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By the numbers: Q1 2026
Net sales: $2.37B
Up 10.6% year over year
Net income: $170.9M
Down 16.1% year over year
- Overview: Packaging Corporation of America executives touted during Thursday’s earnings call the company’s strong performance amid challenging geopolitical and economic conditions, including the war in Iran. This has resulted in higher input costs, including for raw materials and fuel. “The question is does that ramp down over time? ... Time will tell,” said CEO Mark Kowlzan. Despite the headwinds, the company has seen strength in customer ordering patterns across the board, said President Tom Hassfurther. Corrugated shipments per day were up 2.8% year over year in Q1. “We view the business environment as being very good right now,” he said.
- Closure costs: In December, PCA announced that it would permanently shut down the No. 2 paper machine and kraft pulping facilities at its containerboard mill in Wallula, Washington. Those closures were finalized in Q1 and resulted in $53.3 million of charges. However, the completion of the reconfiguration also immediately helped to reduce costs for fiber inputs, power and labor, Kowlzan said.
- Mill integration: PCA made notable progress on integrating and upgrading the mills it acquired from Greif in September and expects completion in Q3, executives said. In February, the Riverville mill in Gladstone, Virginia, produced at a 10% higher rate than when it was acquired, Kowlzan said. “Greif’s operations in February were about as good as we’ve seen them,” said CFO Kent Pflederer. Productivity was so good that the company “dialed it back a little bit in March” to control inventory, he said.
- Weather disruptions: Executives expanded on discussions from their January earnings call regarding a winter storm that month which disrupted business. The negative effects were “quite significant,” Kowlzan said. Riverville was the most impacted mill in the system, he said, with operations there ceasing for the better part of a week. Corrugated operations throughout the system also were disrupted, Pflederer said.
- Energy projects: PCA’s board approved the previously announced gas turbine projects at Riverville and at the mill in Jackson, Alabama. The company also is scoping a third such project at the mill in DeRidder, Louisiana, and plans to submit that to the board at the annual meeting in May. Those mills “would be electricity independent, off the grid, in the same manner that Valdosta [mill in Georgia] is. So we'd have four of our 10 mills that are electricity independent, which would be a huge benefit to us,” Kowlzan said.
- Price increases: Due to the timing of how pricing plays out, PCA did not experience meaningful benefits in Q1 from its announced $70 per ton containerboard price increase slated to take effect March 1. Executives believe benefits will begin to materialize in May, and will be partially reflected in the company’s Q2 earnings — but primarily in Q3 earnings. They noted the net gain of $50 per ton year-to-date that Fastmarkets RISI has recognized, with the index’s surprise $20 per ton decrease in February hindering full recognition. “We were obviously disappointed with the announced downturn at the beginning [of the year]. We didn’t see it. But it is what it is and we’re dealing with it,” Hassfurther said. He also said there was no evidence of customers pre-buying to avoid the announced increases.
- Outlook: PCA has experienced strong volumes through April so far and expects that to continue through the second quarter, especially in the acquired Greif operations. Executives anticipate momentum will increase as the year progresses, given the typical seasonal uptick.
