PACKAGING CORP OF AMERICA

Net sales were $8.4 billion for the year ended December 31, 2024 and $7.8 billion for 2023. We reported $805 million of net income, or $8.93 per diluted share, in 2024, compared to $765 million, or $8.48 per diluted share, in 2023. Net income included $9 million of expense for special items in 2024, compared to $19 million of expense for special items in 2023. Special items in both periods are described later in this section. Excluding special items, we recorded $814 million of net income, or $9.04 per diluted share, in 2024, compared to $784 million, or $8.70 per diluted share, in 2023.1 The increase was driven primarily by higher volumes in our Packaging and Paper segments, and lower freight and logistic expenses, partially offset by lower prices and mix in our Packaging and Paper segments, higher operating and converting costs driven in part by inflation across our cost base, and higher annual outage expense. PCA ended the year with $852 million of cash and marketable debt securities and, including borrowing availability under its revolving credit facility, $1,175 million in liquidity.

Packaging segment operating income was $1,102 million in 2024, compared to $1,074 million for 2023. Packaging segment EBITDA excluding special items was $1,598 million in 2024, compared to $1,556 million in 2023.1 The increase was driven primarily by higher volumes, and lower freight and logistic expenses, partially offset by lower containerboard and corrugated products prices and mix, higher operating and converting costs and higher annual outage expense.

Packaging volumes were up throughout the year, compared to 2023, with record-breaking performance in the third and fourth quarters. Overall, total corrugated products shipments were up 10.5% for the year. Our containerboard production was approximately 294 BSF, and containerboard inventory weeks-of-supply increased 0.3 weeks from year end 2023. For more information on our containerboard production and corrugated products shipments, refer to the table presented under the caption “Production and Shipments” in “Part I, Item 1. Business” of this Form 10-K. Containerboard prices published by industry publications increased in the first and second quarter of 2024, after declining late in 2022 and throughout 2023. In part due to the timing of these changes, our average prices were lower in 2024 than in 2023. We notified customers of a $70 per ton price increase for linerboard and a $90 per ton price increase for medium effective January 1, 2025.

1 Net income excluding special items, earnings per diluted share excluding special items, and segment EBITDA excluding special items are non-GAAP financial measures. See “Non-GAAP Financial Measures” later in this item 7.

Over the past several years, we made extensive capital investments throughout the packaging segment to improve productivity and efficiencies at our containerboard mills and corrugated products facilities and believe that our success in execution of these capital investments has helped us deliver strong results while minimizing the continued inflationary impact across our cost structure.

Paper segment operating income was $130 million in 2024, compared to $119 million in 2023. Paper segment EBITDA excluding special items was $154 million in 2024, compared to $151 million in 2023.1 The increase was due primarily to higher paper volumes and lower operating costs, partially offset by lower prices and mix. We notified customers of a $60 per ton price increase for all office, printing, and converting papers, effective January 13, 2025.