Packaging Corp of America 10-Q 2025-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended September 30, 2025

or

For the transition period from to

Commission file number 1-15399

(Exact Name of Registrant as Specified in its Charter)

Registrant's telephone number, including area code

(847) 482-3000

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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.

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 October 31, 2025, the Registrant had outstanding 89,977,067 shares of common stock, par value $0.01 per share.

Securities registered pursuant to Section 12(b) of the Exchange Act:

Table of Contents

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.

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PART I

FINANCIAL INFORMATION

Packaging Corporation of America

Consolidated Statements of In****come and Comprehensive Income

(unaudited, dollars in millions, except per-share data)

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

Packaging Corporation of America

Consolidated B****alance Sheets

(unaudited, dollars and shares in millions, except per-share data)

See accompanying condensed notes to unaudited quarterly consolidated financial statements.

Packaging Corporation of America

Consolidated Statem****ents of Cash Flows

(unaudited, dollars in millions)

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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 2024 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 93 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 primarily 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 2024 Annual Report on Form 10-K.

Executive Summary

Third quarter net sales were $2.31 billion in 2025 and $2.18 billion in 2024. We reported $227 million of net income, or $2.51 per diluted share, during the third quarter of 2025, compared to $238 million, or $2.64 per diluted share, during the same period in 2024. Net income included $20 million of expense for special items in the third quarter of 2025 primarily relating to charges and costs relating to the Greif Acquisition, compared to $1 million of expense for special items in 2024. Please see “Non-GAAP Financial Measures” elsewhere in this Item 2 for a description of special items. Excluding special items, net income was $247 million, or $2.73 per diluted share, during the third quarter of 2025, compared to $239 million, or $2.65 per diluted share, in the third quarter of 2024.1 The increase was driven by improvement in legacy PCA’s earnings by $0.19 per share, partially offset by a loss of ($0.11) per share for the first month of ownership of the Greif containerboard business. The results of the acquired business included approximately $12 million of depreciation and amortization expense and $8 million of additional interest expense, primarily from new borrowings to finance the acquisition. The increase in the earnings of the legacy PCA business was driven primarily by higher prices and mix in the Packaging segment, lower fiber costs, higher prices and mix in the Paper segment and lower maintenance outage expense. These items were partially offset by higher operating costs, lower production and sales volume in the Packaging segment, higher depreciation expense, higher freight expense, higher fixed and other expense, higher interest expense and lower production volume 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.”

Packaging segment operating income was $328 million in the third quarter of 2025, compared to $321 million in the third quarter of 2024. Packaging segment EBITDA excluding special items was $492 million in the third quarter of 2025 compared to $446 million in the third quarter of 2024.1 The increase in EBITDA, excluding special items, was due to higher prices and mix, lower fiber costs, and lower maintenance outage expense, partially offset by higher operating and converting costs, lower production and sales volumes, higher freight and logistics expense, and higher fixed and other expense. Prices and mix reflected our 2025 price increases for containerboard and corrugated products. Corrugated volume continued to reflect the cautious ordering patterns from customers that have persisted through most of the year. Corrugated product shipments from the legacy PCA business were down 2.7% per day and down 1.1% overall, compared to the same period in 2024. Including the acquired Greif containerboard business, shipments were up 3.7% per day and 5.3% in total. During the initial month of ownership, we took extended outages at both acquired mills to make reliability and quality improvements. These outages resulted in lower production and higher maintenance expenses.

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.

Paper segment operating income was $36 million in the third quarter of 2025, compared to $39 million in the third quarter of 2024. Paper segment EBITDA excluding special items was $40 million in the third quarter of 2025, compared to $43 million in the third quarter of 2024.1 The decrease in EBITDA excluding special items was primarily due to higher operating costs and lower sales and production volumes, partially offset by higher prices and mix.

Packaging segment operating income was $952 million in the first nine months of 2025, compared to $804 million in the same period in 2024. Packaging segment EBITDA excluding special items was $1,354 million in the first nine months of 2025 compared to $1,172 million in the first nine months of 2024.1 The increase in EBITDA excluding special items was due primarily to higher prices and mix and lower fiber costs, partially offset by higher operating and converting costs, higher fixed and other costs, higher maintenance outage expenses, lower sales and production volumes, and higher freight and logistics expense.

Paper segment operating income was $97 million in the first nine months of 2025, compared to $95 million in the first nine months

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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.

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 September 30, 2025. 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 September 30, 2025.

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 evaluating and integrating Greif’s controls over financial reporting which may result in changes or additions to PCA’s internal control over financial reporting. Under guidelines established by the SEC, companies are permitted to exclude acquisitions from their assessment of internal control over financial reporting during the first year of an acquisition while integrating the acquired company. We excluded Greif from the assessment of internal control over financial reporting at September 30, 2025.

Except as may relate to the integration of the Greif acquisition, there were no other changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the most recent fiscal quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As of the quarter ended September 30, 2025, Greif accounted for approximately 18% of the Company’s consolidated total assets. For the three and nine months ended September 30, 2025, Greif accounted for approximately 4% and 1% of the Company’s consolidated net sales, respectively.

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.

Please refer to Item 1A. in PCA’s Annual Report on Form 10-K for the year ended December 31, 2024 for a discussion of risks to which PCA’s business, financial condition, results of operations and cash flows are subject. The following are additional risk factors as a result of the Greif Acquisition.

The Greif containerboard business may underperform relative to our expectations, and we may not be able to successfully integrate the business into our existing business.

We completed the Greif Acquisition on September 2, 2025. The business may underperform relative to our expectations, which may cause our financial results to differ from our own or the investment community’s expectations. We are in the early stages of integrating the acquired business into our business, and are expending considerable time and resources on the integration. There may be substantial difficulties, costs and delays involved in this integration and the integration process could result in the diversion of our management’s attention from our existing business.

We are relying on the Seller to provide transition services to us for key functions of the acquired business, including accounting, information technology systems and support, purchasing and other services. We will be required to implement our own systems at the acquired business to perform these functions and exit the transition services agreement during the next year. We may experience delays or higher than expected costs in connection with these activities. We may face challenges in running the acquired business and achieving expected benefits from the acquisition if we experience difficulties in the implementation of our systems.

If the Greif containerboard business underperforms relative to our expectations, or if we fail to successfully integrate the business or experience difficulties in implementing our systems into the acquired business, it may have a material adverse effect on our business, financial condition and results of operations.

Increased leverage may harm our financial condition and results of operations.

We materially increased our indebtedness in connection with our acquisition of the Greif containerboard business from $2.48 billion as of the end of the second quarter to approximately $3.97 billion after the acquisition. We and our subsidiaries may incur additional indebtedness in the future. This increase and any future increase in our level of indebtedness will have several important effects on our future operations, including, without limitation:

we will have additional cash requirements in order to support the payment of interest on our outstanding indebtedness;

increases in our outstanding indebtedness and leverage may increase our vulnerability to adverse changes in our business;

our ability to obtain additional financing for working capital, capital expenditures, general corporate and other purposes may be reduced;

our flexibility in planning for, or reacting to, changes in our business and our industry may be reduced; and

our flexibility to make acquisitions may be limited.

Further, if we cannot service our indebtedness, we may have to take actions to secure additional cash by selling assets, seeking additional equity or reducing investments, any of which could impede the implementation of our business strategy or prevent us from entering into transactions that would otherwise benefit our business. Additionally, we may not be able to take such actions, if necessary, on commercially reasonable terms, or at all.

Item 2. UNREGISTERED SALES OF EQUI****TY 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 September 30, 2025:

(a)

All shares were withheld from employees to cover income and payroll taxes on equity awards that vested during the period.

Item 3. DEFAULTS UPO****N SENIOR SECURITIES

None.

Item 4. MINE SAF****ETY DISCLOSURES

Not applicable.

During the three months ended September 30, 2025, none of the Company's directors or officers adopted or terminated any contract, instruction, or written plan for the purchase or sale of our securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any non-Rule 10b5-1 trading arrangements as defined in Item 408(a) of Regulation S-K.

† Filed herewith.

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.

Date: November 6, 2025