Packaging Corporation of America reported 3Q 2020 net income of $139 million, or $1.46 per share, and net income of $149 million, or $1.57 per share, excluding special items. 3Q 2020 net sales were $1.69 billion in 2020 and $1.75 billion in 2019.
Reported earnings include $.11 per share of special items expense in the 3Q 2020, primarily for the costs and expenses associated with Hurricane Laura which made landfall on August 27, 2020, approximately 100 miles south of DeRidder, Louisiana mill. Mill production was down, including the time necessary for storm preparations, a total of approximately 12 days.
Excluding special items, the ($.35) per share decrease in third quarter 2020 earnings compared to the 3Q 2019 was driven primarily by lower prices and mix in Packaging segment ($.36) and Paper segment ($.07), lower volumes in our Paper segment ($.33), higher scheduled maintenance outage costs ($.04), and higher freight expense ($.02). These items were partially offset by higher volumes in Packaging segment $.22, lower operating costs $.20, and lower converting $.04 and other costs $.01.
Mark W. Kowlzan, Chairman and CEO, said, “In the Packaging segment, demand was very strong throughout the quarter as we set new all-time quarterly records for total box shipments and shipments per day. We were able to overcome the hurricane-related issues at our DeRidder mill to avoid any disruptions to our customers; however, with this supply disruption along with strong demand, we ended the quarter with much lower inventory than anticipated. This will require us to postpone the mill’s previously announced discretionary outage planned for the 4Q of this year. Market conditions in our Paper segment continue to be challenged due to the nationwide responses to help control the spread of the pandemic. Although demand did increase from the 2Q, it was still well below last year’s levels. As a result, we kept our Jackson Mill idle for the entire 3Q.”
PCA is the third largest producer of containerboard products and the third largest producer of uncoated freesheet paper in North America. PCA operates eight mills and 93 corrugated products plants and related facilities.
Source: Lesprom Network