Packaging Corporation of America Reports Fourth Quarter and Full Year 2020 Results

Rhea-AI Summary

Packaging Corporation of America (NYSE: PKG) reported Q4 2020 net income of $124 million, or $1.30 per share, down from $1.43 per share in Q4 2019. Full year 2020 net income reached $461 million, or $4.84 per share, a decrease from $7.34 in 2019. Q4 net sales remained flat at $1.7 billion, while full year sales dropped to $6.7 billion from $7.0 billion in 2019. Key factors impacting results included lower prices in the Packaging and Paper segments, increased maintenance and freight costs, and tax rate rises. Segment income for Packaging was $209.6 million, while Paper incurred a loss of $1.7 million.

Positive

• Higher volumes in the Packaging segment offset some negative impacts with a $0.40 per share increase.
• Lower operating costs improved overall performance slightly.

Negative

• Q4 2020 earnings decreased by $0.38 per share due to lower prices and mix in both Packaging and Paper segments.
• Full year net income fell by $2.50 per share compared to 2019.
• Paper segment reported a loss of $20 million for the year, compared to a profit in 2019.

Packaging Corporation of America (NYSE: PKG) today reported fourth quarter 2020 net income of $124 million, or $1.30 per share, and net income of $127 million, or $1.33 per share, excluding special items. Fourth quarter net sales were $1.7 billion in both 2020 and 2019. Full year 2020 net income was $461 million, or $4.84 per share, and net income of $550 million, or $5.78 per share, excluding special items. Full year net sales were $6.7 billion in 2020 and $7.0 billion in 2019.

Diluted earnings per share attributable to Packaging Corporation of America shareholders
	Three Months Ended												Full Year Ended
	December 31												December 31
	2020				2019				Change				2020				2019				Change
Reported Diluted EPS	$	1.30			$	1.43			$	(0.13)			$	4.84			$	7.34			$	(2.50)
Special Items Expense (1)	0.03				0.28				(0.25)				0.94				0.31				0.63
Diluted EPS excluding Special Items	$	1.33			$	1.71			$	(0.38)			$	5.78			$	7.65			$	(1.87)
(1) For descriptions and amounts of our special items, see the schedules with this release.

Reported earnings in the fourth quarter include special items for facilities closure and restructuring costs. Full year 2020 earnings include special items primarily for costs associated with facility closures, expenses associated with the impact of Hurricane Laura at our DeRidder, Louisiana mill, and goodwill impairment charges in our Paper segment resulting from the exacerbated deterioration in uncoated freesheet market conditions arising from the COVID-19 pandemic.

Excluding special items, the ($.38) per share decrease in fourth quarter 2020 earnings compared to the fourth quarter of 2019 was driven primarily by lower prices and mix in our Packaging segment ($.30) and Paper segment ($.05), lower volumes in our Paper segment ($.27), higher scheduled maintenance outage costs ($.08), higher freight expense ($.07) and a higher tax rate ($.05). These items were partially offset by higher volumes in our Packaging segment $.40, lower operating costs $.01, and other costs $.03.

Financial information by segment is summarized below and in the schedules with this release.

	(dollars in millions)
	Three Months Ended								Full Year Ended
	December 31								December 31
	2020				2019				2020				2019
Segment income (loss)
Packaging	$	209.6			$	214.9			$	829.5			$	963.4
Paper	1.7				42.9				(20.0		)		175.4
Corporate and Other	(22.0		)		(22.7)				(85.6		)		(85.1)
	$	189.3			$	235.1			$	723.9			$	1,053.7
Segment income (loss) excluding special items
Packaging	$	212.8			$	215.6			$	873.1			$	967.5
Paper	2.5				42.9				36.6				175.6
Corporate and Other	(22.0		)		(22.7)				(85.6		)		(85.1)
	$	193.3			$	235.8			$	824.1			$	1,058.0
EBITDA excluding special items
Packaging	$	303.0			$	303.0			$	1,229.2			$	1,310.0
Paper	9.5				52.5				73.1				213.3
Corporate and Other	(19.8		)		(20.8)				(77.3		)		(78.1)
	$	292.7			$

FAQ

What were Packaging Corporation of America's earnings for Q4 2020?

Packaging Corporation of America reported Q4 2020 net income of $124 million, or $1.30 per share.

How did Packaging Corporation of America's full year 2020 sales compare to 2019?

Full year 2020 net sales were $6.7 billion, down from $7.0 billion in 2019.

What caused the decline in PKG's earnings per share in 2020?

The decline was primarily driven by lower prices in both Packaging and Paper segments and increased operational costs.

Did Packaging Corporation of America see any positive segment performance?

Yes, the Packaging segment showed increased volumes, contributing positively to earnings.

What were the special items affecting Packaging Corporation of America's earnings?

Special items included costs from facility closures, Hurricane Laura's impact, and goodwill impairment charges.