What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-11-06 compared with 2025-08-07 · 216 added, 156 removed, 205 unchanged (64% of the section changed)

7 unchanged sentences

PCA is the third largest producer of containerboard products and a leading producer of UFS paper in North America.

We operate eight mills and 85 corrugated products manufacturing plants.

We operate ten mills and 93 corrugated products manufacturing plants.

Our containerboard mills produce linerboard and corrugating medium, which are papers primarily used in the production of corrugated products.

3 unchanged sentences

We are headquartered in Lake Forest, Illinois and operate primarily in the United States.

On September 2, 2025, we completed the acquisition of the containerboard business of Greif, Inc.

(“Greif”) for $1.8 billion in cash (the “Greif Acquisition”).

The Greif containerboard business includes two containerboard mills with approximately 800,000 tons of production capacity and eight sheet feeder and corrugated plants located across the United States.

The operating results of the Greif Acquisition are included in PCA’s results in the Packaging segment after the date of acquisition.

Included in this Item 2 are various non-GAAP financial measures, including earnings per diluted share excluding special items, net income excluding special items, earnings before non-operating pension income, interest, income taxes, and depreciation, amortization, and depletion (“EBITDA”), segment EBITDA, EBITDA excluding special items, and segment EBITDA excluding special items.

2 unchanged sentences

Executive Summary

Second quarter net sales were $2.17 billion in 2025 and $2.08 billion in 2024.

We reported $242 million of net income, or $2.67 per diluted share, during the second quarter of 2025, compared to $199 million, or $2.21 per diluted share, during the same period in 2024.

Net income included $17 million of income for special items in the second quarter of 2025, compared to an insignificant amount of income for special items in 2024 (discussed below).

Excluding special items, net income was $224 million, or $2.48 per diluted share, during the second quarter of 2025, compared to $199 million, or $2.20 per diluted share, in the second quarter of 2024.

1 The increase in net income was driven primarily by higher prices and mix in the Packaging segment, lower fiber costs, higher prices and mix in the Paper segment, and a lower tax rate.

These items were partially offset by higher operating costs, higher maintenance outage expense, lower production and export sales volume in the Packaging Segment, higher depreciation expense, higher fixed and other expense, lower volume in the Paper segment, higher freight expense, and higher interest expense.

Third quarter net sales were $2.31 billion in 2025 and $2.18 billion in 2024.

We reported $227 million of net income, or $2.51 per diluted share, during the third quarter of 2025, compared to $238 million, or $2.64 per diluted share, during the same period in 2024.

Net income included $20 million of expense for special items in the third quarter of 2025 primarily relating to charges and costs relating to the Greif Acquisition, compared to $1 million of expense for special items in 2024.

Please see “Non-GAAP Financial Measures” elsewhere in this Item 2 for a description of special items.

Excluding special items, net income was $247 million, or $2.73 per diluted share, during the third quarter of 2025, compared to $239 million, or $2.65 per diluted share, in the third quarter of 2024.

1 The increase was driven by improvement in legacy PCA’s earnings by $0.19 per share, partially offset by a loss of ($0.11) per share for the first month of ownership of the Greif containerboard business.

The results of the acquired business included approximately $12 million of depreciation and amortization expense and $8 million of additional interest expense, primarily from new borrowings to finance the acquisition.

The increase in the earnings of the legacy PCA business was driven primarily by higher prices and mix in the Packaging segment, lower fiber costs, higher prices and mix in the Paper segment and lower maintenance outage expense.

These items were partially offset by higher operating costs, lower production and sales volume in the Packaging segment, higher depreciation expense, higher freight expense, higher fixed and other expense, higher interest expense and lower production volume in the Paper segment.

For additional detail on special items included in reported GAAP results and other non-GAAP measures, see “Item 2.

Non-GAAP Financial Measures.”

Packaging segment operating income was $346 million in the second quarter of 2025, compared to $280 million in the second quarter of 2024.

Packaging segment EBITDA excluding special items was $453 million in the second quarter of 2025 compared to $400 million in the second quarter of 2024.

1 The increase was due to higher prices and mix and lower fiber costs, partially offset by higher operating and converting costs, higher maintenance outage expense, lower production and export sales volumes, higher fixed and other expense, and higher freight and logistics expense.

Prices and mix moved higher, reflecting our price increases for containerboard and corrugated products announced to customers in 2024 and earlier in 2025.

Corrugated plant shipments were up 1.7% per day compared to the second quarter of 2024.

Paper segment operating income was $26 million in the second quarter of 2025, compared to $27 million in the second quarter of 2024.

Paper segment EBITDA excluding special items was $30 million in the second quarter of 2025, compared to $31 million in the second quarter of 2024.

1 The slight decrease in EBITDA excluding special items was due to higher operating costs and lower sales and production volumes and higher maintenance outage expense, partially offset by higher prices and mix and lower freight and fixed expenses.

Packaging segment operating income was $624 million in the first six months of 2025, compared to $484 million in the same period in 2024.

Packaging segment EBITDA excluding special items was $862 million in the first six months of 2025 compared to $726 million in the first six months of 2024.

1 The increase in EBITDA excluding special items was due primarily to higher prices and mix, lower fiber costs, higher sales and production volumes, partially offset by higher operating and converting costs, higher maintenance outage expenses, higher fixed and other costs, and higher freight and logistics expense.

Packaging segment operating income was $328 million in the third quarter of 2025, compared to $321 million in the third quarter of 2024.

Packaging segment EBITDA excluding special items was $492 million in the third quarter of 2025 compared to $446 million in the third quarter of 2024.

1 The increase in EBITDA, excluding special items, was due to higher prices and mix, lower fiber costs, and lower maintenance outage expense, partially offset by higher operating and converting costs, lower production and sales volumes, higher freight and logistics expense, and higher fixed and other expense.

Prices and mix reflected our 2025 price increases for containerboard and corrugated products.

Corrugated volume continued to reflect the cautious ordering patterns from customers that have persisted through most of the year.

Corrugated product shipments from the legacy PCA business were down 2.7% per day and down 1.1% overall, compared to the same period in 2024.

Including the acquired Greif containerboard business, shipments were up 3.7% per day and 5.3% in total.

During the initial month of ownership, we took extended outages at both acquired mills to make reliability and quality improvements.

These outages resulted in lower production and higher maintenance expenses.

1 Net income excluding special items, earnings per diluted share excluding special items, and segment EBITDA excluding special items are non-GAAP financial measures.

See “Non-GAAP Financial Measures” later in this Item 2.

Paper segment operating income was $61 million in the first six months of 2025, compared to $56 million in the first six months of 2024.

Paper segment EBITDA excluding special items was $71 million in the first six months of 2025 and 2024.

1 The slight decrease in EBITDA excluding special items was due to lower sales and production volumes, higher operating costs, and higher maintenance outage expenses, partially offset by higher prices and mix, lower fixed and other costs, and lower freight and logistic expense.

On July 1, 2025, we announced our entry into a definitive agreement to purchase the containerboard business of Greif for $1.8 billion in cash.

The transaction is expected to close by the end of the third quarter, subject to certain customary conditions, including regulatory approval.

The operating results of the Greif Acquisition will be included in PCA’s results upon closing of the transaction.

The acquisition is consistent with our historical growth strategy and will provide additional integration of containerboard we produce into our own corrugated products facilities.

Paper segment operating income was $36 million in the third quarter of 2025, compared to $39 million in the third quarter of 2024.

Paper segment EBITDA excluding special items was $40 million in the third quarter of 2025, compared to $43 million in the third quarter of 2024.

1 The decrease in EBITDA excluding special items was primarily due to higher operating costs and lower sales and production volumes, partially offset by higher prices and mix.

Packaging segment operating income was $952 million in the first nine months of 2025, compared to $804 million in the same period in 2024.

Packaging segment EBITDA excluding special items was $1,354 million in the first nine months of 2025 compared to $1,172 million in the first nine months of 2024.

1 The increase in EBITDA excluding special items was due primarily to higher prices and mix and lower fiber costs, partially offset by higher operating and converting costs, higher fixed and other costs, higher maintenance outage expenses, lower sales and production volumes, and higher freight and logistics expense.

Paper segment operating income was $97 million in the first nine months of 2025, compared to $95 million in the first nine months of 2024.

Paper segment EBITDA excluding special items was $111 million in the first nine months of 2025, compared to $114 million in the same period in 2024.

1 The decrease in EBITDA excluding special items was due to higher operating costs, lower sales and production volumes and higher maintenance outage expenses, partially offset by higher prices and mix, lower fixed and other costs, and lower freight and logistics expense.

Industry and Business Conditions

Trade publications reported North American industry-wide corrugated products shipments were down (2.6%) in total and (1.0%) per workday during the second quarter of 2025 compared to the same quarter of 2024.

Reported industry containerboard production decreased (5.2%) compared to the second quarter of 2024.

Reported industry containerboard inventories at the end of the second quarter of 2025 were approximately 2.6 million tons, down (2.1%) compared to the same period in 2024.

Reported containerboard export shipments were down (16.2%) compared to the second quarter of 2024.

Trade publications reported North American industry-wide corrugated products shipments were down (1.4%) in total and (2.9%) per workday during the third quarter of 2025 compared to the same quarter of 2024.

Reported industry containerboard production decreased (3.1%) compared to the third quarter of 2024.

Reported industry containerboard inventories at the end of the third quarter of 2025 were approximately 2.65 million tons, up 0.8% compared to the same period in 2024.

Reported containerboard export shipments were down (8.7%) compared to the third quarter of 2024.

In February 2025, reported index prices increased $40 per ton for linerboard and for corrugating medium.

1 unchanged sentence

Increasing shifts to these alternatives have reduced usage of traditional print media and communication papers.

Trade publications reported North American UFS paper shipments were down (8.5%) in the first six months of 2025, compared to the same period of 2024.

Average prices reported by a trade publication for cut size office papers were higher by $20 per ton, or 1.4% in the second quarter of 2025, compared to the first quarter of 2025, and higher by $47 per ton, or 3.2%, compared to the second quarter of 2024.

Trade publications reported North American UFS paper shipments were down (9.1%) in the first nine months of 2025, compared to the same period of 2024.

Average prices reported by a trade publication for cut size office papers were flat in the third quarter of 2025, compared to the second quarter of 2025, and higher by $40 per ton, or 2.8%, compared to the third quarter of 2024.

Reported index prices increased $30 per ton for cut size office papers and for offset printing papers in February 2025 and $10 per ton in April 2025.

In the Packaging segment, we expect higher corrugated shipments and containerboard production compared to the second quarter.

Export containerboard sales will be lower due to the effects of the global trade environment.

We will build some containerboard inventory ahead of our fourth quarter maintenance outage at the DeRidder mill.

We expect prices and mix in the Packaging segment to be relatively flat with second quarter levels.

We also expect flat pricing in the Paper segment and expect production and sales to increase in the third quarter with the International Falls mill outage completed in the second quarter and seasonal back-to-school orders.

We have no scheduled maintenance outages during the third quarter and expect maintenance outage expense to be lower.

Freight costs will be higher with the full effect of first and second quarter rail rate increases at our mills.

Operating costs are expected to be near second quarter levels and fiber costs will be slightly lower.

Considering these items, we expect third quarter earnings to be higher than second quarter earnings, excluding special items.

Our third quarter outlook does not include any possible impact from the pending acquisition of the Greif containerboard business.

Looking ahead to the fourth quarter, we expect higher per-day corrugated product shipments in the legacy PCA business, but we will have three less shipping days than the third quarter.

Export containerboard sales are expected to be higher than the third quarter, but will be relatively low when compared to traditional fourth quarter volume.

Containerboard production in the legacy PCA containerboard mills will be slightly lower than the third quarter with the maintenance outage at the DeRidder mill performed and completed during October.

Due to the DeRidder outage, maintenance outage expenses will be higher in the fourth quarter.

We expect prices in the Packaging segment to be lower as a result of a seasonally less rich mix.

We expect seasonally higher energy and fiber costs and, on the whole, freight and other operating costs to be relatively flat.

In the Paper segment, compared to the seasonally stronger third quarter, we expect lower production and sales volumes in the fourth quarter with flat pricing.

We expect the results of operations of the acquired business to improve.

We will be impacted by continued lower production and higher maintenance expenses from the Massillon mill outage that continued into October.

The acquired business experiences seasonally lower volumes and mix in the corrugated business during the fourth quarter compared to the third quarter.

We will benefit from a full quarter of improved operations at the Riverville mill.

We expect to manage our production at the acquired mills to achieve lower containerboard inventory levels appropriate for the larger, integrated system.

Considering these items, we expect fourth quarter earnings to be lower than the third quarter of 2025.

1 Net income excluding special items, earnings per diluted share excluding special items, and segment EBITDA excluding special items are non-GAAP financial measures.

See “Non-GAAP Financial Measures” later in this Item 2.

Results of Operations

Three Months Ended June 30, 2025, compared to Three Months Ended June 30, 2024

The historical results of operations of PCA for the three months ended June 30, 2025 and 2024 are set forth below (dollars in millions):

Three Months Ended September 30, 2025, compared to Three Months Ended September 30, 2024

The historical results of operations of PCA for the three months ended September 30, 2025 and 2024 are set forth below (dollars in millions):

Three Months Ended

September 30,

Corporate and Other

14 unchanged sentences

(a) See “Non-GAAP Financial Measures” included in this Item 2 for a reconciliation of non-GAAP measures to the most comparable GAAP measure.

Net sales increased $96 million, or 4.6%, to $2,171 million during the three months ended June 30, 2025, compared to $2,075 million during the same period in 2024.

Net sales increased $98 million, or 5.1%, to $2,006 million, compared to $1,908 million in the second quarter of 2024 due to higher containerboard and corrugated products prices and mix ($107 million), partially offset by lower volume ($9 million).

In the second quarter of 2025, export and domestic containerboard outside shipments decreased (11.4%) compared to the second quarter of 2024.

Our total corrugated products shipments were flat in total and up 1.7% per workday, with one less workday, compared to the same period in 2024.

In the second quarter of 2025, our domestic containerboard prices were 10.8% higher, while export prices were 10.4% higher than the same period in 2024.

Net sales decreased $4 million, or (2.9%), to $146 million, compared to $150 million in the second quarter of 2024, due to lower volume ($8 million), partially offset by higher prices and mix ($4 million).

Gross profit increased $45 million during the three months ended June 30, 2025, compared to the same period in 2024.

The increase was driven primarily by higher prices and mix in the Packaging segment, lower fiber costs, higher prices and mix in the Paper segment, partially offset by higher operating costs, higher maintenance outage expense, lower volumes in the Packaging and Paper segment, higher fixed and other expense, and higher freight expense.

In the three months ended June 30, 2025, gross profit included $1 million of special items expense related to corrugated facility closure.

In the three months ended June 30, 2024, gross profit included no special items.

Net sales increased $131 million, or 6.0%, to $2,313 million during the three months ended September 30, 2025, compared to $2,182 million during the same period in 2024.

Net sales increased $119 million, or 5.9%, to $2,128 million, compared to $2,009 million in the third quarter of 2024 due to higher volume related to the acquired business ($90 million) and higher containerboard and corrugated products prices and mix ($87 million), partially offset by lower legacy volume ($58 million).

In the third quarter of 2025, export and domestic containerboard outside shipments decreased (15.5%) compared to the third quarter of 2024.

Our total corrugated products shipments from the legacy PCA business were down 2.7% per day and down 1.1% overall, compared to the same period in 2024.

Including the acquired business, shipments were up 3.7% per day and 5.3% in total.

In the third quarter of 2025, our domestic containerboard prices were 3.3% higher, while export prices were 3.2% higher than the same period in 2024.

Net sales increased $2 million, or 1.2%, to $161 million, compared to $159 million in the third quarter of 2024, due to higher prices and mix ($3 million), partially offset by lower volume ($1 million).

Gross profit decreased $1 million during the three months ended September 30, 2025, compared to the same period in 2024.

The slight decrease was driven primarily by higher operating costs, lower volumes in the Packaging and Paper segment, higher fixed and other expense, and higher freight expense, largely offset by higher prices and mix in the Packaging segment, lower fiber costs, higher prices and mix in the Paper segment, and lower maintenance outage expense.

In the three months ended September 30, 2025, gross profit included $19 million of special items expense related to the Greif Acquisition.

In the three months ended September 30, 2024, gross profit included no significant special items.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses (“SG&A”) increased $4 million during the three months ended June 30, 2025, compared to the same period in 2024.

The increase was primarily due to higher employee-related expenses and insurance.

Selling, general, and administrative expenses (“SG&A”) decreased $8 million during the three months ended September 30, 2025, compared to the same period in 2024.

The decrease was primarily due to lower employee-related expenses and bad debt, partially offset by higher depreciation related to the newly acquired business.

Other Income (Expense), Net

Other income (expense), net, for the three months ended June 30, 2025 and 2024 are set forth below (dollars in millions):

Other income (expense), net, for the three months ended September 30, 2025 and 2024 are set forth below (dollars in millions):

Three Months Ended

Facilities closure and other income (costs)

September 30,

Asset disposals and write-offs

DeRidder litigation and other litigation

DeRidder litigation and other litigation insurance recovery

Facilities closure and other costs

Acquisition and integration-related costs

DeRidder litigation

DeRidder litigation insurance recovery

Jackson mill conversion-related activities

We discuss these items in more detail in Note 6, Other Income (Expense), Net, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in “Part I, Item 1.

1 unchanged sentence

Income from Operations

Income from operations increased $58 million, or 20.9%, during the three months ended June 30, 2025, compared to the same period in 2024.

The second quarter of 2025 included $23 million of special items income primarily related to gains on sales of corrugated products facilities, partially offset by corrugated products facility closure costs and costs related to the announced Greif, Inc.

acquisition, compared to an insignificant amount of special items in the second quarter of 2024.

Packaging segment operating income increased $66 million to $346 million, compared to $280 million during the three months ended June 30, 2024.

The increase related primarily to higher containerboard and corrugated products prices and mix ($119 million), and lower fiber costs ($18 million), partially offset by higher operating and converting costs ($33 million), higher maintenance outage expenses ($25 million), lower sales and production volumes ($15 million), higher depreciation expense ($11 million), higher fixed and other expense ($8 million), and higher freight expenses ($3 million).The second quarter of 2025 included $25 million of special items income primarily related to gains on sales of corrugated products facilities, partially offset by corrugated products facility closure costs, compared to an insignificant amount of special items in the second quarter of 2024.

Paper segment operating income decreased $1 million to $26 million, compared to $27 million during the three months ended June 30, 2024.

The decrease primarily related to higher operating costs ($4 million), lower volumes ($2 million), higher maintenance outage expenses ($1 million), partially offset by higher prices and mix ($4 million), lower freight expenses ($1 million), and lower fixed expense ($1 million).

There were no significant special items in the second quarter of 2025 or 2024.

Income from operations decreased $3 million, or (0.8%), during the three months ended September 30, 2025, compared to the same period in 2024.

The third quarter of 2025 included $26 million of special items expense related to the Greif Acquisition and corrugated facility closures, compared to $1 million of special items expense related to corrugated products facilities closure costs in the third quarter of 2024.

Packaging segment operating income increased $7 million to $328 million, compared to $321 million during the three months ended September 30, 2024.

The increase related primarily to higher containerboard and corrugated products prices and mix ($87 million), lower fiber costs ($20 million), and lower maintenance outage expenses ($1 million), partially offset by higher operating and converting costs ($35 million), lower sales and production volumes ($20 million), higher depreciation expense ($8 million), higher freight expenses ($8 million), higher fixed and other expense ($5 million) and the impact of newly acquired Greif operations ($5 million).

The third quarter of 2025 included $20 million of special items expense related to the Greif Acquisition and corrugated facility closures, compared to $1 million of special items expense related to corrugated products facility costs in the third quarter of 2024.

Paper segment operating income decreased $3 million to $36 million, compared to $39 million during the three months ended September 30, 2024.

The decrease primarily related to higher operating costs ($4 million), lower volumes ($1 million), and higher fixed and other expense ($1 million), partially offset by higher prices and mix ($3 million).

There were no significant special items in the third quarter of 2025 or 2024.

Non-Operating Pension Income, Interest Expense, Net and Income Taxes

Non-operating pension income decreased $1 million during the three months ended June 30, 2025, compared to the same period in 2024.

Non-operating pension income decreased $1 million during the three months ended September 30, 2025, compared to the same period in 2024.

The decrease in non-operating pension income was related to unfavorable 2024 asset performance partially offset by favorable assumption changes.

Interest expense, net for the three months ended June 30, 2025 increased $3 million when compared to the same period in 2024.

The increase in interest expense, net was primarily due to higher interest expense in 2025 related to the Company’s November 2023 debt refinancing.

During the three months ended June 30, 2025, we recorded $79 million of income tax expense, compared to $68 million of expense during the three months ended June 30, 2024.

The effective tax rate for the three months ended June 30, 2025 and 2024 was 24.7% and 25.4%, respectively.

The decrease in our effective tax rate for the three months ended June 30, 2025 compared to the same period in 2024 was primarily due to higher excess tax benefits associated with employee restricted stock and performance unit vests.

Interest expense, net for the three months ended September 30, 2025 increased $10 million when compared to the same period in 2024.

The increase in interest expense, net was primarily due to higher interest expense in 2025 as a result of the Company’s financing for the Greif Acquisition and the November 2023 debt refinancing.

During the three months ended September 30, 2025, we recorded $78 million of income tax expense, compared to $81 million of expense during the three months ended September 30, 2024.

The effective tax rate for the three months ended September 30, 2025 and 2024 was 25.6% and 25.3%, respectively.

The increase in our effective tax rate for the three months ended September 30, 2025 compared to the same period in 2024 was primarily due to lower estimated federal tax credits and higher nondeductible employee remuneration paid to covered employees.

On July 4, 2025, the President signed into law H.R.1, the One Big Beautiful Bill Act (“OBBBA”).

1 unchanged sentence

Financial Statements” of this Form 10-Q.

Six Months Ended June 30, 2025, compared to Six Months Ended June 30, 2024

The historical results of operations of PCA for the six months ended June 30, 2025 and 2024 are set forth below (dollars in millions):

Six Months Ended

Nine Months Ended September 30, 2025, compared to Nine Months Ended September 30, 2024

The historical results of operations of PCA for the nine months ended September 30, 2025 and 2024 are set forth below (dollars in millions):

Nine Months Ended

September 30,

Corporate and Other

14 unchanged sentences

(a) See “Non-GAAP Financial Measures” included in this Item 2 for a reconciliation of non-GAAP measures to the most comparable GAAP measure.

Net sales increased $257 million, or 6.4%, to $4,312 million during the six months ended June 30, 2025, compared to $4,055 million during the same period in 2024.

Net sales increased $270 million, or 7.3%, to $3,976 million, compared to $3,707 million in the six months ended June 30, 2024, due to higher containerboard and corrugated products prices and mix ($202 million) and higher containerboard and corrugated products volume ($68 million).

In the first six months of 2025, export and domestic containerboard outside shipments were flat compared to the first six months of 2024.

Total corrugated products shipments were up 1.3% overall and up 2.1% per workday compared to the same period in 2024.

In the first six months of 2025, our domestic containerboard prices were 7.1% higher, while export prices were 11.7% higher, than the same period in 2024.

Net sales during the six months ended June 30, 2025 decreased $14 million, or (4.4%), to $300 million, compared to $314 million in the six months ended June 30, 2024, due to lower volume ($20 million), partially offset by higher prices and mix ($6 million).

Gross profit increased $130 million during the six months ended June 30, 2025, compared to the same period in 2024.

The increase was driven primarily by higher prices and mix and sales volumes in the Packaging segment, lower fiber costs, and higher prices and mix in the Paper segment, partially offset by higher operating costs, higher maintenance outage expense, lower volume in the Paper Segment, and higher fixed and other expense.

In the six months ended June 30, 2025, gross profit included $4 million of special items expense related to corrugated facility closure.

In the six months ended June 30, 2024, gross profit included $2 million of special items expense related to Jackson mill conversion-related activities.

Net sales increased $389 million, or 6.2%, to $6,626 million during the nine months ended September 30, 2025, compared to $6,237 million during the same period in 2024.

Net sales increased $389 million, or 6.8%, to $6,104 million, compared to $5,715 million in the nine months ended September 30, 2024, due to higher containerboard and corrugated products prices and mix ($298 million), higher volume related to the acquired business ($90 million), and higher legacy volume ($1 million).

In the first nine months of 2025, export and domestic containerboard outside shipments decreased (5.5%) compared to the first nine months of 2024.

Corrugated products shipments from the legacy PCA business were up 0.4% per day and in total, compared to the same period in 2024.

Including the acquired business, shipments were up 2.7% per day and in total.

In the first nine months of 2025, our domestic containerboard prices were 5.6% higher, while export prices were 8.7% higher, than the same period in 2024.

Net sales during the nine months ended September 30, 2025 decreased $12 million, or (2.5%), to $461 million, compared to $473 million in the nine months ended September 30, 2024, due to lower volume ($21 million), partially offset by higher prices and mix ($9 million).

Gross profit increased $129 million during the nine months ended September 30, 2025, compared to the same period in 2024.

The increase was driven primarily by higher prices and mix in the Packaging and Paper segments and lower fiber costs, partially offset by higher operating costs, higher fixed and other expense, higher maintenance outage expense, lower volume in the Packaging and Paper Segments, and higher freight expense.

In the nine months ended September 30, 2025, gross profit included $23 million of special items expense related to the Greif Acquisition and corrugated facility closures.

In the nine months ended September 30, 2024, gross profit included $2 million of special items expense primarily related to Jackson mill conversion-related activities.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses (“SG&A”) increased $13 million during the six months ended June 30, 2025, compared to the same period in 2024.

The increase was primarily due to higher employee-related expenses, insurance, and bad debt expense.

Selling, general, and administrative expenses (“SG&A”) increased $6 million during the nine months ended September 30, 2025, compared to the same period in 2024.

The increase was primarily due to higher employee-related expenses and higher depreciation related to the newly acquired business, partially offset by lower bad debt expense.

Other Income (Expense), Net

Other income (expense), net, for the six months ended June 30, 2025 and 2024 are set forth below (dollars in millions):

Six Months Ended

Facilities closure and other income

Other income (expense), net, for the nine months ended September 30, 2025 and 2024 are set forth below (dollars in millions):

Nine Months Ended

September 30,

Asset disposals and write-offs

Facilities closure and other income (costs)

DeRidder litigation and other litigation

DeRidder litigation and other litigation insurance recovery

Acquisition and integration-related costs

DeRidder litigation

DeRidder litigation insurance recovery

Jackson mill conversion-related activities

2 unchanged sentences

Income from Operations

Income from operations increased $142 million, or 30.1%, during the six months ended June 30, 2025, compared to the same period in 2024.

The first six months of 2025 included $17 million of special items income primarily related to gains on sales of corrugated products facilities, partially offset by corrugated products facility closure costs and costs related to the announced Greif, Inc.

acquisition, compared to $10 million in the same period in 2024 related to Jackson mill conversion-related costs.

Packaging segment operating income increased $141 million to $624 million during the first six months of 2025, compared to the same period last year.

The increase related primarily to higher containerboard and corrugated products prices and mix ($210 million), lower fiber costs ($27 million), and higher sales and production volumes ($16 million), partially offset by higher operating and converting costs ($71 million), higher maintenance outage expenses ($24 million), higher fixed and other costs ($21 million), and higher depreciation expense ($18 million).

Special items during the first six months of 2025 included $19 million of income primarily related to gains on sales of corrugated products facilities, partially offset by corrugated products facility closure costs, compared to $4 million of expense related to Jackson mill conversion-related activities in the same period in 2024.

Paper segment operating income increased $5 million to $61 million, compared to the six months ended June 30, 2024.

The increase primarily related to no special items in the Paper segment during the first six months of 2025, compared to $6 million of expense for Jackson mill conversion-related activities in the first six months of 2024, along with higher prices and mix ($6 million), lower fixed and other expenses ($2 million), and lower freight expense ($1 million), partially offset by lower sales and production volumes ($5 million), higher operating costs ($5 million), and higher maintenance outage expenses ($1 million).

Income from operations increased $139 million, or 17.4%, during the nine months ended September 30, 2025, compared to the same period in 2024.

The first nine months of 2025 included $9 million of special items expense related to the Greif Acquisition and corrugated facility closures, partially offset by income related to gains on sales of corrugated products facilities, compared to $11 million of expense related to Jackson mill conversion-related costs and corrugated facility closure costs in the same period in 2024.

Packaging segment operating income increased $148 million to $952 million during the first nine months of 2025, compared to the same period last year.

The increase related primarily to higher containerboard and corrugated products prices and mix ($305 million), and lower fiber costs ($47 million), partially offset by higher operating and converting costs ($106 million), higher depreciation expense ($26 million), higher fixed and other costs ($26 million), higher maintenance outage expenses ($23 million), lower sales and production volumes ($12 million), higher freight expense ($9 million), and the impact of newly acquired Greif operations ($5 million).

Special items during the first nine months of 2025 included $2 million of expense related to the Greif Acquisition and corrugated facility closures, partially offset by income related to gains on sales of corrugated products facilities, compared to $5 million of expense related to Jackson mill conversion-related activities and corrugated facility closure costs in the same period in 2024.

Paper segment operating income increased $2 million to $97 million, compared to the nine months ended September 30, 2024.

The increase primarily related to higher prices and mix ($9 million), lower fixed and other expenses ($1 million), and lower freight expense ($1 million), partially offset by higher operating costs ($7 million), lower sales and production volumes ($6 million), higher fiber costs ($2 million), and higher maintenance outage expenses ($1 million).

Additional benefit was due to no significant special items during the first nine months of 2025, compared to $6 million of expense related to Jackson mill conversion-related activities in the same period in 2024.

Non-Operating Pension Income, Interest Expense, and Income Taxes

Non-operating pension income decreased $2 million during the six months ended June 30, 2025, compared to the same period in 2024.

Non-operating pension income decreased $3 million during the nine months ended September 30, 2025, compared to the same period in 2024.

The decrease in non-operating pension income was related to unfavorable 2024 asset performance partially offset by favorable assumption changes.

Interest expense, net increased $6 million during the six months ended June 30, 2025, compared to the same period in 2024.

The increase in interest expense, net was primarily due to higher interest expense in 2025 related to the Company’s November 2023 debt refinancing and lower interest income due to lower interest rates.

During the six months ended June 30, 2025, we recorded $143 million of income tax expense, compared to $108 million of expense during the six months ended June 30, 2024.

The effective tax rate for the six months ended June 30, 2025 and 2024 was 24.3% and 23.9%, respectively.

The increase in our effective tax rate for the six months ended June 30, 2025 compared to the same period in 2024 was primarily due to lower excess tax benefits associated with employee restricted stock and performance unit vests.

Interest expense, net increased $16 million during the nine months ended September 30, 2025, compared to the same period in 2024.

The increase in interest expense, net was primarily due to higher interest expense in 2025 as a result of the Company’s financing for the Greif Acquisition and the November 2023 debt refinancing and lower interest income as a result of lower interest rates on lower cash balances due to the Greif Acquisition.

During the nine months ended September 30, 2025, we recorded $221 million of income tax expense, compared to $189 million of expense during the nine months ended September 30, 2024.

The effective tax rate for the nine months ended September 30, 2025 and 2024 was 24.7% and 24.4%, respectively.

The increase in our effective tax rate for the nine months ended September 30, 2025 compared to the same period in 2024 was primarily due to lower excess tax benefits associated with employee restricted stock and performance unit vests and less favorable state law changes.

Liquidity and Capital Resources

1 unchanged sentence

Our primary sources of liquidity are net cash provided by operating activities and available borrowing capacity under our revolving credit facility.

At June 30, 2025, we had $788 million of cash and cash equivalents, $168 million of marketable debt securities, and $323 million of unused borrowing capacity under the revolving credit facility, net of letters of credit.

At September 30, 2025, we had $634 million of cash and cash equivalents, $172 million of marketable debt securities, and $573 million of unused borrowing capacity under the revolving credit facility, net of letters of credit.

On July 31, 2025, the Company entered into two credit agreements (the “Commercial Credit Agreement” and the “Farm Credit Agreement,” collectively, the “Credit Agreements”).

The Commercial Credit Agreement includes a $500 million three-year unsecured term loan facility and a $600 million unsecured revolving credit facility.

The Farm Credit Agreement includes a $500 million seven-year unsecured term loan facility.

The Credit Agreements were fully drawn upon on September 2, 2025.

Additionally, on August 11, 2025, we issued $500 million of 5.20% senior notes due 2035 through a registered public offering and used the net proceeds received from this issuance, together with the net proceeds from our term loan facilities and cash on hand, to finance the Greif Acquisition.

For more information on the Greif Acquisition financing, see Note 12, Debt, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in “Part I, Item 1.

Financial Statements” of this Form 10-Q as well as the information provided below under “—Financing Activities” for further information.

For more information on the Greif Acquisition, see Note 4, Acquisitions, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in “Part I, Item 1.

Financial Statements” of this Form 10-Q as well as the information provided below under “—Investing Activities” for further information.

Currently, our primary uses of cash are for operations, capital expenditures, acquisitions, debt service, common stock dividends, and repurchases of common stock.

3 unchanged sentences

Below is a summary table of our cash flows, followed by a discussion of our sources and uses of cash through operating activities, investing activities, and financing activities (dollars in millions):

Six Months Ended

Nine Months Ended

September 30,

Net cash provided by (used for):

2 unchanged sentences

Financing activities

Net increase (decrease) in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Operating Activities

1 unchanged sentence

Cash requirements for operating activities are subject to PCA’s operating needs and the timing of collection of receivables and payments of payables and expenses.

During the six months ended June 30, 2025, net cash provided by operating activities was $639 million, compared to $539 million in the same period in 2024, an increase of $100 million.

Cash from operations excluding changes in cash used for operating assets and liabilities increased $84 million primarily due to higher income from operations in 2025 as discussed above.

Cash from operations increased by $16 million when comparing the first six months of 2025 to the same period in 2024 due to changes in operating assets and liabilities primarily due to the following:

a) a net favorable change in prepaid expenses and other current assets primarily related to the establishment of a receivable for the DeRidder trial and related insurance recoveries during the first six months of 2024 and reduction of receivables against insurance carriers in the first six months of 2025 related to the DeRidder settlement and settlement of other litigation;

b) a net favorable change in accounts receivable due to a smaller increase in Packaging segment accounts receivable levels during the first six months of 2025 compared to the same period in 2024 primarily related to higher prices and sales volumes in 2024, partially offset by an increase in Paper segment accounts receivable levels during the first six months of 2025 compared to the same period in 2024 primarily related to an increase in days sales outstanding during 2025.

During the nine months ended September 30, 2025, net cash provided by operating activities was $1,111 million, compared to $866 million in the same period in 2024, an increase of $245 million.

Cash from operations excluding changes in cash used for operating assets and liabilities increased $240 million primarily due to higher deferred income tax liabilities and higher income from operations in 2025.

Cash from operations increased by $5 million when comparing the first nine months of 2025 to the same period in 2024 due to changes in operating assets and liabilities primarily due to the following:

a) a net favorable change in prepaid expenses and other current assets primarily related to the establishment of a receivable for the DeRidder trial and related insurance recoveries during the first nine months of 2024 and reduction of receivables against insurance carriers during the first nine months of 2025 related to the DeRidder settlement and settlement of other litigation;

b) a net favorable change in accounts receivable due to a smaller increase in Packaging segment accounts receivable levels during the first nine months of 2025 compared to the same period in 2024 primarily related to higher prices and sales volumes in 2024, partially offset by a stronger increase in Paper segment accounts receivable levels during the first nine months of 2025 compared to the same period in 2024 primarily related to an increase in days sales outstanding in 2025;

c) a net favorable change in inventories resulting from a stronger increase in Packaging segment inventory levels during the first nine months of 2024 compared to the same period in 2025 due to rising volume and certain customer inventory on hand requirements, partially offset by higher Paper segment inventory levels during the first nine months of 2025 compared to the same period in 2024 due to reduced production during the first nine months of 2024.

These favorable changes were partially offset by the following:

c) a net unfavorable change in accrued liabilities predominantly related to the establishment of an accrued liability for the DeRidder trial in the first half of 2024 and reduction of accrued liabilities in the first half of 2025 related to the DeRidder settlement and settlement of other litigation;

d) a net unfavorable change in accounts payable primarily related to a smaller increase in accounts payable levels during the first six months of 2025 compared to the same period in 2024 due to a larger increase in cost of sales and days payables outstanding during 2024 compared to 2025;

e) a net unfavorable change in inventories primarily related to an increase in Paper segment inventory balances during the first six months of 2025 compared to the same period in 2024 due to lower sales volumes in the first half of 2025, partially offset by a favorable change in Packaging segment inventory due to a smaller increase in inventory balances during the first half of 2025 compared to the same period in 2024.

d) a net unfavorable change in accrued liabilities predominantly related to the establishment of an accrued liability for the DeRidder trial in the first nine months of 2024 and reduction of accrued liabilities during the same period in 2025 related to the DeRidder settlement

and settlement of other litigation;

e) a net unfavorable change in income taxes during the first nine months of 2025 compared to the same period in 2024 due to an increase in income tax receivables in 2025 primarily related to the reduction of taxable income during the third quarter of 2025 as a result of the bonus depreciation taken on assets acquired as part of the Greif Acquisition;

f) a net unfavorable change in accounts payable primarily related to a smaller increase in Packaging accounts payable levels during the first nine months of 2025 compared to the same period in 2024.

Investing Activities

We used $287 million for investing activities during the six months ended June 30, 2025 compared to $324 million during the same period in 2024.

We spent $318 million for internal capital investments during the six months ended June 30, 2025, compared to $322 million during the same period in 2024.

We expect capital investments in 2025 to be within a range of $840 million to $870 million.

We used $2,287 million for investing activities during the nine months ended September 30, 2025 compared to $75 million during the same period in 2024.

We spent $510 million for internal capital investments during the nine months ended September 30, 2025, compared to $468 million during the same period in 2024.

In September 2025, we completed the Greif Acquisition for a purchase price of $1,804 million, net of cash acquired.

In September 2024, we received $400 million in net proceeds from the maturity of our investments in time deposits, which were used to repay our 3.65% senior notes that were due on September 15, 2024.

We expect capital investments in 2025 to be approximately $800 million.

These expenditures could increase or decrease as a result of a number of factors, including our financial results, strategic opportunities, future economic conditions, and our regulatory compliance requirements.

4 unchanged sentences

Financing Activities

During both of the six month periods ended June 30, 2025 and 2024, net cash used for financing activities was $249 million.

We paid $225 million of dividends during the first six months of 2025, compared to $224 million of dividends paid during the comparable period in 2024.

In addition, we withheld shares to cover $23 million of employee restricted stock taxes during the first six months of 2025 compared to $24 million of employee restricted stock taxes withheld during the same period in 2024.

We did not have any repurchases and retirements of the Company’s common stock during both the six months ended June 30, 2025 and 2024.

During the nine months ended September 30, 2025, net cash provided by financing activities was $1,126 million, compared to $763 million of net cash used for financing activities during the same period in 2024.

We paid $337 million of dividends during the first nine months of both 2025 and 2024.

In addition, we withheld shares to cover $23 million of employee restricted stock taxes during the first nine months of 2025 compared to $25 million of employee restricted stock taxes withheld during the same period in 2024.

We did not have any repurchases and retirements of the Company’s common stock during both the nine month periods ended September 30, 2025 and 2024.

On July 31, 2025, the Company entered into two credit agreements (the “Commercial Credit Agreement” and the “Farm Credit Agreement,” collectively, the “Credit Agreements”).

The Commercial Credit Agreement includes a $500 million three-year unsecured term loan facility and a $600 million unsecured revolving credit facility.

The Farm Credit Agreements includes a $500 million seven-year unsecured term loan facility.

The Credit Agreements were fully drawn upon on September 2, 2025.

The net proceeds received from these financing activities were $1,494 million.

We paid $7 million of issuance costs, excluding lender fees, related to the Greif Acquisition financing, which includes $3 million for the bridge loan, $2 million for the Credit Agreements, and $2 million for the 5.20% senior notes due 2035.

On September 15, 2024, we used the net proceeds received from the November 2023 offering of the 5.70% senior notes due 2033 and cash on hand to repay our outstanding 3.65% senior notes due 2024.

The repayment of the old 3.65% notes was $400 million excluding accrued interest.

In addition to the items discussed in Note 12, Debt, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in "Part I, Item 1.

13 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Earnings per diluted share, as reported in accordance with GAAP

Special items:

Facilities closure and other income (a)

Facilities closure and other costs (income) (a)

Acquisition and integration-related costs (b)

2 unchanged sentences

Earnings per diluted share, excluding special items

(a) For the three and six months ended June 30, 2025, includes $24.6 million and $18.8 million, respectively, of income related to gains on sales of corrugated products facilities, partially offset by closure costs related to corrugated products facilities.

For the three months ended June 30, 2024, includes $0.1 million of charges consisting of closure costs related to corrugated products facilities.

For the six months ended June 30, 2024, these charges were completely offset by $0.1 million of income primarily related to a favorable lease buyout for a closed corrugated products facility during the first quarter of 2024.

(b) For the three months and six months ended June 30, 2025, includes $1.6 million of charges related to the announced Greif, Inc.

(c) For the three and six months ended June 30, 2024, includes $0.6 million of income and $9.7 million of charges, respectively, related to the announced discontinuation of production of UFS paper grades on the No.

(a) For the three and nine months ended September 30, 2025, includes $1.3 million of charges and $17.5 million of income, respectively, related to the closure of certain corrugated products facilities.

For the three months ended September 30, 2025, the charges were partially offset by a gain on an asset disposal related to a closed corrugated products facility.

For the nine months ended September 30, 2025, the charges were completely offset by gains on sales of corrugated products facilities during the second quarter of 2025.

For the three and nine months ended September 30, 2024, includes $0.9 million and $1.0 million of charges, respectively, consisting of closure costs related to corrugated products facilities.

For the nine months ended September 30, 2024, these charges were partially offset by income primarily related to a favorable lease buyout for a closed corrugated products facility during the first quarter of 2024.

(b) For the three months and nine months ended September 30, 2025, includes $25.0 million and $26.6 million, respectively, of charges and costs related to the September 2025 Greif Acquisition, including step-up of acquired inventory, integration-related expenses and transaction expenses.

(c) For the nine months ended September 30, 2024, includes $9.7 million of charges related to the announced discontinuation of production of UFS paper grades on the No.

3 machine at the Jackson, Alabama mill associated with the permanent conversion of the machine to produce linerboard and other paper-to-containerboard conversion related activities.

(d) Amount may not foot due to rounding.

The following tables reconcile net income to net income excluding special items for the periods indicated (dollars in millions):

Three Months Ended June 30,

Three Months Ended September 30,

As reported in accordance with GAAP

Special items:

Facilities closure and other (income) costs (e)

Acquisition and integration-related costs (f)

Jackson mill conversion-related activities (g)

Facilities closure and other costs (d)

Acquisition and integration-related costs (e)

Total special items

Excluding special items

Six Months Ended June 30,

Nine Months Ended September 30,

As reported in accordance with GAAP

Special items:

Facilities closure and other income (e)

Acquisition and integration-related costs (f)

Jackson mill conversion-related activities (g)

Facilities closure and other (income) costs (d)

Acquisition and integration-related costs (e)

Jackson mill conversion-related activities (f)

Total special items

Excluding special items

(e) For the three and six months ended June 30, 2025, includes income related to gains on sales of corrugated products facilities, partially offset by closure costs related to corrugated products facilities.

For the three months ended June 30, 2024, includes charges consisting of closure costs related to corrugated products facilities.

For the six months ended June 30, 2024, these charges were completely offset by income primarily related to a favorable lease buyout for a closed corrugated products facility during the first quarter of 2024.

(f) For the three months and six months ended June 30, 2025, includes charges related to the announced Greif, Inc.

(g) Includes items related to the announced discontinuation of production of UFS paper grades on the No.

(d) For the three and nine months ended September 30, 2025, includes charges consisting of closure costs related to corrugated products facilities.

For the three months ended September 30, 2025, the charges were partially offset by a gain on an asset disposal related to a closed corrugated products facility.

For the nine months ended September 30, 2025, these charges were completely offset by gains from the sales of corrugated products facilities during the second quarter of 2025.

For the three and nine months ended September 30, 2024, includes charges consisting of closure costs related to corrugated products facilities.

(e) Includes acquisition and integration costs related to the September 2025 Greif Acquisition.

(f) Includes items related to the announced discontinuation of production of UFS paper grades on the No.

3 machine at the Jackson, Alabama mill associated with the permanent conversion of the machine to produce linerboard and other paper-to-containerboard conversion related activities.

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Non-operating pension income

3 unchanged sentences

Special items:

Facilities closure and other (income) costs

Facilities closure and other costs (income)

Acquisition and integration-related costs

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Segment operating income

Depreciation, amortization, and depletion

Facilities closure and other (income) costs

Facilities closure and other costs (income)

Acquisition and integration-related costs

Jackson mill conversion-related activities

12 unchanged sentences

To manage these risks, we may from time to time enter into transactions, including certain physical commodity transactions, that are determined to be derivatives.

As of June 30, 2025, we are party to certain physical commodity transactions related to natural gas supply contracts.

As of September 30, 2025, we are party to certain physical commodity transactions related to natural gas supply contracts.

These contracts qualify for the normal purchase normal sale ("NPNS") exception, and we have elected that exception.

1 unchanged sentence

Financial Statements and Supplementary Data” of our 2024 Annual Report on Form 10-K.

At June 30, 2025, interest rates on 100% of PCA’s outstanding debt are fixed.

The interest rates on approximately 75% of PCA’s debt are fixed.

A one percent increase in interest rates related to variable-rate debt would have resulted in an increase in interest expense and a corresponding decrease in income before taxes of approximately $10 million annually.

Off-Balance-Sheet Activities

The Company does not have any off-balance sheet arrangements as of June 30, 2025.

The Company does not have any off-balance sheet arrangements as of September 30, 2025.

Environmental Matters

8 unchanged sentences

PCA has included in its 2024 Annual Report on Form 10-K a discussion of its critical accounting policies and estimates which require management’s most difficult, subjective, or complex judgments used in the preparation of its consolidated financial statements.

PCA has not had any changes to these critical accounting estimates during the first six months of 2025.

Based on management’s evaluation, except as discussed below there have not been any changes to these critical accounting estimates during the first nine months of 2025.

Business Combinations

From time to time, we may enter into material business combinations.

We allocate the total purchase price of a business combination to the assets acquired and the liabilities assumed based on their estimated fair values at the acquisition date, with the excess purchase price recorded as goodwill.

The acquisition method of accounting requires us to make significant estimates and assumptions regarding the fair values of the elements of a business combination as of the date of acquisition, including the fair values (fair value is determined using the income approach, cost approach and/or market approach) of inventory, property, plant, and equipment, identifiable intangible assets, deferred tax asset valuation allowances, and liabilities related to uncertain tax positions, among others.

This method also requires us to refine these estimates over a measurement period not to exceed one year to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date.

If we are required to retroactively adjust provisional amounts that we have recorded for the fair values of assets and liabilities in connection with acquisitions, these adjustments could have a material impact on our financial condition and results of operations.

Additionally, we expense any acquisition-related costs as incurred in connection with each business combination.

Significant estimates and assumptions in estimating the fair value of customer relationships and other identifiable intangible assets include future cash flows that we expect to generate from the acquired assets.

If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could record impairment charges.

In addition, we have estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense.

If our estimates of the economic lives change, depreciation or amortization expenses could be increased or decreased.

New and Recently Adopted Accounting Standards

23 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis