PCA reported a solid Q2 beat driven by strong corrugated volumes and Greif acquisition outperformance. The market is described as 'tight' with mill outages and grid instability constraining supply. Two containerboard price increases are rolling in, and management is positive on Q3 demand but flags rising recycled fiber and freight costs. The gas turbine projects aim to reduce grid dependence over the next two years. Q2 EPS $2.35 vs. guidance of $2.33, led by record corrugated shipments and a 4c depreciation benefit from Greif.
PCA reported a solid Q2 beat driven by strong corrugated volumes and Greif acquisition outperformance. The market is described as 'tight' with mill outages and grid instability constraining supply. Two containerboard price increases are rolling in, and management is positive on Q3 demand but flags rising recycled fiber and freight costs. The gas turbine projects aim to reduce grid dependence over the next two years. Q2 EPS $2.35 vs. guidance of $2.33, led by record corrugated shipments and a 4c depreciation benefit from Greif.
Management expressed confidence driven by strong corrugated volumes, record shipments, successful price increases, and improved operational performance, despite headwinds from freight and recycled fiber costs.
Guidance tone
Corrugated shipments achieved all-time quarterly record. Management expressed confidence driven by strong corrugated volumes, record shipments, successful price increases, and improved operational performance, despite headwinds from freight and recycled fiber costs.
Management reiterated a 2026 CapEx forecast of $840-$870 million, with spending on three gas turbine projects expected to continue into 2028, and indicated that CapEx is likely to stay in a similar range going forward.
Corrugated shipments achieved all-time quarterly record. Management expressed confidence driven by strong corrugated volumes, record shipments, successful price increases, and improved operational performance, despite headwinds from freight and recycled fiber costs.
Management reiterated a 2026 CapEx forecast of $840-$870 million, with spending on three gas turbine projects expected to continue into 2028, and indicated that CapEx is likely to stay in a similar range going forward.
Management expressed confidence driven by strong corrugated volumes, record shipments, successful price increases, and improved operational performance, despite headwinds from freight and recycled fiber costs.
“We had at least five distinct utility power outage situations at a number of the mills... It speaks to the importance of the three gas turbine projects that we'll be bringing online over the next two years.”
“We decided mid-quarter to lower export sales to build inventory so we can supply our corrugated plants to efficiently serve our customers.”
“Our capacity is so tight that it's impossible to get a pre-buy in right now. So that's not the case.”
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| Capex | FY2026 | 840–870 | 855 | MAINTAINED |
| Issued | Metric | Target | Guide | Actual | Outcome |
|---|---|---|---|---|---|
| FY2026 Q1 | EPS | FY2026 Q2 | $2.33 | $2.35 | Met / beat |
| FY2025 Q4 | EPS | FY2026 Q1 | $2.20 | $2.40 | Met / beat |
| FY2025 Q3 | EPS | FY2025 Q4 | $2.40 | $2.32 | Missed |
Corrugated box demand in the legacy business grew 4.1% per day in Q2, a record, and Q3 billings are up 1.5% so far against a tough comp, with tight capacity making pre-buy impossible. — Sustained high demand without pre-buy distortion indicates real end-market strength, supporting pricing power and margin expansion for box makers.
“I mentioned some of the e-com driven Prime Day from Amazon and some of those related e-com customers that we have certainly drove some of that business.”
Good morning. Good morning. The 2Q corrugated demand was a bit stronger than we expected. I was wondering, do you think there's any element of pre-buy there with, you know, two price hikes in the market? And then, you know, World Cup, America 250, I don't know if those really had an impact to you, but I'm just curious if there's anything you'd call out there.
Anthony, this is Tom. The second quarter demand was very strong. I mentioned some of the e-com driven Prime Day from Amazon and some of those related e-com customers that we have certainly drove some of that business. Pre-buy, our capacity is so tight that it's impossible to get a pre-buy in right now. So that's not the case. And and World Cup. I'm not sure where that discussion even started, but I think that had very little impact in my opinion.
Greif's containerboard business is performing better than expected, with higher volumes and operational improvements, and integration synergies are on track to exceed $30M run rate by year-end.
“Greif was a 14 cent earnings contribution that exceeded expectations, the headline number by, call it nine or 10 cents. Four cents of that was the depreciation benefit that we called out in the earnings release”
Thank you, Mark, Tom, Kent, for taking my questions. You mentioned Greif beat by 10 cents. I think you were expecting maybe... A four cent contribution positively, you end up with 14 cents. So when you think about the beat, it seems relative to the street for the quarter, it seems like it was done, most of it came from, if not all of it came from Greif rather than your legacy business. So just any color you can provide on the myths in your legacy business relative to expectations, is that largely due to cost, mainly freight, just any color you can have in terms of the puts and takes in the quarter relative to... between legacy and the Greif assets?
So Mike, I'll start with this, it's Kent, and then Tom will add some color. So Greif was a 14 cent earnings contribution that exceeded expectations, the headline number by, call it nine or 10 cents. Four cents of that was the depreciation benefit that we called out in the earnings release, okay? So if you're looking sort of apples to apples, five cents from expectations, that was driven by largely higher volumes than we expected and very good operational performance. But also we're running Greif now as a much more integrated system. It's much less separate from PCA legacy than when we made the acquisition, obviously by design. So there's some puts and takes. We're moving business between trying to get efficiencies maximized, and Tom can comment on this a little bit further.
PCA deliberately cut export container board sales by 30,000 tons in Q2 to build domestic inventory, reflecting extreme tightness in the US corrugated market. — Export reductions signal that domestic supply is being prioritized, which could push global containerboard prices higher and weaken export availability for competitors.
… are seeing the majority of the first increase rolling in during July and we'll see the beginning of the second increase in August with realization split between Q3 and Q4. Export container board prices were one cent above last year's second quarter and two cents above the first quarter of 2026. Export sales volume of container board was 30,000 tons lower than the first quarter of 2026 and 22,000 tons lower than the second quarter of 2025. We decided mid-quarter to lower export sales to build inventory so we can supply our corrugated plants to efficiently serve our customers. As Mark alluded to earlier, we were able to meaningfully increase our inventories during the first week of July, which puts us in a good supply position for the back half of the year with our mills running full out. Demand was very strong throughout the quarter across our entire customer base. Shipments were up over 24% in total and per day versus last year, with the legacy business up 4.1%, achieving an all-time record for total quarterly shipments. The acquired corrugated business had an excellent quarter driven by strong volumes in both the sheet feeder and bulk businesses which drove its earnings …
Corrugated box demand in the legacy business grew 4.1% per day in Q2, a record, and Q3 billings are up 1.5% so far against a tough comp, with tight capacity making pre-buy impossible. — Sustained high demand without pre-buy distortion indicates real end-market strength, supporting pricing power and margin expansion for box makers.
Good morning. Good morning. The 2Q corrugated demand was a bit stronger than we expected. I was wondering, do you think there's any element of pre-buy there with, you know, two price hikes in the market? And then, you know, World Cup, America 250, I don't know if those really had an impact to you, but I'm just curious if there's anything you'd call out there.
Anthony, this is Tom. The second quarter demand was very strong. I mentioned some of the e-com driven Prime Day from Amazon and some of those related e-com customers that we have certainly drove some of that business. Pre-buy, our capacity is so tight that it's impossible to get a pre-buy in right now. So that's not the case. And and World Cup. I'm not sure where that discussion even started, but I think that had very little impact in my opinion.
PCA experienced multiple unplanned mill outages due to grid instability, costing ~10,000 tons of production, and is investing in gas turbines to reduce reliance on the power grid at three key mills.