Packaging

Packaging Corporation of America Reports Record Fourth Quarter and Full Year 2010 Results

Monday 31. January 2011 - Packaging Corporation of America (NYSE: PKG) today reported fourth quarter 2010 net income of $55 million, or $0.54 per share. Reported results include a $5 million, or $0.05 per share, addition to income from cellulosic bio-fuel tax credits generated in 2009, and after-tax, non-cash charges totaling $3 million, or $0.03 per share, from asset disposals related to major energy projects and other assets no longer in service.

Reported results for the fourth quarter of 2009 were $59 million, or $0.57 per share, which included income of $44 million, or $0.42 per share, from alternative fuel mixture tax credits and energy project asset disposal charges of $1 million, or $0.01 per share. Net sales in the fourth quarter were a record $627 million, up 18% compared to fourth quarter 2009 net sales of $532 million.
Excluding income from bio-fuel tax credits and asset disposal charges, net income was a record $53 million, or $0.52 per share, compared to fourth quarter 2009 net income of $16 million, or $0.16 per share. This $0.36 per share increase was driven by higher containerboard and corrugated products price and mix ($0.44) and higher volume ($0.05). These increases were partially offset by higher costs for recycled fiber ($0.05), labor ($0.04), transportation ($0.02), chemicals ($0.02), and a higher tax rate ($0.01).
Excluding income from bio-fuel tax credits and asset disposal and closure charges, full year earnings for 2010 were $166 million, or a record $1.62 per share, compared to $96 million, or $0.94 per share in 2009. Net sales in 2010 were a record $2.44 billion compared to $2.15 billion in 2009.
Corrugated products shipments were up 3.1%, compared to last year’s fourth quarter, and outside sales of containerboard were up 8.6%. Containerboard production was 639,000 tons, up 39,000 tons, or 6.4%, over the fourth quarter of 2009. PCA ended the year with its containerboard inventories about 25,000 tons above 2009 year-end levels.
Mark W. Kowlzan, CEO of PCA, said, “We had another outstanding quarter driven by record corrugated product shipments, strong outside containerboard sales, and highly productive and efficient mill operations. We were also able to build about half of the containerboard inventory needed to offset production losses during the two planned recovery boiler rebuilds at our Counce, TN mill in the second half of 2011. Finally, we set records for both sales and earnings per share in the fourth quarter and for the full year as our volumes returned to pre-economic downturn levels.”
“Looking ahead to the first quarter,” Mr. Kowlzan added, “our Valdosta, GA and Counce, TN mills will be down for annual maintenance outages in the first quarter which will lower production and increase costs. Higher fiber and energy costs associated with colder weather, along with higher timing related benefit costs and a higher tax rate, are also expected. Considering these items, we currently estimate our first quarter earnings at about $0.42 per share.”
PCA is the fifth largest producer of containerboard and corrugated packaging products in the United States with sales of $2.44 billion in 2010. PCA operates four paper mills and 67 corrugated products plants in 26 states across the country.