Packaging Corporation of America

Thank you for joining Packaging Corporation of America's third quarter 2026 earnings conference call. Your host today will be Mark Kowlzan, chairman and chief executive officer of PCA. Upon conclusion of his narrative, there will be a question and answer session. I would now like to turn the conference call over to Mr. Kowlzan. Please go ahead when you're ready.

Thank you, Jamie. Appreciate it very much. Good morning, everyone, and thank you all for participating in Packaging Corporation of America's third quarter 2026. 2026 Earnings Release Conference Call Again, I'm Mark Kowlzan, Chairman and CEO of PCA, and with me on the call today is Tom Hassfurther, our President, and Kent Pflederer, our Chief Financial Officer. I'll begin the call as usual with an overview of the third quarter results, and then I'll be turning the call over to Tom and Kent, who will provide further details. And then after that, I'll be wrapping things up, and then we'll be glad to take questions. Yesterday, we reported third quarter net income of $262 million or $2.93 per share. Excluding special items, third quarter 2026 net income was $272 million or $3.04 per share compared to the third quarter 2025 net income of $247 million or $2.73 per share. Third quarter net sales were $2.6 billion in 2026 and $2.3 billion in 2025. Total company EBITDA for the third quarter excluding special items was $577 million in 2026 and $503 million in 2025. Third quarter net income included special items expense of 11 cents per share primarily for costs and write-offs related to facilities closures, acquisition and integration related costs, the impact of a fire at our Palmyra, Pennsylvania sheet feeder, and the Wallula restructuring charges. Details of the special items for the third quarter of 2026 and 2025 were included in the schedules that accompanied the earnings press release. Excluding the special items, our earnings increased by 31 cents per share compared to the third quarter of 2025. The contribution from the acquired Greif business was 24 cents favorable year over year, generating 13 cents of earnings this year versus an 11 cent loss last year in the first month of ownership. Legacy earnings improved by 7 cents per share, driven by favorable price and mix in the packaging segment for 79 cents, favorable production and sales volume in the packaging segment, which includes the impact of additional container boards supplied to the Greif operations of $0.12, favorable price and mix in the paper segment for $0.05 and the lower share count, $0.02. These items were partially offset by higher labor and operating costs, $0.28, higher freight costs, $0.26, higher corporate and other expenses, $0.13, higher fiber costs, $0.12, higher depreciation and amortization expenses, $0.06, higher maintenance outage expenses in the paper segment for $0.04, lower sales volume in the paper segment for $0.01, and higher interest expense excluding the Greif acquisition and debt in this for $0.01. As comparable quarters going forward will include the ownership of the acquired Greif business for the entire periods We will no longer separate the state and state the earnings contribution from the acquisition in the future. We exceeded our guidance of $2.91 on the strength of price realization and a higher than expected contribution from the acquired right business. These items were partially offset by higher labor and operating costs, partially driven by lower than forecast corrugated products volumes. Looking at our packaging business, EBITDA excluding special items in the third quarter for 2026 of $578 million with sales of 2.4 billion resulted in a margin of 23.9% versus last year's EBITDA of 492 million and sales of 2.1 billion or a 23.1% margin. The mills produced 1,489,000 tons During the quarter, the legacy mills produced 1,286,000 tons of container board, about 77,000 tons more than the second quarter of 2026 and 31,000 tons more than the third quarter of 2025. The acquired mills produced 203,000 tons, quite frankly, an exceptional number for a quarter in which Riverville was down for an extensive annual maintenance outage. System-wide, our inventories were up 34,000 tons from the end of the second quarter, and in fact, most certainly, we need that inventory as we move into the fourth quarter. We've been able to catch up with keeping our plants adequately supplied, resume shipping via most efficient methods possible, and we're in a good position to supply our customers in the fourth quarter, even with three of our container board mills down for their annual maintenance outages. Operational performance was excellent across the board. Much improved from the second quarter, and we completed the first annual maintenance outage at the Riverville Mill under our own ownership safely and successfully. From the cost side, in addition to increasing freight, we saw significant increases in recycled fiber, purchased power, and chemical costs during the quarter, and we expect these input costs to continue to go up. Our mill production reflects improved output at Jackson even ahead of the completion of the winder project coming online in the fourth quarter as we continue to maximize the performance of the paper machines. We also benefited from continued improvement and reliability out of the acquired Greif mills. I'd now be turning it over to Tom who will provide more details on container board sales and corrugated business in general.

Thanks Mark. Domestic container board and corrugated products prices and mix were 75 cents per share above the third quarter of 2025 and up $1.11 per share compared to the second quarter of 2026. We have realized substantially all of the first net $50 increase and about half of the second $50 increase. Price realization came in ahead of forecast for the third quarter. We expect to realize almost all of the remainder of the second increase in the fourth quarter. Realization of the $70 increase will be split between Q4 and Q1 and skewed more towards Q1 in terms of timing. Export container board prices were 4 cents above last year's third quarter and 3 cents above the second quarter of 2026. Export sales volume of container board was 5,000 tons higher than the second quarter of 2026, and 10,000 tons lower than the third quarter of 2025 and remains at a relatively low level. While various factors that we've previously discussed led to lower agriculture and market volume, demand was solid throughout the quarter across the remainder of our customer base. Shipments were up around 11% in total and per day versus last year with the legacy business down a half a percent, which is about in line with our expectations taking into account the lower ag shipments. A silver lining is that we got ourselves back on solid footing from an inventory standpoint in time for what looks like a pretty strong fourth quarter from a volume standpoint based upon our September and October bookings. We were also able to save a lot on freight during the quarter by being able to plan and optimize our routes. We remain in a very tight container board market, which based upon what we are seeing in our own system, appears to be further tightening with fourth quarter seasonal pickups. As Mark said earlier, we have three container board mills down for annual maintenance in the fourth quarter, including DeRidder, and we will need the mills continuing to perform at the top of their game to keep us properly supplied. The acquired corrugated business meaningfully contributed to our profitability during the quarter, though volumes took a hit from the fire at Palmyra that kept the plant down for most of September. Integration levels continue to improve. and Legacy PCA Mills supplied approximately 45,000 more tons of container board into the Greif system during the quarter than it did a year ago. The improved integration together with better operational performance in the mills that Mark mentioned earlier has us well ahead of our synergy targets. All systems work will be completed during the fourth quarter which will further improve our visibility and day-to-day management of the business. This acquisition is working out very well for us, in large part due to the quality and performance of our people who have put in a tremendous effort integrating and running the business. I'll now turn it back to Mark.