Excluding special items, 3Q 2014 net income was $124 million, compared to 3Q 2013 net income of $89 million and 2Q 2014 net income of $114 million.
3Q net sales were $1,519 million compared to 3Q 2013 net sales of $845 million and 2Q 2014 net sales of $1,468 million.
In the packaging segment, EBITDA, excluding special items, was $262 million on sales of $1,176 million. With the acquisition of Boise, corrugated products shipments were up 33% compared to the 3Q 2013. Excluding Boise, PCA shipments were up 6.2% in total and 4.5% per workday compared to the 3Q of last year. With strong internal demand, PCA reduced its outside sales of containerboard by 19,000 tons compared to last year’s 3Q. Containerboard production was 858,000 tons, up 12,000 tons compared to the 2Q of this year.
In the paper segment, EBITDA, excluding special items, was $56 million on sales of $313 million. Office paper shipments were up 7.3% compared with this year's 2Q, and down 5.4% compared to last year’s 3Q. Printing and converting and pressure sensitive paper shipments were up 3,000 tons compared to the 2Q, and decreased by 22,000 tons compared to last year's 3Q, as a result of the 4Q 2013 paper machine closures at the International Falls, Minnesota mill.
Commenting on reported results, Mark W. Kowlzan, CEO of PCA, said, “This was our 8th consecutive quarter of record earnings driven by strong sales volume, record mill productivity, and mill cost reductions. The integration of Boise packaging continues to generate significant synergies, and operational improvements in White Papers have resulted in lower costs and higher margins. The conversion of the No. 3 newsprint machine to containerboard at DeRidder was completed on October 17th, two weeks ahead of schedule. The start-up of the machine is progressing as planned with no major production or quality issues so far.”
“Looking ahead to the 4Q, with the Deridder machine conversion, we expect higher mill production which will allow us to reduce our outside purchases of containerboard. Corrugated products shipments are expected to be lower than in the 3Q with three less shipping days, and we also expect seasonally lower white paper shipments. Amortization of annual outage repair costs will be about $0.07 per share higher than the third quarter, and we expect seasonal increases in fuel and transportation costs. Considering these items, we expect fourth quarter earnings of $1.16 per share.”
PCA is the fourth largest producer of containerboard and corrugated packaging products in the United States and the third largest producer of uncoated freesheet paper in North America. PCA operates eight mills and 100 corrugated products plants and related facilities.
