Packaging Corp. Of America has a market cap of $2.49 billion; its shares were traded at around $24.21 with a P/E ratio of 29.9 and P/S ratio of 1.2. The dividend yield of Packaging Corp. Of America stocks is 2.5%. Packaging Corp. Of America had an annual average earning growth of 2.1% over the past 10 years.PKG is in the portfolios of NWQ Managers of NWQ Investment Management Co, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, Steven Cohen of SAC Capital Advisors, Jeremy Grantham of GMO LLC.
Highlight of Business Operations:Looking ahead to the second quarter our earnings are expected to be significantly higher than the first quarter from the full realization of the first quarter containerboard and corrugated products price increases. In addition, our April containerboard price increase and May corrugated products price increases will increase earnings; however, the majority of the impact from these increases will not be fully realized until the third quarter. Planned mill outages will reduce production by approximately 35,000 tons and increase operating costs, which will be partially offset by lower energy costs with warmer weather and lower wood costs. Outside shipments of containerboard are expected to be lower due to our low containerboard inventory. Considering these items, we expect our second quarter 2010 earnings to be significantly higher than our first quarter earnings of $12.5 million, which excludes income of $9.2 million related to the alternative fuel mixture tax credits generated in 2009 and a $2.5 million after tax charge from asset disposals related to the energy optimization projects and the announced closure of the Ackerman, Mississippi facility.
Income from operations decreased by $16.0 million, or 32.2%, for the three months ended March 31, 2010 compared to the three months ended March 31, 2009, primarily due to lower sales prices ($42.6 million), increased fiber costs ($15.7 million), charges related to the closure of the Ackerman, Mississippi wood products facility ($2.0 million) and asset disposals required for our major energy project at our Counce, Tennessee and Valdosta, Georgia linerboard mills ($2.0 million). Partially offsetting these items was increased containerboard and corrugated products sales volume ($26.1 million), decreased energy ($6.7 million) and chemical costs ($3.0 million) in addition to income related to alternative fuel tax mixture credits generated in 2009 ($9.2 million), which is fully described in Note 13 to the condensed consolidated financial statements.
Selling and administrative expenses increased $1.0 million, or 2.2%, for the three months ended March 31, 2010 compared to the same period in 2009, as a result of increased public warehousing costs ($0.5 million) related to increased customer requirements and increased costs for travel ($0.2 million) and relocation ($0.2 million).
Net cash provided by operating activities for the three months ended March 31, 2010 was $14.5 million compared to $50.7 million for the three months ended March 31, 2009, a decrease of $36.2 million, or 71.4%. Net income, excluding the income from the alternative fuel mixture tax credits of $9.2 million (described in Note 13 to the financial statements included in this report) and the $2.5 million charge from asset disposals related to the mill energy projects and the announced closure of Ackerman, was $12.5 million for the first three months of 2010 compared to $25.7 million for the comparable period in 2009, a decrease of $13.2 million that reduced net cash provided by operating activities. This was partially offset by a higher deferred tax provision in 2010 of $11.5 million. Additionally, requirements for operating assets and liabilities were higher by $34.1 million in 2010 compared to 2009. This was primarily due to higher accounts receivable levels of $32.4 million as a result of the higher sales volumes in 2010 previously described. Cash requirements for operating activities are subject to PCAs operating needs, the timing of collection of receivables and payments of payables and expenses, and seasonal fluctuations in the Companys operations.
Net cash used for investing activities for the three months ended March 31, 2010 increased $35.0 million, or 119.2%, to $64.3 million, compared to the three months ended March 31, 2009. The increase was primarily related to higher additions to property, plant and equipment of $35.2 million, which included $39.7 million for the major energy optimization projects, during the three months ended March 31, 2010 compared to the same period in 2009.
PCA currently expects to incur capital expenditures of about $300.0 million in 2010, including up to $176.0 million for major energy optimization projects at its Counce and Valdosta mills. The remaining $124.0 million in expenditures will be used primarily for maintenance capital, cost reduction, business growth and environmental compliance. As of March 31, 2010, PCA spent $63.1 million for capital expenditures and had committed to spend an additional $275.0 million in the remainder of 2010 and beyond.
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