Packaging Corporation of America (PKG) reported its adjusted earnings per share (EPS) for the second quarter of 2023, surpassing expectations and beating the Zacks Consensus Estimate.

However, the company’s bottom line experienced a significant 28% year-over-year decrease.

Earnings beat expectations, yet down from prior year

  • Second Quarter Earnings: Packaging Corporation of America reported adjusted earnings per share (EPS) of $2.31 in the second quarter of 2023, exceeding the Zacks Consensus Estimate of $1.95.
  • EPS Guidance Surpassed: The reported EPS of $2.31 was higher than the company’s EPS guidance of $1.96 for the quarter under review.
  • Year-Over-Year Decline: Despite beating expectations, the bottom line suffered a 28% decrease compared to the prior year, coming in at $2.24 per share including one-time items, in contrast to the previous year’s $3.20.

Reasons for the decline

1. Lower volumes in packaging and paper segments

The decline in earnings was primarily caused by lower volumes in the Packaging and Paper segments.

2. Headwinds in packaging segment

The Packaging segment faced challenges due to lower prices and mix, combined with higher depreciation expenses and other converting costs.

3. Offsetting factors

However, the negative impact was partially offset by lower operating costs, higher prices and mix in the Paper segment, reduced scheduled maintenance outage expenses, a lower share count, and a lower tax rate.

Segmental performance

Packaging segment

  • Sales in the Packaging segment dropped 13.4% year over year to $1,790 million in the second quarter of 2023, missing the estimated $1,794 million.
  • Total corrugated products shipments and shipments per day in the Packaging segment declined by 9.8% year over year, more than the anticipated volume decline of 7%, and an unfavorable price and mix impact of 6.3%.
  • Adjusted operating profit in the Packaging segment was $286 million compared to $420 million in the prior-year quarter, representing a 32% decrease.

Paper segment

  • The Paper segment’s revenues were $143 million in the second quarter, down 4.7% year over year, missing the estimated $146 million.
  • Adjusted operating profit in the Paper segment was $29 million compared to $23 million in the year-ago quarter.

Cash position

At the end of the second quarter of 2023, Packaging Corp had a cash balance of $630 million, lower than the $811 million at the end of the previous year’s quarter.


For the third quarter of 2023, Packaging Corp projects an EPS of $1.88. Although shipments per day are expected to improve sequentially, pricing is likely to fall due to announced domestic containerboard price decreases and lower export pricing.

In the Paper segment, volumes are expected to pick up, aided by back-to-school shipments, but prices are predicted to trend lower based on recent declines in index prices.

Price performance

Packaging Corp’s shares have gained 1.3% in the past year, outperforming the industry’s fall of 3%.