Packaging Corp. of America Posts Strong First Quarter Results
April 18, 2012 - Packaging Corporation of America [on April 17] reported first quarter net income of $18 million, or $0.18 per share, which included a non-cash, after-tax charge of $23 million, or $0.24 per share, from an amendment to its 2009 federal income tax return related to biofuel tax credits. Excluding this charge, adjusted net income was a first quarter record $41 million, or $0.42 per share, compared to first quarter 2011 adjusted net income of $39 million, or $0.39 per share, which excludes a $2 million, or $0.02 per share, asset disposal charge.
The increase in adjusted net income was driven by higher containerboard and corrugated products volume ($0.09) and lower costs for energy ($0.04) and recycled fiber ($0.02). These items were partially offset by lower containerboard export prices ($0.03) and higher costs for depreciation ($0.03), transportation ($0.02), labor ($0.02), and interest expense ($0.02).
Net sales were a first quarter record $671 million, up 7% compared to first quarter 2011 net sales of $630 million.
Corrugated products shipments were up 8.3% compared to last year’s first quarter, and outside sales of containerboard were essentially equal to last year. Containerboard production was 640,000 tons, up 38,000 tons over the first quarter of 2011. PCA ended the quarter with its containerboard inventories about 11,000 tons above year-end 2011 levels.
Commenting on reported results, Mark W. Kowlzan, Chief Executive Officer of PCA, said, "Our business was very strong throughout the quarter with record corrugated products shipments and stable pricing for both domestic containerboard and corrugated products. Export containerboard prices were lower than last year, but did stabilize early in the first quarter. Our mills ran extremely well, allowing us to meet strong demand and build inventory required to offset lower production from mill maintenance outages in the second quarter. Except for transportation and normal labor and benefit cost increases, inflationary cost pressures were less than last year.
"Looking ahead to the second quarter, we will complete annual maintenance outages at three of our mills resulting in lower production and higher outage related costs, including repairs. These outages will reduce earnings by about $0.03 per share compared to the first quarter. We also expect slightly higher costs for transportation and recycled fiber. Higher corrugated products volume and a richer mix are expected as we move into a seasonally stronger period. Energy costs should be lower with both reduced usage with warmer weather and lower natural gas prices. Considering these items, we currently expect second quarter earnings of about $0.45 per share."
PCA is the fourth largest producer of containerboard and corrugated packaging products in the United States with sales of $2.6 billion in 2011. PCA operates four paper mills and 72 corrugated products plants in 26 states across the country.
SOURCE: Packaging Corporation of America