products price and mix ($0.35) and volume ($0.06). These increases were partially offset by lost volume and higher costs from severe weather ($0.02), and increased costs for transportation ($0.03), chemicals ($0.03), medical and worker’s compensation ($0.02), incentive compensation ($0.02), and labor ($0.02).
Total corrugated products shipments were up 3.1% compared to last year’s first quarter, and outside sales of containerboard were up 1.0%. Containerboard production was 602,000 tons, up 33,000 tons over the first quarter of 2010. PCA ended the quarter with its containerboard inventories down about 8,000 tons below 2010 year-end levels.
Commenting on the first quarter, Mark W. Kowlzan, Chief Executive Officer of PCA, said, “We achieved record earnings despite severe weather issues and two annual maintenance outages. These earnings were driven by higher prices, strong corrugated products volume and highly productive mill operations. Our corrugated products shipments were the highest since our record first quarter 2006 shipments, and in March, we set an all-time monthly shipments record. These strong results were partially offset by continuing cost inflation, particularly for chemicals and transportation.”
“Looking ahead,” Mr. Kowlzan added, “we will complete the bulk of our annual maintenance and major capital project work in the second quarter which will result in production losses totaling 39,000 tons, or 17,000 tons higher than the first quarter. The higher production losses will also result in higher outage related costs, including repairs. Costs for chemicals, transportation and energy are also expected to increase. Corrugated products shipments are expected to increase and energy usage will be lower with warmer weather. Considering these items, we currently expect second quarter earnings of about $0.35 per share.”
PCA is the fifth largest producer of containerboard and corrugated packaging products in the United States with sales of $2.44 billion in 2010. PCA operates four paper mills and 68 corrugated products plants in 26 states across the country.
SOURCE: Packaging Corporation of America