PCA(US:PKG)2025-07-24 14:02Financial Data and Key Metrics Changes - The company reported second quarter net income of $242 million or $2.67 per share, an increase from $199 million or $2.20 per share in 2024 [4] - Excluding special items, net income was $224 million or $2.48 per share compared to $199 million or $2.20 per share in 2024, reflecting a $0.28 per share increase driven by higher prices and lower fiber costs [4][5] - Second quarter net sales were $2.2 billion in 2025, up from $2.1 billion in 2024 [4] - Total company EBITDA for the second quarter, excluding special items, was $451 million in 2025 compared to $400 million in 2024 [4] Business Line Data and Key Metrics Changes - In the Packaging segment, EBITDA excluding special items was $453 million with sales of $2 billion, resulting in a margin of 22.6%, compared to last year's EBITDA of $400 million and sales of $1.9 billion with a margin of 21% [5][6] - The Paper segment reported EBITDA excluding special items of $30 million with sales of $146 million, yielding a margin of 20.8%, compared to $31 million and $150 million in sales in 2024 [12] Market Data and Key Metrics Changes - Domestic containerboard and corrugated products prices and mix were $0.95 per share above 2024, with export containerboard prices up $0.03 per share versus last year's second quarter [8] - Export containerboard sales were lower, with a production of 85,000 fewer tons than in 2024 [6] Company Strategy and Development Direction - The company announced an agreement to acquire the Greif containerboard business, which is expected to provide a strong growth platform for both containerboard and corrugated products [7][10] - The acquisition is anticipated to be completed by the end of the third quarter, subject to regulatory approval [7] Management's Comments on Operating Environment and Future Outlook - Management noted that while corrugated customers remained cautious, there was steady improvement in bookings and shipments as July progressed [15] - The company expects higher corrugated shipments and containerboard production in the third quarter, despite lower export containerboard sales due to the global trade environment [15][16] - Management expressed optimism about potential upside if global trade issues and tariffs are resolved [70] Other Important Information - Cash provided by operations was $300 million in the quarter, with free cash flow of $130 million [13] - The company has a quarter-end cash balance, including marketable securities, of $956 million, with liquidity of approximately $1.3 billion [14] Q&A Session Summary Question: Can you talk about bookings and billings to start the new quarter? - Bookings are trending at 2% over Q2 2024, with a good start compared to last year's strong performance [23] Question: What was behind the better performance in operations? - The company operated at approximately 99% uptime performance, executing efficiently despite some downtime due to demand [25] Question: Can you clarify the impact of export sales on revenue and EBITDA? - The increase in revenue and EBITDA per ton is primarily due to price increases rather than mix changes [29] Question: What is the outlook for e-commerce growth? - Customers in the e-commerce sector are still growing mid-single digits, with more growth expected in the second half of the year [79] Question: How will the Greif acquisition impact recycled mix and customer sets? - The recycled mix is expected to increase from around 20% to approximately 30% post-acquisition, providing better opportunities in the market [86] Question: What is the expected marginal cost of the new debt from the Greif acquisition? - The company is modeling about a 5.5% interest rate on the new debt, resulting in around $100 million incremental interest [100]