Packaging Corp Of America

Strong Q1 operating results; modest EPS lift vs. prior year (but special items weighed on reported earnings): Net income $171M / $1.91 EPS; excluding special items $215M / $2.40 EPS vs. $208M / $2.31 in Q1’25. Revenue $2.4B vs. $2.1B. EBITDA ex-specials $486M vs. $421M. Reported results included special items largely from Wallula restructuring, Greif acquisition/integration, and corrugated closures. Underlying improvement was driven by higher price/mix, lower fiber and maintenance outage expenses, and lower labor/operating costs—partly offset by higher freight and lower volume in legacy packaging.

Packaging momentum + tight containerboard supply; production executed well (good operational “surprise”): Packaging EBITDA ex-specials $482M (margin 22%) on $2.2B sales vs. $409M (margin 20.8%) last year. Company ran full capacity; key outages completed on Counce #1/#2 and Jackson earlier in April; Wallula reconfiguration completed to lower fiber/power/labor. Containerboard production: 1.398M tons in Q1; system inventories down 39k tons vs. Q4, and Greif inventories reduced ~10k tons in the quarter—supporting future efficiencies. Management emphasized exceptional mill execution amid tight linerboard/containerboard conditions and strong corrugated demand heading into a busy Q2 outage cycle.

Q2 outlook: earnings guidance + clear drivers/puts-and-takes (EPS ex-specials expected to rise despite cost headwinds): Management guided Q2 EPS $2.33 (excluding special items). Key positives: continued strong packaging demand, more shipping days, seasonal improvement (especially Greif), and containerboard/corrugated prices moving higher later in the quarter as prior announced price increases roll in (major benefit expected in Q3). Key negatives/headwinds: higher maintenance outage costs in Q2, less favorable sequential labor/benefits tailwind (stock comp timing), higher freight/fiber/chemicals, and a higher tax rate vs Q1.