News Release Details

LAKE FOREST, Ill.--(BUSINESS WIRE)--Apr. 24, 2018-- Packaging Corporation of America (NYSE: PKG) today reported first quarter 2018 net income of $140 million, or $1.48 per share and $1.55 per share excluding special items. First quarter net sales were $1.7 billion in 2018 and $1.5 billion in 2017.

Reported earnings include $.07 per share of special items expense in the first quarter of 2018 and $.03 per share of special items expense in the first quarter of 2017. Excluding special items, the $.28 per share increase in first quarter 2018 earnings compared to first quarter 2017 was driven primarily by higher prices and mix $.39 and volumes $.19 in our Packaging segment, higher volumes in our Paper segment $.02, and a favorable tax rate $.19 resulting from Tax Reform changes. These items were partially offset by lower prices and mix ($.05) in our Paper segment, higher operating costs ($.22), higher annual outage expenses ($.11), higher freight expense ($.07), higher converting costs ($.02), higher depreciation ($.03) and higher interest expense ($.01).

Results were $.03 above first quarter guidance of $1.52 per share primarily due to higher volumes and prices and mix in our Packaging and Paper segments, partially offset by higher than expected freight costs and operating costs.

Financial information by segment is summarized below and in the schedules with this release.

In the Packaging segment, total corrugated products shipments with one less workday were up 6.0% and shipments per day were up 7.7% over last year’s first quarter. Containerboard production was 953,000 tons, and containerboard inventory was down 23,000 tons from the fourth quarter of 2017 and up 31,000 tons compared to the first quarter of 2017, primarily due to the addition of recently acquired Sacramento Container. In the Paper segment, office paper and printing and converting paper sales volumes were up 33,000 tons compared to the first quarter of 2017, and production volume was up 10,000 tons primarily due to no scheduled maintenance outages in the first quarter of 2018.

Commenting on reported results, Mark W. Kowlzan, Chairman and CEO, said, “Demand in our Packaging segment remained strong with record first quarter sales volumes in both our containerboard mills and corrugated products plants as well as improved prices and mix compared to the first quarter of 2017. In our Paper segment, volumes were above year ago levels and although prices and mix were still below last year’s levels, we began to realize some of our announced paper price increases. The scheduled maintenance outages at three of our containerboard mills went very well, and the production optimization work performed during the DeRidder Mill outage was extremely successful with very strong performance immediately after start-up. Year over year inflation in our freight, chemicals, labor and benefits, and other operating costs came in a bit higher than we were expecting, and we also experienced weather-related issues that impacted costs at some of our mills and box plants during the quarter.”

“Looking ahead as we move from the first and into the second quarter,” Mr. Kowlzan added, “we expect continued strong demand in our Packaging segment to result in higher corrugated products and containerboard shipments, and we will continue to implement our previously announced Packaging segment price increases. In our Paper segment, we expect volumes to be lower as we begin the conversion of the No. 3 machine in our Wallula Mill from paper to linerboard, and we will continue implementing the previously announced paper price increases. We also anticipate continued price inflation in chemical and freight costs, incremental wage pressure with a tighter labor market, but slightly lower recycled fiber costs and improving energy costs as we move into seasonally milder weather. Scheduled maintenance outage costs should move lower and we expect a slightly lower tax rate as well. Considering these items, we expect second quarter earnings of $1.96 per share.”

We present various non-GAAP financial measures in this press release, including diluted EPS excluding special items, segment income excluding special items and EBITDA excluding special items. We provide information regarding our use of non-GAAP financial measures and reconciliations of historical non-GAAP financial measures presented in this press release to the most comparable measure reported in accordance with GAAP in the schedules to this press release. We present our earnings expectation for the upcoming quarter excluding special items as special items are difficult to predict and quantify and may reflect the effect of future events. We currently expect special items in the second quarter to include accounting charges, fees, and expenses related to the Wallula Mill paper machine conversion from paper to linerboard. Additional special items may arise due to second quarter events.

PCA is the fourth largest producer of containerboard products and the third largest producer of uncoated freesheet paper in the North America. PCA operates eight mills and 94 corrugated products plants and related facilities.

Some of the statements in this press release are forward-looking statements. Forward-looking statements include statements about our future earnings and financial condition, expected benefits from acquisitions and restructuring activities, 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, 2017 filed with the Securities and Exchange Commission and available at the SEC’s website at “www.sec.gov”.

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Source: Packaging Corporation of America

Packaging Corporation of America
Barbara Sessions
INVESTOR RELATIONS: (877) 454-2509
PCA’s Website: www.packagingcorp.com