PCA is the third largest producer of containerboard products and the third largest producer of uncoated freesheet paper in North America. PCA operates eight mills and 94 corrugated plants and related facilities.
In the Packaging segment, total corrugated products shipments with one additional workday were up 5.6% and shipments per day were up 3.9% over last year’s first quarter. Containerboard production was 1,047,000 tons, and containerboard inventory was down 79,000 tons compared to Q1 2019 and down 39,000 tons from Q4 2019. In the Paper segment, sales volume was down 14,000 tons compared to Q1 2019 and down 26,000 tons from Q4 of 2019.
Commenting on reported results, Mark W. Kowlzan, Chairman and CEO, said, “Strong demand in our Packaging segment drove first-quarter results. We had record first-quarter volume in our containerboard mills and a new all-time quarterly volume record in our corrugated products plants. The integration rate of our mill’s volume into our plants was 95% and our containerboard inventory was at the lowest level since our acquisition of the Boise packaging business. In our Paper segment, volume and prices were lower as expected, but both were slightly better than anticipated. The scheduled maintenance outages at all mills went very well, which helped us meet the better than expected demand in our Packaging and Paper segments.
"Both the mills and the corrugated products plants did a great job of running their operations safely, and in a cost-effective manner, while facing the unprecedented conditions brought on by the COVID-19 pandemic. All facilities operated in adherence to CDC guidelines and followed a strict protocol for workplace operations as well as notification of and response to potential issues. So far, we have not experienced any material disruption in our operations or our supply chain due to the pandemic. I am extremely proud of the effort, responsiveness, and sacrifices displayed by all PCA employees as well as our customers and suppliers.
“These may be the most unpredictable and unprecedented times that, hopefully, we will ever encounter. Not a day passes that we realize something new being impacted in a way we had never thought of or imagined. Our consistent approach towards prudent capital allocation and sound financial governance has served us well for many years, and is certainly helpful in times like this. PCA entered these uncertain economic times brought on by the COVID-19 crisis from a position of financial and balance sheet strength. Our focus has been and will remain on preserving that strength through the actions and decisions we make as a management team. Our company’s liquidity position has never been higher, nor has our confidence in the future success of PCA. We are well-positioned to manage whatever lies ahead, while ensuring we take care of the needs and expectations of our employees, customers, suppliers and shareholders.
“However, this confidence does not translate to the same degree of short-term predictability or guidance specifics that we normally provide at this time. Due to the uncertain scope and duration of the pandemic, and the timing of the global recovery and economic normalization, we are not able to properly quantify our guidance for Q2 2020. We have already announced the actions being taken in our Paper business, and we believe these actions will position us properly for what we anticipate right now for the second half of 2020.
"However, nothing is certain, especially now, and it may require further action to be taken. We know that we experienced a demand surge in our Packaging business in the first quarter, and the second quarter has also begun quite strong as well. Our containerboard inventory at the end of the first quarter was at the lowest levels, both in total and in weeks-of-supply, since our acquisition of the packaging business from Boise. And while recycled fiber prices began moving significantly higher during the first quarter, our position as a primarily virgin fiber producer minimizes this impact compared to other producers. However, it only makes logical sense that demand in certain end markets will return to more normal growth trends at some point, although we have been successful at securing new business in end markets with a stronger demand outlook versus markets whose demand may be impacted more negatively. Also, it is impossible to predict what additional health-related measures will be or must be taken, or dictated to us by the various state and local governments where we operate. Such events and actions could adversely impact the operation of not only our facilities, but also the availability of services and products we rely upon from our suppliers.”