Packaging Corporation of America Reports First Quarter 2017 Results
Diluted earnings per share attributable to Packaging Corporation of America shareholders | |||||||||||
Three Months Ended | |||||||||||
March 31 | |||||||||||
2017 | 2016 | Change | |||||||||
Reported Diluted EPS | $ | 1.24 | $ | 1.09 | $ | 0.15 | |||||
Special Items Expense (1) | 0.03 | 0.02 | 0.01 | ||||||||
Diluted EPS excluding Special items | $ | 1.27 | $ | 1.11 | $ | 0.16 | |||||
(1) For descriptions and amounts of our special items see page 4. | |||||||||||
Reported earnings include the impact of
Our current estimate of the total property damage and business
interruption losses associated with the
Excluding special items, the
Financial information by segment is summarized below and in the schedules with this release.
(dollars in millions) | ||||||
Three Months Ended | ||||||
March 31 | ||||||
2017 | 2016 | |||||
Segment income (loss) | ||||||
Packaging | $ | 190.8 | $ | 161.5 | ||
Paper | 29.8 | 36.1 | ||||
Corporate and Other | (17.5) | (16.8) | ||||
$ | 203.1 | $ | 180.8 | |||
Segment income (loss) excluding special items | ||||||
Packaging | $ | 195.0 | $ | 163.4 | ||
Paper | 29.8 | 37.0 | ||||
Corporate and Other | (18.2) | (16.8) | ||||
$ | 206.6 | $ | 183.6 | |||
EBITDA excluding special items | ||||||
Packaging | $ | 272.2 | $ | 236.7 | ||
Paper | 43.8 | 51.1 | ||||
Corporate and Other | (16.9) | (15.6) | ||||
$ | 299.1 | $ | 272.2 | |||
In the Packaging segment, total corrugated products shipments with one additional workday were up 10.7% and shipments per day were up 8.9% over last year’s first quarter. Containerboard production was 932,000 tons, and containerboard inventory was down 16,000 tons compared to year end 2016 and 12,000 tons below the first quarter of 2016.
Paper segment price and mix was higher than the first and fourth
quarters of 2016 primarily due to the previously announced shutdown of
pulp operations at our
Commenting on the quarter,
“Looking ahead to the second quarter,” Mr. Kowlzan added, “we expect to
continue implementing our previously announced packaging segment price
increases, and we expect higher corrugated products shipments resulting
from strong demand and our two recent acquisitions. Mill maintenance
outage costs will be higher as we have scheduled outages at our three
largest containerboard mills. We expect flat paper volumes although
price and mix should move lower. We also anticipate continued price
inflation in recycled fiber, certain chemicals and freight costs, but
our energy costs should improve as we move into seasonally milder
weather. Considering these items, we expect second quarter earnings of
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. Additional special items may arise due to second quarter events.
PCA is the fourth largest producer of containerboard and corrugated
packaging products and the third largest producer of uncoated freesheet
paper in
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 facility closures, 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
Conference Call Information:
WHAT: |
Packaging Corporation of America’s 1st Quarter 2017 Earnings Conference Call | |
WHEN: |
Thursday, April 27, 2017 at 8:30 a.m. Eastern Time | |
CALL-IN |
(855) 730-0288 (U.S. and Canada) or (832) 412-2295 (International) | |
NUMBER: |
Dial in by 8:15 a.m. Eastern Time | |
Conference Call Leader: Mr. Mark Kowlzan | ||
WEBCAST: |
||
REBROADCAST DATES: |
April 27, 2017 11:30 a.m. Eastern Time through May 11, 2017 11:59 p.m. Eastern Time | |
REBROADCAST NUMBERS: |
(855) 859-2056 (U.S. and Canada) or (404) 537-3406 (International) | |
Passcode: 3726610 |
Packaging Corporation of America | |||||||||||
Consolidated Earnings Results | |||||||||||
Unaudited | |||||||||||
(dollars in millions, except per-share data) | |||||||||||
Three Months Ended | |||||||||||
March 31 | |||||||||||
2017 | 2016 | ||||||||||
Net sales | $ | 1,536.5 | $ | 1,401.0 | |||||||
Cost of sales | (1,198.0 | ) | (1,102.0 | ) |
(2) |
||||||
Gross profit | 338.5 | 299.0 | |||||||||
Selling, general, and administrative expenses | (128.4 | ) | (114.3 | ) | |||||||
Other expense, net | (7.0 | ) |
(1) |
(3.9 | ) |
(2) |
|||||
Income from operations | 203.1 | 180.8 | |||||||||
Interest expense, net | (24.0 | ) | (21.6 | ) | |||||||
Income before taxes | 179.1 | 159.2 | |||||||||
Provision for income taxes | (61.7 | ) | (55.5 | ) | |||||||
Net income | $ | 117.4 | $ | 103.7 | |||||||
Earnings per share: | |||||||||||
Basic | $ | 1.25 | $ | 1.09 | |||||||
Diluted | $ | 1.24 | $ | 1.09 | |||||||
Computation of diluted earnings per share under the two class method: | |||||||||||
Net income | $ | 117.4 | $ | 103.7 | |||||||
Less: Distributed and undistributed income available to participating securities | (1.0 | ) | (1.1 | ) | |||||||
Net income attributable to PCA shareholders | $ | 116.4 | $ | 102.6 | |||||||
Diluted weighted average shares outstanding | 93.6 | 94.2 | |||||||||
Diluted earnings per share | $ | 1.24 | $ | 1.09 | |||||||
Supplemental financial information: | |||||||||||
Capital spending | $ | 57.8 | $ | 52.9 | |||||||
Cash balance | $ | 254.0 | $ | 162.3 |
(1) | The three months ended March 31, 2017 include the following: | |||
a. | $0.8 million of charges consisting of closure costs related to corrugated products facilities, integration costs related to the TimBar Corporation and Columbus Container, Inc. acquisitions, and costs related to a lump sum settlement payment of a multiemployer pension plan withdrawal liability for one of our corrugated products facilities. | |||
b. | $5.0 million of costs for the property damage and business interruption insurance deductible corresponding to the February 2017 explosion at our DeRidder, LA mill. | |||
c. | $2.3 million of income related to a working capital adjustment from the April 2015 sale of our Hexacomb corrugated manufacturing operations in Europe and Mexico. | |||
(2) | The three months ended March 31, 2016 include $2.8 million of facilities closure costs recorded within "Other expense, net" and "Cost of sales", as appropriate. |
Packaging Corporation of America | |||||||||
Segment Information | |||||||||
Unaudited | |||||||||
(dollars in millions) | |||||||||
Three Months Ended | |||||||||
March 31 | |||||||||
2017 | 2016 | ||||||||
Segment sales | |||||||||
Packaging | $ | 1,257.0 | $ | 1,095.5 | |||||
Paper | 259.2 | 280.5 | |||||||
Corporate and Other | 20.3 | 25.0 | |||||||
$ | 1,536.5 | $ | 1,401.0 | ||||||
Segment income (loss) | |||||||||
Packaging | $ | 190.8 | $ | 161.5 | |||||
Paper | 29.8 | 36.1 | |||||||
Corporate and Other | (17.5 | ) | (16.8 | ) | |||||
Income from operations | 203.1 | 180.8 | |||||||
Interest expense, net | (24.0 | ) | (21.6 | ) | |||||
Income before taxes | $ | 179.1 | $ | 159.2 | |||||
Segment income (loss) excluding special items (1) | |||||||||
Packaging | $ | 195.0 | $ | 163.4 | |||||
Paper | 29.8 | 37.0 | |||||||
Corporate and Other | (18.2 | ) | (16.8 | ) | |||||
$ | 206.6 | $ | 183.6 | ||||||
EBITDA excluding special items (1) | |||||||||
Packaging | $ | 272.2 | $ | 236.7 | |||||
Paper | 43.8 | 51.1 | |||||||
Corporate and Other | (16.9 | ) | (15.6 | ) | |||||
$ | 299.1 | $ | 272.2 |
(1) | Segment income (loss) excluding special items, earnings before 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 | ||||||||
March 31 | ||||||||
2017 | 2016 | |||||||
Packaging | ||||||||
Segment income | $ | 190.8 | $ | 161.5 | ||||
DeRidder mill incident | 5.0 | — | ||||||
Integration-related, facilities closure and other costs | 0.8 | 1.9 | ||||||
Hexacomb working capital adjustment | (1.6 | ) | — | |||||
Segment income excluding special items (1) | $ | 195.0 | $ | 163.4 | ||||
Paper | ||||||||
Segment income | $ | 29.8 | $ | 36.1 | ||||
Integration-related, facilities closure and other costs | — | $ | 0.9 | |||||
Segment income excluding special items (1) | $ | 29.8 | $ | 37.0 | ||||
Corporate and Other | ||||||||
Segment loss | $ | (17.5 | ) | $ | (16.8 | ) | ||
Hexacomb working capital adjustment | (0.7 | ) | — | |||||
Segment loss excluding special items (1) | $ | (18.2 | ) | $ | (16.8 | ) | ||
Income from operations | $ | 203.1 | $ | 180.8 | ||||
Income from operations, excluding special items (1) | $ | 206.6 | $ | 183.6 | ||||
(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 and EPS Excluding Special Items (1) | |||||||||||||||||||||||||||||
Three Months Ended March 31 | |||||||||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||||||||
Income | Income | ||||||||||||||||||||||||||||
before | Income | Net | Diluted | before | Income | Net | Diluted | ||||||||||||||||||||||
taxes | Taxes | Income | EPS | taxes | Taxes | Income | EPS | ||||||||||||||||||||||
As reported | $ | 179.1 | $ | (61.7 | ) | $ | 117.4 | $ | 1.24 | $ | 159.2 | $ | (55.5 | ) | $ | 103.7 | $ | 1.09 | |||||||||||
Special items (2): | |||||||||||||||||||||||||||||
DeRidder mill incident | 5.0 | (1.9 | ) | 3.1 | 0.03 | — | — | — | — | ||||||||||||||||||||
Integration-related, facilities closure and other costs | 0.8 | (0.3 | ) | 0.5 | 0.01 | 2.8 | (0.9 | ) | 1.9 | 0.02 | |||||||||||||||||||
Hexacomb working capital adjustment | (2.3 | ) | 0.9 | (1.4 | ) | (0.01 | ) | — | — | — | — | ||||||||||||||||||
Total special items | 3.5 | (1.3 | ) | 2.2 | 0.03 | 2.8 | (0.9 | ) | 1.9 | 0.02 | |||||||||||||||||||
Excluding special items | $ | 182.6 | $ | (63.0 | ) | $ | 119.6 | $ | 1.27 | $ | 162.0 | $ | (56.4 | ) | $ | 105.6 | $ | 1.11 | |||||||||||
(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) | Special items are tax-effected at a combined federal and state income tax rate in effect for the period the special items were recorded. For all periods presented, income taxes on 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 interest (interest expense and interest income), income taxes, and depreciation, amortization, and depletion. The following table reconciles net income to EBITDA and EBITDA excluding special items: | |||||||
Three Months Ended | |||||||
March 31 | |||||||
2017 | 2016 | ||||||
Net income | $ | 117.4 | $ | 103.7 | |||
Interest expense, net | 24.0 | 21.6 | |||||
Provision for income taxes | 61.7 | 55.5 | |||||
Depreciation, amortization, and depletion | 92.5 | 88.7 | |||||
EBITDA (1) | $ | 295.6 | $ | 269.5 | |||
Special items: | |||||||
DeRidder mill incident | 5.0 | — | |||||
Integration-related, facilities closure and other costs | 0.8 | 2.7 | |||||
Hexacomb working capital adjustment | (2.3 | ) | — | ||||
EBITDA excluding special items (1) | $ | 299.1 | $ | 272.2 | |||
(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 income (loss) to EBITDA excluding special items: | ||||||||
Three Months Ended | ||||||||
March 31 | ||||||||
2017 | 2016 | |||||||
Packaging | ||||||||
Segment income | $ | 190.8 | $ | 161.5 | ||||
Depreciation, amortization, and depletion | 77.2 | 73.3 | ||||||
EBITDA (1) | 268.0 | 234.8 | ||||||
DeRidder mill incident | 5.0 | — | ||||||
Integration-related, facilities closure and other costs | 0.8 | 1.9 | ||||||
Hexacomb working capital adjustment | (1.6 | ) | — | |||||
EBITDA excluding special items (1) | $ | 272.2 | $ | 236.7 | ||||
Paper | ||||||||
Segment income | $ | 29.8 | $ | 36.1 | ||||
Depreciation, amortization, and depletion | 14.0 | 14.2 | ||||||
EBITDA (1) | 43.8 | 50.3 | ||||||
Integration-related, facilities closure and other costs | — | 0.8 | ||||||
EBITDA excluding special items (1) | $ | 43.8 | $ | 51.1 | ||||
Corporate and Other | ||||||||
Segment loss | $ | (17.5 | ) | $ | (16.8 | ) | ||
Depreciation, amortization, and depletion | 1.3 | 1.2 | ||||||
EBITDA (1) | (16.2 | ) | (15.6 | ) | ||||
Hexacomb working capital adjustment | (0.7 | ) | — | |||||
EBITDA excluding special items (1) | $ | (16.9 | ) | $ | (15.6 | ) | ||
EBITDA excluding special items (1) | $ | 299.1 | $ | 272.2 | ||||
(1) See footnote (1) on page 2, for a discussion of non-GAAP financial measures. |
View source version on businesswire.com: http://www.businesswire.com/news/home/20170426006770/en/
Source:
Packaging Corporation of America
Barbara Sessions
INVESTOR
RELATIONS: (877) 454-2509
PCA’s Website: www.packagingcorp.com