WestRock Company (NYSE:WRK), a leading provider of
differentiated, sustainable paper and packaging solutions, today
announced results for its fiscal third quarter ended June 30,
2021.
Notable items in the third quarter include:
- Record net sales of $4.8 billion increased 14% compared to the
prior year quarter
- Net income of $250 million increased 40% compared to $179
million in the prior year quarter
- Adjusted Segment EBITDA of $811 million increased 15% compared
to $708 million in the prior year quarter
- Earned $0.93 per diluted share and $1.00 of Adjusted Earnings
Per Diluted Share, an increase of 35% and 32%, respectively,
compared to $0.69 per diluted share and $0.76 of Adjusted Earnings
Per Diluted Share in the prior year quarter
- Record third quarter North American per day box shipments
increased 9% compared to the prior year quarter
- Successfully implementing published price increases across all
major paper grades; pricing realization outpaced inflation in the
quarter
- Generated net cash provided by operating activities of $751
million and Adjusted Free Cash Flow of $554 million compared to
$740 million and $508 million, respectively, in the prior year
quarter
- Reduced total debt by $270 million and Adjusted Net Debt by
$482 million
“We delivered excellent results in the third fiscal quarter,
with record revenue and North American box shipments that drove a
35% year-over-year increase in diluted earnings per share” said
David B. Sewell, chief executive officer. “We saw strong demand for
our products and solutions across our targeted end markets, and
pricing gains outpaced inflation in the quarter. It was another
quarter of strong cash flows, and we executed our capital
allocation priorities, enabling us to approach our targeted net
leverage range ahead of expectations. Looking forward, we remain
well positioned for success and are committed to accelerating the
opportunities we see across our differentiated portfolio,
innovating to develop new sustainable, fiber-based packaging
solutions and driving productivity to generate improved
returns.”
Consolidated Financial
Results
WestRock’s performance for the three months ended June 30, 2021
and June 30, 2020 (in millions):
Three Months Ended
June 30, 2021
June 30, 2020
Change
Net sales
$
4,816.3
$
4,236.3
$
580.0
Segment income
$
453.7
$
323.2
$
130.5
Non-allocated expenses
(22.3
)
(18.3
)
(4.0
)
Depreciation
271.4
258.0
13.4
Amortization
97.6
107.7
(10.1
)
Segment EBITDA
800.4
670.6
129.8
Adjustments (1)
10.6
37.2
(26.6
)
Adjusted Segment EBITDA
$
811.0
$
707.8
$
103.2
(1) See the Adjusted Net Income tables on page 12 for
adjustments
Operating Highlights for the Three Months
Ended June 30, 2021 compared to June 30, 2020:
Net sales increased $580 million compared to the prior year
quarter. Corrugated Packaging segment net sales increased $438
million and Consumer Packaging segment net sales increased $182
million. Segment income increased $131 million compared to the
prior year quarter. Corrugated Packaging segment income increased
$94 million and Consumer Packaging segment income increased $37
million.
Additional information about the changes in segment net sales
and income is included below.
Restructuring and Other
Items
Restructuring and other items during the third quarter of fiscal
2021 was $7 million, primarily related to severance, lease
termination costs and costs associated with previously announced
plant consolidations.
Net Cash Provided By Operating
Activities and Other Financing and Investing
Activities
Net cash provided by operating activities was $751 million in
the third quarter of fiscal 2021 compared to $740 million in the
prior year quarter. Total debt was $8.67 billion at June 30, 2021,
or $8.48 billion excluding $197 million of unamortized fair market
value step-up of debt acquired in mergers and acquisitions, and
$7.93 billion after further excluding cash and cash equivalents of
$550 million. During the third quarter of fiscal 2021, total debt
declined by $270 million and Adjusted Net Debt declined by $482
million. The Company had approximately $3.9 billion of available
liquidity under long-term committed credit facilities and cash and
cash equivalents at June 30, 2021. During the third quarter of
fiscal 2021, WestRock invested $202 million in capital expenditures
and paid $64 million in dividends to stockholders.
Segment Results
WestRock’s segment performance for the three months ended June
30, 2021 and June 30, 2020 (in millions):
Corrugated Packaging
Segment
Three Months Ended
June 30, 2021
June 30, 2020
Change
Segment net sales
$
3,167.1
$
2,728.8
$
438.3
Segment income
$
321.7
$
227.9
$
93.8
Depreciation
185.8
175.2
10.6
Amortization
47.0
57.9
(10.9
)
Segment EBITDA
554.5
461.0
93.5
Adjustments (1)
2.6
21.0
(18.4
)
Adjusted Segment EBITDA
$
557.1
$
482.0
$
75.1
(1) See the Adjusted Net Income tables on page 12 for
adjustments
Operating Highlights for the Three Months
Ended June 30, 2021 compared to June 30, 2020:
Segment net sales increased $438 million, primarily due to
higher selling price/mix, higher volumes and favorable foreign
currency impacts. The Corrugated Packaging segment delivered a
Segment EBITDA margin of 17.5% and a North American Adjusted
Segment EBITDA margin of 19.3%. Record third quarter North American
per day box shipments increased 9% compared to the prior year
quarter.
Segment income increased $94 million, primarily due to the
margin impact of higher selling price/mix and higher volumes that
were partially offset by net cost inflation and other items. The
prior year quarter included $27 million in the aggregate for
one-time recognition awards to the Company’s manufacturing and
operations teammates and increased costs for safety, cleaning and
other items related to COVID-19 compared to $3 million of increased
costs for safety, cleaning and other items related to COVID-19 in
the current year quarter.
Consumer Packaging
Segment
Three Months Ended
June 30, 2021
June 30, 2020
Change
Segment net sales
$
1,734.7
$
1,552.6
$
182.1
Segment income
$
132.0
$
95.3
$
36.7
Depreciation
84.3
81.4
2.9
Amortization
50.6
49.8
0.8
Segment EBITDA
266.9
226.5
40.4
Adjustments (1)
1.7
16.2
(14.5
)
Adjusted Segment EBITDA
$
268.6
$
242.7
$
25.9
(1) See Adjusted Net Income tables on page 12 for
adjustments
Operating Highlights for the Three Months
Ended June 30, 2021 compared to June 30, 2020:
Segment net sales increased $182 million, primarily due to
higher selling price/mix, higher volumes and favorable foreign
currency impacts. The Consumer Packaging segment delivered a
Segment EBITDA margin of 15.4% and an Adjusted Segment EBITDA
margin of 15.5%.
Segment income increased $37 million, primarily due to the
margin impact from higher selling price/mix, higher volumes and
productivity improvements that were partially offset by net cost
inflation and other items. The prior year quarter included $20
million in the aggregate for one-time recognition awards to the
Company’s manufacturing and operations teammates and increased
costs for safety, cleaning and other items related to COVID-19
compared to $2 million of increased costs for safety, cleaning and
other items related to COVID-19 in the current year quarter.
Conference Call
WestRock will host a conference call to discuss its results of
operations for the fiscal third quarter ended June 30, 2021 and
other topics that may be raised during the discussion at 8:30 a.m.,
Eastern Time, on Thursday, August 5, 2021. The conference call,
which will be webcast live, an accompanying slide presentation, and
this release can be accessed at ir.westrock.com.
Investors who wish to participate in the webcast via
teleconference should dial 833-714-0928 (inside the U.S.) or
778-560-2887 (outside the U.S.) at least 15 minutes prior to the
start of the call and enter the passcode 5748195. Replays of the
call can be accessed at ir.westrock.com.
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 may contain 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. The Company
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, that we are successfully implementing published price
increases across all major paper grades and that we remain well
positioned for success and are committed to accelerating the
opportunities we see across our differentiated portfolio,
innovating to develop new sustainable, fiber-based packaging
solutions and driving productivity to generate improved returns.
With respect to these statements, the Company has made assumptions
regarding, among other things, developments related to the COVID-19
pandemic, including the severity, magnitude and duration of the
pandemic, negative global economic conditions arising from the
pandemic, impacts of governments' responses to the pandemic on the
Company’s operations, impacts of the pandemic on commercial
activity, the Company’s customers and consumer preferences and
demand, supply chain disruptions, and disruptions in the credit or
financial markets; the Company’s ability to effectively integrate
the operations of KapStone Paper and Packaging Corporation
(“KapStone”); the Company’s ability to effectively respond
to the recent ransomware incident; the results and impacts of
acquisitions; economic, competitive and market conditions
generally, including the impact of COVID-19; volumes and price
levels of purchases by customers; competitive conditions in the
Company’s businesses and possible adverse actions of our customers,
competitors and suppliers; labor costs; 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 our capital projects; severance and other shutdown
costs; restructuring costs; utilization of real property that is
subject to the restructurings due to realizable values from the
sale of such property; credit availability; and raw material and
energy costs. The Company’s businesses are subject to a number of
risks that would affect any such forward-looking statements,
including, among others, the level of demand for our products; our
ability to respond effectively to the impact of COVID-19; our
ability to successfully identify and make performance and
productivity improvements; increases in energy, raw materials,
shipping and capital equipment costs; reduced supply of raw
materials; adverse legal, reputational and financial effects on the
Company resulting from cyber incidents and the effectiveness of the
Company’s business continuity plans during a ransomware incident;
fluctuations in selling prices and volumes; intense competition;
the potential loss of certain customers; the scope, costs, timing
and impact of any restructuring of our operations and corporate and
tax structure; the occurrence of severe weather or a natural
disaster or other unanticipated problems, such as labor
difficulties, equipment failure or unscheduled maintenance and
repair, which could result in operational disruptions, including
those related to COVID-19; our desire or ability to continue to
repurchase company stock; the scope, timing and outcome of any
litigation, claims or other proceedings or dispute resolutions and
the impact of any such litigation; 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 Part I, Item 1A “Risk Factors” in our Annual Report on
Form 10-K for the fiscal year ended September 30, 2020. 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.
WestRock Company Condensed Consolidated Statements of
Income In millions, except per share amounts (unaudited)
Three Months Ended
Nine Months Ended
June 30,
June 30,
2021
2020
2021
2020
Net sales
$
4,816.3
$
4,236.3
$
13,655.6
$
13,107.3
Cost of goods sold
3,886.4
3,466.3
11,223.2
10,723.5
Gross profit
929.9
770.0
2,432.4
2,383.8
Selling, general and administrative, excluding intangible
amortization
450.9
390.1
1,327.1
1,234.4
Selling, general and administrative intangible amortization
88.8
99.6
269.3
301.5
Loss (gain) on disposal of assets
1.0
1.0
3.8
(5.9
)
Multiemployer pension withdrawal income
-
(2.0
)
-
(1.1
)
Restructuring and other costs
6.9
9.7
19.8
56.2
Operating profit
382.3
271.6
812.4
798.7
Interest expense, net
(102.5
)
(92.4
)
(279.8
)
(283.2
)
Loss on extinguishment of debt
-
(0.6
)
(1.1
)
(1.1
)
Pension and other postretirement non-service income
31.5
25.6
101.4
78.4
Other income (expense), net
6.4
(5.0
)
13.8
(9.6
)
Equity in income of unconsolidated entities
10.7
-
29.4
8.7
Income before income taxes
328.4
199.2
676.1
591.9
Income tax expense
(77.4
)
(19.2
)
(158.2
)
(123.5
)
Consolidated net income
251.0
180.0
517.9
468.4
Less: Net income attributable to noncontrolling interests
(0.9
)
(1.5
)
(3.3
)
(3.3
)
Net income attributable to common stockholders
$
250.1
$
178.5
$
514.6
$
465.1
Computation of diluted earnings per share under the
two-class method (in millions, except per share data): Net
income attributable to common stockholders
$
250.1
$
178.5
$
514.6
$
465.1
Less: Distributed and undistributed income available to
participating securities
-
-
(0.1
)
(0.1
)
Distributed and undistributed income available to common
stockholders
$
250.1
$
178.5
$
514.5
$
465.0
Diluted weighted average shares outstanding
269.0
260.4
267.0
260.2
Diluted earnings per share
$
0.93
$
0.69
$
1.93
$
1.79
WestRock Company Segment Information In millions
(unaudited)
Three Months Ended
Nine Months Ended
June 30,
June 30,
2021
2020
2021
2020
Net sales: Corrugated Packaging
$
3,167.1
$
2,728.8
$
8,945.0
$
8,520.8
Consumer Packaging
1,734.7
1,552.6
4,919.7
4,705.8
Land and Development
-
-
-
18.9
Intersegment Eliminations
(85.5
)
(45.1
)
(209.1
)
(138.2
)
Total net sales
$
4,816.3
$
4,236.3
$
13,655.6
$
13,107.3
Income before income taxes: Corrugated Packaging
$
321.7
$
227.9
$
742.0
$
755.8
Consumer Packaging
132.0
95.3
305.7
232.3
Land and Development
-
-
-
1.4
Total segment income
453.7
323.2
1,047.7
989.5
Gain on sale of certain closed facilities
-
-
0.9
5.5
Multiemployer pension withdrawal income
-
2.0
-
1.1
Restructuring and other costs
(6.9
)
(9.7
)
(19.8
)
(56.2
)
Non-allocated expenses
(22.3
)
(18.3
)
(85.6
)
(54.1
)
Interest expense, net
(102.5
)
(92.4
)
(279.8
)
(283.2
)
Loss on extinguishment of debt
-
(0.6
)
(1.1
)
(1.1
)
Other income (expense), net
6.4
(5.0
)
13.8
(9.6
)
Income before income taxes
$
328.4
$
199.2
$
676.1
$
591.9
WestRock Company Condensed Consolidated Statements of
Cash Flows In millions (unaudited)
Three Months Ended
Nine Months Ended
June 30,
June 30,
2021
2020
2021
2020
Cash flows from operating activities: Consolidated net
income
$
251.0
$
180.0
$
517.9
$
468.4
Adjustments to reconcile consolidated net income to net cash
provided by operating activities: Depreciation, depletion
and amortization
369.0
365.7
1,094.9
1,121.4
Cost of real estate sold
-
-
-
16.1
Deferred income tax expense (benefit)
1.0
4.7
(53.6
)
16.1
Share-based compensation expense
23.3
68.8
74.4
98.4
401(k) match and company contribution in common stock
23.3
-
112.8
-
Pension and other postretirement funding more than expense (income)
(26.5
)
(19.6
)
(82.6
)
(60.7
)
Multiemployer pension withdrawal income
-
(2.0
)
-
(1.1
)
Gain on sale of sawmill
-
-
(16.5
)
-
Gain on sale of investment
(1.3
)
-
(16.0
)
-
Other impairment adjustments
0.1
-
22.6
2.2
Loss (gain) on disposal of plant and equipment and other, net
1.0
0.7
3.8
(5.5
)
Other, net
(20.8
)
(22.1
)
(73.9
)
(33.4
)
Changes in operating assets and liabilities, net of acquisitions /
divestitures: Accounts receivable
(76.4
)
142.8
(333.4
)
82.4
Inventories
(50.9
)
(7.5
)
(130.8
)
(70.7
)
Other assets
(23.1
)
34.6
(149.7
)
(98.3
)
Accounts payable
85.7
(133.4
)
197.2
(240.1
)
Income taxes
17.3
(2.0
)
70.0
15.7
Accrued liabilities and other
178.1
129.5
365.3
28.1
Net cash provided by operating activities
750.8
740.2
1,602.4
1,339.0
Investing activities: Capital expenditures
(202.4
)
(244.0
)
(505.4
)
(860.2
)
Investment in unconsolidated entities
-
(0.3
)
(0.1
)
(1.0
)
Proceeds from sale of sawmill
-
-
58.5
-
Proceeds from sale of investments
1.2
-
29.5
-
Proceeds from sale of property, plant and equipment
1.2
1.2
4.3
22.5
Proceeds from property, plant and equipment insurance settlement
-
1.0
1.7
2.4
Other, net
9.7
6.0
26.0
10.9
Net cash used for investing activities
(190.3
)
(236.1
)
(385.5
)
(825.4
)
Financing activities: Proceeds from issuance of notes
-
598.6
-
598.6
Additions to revolving credit facilities
40.0
38.0
435.0
413.0
Repayments of revolving credit facilities
(80.0
)
(413.2
)
(355.0
)
(478.2
)
Additions to debt
2.9
103.0
258.1
683.1
Repayments of debt
(274.5
)
(987.6
)
(1,131.5
)
(1,195.8
)
Additions (repayments) of commercial paper, net
-
25.5
-
(9.3
)
Other debt additions (repayments), net
9.3
(155.1
)
16.3
(69.2
)
Issuances of common stock, net of related tax withholdings
14.5
3.3
14.7
16.7
Cash dividends paid to stockholders
(64.0
)
(51.9
)
(169.8
)
(292.6
)
Cash distributions paid to noncontrolling interests
(0.7
)
(0.7
)
(1.4
)
(1.4
)
Other, net
(4.2
)
(19.1
)
(7.7
)
(17.0
)
Net cash used for financing activities
(356.7
)
(859.2
)
(941.3
)
(352.1
)
Effect of exchange rate changes on cash and cash equivalents
12.0
6.4
23.1
(21.6
)
Increase (decrease) in cash and cash equivalents and restricted
cash
215.8
(348.7
)
298.7
139.9
Cash and cash equivalents, and restricted cash at beginning of
period
334.0
640.2
251.1
151.6
Cash and cash equivalents, and restricted cash at end of period
$
549.8
$
291.5
$
549.8
$
291.5
Supplemental disclosure of cash flow information:
Cash paid during the period for: Income taxes, net of refunds
$
58.4
$
15.8
$
140.6
$
90.9
Interest, net of amounts capitalized
$
38.1
$
47.0
$
212.8
$
251.4
WestRock Company Condensed Consolidated Balance
Sheets In millions (unaudited)
June 30,
September 30,
2021
2020
Assets Current assets: Cash and
cash equivalents
$
549.8
$
251.1
Accounts receivable (net of allowances of $69.6 and $66.3)
2,518.1
2,142.7
Inventories
2,145.6
2,023.4
Other current assets
500.4
520.5
Assets held for sale
9.8
7.0
Total current assets
5,723.7
4,944.7
Property, plant and equipment, net
10,631.3
10,778.9
Goodwill
5,982.7
5,962.2
Intangibles, net
3,418.0
3,667.2
Restricted assets held by special purpose entities
1,262.2
1,267.5
Prepaid pension asset
470.6
368.7
Other assets
1,925.6
1,790.5
Total Assets
$
29,414.1
$
28,779.7
Liabilities and Equity
Current liabilities: Current portion of debt
$
565.7
$
222.9
Accounts payable
1,906.1
1,674.2
Accrued compensation and benefits
612.0
386.7
Other current liabilities
760.2
645.1
Total current liabilities
3,844.0
2,928.9
Long-term debt due after one year
8,106.9
9,207.7
Pension liabilities, net of current portion
295.2
305.2
Postretirement medical liabilities, net of current portion
152.7
145.4
Non-recourse liabilities held by special purpose entities
1,129.6
1,136.5
Deferred income taxes
2,885.3
2,916.9
Other long-term liabilities
1,527.2
1,490.3
Redeemable noncontrolling interests
2.7
1.3
Total stockholders' equity
11,451.1
10,630.6
Noncontrolling interests
19.4
16.9
Total Equity
11,470.5
10,647.5
Total Liabilities and Equity
$
29,414.1
$
28,779.7
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 and provide
reconciliations of these non-GAAP financial measures to the most
directly comparable financial measures calculated in accordance
with GAAP.
Adjusted Segment EBITDA and Adjustments
to Segment EBITDA
WestRock uses the non-GAAP financial measure “Adjusted Segment
EBITDA”, along with other factors, to evaluate our segment
performance. Management believes adjusting “Segment EBITDA” for
certain items provides WestRock’s board of directors, investors,
potential investors, securities analysts and others with useful
information to evaluate WestRock’s performance across periods or
relative to our peers, and that adjusting “Segment EBITDA” to
“Adjusted Segment EBITDA” more closely aligns those results to the
adjustments in Adjusted Net Income that relate to “Segment EBITDA”.
The consolidated financial results and segment tables include a
reconciliation of “Adjusted Segment EBITDA” to “Segment EBITDA” by
adding certain “Adjustments” to “Segment EBITDA”. These
“Adjustments” are reflected in the “Adjusted Net Income”
reconciliation tables below.
Adjusted Segment Sales and Adjusted
Segment EBITDA Margins
With respect to Adjusted Segment Sales, management believes that
adjusting Segment Sales for trade sales is consistent with how
peers present their sales for purposes of computing margins and
helps analysts compare companies in the same peer group. WestRock
uses the non-GAAP financial measure “Adjusted Segment EBITDA
Margins”, along with other factors, to evaluate our segment
performance against our peers. Management believes this measure is
also useful to investors to evaluate WestRock’s performance
relative to its peers. “Segment EBITDA Margin” is calculated for
each segment by dividing that segment’s Segment EBITDA by Segment
sales. “Adjusted Segment EBITDA Margin” is calculated for each
segment by dividing that segment’s Adjusted Segment EBITDA by
Adjusted Segment Sales.
Adjusted Net Income, 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 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 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 to evaluate 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 attributable to common stockholders,
represented in the table below as the as reported results for
Consolidated net income (i.e. Net of Tax) less net income
attributable to Noncontrolling interests, and Earnings per diluted
share, respectively. This release includes a reconciliation of
Earnings per diluted share to Adjusted Earnings Per Diluted Share
and reconciliations of Adjusted net income to Net income
attributable to common stockholders for the periods indicated (in
millions).
Reconciliations of Net Income to
Adjusted Segment EBITDA
Three Months Ended
June 30,
2021
2020
Net Income attributable to common stockholders
$
250.1
$
178.5
Adjustments: (1) Less: Net Income
attributable to noncontrolling interests
0.9
1.5
Income tax expense
77.4
19.2
Other (income) expense, net
(6.4
)
5.0
Loss on extinguishment of debt
-
0.6
Interest expense, net
102.5
92.4
Restructuring and other costs
6.9
9.7
Multiemployer pension withdrawal income
-
(2.0
)
Non-allocated expenses
22.3
18.3
Segment Income
453.7
323.2
Non-allocated expenses
(22.3
)
(18.3
)
Depreciation and amortization
369.0
365.7
Segment EBITDA
800.4
670.6
Adjustments (2)
10.6
37.2
Adjusted Segment EBITDA
$
811.0
$
707.8
(1) Schedule adds back expense or subtracts income
for certain financial statement and segment footnote items to
compute segment income, Segment EBITDA and Adjusted Segment EBITDA.
(2) See the Adjusted Net Income tables on page 12 for
adjustments.
Reconciliations to Adjusted Net
Income
Three
Months Ended June 30, 2021
Adjustments to Segment EBITDA
Consolidated Results
Corrugated Packaging
Consumer Packaging
Other
Pre-Tax
Tax
Net of Tax
As reported (1)
$
328.4
$
(77.4
)
$
251.0
Ransomware recovery costs
2.1
0.9
6.3
9.3
(2.2
)
7.1
MEPP liability adjustment due to interest rates
n/a
n/a
n/a
7.7
(1.9
)
5.8
Restructuring and other items
n/a
n/a
n/a
6.9
(1.5
)
5.4
Losses at closed plants, transition and start-up costs (2)
0.5
0.8
-
1.4
(0.3
)
1.1
Gain on sale of investment
n/a
n/a
n/a
(1.3
)
0.3
(1.0
)
Adjustments / Adjusted Results
$
2.6
$
1.7
$
6.3
$
352.4
$
(83.0
)
$
269.4
Noncontrolling interests
(0.9
)
Adjusted Net Income
$
268.5
(1) The as reported results for Pre-Tax, Tax and Net of Tax
are equivalent to the line items "Income before income taxes",
"Income tax expense" and "Consolidated net income",
respectively, as reported on the statements of income. (2)
The variance between the Pre-Tax column and the sum of the
Adjustments to Segment EBITDA is depreciation and amortization.
Three Months Ended June 30, 2020
Adjustments to Segment EBITDA Consolidated Results
CorrugatedPackaging ConsumerPackaging L&Dand Other Pre-Tax Tax
Net of Tax As reported (1)
$
199.2
$
(19.2
)
$
180.0
COVID-19 manufacturing and operations bonus
16.5
15.1
-
31.6
(7.7
)
23.9
Restructuring and other items
n/a
n/a
n/a
9.7
(2.4
)
7.3
North Charleston and Florence transition and reconfiguration
costs (2)
5.8
-
-
6.3
(1.5
)
4.8
Losses at closed plants, transition and start-up costs (2)
2.4
2.4
-
5.6
(1.2
)
4.4
Direct costs from Hurricane Michael
0.5
-
-
0.5
(0.1
)
0.4
Loss on extinguishment of debt
n/a
n/a
n/a
0.6
(0.2
)
0.4
Adjustment related to Tax Cuts and Jobs Act
n/a
n/a
n/a
-
(16.4
)
(16.4
)
Brazil indirect tax (3)
(4.2
)
-
-
(9.9
)
3.3
(6.6
)
Other
-
(1.3
)
-
0.9
(0.3
)
0.6
Adjustments/ Adjusted Results
$
21.0
$
16.2
$
-
$
244.5
$
(45.7
)
$
198.8
Noncontrolling interests
(1.5
)
Adjusted Net Income
$
197.3
(1) The as reported results for Pre-Tax, Tax and Net of Tax
are equivalent to the line items "Income before income taxes",
"Income tax expense" and "Consolidated net income",
respectively, as reported on the statements of income. (2)
The variance between the Pre-Tax column and the sum of the
Adjustments to Segment EBITDA is depreciation and amortization.
(3) The variance between the Pre-Tax column and the sum of
the Adjustments to Segment EBITDA is primarily interest income.
Reconciliation to Adjusted Earnings Per
Diluted Share
Set forth below is a reconciliation of Adjusted Earnings Per
Diluted Share to Earnings per diluted share.
Three Months Ended June 30,2021 June
30,2020
Earnings per diluted share
$
0.93
$
0.69
Ransomware recovery costs
0.02
-
Restructuring and other items
0.02
0.03
MEPP liability adjustment due to interest rates
0.02
-
Losses at closed plants, transition and start-up costs
0.01
0.02
COVID-19 manufacturing and operations bonus
-
0.09
North Charleston and Florence transition and reconfiguration costs
-
0.02
Adjustment related to Tax Cuts and Jobs Act
-
(0.06
)
Brazil indirect tax
-
(0.03
)
Gain on sale of certain closed facilities
-
-
Adjusted Earnings Per Diluted Share
$
1.00
$
0.76
Set forth below are reconciliations of Adjusted Segment Sales,
Adjusted Segment EBITDA and Adjusted Segment EBITDA Margins to the
most directly comparable GAAP measures, Segment Sales and Segment
Income, for the quarters ended June 30, 2021 and June 30, 2020 (in
millions, except percentages):
Reconciliation for the Quarter Ended
June 30, 2021
CorrugatedPackaging ConsumerPackaging Corporate
/Elim. Consolidated Segment sales / Net sales
$
3,167.1
$
1,734.7
$
(85.5
)
$
4,816.3
Less: Trade sales
(84.8
)
-
-
(84.8
)
Adjusted Segment Sales
$
3,082.3
$
1,734.7
$
(85.5
)
$
4,731.5
Segment income (1)
$
321.7
$
132.0
$
-
$
453.7
Non-allocated expenses
-
-
(22.3
)
(22.3
)
Depreciation & amortization
232.8
134.9
1.3
369.0
Segment EBITDA
554.5
266.9
(21.0
)
800.4
Adjustments (2)
2.6
1.7
6.3
10.6
Adjusted Segment EBITDA
$
557.1
$
268.6
$
(14.7
)
$
811.0
Segment EBITDA Margins
17.5
%
15.4
%
Adj. Segment EBITDA Margins
18.1
%
15.5
%
(1) Segment income includes pension and other postretirement
income (expense) (2) See the Adjusted Net Income tables on
page 12 for adjustments
Corrugated Reconciliation for the
Quarter Ended June 30, 2021
NorthAmericanCorrugated BrazilCorrugated Other (1)
TotalCorrugatedPackaging Segment sales
$
2,731.2
$
127.2
$
308.7
$
3,167.1
Less: Trade sales
(84.8
)
-
-
(84.8
)
Adjusted Segment Sales
$
2,646.4
$
127.2
$
308.7
$
3,082.3
Segment income (2)
$
292.8
$
17.7
$
11.2
$
321.7
Depreciation & amortization
214.9
11.8
6.1
232.8
Segment EBITDA
507.7
29.5
17.3
554.5
Adjustments (3)
2.6
-
-
2.6
Adjusted Segment EBITDA
$
510.3
$
29.5
$
17.3
$
557.1
Segment EBITDA Margins
18.6
%
23.2
%
17.5
%
Adj. Segment EBITDA Margins
19.3
%
23.2
%
18.1
%
(1) The "Other" column includes our Victory Packaging and
India corrugated operations. (2) Segment income includes
pension and other postretirement income (expense) (3) See
the Adjusted Net Income tables on page 12 for adjustments
Reconciliation for the Quarter Ended
June 30, 2020
Corrugated Packaging
Consumer Packaging
Corporate / Elim.
Consolidated
Segment sales / Net sales
$
2,728.8
$
1,552.6
$
(45.1
)
$
4,236.3
Less: Trade sales
(94.7
)
-
-
(94.7
)
Adjusted Segment Sales
$
2,634.1
$
1,552.6
$
(45.1
)
$
4,141.6
Segment income (1)
$
227.9
$
95.3
$
-
$
323.2
Non-allocated expenses
-
-
(18.3
)
(18.3
)
Depreciation & amortization
233.1
131.2
1.4
365.7
Segment EBITDA
461.0
226.5
(16.9
)
670.6
Adjustments (2)
21.0
16.2
-
37.2
Adjusted Segment EBITDA
$
482.0
$
242.7
$
(16.9
)
$
707.8
Segment EBITDA Margins
16.9
%
14.6
%
Adj. Segment EBITDA Margins
18.3
%
15.6
%
(1) Segment income includes pension and other postretirement
income (expense) (2) See the Adjusted Net Income tables on
page 12 for adjustments
Corrugated Reconciliation for the
Quarter Ended June 30, 2020
NorthAmericanCorrugated BrazilCorrugated Other (1)
TotalCorrugatedPackaging Segment sales
$
2,392.5
$
87.8
$
248.5
$
2,728.8
Less: Trade sales
(94.7
)
-
-
(94.7
)
Adjusted Segment Sales
$
2,297.8
$
87.8
$
248.5
$
2,634.1
Segment income
$
213.6
$
13.7
$
0.6
$
227.9
Depreciation & amortization
216.3
10.5
6.3
233.1
Segment EBITDA
429.9
24.2
6.9
461.0
Adjustments (2)
24.1
(3.5
)
0.4
21.0
Adjusted Segment EBITDA
$
454.0
$
20.7
$
7.3
$
482.0
Segment EBITDA Margins
18.0
%
27.6
%
16.9
%
Adj. Segment EBITDA Margins
19.8
%
23.6
%
18.3
%
(1) The "Other" column includes our Victory Packaging and
India corrugated operations. (2) See the Adjusted Net Income
tables on page 12 for adjustments
Adjusted Operating Cash Flow and
Adjusted Free Cash Flow
WestRock uses the non-GAAP financial measures “Adjusted
Operating Cash Flow” and “Adjusted Free Cash Flow”. Management
believes these measures provide WestRock’s board of directors,
investors, potential investors, securities analysts and others with
useful information to evaluate WestRock’s 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. We believe
“Adjusted Free Cash Flow” provides greater comparability across
periods by excluding capital expenditures. WestRock believes that
the most directly comparable GAAP measure is “Net cash provided by
operating activities”. Set forth below is a reconciliation of
“Adjusted Operating Cash Flow” and “Adjusted Free Cash Flow” to Net
cash provided by operating activities for the periods indicated (in
millions):
Three Months Ended June 30,
2021 June 30, 2020 Net cash provided by operating activities
$
750.8
$
740.2
Plus: Cash Restructuring and other costs, net of income tax
benefit of $1.7 and $3.9
5.4
11.8
Adjusted Operating Cash Flow
756.2
752.0
Less: Capital expenditures
(202.4
)
(244.0
)
Adjusted Free Cash Flow
$
553.8
$
508.0
Total Debt and 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. We believe “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 derived from the current portion of debt and long-term
debt due after one year. Set forth below is a reconciliation of
“Adjusted Net Debt” to “Total Debt” for the periods indicated (in
millions):
June 30,2021 Mar. 31,2021 June 30,2020 Current portion of debt
$
565.7
$
549.5
$
213.1
Long-term debt due after one year
8,106.9
8,393.1
9,840.3
Total debt
$
8,672.6
$
8,942.6
$
10,053.4
Less: Cash and cash equivalents
(549.8
)
(334.0
)
(291.5
)
Less: Fair value of debt step-up
(196.6
)
(200.7
)
(212.9
)
Adjusted Net Debt
$
7,926.2
$
8,407.9
$
9,549.0
Total debt reduction - quarter
$
270.0
Total debt reduction - LTM
$
1,380.8
Adjusted Net Debt reduction - quarter
$
481.7
Adjusted Net Debt reduction - LTM
$
1,622.8
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210805005152/en/
Investors: James Armstrong, 470-328-6327 Vice President,
Investor Relations james.armstrong@westrock.com
Tim Murphy, 678-291-7363 Senior Vice President – Treasurer
tim.murphy@westrock.com
Media: Courtney James, 470-328-6397 Manager, Corporate
Communications mediainquiries@westrock.com
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