WestRock Company (WestRock) (NYSE:WRK), a leading provider of
differentiated paper and packaging solutions, today announced
results for its fiscal second quarter ended March 31, 2017.
Second Quarter 2017 Highlights and Portfolio
Transformation
- Earned $0.40 per diluted share and $0.54 of adjusted earnings
per diluted share
- Generated net cash from operating activities of $300 million
and adjusted free cash flow of $109 million
- Achieved $103 million in year-over-year productivity
improvements and an annual run rate of $675 million of synergy
and performance improvements
- Continued our portfolio transformation with:
- the completion of the sale of the Home, Health and Beauty
business, generating net after-tax proceeds of approximately $1
billion
- the sale of $97 million of Land and Development assets
- the announcement of the agreement to acquire Multi Packaging
Solutions International Limited for a total enterprise value of
approximately $2.3 billion
- Returned $126 million to stockholders through $101 million in
dividends and $25 million in share repurchases
“We executed well during the March quarter and
delivered year-over-year productivity improvements of $103
million and strong earnings,” said Steve Voorhees, WestRock’s chief
executive officer. “While higher input costs may persist, favorable
price and demand trends along with WestRock’s unique portfolio of
products and capabilities position us well to drive value for our
customers and stockholders. We are looking forward to adding Multi
Packaging Solutions to our portfolio, which is currently expected
to occur by the end of the June quarter.”
Conference Call
As previously announced, WestRock will host a conference call to
discuss its results of operations for the second quarter of fiscal
2017 and other topics that may be raised during the discussion
at 8:30 a.m., Eastern Time, on April 26, 2017. The
conference call, which will be webcast live, an accompanying slide
presentation, and this press release can be accessed at
ir.westrock.com.
Investors who wish to participate in the webcast via
teleconference should dial 877-201-0168 (inside the U.S.) or
647-788-4901 (outside the U.S.) at least 15 minutes prior to the
start of the call and enter the passcode 85363849. Replays of
the call can be accessed at ir.westrock.com.
About WestRock
WestRock (NYSE:WRK) partners with our customers to provide
differentiated paper and packaging solutions that help them win in
the marketplace. WestRock’s 36,000 team members support customers
around the world from more than 250 operating and business
locations spanning North America, South America, Europe and Asia.
Learn more at www.westrock.com.
Consolidated Financial Results
The financial results below illustrate the performance of
WestRock for the quarters ended March 31, 2017, and March 31, 2016
(in millions).
|
|
|
|
|
|
March 31, 2017 |
March 31, 2016 |
Change |
|
|
|
|
Net sales |
$ |
3,656.3 |
|
$ |
3,492.7 |
|
$ |
163.6 |
|
|
|
|
|
Segment income |
$ |
295.8 |
|
$ |
270.7 |
|
$ |
25.1 |
|
Non-allocated
expenses |
|
(12.6 |
) |
|
(9.2 |
) |
|
(3.4 |
) |
Depreciation |
|
207.5 |
|
|
208.2 |
|
|
(0.7 |
) |
Amortization |
|
56.4 |
|
|
60.1 |
|
|
(3.7 |
) |
Less: Deferred
financing costs |
|
(1.1 |
) |
|
(1.1 |
) |
― |
Segment EBITDA |
|
546.0 |
|
|
528.7 |
|
|
17.3 |
|
Inventory step-up, net
of LIFO |
|
0.5 |
|
|
1.8 |
|
|
(1.3 |
) |
Adjusted Segment
EBITDA |
$ |
546.5 |
|
$ |
530.5 |
|
$ |
16.0 |
|
The $164 million increase in net sales was primarily
attributable to the $132 million of increased Corrugated Packaging
segment sales and $81 million increase in Land and Development
segment sales, partially offset by a $34 million decrease in
Consumer Packaging segment sales. We discuss the change in
segment sales in the segment discussions below.
Segment income increased by $25 million compared to the prior
year quarter. The increase in segment income was primarily due to
an increase of $22 million in the Land and Development segment and
an increase of $19 million in the Consumer Packaging segment,
partially offset by a decrease of $16 million in the Corrugated
Packaging segment. Non-allocated expenses increased $3 million. The
net increase in segment income was due primarily to synergy and
performance improvements, the increase in the Land and Development
segment, and higher price/mix and volume, which were partially
offset by cost inflation.
Cash Provided From Operating, Financing and Investing
Activities
Cash from operations was $300 million in the second quarter of
fiscal 2017. Total debt was $5.67 billion at March 31, 2017,
including $298 million for the fair-value of debt stepped-up in
purchase accounting. Consistent with WestRock’s balanced capital
allocation strategy, during the second quarter, WestRock invested
$189 million in capital expenditures, paid $101 million in
dividends and returned $25 million to stockholders in stock
repurchases.
Corrugated Packaging Segment
|
|
|
|
|
|
March 31, 2017 |
March 31, 2016 |
Change |
|
|
|
|
Segment
sales |
$ |
2,065.0 |
$ |
1,932.8 |
$ |
132.2 |
|
|
|
|
|
Segment
income |
$ |
159.5 |
$ |
175.0 |
$ |
(15.5 |
) |
Depreciation |
|
123.5 |
|
118.1 |
|
5.4 |
|
Amortization |
|
21.8 |
|
22.7 |
|
(0.9 |
) |
Segment
EBITDA |
|
304.8 |
|
315.8 |
|
(11.0 |
) |
Inventory
step-up, net of LIFO |
|
0.5 |
― |
|
0.5 |
|
Adjusted
Segment EBITDA |
$ |
305.3 |
$ |
315.8 |
$ |
(10.5 |
) |
Operating Highlights for the Quarter Ended March 31, 2017:
- Segment sales increased $132 million primarily due to an
estimated $52 million of higher corrugated volume, $44 million
due to higher recycling net sales primarily due to higher commodity
prices, $29 million due to a favorable corrugated selling
price/mix, and $25 million related to foreign exchange, which were
partially offset by $21 million of lower sales due to shifting
sales from converted boxes, in the prior year quarter, to
containerboard sales this quarter, as a result of the Grupo Gondi
transaction
- Shipments in North America of 2.12 million tons, an increase of
76,000 tons from the prior year quarter; North America box
shipments increased 1.1% on a per day basis
- Maintenance downtime of 78,000 tons and no containerboard
economic downtime taken
- Brazil box shipments increased 16.5% versus the prior year
quarter
Period Comparability Items:
- The impact of foreign exchange on segment sales and income for
the current quarter was favorable $25 million and $3 million,
respectively
Consumer Packaging Segment
|
|
|
|
|
|
March 31, 2017 |
March 31, 2016 |
Change |
|
|
|
|
Segment sales |
$ |
1,554.6 |
$ |
1,588.4 |
$ |
(33.8 |
) |
|
|
|
|
Segment income |
$ |
118.8 |
$ |
99.7 |
$ |
19.1 |
|
Depreciation |
|
82.0 |
|
85.5 |
|
(3.5 |
) |
Amortization |
|
34.3 |
|
37.1 |
|
(2.8 |
) |
Segment EBITDA |
|
235.1 |
|
222.3 |
|
12.8 |
|
Inventory step-up, net
of LIFO |
― |
|
1.8 |
|
(1.8 |
) |
Adjusted Segment
EBITDA |
$ |
235.1 |
$ |
224.1 |
$ |
11.0 |
|
Operating Highlights for the Quarter Ended March 31,
2017:
- Segment sales decreased primarily due to lower pulp volumes and
unfavorable paperboard price/mix due to the flow through of
previously published paperboard price decreases; shipments of
paperboard and converted products increased 0.9%
- Strong operational execution and realization of productivity
benefits; profitability improvements in beverage and merchandising
displays businesses
- During the quarter, we converted our Home, Health and Beauty
business to held for sale accounting and as a result did not record
$10 million of depreciation and amortization expense. This $10
million benefit is excluded from adjusted earnings per share.
Land and Development Segment
|
|
|
|
|
|
March 31, 2017 |
March 31, 2016 |
Change |
|
|
|
|
Segment sales |
$ |
100.0 |
$ |
18.7 |
|
$ |
81.3 |
|
|
|
|
Segment income
(loss) |
$ |
17.5 |
$ |
(4.0 |
) |
$ |
21.5 |
Depreciation |
|
0.2 |
|
0.2 |
|
― |
Segment EBITDA |
$ |
17.7 |
$ |
(3.8 |
) |
$ |
21.5 |
Operating Highlights for the Quarter Ended March 31,
2017:
- Strong results as we continue our monetization program with the
sale of most of our Nexton holdings, the largest single project in
the portfolio, for $90 million
- Due to the accelerated monetization activity, we have excluded
Land and Development’s earnings of $0.04 per share from adjusted
earnings
- Recorded a $42.7 million non-cash impairment, before
noncontrolling interest of $6.4 million, in connection with
accelerated monetization activity; the impairment charge is not
reflected in segment income or adjusted earnings per share
Pension Lump Sum Settlement
During the second quarter of fiscal 2017, our cumulative
year-to-date lump sum payments to certain beneficiaries of two of
our U.S. defined benefit plans, together with several one-time
severance benefit payments out of the plans, triggered pension
settlement accounting and resulted in a $28.7 million non-cash
charge.
Restructuring and Other Items
Restructuring and other items during the second quarter of
fiscal 2017 included the following pre-tax costs and expenses:
- $16 million of integration expenses, $2 million of divestiture
expenses, primarily associated with our Home, Health and Beauty
business, and $3 million of acquisition costs, primarily related to
the previously announced and currently pending acquisition of Multi
Packaging Solutions
- $2 million closure related gain, primarily related to a $9
million gain on sale of a previously closed recycling facility and
$7 million of closure related costs from previously closed
facilities
- $5 million of other items, primarily operating losses
associated with operations in the process of being closed
Adjusted Earnings
|
|
|
|
Three Months Ended |
|
March 31, 2017 |
|
|
Earnings per
diluted share |
$ |
0.40 |
|
|
|
HH&B – impact of
held for sale accounting |
|
(0.03 |
) |
Land and Development
operating results |
|
(0.04 |
) |
Land and Development
impairment |
|
0.09 |
|
Pension lump sum
settlement |
|
0.07 |
|
Restructuring and other
items |
|
0.05 |
|
|
|
Adjusted earnings per diluted share |
$ |
0.54 |
|
Basis of Presentation
The condensed consolidated statements of operations
and segment information tables for the prior year periods have been
recast to present our former Specialty Chemicals segment as a
discontinued operation.
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 are typically identified by words
or phrases such as "may," "will," "could," "should," "would,"
"anticipate," "estimate," "expect," "project," "intend," "plan,"
"believe," "target," "prospects," "potential" and "forecast," and
other words, terms and phrases of similar meaning. Forward-looking
statements involve estimates, expectations, projections, goals,
forecasts, assumptions, risks and uncertainties. WestRock cautions
readers that a forward-looking statement is not a guarantee of
future performance and that actual results could differ materially
from those contained in the forward-looking statement. Such
forward-looking statements include, but are not limited to, those
statements asserting that while higher input costs may persist,
favorable price and demand trends and WestRock’s unique portfolio
of products and capabilities positions us well to drive value for
customers and stockholders, and that we are looking forward to
adding Multi Packaging Solutions to our portfolio, which is
currently expected to occur by the end of the June quarter. With
respect to these statements, WestRock has made assumptions
regarding, among other things, the results and impacts of the
strategic combination of Rock-Tenn Company and MeadWestvaco
Corporation’s respective businesses; the agreement to acquire Multi
Packaging Solutions; economic, competitive and market conditions
generally; volumes and price levels of purchases by customers; and
competitive conditions in WestRock's businesses and possible
adverse actions of their customers, competitors and suppliers.
Further, WestRock's businesses are subject to a number of general
risks that would affect any such forward-looking statements
including, among others, decreases in demand for their products;
increases in energy, raw materials, shipping and capital equipment
costs; reduced supply of raw materials; fluctuations in selling
prices and volumes; intense competition; the potential loss of
certain customers; the scope, costs, and repair, which could result
in operational disruptions of varied duration; our desire or
ability to continue to repurchase company stock; and adverse
changes in general market and industry conditions. Such risks and
other factors that may impact management's assumptions are more
particularly described in our filings with the Securities and
Exchange Commission, including in Item 1A “Risk Factors” in our
Annual Report on Form 10-K for the fiscal year ended September 30,
2016 and Item 1A “Risk Factors” in our Form 10-Q for the quarter
ended December 31, 2016. The information contained herein speaks as
of the date hereof and WestRock 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.
|
|
|
|
|
|
|
|
WestRock Company |
|
|
|
|
|
|
|
Condensed Consolidated Statements of
Operations |
|
|
|
|
|
|
|
In
millions, except per share amounts (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
March 31, |
|
March 31, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
(recast) |
|
|
|
(recast) |
|
|
|
|
|
|
|
|
Net
sales |
$ |
3,656.3 |
|
|
$ |
3,492.7 |
|
|
$ |
7,103.5 |
|
|
$ |
6,963.6 |
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
2,980.9 |
|
|
|
2,835.4 |
|
|
|
5,836.8 |
|
|
|
5,651.6 |
|
|
|
|
|
|
|
|
|
Gross profit |
|
675.4 |
|
|
|
657.3 |
|
|
|
1,266.7 |
|
|
|
1,312.0 |
|
Selling, general and
administrative, excluding intangible amortization |
|
349.1 |
|
|
|
342.0 |
|
|
|
685.4 |
|
|
|
677.9 |
|
Selling, general and
administrative intangible amortization |
|
49.6 |
|
|
|
53.5 |
|
|
|
102.2 |
|
|
|
106.1 |
|
Land and Development
impairment |
|
42.7 |
|
|
|
- |
|
|
|
42.7 |
|
|
|
- |
|
Pension lump sum
settlement |
|
28.7 |
|
|
|
- |
|
|
|
28.7 |
|
|
|
- |
|
Restructuring and other
costs, net |
|
18.3 |
|
|
|
111.1 |
|
|
|
99.3 |
|
|
|
273.9 |
|
|
|
|
|
|
|
|
|
Operating profit |
|
187.0 |
|
|
|
150.7 |
|
|
|
308.4 |
|
|
|
254.1 |
|
Interest expense |
|
(65.8 |
) |
|
|
(64.0 |
) |
|
|
(130.9 |
) |
|
|
(129.2 |
) |
Loss on extinguishment
of debt |
|
(0.1 |
) |
|
|
- |
|
|
|
(0.1 |
) |
|
|
- |
|
Interest income and
other income (expense), net |
|
14.2 |
|
|
|
6.5 |
|
|
|
26.3 |
|
|
|
22.3 |
|
Equity in income (loss)
of unconsolidated entities |
|
6.5 |
|
|
|
(0.3 |
) |
|
|
20.2 |
|
|
|
1.0 |
|
|
|
|
|
|
|
|
|
Income from continuing
operations before income taxes |
|
141.8 |
|
|
|
92.9 |
|
|
|
223.9 |
|
|
|
148.2 |
|
|
|
|
|
|
|
|
|
Income tax expense |
|
(43.6 |
) |
|
|
(34.5 |
) |
|
|
(47.2 |
) |
|
|
(59.4 |
) |
|
|
|
|
|
|
|
|
Income from
continuing operations |
|
98.2 |
|
|
|
58.4 |
|
|
|
176.7 |
|
|
|
88.8 |
|
|
|
|
|
|
|
|
|
Income (loss) from
discontinued operations (net of income tax expense of $5.9 and
$7.2) |
|
- |
|
|
|
1.4 |
|
|
|
- |
|
|
|
(480.7 |
) |
Consolidated net income
(loss) |
|
98.2 |
|
|
|
59.8 |
|
|
|
176.7 |
|
|
|
(391.9 |
) |
|
|
|
|
|
|
|
|
Less: Net loss (income)
attributable to noncontrolling interests |
|
4.9 |
|
|
|
(2.9 |
) |
|
|
7.3 |
|
|
|
(4.7 |
) |
|
|
|
|
|
|
|
|
Net income
(loss) attributable to common |
|
|
|
|
|
|
|
stockholders |
$ |
103.1 |
|
|
$ |
56.9 |
|
|
$ |
184.0 |
|
|
$ |
(396.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding |
|
254.6 |
|
|
|
257.4 |
|
|
|
254.9 |
|
|
|
259.7 |
|
|
|
|
|
|
|
|
|
Diluted earnings per
share from continuing operations |
$ |
0.40 |
|
|
$ |
0.22 |
|
|
$ |
0.72 |
|
|
$ |
0.34 |
|
Diluted loss per share
from discontinued operations |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1.87 |
) |
Diluted earnings (loss)
per share |
$ |
0.40 |
|
|
$ |
0.22 |
|
|
$ |
0.72 |
|
|
$ |
(1.53 |
) |
|
|
|
|
|
|
|
|
WestRock Company |
|
|
|
|
|
|
|
Segment Information |
|
|
|
|
|
|
|
In
millions (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
March 31, |
|
March 31, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
(recast) |
|
|
|
(recast) |
Net
sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corrugated
Packaging |
$ |
2,065.0 |
|
|
$ |
1,932.8 |
|
|
$ |
4,008.6 |
|
|
$ |
3,897.1 |
|
Consumer Packaging |
|
1,554.6 |
|
|
|
1,588.4 |
|
|
|
3,065.5 |
|
|
|
3,130.6 |
|
Land and
Development |
|
100.0 |
|
|
|
18.7 |
|
|
|
154.0 |
|
|
|
34.1 |
|
Intersegment
Eliminations |
|
(63.3 |
) |
|
|
(47.2 |
) |
|
|
(124.6 |
) |
|
|
(98.2 |
) |
|
|
|
|
|
|
|
|
Total net
sales |
$ |
3,656.3 |
|
|
$ |
3,492.7 |
|
|
$ |
7,103.5 |
|
|
$ |
6,963.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations before income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corrugated
Packaging |
$ |
159.5 |
|
|
$ |
175.0 |
|
|
$ |
301.0 |
|
|
$ |
355.1 |
|
Consumer
Packaging |
|
118.8 |
|
|
|
99.7 |
|
|
|
206.4 |
|
|
|
190.9 |
|
Land and
Development |
|
17.5 |
|
|
|
(4.0 |
) |
|
|
19.2 |
|
|
|
(3.3 |
) |
|
|
|
|
|
|
|
|
Total segment
income |
|
295.8 |
|
|
|
270.7 |
|
|
|
526.6 |
|
|
|
542.7 |
|
|
|
|
|
|
|
|
|
Pension lump sum
settlement |
|
(28.7 |
) |
|
|
- |
|
|
|
(28.7 |
) |
|
|
- |
|
Land and Development
impairment |
|
(42.7 |
) |
|
|
- |
|
|
|
(42.7 |
) |
|
|
- |
|
Restructuring and other
costs, net |
|
(18.3 |
) |
|
|
(111.1 |
) |
|
|
(99.3 |
) |
|
|
(273.9 |
) |
Non-allocated
expenses |
|
(12.6 |
) |
|
|
(9.2 |
) |
|
|
(27.3 |
) |
|
|
(13.7 |
) |
Interest expense |
|
(65.8 |
) |
|
|
(64.0 |
) |
|
|
(130.9 |
) |
|
|
(129.2 |
) |
Loss on extinguishment
of debt |
|
(0.1 |
) |
|
|
- |
|
|
|
(0.1 |
) |
|
|
- |
|
Interest income and
other income (expense), net |
|
14.2 |
|
|
|
6.5 |
|
|
|
26.3 |
|
|
|
22.3 |
|
|
|
|
|
|
|
|
|
Income from
continuing operations before income taxes |
$ |
141.8 |
|
|
$ |
92.9 |
|
|
$ |
223.9 |
|
|
$ |
148.2 |
|
|
|
|
|
|
|
|
|
WestRock Company |
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of Cash
Flows |
|
|
|
|
|
|
|
|
|
In
millions (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
|
March 31, |
|
March 31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
|
Consolidated net income
(loss) |
$ |
98.2 |
|
|
$ |
59.8 |
|
|
$ |
176.7 |
|
|
$ |
(391.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile consolidated net income (loss) to net cash provided
by |
|
|
|
|
|
|
|
|
|
operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
263.9 |
|
|
|
291.2 |
|
|
|
539.1 |
|
|
|
585.5 |
|
|
|
Cost of
real estate sold |
|
73.3 |
|
|
|
14.1 |
|
|
|
124.6 |
|
|
|
23.4 |
|
|
|
Deferred
income tax (benefit) expense |
|
(36.7 |
) |
|
|
18.8 |
|
|
|
(55.5 |
) |
|
|
(1.7 |
) |
|
|
Loss on
extinguishment of debt |
|
0.1 |
|
|
|
- |
|
|
|
0.1 |
|
|
|
- |
|
|
|
Share-based compensation expense |
|
17.4 |
|
|
|
18.4 |
|
|
|
34.5 |
|
|
|
30.2 |
|
|
|
(Gain)
loss on disposal of plant and equipment and other, net |
|
(8.1 |
) |
|
|
0.3 |
|
|
|
(8.5 |
) |
|
|
(0.2 |
) |
|
|
Equity in
(income) loss of unconsolidated entities |
|
(6.5 |
) |
|
|
0.3 |
|
|
|
(20.2 |
) |
|
|
(1.0 |
) |
|
|
Pension
and other postretirement funding (more) than expense (income) |
|
7.0 |
|
|
|
(28.3 |
) |
|
|
(10.0 |
) |
|
|
(40.5 |
) |
|
|
Loss on
contribution of subsidiary |
|
1.7 |
|
|
|
- |
|
|
|
1.7 |
|
|
|
- |
|
|
|
Cash
surrender value increase in excess of premium paid |
|
(12.1 |
) |
|
|
(7.5 |
) |
|
|
(18.4 |
) |
|
|
(17.5 |
) |
|
|
Impairment adjustments |
|
6.9 |
|
|
|
63.1 |
|
|
|
45.0 |
|
|
|
186.2 |
|
|
|
Distributed earnings from equity investments |
|
4.1 |
|
|
|
2.2 |
|
|
|
12.7 |
|
|
|
2.7 |
|
|
|
Other
non-cash items |
|
(8.3 |
) |
|
|
(1.4 |
) |
|
|
(21.7 |
) |
|
|
(16.0 |
) |
|
|
Land and
Development impairment |
|
42.7 |
|
|
|
- |
|
|
|
42.7 |
|
|
|
- |
|
|
|
Impairment of Specialty Chemicals goodwill |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
478.3 |
|
|
|
Changes
in operating assets and liabilities, net of acquisitions /
divestitures: |
|
|
|
|
|
|
|
|
|
Accounts
receivable |
|
(144.6 |
) |
|
|
(115.1 |
) |
|
|
(90.8 |
) |
|
|
113.5 |
|
|
|
Inventories |
|
(5.4 |
) |
|
|
(20.7 |
) |
|
|
(50.7 |
) |
|
|
(80.2 |
) |
|
|
Other
assets |
|
(36.8 |
) |
|
|
(81.6 |
) |
|
|
(52.8 |
) |
|
|
(66.1 |
) |
|
|
Accounts
payable |
|
52.2 |
|
|
|
(9.8 |
) |
|
|
218.7 |
|
|
|
(58.8 |
) |
|
|
Income
taxes |
|
13.2 |
|
|
|
(6.8 |
) |
|
|
10.3 |
|
|
|
23.7 |
|
|
|
Accrued
liabilities and other |
|
(22.5 |
) |
|
|
55.2 |
|
|
|
(60.4 |
) |
|
|
5.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities |
|
299.7 |
|
|
|
252.2 |
|
|
|
817.1 |
|
|
|
775.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures |
|
(189.2 |
) |
|
|
(214.6 |
) |
|
|
(365.3 |
) |
|
|
(418.4 |
) |
|
|
Cash paid for business
acquisitions, net of cash acquired |
|
(35.2 |
) |
|
|
(99.3 |
) |
|
|
(31.7 |
) |
|
|
(381.0 |
) |
|
|
Debt purchased in
connection with an acquisition |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(36.5 |
) |
|
|
Corporate-owned life
insurance premium paid |
|
(0.1 |
) |
|
|
- |
|
|
|
(0.8 |
) |
|
|
- |
|
|
|
Investment in
unconsolidated entities |
|
- |
|
|
|
(0.3 |
) |
|
|
(1.4 |
) |
|
|
(0.4 |
) |
|
|
Return of capital from
unconsolidated entities |
|
3.1 |
|
|
|
0.4 |
|
|
|
12.6 |
|
|
|
0.5 |
|
|
|
Proceeds from the sale
of subsidiary and affiliates |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10.2 |
|
|
|
Proceeds from sale of
property, plant and equipment |
|
24.9 |
|
|
|
1.1 |
|
|
|
29.6 |
|
|
|
9.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used for investing
activities |
|
(196.5 |
) |
|
|
(312.7 |
) |
|
|
(357.0 |
) |
|
|
(816.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to revolving
credit facilities |
|
62.2 |
|
|
|
31.9 |
|
|
|
65.6 |
|
|
|
78.3 |
|
|
|
Additions to debt |
|
0.6 |
|
|
|
743.9 |
|
|
|
1.2 |
|
|
|
1,021.1 |
|
|
|
Repayments of debt |
|
(170.4 |
) |
|
|
(311.4 |
) |
|
|
(175.9 |
) |
|
|
(455.2 |
) |
|
|
Other financing
repayments |
|
18.4 |
|
|
|
0.6 |
|
|
|
7.8 |
|
|
|
0.2 |
|
|
|
Issuances of common
stock, net of related minimum tax withholdings |
|
(2.0 |
) |
|
|
(16.2 |
) |
|
|
7.2 |
|
|
|
(10.8 |
) |
|
|
Purchases of common
stock |
|
(25.0 |
) |
|
|
(144.5 |
) |
|
|
(93.0 |
) |
|
|
(238.8 |
) |
|
|
Excess tax benefits
from share-based compensation |
|
0.8 |
|
|
|
0.1 |
|
|
|
1.5 |
|
|
|
0.1 |
|
|
|
(Repayments to)
advances from unconsolidated entity |
|
(1.9 |
) |
|
|
0.9 |
|
|
|
(0.9 |
) |
|
|
(0.2 |
) |
|
|
Cash dividends paid to
stockholders |
|
(100.7 |
) |
|
|
(95.2 |
) |
|
|
(201.1 |
) |
|
|
(191.6 |
) |
|
|
Cash distributions to
noncontrolling interests |
|
(1.1 |
) |
|
|
(14.0 |
) |
|
|
(22.1 |
) |
|
|
(16.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used for) provided by
financing activities |
|
(219.1 |
) |
|
|
196.1 |
|
|
|
(409.7 |
) |
|
|
186.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
7.9 |
|
|
|
(4.9 |
) |
|
|
(6.0 |
) |
|
|
(6.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease)
increase in cash and cash equivalents |
|
(108.0 |
) |
|
|
130.7 |
|
|
|
44.4 |
|
|
|
139.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents from continuing operations, at beginning of period |
|
493.3 |
|
|
|
204.8 |
|
|
|
340.9 |
|
|
|
207.8 |
|
|
|
Cash and cash
equivalents from discontinued operations, at beginning of
period |
|
- |
|
|
|
32.1 |
|
|
|
- |
|
|
|
20.5 |
|
|
|
Balance of cash and
cash equivalent at beginning of period |
|
493.3 |
|
|
|
236.9 |
|
|
|
340.9 |
|
|
|
228.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents from continuing operations, at end of the period |
|
385.3 |
|
|
|
345.2 |
|
|
|
385.3 |
|
|
|
345.2 |
|
|
|
Cash and cash
equivalents from discontinued operations, at end of the period |
|
- |
|
|
|
22.4 |
|
|
|
- |
|
|
|
22.4 |
|
|
|
Cash and cash
equivalents at end of period |
$ |
385.3 |
|
|
$ |
367.6 |
|
|
$ |
385.3 |
|
|
$ |
367.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information |
|
|
|
|
|
|
|
|
|
Cash paid (received)
during the period for: |
|
|
|
|
|
|
|
|
|
Income
taxes, net of refunds |
$ |
67.1 |
|
|
$ |
26.0 |
|
|
$ |
90.6 |
|
|
$ |
49.4 |
|
|
|
Interest,
net of amounts capitalized |
$ |
95.0 |
|
|
$ |
95.4 |
|
|
$ |
115.5 |
|
|
$ |
114.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
WestRock Company |
|
|
|
Condensed Consolidated Balance Sheets |
|
|
|
In
millions (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
September 30, |
|
|
2017 |
|
|
2016 |
|
|
|
|
Assets |
|
|
|
Current
assets |
|
|
|
Cash and cash
equivalents |
$ |
385.3 |
|
$ |
340.9 |
Restricted cash |
|
5.9 |
|
|
25.5 |
Accounts receivable
(net of allowances of $39.1 and $36.5) |
|
1,563.5 |
|
|
1,592.2 |
Inventories |
|
1,587.9 |
|
|
1,638.2 |
Other current
assets |
|
222.8 |
|
|
263.5 |
Assets held for
sale |
|
1,227.1 |
|
|
52.3 |
Total current
assets |
|
4,992.5 |
|
|
3,912.6 |
|
|
|
|
|
|
|
|
Property, plant and
equipment, net |
|
8,633.7 |
|
|
9,294.3 |
Goodwill |
|
4,458.0 |
|
|
4,778.1 |
Intangibles, net |
|
2,282.6 |
|
|
2,599.3 |
Restricted assets held
by special purpose entities |
|
1,290.4 |
|
|
1,293.8 |
Prepaid pension
asset |
|
336.0 |
|
|
257.8 |
Other assets |
|
956.9 |
|
|
902.3 |
Total
assets |
$ |
22,950.1 |
|
$ |
23,038.2 |
|
|
|
|
Liabilities and Equity |
|
|
|
Current
liabilities |
|
|
|
Current portion of
debt |
$ |
214.2 |
|
$ |
292.9 |
Accounts payable |
|
1,225.3 |
|
|
1,054.4 |
Accrued compensation
and benefits |
|
303.1 |
|
|
405.9 |
Other current
liabilities |
|
366.3 |
|
|
429.8 |
Liabilities held for
sale |
|
212.2 |
|
|
- |
Total current
liabilities |
|
2,321.1 |
|
|
2,183.0 |
|
|
|
|
|
|
|
|
Long-term debt due
after one year |
|
5,459.5 |
|
|
5,496.3 |
Pension liabilities,
net of current portion |
|
291.6 |
|
|
328.1 |
Postretirement medical
liabilities, net of current portion |
|
141.0 |
|
|
140.0 |
Non-recourse
liabilities held by special purpose entities |
|
1,165.8 |
|
|
1,170.2 |
Deferred income
taxes |
|
3,033.3 |
|
|
3,130.7 |
Other long-term
liabilities |
|
768.3 |
|
|
746.2 |
Redeemable
noncontrolling interests |
|
12.9 |
|
|
13.7 |
|
|
|
|
Total
common stockholders' equity |
|
9,684.7 |
|
|
9,728.8 |
Noncontrolling interests |
|
71.9 |
|
|
101.2 |
Total Equity |
|
9,756.6 |
|
|
9,830.0 |
Total
liabilities and equity |
$ |
22,950.1 |
|
$ |
23,038.2 |
|
|
|
|
Non-GAAP Financial Measures and
Reconciliations
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 investors and other users with additional
meaningful financial information that should be considered when
assessing our ongoing performance. Management also uses these
non-GAAP financial measures in making financial, operating and
planning decisions, and in evaluating WestRock’s 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. We discuss
below details of the non-GAAP financial measures presented by us as
well as reconciliations of such non-GAAP financial measures to the
most directly comparable financial measures calculated in
accordance with GAAP.
Adjusted Free Cash Flow
WestRock uses the non-GAAP financial measure
“Adjusted Free Cash Flow”. Management believes this non-GAAP
financial measure provides WestRock’s board of directors,
investors, potential investors, securities analysts and others with
useful information to evaluate its performance relative to other
periods because it excludes certain cash restructuring and other
costs, net of tax that management believes are not indicative of
the ongoing operating results of the business. WestRock believes
that the most directly comparable GAAP measure is “Net cash
provided by operating activities”.
Set forth below is a reconciliation of “Adjusted
Free Cash Flow” to Net cash provided by operating activities for
the three months ended March 31, 2017 (in millions).
Net cash provided by
operating activities |
|
$ |
299.7 |
|
|
Less: Capital
expenditures |
|
|
(189.2 |
) |
|
Free Cash
Flow |
|
|
110.5 |
|
|
Plus: Cash
Restructuring and other costs, net of income tax expense of
$0.9 |
|
|
(1.9 |
) |
|
Adjusted Free Cash
Flow |
|
$ |
108.6 |
|
|
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 non-GAAP financial measures provide
WestRock’s board of directors, investors, potential investors,
securities analysts and others with useful information to evaluate
its performance because they exclude restructuring and other costs,
net, 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 these measures to evaluate
its performance relative to other periods. WestRock believes that
the most directly comparable GAAP measures are Net income
attributable to common stockholders and Earnings per diluted share,
respectively. At the beginning of this press release is a
reconciliation of Earnings per diluted share to Adjusted earnings
per diluted share. Set forth below is a reconciliation of Adjusted
net income to Net income attributable to common stockholders (in
millions).
|
|
|
|
Three Months Ended |
|
|
March 31, 2017 |
|
|
|
|
Net
Income attributable to common stockholders |
$ |
103.1 |
|
|
|
HH&B –
impact of held for sale accounting, net of income tax expense of
$2.3 |
|
(7.8 |
) |
Land and
Development operating results, net of income tax expense of
$7.2 |
|
(11.0 |
) |
Land and
Development impairment, net of income tax benefit of $14.4(1) |
|
21.9 |
|
Pension
lump sum settlement, net of income tax benefit of $11.1 |
|
17.7 |
|
Restructuring and other items, net of income tax benefit of
$11.4 |
|
12.0 |
|
Loss on
contribution of subsidiary, net of income tax benefit of $0.6 |
|
1.1 |
|
Acquisition
inventory step-up, net of income tax benefit of $0.2 |
|
0.3 |
|
|
|
Adjusted net income |
$ |
137.3 |
|
(1) Net of $6.4 million of noncontrolling
interest
|
|
|
CONTACT: |
|
|
|
|
|
WestRock |
|
|
|
|
|
Investors: |
|
Media: |
Matt Tractenberg,
470-328-6327 |
|
Donna Owens Cox,
470-328-6397 |
Vice President, Head of
Investor Relations |
|
Chief Communications
Officer |
matt.tractenberg@westrock.com |
|
mediainquiries@westrock.com |
|
|
|
John Stakel, 678-291-7901 |
|
|
Senior Vice President -
Treasurer |
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john.stakel@westrock.com |
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WestRock (NYSE:WRK)
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