Packaging Corporation of America (NYSE: 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.
CONTACT:
Barbara SessionsPackaging Corporation of AmericaINVESTOR
RELATIONS: (877) 454-2509PCA’s Website: www.packagingcorp.com
Conference Call
Information:
WHAT:
Packaging Corporation of America’s 4th
Quarter and Full Year 2015 Earnings Conference Call
WHEN:
Tuesday, January 26, 2016 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:
January 26, 2016 1:00 p.m. Eastern Time through February 9, 2016
11:59 p.m. Eastern Time
REBROADCAST NUMBERS:
(855) 859-2056 (U.S. and Canada) or (404) 537-3406 (International)
Passcode: 35494231
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 Full Year Ended
December 31 December 31 2015 2014
2015 2014 Net sales $ 1,390.9 $ 1,434.0 $ 5,741.7 $
5,852.6 Cost of sales (1,105.9 )
(1)
(1,137.0 )
(1)(2)
(4,533.7 )
(1)
(4,623.1 )
(1)(2)
Gross profit 285.0 297.0 1,208.0 1,229.5 Selling, general, and
administrative expenses (105.3 ) (110.4 )
(2)
(451.3 ) (469.5 )
(2)
Other income (expense), net (3.8 )
(1)(2)
(13.4 )
(2)
(6.7 )
(1)(2)(3)
(57.3 )
(2)(3)
Income from operations 175.9 173.2 750.0 702.7 Interest expense,
net (22.3 ) (23.2 ) (85.5 ) (88.4 )
(3)
Income before taxes 153.6 150.0 664.5 614.3 Provision for income
taxes (49.3 ) (51.5 ) (227.7 ) (221.7 )
Net income $ 104.3 $ 98.5 $ 436.8 $ 392.6
Earnings per share: Basic $ 1.07 $ 1.00 $ 4.47
$ 3.99 Diluted $ 1.07 $ 1.00 $ 4.47
$ 3.99 Supplemental financial information: Capital
spending $ 96.6 $ 165.4 $ 314.5 $ 420.2 Cash balance $ 184.2 $
124.9 $ 184.2 $ 124.9 (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 $3.5 million of
income for cash received from vendor settlements during the three
months ended December 31, 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. (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".
The twelve months ended December 31, 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 twelve months ended December 31, 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".
In the twelve months ended December 31,
2014, $1.5 million of debt-refinancing costs were recorded in
"Interest expense, net".
Packaging Corporation of America Segment
Information Unaudited (dollars in millions)
Three Months Ended Full Year
Ended December 31 December 31 2015
2014 2015 2014 Segment sales Packaging
$ 1,091.4 $ 1,122.0 $ 4,477.3 $ 4,540.3 Paper 272.8 284.4 1,143.1
1,201.4 Corporate and other 26.7 27.6
121.3 110.9
$ 1,390.9
$ 1,434.0 $ 5,741.7
$ 5,852.6 Segment income
(loss) Packaging $ 181.0 $ 161.4 $ 714.9 $ 663.2 Paper 13.9
31.1 112.5 135.4 Corporate and Other (19.0 ) (19.3 )
(77.4 ) (95.9 ) Income from operations
175.9 173.2 750.0
702.7 Interest expense, net
(22.3 ) (23.2 ) (85.5 ) (88.4 ) Income before
taxes
$ 153.6 $ 150.0
$ 664.5 $ 614.3
Segment income (loss) excluding special items (1)
Packaging $ 179.0 $ 178.9 $ 721.0 $ 733.9 Paper 13.9 31.5 105.8
135.4 Corporate and Other (16.7 ) (12.8 )
(68.1 ) (64.8 )
$ 176.2 $
197.6 $ 758.7 $
804.5 EBITDA (1) Packaging $
254.1 $ 238.7 $ 1,012.2 $ 986.2 Paper 28.2 44.5 167.4 186.0
Corporate and Other (17.8 ) (17.8 ) (73.1 )
(88.5 )
$ 264.5 $ 265.4
$ 1,106.5 $ 1,083.7
EBITDA excluding special items (1)
Packaging $ 252.1 $ 249.7 $ 1,009.3 $ 1,015.0 Paper 28.2 44.9 160.7
186.0 Corporate and Other (15.5 ) (11.3 )
(63.8 ) (57.4 )
$ 264.8 $
283.3 $ 1,106.2 $
1,143.6 (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 Full Year Ended December 31
December 31 2015 2014 2015 2014
Packaging Segment income $ 181.0 $ 161.4 $ 714.9 $ 663.2
DeRidder restructuring (3.5 ) 18.0 2.0 65.8 Integration-related and
other costs 1.5 (0.5 ) 4.1
4.9 Segment income excluding special items (1)
$ 179.0 $ 178.9 $
721.0 $ 733.9
Paper Segment income $ 13.9 $ 31.1 $ 112.5 $ 135.4
Integration-related and other costs — 0.4 — — Sale of St. Helens
paper mill site — — (6.7 )
— Segment income excluding special items (1)
$
13.9 $ 31.5 $
105.8 $ 135.4
Corporate and Other Segment loss $ (19.0 ) $ (19.3 ) $ (77.4
) $ (95.9 ) Integration-related and other costs 2.3 6.5 9.3 13.5
Class action lawsuit settlement — —
— 17.6 Segment loss excluding special
items (1)
$ (16.7 ) $ (12.8
) $ (68.1 ) $ (64.8
) Income from operations
$ 175.9 $ 173.2 $
750.0 $ 702.7
Income from operations, excluding special
items (1) $ 176.2 $
197.6 $ 758.7 $
804.5 (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 December 31 2015 2014
Net Income Diluted EPS Net Income Diluted
EPS As reported $ 104.3 $ 1.07 $ 98.5 $ 1.00 Special items (2):
DeRidder restructuring (2.2 ) (0.02 ) 11.7 0.12 Integration-related
and other costs 2.6 0.03 4.2
0.04 Total special items 0.4 0.01
15.9 0.16 Excluding special items
$
104.7 $ 1.08 $
114.4 $ 1.16 Full Year Ended
December 31 2015 2014 Net Income
Diluted EPS Net Income Diluted EPS As reported
$ 436.8 $ 4.47 $ 392.6 $ 3.99 Special items (2): DeRidder
restructuring 1.3 0.01 42.1 0.43 Integration-related and other
costs 8.9 0.10 12.7 0.13 Sale of St. Helens paper mill site (4.4 )
(0.05 ) — — Class action lawsuit settlement —
— 11.2 0.11 Total special items 5.8
0.06 66.0 0.67 Excluding special
items
$ 442.6 $ 4.53
$ 458.6 $ 4.66 (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 Full Year
Ended December 31 December 31 2015
2014 2015 2014 Net income $ 104.3 $
98.5 $ 436.8 $ 392.6 Interest expense, net 22.3 23.2 85.5 88.4
Provision for income taxes 49.3 51.5 227.7 221.7 Depreciation,
amortization, and depletion 88.6 92.2
356.5 381.0
EBITDA (1) $
264.5 $ 265.4 $ 1,106.5
$ 1,083.7 Special items: DeRidder
restructuring (3.5 ) 11.5 (7.0 ) 23.9 Integration-related and other
costs 3.8 6.4 13.4 18.4 Sale of St. Helens paper mill site — — (6.7
) — Class action lawsuit settlement — —
— 17.6
EBITDA excluding special items
(1) $ 264.8 $ 283.3
$ 1,106.2 $ 1,143.6 (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
Full Year Ended December 31 December 31
2015 2014 2015 2014 Packaging
Segment income $ 181.0 $ 161.4 $ 714.9 $ 663.2 Depreciation,
amortization, and depletion 73.1 77.3
297.3 323.0 EBITDA (1) 254.1
238.7 1,012.2 986.2
DeRidder restructuring (3.5 ) 11.5 (7.0 ) 23.9
Integration-related and other costs 1.5 (0.5 )
4.1 4.9 EBITDA excluding special items
(1)
$ 252.1 $ 249.7
$ 1,009.3 $ 1,015.0
Paper Segment income $ 13.9 $ 31.1 $ 112.5 $ 135.4
Depreciation, amortization, and depletion 14.3
13.4 54.9 50.6 EBITDA (1)
28.2 44.5 167.4 186.0
Sale of St. Helens paper mill site — — (6.7 ) —
Integration-related and other costs — 0.4
— — EBITDA excluding special
items (1)
$ 28.2 $ 44.9
$ 160.7 $ 186.0
Corporate and Other Segment loss $ (19.0 ) $ (19.3 ) $ (77.4
) $ (95.9 ) Depreciation, amortization, and depletion 1.2
1.5 4.3 7.4 EBITDA
(1) (17.8 ) (17.8 ) (73.1 ) (88.5 )
Integration-related and other costs 2.3 6.5 9.3 13.5 Class action
lawsuit settlement — — —
17.6 EBITDA excluding special items (1)
$
(15.5 ) $ (11.3 ) $
(63.8 ) $ (57.4 )
EBITDA (1) $ 264.5
$ 265.4 $ 1,106.5
$ 1,083.7
EBITDA excluding special items (1) $
264.8 $ 283.3 $
1,106.2 $ 1,143.6 (1) See
footnote (1) on page 2, for a discussion of non-GAAP financial
measures.
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version on businesswire.com: http://www.businesswire.com/news/home/20160125006600/en/
Packaging Corporation of AmericaBarbara SessionsINVESTOR
RELATIONS: (877) 454-2509PCA’s Website: www.packagingcorp.com
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