Packaging Corp. Q4 Earnings Miss, Sales Rise Y/Y on Higher Volumes

Core Viewpoint - Packaging Corporation of America (PKG) reported mixed financial results for Q4 2024, with adjusted EPS of $2.47, slightly missing the consensus estimate, but showing a year-over-year growth of 16% driven by higher prices and improved volumes [1][9]. Financial Performance - Adjusted EPS for Q4 2024 was $2.47, missing the Zacks Consensus Estimate of $2.51 by 2% but growing 16% year over year [1] - Including special items, earnings were $2.45 per share compared to $2.10 in the prior year [2] - Sales increased by 10.7% year over year to $2.15 billion, surpassing the consensus estimate of $2.13 billion [3] - Cost of products sold rose 9.7% year over year to $1.68 billion, while gross profit grew 14.5% to $469.7 million [3] - Adjusted operating income was $303.9 million, marking a 14.5% increase from $265.3 million in Q4 2023 [4] Segment Performance - In the Packaging segment, sales rose 11.2% year over year to $1.98 billion, exceeding estimates [5] - Total corrugated product shipments increased by 9.1% year over year, with containerboard production at 1,310,000 tons [5] - The Paper segment's revenues were $151.5 million, up 5% year over year, with adjusted operating profit at $35 million compared to $31 million in the prior year [7] Fiscal Year Overview - For the full year 2024, adjusted EPS was $9.04, slightly below the consensus estimate of $9.08, while sales reached $8.38 billion, reflecting a 7% year-over-year increase [9] - The company ended 2024 with a cash balance of $0.85 billion, down from $1.2 billion at the end of 2023 [11] Q1 2025 Outlook - For Q1 2025, PKG projects EPS of $2.21, indicating a 28.5% growth compared to Q1 2024 [12] - The company expects record levels of total shipments in the Packaging segment, although containerboard volume may be lower due to maintenance outages [12] - Price inflation is anticipated across most operating costs, with higher costs for wood, energy, and chemicals expected due to seasonal weather [14] Stock Performance - PKG shares have gained 41% over the past 12 months, outperforming the industry growth of 12.7% [16]