PCA boosts earnings in most recent quarter

Lake Forest, Illinois-based Packaging Corporation of America (PCA) has reported third-quarter 2021 net income of $251 million on net sales of $2 billion. Both figures are up compared with results from the third quarter of 2020.

“Excluding special items, the $1.12 per share increase in third-quarter 2021 earnings compared to the third quarter of 2020 was driven primarily by higher prices and volume in our Packaging segment, higher production volume and prices in our Paper segment, lower nonoperating pension expenses and lower interest expenses,” states PCA.

The company indicates its earnings and income were negatively affected one year ago by “certain costs at the Jackson, Alabama, mill for paper-to-containerboard conversion-related activities [and] costs associated with Hurricane Laura, which made landfall approximately 100 miles south of the DeRidder, Louisiana, mill [in August 2020], resulting in production being down a total of approximately 12 days.”

PCA says in its Packaging segment, total corrugated products shipments and shipments per day were up 2.3 percent compared with last year’s third quarter. Containerboard production was 1.256 million tons during the quarter, and containerboard inventory on average was up 91,000 tons from the third quarter of 2020 and up 17,000 tons compared with the second quarter of 2021. In the PCA Paper segment, sales volume was down 33,000 tons compared with the third quarter of 2020, and up 2,000 tons compared with the second quarter of 2021.

“Packaging segment demand remained strong, and our teams did a tremendous job of implementing our previously announced containerboard and corrugated products price increases,” Mark W. Kowlzan, board chair and CEO of PCA, says. 

“The containerboard mills set an all-time quarterly sales volume record, and our box plants set new third quarter records for total corrugated products shipments as well as shipments per day,” adds Kowlzan. “By utilizing the capability of both machines at our Jackson, Alabama, mill to produce containerboard, we were able to reach our desired inventory levels to better serve customer demand, help minimize the transportation challenges we continue to experience, and build some inventory ahead of the DeRidder mill’s planned outage.”

He continues, “With no relief from the supply chain obstacles that we, our customers, and our suppliers continue to face along with unprecedented inflation-related challenges, the combination of all these efforts are critical to our success. The improvements and execution our employees deliver constantly, across many fronts, is what allows us to continuously improve our margins.”

Regarding the year’s final quarter, Kowlzan says, “We will continue to implement our previously announced price increases for domestic containerboard, corrugated packaging, and paper, and we also expect average export containerboard prices to move higher. Packaging segment volume will be lower due to three less shipping days as well as the scheduled outage at our DeRidder Mill, and Paper segment volume will be lower as the Jackson Mill is not expected to produce any paper grades. With higher gas prices and anticipated colder weather, energy costs will increase. Wood costs, especially in our southern mills, will be higher due to the previous wet weather, low inventory and high demand.”

PCA describes itself as the third-largest producer of containerboard products in North America and a leading producer of uncoated freesheet paper. The company operates eight mills and 89 corrugated products plants and related facilities. The company consumed slightly less than 1 million tons of recovered fiber at those mills in 2020, according to the PCA 2020 Responsibility Report.