Packaging Corporation of America
(
PKG
) reported strong fourth quarter 2012 results with net income of
$61.0 million or 63 cents per share versus $39.5 million or 40
cents per share in the year-earlier quarter.
The year-over-year rise in earnings was primarily attributable to
higher demand for corrugated products during the quarter, which
helped the company to raise their prices. The reported earnings
beat the Zacks Consensus Estimate by a penny. Excluding one-time
items, net income was $59.0 million or 61 cents per share in
fourth quarter 2012 compared to $39.5 million or 40 cents per
share in the year-ago quarter.
For full year 2012, reported earnings were $163.8 million or
$1.68 per share compared to $158.0 million or $1.57 in the prior
year. Excluding one-time items, earnings for 2012 were $200.8
million or $2.06 per share compared to $161.8 million or $1.61 in
2011.
Revenues
Net sales for the reported quarter were $736.6 million compared
to $654.3 million in the year-ago period, representing a
year-over-year increase of 12.6%. Net sales for fourth quarter
2012 exceeded the Zacks Consensus Estimate of $718 million.
Corrugated products' shipments surged 5.8% per workday in the
reported quarter, while total shipments increased 7.6% year over
year. The production of containerboard jumped 12,000 tons year
over year to 652,500 tons.
Net sales for full year 2012 increased 8.5% year over year to
$2.8 billion as the company produced its full capacity of
containerboards totaling 2.600 million tons. Containerboard
inventories at year-end 2012 were about 6,000 tons higher on a
year-over-year basis.
Balance Sheet and Cash Flow
Packaging Corporation generated $153 million in cash from
operations, while capital expenditures were $34 million for the
quarter. The company hiked its quarterly dividend for first
quarter 2013 by 25% from $1.00 per share to $1.25. The company
repurchased 103,000 shares during the fourth quarter, bringing
its tally for the year to 1.5 million shares. Packaging
Corporation ended the quarter with $207 million in cash.
Outlook
Management stated that the company's performance was impressive
during the quarter despite severe weather conditions. In
addition, the quarter witnessed high demand for the company's
containerboard and corrugated products, and record production
during the quarter.
However, in first quarter 2013, Packaging Corporation expect
lower containerboard production and higher operating costs on a
sequential basis with two less mill production days and annual
maintenance downtime. Higher energy costs are also expected with
cold weather patterns putting pressure on wood costs and
availability. Furthermore, seasonality of products is expected to
negatively affect corrugated products volume, partially
offsetting higher average corrugated products prices.
Consequently, the company expects first quarter earnings to be
approximately 56 cents per share.
Packaging Corporation currently has a Zacks Rank #1 (Strong Buy).
The company competes with several leading players in the industry
such as
International Paper Company
(
IP
) and
Graphic Packaging Holding Company
(
GPK
), both carrying Zacks Rank #1, and
Rock-Tenn Co.
(
RKT
), which currently has a Zacks Rank #2 (Buy).
GRAPHIC PKG HLD (GPK): Free Stock Analysis
Report
INTL PAPER (IP): Free Stock Analysis Report
PACKAGING CORP (PKG): Free Stock Analysis
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ROCK-TENN CO (RKT): Free Stock Analysis
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