Packaging Corp. Legacy Business Adds to Third-Quarter Earnings Growth

The Tip Desk · October 22, 2026 · 3 min read

Earnings excluding special items were $3.04 a share, $0.13 above the $2.91 third-quarter outlook.

Packaging Corporation of America (PKG) reported third-quarter earnings of $3.04 a share excluding special items, $0.13 above its $2.91 outlook, after a second quarter in which the legacy corrugated business had lost ground. Reported diluted earnings were $2.93 a share, and net income was $262 million.

The containerboard producer said the $0.31 year-over-year increase excluding special items came from $0.24 of higher earnings at the acquired Greif operations and $0.07 in the legacy business. Greif contributed $0.13 a share, versus a $0.11 loss a year earlier.

Legacy Packaging was the turnaround. Packaging segment operating income excluding special items was $407.7 million, and Packaging EBITDA excluding special items was $577.7 million. The company attributed the legacy lift to $0.79 of favorable price and mix in Packaging, $0.12 from higher production and sales volume including containerboard supplied by legacy mills to Greif plants, $0.05 of favorable price and mix in Paper, and $0.02 from a lower share count. Those gains were partly offset by $0.28 of higher labor and operating expense, $0.26 of higher freight, $0.13 of higher corporate and other expense, and $0.12 of higher fiber costs.

Volume in the legacy corrugated business had reversed. Total corrugated products shipments were up 10.6% per day and in total versus the year-earlier quarter. In the legacy packaging business, shipments were down 0.5% per day and in total, with the same number of shipping days. That followed a second quarter in which legacy shipments were up 4.1% per day and in total and total shipments growth was 24.3%. Chairman and CEO Mark W. Kowlzan said the company executed well across operations despite freight, recycled fiber and chemical cost headwinds and some weakness in agricultural end markets, and that mills ran at full capacity.

Containerboard production was 1,489,000 tons. Containerboard inventory was up 34,000 tons versus the second quarter and down 29,000 tons versus the year-earlier third quarter. Kowlzan said the company built inventory to supply corrugated operations in the fourth quarter and help mitigate escalating freight costs.

Paper was the other segment. Paper segment operating income was $29.0 million, and Paper EBITDA excluding special items was $33.6 million. Paper sales volume was down 2.5% from the year-earlier third quarter. Kowlzan said white paper operations posted higher-than-expected sales volumes, strong price realization, and a completed maintenance outage at the International Falls mill.

Reported earnings included special items for facility closure costs, acquisition and integration-related costs, a fire at a corrugated products facility, and restructuring charges at the Wallula, Washington containerboard mill. Those items totaled $0.11 a share.

Net sales were $2.6 billion, or $2,601.7 million. Income from operations was $385.3 million. Interest expense, net, was $32.3 million. Capital spending was $247.3 million. Cash, cash equivalents, and marketable debt securities were $761.8 million.

Looking into the fourth quarter, the company expects earnings of $2.81 a share excluding special items. It said containerboard and corrugated products prices are expected to improve as earlier price increases are implemented, with seasonally weaker corrugated mix from higher e-commerce volumes. Shipments per day are expected at or around last year’s fourth-quarter level with two fewer shipping days, and total shipments higher than the third quarter. Containerboard production will be lower with maintenance outages at three mills, and outage expenses will be significantly higher. Freight, recycled fiber, wood fiber, chemicals and energy costs are expected to rise. The company said it currently expects acquisition and integration costs and corrugated-closure costs in the fourth quarter.