AI Takeaway
PKG (Packaging Corporation of America) reported Q1 2026 revenue of $2.37B (+10.6% YoY), but profitability declined sharply with net income falling 16.1% to $170.9M as cost pressures and higher SG&A outpaced top-line growth, while long-term debt surged 60.3% to $3.97B.
Revenue
$2.37B
++10.59% YoY
EPS (Basic)
$1.92
-15.42% YoY
Gross Margin
19.1%
-2.11% YoY
Operating Income
$251.3M
-10.35% YoY
Filed · Source: SEC EDGAR 10-Q filing
PKG grew Q1 2026 revenue by 10.6% YoY to $2.37B (from $2.14B), suggesting meaningful volume or pricing gains in its packaging operations. However, cost of revenue rose faster at 13.6% YoY to $1.91B, indicating that input cost inflation or mix shift pressured profitability despite the top-line improvement.
Source: Source: 10-Q Income Statement
Gross margin contracted approximately 2.1 percentage points YoY to 19.1% (from 21.2%), operating margin fell 2.5 percentage points to 10.6% (from 13.1%), and net margin declined to 7.2%. The combination of higher cost of revenue and an 11.7% increase in SG&A ($180.3M vs. $161.4M) squeezed earnings at every level of the income statement.
Source: Source: 10-Q Income Statement & Key Ratios
Long-term debt jumped 60.3% YoY to $3.97B from $2.47B, while total assets expanded 20.2% to $10.78B. This substantial leverage increase, combined with a 63.2% surge in D&A to $225.2M, strongly suggests PKG completed a significant acquisition or major capital investment during or just prior to Q1 2026.
Source: Source: 10-Q Balance Sheet & Cash Flow Statement
2 more insights available
Upgrade to unlockLong-term debt increased 60.3% YoY to approximately $3.97B, significantly raising PKG's financial leverage. Higher interest expense associated with this debt load will weigh on future net income and reduces financial flexibility if business conditions deteriorate. The current debt-to-equity implied ratio is substantial relative to stockholders' equity of $4.59B.
Source: Source: 10-Q Balance Sheet
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Upgrade to unlockReported EPS of $2.40 versus the $2.15 analyst consensus — a +11.4% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $2.37B | $2.14B | +10.59% |
Cost of Revenue | $1.91B | $1.69B | +13.56% |
Gross Profit | $452.9M | $454.7M | -0.40% |
Operating Income | $251.3M | $280.3M | -10.35% |
Net Income | $170.9M | $203.8M | -16.14% |
EPS (Basic) | $1.92 | $2.27 | -15.42% |
EPS (Diluted) | $1.91 | $2.26 | -15.49% |
SG&A Expense | $180.3M | $161.4M | +11.71% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $10.78B | $8.97B | +20.16% |
Current Assets | $3.26B | $3.3B | -1.36% |
Current Liabilities | $1.06B | $1.01B | +5.28% |
Stockholders' Equity | $4.59B | $4.5B | +1.97% |
Cash & Equivalents | $397.1M | $751.7M | -47.17% |
Long-Term Debt | $3.97B | $2.47B | +60.35% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $329.3M | $339.1M | -2.89% |
Investing Cash Flow | $-260.9M | $-144.2M | -80.93% |
Financing Cash Flow | $-200.3M | $-128.2M | -56.24% |
Share Buybacks | $58.8M | $0 | — |
D&A | $225.2M | $138M | +63.19% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 19.1% | 21.2% | -2.11% |
Operating Margin | 10.6% | 13.1% | -2.48% |
Net Margin | 7.2% | — | — |
ROE | 3.7% | — | — |
ROA | 1.6% | — | — |
Current Ratio | $3.071 | — | — |
Other companies in Paper & Plastic Packaging Products & Materials
PKG reported Q1 2026 revenue of $2.37B, up 10.6% YoY, but net income fell 16.1% to $170.9M as cost of revenue grew faster than sales and SG&A rose 11.7%. The most notable development was a 60.3% surge in long-term debt to $3.97B, suggesting a major acquisition or capital investment was completed.
PKG's diluted EPS fell 15.5% YoY to $1.91 from $2.26, primarily because net income declined 16.1% due to cost inflation outpacing revenue growth and higher SG&A expenses. Increased interest expense from the significant rise in long-term debt likely added further pressure on the bottom line.
Yes, PKG's revenue grew 10.6% YoY to $2.37B in Q1 2026 from $2.14B in Q1 2025, indicating solid top-line momentum. However, profitability did not follow, as cost of revenue grew even faster at 13.6%, causing gross profit to decline slightly by 0.4%.
PKG maintains solid short-term liquidity with a current ratio of 3.07x, but its financial leverage has increased significantly with long-term debt rising 60.3% YoY to $3.97B. Cash reserves declined 47.2% to $397.1M, and while operating cash flow of $329.3M remains healthy, the higher debt load is a key risk factor to monitor.
PKG's long-term debt surged 60.3% YoY to approximately $3.97B, which — combined with a 20.2% increase in total assets and a 63.2% jump in depreciation and amortization — strongly suggests the company completed a significant acquisition or major capital project. The full 10-Q filing would provide specific details on the nature of this transaction.