Q2 2018

Commenting on reported results, Mark W. Kowlzan, Chairman and CEO, said, “Packaging segment demand remained strong with all-time record sales volumes in both our containerboard mills and corrugated products plants. Our price increases in the Packaging segment were realized sooner than last year’s second quarter due to the index changing a month earlier this year as well as an accelerated implementation. Additionally, our price increases in the Paper segment were also realized more quickly than anticipated. The benefits of these strong market conditions helped us offset higher inflation in many of our operating and converting costs and higher freight expenses. The scheduled maintenance outages at two of our containerboard mills went very well, and the first phase of our linerboard conversion work on the No. 3 paper machine at our Wallula Mill was executed extremely well both from a ramp-up curve perspective as well as an operating cost perspective.”

“Looking ahead as we move from the second and into the third quarter,” Mr. Kowlzan added, “we anticipate continued strong demand in our Packaging segment, however corrugated products shipments will have one less shipping day during the quarter. Although the majority of our previously announced price increases were recognized in the second quarter, we expect to implement most of the remaining portion during the third quarter. In the Paper segment, we expect to complete the implementation of our previously announced paper price increase, although volumes should be lower than normal during this seasonally stronger period as we manage our already tight inventory levels around the scheduled outage at our Jackson Mill. Finally, we should have lower operating costs related to the No. 3 machine at our Wallula Mill as the first phase of the conversion is now behind us. We expect continued inflation in most of our operating costs, including slightly higher recycled fiber prices and incremental wage pressure with a tighter labor market. In addition, we anticipate higher freight and logistics expenses, higher scheduled maintenance outage costs, as well as a slightly higher tax rate. Considering these items, we expect third quarter earnings of $2.14 per share.”

Packaging Corporation of America Reports Second Quarter 2018 Results | Packaging Corporation of America