Packaging Corporation of America (NYSE: PKG) today reported
first quarter net income of $91 million, or $0.92 per share
compared to last year’s first quarter net income of $90 million, or
$0.92 per share. Earnings included charges for special items for
the Boise integration and DeRidder, Louisiana mill restructuring of
$9 million, or $0.09 per share. Excluding special items, first
quarter 2015 net income was $100 million, or $1.01 per share,
compared to first quarter 2014 net income of $106 million, or $1.08
per share. First quarter net sales were $1.4 billion in both 2015
and 2014.
Excluding special items, the $0.07 per share reduction in first
quarter 2015 earnings, compared to the first quarter of 2014, was
driven by increased annual mill outage downtime and costs ($0.08),
lower white papers prices and mix ($0.05), lower export
containerboard prices ($0.02), and higher costs for wood ($0.04),
medical ($0.04), labor and benefits ($0.04), and depreciation
($0.02). These items were partially offset by increased volume
($0.09), and lower costs for energy ($0.06), chemicals ($0.02) and
purchased fiber ($0.02), and a state tax credit related to the
investments at the DeRidder mill ($0.03).
Lower earnings compared to PCA guidance of $1.07 to $1.10 per
share for the first quarter were a result of extreme weather
conditions ($0.03), additional downtime to complete the DeRidder
annual outage ($0.03), and lower prices from the retroactive price
decrease by trade publications and mix changes in white papers
($0.03).
Packaging segment EBITDA in the first quarter of 2015 was $220
million, and excluding special items, was $222 million with sales
of $1,099 million compared to first quarter 2014 packaging EBITDA,
excluding special items, of $244 million with sales of $1,097
million. Lower profitability was the result of this year’s extended
annual outage at the DeRidder mill, which did not have an annual
outage in 2014, as well as higher wood, medical, labor and benefits
and freight costs, and lower export containerboard prices. These
items were partially offset by corrugated products volume growth
and benefits from the DeRidder No. 3 machine conversion. Corrugated
products shipments per workday, including both PCA and Boise
plants, were up 4.4%, with one less workday compared to the first
quarter of last year, and total shipments were up 2.7%.
Paper segment EBITDA in the first quarter of 2015 increased to
$49 million on sales of $297 million compared to first quarter 2014
EBITDA of $40 million and net sales of $309 million. Office paper
shipments were up slightly, and printing and converting and
pressure sensitive paper shipments were down 5,500 tons compared to
the first quarter of last year. Improved profitability was the
result of operational improvements and synergy realization in the
white paper mills over the past year.
Commenting on results, Mark W. Kowlzan, CEO, said “Our overall
operations remained strong with steady demand and price in both
domestic containerboard and corrugated products. Despite lower
prices and changes in mix, we were able to improve profitability
and margins in white papers. The DeRidder annual outage took about
six days longer than we expected due to vendor design errors which
required equipment to be modified after it was received. Extreme
weather conditions also contributed to higher costs at our mills
and lower shipments at our box plants.”
“Looking ahead to the second quarter,” Mr. Kowlzan added, “we
expect earnings improvement driven primarily from a full quarter of
operations at the DeRidder mill which will increase containerboard
production and lower mill costs. We also expect seasonally higher
containerboard and corrugated products shipments. Costs of annual
mill outages, including amortization of repair costs, will be
slightly higher than in the first quarter.
In addition, we expect higher interest and depreciation expense,
a higher effective tax rate, and no additional state tax credits.
Finally, we expect to incur an insurance deductible charge of $3
million, or $0.02 per share, related to a turbine drive failure on
the No. 1 paper machine at the Jackson, Alabama white papers mill.
Considering these items, we currently expect second quarter
earnings of $1.03 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 94 corrugated products plants and related
facilities.
Conference Call
Information:
WHAT:
Packaging Corporation of America’s 1st Quarter 2015 Earnings
Conference Call
WHEN:
Tuesday, April 21, 2015 at 10:00 a.m. Eastern Time
CALL-IN
(855) 730-0288 (U.S. and Canada) or (832) 412-2295 (International)
NUMBER:
Dial in by 9:45 a.m. Eastern Time Conference Call Leader: Mr. Mark
Kowlzan
WEBCAST:
http://www.packagingcorp.com
REBROADCAST DATES:
April 21, 2015 1:00 p.m. Eastern Time through May 5, 2015 11:59
p.m. Eastern Time
REBROADCAST NUMBERS:
(855) 859-2056 (U.S. and Canada) or (404) 537-3406 (International)
Passcode: 35494228
Some of the statements in this press release are forward-looking
statements. Forward-looking statements include statements about our
future earnings and financial condition, our industry and our
business strategy. Statements that contain words such as “ will”,
“should”, “anticipate”, “believe”, “expect”, “intend”, “estimate”,
“hope” or similar expressions, are forward-looking statements.
These forward-looking statements are based on the current
expectations of PCA. Because forward-looking statements involve
inherent risks and uncertainties, the plans, actions and actual
results of PCA could differ materially. Among the factors that
could cause plans, actions and results to differ materially from
PCA’s current expectations include the following: the impact of
general economic conditions; conditions in the paper and packaging
industries, including competition, product demand and product
pricing; fluctuations in wood fiber and recycled fiber costs;
fluctuations in purchased energy costs; the possibility of
unplanned outages or interruptions at our principal facilities; and
legislative or regulatory requirements, particularly concerning
environmental matters, as well as those identified under Item 1A.
Risk Factors in PCA’s Annual Report on Form 10-K for the year ended
December 31, 2014 filed with the Securities and Exchange Commission
and available at the SEC’s website at “www.sec.gov”.
Non-GAAP measures used in this press release are reconciled to
the most comparable measure reported in accordance with GAAP in the
schedules to this press release.
Packaging Corporation of America Consolidated Earnings
Results Unaudited (dollars in millions, except per-share
data)
Three Months Ended March 31 December
31, 2015 2014 2014 Net sales $ 1,425.7 $
1,431.3 $ 1,434.0 Cost of sales (1,148.7 )
(1)
(1,129.9 )
(1)
(1,137.0 )
(1)
Gross profit 277.0 301.4 297.0 Selling, general, and administrative
expenses (117.3 ) (116.5 ) (110.4 ) Other expense, net (2.6
)
(2)
(24.0 )
(2)
(13.4 )
(2)
Income from operations 157.1 160.9 173.2 Interest expense, net
(19.2 )
(3)
(20.8 )
(3)
(23.2 ) Income before taxes 137.9 140.1 150.0 Provision for
income taxes (47.1 ) (50.0 ) (51.5 ) Net
income $ 90.8 $ 90.1 $ 98.5 Earnings per
share: Basic $ 0.92 $ 0.92 $ 1.00 Diluted $
0.92 $ 0.92 $ 1.00 Supplemental financial
information: Capital spending $ 55.6 $ 50.9 $ 165.4 Cash balance $
126.4 $ 185.7 $ 124.9 (1) The three months ended March 31,
2015 and 2014, and the three months ended December 31, 2014,
include $10.3 million, $4.0 million, and $18.0 million,
respectively, of restructuring charges at our mill in DeRidder,
Louisiana. The restructuring charges primarily related to
accelerated depreciation and were mostly recorded in "Cost of
sales". (2) The three months ended March 31, 2015 and 2014,
and the three months ended December 31, 2014, include $3.5 million,
$4.1 million, and $6.4 million, respectively, of Boise acquisition
integration-related and other costs, mostly recorded in "Other
expense, net". These costs primarily relate to professional fees,
severance, retention, relocation, travel, and other
integration-related costs.
The three months ended March 31, 2015,
also includes a $3.6 million tax credit from the State of Louisiana
related to our recent capital investment and the jobs retained at
the DeRidder, Louisiana, mill, which was recorded as a benefit in
"Other expense, net".
The three months ended March 31, 2014,
also includes $17.6 million of costs accrued for the settlement of
the Kleen Products LLC v Packaging Corp. of America et al class
action lawsuit. These costs are recorded in “Other expense,
net”.
(3) During the three months ended March 31, 2015 and 2014,
we received an interest rebate on a portion of our bank debt,
reducing our interest expense $4.1 million and $0.8 million,
respectively. 1
Packaging Corporation of
America Segment Information Unaudited (dollars in
millions)
Three Months Ended March
31 December 31, 2015 2014 2014
Segment sales Packaging $ 1,099.3 $ 1,097.4 $ 1,122.0 Paper
297.3 309.3 284.4 Intersegment eliminations and other 29.1
24.6 27.6
$
1,425.7 $ 1,431.3 $
1,434.0 Segment income (loss) Packaging
$ 141.1 $ 170.7 $ 161.4 Paper 35.6 27.7 31.1 Corporate and Other
(19.6 ) (37.5 ) (19.3 ) Income from operations
157.1 160.9
173.2 Interest expense, net (19.2 )
(20.8 ) (23.2 ) Income before taxes
$ 137.9
$ 140.1 $ 150.0
Segment income (loss) excluding special items
(1) Packaging $ 152.3 $ 174.7 $ 178.9 Paper 35.6 28.4 31.5
Corporate and Other (17.0 ) (16.5 ) (12.8 )
$ 170.9 $ 186.6 $
197.6 EBITDA (1) Packaging $
219.8 $ 240.3 $ 238.7 Paper 49.3 39.7 44.5 Corporate and Other
(18.6 ) (35.7 ) (17.8 )
$ 250.5
$ 244.3 $ 265.4
EBITDA excluding special items (1) Packaging $
222.0 $ 244.3 $ 249.7 Paper 49.3 40.4 44.9 Corporate and Other
(16.0 ) (14.7 ) (11.3 )
$ 255.3
$ 270.0 $ 283.3
(1) Income from operations excluding special items, segment
income (loss) excluding special items, earnings before interest,
income taxes, and depreciation, amortization, and depletion
(EBITDA), and EBITDA excluding special items are non-GAAP financial
measures. We present these measures because they provide a means to
evaluate the performance of our segments and our company on an
ongoing basis using the same measures that are used by our
management and because these measures are frequently used by
investors and other interested parties in the evaluation of
companies and the performance of their segments. The tables
included in "Reconciliation of Non-GAAP Financial Measures" on the
following pages reconcile the non-GAAP measures with the most
directly comparable GAAP measures. Any analysis of non-GAAP
financial measures should be done only in conjunction with results
presented in accordance with GAAP. The non-GAAP measures are not
intended to be substitutes for GAAP financial measures and should
not be used as such. 2
Packaging Corporation of
America Reconciliation of Non-GAAP Financial Measures
Unaudited (dollars in millions)
Three Months Ended March 31 December 31,
2015 2014 2014 Packaging Segment income
$ 141.1 $ 170.7 $ 161.4 DeRidder restructuring 10.3 4.0 18.0
Integration-related and other costs 0.9 —
(0.5 ) Segment income excluding special items (1)
$ 152.3 $ 174.7 $
178.9 Paper Segment income $ 35.6 $
27.7 $ 31.1 Integration-related and other costs —
0.7 0.4 Segment income excluding
special items (1)
$ 35.6 $ 28.4
$ 31.5 Corporate and
Other Segment loss $ (19.6 ) $ (37.5 ) $ (19.3 )
Integration-related and other costs 2.6 3.4 6.5 Class action
lawsuit settlement — 17.6 —
Segment loss excluding special items (1)
$
(17.0 ) $ (16.5 ) $
(12.8 ) Income from
operations $ 157.1 $ 160.9
$ 173.2 Income
from operations, excluding special items (1) $
170.9 $ 186.6 $
197.6 (1) See footnote (1) on page 2, for a
discussion of non-GAAP financial measures. 3
Packaging Corporation of America
Reconciliation of Non-GAAP Financial Measures
Unaudited (dollars in millions)
Net Income and EPS
Excluding Special Items (1)
Three Months Ended March
31 Three Months Ended 2015 2014
December 31, 2014 Diluted Diluted
Diluted Net Income EPS Net Income
EPS Net Income EPS As reported $ 90.8 $ 0.92 $
90.1 $ 0.92 $ 98.5 $ 1.00 Special items (2): DeRidder restructuring
6.6 0.07 2.6 0.02 11.7 0.12 Integration-related and other costs 2.2
0.02 2.6 0.03 4.2 0.04 Class action lawsuit settlement —
— 11.2 0.11 — — Total special
items 8.8 0.09 16.4 0.16 15.9
0.16 Excluding special items
$ 99.6 $
1.01 $ 106.5 $ 1.08 $
114.4 $ 1.16 (1) Net income and
earnings per share excluding special items are non-GAAP financial
measures. The after-tax effect of special items are presented
because they provide a means to evaluate the performance of our
company on an ongoing basis using the same measures that are used
by our management and because these measures are frequently used by
investors and other interested parties in the evaluation of
companies and their performance. Any analysis of non-GAAP financial
measures should be done only in conjunction with results presented
in accordance with GAAP. The non-GAAP measures are not intended to
be substitutes for GAAP financial measures and should not be used
as such. (2) Special items are tax-effected at a combined
federal and state income tax rate in effect for the period the
special items were recorded. For more information related to these
items, see the footnotes to the Consolidated Earnings Results on
page 1. 4
Packaging Corporation of
America Reconciliation of Non-GAAP Financial Measures
Unaudited (dollars in millions)
EBITDA and EBITDA
Excluding Special Items (1) EBITDA represents income
before interest (interest expense and interest income), income
taxes, and depreciation, amortization, and depletion. The following
table reconciles net income to EBITDA and EBITDA excluding special
items:
Three Months Ended March 31 December
31, 2015 2014 2014 Net income $ 90.8 $
90.1 $ 98.5 Interest expense, net 19.2 20.8 23.2 Provision for
income taxes 47.1 50.0 51.5 Depreciation, amortization, and
depletion 93.4 83.4 92.2
EBITDA
(1) $ 250.5 $ 244.3 $
265.4 Special items: DeRidder restructuring 1.3 4.0 11.5
Integration-related and other costs 3.5 4.1 6.4 Class action
lawsuit settlement — 17.6 —
EBITDA
excluding special items (1) $ 255.3
$ 270.0 $ 283.3 (1) See footnote
(1) on page 2, for a discussion of non-GAAP financial measures.
5
Packaging Corporation of
America Reconciliation of Non-GAAP Financial Measures
Unaudited (dollars in millions) The following table
reconciles segment income (loss) to EBITDA and EBITDA excluding
special items:
Three Months Ended March 31
December 31, 2015 2014 2014
Packaging Segment income $ 141.1 $ 170.7 $ 161.4
Depreciation, amortization, and depletion 78.7
69.6 77.3 EBITDA (1) 219.8
240.3 238.7 DeRidder restructuring 1.3
4.0 11.5 Integration-related and other costs 0.9
— (0.5 ) EBITDA excluding special items (1)
$ 222.0 $ 244.3 $
249.7 Paper Segment income $ 35.6 $
27.7 $ 31.1 Depreciation, amortization, and depletion 13.7
12.0 13.4 EBITDA (1) 49.3
39.7 44.5 Integration-related
and other costs — 0.7 0.4
EBITDA excluding special items (1)
$ 49.3
$ 40.4 $ 44.9
Corporate and Other Segment loss $ (19.6 ) $ (37.5 ) $ (19.3
) Depreciation, amortization, and depletion 1.0
1.8 1.5 EBITDA (1) (18.6 )
(35.7 ) (17.8 ) Integration-related and other costs
2.6 3.4 6.5 Class action lawsuit settlement —
17.6 — EBITDA excluding special items (1)
$ (16.0 ) $ (14.7 )
$ (11.3 ) EBITDA
(1) $ 250.5 $ 244.3
$ 265.4 EBITDA
excluding special items (1) $ 255.3
$ 270.0 $ 283.3
(1) See footnote (1) on page 2, for a discussion of non-GAAP
financial measures. 6
Packaging Corporation of AmericaBarbara SessionsINVESTOR
RELATIONS: (877) 454-2509PCA’s Website: www.packagingcorp.com
Packaging (NYSE:PKG)
Historical Stock Chart
From Mar 2024 to Apr 2024
Packaging (NYSE:PKG)
Historical Stock Chart
From Apr 2023 to Apr 2024