LAKE FOREST, Ill. - Packaging (NYSE:PKG) Corporation of America (NYSE:PKG) reported first quarter 2024 earnings that surpassed analyst expectations, with adjusted earnings per share (EPS) of $1.72, $0.04 higher than the consensus estimate of $1.68. The company's revenue for the quarter was $1.98 billion, also exceeding the consensus estimate of $1.91 billion.
Compared to the first quarter of the previous year, the company experienced a decline in adjusted EPS from $2.20 to $1.72, a decrease of $(0.48) per share. This decline was attributed primarily to lower prices and mix in both the Packaging and Paper segments, along with higher scheduled mill outage expenses, depreciation, and other costs.
Still, these negative impacts were partially offset by higher volume in the Packaging segment, lower operating and converting costs, and a decrease in freight and logistics expenses.
The company's Packaging segment saw a 9.2% increase in total corrugated products shipments, with containerboard production reaching 1,162,000 tons. Despite a reduction in containerboard inventory, the company ended the quarter with record low weeks-of-inventory supply for this time of the year, indicating strong demand.
Mark W. Kowlzan, Chairman and CEO, commented on the results, stating, "Throughout the quarter, containerboard and corrugated products demand exceeded our expectations. We were able to service this higher demand from strong operational performance at our box plants and containerboard mills as well as from excellent execution of the conversion outage at our Jackson, AL mill which enabled us to restart both machines earlier than planned."
Looking ahead, the company provided second-quarter earnings guidance of $2.07 per share, which did not include any significant special items. This forecast is based on expectations of continued strong demand and higher shipments in the Packaging segment, as well as the implementation of recently announced paper price increases.
The company's financial performance, particularly the higher-than-expected volume and lower costs, contributed to the earnings beat for the quarter. As the stock's movement was not specified, it suggests that the market response to the earnings release and forward guidance was relatively muted.
Packaging Corporation of America operates as the third largest producer of containerboard products and a leading producer of uncoated freesheet paper in North America, with eight mills and 86 corrugated products plants and related facilities. The company's performance and guidance indicate a robust operational stance despite the challenges posed by market conditions and cost pressures.
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