Packaging Corporation of America (NYSE: PKG) Q4 2025 Earnings Call dated Jan. 28, 2026
Corporate Participants:
Mark W. Kowlzan — CEO
Kent Pflederer — CFO
Tom Hassfurther — President
Analysts:
George Staphos — Analyst
Michael Roxland — Analyst
Mark Adam Weintrop — Analyst
Gabe Hade — Analyst
Anaja Shaw — Analyst
Anthony Pettinari — Analyst
Phil Ung — Analyst
Charlie Muir Sands — Analyst
Presentation:
operator
Thank you for joining Packaging Corporation of America’s Fourth Quarter and Full Year 2025 Earnings Results Conference call. Your host today will be Mark Colsand, Chairman and Chief Executive Officer of pca. Upon conclusion of his narrative, there will be a Q and A session. I’ll now turn the call over to Mr. Colzan. Please proceed when you are ready.
Mark W. Kowlzan — CEO
Thanks for the introduction, Jamie Good morning everyone and thank you all for joining us today in the participating in packaging incorporation of America’s fourth quarter 2025 earnings release conference call. Again, I’m Mark Holzan, Chairman and CEO of pca, and with me on the. Call today is Tom Hasfruther, our President. And Kent Flederer, our Chief Financial Officer. I’ll begin the call with an overview of our fourth quarter results and then I’ll be turning the call over to Tom and Kent who will be providing more details. After that I’ll wrap things up and then we’ll be glad to take questions.
Kent Pflederer — CFO
Yesterday we reported fourth quarter net income of $102 million, or $1.13 per share, excluding the special items. Fourth quarter 2025 net income was $209 million, or $2.32 per share, compared to the fourth quarter of 2024’s net income of $222 million, or $2.47 per share. Fourth quarter net sales were $2.4 billion in 2025 and $2.1 billion in 2024.
Total company EBITDA for the fourth quarter, excluding special items, was $486 million in 2025 and $439 million in 2024, excluding special items. We also reported full year 2025 earnings of $888 million, or $9.84 per share, compared to 2024’s earnings of $815 million, or $9.04 per share. Net sales were $9 billion in 2025 and $8.4 billion in 2024, excluding special items. Total company EBITDA in 2025 was $1.86 billion and $1.64 billion in 2024. Fourth quarter net income included special items expense of $1.19 per share, primarily for the Walla Mill restructuring charges, as well as costs relating to the acquisition and integration of the Greif containerboard business and costs related to the closure of Corru facilities.
Details of these special items for both the fourth quarter and full year 2025 and 2024 were included in the schedules that accompanied the earnings press release, excluding the special items. Our earnings decreased by $0.15 per share compared to the fourth quarter of 2024. The decrease was driven primarily by lower production and sales volume in the legacy PCA business for 23 cents, higher operating costs 23 cents, higher maintenance outage expense, 14 cents, higher depreciation expense in the legacy PCA packaging business for $0.07, higher freight expense $0.06 higher interest expense excluding the GREIF acquisition debt for $0.01 and lower production and sales volume in the paper segment for $0.01.
These items were partially offset by higher prices and mix in the packaging segment for $0.50, lower fiber costs $0.10, lower fixed and other expenses $0.04 and higher prices and mix in the paper segment $0.01. The acquired greif operations, including interest on the acquisition indebtedness, generated a loss of $0.05 during the fourth quarter, primarily as a result of extended outages at the Massillon mill in October and December to perform reliability maintenance activities and manage our inventory at the acquired operations. Looking at our packaging business EBITDA excluding special Items in the fourth quarter 2025 of $476 million with sales of $2.2 billion resulted in a margin of 21.7% versus last year’s EBITDA of $426 million, sales of $2 billion, or a 21.5% margin.
For the full year 2025 packaging segment EBITDA excluding special items was 1.83 billion with sales of $8.3 billion or a 22.1% margin compared to the full year 2024 EBITDA of $1.6 billion with sales of $7.7 billion or a 20.8% margin. We ran to demand during the quarter and with the planned derivative maintenance outage and a full quarter of ownership of the acquired gripe operations, we produced 1,407,000 tons of containerboard. The legacy mills produced 1,235,000 tons of containerboard, 20,000 tons less than the third quarter and 75,000 tons less than the fourth quarter of 2024. System wide our inventories were at the same level as at the end of the third quarter and with the acquired Graef operations 84,000 tons up from the beginning of the year.
Operational performance during the quarter was again strong across the entire mill system and corrugated system, and we manage costs extremely well throughout the company. We made good progress on the integration and improvement of the acquired GRIF assets with better reliability and performance at both mills and completion of key systems integration activities. We did not expect to take any additional outages at the mills until their annual maintenance outages later in the year and we’ll operate the business at capacity. We’re on track to complete the Wallula restructuring activities by mid February and we will begin to benefit from the improved cost structure beginning in March.
I’d like to give an update on the gas turbine energy projects that we’re currently working on in the engineering phase. The plan includes the installation of gas turbines at the Jackson, Alabama mill and the Riverville, Virginia mills over the next 30 months. These locations have relatively high purchased power costs and good reliable gas supply, as well as demand for the additional power that we can internally generate. We expect that these projects would involve roughly $250 million of total capital, some to be spent in 2026, but most of it coming in 2027 and 2028. The expected returns are in the mid to high teens and most importantly, it would make us Energy electricity independent and protect us from future rising electric rates.
We’re finalizing the scope and we’ll seek board approval during the first quarter. We’re also working on plans for a third installation at one of our mills and we’ll provide more details at the appropriate time. We have a lot of good options and we’re considering all of these. I’m now going to turn it over to Tom who will provide more details on containerboard sales and the corrugated business. Tom thanks Mark.
Tom Hassfurther — President
Domestic containerboard and corrugated products prices and mix were $0.50 per share above the fourth quarter of 2024 and down $0.32 per share compared to the third quarter of 2025. This is mix related as our fourth quarter is seasonally less rich, incorporating more holiday driven E Com export containerboard prices were flat with last year’s fourth quarter and down $0.01 from the third quarter of 2025. Export sales volume of containerboard was up 12,000 tons from the third quarter of 2025 and down 15,000 tons from the fourth quarter of 2024. In the legacy business, corrugated shipments per day and in total were down 1.7% versus last year’s record fourth quarter when per day shipments were up more than 9% over 2023.
That said, 2025 fourth quarter legacy box plant shipments were the second highest ever for the year. Our corrugated shipments were essentially flat with 2024. Our order book strengthened in November and December, and though we were ultimately disappointed with December shipment volume, we’ve seen this strength reflected in January shipments so far. While our corrugated volume and mix ended up below our fourth quarter forecast, the underlying volume trends were positive heading into 2026 to provide a little more color. December got off to a strong start, leading us to believe that we would grow our volume over last year.
Later in the month, customers appeared to manage their already low inventories further down for year end. The exception was E Commerce which continued to remain strong well into the first week of January. In addition to the volume implications, this unfavorably impacted our December mix. The good news is is that January is up significantly in terms of bookings and billings from a Strong comp in 2025 where we were up 5% over 2024. January bookings in our legacy corrugated and sheet plants are up over 11% and billings are up 8% on a per day basis through last Thursday.
We are seeing improvement across our customer base which is a good sign for healthier underlying demand. Based on what we’ve seen so far, we are forecasting solid year over year growth for the first quarter and seasonal improvement in our mix. Our containerboard system is tightening up and we will need to run at full capacity to support our demand. Including the acquisition shipments were up 17% over last year for the fourth quarter and 6% for the year. The acquired plants had a very good quarter, outperforming our expectations and and are also off to a strong start to the year.
We made good progress on integration and are working toward operating as a single corrugated system as soon as we can. With systems integration work ongoing. We still have work to do to optimize the inventory levels and paper grades carried by the acquired plants. We are working off the remaining containerboard purchase and trade commitments and ended the quarter at approximately the same inventory levels that we began, which is higher than what we had forecast. We had planned to bring the inventory levels down significantly while simplifying the grades, carrying the plants and leveraging the larger integrated system.
This will take place over the next two quarters and better day to day visibility once our systems are in place will certainly help us. Last week as you know, we notified our customers of A$70 per ton price increase on our liner board and corrugated medium grades effective March 1. We will work as we normally do to implement the full price increase. I’ll now turn it back to Mark.
Mark W. Kowlzan — CEO
Thanks Tom. Looking at the paper segment, EBITDA excluding special Items in the fourth quarter was $37 million with sales of $154 million or 24.2% margin compared to the fourth quarter, 2024 EBITDA of $39 million and sales of $151 million or a 25.9% margin. Sales volume was 1% above the fourth quarter of 2024 and 4% below the third quarter 2025. Prices and mix were up 1% from the fourth quarter of 2024 and down less than a percent from the third quarter of 2025. Performance exceeded our expectation on higher sales volume and strong underlying operating performance at the International for the full year Paper segment EBITDA was $148 million or with $615 million of sales for a 24.1% margin.
2024’s EBITDA was $154 million on sales of $625 million for a 24.6% margin. I’ll now turn it over to Kent.
Kent Pflederer — CFO
Thanks Mark Cash provided by operations was a fourth quarter record $443 million and after 319 million of CapEx, free cash flow was 124 million. In addition to CapEx, the primary payments of cash during the quarter included share repurchases of 153 million, dividend payments of 112 million, net interest payments of 53 million, and cash tax payments of 15 million. We repurchased 760,000 shares during the quarter at an average price of 201.03. We have approximately 283 million of remaining repurchase authority for the full year 25. Cash from operations was $1.55 billion with capital spending of 829 million and free cash flow was $725 million.
Our year end cash on hand balance including marketable securities was $668 million with liquidity of about one and a quarter billion dollars. Our final recurring effective tax rate for 2025 was 24.7%. Regarding full year estimates of certain key items for the upcoming year, we currently estimate dividend payments of $450 million, total CapEx to be in the range of 840 to $870 million and DDA is expected to be approximately 700 million. Our full year interest expense in 2026 is expected to be approximately 139 million and net cash interest payment should be about 147 million. The estimate for our book 2026 book effective tax rate is 25%.
We have planned annual outages in 2026 at all of our mills which will cover a higher number of outage days and tons in 2025, including lost volume, direct costs and amortized repair costs. We currently expect the outages to total about $1.39 a share. The current estimated impact by quarter during the year is 16 cents in the first, 35 cents in the second, 24 cents in the third and 63 cents in the fourth. I’ll now turn it back over to Mark.
Mark W. Kowlzan — CEO
Thanks Kent. Our employees put in a tremendous effort and delivered outstanding results for PCA during 2025 when business conditions were challenging at various times. We completed the acquisition of the gripe business and achieved significant progress on integration and improving the operations. We successfully started up our Glendale, Arizona plant and completed numerous capital and operational projects to improve our capabilities and efficiency in our corrugated business and continue to serve and profitably grow with our customers. Our paper business continued to deliver outstanding results through its commitment to customer service and manufacturing excellence. As a company, we still have many key strategic capital opportunities in progress or ahead for the 2026 year and beyond.
Our balance sheet remains high quality. We have flexibility to continue to take advantage of internal or external investment opportunities that generate shareholder value. We continue our time tested and balanced approach towards capital allocation, investing in our business to profitably grow our earnings and cash flows and returning value to shareholders through dividends and buybacks. We accomplished a lot in 2025 and are positioned to accomplish even more this year. Looking ahead as we move from the fourth and into the first quarter, as Tom mentioned, we see demand improving and expect year over year growth in corrugated volume in our legacy box plants and strong shipment volume from the acquired plants.
First quarter volume is seasonally lower than the fourth quarter and even with one more shipping day, overall volume is expected to be slightly lower than the fourth quarter. We’ll now be running our mills full but production will be lower than the fourth quarter with two fewer operating days, slightly more outage tons and Wallula running in its new reconfigured state. We expect slightly lower inventory levels at the quarter end. Price and mix will seasonally improve and we expect to see some benefits from our containerboard price increase in March. Export containerboard sales will be slightly higher in the fourth quarter and prices should be flat to slightly down.
Paper volumes will be lower with two fewer operating days and price mix is expected to be slightly lower and will begin to improve in March with our recently announced uncoated free sheet price increase. With the exception of fiber prices, we expect price inflation across most of our directions, indirect and fixed operating and converting costs. In addition, wood, energy and chemical costs will also increase due to winter conditions that impact usages and yields for these items. Our cost structure will begin to benefit from the Wallula reconfiguration during the month of March. Labor and benefits costs will be higher due to the normal timing related items that occur at the beginning of the new year for annual increases, the restart of payroll taxes and share based compensation expenses.
Freight will be slightly higher and we expect slightly lower depreciation expense. Lastly, scheduled outage expenses will be lower and we assume a lower corporate tax rate. Considering these Items, we expect first quarter earnings of $2.20 per share, excluding special items. We are in fact assessing last weekend’s winter storm across multiple regions which caused some of our plants to be down earlier in the week and which could negatively impact shipments and operating and transportation costs for the quarter. With that, we’d be happy to entertain any questions, but I must remind you that some of the statements we’ve made on the call constituted forward looking statements.
The statements were based on current estimates, expectations and projections of a company and involve inherent risks and uncertainties including the direction of the economy and those identified as risk factors in the annual report on Form 10K on file with the SEC. Actual results could differ materially from those expressed in the forward looking statements. And with that, Jamie, I’d like to open the call for the Q and A.
Questions and Answers:
operator
And ladies and gentlemen, at this time we’ll begin that question and answer session. To ask a question, you may press star and then 1. To withdraw your questions you may press star and 2, if you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. Once again, that is STAR and then one to join the question queue. Our first question today comes from George Staphos from Bank of America securities. Please go ahead with your question.
George Staphos
Thanks. Hi everyone. Good morning. Thanks for the details. Hope you’re doing well. I guess the first question I had is on operations in the mills and I guess yeah, in the mills overall we have the outages. You call out the sequential pickup in variable costs for inputs, we have fewer days. And also you’re going to be trying to take down inventory to some degree. Is there a way to maybe size or give us a bit more granularity on what looks like it’ll be a decent increase in cost per ton. In the containerboard business, we’re not surprised by the 1Q sequential drop.
We’re just trying to figure out in earnings, just trying to get maybe a little more granularity on what the cost per ton might look like. 4Q to 1Q.
Mark W. Kowlzan
I’m not sure, you know, we’re going to run the system full. We’ve got the typical, you know, seasonal weather impacts taking place along with the recent storm. So there’s some uncertainty there. But again, we’re basically faced with the normal, you know, year over year inflationary concerns that we always see in January with labor, medical benefits, cost type matters, and then just the, the winter usage and yield matters with energy and wood. Again, I’d like to give you a number, but I don’t have that off the top of my head.
George Staphos
No, that’s okay, Mark. I guess maybe a related question. I know you’re still assessing, but what have you built into your guidance for the quarter related to the winter storms from an earnings standpoint or more sort of a factor standpoint from a volume versus cost qualitatively?
Mark W. Kowlzan
George, we’re just starting. We’ve had plants down from the Texas region all the way across the Gulf region up through the mid Atlantic. Some of these areas are still down without power. We’ve got power outages continuing in Tennessee. The Dallas region is. Has thawed out and coming back. But things are coming back as we speak, Literally. On the call this morning, you know, the mills ran through this. The two biggest mills that were impacted, the Counts, Tennessee mill and the Riverville, Virginia mill. Both mills did run through this quite well. We had exceptional support from all of the employees, and the mills ran through this.
The problem was we couldn’t ship any tons out during the period of time. So just in the last 24 hours, we started moving trucks and rail into Counts and Riverville. But nevertheless, we’ve had a huge number of the box plant system down for the few days. Tom, do you want to add a little color on that?
Kent Pflederer
Because I think the important thing is, George, to understand it’s going to be very hard for us to get our arms around this until we find out what the impact is on that book of orders that were not shipped in the short term and whether they, whether they’ll pick back up with our customers going forward. Obviously, our customers were down as well. So, you know, it’s, you know, we’ve been through these before and sometimes, you know, if it’s, if it’s too long of a process, you know, there are orders lost. Other times we get right back up and, and we can catch up.
So we’ll just have to see as. As this month goes on and really kind of probably as this winter goes on, because they’re calling for another big storm, you know, coming on the. In the mid Atlantic and southern region this weekend. So, you know, we’ll just have to see what happens. But I think overall, I mean, you know, We’ve. I think we weathered it pretty decent, although we had a lot of box plants down. And the transportation is another big issue that, you know, exists, whether it’s rail or truck, if we can get the. If we get the product out, once we get the.
Once we get the plants and mills up and going.
Tom Hassfurther
Hey, George, back to your first question. It’s Kent Ex Freight, and with a little bit of Wallula benefit and. But not all of it. We’re about $15 million total on the cost line in the mills. So running that through, that’s maybe 10 bucks a ton.
George Staphos
Okay. Appreciate that, Ken. Last one. I’ll turn it over. Just be mindful, you know, what gives you comfort that at Masalon you’re through the reliability issues and, you know, for that matter, what gives you comfort and what caused the inventory mismatch in the acquired facilities. Again, presuming it’s going to be worked down, but hopefully by 1Q. But what caused that? Thank you, guys. Good luck in the quarter.
Mark W. Kowlzan
Yeah, I’ll talk about the operational matters and then let Tom talk about the inventory. You know, during the month of. If you went back to the acquisition date in September, we spent six straight weeks with probably 200 PCA personnel assisting Massilon along with contractors essentially rebuilding Massillon mill from bearings, bushings, pumps, motors. We put our hands on everything. Gas turbine rebuild again, all of the mechanical infrastructure. And then during the period of time during December that the mill was down, we continue to address some of the even finer detail items, some operational improvements, even down to lubrication technology.
Again, more bearing monitoring. So I’d like to say that over a three and a half month period of time, we’d essentially rebuilt the Massillon mill. So it’s become the little mill that could. We’ve improved operational efficiency at both Massillon and Riverville from the. From the. You know, probably a 15% improvement overall in operational efficiency, the way we measure efficiency. So both. Both mills are very close now to running to the PCA standard efficiencies. Tom, do you want to talk about the inventory? But again.
Tom Hassfurther
So, George, I’ll at least start on the Masalin piece to quantify it. We were maybe 10,000 tons above where we’d forecasted finishing up the year. Some of that were taking purchase commitment tons. Some of that was. We were a little bit lower than forecasted shipment volume. So, Tom, I’ll let you.
Kent Pflederer
Okay. So I think. George, think of it this way. You know, we knew we had a lot of work that needed to be done. We knew we had to get our reliability up in a number of things. And you know, fortunately we had the financial flexibility to go do that right away to Prepare us for 2026 and the demand we saw coming forward in 2026 now that said, you know, that, you know, everybody did an outstanding job and you know, we’ve got, we’re in good shape starting in 2026. But there is another big piece of this that was part of that inventory.
Ms. And that is that we had the GREIF had a lot of Container Board purchase and trade commitments that were in place that we just chose to absorb basically in the fourth quarter. And you know, and we don’t have a lot of visibility from a systems point of view into a lot of their day to day activities like we do at pca. So those, those were the main, those were the main drivers for the inventory. Ms. And, but, but I think that, I think the most important thing is we got all that work done up front and, and put ourselves in good shape for 2026.
George Staphos
Thank you.
Mark W. Kowlzan
Next question please.
operator
And our next question comes from Michael Roxland from Truist Securities. Please go ahead with your question.
Michael Roxland
Yeah, thank you, Mark, Tom and Ken for taking my questions. Just wanted, Tom wanted to follow up. On that last point. In terms of the purchase and trade commitments that Grant had in place, just provide some more color around those commitments. Is it something you’re looking to keep, something that you’re looking to get rid of once those contracts expire? Just any color you can provide around those commitments and what you’re looking to do with them.
Kent Pflederer
Okay, Mike, I’m going to ignore the color part and just tell you that those commitments and purchases we no longer are keeping or pursuing or anything like that. Those were agreements that Greif had. We would not typically have any of those in place and we’re discontinuing those. We met the commitments and we’re moving forward from there.
Michael Roxland
Perfect. Got. Sounds like demand hasn’t selected a need to run full, but you have two.
Kent Pflederer
Less shipping days in one queue.
Michael Roxland
This is a theoretical question. If you had those two extra shipping days in one queue, would things be looser and volumes be softer or has demand firmed up enough such that you would still be running full even with those two extra shipping days? If we had the two extra days, we’d still be running full. The way we’ve looked at the entire year for the full 2026, we expect to run the entire mill system full out. And so which is a high class problem to Have. So Tom, you want to add anything?
Kent Pflederer
No, this is just a matter of a 30 day period that we’re looking at as opposed to the long term. So we would absolutely be running full out if we had the two extra days.
Michael Roxland
Got it. And then just from a demand perspective, you know, you guys have called out in recent quarters, the housing environment, you’ve called out protein, any inflection in those particular end markets that are contributing to this better demand?
Kent Pflederer
Well, I think as I mentioned. In. The comments, that the underlying demand is improving and it’s improving in all the segments which is what’s really positive for us. You know, as I’ve talked about over the last, certainly last year and maybe even going into the previous year, auto, building products, durables, those segments were down and continued to be down all the.
Michael Roxland
Way through the fourth quarter.
Kent Pflederer
But you know, and they work their inventories down to the bare bones also by the way. And we’re seeing some pickup in that. Area. And that’s a real positive for. Us because those are still, those are. Still large segments for us. And you know, obviously we’re, obviously we’re doing well in the other segments and the other segments continue to do well. But I think, you know, consumer sentiment’s getting better. You know, the GDP’s up 4% the previous quarter, a little over 4%. Forecast to be up over 5% this quarter. If you just think about, you know, at worst box demand could trend at half of the gdp. And that’s a big number, you know, in terms of demand. So you know, everything, everything underlying demand has been is very positive right now. Mike.
Michael Roxland
Got it. Thank you guys. One quick follow up just on a housekeeping question. Are you reflecting the $70 per ton in your 1Q guide? So is that part is that you announced that $70 per ton for March 1st. Is that included in the $2.20 you’re guiding for 1Q?
Tom Hassfurther
The answer is no. We have a little bit into March but not the full benefit.
Kent Pflederer
So you are baking in though you.
Michael Roxland
Are counting that in year one you got to a little, to some extent.
Kent Pflederer
Just a small, just a small, just a small amount is what we’re putting in the forecast. You know, as you know, these price increases, I mean, you know they take place over, you know, for us they take place over about a 90 day. Period. And then we have some contracts that extend to mid year and you know, that sort of thing. But for the most part, you know, I mean we’re baking in of course it’s effective starting March 1st, but you know we can’t bake in the full amount, obviously. Got it.
Michael Roxland
Very helpful. Thanks very much and Good luck in 2Q. Thanks, Mike. Appreciate it. Next question, please.
operator
Our next question comes from Mark Adam Weintrop from Seaport Research Partners. Please go ahead with your question.
Mark Adam Weintrop
Great, thank you. Just two quick clarifications. One, just to be clear, the $70, you get that in Containerboard in March, but you’re talking about because it takes a while to flow through into boxes is why it would have a fairly de minimis impact in 1Q. Is that correct?
Kent Pflederer
Correct, Mark?
Mark W. Kowlzan
Yes.
Mark Adam Weintrop
And just second clarification, just make sure I wasn’t missing something. If there were two more shipping days, then you’d have more demand on your MIL system, not less in the short term.
Kent Pflederer
Correct?
Mark W. Kowlzan
Yes. Okay.
Mark Adam Weintrop
And then just to just going back to costs, last year you had talked about 50 to 60 cents impact going from 4Q to 1Q and that you expected to get about half of it or even perhaps a bit more than that back in the second quarter because some of it seasonal, et cetera. Could you share those types of metrics this time around?
Mark W. Kowlzan
Yes, we can, mark.
Tom Hassfurther
It’s about 45 to $0.50, 4Q to 1Q. We will get, excluding Wallula, a little under half of that back. But then Wallula, the cost improvements there start kicking in more so in the second quarter.
Mark Adam Weintrop
Okay, super. And then the can we also contrast how the Containerboard box markets feel now relative to how they felt this time last year? I mean, obviously you went with price increases January 1st last year. You got at least in terms of what Pulpw Paper Week reflected, partial increases. How does it feel this time around versus the last two years?
Kent Pflederer
Now I’m only going to, I can only speak for pca. So, you know, let’s just, I want to qualify that. How does it feel for us? I mean, it feels improved, in fact, much improved, I think because there were still a lot of question marks in place a year ago. A new administration was going to take place. You know, take, take hold. A lot of things were up in the air. We, you know, we dealt with, we were already dealing with potential tariff stuff and all these other things that were question marks hanging in the air.
Those are all pretty well cleared up at this point in time. And I think the most encouraging thing is what I just mentioned earlier relative to GDP and consumer sentiment. You know, GDP being up over 4% last quarter, projected to be up over 5% this quarter. Those are big numbers and make a big difference in terms of corrugated box demand. And also, you know, I think another great metric is, you know, for the first time in over four years, you know, you’ve got wages that are now ahead of inflation and that will also improve the consumer sentiment going forward.
They may not feel it immediately, but I think throughout the year, I think that’s an important metric for our business.
Mark Adam Weintrop
Great. Appreciate it. Thank you. Thank you. Next question, please.
operator
Our next question comes from Gabe Hade from Wells Fargo Securities. Please go ahead with your question.
Gabe Hade
Mark. Tom Kent, good morning. Thanks for taking the question. Not to be combative here, but I’m curious, like, I think GDP is projected to be up 3.4percent in 2025, yet box demand has been pretty muted, sluggish, disappointing. There seems to be a clear inflection in your tone. I’m curious if you can. Is this something specific to what PCA is doing? Maybe the new Glendale box plant and internal initiatives? We heard from someone else this morning more hunters on the field versus gatherers. There’s obviously been a clear change in tone on the demand side. And then we’ve been dealing with this seemingly jockeying around of orders and inventories at quarter end and then the first month of the new quarter.
Any visibility, any work you guys have done to try to discern if that’s going on here or again, if this is more durable in terms of order patterns. Thank you.
Kent Pflederer
Well, Gabe, I wish I could emphatically, you know, give you. Give you great answers here, but all I can do is anecdotally talk about, you know, the fact that we do have these discussions with our customers. We are trying to find out what they’re thinking and what they’re doing because that’s important to our ability to adapt our business accordingly. But I can tell you there is a much more positive vibe across our entire customer base right now. These starts and stops we experienced last year was quite unusual, quite frankly, you know, because I think everybody was trying to figure out, you know, what consumer demand really was and what.
And what. And capex spending from companies and all these other sorts of things. What was really going to occur because start, stop, start, stop. You know, I mean, we had, I have customers that talked about having product that they were importing that they then add value to and then sell in the market that were stuck in, you know, stuck in ports in different places, you know, waiting for tariffs to find out what the tariffs were going to be, all these other sorts of things. So it was an unusual year in my opinion, and a lot of that’s now cleared out.
And I think that’s helped the visibility going forward and I think it’s also helped the positivity going forward in terms of predictability. So that’s about the best I can tell you.
Gabe Hade
All right, thank you, Tom. On the Greif acquisition, some of the feedback that we’ve gotten is that a fields maybe a little bit of slow out of the gate and I know you guys had a plan going in, but maybe. Mark, can you just talk about, you know, let’s say an impromptu mill rebuild in three and a half weeks. Was that part of the plan? And as you project forward and think about the acquired assets, you talked about running full for the rest of this year. But for planned maintenance outage, do you expect that to be kind of reaching that, I guess, EPS accretion level in the second quarter, first quarter, second half of this year? Just.
Any thoughts on that?
Mark W. Kowlzan
As far as the two mills, the Massillon mill and the Riverville mill, we learned a lesson from Boise and we also have a different organization in place now than we did 13 years ago. But we took advantage of the fact that we have the technology engineering group in house and decided that after the acquisition we would execute an immediate corrective action at the mills and go in in force and you know, do what PCA does well and that’s provide operational expertise. And so we took the couple of months in the fall right through December at Nasalon and essentially addressed all of the issues that normally might take a few years to address.
And so all of the normal maintenance matters are behind us now. We’ve identified like the gas turbine opportunity at Riverville, we’ve identified some bigger long term cost takeouts at Riverville and then we’ll continue just to instill the, the day to day normal practice at Massillon and Riverville in terms of operational expertise. But no, we accelerated that execution and took advantage of the opportunity this fall when we not only had the capability, but we were going to manage inventories to our needs. And so we took advantage of that.
Gabe Hade
Got it.
Mark W. Kowlzan
Gabe. Sorry. On the accretion piece, we are forecasting it to be slightly accretive in the first quarter and then improving as we get on. And you know, seasonality improves as well there. So. Thank you.
Gabe Hade
One quick last one. We’ll say on capex just I guess directionally I think things are probably coming in maybe a little bit heavy in 26 and you talked about maybe only a smidge of the 250 for the two gas turbines, the majority of that hitting in 27. Just directionally would we Expect things to be flattish next year on capex or down. I know we’re just kicking off 26, but just any preliminary thoughts?
Mark W. Kowlzan
I think we’re in a range right now that is in this low 800. The gas turbines will continue to keep the number on the higher end. Here we’re finishing up the big box plant in Ohio. We’ve got a couple of other projects that will finish up this year. On the box plant side, we’ve got on the bigger pieces of capital, you’ve got the Jackson, Alabama winder installation and improvements there. So there’s a few discrete big pieces. Some of those will be wrapping up this year. My goal, quite frankly, would be to see the number come down.
There’s a number of reasons for that. Part of it is just the psychological discipline that you want the organization to take a pause once in a while and step back and then look at what’s been done over the last few years and then go truly put some optimization on all of the capital. So without giving you a number and quantifying that number, my goal would be to bring the number down below the $800 million level. We did that back in 2022 into 2023, and then we had the opportunities and we brought that number up into the 600 million level last year.
800 million with the bigger projects and new box plants. So it really depends on the opportunities. But we are mindful of the discipline required to spend the money wisely. So long answer to a question. But the goal would be to get it down. But we will take advantage of the opportunities.
Gabe Hade
Thank you.
Mark W. Kowlzan
Good luck. Thank you. Next question.
operator
Our next question comes from Anaja Shaw from ubs. Please go ahead with your question.
Anaja Shaw
Hi, good morning, everyone.
Mark W. Kowlzan
Good morning, Anoja.
Anaja Shaw
I just wanted to ask more specifically, what changed in January? It does seem like there was a pretty sudden upturn in demand. And I know you talked about less uncertainty versus last year, but consumer confidence numbers are still kind of depressing and CPG earnings tone hasn’t really changed. So do you think your customers are responding to maybe the promise of stimulus in the one big beautiful bill and then after we get through tax refund season, we can see some choppiness again in demand. What are you hearing from your customers on that?
Kent Pflederer
I think the upturn in demand is a couple of things. One is obviously, as we’ve talked about from an inventory standpoint, they ran inventories incredibly low. So you know, you can’t continue to operate forever at these tremendously low inventory numbers. But I think there is It I think there is some, a lot more positivity going forward, you know, with tax reform. Number of different things I mentioned, you know, wages and some other things, consumer sentiment, you know, depends on who. Depends on what, you know, on what, you know, survey you’re looking at too. You know, one day you get a survey that’s positive, the next one it’s a little more negative.
I think the questions get slanted and a number of different things occur. But I think overall, anytime you get more money in the pockets of the consumer, you know, we’re going to see, we’re going to see more demand and that, and that ultimately reflects in the box business. And I think from our customers point of view, of course, we try to align with, you know, the very best and the ones that, you know, are the tend to be the winners in their space. You know, they tend to have a much more positive viewpoint going forward.
And as I said, all the noise that took place in 2025 with all the different things that were going on with the new administration, I think a lot of that, the air is cleared on that and I think people can see demand improving and count on it a little bit better than they did in the past.
Anaja Shaw
Yep. Okay, that’s good to hear. Let’s hope you’re right. And then for my second question, did I miss the cash tax expectation for 2026 and could you get a meaningful step down year over year this year? Because I don’t know, maybe immediate depreciation expensing provisions on Glendale or anything else?
Kent Pflederer
No.
Tom Hassfurther
So we didn’t provide what the cash tax forecast would be for the year. It’ll be higher though, than we paid out in 25, the Greif acquisition and being able to take some of the immediate depreciation on those assets was a big help. But we’ll be approaching maybe a little more normal levels, but we will still get some benefit from the bonus depreciation provisions.
Anaja Shaw
All right, sounds good. I’ll turn it over. Thank you.
Mark W. Kowlzan
Thanks, Anoja. Next question, please.
operator
Our next question comes from Anthony Pettinari from Citi. Please go ahead with your question.
Anthony Pettinari
Good morning.
Mark W. Kowlzan
Morning, Anthony. For the price increase for Containerboard and Boxes, should we expect the timing and implementation of the price hike for the kind of the grief portion of the business to be pretty much identical to the legacy business, or do they. Are there any sort of existing contracts or terms that might make it a little bit different or longer? We would expect the acquisition plants to roll out the same as pca. Got it. And I mean, there were some pretty large mill closures in the industry last year. And obviously you have Wallula understand that you don’t sell into the open market as much as others.
Can you just talk about sort of availability of board in the open market from a PCA perspective and just sort of what the market feels like given some pretty major supply actions that happened at the, at the end of last year.
Mark W. Kowlzan
Yeah. All I can tell you is from a PCA perspective, we’re going to have to run the mills full out. Things are going to be tight. We’re not going to have additional board, you know that we’re going to be able to sell into the open market. And you know, that’s. That’s all I can comment on.
You can draw other conclusions from your comments relative to the industry.
Anthony Pettinari
Got it, got it. Maybe just one last one. In terms of the CapEx for 26, 840 to 870. I think you said the energy projects would be a small sliver of that. I’m just wondering if you can quantify that and then if there are any other major projects maybe on the box plant level that we should think about for 26 or that you point out.
Mark W. Kowlzan
You know, again we’re finishing up the detailed engineering right now and getting ready to get approval. So there’ll be, you know, a small amount of. If we’re spending 250, you might spend 50 million this year on ordering equipment and getting steel, you know, and different things ordered. But the bigger pieces of capital this year of the 800 plus are coming from the completion of the new Ohio box plant. The big project down at Jackson, the Jackson Winder project and all of the expansion down at Jackson was over $100 million a project over a two year period.
And then we’ve got a couple of other big projects at the counts. Number two machine. It’s a couple of phases of work, but the first phase begins this March and so we’re putting in a considerable amount of effort to upgrade the number two paper machine. And then we’re finishing up a project in Syracuse, New York. And so there’s a couple of other big box plant upgrade projects that are finishing up and then the rest is just the numerous normal projects that we always bring on the converting side. New converting pieces of equipment that are being installed, corrugators, converting lines, upgrades.
So it’s spread out evenly. But that’s the good news, that we’re continuing to invest and grow with the customers as they need us to.
Anthony Pettinari
Okay, that’s very helpful. I’ll turn it Over.
Mark W. Kowlzan
Thank you. Next question.
operator
Our next question comes from Phil Ung from Jefferies. Please go ahead with your question.
Phil Ung
Hey guys, question for Tom. The pickup in orders in January, how. Much would you attribute that being from. That Destock that you saw reversing? Is that uptick pretty broad based, isolated, few end markets? When I look at the spread between bookings and billings, it’s quite large. Larger than normal, from what I can tell. I think that’s a bullish indicator, but just give us a little more color on how we kind of interpret some of these things.
Kent Pflederer
Okay. I think, Phil, it’s very difficult to separate out anything relative to inventory restocking. There’s some of that. I don’t think that’s the majority of it by any stretch. I think that our customers are preparing for more demand. They’ve got more demand. That’s we’re hearing. I think that the, you know, right now being late in the month, you know, we’ve got a lot more visibility as an example into February, and February remains very strong. So it’s kind of following on to January, which helps the bullishness of the forecast. And you know, in general, it’s just a much more positive feeling across the board.
And as I mentioned earlier, we’ve got some of those segments that were real laggards last year that are beginning to show some new life and come back to what I consider to be a little more normal demand that we’ve seen in the past. And I think as housing begins to come forward again, I think with mortgage rates now having dropped under 6%, that’s a real catalyst for for new home building and remodeling, et cetera. So that’ll be a big benefit for us in that sector.
Phil Ung
Gotcha. And then pretty encouraging, all that great stuff. And then I think your commentary is you expect be running full out all this year. Is that a function of demand getting much better this year? I mean, certainly the Lula piece is part of it, but you know, predicated on that, like what kind of box shipments should we assume for you to be running full out?
Kent Pflederer
Well, we’re definitely going to be up and I think one of the things that we’re really focused on this year, although the capital intensity in this business is tremendous, as alluded to in these numbers, that we have to spend capital every year to get the job done, I think as Mark mentioned earlier, we are going to be really focused on maximizing the returns on the capital that we’ve put in place. And this is going to be a great year. For us to really test that and you know, so we’re, we’re very well positioned for significant growth in the business.
And but again, you know, you don’t, you don’t build, you don’t build, you know, for some exorbitant amount of growth because that never happens in this business. So you know, we’re, we’re well positioned for the normal growth plus a little is where we’re really positioned for. So I think we’ll be in good shape. And of course then we’ve got the ability to spend more capital if needed if those opportunities present themselves. Okay, Tom, I don’t want to pin.
Phil Ung
You the number, but it sounds like you’re expecting 26 box demand for the broader industry to be more normalized this year and then do PCA kind of stuff kind of grow?
Kent Pflederer
Well, I’m. No, what I’m saying is that I think the demand is going to definitely be up this year and we at PCA will do what we normally do in terms of how we perform versus the total demand.
Phil Ung
Okay, makes sense. And then a question for Ken. It was helpful color. You said you expect the Grice deal to be modestly accretive in 1Q. I think last quarter you gave us a framework in terms of LTM, EBITDA in that 240 range and maybe 20 million of run rate synergies by 2Q appreciating things move around. Is that still a good way to. Think about it or perhaps some of that gets pushed out a little bit in terms of achieving those targets?
Tom Hassfurther
No, that’s a very good way to think about it. That’s where we still are and I think we’ll be in a better position to talk about some synergy opportunities in the next couple of calls going forward now that we’re able to operate this thing at full capacity.
Mark W. Kowlzan
Okay, super.
Phil Ung
Thank you. Appreciate it guys. Thanks Phil. Next question.
operator
Once again, if you would like to ask a question, please press star and one. Our next question comes from Charlie Muir Sands from BNP Parabol. Please go ahead with your question.
Charlie Muir Sands
Good morning guys. Thank you very much for taking my questions. Just a couple of follow ups. You’ve obviously outlined there a big list of all the projects that are the focus of CAPEX at the moment. If we think ahead sort of 12. Months from today, given that you’re going to be running, you said all out throughout this year, you anticipate, how much more capacity do you think we’re having in a 12 months time from today versus now? And how are you thinking about any kind of constraints or things you might need to do in order to get ahead of that. And then I’ve got one follow up question.
Mark W. Kowlzan
And then I’ve got one follow up question.Thanks. The short answer to that is I’ll let you know then what we’re planning to do going forward. Nothing’s changed in terms of how PCA goes about our business to look at supplying containerboard into the converting side of the business. Tom just said it. We never get too far ahead of ourselves. Part of the impetus for the Greif acquisition is that we had two mills that we looked at that say we’re producing in that 600,000 tons run rate a year. We looked at that. We know how to improve the operations and we said we’ll probably get over a couple year period of time depending on how much capital we want to spend, probably another 200,000 tons out of the 2 mil system.
And so that provides the growth Runway for the next couple of years for us. So that’s how I’m looking at it. But it’s, you know, it’s going to be tight. We’re going to have to run very well as we normally do, run very efficiently. But never forget we’re always looking out on the horizon of where the next containerboard capacity will come from in pca. And we’ve got different levers to pull and different ways to get there. But that’s one of the high class problems that we face all the time. Tom, you want to add that.
Kent Pflederer
No, nothing really more to add other than, you know, we’ll grow with our customers. That’s how we operate.
Charlie Muir Sands
Thank you. And just follow up was you quoted your bookings and billings numbers so far. Can you just clarify, is that a fully legacy PCA number or is that line getting blurs now? Have you sort of moved customers from grief operations into PCA or vice versa or is that an all in number? Aggie.
Kent Pflederer
Okay, that’s, you know, I’m giving you essentially the legacy PCA number, but I also the visibility I do have into our grief business, it doesn’t quite mirror that, but it’s pretty close to that.
Charlie Muir Sands
Many times.
Mark W. Kowlzan
Thank you. Are there any other questions? Jamie?
operator
Mr. Colzan, at this time there are no more questions. Do you have any closing comments?
Mark W. Kowlzan
Yeah. Again I want to thank everybody for joining us today and also I just want to put out a big thanks to the folks at the Riverville Mill and Collins Mill in particular. A number of the employees and managers spent three or four days living at the mill during the storm and protecting the assets and running the mill and safeguarding things. So from up here in Lake Forest to the facilities. Thank you. And then all the box plants that are down and people that have been without power. Again, it’s been a struggle, but things are coming back.
So we appreciate everybody’s effort and the dedication that we have from our PCA employees and look forward to talking with everybody on the next call in April. Thank you. Have a good day.
operator
Ladies and gentlemen. With that, we’ll conclude today’s conference call and presentation. We do thank you for joining. You may now disconnect your lines.