Packaging Corporation of America Reports Third Quarter 2024 Results

"Very strong demand throughout the quarter led to all-time quarterly records for containerboard production, total box shipments and shipments per day." – Mark Kowlzan, Chairman and CEO, PCA.

Oct. 22, 2024 - Packaging Corporation of America (NYSE: PKG) today reported third quarter 2024 net income of $238 million, or $2.64 per share, and net income of $239 million, or $2.65 per share, excluding special items. Third quarter net sales were $2.2 billion in 2024 and $1.9 billion in 2023.

Reported earnings in the third quarter of 2024 include special items primarily for closure costs related to certain corrugated products facilities.

Excluding special items, the $.60 per share increase in third quarter 2024 earnings compared to the third quarter of 2023 was driven primarily by higher volume $.94 and prices and mix $.03 in the Packaging segment, higher volume in the Paper segment $.03, lower freight and logistics expenses $.09, lower scheduled outage expenses $.06, and lower interest expense $.05. These items were partially offset by lower prices and mix in the Paper segment ($.02), higher operating and converting costs ($.51), higher depreciation expense ($.05), and other expenses ($.02).

Results were $.20 above third quarter guidance of $2.45 per share primarily due to higher volume in the Packaging and Paper segments and higher prices and mix in the Packaging segment.

In the Packaging segment, corrugated products shipments per day were up 11.1% over last year's third quarter and total shipments, with one additional shipping day, were up 12.9%. Shipments per day were up 5.8% versus the second quarter of 2024 and total shipments, with one less shipping day, were up 4.1%. Containerboard production was 1,293,000 tons, and containerboard inventory was up 25,000 tons from the third quarter of 2023 and down 3,000 tons compared to the second quarter of 2024.

In the Paper segment, sales volume was up 4% versus the third quarter of 2023 and up 5% versus the second quarter of 2024.

Commenting on reported results, Mark W. Kowlzan, Chairman and CEO, said, "In the Packaging segment, we had great implementation of our previously announced containerboard and corrugated products price increases. Very strong demand throughout the quarter led to all-time quarterly records for containerboard production, total box shipments and shipments per day. We were able to meet this demand, and our customers' quality and service needs, through the operational benefits of our capital spending program and the continued great focus and execution by our sales, customer service, mill and corrugated products plant employees.

"Our Paper segment had excellent results with our previously announced price increases implemented as planned, volume above forecasted levels, and well-managed mill operations. Fortunately, none of our facilities were significantly impacted by the two hurricanes during the quarter."

Looking Ahead

"Looking ahead as we move from the third and into the fourth quarter," Kowlzan added, "we expect demand in our Packaging segment to remain strong with corrugated shipments-per-day continuing to strengthen and slightly higher containerboard volume. However, total shipments for the corrugated business will be impacted by two less shipping days and recent hurricane damage to the strawberry crops in Florida.

"With current containerboard inventory below our target levels, we will also attempt to build some inventory prior to year-end. We expect continued realization from the previously announced price increases and higher export prices, although with a seasonally less rich mix compared to the third quarter.

"In our Paper segment, shipments will be lower versus the seasonally stronger third quarter while prices and mix should be fairly flat.

"Operating and converting costs are expected to increase driven by higher seasonal energy costs and chemical costs.

"Scheduled outage costs are estimated to be $(.12) per share higher than the third quarter, and depreciation expense should be slightly higher.

"Considering these items, we expect fourth quarter earnings of $2.47 per share," Kowlzan concluded.

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.

SOURCE: Packaging Corporation of America