WestRock Reports Fiscal 2021 Third Quarter Results
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WestRock Company (NYSE:WRK), a leading provider of differentiated, sustainable paper and packaging solutions, 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."
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
Operating Highlights for the Three Months Ended June 30, 2021 compared to June 30, 2020:
Corrugated Packaging Segment
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
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.
WestRock's complete fiscal 2021 third quarter report is available on the company's website: www.westrock.com.
