Packaging Corporation of America (NYSE: PKG) today reported third quarter 2022 net income of $262 million, or $2.80 per share, and net income of $266 million, or $2.83 per share, excluding special items. Third quarter net sales were $2.1 billion in 2022 and $2.0 billion in 2021.

Reported earnings in the third quarter of 2022 include special items primarily for certain costs at the Jackson, AL mill for paper-to-containerboard conversion related activities.

Excluding special items, the $.14 per share increase in third quarter 2022 earnings compared to the third quarter of 2021 was driven primarily by higher prices and mix in our Packaging $1.60 and Paper $.23 segments, lower interest expense $.04, a lower share count resulting from share repurchases $.04, and a lower tax rate $.02. These items were partially offset by higher operating costs ($.77), lower volume in our Packaging ($.52) and Paper ($.05) segments, higher freight and logistics expenses ($.20), higher scheduled outage expenses ($.10), higher depreciation expense ($.07), higher converting costs ($.04), and other expenses ($.04).

Results were $.03 above third quarter guidance of $2.80 per share primarily due to higher prices and mix in our Packaging and Paper segments and lower operating costs.

Financial information by segment is summarized below and in the schedules with this release.

In the Packaging segment, total corrugated products shipments and shipments per day were down (6.0%) over last year’s third quarter. Containerboard production was 1,116,000 tons, and containerboard inventory was up 11,000 tons from the third quarter of 2021 and up 22,000 tons compared to the second quarter of 2022. In the Paper segment, sales volume was down 13,000 tons compared to the third quarter of 2021, and up 6,000 tons compared to the second quarter of 2022.

Commenting on reported results, Mark W. Kowlzan, Chairman and CEO, said, “We were able to exceed our guidance for the quarter even though we continued to experience significant cost inflation across the Company and demand in our Packaging segment was well below our expectations. Implementation of our previously announced price increases in the Packaging and Paper segments continued to generate excellent results, and our mills and plants remained focused on lowering operating costs through process efficiency optimization efforts and material usage initiatives. We also ran our containerboard system in a very cost-effective manner to match our supply with demand, and the scheduled outages in our mills were executed very well.”

“Looking ahead as we move from the third and into the fourth quarter,” Mr. Kowlzan added, “we see most of the issues that impacted third quarter Packaging segment demand continuing, and we will run our containerboard system based on this current outlook. At our Jackson, Alabama mill we will be completing the scheduled annual maintenance outage as well as the first phase of the containerboard conversion work on the No. 3 machine. Our box plants will have four less shipping days in the fourth quarter, and we also expect a seasonally less rich mix in corrugated products as well as lower average export containerboard prices. In our Paper segment, we will continue to implement our price increase that took effect in September; however, volume will be lower compared to the seasonally stronger third quarter. Scheduled outage expenses will be higher, and we expect slightly higher operating costs, primarily labor and benefit expenses, along with anticipated colder weather resulting in higher energy costs. Considering these items, we expect fourth quarter earnings of $2.22 per share.”

We present various non-GAAP financial measures in this press release, including diluted EPS excluding special items, segment income excluding special items and EBITDA excluding special items. 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 anticipate special items in the fourth quarter of 2022 to include charges, fees, and expenses for paper-to-containerboard conversion related activities at the Jackson, AL mill. We do not currently expect any additional significant special items during the fourth quarter; however, additional special items may arise due to fourth quarter events.

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 90 corrugated products plants and related facilities.

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 impact of the COVID-19 pandemic on our business, expected benefits from acquisitions and restructuring activities, 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 the COVID-19 pandemic on the health of our employees and on the employees of our suppliers and customers, on our ability to operate our business, and on economic conditions affecting our business and demand for our products; 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 December 31, 2021, and in subsequent quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission and available at the SEC’s website at “www.sec.gov”.

Conference Call Information:

View source version on businesswire.com: https://www.businesswire.com/news/home/20221024005852/en/