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What changed in Packaging Corporation of America's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Packaging Corporation of America's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+209 added−209 removedSource: 10-K (2024-02-29) vs 10-K (2023-02-23)

Top changes in Packaging Corporation of America's 2023 10-K

209 paragraphs added · 209 removed · 180 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

78 edited+8 added−11 removed91 unchanged
Biggest changeThe mill can produce medium in basis weights from 23 lb. to 33 lb. and linerboard in basis weights from 31 lb. to 52 lb. Jackson. Our Jackson, Alabama mill produces kraft linerboard on its No. 3 machine and corrugating medium on its No. 1 machine.
Biggest changeOur Jackson, Alabama mill produces kraft linerboard on its No. 3 machine and kraft linerboard and corrugating medium on its No. 1 machine. The mill can produce linerboard in basis weights from 22 lb. to 34 lb. and medium in basis weights from 23 lb. to 33 lb.
Any of our manufacturing facilities, or any of our machines within such facilities, could cease operations unexpectedly for a significant period of time due to a number of events, including: • Unscheduled maintenance outages. • Prolonged power failures. • Equipment or information system breakdowns or failures. • Explosion of a boiler or other major facilities. • Disruption in the supply of raw materials, such as wood fiber, energy, or chemicals. • A spill or release of pollutants or hazardous substances. • Closure or curtailment related to environmental concerns. • Labor difficulties. • Disruptions in the transportation infrastructure, including roads, bridges, railroad tracks, and tunnels. • Terrorism or threats of terrorism. 13 • The effect of a pandemic or other health event, such as the COVID-19 pandemic. • Other operational problems.
Any of our manufacturing facilities, or any of our machines within such facilities, could cease operations unexpectedly for a significant period of time due to a number of events, including: • Unscheduled maintenance outages. • Prolonged power failures. • Equipment or information system breakdowns or failures. • Explosion of a boiler or other major facilities. • Disruption in the supply of raw materials, such as wood fiber, energy, or chemicals. • A spill or release of pollutants or hazardous substances. • Closure or curtailment related to environmental concerns. • Labor difficulties. • Disruptions in the transportation infrastructure, including roads, bridges, railroad tracks, and tunnels. • Terrorism or threats of terrorism. • The effect of a pandemic or other health event, such as the COVID-19 pandemic. • Other operational problems.
If we are unable to successfully compete, we may lose market share or may be required to charge lower sales prices for our products, both of which would reduce our earnings and operating cash flows. UFS paper products compete with electronic data transmission and document storage alternatives.
If we are unable to successfully compete, we may lose market share or may be required to charge lower sales prices for our products, both of which would reduce our earnings and operating cash flows. 11 UFS paper products compete with electronic data transmission and document storage alternatives.
Further, if we cannot service our indebtedness, we may have to take actions to secure additional cash by selling assets, seeking additional equity or reducing investments, which may not be achievable on acceptable terms or at all. 15 Pension Plans – Our pension plans may require additional funding.
Further, if we cannot service our indebtedness, we may have to take actions to secure additional cash by selling assets, seeking additional equity or reducing investments, which may not be achievable on acceptable terms or at all. Pension Plans – Our pension plans may require additional funding.
If we are unable to meet these goals and targets, our reputation with investors, customers and other stakeholders and businesses may be harmed. Reliance on Personnel - We may fail to attract and retain qualified personnel, including key management personnel.
If we are unable to meet these goals and targets, our reputation with investors, customers and other stakeholders and businesses may be harmed. 13 Reliance on Personnel – We may fail to attract and retain qualified personnel, including key management personnel.
In addition, our Code of Ethics may be accessed in the Investor Relations section of PCA’s website. PCA’s website and the information contained or incorporated therein are not intended to be incorporated into this report. 10 Item 1A.
In addition, our Code of Ethics may be accessed in the Investor Relations section of PCA’s website. PCA’s website and the information contained or incorporated therein are not intended to be incorporated into this report. Item 1A.
In addition, our operating results could be below the expectations of public market analysts and investors, and in response, the market price of our common stock could decrease significantly. Item 1B. U NRESOLVED STAFF COMMENTS None.
In addition, our operating results could be below the expectations of public market analysts and investors, and in response, the market price of our common stock could decrease significantly. Item 1B. U NRESOLVED STAFF COMMENTS None. 15
Before joining PCA, he held several positions of increasing responsibility at multiple locations during his 19 years with International Paper and two years with Champion International. Robert A. Schneider, 57, Senior Vice President and Chief Information Officer - Mr. Schneider has served as our Chief Information Officer since 2000 and was promoted to Senior Vice President in 2019. Mr.
Before joining PCA, he held several positions of increasing responsibility at multiple locations during his 19 years with International Paper and two years with Champion International. Robert A. Schneider, 58, Senior Vice President and Chief Information Officer - Mr. Schneider has served as our Chief Information Officer since 2000 and was promoted to Senior Vice President in 2019. Mr.
Risks Related to our Operations, Business and Industry General Economic Conditions - A continued deterioration in general economic conditions may harm our business, results of operations, cash flows, and financial position.
Risks Related to our Operations, Business and Industry General Economic Conditions – A deterioration in general economic conditions may harm our business, results of operations, cash flows, and financial position.
A $0.10 per million MMBTU increase in natural gas prices would result in approximately $3 million of additional expense, based on 2022 usage. Customer Concentration - We rely on certain large customers. Our packaging and paper segments each have large customers, the loss of which could adversely affect the segment’s sales and profitability.
A $0.10 per million MMBTU increase in natural gas prices would result in approximately $3 million of additional expense, based on 2023 usage. Customer Concentration – We rely on certain large customers. Our packaging and paper segments each have large customers, the loss of which could adversely affect the segment’s sales and profitability.
We are headquartered in Lake Forest, Illinois and operate primarily in the United States. We report in three reportable segments: Packaging, Paper and Corporate and Other. For segment financial information see Note 19, Segment Information, of the Notes to Consolidated Financial Statements in “Part II, Item 8, Financial Statements and Supplementary Data” of this Form 10-K.
We are headquartered in Lake Forest, Illinois and operate primarily in the United States. We report in three reportable segments: Packaging, Paper and Corporate and Other. For segment financial information see Note 18, Segment Information, of the Notes to Consolidated Financial Statements in “Part II, Item 8, Financial Statements and Supplementary Data” of this Form 10-K.
While we have generally been able to manage through these issues and have not experienced material disruptions in our ability to serve our customers, these issues have resulted in significantly higher costs for transportation services. If these factors persist, we could experience even higher transportation costs in the future and difficulties shipping our products in a timely manner.
While we have generally been able to manage through these issues and have not experienced material disruptions in our ability to serve our customers, these issues have resulted, at times, in significantly higher costs for transportation services. If these factors persist, we could experience even higher transportation costs in the future and difficulties shipping our products in a timely manner.
Kowlzan is a member of the board of American Forest and Paper Association. Charles J. Carter, 63, Executive Vice President - Mill Operations - Mr. Carter has led our mill operations since January 2011. From March 2010 to January 2011, Mr. Carter served as PCA’s Director of Papermaking Technology. Prior to joining PCA in 2010, Mr.
Kowlzan is a member of the board of American Forest and Paper Association. Charles J. Carter, 64, Executive Vice President - Mill Operations - Mr. Carter has led our mill operations since January 2011. From March 2010 to January 2011, Mr. Carter served as PCA’s Director of Papermaking Technology. Prior to joining PCA in 2010, Mr.
After joining the company in 1992, she has held various positions of increasing responsibility, including serving as PCA’s Treasurer since 1999. Before joining PCA, Ms. Barnes worked for Deloitte & Touche. Jeff S. Kaser, 57, Senior Vice President – Corrugated Products - Mr. Kaser has served as Senior Vice President — Corrugated Products since May 2020.
After joining the company in 1992, she has held various positions of increasing responsibility, including serving as PCA’s Treasurer since 1999. Before joining PCA, Ms. Barnes worked for Deloitte & Touche. Jeff S. Kaser, 58, Senior Vice President – Corrugated Products - Mr. Kaser has served as Senior Vice President — Corrugated Products since May 2020.
Item 1. B USINESS Packaging Corporation of America (“we,” “us,” “our,” “PCA,” or the “Company”) is the third largest producer of containerboard products and a leading producer of uncoated freesheet (UFS) paper in North America. We operate eight mills and 89 corrugated products plants and related facilities.
Item 1. B USINESS Packaging Corporation of America (“we,” “us,” “our,” “PCA,” or the “Company”) is the third largest producer of containerboard products and a leading producer of uncoated freesheet (UFS) paper in North America. We operate eight mills and 86 corrugated products plants and related facilities.
The paper mill self-generates process steam requirements from by-products (black liquor and wood waste), as well as from the various purchased fuels. The process steam is used throughout the production process and to generate electricity. In 2022, our paper mill consumed about 11 million MMBTUs of fuel to produce both steam and electricity.
The paper mill self-generates process steam requirements from by-products (black liquor and wood waste), as well as from the various purchased fuels. The process steam is used throughout the production process and to generate electricity. In 2023, our paper mill consumed about 11 million MMBTUs of fuel to produce both steam and electricity.
Olivier worked for Coopers & Lybrand LLP, Alberto-Culver Company and SPX Corporation. Kent A. Pflederer, 52, Senior Vice President, General Counsel and Secretary - Mr. Pflederer has served as Senior Vice President, General Counsel and Corporate Secretary since January 2013 and has led our legal department since June 2007. Prior to joining PCA, Mr.
Olivier worked for Coopers & Lybrand LLP, Alberto-Culver Company and SPX Corporation. Kent A. Pflederer, 53, Senior Vice President, General Counsel and Secretary - Mr. Pflederer has served as Senior Vice President, General Counsel and Corporate Secretary since January 2013 and has led our legal department since June 2007. Prior to joining PCA, Mr.
Schneider joined the company in 1989 and has held various management and other positions of increasing responsibility in information systems for PCA. D. Ray Shirley, 51, Senior Vice President – Corporate Engineering and Process Technology - Mr. Shirley has served as PCA’s Senior Vice President – Corporate Engineering and Process Technology since May 2019. Mr.
Schneider joined the company in 1989 and has held various management and other positions of increasing responsibility in information systems for PCA. D. Ray Shirley, 52, Senior Vice President – Corporate Engineering and Process Technology - Mr. Shirley has served as PCA’s Senior Vice President – Corporate Engineering and Process Technology since May 2019. Mr.
Olivier, 53, Senior Vice President – Tax, ESG and Government Affairs - Ms. Olivier has led our tax department since 1994 and served as Vice President—Tax from October 2010 to January 2022. In January 2022, she was promoted to Senior Vice President—Tax, ESG and Government Affairs, and leads our sustainability reporting and government affairs functions. Before joining PCA, Ms.
Olivier, 54, Senior Vice President – Tax, ESG and Government Affairs - Ms. Olivier has led our tax department since 1994 and served as Vice President—Tax from October 2010 to January 2022. In January 2022, she was promoted to Senior Vice President—Tax, ESG and Government Affairs, and leads our sustainability reporting and government affairs functions. Before joining PCA, Ms.
Hassfurther, 67, Executive Vice President - Corrugated Products - Mr. Hassfurther has served as Executive Vice President - Corrugated Products of PCA since September 2009. From February 2005 to September 2009, Mr. Hassfurther served as Senior Vice President - Sales and Marketing, Corrugated Products. Prior to this he held various senior-level management and sales positions at PCA and Tenneco Packaging.
Hassfurther, 68, Executive Vice President - Corrugated Products - Mr. Hassfurther has served as Executive Vice President - Corrugated Products of PCA since September 2009. From February 2005 to September 2009, Mr. Hassfurther served as Senior Vice President - Sales and Marketing, Corrugated Products. Prior to this he held various senior-level management and sales positions at PCA and Tenneco Packaging.
Pflederer served as Senior Counsel, Corporate and Securities, at Hospira, Inc. from 2004 to 2007 and served in the corporate and securities practice at Mayer Brown, LLP from 1996 to 2004. Bruce A. Ridley, 67, Senior Vice President – Environmental Health and Safety and Operational Services - Mr.
Pflederer served as Senior Counsel, Corporate and Securities, at Hospira, Inc. from 2004 to 2007 and served in the corporate and securities practice at Mayer Brown, LLP from 1996 to 2004. Bruce A. Ridley, 68, Senior Vice President – Environmental Health and Safety and Operational Services - Mr.
We are currently in negotiations to renew or extend union contracts that have recently expired or are expiring in the near future. During 2022, we experienced no work stoppages, and we believe we have satisfactory labor relations with our employees.
We are currently in negotiations to renew or extend union contracts that have recently expired or are expiring in the near future. During 2023, we experienced no work stoppages, and we believe we have satisfactory labor relations with our employees.
If supply exceeds demand, operating conditions involving our business and industry continue to deteriorate, or other factors result in lower prices for our products, our earnings, and operating cash flows would be harmed.
If supply exceeds demand, operating conditions involving our business and industry deteriorate, or other factors result in lower prices for our products, our earnings, and operating cash flows would be harmed.
If global economic conditions continue to deteriorate, economies could experience a recession, which may result in higher unemployment rates, lower disposable income, lower Company earnings and investment, and lower consumer spending. These factors may result in continued lower demand for our products and negatively affect our business, results of operations and cash flows.
If global economic conditions deteriorate, economies could experience a recession, which may result in higher unemployment rates, lower disposable income, lower Company earnings and investment, and lower consumer spending. These factors may result in lower demand for our products and negatively affect our business, results of operations and cash flows.
A $10 per ton price increase in recycled fiber for our containerboard mills would result in approximately $8 million of additional expense based on 2022 consumption. 12 Cost of Purchased Fuels and Chemicals - An increase in the cost of purchased fuels and chemicals could lead to higher manufacturing costs, resulting in reduced earnings.
A $10 per ton price increase in recycled fiber for our containerboard mills would result in approximately $8 million of additional expense based on 2023 consumption. Cost of Purchased Fuels and Chemicals – An increase in the cost of purchased fuels and chemicals could lead to higher manufacturing costs, resulting in reduced earnings.
Of the 11 million MMBTUs consumed, about 75% was from mill-generated biogenic fuels that are by-products of the manufacturing and pulping process and 25% was from purchased natural gas. Chemical supply. We consume various chemicals in the production of white papers, including starch, precipitated calcium carbonate, caustic soda, and sodium chlorate.
Of the 11 million MMBTUs consumed, about 76% was from mill-generated biogenic fuels that are by-products of the manufacturing and pulping process and 24% was from purchased natural gas. Chemical supply. We consume various chemicals in the production of white papers, including starch, precipitated calcium carbonate, caustic soda, and sodium chlorate.
He served in various business positions at International Paper from 1983 to 1996. Pamela A. Barnes, 58, Senior Vice President – Finance and Controller - Ms. Barnes has served as Senior Vice President – Finance and Controller since May 2019. Ms. Barnes previously served as a Vice President in PCA’s finance organization from 2012 to 2019.
He served in various business positions at International Paper from 1983 to 1996. 9 Pamela A. Barnes, 59, Senior Vice President – Finance and Controller - Ms. Barnes has served as Senior Vice President – Finance and Controller since May 2019. Ms. Barnes previously served as a Vice President in PCA’s finance organization from 2012 to 2019.
Of the 89 manufacturing facilities, 58 are combining operations, commonly called corrugated plants, which manufacture corrugated sheets and finished corrugated packaging products, 30 are sheet plants, which procure combined sheets and manufacture finished corrugated packaging products, and one is a corrugated sheet-only manufacturer. Corrugated products plants tend to be located in close proximity to customers to minimize freight costs.
Of the 86 manufacturing facilities, 58 are combining operations, commonly called corrugated plants, which manufacture corrugated sheets and finished corrugated packaging products, 27 are sheet plants, which procure combined sheets and manufacture finished corrugated packaging products, and one is a corrugated sheet-only manufacturer. Corrugated products plants tend to be located in close proximity to customers to minimize freight costs.
The primary end-use markets in the United States for corrugated products are shown below as reported in the 2021 Fibre Box Association annual report: Food, beverages, and agricultural products 48 % Retail and wholesale trade 22 % Paper and other products 10 % Chemical, plastic, and rubber products 10 % Miscellaneous manufacturing 10 % 6 Competition As of December 31, 2022, we were the third largest producer of containerboard products in North America, according to industry sources and our own estimates.
The primary end-use markets in the United States for corrugated products are shown below as reported in the 2022 Fibre Box Association annual report: Food, beverages, and agricultural products 42 % Retail and wholesale trade 28 % Paper and other products 10 % Chemical, plastic, and rubber products 10 % Miscellaneous manufacturing 10 % 6 Competition As of December 31, 2023, we were the third largest producer of containerboard products in North America, according to industry sources and our own estimates.
According to industry sources, corrugated products are produced by about 445 U.S. companies operating approximately 1,150 plants. The primary basis for competition for most of our packaging products includes quality, service, price, product design, and innovation. Most corrugated products are manufactured to the customer’s specifications.
According to industry sources, corrugated products are produced by about 400 U.S. companies operating approximately 1,100 plants. The primary basis for competition for most of our packaging products includes quality, service, price, product design, and innovation. Most corrugated products are manufactured to the customer’s specifications.
Mr. Hassfurther joined the company in 1977. 9 Robert P. Mundy, 61, Executive Vice President and Chief Financial Officer - Mr. Mundy has served as our Chief Financial Officer since 2015.
Mr. Hassfurther joined the company in 1977. Robert P. Mundy, 62, Executive Vice President and Chief Financial Officer - Mr. Mundy has served as our Chief Financial Officer since 2015.
ODP Corporation ("ODP"), formerly Office Depot, Inc., along with its subsidiaries and affiliates, is our largest customer in the Paper segment. Effective January 1, 2023, we have a new agreement with ODP in which we will continue to supply commodity and non-commodity office papers through December 31, 2024.
ODP Corporation ("ODP"), formerly Office Depot, Inc., along with its subsidiaries and affiliates, is our largest customer in the Paper segment. Effective January 1, 2024, we have amended the agreement with ODP in which we will continue to supply commodity and non-commodity office papers through December 31, 2025.
ODP Corporation ("ODP"), formerly Office Depot, Inc., along with its subsidiaries and affiliates, is our largest customer in the Paper segment. Effective January 1, 2023, we have a new agreement with ODP in which we will continue to supply commodity and non-commodity office papers through December 31, 2024.
ODP Corporation ("ODP"), formerly Office Depot, Inc., along with its subsidiaries and affiliates, is our largest customer in the Paper segment. Effective January 1, 2024, we have amended the agreement with ODP in which we will continue to supply commodity and non-commodity office papers through December 31, 2025.
We are experiencing significant cost inflation and volatility for key inputs such as fuels and chemicals. We have the ability to use various types of purchased fuels in our manufacturing operations, including natural gas, bark, and other purchased fuels. Fuel prices, in particular prices for oil and natural gas, have fluctuated in the past.
We have, at times, experienced significant cost inflation and volatility for key inputs such as fuels and chemicals. We have the ability to use various types of purchased fuels in our manufacturing operations, including natural gas, bark, and other purchased fuels. Fuel prices, in particular prices for oil and natural gas, have fluctuated in the past.
Executive Officers of the Registrant Brief statements setting forth the age at February 23, 2023, the principal occupation, employment during the past five years, the year in which such person first became an officer of PCA, and other information concerning each of our executive officers appears below. Mark W. Kowlzan, 67, Chairman and Chief Executive Officer - Mr.
Executive Officers of the Registrant Brief statements setting forth the age at February 29, 2024, the principal occupation, employment during the past five years, the year in which such person first became an officer of PCA, and other information concerning each of our executive officers appears below. Mark W. Kowlzan, 68, Chairman and Chief Executive Officer - Mr.
The Packaging segment’s net sales to third parties totaled $7.8 billion in 2022. 4 Facilities We manufacture containerboard, which includes a variety of performance and specialty grades, at our containerboard mills. Total annual containerboard capacity was approximately 5.0 million tons as of December 31, 2022. We also produce corrugated and protective packaging products at 89 manufacturing locations.
The Packaging segment’s net sales to third parties totaled $7.1 billion in 2023. 4 Facilities We manufacture containerboard, which includes a variety of performance and specialty grades, at our containerboard mills. Total annual containerboard capacity was approximately 5.1 million tons as of December 31, 2023. We also produce corrugated and protective packaging products at 86 manufacturing locations.
Published containerboard prices have decreased beginning in the fourth quarter of 2022, which will result in lower prices for our containerboard and corrugated products and lower profitability. Changes in how these surveyed price levels are determined or maintained may affect our sales prices.
Published containerboard prices have decreased beginning in the fourth quarter of 2022 and throughout 2023, which resulted in lower prices for our containerboard and corrugated products and lower profitability. Changes in how these surveyed price levels are determined or maintained may affect our sales prices.
ESG - We may not achieve or make satisfactory progress on our goals and targets to reduce emissions and satisfy other ESG metrics. Investors, governmental authorities, and other interested parties have recently focused on ESG matters, including with respect to climate change, greenhouse gas emissions, and sustainable business practices.
ESG – We may not achieve or make satisfactory progress on our goals and targets to reduce emissions and satisfy other ESG metrics. Investors, customers, governmental authorities, and other interested parties have an increased focus on ESG matters, including with respect to climate change, greenhouse gas emissions, and sustainable business practices.
The process steam is used throughout the production process and also to generate electricity. In 2022, our packaging mills consumed about 80 million MMBTUs of fuel to produce both steam and electricity.
The process steam is used throughout the production process and also to generate electricity. In 2023, our packaging mills consumed about 82 million MMBTUs of fuel to produce both steam and electricity.
Of the 80 million MMBTUs consumed, about 63% was from mill-generated biogenic fuels that are by-products of our containerboard manufacturing and pulping process and 37% was from purchased fuels. Of the purchased fuels, 73% was from natural gas, 25% was from purchased wood waste and 2% was from other purchased fuels. Chemical supply.
Of the 82 million MMBTUs consumed, about 63% was from mill-generated biogenic fuels that are by-products of our containerboard manufacturing and pulping process and 37% was from purchased fuels. Of the purchased fuels, 71% was from natural gas, 27% was from purchased wood waste and 2% was from other purchased fuels. Chemical supply.
Changing demographics and labor work force trends may make it difficult for us to replace retiring employees at our manufacturing and other facilities. U.S. labor market conditions remain tight and labor shortages were exacerbated by the COVID-19 pandemic. We have experienced higher than historical employee turnover in certain of our facilities.
Changing demographics and labor work force trends may make it difficult for us to replace retiring employees at our manufacturing and other facilities. U.S. labor market conditions remain tight, and we have, at times, experienced labor shortages and/or higher than historical employee turnover in certain of our facilities.
During the year ended December 31, 2022, our Packaging segment produced 4.6 million tons of containerboard at our mills. Our corrugated products manufacturing plants sold 63.4 billion square feet (BSF) of corrugated products.
During the year ended December 31, 2023, our Packaging segment produced 4.5 million tons of containerboard at our mills. Our corrugated products manufacturing plants sold 60.5 billion square feet (BSF) of corrugated products.
If the agreement is not renewed by the parties, ODP's obligation to purchase paper would phase down over a two-year period beginning January 1, 2025. In 2022, our sales revenue to ODP represented 48% of our Paper segment sales revenue and 4% of our consolidated sales revenue.
If the agreement is not renewed by the parties, ODP's obligation to purchase paper would phase down over a two-year period beginning January 1, 2026. In 2023, our sales revenue to ODP represented 61% of our Paper segment sales revenue and 5% of our consolidated sales revenue.
If the agreement is not renewed by the parties, ODP’s obligation to purchase paper would phase down over a two-year period beginning January 1, 2025. In 2022, sales to ODP represented 48% of our Paper segment sales and 4% of our consolidated sales.
If the agreement is not renewed by the parties, ODP's obligation to purchase paper would phase down over a two-year period beginning January 1, 2026. In 2023, sales to ODP represented 61% of our Paper segment sales and 5% of our consolidated sales.
These personnel also coordinate and execute all containerboard trade agreements with other containerboard manufacturers. Containerboard produced in our mills is primarily shipped by rail or truck. Our corrugated products are delivered by truck due to our large number of customers and their demand for timely service. Our corrugated manufacturing operations typically serve customers within a 150-mile radius.
These personnel also coordinate and execute all containerboard trade agreements with other containerboard manufacturers. Containerboard produced in our mills is primarily shipped by rail or truck. Our corrugated products are delivered by truck due to proximity of our corrugated manufacturing operations to customers and load size. Our corrugated manufacturing operations typically serve customers within a 150-mile radius.
Our actual results, performance, or achievement could differ materially from those expressed in, or implied by, these forward-looking statements, and accordingly, we can give no assurances that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on our results of operations or financial condition.
These factors, risks and uncertainties include, but are not limited to, the factors described below. 10 Our actual results, performance, or achievement could differ materially from those expressed in, or implied by, these forward-looking statements, and accordingly, we can give no assurances that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on our results of operations or financial condition.
The cost and availability of wood fiber can also be impacted by weather, general logging conditions, geography, and regulatory activity. The availability and cost of recycled fiber depends heavily on recycling rates and the domestic and global supply and demand for recycled products.
The cost and availability of wood fiber can also be impacted by weather, general logging conditions, geography, and regulatory activity. The availability and cost of recycled fiber depends heavily on recycling rates and the domestic and global supply and demand for recycled products. We purchase recycled fiber for use at six of our containerboard mills.
A 1% increase in COS and SG&A costs would increase costs by $70 million and cash costs by $65 million. Debt obligations - Our debt service obligations may reduce our operating flexibility. At December 31, 2022, we had $2.5 billion of debt outstanding and a $321 million undrawn revolving credit facility, after deducting letters of credit.
A 1% increase in COS and SG&A costs would increase costs by $67 million and cash costs by $61 million. Debt obligations – Our debt service obligations may reduce our operating flexibility. At December 31, 2023, we had $2.9 billion of debt outstanding and a $323 million undrawn revolving credit facility, after deducting letters of credit.
New and more stringent environmental regulations may be adopted and may require us to incur additional operating expenses and/or significant additional capital expenditures to modify or replace certain of our boilers and other equipment. In addition, environmental regulations may increase the cost of our raw materials and purchased energy.
New and more stringent environmental regulations may be adopted and may require us to incur additional operating expenses and/or significant additional capital expenditures to modify or replace certain of our boilers and other equipment.
First Quarter Second Quarter Third Quarter Fourth Quarter Full Year Containerboard Production (thousand tons) 2022 1,233 1,256 1,116 961 4,566 2021 1,195 1,193 1,256 1,243 4,887 2020 1,047 1,072 1,048 1,174 4,341 Corrugated Products Shipments (billion square feet) 2022 16.8 16.5 15.4 14.7 63.4 2021 16.4 16.5 16.4 16.4 65.7 2020 15.3 15.1 16.0 16.4 62.8 UFS Production (thousand tons) 2022 126 127 123 130 506 2021 145 149 148 130 572 2020 224 148 129 147 648 3 Below is a map of our locations: Packa ging Packaging Products Our containerboard mills produce linerboard and corrugating medium, which are papers primarily used in the production of corrugated products.
First Quarter Second Quarter Third Quarter Fourth Quarter Full Year Containerboard Production (thousand tons) 2023 1,086 1,112 1,118 1,213 4,529 2022 1,233 1,256 1,116 961 4,566 2021 1,195 1,193 1,256 1,243 4,887 Corrugated Products Shipments (billion square feet) 2023 14.7 14.9 15.2 15.7 60.5 2022 16.8 16.5 15.4 14.7 63.4 2021 16.4 16.5 16.4 16.4 65.7 UFS Production (thousand tons) 2023 126 116 109 121 472 2022 126 127 123 130 506 2021 145 149 148 130 572 3 Below is a map of our locations: Packa ging Packaging Products Our containerboard mills produce linerboard and corrugating medium, which are papers primarily used in the production of corrugated products.
These standards are aimed at ensuring the long-term health and conservation of forestry resources. We are committed to sourcing wood fiber through environmentally, socially, and economically sustainable practices and promoting resource and conservation stewardship ethics. Energy supply. Energy at our packaging mills is obtained through self-generated or purchased fuels and electricity.
We are committed to sourcing wood fiber through environmentally, socially, and economically sustainable practices and promoting resource and conservation stewardship ethics. Energy supply. Energy at our packaging mills is obtained through self-generated or purchased fuels and electricity.
Our workforce is highly unionized and operates under various collective bargaining agreements. We must negotiate to renew or extend any union contracts that have recently expired or are expiring in the near future.
Labor Relations – If we experience strikes or other work stoppages, our business will be harmed. Our workforce is highly unionized and operates under various collective bargaining agreements. We must negotiate to renew or extend any union contracts that have recently expired or are expiring in the near future.
The mill can produce basis weights from 23 lb. to 47 lb. Filer City. Our Filer City, Michigan mill produces corrugating medium on three machines. The mill can produce basis weights from 20 lb. to 47 lb. Wallula. Our Wallula, Washington mill produces corrugating medium on its No. 2 machine and kraft linerboard on its No. 3 machine.
The mill can produce basis weights from 23 lb. to 47 lb. Filer City. Our Filer City, Michigan mill produces corrugating medium on three machines. The mill can produce basis weights from 20 lb. to 47 lb. Wallula.
Macroeconomic conditions and fluctuations in industry capacity can create changes in prices, sales volumes, and margins for most of our products, particularly commodity grades of packaging and paper products.
Industry Cyclicality – Changes in the prices of our products could materially affect our financial condition, results of operations, and liquidity. Macroeconomic conditions and fluctuations in industry capacity can create changes in prices, sales volumes, and margins for most of our products, particularly commodity grades of packaging and paper products.
We have at times experienced lower availability of third-party trucking services, including truck and driver shortages, and service issues, interruptions, and delays in rail services, which are exacerbated in periods of high demand for such services. These issues became more pronounced in 2021 and persisted at times during 2022.
We ship our products primarily by truck and rail. We have at times experienced lower availability of third-party trucking services, including truck and driver shortages, and service issues, interruptions, and delays in rail services, which are exacerbated in periods of high demand for such services.
These events could harm our ability to produce our products and serve our customers and may lead to higher costs and reduced earnings.
These events could harm our ability to produce our products and serve our customers and may lead to higher costs and reduced earnings . Extreme Weather Events – Our facilities are susceptible to extreme weather events, which could disrupt our business.
There are important factors that could cause actual results to differ materially from those in forward-looking statements, many of which are beyond our control. These factors, risks and uncertainties include, but are not limited to, the factors described below.
There are important factors that could cause actual results to differ materially from those in forward-looking statements, many of which are beyond our control.
Prices for recycled fiber may continue to fluctuate significantly in the future, and a significant increase could result in higher costs and lower earnings.
Periods of higher recycled fiber costs and unusual price volatility have occurred in the past, including during 2023. Prices for recycled fiber may continue to fluctuate significantly in the future, and a significant increase could result in higher costs and lower earnings.
Any significant deterioration in the financial condition of ODP affecting its ability to pay or any other change that makes ODP less willing to purchase our products will harm our Paper business and results of operations.
Any significant deterioration in the financial condition of ODP affecting its ability to pay or any other change that makes ODP less willing to purchase our products will harm our Paper business and results of operations. 12 Transportation Costs – Reduced truck and rail availability could lead to higher costs or poorer service, resulting in lower earnings, and harm our ability to distribute our products.
Further changes in tax laws or tax rates may have a material impact on our future cash taxes, effective tax rate or deferred tax assets and liabilities.
Further changes in tax laws or tax rates may have a material impact on our future cash taxes, effective tax rate or deferred tax assets and liabilities. These conditions are beyond our control and may have a material impact on our business, results of operations, liquidity, and financial position.
Although we have established reserves to provide for known environmental liabilities, these reserves may change over time due to the enactment of new environmental laws or regulations or changes in existing laws or regulations, which might require additional significant environmental expenditures. Labor Relations- If we experience strikes or other work stoppages, our business will be harmed.
In addition, environmental regulations may increase the cost of our raw materials and purchased energy. Although we have established reserves to provide for known environmental liabilities, these reserves may change over time due to the enactment of new environmental laws or regulations or changes in existing laws or regulations, which might require additional significant environmental expenditures.
We procure wood fiber through leases of cutting rights, long-term supply agreements, and market purchases and believe we have adequate sources of fiber supply for the foreseeable future. 5 As part of our renewable virgin fiber sourcing efforts, we participate in the Sustainable Forestry Initiative® (SFI), the Programme for the Endorsement of Forest Certification (PEFC), as well as the Forest Stewardship Council® (FSC®), and we are certified under their sourcing and chain of custody standards.
As part of our renewable virgin fiber sourcing efforts, we participate in the Sustainable Forestry Initiative® (SFI), the Programme for the Endorsement of Forest Certification (PEFC), as well as the Forest Stewardship Council® (FSC®), and we are certified under their sourcing and chain of custody standards. These standards are aimed at ensuring the long-term health and conservation of forestry resources.
We experienced higher freight costs in 2022 due to truck and driver shortages and limited boxcar availability, as well as fuel surcharges. Customers We sell containerboard and corrugated products to approximately 15,000 customers in approximately 31,000 locations. About 70% of our corrugated products sales are to regional and local accounts, which are broadly diversified across industries and geographic locations.
Customers We sell containerboard and corrugated products to approximately 14,000 customers in approximately 30,000 locations. About 70 % of our corrugated products sales are to regional and local accounts, which are broadly diversified across industries and geographic locations.
We are subject to, and must comply with, a variety of federal, state and local environmental laws, particularly those relating to air and water quality, waste disposal and the cleanup of contaminated soil and groundwater. Failure to comply with these regulations could result in fines, which may be significant, or other adverse regulatory action.
Environmental Matters – PCA may incur significant environmental liabilities with respect to both past and future operations. We are subject to, and must comply with, a variety of federal, state and local environmental laws, particularly those relating to air and water quality, waste disposal and the cleanup of contaminated soil and groundwater.
However, PCA has not experienced significant disruptions in its operations and has managed to maintain adequate availability of its workforce and supply of raw materials and services to continue to serve its customers. 8 We have extensive recruiting, training and development programs designed to attract and retain a highly talented workforce aligned with our objectives to relentlessly serve our customers and achieve operational excellence throughout our organization.
We have extensive recruiting, training and development programs designed to attract and retain a highly talented workforce aligned with our objectives to relentlessly serve our customers and achieve operational excellence throughout our organization.
Because environmental regulations are constantly evolving, we have incurred, and will continue to incur, costs to maintain compliance with those laws. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Environmental Matters” for estimates of expenditures we expect to make for environmental compliance in the next few years.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations - Environmental Matters” for estimates of expenditures we expect to make for environmental compliance in the next few years.
Beginning in the third quarter of 2021, we began producing corrugating medium on the No. 1 machine. As of December 31, 2022, we operated 89 corrugated manufacturing and protective packaging operations, a technical and development center, 10 regional design centers, a rotogravure printing operation, and a complement of packaging supplies and distribution centers.
As of December 31, 2023, we operated 86 corrugated manufacturing and protective packaging operations, a technical and development center, seven regional design centers, a rotogravure printing operation, and a complement of packaging supplies and distribution centers.
Beginning in October 2020, operating results for the Jackson mill are included in both the Packaging and Paper segments.
Before October 2020, Jackson had historically operated as a UFS paper mill, with its results of operations reported in our Paper segment. Beginning in October 2020, operating results for the Jackson mill are included in both the Packaging and Paper segments.
We publicly disclose in our annual responsibility report our employee demographics in the form of our annual EEO-1 report. Our responsibility report is available on our website and is not intended to be incorporated by reference herein. To promote employee engagement and improve the work experience of our employees, PCA regularly conducts employee engagement surveys.
Our responsibility report is available on our website and is not intended to be incorporated by reference herein. 8 PCA regularly conducts employee engagement surveys to measure our employees’ overall satisfaction as well as gain a better understanding of how to improve our employees’ work experience.
Delayed shipments, slowed production, or other issues resulting from these disruptions could result in lost sales, business delays, and negative publicity and could have a material adverse effect on our operations, financial condition, or operating cash flows. 14 Environmental Matters - PCA may incur significant environmental liabilities with respect to both past and future operations.
Delayed shipments, slowed production, or other issues resulting from these disruptions could result in lost sales, business delays, and negative publicity and could have a material adverse effect on our operations, financial condition, or operating cash flows. For further discussion pertaining to cybersecurity strategy and related roles and responsibilities, see “Part I, Item 1C. Cybersecurity” of this Form 10-K.
We purchase recycled fiber for use at six of our containerboard mills and a small amount at our paper mill. In 2022, we purchased approximately 765,000 tons of recycled fiber at our containerboard mills, net of the recycled fiber generated by our corrugated box plants.
In 2023, we purchased approximately 809,000 tons of recycled fiber at our containerboard mills, net of the recycled fiber generated by our corrugated box plants. The amount of recycled fiber purchased each year varies based upon production and the prices of both recycled fiber and wood fiber.
In 2022, our total company costs including cost of sales (COS) and selling, general, and administrative expenses (SG&A) was $7.0 billion, and excluding non-cash costs (depreciation, depletion and amortization, pension and postretirement expense, and share-based compensation expense) was $6.5 billion .
If we are unable to offset these cost increases by price increases, growth, and/or cost reductions in our operations, these inflationary and other general cost increases could have a material adverse effect on our operating cash flows, profitability, and liquidity. 14 In 2023, our total company costs including cost of sales (COS) and selling, general, and administrative expenses (SG&A) was $6.7 billion, and excluding non-cash costs (depreciation, depletion and amortization, pension and postretirement expense, and share-based compensation expense) was $6.1 billion.
The majority of our unionized employees are represented by the United Steel Workers (USW), the International Brotherhood of Teamsters (IBT), the International Association of Machinists (IAM), and the Association of Western Pulp and Paper Workers (AWPPW). During 2022, PCA reached new six-year master labor agreements covering seven mills and 25 container plants.
Approximately 63% of our hourly employees worked pursuant to collective bargaining agreements. The majority of our unionized employees are represented by the United Steel Workers (USW), the Printing Packaging Production Workers Union (PPPWU), the Association of Western Pulp and Paper Workers (AWPPW), the International Association of Machinists (IAM), and the International Brotherhood of Teamsters (IBT).
Beginning in mid-2022, we have experienced a deterioration in operating conditions involving our Packaging business as a result of general economic conditions and our customers lowering their inventories. This has resulted in lower demand for our containerboard and corrugated products and lower production, which is continuing into 2023 and has negatively affected our profitability.
During the first half of 2023, we experienced a deterioration in operating conditions involving our Packaging business as a result of general economic conditions and lower demand with customers adjusting their ordering patterns to reduce their inventories, which negatively affected our profitability. However, demand rebounded in the second half of 2023. The economic outlook for 2024 remains uncertain.
The mill can produce linerboard in basis weights from 22 lb. to 34 lb. and medium in basis weights from 23 lb. to 33 lb. Before October 2020, Jackson had historically operated as a UFS paper mill, with its results of operations reported in our Paper segment.
Our Wallula, Washington mill produces corrugating medium on its No. 2 machine and kraft linerboard and corrugating medium on its No. 3 machine. The mill can produce medium in basis weights from 23 lb. to 33 lb. and linerboard in basis weights from 31 lb. to 52 lb. Jackson.
General economic conditions have resulted in higher inflation, which has led to higher costs across our business. If we are unable to offset these cost increases by price increases, growth, and/or cost reductions in our operations, these inflationary and other general cost increases could have a material adverse effect on our operating cash flows, profitability, and liquidity.
General economic conditions have resulted in higher inflation, which has led to higher costs across our business.
According to the survey, PCA’s overall employee engagement level is in line with other U.S. manufacturing companies. Our survey continued to have a high level of participation, assuring us that the survey results are an accurate reflection of the feelings and opinions of our employees.
Our last survey, conducted in 2022, had a high level of participation, assuring us that the results were an accurate reflection of the feelings and opinions of our employees. Our employees reaffirmed our strong safety culture, our dedication to being socially and environmentally responsible and responded favorably to questions on diversity, equity and inclusion.
Key components to our system include commitment from management, extensive training of employees, hazard identification and communication and regular safety audits. During 2022, we were committed to conducting safe operations through the COVID-19 pandemic in accordance with the guidelines of the Center for Disease Control and applicable health and safety regulations.
Key components to our system include commitment from management, extensive training of employees, hazard identification and communication and regular safety audits. PCA has, at times, experienced labor shortages and/or higher than historical employee turnover in certain of our facilities.
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In 2022, our usage of recycled fiber, net of internal generation, represents 17% of our containerboard production.
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Beginning in the third quarter of 2021, we began producing corrugating medium on the No. 1 machine. The production of corrugating medium on the No. 1 machine has continued to date, and consequently, the operating results for the Jackson mill are included in the Packaging segment for the periods presented.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur properties have been generally well maintained and are in good operating condition. In general, our facilities have sufficient capacity and are adequate for our production and distribution requirements. As of December 31, 2022, we own buildings and land for our eight mills.
Biggest changeOur properties have been generally well maintained and are in good operating condition. In general, our facilities have sufficient capacity and are adequate for our production and distribution requirements. 16 As of December 31, 2023, we own buildings and land for our eight mills.
Additionally, we have 89 corrugated manufacturing operations, of which the buildings and land for 53 are owned, including 45 combining operations, or corrugated plants, one corrugated sheet-only manufacturer, and seven sheet plants. We lease the buildings for 13 corrugated plants and 23 sheet plants. We own warehouses and miscellaneous other properties, including sales offices and woodlands management offices.
Additionally, we have 86 corrugated manufacturing operations, of which the buildings and land for 53 are owned, including 45 combining operations, or corrugated plants, one corrugated sheet-only manufacturer, and seven sheet plants. We lease the buildings for 13 corrugated plants and 20 sheet plants. We own warehouses and miscellaneous other properties, including sales offices and woodlands management offices.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. LEG AL PROCEEDINGS Information concerning legal proceedings can be found in Note 20, Commitments, Guarantees, Indemnifications, and Legal Proceedings, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K. Item 4. MINE SAFETY DISCLOSURE Not applicable. 16 PAR T II
Biggest changeItem 3. LEG AL PROCEEDINGS Information concerning legal proceedings can be found in Note 19, Commitments, Guarantees, Indemnifications, and Legal Proceedings, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K. Item 4. MINE SAFETY DISCLOSURE Not applicable. 17 PAR T II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(b) Excludes commissions. 17 Performance Graph The graph below compares PCA’s cumulative 5-year total shareholder return on common stock with the cumulative total returns of the S&P 500 index; the S&P Midcap 400 index; and a customized peer group of two companies that includes: International Paper and WestRock Company.
Biggest changeDuring the three months ended December 31, 2023, there were no repurchases of common stock made under repurchase plans authorized by PCA’s Board of Directors and no shares withheld from employees to cover income and payroll taxes on equity awards that vested. 18 Performance Graph The graph below compares PCA’s cumulative 5-year total shareholder return on common stock with the cumulative total returns of the S&P 500 index; the S&P Midcap 400 index; and a customized peer group of two companies that includes: International Paper and WestRock Company.
The graph tracks the performance of a $100 investment (including the reinvestment of all dividends) in our common stock, in each index, and in each peer group's common stock from December 31, 2017 through December 31, 2022. The stock price performance included in this graph is not necessarily indicative of future stock price performance.
The graph tracks the performance of a $100 investment (including the reinvestment of all dividends) in our common stock, in each index, and in each peer group’s common stock from December 31, 2018 through December 31, 2023. The stock price performance included in this graph is not necessarily indicative of future stock price performance.
Item 5. MARKET FO R REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information PCA’s common stock is listed on the New York Stock Exchange (NYSE) under the symbol “PKG”. Stockholders On February 17, 2023, there were 142 holders of record of our common stock.
Item 5. MARKET FO R REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information PCA’s common stock is listed on the New York Stock Exchange (NYSE) under the symbol “PKG.” Stockholders On February 23, 2024, there were 140 holders of record of our common stock.
The timing and amount of repurchases will be determined by the Company in its discretion based on factors such as PCA’s stock price and market and business conditions. During the third and fourth quarters of 2022, we paid $523 million, including fees, to repurchase 4.0 million shares of common stock.
The timing and amount of repurchases will be determined by the Company in its discretion based on factors such as PCA’s stock price and market and business conditions. During the third quarter of 2023, we paid $41.5 million, including fees, to repurchase 0.3 million shares of common stock. All shares repurchased have been retired.
During the fourth quarter of 2021, we paid $193 million, including fees, to repurchase 1.4 million shares of common stock, which was the entire remaining amount of repurchase authority we had under previously announced share repurchase programs. The Company did not repurchase any shares of its common stock during the year ended December 31, 2020.
During the fourth quarter of 2021, we paid $193.0 million, including fees, to repurchase 1.4 million shares of common stock, which was the entire remaining amount of repurchase authority we had under previously announced share repurchase programs. Pursuant to its equity incentive plan, the Company withholds shares from vesting employee equity awards to cover employee tax liabilities.
Cumulative Total Return December 31, 2017 2018 2019 2020 2021 2022 Packaging Corporation of America $ 100.00 $ 71.14 $ 98.42 $ 125.25 $ 127.27 $ 123.91 S&P 500 100.00 95.62 125.72 148.85 191.58 156.89 S&P Midcap 400 100.00 88.92 112.21 127.54 159.12 138.34 Peer Group 100.00 67.94 81.26 89.63 92.95 73.08 The information in the graph and table above is not deemed “filed” with the Securities and Exchange Commission and is not to be incorporated by reference in any of PCA’s filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date of this Annual Report on Form 10-K, except to the extent that PCA specifically incorporates such information by reference.
Cumulative Total Return December 31, 2018 2019 2020 2021 2022 2023 Packaging Corporation of America $ 100.00 $ 138.35 $ 176.07 $ 178.90 $ 174.18 $ 229.71 S&P 500 100.00 131.49 155.68 200.37 164.08 207.21 S&P Midcap 400 100.00 126.20 143.44 178.95 155.58 181.15 Peer Group 100.00 119.60 131.91 136.81 107.55 123.93 The information in the graph and table above is not deemed “filed” with the Securities and Exchange Commission and is not to be incorporated by reference in any of PCA’s filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date of this Annual Report on Form 10-K, except to the extent that PCA specifically incorporates such information by reference.
Pursuant to its equity incentive plan, the Company withholds shares from vesting employee equity awards to cover employee tax liabilities. We withheld 110,827 shares in 2022 to cover $15.4 million in employee tax liabilities, 95,437 shares in 2021 to cover $12.9 million in employee tax liabilities, and 107,627 shares in 2020 to cover $10.5 million in employee tax liabilities.
We withheld 120,534 shares in 2023 to cover $15.7 million in employee tax liabilities, 110,827 shares in 2022 to cover $15.4 million in employee tax liabilities, and 95,437 shares in 2021 to cover $12.9 million in employee tax liabilities.
At December 31, 2022, $477 million of the authorized amount remained available for repurchase of the Company's common stock. All shares repurchased have been retired.
At December 31, 2023, $436.0 million of the authorized amount remained available for repurchase of the Company’s common stock. During the third and fourth quarters of 2022, we paid $522.6 million, including fees, to repurchase 4.0 million shares of common stock.
Removed
The following table presents information related to our repurchases of common stock made under repurchase plans authorized by PCA's Board of Directors, and shares withheld to cover taxes on vesting of equity awards, during the three months ended December 31, 2022: Issuer Purchases of Equity Securities Period Total Number of Shares Purchased (a) Average Price Paid Per Share (b) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in millions) October 1-31, 2022 333,321 $ 118.83 333,200 $ 818.4 November 1-30, 2022 2,073,127 125.70 2,073,127 557.8 December 1-31, 2022 597,185 134.59 596,700 477.5 Total 3,003,633 $ 126.70 3,003,027 $ 477.5 (a) Includes 606 shares withheld from employees to cover income and payroll taxes on equity awards that vested during the period.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeManagement's Discussion and Analysis of Financial Condition and Results of Operations 19 Overview 19 Executive Summary 19 Industry and Business Conditions 21 Results of Operations 21 Liquidity and Capital Resources 23 Commitments 25 Off-Balance Sheet Arrangements 25 Inflation and Other General Cost Increases 25 Regulatory and Environmental Matters 26 Critical Accounting Policies and Estimates 28 New and Recently Adopted Accounting Standards 29 Reconciliations of Non-GAAP Financial Measures to Reported Amounts 29 Item 7A.
Biggest changeManagement's Discussion and Analysis of Financial Condition and Results of Operations 20 Overview 20 Executive Summary 20 Industry and Business Conditions 22 Results of Operations 23 Liquidity and Capital Resources 24 Commitments 26 Off-Balance Sheet Arrangements 27 Inflation and Other General Cost Increases 27 Regulatory and Environmental Matters 28 Critical Accounting Policies and Estimates 29 New and Recently Adopted Accounting Standards 30 Reconciliations of Non-GAAP Financial Measures to Reported Amounts 31 Item 7A.
Quantitative and Qualitative Disclosures About Market Risk 31 Item 8. Financial Statements and Supplementary Data 32
Quantitative and Qualitative Disclosures About Market Risk 32 Item 8. Financial Statements and Supplementary Data 33
Item 6. Selected Financial Data 18 Item 7.
Item 6. Selected Financial Data 19 Item 7.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeReconciliations of the non-GAAP measures to the most comparable measure reported in accordance with GAAP for the years ended December 31, 2022 and 2021 follow (dollars in millions): Year Ended December 31, 2022 2021 Income before Taxes Income Taxes Net Income Income before Taxes Income Taxes Net Income As reported in accordance with GAAP $ 1,364.8 $ (335.0 ) $ 1,029.8 $ 1,108.7 $ (267.6 ) $ 841.1 Special items: Jackson mill conversion-related activities (a) 14.1 (3.5 ) 10.6 14.0 (3.5 ) 10.5 Facilities closure and other costs (income) (b) 0.7 (0.2 ) 0.5 (3.6 ) 0.9 (2.7 ) Acquisition and integration-related activities (c) (1.0 ) 0.3 (0.7 ) 0.9 (0.2 ) 0.7 Debt refinancing (d) — — — 58.9 (14.7 ) 44.2 Total special items 13.8 (3.4 ) 10.4 70.2 (17.5 ) 52.7 Excluding special items $ 1,378.6 $ (338.4 ) $ 1,040.2 $ 1,178.9 $ (285.1 ) $ 893.8 (a) For 2022 and 2021, includes charges related to the announced discontinuation of production of uncoated freesheet paper grades on the No. 3 machine at the Jackson, Alabama mill associated with the permanent conversion of the machine to produce linerboard and other paper-to-containerboard conversion related activities. 29 (b) For 2022, includes charges consisting of closure costs related to corrugated products facilities.
Biggest changeReconciliations of the non-GAAP measures to the most comparable measure reported in accordance with GAAP for the years ended December 31, 2023 and 2022 follow (dollars in millions): Year Ended December 31, 2023 2022 Income before Taxes Income Taxes Net Income Income before Taxes Income Taxes Net Income As reported in accordance with GAAP $ 1,014.1 $ (248.9 ) $ 765.2 $ 1,364.8 $ (335.0 ) $ 1,029.8 Special items: Facilities closure and other costs (a) 14.4 (3.6 ) 10.8 0.7 (0.2 ) 0.5 Jackson mill conversion-related activities (b) 11.1 (2.7 ) 8.4 14.1 (3.5 ) 10.6 Acquisition and integration related activities (c) — — — (1.0 ) 0.3 (0.7 ) Total special items 25.5 (6.3 ) 19.2 13.8 (3.4 ) 10.4 Excluding special items $ 1,039.6 $ (255.2 ) $ 784.4 $ 1,378.6 $ (338.4 ) $ 1,040.2 (a) For 2023, includes charges related to the closure of corrugated products facilities and design centers.
Financial Statements and Supplementary Data” of this Form 10-K. New and Recently Adopte d Accounting Standards For a listing of our new and recently adopted accounting standards, see Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K.
Financial Statements and Supplementary Data” of this Form 10-K. New and Recently Adopte d Accounting Standards For a listing of our new and recently adopted accounting standards, see Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in “Part II, Item 8.
However, climate change legislation and the resulting future energy policy could also provide us with opportunities if the use of renewable energy is encouraged. We currently self-generate the majority of our power requirements at our mills using renewable biogenic fuel such as bark, black liquor and biomass, which are derived from renewable resources.
However, climate change legislation and the resulting future energy policy could also provide us with opportunities if the use of renewable energy is encouraged. We currently self-generate the majority of our power requirements at our mills using renewable biogenic fuel such as bark, black liquor and biomass, which are derived from renewable and sustainable resources.
(b) For 2022, includes $0.7 million of charges consisting of closure costs related to corrugated products facilities. These costs were partially offset by insurance proceeds received for a natural disaster at one of the corrugated products facilities, a gain on sale of assets related to a corrugated products facility, and a favorable lease buyout for a closed corrugated products facility.
For 2022, includes $0.7 million of charges consisting of closure costs related to corrugated products facilities. These costs were partially offset by insurance proceeds received for a natural disaster at one of the corrugated products facilities, a gain on sale of assets related to a corrugated products facility, and a favorable lease buyout for a closed corrugated products facility.
In January 2013, the U.S. Environmental Protection Agency (the “EPA”) established a three-year deadline for compliance with the Boiler MACT regulations, establishing air emissions standards and certain other requirements for industrial boilers. PCA's compliance actions involved modifying or replacing certain boilers, and all PCA mills are in full compliance with Boiler MACT requirements. On July 29, 2016, the U.S.
Environmental Protection Agency (the “EPA”) established a three-year deadline for compliance with the Boiler MACT regulations, establishing air emissions standards and certain other requirements for industrial boilers. PCA's compliance actions involved modifying or replacing certain boilers, and all PCA mills are in full compliance with Boiler MACT requirements. On July 29, 2016, the U.S.
The sensitivities may not be additive, so the impact of changing multiple factors simultaneously cannot be calculated by combining the individual sensitivities shown. For more information related to our pension benefit plans, see Note 13, Employee Benefit Plans and Other Postretirement Benefits, of the Notes to Consolidated Financial Statements in “Part II, Item 8.
The sensitivities may not be additive, so the impact of changing multiple factors simultaneously cannot be calculated by combining the individual sensitivities shown. For more information related to our pension benefit plans, see Note 12, Employee Benefit Plans and Other Postretirement Benefits, of the Notes to Consolidated Financial Statements in “Part II, Item 8.
Over view PCA is the third largest producer of containerboard products and a leading producer of uncoated freesheet paper in North America. We operate eight mills and 89 corrugated products manufacturing plants. Our containerboard mills produce linerboard and corrugating medium, which are papers primarily used in the production of corrugated products.
Over view PCA is the third largest producer of containerboard products and a leading producer of uncoated freesheet paper in North America. We operate eight mills and 86 corrugated products manufacturing plants. Our containerboard mills produce linerboard and corrugating medium, which are papers primarily used in the production of corrugated products.
The Company believes that of its significant accounting policies, the following involve a higher degree of judgment and/or complexity: Pensions The Company accounts for defined benefit pension plans in accordance with Accounting Standards Codification ("ASC") 715, Compensation - Retirement Benefits .
The Company believes that of its significant accounting policies, the following involve a higher degree of judgment and/or complexity: Pensions The Company accounts for defined benefit pension plans in accordance with Accounting Standards Codification (“ASC”) 715, Compensation - Retirement Benefits .
The following table for 2022 provides the total MMBTUs purchased externally by fuel type each quarter and the average cost per MMBTU by fuel type for the year. The cost per MMBTU includes the cost of the fuel plus our transportation and delivery costs. 2022 Fuel Purchased (millions of MMBTUs) 2022 Avg.
The following table for 2023 provides the total MMBTUs purchased externally by fuel type each quarter and the average cost per MMBTU by fuel type for the year. The cost per MMBTU includes the cost of the fuel plus our transportation and delivery costs. 2023 Fuel Purchased (millions of MMBTUs) 2023 Avg.
For our discussion and analysis of our results of operations, financial condition and cash flows for the year ended December 31, 2020, the earliest of the years presented in the accompanying audited financial statements included in Item 8 herein, please refer to our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on February 24, 2022.
For our discussion and analysis of our results of operations, financial condition and cash flows for the year ended December 31, 2021, the earliest of the years presented in the accompanying audited financial statements included in Item 8 herein, please refer to our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on February 23, 2023.
Accumulated losses in excess of 10% of the greater of the projected benefit obligation or the market-related value of assets will be recognized on a straight-line basis over the average remaining service period of active employees in PCA plans (which is between six and nine years) and over the average remaining lifetime of inactive participants of Boise plans (which is between 22 and 25 years), to the extent that losses are not offset by gains in subsequent years.
Accumulated losses in excess of 10% of the greater of the projected benefit obligation or the market-related value of assets will be recognized on a straight-line basis over the average remaining service period of active employees in the PCA plans (which is between six and nine years) and over the average remaining lifetime of inactive participants of the Boise plan (which is approximately 23 years), to the extent that losses are not offset by gains in subsequent years.
These expenditures could increase or decrease as a result of a number of factors, including our financial results, strategic opportunities, future economic conditions, and our regulatory compliance requirements. We currently estimate capital expenditures to comply with environmental regulations will be about $20 million in 2023.
These expenditures could increase or decrease as a result of a number of factors, including our financial results, strategic opportunities, future economic conditions, and our regulatory compliance requirements. We currently estimate capital expenditures to comply with environmental regulations will be about $15 million in 2024.
We are seeking to further improve our environmental impact by setting goals to reduce our absolute Scope 1 and 2 (market-based) greenhouse gas emissions by 35% by 2030 from a 2021 baseline year and to reach net-zero carbon emissions within our own operations and our value chain by 2050.
We are seeking to further improve our environmental impact and have voluntarily set goals to reduce our absolute Scope 1 and 2 (market-based) greenhouse gas emissions by 35% by 2030 from a 2021 baseline year and to reach net-zero carbon emissions within our own operations and our value chain by 2050.
From 2006 through 2022, there were no significant environmental remediation costs at PCA's mills and corrugated plants. As of December 31, 2022, we maintained an environmental reserve of $25.2 million relating to on-site landfills and surface impoundments as well as ongoing and anticipated remedial projects.
From 2006 through 2023, there were no significant environmental remediation costs at PCA's mills and corrugated plants. As of December 31, 2023, we maintained an environmental reserve of $25.8 million relating to on-site landfills and surface impoundments as well as ongoing and anticipated remedial projects.
The following table presents selected assumptions used and expected to be used in the measurement of pension expense in the following periods (dollars in millions): Year Ending December 31, Year Ended December 31, 2023 2022 2021 Pension expense $ 22.7 $ 5.3 $ 2.1 Assumptions Discount rate 5.06 % 2.89 % 2.57 % Expected rate of return on plan assets 5.52 % 4.08 % 4.91 % 28 A change of 0.25% in either direction to the discount rate or the expected rate of return on plan assets would have had the following effect on 2022 and 2023 pension expense (dollars in millions): Increase (Decrease) in Pension Expense(a) Base Expense 0.25% Increase 0.25% Decrease 2022 Discount rate $ 5.3 $ (1.8 ) $ 1.6 Expected rate of return on plan assets 5.3 (3.4 ) 3.4 2023 Discount rate $ 22.7 $ (2.0 ) $ 2.2 Expected rate of return on plan assets 22.7 (2.6 ) 2.6 (a) The sensitivities shown above are specific to 2022 and 2023.
The following table presents selected assumptions used and expected to be used in the measurement of pension expense in the following periods (dollars in millions): Year Ending December 31, Year Ended December 31, 2024 2023 2022 Pension expense $ 8.4 $ 22.1 $ 5.3 Assumptions Discount rate 4.86 % 5.06 % 2.89 % Expected rate of return on plan assets 5.80 % 5.52 % 4.08 % A change of 0.25% in either direction to the discount rate or the expected rate of return on plan assets would have had the following effect on 2023 and 2024 pension expense (dollars in millions): Increase (Decrease) in Pension Expense(a) Base Expense 0.25% Increase 0.25% Decrease 2023 Discount rate $ 22.1 $ (2.0 ) $ 2.2 Expected rate of return on plan assets 22.1 (2.6 ) 2.6 2024 Discount rate $ 8.4 $ 0.7 $ 1.7 Expected rate of return on plan assets 8.4 (2.8 ) 2.8 (a) The sensitivities shown above are specific to 2023 and 2024.
Financial Statements and Supplementary Data" of this Form 10-K for more information on our debt obligations and interest payments and the timing of expected future payments. • Operating and finance leases. See Note 3, Leases, of the Consolidated Financial Statements included in "Part II, Item 8.
Financial Statements and Supplementary Data” of this Form 10-K for more information on our debt obligations and interest payments and the timing of expected future payments. • Operating and finance leases. See Note 3, Leases, of the Consolidated Financial Statements included in “Part II, Item 8.
The purchases by quarter and the average cost per CkWh were as follows: 2022 Purchased Electricity (millions of CkWh) 2022 Avg.
The purchases by quarter and the average cost per CkWh were as follows: 2023 Purchased Electricity (millions of CkWh) 2023 Avg.
Certain items of product input costs have historically been subject to more cost volatility including fiber, purchased energy, and chemicals. 25 Energy Our mills represent about 90% of our total purchased fuel costs. In 2022, our Packaging and Paper mills consumed about 91 million MMBTUs of fuel, including internally generated and externally purchased, to produce both steam and electricity.
Certain items of product input costs have historically been subject to more cost volatility including fiber, purchased energy, and chemicals. Energy Our mills represent about 90% of our total purchased fuel costs. In 2023, our Packaging and Paper mills consumed about 93 million MMBTUs of fuel, including internally generated and externally purchased, to produce both steam and electricity.
(c) For 2022, includes income from a favorable inventory adjustment related to the December 2021 Advance Packaging Corporation acquisition, partially offset by acquisition and integration related costs. For 2021, includes charges for acquisition and integration costs related to the acquisition.
(c) Includes income from a favorable inventory adjustment related to the December 2021 Advance Packaging Corporation acquisition, partially offset by acquisition and integration related costs.
Such information is presented in Item 7 of such report under the subcaptions “Results of Operations —Year Ended December 31, 2021, Compared with Year Ended December 31, 2020” and “Liquidity and Capital Resources” and is incorporated by reference herein.
Such information is presented in Item 7 of such report under the subcaptions “Results of Operations —Year Ended December 31, 2022, Compared with Year Ended December 31, 2021” and “Liquidity and Capital Resources” and is incorporated by reference herein.
We are headquartered in Lake Forest, Illinois and operate primarily in the United States. Executive Summary Net sales were $8.5 billion for the year ended December 31, 2022 and $7.7 billion for 2021. We reported $1,030 million of net income, or $11.03 per diluted share, in 2022, compared to $841 million, or $8.83 per diluted share, in 2021.
We are headquartered in Lake Forest, Illinois and operate primarily in the United States. Executive Summary Net sales were $7.8 billion for the year ended December 31, 2023 and $8.5 billion for 2022. We reported $765 million of net income, or $8.48 per diluted share, in 2023, compared to $1,030 million, or $11.03 per diluted share, in 2022.
If we are unable to offset these cost increases by price increases, growth, and/or cost reductions in our operations, these inflation and other general cost increases could have a material adverse effect on our operating cash flows, profitability, and liquidity.
Inflation and Other G eneral Cost Increases We are subject to both contractual, inflation, and other general cost increases. If we are unable to offset these cost increases by price increases, growth, and/or cost reductions in our operations, these inflation and other general cost increases could have a material adverse effect on our operating cash flows, profitability, and liquidity.
In 2022, gross profit included $7 million of special items expense related to Jackson mill conversion-related activities, corrugated facility closure costs, and income related to acquisition and integration-related activities, compared to $7 million of special items expense related to Jackson mill conversion-related activities, corrugated facility closure costs, and corrugated facility acquisition costs in 2021.
In 2023, gross profit included $15 million of special items expense related to Jackson mill conversion-related activities and corrugated facility closure and other costs, compared to $7 million of special items expense related to Jackson mill conversion-related activities, corrugated facility closure and other costs, and income related to acquisition and integration-related activities in 2022.
Actual results that differ from assumptions are accumulated and amortized over future periods and, therefore, generally affect recognized expense in future periods. At December 31, 2022, we had approximately $100.3 million of actuarial losses and prior service costs, net of tax, recorded in “Accumulated other comprehensive loss” on our Consolidated Balance Sheet.
Actual results that differ from assumptions are accumulated and amortized over future periods and, therefore, generally affect recognized expense in future periods. At December 31, 2023, we had $70.7 million of actuarial losses and prior service costs, net of tax, recorded in “Accumulated other comprehensive loss” on our Consolidated Balance Sheet.
Special items in 2022 included $5 million of expense for Jackson mill conversion-related activities, corrugated facility closure costs, and income related to acquisition and integration-related activities.
Special items in 2023 included $14 million of expense for corrugated facility closure and other costs. Special items in 2022 included $5 million of expense for Jackson mill conversion-related activities, corrugated facility closure and other costs, and income related to acquisition and integration-related activities. Paper.
See Note 20, Commitments, Guarantees, Indemnifications, and Legal Proceedings, of the Consolidated Financial Statements included in "Part II, Item 8. Financial Statements and Supplementary Data" of this Form 10-K for more information on our purchase commitments and the timing of expected future payments. • Employee benefit obligations.
See Note 19, Commitments, Guarantees, Indemnifications, and Legal Proceedings, of the Consolidated Financial Statements included in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K for more information on our purchase commitments and the timing of expected future payments. • Employee benefit obligations.
Financial Statements and Supplementary Data" of this Form 10-K for more information on the debt refinancing. 24 Commit ments Contractual Obligations Our cash requirements greater than twelve months from contractual obligations and commitments include: • Debt obligations and interest payments. See Note 11, Debt, of the Consolidated Financial Statements included in "Part II, Item 8.
Financial Statements and Supplementary Data” of this Form 10-K for more information on our debt. Commit ments Contractual Obligations Our cash requirements greater than twelve months from contractual obligations and commitments include: • Debt obligations and interest payments. See Note 10, Debt, of the Consolidated Financial Statements included in “Part II, Item 8.
Net income included $10 million of expense for special items in 2022, compared to $53 million of expense for special items in 2021. Special items in both periods are described later in this section.
Net income included $19 million of expense for special items in 2023, compared to $10 million of expense for special items in 2022. Special items in both periods are described later in this section.
Reconciliations of Non-GAAP Financial Measures to Reported Amounts.” PCA ended the year with $470 million of cash and marketable debt securities and, including borrowing availability under its revolving credit facility, $791 million in liquidity. Packaging segment income from operations was $1,424 million in 2022, compared to $1,306 million for 2021.
Reconciliations of Non-GAAP Financial Measures to Reported Amounts.” PCA ended the year with $1,206 million of cash and marketable debt securities and, including borrowing availability under its revolving credit facility, $1,529 million in liquidity. Packaging segment income from operations was $1,074 million in 2023, compared to $1,424 million for 2022.
Financial Statements and Supplementary Data" of this Form 10-K for more information on our lease obligations and the timing of expected future payments. • Asset retirement obligations. See Note 14, Asset Retirement Obligations, of the Consolidated Financial Statements included in "Part II, Item 8.
Financial Statements and Supplementary Data” of this Form 10-K for more information on our lease obligations and the timing of expected future payments. • Asset retirement obligations. See Note 13, Asset Retirement Obligations, of the Consolidated Financial Statements included in “Part II, Item 8.
Packaging segment EBITDA excluding special items was $1,849 million in 2022, compared to $1,688 million in 2021. The increase was driven primarily by higher containerboard and corrugated products prices and mix, partially offset by lower sales and production volumes, higher operating and converting costs, higher freight and logistic expenses, and higher annual outage expense.
Packaging segment EBITDA excluding special items was $1,556 million in 2023, compared to $1,849 million in 2022. The decrease was driven primarily by lower containerboard and corrugated products prices and mix, lower volumes, and higher freight and logistic expenses, partially offset by lower operating and converting costs and lower annual outage expense.
In 2022, our total company costs including cost of sales (COS) and selling, general, and administrative expenses (SG&A) was $7.0 billion, and excluding non-cash costs (depreciation, depletion and amortization, pension and postretirement expense, and share-based compensation expense) was $6.5 billion. A 1% increase in COS and SG&A costs would increase costs by $70 million and cash costs by $65 million.
In 2023, our total company costs including cost of sales (COS) and selling, general, and administrative expenses (SG&A) was $6.7 billion, and excluding non-cash costs (depreciation, depletion and amortization, pension and postretirement expense, and share-based compensation expense) was $6.1 billion. A 1% increase in COS and SG&A costs would increase costs by $67 million and cash costs by $61 million.
The non-GAAP measures are not intended to be substitutes for GAAP financial measures and should not be used as such. 20 Industry and Busi ness Conditions Trade publications reported North American industry-wide corrugated products shipments were down 3.8% during 2022, compared to 2021.
The non-GAAP measures are not intended to be substitutes for GAAP financial measures and should not be used as such. 21 Industry and Busi ness Conditions Trade publications reported North American industry-wide corrugated products shipments were down (5.0%) during 2023, compared to 2022.
Reconciliations of Non-GAAP Finan cial Measures to Reported Amounts Net income excluding special items, EBITDA, and EBITDA excluding special items are non-GAAP financial measures. Management excludes special items, as it believes that these items are not necessarily reflective of the ongoing operations of our business.
Financial Statements and Supplementary Data” of this Form 10-K. 30 Reconciliations of Non-GAAP Finan cial Measures to Reported Amounts Net income excluding special items, EBITDA, and EBITDA excluding special items are non-GAAP financial measures. Management excludes special items, as it believes that these items are not necessarily reflective of the ongoing operations of our business.
Below is a summary table of our cash flows, followed by a discussion of our sources and uses of cash through operating activities, investing activities, and financing activities (dollars in millions): Year Ended December 31, 2022 2021 Net cash provided by (used for): Operating activities $ 1,495.0 $ 1,094.1 Investing activities (833.7 ) (794.4 ) Financing activities (960.0 ) (655.6 ) Net decrease in cash and cash equivalents $ (298.7 ) $ (355.9 ) Operating Activities Our operating cash flow is primarily driven by our earnings and changes in operating assets and liabilities, such as accounts receivable, inventories, accounts payable and other accrued liabilities, as well as other factors described below.
Below is a summary table of our cash flows, followed by a discussion of our sources and uses of cash through operating activities, investing activities, and financing activities (dollars in millions): Year Ended December 31, 2023 2022 Net cash provided by (used for): Operating activities $ 1,315.1 $ 1,495.0 Investing activities (875.1 ) (833.7 ) Financing activities (112.0 ) (960.0 ) Net increase (decrease) in cash and cash equivalents $ 328.0 $ (298.7 ) Operating Activities Our operating cash flow is primarily driven by our earnings and changes in operating assets and liabilities, such as accounts receivable, inventories, accounts payable and other accrued liabilities, as well as other factors described below.
The increase was driven primarily by higher prices and mix in our Packaging and Paper segments, partially offset by lower volumes in our Packaging and Paper segments, higher operating and converting costs, higher freight and logistic expenses, and higher annual outage expense.
The decrease was driven primarily by lower prices and mix in our Packaging segment and lower volumes in our Packaging and Paper segments, partially offset by higher prices and mix in our Paper segment, lower operating and converting costs, and lower annual outage expense.
Increasing shifts to these alternatives have reduced usage of traditional print media and communication papers. Trade publications reported North American uncoated freesheet paper shipments were flat in 2022, compared to 2021.
Increasing shifts to these alternatives have reduced usage of traditional print media and communication papers. Trade publications reported North American uncoated freesheet paper shipments decreased (9.7%) in 2023, compared to 2022.
Business" and Note 1, Nature of Operations and Basis of Presentation, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of this Form 10-K.
Business” and Note 1, Nature of Operations and Basis of Presentation, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K.
We recognize the funded status of our pension plans on our Consolidated Balance Sheet and recognize the actuarial and experienced gains and losses and the prior service costs and credits as a component of “Accumulated Other Comprehensive Loss” in our Consolidated Statement of Changes in Stockholders' Equity.
Financial Statements and Supplementary Data” of this Form 10-K. 29 We recognize the funded status of our pension plans on our Consolidated Balance Sheet and recognize the actuarial and experienced gains and losses and the prior service costs and credits as a component of “Accumulated Other Comprehensive Loss” in our Consolidated Statement of Changes in Stockholders' Equity.
Other Expense, Net Other expense, net for the years ended December 31, 2022 and 2021 are set forth below (dollars in millions): Year Ended December 31, 2022 2021 Asset disposals and write-offs $ (44.5 ) $ (38.9 ) Jackson mill conversion-related activities (6.9 ) (8.9 ) Facilities closure and other income (costs) 0.1 6.5 Acquisition and integration-related activities — (0.6 ) Other (10.0 ) (12.9 ) Total $ (61.3 ) $ (54.8 ) We discuss these items in more detail in Note 7, Other Expense, Net of the Condensed Notes to the Consolidated Financial Statements in “Part II, Item 8.
The decrease was primarily due to lower employee-related expenses, outside services, and bad debt expense. 23 Other Expense, Net Other expense, net for the years ended December 31, 2023 and 2022 are set forth below (dollars in millions): Year Ended December 31, 2023 2022 Asset disposals and write-offs $ (31.7 ) $ (44.5 ) Jackson mill conversion-related activities (1.8 ) (6.9 ) Facilities closure and other (costs) income (7.9 ) 0.1 Other (1.5 ) (10.0 ) Total $ (42.9 ) $ (61.3 ) We discuss these items in more detail in Note 6, Other Expense, Net of the Condensed Notes to the Consolidated Financial Statements in “Part II, Item 8.
For the year ended December 31, 2022, we spent $50 million, and for the years ended December 31, 2021 and 2020, we spent $44 million, to comply with the requirements of these and other environmental laws. Additionally, we had $11 million of environmental capital expenditures in 2022, $10 million in 2021, and $9 million in 2020.
For both the years ended December 31, 2023 and 2022, we spent $50 million, and in 2021, we spent $44 million, to comply with the requirements of these and other environmental laws. Additionally, we had $14 million of environmental capital expenditures in 2023, $11 million in 2022, and $10 million in 2021. In January 2013, the U.S.
Cash from operations excluding changes in cash used for operating assets and liabilities increased $199 million, primarily due to higher income from operations as discussed above.
Cash from operations excluding changes in cash used for operating assets and liabilities decreased $258 million, primarily due to lower income from operations in 2023 as discussed above.
The pension assumptions used to measure pension expense and liabilities are discussed in Note 13, Employee Benefit Plans and Other Postretirement Benefits, of the Notes to Consolidated Financial Statements in "Part II, Item 8. Financial Statements and Supplementary Data" of this Form 10-K.
The pension assumptions used to measure pension expense and liabilities are discussed in Note 12, Employee Benefit Plans and Other Postretirement Benefits, of the Notes to Consolidated Financial Statements in “Part II, Item 8.
The increase, excluding special items, primarily related to higher paper prices and mix ($98 million), lower operating costs ($4 million), and lower depreciation expense ($3 million), partially offset by lower sales and production volumes ($27 million), higher annual outage expense ($8 million), higher freight expense ($4 million), and other costs ($2 million).
The increase, excluding special items, primarily related to higher paper prices and mix ($40 million), lower freight expense ($14 million), and lower other costs ($2 million), partially offset by lower sales and production volumes ($23 million), higher operating costs ($13 million), and higher annual outage expense ($1 million).
Cash requirements for operating activities are subject to PCA's operating needs and the timing of collection of receivables and payments of payables and expenses. 23 During 2022, net cash provided by operating activities was $1,495 million, compared to $1,094 million for 2021, an increase of $401 million.
Cash requirements for operating activities are subject to PCA’s operating needs and the timing of collection of receivables and payments of payables and expenses. During 2023, net cash provided by operating activities was $1,315 million, compared to $1,495 million for 2022, a decrease of $180 million.
Excluding special items, we recorded $1,040 million of net income, or $11.14 per diluted share, in 2022, compared to $894 million, or $9.39 per diluted share, in 2021.
Excluding special items, we recorded $784 million of net income, or $8.70 per diluted share, in 2023, compared to $1,040 million, or $11.14 per diluted share, in 2022.
First Quarter Second Quarter Third Quarter Fourth Quarter Full Year Cost / CkWh Purchased electricity 5.7 5.8 5.5 5.0 22.0 $ 6.86 Regulatory and Environme nt al Matters Our operations are subject to our compliance with the laws and regulations in the jurisdictions in which we operate, primarily in the United States.
First Quarter Second Quarter Third Quarter Fourth Quarter Full Year Cost / CkWh Purchased electricity 5.4 5.2 5.1 5.3 21.0 $ 6.50 27 Regulatory and Environment al Matters Our operations are subject to our compliance with the laws and regulations in the jurisdictions in which we operate, primarily in the United States.
Prices decreased $20 per ton for linerboard and $40 per ton for corrugating medium in November, followed by an additional decrease in December of $20 per ton each. In January 2023, prices decreased $10 per ton for linerboard and $30 per ton for corrugating medium. The market for communication papers competes heavily with electronic data transmission and document storage alternatives.
For corrugating medium, index prices decreased $30 per ton in January 2023, followed by additional decreases of $20 per ton in February 2023, $40 per ton in May 2023, and $20 per ton in November 2023, a total decrease of $110 per ton during 2023. The market for communication papers competes heavily with electronic data transmission and document storage alternatives.
Fuel Type First Quarter Second Quarter Third Quarter Fourth Quarter Full Year Cost / MMBTU Natural gas 7.6 6.4 5.0 5.3 24.3 $ 7.17 Purchased bark 1.6 1.7 2.0 2.1 7.4 2.36 Other purchased fuels 0.1 0.2 0.1 0.2 0.6 8.29 Total mills 9.3 8.3 7.1 7.6 32.3 $ 6.09 In addition, the mills purchased 22.00 million CkWh (hundred kilowatt-hours) of electricity in 2022.
Fuel Type First Quarter Second Quarter Third Quarter Fourth Quarter Full Year Cost / MMBTU Natural gas 6.6 5.6 5.2 6.6 24.0 $ 5.19 Purchased bark 2.6 1.8 1.7 2.1 8.2 2.57 Other purchased fuels 0.2 0.2 0.1 0.1 0.6 10.92 Total mills 9.4 7.6 7.0 8.8 32.8 $ 4.64 In addition, the mills purchased 21.03 million CkWh (hundred kilowatt-hours) of electricity in 2023.
Financial Statements” of this Form 10-K. Income from Operations Income from operations increased $179 million, or 14.4%, for the year ended December 31, 2022, compared to 2021. Income from operations in 2022 included $14 million of expense for special items compared to $11 million in 2021.
Financial Statements” of this Form 10-K. Income from Operations Income from operations decreased $346 million, or (24.3%), for the year ended December 31, 2023, compared to 2022. Income from operations in 2023 included $25 million of expense for special items compared to $14 million in 2022.
Special items in 2022 consisted of $14 million of expense for Jackson mill conversion-related activities, $1 million of corrugated facility closure costs, and $1 million of income related to acquisition and integration-related activities. 2021 special items included $14 million of expense for Jackson mill conversion-related costs and other paper-to-containerboard conversion-related activities, $1 million of expense related to the acquisition of Advance Packaging, and $4 million of income related to corrugated products facility closures.
Special items in 2023 included $14 million of expense related to corrugated facility closure and other costs and $11 million for Jackson mill conversion-related activities. Special items in 2022 consisted of $14 million of expense for Jackson mill conversion-related activities, $1 million of corrugated facility closure and other costs, and $1 million of income related to acquisition and integration-related activities.
Paper segment EBITDA excluding special items was $132 million in 2022, compared to $72 million in 2021. The increase was due primarily to higher paper prices and mix and lower operating costs, partially offset by lower sales and production volumes, higher annual outage expense, and higher freight and logistic expenses.
Paper segment income from operations was $119 million in 2023, compared to $103 million in 2022. Paper segment EBITDA excluding special items was $151 million in 2023, compared to $132 million in 2022. The increase was due primarily to higher paper prices and mix and lower freight and logistic expenses, partially offset by lower volumes and higher operating costs.
The following table reconciles net income to EBITDA and EBITDA excluding special items for the periods indicated (dollars in millions): Year Ended December 31, 2022 2021 Net income $ 1,029.8 $ 841.1 Non-operating pension income (14.5 ) (19.7 ) Interest expense, net 70.4 152.4 Provision for income taxes 335.0 267.6 Depreciation, amortization, and depletion 456.8 417.5 EBITDA $ 1,877.5 $ 1,658.9 Special items: Jackson mill conversion-related activities $ 8.6 $ 9.9 Facilities closure and other costs (income) 0.4 (4.3 ) Acquisition and integration-related activities (1.0 ) 0.9 EBITDA excluding special items $ 1,885.5 $ 1,665.4 30 The following table reconciles segment income (loss) to EBITDA and EBITDA excluding special items (dollars in millions): Year Ended December 31, 2022 2021 Packaging Segment income $ 1,423.7 $ 1,306.0 Depreciation, amortization, and depletion 420.2 381.0 EBITDA 1,843.9 1,687.0 Jackson mill conversion-related activities 5.3 4.3 Facilities closure and other costs (income) 0.4 (3.5 ) Acquisition and integration-related activities (1.0 ) 0.4 EBITDA excluding special items $ 1,848.6 $ 1,688.2 Paper Segment income $ 103.0 $ 39.1 Depreciation, amortization, and depletion 26.1 27.4 EBITDA 129.1 66.5 Jackson mill conversion-related activities 3.3 5.2 EBITDA excluding special items $ 132.4 $ 71.7 Corporate and Other Segment loss $ (106.0 ) $ (103.7 ) Depreciation, amortization, and depletion 10.5 9.1 EBITDA (95.5 ) (94.6 ) Acquisition and integration-related activities — 0.5 Jackson mill conversion-related activities — 0.4 Facilities closure and other income — (0.8 ) EBITDA excluding special items $ (95.5 ) $ (94.5 ) EBITDA $ 1,877.5 $ 1,658.9 EBITDA excluding special items $ 1,885.5 $ 1,665.4
The following table reconciles net income to EBITDA and EBITDA excluding special items for the periods indicated (dollars in millions): Year Ended December 31, 2023 2022 Net income $ 765.2 $ 1,029.8 Non-operating pension expense (income) 7.7 (14.5 ) Interest expense, net 53.3 70.4 Provision for income taxes 248.9 335.0 Depreciation, amortization, and depletion 517.7 456.8 EBITDA $ 1,592.8 $ 1,877.5 Special items: Facilities closure and other costs $ 8.9 $ 0.4 Jackson mill conversion-related activities 2.1 8.6 Acquisition and integration related activities — (1.0 ) EBITDA excluding special items $ 1,603.8 $ 1,885.5 31 The following table reconciles segment income (loss) to EBITDA and EBITDA excluding special items (dollars in millions): Year Ended December 31, 2023 2022 Packaging Segment income $ 1,074.3 $ 1,423.7 Depreciation, amortization, and depletion 472.5 420.2 EBITDA 1,546.8 1,843.9 Facilities closure and other costs 8.9 0.4 Jackson mill conversion-related activities — 5.3 Acquisition and integration related activities — (1.0 ) EBITDA excluding special items $ 1,555.7 $ 1,848.6 Paper Segment income $ 118.9 $ 103.0 Depreciation, amortization, and depletion 29.6 26.1 EBITDA 148.5 129.1 Jackson mill conversion-related activities 2.1 3.3 EBITDA excluding special items $ 150.6 $ 132.4 Corporate and Other Segment loss $ (118.1 ) $ (106.0 ) Depreciation, amortization, and depletion 15.6 10.5 EBITDA (102.5 ) (95.5 ) EBITDA excluding special items $ (102.5 ) $ (95.5 ) EBITDA $ 1,592.8 $ 1,877.5 EBITDA excluding special items $ 1,603.8 $ 1,885.5
The Jackson mill produced only containerboard, and no paper products, during 2022, which drove lower sales and production volumes. We have undertaken activities to convert the Jackson mill from production of paper products, which the mill historically produced, to production of containerboard. For more information, see the Packaging caption in "Part I, Item 1.
Lower volumes were driven by declining uncoated freesheet demand and sales of remaining paper at the Jackson, AL mill in 2022. We have undertaken activities to convert the Jackson mill from production of paper products, which the mill historically produced, to production of containerboard. For more information, see the Packaging caption in “Part I, Item 1.
Financing Activities In 2022, net cash used for financing activities was $960 million, compared to $656 million of cash used for financing activities in 2021, an increase of $304 million. We paid $420 million in dividends on our common stock in 2022, compared to $380 million paid in 2021.
Financing Activities In 2023, net cash used for financing activities was $112 million, compared to $960 million of cash used for financing activities in 2022, a decrease of $848 million. We paid $449 million in dividends on our common stock in 2023, compared to $420 million paid in 2022.
Cash increased by $202 million due to changes in operating assets and liabilities, primarily due to the following: a) a favorable change in accounts receivable levels in 2022 compared to 2021 due to lower sales volumes in the Packaging segment during the latter portion of 2022, partially offset by higher pricing in the Packaging and Paper segments in 2022; and b) a net favorable change in inventories in 2022 due to a smaller increase in Packaging segment inventory levels in 2022 compared to 2021, primarily in raw materials and finished goods.
Cash increased by $78 million due to changes in operating assets and liabilities, primarily due to the following: a) a net favorable change in income taxes due to lower tax payments during 2023 compared to 2022; b) a net favorable change in inventories in 2023 compared to 2022 due to a smaller increase in Packaging segment inventory levels in 2023, primarily in raw materials and finished goods, partially offset by an increase in Paper segment inventory levels due to softening demand during 2023; and c) a net favorable change in accounts payable in 2023 compared to 2022 primarily related to higher production volumes during the last quarter of 2023 compared to 2022.
Gross Profit Gross profit increased $218 million in 2022, compared to 2021. The increase was driven primarily by higher prices and mix in our Packaging and Paper segments, partially offset by lower volumes in our Packaging and Paper segments, higher operating and converting costs, higher freight and logistic expense, and higher annual outage expense.
The decrease was driven primarily by lower prices and mix in our Packaging segment, and lower volumes in our Packaging and Paper segments, partially offset by higher prices and mix in our Paper segment, lower operating and converting costs, and lower annual outage expense.
The increase in 2022 related primarily to higher containerboard and corrugated products prices and mix ($842 million), partially offset by lower containerboard and corrugated products sales and production volumes ($166 million), higher operating and converting costs ($394 million), higher freight expense ($105 million), higher depreciation expense ($40 million), higher annual outage expense ($13 million), and other costs ($5 million).
The decrease in 2023 related primarily to lower containerboard and corrugated products prices and mix ($373 million), lower sales and production volumes ($123 million), higher depreciation expense ($47 million), and higher freight expense ($14 million), partially offset by lower operating and converting costs ($163 million), lower annual outage expense ($36 million), and other costs ($18 million).
Year Ended December 31, 2022 2021 Packaging $ 753.5 $ 562.5 Paper 14.1 30.1 Corporate and Other 56.6 12.5 $ 824.2 $ 605.1 We expect capital investments in 2023 to be approximately $475 million.
Year Ended December 31, 2023 2022 Packaging $ 426.8 $ 753.5 Paper 9.7 14.1 Corporate and Other 33.2 56.6 $ 469.7 $ 824.2 We expect capital investments in 2024 to be between $470 million and $490 million.
We do not believe that future compliance with health and safety laws and regulations will have a material adverse effect on our financial condition, results of operations or cash flows. 27 Critical Accounting Po licies and Estimates Management’s discussion and analysis of financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.
Critical Accounting Po licies and Estimates Management’s discussion and analysis of financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.
At this time, we cannot predict with certainty how this decision will impact our existing Boiler MACT compliance efforts or whether we will incur additional costs to comply with any revised standards. 26 As is the case with any industrial operation, PCA has, in the past, incurred costs associated with the remediation of soil or groundwater contamination, as required by the federal Comprehensive Environmental Response, Compensation and Liability Act, commonly known as the federal “Superfund” law, and analogous state laws.
As is the case with any industrial operation, PCA has, in the past, incurred costs associated with the remediation of soil or groundwater contamination, as required by the federal Comprehensive Environmental Response, Compensation and Liability Act, commonly known as the federal “Superfund” law, and analogous state laws.
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 to mitigate cost inflation and better serve our customers. 19 Paper segment income from operations was $103 million in 2022, compared to $39 million in 2021.
We notified customers of a $70 per ton price increase for linerboard and a $100 per ton price increase for medium effective January 1, 2024. 20 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 to mitigate cost inflation and better serve our customers .
Financial Statements and Supplementary Data" of this Form 10-K for more information on our approved capital projects with future spending in connection with the expansion and replacement of existing facilities and equipment. • Purchase commitments. Purchase commitments relate to various purchase agreements for items such as minimum amounts of energy and fiber purchases.
Financial Statements and Supplementary Data” of this Form 10-K for more information on our asset retirement obligation at the end of the period. • Purchase commitments. Purchase commitments relate to various purchase agreements for items such as minimum amounts of energy and fiber purchases.
Packaging. Segment income from operations increased $118 million to $1,424 million, compared to $1,306 million in 2021.
Packaging. Segment income from operations decreased $349 million to $1,074 million, compared to $1,424 million in 2022.
The Company believes that it is not reasonably possible that future environmental expenses above the $25.2 million accrued at December 31, 2022, will have a material impact on its financial condition, results of operations, and cash flows.
The Company believes that it is not reasonably possible that future environmental expenses above the $25.8 million accrued at December 31, 2023, will have a material impact on its financial condition, results of operations, and cash flows. 28 While legislation regarding the regulation of greenhouse gas emissions has been proposed at the federal level, it is uncertain whether such legislation will be passed and, if so, what the breadth and scope of such legislation will be.
During 2022, we recorded $335 million of income tax expense, compared to $268 million of income tax expense during 2021. The effective tax rate for 2022 and 2021 was 24.5% and 24.1%, respectively. The higher effective tax rate for 2022 was primarily due to higher nondeductible employee remuneration paid to covered employees.
During 2023, we recorded $249 million of income tax expense, compared to $335 million of income tax expense during 2022. The effective tax rate for both 2023 and 2022 was 24.5%.
Special items in the Paper segment included $9 million of expense for Jackson mill conversion-related activities in 2022 and 2021. Non-Operating Pension Expense, Interest Expense, Net and Income Taxes During 2022, non-operating pension income decreased $5 million compared to 2021. The decrease in non-operating pension expense was primarily related to assumption changes, partially offset by favorable 2021 asset performance.
Special items in 2023 included $11 million of expense for Jackson mill conversion-related activities. Special items in 2022 included $9 million of expense for Jackson mill conversion-related activities. Non-Operating Pension Expense, Interest Expense, Net and Income Taxes During 2023, non-operating pension expense increased $22 million compared to 2022.
Results of Operations Year Ended December 31, 2022, Compared with Year Ended December 31, 2021 The historical results of operations of PCA for the years ended December 31, 2022 and 2021 are set forth below (dollars in millions): Year Ended December 31, 2022 2021 Change Packaging $ 7,780.7 $ 7,052.6 $ 728.1 Paper 622.1 599.7 22.4 Corporate and other and eliminations 75.2 78.0 (2.8 ) Net sales $ 8,478.0 $ 7,730.3 $ 747.7 Packaging $ 1,423.7 $ 1,306.0 $ 117.7 Paper 103.0 39.1 63.9 Corporate and other (106.0 ) (103.7 ) (2.3 ) Income from operations 1,420.7 1,241.4 179.3 Non-operating pension income 14.5 19.7 (5.2 ) Interest expense, net (70.4 ) (152.4 ) 82.0 Income before taxes 1,364.8 1,108.7 256.1 Income tax expense (335.0 ) (267.6 ) (67.4 ) Net income $ 1,029.8 $ 841.1 $ 188.7 Net income excluding special items (a) $ 1,040.2 $ 893.8 $ 146.4 EBITDA (a) $ 1,877.5 $ 1,658.9 $ 218.6 EBITDA excluding special items (a) $ 1,885.5 $ 1,665.4 $ 220.1 (a) See “Reconciliations of Non-GAAP Financial Measures to Reported Amounts” included in this Item 7 for a reconciliation of non-GAAP measures to the most comparable GAAP measure. 21 Net Sales Net sales increased $748 million, or 9.7%, to $8,478 million in 2022, compared to $7,730 million in 2021.
Considering these items, we expect first quarter earnings to be lower than the fourth quarter of 2023. 22 Results of Operations Year Ended December 31, 2023, Compared with Year Ended December 31, 2022 The historical results of operations of PCA for the years ended December 31, 2023 and 2022 are set forth below (dollars in millions): Year Ended December 31, 2023 2022 Change Packaging $ 7,135.6 $ 7,780.7 $ (645.1 ) Paper 595.4 622.1 (26.7 ) Corporate and other and eliminations 71.4 75.2 (3.8 ) Net sales $ 7,802.4 $ 8,478.0 $ (675.6 ) Packaging $ 1,074.3 $ 1,423.7 $ (349.4 ) Paper 118.9 103.0 15.9 Corporate and other (118.1 ) (106.0 ) (12.1 ) Income from operations 1,075.1 1,420.7 (345.6 ) Non-operating pension (expense) income (7.7 ) 14.5 (22.2 ) Interest expense, net (53.3 ) (70.4 ) 17.1 Income before taxes 1,014.1 1,364.8 (350.7 ) Income tax expense (248.9 ) (335.0 ) 86.1 Net income $ 765.2 $ 1,029.8 $ (264.6 ) Net income excluding special items (a) $ 784.4 $ 1,040.2 $ (255.8 ) EBITDA (a) $ 1,592.8 $ 1,877.5 $ (284.7 ) EBITDA excluding special items (a) $ 1,603.8 $ 1,885.5 $ (281.7 ) (a) See “Reconciliations of Non-GAAP Financial Measures to Reported Amounts” included in this Item 7 for a reconciliation of non-GAAP measures to the most comparable GAAP measure.
Reported industry containerboard production decreased 5.2% compared to 2021, and reported industry containerboard inventories at the end of 2022 were approximately 2.7 million tons, down 2.1% compared to 2021. Reported containerboard export shipments decreased 7.7% compared to 2021. Prices reported by trade publications increased by $60 per ton for linerboard and $70 per ton for corrugating medium in March 2022.
Reported industry containerboard production decreased (3.1%) compared to 2022, and reported industry containerboard inventories at the end of 2023 were approximately 2.6 million tons, down (3.1%) compared to 2022. Reported containerboard export shipments increased 2.6% compared to 2022.
We ended the year with $320 million of cash and cash equivalents, $150 million of marketable debt securities, and $321 million of unused borrowing capacity under the revolving credit facility, net of letters of credit. Currently, our primary uses of cash are for operations, capital expenditures, acquisitions, debt service, common stock dividends, and repurchases of common stock.
We ended the year with $648 million of cash and cash equivalents, $558 million of marketable debt securities, and $323 million of unused borrowing capacity under the revolving credit facility, net of letters of credit.
Special Items and Earnings per Diluted Share, Excluding Special Items Earnings per diluted share, excluding special items, in 2022 and 2021 were as follows: Year Ended December 31, 2022 2021 Earnings per diluted share $ 11.03 $ 8.83 Special items: Jackson mill conversion-related activities (a) 0.11 0.11 Facilities closure and other costs (income) (b) 0.01 (0.03 ) Acquisition and integration-related activities (c) (0.01 ) 0.01 Debt refinancing (d) — 0.47 Total special items expense 0.11 0.56 Earnings per diluted share, excluding special items $ 11.14 $ 9.39 (a) For 2022 and 2021, includes $14.1 million and $14.0 million, respectively, of charges related to the announced discontinuation of production of uncoated freesheet paper grades on the No. 3 machine at the Jackson, Alabama mill associated with the permanent conversion of the machine to produce linerboard and other paper-to-containerboard conversion related activities.
Special Items and Earnings per Diluted Share, Excluding Special Items Earnings per diluted share, excluding special items, in 2023 and 2022 were as follows: Year Ended December 31, 2023 2022 Earnings per diluted share $ 8.48 $ 11.03 Special items: Facilities closure and other costs (a) 0.12 0.01 Jackson mill conversion-related activities (b) 0.09 0.11 Acquisition and integration-related activities (c) — (0.01 ) Total special items expense 0.21 0.11 Earnings per diluted share, excluding special items $ 8.70 (d) $ 11.14 (a) For 2023, includes $14.4 million of charges related to the closure of corrugated products facilities and design centers, partially offset by a gain on sale of a corrugated products facility.
Outlook For the first quarter of 2023, in our Packaging segment we expect corrugated products demand on a per day basis to be similar to fourth quarter levels, although we expect higher total volume as there are four additional shipping days compared to the fourth quarter of 2022.
Outlook For the first quarter of 2024, compared to the fourth quarter of 2023, in our Packaging segment, we expect higher total corrugated products shipments from continued strong demand along with two additional shipping days in the first quarter.
(c) For 2022, includes $1.0 million of income from a favorable inventory adjustment related to the December 2021 Advance Packaging Corporation acquisition, partially offset by acquisition and integration related costs. For 2021, includes $0.9 million of charges for acquisition and integration costs related to the acquisition.
(c) Includes $1.0 million of income from a favorable inventory adjustment related to the December 2021 Advance Packaging Corporation acquisition, partially offset by acquisition and integration related costs. (d) Amount may not foot due to rounding. Management excludes special items, as it believes these items are not necessarily reflective of the ongoing results of operations of our business.
We repurchased and retired 4.0 million shares of the Company's common stock for $523 million in 2022, compared to repurchases of 1.4 million shares for $193 million in 2021.
We repurchased and retired 0.3 million shares of the Company's common stock for $42 million in 2023, compared to repurchases of 4.0 million shares for $523 million in 2022. In November 2023, we issued $400 million of 5.70% senior notes due 2033 through a registered public offering.
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. After increasing throughout 2021 and through the first three quarters of 2022, containerboard prices published by industry publications began to decline during the fourth quarter of 2022.
We began ramping up production in the fourth quarter to meet increasing demand and restarted the No. 3 machine at the Wallula mill. 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.
The details of capital expenditures for property and equipment, excluding acquisitions, by segment for the years ended December 31, 2022 and 2021 are included in the table below (dollars in millions).
Additionally, in November 2023, we invested the net proceeds received from the issuance of our $400 million of 5.70% senior notes due 2033 in time deposits, which are included in marketable debt securities. 25 The details of capital expenditures for property and equipment, excluding acquisitions, by segment for the years ended December 31, 2023 and 2022 are included in the table below (dollars in millions).
Average prices reported by a trade publication for cut size office papers increased $40 per ton in February and March 2022, $90 per ton in May 2022, and $65 per ton in September 2022. The average price was higher by $259, or 22%, in 2022 compared to 2021.
Although average prices reported by a trade publication for cut size office papers were higher by $57 per ton, or 4%, in 2023 compared to 2022, index prices declined throughout the year.
Our containerboard outside shipments decreased 12.2%, and total corrugated products shipments were down 3.4% in total and per workday, compared to 2021. Paper. Net sales increased $22 million, or 3.7%, to $622 million, compared to $600 million in 2021. The increase was due to higher prices and mix ($96 million), partially offset by lower volume ($74 million).
In 2023, our domestic containerboard prices decreased (10.5%) and export prices decreased (29.7%) compared to 2022. Our containerboard outside shipments decreased (1.1%), and total corrugated products shipments were down (4.6%) in total and (4.3%) per workday, compared to 2022. Paper. Net sales decreased $27 million, or (4.3%), to $595 million, compared to $622 million in 2022.
See Note 13, Employee Benefits Plans and Other Postretirement Benefits, of the Consolidated Financial Statements included in "Part II, Item 8. Financial Statements and Supplementary Data" of this Form 10-K for more information on our employee benefit obligations and the timing of expected future benefit payments under our pension plans and postretirement plans.
Financial Statements and Supplementary Data” of this Form 10-K for more information on our employee benefit obligations and the timing of expected future benefit payments under our pension plans and postretirement plans. 26 Off-B alance Sheet Arrangements The Company does not have any off-balance sheet arrangements as of December 31, 2023.
Overall, our corrugated products shipments were down 3.4% for the year as those trends continued through the second half of the year. In order to achieve appropriate production levels for our demand and necessary inventory levels, we reduced our production of containerboard at our packaging mills during the second half of the year.
Overall, our corrugated products shipments were down (4.6%) for the year. In order to match our supply with the demand for our products, we reduced production of containerboard at our packaging mills during the first three quarters of 2023, including idling the Wallula, WA mill in June.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAt December 31, 2022, the interest rates on 100% of PCA’s outstanding debt are fixed. 31
Biggest changeAt December 31, 2023, the interest rates on 100% of PCA’s outstanding debt are fixed. 32
As of December 31, 2022, we are party to certain physical commodity transactions related to natural gas supply contracts. For a discussion of derivatives and hedging activities, see Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K.
As of December 31, 2023, we are party to certain physical commodity transactions related to natural gas supply contracts. For a discussion of derivatives and hedging activities, see Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in “Part II, Item 8. Financial Statements and Supplementary Data” of this Form 10-K.

Other PKG 10-K year-over-year comparisons