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    Packaging Corp of America (PKG)

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    Packaging Corporation of America (PCA) is a leading producer of containerboard products and uncoated freesheet (UFS) paper in North America, primarily operating in the United States with eight mills and 86 corrugated products manufacturing plants . The company focuses on three main segments: Packaging, Paper, and Corporate and Other . PCA's largest segment, Packaging, produces a wide range of containerboard and corrugated packaging products, while the Paper segment offers communication-based papers, including both commodity and specialty papers . The Corporate and Other segment encompasses support services and transportation assets .

    1. Packaging - Produces a diverse array of containerboard and corrugated packaging products, including conventional shipping containers, multi-color boxes, and displays, as well as packaging for various consumer and industrial products .
    2. Paper - Manufactures and sells communication-based papers, including both commodity and specialty papers with features such as colors and coatings .
    3. Corporate and Other - Includes support services, transportation assets, and activities related to ancillary operations, with revenue primarily from related party transactions and transportation services .
    NamePositionStart DateShort Bio
    Mark W. KowlzanChairman of the Board and Chief Executive OfficerJuly 2010Mark W. Kowlzan has served as PCA's CEO since July 2010 and Chairman since January 2016. He previously led PCA's containerboard mill system and worked at International Paper for 15 years .
    Robert P. MundyExecutive Vice President and Chief Financial Officer; Principal Accounting Officer2015; April 1, 2024Robert P. Mundy has been PCA's CFO since 2015 and will become the Principal Accounting Officer effective April 1, 2024. He was previously CFO at Verso Corporation and held finance roles at International Paper .
    Pamela A. BarnesSenior Vice President, Finance and Controller; Principal Accounting Officer (retiring)May 2019Pamela A. Barnes has been in her current role since May 2019. She joined PCA in 1992 and has held various finance positions, including Treasurer since 1999. She will retire on April 1, 2024 .
    Charles J. CarterExecutive Vice President - Mill OperationsJanuary 2011Charles J. Carter has led PCA's mill operations since January 2011. He joined PCA in 2010 after working in managerial roles at various pulp and paper companies .
    Thomas A. HassfurtherExecutive Vice President - Corrugated ProductsSeptember 2009Thomas A. Hassfurther has served in his current role since September 2009. He joined PCA in 1977 and has held senior management and sales positions at PCA and Tenneco Packaging .
    Jeff S. KaserSenior Vice President - Corrugated ProductsMay 2020Jeff S. Kaser has been in his current position since May 2020. He joined PCA in 1987 and has held various roles in sales and management within the corrugated products business .
    Darla J. OlivierSenior Vice President - Tax, ESG and Government AffairsJanuary 2022Darla J. Olivier has led the tax department since 1994 and was promoted to her current role in January 2022. She also leads sustainability reporting and government affairs .
    Kent A. PfledererSenior Vice President, General Counsel and SecretaryJanuary 2013Kent A. Pflederer has served as General Counsel and Secretary since January 2013. He joined PCA in 2007 and previously worked at Hospira, Inc. and Mayer Brown, LLP .
    Bruce A. RidleySenior Vice President - Environmental Health and Safety and Operational ServicesMay 2019Bruce A. Ridley has been in his current role since May 2019. He joined PCA in 1999 and has held various operational roles, including Operations Manager and Mill Manager .
    Robert A. SchneiderSenior Vice President and Chief Information Officer2019Robert A. Schneider has served as CIO since 2019. He joined PCA in 1989 and has held various management positions in information systems .
    D. Ray ShirleySenior Vice President - Corporate Engineering and Process TechnologyMay 2019D. Ray Shirley has been in his current role since May 2019. He joined PCA in 1996 and has held various engineering and management positions, including Mill Manager .
    1. Given the anticipated increase in operating and converting costs due to higher seasonal energy and chemical expenses in the fourth quarter, how do you plan to manage these costs to maintain your profit margins?
    2. With the recent hurricane damage to strawberry crops in Florida impacting your corrugated shipments, can you quantify the expected volume and revenue loss for the fourth quarter, and what strategies are you implementing to mitigate this disruption?
    3. You mentioned plans to build new plants over the next 2.5 to 3 years; can you provide more details on the expected capital expenditures and how you plan to fund these projects without adversely affecting your cash flow and dividend commitments?
    4. Considering your volumes are up over 8% versus 2023 and continue to outpace the industry, when do you expect this growth rate to normalize, especially given the tougher comparisons next year and the restructuring efforts by your larger competitors?
    5. As e-commerce demand continues to grow and you've invested in running lightweight products, are you considering a strategic shift in your virgin versus recycled fiber mix to better capture the lightweight recycled market segment?
    Program DetailsProgram 1
    Approval DateJanuary 26, 2022
    End Date/DurationN/A
    Total additional amount$1 billion
    Remaining authorization amount$436 million as of September 30, 2024
    DetailsThe program allows PCA to repurchase shares in open market or privately negotiated transactions, considering factors like stock price and market conditions. It aims to balance share repurchases with other uses of cash such as acquisitions and dividends.
    YearAmount Due (in millions)Debt TypeInterest Rate (%)% of Total Debt
    2027$499.4 3.40% Senior Notes 3.40 20.0% = (499.4 / 2,492.1) * 100
    2029$499.6 3.00% Senior Notes 3.00 20.0% = (499.6 / 2,492.1) * 100
    2033$399.7 5.70% Senior Notes 5.70 16.0% = (399.7 / 2,492.1) * 100
    2049$396.8 4.05% Senior Notes 4.05 15.9% = (396.8 / 2,492.1) * 100
    2051$696.6 3.05% Senior Notes 3.05 28.0% = (696.6 / 2,492.1) * 100

    Competitors mentioned in the company's latest 10K filing.

    • Domtar Corporation: A division of Paper Excellence, mentioned as one of the largest competitors in the paper segment .
    • Sylvamo Corporation: Listed as a large competitor in the paper segment .
    CustomerRelationshipSegmentDetails
    ODP Corporation (formerly Office Depot, Inc.)
    Largest customer in Paper segment
    Paper
    2023: Sales = 61% of Paper revenue / 5% of consolidated, AR = $46.5 million (4% of total).<br>2022: Sales = 48% of Paper revenue / 4% of consolidated, AR = $52.4 million (5% of total).
    NameStart DateEnd DateReason for Change
    KPMG LLP2014 PresentCurrent auditor

    Recent developments and announcements about PKG.

    Financial Reporting

      Earnings Call

      ·
      7 days ago

      The Packaging Corporation of America (PKG) recently released its fourth quarter and full year 2024 earnings call transcript. Here are the key points from the call:

      • Revenue and Profit Performance: PKG reported a fourth quarter 2024 net income of $221 million or $2.45 per share, excluding special items, compared to $192 million or $2.13 per share in the fourth quarter of 2023. Net sales for the fourth quarter were a record $1 billion in 2024, up from $1.9 billion in 2023. For the full year 2024, earnings were $814 million or $9.04 per share, compared to $784 million or $8.70 per share in 2023. Net sales for the year were $8.4 billion, up from $7.8 billion in 2023.

      • Management’s Forward Guidance: The company expects continued strong demand in its Packaging segment, with new records anticipated for first quarter shipments and shipments per day. However, containerboard volume is expected to be lower due to scheduled maintenance outages. Domestic prices are expected to be higher with an improved product mix, while export prices are assumed to be stable. In the Paper segment, slightly lower volume is forecasted with stable prices and mix.

      • Market Conditions and Strategic Initiatives: PKG highlighted the impact of inflation on its cost structure and the strategic capital spending aimed at growth opportunities. The company is focusing on optimizing its operations and maintaining strong customer relationships to drive growth. It also mentioned ongoing efforts to move away from indexing prices to the RISI publication due to frustrations with its pricing predictability.

      • Analyst Questions and Management Responses: Analysts inquired about volume growth expectations, capital expenditures, and the impact of price increases. Management indicated that volume growth is expected to continue throughout 2025, albeit at a slower rate due to tougher comparisons. They also discussed significant capital projects aimed at enhancing production capabilities and meeting customer demand.

      Overall, PKG is experiencing strong demand and is strategically investing in growth opportunities while managing inflationary pressures. The company remains optimistic about its future performance and is focused on maintaining its competitive advantage in the market.

      Earnings Report

      ·
      7 days ago

      Packaging Corporation of America (PKG) Fourth Quarter and Full Year 2024 Earnings Results

      Packaging Corporation of America (PKG) has released its fourth quarter 2024 and full year 2024 earnings results. Below are the key highlights:

      Fourth Quarter 2024 Results

      • Net Income: $221 million, or $2.45 per share.
      • Net Income Excluding Special Items: $222 million, or $2.47 per share.
      • Net Sales: $2.1 billion, up from $1.9 billion in Q4 2023.

      Full Year 2024 Results

      • Net Income: $805 million, or $8.93 per share.
      • Net Income Excluding Special Items: $814 million, or $9.04 per share.
      • Net Sales: $8.4 billion, up from $7.8 billion in 2023.

      Segment Performance

      • Packaging Segment:
        • Total corrugated product shipments increased by 9.1% compared to Q4 2023.
        • Containerboard production reached 1,310,000 tons, with inventory up by 54,000 tons year-over-year.
      • Paper Segment:
        • Sales volume increased by 5% compared to Q4 2023.

      Key Trends and Drivers

      • The increase in earnings per share (EPS) compared to Q4 2023 was driven by:
        • Higher prices and mix in the Packaging segment ($0.52 per share).
        • Increased volume in the Packaging segment ($0.40 per share).
        • Lower freight and logistics expenses ($0.06 per share).
      • These gains were partially offset by higher operating costs, maintenance expenses, and depreciation.

      CEO Commentary

      Mark W. Kowlzan, Chairman and CEO, highlighted the strong demand in the Packaging segment, with record shipments and production levels. He also noted the company's efforts to mitigate inflationary impacts through operational efficiencies and capital spending programs.

      Outlook for Q1 2025

      • Earnings Guidance: Expected EPS of $2.21.
      • Packaging Segment: Anticipated record shipments despite seasonally slower demand.
      • Paper Segment: Slightly lower volume expected due to fewer operating days.
      • Anticipated cost increases in wood, energy, chemicals, and labor due to seasonal factors and inflation.

      Conclusion

      PKG's strong performance in 2024 reflects robust demand in its core segments and effective cost management. The company remains optimistic about continued growth in 2025, despite anticipated cost pressures.

      For more details, visit the company's website or refer to the full earnings release.