Packaging Corporation of America NYSE: PKG reported first-quarter 2026 net income of $171 million, or $1.91 per share, with results affected by special items tied primarily to mill restructuring and acquisition integration. Excluding special items, the company posted net income of $215 million, or $2.40 per share, up from $208 million, or $2.31 per share, in the first quarter of 2025, Chairman and CEO Mark Kowlzan said on the company’s earnings call.
Net sales increased to $2.4 billion from $2.1 billion a year earlier. Total company EBITDA excluding special items rose to $486 million from $421 million in the prior-year quarter, Kowlzan said.
Earnings bridge highlights and special items
Kowlzan said first-quarter results included special items expense of $0.49 per share, “primarily for the Wallula mill restructuring charges,” as well as costs related to the acquisition and integration of Greif’s containerboard business and costs related to the closure of corrugated products facilities.
Excluding those items, he said earnings were up $0.09 per share year over year, driven by several factors, including:
- Higher prices and mix in the legacy Packaging segment (+$0.17 per share)
- Lower fiber costs in legacy packaging (+$0.11)
- Lower maintenance outage expenses (+$0.09)
- Lower labor and operating costs in legacy packaging (+$0.08)
Those benefits were partially offset by headwinds including higher freight costs (-$0.13 per share) and lower production and sales volume in the legacy packaging business (-$0.11), among other items, Kowlzan said.
Kowlzan also noted the acquired Greif operations, including interest on acquisition debt, generated a loss of $0.06 per share in the quarter. He attributed this primarily to lower volume and higher costs stemming from a January storm that affected the Riverville mill and corrugated operations, as well as “higher than forecast freight and recycled fiber costs and unfavorable mix.”
Packaging segment: higher margins, full capacity, and tighter linerboard
In the Packaging segment, PCA reported first-quarter EBITDA excluding special items of $482 million on sales of $2.2 billion, representing a 22% margin. That compared with EBITDA of $409 million on sales of $2.0 billion, for a 20.8% margin, in the year-ago quarter, Kowlzan said.
Operationally, PCA ran at full capacity during the quarter, completed an outage on the Counce No. 1 machine, and completed outages on the Counce No. 2 machine and at the Jackson mill earlier in April. Kowlzan said the Wallula mill reconfiguration was “successfully completed,” which “immediately helped us reduce our costs of fiber, power, and labor.”
PCA produced 1.398 million tons of containerboard in the quarter. Legacy mills produced 1.210 million tons, down 25,000 tons from the fourth quarter of 2025 and down 40,000 tons from the first quarter of 2025, Kowlzan said. System-wide inventories were down 39,000 tons from the end of the fourth quarter, and PCA “meaningfully reduced the inventories carried by the acquired Greif plants.”
Kowlzan described an “increasingly tight linerboard situation,” saying mills needed to “run well” amid an upcoming busy outage schedule in the second quarter. He highlighted performance at Jackson, which “set new production and speed records,” and said both Counce machines returned earlier than scheduled from outages.
Pricing actions, corrugated demand, and Greif integration progress
President Tom Hassfurther said PCA’s corrugated operations had a “very strong quarter,” with domestic containerboard and corrugated products prices and mix $0.17 per share above the first quarter of 2025. In the legacy business, corrugated shipments per day were up 2.8% year over year, setting a new record on a per-day basis; with one fewer workday, total shipments were up 1.2%, he said.
Hassfurther said legacy shipments ran “consistently 2%-3% ahead of last year” from mid-January through the quarter, and were “very strong so far in April.” Asked about April trends, he told Bank of America’s George Staphos that legacy bookings and billings were up 4.5%, adding that PCA was not seeing any pre-buying related to announced price increases. “We see no pre-buy at all right now,” Hassfurther said, adding that customers continued to operate with lean inventories.
Regarding pricing, Hassfurther said reported containerboard prices were up net $50 per ton from the beginning of the year, but the company did not get a meaningful benefit in the first quarter due to timing. He said PCA expects to start seeing benefit during May, with the “normal implementation period beginning in June,” and that “some benefit” should arrive in the second quarter with the majority in the third quarter.
On Greif integration, Hassfurther said PCA intends to complete systems integration by the end of the third quarter, with all operations running on PCA’s decentralized systems. He said inventory reduction at Greif plants progressed during the quarter, with carried inventories reduced by around 10,000 tons.
During Q&A, CFO Kent Pflederer said February performance at Greif’s mills was strong enough that PCA “dialed it back a little bit in March” to bring inventory levels down. Hassfurther also said PCA did not anticipate the degree of seasonality in Greif’s box business, describing the first quarter as “by far their weakest quarter in terms of volume,” with acceleration expected through the rest of the year.
On synergies, Pflederer said PCA was seeing a run rate of about $15 million to $20 million from productivity improvements at Riverville and Massillon based on February performance. He said the company was “well on target to be at that $30 million run rate by the end of the year,” with additional benefits expected from freight optimization and integration opportunities across PCA and Greif systems.
Paper segment and cash flow details
In the Paper segment, first-quarter EBITDA excluding special items was $38 million on sales of $160 million, for a 23.6% margin, compared with $40 million on $154 million in sales (26.1% margin) in the prior-year quarter, Kowlzan said. Volume was approximately 3% above the first quarter of 2025 and about 4% above the fourth quarter of 2025. Prices and mix were up 1% year over year and flat sequentially. Kowlzan said the company was working to implement previously announced paper price increases and expected to benefit in the second quarter.
Pflederer said cash provided by operations was $329 million. After $165 million of capital spending, free cash flow was $164 million. He said key cash payments in the quarter included $112 million in dividends, $59 million in share repurchases, $18 million in cash taxes, and $11 million in net interest. PCA repurchased 266,000 shares at an average price of $228.78, leaving about $224 million of remaining authorization.
Excluding special items, the effective tax rate was just under 23%, below the company’s forecasted 2026 full-year book effective rate of 25% due to favorability from vesting of employee equity awards. Pflederer said PCA expected the second-quarter tax rate to be approximately 26%.
Pflederer reiterated full-year forecasts of $840 million to $870 million in capital spending and $700 million of depreciation and amortization (DD&A). Responding to a question on DD&A, he said first-quarter depreciation included “a chunk” attributable to completion of the Wallula restructuring and that, excluding special items, the company expected about a $0.03 increase from the first quarter to the second quarter.
Outages, cost outlook, and second-quarter guidance
Pflederer said outage expense was $0.14 per share in the first quarter. He projected outage expense of $0.36 in the second quarter, $0.31 in the third, and $0.64 in the fourth, totaling $1.44 for the year. In Packaging, the Counce and Jackson outages were completed earlier in April, with additional outages scheduled at Tomahawk, Filer City, and Wallula later in the second quarter. In Paper, the International Falls outage is scheduled for the third quarter.
He also outlined sequential cost headwinds heading into the second quarter, including approximately $0.22 of additional outage costs and higher share-based compensation expense. Pflederer said overall costs for freight, fiber, and chemicals could be “maybe $0.15 higher” from the first quarter to the second quarter, and said diesel-driven freight inflation was expected to continue.
Kowlzan said PCA expects packaging demand to remain strong in the second quarter, with corrugated volume increasing due to an additional shipping day and seasonal improvement, particularly in the acquired Greif operations. He said pricing in containerboard and corrugated products should move higher later in the quarter as increases are implemented and mix improves. For the Paper segment, he said PCA expects flat volume and higher prices as it continues to run at full capacity and implements paper price increases.
Taking these factors together, Kowlzan guided to second-quarter earnings of $2.33 per share excluding special items.
About Packaging Corporation of America NYSE: PKG
Packaging Corporation of America NYSE: PKG is a leading North American manufacturer of containerboard and corrugated packaging products. The company produces a range of paper-based packaging solutions including linerboard, corrugating medium, corrugated shipping containers, retail-ready packaging and point-of-purchase displays. In addition to core packaging products, Packaging Corporation of America offers packaging design, testing and supply-chain services intended to optimize protection, cost and sustainability for customers.
Headquartered in Lake Forest, Illinois, the company operates an integrated network of mills and corrugated manufacturing facilities across the United States and serves customers throughout North America in industries such as e-commerce, grocery and food & beverage, consumer packaged goods and industrial markets.
See Also
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Packaging Corporation of America, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Packaging Corporation of America wasn't on the list.
While Packaging Corporation of America currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Looking for the next FAANG stock before everyone has heard about it? Click the link to see which stocks MarketBeat analysts think might become the next trillion dollar tech company.
Get This Free Report
