Packaging Corporation of America (NYSE:PKG) reported fourth-quarter 2025 net income of $102 million, or $1.13 per share, and said results included significant special items tied to restructuring, acquisition-related costs, and facility closures. Excluding special items, fourth-quarter net income was $209 million, or $2.32 per share, compared with $222 million, or $2.47 per share, in the fourth quarter of 2024.
Fourth-quarter net sales rose to $2.4 billion from $2.1 billion a year earlier. Excluding special items, total company EBITDA was $486 million in the quarter, up from $439 million in the prior-year period.
Full-year results and special items
Management said fourth-quarter net income included special items expense of $1.19 per share, primarily related to Wallula Mill restructuring charges, acquisition and integration costs associated with the Greif containerboard business, and costs related to the closure of corrugated products facilities.
On an adjusted basis, management said earnings declined $0.15 per share year over year in the fourth quarter. The company attributed the decline primarily to lower production and sales volume in the legacy PCA business, higher operating costs, higher maintenance outage expense, increased depreciation in the legacy packaging business, higher freight expense, and higher interest expense (excluding Greif acquisition debt). These headwinds were partially offset by higher prices and mix in the packaging segment, lower fiber costs, and lower fixed and other expenses.
Packaging segment: margin improvement and Greif integration
In the packaging business, fourth-quarter EBITDA (excluding special items) was $476 million on sales of $2.2 billion, for a 21.7% margin, compared with $426 million of EBITDA on $2.0 billion of sales (21.5% margin) in the fourth quarter of 2024. For the full year, packaging segment EBITDA (excluding special items) was $1.83 billion on sales of $8.3 billion, for a 22.1% margin, compared with $1.6 billion on $7.7 billion (20.8% margin) in 2024.
PCA said it “ran to demand” during the quarter and, including a full quarter of ownership of the acquired Greif operations and a planned DeRidder maintenance outage, produced 1.407 million tons of containerboard. Legacy mills produced 1.235 million tons, which was 20,000 tons less than the third quarter and 75,000 tons less than the fourth quarter of 2024. The company said system-wide inventories ended the quarter at the same level as the end of the third quarter, and were up 84,000 tons from the beginning of the year when including acquired Greif operations.
Management said integration progress at the acquired Greif assets included better reliability and performance at both mills and completion of key systems integration activities. PCA said it does not expect additional mill outages until annual maintenance outages later in the year and plans to operate the business at capacity.
The acquired Greif operations, including interest on acquisition indebtedness, generated a loss of $0.05 per share in the fourth quarter. Management attributed this to extended outages at the Massillon Mill in October and December to perform reliability maintenance and manage inventory at the acquired operations.
During Q&A, CEO Mark Kowlzan said PCA “essentially rebuilt” the Massillon Mill in the months following the acquisition, describing extensive mechanical work and monitoring improvements. He said efficiency improved at Massillon and Riverville by roughly 15% overall by the company’s measures and that both mills were “very close now to running to the PCA standard efficiencies.”
Demand trends, price actions, and winter storm disruption
President Tom Hassfurther said domestic containerboard and corrugated products prices and mix were $0.50 per share higher than the fourth quarter of 2024 but down $0.32 per share sequentially due to seasonal mix, with more holiday-driven e-commerce. Export containerboard pricing was flat versus the prior-year quarter and down $0.01 sequentially, while export volume rose 12,000 tons from the third quarter and fell 15,000 tons from the fourth quarter of 2024.
In the legacy business, corrugated shipments per day and in total were down 1.7% versus the prior-year quarter, which management characterized as a record. Hassfurther said fourth-quarter 2025 legacy box plant shipments were the second highest ever, and full-year corrugated shipments were essentially flat with 2024.
Hassfurther said the order book strengthened in November and December and that this strength had been reflected in January shipments so far, with January bookings in legacy corrugated and sheet plants up more than 11% and billings up 8% per day through the prior Thursday. He said the company was forecasting “solid year-over-year growth” for the first quarter and seasonal improvement in mix.
PCA also notified customers of a $70 per ton price increase on linerboard and corrugated medium effective March 1. Management said it would work to implement the full increase, while noting in Q&A that only a small amount of benefit was included in first-quarter guidance because price actions typically flow through over about a 90-day period and some contracts extend to mid-year.
Management also discussed the impact of a winter storm that caused multiple plant shutdowns and shipping disruptions across regions. Kowlzan said the Counce, Tennessee and Riverville, Virginia mills ran through the storm, but shipments were constrained during the disruption. Hassfurther said it would take time to determine whether missed orders return in subsequent weeks or are lost, and he also flagged transportation constraints as a factor.
Paper segment, cash flow, and 2026 outlook items
In the paper segment, fourth-quarter EBITDA (excluding special items) was $37 million on sales of $154 million, for a 24.2% margin, compared with $39 million on $151 million (25.9% margin) in the fourth quarter of 2024. PCA said paper sales volume was 1% above the prior-year quarter and 4% below the third quarter, while prices and mix were up 1% year over year and down less than 1% sequentially. Full-year paper segment EBITDA was $148 million on $615 million of sales (24.1% margin), compared with $154 million on $625 million (24.6% margin) in 2024.
CFO Kent Pflederer said fourth-quarter cash provided by operations was a record $443 million. After $319 million of capital spending, free cash flow was $124 million. The company also reported share repurchases of $153 million and dividends of $112 million during the quarter, along with $53 million of net interest payments and $15 million of cash tax payments. PCA repurchased 760,000 shares at an average price of $201.03 and ended the year with about $283 million of remaining repurchase authority.
For the full year, operating cash flow was $1.55 billion, capital spending was $829 million, and free cash flow was $725 million. PCA ended 2025 with $668 million in cash and marketable securities and liquidity of about $1.25 billion.
For 2026, management provided estimates for several key items:
- Dividend payments: approximately $450 million
- Total capital spending: $840 million to $870 million
- DD&A: approximately $700 million
- Interest expense: approximately $139 million; net cash interest payments about $147 million
- Estimated 2026 book effective tax rate: 25%
- Planned annual outages at all mills with an estimated total impact of about $1.39 per share (by quarter: $0.16 Q1, $0.35 Q2, $0.24 Q3, $0.63 Q4)
Kowlzan also outlined gas turbine energy projects in the engineering phase for the Jackson, Alabama and Riverville, Virginia mills, with an estimated total capital investment of roughly $250 million over the next 30 months. He said some spending would occur in 2026 but most would come in 2027 and 2028, with expected returns in the mid- to high-teens. PCA said it expects to seek board approval in the first quarter and is also evaluating a third installation at another mill.
Looking to the first quarter, management guided to earnings of $2.20 per share excluding special items, citing expectations for year-over-year growth in corrugated volume in legacy box plants, strong shipment volume from acquired plants, seasonal improvement in price and mix, and some benefit from the Wallula reconfiguration beginning in March. The company also cautioned that it was still assessing the potential impacts of the recent winter storm on shipments and costs.
About Packaging Corporation of America (NYSE:PKG)
Packaging Corporation of America (NYSE: PKG) is a leading North American manufacturer of containerboard and corrugated packaging products. The company produces a range of paper-based packaging solutions including linerboard, corrugating medium, corrugated shipping containers, retail-ready packaging and point-of-purchase displays. In addition to core packaging products, Packaging Corporation of America offers packaging design, testing and supply-chain services intended to optimize protection, cost and sustainability for customers.
Headquartered in Lake Forest, Illinois, the company operates an integrated network of mills and corrugated manufacturing facilities across the United States and serves customers throughout North America in industries such as e-commerce, grocery and food & beverage, consumer packaged goods and industrial markets.
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