Packaging Corporation of America (NYSE: PKG) today reported
third quarter net income of $128 million, or $1.31 per share,
compared to last year’s third quarter net income of $104 million,
or $1.06 per share. Earnings included a $5 million, or $.05 per
share, net gain for special items related to the Boise integration
including the sale of the former St. Helens mill site previously
operated by Boise Inc. Excluding special items, third quarter 2015
net income was $123 million, or $1.26 per share, compared to third
quarter 2014 net income of $124 million, or $1.26 per share. Third
quarter net sales were $1.5 billion in both 2015 and 2014.
Excluding special items, third quarter 2015 earnings per share,
compared to the third quarter of 2014, included improved volume
($.07), lower costs for chemicals ($.03), energy ($.03) and repairs
($.02) and a lower tax rate ($.03). These items were offset by
lower white paper prices and mix ($.13), lower export
containerboard prices ($.03), and higher fiber costs ($.01).
Packaging segment EBITDA in the third quarter of 2015, excluding
special items, was $268 million with sales of $1,144 million
compared to third quarter 2014 packaging EBITDA of $262 million
with sales of $1,176 million. Revenues in 2014 included $36 million
related to the discontinued newsprint business and other divested
operations. Corrugated products shipments were up 1.3% over last
year’s record third quarter with the same number of workdays.
Containerboard production was 933,000 tons which was an increase of
75,000 tons over last year’s third quarter including 70,000 tons
from the D3 machine at DeRidder. Containerboard inventories were up
2,000 tons compared to 2014 year-end levels.
Paper segment EBITDA in the third quarter of 2015, excluding
special items, was $46 million with sales of $292 million compared
to third quarter 2014 EBITDA of $56 million with sales of $313
million. Total sales prices were lower and volume was essentially
equal to the third quarter of last year.
Commenting on third quarter results, Mark W. Kowlzan, CEO, said
“We performed very well equaling last year’s record third quarter
earnings despite lower white papers prices and mix and lower export
containerboard prices which together totaled $.16 per share. We
achieved record volumes in both our packaging mills and corrugated
products plants and continued to reduce costs and optimize our
operations. The planned capital outage on our D3 paper machine at
DeRidder was successfully completed and has enabled the machine to
achieve the 1,000 tons per day design capacity. Finally, in our
paper segment, we were able to reduce about half of the impact from
lower sales prices through our cost reduction and efficiency
improvement efforts.”
“Looking ahead,” Mr. Kowlzan added, “we expect seasonally lower
volumes for containerboard and corrugated products as well as a
seasonally less rich mix in corrugated products, compared to the
third quarter. In addition, we expect seasonally lower volumes and
a less rich mix in white papers. With colder weather, wood and fuel
costs are also expected to be seasonally higher. Finally, as
previously reported, maintenance outage costs are expected to be
$.10 per share higher in the fourth quarter due to the planned
24-day outage at our Jackson, Alabama white papers mill for a major
rebuild of the recovery boiler which will reduce production and
increase costs. Considering these items, we expect fourth quarter
earnings of $1.03 per share.”
In addition to PCA’s consolidated earnings results and the
segment information that accompanies this press release, we posted
other supplemental financial data for the third quarter on our
website at www.packagingcorp.com.
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 3rd Quarter 2015 Earnings
Conference Call
WHEN:
Wednesday, October 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:
October 21, 2015 1:00 p.m. Eastern Time through November 4, 2015
11:59 p.m. Eastern Time
REBROADCAST NUMBERS:
(855) 859-2056 (U.S. and Canada) or (404) 537-3406 (International)
Passcode: 35494230
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 Nine Months Ended
September 30 September 30 2015 2014
2015 2014 Net sales $ 1,470.8 $ 1,518.9 $ 4,350.8 $
4,418.7 Cost of sales (1,142.5 )
(1)
(1,198.6 )
(1)
(3,427.9 )
(1)
(3,486.2 )
(1)
Gross profit 328.3 320.3 922.9 932.5 Selling, general, and
administrative expenses (112.7 ) (119.6 ) (345.9 ) (359.0 ) Other
income (expense), net 3.8
(1) (2) (3)
(12.3 )
(2)
(2.9 )
(1) (2) (3)
(44.0 )
(2)
Income from operations 219.4 188.4 574.1 529.5 Interest expense,
net (21.7 ) (23.1 )
(2)
(63.2 ) (65.3 )
(2)
Income before taxes 197.7 165.3 510.9 464.2 Provision for income
taxes (69.9 ) (60.9 ) (178.3 ) (170.1 )
Net income $ 127.8 $ 104.4 $ 332.6 $ 294.1
Earnings per share: Basic $ 1.31 $ 1.06 $ 3.39
$ 2.99 Diluted $ 1.31 $ 1.06 $ 3.39
$ 2.99 Supplemental financial information: Capital
spending $ 76.0 $ 106.7 $ 217.9 $ 254.9 Cash balance $ 186.9 $
154.3 $ 186.9 $ 154.3 (1) All periods presented include
amounts from restructuring activities at our mill in DeRidder,
Louisiana, including costs related to the conversion of the No. 3
newsprint machine to containerboard, our exit from the newsprint
business, and other improvements. The restructuring charges
primarily related to accelerated depreciation and were mostly
recorded in "Cost of sales". We completed the restructuring
activities in first quarter 2015, but we recorded $3.8 million of
income for services and equipment received for vendor settlements
during the three months ended September 30, 2015. These amounts
were recorded in "Other income (expense), net". See page 3 for the
amounts recorded in each period. (2) All periods presented
include Boise acquisition integration-related and other costs,
mostly recorded in "Other income (expense), net". These costs
primarily relate to professional fees, severance, retention,
relocation, travel, and other integration-related costs. See page 3
for the amounts recorded in each period.
In both the three and nine months ended
September 30, 2014, $1.5 million of debt-refinancing costs were
recorded in "Interest expense, net".
The nine months ended September 30, 2015,
include 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 income (expense), net".
The nine months ended September 30, 2014,
include $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 income (expense),
net".
(3) In September 2015, we sold the remaining land,
buildings, and equipment at our paper mill site in St. Helens,
Oregon, where we ceased paper production in December 2012. We
recorded a $6.7 million gain on the sale, in "Other income
(expense), net".
Packaging
Corporation of America Segment Information
Unaudited (dollars in millions)
Three Months Ended
Nine Months Ended September 30 September 30
2015 2014 2015 2014 Segment
sales Packaging $ 1,144.4 $ 1,175.7 $ 3,385.9 $ 3,418.3 Paper
291.9
312.5
870.3
917.0 Corporate and other
34.5
30.7
94.6
83.4
$ 1,470.8 $ 1,518.9
$ 4,350.8 $ 4,418.7
Segment income (loss) Packaging $ 198.2 $
164.7 $ 533.9 $ 501.8 Paper 39.5 43.0 98.6 104.3 Corporate and
Other (18.3 ) (19.3 ) (58.4 ) (76.6 )
Income from operations
219.4
188.4 574.1 529.5
Interest expense, net (21.7 ) (23.1 )
(63.2 ) (65.3 ) Income before taxes
$ 197.7
$ 165.3 $ 510.9
$ 464.2 Segment income (loss)
excluding special items (1) Packaging $ 194.4 $ 191.7 $
542.0 $ 555.0 Paper 32.8 43.0 91.9 103.9 Corporate and Other
(15.9 ) (17.3 ) (51.5 ) (52.0 )
$
211.3 $ 217.4 $
582.4 $ 606.9
EBITDA (1) Packaging $ 271.7 $ 253.5 $ 758.1 $ 747.5
Paper 52.8 55.9 139.2 141.5 Corporate and Other (17.4 )
(17.2 ) (55.3 ) (70.7 )
$ 307.1
$ 292.2 $ 842.0
$ 818.3 EBITDA excluding special
items (1) Packaging $ 267.9 $ 262.3 $ 757.2 $ 765.3
Paper 46.1 55.9 132.5 141.1 Corporate and Other (15.0 )
(15.2 ) (48.4 ) (46.1 )
$ 299.0
$ 303.0 $ 841.3
$ 860.3 (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.
Packaging Corporation of America
Reconciliation of Non-GAAP Financial Measures
Unaudited (dollars in millions)
Three Months
Ended Nine Months Ended September 30 September
30 2015 2014 2015 2014
Packaging Segment income $ 198.2 $ 164.7 $ 533.9 $ 501.8
DeRidder restructuring (3.8 ) 26.0 5.4 47.8 Integration-related and
other costs — 1.0 2.7
5.4 Segment income excluding special items (1)
$ 194.4 $ 191.7 $
542.0 $ 555.0
Paper Segment income $ 39.5 $ 43.0 $ 98.6 $ 104.3
Integration-related and other costs — — — (0.4 ) Sale of St. Helens
paper mill site (6.7 ) — (6.7 )
— Segment income excluding special items (1)
$
32.8 $ 43.0 $ 91.9
$ 103.9 Corporate and
Other Segment loss $ (18.3 ) $ (19.3 ) $ (58.4 ) $ (76.6 )
Integration-related and other costs 2.4 2.0 6.9 7.0 Class action
lawsuit settlement — — —
17.6 Segment loss excluding special items (1)
$ (15.9 ) $ (17.3 )
$ (51.5 ) $ (52.0 )
Income from operations $
219.4 $ 188.4 $
574.1 $ 529.5
Income from operations, excluding special
items (1) $ 211.3 $
217.4 $ 582.4 $
606.9 (1) See footnote (1) on page 2, for a
discussion of non-GAAP financial measures.
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 September 30 2015
2014 Net Income Diluted EPS Net Income
Diluted EPS As reported $ 127.8 $ 1.31 $ 104.4 $ 1.06
Special items (2): DeRidder restructuring (2.3 ) (0.02 ) 16.6 0.17
Integration-related and other costs 1.7 0.02 2.9 0.03 Sale of St.
Helens paper mill site (4.4 ) (0.05 ) —
— Total special items (5.0 ) (0.05 ) 19.5
0.20 Excluding special items
$ 122.8
$ 1.26 $ 123.9 $
1.26 Nine Months Ended September 30
2015 2014 Net Income Diluted EPS Net
Income Diluted EPS As reported $ 332.6 $ 3.39 $ 294.1 $
2.99 Special items (2): DeRidder restructuring 3.6 0.04 30.4 0.31
Integration-related and other costs 6.3 0.06 8.5 0.09 Sale of St.
Helens paper mill site (4.4 ) (0.04 ) — Class action lawsuit
settlement — — 11.2 0.11
Total special items 5.5 0.06
50.1 0.51 Excluding special items
$ 338.1
$ 3.45 $ 344.2 $
3.50 (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.
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 Nine Months Ended September
30 September 30 2015 2014 2015
2014 Net income $ 127.8 $ 104.4 $ 332.6 $ 294.1 Interest
expense, net 21.7 23.1 63.2 65.3 Provision for income taxes 69.9
60.9 178.3 170.1 Depreciation, amortization, and depletion
87.7 103.8 267.9 288.8
EBITDA (1) $ 307.1 $
292.2 $ 842.0 $ 818.3
Special items: DeRidder restructuring (3.8 ) 7.8 (3.6 ) 12.4
Integration-related and other costs 2.4 3.0 9.6 12.0 Sale of St.
Helens paper mill site (6.7 ) — (6.7 ) — Class action lawsuit
settlement — — — 17.6
EBITDA excluding special items (1) $
299.0 $ 303.0 $ 841.3
$ 860.3 (1) See footnote (1) on page 2,
for a discussion of non-GAAP financial measures.
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 Nine Months
Ended September 30 September 30 2015
2014 2015 2014 Packaging Segment income
$ 198.2 $ 164.7 $ 533.9 $ 501.8 Depreciation, amortization, and
depletion 73.5 88.8 224.2
245.7 EBITDA (1) 271.7 253.5
758.1 747.5 DeRidder
restructuring (3.8 ) 7.8 (3.6 ) 12.4 Integration-related and other
costs — 1.0 2.7
5.4 EBITDA excluding special items (1)
$ 267.9
$ 262.3 $ 757.2
$ 765.3 Paper Segment income $
39.5 $ 43.0 $ 98.6 $ 104.3 Depreciation, amortization, and
depletion 13.3 12.9 40.6
37.2 EBITDA (1) 52.8 55.9
139.2 141.5 Sale of St. Helens paper
mill site (6.7 ) — (6.7 ) — Integration-related and other costs
— — — (0.4 )
EBITDA excluding special items (1)
$ 46.1
$ 55.9 $ 132.5 $
141.1 Corporate and Other Segment loss
$ (18.3 ) $ (19.3 ) $ (58.4 ) $ (76.6 ) Depreciation, amortization,
and depletion 0.9 2.1 3.1
5.9 EBITDA (1) (17.4 ) (17.2 )
(55.3 ) (70.7 ) Integration-related and other costs 2.4 2.0
6.9 7.0 Class action lawsuit settlement — —
— 17.6 EBITDA excluding special
items (1)
$ (15.0 ) $ (15.2
) $ (48.4 ) $ (46.1
) EBITDA (1) $ 307.1
$ 292.2 $ 842.0
$ 818.3 EBITDA
excluding special items (1) $ 299.0
$ 303.0 $ 841.3 $
860.3 (1) See footnote (1) on page 2, for a
discussion of non-GAAP financial measures.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151020006861/en/
Packaging Corporation of AmericaBarbara SessionsINVESTOR
RELATIONS: (877) 454-2509PCA’s Website: www.packagingcorp.com
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