PCA(US:PKG)2022-10-25 17:46Financial Data and Key Metrics Changes - Third quarter net income for 2022 was $262 million, or $2.80 per share, compared to $257 million, or $2.69 per share in Q3 2021, reflecting a year-over-year increase [3] - Net sales increased to $2.1 billion in Q3 2022 from $2.0 billion in Q3 2021 [3] - Total company EBITDA for Q3 2022 was $477 million, up from $464 million in Q3 2021 [3] Business Line Data and Key Metrics Changes - Packaging business EBITDA excluding special items was $467 million with sales of $1.9 billion, resulting in a margin of 24.1%, down from a margin of 25.5% in the previous year [5] - Paper segment EBITDA excluding special items was $33 million with sales of $165 million, achieving a margin of 20%, compared to $18 million and 12% margin in Q3 2021 [12] Market Data and Key Metrics Changes - Corrugated product shipments decreased by 6% compared to Q3 2021, with containerboard outside sales volume down 57,000 tons year-over-year [9] - Export containerboard prices increased by $0.06 per share compared to Q3 2021 and $1.00 per share compared to Q2 2022 [9] Company Strategy and Development Direction - The company is focused on implementing price increases across all product lines and optimizing process efficiencies to mitigate inflation impacts [5][7] - Scheduled maintenance outages and conversion work at the Jackson mill are expected to enhance operational efficiency and capacity [6][17] Management's Comments on Operating Environment and Future Outlook - Management noted that demand in the packaging segment was below expectations due to inventory corrections and inflation impacting consumer purchases [9][10] - The outlook for Q4 anticipates continued economic headwinds, including lower shipping days and a less favorable product mix [16][17] Other Important Information - Cash provided by operations reached a record $431 million, with free cash flows at $251 million [14] - The company repurchased 1,032,000 shares at an average price of $137.60 per share during the quarter [14] Q&A Session Summary Question: Early Q4 booking and billing trends - Bookings and billings are running about 5% below last year, with significant inventory destocking expected to take a couple of quarters to resolve [20][21] Question: Impact of inventory destocking on demand - Inventory destocking is a primary factor in the 6% decline in shipments, with some customers finally ready to order again after reducing excess inventory [23][24] Question: Guidance on sequential changes in earnings - The expected decline in earnings is attributed to volume issues, inflation, and increased maintenance costs, with specific impacts from energy and labor costs [30][31] Question: Internal inventory levels and economic downtime - The company is comfortable with its inventory levels and will adjust production based on demand [38][40] Question: Impact of COVID lockdowns in China on US economy - The US has seen a record increase in onshoring manufacturing, which is expected to benefit the box business despite ongoing supply chain issues [53]