PCA(US:PKG)2026-01-28 15:00Financial Data and Key Metrics Changes - Fourth quarter net income for 2025 was $102 million or $1.13 per share, while excluding special items, it was $209 million or $2.32 per share, compared to $222 million or $2.47 per share in Q4 2024 [2][3] - Fourth quarter net sales increased to $2.4 billion in 2025 from $2.1 billion in 2024, and total company EBITDA, excluding special items, rose to $486 million in 2025 from $439 million in 2024 [3][4] - Full year 2025 earnings were $888 million or $9.84 per share, up from $815 million or $9.04 per share in 2024, with total net sales for 2025 at $9 billion compared to $8.4 billion in 2024 [4][3] Business Line Data and Key Metrics Changes - The packaging segment's EBITDA, excluding special items, was $476 million in Q4 2025 with sales of $2.2 billion, resulting in a margin of 21.7%, compared to EBITDA of $426 million and sales of $2 billion in Q4 2024 [6][7] - For the full year 2025, packaging segment EBITDA was $1.83 billion with sales of $8.3 billion, achieving a margin of 22.1%, up from $1.6 billion and $7.7 billion in 2024 [7] - The paper segment's EBITDA, excluding special items, was $37 million in Q4 2025 with sales of $154 million, resulting in a margin of 24.2%, compared to $39 million and $151 million in Q4 2024 [17] Market Data and Key Metrics Changes - Domestic containerboard and corrugated products prices were $0.50 per share above Q4 2024 but down $0.32 per share compared to Q3 2025, with export containerboard prices flat year-over-year [11] - Corrugated shipments per day were down 1.7% compared to last year's record Q4, although total shipments for the year were essentially flat with 2024 [12][13] - January bookings in legacy corrugated and sheet plants were up over 11%, indicating a positive trend in underlying demand [13] Company Strategy and Development Direction - The company is focused on integrating the acquired Greif operations and improving operational efficiency, with plans for gas turbine energy projects to enhance energy independence and reduce costs [10][22] - The company aims to maintain a balanced approach to capital allocation, investing in growth while returning value to shareholders through dividends and buybacks [22] - The company expects to run its mills at full capacity to meet demand, with a forecast for solid year-over-year growth in corrugated volume [23] Management's Comments on Operating Environment and Future Outlook - Management noted that demand is improving, with expectations for year-over-year growth in corrugated volume and strong shipment volume from acquired plants [23] - The company anticipates challenges from inflationary pressures on costs, particularly in labor, energy, and materials, but expects to benefit from the Wallula reconfiguration starting in March [25] - Management expressed confidence in the operational improvements made at the Massillon and Riverville mills, which are expected to enhance efficiency and reliability [36][75] Other Important Information - Cash provided by operations reached a record $443 million in Q4, with free cash flow of $124 million after capital expenditures [19] - The company has planned annual outages in 2026, which are expected to impact earnings significantly, with estimated costs of approximately $1.39 per share [21] - The company has approximately $283 million of remaining share repurchase authority, indicating ongoing commitment to returning capital to shareholders [19] Q&A Session Summary Question: Can you provide more granularity on cost increases in the containerboard business? - Management indicated uncertainty due to seasonal weather impacts and inflationary concerns, but estimated a cost increase of about $10 per ton [28][34] Question: What is the impact of winter storms on operations? - Management noted that winter storms caused power outages and disruptions, but the mills managed to run through the challenges, although shipping was affected [30][31] Question: How are the Greif acquisition commitments being handled? - Management confirmed that they are discontinuing the purchase commitments made by Greif and will not pursue similar agreements moving forward [46] Question: What is the outlook for demand in the housing and protein markets? - Management reported improved demand across all segments, with positive consumer sentiment and GDP growth contributing to a more favorable outlook [50][51] Question: How does the company view the containerboard market compared to last year? - Management expressed a more positive outlook compared to the previous year, citing improved visibility and consumer sentiment as key factors [62]