Packaging Corporation of America Reports Strong Fourth Quarter and Full Year 2024 Results

Packaging Corporation of America (NYSE: PKG) reported its fourth quarter and full year 2024 results on January 29, 2025, with the company exceeding analysts' expectations for revenue but missing on earnings. Here's a breakdown of the key financial highlights and the factors driving the results:

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
* Earnings per share (EPS): $2.47, missing analysts' estimate of $2.53 by -2.0%

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
* Earnings per share (EPS): $9.04, missing analysts' estimate of $9.00 by -0.4%

Key Drivers:

* Strong demand in the Packaging segment, with corrugated shipments per day continuing to strengthen and slightly higher containerboard volume.
* Higher prices and mix in the Packaging segment, driven by the company's announced price increases and the increase in published domestic index prices, as well as higher export prices.
* Higher volume in the Paper segment, with sales volume up 5% compared to the fourth quarter of 2023 and down 5% from the seasonally stronger third quarter of 2024.
* Lower operating and converting costs, driven by the company's continued emphasis on cost management and process efficiencies across its manufacturing and converting facilities.
* Higher depreciation expense, primarily due to the company's capital spending program.
* Higher scheduled maintenance outage expenses, primarily due to the company's ongoing conversion project at the Jackson, AL mill.
* Higher expenses related to corrugated plant capital projects, primarily due to the company's ongoing expansion and modernization efforts.
* A lower tax rate, primarily due to the company's ongoing efforts to optimize its tax structure.

Segment Performance:

* Packaging Segment:
+ Operating income: $297.2 million (up from $263.8 million in Q4 2023)
+ EBITDA: $425.7 million (up from $384.7 million in Q4 2023)
+ Total corrugated product shipments: up 9.1% year-over-year (YoY)
+ Shipments per day: up 3.2% quarter-over-quarter (QoQ)
+ Containerboard production: 1,310,000 tons (new quarterly and annual records)
* Paper Segment:
+ Operating income: $34.8 million (up from $28.1 million in Q4 2023)
+ EBITDA: $39.3 million (up from $35.2 million in Q4 2023)
+ Sales volume: up 5% YoY and down 5% QoQ
* Corporate and Other:
+ Operating loss: $(29.8) million (up from $(30.4) million in Q4 2023)
+ EBITDA: $(25.7) million (up from $(26.4) million in Q4 2023)

Outlook:

Packaging Corporation of America's strong performance in the fourth quarter and full year 2024 was driven by robust demand in the Packaging segment, higher prices and mix, and lower operating and converting costs. However, the company missed analysts' earnings estimates due to higher expenses and a lower tax rate. Looking ahead, investors should monitor the company's progress in managing expenses and maintaining strong demand in the Packaging segment.