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What changed in Packaging Corporation of America's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Packaging Corporation of America's 2023 and 2024 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 2024 report.

+212 added−226 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-29)

Top changes in Packaging Corporation of America's 2024 10-K

212 paragraphs added · 226 removed · 183 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

83 edited+13 added−19 removed75 unchanged
Biggest changeWe are committed to sourcing wood fiber through environmentally, socially, and economically sustainable practices and promoting resource and conservation stewardship ethics. Energy supply. We obtain energy through self-generated or purchased fuels and electricity. Fuel sources include by-products of the manufacturing and pulping process (including black liquor and wood waste), natural gas, electricity, and purchased wood waste.
Biggest changeThese standards are aimed at ensuring the long-term health and conservation of forests. Our operations are committed to environmentally conscious, socially responsible, and economically sustainable fiber sourcing practices that prioritize stewardship of forest resources. Energy supply. We obtain energy through self-generated or purchased fuels and electricity.
RISK FACTORS Some of the statements in this report and, in particular, statements found in Management’s Discussion and Analysis of Financial Condition and Results of Operations, that are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
RISK FACTORS Forward Looking Statements Some of the statements in this report and, in particular, statements found in Management’s Discussion and Analysis of Financial Condition and Results of Operations, that are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements about our expectations regarding our future liquidity; earnings; expenditures; environmental, social, and governance (ESG) goals; and financial condition. These statements are often identified by the words “will,” “should,” “anticipate,” “believe,” “expect,” “intend,” “estimate,” "goals," “hope,” or similar expressions. These statements reflect management’s current views with respect to future events and are subject to risks and uncertainties.
Forward-looking statements include statements about our expectations regarding our future liquidity; earnings; expenditures; environmental, social, and governance (ESG) goals; and financial condition. These statements are often identified by the words “will,” “should,” “anticipate,” “believe,” “expect,” “intend,” “estimate,” “goals,” “hope,” or similar expressions. These statements reflect management’s current views with respect to future events and are subject to risks and uncertainties.
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, 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.
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.
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.
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.
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. 14 Pension Plans – Our pension plans may require additional funding.
However, with our strategic focus on regional and local accounts, we also compete with many smaller, independent producers. Pap er We are a leading producer of UFS in North America, according to industry sources and our own estimates.
However, with our strategic focus on regional and local accounts, we also compete with many smaller, independent producers. 6 Pap er We are a leading producer of UFS in North America, according to industry sources and our own estimates.
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.
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.
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.
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.
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
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.
Corrugated producers generally sell within a 150-mile radius of their plants and compete with other corrugated producers in their local region. Competition in our corrugated products operations tends to be regional, although we also face competition from competitors with significant national account presence. On a national level, our primary competitors are International Paper, WestRock Company, and Georgia-Pacific LLC.
Corrugated producers generally sell within a 150-mile radius of their plants and compete with other corrugated producers in their local region. Competition in our corrugated products operations tends to be regional, although we also face competition from competitors with significant national account presence. On a national level, our primary competitors are International Paper, Smurfit WestRock, and Georgia-Pacific LLC.
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.
A $0.10 per million MMBTU increase in natural gas prices would result in approximately $3 million of additional expense, based on 2024 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.
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.
According to industry sources, corrugated products are produced by about 380 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.
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.
Periods of higher recycled fiber costs and unusual price volatility have occurred in the past, including during 2024. Prices for recycled fiber may continue to fluctuate significantly in the future, and a significant increase could result in higher costs and lower earnings.
These individuals are located at both the corrugated plants and the design centers. General marketing support is provided at our corporate headquarters. Our containerboard sales group is responsible for linerboard and corrugating medium order processing and supply to our corrugated plants, to outside domestic customers, and to export customers.
These individuals are located at both our corrugated plants and regional design centers. Marketing support is provided at our corporate headquarters. Our containerboard sales group is responsible for linerboard and corrugating medium order processing and supply to our corrugated plants, to outside domestic customers, and to export customers.
Carter spent 28 years with various pulp and paper companies in managerial and technical positions of increasing responsibility, most recently as Vice President and General Manager of the Calhoun, Tennessee mill of Abitibi Bowater from 2007 to 2010 and as manager of SP Newsprint’s Dublin, Georgia mill from 1999 to 2007. Thomas A.
Carter spent 28 years with various pulp and paper companies in managerial and technical positions of increasing responsibility, most recently as Vice President and General Manager of the Calhoun, Tennessee mill of Abitibi Bowater from 2007 to 2010 and as manager of SP Newsprint’s Dublin, Georgia mill from 1999 to 2007. Robert P.
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.
A $10 per ton price increase in recycled fiber for our containerboard mills would result in approximately $10 million of additional expense based on 2024 consumption. 11 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.
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.
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.
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.
Executive Officers of the Registrant Brief statements setting forth the age at February 27, 2025, 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, 69, Chairman and Chief Executive Officer - Mr.
In 2023, our usage of recycled fiber, net of internal generation, represents 18% of our containerboard production. 5 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.
In 2024, our usage of recycled fiber, net of internal generation, represents 21% of our containerboard production. 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.
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.
Our responsibility report is available on our website and is not intended to be incorporated by reference herein. PCA regularly conducts employee engagement surveys to measure overall satisfaction and gain a deeper understanding of how to improve our employees’ work experience.
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.
Customers We sell containerboard and corrugated products to approximately 13,000 customers in approximately 29,000 locations. About 70% of our corrugated products sales are to regional and local accounts, which are broadly diversified across industries and geographic locations.
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.
Cybersecurity” of this Form 10-K. 13 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.
We have voluntarily established targets and goals with respect to greenhouse gas emissions, which are discussed elsewhere in this report under the caption "Regulatory and Environmental Matters" in "Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K.
We have voluntarily established targets and goals with respect to greenhouse gas emissions, which are discussed elsewhere in this report under the caption “Regulatory and Environmental Matters” in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K.
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 2024, we purchased approximately 1,040,000 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.
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.
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.
We consume various chemicals in the production of containerboard, including caustic soda, starch, sulfuric acid, soda ash, and lime. Most of our chemicals are purchased under contracts, which are bid or negotiated periodically. Sales, Marketing, and Distribution Our corrugated products are sold through our direct sales and marketing organization, independent brokers, and distribution partners.
We consume various chemicals in the production of containerboard, including caustic soda, starch, sulfuric acid, soda ash, and lime. Most of our chemicals are purchased under contracts, which are bid or negotiated periodically. Sales, Marketing, and Distribution Our corrugated products are primarily sold directly through our sales and marketing organization.
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.
The process steam is used throughout the production process and also to generate electricity. In 2024, our packaging mills consumed about 89 million MMBTUs of fuel to produce both steam and electricity.
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.
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 2024, sales to ODP represented 58% of our Paper segment sales and 4% of our consolidated sales.
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.
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. 12 These events could harm our ability to produce our products and serve our customers and may lead to higher costs and reduced earnings .
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.
Of the 89 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, 76% was from natural gas, 22% was from purchased wood waste and 2% was from other purchased fuels. Chemical supply.
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.
The primary end-use markets in the United States for corrugated products are shown below as reported in the 2023 Fibre Box Association annual report: Food, beverages, and agricultural products 43 % Retail and wholesale trade 29 % Chemical, plastic, and rubber products 11 % Paper and other products 9 % Miscellaneous manufacturing 8 % Competition As of December 31, 2024, we were the third largest producer of containerboard products in North America, according to industry sources and our own estimates.
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 have established long-term relationships with many of our customers. 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.
In addition, as many of our customer contracts include price adjustment provisions based upon published surveyed prices for containerboard or certain grades of UFS papers reported by trade publications, our selling prices are influenced by price levels determined and published by trade publications.
In addition, as many of our customer contracts include price adjustment provisions based upon published surveyed prices for containerboard or certain grades of UFS papers reported by trade publications, our selling prices are influenced by price levels determined and published by trade publications. Changes in how these surveyed price levels are determined or maintained may affect our sales prices.
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.
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 mill can produce linerboard in basis weights of 26 lb. to 69 lb. and medium in basis weights of 23 lb. to 33 lb. Valdosta. Our Valdosta, Georgia mill produces kraft linerboard on one machine. The mill can produce basis weights from 35 lb. to 96 lb. Tomahawk. Our Tomahawk, Wisconsin mill produces corrugating medium on two machines.
Our Tomahawk, Wisconsin mill produces corrugating medium on two machines. The mill can produce basis weights from 23 lb. to 47 lb. Valdosta. Our Valdosta, Georgia mill produces kraft linerboard on one machine. The mill can produce basis weights from 35 lb. to 96 lb. Wallula.
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).
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).
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.
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®) voluntary certification programs, and are certified under their chain of custody and fiber sourcing 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.
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®) voluntary certification programs, and are certified under their chain of custody and fiber sourcing standards.
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.
As of December 31, 2024, we produced corrugated and protective packaging products at 86 facilities, and operated a technical and development center, seven regional design centers, a rotogravure printing operation, and a complement of packaging supplies and distribution centers.
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.
Hassfurther previously served as Executive Vice President - Corrugated Products of PCA from September 2009 to February 2025 and as Senior Vice President - Sales and Marketing, Corrugated Products from February 2005 to September 2009. Prior to this, he held various senior-level management and sales positions at PCA and Tenneco Packaging. Mr. Hassfurther joined the company in 1977. Charles J.
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.
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.
Extreme weather events like hurricanes, tornadoes, floods and winter storms have caused disruptions to our business both directly and indirectly in recent history. Climate change may increase the frequency and intensity of these extreme weather events. Certain weather events may cause damage to our facilities and require us to temporarily halt operations.
Extreme Weather Events – Our facilities are susceptible to extreme weather events, which could disrupt our business. Extreme weather events like hurricanes, tornadoes, floods and winter storms have caused disruptions to our business both directly and indirectly in recent history. Climate change may increase the frequency and intensity of these extreme weather events.
These types of events may also disrupt our customers' and suppliers’ operations. Disruptions to the supply chain may cause the cost of goods to temporarily increase. Damage to our facilities may cause insurance premiums to increase and also require us to incur additional costs to mitigate future risks.
Certain weather events may cause damage to our facilities and require us to temporarily halt operations. These types of events may also disrupt our customers' and suppliers’ operations. Disruptions to the supply chain may cause the cost of goods to temporarily increase.
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.
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.
Prices for all of our products are driven by many factors, including demand for our products, industry capacity and decisions made by other producers with respect to capacity and production, and other competitive conditions in our industry. These factors are affected by general global and domestic economic conditions, customer purchasing decisions, and operating conditions involving our business and industry.
Prices for all of our products are driven by many factors, including demand for our products, industry capacity and decisions made by other producers with respect to capacity and production, inflation and other general cost increases, and other competitive conditions in our industry.
Our 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.
Our DeRidder, Louisiana mill produces kraft linerboard on its No. 1 machine and kraft linerboard and corrugating medium on its No. 3 machine. The mill can produce linerboard in basis weights of 26 lb. to 69 lb. and medium in basis weights of 23 lb. to 33 lb. Filer City.
Inflation has resulted in, and may continue to result in, higher production and transportation costs, which we may not be able to recover through higher prices charged to our customers or otherwise. Interest rates have increased, which may result in lower consumer demand and higher borrowing costs, and may cause general economic conditions to deteriorate.
Inflation has resulted in, and may continue to result in, higher production and transportation costs, which we may not be able to recover through higher prices charged to our customers or otherwise.
As demand for qualified personnel is increasing, we are expanding our efforts in these critical areas along with efforts to continue to develop, promote and maintain a diverse workforce with a culture and an environment of respect and inclusion.
As demand for qualified personnel is increasing, we are expanding our efforts in these critical areas along with efforts to continue to develop, promote and maintain a workforce with a culture and an environment of engaged management and mutual respect. We publicly disclose in our annual responsibility report our employee demographics in the form of our annual EEO-1 report.
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.
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.
He previously served as Senior Vice President and Chief Financial Officer of Verso Corporation, a leading North American supplier of coated papers to catalog and magazine publishers, from 2006 to June 2015. Verso Corporation filed for Chapter 11 bankruptcy in January 2016.
Mundy, 63, Executive Vice President and Chief Financial Officer - Mr. Mundy has served as our Chief Financial Officer since 2015. He previously served as Senior Vice President and Chief Financial Officer of Verso Corporation, a leading North American supplier of coated papers to catalog and magazine publishers, from 2006 to June 2015.
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, 2026.
In addition, changes in trade policy, including renegotiating or potentially terminating existing bilateral or multilateral agreements as well as the imposition of tariffs, could impact global markets and demand for our and our customers’ products and the costs associated with certain of our capital investments.
These factors may result in lower demand for our products and negatively affect our business, results of operations and cash flows. 10 In addition, changes in U.S. trade policy, including renegotiating or potentially terminating existing bilateral or multilateral agreements as well as the imposition of tariffs or retaliatory tariffs from other nations, could impact global markets and demand for our and our customers’ products and the costs associated with certain of our capital investments.
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.
Carter, 65, 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.
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.
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.
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.
First Quarter Second Quarter Third Quarter Fourth Quarter Full Year Containerboard Production (billion square feet) 2024 67.3 73.7 76.0 76.8 293.8 2023 64.1 65.3 65.8 70.2 265.4 2022 70.9 71.8 64.9 55.8 263.4 Corrugated Products Shipments (billion square feet) 2024 16.1 16.5 17.2 17.1 66.9 2023 14.7 14.9 15.2 15.7 60.5 2022 16.8 16.5 15.4 14.7 63.4 UFS Production (thousand tons) 2024 124 120 127 128 499 2023 126 116 109 121 472 2022 126 127 123 130 506 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.
For example, the EPA recently enacted more stringent particulate matter emissions standards, which may make it more difficult to obtain or maintain air permits and more difficult and expensive to comply with the limitations set forth in our permits. We are assessing the impact of these new standards on our business and operations.
For example, the EPA recently enacted more stringent particulate matter emissions standards, which may make it more difficult to obtain or maintain air permits and more difficult and expensive to comply with the limitations set forth in our permits. In addition, environmental regulations may increase the cost of our raw materials and purchased energy.
All debt is comprised of fixed-rate senior notes. We and our subsidiaries are not restricted from incurring, and may incur, additional indebtedness in the future.
We and our subsidiaries are not restricted from incurring, and may incur, additional indebtedness in the future.
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.
Fuel sources include by-products of the manufacturing and pulping process (including black liquor and wood waste), natural gas, electricity, and purchased wood waste. 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.
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 Filer City, Michigan mill produces corrugating medium on three machines. The mill can produce basis weights from 20 lb. to 47 lb. Jackson. Our Jackson, Alabama mill produces kraft linerboard on its No. 3 machine and kraft linerboard and corrugating medium on its No. 1 machine.
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.
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.
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.
If global or domestic 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.
We remain committed to seeking feedback from our employees as we work together to continue to make PCA a great place to work. Our next employee engagement survey will be conducted as scheduled in the first half of 2024. As of December 31, 2023, we had approximately 14,900 employees, including 4,300 salaried and 10,600 hourly employees.
We remain committed to seeking feedback from our employees as we work together to make meaningful improvements across our operations and make PCA a great place to work. Our next employee engagement survey will be conducted as scheduled in the first half of 2026.
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.
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. 9 Joseph W. Vaughn, 62 , Senior Vice President – Engineering and Operations Support - Mr.
This increased awareness with respect to ESG matters, including climate change, is expected to result in more prescriptive reporting requirements with respect to ESG metrics and expectations that companies establish goals and commitments regarding ESG metrics and take actions to achieve those goals and commitments.
As a result, we anticipate a continued interest in reporting on ESG metrics, more prescriptive reporting requirements with respect to ESG metrics, and expectations that companies establish goals and commitments regarding ESG metrics and take actions to achieve those goals and commitments.
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.
Debt obligations – Our debt service obligations may reduce our operating flexibility. At December 31, 2024, we had $2.5 billion of debt outstanding and a $323 million undrawn revolving credit facility, after deducting letters of credit. All debt is comprised of fixed-rate senior notes.
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.
During the year ended December 31, 2024, our Packaging segment produced 294 billion square feet (BSF) of containerboard at our mills. Our corrugated products manufacturing plants sold 67 BSF of corrugated products. 4 Facilities We manufacture containerboard, which includes a variety of performance and specialty grades, at our containerboard mills.
Competition The markets in which our Paper segment competes are large and highly competitive. Commodity grades of UFS paper are globally traded, with numerous worldwide manufacturers, and as a result, these products compete primarily on the basis of price.
Commodity grades of UFS paper are globally traded, with numerous worldwide manufacturers, and as a result, these products compete primarily on the basis of price. Our paper manufacturing facility is located in the United States, and although we compete primarily in the domestic market, we do face competition from foreign producers.
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.
These standards are aimed at ensuring the long-term health and conservation of forests. Our operations are committed to environmentally conscious, socially responsible, and economically sustainable fiber sourcing practices that prioritize stewardship of forest resources. 5 Energy supply. Energy at our packaging mills is obtained through self-generated or purchased fuels and electricity.
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.
We are currently in negotiations to renew or extend union contracts that have expired or are expiring in the near future.
Regulatory and Environmenta l Matters A discussion of the financial impact of our compliance with environmental laws is presented under the caption “Regulatory and Environmental Matters” in “Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K.
During 2024, we experienced no work stoppages, and we believe we have satisfactory labor relations with our employees. 8 Regulatory and Environmenta l Matters A discussion of the financial impact of our compliance with environmental laws is presented under the caption “Regulatory and Environmental Matters” in “Part II, Item 7.
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.
Shirley worked for Georgia-Pacific Corporation. Darla J. Olivier, 55, 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.
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.
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.
We have little influence over the timing and extent of price changes of our products, which may be unpredictable and volatile.
These factors are affected by general global and domestic economic conditions, customer purchasing decisions, and operating conditions involving our business and industry. We have little influence over the timing and extent of price changes of our products, which may be unpredictable and volatile.
We have sales representatives and a sales manager at most of our corrugated manufacturing operations and also have corporate account managers who serve customer accounts with a national presence. Additionally, our design centers maintain an on-site dedicated graphics sales force. In addition to direct sales and marketing personnel, we utilize new product development engineers and product graphics and design specialists.
We have local sales teams led by a sales manager at most of our corrugated manufacturing facilities to support our local customers. We also have national account managers who serve customers with a national presence. In addition to our direct sales and marketing personnel, we utilize design and structural engineers to support our sales efforts.
This allows us to respond quickly to customer requirements. 7 Customers We have about 40 customers in approximately 150 locations. These customers include office products distributors and retailers, paper merchants, and envelope and other converters. We have established long-term relationships with many of our customers.
We ship to customers both directly from our mills and through distribution centers and a network of outside warehouses by rail or truck. This allows us to respond quickly to customer requirements. Customers We have about 50 customers in approximately 200 locations. These customers include office products distributors and retailers, paper merchants, and envelope and other converters.
Financial Risks Inflation and Other General Cost Increases – We may not be able to offset higher costs . We are subject to both contractual, inflationary, and other general cost increases, including with regard to our labor costs and purchases of raw materials and transportation services.
Financial Risks Inflation and Other General Cost Increases – We may not be able to offset higher costs . We are subject to both contractual, inflationary, and other general cost increases. General economic conditions have resulted in higher inflation in recent years, which has led to higher costs across our business.
The following provides more details of our primary operating facilities: Counce. Our Counce, Tennessee mill produces kraft linerboard on two machines. The mill can produce basis weights from 26 lb. to 90 lb. DeRidder. Our DeRidder, Louisiana mill produces kraft linerboard on its No. 1 machine and kraft linerboard and corrugating medium on its No. 3 machine.
Total annual containerboard capacity was approximately 301 BSF as of December 31, 2024. The following provides more details of our containerboard mills: Counce. Our Counce, Tennessee mill produces kraft linerboard on two machines. The mill can produce basis weights from 26 lb. to 90 lb. DeRidder.
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.
Investors, customers, governmental authorities, and other stakeholders have an interest in ESG matters, including with respect to climate change, greenhouse gas emissions, and sustainable business practices.
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.
Our most recent survey, conducted in 2024, saw a high level of participation assuring us that the results reflect the feelings and opinions of our employees. Our survey results reaffirmed our strong safety culture and our dedication to being socially and environmentally responsible. Our overall engagement index continues to rise and remains consistent with other U.S. manufacturing companies.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn addition, we have established processes to notify the Audit Committee of active incidents, as deemed necessary. The Company’s program is periodically evaluated by third-party experts, and the results of those reviews are reported to the Board of Directors.
Biggest changeThe Company’s program is periodically evaluated by third-party experts, and the results of those reviews are reported to the Board of Directors. Management Responsibilities The Incident Response Team that we have established as part of our cyber risk management program coordinates the Company’s response to incidents and communicates with internal and external stakeholders.
We believe these measures together with our cyber risk management program as well as our policies, processes and procedures set a high benchmark for our employees to address and respond to cybersecurity threats. Our IT team regularly monitors best practices and as needed, implements changes to the Company’s cyber risk management program to ensure a robust program is maintained.
We believe these measures together with our cyber risk management program as well as our policies, processes and procedures set a high benchmark for our employees to address and respond to cybersecurity threats. 15 Our IT team regularly monitors best practices and as needed, implements changes to the Company’s cyber risk management program to ensure a robust program is maintained.
While we have experienced threats to our data and systems, as of December 31, 2023, we are not aware of any cybersecurity incidents that have materially impacted, or are reasonably likely to materially impact, our operations or financial condition. Board Roles and Responsibilities The Audit Committee of the Board of Directors oversees the Company’s cyber risk management program.
While we have experienced threats to our data and systems, as of December 31, 2024, we are not aware of any cybersecurity incidents that have materially impacted, or are reasonably likely to materially impact, our operations or financial condition. Board Roles and Responsibilities The Audit Committee of the Board of Directors oversees the Company’s cyber risk management program .
We are continuously focused on ensuring our Company is protected from potential cyber threats. Our Information Technology (IT) team is comprised of employees with a diverse mix of skills, backgrounds, perspectives, and relevant expertise, that undergo extensive training as part of their employment with the Company.
Our Information Technology (IT) team is comprised of employees with a diverse mix of skills, backgrounds, perspectives, and relevant expertise, that undergo extensive training as part of their employment with the Company.
The Chief Information Officer (CIO) and the Vice President of Network Services present frequent updates to the Audit Committee and, as necessary, to the full Board of Directors. These regular reports include detailed updates on the Company’s performance preparing for, preventing, detecting, responding to and recovering from cyber incidents.
The Chief Information Officer (CIO) presents frequent updates to the Audit Committee and, as necessary, to the full Board of Directors. These regular reports include detailed updates on the Company’s performance preparing for, preventing, detecting, responding to and recovering from cyber incidents. In addition, we have established processes to notify the Audit Committee of active incidents, as deemed necessary.
Management Responsibilities The Incident Response Team that we have established as part of our cyber risk management program coordinates the Company’s response to incidents and communicates with internal and external stakeholders. The team includes members of our Senior Leadership and draws upon additional staff, consultants, advisors and service providers as needed.
The team includes members of our Senior Leadership and draws upon additional staff, consultants, advisors and service providers as needed. We are continuously focused on ensuring our Company is protected from potential cyber threats.

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. 16 As of December 31, 2023, 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. As of December 31, 2024, we own buildings and land for our eight mills.

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 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
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. 16 PAR T II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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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.
Biggest changeThe 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, 2024: Issuer Purchases of Equity Securities Period Total Number of Shares Purchased (a) Average Price Paid Per Share 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, 2024 2,119 $ 212.90 — $ 436.0 November 1-30, 2024 — — — 436.0 December 1-31, 2024 2,146 224.62 — 436.0 Total 4,265 $ 218.79 — $ 436.0 (a) All shares were withheld from employees to cover income and payroll taxes on equity awards that vested during the period. 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 and the S&P Midcap 400 index.
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.
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 21, 2025, there were 151 holders of record of our common stock.
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.
The graph tracks the performance of a $100 investment (including the reinvestment of all dividends) in our common stock and in each index from December 31, 2019 through December 31, 2024. The stock price performance included in this graph is not necessarily indicative of future stock price performance.
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.
We withheld 142,552 shares in 2024 to cover $25.7 million in employee tax liabilities, 120,534 shares in 2023 to cover $15.7 million in employee tax liabilities, and 110,827 shares in 2022 to cover $15.4 million in employee tax liabilities.
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.
At December 31, 2024, $436.0 million of the authorized amount remained available for repurchase of the Company’s common stock. During the third quarter of 2023, we paid $41.5 million, including fees, to repurchase 0.3 million shares of common stock.
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.
During the third and fourth quarters of 2022, we paid $522.6 million, including fees, to repurchase 4.0 million shares of common stock. All shares repurchased have been retired. 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, 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.
Cumulative Total Return December 31, 2019 2020 2021 2022 2023 2024 Packaging Corporation of America $ 100.00 $ 127.27 $ 129.32 $ 125.90 $ 166.04 $ 235.24 S&P 500 100.00 118.40 152.39 124.79 157.59 197.02 S&P Midcap 400 100.00 113.66 141.80 123.28 143.54 163.54 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.
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.
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. The Company did not repurchase any shares of its common stock under this authority during the year ended December 31, 2024.

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

Item 7. Management's Discussion & Analysis

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

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Biggest changeCash 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.
Biggest changeCash decreased by $204 million due to changes in operating assets and liabilities, primarily due to the following: a) a net unfavorable change in prepaid expenses and other current assets in 2024 compared to 2023 primarily due to an increase in accrued receivables for the insurance recoveries related to pending litigation in 2024; b) a net unfavorable change in accounts receivable levels in 2024 compared to 2023 primarily due to higher sales and an increase in days sales outstanding in the Packaging segment during 2024; c) a net unfavorable change in inventories in 2024 compared to 2023 primarily due to an increase in Packaging segment inventory balances related to higher volume, partially offset by a favorable change in Paper segment inventory balances due to a smaller increase in Paper segment inventory balances in 2024 compared to 2023; and d) a net unfavorable change in income taxes in 2024 compared to 2023 primarily due to a larger decrease in income tax receivables in 2023 compared to 2024. 23 These unfavorable changes were partially offset by a net favorable change in accrued liabilities in 2024 compared to 2023 primarily related to higher accruals related to pending litigation in 2024 and higher accruals for employee compensation and benefit liabilities in 2024.
Financial Statements and Supplementary Data” of this Form 10-K as well as information provided below under “—Investing Activities” and “—Financing Activities” for further information. 24 Currently, our primary uses of cash are for operations, capital expenditures, acquisitions, debt service, common stock dividends, and repurchases of common stock.
Financial Statements and Supplementary Data” of this Form 10-K as well as information provided below under “—Investing Activities” and “—Financing Activities” for further information. Currently, our primary uses of cash are for operations, capital expenditures, acquisitions, debt service, common stock dividends, and repurchases of common stock.
Of particular importance are laws and regulations relating to the environment and health and safety matters. Environmental compliance requirements are a significant factor affecting our business. We employ processes in the manufacture of containerboard, paper, and pulp, which result in various discharges, emissions and waste disposal.
Of particular importance are laws and regulations relating to the environment and health and safety matters. 25 Environmental compliance requirements are a significant factor affecting our business. We employ processes in the manufacture of containerboard, paper, and pulp, which result in various discharges, emissions and waste disposal.
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.
Financial Statements and Supplementary Data” of this Form 10-K for more information on our asset retirement obligation at the end of the period. 24 • 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. 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.
Financial Statements and Supplementary Data” of this Form 10-K. 27 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.
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.
From 2006 through 2024, there were no significant environmental remediation costs at PCA’s mills and corrugated plants. As of December 31, 2024, 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 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.
The following table for 2024 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. 2024 Fuel Purchased (millions of MMBTUs) 2024 Avg.
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.
The Company believes that it is not reasonably possible that future environmental expenses above the $25.8 million accrued at December 31, 2024, will have a material impact on its financial condition, results of operations, and cash flows. 26 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.
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.
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 five and nine years) and over the average remaining lifetime of inactive participants of the Boise plan (which is approximately 22 years), to the extent that losses are not offset by gains in subsequent years.
On November 30, 2023, we issued $400 million of 5.70% senior notes due 2033 through a registered public offering and invested the net proceeds received from this issuance in time deposits, which are included in marketable debt securities.
On November 30, 2023, we issued $400 million of 5.70% senior notes due 2033 through a registered public offering and invested the net proceeds received from this issuance in time deposits, which are included in marketable debt securities at December 31, 2023.
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.
For our discussion and analysis of our results of operations, financial condition and cash flows for the year ended December 31, 2022, 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, 2023, filed with the Securities and Exchange Commission on February 29, 2024.
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.
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 2024, our Packaging and Paper mills consumed about 101 million MMBTUs of fuel, including internally generated and externally purchased, to produce both steam and electricity.
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.
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 $24 million in 2025.
The purchases by quarter and the average cost per CkWh were as follows: 2023 Purchased Electricity (millions of CkWh) 2023 Avg.
The purchases by quarter and the average cost per CkWh were as follows: 2024 Purchased Electricity (millions of CkWh) 2024 Avg.
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.
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, 2024, we had $43.5 million of actuarial losses and prior service costs, net of tax, recorded in “Accumulated other comprehensive loss” on our Consolidated Balance Sheet.
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.
Such information is presented in Item 7 of such report under the subcaptions “Results of Operations —Year Ended December 31, 2023, Compared with Year Ended December 31, 2022” and “Liquidity and Capital Resources” and is incorporated by reference herein.
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.
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, 2025 2024 2023 Pension expense $ 10.7 $ 8.0 $ 22.1 Assumptions Discount rate 5.56 % 4.86 % 5.06 % Expected rate of return on plan assets 5.71 % 5.80 % 5.52 % 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 2024 and 2025 pension expense (dollars in millions): Increase (Decrease) in Pension Expense(a) Base Expense 0.25% Increase 0.25% Decrease 2024 Discount rate $ 8.0 $ 0.7 $ 1.4 Expected rate of return on plan assets 8.0 (2.8 ) 2.8 2025 Discount rate $ 10.7 $ 0.9 $ (0.6 ) Expected rate of return on plan assets 10.7 (2.7 ) 2.7 (a) The sensitivities shown above are specific to 2024 and 2025.
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.
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.
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.
Packaging segment EBITDA excluding special items was $1,598 million in 2024, compared to $1,556 million in 2023. 1 The increase was driven primarily by higher volumes, and lower freight and logistic expenses, partially offset by lower containerboard and corrugated products prices and mix, higher operating and converting costs and higher annual outage expense.
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.
We ended the year with $685 million of cash and cash equivalents, $167 million of marketable debt securities, and $323 million of unused borrowing capacity under the revolving credit facility, net of letters of credit.
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.
First Quarter Second Quarter Third Quarter Fourth Quarter Full Year Cost / CkWh Purchased electricity 5.3 5.2 6.0 5.9 22.4 $ 6.32 Regulatory and Environment al Matters Our operations are subject to compliance with the laws and regulations in the jurisdictions in which we operate, primarily in the United States.
The most significant of these laws affecting the Company are: • Resource Conservation and Recovery Act (RCRA); • Clean Water Act (CWA); • Clean Air Act (CAA); • The Emergency Planning and Community Right-to-Know-Act (EPCRA); • Toxic Substance Control Act (TSCA); and • Safe Drinking Water Act (SDWA).
The most significant of these laws affecting the Company are: a) Resource Conservation and Recovery Act (RCRA); b) Clean Water Act (CWA); c) Clean Air Act (CAA); d) The Emergency Planning and Community Right-to-Know-Act (EPCRA); e) Toxic Substance Control Act (TSCA); and f) Safe Drinking Water Act (SDWA).
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.
In 2024, our total company costs including cost of sales (COS) and selling, general, and administrative expenses (SG&A) was $7.2 billion, and excluding non-cash costs (depreciation, depletion and amortization, pension and postretirement expense, and share-based compensation expense) was $6.6 billion. A 1% increase in COS and SG&A costs would increase costs by $72 million and cash costs by $66 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.
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 2024, net cash provided by operating activities was $1,191 million, compared to $1,315 million for 2023, a decrease of $124 million.
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.
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, 2024 2023 Net cash provided by (used for): Operating activities $ 1,191.2 $ 1,315.1 Investing activities (277.8 ) (875.1 ) Financing activities (876.4 ) (112.0 ) Net increase in cash and cash equivalents $ 37.0 $ 328.0 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.
Any analysis of non-GAAP financial measures should be done in conjunction with results presented in accordance with GAAP. The non-GAAP measures are not intended to be substitutes for GAAP financial measures and should not be used as such.
Any analysis of non-GAAP financial measures should be done in conjunction with results presented in accordance with GAAP. The non-GAAP measures are not intended to be substitutes for GAAP financial measures and should not be used as such. Reconciliations of the non-GAAP measures to the most comparable measure reported in accordance with GAAP are detailed below.
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.
At this time, we cannot predict with certainty how this assessment review will impact our pulp mill MACT compliance efforts or whether we will incur additional costs to comply with any revised standards.
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.
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.
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.
In 2024, gross profit included $3 million of special items expense related to Jackson mill conversion-related activities and corrugated facility closure and other costs, compared to $15 million of special items expense related to Jackson mill conversion-related activities and corrugated facility closure and other costs in 2023.
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.
The increase was primarily due to higher employee-related expenses and bad debt expense. 21 Other Expense, Net Other expense, net for the years ended December 31, 2024 and 2023 are set forth below (dollars in millions): Year Ended December 31, 2024 2023 Asset disposals and write-offs $ (39.7 ) $ (31.7 ) Jackson mill conversion-related activities (7.6 ) (1.8 ) Facilities closure and other costs (1.0 ) (7.9 ) DeRidder and other litigation (95.2 ) — DeRidder and other litigation insurance recoveries 95.2 — Other (23.2 ) (1.5 ) Total $ (71.5 ) $ (42.9 ) 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.
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%.
During 2024, we recorded $259 million of income tax expense, compared to $249 million of income tax expense during 2023. The effective tax rate for 2024 and 2023 was 24.4% and 24.5%, respectively.
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.
For the year ended December 31, 2024, we spent $60 million, and for both the years ended December 31, 2023 and 2022, we spent $50 million, to comply with the requirements of these and other environmental laws. Additionally, we had $19 million of environmental capital expenditures in 2024, $14 million in 2023, and $11 million in 2022.
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.
In 2024, our domestic containerboard prices increased 3.7% and export prices decreased (2.2%) compared to 2023. Our containerboard outside shipments increased 16.1%, and total corrugated products shipments were up 10.5% in total and 10.1% per workday, compared to 2023. Paper. Net sales increased $29 million, or 4.9%, to $625 million, compared to $595 million in 2023.
Investing Activities We used $875 million for investing activities in 2023, compared to $834 million in 2022. In 2023, we spent $470 million for internal capital investments, compared to $824 million in 2022.
Investing Activities We used $278 million for investing activities in 2024, compared to $875 million in 2023. In 2024, we spent $670 million for internal capital investments, compared to $470 million in 2023.
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.
Paper segment operating income was $130 million in 2024, compared to $119 million in 2023. Paper segment EBITDA excluding special items was $154 million in 2024, compared to $151 million in 2023. 1 The increase was due primarily to higher paper volumes and lower operating costs, partially offset by lower prices and mix.
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.
Cash from operations excluding changes in cash used for operating assets and liabilities increased $80 million, primarily due to higher income from operations in 2024 as discussed above.
We intend to use the net proceeds from this issuance, together with a portion of cash on hand, to redeem, repurchase, or otherwise repay at or prior to maturity our outstanding 3.65% senior notes due 2024, which mature on September 15, 2024. See Note 10, Debt, of the Consolidated Financial Statements included in “Part II, Item 8.
On September 15, 2024, the Company used the net proceeds from this issuance, together with a portion of cash on hand, to repay its outstanding 3.65% senior notes due 2024. See Note 10, Debt, of the Consolidated Financial Statements included in “Part II, Item 8.
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.
Special items in 2024 included $10 million for Jackson mill conversion-related activities and $2 million of expense related to corrugated facility closure and other costs. 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. Packaging.
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.
Financial Statements” of this Form 10-K. Income from Operations Income from operations increased $26 million, or 2.4%, for the year ended December 31, 2024, compared to 2023. Income from operations in 2024 included $12 million of expense for special items compared to $25 million in 2023.
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.
Special items in 2023 included $11 million of expense for Jackson mill conversion-related activities. Non-Operating Pension Income, Interest Expense, Net and Income Taxes During 2024, non-operating pension income increased $12 million compared to 2023. The increase in non-operating pension income was related to favorable 2023 asset performance and favorable assumption changes.
Selling, General, and Administrative Expenses Selling, general, and administrative expenses (SG&A) decreased $28 million in 2023 compared to 2022.
Selling, General, and Administrative Expenses Selling, general, and administrative expenses (SG&A) increased $29 million in 2024 compared to 2023.
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.
Fuel Type First Quarter Second Quarter Third Quarter Fourth Quarter Full Year Cost / MMBTU Natural gas 7.4 6.8 6.5 7.4 28.1 $ 3.54 Purchased bark 1.8 1.8 1.8 2.0 7.4 2.31 Other purchased fuels 0.2 0.1 0.1 0.1 0.5 7.04 Total mills 9.4 8.7 8.4 9.5 36.0 $ 3.34 In addition, the mills purchased 22.41 million CkWh (hundred kilowatt-hours) of electricity in 2024.
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.
Year Ended December 31, 2024 2023 Packaging $ 626.6 $ 426.8 Paper 15.0 9.7 Corporate and Other 28.1 33.2 $ 669.7 $ 469.7 We expect capital investments in 2025 to be between $840 million and $870 million.
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.
Special items in 2024 included $4 million of expense for Jackson mill conversion-related activities and $2 million of expense for corrugated facility closure and other costs. Special items in 2023 included $14 million of expense for corrugated facility closure and other costs. Paper. Segment operating income increased $11 million to $130 million, compared to $119 million in 2023.
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.
Financing Activities In 2024, net cash used for financing activities was $876 million, compared to $112 million of cash used for financing activities in 2023, an increase of $764 million. We paid $449 million in dividends on our common stock in both 2024 and 2023.
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.
PCA ended the year with $852 million of cash and marketable debt securities and, including borrowing availability under its revolving credit facility, $1,175 million in liquidity. Packaging segment operating income was $1,102 million in 2024, compared to $1,074 million for 2023.
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).
The increase, excluding special items, related primarily to higher sales and production volumes ($377 million) and lower freight expense ($30 million), partially offset by lower containerboard and corrugated products prices and mix ($211 million), higher operating and converting costs ($121 million), higher depreciation expense ($22 million), higher annual outage expense ($13 million), and other costs ($20 million).
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.
Reported industry containerboard production increased 4.7% compared to 2023, and reported industry containerboard inventories at the end of 2024 were approximately 2.8 million tons, up 5.7% compared to 2023. Reported containerboard export shipments increased 15.4% compared to 2023.
The decrease was due to lower volume ($65 million), partially offset by higher prices and mix ($38 million). Gross Profit Gross profit decreased $392 million in 2023, compared to 2022.
The increase was due to higher volume ($49 million), partially offset by lower prices and mix ($19 million). Gross Profit Gross profit increased $84 million in 2024, compared to 2023.
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.
Considering these items, we expect first quarter earnings to be lower than the fourth quarter of 2024. 20 Results of Operations Year Ended December 31, 2024, Compared with Year Ended December 31, 2023 The historical results of operations of PCA for the years ended December 31, 2024 and 2023 are set forth below (dollars in millions): Year Ended December 31, 2024 2023 Change Packaging $ 7,690.9 $ 7,135.6 $ 555.3 Paper 624.7 595.4 29.3 Corporate and other and eliminations 67.7 71.4 (3.7 ) Net sales $ 8,383.3 $ 7,802.4 $ 580.9 Packaging $ 1,101.5 $ 1,074.3 $ 27.2 Paper 129.7 118.9 10.8 Corporate and Other (129.9 ) (118.1 ) (11.8 ) Income from operations 1,101.3 1,075.1 26.2 Non-operating pension income (expense) 4.5 (7.7 ) 12.2 Interest expense, net (41.4 ) (53.3 ) 11.9 Income before taxes 1,064.4 1,014.1 50.3 Income tax expense (259.3 ) (248.9 ) (10.4 ) Net income $ 805.1 $ 765.2 $ 39.9 Net income excluding special items (a) $ 814.5 $ 784.4 $ 30.1 EBITDA (a) $ 1,626.9 $ 1,592.8 $ 34.1 EBITDA excluding special items (a) $ 1,637.1 $ 1,603.8 $ 33.3 (a) See “Non-GAAP Financial Measures” included in this Item 7 for a reconciliation of non-GAAP measures to the most comparable GAAP measure.
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
These costs were partially offset by a gain on sale of a corrugated products facility. 29 The following table reconciles net income to EBITDA and EBITDA excluding special items for the periods indicated (dollars in millions): Year Ended December 31, 2024 2023 Net income $ 805.1 $ 765.2 Non-operating pension (income) expense (4.5 ) 7.7 Interest expense, net 41.4 53.3 Provision for income taxes 259.3 248.9 Depreciation, amortization, and depletion 525.6 517.7 EBITDA $ 1,626.9 $ 1,592.8 Special items: Jackson mill conversion-related activities 8.3 2.1 Facilities closure and other costs 1.9 8.9 EBITDA excluding special items $ 1,637.1 $ 1,603.8 The following table reconciles segment operating income (loss) to segment EBITDA and segment EBITDA excluding special items (dollars in millions): Year Ended December 31, 2024 2023 Packaging Segment operating income $ 1,101.5 $ 1,074.3 Depreciation, amortization, and depletion 490.1 472.5 EBITDA 1,591.6 1,546.8 Facilities closure and other costs 1.9 8.9 Jackson mill conversion-related activities 4.0 — EBITDA excluding special items $ 1,597.5 $ 1,555.7 Paper Segment operating income $ 129.7 $ 118.9 Depreciation, amortization, and depletion 19.5 29.6 EBITDA 149.2 148.5 Jackson mill conversion-related activities 4.3 2.1 EBITDA excluding special items $ 153.5 $ 150.6 Corporate and Other Segment operating loss $ (129.9 ) $ (118.1 ) Depreciation, amortization, and depletion 16.0 15.6 EBITDA (113.9 ) (102.5 ) EBITDA excluding special items $ (113.9 ) $ (102.5 )
The increase in non-operating pension expense was related to unfavorable 2022 asset performance, partially offset by favorable assumption changes. Interest expense, net, during 2023 decreased $17 million compared to 2022. The decrease in interest expense, net in 2023 was primarily due to higher interest income due to higher rates on invested cash balances compared to 2022.
Interest expense, net, during 2024 decreased $12 million compared to 2023. The decrease in interest expense, net in 2024 was primarily due to higher interest income due to higher rates on invested cash balances, partially offset by higher interest expense in 2024 related to the Company’s November 2023 debt refinancing.
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.
We reported $805 million of net income, or $8.93 per diluted share, in 2024, compared to $765 million, or $8.48 per diluted share, in 2023. Net income included $9 million of expense for special items in 2024, compared to $19 million of expense for special items in 2023. Special items in both periods are described later in this section.
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.
Index prices, in February 2024, increased $40 per ton for linerboard and $60 per ton for corrugating medium, followed by an additional increase in June 2024 of $40 per ton for linerboard and corrugating medium. The market for communication papers competes heavily with electronic data transmission and document storage alternatives.
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 was driven primarily by higher volumes, and lower freight and logistic expenses, partially offset by lower containerboard and corrugated products prices and mix, higher operating and converting costs and higher annual outage expense.
Labor and benefits costs will have seasonal timing-related increases that occur at the beginning of a new year related to annual wage and benefit increases, the restart of payroll taxes, and share-based compensation expenses. Scheduled outage expenses will be higher and will include the significant first quarter impact of the conversion outage at our Jackson mill.
Labor and benefits costs will be higher due to timing-related items that occur at the beginning of a new year for annual increases, the restart of payroll taxes, and share-based compensation expenses. First quarter rail rate increases at three of our mills will impact freight and logistics expenses and we expect higher depreciation expense.
The Company paid $4 million of debt issuance costs associated with the new notes, of which $3 million was funded using the net proceeds received from the issuance of new notes and $1 million was funded using cash on hand. The net proceeds received from the issuance of the new notes were invested in time deposits.
On November 30, 2023, we issued $400 million of 5.70% senior notes due 2033 through a registered public offering. The Company paid $4 million of debt issuance costs associated with the new notes, of which $3 million was funded using the net proceeds received from the issuance of new notes and $1 million was funded using cash on hand.
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.
For more information on our containerboard production and corrugated products shipments, refer to the table presented under the caption “Production and Shipments” in “Part I, Item 1. Business” of this Form 10-K. Containerboard prices published by industry publications increased in the first and second quarter of 2024, after declining late in 2022 and throughout 2023.
See Note 12, Employee Benefits Plans and Other Postretirement Benefits, of the Consolidated Financial Statements included in “Part II, Item 8.
See Note 12, 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.
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.
Increasing shifts to these alternatives have reduced usage of traditional print media and communication papers. Trade publications reported North American uncoated freesheet paper shipments increased slightly 0.5% in 2024, compared to 2023. Average prices reported by a trade publication for cut size office papers were lower by $36 per ton, or (2.4%), in 2024 compared to 2023.
Reconciliations 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.
The following table reconciles net income to net income excluding special items for the periods indicated (dollars in millions): Year Ended December 31, 2024 2023 Income before Taxes Income Taxes Net Income Income before Taxes Income Taxes Net Income As reported in accordance with GAAP $ 1,064.4 $ (259.3 ) $ 805.1 $ 1,014.1 $ (248.9 ) $ 765.2 Special items: Jackson mill conversion-related activities (d) 9.7 (2.4 ) 7.3 11.1 (2.7 ) 8.4 Facilities closure and other costs (e) 2.7 (0.6 ) 2.1 14.4 (3.6 ) 10.8 Total special items 12.4 (3.0 ) 9.4 25.5 (6.3 ) 19.2 Excluding special items $ 1,076.8 $ (262.3 ) $ 814.5 $ 1,039.6 $ (255.2 ) $ 784.4 (d) For 2024 and 2023, 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.
We intend to use the net proceeds from this issuance, together with a portion of cash on hand, to redeem, repurchase, or otherwise repay at or prior to maturity our outstanding 3.65% senior notes due 2024, which mature on September 15, 2024. See Note 10, Debt, of the Consolidated Financial Statements included in “Part II, Item 8.
The net proceeds received from the issuance of the new notes were invested in time deposits, which are included in marketable debt securities at December 31, 2023. On September 15, 2024, we used the net proceeds from this issuance, together with a portion of cash on hand, to repay our outstanding 3.65% senior notes due 2024.
For additional detail on special items included in reported GAAP results, as well as segment income (loss) excluding special items, earnings before non-operating pension expense, interest, income taxes, and depreciation, amortization, and depletion (EBITDA), and EBITDA excluding special items, see “Item 7.
Included in this Item 7 are various non-GAAP financial measures, including earnings per diluted share excluding special items, net income excluding special items, earnings before non-operating pension income (expense), interest, income taxes, and depreciation, amortization, and depletion (“EBITDA”), segment EBITDA, EBITDA excluding special items, and segment EBITDA excluding special items.
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.
(b) For 2024, includes $2.7 million of charges related to the closure of corrugated products facilities, partially offset by income primarily related to a favorable lease buyout for a closed corrugated products facility.
For cut size office papers, index prices decreased $20 per ton in April 2023, followed by additional decreases of $10 per ton in June 2023 and $20 per ton in October 2023, a total decrease of $50 per ton during 2023.
For cut size office papers, index prices decreased $40 per ton in January, followed by increases of $20 per ton in April and May 2024. For offset printing papers, index prices decreased $20 per ton in January, followed by increases of $20 per ton in April and May 2024.
These costs were partially offset by a gain on sale of a corrugated products facility. For 2022, includes charges consisting of closure costs related to corrugated products facilities.
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. (c) Amount may not foot due to rounding.
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 .
See “Non-GAAP Financial Measures” later in this item 7. 19 Over the past several years, we made extensive capital investments throughout the packaging segment to improve productivity and efficiencies at our containerboard mills and corrugated products facilities and believe that our success in execution of these capital investments has helped us deliver strong results while minimizing the continued inflationary impact across our cost structure.
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.
(e) For 2024, includes charges related to the closure of corrugated products facilities. These costs were partially offset by income primarily related to a favorable lease buyout for a closed corrugated products facility during the first quarter of 2024. 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. 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.
Financial Statements and Supplementary Data” of this Form 10-K. 28 Non-GAAP Finan cial Measures Earnings per diluted share excluding special items, net income excluding special items, EBITDA, EBITDA excluding special items, segment EBITDA, and segment EBITDA excluding special items are non-GAAP financial measures.
(b) For 2023 and 2022, includes $11.1 million and $14.1 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.
The following table reconciles earnings per diluted share to earnings per diluted share excluding special items for the periods indicated (dollars in millions): Year Ended December 31, 2024 2023 Earnings per diluted share, as reported in accordance with GAAP $ 8.93 $ 8.48 Special items: Jackson mill conversion-related activities (a) 0.08 0.09 Facilities closure and other costs (b) 0.03 0.12 Total special items 0.11 0.21 Earnings per diluted share, excluding special items $ 9.04 $ 8.70 (c) (a) For 2024 and 2023, includes $9.7 million and $11.1 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.
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.
The repayment of these notes was $400 million excluding accrued interest. See Note 10, 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.
Net Sales Net sales decreased $676 million, or (8.0%), to $7,802 million in 2023, compared to $8,478 million in 2022. Packaging. Net sales decreased $645 million, or (8.3%), to $7,136 million, compared to $7,781 million in 2022, due to lower prices and mix ($397 million) and lower volumes ($248 million).
Net Sales Net sales increased $581 million, or 7.4%, to $8,383 million in 2024, compared to $7,802 million in 2023. Packaging. Net sales increased $555 million, or 7.8%, to $7,691 million, compared to $7,136 million in 2023, due to higher volumes ($735 million), partially offset by lower prices and mix ($180 million).
Liquidity and Ca pital Resources Sources and Uses of Cash Our primary sources of liquidity are net cash provided by operating activities and available borrowing capacity under our revolving credit facility.
The lower effective tax rate for 2024 was primarily due to higher excess tax benefits associated with employee restricted stock and performance unit vests partially offset by higher nondeductible employee remuneration paid to covered employees. 22 Liquidity and Ca pital Resources Sources and Uses of Cash Our primary sources of liquidity are net cash provided by operating activities and available borrowing capacity under our revolving credit facility.
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).
The details of capital expenditures for property and equipment by segment for the years ended December 31, 2024 and 2023 are included in the table below (dollars in millions).
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.
Excluding special items, we recorded $814 million of net income, or $9.04 per diluted share, in 2024, compared to $784 million, or $8.70 per diluted share, in 2023. 1 The increase was driven primarily by higher volumes in our Packaging and Paper segments, and lower freight and logistic expenses, partially offset by lower prices and mix in our Packaging and Paper segments, higher operating and converting costs driven in part by inflation across our cost base, and higher annual outage expense.
Packaging. Segment income from operations decreased $349 million to $1,074 million, compared to $1,424 million in 2022.
Segment operating income increased $28 million to $1,102 million, compared to $1,074 million in 2023.
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).
The increase, excluding special items, primarily related to higher sales and production volumes ($22 million), lower depreciation expense ($3 million), and lower operating costs ($2 million), partially offset by lower paper prices and mix ($19 million) and higher freight expense ($1 million). Special items in 2024 included $6 million of expense for Jackson mill conversion-related activities.
Recycled fiber and energy prices will be higher, and seasonally colder weather will negatively impact usages and yields for energy, wood and chemicals along with higher operating costs associated with the restart of full operations at the Wallula mill compared to fourth quarter operations.
With the exception of recycled fiber prices, we expect inflation across most of our direct, indirect and fixed operating and converting costs along with a higher cost mix of mill operations. In addition, wood, energy, and chemical costs will also increase due to the unusually cold seasonal weather negatively affecting usages and yields for these items.
(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.
Management excludes special items, as it believes that these items are not necessarily reflective of the ongoing operations of our business.
Removed
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.

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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, 2023, the interest rates on 100% of PCA’s outstanding debt are fixed. 32
Biggest changeAt December 31, 2024, the interest rates on 100% of PCA’s outstanding debt are fixed. 30
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.
As of December 31, 2024, 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