01—Abstract
Summary
Summary of the 10-Q filed May 8, 2026. Cited figures are marked; the original filing is the authoritative source.
Packaging Corporation of America (PKG) reported first-quarter 2026 net sales of $2.37 billiona, up from $2.14 billion in the first quarter of 2025, with net income of $170.9 million, or $1.91 per diluted share, compared with $203.8 million, or $2.26 per diluted share, a year earlier.
Results were weighed down by $44 millionb of after-tax special items expense, primarily from the Wallula mill restructuring, which included the permanent shutdown of the No. 2 paper machine and kraft pulping facilities. Excluding special items, net income was $215 million, or $2.40 per diluted share, versus $208 million, or $2.31 per diluted share, in the prior-year quarter. The filing attributes the improvement in legacy PCA earnings to higher prices and mix, lower fiber costs, and lower maintenance outage expense, partly offset by a per-share loss from the acquired Greif containerboard business.
Income from operations fell to $251.3 millionc from $280.3 million, while interest expense, net rose to $32.6 million from $12.9 million, reflecting financing for the $1.8 billion Greif Acquisition completed September 2, 2025. Net cash provided by operating activities was $329.3 million, and cash and cash equivalents declined to $397.1 million at March 31, 2026 from $529.0 million at December 31, 2025, as the company spent $164.7 million on capital additions, paid $111.9 million in dividends, and repurchased $58.8 million of common stock. The company expects 2026 capital investments of $840 million to $870 million and expects second-quarter earnings excluding special items to be lower than the first quarter.
The filing also discloses a purported class action antitrust lawsuit, filed July 29, 2025, naming PCA and seven other containerboard producers, which alleges price-fixing and seeks treble damages. Management believes the allegations are without merit, and the company states it does not consider any other pending legal actions reasonably likely to have a material adverse effect.
02—Key points
Key Highlights
- Net sales rose to $2,367.8 million from $2,141.0 million, with Packaging segment sales of $2,188.6 million, up $218.3 million, driven by the acquired business ($224 million in higher volume).
- Net income was $170.9 million ($1.91 per diluted share), down from $203.8 million ($2.26 per diluted share); excluding special items, EPS was $2.40 versus $2.31.
- Special items totaled $44.3 million after tax in Q1 2026, primarily the Wallula mill restructuring, which included $53.3 million of charges related to discontinuing the No. 2 machine and kraft pulping facilities.
- Income from operations declined to $251.3 million from $280.3 million; Packaging segment operating income fell to $260.3 million, while Packaging EBITDA excluding special items rose to $481.8 million from $409.3 million.
- Interest expense, net increased to $32.6 million from $12.9 million, primarily due to financing for the Greif Acquisition.
- Cash and cash equivalents fell to $397.1 million; operating cash flow of $329.3 million was offset by $164.7 million of capital expenditures, $111.9 million of dividends and $58.8 million of share repurchases.
- Management expects second-quarter 2026 earnings excluding special items to be lower than the first quarter, citing higher maintenance outage expenses at five Packaging mills and higher freight, fiber and chemical costs.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Packaging Corp. of America kept $0.07.
- Revenue$2.37B100.0%
- Cost of revenue−$1.91B80.9%
- Gross profit$452.9M19.1%
- Operating costs−$201.6M8.5%
- Operating income$251.3M10.6%
- Interest, other & tax−$80.4M3.4%
- Net income$170.9M7.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed May 8, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $2.37B$2.14B | +10.6% |
| Cost of Revenue | $1.91B$1.69B | +13.6% |
| Gross Profit | $452.90M$454.70M | −0.4% |
| SG&A Expenses | $180.30M$161.40M | +11.7% |
| Operating Income | $251.30M$280.30M | −10.3% |
| Net Income | $170.90M$203.80M | −16.1% |
| EPS (Basic) | $1.92$2.27 | −15.4% |
| EPS (Diluted) | $1.91$2.26 | −15.5% |
| Shares Outstanding (Basic) | 88.60M89.20M | −0.7% |
| Shares Outstanding (Diluted) | 89.10M89.60M | −0.6% |
05—Questions
Frequently Asked Questions
How did Packaging Corporation of America perform in the first quarter of 2026?
Net sales increased 10.6% to $2.37 billion, but net income fell to $170.9 million ($1.91 per diluted share) from $203.8 million ($2.26 per diluted share). Excluding special items, diluted EPS was $2.40, up from $2.31 a year earlier.
What drove the special items charges in the quarter?
The largest item was the Wallula mill restructuring, with $53.3 million of pre-tax charges tied to the permanent shutdown of the No. 2 paper machine and kraft pulping facilities at the Wallula, Washington containerboard mill. Acquisition and integration costs of $3.4 million and facilities closure costs of $2.9 million also contributed.
What is the outlook for the rest of 2026?
The company expects second-quarter earnings excluding special items to be lower than the first quarter of 2026. It anticipates higher containerboard and corrugated prices, higher maintenance outage expenses at five Packaging mills, higher freight, fiber and chemical costs, and a higher tax rate in the second quarter. Capital investments for 2026 are expected in a range of $840 million to $870 million.
How did the Greif acquisition affect results?
The Greif containerboard business, acquired September 2, 2025 for $1.8 billion in cash, added $224 million of Packaging net sales volume in the quarter. Management reported that the acquired business reduced earnings per diluted share by $0.06, including approximately $34 million of depreciation and amortization and $19 million of additional interest expense.
What legal matters and capital returns should investors note?
PCA and seven other containerboard producers were named in a purported class action alleging Sherman Act and Clayton Act violations related to containerboard pricing, seeking treble damages; PCA says the claims are without merit. During the quarter, the company repurchased $58.8 million of stock, leaving $224.3 million available under its authorization, and paid a regular quarterly dividend of $1.25 per share.
06—Continue