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Packaging Corp. of America (PCA), a packaging producer based in Lake Forest, Illinois, has announced financial results for the first quarter of 2021.
According to its first-quarter 2021 report, PCA earned a net income of $167 million, or $1.75 per share, and net income of $169 million, or $1.77 per share, excluding special items. First-quarter net sales were $1.8 billion in 2021 and $1.7 billion in 2020.
Total company earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter, excluding special items, was $342 million in 2021 and $311 million in 2020.
In the packaging segment, PCA achieved record containerboard volume in the first quarter of 2021. During PCA’s earnings call that took place April 27, Tom Hassfurther, executive vice president of corrugated products, said total volume in PCA’s corrugated products plants was up 6.6 percent compared with 2020 figures and equaled the record for total box shipments set in the fourth quarter of 2020. He said shipments per day were up 8.3 percent compared with last year.
Hassfurther reported that strong domestic demand drove the outside sales volume of containerboard up 13 percent over last year’s first quarter. Containerboard production was 1,195,000 tons, and containerboard inventory was up 14,000 tons from the fourth quarter of 2020 and up 41,000 tons compared to the first quarter of 2020.
“Packaging segment demand remained very strong throughout the first quarter as we set a new all-time quarterly record for containerboard volume and matched our all-time quarterly total box shipments record,” says Mark W. Kowlzan, chairman and CEO of PCA., in the news release announcing the company's earnings,
In the paper segment, sales volume was up 5,000 tons from the fourth quarter of 2020 and down 48,000 tons compared to the first quarter of 2020.
“Looking at our Paper segment, EBITDA excluding special items in the first quarter was $16 million with sales of $165 million or a 10 percent margin compared to the first quarter of 2020’s EBITDA of $42 million and sales of $217 million or 19 percent margin,” Kowlzan says. “As expected, sales volume was about 22 percent below last year, as we ran only one machine at the Jackson, Alabama, mill this quarter versus both machines running in the first quarter of 2020. First-quarter paper prices and mix were almost 3 percent below last year. However, prices began to move higher in the latter part of the quarter, resulting from the announced paper price increases and averaged 1 percent higher than fourth quarter 2020 average prices.”
Looking at the second quarter
In the second quarter of the year, Kowlzan says he expects packaging demand to remain strong with export prices increasing. In the paper segment, he expects volumes to be fairly flat with higher average prices and mix as the company continues the rollout of its recently announced paper price increases.
“The second quarter will be our busiest of the year for planned annual outages in our Packaging segment with work scheduled at four of our mills,” Kowlzan says.
The PCA says that outage expenses are estimated to be about 20 cents per share higher compared with the first quarter. Continued inflation with freight and logistics expenses as most of our operating and converting costs are also expected. However, Kowlzan says he believes energy costs should improve as we move into seasonally milder weather.
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Regarding old corrugated containers (OCC) prices, Kowlzan said in the earnings call that he expects that prices for that recovered paper grade could be up as much as 50 percent over last year’s average in the second quarter of the year.
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