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By the numbers: Q3 2025
Net sales: $2.31B
Up 6% year over year
Packaging segment net sales: $2.13B
Up 5.9% year over year
Net income: $226.9M
Down 4.7% year over year
- Overview: Packaging Corporation of America’s corrugated sales volumes were “largely on plan and continued to reflect the cautious ordering patterns we've seen most of the year,” said CEO Mark Kowlzan during Thursday’s third-quarter earnings call. The company ran production to demand and year over year produced 38,000 fewer tons in Q3, he said. While corrugated shipments per day were down 2.7% year over year, demand improved as the quarter progressed, said President Tom Hassfurther. Business generally has been good, Kowlzan said, other than in certain end markets such as beef, and industry that is broadly suffering and is “a big segment for us.”
- Greif acquisition: PCA completed its $1.8 billion acquisition of Greif’s containerboard business on Sept. 2. “I'm feeling very bullish on what we've seen just in a month and a half,” Kowlzan said. PCA is working to integrate Greif’s operations, and so far “the culture is highly compatible,” Hassfurther said. Greif has historically carried more inventory in its corrugated system than PCA has, and “we can more efficiently and nimbly supply [customers] now that they are part of PCA,” he said.
- Mill operations: While the acquired sheet feeders and corrugated box plants “are very well capitalized,” Hassfurther said, PCA launched improvements to the two newly acquired mills. The Riverville mill in Gladstone, Virginia, had a five-day maintenance outage, and Kowlzan said it achieved a 97.2% operating rate, which is “up dramatically from prior to the acquisition.” A six-week maintenance outage occurred at the mill in Massillon, Ohio, and extended into October. The extension resulted in lower production and higher maintenance expenses, to be reflected in Q4 results. Massillon restarted two weeks ago and “saw at least a 50% improvement just in the quality: moisture profiles, basis weight profiles, physical test profiles,” Kowlzan said.
- Containerboard capacity: Containerboard production in PCA’s legacy system is expected to be slightly lower sequentially in the fourth quarter due to a maintenance outage at the mill in DeRidder, Louisiana. Industrywide containerboard capacity loss to-date in 2025 is an estimated 9.5%, which many industry observers call unprecedented. “I think you're seeing a consistent trend in this industry that it rightsizes to demand,” Hassfurther said about the rationalization. Regarding PCA’s newly added containerboard production, “I look at Massillon and Riverville as an opportunity to make more medium, which we need,” Kowlzan said.
- Closures: PCA recently announced some upcoming closures, which Hassfurther cited as necessary for the underperforming assets. In December, the company will close a full-line plant in Allentown, Pennsylvania, and another in Salisbury, North Carolina. “Capitalization isn’t the answer for those box plants,” he explained, noting the company’s intention to continue servicing customers in that region via a simplified production network.
- Energy independence investments: PCA currently is focusing capital expenditures on two major converting line projects, one in New York and the other in Ohio, slated for completion next year. It’s also working to make three mills energy independent within the next two-and-a-half years, which should help with energy costs. Due largely to a surge in electricity demand from new data centers and the ongoing construction of others, energy costs have gone up substantially, Kowlzan said. “I just don't see that it's going to abate any time soon.” The projects primarily involve gas turbine technology, Kowlzan said, and the company expects to share more details during the January earnings call.
- Outlook: PCA expects Q4 corrugated shipments to be higher than in Q3. The company also expects sales of containerboard to be higher, but still relatively low in comparison to traditional fourth-quarter volumes. The company will adjust output to work down inventories, Kowlzan said. PCA expects to incur acquisition and integration costs related to the Greif deal in Q4, as well as charges related to closing the corrugated products facilities.
