Packaging Corporation of America (NYSE: PKG) today reported
third quarter 2024 net income of $238 million, or $2.64 per share,
and net income of $239 million, or $2.65 per share, excluding
special items. Third quarter net sales were $2.2 billion in 2024
and $1.9 billion in 2023.
Diluted earnings per share attributable
to Packaging Corporation of America shareholders
Three Months Ended
September 30
2024
2023
Change
Reported Diluted EPS
$
2.64
$
2.03
$
0.61
Special Items Expense
0.01
0.02
(0.01)
Diluted EPS excluding Special items
(1)
$
2.65
$
2.05
$
0.60
(1) Diluted EPS excluding Special Items is
a non-GAAP financial measure. For information regarding our use of
non-GAAP financial measures and descriptions and amounts of our
special items, see the schedules with this release.
Reported earnings in the third quarter of 2024 include special
items primarily for closure costs related to certain corrugated
products facilities.
Excluding special items, the $.60 per share increase in third
quarter 2024 earnings compared to the third quarter of 2023 was
driven primarily by higher volume $.94 and prices and mix $.03 in
the Packaging segment, higher volume in the Paper segment $.03,
lower freight and logistics expenses $.09, lower scheduled outage
expenses $.06, and lower interest expense $.05. These items were
partially offset by lower prices and mix in the Paper segment
($.02), higher operating and converting costs ($.51), higher
depreciation expense ($.05), and other expenses ($.02).
Results were $.20 above third quarter guidance of $2.45 per
share primarily due to higher volume in the Packaging and Paper
segments and higher prices and mix in the Packaging segment.
Financial information by segment is summarized below and in the
schedules with this release.
(dollars in millions)
Three Months Ended
September 30
2024
2023
Segment operating income (loss)
Packaging
$
320.7
$
256.8
Paper
38.5
27.6
Corporate and Other
(32.1
)
(25.8
)
$
327.1
$
258.6
Segment operating income (loss)
excluding special items (1)
Packaging
$
321.6
$
256.7
Paper
38.5
30.2
Corporate and Other
(32.1
)
(25.8
)
$
328.0
$
261.1
EBITDA excluding special items
(1)
Packaging
$
445.6
$
374.2
Paper
43.1
35.4
Corporate and Other
(28.1
)
(21.8
)
$
460.6
$
387.8
(1)
Segment operating income (loss)
excluding special items and EBITDA excluding special items are
non-GAAP financial measures. 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
In the Packaging segment, corrugated products shipments per day
were up 11.1% over last year’s third quarter and total shipments,
with one additional shipping day, were up 12.9%. Shipments per day
were up 5.8% versus the second quarter of 2024 and total shipments,
with one less shipping day, were up 4.1%. Containerboard production
was 1,293,000 tons, and containerboard inventory was up 25,000 tons
from the third quarter of 2023 and down 3,000 tons compared to the
second quarter of 2024. In the Paper segment, sales volume was up
4% versus the third quarter of 2023 and up 5% versus the second
quarter of 2024.
Commenting on reported results, Mark W. Kowlzan, Chairman and
CEO, said, “In the Packaging segment, we had great implementation
of our previously announced containerboard and corrugated products
price increases. Very strong demand throughout the quarter led to
all-time quarterly records for containerboard production, total box
shipments and shipments per day. We were able to meet this demand,
and our customers’ quality and service needs, through the
operational benefits of our capital spending program and the
continued great focus and execution by our sales, customer service,
mill and corrugated products plant employees. Our Paper segment had
excellent results with our previously announced price increases
implemented as planned, volume above forecasted levels, and
well-managed mill operations. Fortunately, none of our facilities
were significantly impacted by the two hurricanes during the
quarter.”
“Looking ahead as we move from the third and into the fourth
quarter,” Mr. Kowlzan added, “we expect demand in our Packaging
segment to remain strong with corrugated shipments-per-day
continuing to strengthen and slightly higher containerboard volume.
However, total shipments for the corrugated business will be
impacted by two less shipping days and recent hurricane damage to
the strawberry crops in Florida. With current containerboard
inventory below our target levels, we will also attempt to build
some inventory prior to year-end. We expect continued realization
from the previously announced price increases and higher export
prices, although with a seasonally less rich mix compared to the
third quarter. In our Paper segment, shipments will be lower versus
the seasonally stronger third quarter while prices and mix should
be fairly flat. Operating and converting costs are expected to
increase driven by higher seasonal energy costs and chemical costs.
Scheduled outage costs are estimated to be $(.12) per share higher
than the third quarter, and depreciation expense should be slightly
higher. Considering these items, we expect fourth quarter earnings
of $2.47 per share.”
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 do not
currently expect any significant special items during the fourth
quarter; however, additional special items may arise due to fourth
quarter events.
PCA is the third largest producer of containerboard products and
a leading producer of uncoated freesheet paper in North America.
PCA operates eight mills and 86 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, 2023, and in subsequent quarterly reports on Form
10-Q, filed with the Securities and Exchange Commission and
available at the SEC’s website at “www.sec.gov”.
Conference Call
Information:
WHAT:
Packaging Corporation of America’s 3rd
Quarter 2024 Earnings Conference Call
Conference ID: Packaging Corporation of
America
WHEN:
Wednesday, October 23, 2024 at 9:00am
Eastern Time
PRE-REGISTRATION:
https://dpregister.com/sreg/10184918/fb352f9a34
CALL-IN NUMBER:
(833) 816-1102 (U.S.); (866) 605-3852
(Canada) or (412) 317-0684 (International)
Dial in by 8:45am Eastern Time
WEBCAST INFO:
www.packagingcorp.com
REBROADCAST DATES:
October 23, 2024 through November 6,
2024
REBROADCAST NUMBERS:
(877) 344-7529 (U.S.); (855) 669-9658
(Canada) or (412) 317-0088 (International)
Passcode: 4213034
Packaging Corporation of America Consolidated Earnings
Results Unaudited (dollars in millions, except per-share
data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Net sales
$
2,182.4
$
1,936.0
$
6,237.2
$
5,864.5
Cost of sales
(1,677.2
)
(1
)
(1,523.3
)
(3
)
(4,923.8
)
(1)(2
)
(4,575.7
)
(3
)
Gross profit
505.2
412.7
1,313.4
1,288.8
Selling, general, and administrative expenses
(162.0
)
(1
)
(144.2
)
(463.3
)
(1
)
(438.1
)
(3
)
Other expense, net
(16.1
)
(1
)
(9.9
)
(3
)
(51.0
)
(1)(2
)
(37.1
)
(3
)
Income from operations
327.1
258.6
799.1
813.6
Non-operating pension income (expense)
1.2
(1.8
)
3.4
(5.8
)
Interest expense, net
(9.7
)
(12.3
)
(29.7
)
(42.2
)
Income before taxes
318.6
244.5
772.8
765.6
Provision for income taxes
(80.5
)
(61.3
)
(188.8
)
(189.6
)
Net income
$
238.1
$
183.2
$
584.0
$
576.0
Earnings per share: Basic
$
2.65
$
2.04
$
6.51
$
6.41
Diluted
$
2.64
$
2.03
$
6.48
$
6.38
Computation of diluted earnings per share under the two
class method: Net income
$
238.1
$
183.2
$
584.0
$
576.0
Less: Distributed and undistributed income available to
participating securities
(1.7
)
(1.4
)
(4.1
)
(4.8
)
Net income attributable to PCA shareholders
$
236.4
$
181.8
$
579.9
$
571.2
Diluted weighted average shares outstanding
89.5
89.5
89.5
89.5
Diluted earnings per share
$
2.64
$
2.03
$
6.48
$
6.38
Supplemental financial information: Capital spending
$
146.7
$
89.8
$
468.4
$
328.6
Cash, cash equivalents, and marketable debt securities
$
841.3
$
726.5
$
841.3
$
726.5
(1)
The three and nine months ended September 30, 2024 include $0.9
million and $1.0 million of charges, respectively, consisting of
closure costs related to corrugated products facilities. For the
nine months ended September 30, 2024, these charges were partially
offset by income primarily related to a favorable lease buyout for
a closed corrugated products facility during the first quarter of
2024. These items were recorded in "Cost of sales", "Selling,
general, and administrative expenses", and "Other expense, net", as
appropriate.
(2)
The nine months ended September 30, 2024 include $9.7 million of
charges related to the announced discontinuation of production of
uncoated freesheet paper grades on the No. 3 machine at the
Jackson, Alabama mill associated with the permanent conversion of
the machine to produce linerboard and other paper-to-containerboard
conversion related activities. The costs were recorded in “Cost of
sales” and “Other expense, net”, as appropriate.
(3)
The three and nine months ended
September 30, 2023 include the following:
a.
$2.6 million and $8.2 million, respectively, of charges related to
the announced discontinuation of production of uncoated freesheet
paper grades on the No. 3 machine at the Jackson, Alabama mill
associated with the permanent conversion of the machine to produce
linerboard and other paper-to-containerboard conversion related
activities. The costs were recorded in “Cost of sales” and “Other
expense, net”, as appropriate.
b.
$0.1 million of income and $13.5 million of charges, respectively,
related to the closure of corrugated products facilities and design
centers. Included therein are closure costs as well as the gain on
sale of a corrugated products facility. These items were recorded
in "Cost of sales", "Selling, general, and administrative
expenses", and "Other expense, net", as appropriate.
Packaging
Corporation of America Segment Information
Unaudited (dollars in millions)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Segment sales Packaging
$
2,008.7
$
1,759.8
$
5,715.3
$
5,358.7
Paper
159.3
157.9
473.2
451.6
Corporate and Other
14.4
18.3
48.7
54.2
$
2,182.4
$
1,936.0
$
6,237.2
$
5,864.5
Segment operating income (loss) Packaging
$
320.7
$
256.8
$
804.3
$
810.5
Paper
38.5
27.6
94.9
90.8
Corporate and Other
(32.1
)
(25.8
)
(100.1
)
(87.7
)
Income from operations
327.1
258.6
799.1
813.6
Non-operating pension income (expense)
1.2
(1.8
)
3.4
(5.8
)
Interest expense, net
(9.7
)
(12.3
)
(29.7
)
(42.2
)
Income before taxes
$
318.6
$
244.5
$
772.8
$
765.6
Segment operating income (loss) excluding special items
(1) Packaging
$
321.6
$
256.7
$
809.2
$
823.7
Paper
38.5
30.2
100.7
99.3
Corporate and Other
(32.1
)
(25.8
)
(100.1
)
(87.7
)
$
328.0
$
261.1
$
809.8
$
835.3
EBITDA excluding special items (1) Packaging
$
445.6
$
374.2
$
1,171.8
$
1,171.0
Paper
43.1
35.4
114.3
115.3
Corporate and Other
(28.1
)
(21.8
)
(88.3
)
(76.1
)
$
460.6
$
387.8
$
1,197.8
$
1,210.2
(1)
Income (loss) from operations
excluding special items, segment operating income (loss) excluding
special items, earnings before non-operating pension income
(expense), interest, income taxes, and depreciation, amortization,
and depletion (EBITDA), segment EBITDA, EBITDA excluding special
items, and segment EBITDA excluding special items are non-GAAP
financial measures. Management excludes special items as it
believes these items are not necessarily reflective of the ongoing
results of operations of our business. We present these measures
because they provide a means to evaluate the performance of our
segments and our company on an ongoing basis using the same
measures that are used by our management, because these measures
assist in providing a meaningful comparison between periods
presented and because these measures are frequently used by
investors and other interested parties in the evaluation of
companies and the performance of their segments. The tables
included in "Reconciliation of Non-GAAP Financial Measures" on the
following pages reconcile the non-GAAP measures with the most
directly comparable GAAP measures. Any analysis of non-GAAP
financial measures should be done only in conjunction with results
presented in accordance with GAAP. The non-GAAP measures are not
intended to be substitutes for GAAP financial measures and should
not be used as such.
Packaging Corporation of America Reconciliation of
Non-GAAP Financial Measures Unaudited (dollars in
millions)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Packaging Segment operating income
$
320.7
$
256.8
$
804.3
$
810.5
Facilities closure and other costs (income)
0.9
(0.1
)
1.0
13.5
Jackson mill conversion-related activities
-
-
3.9
(0.3
)
Segment operating income excluding special items (1)
$
321.6
$
256.7
$
809.2
$
823.7
Paper Segment operating income
$
38.5
$
27.6
$
94.9
$
90.8
Jackson mill conversion-related activities
-
2.6
5.8
8.5
Segment operating income excluding special items (1)
$
38.5
$
30.2
$
100.7
$
99.3
Corporate and Other Segment operating loss
$
(32.1
)
$
(25.8
)
$
(100.1
)
$
(87.7
)
Segment operating loss excluding special items (1)
$
(32.1
)
$
(25.8
)
$
(100.1
)
$
(87.7
)
Income from operations
$
327.1
$
258.6
$
799.1
$
813.6
Income from operations, excluding special items (1)
$
328.0
$
261.1
$
809.8
$
835.3
(1) See footnote (1) on page 2, for a discussion of non-GAAP
financial measures.
Packaging Corporation of America
Reconciliation of Non-GAAP Financial Measures
Unaudited (dollars in millions)
Net Income Excluding
Special Items and EPS Excluding Special Items (1)
Three Months Ended September 30,
2024
2023
Income before taxes
Income Taxes
Net Income
Diluted EPS
Income before taxes
Income Taxes
Net Income
Diluted EPS
As reported in accordance with GAAP
$
318.6
$
(80.5
)
$
238.1
$
2.64
$
244.5
$
(61.3
)
$
183.2
$
2.03
Special items (2): Facilities closure and other costs (income)
0.9
(0.2
)
0.7
0.01
(0.1
)
-
(0.1
)
-
Jackson mill conversion-related activities
-
-
-
-
2.6
(0.6
)
2.0
0.02
Total special items
0.9
(0.2
)
0.7
0.01
2.5
(0.6
)
1.9
0.02
Excluding special items
$
319.5
$
(80.7
)
$
238.8
$
2.65
$
247.0
$
(61.9
)
$
185.1
$
2.05
Nine Months Ended September 30,
2024
2023
Income before taxes
Income Taxes
Net Income
Diluted EPS
Income before taxes
Income Taxes
Net Income
Diluted EPS
As reported in accordance with GAAP
$
772.8
$
(188.8
)
$
584.0
$
6.48
$
765.6
$
(189.6
)
$
576.0
$
6.38
Special items (2): Jackson mill conversion-related activities
9.7
(2.4
)
7.3
0.08
8.2
(2.0
)
6.2
0.07
Facilities closure and other costs
1.0
(0.3
)
0.7
0.01
13.5
(3.4
)
10.1
0.11
Total special items
10.7
(2.7
)
8.0
0.09
21.7
(5.4
)
16.3
0.18
Excluding special items
$
783.5
$
(191.5
)
$
592.0
$
6.57
$
787.3
$
(195.0
)
$
592.3
$
6.56
(1)
Net income excluding special
items and earnings per share excluding special items are non-GAAP
financial measures. Management excludes special items as it
believes these items are not necessarily reflective of the ongoing
results of operations of our business. We present these measures
because they provide a means to evaluate the performance of our
company on an ongoing basis using the same measures that are used
by our management, because these measures assist in providing a
meaningful comparison between periods presented and because these
measures are frequently used by investors and other interested
parties in the evaluation of companies and their performance. Any
analysis of non-GAAP financial measures should be done only in
conjunction with results presented in accordance with GAAP. The
non-GAAP measures are not intended to be substitutes for GAAP
financial measures and should not be used as such.
(2)
Pre-tax special items are
tax-effected at a combined federal and state income tax rate in
effect for the period the special items were recorded and this rate
is adjusted for each subsequent quarter to be consistent with the
estimated annual effective tax rate, in accordance with ASC 270,
Interim Reporting, and ASC 740-270, Income Taxes – Intra Period Tax
Allocation. For all periods presented, income taxes on pre-tax
special items represent the current amount of tax. For more
information related to these items, see the footnotes to the
Consolidated Earnings Results on page 1.
Packaging Corporation of America Reconciliation of
Non-GAAP Financial Measures Unaudited (dollars in
millions)
EBITDA and EBITDA Excluding Special Items (1)
EBITDA represents income before non-operating pension
(income) expense, interest, income taxes, and depreciation,
amortization, and depletion. The following table reconciles net
income to EBITDA and EBITDA excluding special items:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Net income
$
238.1
$
183.2
$
584.0
$
576.0
Non-operating pension (income) expense
(1.2
)
1.8
(3.4
)
5.8
Interest expense, net
9.7
12.3
29.7
42.2
Provision for income taxes
80.5
61.3
188.8
189.6
Depreciation, amortization, and depletion
132.7
129.3
389.6
386.8
EBITDA (1)
$
459.8
$
387.9
$
1,188.7
$
1,200.4
Special items: Facilities closure and other costs (income)
0.8
(0.1
)
0.8
8.1
Jackson mill conversion-related activities
-
-
8.3
1.7
EBITDA excluding special items (1)
$
460.6
$
387.8
$
1,197.8
$
1,210.2
(1) See footnote (1) on page 2, for a discussion of non-GAAP
financial measures.
Packaging Corporation of America
Reconciliation of Non-GAAP Financial Measures
Unaudited (dollars in millions) The following table
reconciles segment operating income (loss) to segment EBITDA and
segment EBITDA excluding special items:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Packaging Segment operating income
$
320.7
$
256.8
$
804.3
$
810.5
Depreciation, amortization, and depletion
124.1
117.5
362.7
352.7
EBITDA (1)
444.8
374.3
1,167.0
1,163.2
Facilities closure and other costs (income)
0.8
(0.1
)
0.8
8.1
Jackson mill conversion-related activities
-
-
4.0
(0.3
)
EBITDA excluding special items (1)
$
445.6
$
374.2
$
1,171.8
$
1,171.0
Paper Segment operating income
$
38.5
$
27.6
$
94.9
$
90.8
Depreciation, amortization, and depletion
4.6
7.8
15.1
22.5
EBITDA (1)
43.1
35.4
110.0
113.3
Jackson mill conversion-related activities
-
-
4.3
2.0
EBITDA excluding special items (1)
$
43.1
$
35.4
$
114.3
$
115.3
Corporate and Other Segment operating loss
$
(32.1
)
$
(25.8
)
$
(100.1
)
$
(87.7
)
Depreciation, amortization, and depletion
4.0
4.0
11.8
11.6
EBITDA (1)
(28.1
)
(21.8
)
(88.3
)
(76.1
)
EBITDA excluding special items (1)
$
(28.1
)
$
(21.8
)
$
(88.3
)
$
(76.1
)
EBITDA excluding special items (1)
$
460.6
$
387.8
$
1,197.8
$
1,210.2
(1) See footnote (1) on page 2, for a discussion of non-GAAP
financial measures.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241022657337/en/
Barbara Sessions Packaging Corporation of America INVESTOR
RELATIONS: (877) 454-2509 PCA’s Website: www.packagingcorp.com
Grafico Azioni Packaging (NYSE:PKG)
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