Packaging Corporation of America Reports Record Fo
Packaging Corporation of America Reports Record Fourth Quarter and Full Year 2012 Results
LAKE FOREST, Ill.--(BUSINESS WIRE)--Jan. 22, 2013-- Packaging Corporation of America (NYSE: PKG) today reported fourth quarter 2012 net income of $61 million, or $0.63 per share. The reported results included net income of $3 million, or $0.03 per share, from state income tax adjustments and after tax charges of $1 million, or $0.01 per share, from plant closures. Excluding these items, net income was $59 million, or $0.61 per share, compared to fourth quarter 2011 net income of $39 million, or $0.40 per share. Net sales in the fourth quarter were $737 million, up 13% compared to the fourth quarter of 2011.
The $0.21 per share increase in earnings, excluding special items, was driven by higher containerboard and corrugated products price and mix ($0.12), higher volume ($0.09) and lower costs for recycled fiber ($0.04) and energy ($0.02). These items were partially offset by higher costs for labor and benefits ($0.05).
Full year earnings, excluding special items, were $201 million, or $2.06 per share, compared to 2011 earnings of $162 million, or $1.61 per share. The $0.45 per share increase in earnings was driven by higher volume ($0.33) and price and mix ($0.06), lower costs for energy ($0.17), recycled fiber ($0.12) and chemicals ($0.05) and a lower share count ($0.05). These items were partially offset by higher costs for labor and benefits ($0.14), depreciation ($0.08), interest ($0.06) and transportation ($0.05). Net sales in 2012 were a record $2.844 billion, up 9% over 2011. Full year earnings, including special items, were $164 million, or $1.68 per share, compared to 2011 earnings of $158 million, or $1.57 per share. Special items for both years are shown on the schedule included in this press release.
Corrugated products shipments for the fourth quarter were up 5.8% per workday, and total shipments were up 7.6% with one more workday compared to last year’s fourth quarter. Containerboard production was 652,500 tons, up 12,000 tons over the fourth quarter of 2011. For the full year, PCA mills produced 2.600 million tons of containerboard which is essentially 100% of capacity. PCA ended the year with its containerboard inventories about 6,000 tons above 2011 year-end levels.
Commenting on results, Mark W. Kowlzan, CEO of PCA, said, “We had an exceptional quarter and full year, setting records for earnings, sales and shipments. Our corrugated products demand remained strong throughout the fourth quarter, and we completed our corrugated products price increase as planned. For the year, our earnings of $2.06 per share were up 27% over our previous record driven by strong sales volumes and the benefits from our energy project. ”
“Looking ahead to the first quarter,” Mr. Kowlzan added, “we expect lower containerboard production and higher operating costs compared to the fourth quarter with two less mill production days and annual maintenance downtime. We also expect higher energy costs with colder weather, and a pattern of extremely wet weather in the south is putting pressure on wood costs and availability. Corrugated products volume will be seasonally lower, and we expect higher costs for recycled fiber and labor and benefits. These items will be partially offset by higher average corrugated products prices with a full quarter’s realization of fourth quarter price increases. Considering all of these items, we currently estimate our first quarter earnings at about $0.56 per share.”
PCA is the fourth largest producer of containerboard and corrugated packaging products in the United States with sales of $2.8 billion in 2012. PCA operates four paper mills and 71 corrugated products plants in 26 states across the country.