By Mackenzie Tatananni

Packaging Corp. of America stock was the worst performer in the S&P 500 on Wednesday after the container products company said it expects various headwinds in the first quarter of 2025.

Shares of Packaging Corp. plummeted 10% to $213.99, putting the stock on pace for the largest same-day percentage decrease since Sept. 16, 2022, according to Dow Jones Market Data.

Packaging Corp. announced quarterly and fiscal-year results after the closing bell on Tuesday. The company reported profit of $221.1 million, or $2.45 a share, for the December quarter, compared to profit of $189.2 million, or $2.10, in the prior year.

Adjusted earnings of $2.47 a share were below the FactSet consensus estimate of $2.53, while revenue increased 11% to $2.15 billion, better than Wall Street's call for $2.13 billion.

Aside from the adjusted earnings miss, the company's first-quarter outlook appeared to be weighing on the stock Wednesday.

CEO Mark Kowlzan said he anticipates the quarter to be seasonally slower, with lower containerboard volume caused by fewer operating days and scheduled maintenance outages at two plants.

Wood, energy, and chemical costs are expected to increase due to "unusually cold seasonal weather" impacting usages and yields.

"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," Kowlzan said.

The CEO guided for first-quarter earnings of $2.21 a share. Analysts were looking for $2.28.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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January 29, 2025 13:01 ET (18:01 GMT)

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