Core Insights - Soros Fund Management reported a total market value of $7.97 billion for Q2 2025, up from $6.70 billion in the previous quarter, reflecting a 19% increase [1][2] - The fund added 80 new stocks and increased holdings in 60 stocks, while reducing positions in 45 stocks and completely selling out of 87 stocks [1][2] Holdings Overview - The top ten holdings account for 28.11% of the total market value [1][2] - The largest position is in SPDR S&P 500 ETF put options (SPY.US, PUT) with approximately 537,500 shares valued at about $332 million, representing 4.17% of the portfolio, a significant increase of 168.75% from the previous quarter [3][4] - Other notable holdings include Smurfit WestRock (SW.US) with 7.48 million shares valued at approximately $323 million (4.05% of the portfolio) and First Solar call options (FSLR.US, CALL) with 1.64 million shares valued at about $271 million (3.40% of the portfolio) [3][4] Buying and Selling Activity - The top five purchases by percentage change in portfolio include Invesco QQQ Trust call options (QQQ.US, CALL), SPDR S&P 500 ETF put options (SPY.US, PUT), and Globant (GLOB.US) notes [4][6] - The top five sales by largest value include AstraZeneca (AZN.US), iShares 20+ Year Treasury ETF call options (TLT.US, CALL), and SPDR S&P 500 ETF (SPY.US) [5][6]

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) This section provides essential administrative details about Smurfit Westrock plc, including its incorporation, filing period, and non-accelerated filer status [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides key administrative details about Smurfit Westrock plc, including its incorporation, address, trading symbol, and non-accelerated filer status for the quarterly period ended June 30, 2025 - Registrant: **Smurfit Westrock plc**, incorporated in Ireland[3](index=3&type=chunk) - Filing Period: Quarterly report for the period ended **June 30, 2025**[3](index=3&type=chunk) - Filer Status: **Non-accelerated filer**[3](index=3&type=chunk) Shares Issued and Outstanding as of July 31, 2025 | Class | Nominal Value | Shares Outstanding | | :-------------- | :----------------- | :----------------- | | Ordinary shares | $0.001 per share | 522,125,044 | [Table of Contents](index=1&type=section&id=TABLE%20OF%20CONTENTS) This section outlines the report's structure, including an explanatory note on the Smurfit Kappa and WestRock Combination and a cautionary note on forward-looking statements [Explanatory Note](index=2&type=section&id=EXPLANATORY%20NOTE) This note clarifies the corporate structure after the Smurfit Kappa and WestRock Combination, identifying Smurfit Kappa as the accounting acquirer for historical financial statements - Combination Details: Smurfit Westrock plc acquired Smurfit Kappa and WestRock Company, with the Combination closing on **July 5, 2024**[7](index=7&type=chunk) - Accounting Acquirer: **Smurfit Kappa** was determined to be the accounting acquirer, presenting its historical financials for periods prior to the Combination[7](index=7&type=chunk) - Ownership Structure Post-Combination: Smurfit Kappa shareholders own approximately **50.3%** and WestRock shareholders own approximately **49.7%** of Smurfit Westrock[7](index=7&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This note advises that the report contains forward-looking statements about future plans and financial prospects, which involve risks and uncertainties that could cause actual results to differ materially - Forward-looking statements cover plans, strategies, outcomes, outlooks, and prospects, including expected benefits and synergies from the Combination[9](index=9&type=chunk) - Risks and uncertainties include changes in demand, ability to execute closure plans, economic and market conditions, geopolitical factors, supply chain disruptions, competition, cybersecurity risks, and integration challenges post-Combination[11](index=11&type=chunk)[12](index=12&type=chunk) - The Company disclaims any obligation to publicly update or revise forward-looking statements, except as required by legal or regulatory obligations[14](index=14&type=chunk) [PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis of Smurfit Westrock's financial condition and results of operations [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Smurfit Westrock plc's unaudited condensed consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, comprehensive income, cash flows, and changes in equity, along with detailed notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet reflects a significant increase in total assets and liabilities from December 31, 2024, to June 30, 2025, primarily due to the WestRock acquisition, alongside increases in current assets and total equity Condensed Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Total assets | $45,746 | $43,759 | | Total liabilities | $27,422 | $26,372 | | Total equity | $18,324 | $17,387 | | Cash and cash equivalents | $778 | $855 | - Goodwill increased from **$6,822 million** to **$7,207 million**, reflecting the impact of the WestRock acquisition[17](index=17&type=chunk) - Non-current debt due after one year increased from **$12,542 million** to **$13,329 million**[17](index=17&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, the company reported a net loss due to impairment and restructuring costs, while net income for the six months increased, driven by the WestRock acquisition despite higher interest and restructuring costs Condensed Consolidated Statements of Operations Highlights (in millions, except per share data) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net sales | $7,940 | $2,969 | $15,596 | $5,899 | | Gross profit | $1,515 | $693 | $3,092 | $1,403 | | Operating profit | $251 | $244 | $804 | $551 | | Net (loss) income attributable to common shareholders | $(28) | $132 | $356 | $323 | | Basic (loss) earnings per share | $(0.05) | $0.51 | $0.68 | $1.25 | - Impairment and restructuring costs were **$280 million** for the three months and **$295 million** for the six months ended June 30, 2025, compared to zero in the prior year periods[20](index=20&type=chunk) - Interest expense, net, significantly increased to **$182 million** (3 months) and **$349 million** (6 months) in 2025, up from $33 million and $58 million in 2024, primarily due to debt from the Combination[20](index=20&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for the three and six months ended June 30, 2025, substantially increased compared to the prior year, primarily driven by foreign currency translation gains Condensed Consolidated Statements of Comprehensive Income Highlights (in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net (loss) income | $(26) | $132 | $356 | $323 | | Foreign currency translation gain (loss) | $712 | $(151) | $1,090 | $(267) | | Other comprehensive income (loss), net of tax | $651 | $(121) | $1,018 | $(224) | | Comprehensive income attributable to common shareholders | $623 | $11 | $1,374 | $99 | - Foreign currency translation shifted from a loss of **$151 million** (3 months 2024) to a gain of **$712 million** (3 months 2025), and from a loss of **$267 million** (6 months 2024) to a gain of **$1,090 million** (6 months 2025)[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly increased for the six months ended June 30, 2025, driven by higher net income adjusted for non-cash items, while investing activities saw increased capital expenditures and financing activities shifted to a net outflow Condensed Consolidated Statements of Cash Flows Highlights (in millions) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $1,064 | $382 | | Net cash used for investing activities | $(996) | $(410) | | Net cash (used for) provided by financing activities | $(204) | $2,382 | | (Decrease) increase in cash and cash equivalents | $(77) | $2,325 | | Cash and cash equivalents at end of period | $778 | $3,325 | - Capital expenditures increased from **$385 million** (6 months 2024) to **$999 million** (6 months 2025)[22](index=22&type=chunk) - Cash dividends paid to shareholders increased from **$335 million** (6 months 2024) to **$450 million** (6 months 2025)[22](index=22&type=chunk) [Condensed Consolidated Statements of Changes in Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total shareholders' equity increased from December 31, 2024, to June 30, 2025, primarily due to net income and other comprehensive income, despite dividend payments, with an increase in common shares outstanding Condensed Consolidated Statements of Changes in Equity Highlights (in millions, except share data) | Metric | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Total shareholders' equity | $18,297 | $17,360 | | Common stock shares outstanding | 522,058,394 | 520,444,261 | | Retained earnings | $2,771 | $2,950 | | Accumulated other comprehensive loss | $(428) | $(1,446) | - Net income contributed **$356 million** to equity for the six months ended June 30, 2025[28](index=28&type=chunk) - Dividends declared for the six months ended June 30, 2025, totaled **$450 million** (**$0.86 per share**)[28](index=28&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures supporting the condensed consolidated financial statements, covering business description, accounting policies, acquisitions, segment information, revenue recognition, impairment, debt, income taxes, retirement plans, earnings per share, commitments, variable interest entities, accumulated other comprehensive loss, and subsequent events [1. Description of Business and Summary of Significant Accounting Policies](index=9&type=section&id=1.%20Description%20of%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note describes Smurfit Westrock plc as a multinational provider of sustainable fiber-based paper and packaging solutions, outlining the basis of financial statement presentation, key accounting estimates, and details on supplier finance programs and impairment/restructuring cost recognition - Business Description: Multinational provider of sustainable fiber-based paper and packaging solutions with operations across North America, South America, Europe, Asia, Africa, and Australia[32](index=32&type=chunk) - Basis of Presentation: Unaudited Condensed Consolidated Financial Statements prepared in accordance with **U.S. GAAP** for interim financial information, omitting certain notes from the 2024 Annual Report on Form 10-K[34](index=34&type=chunk) Supplier Finance Program Obligations (in millions) | Date | Outstanding Payment Obligations | | :------------- | :------------------------------ | | June 30, 2025 | $375 | | Dec 31, 2024 | $450 | [2. Acquisitions](index=11&type=section&id=2.%20Acquisitions) This note details the Combination with WestRock Company, which closed on July 5, 2024, with an aggregate merger consideration of $13,461 million, and a preliminary purchase price allocation resulting in a $51 million increase in goodwill - Combination Closing Date: **July 5, 2024**[50](index=50&type=chunk) - Aggregate Merger Consideration: **$13,461 million**[50](index=50&type=chunk) - Goodwill Adjustment: Preliminary purchase price allocation resulted in a **$51 million** increase in goodwill[51](index=51&type=chunk) Unaudited Pro Forma Combined Financial Information (6 months ended June 30, 2024, as if Merger occurred Jan 1, 2023) (in millions) | Metric | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2024 | | :-------------------------------------- | :--------------------------- | :--------------------------- | | Net sales | $7,786 | $15,450 | | Net income attributable to common shareholders | $267 | $482 | [3. Segment Information](index=11&type=section&id=3.%20Segment%20Information) The Company reports financial results across three segments: North America; Europe, MEA and APAC; and Latin America, with segment profitability measured by Adjusted EBITDA for performance assessment, pricing strategies, and resource allocation - Reportable Segments: North America; Europe, Middle East and Africa (MEA) and Asia-Pacific (APAC); and Latin America (LATAM)[57](index=57&type=chunk) - Profitability Metric: **Adjusted EBITDA**, which excludes unallocated corporate costs, D&A, interest, pension non-service income/expense, share-based compensation, other income/expense, inventory fair value step-up amortization, transaction/integration costs, impairment/restructuring, and other specific items[58](index=58&type=chunk) Segment Adjusted EBITDA (in millions) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | North America | $752 | $61 | $1,537 | $120 | | Europe, MEA and APAC | $372 | $362 | $761 | $747 | | LATAM | $123 | $87 | $238 | $141 | [4. Revenue Recognition](index=14&type=section&id=4.%20Revenue%20Recognition) This note disaggregates revenue by product type (Paper and Packaging) and segment, showing significant net sales increases across all segments for both product types, largely attributable to the WestRock acquisition Disaggregated Revenue by Product Type (3 Months Ended June 30, 2025, in millions) | Product | North America | Europe, MEA and APAC | LATAM | Total | | :-------- | :------------ | :------------------- | :---- | :---- | | Paper | $1,092 | $374 | $50 | $1,516| | Packaging | $3,560 | $2,399 | $465 | $6,424| Disaggregated Revenue by Product Type (6 Months Ended June 30, 2025, in millions) | Product | North America | Europe, MEA and APAC | LATAM | Total | | :-------- | :------------ | :------------------- | :---- | :---- | | Paper | $2,218 | $784 | $96 | $3,098| | Packaging | $7,012 | $4,565 | $921 | $12,498| - Packaging revenue is the primary source, mainly from corrugated and consumer packaging products[73](index=73&type=chunk) [5. Impairment and Restructuring Costs](index=15&type=section&id=5.%20Impairment%20and%20Restructuring%20Costs) The Company recognized significant impairment and restructuring costs for the three and six months ended June 30, 2025, primarily due to announced permanent closures of two U.S. mills and consultations for two German converting facilities, including impairment of property, plant, and equipment, and severance charges Impairment and Restructuring Costs (in millions) | Cost Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Impairment charges | $184 | $— | $184 | $— | | Restructuring costs | $96 | $— | $111 | $— | | **Total** | **$280** | **$—** | **$295** | **$—** | - Impairment charges of **$176 million** were triggered by the April 30, 2025, announcement of mill closures in St. Paul, Minnesota, and Forney, Texas, and potential closures in Germany[79](index=79&type=chunk) - Restructuring costs for the six months ended June 30, 2025, were split across segments: North America (**$54 million**), Europe, MEA and APAC (**$54 million**), and LATAM (**$3 million**)[82](index=82&type=chunk) [6. Transaction and Integration-related Expenses Associated with the Combination](index=16&type=section&id=6.%20Transaction%20and%20Integration-related%20Expenses%20Associated%20with%20the%20Combination) The Company incurred transaction and integration-related expenses due to the Combination, with the three months ended June 30, 2025, primarily reflecting integration costs, while the prior year focused on transaction-related expenses Transaction and Integration-related Expenses (in millions) | Expense Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Transaction-related expenses | $2 | $(60) | $— | $(83) | | Integration-related expenses | $(23) | $— | $(57) | $— | | **Total** | **$(21)** | **$(60)** | **$(57)** | **$(83)** | - Transaction-related expenses include banking, financing, legal, and professional services directly attributable to the Combination[86](index=86&type=chunk) - Integration expenses post-acquisition primarily consist of professional services and personnel costs related to merger integration, such as information systems work[87](index=87&type=chunk) [7. Accounts Receivable, net](index=16&type=section&id=7.%20Accounts%20Receivable,%20net) Net accounts receivable increased from **$4,117 million** at December 31, 2024, to **$4,844 million** at June 30, 2025, with corresponding increases in allowances for credit impairment, returns, and discounts Accounts Receivable, net (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Gross accounts receivable | $5,076 | $4,339 | | Less: Allowances | $(232) | $(222) | | **Accounts receivable, net**| **$4,844** | **$4,117** | [8. Inventories](index=16&type=section&id=8.%20Inventories) Total inventories increased from **$3,550 million** at December 31, 2024, to **$3,774 million** at June 30, 2025, with increases across finished goods, work-in-progress, raw materials, and consumables/spare parts Inventories (in millions) | Category | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Finished goods | $1,446 | $1,374 | | Work-in-progress | $222 | $206 | | Raw materials | $1,362 | $1,288 | | Consumables and spare parts | $744 | $682 | | **Total Inventories** | **$3,774** | **$3,550** | [9. Property, Plant and Equipment, net](index=17&type=section&id=9.%20Property,%20Plant%20and%20Equipment,%20net) Net property, plant, and equipment increased to **$23,097 million** at June 30, 2025, from **$22,675 million** at December 31, 2024, including significant depreciation, depletion, and impairment charges primarily in North America and Europe, MEA and APAC segments Property, Plant and Equipment, net (in millions) | Category | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Property, plant and equipment at cost, excluding forestlands | $31,946 | $29,579 | | Less: Accumulated depreciation and impairment | $(9,134) | $(7,155) | | Property, plant and equipment, net, excluding forestlands | $22,812 | $22,424 | | Forestlands, net of depletion | $285 | $251 | | **Property, plant and equipment, net** | **$23,097** | **$22,675** | Depreciation and Depletion Expense (in millions) | Period | 2025 | 2024 | | :------------------------- | :----- | :----- | | Three months ended June 30 | $575 | $149 | | Six months ended June 30 | $1,144 | $285 | - Of the **$167 million** impairment charges for property, plant and equipment, **$156 million** was in North America and **$11 million** in Europe, MEA and APAC[93](index=93&type=chunk) [10. Interest](index=17&type=section&id=10.%20Interest) Net interest expense significantly increased for both the three and six months ended June 30, 2025, primarily due to interest on debt assumed and issued in connection with the WestRock Combination Interest Expense, net (in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Interest expense | $(208) | $(75) | $(403) | $(112) | | Interest income | $26 | $42 | $54 | $54 | | **Interest expense, net** | **$(182)** | **$(33)** | **$(349)** | **$(58)** | - Cash paid for interest, net of interest received, was **$283 million** for the six months ended June 30, 2025, a substantial increase from **$14 million** in the prior year[94](index=94&type=chunk) [11. Fair Value Measurement](index=17&type=section&id=11.%20Fair%20Value%20Measurement) This note details the fair value measurement of financial instruments, including debt, derivatives, and other investments, and covers accounts receivable monetization agreements, which generated **$20 million** in expense for the six months ended June 30, 2025 Fair Value of Debt with Fixed Interest Rates (in millions) | Date | Book Value | Fair Value | | :------------- | :--------- | :--------- | | June 30, 2025 | $11,775 | $11,783 | | Dec 31, 2024 | $11,370 | $11,289 | Fair Value of Derivatives (in millions) | Category | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Derivatives in cash flow hedging relationships (Assets) | $— | $3 | | Derivatives not designated as hedging instruments (Assets) | $47 | $11 | | Derivatives in cash flow hedging relationships (Liabilities) | $19 | $1 | | Derivatives not designated as hedging instruments (Liabilities) | $2 | $13 | - Expense related to the sale of receivables under monetization agreements was **$10 million** for the three months and **$20 million** for the six months ended June 30, 2025[105](index=105&type=chunk) [12. Debt](index=19&type=section&id=12.%20Debt) Total debt, excluding issuance costs, increased to **$14,425 million** at June 30, 2025, following an exchange offer for **$3,588 million** of unregistered senior unsecured notes for new registered notes, and the revolving credit facility maturity was extended to **June 28, 2030** Total Debt (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Total debt, excluding debt issuance costs | $14,425 | $13,658 | | Less: Current portion of debt | $(1,034) | $(1,053) | | **Non-current debt due after one year** | **$13,329** | **$12,542** | - Exchange Offer: Approximately **$3,588 million** aggregate principal amount of Original Notes were exchanged for New Notes, with identical terms except for registration status[109](index=109&type=chunk) - Revolving Credit Facility: Maturity date extended to **June 28, 2030**[107](index=107&type=chunk) [13. Income Taxes](index=20&type=section&id=13.%20Income%20Taxes) The effective tax rate for the three months ended June 30, 2025, was **144.8%** due to increased unrecognized tax benefits and unrecognised losses, while for the six months, the rate was **20.5%**, benefiting from the resolution of unrecognized tax benefits, with U.S. tax legislation enacted on July 4, 2025, not expected to have a material impact Effective Tax Rates | Period | 2025 | 2024 | | :------------------------- | :------ | :------ | | Three months ended June 30 | 144.8% | 29.4% | | Six months ended June 30 | 20.5% | 28.9% | - Cash paid for income taxes, net of refunds, was **$210 million** for the six months ended June 30, 2025, compared to **$79 million** in the prior year[118](index=118&type=chunk) - U.S. tax legislation enacted on July 4, 2025, is being evaluated but is not expected to materially impact results[119](index=119&type=chunk) [14. Retirement Plans](index=21&type=section&id=14.%20Retirement%20Plans) Net periodic benefit income for defined benefit pension plans was recognized for the three and six months ended June 30, 2025, a shift from a cost in the prior year, primarily due to increased expected return on assets from acquired pension assets, with contributions to these plans also increasing Net Periodic Benefit (Income) Cost for Defined Benefit Pension Plans (in millions) | Plan Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | U.S. Plans | $(11) | $— | $(22) | $— | | Non-U.S. Plans | $16 | $36 | $31 | $52 | | **Total** | **$5** | **$36** | **$9** | **$52** | Company Contributions to Retirement Plans (in millions) | Plan Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Defined Benefit Pension Plans | $41 | $31 | $67 | $55 | | Other Postretirement Benefit Plans | $2 | $1 | $5 | $2 | - Withdrawal liabilities for multiemployer pension plans were **$128 million** at June 30, 2025[125](index=125&type=chunk) [15. Earnings Per Share](index=21&type=section&id=15.%20Earnings%20Per%20Share) Basic and diluted earnings per share for the three months ended June 30, 2025, showed a loss, contrasting with positive EPS in the prior year, and for the six months, EPS decreased despite an increase in net income, due to a higher weighted average number of shares outstanding Basic and Diluted Earnings Per Share (per share) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic (loss) earnings per share | $(0.05) | $0.51 | $0.68 | $1.25 | | Diluted (loss) earnings per share | $(0.05) | $0.51 | $0.68 | $1.24 | Weighted Average Shares Outstanding (in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic weighted average shares outstanding | 522 | 259 | 521 | 259 | | Diluted weighted average shares outstanding | 522 | 260 | 525 | 260 | [16. Commitments and Contingencies](index=22&type=section&id=16.%20Commitments%20and%20Contingencies) This note outlines various legal and tax contingencies, including a challenge to a Brazil tax liability of **$142 million**, ongoing asbestos-related litigation with estimated liabilities of **$81 million** and insurance recoveries of **$50 million**, and an Italian Competition Authority investigation where a fine was reduced by **$18 million** - Brazil Tax Liability: WestRock is challenging claims for **R$770 million** (**$142 million**) in underpaid taxes, penalties, and interest[129](index=129&type=chunk)[130](index=130&type=chunk) - Asbestos-Related Litigation: Approximately **720 lawsuits** with estimated liabilities of **$81 million** and estimated insurance recoveries of **$50 million** as of June 30, 2025[131](index=131&type=chunk) - Italian Competition Authority Investigation: A fine levied on Smurfit Kappa Italia was reduced by approximately **$18 million**, with an appeal on the reduction amount pending[134](index=134&type=chunk) - International Arbitration Against Venezuela: Smurfit Holdings BV was granted compensation in excess of **$469 million**, plus legal costs and interest, for Venezuela's unlawful seizure of its business[138](index=138&type=chunk) [17. Variable Interest Entities](index=23&type=section&id=17.%20Variable%20Interest%20Entities) The Company is involved with several Variable Interest Entities (VIEs) related to trade receivables securitization arrangements and a timber note receivable securitization arrangement, for which the Company is the primary beneficiary and whose assets and liabilities are consolidated - Trade Receivables Securitization: Involves special purpose entities (Smurfit Kappa International Receivables DAC, Smurfit Kappa European Packaging DAC, Smurfit Kappa Receivables plc) for financing using receivables as collateral[141](index=141&type=chunk) - Timber Note Receivable Securitization: Involves MeadWestvaco Timber Notes Holding, LLC (MWV TN) using an installment note receivable as collateral for secured financing[144](index=144&type=chunk) VIE Assets and Liabilities (in millions) | Category | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | Total assets | $1,355 | $1,218 | | Total liabilities | $640 | $353 | [18. Accumulated Other Comprehensive Loss](index=24&type=section&id=18.%20Accumulated%20Other%20Comprehensive%20Loss) Accumulated other comprehensive loss significantly decreased (improved) for the three and six months ended June 30, 2025, primarily due to foreign currency translation gains, partially offset by defined benefit pension and other post-retirement benefit plan adjustments Changes in Accumulated Other Comprehensive Loss (in millions) | Component | Balance at March 31, 2025 | Other Comprehensive (Income) Loss | Balance at June 30, 2025 | | :----------------------------------------- | :------------------------ | :-------------------------------- | :----------------------- | | Foreign Currency Translation | $1,306 | $(712) | $594 | | Cash Flow Hedges | $13 | $5 | $18 | | Defined Benefit Pension and Postretirement Plans | $511 | $56 | $567 | | Other Reserves | $(751) | $— | $(751) | | **Total** | **$1,079** | **$(651)** | **$428** | - Foreign currency translation gain was **$712 million** for the three months and **$1,090 million** for the six months ended June 30, 2025, reversing prior year losses[153](index=153&type=chunk)[154](index=154&type=chunk) [19. Subsequent Events](index=26&type=section&id=19.%20Subsequent%20Events) This note discloses two significant subsequent events: a class action antitrust lawsuit filed on July 29, 2025, alleging price-fixing, and the Board's approval of a quarterly dividend of **$0.4308 per share** on July 30, 2025 - Legal Proceedings: On **July 29, 2025**, Smurfit Westrock plc and other industry participants were named defendants in a class action antitrust lawsuit alleging price-fixing for containerboard and packaging products[155](index=155&type=chunk) - Dividend Approval: On **July 30, 2025**, the Board approved a quarterly dividend of **$0.4308 per share**, payable September 18, 2025[156](index=156&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a comprehensive analysis of Smurfit Westrock's financial performance and condition, highlighting the significant impact of the WestRock acquisition on net sales, operating results, and cash flows, along with key business factors, segment performance, liquidity, and capital resources [Overview](index=26&type=section&id=OVERVIEW) Smurfit Westrock is a leading global manufacturer of paper-based packaging products with operations across multiple continents, whose financial reporting was significantly altered by the WestRock Combination, with Smurfit Kappa's historical financials forming the basis for prior periods - Company Profile: One of the world's largest integrated manufacturers of paper-based packaging products, operating in North America, South America, Europe, Asia, Africa, and Australia[160](index=160&type=chunk) - Combination Impact: The consolidated financial statements post-Combination are a continuation of Smurfit Kappa's financials, with retrospective adjustments for legal share capital[162](index=162&type=chunk) [Recent Developments](index=27&type=section&id=Recent%20Developments) The Company announced plans to permanently close two U.S. mills and initiated consultations for two German converting facilities, reducing capacity by over **500,000 tons**, which is expected to increase overall profitability by eliminating fixed costs - Facility Closures: Permanent closure of CRB mill in St. Paul, Minnesota, and containerboard mill in Forney, Texas, by **June 2025** and **May 2025**, respectively[164](index=164&type=chunk) - Capacity Reduction: Over **500,000 tons** of capacity reduced due to U.S. mill closures[164](index=164&type=chunk) - Strategic Impact: Closures are not expected to significantly impact net sales, as the Company aims to match supply with demand, and are anticipated to increase overall profitability by eliminating fixed costs[164](index=164&type=chunk) [Executive Summary](index=27&type=section&id=EXECUTIVE%20SUMMARY) Smurfit Westrock experienced substantial net sales growth for the three and six months ended June 30, 2025, primarily driven by the WestRock acquisition, while net income attributable to common shareholders decreased for the three-month period but increased for the six-month period, also influenced by the acquisition Executive Summary Financial Highlights (in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net sales | $7,940 | $2,969 | $15,596 | $5,899 | | Net (loss) income attributable to common shareholders | $(28) | $132 | $356 | $323 | | Net cash provided by operating activities | N/A | N/A | $1,064 | $382 | - WestRock acquisition contributed **$4,839 million** to net sales for the three months and **$9,575 million** for the six months ended June 30, 2025[166](index=166&type=chunk) - Net cash provided by operating activities increased by **$682 million** for the six months ended June 30, 2025, driven by higher net income adjusted for non-cash items[168](index=168&type=chunk) [Significant Factors and Trends Affecting Smurfit Westrock's Results](index=27&type=section&id=SIGNIFICANT%20FACTORS%20AND%20TRENDS%20AFFECTING%20SMURFIT%20WESTROCK'S%20RESULTS) Smurfit Westrock's results are influenced by demand for paper-based packaging, correlating with economic growth and e-commerce, with prices affected by industry cycles, capacity, raw material costs, and energy prices, while foreign currency fluctuations also impact financial statements - Volumes: Demand for corrugated and consumer packaging is linked to economic growth, industrial production, and shifts towards paper-based packaging due to sustainability trends and e-commerce[171](index=171&type=chunk)[172](index=172&type=chunk) - Prices and Costs: Influenced by industry cycles, market competition, raw material prices (wood, recycled paper), and operating costs such as energy, chemicals, and transportation, with price adjustment clauses in contracts potentially having a **3-6 month lag**[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) - Foreign Currency Effects: Operations in multiple countries mean currency fluctuations directly and indirectly impact U.S. dollar-denominated financial statements[176](index=176&type=chunk) [Results of Operations](index=28&type=section&id=RESULTS%20OF%20OPERATIONS) This section provides a detailed breakdown of the Company's consolidated financial performance, showing significant increases in net sales, cost of goods sold, and SG&A expenses, primarily driven by the WestRock acquisition, and highlights the impact of impairment, restructuring, and integration costs, as well as changes in interest and tax expenses Consolidated Results of Operations (in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net sales | $7,940 | $2,969 | $15,596 | $5,899 | | Cost of goods sold | $(6,425) | $(2,276) | $(12,504) | $(4,496) | | Gross profit | $1,515 | $693 | $3,092 | $1,403 | | Operating profit | $251 | $244 | $804 | $551 | | Net (loss) income attributable to common shareholders | $(28) | $132 | $356 | $323 | - Net sales increased by **$4,971 million** (3 months) and **$9,697 million** (6 months) in 2025, with the WestRock acquisition contributing **$4,839 million** and **$9,575 million**, respectively[179](index=179&type=chunk)[180](index=180&type=chunk) - Impairment and restructuring costs of **$280 million** (3 months) and **$295 million** (6 months) in 2025 were primarily due to facility closures[186](index=186&type=chunk)[187](index=187&type=chunk) - Interest expense, net, increased significantly due to debt from the Combination, rising by **$149 million** (3 months) and **$291 million** (6 months) in 2025[195](index=195&type=chunk)[196](index=196&type=chunk) [Segment Information](index=31&type=section&id=SEGMENT%20INFORMATION) Segment results show substantial growth in net sales and Adjusted EBITDA for North America and LATAM, primarily driven by the WestRock acquisition, while Europe, MEA and APAC also saw increased net sales, but Adjusted EBITDA growth was more modest due to higher input prices offsetting acquisition benefits and higher selling prices Segment Net Sales (aggregate, in millions) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | North America | $4,755 | $438 | $9,424 | $850 | | Europe, MEA and APAC | $2,778 | $2,211 | $5,360 | $4,405 | | LATAM | $518 | $340 | $1,031 | $681 | Segment Adjusted EBITDA (in millions) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | North America | $752 | $61 | $1,537 | $120 | | Europe, MEA and APAC | $372 | $362 | $761 | $747 | | LATAM | $123 | $87 | $238 | $141 | - North America's net sales and Adjusted EBITDA saw the largest increases, primarily due to the WestRock acquisition, contributing **$4,354 million** to sales and **$690 million** to Adjusted EBITDA for the three months[207](index=207&type=chunk)[209](index=209&type=chunk) - Europe, MEA and APAC Adjusted EBITDA growth was limited by higher input prices (**$58 million** for 3 months, **$224 million** for 6 months), despite positive impacts from the acquisition and higher selling prices[213](index=213&type=chunk)[214](index=214&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Smurfit Westrock's liquidity is primarily derived from operations, commercial paper, and committed credit lines, which the Company believes are adequate to meet future requirements, despite an increase in total debt, and the Company utilizes various working capital management strategies, including supplier finance and receivables securitization programs - Primary Liquidity Sources: Cash flows from operations, commercial paper program, and committed credit lines, including a **$4,500 million** revolving loan facility[220](index=220&type=chunk) Available Liquidity (as of June 30, 2025, in millions) | Component | Amount | | :-------------------------------- | :----- | | Undrawn committed facilities | $4,744 | | Cash and cash equivalents | $778 | | **Total Available Liquidity** | **$5,522** | - Total debt increased by **$768 million** for the six months ended June 30, 2025, reaching **$14,425 million**, primarily due to net increase in borrowings and translation adjustments[222](index=222&type=chunk) - Working Capital Strategies: Includes supplier finance programs (outstanding obligations of **$375 million** at June 30, 2025), vendor financing, commercial card programs, and receivables monetization/securitization facilities[224](index=224&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) Cash Flow Activity (6 months ended June 30, in millions) | Activity | 2025 | 2024 | | :---------------------------------------- | :----- | :----- | | Net cash provided by operating activities | $1,064 | $382 | | Net cash used for investing activities | $(996) | $(410) | | Net cash (used for) provided by financing activities | $(204) | $2,382 | [Non-GAAP Financial Measure](index=35&type=section&id=NON-GAAP%20FINANCIAL%20MEASURE) This section defines Adjusted EBITDA as a non-GAAP financial measure used by management and investors to assess ongoing performance, excluding non-recurring items, and provides a reconciliation of Adjusted EBITDA to Net (loss) income, the most directly comparable GAAP measure - Adjusted EBITDA Definition: Net (loss) income before income tax, D&A, interest, pension non-service income/expense, share-based compensation, other income/expense, inventory fair value step-up amortization, transaction/integration costs, impairment/restructuring, and other specific non-recurring items[238](index=238&type=chunk) Reconciliation of Adjusted EBITDA to Net (loss) income (in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net (loss) income | $(26) | $132 | $356 | $323 | | Income tax expense | $84 | $55 | $92 | $131 | | Depreciation, depletion and amortization | $613 | $160 | $1,216 | $308 | | Impairment and restructuring costs | $280 | $— | $295 | $— | | Transaction and integration-related expenses | $21 | $60 | $57 | $83 | | Interest expense, net | $182 | $33 | $349 | $58 | | Pension and other postretirement non-service (income) expense, net | $(7) | $29 | $(16) | $39 | | Share-based compensation expense | $36 | $16 | $79 | $31 | | Other expense (income), net | $18 | $(5) | $23 | $— | | Other adjustments | $12 | $— | $14 | $(18) | | **Adjusted EBITDA** | **$1,213** | **$480** | **$2,465** | **$955** | [Guarantor Summarized Financial Information](index=36&type=section&id=GUARANTOR%20SUMMARIZED%20FINANCIAL%20INFORMATION) This section provides summarized financial information for the Obligor Group (Issuers and Guarantors of the New Notes), presented on a combined basis, highlighting that operations are primarily conducted through non-obligor subsidiaries, making the Obligor Group's debt servicing dependent on earnings distributions from these subsidiaries - Guarantors: Smurfit Westrock plc and several wholly-owned subsidiaries (e.g., Smurfit Kappa Group plc, WestRock Company) jointly and severally guarantee the Original and New Notes[242](index=242&type=chunk) - Dependency: The Obligor Group's ability to service its debt relies on earnings distributions from non-obligor subsidiaries[243](index=243&type=chunk) Obligor Group Summarized Statement of Operations (6 months ended June 30, 2025, in millions) | Metric | Amount | | :---------------------------------------- | :----- | | Net sales to unrelated parties | $743 | | Net sales to non-Guarantor Subsidiaries | $625 | | Gross profit | $491 | | Interest expense, net with unrelated parties | $(308) | | Interest expense, net with non-Guarantor Subsidiaries | $(173) | | Net income and net income attributable to the Obligor Group | $457 | Obligor Group Summarized Balance Sheets (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Current amounts due from non-Guarantor Subsidiaries | $5,459 | $4,925 | | Other current assets | $854 | $1,049 | | Total current assets | $6,313 | $5,974 | | Non-current amounts due from non-Guarantor Subsidiaries | $2,855 | $2,848 | | Other non-current assets | $385 | $370 | | Total non-current assets | $3,240 | $3,218 | | Current amounts due to non-Guarantor Subsidiaries | $7,964 | $9,681 | | Other current liabilities | $1,162 | $1,122 | | Total current liabilities | $9,126 | $10,803 | | Non-current amounts due to non-Guarantor Subsidiaries | $6,626 | $6,604 | | Other non-current liabilities | $11,683 | $9,644 | | Total non-current liabilities | $18,309 | $16,248 | [Critical Accounting Policies and Estimates](index=37&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) There have been no material changes to Smurfit Westrock's critical accounting policies and estimates during the six months ended June 30, 2025, as previously identified in the 2024 Annual Report on Form 10-K - No material changes to critical accounting policies and estimates since the 2024 Form 10-K[248](index=248&type=chunk) [New Accounting Standards](index=37&type=section&id=NEW%20ACCOUNTING%20STANDARDS) This section refers to Note 1 of the Condensed Consolidated Financial Statements for a full description of recently issued or applicable accounting pronouncements, including their expected adoption dates and potential impacts - Refer to Note 1 for details on new accounting standards, including ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures)[250](index=250&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes in Smurfit Westrock's exposure to market risk since the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in market risk exposure since the 2024 Form 10-K[251](index=251&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that Smurfit Westrock's disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in internal control over financial reporting, stemming from the integration of Smurfit Kappa and WestRock's legacy control frameworks, particularly at historical Smurfit Kappa operations not previously subject to SOX Section 404 - Disclosure Controls Effectiveness: Not effective as of **June 30, 2025**, due to a **material weakness** in internal control over financial reporting[253](index=253&type=chunk) - Material Weakness Origin: Relates to the integration of Smurfit Kappa and WestRock's control frameworks, specifically processes and controls at historical Smurfit Kappa not subject to **SOX Section 404** prior to the Combination[255](index=255&type=chunk)[256](index=256&type=chunk) - Remediation Plan: Ongoing actions include designing and implementing policies for control operation, developing controls over manual journal entries (with automated workflow rollout), and enhancing general IT processes and controls (logical access, change management)[258](index=258&type=chunk) [PART II - OTHER INFORMATION](index=38&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section covers other information not included in the financial statements, such as legal proceedings, risk factors, equity sales, defaults, and exhibits [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference disclosures regarding commitments and contingencies from Note 16 and subsequent events from Note 19 of the Condensed Consolidated Financial Statements, detailing various legal and tax disputes, including a recent antitrust class action lawsuit - Legal proceedings information is incorporated from Note 16 (Commitments and Contingencies) and Note 19 (Subsequent Events) of the financial statements[261](index=261&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the Company's risk factors since those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in risk factors since the 2024 Form 10-K[262](index=262&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No repurchases of ordinary shares occurred during the three months ended June 30, 2025, and **25,000** deferred shares were surrendered and cancelled for nil consideration, as they were no longer required for capital maintenance - No repurchases of ordinary shares during the three months ended June 30, 2025[263](index=263&type=chunk) - **25,000** deferred shares with a nominal value of **€1.00** were surrendered and cancelled for nil consideration[264](index=264&type=chunk) [Item 3. Defaults Upon Senior Securities](index=39&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities - No defaults upon senior securities[265](index=265&type=chunk) [Item 4. Mine Safety Disclosures](index=39&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Not applicable[265](index=265&type=chunk) [Item 5. Other Information](index=39&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - No changes in Rule 10b5-1 or non-Rule 10b5-1 trading arrangements by directors or officers[266](index=266&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including the Amended Constitution, Deferred Compensation Plan, List of Guarantor Subsidiaries, Certifications of Principal Executive and Financial Officers, and Inline XBRL documents - Exhibits include Amended Constitution, Deferred Compensation Plan, List of Guarantor Subsidiaries, Section 302 and 906 Certifications, and Inline XBRL documents[268](index=268&type=chunk) [Signatures](index=40&type=section&id=Signatures) The report is duly signed by Anthony Smurfit, President & Group Chief Executive Officer, and Ken Bowles, Executive Vice President & Group Chief Financial Officer, on August 7, 2025 - Signed by Anthony Smurfit (President & Group CEO) and Ken Bowles (Executive VP & Group CFO) on **August 7, 2025**[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk)

Company Overview - Sodexo, founded in 1966 in Marseille by Pierre Bellon, is a global leader in sustainable food and valued experiences across various life moments [3] - The company operates with a dual focus on improving the quality of life for employees and consumers while contributing to economic, social, and environmental progress [3] - Sodexo is recognized for its independence, family shareholding, and responsible business model, and is included in several indices such as CAC Next 20 and FTSE 4 Good [3] Key Financial Figures - For fiscal 2024, Sodexo reported consolidated revenues of 23.8 billion euros [6] - As of August 31, 2024, the company employed 423,000 individuals, making it the largest private employer in France and worldwide [6] - Sodexo serves approximately 80 million consumers daily across 45 countries [6] - The company's market capitalization was 7.7 billion euros as of June 30, 2025 [6] Voting Rights Information - All shares of Sodexo have the same voting rights, except for treasury shares which do not have voting rights and registered shares held for more than four years, which have double voting rights [1] - The theoretical voting rights include shares with single or double voting rights, accounting for treasury shares that are temporarily deprived of voting rights [2]

Group 1 - The article revisits the investment opportunity in Smurfit Westrock Plc (NYSE: SW) following the Q2 release, indicating a strategic value in the merger [1] - The previous analysis highlighted the merger's potential for long-term, income-oriented investment strategies across developed markets [1] Group 2 - The analyst expresses a beneficial long position in the shares of SW, SMFTF, and SMFKY, indicating confidence in the company's performance [2]

Core Insights - Sodexo has signed a Share Purchasing Agreement to acquire Grupo Mediterránea, a leading food service provider in Spain, which has annual revenues of approximately €350 million and operates over 1,700 sites [1][2][5] - This acquisition will double Sodexo's footprint in Spain, positioning it as a market leader in food services, particularly in corporate services, healthcare, and education [2][3] - The acquisition is expected to enhance Sodexo's capabilities, unlock operational synergies, and is subject to regulatory approvals, with finalization anticipated by the end of 2025 [3][4] Company Overview - Grupo Mediterránea, founded in 1988, is a trusted partner in the food service industry, primarily serving healthcare, education, and corporate sectors, with a workforce of over 14,700 professionals [5] - Sodexo, established in 1966, is a global leader in sustainable food and facilities management services, operating in 45 countries and serving 80 million consumers daily [6][9] Strategic Implications - The acquisition aligns with Sodexo's long-term strategy to lead in food services and enhance client satisfaction, with both companies sharing a vision for excellence [2][4] - The leadership teams from both companies are expected to work together to ensure a smooth transition and continued growth in the Spanish market [3][4]

Core Insights - Smurfit Westrock Plc (SW) reported earnings of 45 cents per share in Q2 2025, missing the Zacks Consensus Estimate of 57 cents by 21% and down from 69 cents in the same quarter last year [1][10] - The company's net sales for Q2 2025 were $7.94 billion, exceeding the Zacks Consensus Estimate of $7.92 billion and significantly up from $2.97 billion in the prior year [3][10] - Adjusted EBITDA for Q2 2025 was $1.21 billion, compared to $0.48 billion in the year-ago quarter, with an adjusted EBITDA margin of 15.3% [4][10] Financial Performance - The cost of sales in Q2 2025 was $6.43 billion, up from $2.28 billion in the previous year, leading to a gross profit of $1.52 billion, which surged 118.6% year over year [4] - The gross margin decreased to 19.1% from 23.3% in the year-ago quarter [4] - Cash and cash equivalents at the end of Q2 2025 were $778 million, down from $855 million at the end of 2024, while net cash provided by operating activities increased to $829 million from $340 million in the prior year [8] Segment Performance - The Europe, MEA & APAC segment reported sales of $2.78 billion, a 25.6% increase year over year, with adjusted EBITDA rising 2.8% to $372 million [5] - The North America segment saw sales of $4.76 billion, a significant increase from $0.44 billion in the year-ago period, with adjusted EBITDA soaring to $752 million from $61 million [6] - The LATAM segment's sales were $518 million, up 52.4% year over year, with adjusted EBITDA increasing 41.4% to $123 million [7] Outlook - Smurfit Westrock expects Q3 2025 adjusted EBITDA to be $1.3 billion and projects FY 2025 adjusted EBITDA between $5 billion and $5.2 billion, indicating a year-over-year rise from $4.7 billion [11][10] Stock Performance - Shares of Smurfit Westrock have gained 6.3% over the past year, compared to the industry's growth of 29.4% [12]

Core Insights - Smurfit Westrock reported a revenue of $7.94 billion for the quarter ended June 2025, reflecting a significant increase of 167.4% year-over-year [1] - The company's EPS was $0.45, down from $0.69 in the same quarter last year, indicating a decline in profitability [1] - The reported revenue slightly exceeded the Zacks Consensus Estimate of $7.92 billion, resulting in a revenue surprise of +0.22% [1] - However, the EPS fell short of the consensus estimate of $0.57, leading to an EPS surprise of -21.05% [1] Performance Metrics - Smurfit Westrock's stock has returned +5.1% over the past month, outperforming the Zacks S&P 500 composite, which increased by +3.4% [3] - The company currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3] Geographic Revenue Breakdown - Revenue from Europe, MEA, and APAC was reported at $2.78 billion, slightly below the estimated $2.83 billion [4] - Revenue from LATAM reached $518 million, exceeding the estimated $496.83 million [4] - North America generated $4.76 billion in revenue, surpassing the estimated $4.62 billion [4]

Smurfit Westrock (SW) came out with quarterly earnings of $0.45 per share, missing the Zacks Consensus Estimate of $0.57 per share. This compares to earnings of $0.69 per share a year ago. These figures are adjusted for non-recurring items. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record ...

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $1,213 million with an adjusted EBITDA margin of 15.3% for the second quarter, showing mid-single-digit growth compared to the previous year [7][18] - Net sales exceeded $7,900 million, with adjusted free cash flow of $387 million, marking a significant improvement from the combined performance of the previous year [18][19] - Fitch upgraded the company's long-term debt rating to BBB+ with a stable outlook, reflecting confidence in the business's quality and long-term prospects [9][24] Business Line Data and Key Metrics Changes - North American operations generated net sales of $4,800 million with adjusted EBITDA of $752 million and an adjusted EBITDA margin of 15.8%, showing significant margin improvement due to higher selling prices and synergy benefits [19][20] - EMEA and APAC segments reported net sales of $2,800 million with adjusted EBITDA of $372 million and an adjusted EBITDA margin of 13.4%, despite a challenging market environment [21] - Latin American operations achieved net sales of $505 million with an adjusted EBITDA of $123 million and an adjusted EBITDA margin of over 23%, indicating strong demand growth in certain countries [22] Market Data and Key Metrics Changes - In North America, box volumes decreased by 4.5% year-over-year, while third-party paper sales were down 2% [20] - EMEA operations faced headwinds from energy costs and labor, with corrugated box volumes remaining flat [21][72] - Latin America showed a nascent improvement in demand, particularly in Argentina, Colombia, and Chile, despite a 1.9% decline in corrugated box volumes [22] Company Strategy and Development Direction - The company aims to optimize its operations by eliminating non-strategic assets and has announced the permanent closure of 600,000 tonnes of capacity [11][15] - A synergy program is on track to deliver $400 million in full-year run-rate synergies by 2025, with additional opportunities identified [25] - The company emphasizes a culture of empowerment and operational excellence, focusing on customer service and profitability [12][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the North American business's recovery and sees significant opportunities for improvement in corrugated operations [27][39] - The European market is expected to face challenges, but management believes they are close to a low point, with potential for pricing improvements in the second half of the year [39][41] - Latin America is viewed as a high-growth potential region, with management committed to driving long-term success [22][28] Other Important Information - The company has invested approximately $1 billion in its system, with a focus on both paper and converting assets [15] - A quarterly dividend of $0.04 per share has been declared, reflecting confidence in the company's cash-generating ability [23] Q&A Session Summary Question: Can you provide details on the loss-making contracts in North America? - Management indicated that about 40% of plants have moved from loss to profit, with a systematic process in place to address unprofitable contracts [34][39] Question: What is the outlook for Europe given the pricing weakness? - Management believes that current pricing levels are unsustainable for many players, indicating potential for further closures in the market [41][42] Question: How is the company addressing consumer confidence and demand? - Management noted that while volumes in North America were down, they expect a seasonal pickup in demand in the latter half of the year [56][77] Question: What are the assumptions for the second half of the year regarding volumes? - Management anticipates flat volumes for the second half compared to the first half, with no significant deterioration expected [95] Question: Can you elaborate on the synergy program and its impact? - The synergy program is on track to deliver $400 million in run-rate synergies, with management confident in achieving this target [25][106]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $1,213 million with an adjusted EBITDA margin of 15.3% for the second quarter [5][15] - Net sales exceeded $7,900 million, showing mid-single-digit growth in adjusted EBITDA compared to the same period last year [15][16] - Strong adjusted free cash flow of $387 million was noted, reflecting improved financial performance [15] Business Line Data and Key Metrics Changes - North America segment achieved net sales of $4,800 million with adjusted EBITDA of $752 million and an adjusted EBITDA margin of 15.8%, showing significant margin improvement due to higher selling prices and operational efficiencies [16][18] - EMEA and APAC segment reported net sales of $2,800 million with adjusted EBITDA of $372 million and an adjusted EBITDA margin of 13.4%, despite a challenging market [19] - Latin America segment delivered net sales of $505 million with an outstanding adjusted EBITDA margin of over 23%, indicating strong demand growth in certain countries [20] Market Data and Key Metrics Changes - North American box volumes decreased by 4.5% on a same-day basis, aligning with the company's value-over-volume strategy [18] - EMEA and APAC faced headwinds from energy and labor costs, with flat corrugated box volumes on a same-day basis [19] - Latin America showed a nascent improvement in demand, particularly in Argentina, Colombia, and Chile, despite a 1.9% decline in box volumes [20] Company Strategy and Development Direction - The company is focused on optimizing its operations and has identified at least $400 million in synergies from the integration of Smurfit Kappa and WestRock [7][23] - A disciplined investment approach is being maintained, with $1 billion already invested in system improvements [12] - The company aims to be the go-to innovative sustainable packaging partner, emphasizing value, quality, and service [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the North American business, noting significant improvements and a strong operational focus [25] - The European market is expected to recover, with management believing they are close to a low point despite current pricing challenges [25][39] - Latin America is viewed as a high-growth potential region, with ongoing pricing initiatives to offset negative currency impacts [20][26] Other Important Information - Fitch upgraded the company's long-term debt rating to BBB+ with a stable outlook, reflecting confidence in its business quality and long-term prospects [6][22] - The company declared a quarterly dividend of $0.04 per share, demonstrating confidence in its cash-generative ability [21] Q&A Session Summary Question: Details on loss-making contracts in North America - Management indicated that approximately 40% of plants have moved from loss to profit, with ongoing efforts to improve profitability [32][34] Question: Current status of loss-making contracts - About 60% of loss-making contracts remain, with expectations that many will transition to profitability over the next year [37][38] Question: Impact of tariffs and consumer confidence - Management noted that tariffs have been largely absorbed by consumers, with no significant changes expected in import/export flows [49][51] Question: Future demand expectations - Management anticipates a seasonal pickup in demand but is not baking in significant improvements for the second half of the year [72][73] Question: Clarification on volume assumptions - The company expects flat volumes in the second half compared to the first half, with no significant deterioration anticipated [90]