Packaging Corporation of America (NYSE: PKG) reported Q3 2026 net sales of $2.60 billion, up about 12.5% from $2.31 billion a year earlier, while GAAP diluted EPS increased to $2.93 from $2.51. Adjusted EPS rose to $3.04 from $2.73 as acquired Greif operations became profitable and Packaging price and mix improved, partly offset by higher labor, freight, fiber, corporate, depreciation, and interest costs. PCA expects Q4 adjusted EPS of $2.81 as maintenance outages and cost inflation increase.
Core Results
For the quarter ended September 30, revenue growth translated into faster increases in gross profit and operating income. Gross margin expanded by about 1.4 percentage points to 23.2%, while operating margin improved by approximately 0.8 percentage points to 14.8%.
GAAP net income increased about 15.6% to $262.3 million. Adjusted EPS was $0.13 above PCA’s prior Q3 guidance of $2.91, primarily because of favorable Packaging price and mix and better earnings from the Greif operations, partly offset by higher labor and operating costs and unfavorable corrugated products sales volume.
| Metric | Q3 2026 | Q3 2025 | Year-Over-Year Change |
|---|---|---|---|
| Net sales | $2,601.7 million | $2,313.4 million | About +12.5% |
| Gross profit | $603.9 million | $504.3 million | About +19.8% |
| Gross margin | About 23.2% | About 21.8% | About +1.4 pp |
| Operating income | $385.3 million | $324.5 million | About +18.7% |
| Net income | $262.3 million | $226.9 million | About +15.6% |
| GAAP diluted EPS | $2.93 | $2.51 | About +16.7% |
| Adjusted diluted EPS | $3.04 | $2.73 | About +11.4% |
| Adjusted EBITDA | $577.2 million | $503.4 million | About +14.7% |
Gross margin is calculated from reported gross profit and net sales. Adjusted EPS and adjusted EBITDA exclude special items and are non-GAAP measures.
Greif Operations Drove Growth While Legacy Shipments Slipped
Packaging generated nearly all of PCA’s revenue increase. Total corrugated products shipments rose 10.6%, but shipments in the legacy Packaging business declined 0.5%, indicating that the acquired operations were the primary source of volume growth.
The $0.31 year-over-year increase in adjusted EPS consisted of a $0.24 improvement from acquired Greif operations and a $0.07 increase from the legacy business. Greif’s contribution moved from a loss of $0.11 per share in Q3 2025 to earnings of $0.13 per share this quarter.
| Segment Metric | Q3 2026 | Q3 2025 | Year-Over-Year Change |
|---|---|---|---|
| Packaging sales | $2,414.0 million | $2,128.1 million | About +13.4% |
| Packaging operating income | $397.8 million | $327.5 million | About +21.5% |
| Adjusted Packaging operating income | $407.7 million | $347.9 million | About +17.2% |
| Paper sales | $163.2 million | $161.2 million | About +1.2% |
| Paper operating income | $29.0 million | $35.6 million | About -18.5% |
Paper sales were roughly stable, but volume declined 2.5% and operating income fell as maintenance outage expense increased. Packaging benefited from favorable pricing and mix, full mill capacity, improvements at the acquired Greif mills, and production benefits from projects at the Jackson mill.
Containerboard production totaled 1.489 million tons. Inventory increased by 34,000 tons from Q2 2026 but remained 29,000 tons below Q3 2025; management said the inventory build would help supply corrugated operations in Q4 and mitigate rising freight costs.
Profitability, Capital Spending, and Liquidity
PCA’s adjusted earnings bridge shows how pricing offset substantial cost pressure. Favorable Packaging price and mix contributed $0.79 per share, Packaging production and volume added $0.12, and Paper price and mix added $0.05. The largest offsets were labor and operating expenses at $0.28 per share, freight at $0.26, corporate and other expenses at $0.13, and fiber costs at $0.12.
Special items totaled $12.5 million before tax, or $0.11 per share after tax, compared with $26.3 million and $0.22 per share a year earlier. The latest charges covered facility closures, acquisition and integration work, a corrugated products facility fire, and Wallula mill restructuring.
Interest expense increased to $32.3 million from $19.3 million. Quarterly capital spending rose to $247.3 million from $192.1 million, while cash, cash equivalents, and marketable debt securities stood at $761.8 million, compared with $806.4 million one year earlier.
Q4 2026 Guidance
PCA expects Q4 adjusted EPS of $2.81, approximately 7.6% below Q3’s adjusted result. Improving Packaging prices and higher total corrugated shipments are expected to be outweighed by mill maintenance outages, seasonal mix changes, and rising freight, fiber, chemical, and energy expenses. The guidance excludes special items, including expected acquisition, integration, and facility closure costs.
| Metric or Driver | Q4 2026 Outlook | Context |
|---|---|---|
| Adjusted EPS | $2.81 | Excludes special items |
| Corrugated shipments | Daily shipments around Q4 2025; total shipments above Q3 2026 | Two fewer shipping days than Q3 |
| Packaging pricing and mix | Higher prices but seasonally weaker mix | Higher e-commerce volume affects mix |
| Containerboard production | Lower | Outages at three mills and significantly higher outage expense |
| Paper | Seasonally lower volume and slightly higher prices | Sequential outlook |
| Freight and input costs | Higher | Includes recycled fiber, wood fiber, chemicals, energy, and diesel-related freight costs |
Recent Insider Transactions
The six-month insider summary provided reported 4,728 shares acquired across eight transactions and 49,657 shares sold across four transactions, resulting in net sales of 44,929 shares. Total insider holdings were listed at approximately 1.4 million shares; the 10 most recent records comprised four sales and six director stock grants, all reported as direct ownership.
| Date | Insider and Role | Action | Price | Reported Value |
|---|---|---|---|---|
| Aug. 20, 2026 | Shirley, Donald R. — Officer | Sale | $250.71 | $3,008,496 |
| Aug. 7, 2026 | Hassfurther, Thomas A. — President | Sale | $254.00 | $1,794,002 |
| Aug. 5, 2026 | Hassfurther, Thomas A. — President | Sale | $250.00–$257.00 | $5,393,579 |
| May 27, 2026 | Kowlzan, Mark W. — CEO | Sale | $217.08 | $2,011,426 |
| May 12, 2026 | Porter, Roger B. — Director | Stock grant | $0.00 | $0 |
| May 12, 2026 | Mencoff, Samuel M. — Director | Stock grant | $0.00 | $0 |
| May 12, 2026 | Gowland, Karen E. — Director | Stock grant | $0.00 | $0 |
| May 12, 2026 | Beebe, Cheryl K. — Director | Stock grant | $0.00 | $0 |
| May 12, 2026 | Souleles, Thomas S. — Director | Stock grant | $0.00 | $0 |
| May 12, 2026 | Farrington, Duane C. — Director | Stock grant | $0.00 | $0 |
Risks Investors Should Watch
- Maintenance outages: PCA plans outages at three mills in Q4, reducing containerboard production and significantly increasing outage expense.
- Freight and input-cost inflation: The company expects higher diesel-related freight, recycled fiber, wood fiber, chemical, and seasonal energy costs, which could limit the benefit from pricing actions.
- Legacy demand and product mix: Legacy corrugated shipments declined 0.5% in Q3, agricultural end markets remained weak, and higher e-commerce volume is expected to produce a seasonally weaker Q4 mix.
- Paper profitability: Paper volume fell 2.5% and segment operating income declined 18.5%, despite favorable pricing and mix.
- Special charges: Acquisition, integration, and facility closure costs are expected to continue in Q4, potentially maintaining a gap between GAAP and adjusted earnings.
Summary
PCA’s Q3 2026 results benefited from Packaging pricing, the improved profitability of the acquired Greif operations, and higher overall corrugated volume, allowing earnings and margins to rise despite substantial freight, labor, and fiber pressures. The main questions for Q4 are whether further pricing can absorb accelerating costs and maintenance expense, and whether growth can broaden beyond the acquired operations as legacy corrugated demand remains subdued.
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