Packaging Corporation of America (NYSE:PKG) Q1 2015 Earnings Conference Call - Final Transcript
Apr 21, 2015 • 10:00 am ET
Thank you for joining Packaging Corporation of America's First Quarter 2015 Earnings Result Conference Call. Your host today will be Mark Kowlzan, Chief Executive Officer of PCA. Upon conclusion of his narrative, there will be a Q&A session.
I will now turn the conference call over to Mr. Kowlzan. And please proceed when you are ready.
Good morning, and thank you for participating in Packaging Corporation of America's first quarter 2015 earnings release conference call. I'm Mark Kowlzan, CEO of PCA and with me on the call today are Paul Stecko, our Chairman; Tom Hassfurther, Executive Vice President, who runs run our Packaging business; Judy Lassa, Senior Vice President, who runs our White Papers business; and Rick West, our Chief Financial Officer. I'll begin the call with an overview of our first quarter results, and then I'll turn the call over to Tom, Judy, and Rick, who'll provide more details. I'll then wrap things up and then we'll be glad to take any questions.
Yesterday, we reported first quarter net income of $91 million or $0.92 per share compared to last year's first quarter net income of $90 million or $0.92 per share. First quarter net income included charges for Boise integration and DeRidder mill restructuring of $9 million or $0.09 per share. Excluding these special items, net income was $100 million or $1.01 per share compared to last year's net income of $106 million or $1.08 per share.
Net sales were $1.4 billion in both first quarter of 2015 and 2014. Excluding special items, the $0.07 per share reduction in first quarter 2015 earnings compared to the first quarter of 2014 was driven by increased annual mill outage downtime in costs for $0.08, lower white paper prices and changes in mix $0.05, lower export containerboard prices $0.02, and higher cost for wood $0.04, medical $0.04, labor and benefits $0.04 and depreciation $0.02. These items were partially offset by increased volumes for $0.09 and lower costs for energy $0.06, chemicals $0.02, and purchased fiber $0.02, and the state tax credit related to the investments at the DeRidder mill are $0.03.
Lower earnings compared to PCA's guidance of $1.07 to $1.10 per share for the first quarter was the result of extreme weather conditions for $0.03, additional downtime to complete the DeRidder annual outage for $0.03 and lower prices from the retroactive price decreased by trade publications and mixed changes in white papers for $0.03.
Extreme weather condition resulted in higher mill cost and also lower corrugated product shipments with downtime at 20 of our corrugated products plants, including 12 plants with downtime of more than two days during the quarter. The DeRidder annual mill outage took about six days longer to complete than we expected. The additional downtime was the result of vendor design errors, which required equipment to be modified after it was received.
Looking at more details of our operations, packaging EBITDA excluding special items was $222 million and net sales were $1,099 million compared to last year's packaging