Packaging Corporation of America (PCA) recently reported record first quarter net income of $61 million, or $0.62 per share, compared to first quarter 2012 net income, excluding special items, of $41 million, or $0.42 per share. Net sales were a record $755 million, up 12% compared to first quarter 2012 net sales of $671 million.
The $0.20 per share increase in earnings, excluding 2012 special items, was driven by higher containerboard and corrugated products prices and mix ($0.23), higher sales volume ($0.05) and lower recycled fiber costs ($0.01). These items were partially offset by higher costs including labor and benefits ($0.06), workers’ compensation ($0.01), energy ($0.01) and transportation ($0.01).
Corrugated products shipments per workday were up 7.1% compared to last year’s first quarter, and total shipments were up 3.8% with two less workdays in this year’s first quarter. Outside sales of containerboard were equal to last year’s first quarter. Containerboard production was 646,000 tons, up 6,000 tons over the first quarter of 2012. PCA ended the quarter with its containerboard inventories about 3,000 tons above year-end levels.
Commenting on reported results, Mark W. Kowlzan, Chief Executive Officer of PCA, said, “We had an outstanding quarter in all aspects of our operations with higher pricing and strong volume driving all-time records for sales, corrugated products shipments and earnings per share. Corrugated products demand was stronger than we expected throughout the quarter, and our mills ran extremely well, allowing us to meet the strong demand while building needed containerboard inventory to help support our mill maintenance outages in the second quarter.”
“Looking ahead,” Mr. Kowlzan added, “we expect seasonally stronger volume and higher prices in the second quarter. However, the majority of the earnings benefit from price increases will not be realized until the third quarter when our April containerboard price increase pass-through to corrugated products is completed. Also, most of our annual mill maintenance this year will occur in the second quarter with outages at three of our four mills. We expect these outages to reduce our containerboard production by 30,000 tons in the second quarter compared to 7,000 tons of lost production from maintenance downtime in the first quarter. The lower production, along with higher repair and operating costs during these outages, will reduce earnings by $0.08 per share compared to the first quarter. We also expect higher transportation, recycled fiber and purchased electricity costs. Considering these items, we currently expect second quarter earnings of about $0.62 per share.”
PCA is the fourth largest producer of containerboard and corrugated packaging products in the United States.
