Packaging Corporation of America
), the fourth largest containerboard and corrugated packaging
manufacturer in the U.S., reported stellar third quarter 2013
results with record net sales and earnings. Net income for the
reported quarter increased to $84.2 million or 86 cents per share
from $39.8 million or 41 cents per share in the year-earlier
BOISE INC (BZ): Free Stock Analysis Report
KAPSTONE PAPER (KS): Free Stock Analysis
PACKAGING CORP (PKG): Free Stock Analysis
ORCHIDS PAPER (TIS): Free Stock Analysis
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Excluding a one-time charge of $5 million related to the proposed
) and annuity plans, recurring earnings for the reported quarter
were $88.9 million or 91 cents per share compared with $53.3
million or 55 cents in the year-ago quarter. The recurring
earnings exceeded the Zacks Consensus Estimate by 2 cents.
The year-over-year rise in earnings was primarily attributable to
higher prices for corrugated and containerboard products during
the quarter. While high product prices contributed 44 cents per
share to the recurring earnings, higher sales volume contributed
5 cents to the tally, partially offset by higher energy costs,
higher fiber costs, higher labor and transportation expenses.
Net sales for the reported quarter hit a record high of $845.4
million, up from $723.5 million in the year-ago period,
representing a year-over-year increase of 16.8%. Record sales for
the quarter were largely driven by strong demands for
containerboard and corrugated products as most mills ran well.
Net sales for third quarter 2013 exceeded the Zacks Consensus
Estimate of $831 million.
Corrugated products' shipments increased 7.8% per workday in the
reported quarter. Total shipments were a record 671,000 tons as
box shipments set an all-time high for shipments per workday.
Total containerboard inventories decreased 4,000 tons compared
with year-end 2012.
During third quarter 2013, Packaging Corporation inked a deal to
acquire Boise for $1.995 billion in cash. The transaction is
expected to close by the fourth quarter of 2013, subject to
Based in Boise, Idaho, Boise produces a broad range of packaging
and paper products. The strategic acquisition will increase
Packaging Corporation's containerboard capacity by 42% to 3.7
million tons. The deal is also likely to boost the company's
corrugated products volumes by 30%. Moreover, the acquisition
will enable Packaging Corporation to facilitate mill grade
optimization, reduce operating costs, and optimize corrugated
products production. The company is expected to generate a
pre-tax benefit of about $105 million from these areas within
three years of the deal's closure.
Management expects lower fourth quarter corrugated products
volume compared with third quarter due to seasonality factors and
lesser number of shipping days. In addition, production is also
likely to be affected by annual maintenance outage at the Filer
City, Michigan mill. Operating costs are also expected to
increase due to high fuel costs and cold weather conditions.
Consequently, the company anticipates fourth quarter earnings to
be approximately 84 cents per share.
Packaging Corporation currently has a Zacks Rank #3 (Hold). Other
companies in the industry that are worth mentioning include
Orchids Paper Products Company
KapStone Paper and Packaging Corporation
), both carrying a Zacks Rank #2 (Buy).