PCA says corrugated volumes reflect ‘cautious ordering patterns’

In what has been a challenging year for box makers and paper packaging companies, continued economic uncertainty has been reflected in third-quarter earnings reports, including for Lake Forest, Illinois-based Packaging Corp. of America (PCA), the third-largest containerboard producer in North America.

 CEO Mark W. Kowlzan says the company had “a very strong quarter” in its legacy PCA packaging business, but, despite slightly improved ordering patterns, corrugated volumes continue to reflect caution among customers.

PCA has reported third-quarter net sales of $2.3 billion, up slightly from $2.2 billion in the third quarter of last year, while operating income and net income are down year over year.

Specifically, operating income and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in PCA’s Paper segment are down year over year, while operating income and adjusted EBITDA are up in its Packaging segment. However, despite Paper segment sales volume being down 0.7 percent year over year, it is up 10 percent compared with the second quarter of this year.

Total corrugated products shipments in the Packaging segment from the legacy PCA business were down 2.7 percent per day and down 1.1 percent compared with the third quarter of 2024. Including the newly acquired containerboard business of Delaware, Ohio-based Greif Inc., shipments were up 3.7 percent per day and 5.3 percent overall.

“Export containerboard sales volume remained relatively low with continued trade uncertainty,” Kowlzan says. “Our containerboard mills continued to operate very efficiently and we ended the quarter at targeted containerboard inventory levels in the legacy PCA system.”

PCA’s containerboard production was 1.26 million tons in its legacy mills and 47,000 tons at acquired mills, while containerboard inventory in the legacy system was 417,000 tons, up 56,000 tons from last year’s third quarter and up 15,000 tons from the second quarter of this year. Inventory at the newly acquired mills was 86,000 tons.

“We closed the acquisition of the Greif containerboard business in early September and took the opportunity to perform extensive work in the mills to improve future operations and to begin to manage acquired inventory levels down to appropriate levels within the larger integrated system,” Kowlzan says. We extended the Massillon mill annual shutdown to five weeks, which we completed earlier this month. We executed a complete refurbishment of the entire facility, including reliability improvements on both paper machines, the [old corrugated containers] facility and the power plant. At the Riverville mill, we took five-day outages on both paper machines to perform work to improve reliability and up-time.

While these activities significantly impacted results in September, we are already seeing the benefits of improved performance. We will continue to manage and invest in these facilities to achieve operating performance in line with the legacy PCA system. The acquired corrugated business achieved strong volumes and pricing consistent with expectations and will drive profitable performance of the acquired business.”

Looking ahead, PCA expects higher per-day corrugated shipments in the fourth quarter, and while export containerboard sales are anticipated to be higher than the third quarter, they still are expected to be relatively low compared with traditional fourth-quarter volumes.

“We expect seasonally higher energy and fiber costs and, on the whole, freight and other operating costs to be relatively flat,” Kowlzan says. “In the Paper segment, we expect lower production and sales volumes than the seasonally stronger third quarter with flat pricing.”

“We expect significant improvement in the results of operations of the acquired business. We will be impacted by continued lower production and higher maintenance expenses from the Massillon mill outage that continued into October and seasonally lower volumes and mix in the corrugated business. We will benefit from a full quarter of improved operations at the Riverville mill. We will be managing our production to achieve lower inventories at the acquired operations appropriate for the larger, integrated system. Considering these items, we expect fourth quarter earnings of $2.40 per share, excluding special items.”

PCA’s full third-quarter 2025 earnings report can be found here.