PKGPackaging Corporation of America

For Looking ahead to the first quarter of 2025, 2026, in our Packaging segment, we expect higher per-day volume in our legacy corrugated products plants to increase over last year, reflecting improving demand, though shipment volume is seasonally slower than the fourth quarter and set new first we experienced some disruption in shipments from weather events earlier in the quarter. We will produce less containerboard than the fourth quarter records for total shipments and shipments-per-day. Containerboard production will be lower with two less fewer operating days and in the first quarter, a scheduled maintenance outages outage at our Counce, TN mill and Valdosta, GA mills. lower production at the reconfigured Wallula, WA mill. Domestic containerboard and corrugated products prices will be higher with an improved corrugated product mix throughout the quarter and we expect to benefit slightly from our previously announced containerboard price increases beginning in March. Export volume is expected to be slightly higher and prices are expected to be higher with an improved product mix together with our previously announced price increases. Export prices are assumed flat to be stable. slightly down. In our the Paper segment, we forecast slightly lower volume with two less mill operating days and prices and mix to be fairly flat. slightly lower. With the exception of recycled fiber prices, we expect price inflation across most of our direct, indirect and fixed operating and converting costs along with a higher cost mix of mill operations. costs. In addition, wood, energy, and chemical costs will also increase due to the unusually cold seasonal weather winter conditions negatively affecting impacting usages and yields for these items. Our cost structure will begin to benefit from the Wallula reconfiguration late in the first quarter. 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 Freight will impact freight and logistics expenses be slightly higher and we expect higher slightly lower depreciation expense. Lastly, scheduled Scheduled outage expenses should will be slightly lower and we assume a lower corporate tax rate. Considering these items, we expect first quarter earnings to be lower than the fourth quarter of 2024. 2025.

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 stakeholders have an interest in ESG matters, including with respect to climate change, greenhouse gas emissions, and sustainable business practices. As a result, we anticipate a continued interest in reporting on The expectations of these stakeholders continues to evolve and there can be no guarantee that our approach will align with the preferences of any particular stakeholder. Both mandatory and voluntary ESG metrics, more prescriptive reporting requirements with respect to are also evolving and may not be uniform nor evenly interpreted, ESG metrics, information is often reliant on third-party information and expectations that companies establish goals and commitments regarding ESG metrics and take actions to achieve those goals and commitments. scoring service providers use differing methodologies which may impact how stakeholders perceive, justifiably or not, how we are performing.

The Details on the legal proceedings associated with the incident at the Company’s DeRidder, Louisiana mill 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 our 2024 Annual Report on Form 10-K. As of December 31, 2024, the Company has had recorded a liability of $59.2 million in “Other Accrued “Accrued Liabilities” and a receivable for the insurance recovery of $59.2 million in “Prepaids and Other Assets” in the Consolidated Balance Sheet as Sheets for the settlement amount to be paid to the plaintiffs and related insurance recovery from the Company’s insurers. As of December 31, 2024. 2025, the settlement amount has been paid, and no amounts remain outstanding.

In December 2023, the FASB issued Effective January 1, 2025, we adopted ASU 2023-09, Income Taxes (Topic 740): Improvement to the Income Tax Disclosures. This ASU provides for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This ASU is effective for fiscal years beginning after December 15, 2024 The new guidance was applied retrospectively in this Annual Report on Form 10-K and did not have a prospective basis. Early adoption is permitted. The Company is currently assessing significant impact on the impact of the Company’s related disclosure requirements on its consolidated financial statements. as reflected in Note 8, Income Taxes.