Packaging Corporation of America (NYSE: PKG) today reported
fourth quarter 2023 net income of $189 million, or $2.10 per share,
and net income of $192 million, or $2.13 per share, excluding
special items. Fourth quarter net sales were $1.94 billion in 2023
and $1.98 billion in 2022. Full year 2023 net income was $765
million, or $8.48 per share, and net income of $784 million, or
$8.70 per share, excluding special items. Full year net sales were
$7.8 billion in 2023 and $8.5 billion in 2022.
Diluted
earnings per share attributable to Packaging Corporation of America
shareholders
Three Months Ended
Full Year Ended
December 31
December 31
2023
2022
Change
2023
2022
Change
Reported Diluted EPS
$
2.10
$
2.31
$
(0.21)
$
8.48
$
11.03
$
(2.54)
Special Items Expense (1)
0.03
0.04
(0.01)
0.21
0.11
0.10
Diluted EPS excluding Special Items
(2)
$
2.13
$
2.35
$
(0.22)
$
8.70
$
11.14
$
(2.44)
(1) For descriptions and amounts of our
special items, see the schedules with this release.
(2) Amounts may not foot or crossfoot due
to rounding.
Reported earnings in the fourth quarter and full year 2023
include special items primarily for certain costs at the Jackson,
AL mill for paper-to-containerboard conversion related activities
and closure and other costs related to corrugated products
facilities and design centers.
Excluding special items, the $(.22) per share decrease in fourth
quarter 2023 earnings compared to the fourth quarter of 2022 was
driven primarily by lower prices and mix ($1.93) in the Packaging
segment, lower prices and mix ($.04) and volume ($.03) in the Paper
segment, and higher depreciation expense ($.10). These items were
partially offset by higher volume in the Packaging segment $1.07,
lower operating and converting costs $.51, lower scheduled
maintenance outage expenses $.19, lower freight and logistics
expenses $.03, lower other expenses $.04, and a lower share count
resulting from share repurchases $.04.
Results were $.37 above fourth quarter guidance of $1.76 per
share primarily due to higher volume in the Packaging segment,
lower operating and converting costs, and lower freight and
logistics expenses.
Financial information by segment is summarized below and in the
schedules with this release.
(dollars in millions)
Three Months Ended
Full Year Ended
December 31
December 31
2023
2022
2023
2022
Segment income (loss)
Packaging
$
263.8
$
282.4
$
1,074.3
$
1,423.7
Paper
28.1
31.9
118.9
103.0
Corporate and Other
(30.4
)
(26.2
)
(118.1
)
(106.0
)
$
261.5
$
288.1
$
1,075.1
$
1,420.7
Segment income (loss) excluding special
items
Packaging
$
265.0
$
284.4
$
1,088.7
$
1,428.7
Paper
30.7
34.4
130.0
111.8
Corporate and Other
(30.4
)
(26.2
)
(118.1
)
(106.0
)
$
265.3
$
292.6
$
1,100.6
$
1,434.5
EBITDA excluding special items
Packaging
$
384.7
$
392.2
$
1,555.7
$
1,848.6
Paper
35.2
39.4
150.6
132.4
Corporate and Other
(26.4
)
(22.9
)
(102.5
)
(95.5
)
$
393.5
$
408.7
$
1,603.8
$
1,885.5
In the Packaging segment, shipments per day were up 5.1% and
total corrugated products shipments, with one extra shipping day,
were up 6.9% versus last year’s fourth quarter. Shipments per day
were up 5.2% versus the third quarter of 2023. Containerboard
production was 1,213,000 tons, and containerboard inventory was up
15,000 tons from the fourth quarter of 2022 and up 32,000 tons
compared to the third quarter of 2023. In the Paper segment, sales
volume was down 4,000 tons compared to the fourth quarter of 2022
and down 8,000 tons from the third quarter of 2023.
Commenting on reported results, Mark W. Kowlzan, Chairman and
CEO, said, “Throughout the quarter, demand in the Packaging segment
was stronger than our expectations. In addition, the higher volume
along with the operational benefits of our capital spending program
and continued emphasis on cost management and process efficiencies
across our manufacturing and converting facilities drove operating
and converting costs lower as well. We had an excellent restart of
our Wallula, WA mill and the No. 3 machine to meet the stronger
demand and build some needed inventory during the quarter. We plan
to restart the No. 2 machine at the Wallula mill in the first
quarter to help manage our expectations in the first half of 2024
for continued strong demand together with scheduled mill
maintenance outages and the final phase of the containerboard
conversion of the No. 3 machine at our Jackson, AL mill. The Paper
segment had very good results with volume slightly higher than
expected and costs managed extremely well.”
“Looking ahead as we move from the fourth and into the first
quarter,” Mr. Kowlzan continued, “in our Packaging segment, we
expect higher total corrugated products shipments from continued
strong demand and two additional shipping days in the first
quarter. Despite restarting the No. 2 machine at our Wallula Mill,
containerboard volume will be lower due to downtime associated with
the conversion of the No. 3 machine at our Jackson Mill and a
scheduled maintenance outage at our Counce, TN mill. Prices and mix
should be slightly higher with the implementation of our announced
January price increases partially offset by a decrease in the
published benchmark prices that occurred late in 2023, with export
prices fairly flat. In our Paper segment, we expect an improved mix
to move prices slightly higher with flat sales volume. Recycled
fiber and energy prices will be higher, and unusually cold seasonal
weather will negatively impact usages and yields for energy, wood
and chemicals along with higher operating costs associated with the
restart of full operations at the Wallula mill compared to fourth
quarter operations. Labor and benefits costs will have seasonal
timing-related increases that occur at the beginning of a new year
related to annual wage and benefit increases, the restart of
payroll taxes, and share-based compensation expenses. Scheduled
outage expenses will be higher and will include the significant
first quarter impact of the conversion outage at our Jackson Mill
which is estimated to be ($.16) per share. Considering these items,
we expect first quarter earnings of $1.54 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 anticipate special items in the first quarter of 2024
to include charges, fees, and expenses for paper-to-containerboard
conversion related activities at the Jackson, AL mill. We do not
currently expect any additional significant special items during
the first quarter; however, additional special items may arise due
to first 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, the impact of the COVID-19
pandemic on our business, 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,
2022, 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 4th
Quarter and Full Year 2023 Earnings Conference Call
Conference ID: Packaging Corporation of
America
WHEN:
Thursday, January 25, 2024 at 9:00am
Eastern Time
PRE-REGISTRATION:
https://dpregister.com/sreg/10184908/fb32b1ccf8
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:
January 25, 2024 through February 8,
2024
REBROADCAST NUMBERS:
(877) 344-7529 (U.S.); (855) 669-9658
(Canada) or (412) 317-0088 (International)
Passcode: 5364844
Packaging Corporation of America Consolidated Earnings
Results Unaudited (dollars in millions, except per-share
data)
Three Months Ended Full Year Ended
December 31, December 31,
2023
2022
2023
2022
Net sales
$
1,937.9
$
1,978.4
$
7,802.4
$
8,478.0
Cost of sales
(1,527.8
)
(1)
(1,528.1
)
(2)
(6,103.5
)
(1)
(6,387.4
)
(2)
Gross profit
410.1
450.3
1,698.9
2,090.6
Selling, general, and administrative expenses
(142.8
)
(145.6
)
(580.9
)
(1)
(608.6
)
Other expense, net
(5.8
)
(1)
(16.6
)
(2)
(42.9
)
(1)
(61.3
)
(2)
Income from operations
261.5
288.1
1,075.1
1,420.7
Non-operating pension (expense) income
(1.9
)
3.6
(7.7
)
14.5
Interest expense, net
(11.1
)
(15.1
)
(53.3
)
(70.4
)
Income before taxes
248.5
276.6
1,014.1
1,364.8
Provision for income taxes
(59.3
)
(64.9
)
(248.9
)
(335.0
)
Net income
$
189.2
$
211.7
$
765.2
$
1,029.8
Earnings per share: Basic
$
2.11
$
2.32
$
8.52
$
11.08
Diluted
$
2.10
$
2.31
$
8.48
$
11.03
Computation of diluted earnings per share under the two
class method: Net income
$
189.2
$
211.7
$
765.2
$
1,029.8
Less: Distributed and undistributed income available to
participating securities
(1.4
)
(1.6
)
(6.2
)
(7.9
)
Net income attributable to PCA shareholders
$
187.8
$
210.1
$
759.0
$
1,021.9
Diluted weighted average shares outstanding
89.3
90.9
89.5
92.7
Diluted earnings per share
$
2.10
$
2.31
$
8.48
$
11.03
Supplemental financial information: Capital spending
$
141.1
$
247.1
$
469.7
$
824.2
Cash, cash equivalents, and marketable debt securities
$
1,205.6
$
470.1
$
1,205.6
$
470.1
(1)
The three and twelve months ended December 31, 2023 include the
following: a. $2.9 million and $11.1 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. $0.9 million
and $14.4 million, respectively, of charges related to the closure
of corrugated products facilities and design centers. For the
twelve months ended December 31, 2023, these costs were partially
offset by a 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.
(2)
The three and twelve months ended December 31, 2022 include the
following: a. $4.7 million and $14.1 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. $1.2 million
and $0.7 million, respectively, of charges consisting of closure
costs related to corrugated products facilities. For the twelve
months ended December 31, 2022, these costs were partially offset
by insurance proceeds received for a natural disaster at one of the
corrugated products facilities, a gain on sale of assets related to
a corrugated products facility, and a favorable lease buyout for a
closed corrugated products facility. These items were recorded in
"Cost of sales" and "Other expense, net", as appropriate. c. $1.4
million and $1.0 million, respectively, of income from a favorable
inventory adjustment related to the December 2021 Advance Packaging
Corporation acquisition, partially offset by acquisition and
integration related costs. These items were recorded in "Cost of
sales" and "Other expense, net", as appropriate.
Packaging
Corporation of America Segment Information
Unaudited (dollars in millions)
Three Months
Ended Full Year Ended December 31, December
31,
2023
2022
2023
2022
Segment sales Packaging
$
1,776.9
$
1,809.1
$
7,135.6
$
7,780.7
Paper
143.8
153.5
595.4
622.1
Corporate and Other
17.2
15.8
71.4
75.2
$
1,937.9
$
1,978.4
$
7,802.4
$
8,478.0
Segment income (loss) Packaging
$
263.8
$
282.4
$
1,074.3
$
1,423.7
Paper
28.1
31.9
118.9
103.0
Corporate and Other
(30.4
)
(26.2
)
(118.1
)
(106.0
)
Income from operations
261.5
288.1
1,075.1
1,420.7
Non-operating pension (expense) income
(1.9
)
3.6
(7.7
)
14.5
Interest expense, net
(11.1
)
(15.1
)
(53.3
)
(70.4
)
Income before taxes
$
248.5
$
276.6
$
1,014.1
$
1,364.8
Segment income (loss) excluding special items (1)
Packaging
$
265.0
$
284.4
$
1,088.7
$
1,428.7
Paper
30.7
34.4
130.0
111.8
Corporate and Other
(30.4
)
(26.2
)
(118.1
)
(106.0
)
$
265.3
$
292.6
$
1,100.6
$
1,434.5
EBITDA excluding special items (1) Packaging
$
384.7
$
392.2
$
1,555.7
$
1,848.6
Paper
35.2
39.4
150.6
132.4
Corporate and Other
(26.4
)
(22.9
)
(102.5
)
(95.5
)
$
393.5
$
408.7
$
1,603.8
$
1,885.5
(1) Segment income (loss) excluding special items, earnings before
non-operating pension (expense) income, interest, income taxes, and
depreciation, amortization, and depletion (EBITDA), and 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 Full Year Ended December 31, December
31,
2023
2022
2023
2022
Packaging Segment income
$
263.8
$
282.4
$
1,074.3
$
1,423.7
Facilities closure and other costs
0.9
1.2
14.4
0.7
Jackson mill conversion-related activities
0.3
2.2
-
5.3
Acquisition and integration-related activities
-
(1.4
)
-
(1.0
)
Segment income excluding special items (1)
$
265.0
$
284.4
$
1,088.7
$
1,428.7
Paper Segment income
$
28.1
$
31.9
$
118.9
$
103.0
Jackson mill conversion-related activities
2.6
2.5
11.1
8.8
Segment income excluding special items (1)
$
30.7
$
34.4
$
130.0
$
111.8
Corporate and Other Segment loss
$
(30.4
)
$
(26.2
)
$
(118.1
)
$
(106.0
)
Segment loss excluding special items (1)
$
(30.4
)
$
(26.2
)
$
(118.1
)
$
(106.0
)
Income from operations
$
261.5
$
288.1
$
1,075.1
$
1,420.7
Income from operations, excluding special items (1)
$
265.3
$
292.6
$
1,100.6
$
1,434.5
(1) See footnote (1) on page 3, for a discussion of non-GAAP
financial measures.
Packaging Corporation of America
Reconciliation of Non-GAAP Financial Measures
Unaudited (dollars in millions)
Net Income and EPS
Excluding Special Items (1) Three Months Ended
December 31,
2023
2022
Income before taxes Income Taxes Net Income
Diluted EPS Income before taxes Income Taxes
Net Income Diluted EPS As reported
$
248.5
$
(59.3
)
$
189.2
$
2.10
$
276.6
$
(64.9
)
$
211.7
$
2.31
Special items (2): Jackson mill conversion-related activities
2.9
(0.7
)
2.2
0.02
4.7
(1.1
)
3.6
0.04
Facilities closure and other costs
0.9
(0.2
)
0.7
0.01
1.2
(0.3
)
0.9
0.01
Acquisition and integration-related activities
-
-
-
-
(1.4
)
0.3
(1.1
)
(0.01
)
Total special items
3.8
(0.9
)
2.9
0.03
4.5
(1.1
)
3.4
0.04
Excluding special items
$
252.3
$
(60.2
)
$
192.1
$
2.13
$
281.1
$
(66.0
)
$
215.1
$
2.35
Full Year Ended December 31,
2023
2022
Income before taxes Income Taxes Net Income
Diluted EPS Income before taxes Income Taxes
Net Income Diluted EPS As reported
$
1,014.1
$
(248.9
)
$
765.2
$
8.48
$
1,364.8
$
(335.0
)
$
1,029.8
$
11.03
Special items (2): Facilities closure and other costs
14.4
(3.6
)
10.8
0.12
0.7
(0.2
)
0.5
0.01
Jackson mill conversion-related activities
11.1
(2.7
)
8.4
0.09
14.1
(3.5
)
10.6
0.11
Acquisition and integration-related activities
-
-
-
-
(1.0
)
0.3
(0.7
)
(0.01
)
Total special items
25.5
(6.3
)
19.2
0.21
13.8
(3.4
)
10.4
0.11
Excluding special items
$
1,039.6
$
(255.2
)
$
784.4
$
8.70
(3)
$
1,378.6
$
(338.4
)
$
1,040.2
$
11.14
(1) Net income 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. (3)
Amount may not foot due to rounding.
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 expense (income), interest, income
taxes, and depreciation, amortization, and depletion. The following
table reconciles net income to EBITDA and EBITDA excluding special
items:
Three Months Ended Full Year Ended
December 31, December 31,
2023
2022
2023
2022
Net income
$
189.2
$
211.7
$
765.2
$
1,029.8
Non-operating pension expense (income)
1.9
(3.6
)
7.7
(14.5
)
Interest expense, net
11.1
15.1
53.3
70.4
Provision for income taxes
59.3
64.9
248.9
335.0
Depreciation, amortization, and depletion
130.8
118.8
517.7
456.8
EBITDA (1)
$
392.3
$
406.9
$
1,592.8
$
1,877.5
Special items: Facilities closure and other costs
0.9
1.0
8.9
0.4
Jackson mill conversion-related activities
0.3
2.2
2.1
8.6
Acquisition and integration-related activities
-
(1.4
)
-
(1.0
)
EBITDA excluding special items (1)
$
393.5
$
408.7
$
1,603.8
$
1,885.5
(1) See footnote (1) on page 3, 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 income (loss) to EBITDA excluding special items:
Three Months Ended Full Year Ended December
31, December 31,
2023
2022
2023
2022
Packaging Segment income
$
263.8
$
282.4
$
1,074.3
$
1,423.7
Depreciation, amortization, and depletion
119.7
108.0
472.5
420.2
EBITDA (1)
383.5
390.4
1,546.8
1,843.9
Facilities closure and other costs
0.9
1.0
8.9
0.4
Jackson mill conversion-related activities
0.3
2.2
-
5.3
Acquisition and integration-related activities
-
(1.4
)
-
(1.0
)
EBITDA excluding special items (1)
$
384.7
$
392.2
$
1,555.7
$
1,848.6
Paper Segment income
$
28.1
$
31.9
$
118.9
$
103.0
Depreciation, amortization, and depletion
7.1
7.5
29.6
26.1
EBITDA (1)
35.2
39.4
148.5
129.1
Jackson mill conversion-related activities
-
-
2.1
3.3
EBITDA excluding special items (1)
$
35.2
$
39.4
$
150.6
$
132.4
Corporate and Other Segment loss
$
(30.4
)
$
(26.2
)
$
(118.1
)
$
(106.0
)
Depreciation, amortization, and depletion
4.0
3.3
15.6
10.5
EBITDA (1)
(26.4
)
(22.9
)
(102.5
)
(95.5
)
EBITDA excluding special items (1)
$
(26.4
)
$
(22.9
)
$
(102.5
)
$
(95.5
)
EBITDA excluding special items (1)
$
393.5
$
408.7
$
1,603.8
$
1,885.5
(1) See footnote (1) on page 3, for a discussion of non-GAAP
financial measures.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240124157955/en/
Barbara Sessions Packaging Corporation of America INVESTOR
RELATIONS: (877) 454-2509 PCA’s Website: www.packagingcorp.com
Packaging (NYSE:PKG)
Historical Stock Chart
From Apr 2024 to May 2024
Packaging (NYSE:PKG)
Historical Stock Chart
From May 2023 to May 2024