Packaging Corp of America (NYSE: PKG) Q2 net income $192.1 million
Rhea-AI Filing Summary
Packaging Corporation of America reported net sales of $2,489.9 million for the quarter ended June 30, 2026, compared with $2,171.3 million a year earlier. Net income declined to $192.1 million from $241.5 million and diluted EPS to $2.15 from $2.67, as income from operations decreased to $291.2 million from $333.7 million and interest expense, net rose to $33.3 million from $13.1 million.
For the first six months of 2026, net sales were $4,857.6 million and net income was $363.0 million, both below the prior-year period. Results included $59.7 million of expenses tied to the Wallula mill shutdown, other facility-closure and sustainability project write-off costs, and $6.7 million of acquisition and integration charges related to the Greif containerboard business and other deals. Operating cash flow was strong at $705.3 million, funding $370.6 million of capital spending, $223.2 million of dividends and $58.8 million of share repurchases. The company ended June 30, 2026 with $442.8 million of cash, $3,968.9 million of long-term debt and total assets of $11,015.5 million, and increased its annual common dividend rate from $5.00 to $6.00 per share.
Positive
- Operating cash flow was $705.3 million in the first half of 2026, providing substantial internal funding for capital expenditures, dividends and share repurchases.
- The quarterly common dividend was increased to $1.50 per share (annual rate $6.00), and the company paid $223.2 million of cash dividends in the first six months of 2026.
Negative
- Quarterly net income declined to $192.1 million from $241.5 million a year earlier, and diluted EPS decreased to $2.15 from $2.67.
- For the first six months of 2026, net income fell to $363.0 million from $445.3 million, with higher depreciation, restructuring, closure and acquisition-related costs and interest expense rising to $66.0 million.
Insights
Analyzing...
Key Figures
Key Terms
Greif Acquisition financial
Wallula mill restructuring financial
build-to-suit guidance technical
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of July 31, 2026, the Registrant had outstanding
Securities registered pursuant to Section 12(b) of the Exchange Act:
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Table of Contents
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PART I |
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Item 1. |
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Financial Statements |
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Item 2. |
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Management's Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Quantitative and Qualitative Disclosures About Market Risk |
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Item 4. |
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Controls and Procedures |
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PART II |
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Item 1. |
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Legal Proceedings |
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Item 1A. |
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Risk Factors |
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Item 2. |
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Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 3. |
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Defaults Upon Senior Securities |
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Item 4. |
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Mine Safety Disclosures |
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Item 5. |
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Other Information |
32 |
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Item 6. |
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Exhibits |
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All reports we file with the Securities and Exchange Commission (SEC) are available free of charge via the Electronic Data Gathering Analysis and Retrieval (EDGAR) System on the SEC website at www.sec.gov. We also provide copies of our SEC filings at no charge upon request and make electronic copies of our reports available through our website at www.packagingcorp.com as soon as reasonably practicable after filing such material with the SEC.
i
PART I
FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Packaging Corporation of America
Consolidated Statements of Income and Comprehensive Income
(unaudited, dollars in millions, except per-share data)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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2026 |
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Statements of Income: |
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Net sales |
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Cost of sales |
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Gross profit |
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Selling, general and administrative expenses |
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Other (expense) income, net |
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Income from operations |
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Non-operating pension income |
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Interest expense, net |
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Income before taxes |
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Provision for income taxes |
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Net income |
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Net income per common share: |
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Basic |
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Diluted |
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Dividends declared per common share |
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Statements of Comprehensive Income: |
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Net income |
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Other comprehensive income, net of tax: |
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Changes in unrealized (losses) gains on marketable |
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Amortization of pension and postretirement plans actuarial loss |
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Other comprehensive income |
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Comprehensive income |
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$ |
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$ |
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See accompanying condensed notes to unaudited quarterly consolidated financial statements.
1
Packaging Corporation of America
Consolidated Balance Sheets
(unaudited, dollars and shares in millions, except per-share data)
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June 30, |
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December 31, |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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Short-term marketable debt securities and other ($ |
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Accounts receivable, net of allowance for credit losses and customer deductions |
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Inventories |
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Prepaid expenses and other current assets |
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Federal and state income taxes receivable |
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Total current assets |
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Property, plant, and equipment, net |
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Goodwill |
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Other intangible assets, net |
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Operating lease right-of-use assets |
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Long-term marketable debt securities |
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Other long-term assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Operating lease obligations |
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Finance lease obligations |
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Accounts payable |
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Dividends payable |
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Accrued liabilities |
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Accrued interest |
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Total current liabilities |
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Long-term liabilities: |
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Long-term debt |
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Operating lease obligations |
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Finance lease obligations |
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Deferred income taxes |
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Compensation and benefits |
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Other long-term liabilities |
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Total long-term liabilities |
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Stockholders' equity: |
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Common stock, par value $ |
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Additional paid in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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See accompanying condensed notes to unaudited quarterly consolidated financial statements.
2
Packaging Corporation of America
Consolidated Statements of Cash Flows
(unaudited, dollars in millions)
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Six Months Ended |
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June 30, |
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2026 |
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2025 |
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Cash Flows from Operating Activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation, depletion, and amortization of intangibles |
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Amortization of deferred financing costs |
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Share-based compensation expense |
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Deferred income tax provision |
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Net loss (gain) on asset disposals |
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Pension and post-retirement benefits expense, net of contributions |
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Other, net |
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Changes in operating assets and liabilities, net of acquisitions: |
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(Increase) decrease in assets — |
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Accounts receivable |
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Inventories |
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Prepaid expenses and other current assets |
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Increase (decrease) in liabilities — |
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Accounts payable |
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Accrued liabilities |
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Federal and state income taxes payable/receivable |
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Net cash provided by operating activities |
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Cash Flows from Investing Activities: |
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Additions to property, plant, and equipment |
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Acquisition of business, net of cash acquired |
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Additions to other long-term assets |
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Proceeds from asset disposals |
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Purchase of short-term investment in time deposit |
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Purchases of available-for-sale debt securities |
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Proceeds from sales of available-for-sale debt securities |
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Proceeds from maturities of available-for-sale debt securities |
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Other, net |
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Net cash used for investing activities |
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Cash Flows from Financing Activities: |
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Repayments of debt and finance lease obligations |
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Common stock dividends paid |
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Repurchases of common stock |
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Shares withheld to cover employee restricted stock taxes |
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Other, net |
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Net cash used for financing activities |
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Net (decrease) increase in cash and cash equivalents |
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Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period |
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$ |
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$ |
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See accompanying condensed notes to unaudited quarterly consolidated financial statements.
3
Packaging Corporation of America
Consolidated Statements of Changes in Stockholders’ Equity
(unaudited, dollars in millions and shares in thousands)
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Common Stock |
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Additional |
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Retained |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Earnings |
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Loss |
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Equity |
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Balance at April 1, 2026 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Common stock withheld and retired |
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( |
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— |
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( |
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— |
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( |
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Common stock dividends declared |
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— |
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— |
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— |
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( |
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— |
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Share-based compensation and other |
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— |
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— |
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Comprehensive income |
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— |
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— |
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— |
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Balance at June 30, 2026 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Common Stock |
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Additional |
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Retained |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Earnings |
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Loss |
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Equity |
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Balance at April 1, 2025 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Common stock withheld and retired to |
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— |
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( |
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( |
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— |
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( |
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Common stock dividends declared |
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— |
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— |
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— |
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( |
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— |
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( |
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Share-based compensation and other |
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— |
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— |
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— |
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Comprehensive income |
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— |
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— |
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— |
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Balance at June 30, 2025 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Common Stock |
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Additional |
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Retained |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Earnings |
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Loss |
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Equity |
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Balance at January 1, 2026 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Common stock repurchases and retirements |
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( |
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— |
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( |
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( |
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— |
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( |
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Common stock withheld and retired to |
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( |
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— |
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( |
) |
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( |
) |
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— |
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( |
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Common stock dividends declared |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Share-based compensation and other |
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— |
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— |
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— |
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Comprehensive income |
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— |
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— |
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— |
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Balance at June 30, 2026 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Common Stock |
|
|
Additional |
|
|
Retained |
|
|
Accumulated |
|
|
Total |
|
|||||||||
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Earnings |
|
|
Loss |
|
|
Equity |
|
||||||
Balance at January 1, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Common stock withheld and retired to |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Common stock dividends declared |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Share-based compensation and other |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Balance at June 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
See accompanying condensed notes to unaudited quarterly consolidated financial statements.
4
Condensed Notes to Unaudited Quarterly Consolidated Financial Statements
1. Nature of Operations and Basis of Presentation
Packaging Corporation of America (“we,” “us,” “our,” “PCA,” or the “Company”) was incorporated on
We report our business in
On September 2, 2025, we completed the acquisition of the containerboard business of Greif, Inc. (“Greif”) for $
On December 3, 2025, the Company approved and announced the permanent shut down of the No. 2 paper machine and kraft pulping facilities at its Wallula, Washington containerboard mill. The Company continues to operate the No. 3 paper machine and recycled pulping facilities at the mill. These actions, completed in the first quarter of 2026, resulted in approximately $
In these consolidated financial statements, certain amounts in prior periods’ consolidated financial statements have been reclassified to conform with the current period presentation.
The consolidated financial statements of PCA as of June 30, 2026 and for the three and six months ended June 30, 2026 and 2025 are unaudited but include all adjustments (consisting only of normal recurring adjustments) that management considers necessary for a fair presentation of such financial statements. The preparation of the consolidated financial statements involves the use of estimates and accruals. Actual results may vary from those estimates. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete audited financial statements. Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. These consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025.
The consolidated financial statements include the accounts of PCA and its majority-owned subsidiaries after elimination of intercompany balances and transactions.
2. New Accounting Standards
In May 2026, the FASB issued ASU 2026-02 Environmental Credits and Environmental Credit Obligations (Topic 818). This ASU is intended to provide recognition, measurement, presentation and disclosure requirements for environmental credits and related environmental credit obligations for all entities that generate, purchase or receive environmental credits or have a regulatory compliance obligation that may be settled with environmental credits. This update is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years on a retrospective basis. Early adoption is permitted. The Company is currently assessing the impact of the disclosure requirements on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU is intended to enhance transparency into the nature and function of expenses. The amendments require that on an annual and interim basis, entities disclose disaggregated operating expense information about specific categories, including purchases of inventory, employee compensation, depreciation, amortization, and depletion. The update is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, as clarified by ASU 2025-01 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, on a prospective basis or with the option for retrospective application. Early adoption is permitted. The Company is currently assessing the impact of the disclosure requirements on its consolidated financial statements.
There were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations.
5
3. Revenue
Revenue Recognition
Revenue is recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration expected to be received in exchange for those goods or services. Sales, value added, and other taxes collected concurrently with revenue-producing activities are excluded from revenue.
The following table presents our revenues disaggregated by product line (dollars in millions):
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Packaging |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Paper |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate and Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Packaging Revenue
Our containerboard mills produce linerboard and corrugating medium which are papers primarily used in the production of corrugated products. The majority of our containerboard production is used internally by our corrugated products manufacturing facilities. The remaining containerboard is sold to outside domestic and export customers. Our corrugated products manufacturing plants produce a wide variety of corrugated packaging products and retail merchandise displays. We sell corrugated products to national, regional and local accounts, which are broadly diversified across industries and geographic locations.
The Company recognizes revenue for its packaging products when performance obligations under the terms of a contract with a customer are satisfied. This occurs with the transfer of control of our products at a specific point in time. Based on our express terms and conditions of the sale of products to our customers, as well as terms included in contractual arrangements with our customers, we do not have an enforceable right of payment that includes a reasonable profit throughout the duration of the contract for products that do not have an alternative use. Revenue is recognized when the product is shipped from the mill or from our manufacturing facility to our customer. Certain customers may receive volume-based incentives, which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenue recognized.
Certain customers receive a portion of their packaging products as consigned inventory with billing triggered once the customer uses or consumes the designated product. Prior to invoicing, these amounts are handled as unbilled receivables. Total unbilled receivables, which are immaterial in amount, are included in the accounts receivable financial statement caption.
Paper Revenue
We manufacture and sell a range of communication-based papers. Communication papers consist of cut-size office papers, and printing and converting papers.
The Company recognizes revenue for its paper products when performance obligations under the terms of a contract with a customer are satisfied. This occurs with the transfer of control of our products at a specific point in time. Revenue is recognized when the product is shipped from the mill or from our manufacturing facility or distribution center to our customer. Certain customers may receive volume-based incentives, which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenue recognized.
Corporate and Other Revenue
Revenue in this segment primarily relates to Louisiana Timber Procurement Company, L.L.C. (“LTP”), a variable-interest entity that is
The Company recognizes revenue within this segment when performance obligations under the terms of a contract with a customer are satisfied. This occurs with the transfer of control of our products at a specific point in time.
Practical Expedients and Exemption
Shipping and handling fees billed to a customer are recorded on a gross basis in “Net sales” with the corresponding shipping and handling costs included in “Cost of sales” in the concurrent period as the revenue is recorded. We expense sales commissions when incurred because the amortization period is one year or less. Sales commissions are recorded in “Selling, general, and administrative expenses”.
We do not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less.
6
4. Acquisitions
Greif Acquisition
On September 2, 2025, we completed the Greif Acquisition for $
|
|
Amount |
|
|
Cash paid for Greif Acquisition |
|
$ |
|
|
Net working capital adjustment |
|
|
( |
) |
Settlement of pre-existing relationships |
|
|
( |
) |
Total purchase consideration |
|
$ |
|
|
The Company accounted for the Greif Acquisition using the acquisition method of accounting in accordance with ASC 805, Business Combinations.
|
|
12/31/25 Allocation |
|
|
Adjustments |
|
|
Revised Allocation |
|
|||
Current Assets: |
|
|
|
|
|
|
|
|
|
|||
Cash |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Accounts receivable |
|
|
|
|
|
|
|
|
|
|||
Inventories |
|
|
|
|
|
|
|
|
|
|||
Prepaid expenses and other current assets |
|
|
|
|
|
|
|
|
|
|||
Total current assets |
|
|
|
|
|
|
|
|
|
|||
Property, plant, and equipment (a) |
|
|
|
|
|
( |
) |
|
|
|
||
Operating lease right-of-use assets |
|
|
|
|
|
|
|
|
|
|||
Intangible assets (b): |
|
|
|
|
|
|
|
|
|
|||
Customer relationships |
|
|
|
|
|
|
|
|
|
|||
Trademarks |
|
|
|
|
|
|
|
|
|
|||
Goodwill (c) |
|
|
|
|
|
|
|
|
|
|||
Assets acquired |
|
|
|
|
|
( |
) |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|||
Accounts payable |
|
|
|
|
|
( |
) |
|
|
|
||
Accrued liabilities |
|
|
|
|
|
|
|
|
|
|||
Current operating lease obligations |
|
|
|
|
|
|
|
|
|
|||
Long-term operating lease obligations |
|
|
|
|
|
|
|
|
|
|||
Long-term finance lease obligations |
|
|
|
|
|
|
|
|
|
|||
Other long-term liabilities |
|
|
|
|
|
|
|
|
|
|||
Liabilities assumed |
|
|
|
|
|
( |
) |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|||
Net assets acquired |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The purchase price allocation remains preliminary and is subject to the finalization of various valuations and assessments. These may affect the consideration paid and may materially impact the valuations and subsequent assessments. During the six months ended June 30, 2026, the Company recorded measurement period adjustments, including $
7
For the three and six months ended June 30, 2026, the Company incurred $
5. Earnings Per Share
The following table sets forth the computation of basic and diluted income per common share for the periods presented (dollars and shares in millions, except per share data):
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: Distributed and undistributed earnings allocated to participating |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net income attributable to common shareholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average basic common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average diluted common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic income per common share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted income per common share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
6. Other Income (Expense), Net
The components of other expense, net, were as follows (dollars in millions):
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Asset disposals and write-offs |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Facilities closure and other (costs) income (a) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Acquisition and integration-related costs (b) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Wallula mill restructuring (c) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Other |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
8
7. Income Taxes
For the three months ended June 30, 2026 and 2025, we recorded $
For the six months ended June 30, 2026 and 2025, we recorded $
Our current effective tax rate is higher than the federal statutory income tax rate of
During the three and six months ended June 30, 2026 and 2025, there were no significant changes to our uncertain tax positions. For more information, see Note 8, Income Taxes, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of our 2025 Annual Report on Form 10-K.
8. Inventories
We value our raw materials, work in process, and finished goods inventories using lower of cost, as determined by the average cost method, or net realizable value. Supplies and materials are valued at the first-in, first-out (FIFO) or average cost method.
The components of inventories were as follows (dollars in millions):
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work in process |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Supplies and materials |
|
|
|
|
|
|
||
Inventories |
|
$ |
|
|
$ |
|
||
9. Property, Plant, and Equipment
The components of property, plant, and equipment were as follows (dollars in millions):
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Land and land improvements |
|
$ |
|
|
$ |
|
||
Buildings |
|
|
|
|
|
|
||
Machinery and equipment |
|
|
|
|
|
|
||
Construction in progress |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Property, plant and equipment, at cost |
|
|
|
|
|
|
||
Less accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Property, plant, and equipment, net |
|
$ |
|
|
$ |
|
||
Depreciation expense for the three months ended June 30, 2026 and 2025 was $
9
During the fourth quarter of 2025, the Company entered into an agreement with a third-party contractor to design, construct, and operate a new woodyard and chip processing facility at the Valdosta, Georgia mill. Pursuant to the agreement and in accordance with the build-to-suit guidance in ASC 842, Leases, the Company recorded $
At June 30, 2026 and December 31, 2025, purchases of property, plant, and equipment included in accounts payable were $
10. Goodwill and Intangible Assets
Goodwill
Goodwill represents the excess of the cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. At June 30, 2026 and December 31, 2025, we had $
Changes in the carrying amount of our goodwill are as follows (dollars in millions):
|
|
Goodwill |
|
|
Balance at January 1, 2026 |
|
$ |
|
|
Acquisitions (a) |
|
|
|
|
Balance at June 30, 2026 |
|
$ |
|
|
Intangible Assets
Intangible assets are primarily comprised of customer relationships and trademarks and trade names.
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||||||||||
|
|
Weighted |
|
|
Gross |
|
|
Accumulated |
|
|
Weighted |
|
|
Gross |
|
|
Accumulated |
|
||||||
Customer relationships (b) |
|
|
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
||||||
Trademarks and trade names (b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total intangible assets (excluding goodwill) |
|
|
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
||||||
During the six months ended June 30, 2026 and 2025, amortization expense was $
10
11. Accrued Liabilities
The components of accrued liabilities were as follows (dollars in millions):
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Compensation and benefits |
|
$ |
|
|
$ |
|
||
Franchise, property, sales and use taxes |
|
|
|
|
|
|
||
Medical insurance and workers’ compensation |
|
|
|
|
|
|
||
Customer rebates and other credits |
|
|
|
|
|
|
||
Severance, retention, and relocation |
|
|
|
|
|
|
||
Environmental liabilities and asset retirement obligations |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
12. Debt
For the six months ended June 30, 2026 and 2025, cash payments for interest were $
Included in interest expense, net is the amortization of financing costs, which includes the amortization of debt issuance costs and amortization of bond discounts. For the three months ended June 30, 2026 and 2025, amortization of debt issuance costs was $
At June 30, 2026, we had $
For more information on our long-term debt and interest rates on that debt, see Note 11, Debt, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of our 2025 Annual Report on Form 10-K.
11
13. Cash, Cash Equivalents, Marketable Debt Securities and Other
The following table shows the Company’s cash, cash equivalents, time deposit investments, and available-for-sale (“AFS”) debt securities by major asset category at June 30, 2026 and December 31, 2025 (in millions):
|
|
June 30, 2026 |
|
|||||||||||||||||||||||||
|
|
Adjusted |
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
|
Cash and |
|
|
Short-Term |
|
|
Long-Term |
|
|||||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Time Deposits (a): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Level 1 (b): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
U.S. Treasury securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Money market funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Subtotal |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Level 2 (c): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Corporate debt securities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial paper |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Certificates of deposit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
U.S. government agency securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Subtotal |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
December 31, 2025 |
|
|||||||||||||||||||||||||
|
|
Adjusted |
|
|
Unrealized |
|
|
Unrealized |
|
|
Fair |
|
|
Cash and |
|
|
Short-Term |
|
|
Long-Term |
|
|||||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Level 1 (b): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Money market funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
U.S. Treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Subtotal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Level 2 (c): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Corporate debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
U.S. government agency securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Certificates of deposit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Subtotal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
For both the three and six months ended June 30, 2026 and 2025, net realized gains and losses on the sales and maturities of certain marketable debt securities were insignificant.
The Company invests in highly rated securities, with the primary objective of minimizing the potential risk of principal loss. The Company’s investment policy requires securities to be investment grade and limits the amount of credit exposure to any one issuer. The maturities of the Company’s long-term marketable debt securities generally range from to
Fair values were determined for each individual marketable debt security in the investment portfolio. When evaluating a marketable debt security for impairment, PCA reviews factors such as the duration and extent to which the fair value of the marketable debt security is less than its cost, the financial condition of the issuer and any changes thereto, the general market condition in which the issuer operates, and PCA’s intent to sell, or whether it will be more likely than not required to sell, the marketable debt security before recovery of its amortized cost basis.
12
As of June 30, 2026 and December 31, 2025, we do
The following tables provide information about the Company’s marketable debt securities that have been in a continuous loss position as of June 30, 2026 and December 31, 2025 (in millions, except number of marketable debt securities in a loss position):
|
|
June 30, 2026 |
|
|||||||||
|
|
Fair Value of |
|
|
Number of Marketable |
|
|
Unrealized Losses |
|
|||
Corporate debt securities |
|
$ |
|
|
|
|
|
$ |
|
|||
U.S. Treasury securities |
|
|
|
|
|
|
|
|
|
|||
Commercial paper |
|
|
|
|
|
|
|
|
|
|||
Certificates of deposit |
|
|
|
|
|
|
|
|
|
|||
U.S. government agency securities |
|
|
|
|
|
|
|
|
|
|||
|
|
$ |
|
|
|
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
|
December 31, 2025 |
|
|||||||||
|
|
Fair Value of |
|
|
Number of Marketable |
|
|
Unrealized Losses |
|
|||
Corporate debt securities |
|
$ |
|
|
|
|
|
$ |
|
|||
U.S. government agency securities |
|
|
|
|
|
|
|
|
|
|||
|
|
$ |
|
|
|
|
|
$ |
|
|||
For both periods ended June 30, 2026 and December 31, 2025, there were no marketable debt securities in a continuous loss position greater than or equal to 12 months.
14. Employee Benefit Plans and Other Postretirement Benefits
The components of net periodic benefit cost for our pension plans were as follows (dollars in millions):
|
|
Pension Plans |
|
|||||||||||||
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Service cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expected return on plan assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net amortization of unrecognized amounts |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Prior service cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Actuarial loss |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net periodic benefit cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
PCA makes pension plan contributions that are sufficient to fund its actuarially determined costs, generally equal to the minimum amounts required by the Employee Retirement Income Security Act (ERISA). From time to time, PCA may make additional discretionary contributions based on the funded status of the plans, tax deductibility, income from operations, and other factors. During both the three and six months ended June 30, 2026 and 2025, payments to our nonqualified pension plans were insignificant. During both the three and six months ended June 30, 2026 and 2025, we did not make any contributions to our qualified pension plans. We do
For both the three and six months ended June 30, 2026 and 2025, the net periodic benefit cost for our postretirement plans was insignificant.
13
15. Share-Based Compensation
The Company has a long-term equity incentive plan, which allows for grants of restricted stock, restricted stock units, performance awards, stock appreciation rights, and stock options to directors, officers, and employees, as well as others who engage in services for PCA. On February 28, 2024, our board of directors approved, and, on May 8, 2024, our stockholders approved, the amendment and restatement of the plan. The amendment extended the plan’s term to
On February 25, 2026, our Compensation Subcommittee approved new forms of equity award agreements under the long-term equity incentive plan for Total Shareholder Return (TSR) performance units, Return on Invested Capital (ROIC) performance units, and restricted stock units (RSUs). These agreements apply to performance units and RSUs granted on or after February 25, 2026, with no changes to prior year award forms. The new agreements are largely consistent with prior versions, with targeted amendments addressing vesting treatment upon certain termination events. The other material terms of the equity award agreement forms remain substantially unchanged.
As of June 30, 2026, assuming performance units are paid out at the target level of performance,
The following table presents restricted stock, restricted stock unit and performance unit award activity for the six months ended June 30, 2026:
|
|
Restricted Stock |
|
|
Restricted Stock Units |
|
|
Performance Units |
|
|||||||||||||||
|
|
Shares |
|
|
Weighted |
|
|
Shares |
|
|
Weighted |
|
|
Shares |
|
|
Weighted |
|
||||||
Outstanding at January 1, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Vested (a) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Forfeitures |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Outstanding at June 30, 2026 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
Compensation Expense
Our share-based compensation expense is primarily recorded in “Selling, general, and administrative expenses.” Compensation expense for share-based awards recognized in the Consolidated Statements of Income, net of forfeitures, was as follows (dollars in millions):
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
||||
Restricted stock |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
Restricted stock units |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Performance units |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total share-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax benefit |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Share-based compensation expense, net of tax benefit |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
Our restricted stock awards and RSU awards cliff vest four years after the grant date. The fair values of restricted stock and RSUs are determined based on the closing price of the Company’s stock on the grant date. Compensation expense, net of estimated forfeitures, is recorded over the requisite service period. As PCA’s Board of Directors has the ability to accelerate the vesting of restricted stock awards upon an employee’s retirement, the Company accelerates the recognition of compensation expense for certain employees approaching normal retirement age.
Performance unit awards granted to certain key employees are earned based on the achievement of defined performance rankings of ROIC or TSR compared to the ROIC and TSR for peer companies. TSR and ROIC awards cliff vest three and four years, respectively, and for performance unit awards made in 2026 and 2025, in terms of grant date value,
14
For RSU and performance unit awards that meet retirement-eligibility provisions, the Company recognizes compensation expense over the period from the grant date through the date an employee attains retirement eligibility while retaining the award (derived service period), subject to a minimum period of
The unrecognized compensation expense for all share-based awards at June 30, 2026 was as follows (dollars in millions):
|
|
June 30, 2026 |
|
|||||
|
|
Unrecognized |
|
|
Remaining |
|
||
Restricted stock |
|
$ |
|
|
|
|
||
Restricted stock units |
|
|
|
|
|
|
||
Performance units |
|
|
|
|
|
|
||
Total unrecognized share-based compensation expense |
|
$ |
|
|
|
|
||
16. Stockholders' Equity
Dividends
During the six months ended June 30, 2026, we paid $
Repurchases of Common Stock
On January 26, 2022, PCA announced that its Board of Directors authorized the repurchase of an additional $
The Company did not repurchase any shares of its common stock under this authority during the three months ended June 30, 2026. During the six months ended June 30, 2026, the Company paid $
Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) (AOCI) by component were as follows (dollars in millions). Amounts in parentheses indicate losses:
|
|
Unrealized |
|
|
Unrealized |
|
|
Unfunded |
|
|
Total |
|
||||
Balance at January 1, 2026 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive loss before reclassifications, net of tax |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Amounts reclassified from AOCI, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at June 30, 2026 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Reclassifications out of AOCI were as follows (dollars in millions). Amounts in parentheses indicate expenses in the Consolidated Statements of Income:
|
|
Amounts Reclassified from AOCI |
|
|
|
|||||||||||||
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
||||||||||
Details about AOCI Components |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
|
||||
Unfunded employee benefit obligations (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of prior service costs |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
See (a) below |
Amortization of actuarial gains / (losses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
See (a) below |
||||
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Total before tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax benefit |
||||
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Net of tax |
15
Louisiana Timber Procurement Company, L.L.C. (“LTP”) is a variable-interest entity that is
During the three months ended June 30, 2026 and 2025, fiber purchases from related parties were $
18. Segment Information
We report our business in
Each segment’s profits and losses are measured on operating profits before non-operating pension income, interest expense, net, and income taxes. For many of these allocated expenses, the related assets and liabilities remain in the Corporate and Other segment.
On September 2, 2025, we completed the Greif Acquisition for $
16
Chief Operating Decision Maker
ASC 280-10-50-5 (Topic 280) defines the chief operating decision maker (“CODM”) as an individual or group of individuals responsible for assessing the performance of the operating segments of a public entity and determining the overall resource allocation to those operating segments. Based on these criteria, we deem our Chief Executive Officer as the CODM, as the Chief Executive Officer is responsible for evaluating our operating results and concluding on the overall resource allocation.
Analysis of Operations by Reportable Segments
An analysis of operations by reportable segments is as follows (dollars in millions):
Three Months Ended June 30, 2026 |
|
Packaging |
|
|
Paper |
|
|
Corporate and Other |
|
|
Total |
|
||||
Trade sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Intersegment sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Elimination of intersegment sales |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less (a): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Variable costs (b) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Fixed costs (c) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Freight |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Other segment items (d) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Income (loss) from operations |
|
|
|
|
|
|
|
|
( |
) |
(e) |
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-operating pension income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Income before taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment disclosures: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment sales to external customers |
|
$ |
|
|
$ |
|
|
$ |
|
(f) |
$ |
|
||||
Depreciation, amortization, and depletion |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital expenditures (g) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Three Months Ended June 30, 2025 |
|
Packaging |
|
|
Paper |
|
|
Corporate and Other |
|
|
Total |
|
||||
Trade sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Intersegment sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Elimination of intersegment sales |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less (a): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Variable costs (b) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Fixed costs (c) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Freight |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Other segment items (d) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Income (loss) from operations |
|
|
|
|
|
|
|
|
( |
) |
(e) |
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-operating pension expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Income before taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment disclosures: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment sales to external customers |
|
$ |
|
|
$ |
|
|
$ |
|
(f) |
$ |
|
||||
Depreciation, amortization, and depletion |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital expenditures (g) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
17
Six Months Ended June 30, 2026 |
|
Packaging |
|
|
Paper |
|
|
Corporate and Other |
|
|
Total |
|
||||
Trade sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Intersegment sales |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Elimination of intersegment sales |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less (a): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Variable costs (b) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Fixed costs (c) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Freight |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Other segment items (d) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Income (loss) from operations |
|
|
|
|
|
|
|
|
( |
) |
(e) |
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-operating pension income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Income before taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment disclosures: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment sales to external customers |
|
$ |
|
|
$ |
|
|
$ |
|
(f) |
$ |
|
||||
Depreciation, amortization, and depletion |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital expenditures (g) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Six Months Ended June 30, 2025 |
|
Packaging |
|
|
Paper |
|
|
Corporate and Other |
|
|
Total |
|
||||
Trade sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Intersegment sales |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Elimination of intersegment sales |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less (a): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Variable costs (b) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Fixed costs (c) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Freight |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Other segment items (d) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Income (loss) from operations |
|
|
|
|
|
|
|
|
( |
) |
(e) |
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-operating pension expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Income before taxes |
|
|
|
|
|
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other segment disclosures: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment sales to external customers |
|
$ |
|
|
$ |
|
|
$ |
|
(f) |
$ |
|
||||
Depreciation, amortization, and depletion |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital expenditures (g) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
18
19. Commitments, Guarantees, Indemnifications and Legal Proceedings
We have financial commitments and obligations that arise in the ordinary course of our business. These include lease obligations, long-term debt, capital additions, purchase commitments for goods and services, and legal proceedings, all of which are discussed in Note 3, Leases; Note 11, Debt; and Note 20, Commitments, Guarantees, Indemnifications, and Legal Proceedings, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of our 2025 Annual Report on Form 10-K.
During the fourth quarter of 2025, the Company entered into an agreement with a third-party contractor to design, construct, and operate a new woodyard and chip processing facility at the Valdosta, Georgia mill. Upon completion of construction and commencement of operations in 2028, the Company will lease the woodyard and chip processing facility from the third-party contractor and is obligated to deliver a minimum of
Guarantees and Indemnifications
We provide guarantees, indemnifications, and other assurances to third parties in the normal course of our business. These include tort indemnifications, environmental assurances, and representations and warranties in commercial agreements.
In connection with the agreement described above, the Company provided a guarantee of certain construction-phase financing obligations of the third-party contractor. The guarantee relates to a delayed-draw term loan facility used to finance construction of the facility and, if triggered, would require us to satisfy the contractor’s obligations under the financing agreement, subject to its terms. As of June 30, 2026 and December 31, 2025, we had a $
We evaluate our guarantees and indemnifications on an ongoing basis and accrue additional amounts when a loss is both probable and reasonably estimable. At June 30, 2026, other than the recorded liabilities described above, we were not aware of any material liabilities arising from any guarantees, indemnifications, or other assurances we have provided.
DeRidder Mill Incident
Details on the legal proceedings associated with the incident at the Company’s DeRidder, Louisiana mill can be found in Note 19, Commitments, Guarantees, Indemnifications, and Legal Proceedings, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of our 2024 Annual Report on Form 10-K. The settlement amount was paid in 2025, and no amounts remain outstanding.
Legal Proceedings
On July 29, 2025, PCA and seven other U.S. and Canadian containerboard producers were named as defendants in a purported class action lawsuit, Artuso Pastry Foods Corp v. Packaging Corporation of America, et al, No. 1:25-cv-08856, filed in the United States District Court for the Northern District of Illinois, alleging violations of the Sherman Act and the Clayton Act. The complaint alleges that the defendants conspired to raise prices of containerboard and restrict containerboard capacity, and that the purpose and effect of the alleged conspiracy was to artificially increase prices of containerboard products during the period of November 1, 2020, to the present. The complaint was filed as a purported class action suit on behalf of all purchasers of containerboard products during such period. The complaint seeks treble damages and costs, including attorney’s fees. PCA believes the allegations are without merit and will defend this lawsuit vigorously.
We are also a party to various legal actions arising in the ordinary course of our business. These legal actions include commercial liability claims, premises liability claims, and employment-related claims, among others. As of the date of this filing, we believe it is not reasonably possible that any of the legal actions against us will, either individually or in the aggregate, have a material adverse effect on our financial condition, results of operations, or cash flows.
19
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This management’s discussion and analysis includes statements regarding our expectations with respect to our future performance, expected business conditions, liquidity, and capital resources. Such statements, along with any other statements that are not historical in nature, are forward-looking. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in our 2025 Annual Report on Form 10-K, as well as those factors listed in other documents we file with the Securities and Exchange Commission (“SEC”). We do not assume any obligation to update any forward-looking statement. Our actual results may differ materially from those contained in or implied by any of the forward-looking statements in this Form 10-Q. Please see “Forward Looking Statements” elsewhere in this Item 2.
Overview
PCA is the third largest producer of containerboard products and a leading producer of UFS paper in North America. We operate ten mills and 90 corrugated products manufacturing plants. Our containerboard mills produce linerboard and corrugating medium, which are papers primarily used in the production of corrugated products. Our corrugated products manufacturing plants produce a wide variety of corrugated packaging products, including conventional shipping containers used to protect and transport manufactured goods, multi-color boxes and displays with strong visual appeal that help to merchandise the packaged product in retail locations, and honeycomb protective packaging. In addition, we are a large producer of packaging for meat, fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products. We also manufacture and sell UFS papers, including both commodity and specialty papers, which may have custom or specialized features such as colors, coatings, high brightness, and recycled content. We are headquartered in Lake Forest, Illinois and operate in the United States.
On September 2, 2025, we completed the acquisition of the containerboard business of Greif, Inc. (“Greif”) for $1.8 billion in cash (the “Greif Acquisition”). The Greif containerboard business includes two containerboard mills with approximately 800,000 tons of production capacity and eight sheet feeder and corrugated plants located across the United States. The operating results of the Greif Acquisition are included in PCA’s results in the Packaging segment after the date of acquisition.
Included in this Item 2 are various non-GAAP financial measures, including earnings per diluted share excluding special items, net income excluding special items, earnings before non-operating pension income, interest, income taxes, and depreciation, amortization, and depletion (“EBITDA”), segment EBITDA, EBITDA excluding special items, and segment EBITDA excluding special items. We provide important disclosures regarding our presentation of non-GAAP financial measures and reconciliations of presented non-GAAP financial measures to the most comparable measures presented in accordance with GAAP later in this section under the caption “Non-GAAP Financial Measures.”
This Item 2 is intended to supplement, and should be read in conjunction with, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2025 Annual Report on Form 10-K.
Executive Summary
Second quarter net sales were $2.49 billion in 2026 and $2.17 billion in 2025. We reported $192 million of net income, or $2.15 per diluted share, during the second quarter of 2026, compared to $242 million, or $2.67 per diluted share, during the same period in 2025. Net income included $18 million of expense for special items in the second quarter of 2026, primarily related to facility closure costs, Wallula mill restructuring activities, and acquisition and integration-related costs, compared to $17 million of income for special items in 2025. Please see “Non-GAAP Financial Measures” elsewhere in this Item 2 for a description of special items. Excluding special items, net income was $210 million, or $2.35 per diluted share, during the second quarter of 2026, compared to $224 million, or $2.48 per diluted share, in the second quarter of 2025.1 The decrease was driven by lower earnings in the legacy business of ($0.27) per share, partially offset by $0.14 per share of earnings from the acquired Greif containerboard business. The decrease in the earnings of the legacy PCA business was driven primarily by higher freight costs, higher corporate and other expenses due to higher deferred compensation benefit costs and stock compensation expenses, unfavorable price and mix in the Packaging segment, higher labor and operating costs, higher depreciation and amortization expense, higher fiber costs, higher tax rate, and higher interest expense, excluding Greif acquisition indebtedness. These items were partially offset by higher production and sales volume in the Packaging segment, lower maintenance outage expense, and higher production and sales volume and prices and mix in the Paper segment. For additional detail on special items included in reported GAAP results and other non-GAAP measures, see “Item 2. Non-GAAP Financial Measures.”
20
Packaging segment operating income was $313 million in the second quarter of 2026, compared to $346 million in the second quarter of 2025. Packaging segment EBITDA excluding special items was $489 million in the second quarter of 2026 compared to $453 million in the second quarter of 2025.1 The increase in EBITDA excluding special items was driven by contribution from the acquired business and higher sales and production volume in the legacy business, partially offset by higher freight and logistics expenses, lower price and mix, higher fixed and other expenses, higher maintenance outage expense, and higher operating and converting costs. Prices and mix began to improve in the second quarter and are expected to further improve in the third and fourth quarters due to two containerboard and corrugated products price increases that we notified to customers during the first half of the year and the increase in reported containerboard prices described below under “Industry and Business Conditions.” PCA’s agreements with corrugated products customers generally include price change provisions based upon the change in reported containerboard prices at negotiated amounts and times. PCA expects to realize the majority of the price and mix improvement from the first price increase during the third quarter and expects that the price and mix improvement from the second price increase will be divided between the third and fourth quarters. Freight rates increased significantly during the second quarter primarily as a result of higher diesel fuel prices and recycled fiber prices have increased throughout the first half of the year.
Corrugated product shipments were up 24.3% per day and in total compared to the second quarter of 2025. Shipments from the legacy PCA business were up 4.1% per day and in total compared to the second quarter of 2025. Containerboard production in the second quarter of 2026 was approximately 1,415,000 tons, and containerboard inventory was down (5.3%) compared to the first quarter, and up 9.9% compared to the second quarter of 2025, primarily due to the acquisition.
Paper segment operating income was $34 million in the second quarter of 2026, compared to $26 million in the second quarter of 2025. Paper segment EBITDA excluding special items was $39 million in the second quarter of 2026, compared to $30 million in the second quarter of 2025.1 The increase in EBITDA excluding special items was primarily due to lower maintenance outage expense in 2026 due to the timing of annual maintenance outages, higher sales and production volume, and higher prices and mix, partially offset by higher freight and operating costs, with freight rates rising significantly during the quarter.
Packaging segment operating income was $574 million in the first six months of 2026, compared to $624 million in the same period in 2025. Packaging segment EBITDA excluding special items was $970 million in the first six months of 2026 compared to $862 million in the first six months of 2025.1 The increase in EBITDA excluding special items was driven by contribution from the acquired business and higher sales and production volume in the legacy business, lower fiber costs, higher prices and mix, and lower maintenance outage expense, partially offset by higher freight and logistics expense, higher fixed and other costs, and higher operating and converting costs with the addition of the acquired business.
Paper segment operating income was $67 million in the first six months of 2026, compared to $61 million in the first six months of 2025. Paper segment EBITDA excluding special items was $77 million in the first six months of 2026, compared to $71 million in the first six months of 2025.1 The increase in EBITDA excluding special items was due to lower maintenance outage expense, higher sales and production volume, and higher prices and mix, partially offset by higher operating costs and higher freight and logistics expense.
Industry and Business Conditions
Trade publications reported North American industry-wide corrugated products shipments were up 0.9% in total and per workday during the second quarter of 2026 compared to the same quarter of 2025. Reported industry containerboard production decreased (2.3%) compared to the second quarter of 2025. Reported industry containerboard inventories at the end of the second quarter of 2026 were approximately 2.40 million tons, down (12.5%) compared to the same period in 2025. Reported containerboard export shipments were down (27.3%) compared to the second quarter of 2025. Reported containerboard prices increased a net $20 per ton for linerboard and for corrugating medium during the first quarter of 2026, an additional $30 per ton in April 2026 and an additional $50 per ton in June 2026.
The market for communication papers competes heavily with electronic data transmission and document storage alternatives. Increasing shifts to these alternatives have reduced usage of traditional print media and communication papers. Trade publications reported North American UFS paper shipments were down (9.1%) in the first six months of 2026, compared to the same period of 2025. Average prices reported by a trade publication for cut size office papers were higher by $87 per ton, or 5.8%, in the second quarter of 2026, compared to the first quarter of 2026, and higher by $107 per ton, or 7.2%, compared to the second quarter of 2025. Reported index prices increased $60 per ton in March 2026, $40 per ton in April 2026 and $20 per ton in June 2026 for cut size office papers and for offset printing papers.
1 Net income excluding special items, earnings per diluted share excluding special items, and segment EBITDA excluding special items are non-GAAP financial measures. See “Non-GAAP Financial Measures” later in this Item 2.
21
Outlook
We expect continued strong demand in the Packaging segment and corrugated products volume to increase with one more shipping day in the third quarter of 2026 compared to the second quarter. We expect continued Packaging segment price and mix improvement in the third quarter as we complete the implementation of the first price increase and begin to implement the second price increase to corrugated products customers. Packaging mill production will be higher with one more operating day and lower impact to production from maintenance outages with fewer mills having annual outages as well as expected improved operating performance in our containerboard mill system. Mill maintenance outage expenses will be lower in total and in the Packaging segment and higher in the Paper segment with our single Paper segment mill having its maintenance outage in the third quarter. We expect lower volume and higher prices in the Paper segment as a result of the maintenance outage and the continued implementation of our previously announced paper price increases. We expect costs for freight to remain at or around the elevated levels we experienced later in the second quarter and higher on average for the third quarter. We expect prices for recycled fiber to continue to increase and higher mill production will drive increased usage and higher costs. Costs for chemicals and purchased electricity will be higher and will remain relatively flat for wood fiber and natural gas. We expect improvement in benefits costs due to second quarter unfavorability that is not expected to repeat in the third quarter. Considering these items, we expect third quarter earnings to be higher than the second quarter of 2026, excluding special items.
Results of Operations
Three Months Ended June 30, 2026, compared to Three Months Ended June 30, 2025
The historical results of operations of PCA for the three months ended June 30, 2026 and 2025 are set forth below (dollars in millions):
|
|
Three Months Ended |
|
|
|
|
||||||
|
|
June 30, |
|
|
|
|
||||||
|
|
2026 |
|
|
2025 |
|
|
Change |
|
|||
Packaging |
|
$ |
2,311.3 |
|
|
$ |
2,005.9 |
|
|
$ |
305.4 |
|
Paper |
|
|
157.3 |
|
|
|
145.8 |
|
|
|
11.5 |
|
Corporate and Other |
|
|
62.9 |
|
|
|
58.4 |
|
|
|
4.5 |
|
Intersegment eliminations |
|
|
(41.6 |
) |
|
|
(38.8 |
) |
|
|
(2.8 |
) |
Net sales |
|
$ |
2,489.9 |
|
|
$ |
2,171.3 |
|
|
$ |
318.6 |
|
|
|
|
|
|
|
|
|
|
|
|||
Packaging |
|
$ |
313.2 |
|
|
$ |
346.3 |
|
|
$ |
(33.1 |
) |
Paper |
|
|
34.3 |
|
|
|
25.8 |
|
|
|
8.5 |
|
Corporate and Other |
|
|
(56.3 |
) |
|
|
(38.4 |
) |
|
|
(17.9 |
) |
Income from operations |
|
$ |
291.2 |
|
|
$ |
333.7 |
|
|
$ |
(42.5 |
) |
Non-operating pension income |
|
|
1.1 |
|
|
|
— |
|
|
|
1.1 |
|
Interest expense, net |
|
|
(33.3 |
) |
|
|
(13.1 |
) |
|
|
(20.2 |
) |
Income before taxes |
|
|
259.0 |
|
|
|
320.6 |
|
|
|
(61.6 |
) |
Income tax provision |
|
|
(66.9 |
) |
|
|
(79.1 |
) |
|
|
12.2 |
|
Net income |
|
$ |
192.1 |
|
|
$ |
241.5 |
|
|
$ |
(49.4 |
) |
Non-GAAP Measures (a) |
|
|
|
|
|
|
|
|
|
|||
Net income excluding special items |
|
$ |
210.1 |
|
|
$ |
224.2 |
|
|
$ |
(14.1 |
) |
Consolidated EBITDA |
|
|
467.5 |
|
|
|
474.4 |
|
|
|
(6.9 |
) |
Consolidated EBITDA excluding special items |
|
|
485.7 |
|
|
|
450.8 |
|
|
|
34.9 |
|
Packaging EBITDA |
|
|
479.5 |
|
|
|
478.1 |
|
|
|
1.4 |
|
Packaging EBITDA excluding special items |
|
|
488.6 |
|
|
|
452.9 |
|
|
|
35.7 |
|
Paper EBITDA |
|
|
39.1 |
|
|
|
30.3 |
|
|
|
8.8 |
|
Paper EBITDA excluding special items |
|
|
39.1 |
|
|
|
30.3 |
|
|
|
8.8 |
|
Net Sales
Net sales increased $319 million, or 14.7%, to $2,490 million during the three months ended June 30, 2026, compared to $2,171 million during the same period in 2025.
Packaging. Net sales increased $305 million, or 15.2%, to $2,311 million, compared to $2,006 million in the second quarter of 2025 due to higher volume related to the acquired business ($258 million) and higher legacy volume ($58 million), partially offset by lower containerboard and corrugated products prices and mix ($11 million). In the second quarter of 2026, export and domestic containerboard outside shipments decreased (19.0%) compared to the second quarter of 2025, with more containerboard being integrated into PCA’s corrugated products system. Our total corrugated products shipments were up 24.3% per day and in total, compared to the same period in 2025. Shipments from the legacy PCA business were up 4.1% per day and in total. In the second quarter of 2026, our domestic containerboard prices were 3.2% higher, while export prices were 1.8% higher compared to the same period in 2025.
22
Paper. Net sales increased $11 million, or 7.9%, to $157 million, compared to $146 million in the second quarter of 2025, due to higher volumes ($9 million) and higher prices and mix ($2 million).
Gross Profit
Gross profit increased $30 million during the three months ended June 30, 2026, compared to the same period in 2025. The increase was driven primarily by higher volumes in the Packaging and Paper segments, lower maintenance outage expense, and higher prices and mix in the Paper segment, partially offset by higher freight expense, lower prices and mix in the Packaging segment, higher operating costs, and higher fixed and other costs. In the three months ended June 30, 2026, gross profit included $5 million of special items expense related to corrugated products facility closures, compared to $1 million in the three months ended June 30, 2025 related to corrugated products facility closures.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses (“SG&A”) increased $26 million during the three months ended June 30, 2026, compared to the same period in 2025. The increase was primarily due to higher employee-related expenses, higher depreciation related to the acquired business, and higher information technology and outside service expenses.
Other Income (Expense), Net
Other income (expense), net, for the three months ended June 30, 2026 and 2025 are set forth below (dollars in millions):
|
|
Three Months Ended |
|
|||||
|
|
June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Asset disposals and write-offs |
|
$ |
(11.0 |
) |
|
$ |
(10.5 |
) |
Facilities closure and other (costs) income |
|
|
(8.8 |
) |
|
|
25.3 |
|
Acquisition and integration-related costs |
|
|
(3.3 |
) |
|
|
(1.6 |
) |
Wallula mill restructuring |
|
|
(6.3 |
) |
|
|
— |
|
Other |
|
|
(12.6 |
) |
|
|
(9.3 |
) |
Total |
|
$ |
(42.0 |
) |
|
$ |
3.9 |
|
We discuss these items in more detail in Note 6, Other Income (Expense), Net, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this Form 10-Q.
Income from Operations
Income from operations decreased $43 million, or (12.7%), during the three months ended June 30, 2026 compared to the same period in 2025. The second quarter of 2026 included $24 million of special items expense related to corrugated facility closures, Wallula mill restructuring, and recent acquisitions, compared to $23 million of special items income related to gains on sales of corrugated products facilities, partially offset by corrugated products facility closure costs and costs related to the Greif acquisition in the second quarter of 2025.
Packaging. Packaging segment operating income decreased $33 million to $313 million, compared to $346 million during the three months ended June 30, 2025. The decrease related primarily to $15 million of special items expense related to the Wallula mill restructuring and corrugated facility closures, compared to $25 million of special items income primarily related to gains on sales of corrugated products facilities, partially offset by corrugated products facility closure costs in the second quarter of 2025. Excluding special items, operating income increased $6 million compared to the same period last year. The increase was driven primarily by the impact of newly acquired Greif operations ($36 million) and higher sales and production volume ($31 million), partially offset by higher freight expenses ($28 million), lower containerboard and corrugated products prices and mix ($14 million), higher fixed and other expenses ($8 million), higher maintenance outage expenses ($5 million), higher depreciation expense ($2 million), higher fiber costs ($2 million), and higher labor and operating costs ($1 million).
Paper. Paper segment operating income increased $8 million to $34 million, compared to $26 million during the three months ended June 30, 2025. The increase primarily related to lower maintenance outage expenses ($9 million), higher sales and production volume ($3 million), and higher prices and mix ($2 million), partially offset by higher freight expenses ($3 million), and higher operating costs ($2 million). There were no significant special items in the second quarter of 2026 or 2025.
Non-Operating Pension Income, Interest Expense, Net and Income Taxes
Non-operating pension income increased $1 million during the three months ended June 30, 2026, compared to the same period in 2025. The increase in non-operating pension income was related to favorable 2025 asset performance and favorable assumption changes.
Interest expense, net for the three months ended June 30, 2026 increased $20 million when compared to the same period in 2025. The increase in interest expense, net was primarily due to higher interest expense in 2026 as a result of the Company’s financing for the Greif Acquisition and lower interest income as a result of lower interest rates on lower cash balances.
23
During the three months ended June 30, 2026, we recorded $67 million of income tax expense, compared to $79 million of expense during the three months ended June 30, 2025. The effective tax rate for the three months ended June 30, 2026 and 2025 was 25.8% and 24.7%, respectively. The increase in our effective tax rate for the three months ended June 30, 2026 compared to the same period in 2025 was primarily due to lower excess tax benefits associated with employee restricted stock and performance unit vests and higher non-deductible employee remuneration paid to covered employees partially offset by favorable state law changes.
Six Months Ended June 30, 2026, compared to Six Months Ended June 30, 2025
The historical results of operations of PCA for the six months ended June 30, 2026 and 2025 are set forth below (dollars in millions):
|
|
Six Months Ended |
|
|
|
|
||||||
|
|
June 30, |
|
|
|
|
||||||
|
|
2026 |
|
|
2025 |
|
|
Change |
|
|||
Packaging |
|
$ |
4,499.8 |
|
|
$ |
3,976.3 |
|
|
$ |
523.5 |
|
Paper |
|
|
317.2 |
|
|
|
300.0 |
|
|
|
17.2 |
|
Corporate and Other |
|
|
120.9 |
|
|
|
114.8 |
|
|
|
6.1 |
|
Intersegment eliminations |
|
|
(80.3 |
) |
|
|
(78.8 |
) |
|
|
(1.5 |
) |
Net sales |
|
$ |
4,857.6 |
|
|
$ |
4,312.3 |
|
|
$ |
545.3 |
|
|
|
|
|
|
|
|
|
|
|
|||
Packaging |
|
$ |
573.5 |
|
|
$ |
624.4 |
|
|
$ |
(50.9 |
) |
Paper |
|
|
67.2 |
|
|
|
61.4 |
|
|
|
5.8 |
|
Corporate and Other |
|
|
(98.2 |
) |
|
|
(71.8 |
) |
|
|
(26.4 |
) |
Income from operations |
|
$ |
542.5 |
|
|
$ |
614.0 |
|
|
$ |
(71.5 |
) |
Non-operating pension income |
|
|
2.2 |
|
|
|
— |
|
|
|
2.2 |
|
Interest expense, net |
|
|
(66.0 |
) |
|
|
(26.0 |
) |
|
|
(40.0 |
) |
Income before taxes |
|
|
478.7 |
|
|
|
588.0 |
|
|
|
(109.3 |
) |
Income tax provision |
|
|
(115.7 |
) |
|
|
(142.7 |
) |
|
|
27.0 |
|
Net income |
|
$ |
363.0 |
|
|
$ |
445.3 |
|
|
$ |
(82.3 |
) |
Non-GAAP Measures (a) |
|
|
|
|
|
|
|
|
|
|||
Net income excluding special items |
|
$ |
425.3 |
|
|
$ |
432.4 |
|
|
$ |
(7.1 |
) |
Consolidated EBITDA |
|
|
944.0 |
|
|
|
892.6 |
|
|
|
51.4 |
|
Consolidated EBITDA excluding special items |
|
|
971.2 |
|
|
|
871.8 |
|
|
|
99.4 |
|
Packaging EBITDA |
|
|
955.7 |
|
|
|
884.5 |
|
|
|
71.2 |
|
Packaging EBITDA excluding special items |
|
|
970.4 |
|
|
|
862.1 |
|
|
|
108.3 |
|
Paper EBITDA |
|
|
76.8 |
|
|
|
70.5 |
|
|
|
6.3 |
|
Paper EBITDA excluding special items |
|
|
76.8 |
|
|
|
70.5 |
|
|
|
6.3 |
|
Net Sales
Net sales increased $546 million, or 12.7%, to $4,858 million during the six months ended June 30, 2026, compared to $4,312 million during the same period in 2025.
Packaging. Net sales increased $524 million, or 13.2%, to $4,500 million, compared to $3,976 million in the six months ended June 30, 2025, due to higher volume related to the acquired business ($483 million), higher legacy volumes ($34 million), and higher containerboard and corrugated products prices and mix ($7 million). In the first six months of 2026, export and domestic containerboard outside shipments decreased (17.3%) compared to the first six months of 2025, with more containerboard being integrated into PCA’s corrugated products system. Our total corrugated products shipments were up 23.1% per day and 22.1% in total, compared to the same period in 2025. Shipments from the legacy PCA business were up 3.5% per day and up 2.7% in total. In the first six months of 2026, our domestic containerboard prices were 3.0% higher, while export prices were 0.5% higher compared to the same period in 2025.
Paper. Net sales during the six months ended June 30, 2026 increased $17 million, or 5.7%, to $317 million, compared to $300 million in the six months ended June 30, 2025, due to higher volume ($13 million) and higher prices and mix ($4 million).
Gross Profit
Gross profit increased $28 million during the six months ended June 30, 2026, compared to the same period in 2025. The increase was driven primarily by higher volumes and higher prices and mix in the Packaging and Paper segments, lower maintenance outage expense and lower fiber costs, partially offset by higher freight expense, higher operating costs, and higher fixed and other costs. In the six months ended June 30, 2026, gross
24
profit included $56 million of special items expense related to Wallula mill restructuring and corrugated products facility closures. In the six months ended June 30, 2025, gross profit included $4 million of special items expense related to corrugated products facility closures.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses (“SG&A”) increased $45 million during the six months ended June 30, 2026, compared to the same period in 2025. The increase was primarily due to higher depreciation related to the acquired business and higher employee-related expenses.
Other Income (Expense), Net
Other income (expense), net, for the six months ended June 30, 2026 and 2025 are set forth below (dollars in millions):
|
|
Six Months Ended |
|
|||||
|
|
June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Asset disposals and write-offs |
|
$ |
(17.0 |
) |
|
$ |
(18.8 |
) |
Facilities closure and other (costs) income |
|
|
(11.7 |
) |
|
|
23.0 |
|
Acquisition and integration-related costs |
|
|
(6.7 |
) |
|
|
(1.6 |
) |
Wallula mill restructuring |
|
|
(9.0 |
) |
|
|
— |
|
Other |
|
|
(18.8 |
) |
|
|
(11.8 |
) |
Total |
|
$ |
(63.2 |
) |
|
$ |
(9.2 |
) |
We discuss these items in more detail in Note 6, Other Income (Expense), Net, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this Form 10-Q.
Income from Operations
Income from operations decreased $72 million, or (11.6%), during the six months ended June 30, 2026 compared to the same period in 2025. The first six months of 2026 included $83 million of special items expense related to Wallula mill restructuring, corrugated products facility closures, and recent acquisitions, compared to $17 million of special items income primarily related to gains on sales of corrugated products facilities, partially offset by corrugated products facility closure costs and costs related to the Greif acquisition in the same period in 2025.
Packaging. Packaging segment operating income decreased $51 million to $574 million during the six months ended June 30, 2026, compared to the same period in 2025. The decrease related primarily to $71 million of special items expense related to the Wallula mill restructuring and corrugated products facility closures, compared to $19 million of special items income primarily related to gains on sales of corrugated products facilities, partially offset by corrugated products facility closure costs in the same period in 2025. Excluding special items, operating income increased $39 million compared to the same period last year. The increase was driven primarily by the impact of newly acquired Greif operations ($48 million), higher containerboard and corrugated products prices and mix ($18 million), lower fiber costs ($11 million), lower labor and operating costs ($8 million), higher sales and production volume ($7 million), and lower maintenance outage expenses ($5 million), partially offset by higher freight expenses ($42 million), higher depreciation expense ($8 million) and higher fixed and other expenses ($7 million).
Paper. Paper segment operating income increased $6 million to $67 million during the six months ended June 30, 2026, compared to the same period in 2025. The increase primarily related to lower maintenance outage expenses ($9 million), higher prices and mix ($4 million) and higher sales and production volume ($4 million), partially offset by higher operating costs ($6 million) and higher freight expenses ($4 million). There were no significant special items in the first six months of 2026 or 2025.
Non-Operating Pension Income, Interest Expense, and Income Taxes
Non-operating pension income increased $2 million during the six months ended June 30, 2026, compared to the same period in 2025. The increase in non-operating pension income was related to favorable 2025 asset performance and favorable assumption changes.
Interest expense, net for the six months ended June 30, 2026 increased $40 million when compared to the same period in 2025. The increase in interest expense, net was primarily due to higher interest expense in 2026 as a result of the Company’s financing for the Greif Acquisition and lower interest income as a result of lower interest rates on lower cash balances.
During the six months ended June 30, 2026, we recorded $116 million of income tax expense, compared to $143 million of expense during the six months ended June 30, 2025. The effective tax rate for the six months ended June 30, 2026 and 2025 was 24.2% and 24.3%, respectively. The decrease in our effective tax rate for the six months ended June 30, 2026 compared to the same period in 2025 was primarily due to higher excess tax benefits associated with employee restricted stock and performance unit vests and favorable state law changes partially offset by higher non-deductible employee remuneration paid to covered employees.
25
Liquidity and Capital Resources
Sources and Uses of Cash
Our primary sources of liquidity are net cash provided by operating activities and available borrowing capacity under our revolving credit facility. At June 30, 2026, we had $443 million of cash and cash equivalents, $224 million of marketable debt securities and other, and $573 million of unused borrowing capacity under the revolving credit facility, net of letters of credit.
Currently, our primary uses of cash are for operations, capital expenditures, acquisitions, debt service, common stock dividends, and repurchases of common stock. We believe that net cash generated from operating activities, cash on hand, available borrowings under our revolving credit facility, and available capital through access to capital markets will be adequate to meet our liquidity and capital requirements, including payments of any declared common stock dividends, for the foreseeable future. As our debt or credit facilities become due, we will need to repay, extend, or replace such facilities. Our ability to do so will be subject to future economic conditions and financial, business, and other factors, many of which are beyond our control.
Below is a summary table of our cash flows, followed by a discussion of our sources and uses of cash through operating activities, investing activities, and financing activities (dollars in millions):
|
|
Six Months Ended |
|
|
|
|
||||||
|
|
June 30, |
|
|
|
|
||||||
|
|
2026 |
|
|
2025 |
|
|
Change |
|
|||
Net cash provided by (used for): |
|
|
|
|
|
|
|
|
|
|||
Operating activities |
|
$ |
705.3 |
|
|
$ |
638.7 |
|
|
$ |
66.6 |
|
Investing activities |
|
|
(477.5 |
) |
|
|
(287.0 |
) |
|
|
(190.5 |
) |
Financing activities |
|
|
(314.0 |
) |
|
|
(248.8 |
) |
|
|
(65.2 |
) |
Net (decrease) increase in cash and cash equivalents |
|
$ |
(86.2 |
) |
|
$ |
102.9 |
|
|
$ |
(189.1 |
) |
Operating Activities
Our operating cash flow is primarily driven by our earnings and changes in operating assets and liabilities, such as accounts receivable, inventories, accounts payable and other accrued liabilities, as well as factors described below. Cash requirements for operating activities are subject to PCA’s operating needs and the timing of collection of receivables and payments of payables and expenses.
During the six months ended June 30, 2026, net cash provided by operating activities was $705 million, compared to $639 million in the same period in 2025, an increase of $66 million. Cash from operations excluding changes in cash used for operating assets and liabilities increased $96 million due to higher net income adjusted for depreciation, depletion and amortization of intangibles and losses on asset disposals in 2026, and higher deferred income tax liabilities in 2026. Cash from operations decreased by $30 million when comparing the first six months of 2026 to the same period in 2025 due to changes in operating assets and liabilities primarily due to the following:
These unfavorable changes were partially offset by the following:
Investing Activities
We used $478 million for investing activities during the six months ended June 30, 2026 compared to $287 million during the same period in 2025. We spent $371 million for internal capital investments during the six months ended June 30, 2026, compared to $318 million during the same period in 2025. We completed acquisitions in the Packaging segment during the first six months ended June 30, 2026 for $21 million, including working capital adjustments. In March 2026, we used $50 million of cash on hand to invest in a time deposit.
We expect capital investments in 2026 to be within a range of $840 million to $870 million. These expenditures could increase or decrease as a result of a number of factors, including our financial results, strategic opportunities, future economic conditions, and our regulatory compliance requirements. We currently estimate capital expenditures to comply with environmental regulations will be about $21 million in 2026. Our estimated environmental expenditures could vary significantly depending upon the enactment of new environmental laws and regulations. For additional information, see “Environmental Matters” in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2025 Annual Report on Form 10-K.
26
Financing Activities
During the six months ended June 30, 2026, net cash used for financing activities was $314 million, compared to $249 million during the same period in 2025. We paid $223 million of dividends during the first six months of 2026, compared to $225 million of dividends paid during the comparable period in 2025. In addition, we withheld shares to cover $30 million of employee restricted stock taxes during the first six months of 2026 compared to $23 million of employee restricted stock taxes withheld during the same period in 2025. We repurchased and retired 0.3 million shares of the Company’s common stock for $59 million during the first six months of 2026. We did not have any repurchases and retirements of the Company’s common stock during the same period in 2025.
In addition to the items discussed in Note 12, Debt, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this Form 10-Q, see Note 11, Debt, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of our 2025 Annual Report on Form 10-K for more information.
Contractual Obligations
There have been no material changes to the contractual obligations disclosed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2025 Annual Report on Form 10-K.
Non-GAAP Financial Measures
Earnings per diluted share excluding special items, net income excluding special items, EBITDA, segment EBITDA, EBITDA excluding special items, and segment EBITDA excluding special items are non-GAAP financial measures. Management excludes special items, as it believes that these items are not necessarily reflective of the ongoing operations of our business. These measures are presented because they provide a means to evaluate the performance of our segments and our Company on an ongoing basis using the same measures that are used by our management, because these measures assist in providing a meaningful comparison between periods and because these measures are frequently used by investors and other interested parties in the evaluation of companies and the performance of their segments. Any analysis of non-GAAP financial measures should be done in conjunction with results presented in accordance with GAAP. The non-GAAP measures are not intended to be substitutes for GAAP financial measures and should not be used as such. Reconciliations of the non-GAAP measures to the most comparable measure reported in accordance with GAAP are detailed below.
The following table reconciles earnings per diluted share to earnings per diluted share excluding special items for the periods indicated:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Earnings per diluted share, as reported in accordance with GAAP |
|
$ |
2.15 |
|
|
$ |
2.67 |
|
|
$ |
4.05 |
|
|
$ |
4.93 |
|
Special items: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Facilities closure and other costs (income) (a) |
|
|
0.12 |
|
|
|
(0.20 |
) |
|
|
0.14 |
|
|
|
(0.15 |
) |
Acquisition and integration-related costs (b) |
|
|
0.03 |
|
|
|
0.01 |
|
|
|
0.06 |
|
|
|
0.01 |
|
Wallula mill restructuring (c) |
|
|
0.05 |
|
|
|
— |
|
|
|
0.50 |
|
|
|
— |
|
Total special items |
|
|
0.20 |
|
|
|
(0.19 |
) |
|
|
0.70 |
|
|
|
(0.14 |
) |
Earnings per diluted share, excluding special items |
|
$ |
2.35 |
|
|
$ |
2.48 |
|
|
$ |
4.75 |
|
|
$ |
4.79 |
|
27
The following table reconciles net income to net income excluding special items for the periods indicated (dollars in millions):
|
|
Three Months Ended June 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
|
|
Income |
|
|
Income |
|
|
Net |
|
|
Income |
|
|
Income |
|
|
Net |
|
||||||
As reported in accordance with GAAP |
|
$ |
259.0 |
|
|
$ |
(66.9 |
) |
|
$ |
192.1 |
|
|
$ |
320.6 |
|
|
$ |
(79.1 |
) |
|
$ |
241.5 |
|
Special items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Facilities closure and other costs (income) (d) |
|
|
14.1 |
|
|
|
(3.4 |
) |
|
|
10.7 |
|
|
|
(24.6 |
) |
|
|
6.1 |
|
|
|
(18.5 |
) |
Acquisition and integration-related costs (e) |
|
|
3.3 |
|
|
|
(0.8 |
) |
|
|
2.5 |
|
|
|
1.6 |
|
|
|
(0.4 |
) |
|
|
1.2 |
|
Wallula mill restructuring (f) |
|
|
6.3 |
|
|
|
(1.5 |
) |
|
|
4.8 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total special items |
|
|
23.7 |
|
|
|
(5.7 |
) |
|
|
18.0 |
|
|
|
(23.0 |
) |
|
|
5.7 |
|
|
|
(17.3 |
) |
Excluding special items |
|
$ |
282.7 |
|
|
$ |
(72.6 |
) |
|
$ |
210.1 |
|
|
$ |
297.6 |
|
|
$ |
(73.4 |
) |
|
$ |
224.2 |
|
|
|
Six Months Ended June 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
|
|
Income |
|
|
Income |
|
|
Net |
|
|
Income |
|
|
Income |
|
|
Net |
|
||||||
As reported in accordance with GAAP |
|
$ |
478.7 |
|
|
$ |
(115.7 |
) |
|
$ |
363.0 |
|
|
$ |
588.0 |
|
|
$ |
(142.7 |
) |
|
$ |
445.3 |
|
Special items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Facilities closure and other costs (income) (d) |
|
|
17.0 |
|
|
|
(4.3 |
) |
|
|
12.7 |
|
|
|
(18.8 |
) |
|
|
4.7 |
|
|
|
(14.1 |
) |
Acquisition and integration-related costs (e) |
|
|
6.7 |
|
|
|
(1.7 |
) |
|
|
5.0 |
|
|
|
1.6 |
|
|
|
(0.4 |
) |
|
|
1.2 |
|
Wallula mill restructuring (f) |
|
|
59.7 |
|
|
|
(15.1 |
) |
|
|
44.6 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total special items |
|
|
83.4 |
|
|
|
(21.1 |
) |
|
|
62.3 |
|
|
|
(17.2 |
) |
|
|
4.3 |
|
|
|
(12.9 |
) |
Excluding special items |
|
$ |
562.1 |
|
|
$ |
(136.8 |
) |
|
$ |
425.3 |
|
|
$ |
570.8 |
|
|
$ |
(138.4 |
) |
|
$ |
432.4 |
|
The following table reconciles net income to EBITDA and EBITDA excluding special items for the periods indicated (dollars in millions):
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net income |
|
$ |
192.1 |
|
|
$ |
241.5 |
|
|
$ |
363.0 |
|
|
$ |
445.3 |
|
Non-operating pension income |
|
|
(1.1 |
) |
|
|
— |
|
|
|
(2.2 |
) |
|
|
— |
|
Interest expense, net |
|
|
33.3 |
|
|
|
13.1 |
|
|
|
66.0 |
|
|
|
26.0 |
|
Income tax provision |
|
|
66.9 |
|
|
|
79.1 |
|
|
|
115.7 |
|
|
|
142.7 |
|
Depreciation, amortization, and depletion |
|
|
176.3 |
|
|
|
140.7 |
|
|
|
401.5 |
|
|
|
278.6 |
|
EBITDA |
|
$ |
467.5 |
|
|
$ |
474.4 |
|
|
$ |
944.0 |
|
|
$ |
892.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Special items: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Facilities closure and other costs (income) |
|
|
8.6 |
|
|
|
(25.2 |
) |
|
|
11.5 |
|
|
|
(22.4 |
) |
Acquisition and integration-related costs |
|
|
3.3 |
|
|
|
1.6 |
|
|
|
6.7 |
|
|
|
1.6 |
|
Wallula mill restructuring |
|
|
6.3 |
|
|
|
— |
|
|
|
9.0 |
|
|
|
— |
|
Total special items |
|
|
18.2 |
|
|
|
(23.6 |
) |
|
|
27.2 |
|
|
|
(20.8 |
) |
EBITDA excluding special items |
|
$ |
485.7 |
|
|
$ |
450.8 |
|
|
$ |
971.2 |
|
|
$ |
871.8 |
|
28
The following table reconciles segment operating income (loss) to segment EBITDA and segment EBITDA excluding special items for the periods indicated (dollars in millions):
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Packaging |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment operating income |
|
$ |
313.2 |
|
|
$ |
346.3 |
|
|
$ |
573.5 |
|
|
$ |
624.4 |
|
Depreciation, amortization, and depletion |
|
|
166.3 |
|
|
|
131.8 |
|
|
|
382.2 |
|
|
|
260.1 |
|
EBITDA |
|
|
479.5 |
|
|
|
478.1 |
|
|
|
955.7 |
|
|
|
884.5 |
|
Facilities closure and other costs (income) |
|
|
2.8 |
|
|
|
(25.2 |
) |
|
|
5.7 |
|
|
|
(22.4 |
) |
Wallula mill restructuring |
|
|
6.3 |
|
|
|
— |
|
|
|
9.0 |
|
|
|
— |
|
EBITDA excluding special items |
|
$ |
488.6 |
|
|
$ |
452.9 |
|
|
$ |
970.4 |
|
|
$ |
862.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Paper |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment operating income |
|
$ |
34.3 |
|
|
$ |
25.8 |
|
|
$ |
67.2 |
|
|
$ |
61.4 |
|
Depreciation, amortization, and depletion |
|
|
4.8 |
|
|
|
4.5 |
|
|
|
9.6 |
|
|
|
9.1 |
|
EBITDA |
|
|
39.1 |
|
|
|
30.3 |
|
|
|
76.8 |
|
|
|
70.5 |
|
EBITDA excluding special items |
|
$ |
39.1 |
|
|
$ |
30.3 |
|
|
$ |
76.8 |
|
|
$ |
70.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate and Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Segment operating loss |
|
$ |
(56.3 |
) |
|
$ |
(38.4 |
) |
|
$ |
(98.2 |
) |
|
$ |
(71.8 |
) |
Depreciation, amortization, and depletion |
|
|
5.2 |
|
|
|
4.4 |
|
|
|
9.7 |
|
|
|
9.4 |
|
EBITDA |
|
|
(51.1 |
) |
|
|
(34.0 |
) |
|
|
(88.5 |
) |
|
|
(62.4 |
) |
Facilities closure and other costs |
|
|
5.8 |
|
|
|
— |
|
|
|
5.8 |
|
|
|
— |
|
Acquisition and integration-related costs |
|
|
3.3 |
|
|
|
1.6 |
|
|
|
6.7 |
|
|
|
1.6 |
|
EBITDA excluding special items |
|
$ |
(42.0 |
) |
|
$ |
(32.4 |
) |
|
$ |
(76.0 |
) |
|
$ |
(60.8 |
) |
Market Risk and Risk Management Policies
PCA is exposed to the impact of commodity price changes, interest rate changes, and changes in the market value of its financial instruments. To manage these risks, we may from time to time enter into transactions, including certain physical commodity transactions, that are determined to be derivatives. As of June 30, 2026, we are party to certain physical commodity transactions related to natural gas supply contracts. These contracts qualify for the normal purchase normal sale (“NPNS”) exception, and we have elected that exception. For a discussion of derivatives and hedging activities, see Note 2, Summary of Significant Account Policies, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of our 2025 Annual Report on Form 10-K.
The interest rates on approximately 75% of PCA’s debt are fixed. A one percent increase in interest rates related to variable-rate debt would have resulted in an increase in interest expense and a corresponding decrease in income before taxes of approximately $10 million annually.
Off-Balance-Sheet Activities
The Company does not have any off-balance sheet arrangements as of June 30, 2026.
Environmental Matters
There have been no material changes to the disclosure set forth in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Environmental Matters” filed with our 2025 Annual Report on Form 10-K.
Critical Accounting Policies and Estimates
Management’s discussion and analysis of financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, PCA evaluates its estimates, including those related to business combinations, pensions and other postretirement benefits, goodwill and intangible assets, long-lived asset impairment, environmental liabilities, and income taxes, among others. PCA bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
PCA has included in its 2025 Annual Report on Form 10-K a discussion of its critical accounting policies and estimates which require management’s most difficult, subjective, or complex judgments used in the preparation of its consolidated financial statements. PCA has not had any changes to these critical accounting estimates during the first six months of 2026.
29
New and Recently Adopted Accounting Standards
For a listing of our new and recently adopted accounting standards, see Note 2, New and Recently Adopted Accounting Standards, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this Form 10-Q.
Forward-Looking Statements
Some of the statements in this Quarterly Report on Form 10-Q, and in particular, statements found in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, that are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about our expectations regarding our future liquidity, earnings, expenditures, and financial condition. These statements are often identified by the words “will,” “should,” “anticipate,” “believe,” “expect,” “intend,” “estimate,” “hope,” or similar expressions. These statements reflect management’s current views with respect to future events and are subject to risks and uncertainties. There are important factors that could cause actual results to differ materially from those in forward-looking statements, many of which are beyond our control. These factors, risks and uncertainties include the following:
Our actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements, and accordingly, we can give no assurances that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do occur, what impact they will have on our results of operations or financial condition. Given these uncertainties, investors are cautioned not to place undue reliance on these forward-looking statements. We expressly disclaim any obligation to publicly revise any forward-looking statements that have been made to reflect the occurrence of events after the date hereof. For a discussion of other factors, risks and uncertainties that may affect our business, see Item 1A. Risk Factors included in our Annual Report on Form 10-K for the year ended December 31, 2025.
30
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For a discussion of market risks related to PCA, see Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Market Risk and Risk Management Policies” in this Quarterly Report on Form 10-Q.
Item 4. CONTROLS AND PROCEDURES
PCA maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) that are designed to provide reasonable assurance that information required to be disclosed in PCA’s filings under the Securities Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to PCA’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Prior to filing this report, PCA completed an evaluation under the supervision and with the participation of PCA’s management, including PCA’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of PCA’s disclosure controls and procedures as of June 30, 2026. The evaluation of PCA’s disclosure controls and procedures included a review of the controls’ objectives and design, PCA’s implementation of the controls, and the effect of the controls on the information generated for use in this report. Based on this evaluation, PCA’s Chief Executive Officer and Chief Financial Officer concluded that PCA’s disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2026.
Changes in Internal Control over Financial Reporting
On September 2, 2025, we completed the acquisition of the containerboard business of Greif, Inc. We are currently in the process of assessing and integrating Greif’s internal control over financial reporting with our existing internal control over financial reporting.
Except as described above, there have been no changes in the Company’s internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the quarter ended June 30, 2026.
31
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The disclosure set forth under the caption “Legal Proceedings” in Note 19, Commitments, Guarantees, Indemnifications and Legal Proceedings, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in “Part I, Item 1. Financial Statements” of this Form 10-Q is incorporated herein by reference.
Item 1A. RISK FACTORS
There have been no material changes to the risk factors disclosed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table presents information related to our repurchases of common stock made under repurchase plans authorized by PCA's Board of Directors, and shares withheld to cover taxes on vesting of equity awards, during the three months ended June 30, 2026:
Issuer Purchases of Equity Securities |
|
|||||||||||||||
Period |
|
Total |
|
|
Average |
|
|
Total Number |
|
|
Approximate |
|
||||
April 1-30, 2026 |
|
|
250 |
|
|
$ |
209.63 |
|
|
|
— |
|
|
$ |
224.3 |
|
May 1-31, 2026 |
|
|
2,306 |
|
|
|
210.77 |
|
|
|
— |
|
|
|
224.3 |
|
June 1-30, 2026 |
|
|
1,206 |
|
|
|
220.97 |
|
|
|
— |
|
|
|
224.3 |
|
Total |
|
|
3,762 |
|
|
$ |
213.97 |
|
|
|
— |
|
|
$ |
224.3 |
|
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
Item 5. OTHER INFORMATION
During the three months ended June 30, 2026, none of the Company's directors or officers
32
Item 6. EXHIBITS
Exhibit Number |
|
Description |
|
|
|
31.1 |
|
Certification of Chief Executive Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. † |
|
|
|
31.2 |
|
Certification of Chief Financial Officer, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. † |
|
|
|
32 |
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. † |
|
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. † |
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document. † |
|
|
|
104 |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). † |
† Filed herewith.
33
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
Packaging Corporation of America |
|
|
|
|
|
/s/ FABIAN C. STRAUSS |
|
|
FABIAN C. STRAUSS Senior Vice President, Finance, Controller and Treasurer |
|
|
|
Date: August 7, 2026
34