Packaging Corp of America

NYSE:PKG

Beat and guidance: Packaging Corporation of America reported second-quarter adjusted EPS of $2.35, beating its $2.33 outlook, and guided to $2.91 for the third quarter, excluding special items.

Demand stayed strong: Corrugated demand was described as “very strong” and “tight,” with total shipments up over 24% versus last year and an all-time quarterly shipment record in the legacy business.

Costs hurt legacy results: Higher freight, recycled fiber, and employee benefit costs weighed on the legacy business, partly offsetting strong volume and operational performance.

Price actions flowing through: PCA said the first packaging price increase started to show up in June and will mostly benefit Q3, while the second increase will be realized across Q3 and Q4.

Greif integration ahead: The acquired Greif business outperformed expectations in Q2, and PCA said integration benefits and synergies are tracking ahead of plan, with the TSA expected to end by year-end.

Outlook positive: Management expects continued strong packaging demand, better mill performance, lower packaging outage costs, and higher paper prices in Q3, while freight remains elevated.