Packaging Corporation of America Q3 Earnings Call Highlights

Key Points

• Q3 earnings exceeded expectations: Adjusted EPS rose to $3.04 from $2.73 a year earlier, surpassing guidance of $2.91, while sales increased to $2.6 billion and adjusted EBITDA climbed to $577 million.
• Pricing and Greif integration boosted results: Packaging profitability benefited from containerboard price increases and a $0.24-per-share year-over-year contribution from the acquired Greif business. PCA said Greif synergies are running at $40 million to $50 million annually.
• Q4 outlook reflects solid demand but higher costs: PCA forecasts adjusted EPS of $2.81, supported by continued pricing gains and corrugated shipments, but expects increased maintenance outages, freight, fiber, chemical and energy expenses to weigh on results.

Packaging Corporation of America NYSE: PKG reported third-quarter 2026 net income of $262 million, or $2.93 per share, while adjusted net income excluding special items totaled $272 million, or $3.04 per share. Adjusted earnings rose from $2.73 per share in the third quarter of 2025 and exceeded the company’s guidance of $2.91 per share.

Net sales increased to $2.6 billion from $2.3 billion a year earlier, while total company EBITDA excluding special items rose to $577 million from $503 million. Chairman and Chief Executive Officer Mark Kowlzan said the quarter benefited from price realization and a stronger-than-expected contribution from the company’s acquired Greif business, though higher labor, operating, freight and fiber costs tempered the gains.

Special items reduced quarterly earnings by $0.11 per share and primarily included costs and write-offs related to facility closures, acquisition and integration activities, a fire at PCA’s Palmyra, Pennsylvania, sheet feeder, and Wallula restructuring charges.

Pricing and Greif Integration Drive Packaging Results

PCA’s packaging segment generated $578 million of EBITDA excluding special items on $2.4 billion in sales, producing a 23.9% margin. That compared with EBITDA of $492 million on $2.1 billion in sales and a 23.1% margin a year earlier.

Kowlzan said the acquired Greif business contributed $0.24 per share on a year-over-year basis, generating $0.13 per share of earnings in the quarter versus a $0.11 per-share loss in the first month of ownership during the prior-year period. Going forward, PCA said it will no longer separately disclose the acquisition’s earnings contribution because comparable periods will include Greif ownership for the full quarter.

President Tom Hassfurther said domestic containerboard and corrugated product prices and mix contributed $0.75 per share versus the prior-year quarter and $1.11 per share compared with the second quarter. PCA has realized substantially all of its first net $50 price increase and about half of its second $50 increase, he said. The company expects to realize nearly all of the remaining second increase during the fourth quarter.

A third, $70 price increase will be realized across the fourth and first quarters, with the majority expected in the first quarter, according to Hassfurther. He said PCA remains focused on price during the current increase cycle, while describing its overall objective as “profitable revenue growth.”

The company said it is operating in a tight containerboard market that appears to be tightening further as seasonal fourth-quarter demand picks up. PCA’s legacy mills produced 1.286 million tons of containerboard during the quarter, up 77,000 tons from the second quarter and 31,000 tons from a year earlier. Acquired mills produced 203,000 tons, despite an extensive annual maintenance outage at the Riverville mill.

PCA’s systemwide containerboard inventories increased by 34,000 tons from the end of the second quarter. Kowlzan said the inventory build positioned the company to serve customers during the fourth quarter even as three containerboard mills undergo annual maintenance outages.

Demand Trends and Acquisition Synergies

Total corrugated shipments increased about 11% from a year earlier on both a total and per-day basis, while legacy-business shipments declined 0.5%. Hassfurther attributed the legacy decline in part to lower agricultural shipments, including lettuce-related issues affecting customers. He said demand remained solid across much of the rest of PCA’s customer base.

Bookings were strong in September and were up more than 5% in October, according to Hassfurther, while billings lagged somewhat and are expected to catch up in the fourth quarter. PCA forecasts fourth-quarter shipments per day will be at or around the prior-year level, with total shipments higher than the third quarter because of the number of shipping days.

Hassfurther said e-commerce remains a growing end market, though not at its prior growth rate. Protein-related packaging demand, particularly tied to beef, has remained weak, while building products have yet to improve meaningfully, he said.

Integration of the Greif operations continues to advance. PCA’s legacy mills supplied approximately 45,000 more tons of containerboard to the acquired system than they did a year earlier. Hassfurther said the company is ahead of its synergy targets and is currently achieving a synergy run rate between $40 million and $50 million, supported by integration benefits, mill reliability and cost performance. He said acquired mills are operating at a run rate about 70,000 tons above their production level at the time of acquisition.

Cash Flow, Investment and Outlook

Chief Financial Officer Kent Pflederer said cash provided by operations totaled $472 million in the quarter. After $247 million of capital expenditures, PCA generated $225 million in free cash flow. The company paid $134 million in dividends, $66 million in cash taxes and $29 million in net cash interest during the period, and it did not repurchase shares.

PCA now expects 2026 capital expenditures of $865 million to $890 million and depreciation and amortization of just above $705 million, excluding special items. Pflederer said the updated outlook mainly reflects the timing of expenditures and assets placed in service rather than a change in the company’s overall plans.

The company expects fourth-quarter maintenance outage expense of $0.72 per share, bringing the full-year total to $1.48 per share. The fourth-quarter estimate rose by $0.08 per share from the prior update because of timing, an expanded scope of work at Riverville, and additional work planned at DeRidder.

For the fourth quarter, PCA forecast adjusted earnings of $2.81 per share. The company expects solid corrugated demand, continued pricing improvement and higher total corrugated shipments from the third quarter. However, it also expects higher freight, recycled fiber, wood fiber, chemical and energy costs, as well as substantially higher maintenance-outage expenses and lower containerboard production.

Kowlzan said PCA is working toward a containerboard system capacity of roughly 6 million tons through projects at mills including Jackson, Counce, Massillon and Riverville. The company is also pursuing gas-turbine projects at Jackson, DeRidder and Riverville, although the Riverville installation is expected later because it remains in the permitting process.

About Packaging Corporation of America (NYSE:PKG)

Packaging Corporation of America NYSE: PKG is a manufacturer of corrugated packaging and containerboard products serving businesses primarily in the United States. Its products include shipping boxes, retail packaging, displays, protective packaging and specialty corrugated solutions used to transport and present a broad range of consumer and industrial goods.

The company also produces uncoated freesheet paper and related paper products for commercial printing, office use, publishing, converting and other applications.

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