PCA(PKG) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Second Quarter 2025 Financial Highlights PCA reported strong Q2 2025 results, achieving $242 million net income, $2.67 diluted EPS, and $2.2 billion net sales Q2 2025 vs Q2 2024 Key Financials | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------------------- | :------ | :------ | :----- | | Net Income (Reported) | $242M | $198.9M | +$43.1M | | Net Income (Excl. Special Items) | $224M | $198.6M | +$25.4M | | Diluted EPS (Reported) | $2.67 | $2.21 | +$0.46 | | Diluted EPS (Excl. Special Items) | $2.48 | $2.20 | +$0.28 | | Net Sales | $2.2B | $2.1B | +$0.1B | Earnings Drivers and Special Items Q2 2025 earnings (excl. special items) increased by $0.28 per share, driven by higher prices and lower fiber costs, despite increased operating and maintenance expenses - Q2 2025 EPS (excl. special items) was $0.07 above guidance of $2.41, mainly due to lower operating and fiber costs[6] - Key drivers for the $0.28 EPS increase (excl. special items) YoY: * Positive Drivers: Higher prices and mix (Packaging: $0.98, Paper: $0.04), lower fiber costs ($0.13), lower tax rate ($0.02)[5] * Offsetting Factors: Higher operating costs ($0.30), higher maintenance outage expense ($0.21), lower production and export sales volume (Packaging: $0.13), higher depreciation ($0.10), higher fixed and other expense ($0.09), lower volume (Paper: $0.02), higher freight ($0.02), higher interest expense ($0.02)[5] - Special items in Q2 2025 primarily included gains from real estate sales from closed corrugated products facilities, partially offset by costs related to the pending Greif containerboard business acquisition[4] Segment Performance Overview Packaging segment achieved significant operating income and EBITDA growth, with Paper maintaining profitability despite a sales volume decrease Segment Operating Income (Excl. Special Items) (Millions USD) | Segment | Q2 2025 | Q2 2024 | YoY Change | | :-------- | :------ | :------ | :--------- | | Packaging | $321.7 | $279.9 | +$41.8 | | Paper | $25.8 | $26.1 | -$0.3 | | Corporate | $(36.8) | $(30.5) | -$6.3 | Segment EBITDA (Excl. Special Items) (Millions USD) | Segment | Q2 2025 | Q2 2024 | YoY Change | | :-------- | :------ | :------ | :--------- | | Packaging | $452.9 | $400.0 | +$52.9 | | Paper | $30.3 | $30.6 | -$0.3 | | Corporate | $(32.4) | $(26.6) | -$5.8 | - Packaging segment corrugated products shipments were up 1.7% per day and flat overall compared to Q2 2024, with containerboard production at 1,195,000 tons[8] - Paper segment sales volume was down 5% from Q2 2024 and 7% compared to Q1 2025[8] Management Commentary & Outlook CEO highlighted strong Q2 operational performance, with Q3 guidance of $2.80 per share anticipating higher corrugated shipments and stable pricing - Q2 performance included strong earnings and cash flows, higher margins in Packaging, consistent pricing, and solid corrugated products volume[9] - Q3 2025 earnings guidance is $2.80 per share, excluding special items[9] - Q3 expectations include: * Higher corrugated shipments driving increased containerboard production[9] * Lower export containerboard sales due to global trade environment[9] * Relatively flat prices and mix in Packaging and Paper segments[9] * Increased Paper segment production and sales due to completed mill outage and seasonal back-to-school orders[9] * Lower maintenance outage expense (no scheduled outages)[9] * Higher freight costs due to rail rate increases[9] * Operating costs near Q2 levels, slightly lower fiber costs[9] * Guidance excludes impact from pending Greif acquisition[9] Company Overview & Forward-Looking Statements Company Description PCA is a leading North American producer of containerboard products and uncoated freesheet paper, operating eight mills and 85 plants - PCA is the third largest producer of containerboard products and a leading producer of uncoated freesheet paper in North America[10] - Operates eight mills and 85 corrugated products plants and related facilities[10] Forward-Looking Statements Forward-looking statements on future financial performance and strategic initiatives are subject to inherent risks and uncertainties - Forward-looking statements relate to future earnings, financial condition, acquisition benefits, industry, and business strategy[11] - Key risk factors include general economic conditions, paper and packaging industry conditions (competition, demand, pricing), fluctuations in wood fiber, recycled fiber, and energy costs, unplanned outages, and legislative/regulatory requirements[11] Investor Information Contact & Conference Call Details Investor relations contact and Q2 2025 earnings conference call details, including access and webcast information, are provided - Investor Relations contact: Barbara Sessions, (877) 454-2509[12] Q2 2025 Earnings Conference Call Details | Item | Detail | | :---------------- | :---------------------------------------------------------------- | | What | Packaging Corporation of America's 2nd Quarter 2025 Earnings Conference Call | | When | Thursday, July 24, 2025 at 9:00am Eastern Time | | Pre-registration | https://dpregister.com/sreg/10195048/fe1ab3f0a8 | | Call-in Number | (833) 816-1102 (U.S.); (866) 605-3852 (Canada); (412) 317-0684 (International) | | Webcast Info | www.packagingcorp.com | | Rebroadcast Dates | July 24, 2025 through August 7, 2025 | Detailed Financial Statements Consolidated Earnings Results (Unaudited) Q2 2025 consolidated results show increased net sales, net income, and diluted EPS compared to Q2 2024 Consolidated Earnings Results (Three Months Ended June 30) (Millions USD) | Metric | Q2 2025 | Q2 2024 | | :-------------------------------- | :-------- | :-------- | | Net sales | $2,171.3 | $2,075.3 | | Gross profit | $483.0 | $437.7 | | Income from operations | $333.7 | $276.0 | | Income before taxes | $320.6 | $266.7 | | Net income | $241.5 | $198.9 | | Diluted EPS | $2.67 | $2.21 | | Capital spending | $169.7 | $245.0 | | Cash, cash equivalents, and marketable debt securities | $955.9 | $1,172.8 | Consolidated Earnings Results (Six Months Ended June 30) (Millions USD) | Metric | H1 2025 | H1 2024 | | :-------------------------------- | :-------- | :-------- | | Net sales | $4,312.3 | $4,054.8 | | Gross profit | $937.8 | $808.1 | | Income from operations | $614.0 | $472.0 | | Income before taxes | $588.0 | $454.3 | | Net income | $445.3 | $345.9 | | Diluted EPS | $4.93 | $3.84 | | Capital spending | $317.8 | $321.7 | | Cash, cash equivalents, and marketable debt securities | $955.9 | $1,172.8 | - Q2 2025 special items include $24.6 million income from gains on sales of corrugated products facilities and $1.6 million charges related to the Greif acquisition[14] Segment Information (Unaudited) Packaging segment reported increased sales and operating income in Q2 2025, while Paper segment saw slight decreases year-over-year Segment Sales (Three Months Ended June 30) (Millions USD) | Segment | Q2 2025 | Q2 2024 | | :-------- | :-------- | :-------- | | Packaging | $2,005.9 | $1,908.3 | | Paper | $145.8 | $150.1 | | Corporate | $19.6 | $16.9 | | Total | $2,171.3 | $2,075.3 | Segment Operating Income (Three Months Ended June 30) (Millions USD) | Segment | Q2 2025 | Q2 2024 | | :-------- | :-------- | :-------- | | Packaging | $346.3 | $279.8 | | Paper | $25.8 | $26.7 | | Corporate | $(38.4) | $(30.5) | | Total | $333.7 | $276.0 | Segment Operating Income Excluding Special Items (Three Months Ended June 30) (Millions USD) | Segment | Q2 2025 | Q2 2024 | | :-------- | :-------- | :-------- | | Packaging | $321.7 | $279.9 | | Paper | $25.8 | $26.1 | | Corporate | $(36.8) | $(30.5) | | Total | $310.7 | $275.5 | Non-GAAP Financial Measures Reconciliation Reconciliation of Segment Operating Income (Unaudited) GAAP segment operating income is reconciled to non-GAAP measures by adjusting for special items, providing a clearer view of underlying segment performance Reconciliation of Segment Operating Income (Three Months Ended June 30) (Millions USD) | Segment | GAAP Operating Income (Q2 2025) | Special Items (Q2 2025) | Excl. Special Items (Q2 2025) | GAAP Operating Income (Q2 2024) | Special Items (Q2 2024) | Excl. Special Items (Q2 2024) | | :-------------------- | :------------------------------ | :---------------------- | :------------------------------ | :------------------------------ | :---------------------- | :------------------------------ | | Packaging | $346.3 | $(24.6) | $321.7 | $279.8 | $0.1 | $279.9 | | Paper | $25.8 | $0.0 | $25.8 | $26.7 | $(0.6) | $26.1 | | Corporate and Other | $(38.4) | $1.6 | $(36.8) | $(30.5) | $0.0 | $(30.5) | | Total Operations | $333.7 | $(23.0) | $310.7 | $276.0 | $(0.5) | $275.5 | Reconciliation of Net Income and EPS Excluding Special Items (Unaudited) GAAP net income and diluted EPS are reconciled to non-GAAP measures by adjusting for special items, offering a normalized view of profitability Reconciliation of Net Income and Diluted EPS (Three Months Ended June 30) (Millions USD, except EPS) | Metric | GAAP (Q2 2025) | Special Items (Q2 2025) | Excl. Special Items (Q2 2025) | GAAP (Q2 2024) | Special Items (Q2 2024) | Excl. Special Items (Q2 2024) | | :-------------------- | :------------- | :---------------------- | :------------------------------ | :------------- | :---------------------- | :------------------------------ | | Net Income | $241.5 | $(17.3) | $224.2 | $198.9 | $(0.3) | $198.6 | | Diluted EPS | $2.67 | $(0.19) | $2.48 | $2.21 | $0.00 | $2.20 | Reconciliation of Net Income and Diluted EPS (Six Months Ended June 30) (Millions USD, except EPS) | Metric | GAAP (H1 2025) | Special Items (H1 2025) | Excl. Special Items (H1 2025) | GAAP (H1 2024) | Special Items (H1 2024) | Excl. Special Items (H1 2024) | | :-------------------- | :------------- | :---------------------- | :------------------------------ | :------------- | :---------------------- | :------------------------------ | | Net Income | $445.3 | $(12.9) | $432.4 | $345.9 | $7.3 | $353.2 | | Diluted EPS | $4.93 | $(0.14) | $4.79 | $3.84 | $0.08 | $3.92 | Reconciliation of EBITDA and EBITDA Excluding Special Items (Unaudited) GAAP net income is reconciled to EBITDA and then to EBITDA excluding special items, providing a comprehensive view of operational performance Reconciliation of EBITDA and EBITDA Excluding Special Items (Three Months Ended June 30) (Millions USD) | Metric | Q2 2025 | Q2 2024 | | :-------------------------------- | :-------- | :-------- | | Net income | $241.5 | $198.9 | | EBITDA | $474.4 | $404.5 | | Special items | $(25.2) (Facilities closure) + $1.6 (Acquisition costs) | $0.1 (Facilities closure) - $0.6 (Jackson mill conversion) | | EBITDA excluding special items | $450.8 | $404.0 | Reconciliation of EBITDA and EBITDA Excluding Special Items (Six Months Ended June 30) (Millions USD) | Metric | H1 2025 | H1 2024 | | :-------------------------------- | :-------- | :-------- | | Net income | $445.3 | $345.9 | | EBITDA | $892.6 | $728.9 | | Special items | $(22.4) (Facilities closure) + $1.6 (Acquisition costs) | $8.3 (Jackson mill conversion) | | EBITDA excluding special items | $871.8 | $737.2 | Reconciliation of Segment EBITDA and Segment EBITDA Excluding Special Items (Unaudited) Segment operating income is reconciled to segment EBITDA and then to segment EBITDA excluding special items, offering a segment-specific view of profitability Reconciliation of Segment EBITDA and Segment EBITDA Excluding Special Items (Three Months Ended June 30) (Millions USD) | Segment | GAAP Operating Income (Q2 2025) | EBITDA (Q2 2025) | Special Items (Q2 2025) | EBITDA Excl. Special Items (Q2 2025) | | :-------------------- | :------------------------------ | :--------------- | :---------------------- | :------------------------------------- | | Packaging | $346.3 | $478.1 | $(25.2) | $452.9 | | Paper | $25.8 | $30.3 | $0.0 | $30.3 | | Corporate and Other | $(38.4) | $(34.0) | $1.6 | $(32.4) | | Total | $333.7 | $474.4 | $(23.6) | $450.8 | Reconciliation of Segment EBITDA and Segment EBITDA Excluding Special Items (Six Months Ended June 30) (Millions USD) | Segment | GAAP Operating Income (H1 2025) | EBITDA (H1 2025) | Special Items (H1 2025) | EBITDA Excl. Special Items (H1 2025) | | :-------------------- | :------------------------------ | :--------------- | :---------------------- | :------------------------------------- | | Packaging | $624.4 | $884.5 | $(22.4) | $862.1 | | Paper | $61.4 | $70.5 | $0.0 | $70.5 | | Corporate and Other | $(71.8) | $(62.4) | $1.6 | $(60.8) | | Total | $614.0 | $892.6 | $(20.8) | $871.8 |