Packaging Corporation of America To Permanently Close Wallula Paper Machine And Pulping Facilities, Cutting 250,000 Tons Of Capacity; Expects A Reduction In Headcount Of ~200 Positions

Packaging Corporation of America (NYSE:PKG) today announced that it will permanently shut down the No. 2 paper machine (W2) and kraft pulping facilities at its Wallula, WA containerboard mill. PCA will continue to operate the No. 3 paper machine (W3) and recycled pulping facilities at the mill. After the announced actions, which are expected to be completed by the end of the first quarter 2026, the mill will have capacity to produce 285,000 tons per year of high-performance recycled linerboard and corrugating medium on the W3 machine, which is a reduction of 250,000 tons of annual production capacity at the mill.

The W2 machine has approximately 140,000 tons of annual capacity to produce corrugating medium and has been idled since May 2025. The mill is expected to produce approximately 400,000 tons of containerboard this year. The new configuration is expected to lower the production cost at the mill by approximately $125 per ton from 2025 levels due to an improved cost structure and utilization rate. The 250,000 tons of reduced capacity will be replaced with production enhancements at other PCA mills beginning in the fourth quarter of 2026.

These actions are estimated to result in pre-tax restructuring charges of approximately $205 million, substantially all of which will be recorded in the fourth quarter of 2025 and first quarter of 2026. These charges include approximately $165 million of non-cash impairment and accelerated depreciation charges and $40 million of cash charges for contract termination, severance and other charges. We expect a reduction in headcount of approximately 200 positions.