By the numbers: Q4 and full-year 2024
Q4 net sales: $2.15B
Up 10.7% year over year
Full-year net sales: $8.34B
Up 7.4% year over year
Q4 packaging segment net sales: $1.98B
Up 11.2% year over year
Full-year packaging segment net sales: $7.69B
Up 7.8% year over year
- Results: Packaging Corporation of America set records for total and per-day box shipments in the fourth quarter and full-year 2024, continuing a trend from Q3. Packaging segment demand “remained very strong,” and record production allowed PCA to build some inventory ahead of planned maintenance outages at mills in Counce, Tennessee, and Valdosta, Georgia, in the first half of this year, said CEO Mark Kowlzan on Wednesday’s earnings call.
- Pricing: Executives repeatedly expressed their own and customers’ frustration regarding Fastmarkets RISI’s index not recognizing price increases this month for either linerboard or medium. PCA was the first to announce increases to take effect this month, and about a dozen major producers followed. “We raised the prices, we're billing at those prices, our customers ... will be paying those invoices at those higher prices,” said Executive Vice President of Corrugated Products Tom Hassfurther.
- Exiting index: PCA is “moving away from [Fastmarkets RISI’s index] as fast as we possibly can,” Hassfurther said. The company has not identified an alternative index yet, and it is working to “unwind” customer contracts that trigger price changes based on this index, Hassfurther said. “This endeavor didn’t start five years ago, it started about a year ago. ... This is going to take some time,” he said. “But we feel very comfortable in our discussions with our customers about where we're going to end up going forward.”
- Shrinking index influence: The index only covers the open market, which Hassfurther noted “has shrunk over the years,” and thus executives say it’s not representative of the broader industry. Hassfurther said Fastmarkets RISI is “gathering information from a very small sample of the containerboard market and using that to opine on market conditions for the entire industry.” Analysts generally estimate the open market now comprises less than 10% of the total containerboard market.
- Facility updates: Last week, PCA broke ground on a new box plant in Newark, Ohio, and it should open by the end of 2026, Kowlzan said. During 2024, PCA completed 12 new converting equipment installations. Build-outs will continue this year for many small and a few large projects, such as rebuilding a box plant in the Northeast and completing a new box plant in Glendale, Arizona, slated to open in late Q1 or early Q2. Up until now, PCA had been running three different locations in the Phoenix area, and the new Arizona plant will consolidate those operations, Kowlzan said; employees are moving to the new operation.
- Outlook: PCA executives project that the company will again set records in the first quarter for production and box shipments. Bookings and billings are up 8% so far in January, Hassfurther said. That said, the company is facing rising costs this quarter, including for energy. The company also says Q1 results may be affected by the recent unseasonably cold weather and snowstorms in the South, including a multi-day shutdown of portions of Interstate 10 from Florida to Texas, Kowlzan said. “Last week, in particular, we saw some volume impact from that weather,” he said. “We're running very well, but it's more expensive to run well under these conditions.”
