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Released October 17, 2012 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Packaging Corporation of America (NYSE:PKG) (PCA) (Lake Forest, Illinois), the fourth-largest U.S. producer of containerboard and corrugated packaging products, reported improved sales in the third quarter of 2012, as volumes for containerboard and corrugated products strengthened, key costs declined, and the company's mills set a production record. Net income for the quarter was reported to be $39.8 million, a 4.78% decrease from third-quarter 2011.
PCA executives stressed that results were notably different when excluding $13 million of after-tax debt refinancing charges from third-quarter 2012 and energy project asset disposal charges in third-quarter 2011. Making these two exceptions, income stood at a record $53 million, a 23.26% increase.
Net sales for the quarter were reported to be $723.5 million, a 7.86% increase from the same period last year. Demand for both containerboard and corrugated products remained strong, and the company's mills produced a record 650,000 tons of containerboard, which was 20,000 tons more than in third-quarter 2011. Corrugated shipments were up 4% altogether, much of which was attributed to acquisitions. Costs for energy, chemicals and recycled fiber were significantly lower.
During the quarter, PCA implemented a $50-per-ton price increase for domestic containerboard, which executives cited as a major driver for the quarter's results.
Industrial Info is tracking about $50 million in planned projects involving PCA, including the proposed $20 million addition of a kraft pulp and linerboard mill in Counce, Tennessee. The addition, which is undergoing market analysis, would increase output to 1,500 tons of woodyard chips per day, from the current 1,000 tons. The proposed project would kick off in April 2013 and be completed in December 2014.
PCA also is performing an economic evaluation for the proposed conversion of a recovery boiler and addition of a continuous digester at a pulp and linerboard mill in Clyattville, Georgia, which would kick off in October 2013 and be completed in February 2014.
"Our shipments for workdays were up each month for the quarter compared to last year, and in September, we set an all-time record for shipments per workday, both including and excluding acquisitions," said Mark W. Kowlzan, the chief executive officer of PCA, in a conference call.
"Our domestic and export containerboard demand remains strong, and we're able to sell more tons to the export market with our mills' annual maintenance outages completed in the second quarter," he later added. "Our export shipments of containerboard were up about 9,000 tons compared to last year's third quarter, and up about 21,000 tons compared to the second quarter of this year. Domestic containerboard sales were essentially flat with both the third quarter of last year and the second quarter of this year."
PCA executives expect to see seasonally higher costs in the fourth quarter, partly due to weather conditions. However, the company is now implementing a price increase for corrugated products that will correspond to the third quarter's increase for containerboard. The company expects to see the increase completed by the end of the year. PCA executives expect to see stronger earnings from the containerboard price increase, but caution that a full quarter's worth of such earnings will not be seen until the end of first-quarter 2013.
PCA operates 71 corrugated products plants and four paper mills in 26 U.S. states. For more information, visit Industrial Info's North American Pulp & Paper Project Database.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
PCA executives stressed that results were notably different when excluding $13 million of after-tax debt refinancing charges from third-quarter 2012 and energy project asset disposal charges in third-quarter 2011. Making these two exceptions, income stood at a record $53 million, a 23.26% increase.
Net sales for the quarter were reported to be $723.5 million, a 7.86% increase from the same period last year. Demand for both containerboard and corrugated products remained strong, and the company's mills produced a record 650,000 tons of containerboard, which was 20,000 tons more than in third-quarter 2011. Corrugated shipments were up 4% altogether, much of which was attributed to acquisitions. Costs for energy, chemicals and recycled fiber were significantly lower.
During the quarter, PCA implemented a $50-per-ton price increase for domestic containerboard, which executives cited as a major driver for the quarter's results.
Industrial Info is tracking about $50 million in planned projects involving PCA, including the proposed $20 million addition of a kraft pulp and linerboard mill in Counce, Tennessee. The addition, which is undergoing market analysis, would increase output to 1,500 tons of woodyard chips per day, from the current 1,000 tons. The proposed project would kick off in April 2013 and be completed in December 2014.
PCA also is performing an economic evaluation for the proposed conversion of a recovery boiler and addition of a continuous digester at a pulp and linerboard mill in Clyattville, Georgia, which would kick off in October 2013 and be completed in February 2014.
"Our shipments for workdays were up each month for the quarter compared to last year, and in September, we set an all-time record for shipments per workday, both including and excluding acquisitions," said Mark W. Kowlzan, the chief executive officer of PCA, in a conference call.
"Our domestic and export containerboard demand remains strong, and we're able to sell more tons to the export market with our mills' annual maintenance outages completed in the second quarter," he later added. "Our export shipments of containerboard were up about 9,000 tons compared to last year's third quarter, and up about 21,000 tons compared to the second quarter of this year. Domestic containerboard sales were essentially flat with both the third quarter of last year and the second quarter of this year."
PCA executives expect to see seasonally higher costs in the fourth quarter, partly due to weather conditions. However, the company is now implementing a price increase for corrugated products that will correspond to the third quarter's increase for containerboard. The company expects to see the increase completed by the end of the year. PCA executives expect to see stronger earnings from the containerboard price increase, but caution that a full quarter's worth of such earnings will not be seen until the end of first-quarter 2013.
PCA operates 71 corrugated products plants and four paper mills in 26 U.S. states. For more information, visit Industrial Info's North American Pulp & Paper Project Database.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
