Packaging Corp. of America Reports Fourth Quarter and Full Year 2015 Results
"We performed very well operationally and our earnings exceeded fourth quarter guidance despite lower than expected containerboard production and corrugated products volume." – Mark Kowlzan, Chairman and CEO, PCA.
Jan. 25, 2016 - Packaging Corporation of America (PKG) today reported fourth quarter net income of $104 million, or $1.07 per share. Earnings included net charges for special items, primarily for the Boise integration, of $0.4 million. Excluding special items, fourth quarter 2015 net income was $105 million, or $1.08 per share, compared to fourth quarter 2014 net income of $114 million, or $1.16 per share. Fourth quarter net sales were $1.4 billion in both 2015 and 2014.
Full year 2015 earnings were $437 million, or $4.47 per share, compared to 2014 earnings of $393 million, or $3.99 per share. Full year earnings, excluding special items, were $443 million, or $4.53 per share, compared to 2014 earnings of $459 million, or $4.66 per share. Full year 2015 net sales were $5.74 billion compared to 2014 net sales of $5.85 billion.
Excluding special items, the $.08 per share reduction in fourth quarter 2015 earnings, compared to the fourth quarter of 2014, was driven primarily by lower white paper prices and mix ($.10), higher annual mill outage costs ($.03), lower corrugated volume ($.02), containerboard production ($.02), and export containerboard prices ($.02), and higher depreciation expense ($.02). These items were partially offset by lower costs for energy ($.05), mill repair costs ($.03), and freight ($.02) as well as lower income taxes of ($.04) per share.
Packaging segment EBITDA in the fourth quarter of 2015, excluding special items, was $252 million with sales of $1.09 billion compared to fourth quarter 2014 packaging EBITDA of $250 million with sales of $1.12 billion. Corrugated products shipments were 1% lower than last year's record fourth quarter with the same number of workdays. Containerboard production was 903,000 tons which was a 24,000 ton decrease compared to last year's fourth quarter as PCA ran to demand and, unlike last year's fourth quarter, did not need to prebuild any inventory to support first quarter maintenance outages. Containerboard inventories ended the year 2,500 tons lower than the third quarter and flat compared to 2014 year-end levels. Full year 2015 packaging EBITDA, excluding special items, was $1,009 million with sales of $4.48 billion compared to full year 2014 EBITDA of $1,015 million with sales of $4.54 billion.
Paper segment EBITDA in the fourth quarter of 2015 was $28 million with sales of $273 million compared to fourth quarter 2014 paper EBITDA, excluding special items, of $45 million with sales of $284 million. Sales prices were lower and volume was essentially equal to the fourth quarter of last year. In addition, the Jackson, Alabama paper mill was down for an extended period for a planned rebuild of the recovery boiler which reduced production by 28,000 tons and increased operating costs. Full year 2015 paper EBITDA, excluding special items, was $161 million and sales were $1.14 billion compared to full year 2014 EBITDA of $186 million with sales of $1.20 billion.
Commenting on reported results, Mark W. Kowlzan, Chairman and CEO, said, “We performed very well operationally and our earnings exceeded fourth quarter guidance despite lower than expected containerboard production and corrugated products volume. For the year, our earnings of $4.53 per share, excluding special items, were only $.13 per share below last year's record earnings despite lower white paper prices and mix which reduced 2015 earnings by $.38 per share.”
“Looking ahead to the first quarter compared to the fourth quarter,” Mr. Kowlzan added, “labor and benefits costs will be higher with annual wage increases and other timing-related expenses, and seasonally colder weather will increase wood and energy costs. Our tax rate will also be higher in the first quarter. These items will be partially offset by slightly higher corrugated products shipments and containerboard production, and lower scheduled mill outage costs. Finally, over the weekend Pulp and Paper Week, a trade publication, lowered its published prices for domestic linerboard and medium by $15 and $20 per ton, respectively, which will adversely affect earnings. Everything considered, we currently expect first quarter earnings of $1.00 per share.”
PCA is the fourth largest producer of containerboard and corrugated packaging products in the United States and the third largest producer of uncoated freesheet paper in North America. PCA operates eight mills and 93 corrugated products plants and related facilities. To learn more, please visit: www.packagingcorp.com
SOURCE: Packaging Corporation of America