WestRock Company (NYSE:WRK), a leading provider of sustainable
paper and packaging solutions, today announced results for its
fiscal second quarter ended March 31, 2024.
Second Quarter Highlights and other notable items:
- Net sales of $4.73 billion
- Net income of $16 million, Adjusted Net Income of $101 million;
net income included $81 million of restructuring and other costs,
net
- Earnings of $0.06 per diluted share (“EPS”) and Adjusted EPS of
$0.39
- Consolidated Adjusted EBITDA of $618 million
- Consumer Packaging Adjusted EBITDA margin increased 70 bps to
18.0%
- Achieved over $160 million in cost savings; expect to
significantly exceed previously announced fiscal 2024 target of
$300 to $400 million
“I’m proud of our team’s continued focus and execution, as we
delivered strong results and made significant progress on our cost
savings initiatives,” said David B. Sewell, chief executive
officer. “We have already exceeded the midpoint of our targeted
cost savings for fiscal 2024, and we expect further savings through
the remainder of the year and beyond. Our efforts are better
positioning us to compete in the market and making us a more
efficient company. Together with our scale and innovative,
sustainable packaging solutions, WestRock is well positioned to
capture share and drive long-term earnings growth.”
Consolidated Financial Results
WestRock’s performance for the three months ended March 31, 2024
and 2023 (in millions):
Three Months Ended Mar. 31, 2024 Mar. 31, 2023 Net sales
$
4,726.7
$
5,277.6
Net income (loss)
$
15.5
$
(2,006.1
)
Consolidated Adjusted EBITDA
$
618.3
$
788.6
The decline in net sales compared to the second quarter of
fiscal 2023 was driven primarily by a $229 million, or 8.7%,
decrease in Corrugated Packaging segment sales, a $152 million, or
13.0%, decrease in Global Paper segment sales and a $152 million,
or 12.0%, decrease in Consumer Packaging segment sales. The
decrease in net sales was primarily due to lower selling price/mix
largely driven by published price declines and softer volumes.
Current year results were also impacted by the prior year mill and
interior partition divestitures.
Net income in the second quarter of fiscal 2024 was not
comparable to the prior year quarter primarily due to the $1.9
billion pre-tax, non-cash goodwill impairment and higher
restructuring and other costs, net in the second quarter of fiscal
2023. Net income in the second quarter of fiscal 2024 was primarily
impacted by lower selling price/mix and increased cost savings.
Consolidated Adjusted EBITDA decreased $170 million, or 21.6%,
compared to the second quarter of fiscal 2023, primarily due to
lower Adjusted EBITDA across each of our segments.
Additional information about the changes in segment sales and
Adjusted EBITDA by segment is included below.
Restructuring and Other Costs,
Net
Restructuring and other costs, net during the second quarter of
fiscal 2024 were $81 million. The charges were primarily
acquisition costs related to the Transaction (as hereinafter
defined), ongoing costs related to previously closed operations and
severance associated with converting plant closures.
Cash Flow Activities
Net cash provided by operating activities was $37 million in the
second quarter of fiscal 2024 compared to $284 million in the prior
year quarter. The decrease was primarily due to increased working
capital usage in the second quarter of fiscal 2024.
Total debt was $9.0 billion at March 31, 2024, and Adjusted Net
Debt was $8.4 billion. The Company had approximately $3.0 billion
of available liquidity from long-term committed credit facilities
and cash and cash equivalents at March 31, 2024.
During the second quarter of fiscal 2024, WestRock invested $301
million in capital expenditures and returned $78 million in capital
to stockholders in dividend payments.
Segment Results
WestRock’s segment performance for the three months ended March
31, 2024 and 2023 was as follows (in millions):
Corrugated Packaging Segment
Three Months Ended Mar. 31, 2024 Mar. 31, 2023 Segment sales
$
2,398.3
$
2,627.4
Adjusted EBITDA
$
317.9
$
407.5
Adjusted EBITDA Margin
13.3%
15.5%
Corrugated Packaging segment sales decreased primarily due to
lower selling price/mix and lower volumes. These declines were
partially offset by favorable foreign exchange rates.
Corrugated Packaging Adjusted EBITDA decreased primarily due to
the margin impact of lower selling price/mix driven by published
price declines, net cost inflation, lower volumes and the impact of
winter weather, which were partially offset by increased cost
savings, and the net impact of lower economic downtime and prior
year mill closures. Corrugated Packaging Adjusted EBITDA margin was
13.3% and Adjusted EBITDA margin excluding trade sales was
13.7%.
Consumer Packaging Segment
Three Months Ended Mar. 31, 2024 Mar. 31, 2023 Segment sales
$
1,113.5
$
1,265.1
Adjusted EBITDA
$
200.3
$
218.6
Adjusted EBITDA Margin
18.0%
17.3%
Consumer Packaging segment sales decreased primarily due to
lower volumes and the prior year divestiture of our interior
partition operations.
Consumer Packaging Adjusted EBITDA decreased primarily due to
net cost inflation, increased economic downtime, lower volumes and
the prior year divestiture of our interior partition operations.
These items were partially offset by increased cost savings.
Consumer Packaging Adjusted EBITDA margin was 18.0%.
Global Paper Segment
Three Months Ended Mar. 31, 2024 Mar. 31, 2023 Segment sales
$
1,016.2
$
1,168.2
Adjusted EBITDA
$
129.5
$
187.1
Adjusted EBITDA Margin
12.7%
16.0%
Global Paper segment sales decreased primarily due to lower
selling price/mix driven by published price declines and the impact
of prior year divested mill operations.
Global Paper Adjusted EBITDA decreased primarily due to the
margin impact of lower selling price/mix, the impact of increased
economic downtime and prior year mill closures, the impact of prior
year divested mill operations and the impact of winter weather.
These items were partially offset by increased cost savings, net
cost deflation and lower planned maintenance downtime. Global Paper
Adjusted EBITDA margin was 12.7%.
Distribution Segment
Three Months Ended Mar. 31, 2024 Mar. 31, 2023 Segment sales
$
272.0
$
307.3
Adjusted EBITDA
$
8.9
$
9.3
Adjusted EBITDA Margin
3.3%
3.0%
Distribution segment sales decreased primarily due to lower
volumes and lower selling price/mix.
Distribution Adjusted EBITDA decreased primarily due to lower
volumes and the margin impact of lower selling price/mix. These
items were largely offset by increased cost savings and by
increased cost deflation.
Conference Call and Financial Guidance for Subsequent
Periods
Due to the proposed business combination with Smurfit Kappa
Group plc to create a global leader in sustainable packaging (the
“Transaction”), WestRock will not host a conference call to discuss
its financial results for the fiscal second quarter ended March 31,
2024. A slide presentation and other relevant financial and
statistical information along with this release can be accessed at
ir.westrock.com.
Preparations for the Transaction, including regulatory
submissions, are currently underway, and WestRock continues to
expect the Transaction to close in early July 2024. As previously
communicated, to avoid a delay in this anticipated timeline caused
by the inclusion of financial guidance after the second fiscal
quarter in certain of those submissions, WestRock does not intend
to provide such guidance for this and subsequent periods.
About WestRock
WestRock (NYSE:WRK) partners with our customers to provide
differentiated, sustainable paper and packaging solutions that help
them win in the marketplace. WestRock’s team members support
customers around the world from locations spanning North America,
South America, Europe, Asia and Australia. Learn more at
www.westrock.com.
Cautionary Statements
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on our current expectations,
beliefs, plans or forecasts and use words or phrases such as "may,"
"will," "could," "should," "would," "anticipate," "estimate,"
"expect," "project," "intend," "plan," "believe," "target,"
"prospects," "potential," “commit,” and "forecast," and other
words, terms and phrases of similar meaning or refer to future time
periods. Forward-looking statements involve estimates,
expectations, projections, goals, targets, forecasts, assumptions,
risks and uncertainties. A forward-looking statement is not a
guarantee of future performance, and actual results could differ
materially from those contained in the forward-looking
statement.
Forward-looking statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond our
control, such as developments related to pricing cycles and
volumes; economic, competitive and market conditions generally,
including macroeconomic uncertainty, customer inventory
rebalancing, the impact of inflation and increases in energy, raw
materials, shipping, labor and capital equipment costs; reduced
supply of raw materials, energy and transportation, including from
supply chain disruptions and labor shortages; intense competition;
results and impacts of acquisitions, including operational and
financial effects from the Mexico Acquisition, and divestitures;
business disruptions, including from the occurrence of severe
weather or a natural disaster or other unanticipated problems, such
as labor difficulties, equipment failure or unscheduled maintenance
and repair, or public health crises; failure to respond to changing
customer preferences and to protect our intellectual property; the
amount and timing of capital expenditures, including installation
costs, project development and implementation costs, and costs
related to resolving disputes with third parties with which we work
to manage and implement capital projects; risks related to
international sales and operations; the production of faulty or
contaminated products; the loss of certain customers; adverse
legal, reputational, operational and financial effects resulting
from information security incidents and the effectiveness of
business continuity plans during a ransomware or other cyber
incident; work stoppages and other labor relations difficulties;
inability to attract, motivate and retain qualified personnel,
including as a result of the proposed Transaction; risks associated
with sustainability and climate change, including our ability to
achieve our sustainability targets and commitments and realize
climate-related opportunities on announced timelines or at all; our
inability to successfully identify and make performance
improvements and deliver cost savings and risks associated with
completing strategic projects on anticipated timelines and
realizing anticipated financial or operational improvements on
announced timelines or at all, including with respect to our
business systems transformation; risks related to the proposed
Transaction, including our ability to complete the Transaction on
the anticipated timeline, or at all, restrictions imposed on our
business under the Transaction, disruptions to our business while
the proposed Transaction is pending, the impact of management’s
time and attention being focused on consummation of the proposed
Transaction, costs associated with the proposed Transaction, and
integration difficulties; risks related to our indebtedness,
including increases in interest rates; the scope, costs, timing and
impact of any restructuring of our operations and corporate and tax
structure; the scope, timing and outcome of any litigation, claims
or other proceedings or dispute resolutions and the impact of any
such litigation (including with respect to the Brazil tax liability
matter); and additional impairment charges. Such risks and other
factors that may impact forward-looking statements are discussed in
our Annual Report on Form 10-K for the fiscal year ended September
30, 2023, including in Item 1A “Risk Factors”, as well as in our
subsequent filings with the Securities and Exchange Commission. The
information contained herein speaks as of the date hereof, and the
Company does not have or undertake any obligation to update or
revise its forward-looking statements, whether as a result of new
information, future events or otherwise, except to the extent
required by law.
WestRock Company Consolidated Statements of
Operations In millions, except per share amounts (unaudited)
Three Months Ended Six Months Ended March
31, March 31,
2024
2023
2024
2023
Net sales
$
4,726.7
$
5,277.6
$
9,346.7
$
10,200.7
Cost of goods sold
3,946.6
4,357.6
7,807.8
8,514.7
Gross profit
780.1
920.0
1,538.9
1,686.0
Selling, general and administrative expense excluding intangible
amortization
499.5
498.9
1,026.6
978.0
Selling, general and administrative intangible amortization expense
79.0
86.2
161.0
172.8
Restructuring and other costs, net
81.2
435.8
146.7
467.9
Impairment of goodwill
-
1,893.0
-
1,893.0
Operating profit (loss)
120.4
(1,993.9
)
204.6
(1,825.7
)
Interest expense, net
(100.8
)
(108.4
)
(202.2
)
(205.7
)
Pension and other postretirement non-service cost
(0.6
)
(6.0
)
(0.4
)
(11.0
)
Other (expense) income, net
(13.5
)
(17.8
)
(18.2
)
7.4
Equity in income (loss) of unconsolidated entities
2.9
4.5
7.1
(31.5
)
Loss on sale of RTS and Chattanooga
(2.0
)
-
(1.5
)
-
Income (loss) before income taxes
6.4
(2,121.6
)
(10.6
)
(2,066.5
)
Income tax benefit
10.0
116.8
4.3
108.5
Consolidated net income (loss)
16.4
(2,004.8
)
(6.3
)
(1,958.0
)
Less: Net income attributable to noncontrolling interests
(0.9
)
(1.3
)
(0.6
)
(2.8
)
Net income (loss) attributable to common stockholders
$
15.5
$
(2,006.1
)
$
(6.9
)
$
(1,960.8
)
Computation of diluted earnings per share (in millions,
except per share data): Net income (loss) attributable to
common stockholders
$
15.5
$
(2,006.1
)
$
(6.9
)
$
(1,960.8
)
Diluted weighted average shares outstanding
259.3
255.6
257.5
255.2
Diluted earnings (loss) per share
$
0.06
$
(7.85
)
$
(0.03
)
$
(7.68
)
WestRock Company Segment Information In millions
(unaudited)
Three Months Ended Six Months
Ended March 31, March 31,
2024
2023
2024
2023
Net sales: Corrugated Packaging
$
2,398.3
$
2,627.4
$
4,818.2
$
4,964.8
Consumer Packaging
1,113.5
1,265.1
2,172.8
2,480.1
Global Paper
1,016.2
1,168.2
1,934.5
2,291.8
Distribution
272.0
307.3
561.7
628.8
Intersegment Eliminations
(73.3
)
(90.4
)
(140.5
)
(164.8
)
Total
$
4,726.7
$
5,277.6
$
9,346.7
$
10,200.7
Adjusted EBITDA: Corrugated Packaging
$
317.9
$
407.5
$
645.7
$
736.9
Consumer Packaging
200.3
218.6
366.5
401.9
Global Paper
129.5
187.1
247.9
344.4
Distribution
8.9
9.3
17.9
20.1
Total
656.6
822.5
1,278.0
1,503.3
Depreciation, depletion and amortization
(388.4
)
(395.8
)
(770.2
)
(769.0
)
Restructuring and other costs, net
(81.2
)
(435.8
)
(146.7
)
(467.9
)
Impairment of goodwill
-
(1,893.0
)
-
(1,893.0
)
Non-allocated expenses
(38.3
)
(33.9
)
(89.0
)
(62.6
)
Interest expense, net
(100.8
)
(108.4
)
(202.2
)
(205.7
)
Other (expense) income, net
(13.5
)
(17.8
)
(18.2
)
7.4
Loss on sale of RTS and Chattanooga
(2.0
)
-
(1.5
)
-
Other adjustments
(26.0
)
(59.4
)
(60.8
)
(179.0
)
Income (loss) before income taxes
$
6.4
$
(2,121.6
)
$
(10.6
)
$
(2,066.5
)
Depreciation, depletion and amortization: Corrugated
Packaging
$
202.6
$
211.2
$
407.9
$
403.4
Consumer Packaging
90.9
85.5
177.4
169.6
Global Paper
85.6
91.2
166.7
180.3
Distribution
7.5
6.9
14.8
13.8
Corporate
1.8
1.0
3.4
1.9
Total
$
388.4
$
395.8
$
770.2
$
769.0
Other adjustments: Corrugated Packaging
$
1.7
$
4.7
$
6.8
$
54.5
Consumer Packaging
3.4
28.0
7.0
59.6
Global Paper
0.7
9.1
2.2
26.6
Distribution
-
-
(0.3
)
-
Corporate
20.2
17.6
45.1
38.3
Total
$
26.0
$
59.4
$
60.8
$
179.0
WestRock Company Consolidated Statements of Cash
Flows In millions (unaudited)
Three Months Ended Six
Months Ended March 31, March 31,
2024
2023
2024
2023
Cash flows from operating activities: Consolidated net
income (loss)
$
16.4
$
(2,004.8
)
$
(6.3
)
$
(1,958.0
)
Adjustments to reconcile consolidated net income (loss) to net cash
provided by operating activities: Depreciation, depletion and
amortization
388.4
395.8
770.2
769.0
Deferred income tax benefit
(10.0
)
(220.1
)
(33.3
)
(239.6
)
Share-based compensation expense
5.7
13.5
13.0
23.1
Pension and other postretirement cost (income), net of
contributions
1.1
4.6
1.6
8.2
Cash surrender value increase in excess of premiums paid
(14.5
)
(12.3
)
(31.9
)
(25.4
)
Equity in (income) loss of unconsolidated entities
(2.9
)
(4.5
)
(7.1
)
31.5
Loss on sale of RTS and Chattanooga
2.0
-
1.5
-
Gain on sale of other businesses
-
-
-
(11.1
)
Impairment of goodwill
-
1,893.0
-
1,893.0
Other impairment adjustments
4.7
388.4
(0.1
)
387.7
(Gain) loss on disposal of assets, net
2.3
(7.9
)
-
(9.6
)
Other, net
0.7
(15.0
)
(1.3
)
(14.3
)
Changes in operating assets and liabilities, net of acquisitions /
divestitures: Accounts receivable
(154.7
)
(114.6
)
26.8
170.3
Inventories
(30.0
)
9.0
(55.7
)
(44.8
)
Other assets
(7.2
)
14.6
(80.7
)
(49.7
)
Accounts payable
8.9
(100.4
)
(14.6
)
(214.3
)
Income taxes
(186.5
)
46.5
(175.7
)
46.7
Accrued liabilities and other
12.7
(1.7
)
(94.3
)
(212.7
)
Net cash provided by operating activities
37.1
284.1
312.1
550.0
Investing activities: Capital expenditures
(301.3
)
(281.5
)
(548.6
)
(563.7
)
Cash paid for purchase of businesses, net of cash acquired
-
-
-
(853.5
)
Proceeds from settlement of Timber Note related to SPEs
-
-
860.0
-
Proceeds from corporate owned life insurance
1.9
4.5
5.0
6.7
Proceeds from sale of other businesses
0.3
-
0.8
25.9
Proceeds from sale of unconsolidated entities
-
-
1.0
-
Proceeds from currency forward contracts
-
-
-
23.2
Proceeds from sale of property, plant and equipment
30.4
14.2
38.7
18.7
Other, net
-
(0.5
)
(0.2
)
(0.8
)
Net cash (used for) provided by investing activities
(268.7
)
(263.3
)
356.7
(1,343.5
)
Financing activities: Additions to revolving credit
facilities
86.9
32.1
86.9
52.9
Repayments of revolving credit facilities
-
-
-
(126.9
)
Additions to debt
2.2
176.2
104.5
1,704.1
Repayments of debt
(35.2
)
(192.9
)
(70.2
)
(841.7
)
Changes in commercial paper, net
314.9
(10.1
)
280.2
291.4
Other debt (repayments) additions, net
(45.7
)
7.5
(29.2
)
(16.1
)
Repayment of Timber Loan related to SPEs
-
-
(774.0
)
-
Cash dividends paid to stockholders
(78.0
)
(70.3
)
(155.6
)
(140.3
)
Other, net
(10.8
)
(17.8
)
(12.3
)
(15.8
)
Net cash provided by (used for) financing activities
234.3
(75.3
)
(569.7
)
907.6
Effect of exchange rate changes on cash and cash equivalents, and
restricted cash
3.9
3.7
2.2
(2.0
)
Changes in cash and cash equivalents, and restricted cash in assets
held-for-sale
-
(1.0
)
-
(8.9
)
Increase in cash and cash equivalents and restricted cash
6.6
(51.8
)
101.3
103.2
Cash and cash equivalents, and restricted cash at beginning of
period
488.1
415.2
393.4
260.2
Cash and cash equivalents, and restricted cash at end of period
$
494.7
$
363.4
$
494.7
$
363.4
Supplemental disclosure of cash flow information:
Cash paid during the period for: Income taxes, net of refunds
$
184.2
$
57.6
$
203.5
$
86.2
Interest, net of amounts capitalized
$
144.5
$
145.4
$
237.7
$
213.5
WestRock Company Condensed Consolidated Balance
Sheets In millions (unaudited)
March 31,
September 30,
2024
2023
Assets Current assets: Cash and
cash equivalents
$
494.7
$
393.4
Accounts receivable (net of allowances of $60.1 and $60.2)
2,583.7
2,591.9
Inventories
2,328.4
2,331.5
Other current assets (amount related to SPEs of $0 and $862.1)
873.7
1,584.8
Assets held for sale
62.8
91.5
Total current assets
6,343.3
6,993.1
Property, plant and equipment, net
11,240.7
11,063.2
Goodwill
4,266.5
4,248.7
Intangibles, net
2,424.0
2,576.2
Prepaid pension asset
637.2
618.3
Other noncurrent assets (amount related to SPEs of $384.4 and
$382.7)
1,972.3
1,944.2
Total Assets
$
26,884.0
$
27,443.7
Liabilities and Equity
Current liabilities: Current portion of debt
$
1,317.5
$
533.0
Accounts payable
2,138.0
2,123.9
Accrued compensation and benefits
426.1
524.9
Other current liabilities (amount related to SPEs of $0 and $776.7)
855.8
1,737.6
Total current liabilities
4,737.4
4,919.4
Long-term debt due after one year
7,718.2
8,050.9
Pension liabilities, net of current portion
194.4
191.2
Postretirement medical liabilities, net of current portion
99.9
99.1
Deferred income taxes
2,251.6
2,433.2
Other noncurrent liabilities (amount related to SPEs of $331.1 and
$330.2)
1,798.7
1,652.2
Total stockholders' equity
10,066.2
10,080.7
Noncontrolling interests
17.6
17.0
Total Equity
10,083.8
10,097.7
Total Liabilities and Equity
$
26,884.0
$
27,443.7
Definitions, Non-GAAP Financial
Measures and Reconciliations
We calculate cost savings as the year-over-year change in
certain costs incurred for manufacturing, procurement, logistics,
and selling, general and administrative, in each case excluding the
impact of economic downtime and inflation. Cost savings achieved to
date may not recur in future periods, and estimates of future
savings are subject to change.
WestRock reports its financial results in accordance with
accounting principles generally accepted in the United States
("GAAP"). However, management believes certain non-GAAP financial
measures provide additional meaningful financial information that
may be relevant when assessing our ongoing performance. Non-GAAP
financial measures should be viewed in addition to, and not as an
alternative for, WestRock’s GAAP results. The non-GAAP financial
measures we present may differ from similarly captioned measures
presented by other companies.
Business Systems
Transformation Costs
In the fourth quarter of fiscal 2022,
WestRock launched a multi-year phased business systems
transformation project. Due to the nature, scope and magnitude of
this investment, management believes these incremental
transformation costs are above the normal, recurring level of
spending for information technology to support operations. Since
these strategic investments, including incremental nonrecurring
operating costs, will cease at the end of the investment period,
are not expected to recur in the foreseeable future, and are not
considered representative of our underlying operating performance,
management believes presenting these costs as an adjustment in the
non-GAAP results provides additional information to investors about
trends in our operations and is useful for period-over-period
comparisons. This presentation also allows investors to view our
underlying operating results in the same manner as they are viewed
by management.
We discuss below details of the non-GAAP financial measures
presented by us and provide reconciliations of these non-GAAP
financial measures to the most directly comparable financial
measures calculated in accordance with GAAP.
Consolidated Adjusted EBITDA and
Adjusted EBITDA
WestRock uses the non-GAAP financial measure “Consolidated
Adjusted EBITDA”, along with other measures such as “Adjusted
EBITDA” (a measure of performance the Company uses to evaluate
segment results in accordance with Accounting Standards
Codification 280 (“ASC 280”)), to evaluate our overall performance.
Management believes that the most directly comparable GAAP measure
to “Consolidated Adjusted EBITDA” is “Net income (loss)
attributable to common stockholders”. It can also be derived by
adding together each segment’s “Adjusted EBITDA” plus
“Non-allocated expenses”. Management believes this measure provides
WestRock’s management, board of directors, investors, potential
investors, securities analysts and others with useful information
to evaluate WestRock’s performance because it excludes
restructuring and other costs, net, business systems transformation
costs and other specific items that management believes are not
indicative of the ongoing operating results of the business.
WestRock’s management and board use this information in making
financial, operating and planning decisions and when evaluating
WestRock’s performance relative to other periods.
Adjusted EBITDA, a measure of segment performance in accordance
with ASC 280, is defined as pretax earnings of a reportable segment
before depreciation, depletion and amortization, and excludes the
following items the Company does not consider part of our segment
performance: restructuring and other costs, net, impairment of
goodwill, non-allocated expenses, interest expense, net, other
(expense) income, net, loss on sale of RTS and Chattanooga and
other adjustments - each as outlined in the table on page 6
(“Adjusted EBITDA”). The composition of Adjusted EBITDA is not
addressed or prescribed by GAAP.
Adjusted Segment Sales and Adjusted
EBITDA Margin, Excluding Trade Sales
WestRock uses the non-GAAP financial measures “Adjusted Segment
Sales” and “Adjusted EBITDA Margin, excluding trade sales”.
Management believes that adjusting segment sales for trade sales is
consistent with how our peers present their sales for purposes of
computing segment margins and helps WestRock’s management, board of
directors, investors, potential investors, securities analysts and
others compare companies in the same peer group. Management
believes that the most directly comparable GAAP measure to
“Adjusted Segment Sales” is “segment sales”. Additionally, the most
directly comparable GAAP measure to “Adjusted EBITDA Margin,
excluding trade sales” is “Adjusted EBITDA Margin”. “Adjusted
EBITDA Margin, excluding trade sales” is calculated by dividing
that segment’s Adjusted EBITDA by Adjusted Segment Sales. “Adjusted
EBITDA Margin” is a profitability measure in accordance with ASC
280, and it is calculated for each segment by dividing that
segment’s Adjusted EBITDA by segment sales.
Adjusted Net Income and Adjusted
Earnings Per Diluted Share
WestRock uses the non-GAAP financial measures “Adjusted Net
Income” and “Adjusted Earnings Per Diluted Share”. Management
believes these measures provide WestRock’s management, board of
directors, investors, potential investors, securities analysts and
others with useful information to evaluate WestRock’s performance
because they exclude restructuring and other costs, net, business
systems transformation costs and other specific items that
management believes are not indicative of the ongoing operating
results of the business. WestRock and its board of directors use
this information in making financial, operating and planning
decisions and when evaluating WestRock’s performance relative to
other periods. WestRock believes that the most directly comparable
GAAP measures to Adjusted Net Income and Adjusted Earnings Per
Diluted Share are Net income (loss) attributable to common
stockholders and Earnings (loss) per diluted share,
respectively.
Adjusted Net Debt
WestRock uses the non-GAAP financial measure “Adjusted Net
Debt”. Management believes this measure provides WestRock’s board
of directors, investors, potential investors, securities analysts
and others with useful information to evaluate WestRock’s repayment
of debt relative to other periods because it includes or excludes
certain items management believes are not comparable from period to
period. Management believes “Adjusted Net Debt” provides greater
comparability across periods by adjusting for cash and cash
equivalents, as well as fair value of debt step-up included in
Total Debt that is not subject to debt repayment. WestRock believes
that the most directly comparable GAAP measure is “Total Debt”
which is the sum of the current portion of debt and long-term debt
due after one year.
This release includes reconciliations of our non-GAAP financial
measures to their respective directly comparable GAAP measures, as
identified above, for the periods indicated (in millions, except
percentages and dollars per share).
Reconciliations of Consolidated
Adjusted EBITDA
Three Months Ended Mar. 31, 2024 Mar.
31, 2023 Net income (loss) attributable to common
stockholders
$
15.5
$
(2,006.1
)
Adjustments: (1) Less: Net income
attributable to noncontrolling interests
0.9
1.3
Income tax benefit
(10.0
)
(116.8
)
Other expense (income), net
13.5
17.8
Interest expense, net
100.8
108.4
Restructuring and other costs, net
81.2
435.8
Impairment of goodwill
-
1,893.0
Loss on sale of RTS and Chattanooga
2.0
-
Depreciation, depletion and amortization
388.4
395.8
Other adjustments
26.0
59.4
Consolidated Adjusted EBITDA
$
618.3
$
788.6
(1) Schedule adds back expense or subtracts income for
certain financial statement and segment footnote items to compute
Consolidated Adjusted EBITDA.
Reconciliations of Adjusted Net
Income
Three Months Ended March 31, 2024
Pre-Tax Tax Net of Tax As reported (1)
$
6.4
$
10.0
$
16.4
Restructuring and other costs, net
81.2
(19.9)
61.3
Business systems transformation costs (2)
20.2
(4.9)
15.3
Losses at closed facilities (2)
7.1
(1.8)
5.3
Accelerated depreciation on certain
consolidated facilities
2.8
(0.6)
2.2
Loss on sale of RTS and Chattanooga
2.0
(0.6)
1.4
Adjusted Results
$
119.7
$
(17.8)
$
101.9
Noncontrolling interests
(0.9)
Adjusted Net Income
$
101.0
(1)
The as reported results for Pre-Tax, Tax
and Net of Tax are equivalent to the line items "Income (loss)
before income taxes", "Income tax benefit" and "Consolidated net
income (loss)", respectively, as reported on the Consolidated
Statements of Operations.
(2)
These footnoted items are the “Other
adjustments” reported in the Segment Information table on page 6.
The “Losses at closed facilities” line includes $1.3 million of
depreciation and amortization.
Three Months Ended March 31, 2023
Pre-Tax Tax Net of Tax As reported (1)
$
(2,121.6)
$
116.8
$
(2,004.8)
Impairment of goodwill
1,893.0
(63.2)
1,829.8
Restructuring and other costs
435.8
(106.9)
328.9
Mahrt mill work stoppage (2)
36.2
(8.9)
27.3
Business systems transformation costs (2)
17.5
(4.3)
13.2
Acquisition accounting inventory related adjustments (2)
4.6
(1.1)
3.5
Losses at closed facilities (2)
1.2
(0.3)
0.9
Other (2)
0.1
-
0.1
Adjusted Results
$
266.8
$
(67.9)
$
198.9
Noncontrolling interests
(1.3)
Adjusted Net Income
$
197.6
(1)
The as reported results for Pre-Tax, Tax
and Net of Tax are equivalent to the line items "Income (loss)
before income taxes", "Income tax benefit" and "Consolidated net
income (loss)", respectively, as reported on the Consolidated
Statements of Operations.
(2)
These footnoted items are the “Other
adjustments” reported in the Segment Information table on page 6.
The “Losses at closed facilities” line includes $0.2 million of
depreciation and amortization.
Reconciliations of Adjusted Earnings
Per Diluted Share
Three Months Ended
Mar. 31, 2024
Mar. 31, 2023
Earnings (loss) per diluted share
$
0.06
$
(7.85
)
Impairment of goodwill
-
7.16
Restructuring and other costs, net
0.24
1.29
Business systems transformation costs
0.06
0.05
Losses at closed facilities
0.02
-
Accelerated depreciation on certain consolidated facilities
0.01
-
Work stoppage costs
-
0.11
Acquisition accounting inventory related adjustments
-
0.01
Adjusted Earnings Per Diluted Share
$
0.39
$
0.77
Reconciliations of Adjusted Segment
Sales and Adjusted EBITDA Margin, Excluding Trade
Sales
Corrugated Packaging Segment
Three Months Ended Mar. 31,
2024 Mar. 31, 2023 Segment sales
$
2,398.3
$
2,627.4
Less: Trade Sales
(70.8
)
(86.9
)
Adjusted Segment Sales
$
2,327.5
$
2,540.5
Adjusted EBITDA
$
317.9
$
407.5
Adjusted EBITDA Margin
13.3%
15.5%
Adjusted EBITDA Margin, excluding Trade Sales
13.7%
16.0%
Reconciliation of Total Debt to
Adjusted Net Debt
Mar. 31, 2024 Current
portion of debt
$
1,317.5
Long-term debt due after one year
7,718.2
Total debt
9,035.7
Less: Cash and cash equivalents
(494.7
)
Less: Fair value of debt step-up
(147.6
)
Adjusted Net Debt
$
8,393.4
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240501920671/en/
Robert Quartaro, 470-328-6979 Vice President, Investor Relations
robert.quartaro@westrock.com
Robby Johnson, 470-328-6397 Manager, Corporate Communications
s-crp-mediainquiries@westrock.com
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