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Packaging Of America Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: PKG

Moving to operations. Higher mill production and corrugated products volume improved our earnings by $0.07 per share compared to last year's second quarter. Our corrugated shipments were strong, up 6.6% both on a total and a per day workday basis compared to last year's second quarter. This increase in shipments included 3.6% from our box plant acquisition in 2011 and our first quarter 2012 acquisition. Even excluding our recent acquisitions, total shipments were a new all-time record for any quarter. Our corrugated shipments volume also improved compared to the first quarter of this year, with total shipments up 2.7% and per workday shipments up 4.3%, with 1 less workday in the second quarter.

Domestic and export containerboard demand remained steady compared to the first quarter. With the higher containerboard consumption at PCA box plants from increased demand and considering that 3 of our mills will be down during the quarter for their annual maintenance outages, we made a decision to sell fewer containerboard tons into the export market. As a result, our export shipments of containerboard were down about 13,000 tons compared to last year's second quarter.

Our mills produced 638,000 tons of containerboard, a second quarter record, up 32,000 tons or 5.3% over the second quarter of 2011. The increase in production was driven by strong productivity and no energy project-related downtime this year. In total, annual mill maintenance outages, including an overhaul for the 23 days of our 50-megawatt turbine generator accounts and major wall panel replacements to the large T2 boiler accounts, resulted in lost production of about 23,000 tons during the quarter.

Pricing for corrugated products and domestic containerboard remained steady. Export prices for containerboard were higher, and our corrugated products mix improved compared to the first quarter. Compared to the second quarter of 2011, corrugated and domestic containerboard pricing was essentially flat and export containerboard prices were lower. The lower export prices reduced our earnings by about $0.01 a share compared to last year's second quarter.

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