LAKE FOREST, Ill. (News release) -- Packaging Corporation of America reported third quarter 2025 net income of $226.9 million, or $2.51 per share, and net income of $246.7 million, or $2.73 per share, excluding special items. Third quarter net sales were $2.3 billion in 2025 and $2.2 billion in 2024.

Reported earnings in the third quarter of 2025 include special items for costs and charges related to the Greif containerboard business acquisition and costs related to closures of corrugated products facilities.

Excluding special items, the $.08 per share increase in third quarter 2025 earnings compared to the third quarter of 2024 was driven by improvement in PCA's earnings by $0.19, partially offset by a loss of ($0.11) for the first month of ownership of the Greif containerboard business, which we completed on September 2, 2025. The increase in PCA's earnings was driven primarily by higher prices and mix in the Packaging segment $.73, lower fiber costs $.16, higher prices and mix in the Paper segment $.02 and lower maintenance outage expense $.01. These items were partially offset by higher operating costs ($.33), lower production and sales volume in the Packaging segment ($.16), higher depreciation expense ($.07), higher freight expense ($.07), higher fixed and other expense ($.07), higher interest expense excluding Greif acquisition debt ($.02) and lower production volume in the Paper segment ($.01).

Greif results included approximately $12 million of depreciation and amortization expense after preliminary purchase accounting step-up adjustments ($0.09 per diluted share) and $8 million of additional interest expense from new debt financing and lower cash balances ($0.06 per diluted share). Upon the closing of the acquisition, we took extended outages at both acquired mills, which resulted in lower mill production and higher maintenance expenses during the month. In addition, shipments of containerboard supplied by PCA to Greif changed from third party sales to intercompany upon the closing of the acquisition, which changes the timing of income recognition. The outages and timing effects lowered earnings by approximately $12 million ($0.10 per diluted share).

Excluding the impact of the Greif acquisition and special items, results were $.04 above third quarter guidance of $2.80 per share primarily due to favorable price and mix in the Packaging segment and lower freight costs.

Financial information by segment is summarized below and in the schedules with this release.

In the Packaging segment, total corrugated products shipments from the legacy PCA business were down 2.7% per day and down 1.1% overall compared to the third quarter of 2024, with one additional workday in 2025. Including the acquired business, shipments were up 3.7% per day and 5.3% in total. Containerboard production was 1,255,000 tons at the legacy PCA mills and 47,000 tons at the acquired mills, and containerboard inventory in the legacy PCA system was 417,000 tons, up 56,000 tons from the end of the third quarter of 2024 and 15,000 tons from the end of the second quarter of 2025. Inventory on hand at the newly acquired facilities was 86,000 tons. In the Paper segment, sales volume was down 0.7% from the third quarter of 2024 and up 10% compared to the second quarter of 2025.

Commenting on reported results, Mark W. Kowlzan, Chairman and CEO, said, "We had a very strong quarter in the legacy PCA packaging business, with corrugated volume continuing to reflect cautious ordering patterns and improving throughout the quarter, with volume and price largely on plan. Export containerboard sales volume remained relatively low with continued trade uncertainty. Our containerboard mills continued to operate very efficiently and we ended the quarter at targeted containerboard inventory levels in the legacy PCA system. The Paper segment delivered another outstanding quarter on strong sales volume and operating performance at the International Falls mill."

"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. 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 OCC 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 as we move from the third into the fourth quarter," Mr. Kowlzan added, "we expect higher per-day corrugated shipments, with three less shipping days than the third quarter. Export containerboard sales will be higher than the third quarter, but will be relatively low when compared to traditional fourth quarter volume. Containerboard production in the legacy system will be slightly lower than the third quarter with the maintenance outage at the DeRidder mill, and maintenance outage expenses will be higher by approximately ($0.29) per share. Prices in the Packaging segment will be lower as a result of a seasonally less rich mix. We expect seasonally higher energy and fiber costs and, on the whole, freight and other operating costs to be relatively flat. In the Paper segment, we expect lower production and sales volumes than the seasonally stronger third quarter with flat pricing."

Mr Kowlzan continued, "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."

We present our earnings expectation for the upcoming quarter excluding special items as special items are difficult to predict and quantify and may reflect the effect of future events. We currently expect to incur acquisition and integration related costs for our acquisition of the Greif containerboard business during the fourth quarter and charges related to closures of corrugated products facilities; however, additional special items may arise due to fourth quarter events.

PCA is the third largest producer of containerboard products and a leading producer of uncoated freesheet paper in North America. PCA operates ten mills and 93 corrugated products plants and related facilities.