Packaging Corporation of America Q4 FY2025 earnings call

• Fourth quarter 2025 net income was $102 million or $1.13 per share; excluding special items, net income was $209 million or $2.32 per share. Full year 2025 earnings were $888 million or $9.84 per share compared to 2024's $815 million or $9.04 per share.
• Packaging business ran to demand, produced 1,407,000 tons of containerboard, with EBITDA excluding special items in Q4 2025 at $476 million. Integrated Greif assets with better reliability and performance, and plan to complete Wallula restructuring by mid-February.
• Gas turbine energy projects planned at Jackson, Alabama and Riverville, Virginia mills, involving ~$250 million in capital.
• Paper segment had 1% higher sales volume in Q4 2025, with EBITDA excluding special items at $37 million.
• Cash provided by operations was a Q4 record $443 million, free cash flow $124 million; full year free cash flow $725 million.

Packaging Segment: Fourth quarter 2025 EBITDA, excluding special items, was $476 million with sales of $2.2 billion, resulting in a margin of 21.7% versus last year's EBITDA of $426 million, sales of $2 billion or a 21.5% margin. For the full year 2025, Packaging segment EBITDA, excluding special items, was $1.83 billion with sales of $8.3 billion or a 22.1% margin compared to the full year 2024 EBITDA of $1.6 billion with sales of $7.7 billion or a 20.8% margin. Paper Segment: Fourth quarter 2025 EBITDA, excluding special items, was $37 million with sales of $154 million or 24.2% margin compared to the fourth quarter 2024 EBITDA of $39 million and sales of $151 million or a 25.9% margin. For the full year, Paper segment EBITDA was $148 million on $615 million of sales for a 24.1% margin, versus 2024's EBITDA of $154 million on sales of $625 million for a 24.6% margin.

• Expect first quarter earnings of $2.20 per share, excluding special items. Anticipate demand improving, year-over-year growth in corrugated volume, and benefits from containerboard price increase in March.
• Forecast dividend payments of $450 million, total CapEx in range of $840 million to $870 million, DD&A ~$700 million in 2026. Full year interest expense expected ~$139 million, net cash interest payments ~$147 million. Book effective tax rate for 2026 estimated at 25%.

• Winter storms impacting shipments, operating, and transportation costs.
• Uncertainty in inventory management and systems integration with acquired Greif operations.
• Inflationary pressures on direct, indirect, and fixed operating and converting costs, including labor, energy, and chemical costs.

Q: On operations in the mills and cost per ton, can you provide granularity?

A: Mark Kowlzan mentioned uncertainty due to seasonal weather and recent storm, with Kent Pflederer noting ~$15 million total on cost line in mills, ~$10 a ton.

Q: What gives comfort that Massillon mill is through reliability issues?

A: Mark Kowlzan said PCA spent 6 weeks assisting Massillon, rebuilding infrastructure, and improving operational efficiency.

Q: On Greif acquisition purchase and trade commitments, what's the plan?

A: Thomas Hassfurther stated they are discontinuing those commitments.

Q: On demand inflection, any specific end markets contributing?

A: Thomas Hassfurther mentioned improving demand across segments, positive GDP, and wages ahead of inflation as positive factors.

Q: On $70 per ton containerboard price increase and 1Q guide, is it included?

A: Kent Pflederer said a small amount is included, as price increases take time to flow through.

Q: On Greif acquisition accretion and CapEx direction for 2026?

A: Kent Pflederer forecast slight accretion in 1Q, and Mark Kowlzan mentioned goal to bring CapEx below $800 million level while taking advantage of opportunities.

Q: On January demand upturn and customer feedback?

A: Thomas Hassfurther attributed upturn to low inventories, tax reform, and improved consumer sentiment.

Q: On price increase implementation for Greif portion and market availability?

A: Thomas Hassfurther said acquisition plants will roll out same as PCA, and PCA will run mills full out with tight availability.

Q: On CapEx for 2026 and capacity in 12 months?

A: Mark Kowlzan mentioned plans to grow with customers, with potential to increase capacity through Greif acquisition improvements, but it will be tight.