Packaging Corporation of America (NYSE: PKG) exceeded analysts’ expectations in its first-quarter earnings, primarily driven by higher volumes in packaging and paper segments and reduced operating costs. Despite a decline from last year’s performance, the company’s EPS of $1.72 surpassed estimates by four cents. Total revenue remained steady year-over-year, exceeding expectations by $70 million. The company reported a 28% decrease in adjusted EBITDA to $333.2 million.
Despite ongoing inflation, CEO Mark Kowlzan attributed the improved results to strong volume growth and cost management initiatives across manufacturing and converting facilities. The company recently implemented a $100 per ton price increase in all paper grades, effective April 1st. However, average prices and sales mix are expected to be slightly lower due to a reduction in index prices earlier this year.
For Q2, higher freight, depreciation, and tax costs will be partially offset by lower operating and converting costs, leading to an expected EPS of $2.07. This is below both the $2.31 reported in Q2 2023 and the analyst consensus of $2.22.
In terms of segments, packaging sales declined by 0.8%, while paper sales increased by 8.5%. However, both segments experienced a decline in profits compared to the previous year’s quarter, with packaging down 24% and paper down 13%.