Packaging Corporation of America Reports Second Quarter 2016 Results
Diluted earnings per share attributable to Packaging Corporation of America shareholders | |||||||||||
Three Months Ended | |||||||||||
June 30 | |||||||||||
2016 | 2015 | Change | |||||||||
Reported Diluted EPS | $ | 1.23 | $ | 1.16 | $ | 0.07 | |||||
Special Items Expense (1) | 0.02 | 0.02 | — | ||||||||
Diluted EPS excluding Special items | $ | 1.25 | $ | 1.18 | $ | 0.07 | |||||
(1) For descriptions and amounts of our special items see page 4. |
The
Financial information by segment is summarized below and in the schedules with this release.
(dollars in millions) | ||||
Three Months Ended | ||||
June 30 | ||||
2016 | 2015 | |||
Segment income (loss) | ||||
Packaging | $ 192.4 | $ 194.6 | ||
Paper | 24.4 | 23.4 | ||
Corporate and Other | (16.6) | (20.4) | ||
$ 200.2 | $ 197.6 | |||
Segment income (loss) excluding special items | ||||
Packaging | $ 194.7 | $ 195.3 | ||
Paper | 24.7 | 23.4 | ||
Corporate and Other | (16.3) | (18.4) | ||
$ 203.1 | $ 200.3 | |||
EBITDA excluding special items | ||||
Packaging | $ 266.7 | $ 267.4 | ||
Paper | 38.7 | 37.1 | ||
Corporate and Other | (15.0) | (17.4) | ||
$ 290.4 | $ 287.1 | |||
Corrugated products shipments were up 2.2% in total and up 0.6% per workday compared to the second quarter of 2015. Packaging segment price and mix was lower than the second quarter of 2015, but up compared to the first quarter of 2016. Containerboard production was 926,000 tons, and containerboard inventory was flat compared to the end of the first quarter of 2016 and the end of the second quarter of 2015.
Paper segment price and mix was lower than the second quarter of 2015, but higher than the first quarter of 2016. White paper sales volume was up slightly and pulp volume was lower compared to the second quarter of 2015, while volume for both white paper and pulp was lower than the first quarter of 2016 primarily due to scheduled annual outages at two mills.
Commenting on reported results,
“Looking ahead to the third quarter,” Mr. Kowlzan added, “we expect
higher containerboard, corrugated products and white paper shipments.
Paper prices should move higher reflecting continued realization of the
announced price increases, and our annual outage costs will be lower. We
expect a less rich mix in corrugated products and higher prices for
recycled fiber, electricity and fuels. Considering these items, we
expect third 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. We currently expect special items in the third quarter to include fees, expenses and purchase accounting charges relating to the TimBar acquisition. Additional special items may arise due to third quarter events.
PCA is the fourth largest producer of containerboard and corrugated
packaging products in
Conference Call Information:
WHAT: |
Packaging Corporation of America’s 2nd Quarter 2016 Earnings Conference Call | |
WHEN: |
Thursday, July 21, 2016 at 10:00 a.m. Eastern Time | |
CALL-IN |
(855) 730-0288 (U.S. and Canada) or (832) 412-2295 (International) | |
NUMBER: |
Dial in by 9:45 a.m. Eastern Time | |
Conference Call Leader: Mr. Mark Kowlzan | ||
WEBCAST: |
||
REBROADCAST DATES: |
July 21, 2016 1:00 p.m. Eastern Time through August 4, 2016 11:59 p.m. Eastern Time | |
REBROADCAST NUMBERS: |
(855) 859-2056 (U.S. and Canada) or (404) 537-3406 (International) | |
Passcode: 55069110 | ||
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 benefits and timing of
completion of the TimBar acquisition, 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
Packaging Corporation of America | |||||||||||||||||
Consolidated Earnings Results | |||||||||||||||||
Unaudited | |||||||||||||||||
(dollars in millions, except per-share data) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30 | June 30 | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Net sales | $ | 1,417.4 | $ | 1,454.3 | $ | 2,818.4 | $ | 2,880.0 | |||||||||
Cost of sales | (1,097.3 | ) |
(1) |
(1,136.6 | ) |
(2)(3) |
(2,199.3 | ) |
(1) |
(2,285.3 | ) |
(2)(3) |
|||||
Gross profit | 320.1 | 317.7 | 619.1 | 594.7 | |||||||||||||
Selling, general, and administrative expenses | (114.8 | ) | (115.9 | ) |
(3) |
(229.1 | ) | (233.2 | ) |
(3) |
|||||||
Other expense, net | (5.1 | ) |
(1) |
(4.2 | ) |
(2) |
(9.0 | ) |
(1) |
(6.8 | ) |
(2) |
|||||
Income from operations | 200.2 | 197.6 | 381.0 | 354.7 | |||||||||||||
Interest expense, net | (22.5 | ) | (22.2 | ) | (44.1 | ) | (41.4 | ) | |||||||||
Income before taxes | 177.7 | 175.4 | 336.9 | 313.3 | |||||||||||||
Provision for income taxes | (61.8 | ) | (61.4 | ) | (117.3 | ) | (108.5 | ) | |||||||||
Net income | $ | 115.9 | $ | 114.0 | $ | 219.6 | $ | 204.8 | |||||||||
Earnings per share: | |||||||||||||||||
Basic | $ | 1.23 | $ | 1.16 | $ | 2.32 | $ | 2.09 | |||||||||
Diluted | $ | 1.23 | $ | 1.16 | $ | 2.32 | $ | 2.08 | |||||||||
Computation of diluted earnings per share under the two class method: | |||||||||||||||||
Net income | $ | 115.9 | $ | 114.0 | $ | 219.6 | $ | 204.8 | |||||||||
Less: Distributed and undistributed income available to participating securities | (1.2 | ) | (1.4 | ) | (2.3 | ) | (2.6 | ) | |||||||||
Net income attributable to PCA shareholders | $ | 114.7 | $ | 112.6 | $ | 217.3 | $ | 202.2 | |||||||||
Diluted weighted average shares outstanding | 93.3 | 96.9 | 93.7 | 97.0 | |||||||||||||
Diluted earnings per share | $ | 1.23 | $ | 1.16 | $ | 2.32 | $ | 2.08 | |||||||||
Supplemental financial information: | |||||||||||||||||
Capital spending | $ | 68.9 | $ | 86.3 | $ | 121.8 | $ | 141.9 | |||||||||
Cash balance | $ | 213.6 | $ | 163.7 | $ | 213.6 | $ | 163.7 |
(1) The three and six months ended
The three months ended
The three months ended
(2) The three and six months ended
The six months ended
The three and six months ended
(3) Certain amounts in prior periods' consolidated financial statements
have been revised to correct an error in the previous presentation
totaling
Packaging Corporation of America | ||||||||||||||||
Segment Information | ||||||||||||||||
Unaudited | ||||||||||||||||
(dollars in millions) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Segment sales | ||||||||||||||||
Packaging | $ | 1,125.3 | $ | 1,142.2 | $ | 2,220.8 | $ | 2,241.5 | ||||||||
Paper | 266.8 | 281.1 | 547.3 | 578.4 | ||||||||||||
Intersegment eliminations and other | 25.3 | 31.0 | 50.3 | 60.1 | ||||||||||||
$ | 1,417.4 | $ | 1,454.3 | $ | 2,818.4 | $ | 2,880.0 | |||||||||
Segment income (loss) | ||||||||||||||||
Packaging | $ | 192.4 | $ | 194.6 | $ | 353.9 | $ | 335.7 | ||||||||
Paper | 24.4 | 23.4 | 60.5 | 59.0 | ||||||||||||
Corporate and Other | (16.6 | ) | (20.4 | ) | (33.4 | ) | (40.0 | ) | ||||||||
Income from operations | 200.2 | 197.6 | 381.0 | 354.7 | ||||||||||||
Interest expense, net | (22.5 | ) | (22.2 | ) | (44.1 | ) | (41.4 | ) | ||||||||
Income before taxes | $ | 177.7 | $ | 175.4 | $ | 336.9 | $ | 313.3 | ||||||||
Segment income (loss) excluding special items (1) | ||||||||||||||||
Packaging | $ | 194.7 | $ | 195.3 | $ | 358.1 | $ | 347.6 | ||||||||
Paper | 24.7 | 23.4 | 61.7 | 59.0 | ||||||||||||
Corporate and Other | (16.3 | ) | (18.4 | ) | (33.1 | ) | (35.4 | ) | ||||||||
$ | 203.1 | $ | 200.3 | $ | 386.7 | $ | 371.2 | |||||||||
EBITDA excluding special items (1) | ||||||||||||||||
Packaging | $ | 266.7 | $ | 267.4 | $ | 503.4 | $ | 489.4 | ||||||||
Paper | 38.7 | 37.1 | 89.8 | 86.4 | ||||||||||||
Corporate and Other | (15.0 | ) | (17.4 | ) | (30.6 | ) | (33.4 | ) | ||||||||
$ | 290.4 | $ | 287.1 | $ | 562.6 | $ | 542.4 |
(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 | Six Months Ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Packaging | ||||||||||||||||
Segment income | $ | 192.4 | $ | 194.6 | $ | 353.9 | $ | 335.7 | ||||||||
Facilities closure costs | 1.4 | — | 3.3 | — | ||||||||||||
Multiemployer pension withdrawal | 0.9 | — | 0.9 | — | ||||||||||||
DeRidder restructuring | — | (1.0 | ) | — | 9.3 | |||||||||||
Integration-related and other costs | — | 1.7 | — | 2.6 | ||||||||||||
Segment income excluding special items (1) | $ | 194.7 | $ | 195.3 | $ | 358.1 | $ | 347.6 | ||||||||
Paper | ||||||||||||||||
Segment income | $ | 24.4 | $ | 23.4 | $ | 60.5 | $ | 59.0 | ||||||||
Facilities closure costs | 0.3 | — | 1.2 | — | ||||||||||||
Segment income excluding special items (1) | $ | 24.7 | $ | 23.4 | $ | 61.7 | $ | 59.0 | ||||||||
Corporate and Other | ||||||||||||||||
Segment loss | $ | (16.6 | ) | $ | (20.4 | ) | $ | (33.4 | ) | $ | (40.0 | ) | ||||
Acquisition-related costs | 0.3 | — | 0.3 | — | ||||||||||||
Integration-related and other costs | — | 2.0 | — | 4.6 | ||||||||||||
Segment loss excluding special items (1) | $ | (16.3 | ) | $ | (18.4 | ) | $ | (33.1 | ) | $ | (35.4 | ) | ||||
Income from operations | $ | 200.2 | $ | 197.6 | $ | 381.0 | $ | 354.7 | ||||||||
Income from operations, excluding special items (1) | $ | 203.1 | $ | 200.3 | $ | 386.7 | $ | 371.2 | ||||||||
(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) | |||||||||||||||||||||||||||||
Net Income and EPS Excluding Special Items (1) | |||||||||||||||||||||||||||||
Three Months Ended June 30 | |||||||||||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||||||||||
Income | Income | ||||||||||||||||||||||||||||
before | Income | Diluted | before | Income | Diluted | ||||||||||||||||||||||||
taxes | Taxes | Net Income | EPS | taxes | Taxes | Net Income | EPS | ||||||||||||||||||||||
As reported | $ | 177.7 | $ | (61.8 | ) | $ | 115.9 | $ | 1.23 | $ | 175.4 | $ | (61.4 | ) | $ | 114.0 | $ | 1.16 | |||||||||||
Special items (2): | |||||||||||||||||||||||||||||
Facilities closure costs | 1.7 | (0.7 | ) | 1.0 | 0.01 | — | — | — | — | ||||||||||||||||||||
Acquisition related costs | 0.3 | (0.1 | ) | 0.2 | — | — | — | — | — | ||||||||||||||||||||
Multiemployer pension withdrawal | 0.9 | (0.3 | ) | 0.6 | 0.01 | — | — | — | — | ||||||||||||||||||||
DeRidder restructuring | — | — | — | — | (1.0 | ) | 0.3 | (0.7 | ) | (0.01 | ) | ||||||||||||||||||
Integration-related and other costs | — | — | — | — | 3.7 | (1.4 | ) | 2.3 | 0.03 | ||||||||||||||||||||
Total special items | 2.9 | (1.1 | ) | 1.8 | 0.02 | 2.7 | (1.1 | ) | 1.6 | 0.02 | |||||||||||||||||||
Excluding special items | $ | 180.6 | $ | (62.9 | ) | $ | 117.7 | $ | 1.25 | $ | 178.1 | $ | (62.5 | ) | $ | 115.6 | $ | 1.18 | |||||||||||
Six Months Ended June 30 | |||||||||||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||||||||||
Income | Income | ||||||||||||||||||||||||||||
before | Income | Diluted | before | Income | Diluted | ||||||||||||||||||||||||
taxes | Taxes | Net Income | EPS | taxes | Taxes | Net Income | EPS | ||||||||||||||||||||||
As reported | $ | 336.9 | $ | (117.3 | ) | $ | 219.6 | $ | 2.32 | $ | 313.3 | $ | (108.5 | ) | $ | 204.8 | $ | 2.08 | |||||||||||
Special items (2): | |||||||||||||||||||||||||||||
Facilities closure costs | 4.5 | (1.6 | ) | 2.9 | 0.03 | — | — | — | — | ||||||||||||||||||||
Acquisition related costs | 0.3 | (0.1 | ) | 0.2 | — | — | — | — | — | ||||||||||||||||||||
Multiemployer pension withdrawal | 0.9 | (0.3 | ) | 0.6 | 0.01 | — | — | — | — | ||||||||||||||||||||
DeRidder restructuring | — | — | — | — | 9.3 | (3.4 | ) | 5.9 | 0.06 | ||||||||||||||||||||
Integration-related and other costs | — | — | — | — | 7.2 | (2.7 | ) | 4.5 | 0.05 | ||||||||||||||||||||
Total special items | 5.7 | (2.0 | ) | 3.7 | 0.04 | 16.5 | (6.1 | ) | 10.4 | 0.11 | |||||||||||||||||||
Excluding special items | $ | 342.6 | $ | (119.3 | ) | $ | 223.3 | $ | 2.36 | $ | 329.8 | $ | (114.6 | ) | $ | 215.2 | $ | 2.19 |
(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 | Six Months Ended | ||||||||||||
June 30 | June 30 | ||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||
Net income | $ | 115.9 | $ | 114.0 | $ | 219.6 | $ | 204.8 | |||||
Interest expense, net | 22.5 | 22.2 | 44.1 | 41.4 | |||||||||
Provision for income taxes | 61.8 | 61.4 | 117.3 | 108.5 | |||||||||
Depreciation, amortization, and depletion | 87.6 | 86.8 | 176.3 | 180.2 | |||||||||
EBITDA (1) | $ | 287.8 | $ | 284.4 | $ | 557.3 | $ | 534.9 | |||||
Special items: | |||||||||||||
Facilities closure costs | 1.4 | — | 4.1 | — | |||||||||
Acquisition related costs | 0.3 | — | 0.3 | — | |||||||||
Multiemployer pension withdrawal | 0.9 | — | 0.9 | — | |||||||||
DeRidder restructuring | — | (1.0 | ) | — | 0.3 | ||||||||
Integration-related and other costs | — | 3.7 | — | 7.2 | |||||||||
EBITDA excluding special items (1) | $ | 290.4 | $ | 287.1 | $ | 562.6 | $ | 542.4 | |||||
(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 | Six Months Ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Packaging | ||||||||||||||||
Segment income | $ | 192.4 | $ | 194.6 | $ | 353.9 | $ | 335.7 | ||||||||
Depreciation, amortization, and depletion | 72.0 | 72.1 | 145.3 | 150.8 | ||||||||||||
EBITDA (1) | 264.4 | 266.7 | 499.2 | 486.5 | ||||||||||||
Facilities closure costs | 1.4 | — | 3.3 | — | ||||||||||||
Multiemployer pension withdrawal | 0.9 | — | 0.9 | — | ||||||||||||
DeRidder restructuring | — | (1.0 | ) | — | 0.3 | |||||||||||
Integration-related and other costs | — | 1.7 | — | 2.6 | ||||||||||||
EBITDA excluding special items (1) | $ | 266.7 | $ | 267.4 | $ | 503.4 | $ | 489.4 | ||||||||
Paper | ||||||||||||||||
Segment income | $ | 24.4 | $ | 23.4 | $ | 60.5 | $ | 59.0 | ||||||||
Depreciation, amortization, and depletion | 14.3 | 13.7 | 28.5 | 27.4 | ||||||||||||
EBITDA (1) | 38.7 | 37.1 | 89.0 | 86.4 | ||||||||||||
Facilities closure costs | — | — | 0.8 | — | ||||||||||||
EBITDA excluding special items (1) | $ | 38.7 | $ | 37.1 | $ | 89.8 | $ | 86.4 | ||||||||
Corporate and Other | ||||||||||||||||
Segment loss | $ | (16.6 | ) | $ | (20.4 | ) | $ | (33.4 | ) | $ | (40.0 | ) | ||||
Depreciation, amortization, and depletion | 1.3 | 1.0 | 2.5 | 2.0 | ||||||||||||
EBITDA (1) | (15.3 | ) | (19.4 | ) | (30.9 | ) | (38.0 | ) | ||||||||
Acquisition related costs | 0.3 | — | 0.3 | — | ||||||||||||
Integration-related and other costs | — | 2.0 | — | 4.6 | ||||||||||||
EBITDA excluding special items (1) | $ | (15.0 | ) | $ | (17.4 | ) | $ | (30.6 | ) | $ | (33.4 | ) | ||||
EBITDA excluding special items (1) | $ | 290.4 | $ | 287.1 | $ | 562.6 | $ | 542.4 | ||||||||
(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/20160720006473/en/
Source:
Packaging Corporation of America
Barbara Sessions
INVESTOR
RELATIONS: (877) 454-2509
PCA’s Website: www.packagingcorp.com