Skip to content
    PKG
    Earnings call· Mar 2026(Q1 FY26)

    PACKAGING CORP OF AMERICA Q1 FY26 earnings call PKG

    Apr 23, 2026 Source

    Executive summary

    Packaging Corporation of America Q1 FY26 — Strong Operational Performance and Greif Integration Progress

    Packaging Corporation of America delivered strong Q1 FY26 results, exceeding guidance driven by robust operational performance and favorable pricing in its legacy packaging business. While the acquired Greif operations faced initial headwinds from weather and seasonality, management expects sequential improvement and accretion in Q2. The company is focused on integrating Greif, optimizing its mill system, and implementing price increases to offset rising input costs and capitalize on resilient customer demand.

    Highlights

    5

    • Adjusted EPS increased by $0.09 per share compared to Q1 FY25, reaching $2.40 per share.

    • Legacy packaging segment saw higher prices and mix contributing $0.17 per share and lower fiber costs contributing $0.11 per share.

    • Corrugated shipments per day for the legacy business were up 2.8% year-over-year, setting a new record.

    • Packaging segment EBITDA margin improved to 22% in Q1 FY26 from 20.8% in Q1 FY25.

    • Wallula mill reconfiguration successfully completed, reducing fiber, power, and labor costs.

    Concerns

    4

    • Acquired Greif operations generated a loss of $0.06 per share in Q1 FY26, primarily due to lower volume and higher costs from a January storm, higher freight, and recycled fiber costs.

    • Higher freight costs impacted earnings by $0.13 per share.

    • Lower production and sales volume in the legacy packaging business reduced earnings by $0.11 per share.

    • Overall cost for fiber and chemicals are expected to be higher in Q2 FY26, offsetting normal seasonal benefits.

    Guidance & targets

    13
    CategoryTargetConfidence
    Q2 FY26 Earnings (ex-special items)
    $2.33 per share
    high materiality
    High
    Full-year FY26 Capital Expenditure
    $840 million to $870 million
    high materiality
    High
    Full-year FY26 Depreciation, Depletion & Amortization (DD&A)
    $700 million
    medium materiality
    High
    Q2 FY26 Effective Tax Rate
    approximately 26%
    medium materiality
    High
    Q2 FY26 Maintenance Outage Expense
    $0.36
    medium materiality
    High
    Q3 FY26 Maintenance Outage Expense
    $0.31
    medium materiality
    High
    Q4 FY26 Maintenance Outage Expense
    $0.64
    medium materiality
    High
    Full-year FY26 Maintenance Outage Expense
    $1.44
    medium materiality
    High
    Greif Systems Integration Completion
    complete systems integration
    medium materiality
    High
    Greif Productivity Improvements Run Rate
    $15 million to $20 million
    medium materiality
    High
    Greif Total Synergy Run Rate
    $30 million
    medium materiality
    High
    Greif Sequential EPS Improvement
    $0.10
    medium materiality
    High
    Employee Stock Compensation Expense Increase
    $17 million higher
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Packaging
    Ran at full capacity during the quarter. Completed the outage on the Counce #1 machine. Wallula mill reconfiguration successfully completed. Jackson set new production and speed records. Riverville produced at approximately 10% higher rate than prior to acquisition.
    EBITDA (ex-special items): $482 million (Q1 FY26)EBITDA (ex-special items) Q1 FY25: $409 millionSales Q1 FY25: $2 billionEBITDA margin Q1 FY25: 20.8%Containerboard production: 1,398,000 tons (Q1 FY26)Legacy mills containerboard production: 1,210,000 tons (Q1 FY26)Legacy mills containerboard production vs Q4 FY25: down 25,000 tonsLegacy mills containerboard production vs Q1 FY25: down 40,000 tonsSystem-wide inventories: down 39,000 tons from Q4 FY25Legacy corrugated shipments per day YoY: up 2.8%Total legacy shipments YoY: up 1.2% (with 1 fewer day)Acquired Greif operations shipments per day YoY: up 22%Acquired Greif operations total shipments YoY: up 20%Greif inventories reduced: 10,000 tons (during Q1 FY26)
    		$2.2 billion——22%
    Paper
    Continues to generate high margins, driven by strong commercial and operational performance. Working to implement previously announced price increases.
    EBITDA (ex-special items): $38 million (Q1 FY26)EBITDA (ex-special items) Q1 FY25: $40 millionSales Q1 FY25: $154 millionEBITDA margin Q1 FY25: 26.1%Sales volume YoY: up 3%Sales volume QoQ: up 4%Prices and mix YoY: up 1%Prices and mix QoQ: flat
    		$160 million——23.6%

    Operational metrics

    34
    Adjusted EPS
    $2.40up $0.09 YoY
    Q1 FY26

    Excluding special items.

    Special Items Expense
    $0.49
    Q1 FY26

    Included in net income.

    Legacy Packaging Price & Mix Impact
    $0.17vs Q1 FY25
    Q1 FY26

    Positive impact on earnings.

    Legacy Packaging Fiber Cost Impact
    $0.11
    Q1 FY26

    Positive impact on earnings from lower fiber costs.

    Lower Maintenance Outage Expenses Impact
    $0.09
    Q1 FY26

    Positive impact on earnings.

    Legacy Packaging Labor & Operating Costs Impact
    $0.08
    Q1 FY26

    Positive impact on earnings from lower costs.

    Paper Segment Price & Mix Impact
    $0.02
    Q1 FY26

    Positive impact on earnings.

    Paper Segment Volume Impact
    $0.01
    Q1 FY26

    Positive impact on earnings.

    Lower Tax Rate Impact
    $0.01
    Q1 FY26

    Positive impact on earnings.

    Lower Share Count Impact
    $0.01
    Q1 FY26

    Positive impact on earnings.

    Higher Freight Costs Impact
    $0.13
    Q1 FY26

    Negative impact on earnings.

    Legacy Packaging Production & Sales Volume Impact
    $0.11
    Q1 FY26

    Negative impact on earnings.

    Legacy Packaging Depreciation Expense Impact
    $0.05
    Q1 FY26

    Negative impact on earnings from higher depreciation.

    Paper Segment Labor & Operating Costs Impact
    $0.03
    Q1 FY26

    Negative impact on earnings from higher costs.

    Higher Corporate & Other Expenses Impact
    $0.03
    Q1 FY26

    Negative impact on earnings.

    Greif Operations Loss Impact
    $0.06
    Q1 FY26

    Loss generated by acquired Greif operations, including interest on acquisition indebtedness.

    Total Company EBITDA (ex-special items)
    $486 millionup from $421 million Q1 FY25
    Q1 FY26

    Total company EBITDA excluding special items.

    Cash Provided by Operations
    $329 million
    Q1 FY26

    Operating cash flow.

    Dividend Payments
    $112 million
    Q1 FY26

    Cash outflow for dividends.

    Share Repurchases
    $59 million
    Q1 FY26

    Cash outflow for share repurchases.

    Cash Tax Payments
    $18 million
    Q1 FY26

    Cash outflow for taxes.

    Net Interest Payments
    $11 million
    Q1 FY26

    Cash outflow for net interest.

    Shares Repurchased
    266,000
    Q1 FY26

    Shares repurchased during the quarter.

    Remaining Repurchase Authority
    $224 million
    Q1 FY26

    Remaining authorization for share repurchases.

    Effective Tax Rate (ex-special items)
    just under 23%
    Q1 FY26

    Lower than forecasted full-year rate due to favorability from vesting of employee equity awards.

    Greif Productivity Improvement Run Rate
    $15 million to $20 million
    run rate

    Expected run rate of productivity improvements from the acquired mills.

    Greif Total Synergy Run Rate Target
    $30 million
    FY26

    Targeted total run rate for synergies from Greif acquisition.

    Greif Sequential EPS Improvement
    $0.10
    1Q to 2Q FY26

    Expected sequential improvement in EPS contribution from Greif operations.

    Employee Stock Compensation Expense Increase
    $17 millionvs FY25
    FY26

    Higher expense due to change in timing of recognition, timing out over 2-3 years.

    Freight, Fiber, Chemicals Cost Increase
    $0.15
    1Q to 2Q FY26

    Estimated sequential increase in costs, normally flat or beneficial.

    Tax Rate Impact (1Q to 2Q)
    $0.07
    1Q to 2Q FY26

    Analyst-confirmed estimate for the sequential tax effect.

    Massillon and Riverville Uptime Efficiency
    97% plus
    last couple of months

    Performance on uptime efficiency for the acquired Greif mills.

    Legacy Bookings and Billings Growth
    4.5%
    April

    Growth rate for bookings and billings in the legacy business.

    Domestic Containerboard & Corrugated Products Price & Mix Impact (ex-Greif)
    $0.12vs Q4 FY25
    Q1 FY26

    Impact on earnings from price and mix, excluding Greif operations.

    Industry KPIs

    6
    MetricValueDetails
    Dividends$112 millionUSD
    Share buyback$59 millionUSD
    CAPEX capital program$165 millionUSD
    Volume production growth1,398,000 tonstons
    End market demand driversResilient economy
    Adjusted underlying EBITDA$486 millionUSD

    Deals & partnerships

    1
    GreifAcquisition and integration of the Greif containerboard business

    Costs relating to the acquisition and integration of the Greif containerboard business.

    Capital programs

    4
    Wallula Mill reconfigurationsuccessfully completed

    Benefit: reduced cost of fiber, power and labor

    The Wallula mill reconfiguration was successfully completed, which immediately helped us reduce our cost of fiber, power and labor.

    Jackson Mill gas turbine projectapproved

    Benefit: electricity independent off the grid

    Our Board of Directors approved the gas turbine projects for the Jackson, Alabama mill... and we're scoping a third project for the DeRidder, Louisiana mill, which we will be submitting in the period of May at the Annual Board meeting.

    Riverville Mill gas turbine projectapproved

    Benefit: electricity independent off the grid

    Our Board of Directors approved the gas turbine projects for the Jackson, Alabama mill and Riverville, Virginia mills that we talked about on the last call.

    DeRidder Mill gas turbine projectscoping

    Benefit: electricity independent off the grid

    we're scoping a third project for the DeRidder, Louisiana mill, which we will be submitting in the period of May at the Annual Board meeting.

    Risks & headwinds

    5
    Greif Operations UnderperformanceQ1 FY26

    $0.06 per share loss

    Mitigation: Optimizing mill system, moving business around, reducing inventories, expecting sequential improvement and accretion in Q2.

    Higher Freight CostsQ1 FY26, Q2 FY26

    $0.13 per share impact in Q1 FY26; higher diesel fuel prices expected to continue into Q2 FY26

    Mitigation: Freight optimization activities, running operations efficiently.

    Increased Input Costs (Fiber, Chemicals)Q2 FY26

    Overall cost in these areas will be higher in Q2 FY26 than in Q1 FY26; estimated $0.15 per share higher 1Q to 2Q

    Mitigation: Running mills efficiently, optimizing mix, implementing price increases.

    Lower Production & Sales Volume (Legacy Packaging)Q1 FY26

    $0.11 per share impact in Q1 FY26

    Mitigation: Running at full capacity, executing outages efficiently, improving productivity.

    Increased Employee Stock Compensation ExpenseFY26, next 2 to 3 years

    approximately $17 million higher for 2026 than for 2025, evenly split between Q2, Q3, Q4

    Mitigation: This is a fixed cost increase, managed through overall financial performance.

    What to watch in Q2 FY26

    5

    Greif operations EPS contribution

    Q2 FY26
    Current$0.06 per share loss (Q1 FY26)
    TargetAccretive, $0.10 sequential improvement

    Why it matters

    Verifies the successful integration and turnaround of the acquired business, crucial for overall profitability.

    We're forecasting sequentially improvement conservatively about $0.10, 1Q to 2Q. So we expect to be accretive in the second quarter and going forward⏳.

    Q&A highlights

    5

    Inquired about April bookings/billings growth and any signs of pre-buying ahead of price increases.

    Legacy bookings and billings were up 4.5%. No pre-buy activity was observed, with customers maintaining lean inventories.

    “Our customers continue to operate with very lean inventories, and I think they'll continue to do so.”

    asked by George Staphos · answered by Thomas Hassfurther

    2 min read5 chapters

    Detailed Narrative

    01

    Wallula Mill Reconfiguration & Cost Reduction

    The successful reconfiguration of the Wallula mill immediately contributed to reduced costs for fiber, power, and labor. This strategic move is part of the company's broader efforts to enhance operational efficiency and manage input expenses, demonstrating effective capital deployment for long-term benefits.

    02

    Mill System Optimization and Greif Integration

    Following the acquisition of Greif assets, PCA is actively optimizing its mill system by strategically moving business to mills best suited for specific product mixes and freight advantages. This includes leveraging the improved reliability and performance of the Massillon and Riverville mills, which have achieved over 97% uptime efficiency, to enhance overall system efficiency and support customer demand.

    03

    Strategic Gas Turbine Projects

    The Board approved gas turbine projects for the Jackson, Alabama, and Riverville, Virginia mills, with a third project for the DeRidder, Louisiana mill currently being scoped for May Board submission. These projects aim to achieve electricity independence for these facilities, similar to the Valdosta mill, representing significant capital investments focused on long-term operational resilience, energy cost control, and reduced grid reliance.

    04

    Containerboard Market Dynamics and Pricing

    The company noted a tight linerboard situation, necessitating continued exceptional performance from mill operations to support customer demand. Despite global events and higher fuel prices, the economy remains resilient, with strong customer ordering patterns and expected continued demand strength into Q2. Management anticipates price increases to provide some benefit in Q2, with the majority impacting Q3.

    05

    End-Market Demand and Consumer Resilience

    PCA's food and beverage customers continue to perform well, adapting quickly to varying demands, including the impact of GLP-1s, by introducing new products. The building products segment is also showing signs of resurgence. Management anticipates that upcoming tax refunds to consumers will positively impact the economy and, by extension, the company's business in the second half of the year, contributing to continued resilient consumer spending.

    AI-generated summary of the company’s earnings call. Not investment advice.