Packaging Corp Earnings Surpass Estimates in Q1, Sales Rise Y/Y

Packaging Corporation of America PKG reported adjusted earnings per share (EPS) of $2.31 in the first quarter of 2025, beating the Zacks Consensus Estimate of $2.21. The bottom line increased 34% year over year. The figure was above the company’s guidance of $2.21. 

The upside primarily resulted from higher prices and mix in the Packaging and Paper segments and volumes in the Packaging segment (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Including one-time items, earnings in the reported quarter were $2.26 per share compared with the prior-year quarter’s $1.63.

Packaging Corp’s Sales & Margins Improve Y/Y in Q1

Sales in the first quarter rose 8.2% year over year to $2.141 billion. The top line surpassed the Zacks Consensus Estimate of $2.140 billion. 

The cost of products sold moved up 4.8% year over year to $1.69 billion in the first quarter. The gross profit rose 22.8% year over year to $455 million. The gross margin came in at 21.2% up from prior year quarter’s 18.7%.

Selling, general and administrative expenses amounted to $161 million compared with the prior-year quarter’s $152 million. The adjusted operating income grew 38.7% year over year to $286 million.

PKG’s Q1 Segmental Performances

Packaging: Sales in this segment increased 9.6% year over year to $1.97 billion in the first quarter of 2025. In the Packaging segment, total corrugated product shipments per day rose 2.5% year over year. 

We anticipated a year-over-year volume increase of 5.2% and a favorable price and mix impact of 3.6%.Containerboard production was 1,250,000 tons for the quarter, lower than our expectation of 1,311,960 tons. Containerboard inventory grew 75,000 tons year over year and moved down 3,000 tons sequentially.

Adjusted operating profit was $284 million, a 36.7% rise from $208 million in the prior-year quarter.

Paper: The segment’s sales were $154 million in the January-March quarter, down 5.9% year over year. The segment’s sales volume fell 7% year over year and 2% sequentially.

We expected a pricing/mix benefit of 2.1% in the first quarter. Volume was expected to be a positive 2.7%.
The Paper segment reported an adjusted operating profit of $35.6 million, a dip from the year-ago quarter’s $36.1 million.

Packaging Corp’s Cash Flow Updates

Packaging Corp had a cash balance of $0.91 billion at the end of the first quarter, down from $1.25 billion of cash held at the end of the prior-year quarter.

PKG’s Q2 Outlook

Packaging Corp projects a second-quarter 2025 EPS of $2.41.

In the Packaging segment, the company expects domestic prices to improve due to the continued implementation of the company’s price increases, along with fairly flat export prices. Box shipments are expected to improve, but operating costs will be negatively impacted by lower containerboard volume. PKG’s adjustments to the maintenance outage schedule will result in higher costs in the second quarter of 2024.

The Paper segment is expected to see higher prices, but volume will be lower due to a planned maintenance outage at the International Falls mill.

Packaging Corp’s Stock Price Performance

Over the past year, PKG shares have gained 9.8% compared with the industry’s 0.8% growth.

PKG’s Zacks Rank

Packaging Corp currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Packaging Stocks Awaiting Results

AptarGroup, Inc. ATR is scheduled to release its first-quarter 2025 results on May 1. The Zacks Consensus Estimate for ATR’s first-quarter 2025 earnings is pegged at $1.16 per share, indicating a year-over-year decrease of 7.9%.

The consensus estimate for AptarGroup’s top line is pegged at $895.6 million, indicating a fall of 2.2% from the prior year’s actual. ATR has a trailing four-quarter average earnings surprise of 9.3%.

Sonoco SON, scheduled to release first-quarter 2025 results soon, has a trailing four-quarter average surprise of 1.9%. The Zacks Consensus Estimate for SON’s first-quarter 2025 earnings is pegged at $1.41 per share, implying year-over-year growth of 25.9%.

The consensus estimate for the company’s top line is pegged at $2.08 billion, indicating a rise of 26.9% from the prior-year figure.

Silgan Holdings SLGN is scheduled to release its first-quarter 2025 results on April 30. The Zacks Consensus Estimate for Silgan’s first-quarter 2025 earnings is pegged at 78 cents per share, indicating a year-over-year rise of 13%.

The consensus estimate for Silgan’s top line is pegged at $1.47 billion, indicating a rise of 11.6% from the prior year’s actual. SLGN has a trailing four-quarter average earnings surprise of 1.5%.

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This article originally published on Zacks Investment Research (zacks.com).

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