Thanks, Jamie, and good morning, everyone, and thank you all for participating in Packaging Corporation of America's second quarter 26 Earnings Release Conference Call. Again, I am Mark W.

Kowlzan, Chairman and CEO of Packaging Corporation of America. And with me on the call today is Tom Hassfurther, president and Kent A.

Pflederer, our chief financial officer. I will begin the call as usual with an overview of our second quarter results and then I will be turning the call over to Tom and Kent who will provide further details.

I will then wrap things up, and then we will be glad to take questions. Yesterday, we reported second quarter net income of $192 million or $2.15 per share.

Excluding special items, the second quarter 26 net income was $210 million or $2.35 per share compared to the second quarter of 25's net income of $224 million or $2.48 per share. Second quarter net sales were $2.5 billion and 2026 and $2.2 billion in 2025.

Total company EBITDA for the second quarter is excluding special items, $486 million in 2026, $451 million in 2025. Second quarter net income included special items expense of $0.20 per share, primarily for costs and write offs related to facilities closures, Wallula Mill restructuring charges and costs related to the acquisition and integration of the Greif containerboard business.

Details of the special items for the second quarter of 26 and 2025 were included in the schedules that accompanied the press release. Excluding the special items, our earnings decreased by $0.13 per share compared to the second quarter of 25 resulting from a $0.27 decrease in legacy business earnings.

Partially offset by $0.14 of earnings from the acquired Greif business. The decrease in the legacy earnings was driven primarily by higher freight costs of $0.26 higher corporate and other expenses, $0.12, lower price and mix in the packaging business, $0.11, higher labor and operating costs, $0.05, higher depreciation and amortization expenses, $0.03, higher fiber costs, $0.02, higher tax rates, $0.02, and higher interest expense.

Excluding the Greif acquisition, indebtedness for $0.01. These items were partially offset by higher production and sales volume in the packaging business for $0.26, lower maintenance outage expense, $0.04, higher production and sales volume in the paper business for $0.03, and higher price and mix in the paper business, $0.02.

Greif's earnings were driven by strong volumes in the corrugated business and improved operating performance in the mills and included a $0.04 benefit to depreciation expense due to measurement period adjustments to the valuation of fixed assets on the opening balance sheet of the business. We exceeded our guidance of $2.33 on the strength of our corrugated volumes, which helped drive cost favorability in areas that we could control and offset higher than forecast costs for freight.

Recycled fiber, and employee benefits. Greif's earnings contribution also exceeded our expectations.

Looking at our packaging business, EBITDA excluding special items in the second quarter of 26 of $489 million with sales of $2.3 billion resulted in a margin of 21.1% versus last year's EBITDA of $453 million and sales of $2 billion or a 22.6% margin. We produced 1.42 million tons of containerboard during the quarter.

The legacy mills produced 1.21 million tons of containerboard about even with the first quarter of 26, and 14 thousand tons more than the second quarter of 25. The acquired mills produced 206 thousand tons during the quarter.

Significantly exceeding their production in any quarter since the acquisition. System wide, our inventories were down 25 thousand tons from the end of the first quarter.

While we ended the quarter at a low number, we have been able to build some inventory early in July with many plants down for the holiday weekend, to help get us near our target levels of inventory. With not as much outage impact in the third quarter, we will be in a much stronger position to serve our customers in very tight conditions that we are operating under.

Operational performance was a mixed bag during the quarter, as we were hit with some production interruptions resulting from utility power outages across the mill system. This further emphasizes our need to execute and realize the benefits of the gas turbine projects, which will reduce, if not eliminate, our reliance on the grid at 3 key facilities.

It is also a testament to the organization that we are able to work through and minimize the effects of these issues to achieve the production we achieved given that we had completed outages at 5 of the packaging mills during the quarter. We manage costs very well in the areas we could control, particularly in the box plant system to help offset the headwinds we faced from elevated freight and increased recycled fiber costs.

I will now turn it over to Tom, who will provide further details on containerboard sales and the corrugated in general.

Thank you, Mark. Our corrugated operations turned in yet another very strong quarter in all areas.

Domestic containerboard and corrugated products prices and mix were $0.11 per share below the second quarter of 25 and up $0.04 per share compared to the first quarter of 26 and in line with our forecast. Corrugated prices were slightly below first quarter levels until we began to realize the first increase in June.

We are seeing the majority of the first increase rolling in during July and we will see the beginning of the second increase in August with realization split between Q3 and Q4. Export containerboard prices were $0.01 above last year's second quarter and $0.02 above the first quarter of 26.

Export sales volume of containerboard was 30 thousand tons lower than the first quarter of 26 and 22 thousand tons lower than the second quarter of 25. We decided mid quarter to lower export sales to build inventory so we can supply our corrugated plants to efficiently serve our customers.

As Mark alluded to earlier, we were able to meaningfully increase our inventory during the first week of July which puts us in a good supply position for the back half of the year with our mills running full out. Demand was very strong throughout the quarter across our entire customer base.

Shipments were up over 24% in total and per day versus last year, with the legacy business up 4.1%, achieving an all time record for total quarterly shipments. The acquired corrugated business had an excellent quarter driven by strong volumes in both the sheet feeder and bulk businesses which drove its earnings contribution above our expectations.

We saw meaningful improvement of the integration level of containerboard produced by the acquired mills into the combined box plant system as well as from legacy PCA mills into the acquired corrugator. Corrugated operations.

Given the volume, the box plants across the whole system had to step up and perform to satisfy our customers while costs were increasing, and they did just that. Our corrugated operations were favorable to forecast in almost all cost areas which helped mitigate the freight hit we took during the quarter.

We also optimized our production and ran the right orders in the right plants to maximize efficiency and margins. Our people demonstrated their unwavering commitment to our customers to deliver this outstanding performance.

Finally, I am pleased to report that we successfully started up the new Ohio plant earlier this month ahead of schedule. The state of the art 550 thousand-square-foot facility will further enhance our capabilities to serve and grow with our customer base in a very strategic area for us while improving our operational efficiency over the long term.

I will now turn it back to Mark.

Thank you, Tom. Looking at the Paper segment, EBITDA excluding special items the second quarter was $39 million with sales of $157 million.

Or a 24.9% margin compared to the second quarter of 25's EBITDA of $30 million and sales of $146 million or a 20.8% margin. Note that the international falls outage was in the second quarter of last year and will be in the third quarter this year.

Sales volume was approximately 3% below the first quarter of 26 and approximately 6% above the second quarter of 25. Prices and mix were up 2% from both the first quarter of 26 and the second quarter of 25.

So another solid quarter from the paper business with strong margins. We are continuing to implement our previously announced price increases and expect to benefit in Q3.

I will now turn it over to Kent.

Thanks, Mark. Cash provided by operations was $376 million and after $2.00 $6 million of CapEx, free cash flow was 170 million In addition to CapEx, the primary payments of cash during the quarter included dividend payments, of 111 million cash tax payments of 78 million and net interest payments of 54 million did not repurchase shares during the quarter.

Excluding special items, our effective tax rate during the second quarter was 25.7%. Expect the third quarter rate to be approximately 26%.

We continue to forecast $840 million to $870 million of CapEx and excluding special items, around $710 million of DD and A for the year. Our special items expense for the year through the end of 2Q included $56 million in depreciation expense associated primarily with the Wallula Mill restructuring.

I would now like to give you an update on the annual outage schedule and earnings impact for the year. Our outage expense was $0.34 during the second quarter, Our back half estimates are now $0.30 for the third quarter, and $0.63 for the fourth quarter, totaling $1.41 for the year.

As we indicated, International Falls are only white paper mill, will have the outage in the third quarter. In the packaging segment, only the Riverville mill is scheduled for a third quarter maintenance outage.

I will now turn it back over to Mark.

Thanks, Kent. Looking ahead, as we move from the second quarter into the third quarter, we expect continued strong demand in the Packaging segment and corrugated products volume to increase with 1 more shipping day.

Prices for containerboard and corrugated products will be higher as we complete implementation of our first announced increase and begin to realize our second announced price increase. We will have 1 more day of mill operation and, as well as lower impact to production from maintenance outages.

We also expect better operating performance across our containerboard mill system with continued improved capabilities from our Jackson mill as well as the acquired Greif mills. Mill maintenance outage expenses will be lower in total in the packaging segment and higher in the paper segment.

We expect lower volume and higher prices in the paper segment as a result of the maintenance outage and continued implementation of our previously announced paper price increases. Cost for freight across the business will remain at or around the elevated levels we experienced in May and June, Recycled fiber prices are continuing to increase and higher mill production will drive usage higher usage.

We expect higher prices for chemicals and per electricity with wood fiber and natural gas remaining relatively flat. We accept expect some improvement in employee benefits costs due to second quarter unfavorability that is not expected to repeat in the third quarter.

Considering these items, we expect third quarter earnings of $2.91 per share, excluding special items. With that, I would be happy to any questions, but I must remind you that some of the statements we have made on the call constituted forward looking statements.

The statements are based on current estimates, expectations and projections of the company, and do involve inherent risks and uncertainties, including the direction of the economy and those identified as risk factors in our annual report on Form 10 k on file with the SEC. Actual results could differ materially from those expressed in the forward looking statements.

And with that, Jamie, I would like to go ahead and open the call for Q&A.

Hi, everyone. Good morning.

Hope you are doing well. Thanks for the details.

How are you? So I guess maybe to start, as always, can you give us a rundown on what you are seeing in terms of bookings and billings to start the third quarter.

Anything sort of unique or notable in the trends that you are seeing? and I had a couple of follow ons.

Hey, George. it is Tom.

Yeah. Billings are up 1.5% so far, and we are expecting for the quarter, this is in the legacy business and up about 2%.

So, that is that is pretty much in track with what we thought. And, of course, it is against a pretty tough comp.

And, you know, as you may know, Prime days were moved up a quarter, so it is going to change the numbers a little bit in the third quarter, but all in all, we are we are we are happy with that. We are happy with that growth, and we are being pretty disciplined and selective in terms of our growth as well.

Okay. Thanks for that, Tom.

Within the 2Q volume to 3Q volume comparison, and you mentioned, you know, 1 consideration, is there anything else that decelerate, or is that the only thing that you know, from what you can see that is worth noting? And relatedly, you know, this is neither here nor there.

it is our model, not yours. But mix was a little bit less than we are expecting in terms of revenue per ton.

Was that related to any sort of customer factors or anything else in the mix And then my last question, bigger picture, you know, Mark, you know, for years, the company has you know, talked rightly about its fiber flexibility. Frankly, the weighting more towards virgin versus recycled, which gave you a little bit more predictability on your on your costs.

How do you see that evolving now that you become you know, maybe almost as much recycled as virgin relative to the pure set. Thanks, guys, and good luck in the quarter.

Let me start that question up first, George. We are we are we are probably currently around 30%, recycled to 70%, any given day.

There it flexes up and down to 35% at times. As we are pushing the system now, we are probably up closer to the 35% level.

But, nevertheless, it is, you know, we have gone through an unusual time since the beginning of the year, you think about it, OCC DLK recycled fiber is up about 70% And so, you know, that impact is felt directly. So, you know, we are we are maximizing the virgin craft system and taking advantage of the OCC DLK systems to fiber up the mills.

that is pretty much where we are and where we expect to be. We are not we are not planning on any big capital expenditures right now for either fiber.

Thumb?

George, you know, relative to, mix, 2Q going into 3Q, you know, as I mentioned, the prime days in the e-comm was very strong in the quarter. So in the second quarter.

And, that moved they moved that up. Somewhat.

So, you know, that really impacted the general mix, which translated into price as well. And then, of course, we had the, we had the $20 reduction that was announced in RISI, which, which impacted price as well.

But the good news is all segments of the business were very strong, and we are up. And, we plan to see that going forward as well.

Yeah. And the 3Q price, obviously, is going to change dramatically as we as we roll through the price increase that we as I as I mentioned in my commentary.

Okay. Thank you very much.

I will turn it over.

Yeah. Thank you, Mark, Tom, Kent, for taking my questions.

You mentioned Greif beat by 10¢. Think you were expecting maybe a 4¢ contribution positively.

You ended up with 14¢. This is all-- excuse me.

So when you think about the 4 the beat, it seems relative to the streak for the quarter, it seems like it was done-- it came most of it came from, if not all, it came from Greif rather than your legacy business. So just any color you can provide on the miss in your legacy business relative to expectations?

Is that largely due to cost mainly freight? Just any color you could have in terms of the puts and takes in the quarter relative to between legacy and your and the Greif assets?

So, Mike, I will start with this. it is Kent, and then Tom will Tom will add some color.

So, Greif was a 14¢ earnings contribution that exceeded expectations, the headline number by, you know, call it 9 or 10¢. 4¢ of that was the depreciation benefit that we called out in the earnings release.

Okay? So if you are looking sort of apples to apples, $5.05 cents from expectations, That was driven by, you know, largely higher volumes than we expected and very good operational performance.

But, also, we are running Greif now as a much more integrated system. You know?

it is it is it is much less separate from PCA legacy. Than when we made the acquisition, obviously, by design.

So there is some puts and takes. We are moving business between, trying to get things you know, trying to get efficiencies maximized, and Tom can comment on this a little bit further.

there is really not a ton to add. it is just that we you know, we are running the business to the to the greatest efficiency we can, and we are trying to utilize all of our assets in the best possible way.

So, you know, we now view this business as being totally integrated. And, we are we are operating as 1 unit.

Got it. You know, in that regard, Tom, you know, I think you had a transition service agreement with Greif that may have expired.

Talk about and is there any way to quantify what the what you get back from the expiration of that agreement?

I will let Kent handle that.

So the transition services agreement is running through the end of the year as we bring the last few corrugated plants and 1 facet of the mills onto PCA system. So, yeah, we got 3 more plants coming up in 3Q in the last couple coming up in 4Q.

The TSA is, you know, number 1, we are reporting the cost and special items as part of, acquisition integration charges. But, really, the efficiencies we are seeing is just having better visibility to the business, take-- you know, being able to take advantage really of just optimizing the supply position between PCA mills on 1 hand and great facilities on the other hand.

So that is you know, really where it is coming from, Mike.

I will add, Mike, that we look very we look very much forward to having them all on our system. I can tell you that.

Got it. And that sounds like it will be done by year end.

that is, putting a together. You will be done completely with, with the TSA.

Perfect. 1 last 1.

I will turn it over. Just in terms of tariffs, obviously, there is they are 50% tariffs potentially being proposed to be applied to Canadian imports of containerboard, maybe boxes, Any thoughts around those tariffs and what it means for the domestic industry?

Right now, our initial read is little to no impact, not 100% clear at this point in terms of what it really applies to. So we will we will we will take a little more of a wait-and-see approach.

But right now, we do not we do not view it as a as a significant driver either way.

Thank you. So you mentioned that you started to see the Mark, April increase in June.

Can you give us a sense as to how much of it then would of the 50 would have shown up in your box prices in the second quarter, presumably, the balance of that is it fair to say, would be in the third quarter? And then can you share I think you used the term you expect to kind of split the June increase between 3Q and 4Q Is that evenly, or was that just sort of some of it is gonna show up in 3Q and some's gonna show up in April and to the extent that you are comfortable quantifying, rough percentages, that would be helpful.

Yeah. Hey.

Hey, Mark. it is Kent.

I will start, and then Tom will Tom will finish. Here.

Okay? On the first increase, The vast majority of that is coming in Q3.

Okay? You know, calibrate it maybe 70, 75% of it is Q3 in July there.

The second increase, the majority will come in 4Q, but not quite as pronounced as the, as the 2Q, 3Q split. On the first increase.

Tom? Yeah.

Yeah. that is-- I mean, that is exactly the way we see it.

And, I think a lot of times people forget that you know, we were impacted by the by the $20 down that was announced at trailed into 2Q and also the mix. You know, had some impact in 2Q from the from the price standpoint.

All of that then comes back in 3Q and 4Q with these increases as they roll through, as Kent mentioned.

Right. And then just as a follow-up.

In some environments in the past, you have been able to get more than full pass through. And, you know, clearly, we got a very high cost environment right now.

Is are we in that type of an environment? What would sort of be recognizing they are gonna always gonna be competitive pressures as well at work?

How should we be thinking about the ability to get full and or possibly even more than full pass through?

Well, you know, Mark, you know, I do not I do not you know, I am not gonna quantify that for you, but, you know, I can tell you that, you know, you did observe that, is our mission. And that is what we always tried to do.

And we and you also mentioned, and I think very importantly, that we are in a very high inflationary environment right now. And, you know, we are having a you know, it is it is, we are having a lot of we are having a lot of discussions around that.

I will leave it at that.

Mark, Kent, Tom. Good morning.

Morning. You talked about being able to build a little bit of inventory early in the quarter maybe in and around the July 4 holiday.

And then, Tom, I think you also mentioned 1.5% billings. I know we cannot extrapolate that out, but I think you referenced maybe 1.5%, 2% were sort of what you were thinking for the quarter on a year over year basis.

If I got my comparisons correctly-- or correct here, I think down 1.1 for corrugated shipments in Q3 25. So just assuming I have got that level set, how would you describe kind of the feel in the market right now from a supply demand standpoint?

And I am sort of asking because you guys obviously delayed some sales of exports into the third quarter to kind of shore up your own inventories. Then there is been some supply disruptions in the market.

So just if you got customers coming to you asking for help, anything like that. Thank you.

I am gonna give you 1 word, Gabe, that I would that I would use to describe the environment. that is tight.

Okay. Got it.

And then we did hear some comments about maintenance outages maybe some folks coming out a little bit slower. Than what was expected.

Just curious if you guys had experienced any of that, or maybe it was Mark, related to the grid volatility that you mentioned in your prepared remarks.

As far as, you know, we went through annual outages at 5 of the mills during the second quarter, and we executed incredibly well and done most cases ahead of schedule and started the mills very successfully. But we had at least 5 distinct utility power outage situation at, a number of the mills.

I mean, I will give you example. 1 mill, they shut us down for the better part of a full day, just with, their own hardware issues and then had continuing problems for a few more days trying to get their own you know, their own grid structure stabilized.

Another location, you know, basically, you know, you are in forest fire season. We had the utility, shut down the entire regional system without notifying anybody.

So it took down the mill instantaneously out in Wallula. And impacted us for a period of time.

So we are having these types of situations where you know, voltage droops and surges through the systems. It just I think it speaks in many cases to what is happening with the nationwide integrity of the system.

And so but we overcame those issues, and, again, as I said on my comments, it speaks to the ability of our individuals to rally and get through these things and stabilize the mills, but it also speaks to the importance of the 3 gas turbine projects that we are bringing online over the next 2 years. And, how critical they are gonna be to these 3 particular mills.

So Right. Thank you.

I know I am going to be maybe a little aggressive here or at least give a mouse a cookie. or no class for a cookie?

Think you said 70% realization, Kent, on the second price increase in sort of split. Q3, Q4.

$35 a ton, maybe 1.4 million tons. But directionally $4.55 billion benefit we are thinking about on a sequential basis.

And then I know maintenance costs are up I think 33¢ directionally. So maybe $40 million offset And then I think there is 1 less shipping day.

Is there anything else that we should be thinking about, I think, a higher energy consumption for colder weather conditions, things like that in Q4? Anything else that we should be mindful of thinking about for Q4?

For Q4, maintenance primarily higher. You know, norm normal seasonal mix.

A little bit higher depreciation run rate as I kind of called out as I alluded to in my prepared remarks. But yeah, you know, seasonally strong volumes.

So those are your primary factors. And at least, you know, right now, trying to put a crystal ball around some of the, you know, some of the freight and energy base costs, it is pretty premature to do that.

Absolutely. Good luck.

Okay. Thanks.

Hi. Good morning, everyone.

Sorry if I missed it. Morning.

Sorry if I missed it, but did you give a sense of what you expect from the Greif assets in third quarter in your guidance?

Yeah. The way I would look at it, Anojja, is you have you will have the benefits of you know, continued, strong volume, you know, consistent with or even maybe a little above second quarter levels.

You will have the benefits of price coming in. But then that will be probably over by the fact that you have Riverville down in the third quarter, so you will have outage expenses.

So the way I am looking at it from a from an earnings contribution and, again, I am I am I am taking this against a 10¢ contribution without the depreciation benefit we got in February. You are probably gonna be a penny or 2 down Mark to February in terms of the Greif contribution.

And, again, you know, I will I will reemphasize this. 3Q will be the last time we call Greif out as an individual, you know, contributor.

it is really part of PCA from this point on.

Okay. Great.

And then do not think we have talked about this recently, but any update you can give us on the Greif synergies? I think we had about 30 million penciled in for this year, and now we are at the halfway point.

Can you just give us an update there? Thank you.

So between the mill production improvements that we called out last quarter, you know, we are on track or even a little bit ahead of that. You know, we are running you know, we are running in the oh, 5 to 10%, improved reliability, which we are seeing in better production.

But the integration benefits now are starting to come into you know, come into the numbers as well. And, you know, from an integration standpoint, adding that in, we are we are on track probably to exceed $30 million run rate by the end of the year.

So very comfortable with, where we are at there, Anojja.

Okay. Great.

Thanks very much. I will turn it over.

Hi. Good morning.

Morning. The 2Q-- hey.

The 2Q corrugated demand was a bit stronger than we expected. And was wondering, do you think there is any element of prebuy there with you know, 2 price hikes in the market And then, you know, World Cup, America 52, I do not know if those really had any impact on you, but I am just curious if there is anything you would call there.

Anthony, this is Tom. The yeah, the second quarter demand was very strong.

I mentioned, I mentioned, you know, some of the e comm driven Prime Day from Amazon and some of those related e comm customers that we have, certainly drove some of that business Prebuy, you know, our capacity is so tight that it is impossible to get a prebuy in right now. So that is not that is not the case.

And World Cup, I am not sure where that discussion even started, but I think that was that had very little impact in my opinion.

Okay. Okay.

And then just switching gears Mark, you referenced the 3 energy projects over the next couple of years. I do not know if there is any minor point you could put on you know, the cadence there or when those would go in, and then just the CapEx guide of $840 million to $870 million, you reiterated you know, directionally as we look to 27, Is there a way to think about CapEx?

Yes. Regarding the 3 gas turbines, we are in construction phase at the Jackson Mill as we speak.

We are waiting on some word on deliveries of some of the switchgear components that will be needed to tie in and utilize the gas turbine into the existing system at the mill. The goal would be to have that gas turbine at Jackson up online next year in coordination with their Jackson's Annual Outage Next Year.

In the latter part of the year. And Then The Riverville Virginia, and then the DeRidder, Louisiana units.

We are having to go through environmental permitting there. So it is kind of like, go figure.

We wanna put in gas turbines, but it is taking us longer to get, state and federal permits than it does to put in a data center. So we should have called them data centers.

But I am thinking it is gonna be for the DeRidder and the Riverville units. it is probably gonna be more like the first part of 28 to, you know, the mid part of 28 to get those 2 units up and running based on the timing for the permits from the from the states.

Got it. Got it.

And any kind of directional views on CapEx in 2027? Versus 2026?

I think with the opportunity, we are just starting that discussion right now. And, you know, as always, I reserve the right to take advantage of any of the great ideas that we have.

But yeah, it could be in line with where we have been last year and this year. We got, you know, the gas turbine projects will consume a good portion.

And then, you know, you know, we always have good opportunities on the on the converting side. And then the mill side, we will continue to take advantage of you know, any high return projects that we identify, which we have got a number of them on the on the table that we are looking at right now.

So I would I would assume that the CapEx is gonna stay in this range that we have been at but these are you know, well executed high return opportunities.

Tom, you got anything to add? Well, I would just say that, Anthony, 1 thing to keep in mind relative to CapEx.

I mean, you know, this is a very capital intensive business we are running here. And, you know, we need to recapitalize, but just like everything else, cost of capital keeps going up as well.

And so, you know, it is it is incumbent on us to make sure that we hit those hurdle rates and that we are able to reinvest in the business. And we are working hard at it, but, you know, it is you know, you do not have to look very far in business to see what is going on.

And, certainly, we are feeling we are feeling that pinch. that is that is happening in the business in terms of tight board and tight box plant capacity and things like that.

So we are gonna need that going forward.

Anything else, Anthony? Got it.

That no. that is that is very helpful.

I will turn it over.

Hey, guys. Just given how tight the market is, Good morning.

And, Tom, I appreciate your brevity. Tight was, the operative word here.

Just given how tight the market is, can you just give us an update in terms of some of the capacity unlock you guys were planning from accounts, Jackson, I think some the Greif assets. Then, Mark, I think you kinda hinted potentially there is other things you guys are circling in terms of unlocking perhaps more capacity on the mill side.

Give us a little more color in terms of how that is coming along and potentially some more opportunities going forward.

Yep. Well, even the Jackson mill, project that we have talked about for the last you know, year, it is the new winder project.

that is coming on, you know, later this year. So and we are, you know, we have we have done a number of things at Jackson.

So we will see the incremental tons that we had talked about coming online. But even more important than that, the Massillon Mill in the Riverville mill have delivered as I had hoped they would deliver.

And, with the efforts that we put in over the last few quarters. So know, the incremental tons will continue to flow out of the acquired mills.

And then Jackson project is you know, going to, you know, bring on the tons that we committed to. We got a few capital projects that we have identified that we are looking at for next year as an example that would bring on some incremental tons.

So you know, we are and which is pretty much what we do every year. But you know, it is it is the 25 thousand 50 thousand tons of annual incremental opportunity with some capital spending but that is kinda where we are.

No 1 big project, just a number of little things.

Okay. Bill, I would I would Philip, I would add this time.

I would add that, you know, when I when I said tight, I, you know, I was referring to not only our ability to source domestically, but also our ability to source globally. So it you know, again, this comes back to the commentary that, you know, we are gonna have to we are gonna have to manage our own and, and figure out ways to do so.

But, it is a, you know, it is it is it is a unique situation.

Perfect segue, Tom, to my next question. When I think about your margins return, you know, they have remained quite good even with the demand and inflation shock we have seen the last few years.

Now your margins, EBITDA margins kinda bottomed out, like, 19 ish years ago. But just looking over a very long duration, margins have been very tight, call it, in the low 20-ish range.

Supply demand certainly deals pretty tight right now. The tightest it is been since the pandemic And demand, frankly, has not even really recovered in a big way yet on the box side.

So feels like you got great runway for margins and returns and improved mix. But I think my question really here is bigger picture, guys.

is PCA and the broader industry in a position to kind of rebase that return margin profile structure a little higher. what is different this time around?

And certainly, you guys are spending a lot of capital for these projects to kind of enhance your return profile going forward. But give us kind of a little more color on how you are thinking about this long term.

Well, let me let me start this out, then Tom can take it. But again, just re reminding everybody that over the last, say, 8 or 9 years, if you think about year to date 2026, we have spent about $6 billion on the box plants and mills to recapitalize, build new plants, you know, basically, you know, recapitalize the converting footprint and then continue to optimize the mill system and build out the mill system.

So that is what is enabled us to maintain the double digit, you know, the 20 plus percent type of margin that we have been in. But at the end of the day, we have said this for all along year after year.

It does not matter how much capital you are willing and able to spend At some point in time, you gotta back that up with price also.

Tom? Yes.

it is it all comes back to earning your cost of capital. that is what it comes back to.

And, you know, you have to be very you have to be incredibly disciplined about it, and we are and we are very fortunate that we embarked on this, you know, approximately 15 years ago. To recapitalize our business because I would hate to be in a position right now you know, where we are suddenly at the with the cost of capital you got today, to have to have to do that all over again.

But, you know, we have got we do have we do have good plans and a good runway to continue to do what we need to do to take care of our customers. But when I said, when I use the word selective and disciplined, relative to customer growth, That revolves around some of the things that we are talking about relative to capital and our ability to serve those customers and get paid appropriately for it.

So that is that is that is that is our mission. It has it does not change, but, but it is it is a challenging situation as I mentioned, not only domestically, but globally right now.

There has not been, you know, some of the some of the same type of investments made that we have made. And that is that is that is my observation.

You know, just to continue on with what Tom's talking about, if you go back over the 15- or 17-year period, know, the total capital spend on the on the mills and box plants and, you know, all of these efforts. We probably spent $10 billion to, to enhance PCA's capability.

And, and we you have also heard us talk about we expect an appropriate return for that investment. And we are not ashamed to say that.

That sounds great, guys. Makes total sense given all the investments you are making.

Thank you so much.

Hi. Thanks for taking my questions.

So, obviously, you know, significant pricing strength this year, but, you know, with input costs still being high, do you think there will need to be additional price increases later this year? Just overall as an industry, I am not saying, you know, you specifically, but just as an industry.

Hillary, we do not we do not comment on price going forward, so we will just we will leave it at that. You can come you can come to your own conclusions.

Okay. Got it.

Okay. So last quarter, I think you said Riverville and Riverville and Massillon facilities are operating at about 10% above pre acquisition levels.

Could you talk about where those facilities are operating today in terms of percentage above pre acquisition level? And are there still meaningful productivity opportunities remaining?

Yeah. You know, if you went back historically and looked at you know, the Boise acquisitions, the reconfigurations we have done, everything in my career.

I have always looked at ultimately about a 30% improvement in productivity. In some cases, we have seen 40%.

It depends on how much capital you would need to spend and are willing to spend to get the incremental capability out of a mill. There comes a point in time where you have a diminishing return for every dollar spent, and so we are very prudent in how we do that analysis.

And how we step forward to these opportunities, but it is always about what do we need to do to supply the, the converting side of the business and do it in a prudent manner. But you know, just reminding everybody that we are really 9 months into the acquisition here.

You know, we will be lapping a full year come September, but we are we are feeling pretty bullish on the productivity coming out of both Massillon and Riverville. And not just the productivity, but the cost to produce those tons has come down, you know, significantly.

And we are looking forward to continuing to ramp up the productivity of both those mills. So, you know, stay tuned.

I am I am not gonna give you a number. I am just gonna say that historically, we have always, you know, done significantly more than we have already done.

Got it. Thank you very much.

Hi, George. How are you?

Just wanted to come back to some of the cost factors in the second quarter and try to get at the earnings power really more of a grab bag, if you will, Mark. So the outages that you were not expecting because the utilities what do you think that cost you If you can talk about the corporate cost, where it shook out relative to what you are expecting, what was that variance And, also, I think if I did my math correctly, maintenance this year now is looking to be maybe a nickel dime more than, in the first quarter guidance.

Correct me if I am wrong, but correct me if I am wrong. I just want to run down those things.

Thanks so much, and good luck in the quarter again.

Okay, George, it is Kent. You asked for a you asked for a fair amount.

So the corporate variance that was largely a benefits obligation that Yep. You know, higher than forecast.

it is a it was a mark to market obligation on a comp-- on compensation and benefits. And that was about a nickel variance from 2Q to from 1Q to 2Q, and that showed up in the corporate segment.

And I am sorry, George. I am taking these out of order.

What was your what was the first? All the utility outages that were unplanned, what did that cost you?

If you had-- I recognize there is always stuff that goes wrong in a quarter, but Yeah.

That you cannot plan for. I think that probably hit us for about 10 thousand tons of production.

All in.

Okay. And then lastly, maintenance expense this year for the year.

Relative to the to prior guide. I wanna say it is a nickel dime higher, but correct me if I am wrong.

And if you could just affirm what the number is and the variance, that would be great.

George, on full year maintenance for the for full company, I thought we brought it down a few cents from where we were from where we were. We are $1.41 for the year.

You know, including 4Q. And I thought we brought it down maybe 2 or 3¢ from where we were at the end of 1Q.

I can clean that up in our-- and you know, after the call, I will I will go double check that. But, you know, I thought we were maybe a penny or 2 better than we were coming into the quarter.

Okay.

No worries. Probably my miscalculation, but I appreciate the color.

Thanks, guys.

Thanks, Jamie, and, thank you, everyone, for joining us on the call today, and appreciate everybody's time. We look forward to, speaking with you in October and giving you the details and wrap up for 3Q.

Take care. Have a good day.

Bye.