- Q2 results: Growing demand for Packaging Corporation of America’s corrugated products powered a new corrugated shipments-per-day record for the month of June. PCA reported it marked a 9.2% year-over-year increase and was 0.1% below setting an all-time PCA Q2 global shipments record. The company also set a containerboard production record for the quarter; it produced 1.28 million tons, with outside sales volume for the quarter coming in 42,000 tons above Q2 2023.
- New box plant: PCA confirmed it’s in the process of replacing its existing corrugated products plant in Phoenix with a new facility. “We've been looking at an opportunity and a solution for a couple of years to move out of some older, inefficient operating facilities. And so that's come about,” CEO Mark Kowlzan said on Wednesday’s earnings call. Executives expect the greenfield box plant to become operational in spring 2025.
- Southwest demand: The new plant will more than double the existing site’s capacity to more than 2 billion square feet of production per year. PCA needs to keep up with the growing demand in that region but is “clearly out of capacity in that marketplace. We are not able to service the customers locally as we would like to,” said Tom Hassfurther, executive vice president of corrugated products. He explained that numerous distant plants, such as in the Los Angeles area, have been fulfilling the region’s orders, “and that's not sustainable long term.”
- Pricing: Executives described how PCA experienced a delay in customer recognition for increased prices, similar to competitors. “It didn't trigger in a lot of contracts” right away, Hassfurther said, “so that kind of hurt us in the first half of the year.” They expect to see most of the gains from increased prices in the third and fourth quarters.
- Destocking vs. restocking: Executives reiterated that destocking is in the past, with Hassfurther saying, “We got through that whole destocking process quite some time ago now.” Customers have since replenished their stocks. However, they are “keeping what I would consider to be a very conservative inventory,” Hassfurther said.
- Outlook: PCA executives expect a busy second half of the year. Based on bookings in early July, the company is experiencing an “incredibly good start” to the third quarter, Hassfurther said. Executives anticipate that corrugated shipments per day could continue strengthening and achieve a third-quarter record. PCA is attempting to build volumes ahead of scheduled maintenance at its containerboard mill in DeRidder, Louisiana, in October. The company raised its full-year capital spending guidance by $200 million to a range between $670 million and $690 million, which includes the Arizona plant as well as shorter-term projects like new corrugators and converting lines.
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PCA to build new box plant in Phoenix area
The corrugated production expansion comes as PCA set a June record for corrugated shipments per day.
![A variety of different corrugated boxes for shipping products.](/imgproxy/f4TK0u8pvd5xfNkuz6UWqB5zQihc6sslLktV7xteKYM/g:ce/rs:fill:1200:675:1/bG9jYWw6Ly8vZGl2ZWltYWdlL0Fzc29ydG1lbnQtb2YtU2hpcHBpbmctQ29udGFpbmVycy5qcGc=.webp)
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