PACKAGING CORP OF AMERICA (PKG)

Packaging Corporation of America (PCA) is the third largest producer of containerboard products and a leading producer of uncoated freesheet (UFS) paper in North America. It operates ten mills and 91 corrugated products plants and related facilities, is headquartered in Lake Forest, Illinois, and operates in the United States. On September 2, 2025, PCA completed the acquisition of Greif, Inc.'s containerboard business for $1.8 billion in cash. The acquisition added two containerboard mills with roughly 800,000 tons of capacity and eight sheet feeder and corrugated plants, and its results are included in the Packaging segment.

PCA reports three segments: Packaging, Paper, and Corporate and Other. The Packaging segment's mills produce linerboard and corrugating medium, which its corrugated plants convert into shipping containers, multi-color boxes and displays, and honeycomb protective packaging. PCA also produces packaging for meat, fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products. In 2025 the segment produced 5.2 million tons of containerboard and sold 71 billion square feet of corrugated products, against annual capacity of about 5.8 million tons. Of the 91 corrugated facilities, 56 are corrugated plants that make sheets and finished products, 28 are sheet plants, and seven are sheet-only plants. The Paper segment makes commodity and specialty UFS papers, including cut-size office papers and printing and converting papers, at one mill in International Falls, Minnesota, with capacity of about 500,000 tons a year.

PCA sells containerboard and corrugated products to about 12,000 customers at roughly 27,000 locations. About 70% of corrugated sales go to regional and local accounts across diverse industries and regions, and the rest go mainly to national accounts. No customer exceeds 10% of Packaging segment sales. The main U.S. end markets for corrugated products are food, beverages and agricultural products, retail and wholesale trade, chemicals, plastics and rubber, paper and other products, and miscellaneous manufacturing. The Paper segment has about 50 customers at roughly 180 locations, including office products distributors and retailers, paper merchants, and envelope and other converters. ODP Corporation is its largest customer, at 58% of Paper segment revenue and 4% of consolidated revenue in 2025. The ODP supply agreement runs through December 31, 2026.

Fiber is the largest raw material cost. PCA uses virgin wood fiber, recycled fiber, and purchased pulp, buying wood fiber through cutting-right leases, long-term supply agreements, and market purchases. Its mills generate much of their own energy from by-products such as black liquor and wood waste, supplemented by natural gas and other purchased fuels. Chemicals such as caustic soda and starch are bought under contracts. Corrugated plants are placed near customers and typically serve a radius of about 150 miles, with delivery by truck, while mill output ships mainly by rail or truck. Sales are made mostly through PCA's own sales and marketing organization, supported by design centers. Its main national competitors are International Paper, Smurfit WestRock, Georgia-Pacific LLC, and Pratt Industries, and it also competes with many smaller regional producers. In late 2025 PCA announced a shutdown of the No. 2 paper machine and kraft pulping facilities at its Wallula, Washington mill, completed in the first quarter of 2026.