Packaging Corporation of America recently reported fourth quarter net income of $98 million, or $1.00 per share. Earnings included charges for special items for the Boise integration and DeRidder mill restructuring of $16 million, or $0.16 per share. Excluding special items, fourth quarter 2014 net income was $114 million, or $1.16 per share, compared to fourth quarter 2013 net income of $102 million, or $1.05 per share, and third quarter 2014 net income of $124 million, or $1.26 per share. Fourth quarter net sales were $1.434 billion compared to fourth quarter 2013 net sales of $1.264 billion and third quarter 2014 net sales of $1.519 billion.
Full year earnings were $393 million, or $3.99 per share, compared to 2013 earnings of $441 million, or $4.52 per share. Full year 2014 earnings, excluding special items, were a record $459 million, or $4.66 per share, compared to 2013 earnings, excluding special items, of $325 million, or $3.33 per share. Full year 2014 net sales were a record $5.9 billion compared to 2013 net sales of $3.7 billion. Details of special items for both the fourth quarter and full year are included in this press release.
Excluding special items, the $0.10 per share reduction in fourth quarter 2014 earnings, compared to the third quarter of 2014, was driven primarily by higher annual mill outage costs ($0.07), lower white paper prices and mix ($0.03), a seasonally less rich mix in corrugated products ($0.03), lower corrugated product shipments with three less shipping days ($0.02), and higher wood costs ($0.02). These items were partially offset by higher containerboard volume driven primarily by the start-up of the D3 machine at the DeRidder, Louisiana mill ($0.04), and lower taxes ($0.04) related in part to the passage of the federal tax extenders package in December.
Packaging segment EBITDA in the fourth quarter of 2014 was $239 million, and excluding special items, was $250 million with sales of $1.122 billion. For the year, EBITDA was $986 million, and excluding special items, was $1.015 billion with full year sales of $4.54 billion. PCA fourth quarter corrugated products shipments were up 5.4%, and including Boise, were up 11% compared to last year’s fourth quarter. Containerboard production was 927,000 tons, including 58,000 tons produced on the DeRidder No. 3 machine which started up on October 17, 2014.
Paper segment EBITDA in the fourth quarter of 2014 was $45 million and sales were $284 million. For the year, EBITDA was $186 million and sales were $1.2 billion. Office paper shipments in the fourth quarter were down 6% compared to last year’s fourth quarter. Printing and converting and pressure sensitive paper shipments were down 12,500 tons as a result of the fourth quarter 2013 paper machine closures at the International Falls, Minnesota mill. Mill production was 287,000 tons.
Commenting on reported results for the quarter and full year, Mark W. Kowlzan, CEO, said “We had a solid quarter with strong corrugated products demand, productive mill operations, and a successful rebuild and start-up of the D3 machine. As a result of the D3 production, we were able to reduce the outside purchases of containerboard from about 17,000 tons per month to 4,500 tons in December. Excluding special items, our 2014 earnings of $4.66 per share were up 40% over 2013’s record earnings, and total company EBITDA was $1.144 billion, up $393 million, or 52% over 2013. This earnings improvement was driven primarily by the Boise acquisition, including synergies realized.”
