WestRock(US:WRK)2022-08-05 15:25Financial Performance - Net sales for Q3 fiscal 2022 reached $5,519.7 million, an increase of $703.4 million or 14.6% compared to Q3 fiscal 2021, primarily driven by higher selling price/mix [137]. - Net income attributable to common stockholders for Q3 fiscal 2022 was $377.9 million, up $127.8 million or 51.1% from Q3 fiscal 2021, despite increased cost inflation and lower volumes [138]. - Consolidated Adjusted EBITDA for Q3 fiscal 2022 was $1,005.5 million, reflecting a $194.5 million or 24.0% increase from $811.0 million in Q3 fiscal 2021 [138]. - Net sales for the nine months ended June 30, 2022, increased by $2,198.4 million compared to the prior year, driven by higher selling price/mix and volumes [156]. - Earnings per diluted share for Q3 2022 was $1.47, up 58.1% from $0.93 in Q3 2021 [247]. - Adjusted Earnings Per Diluted Share increased to $1.54 in Q3 2022 from $1.00 in Q3 2021, representing a 54% increase [247]. - Consolidated Adjusted EBITDA for the nine months ended June 30, 2022, was $2,539.7 million, compared to $2,121.3 million for the same period in 2021, reflecting a 19.7% increase [251]. - Net income attributable to common stockholders for Q3 2022 was $377.9 million, compared to $250.1 million in Q3 2021, marking a 51% increase [251]. - The company reported a pre-tax income of $512.5 million for Q3 2022, up from $328.4 million in Q3 2021, an increase of 55.9% [248]. - Adjusted Net Income for the nine months ended June 30, 2022, was $879.1 million, compared to $575.6 million for the same period in 2021, a 52.8% increase [248]. Costs and Expenses - Cost of Goods Sold increased by $473.9 million in Q3 FY2022 compared to Q3 FY2021, primarily due to cost inflation and higher operating costs [158]. - Selling, General and Administrative (SG&A) expenses excluding intangible amortization increased by $53.4 million in Q3 FY2022 compared to Q3 FY2021, driven by higher compensation and benefits [161]. - SG&A expenses excluding intangible amortization rose by $123.2 million in the nine months ended June 30, 2022, compared to the prior year period, largely due to increased compensation and benefits [162]. - Interest expense, net decreased to $78.5 million in Q3 FY2022 from $102.5 million in Q3 FY2021, attributed to lower debt levels and a reduction in pension liabilities [169]. - The company recorded a loss on extinguishment of debt of $8.2 million for the nine months ended June 30, 2022, related to the redemption of $350 million senior notes [171]. - The effective tax rate for Q3 FY2022 was 25.9%, compared to 23.6% for Q3 FY2021, with income tax expense increasing to $132.7 million [176]. Segment Performance - Corrugated Packaging shipments in thousands of tons for Q3 FY2022 were 1,648.7, a slight decrease from 1,709.6 in Q3 FY2021 [180]. - Net sales for the Corrugated Packaging segment in the nine months ended June 30, 2022, were $6,921.5 million, with an Adjusted EBITDA of $1,002.8 million [181]. - Corrugated Packaging segment net sales increased by $227.8 million in Q3 FY2022, driven by $300.1 million from higher selling price/mix, partially offset by $84.1 million from lower volumes [182]. - Consumer Packaging segment net sales rose by $138.0 million in Q3 FY2022, primarily due to $122.4 million from higher selling price/mix and $58.3 million from higher volumes, offset by $44.0 million in unfavorable foreign currency impacts [189]. - Global Paper segment net sales increased by $311.1 million in Q3 FY2022, mainly due to $297.0 million from higher selling price/mix and $38.7 million from higher volumes [197]. - Adjusted EBITDA for the Corrugated Packaging segment increased by $21.3 million in Q3 FY2022, primarily due to a $300.3 million margin impact from higher selling price/mix, offset by $218.1 million in increased cost inflation [184]. - Consumer Packaging segment Adjusted EBITDA increased by $51.6 million in Q3 FY2022, driven by a $122.0 million margin impact from higher selling price/mix, partially offset by $76.9 million in increased cost inflation [191]. - Global Paper segment Adjusted EBITDA rose by $133.8 million in Q3 FY2022, primarily due to a $297.0 million margin impact from higher selling price/mix [199]. - Distribution segment net sales increased by $35.4 million in Q3 FY2022, primarily due to $40.8 million from higher selling price/mix, partially offset by $5.7 million from lower volumes [205]. - For the nine months ended June 30, 2022, Consumer Packaging segment net sales increased by $384.2 million, mainly due to $298.6 million from higher selling price/mix and $176.0 million from higher volumes [190]. - Global Paper segment net sales increased by $980.3 million for the nine months ended June 30, 2022, primarily due to $854.4 million from higher selling price/mix and $210.4 million from higher volumes [198]. - Distribution segment net sales increased by $138.4 million for the nine months ended June 30, 2022, primarily due to $96.3 million from higher selling price/mix and $38.0 million from higher volumes [206]. - Distribution segment Adjusted EBITDA increased by $1.2 million in Q3 FY2022, driven by a $40.8 million margin impact from higher selling prices and a $9.4 million increase in productivity, offset by $47.2 million in cost inflation and $2.1 million in lower volumes [207][208]. - For the nine months ended June 30, 2022, Distribution segment Adjusted EBITDA rose by $8.3 million, primarily due to a $96.3 million margin impact from higher selling prices and a $19.6 million increase in volumes, countered by $103.0 million in cost inflation [209]. Cash Flow and Capital Expenditures - Net cash provided by operating activities for the nine months ended June 30, 2022, was $1,480.1 million, down from $1,602.4 million in the prior year, primarily due to increased working capital usage [140]. - Capital expenditures for the nine months ended June 30, 2022, totaled $569.5 million, while $795.9 million was returned to stockholders through stock repurchases and dividends [141]. - Cash and cash equivalents were $305.4 million as of June 30, 2022, up from $290.9 million at September 30, 2021, with approximately two-thirds held outside the U.S. [212]. - Total debt decreased by $171.2 million during the nine months ended June 30, 2022, primarily due to repayments using net cash from operating activities [212]. - Net cash provided by operating activities decreased by $122.3 million to $1,480.1 million for the nine months ended June 30, 2022, mainly due to $379.9 million of greater working capital usage compared to the prior year [219]. - Capital expenditures for the nine months ended June 30, 2022, were $569.5 million, with expectations to invest approximately $900 million for the full fiscal year 2022 [220][222]. - Net cash used for financing activities was $965.8 million, including $600.0 million for share repurchases and $195.9 million in cash dividends paid to stockholders [223]. - The board declared a quarterly dividend of $0.25 per share, representing a 25% increase from the previous annualized dividend of $1.00 per share [224]. - As of June 30, 2022, the company had approximately $3.5 billion available under long-term committed credit facilities and cash equivalents [213]. - The company anticipates being able to fund capital expenditures, interest payments, dividends, and stock repurchases from cash generated from operations and other financing sources [231]. Impairments and Non-Cash Charges - The company recorded a $26.0 million pre-tax non-cash mineral rights impairment in Q3 fiscal 2022, which impacted net income [138]. - A pre-tax non-cash impairment of $26.0 million was recorded for certain mineral rights due to a lack of leasing or development activity [166]. - Mineral rights impairment for Q3 2022 was $26.0 million, with no impairment reported in Q3 2021 [251]. Strategic Initiatives and Future Outlook - The company announced an agreement to acquire the remaining 67.7% interest in Grupo Gondi on July 27, 2022 [175]. - The company anticipates continued growth driven by strategic acquisitions and market expansion efforts, including the recent acquisition of Grupo Gondi [254]. - Forward-looking statements indicate potential risks including supply chain disruptions and inflationary pressures impacting future performance [254].