📢 Earnings Summary — PKG

PKG delivered solid Q3 results with higher sales, EPS ex-specials, and EBITDA, and posted record operating cash flow and free cash flow. Packaging margins expanded, driven by strong price/mix and lower fiber costs, while the Paper segment benefited from seasonal strength despite margin compression. The Greif acquisition closed early September, with rapid integration actions already improving mill performance and synergy plans tracking to targets. Management guided Q4 EPS below Q3 on seasonal mix, higher outage and input costs, and fewer shipping days, though per-day shipments are expected to rise and acquired operations should improve sequentially. Demand remains generally healthy outside of beef and building materials, but tough comparisons persist into early 2026. Overall, the tone balances confidence in integration and cost execution with acknowledgment of near-term seasonal and market headwinds.

📈 Growth Highlights

• Net sales grew to $2.3B from $2.2B (+~5% YoY).
• EPS ex-specials rose to $2.73 from $2.65; excluding acquisition impact, EPS was ~$2.84 (+$0.19 YoY).
• Total company EBITDA ex-specials increased to $503M from $461M (+~9% YoY).
• Packaging segment EBITDA margin improved to 23.1% (vs. 22.2% YoY; 22.6% in Q2).
• Including the acquisition, corrugated shipments were up 3.7% per day and 5.3% overall YoY.

🔨 Business Development

• Closed the acquisition of Greif’s Containerboard business on Sep 2, adding CorrChoice converting assets and the Massillon and Riverville mills.
• Initiated intensive integration: extended Massillon’s annual outage to 5 weeks for comprehensive refurbishment; executed phase-1 reliability upgrades at Riverville (5 days per machine).
• Early operational gains at Riverville with September run performance of ~97.2%.
• Synergy plan on track: ~$60M run-rate by year 2; targeting ~+$20M run-rate by Q2 next year.
• Plan to reduce historically higher inventories in acquired corrugated network over the next couple of quarters.

💵 Financial Performance

• Reported net income $227M ($2.51); EPS ex-specials $2.73 vs. $2.65 LY.
• Special items of $0.22/share tied to acquisition (inventory step-up, integration, transaction costs).
• Acquisition reduced Q3 EPS by ~$0.11 after specials; timing shift from now-internal shipments reduced EPS by ~$0.03 (nonrecurring).
• Packaging price/mix +$0.73/share YoY and lower fiber costs +$0.16/share were key positives; offsets included higher operating costs (-$0.33), lower legacy Packaging volume (-$0.16), higher D&A (-$0.07), freight (-$0.07), fixed/other (-$0.07), and higher base interest (-$0.02).
• Paper segment: EBITDA $40M on $161M sales; margin 24.9% (vs. 27.1% LY); price/mix +2.1% YoY, volume -1% YoY.
• Record cash from operations $469M; CapEx $192M; record free cash flow $277M; dividends paid $113M.
• Year CapEx outlook revised to ~$800M (from $840–$870M) due to timing; overall plan unchanged and includes acquired assets.
• Purchase accounting preliminary: ~$870M PP&E, ~$530M intangibles, ~$280M goodwill; D&A run-rate ~ $130M/yr; additional annual net interest expense ~+$95M post-deal (Q3 incremental interest $8M).

🏦 Capital & Funding

• Quarter-end cash and marketable securities of $806M; total liquidity ~ $1.4B.
• New borrowing to fund acquisition; dividend payments maintained ($113M in Q3).
• Strong free cash flow supports integration investments and scheduled maintenance outages.

🧠 Operations & Strategy

• Ran to demand; produced 38k fewer containerboard tons vs. Q3 2024 and 59k more vs. Q2 2025.
• Legacy containerboard inventory increased by 15k tons to prepare for Q4 DeRidder outage; targeting year-end inventory similar to Q4 start.
• Export containerboard volumes -8k tons QoQ and -32k YoY; export pricing flat QoQ, slightly up YoY.
• Focus on cost takeout, production optimization, and leveraging in-house technical/capital execution.
• Expect significant sequential improvement from acquired operations in Q4, despite Massillon outage carryover and seasonal mix.

🌍 Market Outlook

• Q4 EPS guidance: $2.40 ex-specials.
• Per-day corrugated shipments expected higher than Q3, with three fewer shipping days; export sales higher QoQ but below typical Q4 levels.
• Packaging prices/mix expected lower QoQ on seasonal mix; Paper volumes seasonally lower with flat pricing.
• Seasonally higher energy and fiber costs and slightly higher freight/other operating costs anticipated.
• Bookings/billings at Q4 start are a little over 1% higher per day; tough YoY comps expected through Q1 2026.
• End-market softness persists in beef proteins (cattle herd at multi-decade low) and building materials (weak housing starts); other segments performing well.

⚠ Risks & Headwinds

• Integration execution risk at Massillon and Riverville; realization and timing of synergy capture.
• Higher planned maintenance/outage expense in Q4 (+$0.29/share vs. Q3).
• Increased leverage and interest expense (+~$95M/yr) following acquisition.
• Seasonal cost pressures (energy, fiber) and slightly higher freight/operating costs.
• Export demand softness and cautious customer ordering patterns.
• Challenging YoY comparisons through Q1 2026.
• Preliminary purchase accounting subject to change within one year of close.

AI-generated earnings recap sourced from company results & conference call observations. Not investment advice — verify with official filings.