Packaging Corporation of America’s fourth quarter results were met with a negative reaction from the market, as both revenue and non-GAAP earnings per share came in below Wall Street expectations. Management attributed the underperformance to higher operating and maintenance costs, as well as lower production and sales volumes in the legacy business. CEO Mark Kowlzan described the period as one of “challenging business conditions at various times,” emphasizing the impact of outages, integration expenses from the Greif acquisition, and unexpected freight and depreciation costs. Despite these setbacks, the company highlighted steady progress in integrating acquired assets and maintaining operational performance across its mills.
Is now the time to buy PKG? Find out in our full research report (it’s free for active Edge members).
Packaging Corporation of America (PKG) Q4 CY2025 Highlights:
- Revenue: $2.36 billion vs analyst estimates of $2.44 billion (10.1% year-on-year growth, 2.9% miss)
- Adjusted EPS: $2.32 vs analyst expectations of $2.41 (3.9% miss)
- Adjusted EBITDA: $486.3 million vs analyst estimates of $503.7 million (20.6% margin, 3.5% miss)
- Operating Margin: 7.1%, down from 14.1% in the same quarter last year
- Sales Volumes rose 7.4% year on year, in line with the same quarter last year
- Market Capitalization: $19.99 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Packaging Corporation of America’s Q4 Earnings Call
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George Staphos (Bank of America Securities) asked about the impact of winter storms and rising input costs on mill operations. CEO Mark Kowlzan explained, “We’re basically faced with the normal year-over-year inflationary concerns… and then just the winter usage and yield matters with energy and wood.”
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Michael Roxland (Truist Securities) inquired whether the $70 per ton price increase was included in first quarter guidance. CFO Kent Pflederer responded, “We have a little bit into March, but not the full benefit,” due to phased contract implementation.
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Mark Adam Weintraub (Seaport Research Partners) sought clarification on inventory levels and the impact of legacy Greif purchase commitments. Management noted these commitments are being phased out and inventory levels should normalize as integration progresses.
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Gabe Hajde (Wells Fargo Securities) questioned the pace of Greif integration and the timeline for achieving expected synergies. CEO Mark Kowlzan stated that accelerated maintenance and operational improvements have put the acquired mills on track for improved efficiency and earnings accretion in upcoming quarters.
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Philip Ng (Jefferies) asked about the drivers of January’s demand uptick and whether it reflected inventory restocking or genuine end-market improvement. President Tom Hassfurther indicated that stronger demand was “broad-based” and not solely due to restocking, with momentum expected to continue in February.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace at which Greif asset integration delivers operational and cost synergies; (2) the realization and flow-through of announced price increases in both containerboard and corrugated products; and (3) normalization of inventory levels and the sustainability of recent demand improvements across end markets. Additional attention will be given to progress on key capital projects, including energy investments and mill upgrades.
Packaging Corporation of America currently trades at $223.80, in line with $223.62 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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