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By the numbers: Q1 2025
Net sales: $2.14B
Up 8.2% year over year
Packaging segment net sales: $1.97B
Up 9.6% year over year
Paper segment net sales: $154.2M
Down 5.9% year over year
- Overview: Packaging Corporation of America set Q1 records for both revenue and free cash flow, with the latter reaching $191 million, executives said on Tuesday’s earnings call. Tom Hassfurther, company president, described demand as solid despite a mid-quarter dip due to economic uncertainty created by the Trump administration’s tariff announcements and other countries’ retaliatory tariff announcements.
- Pricing: Successful implementation of PCA’s previously announced price increases proved to be a “significant contributor to this year’s first quarter results,” Hassfurther said. In November, PCA became the first major producer to announce price increases for 2025 on linerboard and corrugating medium, with a wave of other companies following suit.
- Tariffs and economic uncertainty: Because of the trade uncertainty, PCA “pulled back from a very small amount of exports going specifically to China,” CEO Mark Kowlzan said. The uncertainty’s impact on demand has prompted PCA to adjust its planned maintenance outage schedule. In Q2, it will begin an outage in Filer City, Michigan, that was initially scheduled for later this year. “We anticipate the month of May will probably have two of our smaller machines down for the month, unless something changes dramatically. That’s how we’re going to manage our inventory,” Kowlzan said.
- Arizona box plant: In March, PCA started operations ahead of schedule at its new box plant in Glendale, Arizona, Hassfurther said. The plant will boost box capacity by almost 2 billion square feet, providing two times the output at a lower labor cost compared to the average box plant in PCA’s network.
- Footprint shifts: Kowlzan noted that PCA has modernized and recapitalized roughly 80% of its converting operations in the last 15 years to boost productivity and efficiency to levels similar to what Glendale will offer. That combined with other acquisitions and closures means “the PCA footprint today is unrecognizable to anybody that was looking at it 20 years ago,” he said.
- Outlook: Moving from Q1 to Q2, PCA will exercise caution amid economic uncertainty, and “our attention will remain on what we can control,” Kowlzan said. “We anticipate continued ambiguity relative to domestic and foreign tariff actions and their effect on global trade,” as well as a drag on demand. However, PCA still anticipates that box shipments will be “higher than the first quarter and above last year’s tough comp,” Hassfurther said, noting that bookings and billings are up 4.1% so far in Q2. Demand in the second half of the year is expected to exceed the first half.
