WestRock(WRK) - 2024 Q2 - Quarterly Results

Financial Performance - Net sales for Q2 fiscal 2024 were $4.73 billion, a decrease of 10.4% from $5.28 billion in Q2 fiscal 2023[4] - Net income for Q2 fiscal 2024 was $15.5 million, compared to a net loss of $2.01 billion in the same quarter last year[5] - Consolidated Adjusted EBITDA decreased by $170 million, or 21.6%, to $618 million compared to Q2 fiscal 2023[6] - Consolidated net income for the three months ended March 31, 2024, was $16.4 million, a significant improvement from a net loss of $2,004.8 million in the same period last year[27] - In Q1 2024, WestRock reported a net income attributable to common stockholders of $15.5 million, a significant improvement from a net loss of $2,006.1 million in Q1 2023[40] - Adjusted Net Income for Q1 2024 was $101.0 million, compared to an adjusted net income of $197.6 million in Q1 2023, indicating a decline of about 48.9%[42] - Adjusted Earnings Per Diluted Share for Q1 2024 was $0.39, a decrease from $0.77 in Q1 2023, representing a decline of approximately 49.4%[44] Segment Performance - The Corrugated Packaging segment reported sales of $2.40 billion, down 8.7% from $2.63 billion in Q2 fiscal 2023[11] - Consumer Packaging segment sales decreased to $1.11 billion, a decline of 12.0% from $1.27 billion in the prior year[13] - Global Paper segment sales fell to $1.02 billion, down 13.0% from $1.17 billion in Q2 fiscal 2023[15] - The Corrugated Packaging segment reported net sales of $2,398.3 million for the three months ended March 31, 2024, compared to $2,627.4 million in 2023, a decrease of 8.7%[26] - Consumer Packaging segment net sales decreased to $1,113.5 million in Q1 2024 from $1,265.1 million in Q1 2023, a decline of 12.0%[26] - Global Paper segment net sales were $1,012.6 million for the three months ended March 31, 2024, down from $1,116.8 million in the previous year, a decrease of 9.3%[26] - The Corrugated Packaging Segment reported adjusted segment sales of $2,327.5 million in Q1 2024, down from $2,540.5 million in Q1 2023, a decrease of about 8.4%[45] - Adjusted EBITDA Margin for the Corrugated Packaging Segment was 13.3% in Q1 2024, down from 15.5% in Q1 2023, reflecting a margin contraction of 2.2 percentage points[45] Cost Management - The company achieved over $160 million in cost savings and expects to exceed the fiscal 2024 target of $300 to $400 million[5] - Cost savings are calculated based on year-over-year changes in manufacturing, procurement, logistics, and administrative costs, excluding economic downtime and inflation impacts[29] - Future cost savings estimates are subject to change and may not recur in future periods[29] - Business systems transformation costs incurred in Q1 2024 amounted to $20.2 million, which are considered non-recurring and not indicative of ongoing operating results[42] - Restructuring and other costs, net, were reported at $81.2 million in Q1 2024, down from $435.8 million in Q1 2023, showing a reduction of approximately 81.4%[40] Debt and Cash Flow - Total debt stood at $9.0 billion as of March 31, 2024, with Adjusted Net Debt at $8.4 billion[10] - Net cash provided by operating activities was $37 million, a significant decrease from $284 million in the prior year quarter[9] - Net cash provided by operating activities for the six months ended March 31, 2024, was $312.1 million, down from $550.0 million in the prior year[27] - Capital expenditures for the three months ended March 31, 2024, totaled $301.3 million, compared to $281.5 million in the same period last year[27] - Net cash used for investing activities was $(268.7) million for the three months ended March 31, 2024, compared to $(263.3) million in the prior year[27] - Net cash provided by financing activities was $234.3 million for the three months ended March 31, 2024, compared to a net cash used of $(75.3) million in the same period last year[27] - Cash and cash equivalents at the end of the period increased to $494.7 million from $363.4 million year-over-year[27] - Interest expense for the three months ended March 31, 2024, was $100.8 million, compared to $108.4 million in Q1 2023, a decrease of 6.9%[26] Market Outlook - The company anticipates continued challenges in the market, impacting future performance and guiding for a cautious outlook in the upcoming quarters[26] - The company emphasizes the importance of non-GAAP financial measures for assessing ongoing performance, which may differ from GAAP results[30] - Management believes that certain non-GAAP measures provide additional meaningful financial information relevant for performance assessment[30] - WestRock's management emphasizes the importance of non-GAAP measures like Adjusted EBITDA and Adjusted Net Income for evaluating performance and making strategic decisions[33] Asset and Liability Changes - Current assets increased to $6,343.3 million as of March 31, 2024, compared to $6,993.1 million as of September 30, 2023, reflecting a decrease of approximately 9.3%[28] - Cash and cash equivalents rose to $494.7 million from $393.4 million, representing a growth of about 25.7%[28] - Total assets decreased to $26,884.0 million from $27,443.7 million, indicating a decline of approximately 2.0%[28] - Current liabilities increased to $4,737.4 million from $4,919.4 million, showing a decrease of about 3.7%[28] - Long-term debt due after one year decreased to $7,718.2 million from $8,050.9 million, reflecting a reduction of approximately 4.1%[28] - Total equity increased to $10,008.3 million from $10,009.7 million, indicating a slight decrease of about 0.01%[28] Accounts Receivable - The company reported a decrease in accounts receivable by $154.7 million for the three months ended March 31, 2024, compared to a decrease of $114.6 million in the same period last year[27]