PCA(US:PKG) ZACKSยท2025-10-23 16:11Core Insights - Packaging Corporation of America (PKG) reported adjusted earnings per share (EPS) of $2.73 for Q3 2025, missing the Zacks Consensus Estimate of $2.83 by 4% [1] - The company's revenues increased by 6% year over year to $2.3 billion, surpassing the Zacks Consensus Estimate of $2.26 billion [4] - The company anticipates a Q4 2025 EPS of $2.40, indicating a year-over-year decline of 2.8% and a sequential decline of 12% [11] Financial Performance - Adjusted EPS increased by 3% year over year, despite missing estimates [10] - Including one-time items, earnings were $2.51 per share, down from $2.64 in the prior year [3] - Gross profit decreased by 0.2% year over year to $504 million, with a gross margin of 21.8% compared to 23.1% a year ago [4] Segment Performance - In the Packaging segment, sales rose 6% year over year to $2.13 billion, with total corrugated product shipments down 1.1% year over year [6] - Containerboard production was 1,255,000 tons at legacy mills and 47,000 tons at acquired mills, with adjusted operating profit of $348 million [7] - The Paper segment's revenues were $161 million, up 1.2% year over year, but adjusted operating profit fell to $36 million from $39 million [8] Cost and Expenses - Cost of products sold increased by 8% year over year to $1.81 billion [4] - Selling, general and administrative expenses totaled $154 million, down from $162 million in the prior year [5] - Higher operating costs, lower production volumes, and increased depreciation and freight expenses impacted overall profitability [2] Cash Flow and Balance Sheet - The cash balance at the end of Q3 was $806.4 million, down from $841 million at the end of the prior year [9] Market Outlook - The company expects higher daily corrugated shipments in Q4 but anticipates seasonal cost and mix headwinds [12] - Containerboard production is expected to dip sequentially due to maintenance outages, impacting earnings by 29 cents [12] - The Packaging segment is projected to experience lower prices due to a less favorable seasonal mix [13] Stock Performance - PKG shares have declined by 8.3% over the past year, outperforming the industry decline of 34.0% [15]