LAKE FOREST, Ill. (News release) -- Packaging Corporation of America reported fourth quarter 2025 net income of $102 million, or $1.13 per share, and net income of $209 million, or $2.32 per share, excluding special items. Fourth quarter net sales were $2.4 billion in 2025 and $2.1 billion in 2024. Full year 2025 net income was $774 million, or $8.58 per share, and net income of $888 million, or $9.84 per share, excluding special items. Full year 2024 net income was $805 million, or $8.93 per share, and $814 million, or $9.04 per share, excluding special items. Full year net sales were $9.0 billion in 2025 and $8.4 billion in 2024.

Reported earnings in the fourth quarter and for the full year include special items for the restructuring of the Wallula, WA containerboard mill, costs related to the acquisition and integration of the Greif containerboard business and costs and gains related to the closure and disposal of corrugated products facilities. Excluding special items, the $0.15 per share decrease in fourth quarter 2025 earnings compared to the fourth quarter of 2024 was driven primarily by lower production and sales volume in the legacy PCA packaging business ($0.23), higher operating costs ($0.23), higher maintenance outage expense ($0.14), higher depreciation in the legacy PCA packaging business ($0.07), higher freight expenses ($0.06), lower production and sales volume in the Paper segment ($0.01), and higher interest expense, excluding Greif acquisition indebtedness ($0.01). These items were partially offset by higher prices and mix in the packaging segment $0.50, lower fiber costs $0.10, lower fixed and other expenses $0.04, and higher prices and mix in the Paper segment $0.01. The acquired Greif business, including interest on acquisition indebtedness, generated a loss of ($0.05) during the quarter, due to extended outages at the Massillon containerboard mill during October and December for reliability maintenance activities and inventory management.

Results for the quarter were lower than fourth quarter guidance due to unfavorable December volume and mix in the legacy corrugated business and unfavorable December production and sales volume in the acquired Greif business.

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

In the legacy packaging business, total corrugated product shipments and shipments per day were down 1.7% versus last year's fourth quarter and up 4.2% versus the third quarter of 2025. Including the acquired Greif business, shipments per day were up 17.0% over last year's fourth quarter and 16.5% over the third quarter of 2025. Containerboard production was 1,407,000 tons and containerboard inventory was up 84,000 tons from the fourth quarter of 2024, primarily due to the acquisition, and flat compared to the third quarter of 2025. In the Paper segment, sales volume was up 1% compared to the fourth quarter of 2024 and down 4% from the seasonally stronger third quarter of 2025.

Commenting on reported results, Mark W. Kowlzan, Chairman and CEO, said, "Corrugated shipments during the quarter were slightly down from record 2024 levels, and our results reflected a seasonally less rich mix with strong e-commerce volume through the holiday season and continued inventory management from other customers. Our order book strengthened as the fourth quarter progressed and we've seen significantly improved demand throughout our customer base so far in January. We made tremendous progress on the integration of the Greif business and have no planned outages at the acquired mills during the first half of the year. Our paper business performed well, with higher year-over-year volumes, strong price realization and exceptional customer service. We repurchased 760,000 shares during the quarter at an average price of $201 per share. On the whole, we had a very strong year with growth in our earnings excluding special items and operating cash flows, driven by the tremendous efforts of our employees and the benefits of our capital investments across our business and we are well positioned for continued profitable growth."

"Looking ahead as we move from the fourth and into the first quarter," Mr. Kowlzan continued, "in our Packaging segment, although seasonally slower, we expect higher per-day volume in our legacy corrugated products plants over last year and continued strength in the acquired corrugated operations, reflecting improving demand. We expect to operate our containerboard mills at full capacity but will produce less containerboard than the fourth quarter as we have two fewer operating days in the first quarter, a scheduled maintenance outage at our Counce, TN mill and lower production at the reconfigured Wallula, WA mill. Domestic containerboard and corrugated products prices will be higher with an improved corrugated product mix throughout the quarter and we expect to benefit from our previously announced containerboard price increases beginning in March. Export volume is expected to be slightly higher and prices are expected to be flat to slightly down. In the Paper segment, we forecast slightly lower volume with two less mill operating days and prices and mix to be slightly lower. With the exception of fiber prices, we expect price inflation across most of our direct, indirect and fixed operating and converting costs. In addition, wood, energy, and chemical costs will also increase due to winter conditions that impact usages and yields for these items. Our cost structure will begin to benefit from the Wallula reconfiguration in March. Labor and benefits costs will be higher due to timing-related items that occur at the beginning of a new year for annual increases, the restart of payroll taxes, and share-based compensation expenses. Freight will be slightly higher and we expect slightly lower depreciation expense. Scheduled outage expenses will be lower and we assume a lower corporate tax rate. Considering these items, we expect first quarter earnings of $2.20 per share. We are assessing last weekend's winter storm across multiple regions, which caused some of our plants to be down earlier in the week and could negatively impact shipments and operating and transportation costs."

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 costs related to the Wallula mill restructuring, acquisition and integration related costs for our acquisition of the Greif containerboard business and charges related to closures of corrugated products facilities during the first quarter; however, additional special items may arise due to first 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 91 corrugated products plants and related facilities.