0001564590-20-033955.txt : 20200728 0001564590-20-033955.hdr.sgml : 20200728 20200728172952 ACCESSION NUMBER: 0001564590-20-033955 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 20200724 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Material Impairments ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20200728 DATE AS OF CHANGE: 20200728 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PACKAGING CORP OF AMERICA CENTRAL INDEX KEY: 0000075677 STANDARD INDUSTRIAL CLASSIFICATION: PAPERBOARD CONTAINERS & BOXES [2650] IRS NUMBER: 364277050 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15399 FILM NUMBER: 201054872 BUSINESS ADDRESS: STREET 1: 1955 W FIELD CT CITY: LAKE FOREST STATE: IL ZIP: 60045 BUSINESS PHONE: 8474823000 MAIL ADDRESS: STREET 1: 1955 W FIELD CT CITY: LAKE FOREST STATE: IL ZIP: 60045 8-K 1 pkg-8k_20200724.htm 8-K pkg-8k_20200724.htm
PACKAGING CORP OF AMERICA false 0000075677 0000075677 2020-07-24 2020-07-24

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 24, 2020

 

(Exact name of registrant as specified in its charter)

 

Delaware

 

1-15399

 

36-4277050

(State or other jurisdiction
of incorporation)

 

(Commission
File Number)

 

(IRS Employer

Identification No.)

 

1 North Field Court, Lake Forest, Illinois 60045

(Address of Principal Executive Offices, including Zip Code)

 

(847) 482-3000

(Registrants' Telephone Number, Including Area Code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2 (b))

Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4 (c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

PKG

New York Stock Exchange

 

 


 

 

Item 2.02.

Results of Operations and Financial Condition.

 

Except to the extent set forth in Item 2.06 hereof, the information furnished in this Item 2.02, including the exhibit described below, shall not be deemed “filed” hereunder for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Exchange Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On July 28, 2020, Packaging Corporation of America issued a press release announcing second quarter financial results. The press release is furnished as Exhibit 99.1 and is incorporated into this Item 2.02 by reference.

 

 

Item 2.06.

 

Material Impairments.

 

In connection with the preparation of its interim financial statements to be included in its upcoming Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, on July 24, 2020, Packaging Corporation of America concluded that goodwill for its Paper segment was fully impaired and recorded a non-cash impairment charge of $55.2 million for the second quarter of 2020.  The third paragraph of Exhibit 99.1 is incorporated by reference into this Item 2.06.

 

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)Exhibits

99.1Second Quarter 2020 Earnings Press Release dated July 28, 2020

104Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.

 

 

 

PACKAGING CORPORATION OF AMERICA

 

 

 

 

(Registrant)

 

 

 

 

 

 

 

 

 

By:

/s/ PAMELA A. BARNES

 

 

 

 

Senior Vice President, Finance and Controller

 

 

 

 

 

 

 

 

 

 

 

Date: July 28, 2020

 

 

EX-99.1 2 pkg-ex991_6.htm EX-99.1 pkg-ex991_6.htm

 

Exhibit 99.1

 

PACKAGING CORPORATION OF AMERICA REPORTS SECOND QUARTER 2020 RESULTS

 

 

Lake Forest, IL, July 28, 2020 – Packaging Corporation of America (NYSE: PKG) today reported second quarter 2020 net income of $57 million, or $0.59 per share, and net income of $132 million, or $1.38 per share, excluding special items.  Second quarter net sales were $1.54 billion in 2020 and $1.76 billion in 2019.

 

Diluted earnings per share attributable to Packaging Corporation of America shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

Change

 

Reported Diluted EPS

 

$

0.59

 

 

$

2.04

 

 

$

(1.45

)

Special Items Expense (1)

 

 

0.79

 

 

 

 

 

 

0.79

 

Diluted EPS excluding Special items

 

$

1.38

 

 

$

2.04

 

 

$

(0.66

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) For descriptions and amounts of our special items, see the schedules with this release.

 

 

Reported earnings in the second quarter of 2020 include $.79 per share of special items expense primarily for the impairment of goodwill associated with our Paper segment (as described below), the previously reported closure of our corrugated products production facility in San Lorenzo, CA, and costs and expenses associated with the COVID-19 pandemic.

 

During the second quarter of 2020, with the exacerbated deterioration in uncoated freesheet market conditions arising from the COVID-19 pandemic and its estimated impact on our Paper segment and the projected future results of operations, we identified a triggering event indicating possible impairment of goodwill and our long- lived assets within our Paper segment. Due to this triggering event and a more likely than not assessment that an impairment of goodwill occurred, an interim quantitative impairment analysis as of May 31, 2020 was performed. Based on this evaluation, we determined that goodwill was fully impaired for the Paper segment and recognized a non-cash impairment charge totaling $55.2 million. The impairment charge is not tax deductible. As a result of the triggering event described above, we also performed a recoverability test on the long-lived assets within our Paper segment, including long-lived intangible assets, as of May 31, 2020. The results of the recoverability test indicated that the long-lived assets, inclusive of the long-lived intangible assets, were 100% recoverable.

 

Excluding special items, the ($.66) per share decrease in second quarter 2020 earnings compared to the second quarter of 2019 was driven primarily by lower prices and mix in our Packaging segment ($.66) and Paper segment ($.05), lower volumes in our Paper segment ($.40), and higher depreciation expense ($.04). These items were partially offset by lower operating costs $.33, lower annual outage expenses $.10, lower converting costs $.03, lower freight expense $.02 and other costs $.01.

 


 

Financial information by segment is summarized below and in the schedules with this release.

 

 

(dollars in millions)

 

 

 

Three Months Ended

 

 

 

June 30,

 

 

 

 

2020

 

 

 

2019

 

Segment income (loss)

 

 

 

 

 

 

 

 

Packaging

 

$

197.6

 

 

$

263.9

 

Paper

 

 

(61.4

)

 

 

38.8

 

Corporate and Other

 

 

(20.1

)

 

 

(22.3

)

 

 

$

116.1

 

 

$

280.4

 

 

 

 

 

 

 

 

 

 

Segment income (loss) excluding special items

 

 

 

 

 

 

 

 

Packaging

 

$

223.6

 

 

$

263.9

 

Paper

 

 

(5.7

)

 

 

38.8

 

Corporate and Other

 

 

(20.1

)

 

 

(22.3

)

 

 

$

197.8

 

 

$

280.4

 

 

 

 

 

 

 

 

 

 

EBITDA excluding special items

 

 

 

 

 

 

 

 

Packaging

 

$

312.5

 

 

$

348.6

 

Paper

 

 

4.7

 

 

 

48.2

 

Corporate and Other

 

 

(18.2

)

 

 

(20.6

)

 

 

$

299.0

 

 

$

376.2

 

 

In the Packaging segment, total corrugated products shipments and shipments per day were up 1.2% over last year’s second quarter.   Containerboard production was 1,073,000 tons, and containerboard inventory was down 33,000 tons from the second quarter of 2019 and up 42,000 tons compared to the first quarter of 2020. In the Paper segment, sales volume was down 103,000 tons compared to the second quarter of 2019 and down 93,000 tons from the first quarter of 2020 due to the previously announced downtime at our Jackson, AL mill.  

 

Commenting on reported results, Mark W. Kowlzan, Chairman and CEO, said, “In the Packaging segment, our mills supplied the necessary containerboard to achieve a second quarter record for box shipments per day. We ran our containerboard system to demand while building some much-needed inventory as we began the second quarter with containerboard inventories at our lowest levels since the Boise acquisition and ended the quarter with our weeks-of-inventory supply still below our average over the last five years. All of our mills and corrugated products plants exhibited outstanding cost control throughout the quarter. In addition, we are seeing the benefits of our corrugated products capital spending strategy reflected in our box plant volume improvement as well as operating and converting cost reductions and efficiencies. We also saw the benefits from some of our mill cost reduction projects especially in the areas of energy and fiber. As previously communicated in April and again in late June, market conditions in the Paper segment continue to be challenged as nationwide responses to help control the spread of the COVID-19 virus have resulted in a dramatic decrease in demand for our cut-size office papers. Our Jackson, AL mill was temporarily idled for two months during the second quarter, and we expect the mill to stay down at least through the end of August.”

 

Mr. Kowlzan added, “As in the first quarter, the employees at all of our manufacturing and office locations ran their operations safely, and in a cost-effective manner, while facing the unprecedented conditions brought on by the COVID-19 pandemic. All facilities continued to operate in adherence to CDC guidelines and followed a strict protocol for workplace operations as well as notification of and response to potential issues. Although we did experience some challenges during the second quarter, we have not experienced any material disruption in our operations or our supply chain due to the pandemic. The accomplishments by our employees during this period, with the help of our customers and suppliers, were truly amazing.”

 

Mr. Kowlzan continued, “Looking ahead to the third quarter, we will stay focused on preserving our financial and balance sheet strength during these uncertain times. We will remain well-positioned to manage whatever lies ahead, while ensuring we take care of the needs and expectations of our employees, customers, suppliers and shareholders. During these unprecedented times, corrugated products demand has performed quite well so far this year, and we expect the third quarter to be even stronger. We began the third quarter with replenished, yet still relatively low, containerboard inventories and our expectation is that we will end the quarter at levels below where we started while managing scheduled outages at two of our mills. We have already announced the actions being taken in our Paper business, and we will continue to evaluate the demand for our paper products throughout the third quarter. However, shelter-in-place and lockdown conditions continue to change constantly across the country, and such events and actions could adversely impact these expectations and the operation of not only our facilities, but also the availability of services and products we rely upon from our suppliers. As a result, we are not able to appropriately quantify our guidance for the third quarter.”  

 


 

We present various non-GAAP financial measures in this press release, including diluted EPS excluding special items, segment income excluding special items and EBITDA excluding special items. We provide information regarding our use of non-GAAP financial measures and reconciliations of historical non-GAAP financial measures presented in this press release to the most comparable measure reported in accordance with GAAP in the schedules to this press release.

 

PCA is the third largest producer of containerboard products and the third largest producer of uncoated freesheet paper in North America. PCA operates eight mills and 93 corrugated products plants and related facilities.

 

Some of the statements in this press release are forward-looking statements. Forward-looking statements include statements about our future earnings and financial condition, the impact of the COVID-19 pandemic on our business, expected benefits from acquisitions and restructuring activities, our industry and our business strategy. Statements that contain words such as “will”, “should”, “anticipate”, “believe”, “expect”, “intend”, “estimate”, “hope” or similar expressions, are forward-looking statements. These forward-looking statements are based on the current expectations of PCA. Because forward-looking statements involve inherent risks and uncertainties, the plans, actions and actual results of PCA could differ materially. Among the factors that could cause plans, actions and results to differ materially from PCA’s current expectations include the following: the impact of the COVID-19 pandemic on the health of our employees and on the employees of our suppliers and customers, on our ability to operate our business, and on economic conditions affecting our business and demand for our products; the impact of general economic conditions; conditions in the paper and packaging industries, including competition, product demand and product pricing; fluctuations in wood fiber and recycled fiber costs; fluctuations in purchased energy costs; the possibility of unplanned outages or interruptions at our principal facilities; and legislative or regulatory requirements, particularly concerning environmental matters, as well as those identified under Item 1A. Risk Factors in PCA’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission and available at the SEC’s website at “www.sec.gov”.

 



 

 

CONTACT:

 

Barbara Sessions

Packaging Corporation of America

INVESTOR RELATIONS:  (877) 454-2509

PCA’s Website: www.packagingcorp.com

 

 

Conference Call Information:          

 

WHAT:

Packaging Corporation of America’s 2nd Quarter 2020 Earnings Conference Call

Conference ID:  8785211

 

WHEN:

Wednesday, July 29, 2020 at 9:00 a.m. Eastern Time

 

CALL-IN

(855) 730-0288 (U.S. and Canada) or (832) 412-2295 (International)

NUMBER:

Dial in by 8:45 a.m. Eastern Time

Conference Call Leader:  Mr. Mark Kowlzan

 

WEBCAST INFO:

http://www.packagingcorp.com

 

REBROADCAST DATES:

July 29, 2020 at 12:00 p.m. Eastern Time through August 12, 2020 11:59 p.m. Eastern Time

 

REBROADCAST NUMBERS:

(855) 859-2056 (U.S. and Canada) or (404) 537-3406 (International)

Passcode:  8785211


 

Packaging Corporation of America

Consolidated Earnings Results

Unaudited

(dollars in millions, except per-share data)

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

 

Net sales

$

1,541.6

 

 

$

1,759.9

 

 

$

3,250.3

 

 

$

3,493.6

 

 

Cost of sales

 

(1,215.8

)

(1)

 

(1,332.0

)

 

 

(2,559.6

)

(1)

 

(2,644.3

)

(3)

Gross profit

 

325.8

 

 

 

427.9

 

 

 

690.7

 

 

 

849.3

 

 

Selling, general, and administrative expenses

 

(136.3

)

(1)

 

(143.7

)

 

 

(282.2

)

(1)

 

(283.7

)

 

Goodwill impairment

 

(55.2

)

(2)

 

 

 

 

(55.2

)

(2)

 

 

 

Other expense, net

 

(18.2

)

(1)

 

(3.8

)

 

 

(28.1

)

(1)

 

(9.8

)

(3)

Income from operations

 

116.1

 

 

 

280.4

 

 

 

325.2

 

 

 

555.8

 

 

Non-operating pension income (expense)

 

0.6

 

 

 

(2.0

)

 

 

1.1

 

 

 

(4.1

)

 

Interest expense, net

 

(25.1

)

 

 

(22.4

)

 

 

(44.6

)

 

 

(46.4

)

 

Income before taxes

 

91.6

 

 

 

256.0

 

 

 

281.7

 

 

 

505.3

 

 

Provision for income taxes

 

(34.9

)

 

 

(62.4

)

 

 

(83.4

)

 

 

(124.9

)

 

Net income

$

56.7

 

 

$

193.6

 

 

$

198.3

 

 

$

380.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.60

 

 

$

2.05

 

 

$

2.09

 

 

$

4.03

 

 

Diluted

$

0.59

 

 

$

2.04

 

 

$

2.08

 

 

$

4.02

 

 

 

 

Computation of diluted earnings per share under the two class method:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

56.7

 

 

$

193.6

 

 

$

198.3

 

 

$

380.4

 

 

Less: Distributed and undistributed income available to participating securities

 

(0.5

)

 

 

(1.5

)

 

 

(1.8

)

 

 

(2.9

)

 

Net income attributable to PCA shareholders

$

56.2

 

 

$

192.1

 

 

$

196.5

 

 

$

377.5

 

 

Diluted weighted average shares outstanding

 

94.4

 

 

 

94.0

 

 

 

94.4

 

 

 

94.0

 

 

Diluted earnings per share

$

0.59

 

 

$

2.04

 

 

$

2.08

 

 

$

4.02

 

 

 

Supplemental financial information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital spending

$

80.8

 

 

$

92.1

 

 

$

151.2

 

 

$

170.9

 

 

Cash balance

$

853.3

 

 

$

569.4

 

 

$

853.3

 

 

$

569.4

 

 

 

 

(1)

The three and six months ended June 30, 2020 include the following:

 

 

a.

$20.4 million and $20.8 million, respectively, consisting of closure costs related to corrugated products facilities, substantially all of which relates to the previously announced closure of the San Lorenzo, California facility during the second quarter, partially offset by income related to the sale of a corrugated products facility, which were recorded in “Cost of sales”, “Selling, general, and administrative expenses”, and “Other expense, net”.

 

 

b.

$6.1 million and $6.9 million, respectively, of incremental, out-of-pocket costs related to COVID-19, including supplies, cleaning and sick pay, which were recorded in “Cost of sales”.

 

 

(2)

During the second quarter of 2020, with the exacerbated deterioration in uncoated freesheet market conditions and the estimated impact on our Paper reporting unit arising from the COVID-19 pandemic, as well as projected future results of operations, we identified a triggering event indicating possible impairment of goodwill within our Paper reporting unit. The Company performed an interim quantitative impairment analysis as of May 31, 2020, and, based on the evaluation performed, we determined that goodwill was fully impaired for the Paper reporting unit and recognized a non-cash impairment charge of $55.2 million.

 

 

(3)

The six months ended June 30, 2019 include $0.6 million of charges related to the second quarter 2018 discontinuation of uncoated free sheet and coated one-side grades at the Wallula, Washington mill associated with the conversion of the No. 3 paper machine to produce virgin kraft linerboard. The costs were recorded within “Other expense, net” and “Cost of sales”, as appropriate.

1

 


 

Packaging Corporation of America

Segment Information

Unaudited

(dollars in millions)

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

Segment sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Packaging

$

1,409.9

 

 

$

1,504.6

 

 

$

2,877.4

 

 

$

2,982.2

 

Paper

 

123.3

 

 

 

237.8

 

 

 

340.7

 

 

 

477.5

 

Corporate and Other

 

8.4

 

 

 

17.5

 

 

 

32.2

 

 

 

33.9

 

 

$

1,541.6

 

 

$

1,759.9

 

 

$

3,250.3

 

 

$

3,493.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Packaging

$

197.6

 

 

$

263.9

 

 

$

397.5

 

 

$

513.4

 

Paper

 

(61.4

)

 

 

38.8

 

 

 

(29.0

)

 

 

84.4

 

Corporate and Other

 

(20.1

)

 

 

(22.3

)

 

 

(43.3

)

 

 

(42.0

)

Income from operations

 

116.1

 

 

 

280.4

 

 

 

325.2

 

 

 

555.8

 

Non-operating pension income (expense)

 

0.6

 

 

 

(2.0

)

 

 

1.1

 

 

 

(4.1

)

Interest expense, net

 

(25.1

)

 

 

(22.4

)

 

 

(44.6

)

 

 

(46.4

)

Income before taxes

$

91.6

 

 

$

256.0

 

 

$

281.7

 

 

$

505.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment income (loss) excluding special items (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Packaging

$

223.6

 

 

$

263.9

 

 

$

424.6

 

 

$

513.8

 

Paper

 

(5.7

)

 

 

38.8

 

 

 

26.8

 

 

 

84.6

 

Corporate and Other

 

(20.1

)

 

 

(22.3

)

 

 

(43.3

)

 

 

(42.0

)

 

$

197.8

 

 

$

280.4

 

 

$

408.1

 

 

$

556.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA excluding special items (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Packaging

$

312.5

 

 

$

348.6

 

 

$

602.3

 

 

$

682.4

 

Paper

 

4.7

 

 

 

48.2

 

 

 

46.7

 

 

 

103.1

 

Corporate and Other

 

(18.2

)

 

 

(20.6

)

 

 

(39.5

)

 

 

(38.7

)

 

$

299.0

 

 

$

376.2

 

 

$

609.5

 

 

$

746.8

 

 

 ____________

(1)

Segment income (loss) excluding special items, earnings before non-operating pension income (expense), interest, income taxes, and depreciation, amortization, and depletion (EBITDA), and EBITDA excluding special items are non-GAAP financial measures. Management excludes special items as it believes these items are not necessarily reflective of the ongoing results of operations of our business. We present these measures because they provide a means to evaluate the performance of our segments and our company on an ongoing basis using the same measures that are used by our management, because these measures assist in providing a meaningful comparison between periods presented and because these measures are frequently used by investors and other interested parties in the evaluation of companies and the performance of their segments. The tables included in "Reconciliation of Non-GAAP Financial Measures" on the following pages reconcile the non-GAAP measures with the most directly comparable GAAP measures. Any analysis of non-GAAP financial measures should be done only in conjunction with results presented in accordance with GAAP. The non-GAAP measures are not intended to be substitutes for GAAP financial measures and should not be used as such.

2

 


 

Packaging Corporation of America

Reconciliation of Non-GAAP Financial Measures

Unaudited

(dollars in millions)

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

Packaging

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment income

$

197.6

 

 

$

263.9

 

 

$

397.5

 

 

$

513.4

 

Facilities closure and other costs

 

20.4

 

 

 

 

 

 

20.8

 

 

 

 

Incremental costs for COVID-19

 

5.6

 

 

 

 

 

 

6.3

 

 

 

 

Wallula mill restructuring

 

 

 

 

 

 

 

 

 

 

0.4

 

Segment income excluding special items (1)

$

223.6

 

 

$

263.9

 

 

$

424.6

 

 

$

513.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paper

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment income (loss)

$

(61.4

)

 

$

38.8

 

 

$

(29.0

)

 

$

84.4

 

Goodwill impairment

 

55.2

 

 

 

 

 

 

55.2

 

 

 

 

Incremental costs for COVID-19

 

0.5

 

 

 

 

 

 

0.6

 

 

 

 

Wallula mill restructuring

 

 

 

 

 

 

 

 

 

 

0.2

 

Segment income (loss) excluding special items (1)

$

(5.7

)

 

$

38.8

 

 

$

26.8

 

 

$

84.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment loss

$

(20.1

)

 

$

(22.3

)

 

$

(43.3

)

 

$

(42.0

)

Segment loss excluding special items (1)

$

(20.1

)

 

$

(22.3

)

 

$

(43.3

)

 

$

(42.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

$

116.1

 

 

$

280.4

 

 

$

325.2

 

 

$

555.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations, excluding special items (1)

$

197.8

 

 

$

280.4

 

 

$

408.1

 

 

$

556.4

 

 ____________

(1)

See footnote (1) on page 2, for a discussion of non-GAAP financial measures.

3

 


 

Packaging Corporation of America

Reconciliation of Non-GAAP Financial Measures

Unaudited

(dollars in millions)

Net Income and EPS Excluding Special Items (1)

 

Three Months Ended

 

 

June 30,

 

 

2020

 

 

2019

 

 

Income before Taxes

 

 

Income Taxes

 

 

Net Income

 

 

Diluted EPS

 

 

Income before Taxes

 

 

Income Taxes

 

 

Net Income

 

 

Diluted EPS

 

As reported

$

91.6

 

 

$

(34.9

)

 

$

56.7

 

 

$

0.59

 

 

$

256.0

 

 

$

(62.4

)

 

$

193.6

 

 

$

2.04

 

Special items (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill impairment

 

55.2

 

 

 

 

 

 

55.2

 

 

 

0.58

 

 

 

 

 

 

 

 

 

 

 

 

 

Facilities closure and other costs

 

20.4

 

 

 

(5.1

)

 

 

15.3

 

 

 

0.16

 

 

 

 

 

 

 

 

 

 

 

 

 

Incremental costs for COVID-19

 

6.1

 

 

 

(1.5

)

 

 

4.6

 

 

 

0.05

 

 

 

 

 

 

 

 

 

 

 

 

 

Total special items

 

81.7

 

 

 

(6.6

)

 

 

75.1

 

 

 

0.79

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding special items

$

173.3

 

 

$

(41.5

)

 

$

131.8

 

 

$

1.38

 

 

$

256.0

 

 

$

(62.4

)

 

$

193.6

 

 

$

2.04

 

 

Six Months Ended

 

 

June 30,

 

 

2020

 

 

2019

 

 

Income before Taxes

 

 

Income Taxes

 

 

Net Income

 

 

Diluted EPS

 

 

Income before Taxes

 

 

Income Taxes

 

 

Net Income

 

 

Diluted EPS

 

As reported

$

281.7

 

 

$

(83.4

)

 

$

198.3

 

 

$

2.08

 

 

$

505.3

 

 

$

(124.9

)

 

$

380.4

 

 

$

4.02

 

Special items (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill impairment

 

55.2

 

 

 

 

 

 

55.2

 

 

 

0.58

 

 

 

 

 

 

 

 

 

 

 

 

 

Facilities closure and other costs

 

20.8

 

 

 

(5.2

)

 

 

15.6

 

 

 

0.17

 

 

 

 

 

 

 

 

 

 

 

 

 

Incremental costs for COVID-19

 

6.9

 

 

 

(1.7

)

 

 

5.2

 

 

 

0.05

 

 

 

 

 

 

 

 

 

 

 

 

 

Wallula mill restructuring

 

 

 

 

 

 

 

 

 

 

 

 

 

0.6

 

 

 

(0.1

)

 

 

0.5

 

 

 

 

Total special items

 

82.9

 

 

 

(6.9

)

 

 

76.0

 

 

 

0.80

 

 

 

0.6

 

 

 

(0.1

)

 

 

0.5

 

 

 

 

Excluding special items

$

364.6

 

 

$

(90.3

)

 

$

274.3

 

 

$

2.88

 

 

$

505.9

 

 

$

(125.0

)

 

$

380.9

 

 

$

4.02

 

 ____________

(1)

Net income and earnings per share excluding special items are non-GAAP financial measures. Management excludes special items as it believes these items are not necessarily reflective of the ongoing results of operations of our business. We present these measures because they provide a means to evaluate the performance of our company on an ongoing basis using the same measures that are used by our management, because these measures assist in providing a meaningful comparison between periods presented and because these measures are frequently used by investors and other interested parties in the evaluation of companies and their performance. Any analysis of non-GAAP financial measures should be done only in conjunction with results presented in accordance with GAAP. The non-GAAP measures are not intended to be substitutes for GAAP financial measures and should not be used as such.

(2)

Pre-tax special items are tax-effected at a combined federal and state income tax rate in effect for the period the special items were recorded and this rate is adjusted for each subsequent quarter to be consistent with the estimated annual effective tax rate, in accordance with ASC 270, Interim Reporting, and ASC 740-270, Income Taxes – Intra Period Tax Allocation. For all periods presented, income taxes on pre-tax special items represent the current amount of tax. For more information related to these items, see the footnotes to the Consolidated Earnings Results on page 1.

 

4

 


 

Packaging Corporation of America

Reconciliation of Non-GAAP Financial Measures

Unaudited

(dollars in millions)

EBITDA and EBITDA Excluding Special Items (1)

EBITDA represents income before non-operating pension income (expense), interest, income taxes, and depreciation, amortization, and depletion. The following table reconciles net income to EBITDA and EBITDA excluding special items:

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

Net income

$

56.7

 

 

$

193.6

 

 

$

198.3

 

 

$

380.4

 

Non-operating pension (income) expense

 

(0.6

)

 

 

2.0

 

 

 

(1.1

)

 

 

4.1

 

Interest expense, net

 

25.1

 

 

 

22.4

 

 

 

44.6

 

 

 

46.4

 

Provision for income taxes

 

34.9

 

 

 

62.4

 

 

 

83.4

 

 

 

124.9

 

Depreciation, amortization, and depletion

 

108.3

 

 

 

95.8

 

 

 

208.5

 

 

 

190.6

 

EBITDA (1)

$

224.4

 

 

$

376.2

 

 

$

533.7

 

 

$

746.4

 

Special items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill impairment

 

55.2

 

 

 

 

 

 

55.2

 

 

 

 

Facilities closure and other costs

 

13.3

 

 

 

 

 

 

13.7

 

 

 

 

Incremental costs for COVID-19

 

6.1

 

 

 

 

 

 

6.9

 

 

 

 

Wallula mill restructuring

 

 

 

 

 

 

 

 

 

 

0.4

 

EBITDA excluding special items (1)

$

299.0

 

 

$

376.2

 

 

$

609.5

 

 

$

746.8

 

 ____________

(1)

See footnote (1) on page 2, for a discussion of non-GAAP financial measures.

 

5

 


 

Packaging Corporation of America

Reconciliation of Non-GAAP Financial Measures

Unaudited

(dollars in millions)

The following table reconciles segment income (loss) to EBITDA excluding special items:

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

Packaging

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment income

$

197.6

 

 

$

263.9

 

 

$

397.5

 

 

$

513.4

 

Depreciation, amortization, and depletion

 

96.0

 

 

 

84.7

 

 

 

184.8

 

 

 

168.8

 

EBITDA (1)

 

293.6

 

 

 

348.6

 

 

 

582.3

 

 

 

682.2

 

Facilities closure and other costs

 

13.3

 

 

 

 

 

 

13.7

 

 

 

 

Incremental costs for COVID-19

 

5.6

 

 

 

 

 

 

6.3

 

 

 

 

Wallula mill restructuring

 

 

 

 

 

 

 

 

 

 

0.2

 

EBITDA excluding special items (1)

$

312.5

 

 

$

348.6

 

 

$

602.3

 

 

$

682.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paper

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment income (loss)

$

(61.4

)

 

$

38.8

 

 

$

(29.0

)

 

$

84.4

 

Depreciation, amortization, and depletion

 

10.4

 

 

 

9.4

 

 

 

19.9

 

 

 

18.5

 

EBITDA (1)

 

(51.0

)

 

 

48.2

 

 

 

(9.1

)

 

 

102.9

 

Goodwill impairment

 

55.2

 

 

 

 

 

 

55.2

 

 

 

 

Incremental costs for COVID-19

 

0.5

 

 

 

 

 

 

0.6

 

 

 

 

Wallula mill restructuring

 

 

 

 

 

 

 

 

 

 

0.2

 

EBITDA excluding special items (1)

$

4.7

 

 

$

48.2

 

 

$

46.7

 

 

$

103.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment loss

$

(20.1

)

 

$

(22.3

)

 

$

(43.3

)

 

$

(42.0

)

Depreciation, amortization, and depletion

 

1.9

 

 

 

1.7

 

 

 

3.8

 

 

 

3.3

 

EBITDA (1)

 

(18.2

)

 

 

(20.6

)

 

 

(39.5

)

 

 

(38.7

)

EBITDA excluding special items (1)

$

(18.2

)

 

$

(20.6

)

 

$

(39.5

)

 

$

(38.7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA excluding special items (1)

$

299.0

 

 

$

376.2

 

 

$

609.5

 

 

$

746.8

 

 

 ____________

(1)

See footnote (1) on page 2, for a discussion of non-GAAP financial measures.

 

 

 

 

 

 

 

 

6

 

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Cover [Abstract]  
Entity Registrant Name PACKAGING CORP OF AMERICA
Document Type 8-K
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Entity Central Index Key 0000075677
Document Period End Date Jul. 24, 2020
Entity Emerging Growth Company false
Entity File Number 1-15399
Entity Incorporation, State or Country Code DE
Entity Tax Identification Number 36-4277050
Entity Address, Address Line One 1 North Field Court
Entity Address, City or Town Lake Forest
Entity Address, State or Province IL
Entity Address, Postal Zip Code 60045
City Area Code (847)
Local Phone Number 482-3000
Written Communications false
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Security 12b Title Common Stock
Trading Symbol PKG
Security Exchange Name NYSE
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