LAKE FOREST, IL, Feb. 11, 2014 (Business Wire) -Packaging Corporation of America (PKG) reported today fourth quarter record net income of $227 million, or $2.33 per share. Earnings included special items of $1.70 per share of income from the reversal of tax reserves related to alternative energy tax credits, and after tax costs totaling $0.41 per share related primarily to PCA's acquisition of Boise Inc. on October 25, 2013. Excluding special items, net income was $101 million, or $1.04 per share, compared to fourth quarter 2012 net income, excluding special items, of $59 million, or $0.61 per share. Net sales were a record $1.3 billion in the fourth quarter compared to $737 million last year.
The $0.43 per share increase in earnings, excluding special items, was driven by improvements in PCA's earnings of $0.23 per share compared to last year's fourth quarter, and a partial quarter's results from the acquisition of Boise of $0.20 per share. The PCA earnings increase of $0.23 per share resulted from improved price and mix ($0.36) and volume ($0.04), and was partially offset by cost increases for repairs ($0.03), fiber ($0.03), labor ($0.03), energy ($0.02), depreciation ($0.02), chemicals ($0.01) and other items ($0.03).
Full year 2013 earnings, excluding special items, were a record $320 million, or $3.28 per share, compared to 2012 earnings, excluding special items, of $201 million, or $2.06 per share. Full year 2013 net sales were a record $3.7 billion compared to 2012 net sales of $2.8 billion. Full year earnings, including special items, were $436 million, or $4.47 per share, compared to 2012 earnings of $164 million, or $1.68 per share. Details of special items for both years are included in this press release.
PCA's corrugated products shipments were up 4.4% compared to last year's fourth quarter, and were up 24.0% including Boise's partial quarter shipments. Containerboard production, including Boise, was 803,000 tons, up 151,000 tons over last year's fourth quarter. Total containerboard inventories (PCA plus Boise) were down 1,000 tons compared to year-end 2012.
Commenting on PCA's overall results, Mark W. Kowlzan, Chief Executive Officer of PCA, said, "We finished 2013 with another outstanding quarter, achieving all-time record earnings from improved prices, strong corrugated products volume, and productive and efficient mill operations. The integration of Boise's operations with PCA is well underway, and we are finding additional synergy opportunities as the process continues. For the year, our earnings were up 60% over 2012's record earnings, and we have been able to pay down $150 million in debt since the acquisition. Going into 2014, PCA is well positioned to further improve its results and continue to pay down debt."
"Looking ahead to the first quarter," Mr. Kowlzan added, "earnings improvement is expected from a full quarter's operation of Boise with synergies and lower amortization of annual mill outage costs. We also expect higher prices for white papers in the first quarter as a result of announced price increases. Our largest containerboard mill in Counce, Tennessee will be down for a week in March for its annual maintenance outage which will reduce production and increase operating costs. Extremely cold weather and significant snowfalls have resulted in some plant closures and more than normal increases for energy, wood and transportation costs. Labor and benefit costs will be higher with annual wage increases and timing related benefit payments, and we expect a higher tax rate. Considering these items, we currently expect first quarter earnings of $1.00 to $1.05 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 paper mills and 98 corrugated products plants and related facilities.