Packaging Corporation of America Reports Record First Quarter 2013 Results

  Packaging Corporation of America Reports Record First Quarter 2013 Results

Business Wire

LAKE FOREST, Ill. -- April 22, 2013

Packaging Corporation of America (NYSE: PKG) today reported record first
quarter net income of $61 million, or $0.62 per share, compared to first
quarter 2012 net income, excluding special items, of $41 million, or $0.42 per
share. Net sales were a record $755 million, up 12% compared to first quarter
2012 net sales of $671 million.

The $0.20 per share increase in earnings, excluding 2012 special items, was
driven by higher containerboard and corrugated products prices and mix
($0.23), higher sales volume ($0.05) and lower recycled fiber costs ($0.01).
These items were partially offset by higher costs including labor and benefits
($0.06), workers’ compensation ($0.01), energy ($0.01) and transportation
($0.01).

Corrugated products shipments per workday were up 7.1% compared to last year’s
first quarter, and total shipments were up 3.8% with two less workdays in this
year’s first quarter. Outside sales of containerboard were equal to last
year’s first quarter. Containerboard production was 646,000 tons, up 6,000
tons over the first quarter of 2012. PCA ended the quarter with its
containerboard inventories about 3,000 tons above year-end levels.

Commenting on reported results, Mark W. Kowlzan, Chief Executive Officer of
PCA, said, “We had an outstanding quarter in all aspects of our operations
with higher pricing and strong volume driving all-time records for sales,
corrugated products shipments and earnings per share. Corrugated products
demand was stronger than we expected throughout the quarter, and our mills ran
extremely well, allowing us to meet the strong demand while building needed
containerboard inventory to help support our mill maintenance outages in the
second quarter.”

“Looking ahead,” Mr. Kowlzan added, “we expect seasonally stronger volume and
higher prices in the second quarter. However, the majority of the earnings
benefit from price increases will not be realized until the third quarter when
our April containerboard price increase pass-through to corrugated products is
completed. Also, most of our annual mill maintenance this year will occur in
the second quarter with outages at three of our four mills. We expect these
outages to reduce our containerboard production by 30,000 tons in the second
quarter compared to 7,000 tons of lost production from maintenance downtime in
the first quarter. The lower production, along with higher repair and
operating costs during these outages, will reduce earnings by $0.08 per share
compared to the first quarter. We also expect higher transportation, recycled
fiber and purchased electricity costs. Considering these items, we currently
expect second quarter earnings of about $0.62 per share.”

PCA is the fourth largest producer of containerboard and corrugated packaging
products in the United States with sales of $2.8 billion in 2012. PCA operates
four paper mills and 71 corrugated products plants in 26 states across the
country.


Conference Call Information:

WHAT:                Packaging Corporation of America’s 1st Quarter 2013
                      Earnings
                      Conference Call

WHEN:                 Tuesday, April 23, 2013
                      10:00 a.m. Eastern Time

NUMBER:               (866) 818-1395 (U.S. and Canada) or (703) 639-1379
                      (International)
                      Dial in by 9:45 a.m. Eastern Time
                      Conference Call Leader: Mr. Mark Kowlzan

WEBCAST:              http://www.packagingcorp.com

REBROADCAST DATES:    April 23, 2013 1:00 p.m. Eastern Time through
                      May 7, 2013 11:59 p.m. Eastern Time

REBROADCAST NUMBER:   (888) 266-2081 (U.S. and Canada) or (703) 925-2533
                      (International)
                      Passcode: 1610454
                    
                      

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; containerboard and corrugated products
general industry conditions, 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, 2012 filed with the Securities and Exchange Commission and
available at the SEC’s website at “www.sec.gov”.

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


                                      Three Months Ended March 31,
(in millions, except per share data)   2013         2012

Net sales                              $  755.2      $ 671.3
Cost of sales                            (572.8 )    (526.3 )

Gross profit                              182.4        145.0
Selling and administrative expenses       (55.7  )     (51.9  )
Corporate overhead                        (19.5  )     (16.9  )
Alternative fuel mixture credits          -            95.5   ^(1)
Other expense, net                       (4.0   )    (2.6   )

Income before interest and taxes          103.2        169.1
Interest expense, net                    (9.2   )    (9.7   )

Income before taxes                       94.0         159.4
Provision for income taxes               (33.4  )    (141.6 )^(1)

Net income                             $  60.6      $ 17.8   ^(1)

Earnings per share:
Basic                                  $  0.63      $ 0.18   
Diluted                                $  0.62      $ 0.18   
                                                              
Basic common shares outstanding           96.4         96.6
Diluted common shares outstanding         97.4         97.7
                                                     
Supplemental financial information:
Cash balance                           $  268.0      $ 84.0
Capital spending                       $  27.3       $ 34.8
                                                              

 Notes to Consolidated Earnings Results
      
        In the first quarter of 2012, the company amended its 2009 tax return
        to reduce the gallons claimed as cellulosic biofuel producer credits
        previously recorded as a tax benefit, and increase the gallons claimed
  (1)   for alternative fuel mixture credits previously recorded as income.
        The increase in gallons claimed as alternative fuel mixture credits
        resulted in income of $95.5 million, and the decrease in gallons
        claimed as cellulosic biofuel producer credits resulted in a decrease
        in tax benefits of $118.5 million, or a net charge of $23.0 million.

                                                               
Packaging Corporation of America
Reconciliation of Non-GAAP Financial Measures ^(1)
Unaudited


                               Three Months Ended March 31,
                               2013                      2012
(in millions, except per       Net Income     EPS        Net Income     EPS
share data)

As reported                    $   60.6       $ 0.62     $   17.8       $ 0.18

Special items:
Biofuel tax credits ^(2)          -           -           23.0        0.24

Total special items               -           -           23.0        0.24

Excluding special items        $   60.6       $ 0.62     $   40.8       $ 0.42
                                                                        

 Notes to Reconciliation of Non-GAAP Financial Measures
      
        Net income and earnings per share excluding special items are non-GAAP
        financial measures. The after-tax effect of special items are excluded
        as management considers such items to not necessarily be indicative of
  (1)   PCA’s ongoing operations. Management uses these measures to focus on
        PCA's ongoing operations and believes that it is useful to investors
        because it enables them to perform meaningful comparisons of past and
        present operating results.
        
        Represents a charge from the amendment of our 2009 federal income tax
  (2)   return related to biofuel credits. (See Notes under Consolidated
        Earnings Results.)
        

Contact:

Packaging Corporation of America
Barbara Sessions
INVESTOR RELATIONS: (877) 454-2509
PCA’s Website: www.packagingcorp.com