Packaging Corporation of America

Upon conclusion of his narrative, there will be a Q&A session. I'll now turn the call over to Mr. Coltan. Please proceed when you are ready.

Thanks for the introduction, Jamie. Good morning, everyone, and thank you all for joining us today in participating in PacGen Corporation of America's fourth quarter 2025 earnings release conference call. Again, I'm Mark Holzan, Chairman and CEO of PCA, and with me on the call today is Tom Hasfurther, our President, and Kent Flutter, our Chief Financial Officer. I'll begin the call with an overview of our fourth quarter results, and then I'll be turning the call over to Tom and Kent, who will be providing more details. After that, I'll wrap things up, and then we'll be glad to take questions. Yesterday, we reported fourth quarter net income of $102 million, or $1.13 per share. Excluding the special items, fourth quarter 2025 net income was $209 million or $2.32 per share compared to the fourth quarter of 2024's net income of $222 million or $2.47 per share. Fourth quarter net sales were $2.4 billion in 2025 and $2.1 billion in 2024. Total company EBITDA for the fourth quarter excluding special items was $486 million in 2025 and $439 million in 2024. Excluding special items, we also reported full year 2025 earnings of $888 million or $9.84 per share compared to 2024's earnings of $815 million or $9.04 per share. Net sales were $9 billion in 2025 and $8.4 billion in 2024. Excluding special items, total company EBITDA in 2025 was $1.86 billion and $1.64 billion in 2024. Fourth quarter net income included special items expense of $1.19 per share primarily for the Wallula Mill restructuring charges, as well as costs relating to the acquisition and integration of the Greif Container Board business and costs related to the closure of corrugated products facilities. Details of these special items for both the fourth quarter and full year of 2025 and 2024 were included in the schedules that accompanied the earnings press release. Excluding the special items, our earnings decreased by 15 cents per share compared to the fourth quarter of 2024. The decrease was driven primarily by lower production and sales volume in the legacy PCA business for 23 cents, higher operating costs, 23 cents, higher maintenance outage expense, 14 cents, higher depreciation expense in the legacy PCA packaging business for 7 cents, higher freight expense, $0.06, higher interest expense excluding the Greif acquisition debt for $0.01, and lower production and sales volume in the paper segment for $0.01. These items were partially offset by higher prices and mix in the packaging segment for $0.50, lower fiber costs, $0.10, lower fixed and other expenses, $0.04, and higher prices and mix in the paper segment, one cent. The acquired Greif operations, including interest on the acquisition indebtedness, generated a loss of five cents during the fourth quarter, primarily as a result of extended outages at the Massalon Mill in October and December to perform reliability maintenance activities and manage our inventory at the acquired operations. Looking at our packaging business, EBITDA excluding special items in the fourth quarter 2025 of $476 million with sales of $2.2 billion resulted in a margin of 21.7% versus last year's EBITDA of $426 million, sales of $2 billion or a 21.5% margin. For the full year 2025, Packaging segment EBITDA excluding special items was $1.83 billion with sales of $8.3 billion or a 22.1% margin compared to the full year 2024 EBITDA of $1.6 billion with sales of $7.7 billion or a 20.8% margin. We ran to demand during the quarter, and with the planned to ritter maintenance outage and a full quarter of ownership of the acquired Greif operations, we produced 1,407,000 tons of container board. The legacy mills produced 1,235,000 tons of container board, 20,000 tons less than the third quarter, and 75,000 tons less than the fourth quarter of 2024. System-wide, our inventories were at the same level as at the end of the third quarter, and with the acquired Greif operations 84,000 tons up from the beginning of the year. Operational performance during the quarter was, again, strong across the entire mill system and corrugated system, and we managed costs extremely well throughout the company. We made good progress on the integration and improvement of the acquired GRIFAC assets with better reliability and performance at both mills and completion of key systems integration activities. We did not expect to take any additional outages at the mills until their annual maintenance outages later in the year and will operate the business at capacity. We're on track to complete the Wallula restructuring activities by mid-February and we will begin to benefit from the improved cost structure beginning in March. I'd like to give an update on the gas turbine energy projects that we're currently working on in the engineering phase. The plan includes the installation of gas turbines at the Jackson, Alabama mill and the Riverville, Virginia mills over the next 30 months. These locations have relatively high purchased power costs and good reliable gas supply as well as demand for the additional power that we can internally generate. We expect that these projects would involve roughly $250 million of total capital, some to be spent in 2026, but most of it coming in 2027 and 2028. The expected returns are in the mid to high teens, and most importantly, it would make us energy, electricity independent at these facilities and protect us from future rising electric rates. We're finalizing the scope, and we'll seek board approval during the first quarter. We're also working on plans for a third installation at one of our mills, and we'll provide more details at the appropriate time. We have a lot of good options, and we're considering all of these. I'm now going to turn it over to Tom, who will provide more details on container board sales and the corrugated business. Tom? Thanks, Mark.

Domestic container board and corrugated products prices and mix were 50 cents share above the fourth quarter of 2024 and down 32 cents per share compared to the third quarter of 2025. This is mixed related as our fourth quarter is seasonally less rich, incorporating more holiday-driven e-com. Export container board prices were flat with last year's fourth quarter and down one cent from the third quarter of 2025. Export sales volume of container board was up 12,000 tons from the third quarter of 2025 and and down 15,000 tons from the fourth quarter of 2024. In the legacy business, corrugated shipments per day and in total were down 1.7% versus last year's record fourth quarter when per day shipments were up more than 9% over 2023. That said, 2025 fourth quarter legacy box plant shipments were the second highest ever. For the year, our corrugated shipments were essentially flat with 2024. Our order book strengthened in November and December, and though we were ultimately disappointed with December shipment volume, we've seen this strength reflected in January shipments so far. While our corrugated volume and mix ended up below our fourth quarter forecast, the underlying volume trends were positive heading into 2026. To provide a little more color, December got off to a strong start, leading us to believe that we would grow our volume over last year. Later in the month, customers appeared to manage their already low inventories further down for year-end. The exception was e-commerce, which continued to remain strong well into the first week of January. In addition to the volume implications, this unfavorably impacted our December mix. The good news is that January is up significantly in terms of bookings and billings from a strong comp in 2025, where we were up 5% over 2024. January bookings in our legacy corrugated and sheet plants are up over 11%, and billings are up 8% on a per day basis through last Thursday. We're seeing improvement across our customer base, which is a good sign for healthier underlying demand. Based on what we've seen so far, we are forecasting solid year-over-year growth for the first quarter and seasonal improvement in our mix. Our container board system is tightening up, and we will need to run at full capacity to support our demand. Including the acquisition, shipments were up 17% over last year for the fourth quarter and 6% for the year. The acquired plants had a very good quarter, outperforming our expectations and are also off to a strong start to the year. We made good progress on integration and are working toward operating as a single corrugated system as soon as we can with systems integration work ongoing. We still have work to do to optimize the inventory levels and paper grades carried by the acquired plants. We are working off the remaining container board purchase and trade commitments and ended the quarter at approximately the same inventory levels that we began, which is higher than what we had forecast. We had planned to bring the inventory levels down significantly while simplifying the grades carried at the plants and leveraging the larger integrated system. This will take place over the next two quarters, and better day-to-day visibility once our systems are in place will certainly help us. Last week, as you know, we notified our customers of a $70 per ton price increase on our liner board and corrugated medium grades, effective March 1st. We will work as we normally do to implement the full price increase. I'll now turn it back to Mark.