PCA's Q2 2026 sales rose 14.7% to $2.49B on the Greif containerboard acquisition, but GAAP EPS fell to $2.15 from $2.67 on one-off charges and a freight-cost squeeze; management guides Q3 to $2.91 as price increases land.
Revenue
$2.5B
+14.7% YoY
Net income
$192M
-20.5% YoY
Diluted EPS
$2.15
-19.5% YoY
Operating margin
11.7%
Overview: bigger company, thinner margins, and higher prices only starting to arrive
Packaging Corporation of America (PCA) makes containerboard, the heavy paper used to build cardboard boxes. It also runs the corrugated plants that turn that paper into boxes, plus a smaller business making white office paper. In the second quarter of 2026 (April–June), net sales rose 14.7% to $2,490 million. Almost all of that growth was bought, not organic. PCA paid $1.8 billion in cash on September 2, 2025 for Greif's containerboard business: two mills with about 800,000 tons a year of capacity, plus eight box and sheet plants. That business was not part of PCA a year ago.
Profit went the other way. Net income fell 20.5% to $192 million and diluted EPS fell from $2.67 to $2.15. Two things drove that: one-off charges this year set against one-off gains last year, and a real squeeze on the original ("legacy") business from much higher freight costs. Leaving out one-off "special items", EPS was $2.35, down 5.2% from $2.48. That was $0.02 above the $2.33 management had guided to.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Net sales
$2,489.9M
$2,171.3M
+14.7%
Gross margin
20.6%
22.2%
-1.6 pts
Income from operations
$291.2M
$333.7M
-12.7%
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Operating margin is the share of sales left after running the business, before interest and tax. EBITDA is operating profit before depreciation and amortization, the accounting charges that spread the cost of mills and machines over their lives. It is a rough gauge of cash earnings and matters here because the Greif mills added a lot of depreciation. "Special items" are charges or gains PCA treats as one-off. The EBITDA and "excl. special items" figures are PCA's own non-GAAP measures.
Takeaway: Greif is adding volume and earnings: $0.14 of EPS and about $258 million of sales this quarter. But the legacy business earned $0.27 per share less than a year ago, mostly because freight costs jumped with diesel prices and selling prices had not yet risen. The quarter's real message is timing. Two price increases announced in the first half mostly land in Q3 and Q4, and that is why management guides Q3 EPS to $2.91 (excluding special items), up from $2.35.
Why GAAP profit fell more than the underlying business
The reported numbers swing more than the business did because of special items:
This year (Q2 2026): $23.7 million of pre-tax charges ($0.20 per share). These were $14.1 million of corrugated plant closure costs and write-offs of renewable-energy projects, $6.3 million for the restructuring at the Wallula, Washington mill, and $3.3 million of acquisition and integration costs. PCA permanently shut Wallula's No. 2 paper machine and its kraft pulping line in Q1 2026. That restructuring cost about $187.7 million in total, $59.7 million of it in the first half of 2026.
Last year (Q2 2025): $23.0 million of pre-tax gains ($0.19 per share). These came mainly from selling real estate at closed box plants.
That is a swing of about $0.39 per share, and it explains most of the $0.52 drop in GAAP EPS. The other $0.13 is the real decline in underlying earnings.
Inside the $0.13 underlying EPS decline
PCA's own per-share bridge from Q2 2025 to Q2 2026 (excluding special items):
Driver
EPS impact
Higher packaging volume (legacy)
+$0.26
Greif operations' earnings
+$0.14
Lower maintenance outage expense
+$0.04
Paper volume / paper price and mix
+$0.03 / +$0.02
Higher freight costs
-$0.26
Higher corporate and other expense
-$0.12
Unfavorable packaging price and mix
-$0.11
Higher labor and operating costs
-$0.05
Higher depreciation and amortization
-$0.03
Higher fiber cost / higher tax rate
-$0.02 / -$0.02
Higher interest (excl. Greif debt)
-$0.01
The legacy business sold more: box shipments rose 4.1% per day, against 0.9% growth for the North American industry according to trade publications. But freight cost almost exactly as much as the extra volume earned ($0.26 each). The 10-Q says freight rates rose "significantly during the second quarter primarily as a result of higher diesel fuel prices." The corporate line got worse mainly because of higher deferred-compensation and stock-compensation expense. PCA also flags that $0.04 of the $0.14 Greif contribution came from a one-time accounting adjustment: revaluing the acquired fixed assets lowered depreciation. The Greif business's underlying earnings were closer to $0.10.
Segments
Segment
Sales Q2 2026
Sales Q2 2025
Op. income Q2 2026
Op. income Q2 2025
EBITDA excl. special items (2026 vs 2025)
Packaging
$2,311.3M
$2,005.9M
$313.2M
$346.3M
$488.6M vs $452.9M
Paper
$157.3M
$145.8M
$34.3M
$25.8M
$39.1M vs $30.3M
Corporate and Other
$21.3M
$19.6M
-$56.3M
-$38.4M
-$42.0M vs -$32.4M
Packaging. Sales rose $305 million (+15.2%). That came from $258 million of acquired volume and $58 million of legacy volume, less $11 million from lower price and mix. Excluding special items, operating income rose only $6 million, to $327.8 million. Greif added $36 million and volume $31 million, but higher freight took $28 million, lower price and mix $14 million, and higher fixed costs $8 million. PCA also sold less containerboard to outside buyers (down 19.0%), both export and domestic. More of its own paper went into its own box plants, where it earns more. Export sales alone were cut by about 30,000 tons from Q1.
Paper. Operating income rose $8 million to $34.3 million. Most of that ($9 million) is timing: this year's maintenance shutdown, when a mill stops for planned repairs, falls in Q3 at International Falls rather than in Q2. Volume and price added a little. The market backdrop is weak: trade publications report North American office paper shipments down 9.1% in the first half. Index prices still rose, by $60, $40 and $20 per ton in March, April and June.
Pricing: the lag working against PCA, for now
Most of PCA's box contracts adjust prices to a published containerboard price index, but only after a delay. That index rose a net $20 per ton in Q1 2026, then another $30 in April and $50 in June. Because of the delay, Q2 still carried a $14 million price-and-mix headwind in Packaging. PCA says it expects to "realize the majority of the price and mix improvement from the first price increase during the third quarter," with the second increase split between Q3 and Q4. The market looks tight enough for the increases to hold. Industry containerboard inventories were 2.40 million tons at quarter-end, 12.5% lower than a year earlier.
Balance sheet and cash
Long-term debt was $3,969 million at June 30, 2026, about unchanged from year-end. Net interest expense rose to $33.3 million from $13.1 million because of the Greif financing and lower interest income on a smaller cash pile.
Cash, cash equivalents and marketable debt securities were $667 million, against $956 million a year earlier. PCA also had $573 million of unused revolving credit.
First-half operating cash flow was $705 million (up from $639 million). Capital spending was $371 million, and the full-year 2026 plan is $840–870 million, a heavy year. PCA paid $223 million in dividends in the half and bought back 0.3 million shares for $59 million.
Outlook
For Q3 2026, management guides to $2.91 EPS excluding special items. That is 24% above Q2's $2.35, and it rests on:
Higher containerboard and box prices as the first increase is completed and the second begins to show up
One more shipping day, more mill output and lower packaging maintenance-outage costs, with continued improvement at the Jackson mill and the acquired Greif mills
Partly offset by freight "at or around the elevated levels" of May–June, still-rising recycled fiber costs, higher chemical and electricity costs, and the planned outage at the International Falls paper mill
Our read: Q3 guidance depends on price more than on anything else. Volume is already strong, and PCA says it is running its mills at full capacity, so the step-up has to come from pricing flowing through contracts faster than freight and fiber costs rise. If the index increases hold, the second half should show the operating margin recovering toward last year's levels on a much larger sales base. If diesel and recycled fiber keep climbing, some of that gain goes to costs. Watch the price-and-mix line in the Q3 EPS bridge: it has to swing from a $0.11 drag to a clear positive for the $2.91 to be met. The first real test of the Greif purchase comes in Q4 2026. That is when PCA will have owned Greif for a full year, so results will no longer be compared against a quarter without it.
Source: PCA Form 10-Q for the quarter ended June 30, 2026 (filed August 7, 2026) and Q2 2026 earnings release (Exhibit 99.1, July 22, 2026).