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By the numbers: Q3 2024
Net sales: $2.18B
Up 12.7% year over year
Packaging segment sales: $2.01B
Up 14.1% year over year
Packaging segment income: $320.7M
Up 24.9% year over year
- Quarterly records: Packaging Corporation of America exceeded expectations in Q3, citing “all-time quarterly records for containerboard production, total box shipments and shipments per day.” Containerboard production totaled more than 1.29 million tons. Corrugated product shipments were up 12.9% year over year.
- Pricing: The company reported positive movement on pricing in both of its packaging and paper segments during Q3. Tom Hassfurther, executive vice president of corrugated products, said during a Wednesday earnings call that “the lion’s share” of box price increases have been implemented, but there will be more to come in Q4 and into January due to certain annual agreement cycles.
- Inventory: Containerboard inventory was down 3,000 tons from the second quarter, and executives said they’re trying to build that back up by the end of the year. “We did not expect to see the kind of growth this year that we have experienced,” said CEO Mark Kowlzan, in reference to the inventory effects. “We've been talking about building inventory all year, and we've not yet succeeded in coming anywhere near close to where we should be." Kowlzan added he didn’t necessarily view this as an issue, because it could motivate facility operators to be more efficient.
- Demand factors: Much of this elevated demand is from existing customers, though PCA noted some new clients as well. Hassfurther also noted an ongoing trend of rising demand for e-commerce packaging, whereas demand for point-of-purchase displays has been flat. The company anticipates a possible short-term impact to demand due to hurricane damage to customers’ strawberry crops in Florida.
- Capital expenditures: PCA reported $468.4 million in capital spending through Q3, allocated in part to planned maintenance and upgrades at multiple facilities. Kowlzan said this included at least 60 projects at box plants, including “new corrugators, major corrugator rebuilds” and “new converting lines.”
- Facility news: Ongoing projects include a previously announced facility in Glendale, Arizona, that is set to open in 2025. Kowlzan noted the potential for future upgrades at mills in Counce, Tennessee, and Valdosta, Georgia, and previewed more to come. “We’ve got plans on the books to build out a couple of new big plants over the next two-and-a half, three years, also,” he said, adding that more details will be shared in the Q4 call.
