What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-08 compared with 2025-11-06 · 108 added, 248 removed, 173 unchanged (67% of the section changed)

21 unchanged sentences

Executive Summary

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.

First quarter net sales were $2.37 billion in 2026 and $2.14 billion in 2025.

We reported $171 million of net income, or $1.91 per diluted share, during the first quarter of 2026, compared to $204 million, or $2.26 per diluted share, during the same period in 2025.

Net income included $44 million of expense for special items in the first quarter of 2026, primarily related to Wallula mill restructuring activities, compared to $4 million of expense for special items in 2025.

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.

Excluding special items, net income was $215 million, or $2.40 per diluted share, during the first quarter of 2026, compared to $208 million, or $2.31 per diluted share, in the first quarter of 2025.

1 The increase was driven by improvement in legacy PCA’s earnings by $0.15 per share, partially offset by a loss of ($0.06) per share for the acquired Greif containerboard business.

The results of the acquired business included approximately $34 million of depreciation and amortization expense and $19 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.

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, lower maintenance outage expense, lower labor and operating costs in the Packaging segment, higher prices and mix and volume in the Paper segment, along with a lower tax rate and lower share count.

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

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 $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.

Packaging segment operating income was $260 million in the first quarter of 2026, compared to $278 million in the first quarter of 2025.

Packaging segment EBITDA excluding special items was $482 million in the first quarter of 2026 compared to $409 million in the first quarter of 2025.

1 The increase in EBITDA, excluding special items, was driven primarily by higher sales and production volume with the addition of the acquired business, higher prices and mix, lower fiber costs, and lower maintenance outage expense, partially offset by higher operating and converting costs, and higher freight and logistics 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 $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.

Corrugated product shipments were up 21.8% per day and up 19.9% in total compared to the first quarter of 2025.

Shipments from the legacy PCA business were up 2.8% per day and up 1.2% in total compared to the first quarter of 2025.

Containerboard production in the first quarter of 2026 was approximately 1,398,000 tons, and containerboard inventory was down (7.8%) compared to the fourth quarter, and up 11.4% compared to the first quarter of 2025, primarily due to the acquisition.

Paper segment operating income was $33 million in the first quarter of 2026, compared to $36 million in the first quarter of 2025.

Paper segment EBITDA excluding special items was $38 million in the first quarter of 2026, compared to $40 million in the first quarter of 2025.

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

Industry and Business Conditions

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.

Trade publications reported North American industry-wide corrugated products shipments were down (1.9%) in total and (0.3%) per workday during the first quarter of 2026 compared to the same quarter of 2025.

Reported industry containerboard production decreased (8.3%) compared to the first quarter of 2025.

Reported industry containerboard inventories at the end of the first quarter of 2026 were approximately 2.62 million tons, down (5.5%) compared to the same period in 2025.

Reported containerboard export shipments were down (28.2%) compared to the first quarter of 2025.

Reported index prices increased a net $20 per ton for linerboard and for corrugating medium during the first quarter of 2026 and an additional $30 per ton in April 2026.

The market for communication papers competes heavily with electronic data transmission and document storage alternatives.

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 (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.

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.

Trade publications reported North American UFS paper shipments were down (8.8%) in the first quarter of 2026, compared to the same period of 2025.

Average prices reported by a trade publication for cut size office papers were higher by $20 per ton, or 1.3%, in the first quarter of 2026, compared to the fourth quarter of 2025, and higher by $40 per ton, or 2.7%, compared to the first quarter of 2025.

Reported index prices increased $60 per ton for cut size office papers and for offset printing papers in March 2026.

We expect demand in the Packaging segment to remain strong and corrugated volume to increase with one more shipping day and some seasonal improvement in the second quarter compared to the first quarter.

Prices for containerboard and corrugated products will move higher with the implementation of our previously announced price increases and improved corrugated mix.

Packaging mill production will be slightly higher with one more operating day and production improvements at some of the mills more than offsetting the impact of maintenance outages at five Packaging mills during the second quarter.

Mill maintenance outage expenses will be higher with more Packaging mills taking outages than in the first quarter.

We expect flat volume and higher prices in the Paper segment as we continue to operate at full capacity and implement our previously announced paper price increases.

Costs for freight, fiber and chemicals will be up due to higher prices and energy costs are expected to be seasonally lower with warmer weather in the second quarter.

The sequential improvement in expenses for wages and benefits that we normally experience from first quarter to second quarter will be less than in past years due to higher expected stock compensation expenses and benefits costs in the second quarter.

Finally, our tax rate will be higher in the second quarter due to the tax-related benefit of share-based compensation awards that vested in the first quarter.

Considering these items, we expect second quarter earnings to be lower than the first quarter of 2026, excluding special items.

Results of Operations

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 March 31, 2026, compared to Three Months Ended March 31, 2025

The historical results of operations of PCA for the three months ended March 31, 2026 and 2025 are set forth below (dollars in millions):

Three Months Ended

September 30,

Corporate and Other

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(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 $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.

Net sales increased $227 million, or 10.6%, to $2,368 million during the three months ended March 31, 2026, compared to $2,141 million during the same period in 2025.

Net sales increased $218 million, or 11.1%, to $2,189 million, compared to $1,970 million in the first quarter of 2025 due to higher volume related to the acquired business ($224 million) and higher containerboard and corrugated products prices and mix ($18 million), partially offset by lower legacy volume ($24 million).

In the first quarter of 2026, export and domestic containerboard outside shipments decreased (15.8%) compared to the first quarter of 2025.

Our total corrugated products shipments from the legacy PCA business were up 2.8% per day and up 1.2% overall, compared to the same period in 2025.

Including the acquired business, shipments were up 21.8% per day and 19.9% 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.

In the first quarter of 2026, our domestic containerboard prices were 2.6% higher, while export prices were flat compared to the same period in 2025.

Net sales increased $6 million, or 3.7%, to $160 million, compared to $154 million in the first quarter of 2025, due to higher volumes ($4 million) and higher prices and mix ($2 million).

Gross profit decreased $2 million during the three months ended March 31, 2026, compared to the same period in 2025.

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

In the three months ended March 31, 2026, gross profit included $51 million of special items expense related to Wallula mill restructuring.

In the three months ended March 31, 2025, gross profit included $4 million of special items expense related to corrugated facility closure and other costs.

Selling, General, and Administrative Expenses

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.

Selling, general, and administrative expenses (“SG&A”) increased $19 million during the three months ended March 31, 2026, compared to the same period in 2025.

The increase was primarily due to higher depreciation related to the acquired business, higher employee-related expenses, information technology expenses, and insurance costs.

Other Income (Expense), Net

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

Other income (expense), net, for the three months ended March 31, 2026 and 2025 are set forth below (dollars in millions):

Three Months Ended

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

Wallula mill restructuring

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 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.

Income from operations decreased $29 million, or (10.3%), during the three months ended March 31, 2026 compared to the same period in 2025.

The first quarter of 2026 included $60 million of special items expense related to Wallula mill restructuring, recent acquisitions and corrugated facility closures, compared to $6 million of special items expense related to corrugated products facilities closure costs in the first quarter of 2025.

Packaging segment operating income decreased $18 million to $260 million, compared to $278 million during the three months ended March 31, 2025.

The decrease related primarily to $56 million of special item expense related to the Wallula mill restructuring and corrugated facility closures, compared to $6 million of special items expense related to corrugated products facility costs in the first quarter of 2025.

Excluding special items, operating income increased $33 million compared to the same period last year.

The increase was driven primarily by higher containerboard and corrugated products prices and mix ($21 million), lower fiber costs ($13 million), the impact of newly acquired Greif operations ($12 million), lower maintenance outage expenses ($10 million), lower labor and operating costs ($7 million), and lower other expenses ($3 million), partially offset by higher freight expenses ($14 million), lower sales and production volumes ($13 million), higher depreciation expense ($6 million).

Paper segment operating income decreased $3 million to $33 million, compared to $36 million during the three months ended March 31, 2025.

The decrease primarily related to higher operating costs ($4 million), and higher freight expenses ($1 million), partially offset by higher prices and mix ($2 million) and higher sales and production volumes ($1 million).

There were no significant special items in the first quarter of 2026 or 2025.

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

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 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”).

For additional information regarding the impact of the OBBBA, see Note 7, Income Taxes, of the Condensed Notes to Unaudited Quarterly Consolidated Financial Statements in “Part I, Item 1.

Financial Statements” of this Form 10-Q.

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

Intersegment eliminations

Corporate and Other

Income from operations

Non-operating pension income

Interest expense, net

Income before taxes

Income tax provision

Non-GAAP Measures (a)

Net income excluding special items

Consolidated EBITDA

Consolidated EBITDA excluding special items

Packaging EBITDA

Packaging EBITDA excluding special items

Paper EBITDA excluding special items

(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 $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 $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 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

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.

Financial Statements” of this Form 10-Q.

Income from Operations

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 $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 $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.

Non-operating pension income increased $1 million during the three months ended March 31, 2026, compared to the same period in 2025.

The increase in non-operating pension income was related to favorable 2025 asset performance and favorable assumption changes.

Interest expense, net for the three months ended March 31, 2026 increased $20 million when compared to the same period in 2025.

The increase in interest expense, net was primarily due to higher interest expense in 2026 as a result of the Company’s financing for the Greif Acquisition and lower interest income as a result of lower interest rates on lower cash balances.

During the three months ended March 31, 2026, we recorded $49 million of income tax expense, compared to $64 million of expense during the three months ended March 31, 2025.

The effective tax rate for the three months ended March 31, 2026 and 2025 was 22.2% and 23.8%, respectively.

The decrease in our effective tax rate for the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to higher excess tax benefits associated with employee restricted stock and performance unit vests partially offset by higher nondeductible employee remuneration paid to covered employees.

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 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.

At March 31, 2026, we had $397 million of cash and cash equivalents, $218 million of marketable debt securities and other, and $573 million of unused borrowing capacity under the revolving credit facility, net of letters of credit.

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

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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):

Nine Months Ended

September 30,

Three Months Ended

Net cash provided by (used for):

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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 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:

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.

During the three months ended March 31, 2026, net cash provided by operating activities was $329 million, compared to $339 million in the same period in 2025, a decrease of $10 million.

Cash from operations excluding changes in cash used for operating assets and liabilities increased $58 million primarily due to the Greif Acquisition.

Cash from operations decreased by $68 million when comparing the first three months of 2026 to the same period in 2025 due to changes in operating assets and liabilities primarily due to the following:

a) a net unfavorable change in accounts receivable due to a larger increase in Packaging segment accounts receivable levels during 2026 primarily related to higher sales volumes in 2026 when compared to 2025 and a larger increase in Corporate accounts receivable levels in 2026 compared to 2025;

b) a net unfavorable change in prepaid expenses and other current assets primarily related to the reduction of receivables against insurance carriers during 2025 related to the settlement of litigation, partially offset by a favorable change in prepaid expenses related to the timing and magnitude of the annual mill shutdowns during the first quarter of 2026 compared to the same period in 2025;

c) a net unfavorable change in income taxes resulting from a smaller decrease in income tax receivable amounts in the first quarter of 2026 compared to the first quarter of 2025.

These unfavorable changes were partially offset by the following:

d) a net favorable change in accrued liabilities primarily related to the reduction of accrued liabilities in 2025 due to the settlement of litigation and an increase in compensation and benefits liabilities during the first quarter of 2026 compared to the same period in 2025;

e) a net favorable change in accounts payable primarily related to a larger increase in accounts payable levels during the first quarter of 2026 compared to the first quarter of 2025, partially offset by an unfavorable change related to the timing of payments.

Investing Activities

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.

We used $261 million for investing activities during the three months ended March 31, 2026 compared to $144 million during the same period in 2025.

We spent $165 million for internal capital investments during the three months ended March 31, 2026, compared to $148 million during the same period in 2025.

We completed an acquisition in the Packaging segment during the first quarter of 2026 for $15 million, including working capital adjustments.

In March 2026, we used $50 million of cash on hand to invest in a time deposit.

We expect capital investments in 2026 to be within a range of $840 million to $870 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.

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Financing Activities

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.

During the three months ended March 31, 2026, net cash used for financing activities was $200 million, compared to $128 million of net cash used for financing activities during the same period in 2025.

We paid $112 million of dividends during the first three months of both 2026 and 2025.

In addition, we withheld shares to cover $29 million of employee restricted stock taxes during the first three months of 2026 compared to $15 million of employee restricted stock taxes withheld during the same period in 2025.

We repurchased and retired 0.3 million shares of the Company’s common stock for $59 million during the first three months of 2026.

We did not have any repurchases and retirements of the Company’s common stock during the same period in 2025.

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.

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Three Months Ended

Nine Months Ended

September 30,

Earnings per diluted share, as reported in accordance with GAAP

Special items:

Facilities closure and other costs (income) (a)

Acquisition and integration-related costs (b)

Jackson mill conversion-related activities (c)

Facilities closure and other costs (a)

Wallula mill restructuring (b)

Acquisition and integration-related costs (c)

Total special items

Earnings per diluted share, excluding special items

(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.

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

Three Months Ended September 30,

(a) For the three months ended March 31, 2026 and March 31, 2025, includes $2.9 million and $5.9 million, respectively, of charges consisting of closure costs related to corrugated products facilities.

(b) Includes $53.3 million of charges related to the announced discontinuation of the No.

2 machine and kraft pulping facilities at the Wallula, Washington mill.

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

Three Months Ended March 31,

As reported in accordance with GAAP

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Facilities closure and other costs (d)

Acquisition and integration-related costs (e)

Total special items

Excluding special items

Nine Months Ended September 30,

As reported in accordance with GAAP

Special items:

Facilities closure and other (income) costs (d)

Acquisition and integration-related costs (e)

Jackson mill conversion-related activities (f)

Wallula mill restructuring (e)

Acquisition and integration-related costs (f)

Total special items

Excluding special items

(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.

(d) Includes charges consisting of closure costs related to corrugated products facilities.

(e) Includes charges related to the announced discontinuation of the No.

2 machine and kraft pulping facilities at the Wallula, Washington mill.

(f) Includes acquisition and integration costs related to recent acquisitions.

The following table reconciles net income to EBITDA and EBITDA excluding special items for the periods indicated (dollars in millions):

Three Months Ended

Nine Months Ended

September 30,

Non-operating pension income

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Special items:

Facilities closure and other costs (income)

Facilities closure and other costs

Acquisition and integration-related costs

Jackson mill conversion-related activities

Wallula mill restructuring

Total special items

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Three Months Ended

Nine Months Ended

September 30,

Segment operating income

Depreciation, amortization, and depletion

Facilities closure and other costs (income)

Acquisition and integration-related costs

Jackson mill conversion-related activities

Facilities closure and other costs

Wallula mill restructuring

EBITDA excluding special items

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Depreciation, amortization, and depletion

Jackson mill conversion-related activities

EBITDA excluding special items

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

As of March 31, 2026, 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.

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Off-Balance-Sheet Activities

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

The Company does not have any off-balance sheet arrangements as of March 31, 2026.

Environmental Matters

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PCA has included in its 2025 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.

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.

PCA has not had any changes to these critical accounting estimates during the first three months of 2026.

New and Recently Adopted Accounting Standards

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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