Packaging Corporation of America reports third quarter 2012 results
Packaging Corporation of America (PCA) today reported third quarter 2012 net income of $40 million or $0.41 per share which included after-tax charges of $13 million or $0.14 per share from debt refinancing charges. Net income excluding these charges was $53 million or $0.55 per share compared to third quarter 2011 net income of $43 million or $0.43 per share which excludes energy project asset disposal charges.
The $0.12 per share earnings increase excluding special items was driven by higher containerboard and corrugated products volume ($0.07) and lower costs for energy ($0.05), recycled fiber ($0.04) and chemicals ($0.02). These items were partially offset by higher costs for labor and benefits ($0.03), interest ($0.02) and depreciation ($0.02).
Excluding special items, net income for the first nine months of 2012 was a record $142 million or $1.45 per share compared to $122 million or $1.21 per share, in 2011. This earnings increase of $0.24 per share was driven by higher containerboard and corrugated products volume ($0.23), lower costs for energy ($0.14), recycled fiber ($0.08) and chemicals ($0.05) and a lower share count from share repurchases ($0.04). These items were partially offset by higher costs for labor and benefits ($0.09), depreciation ($0.07), interest ($0.06) and transportation ($0.04) and lower export pricing ($0.05).
Net sales were a record $723 million, up 8% compared to the third quarter of 2011 and year-to-date net sales were a record $2.1 billion, up 7% over 2011.
Corrugated products shipments per workday were up 5.7% including 3.1% from acquisitions and were up 4.0% in total with one less shipping day this year. Outside sales of containerboard were up 8,000 tons over last year’s third quarter. Containerboard production was 670,000 tons, up 20,000 tons over the third quarter of 2011. Containerboard inventories at the end of September were 9,000 tons below second quarter levels.
“We had a very strong quarter in all aspects of our operations,” comments CEO Mark W. Kowlzan. “Our mills ran extremely well setting an all-time production record and both our containerboard and corrugated products demand remained strong. We implemented a $50 per ton domestic containerboard price increase during the third quarter and are now in the process of implementing a corresponding price increase for corrugated products which we expect to essentially complete in the fourth quarter.”
“Looking ahead, we expect higher earnings from our announced price increases, but an entire quarter’s earnings benefit from these price increases will not be fully realised until the first quarter of 2013. The earnings improvement from higher prices in the fourth quarter is expected to be partially offset by seasonally higher costs due in part to colder weather. Considering these items, we expect fourth quarter earnings of about $0.61 per share.”
PCA is the fourth largest producer of containerboard and corrugated packaging products in the US with sales of $2.6 billion in 2011, operating four paper mills and 71 corrugated products plants in 26 states.