Packaging Corporation of America Completes Acquisition of TimBar

Packaging Corporation of America (PKG) has a market cap of $7.4 billion. It fell by 0.57% to close at $78.91 per share on August 29, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 3.1%, 5.7%, and 27.5%, respectively, on the same day. PKG is trading 3.6% above its 20-day moving average, 8.8% above its 50-day moving average, and 25.6% above its 200-day moving average.

The iShares Global Timber & Forestry ETF (WOOD) invests 3.8% of its holdings in PKG. The ETF tracks the 25 largest publicly listed companies that own or manage forests and timberlands. The YTD price movement of WOOD was 4.1% on August 29.

The market caps of PKG’s competitors are as follows:

• International Paper (IP) — $20.1 billion
• WestRock (WRK) — $12.3 billion
• Domtar (UFS) — $2.4 billion

Packaging Corporation of America has completed the acquisition of TimBar in a cash-free and debt-free transaction and funded this acquisition from a five-year term loan facility of $385 million. This acquisition will improve the financial results of the company.

Packaging Corporation of America reported 2Q16 net sales of $1.42 billion, a fall of 2.5% from the net sales of $1.45 billion in 2Q15. Sales of the packaging and paper segments fell by 1.5% and 5.1%, respectively, between 2Q15 and 2Q16. The company’s gross profit margin and income from operations rose by 3.4% and 1.3%, respectively.

Its net income and EPS (earnings per share) rose to $115.9 million and $1.23, respectively, in 2Q16, compared with $114.0 million and $1.16, respectively, in 2Q15. It reported EBITDA (earnings before interest, tax, depreciation, and amortization) excluding special items of $290.4 million in 2Q16, a rise of 1.1% from 2Q15. PKG’s capital spending fell by 20.2%, and its cash balance rose by 30.5% between 2Q15 and 2Q16. Next, we’ll look at Harley-Davidson (HOG).