The paragraph is an introduction to the Packaging Corporation of America's First Quarter 2025 Earnings Results Conference Call. Mark Kowlzan, the Chairman and CEO, introduces himself and his team, including Tom Hassfurther, President, and Bob Mundy, CFO. The company reported a first-quarter net income of $204 million or $2.26 per share, excluding special items, net income was $208 million or $2.31 per share, marking an increase from the first quarter of 2024's net income of $155 million or $1.72 per share. First-quarter net sales were $2.1 billion in 2025 compared to $2 billion in 2024. Total company EBITDA, excluding special items, was $421 million in 2025, compared to $333 million in 2024. The increase in earnings is attributed to higher prices, mix, and volume in the Packaging segment. Special items, primarily closure costs related to corrugated products facilities, amounted to $0.05 per share.

In the paragraph, the company reports improvements in the Paper segment due to higher prices, reduced freight costs, and lower outage expenses, but these are partially offset by increased operating costs and continued inflation across most of their cost structure. Despite lower fiber prices, the Paper segment volume decreased, and depreciation, tax rate, and interest expenses rose. However, the company exceeded first-quarter guidance due to strong performance in the Packaging segment, achieving a 21% EBITDA margin due to price increases, strong shipment volumes, and exceptional operational performance. The company also hit its inventory targets and continued to implement cost reduction initiatives and efficiency improvements to mitigate inflation's impact and advance strategic goals.

In the paragraph, Thomas Hassfurther discusses the strong sales and pricing performance in the containerboard and corrugated products sector, highlighting significant price increases and higher domestic prices compared to previous quarters. Despite trade tensions affecting demand, box demand remained strong, and shipments were up by 2.5% compared to last year's first quarter. Additionally, record containerboard production met internal and external sales demands. Looking ahead, although economic uncertainty may impact demand, box shipments are expected to increase. The paragraph also mentions the successful and early start-up of a new, efficient box plant in Glendale, Arizona, which was completed below budget.

The new plant will significantly boost box production capacity, improve productivity, and reduce costs, enhancing service capabilities in Phoenix, Las Vegas, and parts of California. In the Paper segment, EBITDA for the first quarter was $40 million, slightly below the previous year's $41 million, despite a 26% margin compared to 25% previously. Sales volume decreased by 7% year-over-year but increased by 2% from the prior quarter. Prices for office printing and converting grades have started to rise due to an implemented price increase, expected to impact second quarter results. Cash from operations and free cash flow both hit first quarter records at $339 million and $191 million, respectively.

The paragraph discusses the company's financial activities and future outlook. In the past quarter, significant cash expenditures were made for capital expenses and dividends, and the quarter ended with a strong cash balance and liquidity. Due to economic uncertainties affecting demand, a maintenance outage was rescheduled to the second quarter, leading to increased estimated costs per share. The company remains focused on controllable factors, leveraging its strong North American presence, robust balance sheet, and ability to respond to external economic factors. Despite uncertainties surrounding tariffs and global trade, the company anticipates domestic price improvements in its Packaging segment while expecting stable export prices.

The paragraph discusses the company's expectations for its financial performance in the second quarter, noting improvements in box shipments but also highlighting increased operating costs due to decreased containerboard volume and maintenance schedules. A planned maintenance outage will lead to a $0.16 per share increase in costs compared to the first quarter. The Paper segment will continue to implement higher prices despite decreased volume due to maintenance at a specific mill. Additionally, increased rail contract rates at six mills will raise freight and logistics expenses, alongside anticipated higher depreciation expenses. The company projects second-quarter earnings of $2.41 per share but notes that these are forward-looking statements subject to risks and uncertainties, which could lead to different actual results. Following these announcements, the company opens the floor for questions, starting with George Staphos from Bank of America Securities, who inquires about changes in the company's guidance and forecast amid economic uncertainties.

The paragraph discusses how the company is approaching its forecasts and guidance with caution due to prudent behavior from its customer base. The company acknowledges a variety of factors contributing to this caution, including tariffs and a recent price increase. They report a 4.1% increase in bookings and billings for the start of the second quarter, aligning with expectations. Additionally, e-commerce is identified as a growth area for corrugated products, particularly in the latter half of the year. The paragraph also mentions that the company exceeded its guidance due to improved price realization in the Packaging segment.

The paragraph discusses a company's performance compared to its internal guidance and expectations for the second quarter. George Staphos inquires about the company's decision to reduce production despite having optimal inventory levels and increasing box volumes. Mark Kowlzan explains that the company aligns production with customer demand, which has influenced their decision to reduce exports to China due to trade tariff issues. They plan to manage inventory by potentially shutting down two smaller machines for the month of May unless demand significantly changes. Overall, the company adjusts its operations based on market conditions and customer needs.

The paragraph discusses the decision to advance the annual outage of a mill in Filer City, Michigan, from the fall to May, which may result in one small machine remaining down for several weeks. The company is cautious due to fluctuating inventories and demand but can adapt quickly. In the first quarter, more weather-related closures occurred than usual, especially affecting the agriculture business in Southern Texas. The company expects higher demand in the second half of the year, prompting them to complete maintenance earlier to operate at full capacity later. The paragraph ends with a transition to a different speaker for the next question.

In the paragraph, Mark Kowlzan and Thomas Hassfurther discuss their company's ability to exceed financial expectations by $0.10 in the first quarter. This success is attributed to effective operations and the implementation of a price increase, particularly in the sales of liner, medium, and noncontract boxes. Kowlzan and Hassfurther emphasize the structured process of this price adjustment, with part of it being completed in the second quarter and finalizing by July. Additionally, they discuss gaining market share in e-commerce, originating mainly from existing customers, and they touch upon the company's EBITDA margins and return on invested capital in relation to these new business wins.

The paragraph discusses a company's strategy of targeting long-term, reliable customers rather than focusing on any specific market segment. Despite e-commerce being the fastest-growing segment in corrugated, the company maintains consistent margins and does not pursue business merely for volume. They adapt to market changes by customizing products for different industries. As e-commerce grows and offsets traditional big-box segments, the mix shifts from graphic-rich products to simpler ones. This adaptation aligns with the company's focus on sustainable business practices. The paragraph concludes with an acknowledgment of industry discussions on value over volume strategies.

The paragraph features a conversation between Gabe Hajde and Thomas Hassfurther about trends in packaging and market dynamics. Gabe inquires about the role of retail-ready packaging and customer experience enhancements. Thomas emphasizes PCA's leadership in offering value and innovative packaging solutions that serve multiple purposes, such as advertising and protection, while maintaining sustainability. Thomas reassures that PCA is not moving exclusively towards plain packaging and is adapting to market realities. Gabe also mentions a press release about rail cost increases typically occurring around April 1 and asks for clarification on whether these increases met expectations. Additionally, Gabe touches on PCA's capital expenditure, noted to be $148 million.

In the article paragraph, a discussion is held regarding capital expenditures and pricing strategies. Mark Kowlzan confirms that the company is tracking an $800 million level of spending on capital projects, including a new plant in Ohio and various upgrades to other facilities. Robert Mundy mentions rail cost increases affecting the second quarter. Mark Weintraub, from Seaport Research Partners, inquires about pricing and non-contract business. Thomas Hassfurther notes that the company's non-contract business is about 30%, with 70% on contract, a consistent ratio over the years. Weintraub seeks clarification on how the company achieved better-than-expected pricing results in the first quarter.

In the paragraph, Thomas Hassfurther discusses the company's approach to price increases, indicating they announced price hikes for linerboard and medium, which were implemented swiftly. He notes that while there was some disappointment with the contractual publication side, most revenue recovery will occur in the second quarter and into July. Hassfurther attributes expected higher volumes in the second half to a macroeconomic view and highlights new facilities like the Glendale, Arizona plant, which are built with pre-existing customer demand and are ramping up operations successfully. He praises the engineering, technical, and plant staff for their efficient and cost-effective work in bringing these facilities online.

In the paragraph, the discussion revolves around the operational and financial strategies of a company, particularly related to handling costs and market demands. The company experiences seasonal variations in its operations, with the latter half of the year seeing more activity. They faced significant cost increases in the first and fourth quarters but expect to recoup about half of those costs in the second quarter, although other operational adjustments might offset these gains. The conversation also touches on the rise of e-commerce and the importance of lightweighting packaging materials to adapt to this growing market. The company has been investing in its mills and box plants to meet customer demands, viewing lightweighting as a competitive advantage.

The paragraph discusses the importance of adjusting for lightweighting when using tons as a measurement in the board production industry. Mark Kowlzan highlights that the market is customer-driven and emphasizes the significance of measuring sales in MSF to understand market trends and margins. He notes that the new Jackson #3 machine demonstrates significant advances in production, outperforming older machines at Counce and Valdosta. Thomas Hassfurther adds that PCA's technology has enabled the company to produce lightweight boards with high performance, thanks to substantial capital investments. Lastly, there is a brief appreciation exchange between Mark Weintraub and Mark Kowlzan, before moving on to the next question from Anthony Pettinari.

Mark Kowlzan discusses cost inflation and its potential impact on projects, particularly in relation to tariffs on steel and equipment from Europe and Asia. He mentions that while there have been some minor impacts on equipment purchases, their team is actively managing and monitoring the situation. There haven't been significant changes to project timelines as a result. Anthony Pettinari asks about the performance of the Glendale box plant compared to an average plant. Mark provides insights into their management approach but doesn't specify detailed metrics. Robert Mundy agrees with Mark's assessment.

The paragraph discusses the strategic improvements and consolidations in a company's operations. Thomas Hassfurther highlights that the Glendale plant will double output with reduced labor costs compared to other plants, due to significant capital investments. Mark Kowlzan adds that over the past eight years, most converting operations have been modernized, achieving efficiencies similar to Glendale but on a smaller scale. Despite the age of some plants, substantial recapitalization has brought them up to modern standards. The company has consolidated inefficient operations and closed over 20 outdated plants while acquiring new ones, enhancing overall efficiency and rationalizing the business.

The paragraph discusses a conversation about the future demand for containerboard production. Thomas Hassfurther explains that their strategy is to align mill production with expected demand, and they have moved an outage forward to the second quarter to manage this efficiently. The focus is on meeting customer needs and maintaining operational efficiency rather than managing quarterly financial results. Philip Ng asks if containerboard production and box shipments will align in the second half, given the demand outlook, and Thomas confirms that they plan to match production to demand. Additionally, if export demand increases in the second half, they anticipate exporting more then compared to the first half.

The discussion centers around the current uncertain market environment and expectations for the near future. Philip Ng inquires about inventory levels and order patterns, suggesting there's a destocking phase occurring. Thomas Hassfurther responds that customers are maintaining lean inventories due to global concerns and tariffs, but expects restocking in the latter half of the year. Philip Ng also asks Mark Kowlzan about the company’s financial position and potential for increasing share buybacks given the stock price drop. Mark Kowlzan acknowledges the opportunity and implies they will evaluate their options.

In a conversation with Charlie Muir-Sands from BNP Paribas, the focus is on understanding the recent booking trends and their impact on business performance. The discussion highlights that while Q1 began with strong bookings, overall growth slowed to 2.5% for the entire quarter and rose to 4% in early Q2. Factors contributing to the slowdown include weather impacts and customer caution due to new tariffs, which led to inventory reductions and altered demand patterns. Thomas Hassfurther acknowledges these influences and notes that Q1 is typically less predictable. He also indicates a positive outlook for volume growth year-on-year and quarter-on-quarter in Q2, although he doesn't specify if the 4% growth rate will be maintained in the guidance.

The paragraph is a conversation between Mark Kowlzan and George Staphos during a financial earnings call. It discusses the company's strong performance in the first and second quarters of 2024, despite challenging market conditions. Mark Kowlzan notes the company's 9.2% growth in the second quarter and mentions that they are ahead of their forecasts. George Staphos asks about the company's ability to keep up with demand for containerboard, given that their production is close to capacity. Mark assures that the company has strategies in place to meet future needs, including shifting export supply back to the domestic market if necessary.

The paragraph discusses the continued improvement in mill productivity and the search for market opportunities such as mill acquisitions or paper machine reconfigurations to meet the needs of box plants. In the short term, they are optimistic about growth, but they acknowledge that if current trends continue, there will be a need for significantly more containerboard in the future. The conversation between George Staphos and Thomas Hassfurther touches upon the trend of declining basis weights of boxes, driven by advancements in paper technology tailored to customer needs. The general trend indicates that basis weights are decreasing year over year, emphasizing performance rather than reducing weight for its own sake.

In the paragraph, Mark Kowlzan discusses the strategic advancements and improvements implemented at the Jackson mill, particularly highlighting the transformation of the Jackson #3 machine to produce high-performance linerboard. This upgrade, notably completed in Phase 2 of its reconfiguration, has significantly enhanced the mill's output, making it one of the most advanced in North America. The enhancements have positively impacted PCA, allowing them to replicate successes across other mills. The conversation concludes with Mark expressing gratitude to participants and mentioning a follow-up meeting scheduled for late July.

This summary was generated with AI and may contain some inaccuracies.