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OFFON

PACKAGING CORPORATION OF AMERICA

(PKG)
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2021 3rd Quarter 10Q

11/04/2021 | 02:46pm EST

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

  • QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

or

  • TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

to

Commission file number 1-15399

(Exact Name of Registrant as Specified in its Charter)

Delaware

36-4277050

(State or Other Jurisdiction of

(I.R.S. Employer Identification No.)

Incorporation or Organization)

1 North Field Court, Lake Forest, Illinois

60045

(Address of Principal Executive Offices)

(Zip Code)

Registrant's telephone number, including area code

(847) 482-3000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Emerging growth company

Non-accelerated filer

Smaller reporting 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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of October 29, 2021 the Registrant had outstanding 94,990,766 shares of common stock, par value $0.01 per share.

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, par value $0.01 per share

PKG

New York Stock Exchange

Table of Contents

PART I

Item 1.

Financial Statements

1

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

31

PART II

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

32

Item 3.

Defaults Upon Senior Securities

32

Item 4.

Mine Safety Disclosures

32

Item 5.

Other Information

32

Item 6.

Exhibits

33

All reports we file with the Securities and Exchange Commission (SEC) are available free of charge via the Electronic Data Gathering Analysis and Retrieval (EDGAR) System on the SEC website at www.sec.gov. We also provide copies of our SEC filings at no charge upon request and make electronic copies of our reports available through our website at www.packagingcorp.com as soon as reasonably practicable after filing such material with the SEC.

i

PART I

FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Packaging Corporation of America

Consolidated Statements of Income and Comprehensive Income

(unaudited, dollars in millions, except per-share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

Statements of Income:

Net sales

$

2,000.1

$

1,693.7

$

5,687.1

$

4,944.0

Cost of sales

(1,489.4 )

(1,348.3 )

(4,324.0 )

(3,907.9 )

Gross profit

510.7

345.4

1,363.1

1,036.1

Selling, general and administrative expenses

(144.5 )

(127.1 )

(435.7 )

(409.3 )

Goodwill impairment

-

-

-

(55.2 )

Other expense, net

(13.4 )

(8.8 )

(41.7 )

(36.9 )

Income from operations

352.8

209.5

885.7

534.7

Non-operating pension income

5.0

0.6

14.8

1.7

Interest expense, net

(23.9 )

(24.4 )

(72.2 )

(69.1 )

Income before taxes

333.9

185.7

828.3

467.3

Provision for income taxes

(83.2 )

(46.6 )

(203.7 )

(129.9 )

Net income

$

250.7

$

139.1

$

624.6

$

337.4

Net income per common share:

Basic

$

2.64

$

1.47

$

6.58

$

3.56

Diluted

$

2.63

$

1.46

$

6.55

$

3.54

Dividends declared per common share

$

1.00

$

0.79

$

3.00

$

2.37

Statements of Comprehensive Income:

Net income

$

250.7

$

139.1

$

624.6

$

337.4

Other comprehensive income, net of tax:

Foreign currency translation adjustment

0.4

-

0.4

-

Changes in unrealized gains (losses) on marketable debt securities,

net of tax of $0.0 million, $0.1 million, $0.1 million,

and $0.2 million

-

(0.2 )

(0.2 )

0.5

Amortization of pension and postretirement plans actuarial loss and

prior service cost, net of tax of $0.8 million, $0.9 million,

2.7

$2.5 million, and $2.7 million

2.5

7.5

8.1

Other comprehensive income

2.9

2.5

7.7

8.6

Comprehensive income

$

253.6

$

141.6

$

632.3

$

346.0

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

1

Packaging Corporation of America

Consolidated Balance Sheets

(unaudited, dollars and shares in millions, except per-share data)

September 30,

December 31,

2021

2020

ASSETS

Current assets:

Cash and cash equivalents

$

1,702.9

$

974.6

Short-term marketable debt securities

88.3

105.6

Accounts receivable, net of allowance for credit losses and customer deductions

of $15.1 million and $10.6 million as of September 30, 2021 and December 31, 2020,

respectively

1,066.7

832.4

Inventories

880.1

787.9

Prepaid expenses and other current assets

55.4

44.7

Federal and state income taxes receivable

11.4

5.1

Total current assets

3,804.8

2,750.3

Property, plant, and equipment, net

3,360.8

3,193.4

Goodwill

863.5

863.5

Other intangible assets, net

267.7

295.9

Operating lease right-of-use assets

230.4

234.2

Long-term marketable debt securities

57.8

42.7

Other long-term assets

45.8

53.2

Total assets

$

8,630.8

$

7,433.2

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current maturities of long-term debt

$

698.1

$

-

Operating lease obligations

67.2

68.9

Finance lease obligations

1.7

1.6

Accounts payable

499.1

387.0

Dividends payable

97.3

97.0

Accrued liabilities

252.5

216.2

Accrued interest

28.5

11.9

Total current liabilities

1,644.4

782.6

Long-term liabilities:

Long-term debt

2,471.1

2,479.4

Operating lease obligations

171.5

173.6

Finance lease obligations

13.1

14.4

Deferred income taxes

423.9

379.4

Compensation and benefits

241.1

298.3

Other long-term liabilities

57.4

59.2

Total long-term liabilities

3,378.1

3,404.3

Commitments and contingent liabilities

Stockholders' equity:

Common stock, par value $0.01 per share, 300.0 million shares authorized, 95.0 million

and 94.8 million shares issued as of September 30, 2021 and December 31, 2020,

respectively

1.0

0.9

Additional paid in capital

581.3

554.4

Retained earnings

3,162.8

2,835.5

Accumulated other comprehensive loss

(136.8 )

(144.5 )

Total stockholders' equity

3,608.3

3,246.3

Total liabilities and stockholders' equity

$

8,630.8

$

7,433.2

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

2

Packaging Corporation of America

Consolidated Statements of Cash Flows

(unaudited, dollars in millions)

Nine Months Ended

September 30,

2021

2020

Cash Flows from Operating Activities:

Net income

$

624.6

$

337.4

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion, and amortization of intangibles

311.1

309.0

Amortization of deferred financing costs

2.0

1.9

Share-based compensation expense

26.9

23.8

Deferred income tax provision

41.7

21.1

Loss on asset disposals

7.3

4.1

Goodwill impairment

-

55.2

Pension and post-retirement benefits expense, net of contributions

(50.4 )

(68.1 )

Other, net

8.9

18.8

Changes in operating assets and liabilities:

(Increase) decrease in assets -

Accounts receivable

(234.3 )

(19.0 )

Inventories

(92.3 )

16.5

Prepaid expenses and other current assets

(11.8 )

(5.6 )

Increase (decrease) in liabilities -

Accounts payable

22.3

(6.2 )

Accrued liabilities

53.5

29.0

Federal and state income taxes payable / receivable

(6.1 )

43.8

Net cash provided by operating activities

703.4

761.7

Cash Flows from Investing Activities:

Additions to property, plant, and equipment

(366.2 )

(253.5 )

Additions to other long term assets

(1.8 )

(6.2 )

Proceeds from asset disposals

2.6

4.4

Purchases of marketable debt securities

(100.3 )

(71.5 )

Proceeds from sales of marketable debt securities

17.7

17.2

Proceeds from maturities of marketable debt securities

83.0

53.7

Net cash used for investing activities

(365.0 )

(255.9 )

Cash Flows from Financing Activities:

Repayments of debt and finance lease obligations

(1.2 )

(1.1 )

Proceeds from issuance of debt

696.3

-

Financing costs paid

(8.5 )

-

Common stock dividends paid

(284.8 )

(224.6 )

Shares withheld to cover employee restricted stock taxes

(11.9 )

(10.5 )

Net cash provided by (used for) financing activities

389.9

(236.2 )

Net increase in cash and cash equivalents

728.3

269.6

Cash and cash equivalents, beginning of period

974.6

679.5

Cash and cash equivalents, end of period

$

1,702.9

$

949.1

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

3

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Packaging Corporation of America published this content on 04 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 November 2021 19:45:02 UTC.


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Sales 2021 7 623 M - -
Net income 2021 820 M - -
Net Debt 2021 1 303 M - -
P/E ratio 2021 15,6x
Yield 2021 2,98%
Capitalization 12 688 M 12 688 M -
EV / Sales 2021 1,84x
EV / Sales 2022 1,73x
Nbr of Employees 15 200
Free-Float -
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Technical analysis trends PACKAGING CORPORATION OF AMERICA
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TrendsNeutralNeutralBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 12
Last Close Price 134,52 $
Average target price 141,56 $
Spread / Average Target 5,23%
EPS Revisions
Managers and Directors
Mark W. Kowlzan Chairman & Chief Executive Officer
Robert P. Mundy Chief Financial Officer & Executive Vice President
Robert A. Schneider Chief Information Officer & Vice President
D. Ray Shirley SVP-Corporate Engineering & Process Technology
Samuel M. Mencoff Independent Director
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