Packaging Corporation of America (NYSE: PKG), the third-largest producer of containerboard products, reported better-than-expected first-quarter results. Higher volume in the company’s packaging and paper segments, coupled with lower operating and converting costs, resulted in a profit of $1.72 per share. This was down from $2.20 per share in the same quarter last year but four cents better than estimates.
Total revenue was flat from a year ago, beating expectations by $70 million. Adjusted EBITDA dropped 28% to $333.2 million.
The strong volume in both the packaging and paper segments along with the continued emphasis on cost management and process efficiencies across our manufacturing and converting facilities drove operating and converting costs lower, even with the persistent inflation we continue to experience across most of our cost structure, said CEO Mark Kowlzan.
During Q1, the company announced a price increase of $100 per ton across all paper grades. The price hike was implemented April 1.
The company anticipates average prices and mix will be expected to be slightly lower, however, due to the published decrease in index prices earlier this year and how that impacts contract triggers with certain customers.
For Q2, higher freight, depreciation, and tax costs will be offset by lower operating and converting costs, resulting in an expected profit of $2.07 per share. This is down from $2.31 in the same quarter of 2023 and below Street expectations of $2.22 per share.
By segment, packaging sales were down 0.8%, while paper sales increased 8.5%. Profits for both segments, however, were down from the prior year’s quarter with packaging down 24% and paper down 13%.
Shares were fractionally higher in Monday’s after-hours trading.
