01—Abstract
Summary
Summary of the 8-K filed December 4, 2025. Cited figures are marked; the original filing is the authoritative source.
Packaging Corporation of America (NYSE: PKG) announced on December 3, 2025 a plan to permanently shut down the No. 2 paper machine and kraft pulping facilities at its Wallula, Washington containerboard mill, while continuing to operate the No. 3 paper machine and recycled pulping facilities at the mill.
The actions are expected to be completed by the end of the first quarter of 2026. The company estimates pre-tax restructuring charges of $205 milliona, substantially all recorded in the fourth quarter of 2025 and first quarter of 2026. These comprise approximately $165 million of non-cash impairment and accelerated depreciation charges and $40 million of cash charges for contract termination, severance and other charges.
The company expects a reduction of approximately 200 positions. The press release states that after the actions the mill will have capacity to produce 285,000 tons per year of recycled linerboard and corrugating medium on the W3 machine, a reduction of 250,000 tons of annual production capacity. The company says the mill is expected to produce approximately 400,000 tons of containerboard this year and that the new configuration is expected to lower production cost at the mill by approximately $125b per ton from 2025 levels.
Management states that the reduced capacity will be replaced with production enhancements at other PCA mills beginning in the fourth quarter of 2026, including approximately 140,000 tons per year of capacity at the Jackson mill. The Item 2.05 and Item 2.06 disclosures are incorporated by reference, and the impairment and accelerated depreciation charges are the key items for investors to track in upcoming reporting periods.
02—Key points
Key Highlights
- Permanent shutdown of the No. 2 paper machine (W2) and kraft pulping facilities at the Wallula, Washington containerboard mill, with completion expected by end of Q1 2026.
- Estimated pre-tax restructuring charges of $205 million, substantially all recorded in Q4 2025 and Q1 2026.
- Charges include approximately $165 million of non-cash impairment and accelerated depreciation and $40 million of cash charges for contract termination, severance and other items.
- Expected reduction of approximately 200 headcount positions.
- Wallula mill capacity to fall to 285,000 tons per year after a reduction of 250,000 tons; the mill is expected to produce approximately 400,000 tons this year.
- Expected production cost reduction at the mill of approximately $125 per ton from 2025 levels.
- Management states the lost capacity will be replaced by improvements at other PCA mills starting Q4 2026, including about 140,000 tons per year at the Jackson mill.
03—Questions
Frequently Asked Questions
What is the total expected cost of the Wallula restructuring?
The company estimates pre-tax restructuring charges of approximately $205 million, consisting of about $165 million of non-cash impairment and accelerated depreciation charges and $40 million of cash charges for contract termination, severance and other charges.
When will the restructuring charges be recorded?
Substantially all of the charges are expected to be recorded in the fourth quarter of 2025 and the first quarter of 2026.
How much capacity is being removed at the Wallula mill?
The mill's capacity will be reduced by 250,000 tons of annual production, leaving capacity of 285,000 tons per year on the No. 3 paper machine for recycled linerboard and corrugating medium.
How many jobs will be affected?
The company expects a reduction in headcount of approximately 200 positions.
What does management expect to gain from the change?
Management expects the new configuration to lower production cost at the mill by approximately $125 per ton from 2025 levels, citing an improved cost structure and utilization rate, and states that moving some production to lower-cost PCA facilities will further improve efficiency.
04—Continue