Packaging Corporation of America Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Q2 Results Overview: Net income was $242 million ($2.67 per share) with net sales of $2.2 billion. Excluding special items, net income was $224 million ($2.48 per share) compared to $199 million ($2.20 per share) in Q2 2024. EBITDA excluding special items was $451 million.
• Packaging Business: EBITDA margin improved, corrugated products performance was consistent with expectations, but export containerboard sales were lower. The organization operated efficiently with high uptime performance.
• Paper Segment: Successfully completed maintenance outage at International Falls Mill, though sales volume was lower. Price increases were implemented during the quarter.
• Greif Acquisition: Announced agreement to acquire Greif containerboard business, which is a well-capitalized business complementing PCA's offerings, with strategic fit and targeting Q3 completion.

Segment Performance

• Packaging Business: Excluding special items, EBITDA in Q2 2025 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 (21% margin). Corrugated products price and volume were generally consistent, but export containerboard sales were lower.
• Paper Segment: EBITDA excluding special items in Q2 2025 was $30 million with sales of $146 million, a 20.8% margin. Sales volume was 5% below Q2 2024 and 7% below Q1 2025 due to a maintenance outage, but price increases were implemented during the quarter.

Guidance

• Third Quarter Expectations: Expect earnings of $2.80 per share excluding special items. Higher corrugated shipments are anticipated, with Packaging segment prices expected to remain relatively flat, Paper segment pricing flat, lower maintenance outage expense, higher freight costs, and slightly lower fiber costs. Guidance does not include impact from the pending Greif acquisition.

Risks

• Forward-looking statements involve inherent risks and uncertainties, including the direction of the economy, as detailed in the company's Form 10-K risk factors.

Question and Answer

• **Q: Talk about bookings and billings to start new quarter, and second quarter guidance beat.

A: Bookings are trending 2% over Q2 2024 and are sequentially up 10% from the last month of 2025. The second quarter guidance beat was due to extremely high efficiencies, running to demand, and efficient mill operation despite some operations being down for lack of demand.**

• **Q: Revenue per ton and EBITDA per ton up.

A: Due to price increases, even with lower export sales, revenue per ton and EBITDA per ton increased as margins improved. Sales down in export were offset by other factors contributing to higher margins.**

• **Q: Greif acquisition financials, cash tax.

A: The acquisition is structured as an asset acquisition providing a depreciation shield, and there is an opportunity for bonus depreciation under the Big Beautiful Bill.**

• **Q: E-commerce growth, Greif recycled mix.

A: E-commerce is still growing, and the Greif acquisition brings the recycled mix to approximately 30% compared to PCA's previous ~20%, providing better market opportunities and freight/fiber savings.**

• **Q: Volumes, demand, inventory levels.

A: Containerboard production is down year-over-year primarily due to lower export sales. Customers have completed destocking and are carrying lean inventories, with potential upside if tariff clarity and interest rate movement occur.**