How did Packaging Corporation of America perform in the second quarter of 2024?

The company reported net income of $198.9 million, or $2.21 per diluted share, on net sales of $2,075.3 million. Excluding special items, diluted EPS was $2.20, compared with $2.31 in the second quarter of 2023. Results beat the company's $2.07 per share guidance by $0.13.

What drove the year-over-year decline in earnings excluding special items?

The filing attributes the $0.11 per share decrease primarily to lower prices and mix in the Packaging segment ($0.87) and Paper segment ($0.07), higher operating costs ($0.31), higher depreciation expense ($0.03), and a higher tax rate ($0.03). These were partially offset by higher Packaging volume ($0.94), higher Paper volume ($0.07), lower other converting costs ($0.07), lower freight and logistics expenses ($0.06), and lower interest expense ($0.06).

What is the company's outlook for the third quarter of 2024?

Management expects prices and mix in both the Packaging and Paper segments to move higher, along with higher containerboard export prices and higher containerboard volume. Corrugated shipments per day are expected to keep strengthening, potentially setting a third quarter record, though there is one fewer shipping day. The company projects third quarter earnings of $2.45 per share. Operating and converting costs are expected to be higher, primarily due to seasonal electricity usage and prices, while scheduled outage expenses are expected to be slightly lower.

How did the company's segments perform?

Packaging segment income was $279.8 million in the second quarter of 2024, compared with $285.8 million a year earlier, and Packaging segment sales were $1,908.3 million, up from $1,790.3 million. Paper segment income was $26.7 million, versus $29.1 million, and Paper segment sales were $150.1 million, up from $142.8 million. Paper sales volume was up 12% year over year.

What operational developments and capital activity were reported?

Containerboard production reached a record 1,281,000 tons, and containerboard inventory rose 16,000 tons from the second quarter of 2023 and 20,000 tons from the first quarter of 2024. Capital spending was $245.0 million, up from $126.4 million. The company also discontinued uncoated freesheet production on the No. 3 machine at its Jackson, Alabama mill to convert it to linerboard, with $9.7 million of related charges in the first half of 2024.

PKG 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed July 24, 2024. Cited figures are marked; the original filing is the authoritative source.

Packaging Corporation of America (NYSE: PKG) reported second quarter 2024 net income of $198.9 million^a, or $2.21 per diluted share, compared with $202.7 million, or $2.24 per diluted share, in the second quarter of 2023.

Excluding special items, diluted EPS was $2.20^b, versus $2.31 a year earlier. Net sales rose to $2,075.3 million from $1,952.1 million. The company beat its second quarter guidance of $2.07 per share by $0.13, citing higher Packaging segment volume, lower operating and converting costs, and lower freight costs.

Packaging segment income was $279.8 million^c, roughly flat with $285.8 million a year earlier, and Paper segment income was $26.7 million, versus $29.1 million. Management said strong Packaging market conditions drove a new all-time containerboard production record of 1,281,000 tons and a record corrugated shipments-per-day month for June. Corrugated shipments per day rose 9.2% year over year.

Capital spending was $245.0 million^d in the quarter, up from $126.4 million, and cash, cash equivalents and marketable debt securities totaled $1,172.8 million, compared with $629.6 million at June 30, 2023. For the third quarter of 2024, management expects prices and mix to rise in both segments, along with higher containerboard export prices and higher containerboard volume.

It projects third quarter earnings of $2.45 per share, excluding special items it does not currently expect. The company also plans to build containerboard inventory ahead of a scheduled October maintenance outage at its Deridder mill.

02—Key points

Key Highlights

Q2 2024 net income of $198.9 million ($2.21 diluted EPS), versus $202.7 million ($2.24) in Q2 2023; EPS excluding special items was $2.20 versus $2.31.
Net sales of $2,075.3 million, up from $1,952.1 million in the prior-year quarter.
EPS beat second quarter guidance of $2.07 by $0.13, driven by Packaging volume, lower operating and converting costs, and lower freight costs.
Corrugated products shipments per day rose 9.2% year over year; containerboard production hit a record 1,281,000 tons.
Third quarter 2024 EPS guidance of $2.45 per share, excluding special items, with higher prices and mix expected in both segments.
Capital spending increased to $245.0 million from $126.4 million; cash and marketable debt securities were $1,172.8 million at June 30, 2024.
A scheduled maintenance outage at the Deridder mill in October is expected, and the company plans to build containerboard inventory ahead of it.

03—Questions

Frequently Asked Questions

How did Packaging Corporation of America perform in the second quarter of 2024?
The company reported net income of $198.9 million, or $2.21 per diluted share, on net sales of $2,075.3 million. Excluding special items, diluted EPS was $2.20, compared with $2.31 in the second quarter of 2023. Results beat the company's $2.07 per share guidance by $0.13.
What drove the year-over-year decline in earnings excluding special items?
The filing attributes the $0.11 per share decrease primarily to lower prices and mix in the Packaging segment ($0.87) and Paper segment ($0.07), higher operating costs ($0.31), higher depreciation expense ($0.03), and a higher tax rate ($0.03). These were partially offset by higher Packaging volume ($0.94), higher Paper volume ($0.07), lower other converting costs ($0.07), lower freight and logistics expenses ($0.06), and lower interest expense ($0.06).
What is the company's outlook for the third quarter of 2024?
Management expects prices and mix in both the Packaging and Paper segments to move higher, along with higher containerboard export prices and higher containerboard volume. Corrugated shipments per day are expected to keep strengthening, potentially setting a third quarter record, though there is one fewer shipping day. The company projects third quarter earnings of $2.45 per share. Operating and converting costs are expected to be higher, primarily due to seasonal electricity usage and prices, while scheduled outage expenses are expected to be slightly lower.
How did the company's segments perform?
Packaging segment income was $279.8 million in the second quarter of 2024, compared with $285.8 million a year earlier, and Packaging segment sales were $1,908.3 million, up from $1,790.3 million. Paper segment income was $26.7 million, versus $29.1 million, and Paper segment sales were $150.1 million, up from $142.8 million. Paper sales volume was up 12% year over year.
What operational developments and capital activity were reported?
Containerboard production reached a record 1,281,000 tons, and containerboard inventory rose 16,000 tons from the second quarter of 2023 and 20,000 tons from the first quarter of 2024. Capital spending was $245.0 million, up from $126.4 million. The company also discontinued uncoated freesheet production on the No. 3 machine at its Jackson, Alabama mill to convert it to linerboard, with $9.7 million of related charges in the first half of 2024.

04—Continue

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