Packaging Corporation of America Reports Third Quarter 2015 Results
Excluding special items, third quarter 2015 earnings per share, compared
to the third quarter of 2014, included improved volume
Packaging segment EBITDA in the third quarter of 2015, excluding special
items, was
Paper segment EBITDA in the third quarter of 2015, excluding special
items, was
Commenting on third quarter results,
“Looking ahead,” Mr. Kowlzan added, “we expect seasonally lower volumes
for containerboard and corrugated products as well as a seasonally less
rich mix in corrugated products, compared to the third quarter. In
addition, we expect seasonally lower volumes and a less rich mix in
white papers. With colder weather, wood and fuel costs are also expected
to be seasonally higher. Finally, as previously reported, maintenance
outage costs are expected to be
In addition to PCA’s consolidated earnings results and the segment information that accompanies this press release, we posted other supplemental financial data for the third quarter on our website at www.packagingcorp.com.
PCA is the fourth largest producer of containerboard and corrugated
packaging products in
Conference Call Information:
WHAT: |
Packaging Corporation of America’s 3rd Quarter 2015 Earnings Conference Call | |
WHEN: |
Wednesday, October 21, 2015 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: |
October 21, 2015 1:00 p.m. Eastern Time through | |
November 4, 2015 11:59 p.m. Eastern Time | ||
REBROADCAST NUMBERS: |
(855) 859-2056 (U.S. and Canada) or (404) 537-3406 (International) | |
Passcode: 35494230 |
Some of the statements in this press release are forward-looking
statements. Forward-looking statements include statements about our
future earnings and financial condition, 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
Non-GAAP measures used in this press release are reconciled to the most comparable measure reported in accordance with GAAP in the schedules to this press release.
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 | |||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||
Net sales | $ | 1,470.8 | $ | 1,518.9 | $ | 4,350.8 | $ | 4,418.7 | ||||||||||||||||
Cost of sales | (1,142.5 | ) |
(1) |
(1,198.6 | ) |
(1) |
(3,427.9 | ) |
(1) |
(3,486.2 | ) |
(1) |
||||||||||||
Gross profit | 328.3 | 320.3 | 922.9 | 932.5 | ||||||||||||||||||||
Selling, general, and administrative expenses | (112.7 | ) | (119.6 | ) | (345.9 | ) | (359.0 | ) | ||||||||||||||||
Other income (expense), net | 3.8 |
(1) (2) (3) |
(12.3 | ) |
(2) |
(2.9 | ) |
(1) (2) (3) |
(44.0 | ) |
(2) |
|||||||||||||
Income from operations | 219.4 | 188.4 | 574.1 | 529.5 | ||||||||||||||||||||
Interest expense, net | (21.7 | ) | (23.1 | ) |
(2) |
(63.2 | ) | (65.3 | ) |
(2) |
||||||||||||||
Income before taxes | 197.7 | 165.3 | 510.9 | 464.2 | ||||||||||||||||||||
Provision for income taxes | (69.9 | ) | (60.9 | ) | (178.3 | ) | (170.1 | ) | ||||||||||||||||
Net income | $ | 127.8 | $ | 104.4 | $ | 332.6 | $ | 294.1 | ||||||||||||||||
Earnings per share: | ||||||||||||||||||||||||
Basic | $ | 1.31 | $ | 1.06 | $ | 3.39 | $ | 2.99 | ||||||||||||||||
Diluted | $ | 1.31 | $ | 1.06 | $ | 3.39 | $ | 2.99 | ||||||||||||||||
Supplemental financial information: | ||||||||||||||||||||||||
Capital spending | $ | 76.0 | $ | 106.7 | $ | 217.9 | $ | 254.9 | ||||||||||||||||
Cash balance | $ | 186.9 | $ | 154.3 | $ | 186.9 | $ | 154.3 | ||||||||||||||||
(1) All periods presented include amounts from restructuring activities at our mill in DeRidder, Louisiana, including costs related to the conversion of the No. 3 newsprint machine to containerboard, our exit from the newsprint business, and other improvements. The restructuring charges primarily related to accelerated depreciation and were mostly recorded in "Cost of sales". We completed the restructuring activities in first quarter 2015, but we recorded $3.8 million of income for services and equipment received for vendor settlements during the three months ended September 30, 2015. These amounts were recorded in "Other income (expense), net". See page 3 for the amounts recorded in each period. | ||||||||||||||||||||||||
(2) All periods presented include Boise acquisition
integration-related and other costs, mostly recorded in "Other
income (expense), net". These costs primarily relate to professional
fees, severance, retention, relocation, travel, and other
integration-related costs. See page 3 for the amounts recorded in
each period.
In both the three and nine months ended September 30, 2014, $1.5 million of debt-refinancing costs were recorded in "Interest expense, net".
The nine months ended September 30, 2015, include a $3.6 million tax credit from the State of Louisiana related to our recent capital investment and the jobs retained at the DeRidder, Louisiana, mill, which was recorded as a benefit in "Other income (expense), net".
The nine months ended September 30, 2014, include $17.6 million of costs accrued for the settlement of the Kleen Products LLC v Packaging Corp. of America et al class action lawsuit. These costs are recorded in "Other income (expense), net". |
||||||||||||||||||||||||
(3) In September 2015, we sold the remaining land, buildings, and equipment at our paper mill site in St. Helens, Oregon, where we ceased paper production in December 2012. We recorded a $6.7 million gain on the sale, in "Other income (expense), net". |
Packaging Corporation of America | ||||||||||||||||
Segment Information | ||||||||||||||||
Unaudited | ||||||||||||||||
(dollars in millions) | ||||||||||||||||
Three Months Ended |
Nine Months Ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Segment sales | ||||||||||||||||
Packaging | $ | 1,144.4 | $ | 1,175.7 | $ | 3,385.9 | $ | 3,418.3 | ||||||||
Paper |
|
291.9 |
|
312.5 |
|
870.3 |
|
917.0 | ||||||||
Corporate and other |
|
34.5 |
|
30.7 |
|
94.6 |
|
83.4 | ||||||||
$ | 1,470.8 | $ | 1,518.9 | $ | 4,350.8 | $ | 4,418.7 | |||||||||
Segment income (loss) | ||||||||||||||||
Packaging | $ | 198.2 | $ | 164.7 | $ | 533.9 | $ | 501.8 | ||||||||
Paper | 39.5 | 43.0 | 98.6 | 104.3 | ||||||||||||
Corporate and Other | (18.3 | ) | (19.3 | ) | (58.4 | ) | (76.6 | ) | ||||||||
Income from operations | 219.4 | 188.4 | 574.1 | 529.5 | ||||||||||||
Interest expense, net | (21.7 | ) | (23.1 | ) | (63.2 | ) | (65.3 | ) | ||||||||
Income before taxes | $ | 197.7 | $ | 165.3 | $ | 510.9 | $ | 464.2 | ||||||||
Segment income (loss) excluding special items (1) | ||||||||||||||||
Packaging | $ | 194.4 | $ | 191.7 | $ | 542.0 | $ | 555.0 | ||||||||
Paper | 32.8 | 43.0 | 91.9 | 103.9 | ||||||||||||
Corporate and Other | (15.9 | ) | (17.3 | ) | (51.5 | ) | (52.0 | ) | ||||||||
$ | 211.3 | $ | 217.4 | $ | 582.4 | $ | 606.9 | |||||||||
EBITDA (1) | ||||||||||||||||
Packaging | $ | 271.7 | $ | 253.5 | $ | 758.1 | $ | 747.5 | ||||||||
Paper | 52.8 | 55.9 | 139.2 | 141.5 | ||||||||||||
Corporate and Other | (17.4 | ) | (17.2 | ) | (55.3 | ) | (70.7 | ) | ||||||||
$ | 307.1 | $ | 292.2 | $ | 842.0 | $ | 818.3 | |||||||||
EBITDA excluding special items (1) | ||||||||||||||||
Packaging | $ | 267.9 | $ | 262.3 | $ | 757.2 | $ | 765.3 | ||||||||
Paper | 46.1 | 55.9 | 132.5 | 141.1 | ||||||||||||
Corporate and Other | (15.0 | ) | (15.2 | ) | (48.4 | ) | (46.1 | ) | ||||||||
$ | 299.0 | $ | 303.0 | $ | 841.3 | $ | 860.3 | |||||||||
(1) Income from operations excluding special items, 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. 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 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 | ||||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||||
Packaging | |||||||||||||||||||
Segment income | $ | 198.2 | $ | 164.7 | $ | 533.9 | $ | 501.8 | |||||||||||
DeRidder restructuring | (3.8 | ) | 26.0 | 5.4 | 47.8 | ||||||||||||||
Integration-related and other costs | — | 1.0 | 2.7 | 5.4 | |||||||||||||||
Segment income excluding special items (1) | $ | 194.4 | $ | 191.7 | $ | 542.0 | $ | 555.0 | |||||||||||
Paper | |||||||||||||||||||
Segment income | $ | 39.5 | $ | 43.0 | $ | 98.6 | $ | 104.3 | |||||||||||
Integration-related and other costs | — | — | — | (0.4 | ) | ||||||||||||||
Sale of St. Helens paper mill site | (6.7 | ) | — | (6.7 | ) | — | |||||||||||||
Segment income excluding special items (1) | $ | 32.8 | $ | 43.0 | $ | 91.9 | $ | 103.9 | |||||||||||
Corporate and Other | |||||||||||||||||||
Segment loss | $ | (18.3 | ) | $ | (19.3 | ) | $ | (58.4 | ) | $ | (76.6 | ) | |||||||
Integration-related and other costs | 2.4 | 2.0 | 6.9 | 7.0 | |||||||||||||||
Class action lawsuit settlement | — | — | — | 17.6 | |||||||||||||||
Segment loss excluding special items (1) | $ | (15.9 | ) | $ | (17.3 | ) | $ | (51.5 | ) | $ | (52.0 | ) | |||||||
Income from operations | $ | 219.4 | $ | 188.4 | $ | 574.1 | $ | 529.5 | |||||||||||
Income from operations, excluding special items (1) | $ | 211.3 | $ | 217.4 | $ | 582.4 | $ | 606.9 | |||||||||||
(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 September 30 | ||||||||||||||
2015 | 2014 | |||||||||||||
Net Income | Diluted EPS | Net Income | Diluted EPS | |||||||||||
As reported | $ | 127.8 | $ | 1.31 | $ | 104.4 | $ | 1.06 | ||||||
Special items (2): | ||||||||||||||
DeRidder restructuring | (2.3 | ) | (0.02 | ) | 16.6 | 0.17 | ||||||||
Integration-related and other costs | 1.7 | 0.02 | 2.9 | 0.03 | ||||||||||
Sale of St. Helens paper mill site | (4.4 | ) | (0.05 | ) | — | — | ||||||||
Total special items | (5.0 | ) | (0.05 | ) | 19.5 | 0.20 | ||||||||
Excluding special items | $ | 122.8 | $ | 1.26 | $ | 123.9 | $ | 1.26 | ||||||
Nine Months Ended September 30 | ||||||||||||||
2015 | 2014 | |||||||||||||
Net Income | Diluted EPS | Net Income | Diluted EPS | |||||||||||
As reported | $ | 332.6 | $ | 3.39 | $ | 294.1 | $ | 2.99 | ||||||
Special items (2): | ||||||||||||||
DeRidder restructuring | 3.6 | 0.04 | 30.4 | 0.31 | ||||||||||
Integration-related and other costs | 6.3 | 0.06 | 8.5 | 0.09 | ||||||||||
Sale of St. Helens paper mill site | (4.4 | ) | (0.04 | ) | — | |||||||||
Class action lawsuit settlement | — | — | 11.2 | 0.11 | ||||||||||
Total special items | 5.5 | 0.06 | 50.1 | 0.51 | ||||||||||
Excluding special items | $ | 338.1 | $ | 3.45 | $ | 344.2 | $ | 3.50 | ||||||
(1) Net income and earnings per share excluding special items are non-GAAP financial measures. The after-tax effect of special items are presented 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 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 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: |
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Three Months Ended | Nine Months Ended | |||||||||||||
September 30 | September 30 | |||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||
Net income | $ | 127.8 | $ | 104.4 | $ | 332.6 | $ | 294.1 | ||||||
Interest expense, net | 21.7 | 23.1 | 63.2 | 65.3 | ||||||||||
Provision for income taxes | 69.9 | 60.9 | 178.3 | 170.1 | ||||||||||
Depreciation, amortization, and depletion | 87.7 | 103.8 | 267.9 | 288.8 | ||||||||||
EBITDA (1) | $ | 307.1 | $ | 292.2 | $ | 842.0 | $ | 818.3 | ||||||
Special items: | ||||||||||||||
DeRidder restructuring | (3.8 | ) | 7.8 | (3.6 | ) | 12.4 | ||||||||
Integration-related and other costs | 2.4 | 3.0 | 9.6 | 12.0 | ||||||||||
Sale of St. Helens paper mill site | (6.7 | ) | — | (6.7 | ) | — | ||||||||
Class action lawsuit settlement | — | — | — | 17.6 | ||||||||||
EBITDA excluding special items (1) | $ | 299.0 | $ | 303.0 | $ | 841.3 | $ | 860.3 | ||||||
(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) | ||||||||||||||||
The following table reconciles segment income (loss) to EBITDA and EBITDA excluding special items: | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Packaging | ||||||||||||||||
Segment income | $ | 198.2 | $ | 164.7 | $ | 533.9 | $ | 501.8 | ||||||||
Depreciation, amortization, and depletion | 73.5 | 88.8 | 224.2 | 245.7 | ||||||||||||
EBITDA (1) | 271.7 | 253.5 | 758.1 | 747.5 | ||||||||||||
DeRidder restructuring | (3.8 | ) | 7.8 | (3.6 | ) | 12.4 | ||||||||||
Integration-related and other costs | — | 1.0 | 2.7 | 5.4 | ||||||||||||
EBITDA excluding special items (1) | $ | 267.9 | $ | 262.3 | $ | 757.2 | $ | 765.3 | ||||||||
Paper | ||||||||||||||||
Segment income | $ | 39.5 | $ | 43.0 | $ | 98.6 | $ | 104.3 | ||||||||
Depreciation, amortization, and depletion | 13.3 | 12.9 | 40.6 | 37.2 | ||||||||||||
EBITDA (1) | 52.8 | 55.9 | 139.2 | 141.5 | ||||||||||||
Sale of St. Helens paper mill site | (6.7 | ) | — | (6.7 | ) | — | ||||||||||
Integration-related and other costs | — | — | — | (0.4 | ) | |||||||||||
EBITDA excluding special items (1) | $ | 46.1 | $ | 55.9 | $ | 132.5 | $ | 141.1 | ||||||||
Corporate and Other | ||||||||||||||||
Segment loss | $ | (18.3 | ) | $ | (19.3 | ) | $ | (58.4 | ) | $ | (76.6 | ) | ||||
Depreciation, amortization, and depletion | 0.9 | 2.1 | 3.1 | 5.9 | ||||||||||||
EBITDA (1) | (17.4 | ) | (17.2 | ) | (55.3 | ) | (70.7 | ) | ||||||||
Integration-related and other costs | 2.4 | 2.0 | 6.9 | 7.0 | ||||||||||||
Class action lawsuit settlement | — | — | — | 17.6 | ||||||||||||
EBITDA excluding special items (1) | $ | (15.0 | ) | $ | (15.2 | ) | $ | (48.4 | ) | $ | (46.1 | ) | ||||
EBITDA (1) | $ | 307.1 | $ | 292.2 | $ | 842.0 | $ | 818.3 | ||||||||
EBITDA excluding special items (1) | $ | 299.0 | $ | 303.0 | $ | 841.3 | $ | 860.3 | ||||||||
(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/20151020006861/en/
Source:
Packaging Corporation of America
Barbara Sessions
INVESTOR
RELATIONS: (877) 454-2509
PCA’s Website: www.packagingcorp.com