WestRock Reports Fiscal 2020 Third Quarter Results

WestRock Company (“WestRock”), a leading provider of differentiated paper and packaging solutions, today announced results for its fiscal third quarter ended June 30, 2020.

WestRock is executing its differentiated strategy with financial strength and substantial liquidity. Given the uncertainties associated with the severity and duration of the COVID-19 pandemic, the Company is focused on meeting the needs of its customers and supporting the health, safety and well-being of its teammates.

Third quarter of fiscal 2020 financial highlights include:

– Net sales of $4.2 billion decreased by 9.7% compared to the prior year quarter
– $0.69 of earnings per diluted share and $0.76 of adjusted earnings per diluted share compared to $0.98 of earnings per diluted share and $1.11 of adjusted earnings per diluted share in the prior year quarter; up sequentially from $0.57 of earnings per diluted share and $0.67 of adjusted earnings per diluted share in the second quarter
– Segment EBITDA margins improved sequentially across both segments in a rapidly changing economic environment
– Generated net cash provided by operating activities of $740 million
– More than $3.2 billion of availability under long-term committed credit facilities and cash and cash equivalents at June 30, 2020

“Our results for the fiscal third quarter, including our strong cash flow and debt reduction, demonstrate why I am so proud of how the WestRock team is working closely with our customers to help them meet changing demand across a variety of end markets,” said Steve Voorhees, chief executive officer. “We are taking the necessary steps to help our teammates work safely during the pandemic. WestRock remains well positioned with the capabilities, cash flow, liquidity and team to meet the challenges ahead and support our customers, teammates and communities.”

Consolidated Financial Results

Operating Highlights for the Three Months Ended June 30, 2020 compared to June 30, 2019

Net sales decreased $454 million compared to the prior year quarter. Corrugated Packaging segment and Consumer Packaging segment net sales declined $344 million and $98 million, respectively, primarily due to lower selling price/mix on sales, lower volumes, including the impact of COVID-19, and unfavorable foreign currency impact.

Segment income decreased $162 million compared to the prior year quarter. Corrugated Packaging segment income decreased $165 million and Consumer Packaging segment income increased $4 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 2020 included the following pre-tax costs:

– $7 million of restructuring costs, primarily related to severance and other employee costs and plant consolidations
– $2 million of integration costs, primarily related to the fiscal 2019 acquisition of KapStone Paper and Packaging Corporation (“KapStone”)

Net Cash Provided By Operating Activities and Other Financing and Investing Activities

Net cash provided by operating activities was $740 million in the third quarter of fiscal 2020 compared to $735 million in the prior year quarter.

Total debt was $10.05 billion at June 30, 2020, or $9.84 billion excluding $213 million of unamortized fair market value step-up of debt acquired in mergers and acquisitions, and $9.55 billion net of cash and cash equivalents of $292 million. During the third quarter of fiscal 2020, WestRock invested $244 million in capital expenditures and paid $52 million in dividends to stockholders.

Segment Results

Operating Highlights for the Three Months Ended June 30, 2020 compared to June 30, 2019

Corrugated Packaging Segment

Segment net sales decreased $344 million, primarily due to $184 million of lower volumes, including the impact of COVID-19, $134 million of lower selling price/mix on sales and $27 million of unfavorable foreign currency impacts. The Corrugated Packaging segment delivered a Segment EBITDA margin of 16.9% and a North American Adjusted Segment EBITDA margin of 19.8%.

Segment income decreased $165 million, primarily due to the $134 million margin impact of lower selling price/mix, $57 million of lower volumes, including the impact of COVID-19, an estimated $39 million of net cost inflation, $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. These impacts were partially offset by productivity improvements, the decreased impact of maintenance and economic downtime, lower depreciation and amortization, and other items, which totaled $92 million in aggregate.

Consumer Packaging Segment

Segment net sales decreased $98 million, primarily due to $44 million of lower selling price/mix on sales, $38 million of lower volumes, including the impact of COVID-19, and $16 million of unfavorable foreign currency impacts. The Consumer Packaging segment delivered a Segment EBITDA margin of 14.6% and an Adjusted Segment EBITDA margin of 15.6%.

Segment income increased $4 million, primarily due to productivity improvements, net cost deflation, lower depreciation and amortization and decreased outage costs, which totaled $89 million in the aggregate. These impacts were largely offset by the margin impact of lower selling price/mix, lower volumes, including the impact of COVID-19, economic downtime, and other items, which totaled $85 million in aggregate. The other items included 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, which totaled $20 million in the aggregate.

For the full third quarter results, click here.

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 team members support customers around the world from locations spanning North America, South America, Europe, Asia and Australia. Learn more at www.westrock.com.

Contact:

John Stakel – Senior Vice President & Treasurer – john.stakel@westrock.com – (678) 291-7901

Source: WestRock Company