WESTROCK COMPANY WestRock
Q2 FY2024 Results
May 2, 2024
Cautionary Language
Forward Looking Statements:
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to statements on the slides entitled "Key Highlights", "Exceeding Cost Savings Targets; Strong Momentum for FY24 and Beyond", "Q2 FY24 Corrugated Packaging Results", "Q2 FY24 Consumer Packaging Results", "Q2 FY24 Global Paper Results", "Q2 FY24 Distribution Results", and "Q3/H2 FY24 Sequential Expectations" that present our current expectations, beliefs, plans or forecasts for future periods.
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 acquisition of the remaining stake in Grupo Gondi (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 business combination with Smurfit Kappa plc (the "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 agreement, 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.
Non-GAAP Financial Measures:
We report our financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). However, management believes certain non-GAAP financial measures provide 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 our performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our GAAP results. The non- GAAP financial measures we present may differ from similarly captioned measures presented by other companies. For additional information, see the Appendix. In addition, as explained in the Appendix, we are not providing a reconciliation of forward-lookingnon-GAAP financial measures to the most directly comparable U.S. GAAP measure because we are unable to predict with reasonable certainty the ultimate outcome of certain significant items without unreasonable effort.
2 | © 2024 WestRock Company. All Rights Reserved.
Key Highlights
- Sales and earnings in Q2 FY24
- Net sales of $4.73 billion
- Consolidated Adjusted EBITDA(1) of $618 million
- Consolidated Adjusted EBITDA margin(1) of 13.1%
- Adjusted EPS(1) of $0.39 per share, lower Adjusted Effective Tax Rate(1) from several discrete items
- Results exceeded guidance, primarily due to favorable volumes in Global Paper resulting in lower-than-expected economic downtime (EDT) and favorable energy costs
- N.A. corrugated per-day box shipments improved through the quarter, with March per-day shipments up 3.3% YoY
- Consumer Packaging Adjusted EBITDA margin expanded 70 bps YoY to 18.0%, driven by strong cost control
- Continued recovery in external containerboard, with shipments up 28% YoY driven by strength in exports; sequential improvement in paperboard volumes, up 15% QoQ
- Achieved ~$370 million in cost savings YTD; expect to significantly exceed previously announced FY24 target of $300 to $400 million(2)
- Named as one of Fortune's Most Innovative Companies in America in 2024
Expect Continued Recovery through 2024 Driven by Improving Demand, Implementation of Announced Price Increases and Cost Savings Initiatives
1) Non-GAAP Financial Measure. See Non-GAAP Financial Measures and Reconciliations in the Appendix | ||
2) | Cost savings reflect YoY change in certain costs incurred for manufacturing, SG&A, procurement and | |
3 | © 2024 WestRock Company. All Rights Reserved. | logistics, but exclude impact of economic downtime and inflation | |
3) Consolidated Adjusted EBITDA and Consolidated Adjusted EBITDA margin | ||
4) | Adjusted EBITDA margin (excluding white top trade sales), a non-GAAP financial measure |
Adjusted EBITDA $ in millions
Q2 FY24 | |
Corrugated Packaging | $318 |
Consumer Packaging | $200 |
Global Paper | $130 |
Distribution | $9 |
WestRock(3) | $618 |
Adjusted EBITDA Margins
Q2 FY24 | |
Corrugated Packaging(4) | 13.7% |
Consumer Packaging | 18.0% |
Global Paper | 12.7% |
Distribution | 3.3% |
WestRock(3) | 13.1% |
WestRock named as one of Fortune's Most Innovative Companies in America in 2024
WestRock has ranked among the top 200 U.S. companies on
Fortune's list of America's Most Innovative Companies 2024.
The only packaging company to make the list!
4 | © 2024 WestRock Company. All Rights Reserved.
Exceeding Cost Savings Targets; Strong Momentum for FY24 and Beyond(1)
Expect to Significantly Exceed
Previously Announced Target with
~$370M Achieved through
Q2 YTD
$300M to $400M
Exceeded OriginalTargeted Target of $250M
$350M
Achieved
Continued Cost
Savings Beyond
FY24
FY23 | FY24 | FY25+ |
Positioned for Significant Earnings Growth as Market Recovery Continues
5 | © 2024 WestRock Company. All Rights Reserved. | 1) Cost savings reflect YoY change in certain costs incurred for manufacturing, SG&A, procurement and | |
logistics, but exclude impact of economic downtime and inflation | 5 | |
Q2 FY24 WestRock Results
$ in Millions | Q2 FY24 | Q2 FY23 |
Net Sales | $4,727 | $5,278 |
Consolidated Adjusted EBITDA(1) | $618 | $789 |
% Margin(1) | 13.1% | 14.9% |
Consolidated Adjusted EBITDA | $ in Millions
$164 | ||||||||||||||||
$789 | ($13) | |||||||||||||||
($36) | ($11) | $618 | ||||||||||||||
($257) | ($18) | |||||||||||||||
Q2 FY23 | Volume | Price/Mix | Inflation | Operating Costs | EDT & Mill | Pension, FX & | Q2 FY24 | |
Closures(2) | Other | |||||||
1) Non-GAAP Financial Measure. See Non-GAAP Financial Measures and Reconciliations in the Appendix | ||||||||
2) | Includes positive economic downtime impact of $8 million and negative mill closures impact of $44 million. Total EDT | |||||||
3) | of 134K tons including 102K of paperboard and 32K of containerboard | |||||||
Cost savings reflect YoY change in certain costs incurred for manufacturing, SG&A, procurement and logistics, but | ||||||||
exclude impact of economic downtime and inflation | ||||||||
6 | © 2024 WestRock Company. All Rights Reserved. | 4) Packaging Adjusted EBITDA margin is a non-GAAP financial measure and combines our Corrugated Packaging and | |||||||
Consumer Packaging segments and excludes white top trade sales. See the Appendix |
Highlights
- Strong execution of cost savings initiatives with $164 million saved in Q2 and ~$370 million saved YTD(3)
- Packaging Adjusted EBITDA margin(4) of 15.1% increased 50 bps QoQ
- Results impacted by flow- through of previously published price declines and winter weather
- Containerboard system exited the quarter running full, with only 32K tons of containerboard economic downtime taken primarily early in the quarter
Q2 FY24 Corrugated Packaging Results
$ in Millions | Q2 FY24 | Q2 FY23 |
Segment Sales(1)(2) | $2,328 | $2,541 |
Adjusted EBITDA | $318 | $408 |
% Margin(1)(2) | 13.7% | 16.0% |
Adjusted EBITDA | $ in Millions
$408 | ($8) | $72 | $11 |
($1) $318
($146) ($18)
Q2 FY23 | Volume | Price/Mix | Inflation | Operating Costs | EDT & Mill | Pension, FX & | Q2 FY24 |
Closures(3) | Other |
1) | Excludes white top trade sales | |
2) | Non-GAAP Financial Measure. See Non-GAAP Financial Measures and Reconciliations in the Appendix | |
3) | Includes positive economic downtime impact of $27 million and negative mill closures impact of $16 million | |
7 | © 2024 WestRock Company. All Rights Reserved. | 4) | Cost savings reflect YoY change in certain costs incurred for manufacturing, SG&A, procurement and |
logistics, but exclude impact of economic downtime and inflation |
Highlights
- Strong execution of cost savings initiatives with $72 million saved in Q2(4)
- Results impacted by winter weather, with improvement through the quarter
- March N.A. per day box shipments up 3.3% YoY, with strong momentum from new business wins heading into H2 FY24
- Continued execution of announced price increases
- Containerboard system exited the quarter running full
- Expect improving demand trends in H2 FY24
Q2 FY24 Consumer Packaging Results
$ in Millions | Q2 FY24 | Q2 FY23 |
Segment Sales | $1,114 | $1,265 |
Adjusted EBITDA | $200 | $219 |
% Margin | 18.0% | 17.3% |
Adjusted EBITDA | $ in Millions | |||||||
$28 | |||||||
$219 | ($8) | ($1) | ($21) | ($$20710) | ($7) | $200 | |
Q2 FY23 | Volume | Price/Mix | Inflation | Operating Costs | Economic | Pension, FX & | Q2 FY24 |
Downtime | Other |
Highlights
- Strong execution of cost savings initiatives with $28 million saved in Q2(1)
- Expanded Adjusted EBITDA Margin 230 bps QoQ and 70 bps YoY to 18.0%
- Net organic sales volume(2) increased 4.8% sequentially
- Continued execution of announced price increases
- Results impacted by RTS divestiture in FY23(3)
- Expect improving demand trends in H2 FY24
- Cost savings reflect YoY change in certain costs incurred for manufacturing, SG&A, procurement and logistics, but exclude impact of economic downtime and inflation
- Non-GAAPFinancial Measure. See Non-GAAP Financial Measures and Reconciliations in the Appendix
- RTS Q2 FY23 results included $57 million of segment sales and $7 million of Adjusted EBITDA
8 | © 2024 WestRock Company. All Rights Reserved.
Q2 FY24 Global Paper Results
$ in Millions | Q2 FY24 | Q2 FY23 |
Segment Sales | $1,016 | $1,168 |
Adjusted EBITDA | $130 | $187 |
% Margin | 12.7% | 16.0% |
Adjusted EBITDA | $ in Millions
$84 | ||||||||||||||||
$187 | ($1) | |||||||||||||||
$15 | ($37) | |||||||||||||||
($12) | $130 | |||||||||||||||
($106) | ||||||||||||||||
Q2 FY23 | Volume | Price/Mix | Inflation | Operating Costs | EDT & Mill | Pension, FX & | Q2 FY24 | |||||||||
Closures (1) | Other |
Highlights
- Containerboard shipments increased 28% YoY driven by strength in exports
- Paperboard volumes up 15% QoQ, expecting continued improvement through 2024
- Strong execution of cost savings initiatives with $84 million saved in Q2(2)
- Results impacted by winter weather, with improvement through the quarter
- Q2 FY23 includes $22 million of net sales and $10 million of Adjusted EBITDA related to divested mills
- Containerboard system exited the quarter running full
1) | Includes economic downtime impact of $9 million and mill closures impact of $28 million | |
9 | © 2024 WestRock Company. All Rights Reserved. | 2) | Cost savings reflect YoY change in certain costs incurred for manufacturing, SG&A, procurement and |
logistics, but exclude impact of economic downtime and inflation | ||
Q2 FY24 Distribution Results
$ in Millions | Q2 FY24 | Q2 FY23 |
Segment Sales | $272 | $307 |
Adjusted EBITDA | $9 | $9 |
% Margin | 3.3% | 3.0% |
Adjusted EBITDA | $ in Millions
$7
$9 | $9 |
$6
($9)
($4)
Q2 FY23 | Volume | Price/Mix | Inflation | Operating Costs | Q2 FY24 |
Highlights
- Strong execution of cost savings initiatives with $7 million saved in Q2(1)
- Expanded Adjusted EBITDA margin 30 bps YoY
- Volume down due to decline in moving & storage business
- Continue to execute commercial improvement program and cost savings initiatives to drive profitability
10 | © 2024 WestRock Company. All Rights Reserved. | 1) Cost savings reflect YoY change in certain costs incurred for manufacturing, SG&A, procurement and |
logistics, but exclude impact of economic downtime and inflation | |
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WestRock Company published this content on 01 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 May 2024 12:58:34 UTC.
