Packaging Corporation of America Reports First Quarter 2022 Results

"Packaging segment demand remained very strong in the first quarter as we set a new all-time record for total box shipments and new first quarter records for box shipments per day and for containerboard volume." — Mark Kowlzan, Chairman and CEO of PCA.

April 25, 2022 - Packaging Corporation of America today reported first quarter 2022 net income of $254 million, or $2.70 per share, and net income of $256 million, or $2.72 per share, excluding special items. First quarter net sales were $2.1 billion in 2022 and $1.8 billion in 2021.

Reported earnings in the first quarter of 2022 include special items primarily for certain costs at the Jackson, Alabama, mill for paper-to-containerboard conversion related activities.

Excluding special items, the $.95 per share increase in first quarter 2022 earnings compared to the first quarter of 2021 was driven primarily by higher prices and mix $1.83 and volume $.23 in the Packaging segment, higher prices and mix in the Paper segment $.15, a lower share count resulting from share repurchases $.03, and lower interest expense $.02. These items were partially offset by higher operating costs ($.71), higher freight and logistics expenses ($.27), higher converting costs ($.11), higher depreciation expense ($.07), lower volume in the Paper segment ($.06), higher scheduled outage expenses ($.05), a higher tax rate ($.03), and other costs ($.01).

Results were $.22 above first quarter guidance of $2.50 per share primarily due to higher prices and mix and higher volumes in both the Packaging and Paper segments, operating cost improvements from efficiency and usage initiatives, and favorable weather conditions.

In the Packaging segment, total corrugated products shipments with one additional workday were up 2.9% and shipments per day were up 1.3% over last year's first quarter. Containerboard production was 1,233,000 tons, and containerboard inventory was down 4,000 tons from the fourth quarter of 2021 and up 23,000 tons compared to the first quarter of 2021.

In the Paper segment, sales volume was up 2,000 tons from the fourth quarter of 2021 and down 32,000 tons compared to the first quarter of 2021.

CEO Comments

Commenting on reported results, Mark W. Kowlzan, Chairman and CEO, said, "Packaging segment demand remained very strong in the first quarter as we set a new all-time record for total box shipments and new first quarter records for box shipments per day and for containerboard volume. We also had excellent execution of implementing previously announced price increases in both our Packaging and Paper segments.

"The scheduled maintenance outages in our mills went well, and both machines at our Jackson, Alabama mill produced containerboard the entire quarter. However, with strong internal and external demand, we ended the quarter once again with containerboard inventory below our targeted and historical levels.

"Although we still face unprecedented inflationary headwinds, our incessant focus on operational efficiency, cost reduction initiatives, and capital project execution contributes greatly to minimize this impact and maximize our operating margins."

Looking Ahead

"Looking ahead as we move from the first and into the second quarter," Mr. Kowlzan added, "we expect demand in our Packaging segment to remain very strong, and we will continue implementing the previously announced price increases in both our Packaging and Paper segments. Scheduled outage costs, which include an outage at our International Falls mill that will result in lower Paper segment sales volume, will be higher compared to the first quarter. We also anticipate continued inflation with freight and logistics expenses as well as most of our operating costs, although recycled fiber prices should be slightly lower. Considering these items, we expect second quarter earnings of $2.83 per share."

Packaging Corporation of America (NYSE: PKG) is the third largest producer of containerboard products and a leading producer of uncoated freesheet paper in North America. PCA operates eight mills and 90 corrugated products plants and related facilities. To learn more, visit: www.packagingcorp.com

SOURCE: Packaging Corporation of America (PCA)