WestRock(WRK) - 2021 Q4 - Annual Report

Sales Performance - Sales of corrugated packaging products accounted for 65.4% of net sales in fiscal 2021, a slight decrease from 64.6% in 2020 and 64.2% in 2019[16] - Sales of consumer packaging products represented 34.6% of net sales in fiscal 2021, down from 35.3% in 2020 and 35.7% in 2019[20] - Sales from non-U.S. operations accounted for 18.5% of net sales in fiscal 2021, compared to 17.7% in fiscal 2020[85] Customer Base - The company serves over 15,000 customers, including 188 customers who purchased at least $1 million from the Corrugated Packaging and Consumer Packaging segments in fiscal 2021[29] - The company serves more than 15,000 customers, including 188 customers who purchased at least $1 million from its segments in fiscal 2021[29] Environmental Compliance and Sustainability - The overall fiber sourcing for all mills is approximately 65% virgin and 35% recycled[23] - The company achieved a 14% reduction in greenhouse gas emissions per ton of production as of September 30, 2020, towards a goal of 20% reduction by 2025[51] - Approximately 7 to 8 million tons of paper and packaging are diverted from landfills annually through the company's recycling operations[50] - The company has established a goal to reduce Scope 1 and Scope 2 greenhouse gas emissions by 20% from a 2015 baseline by 2025[51] - The company has systems in place for tracking greenhouse gas emissions and monitors developments in climate-related laws and regulations[58] - The company has been recognized for sustainability efforts, including inclusion in the Dow Jones World and North American Sustainability Indices[63] - The company has invested in new roles and capabilities to support its business strategy, including hiring a Chief Sustainability Officer and a Chief Innovation Officer[70] - The company is involved in various environmental compliance obligations, which may require significant capital investments and increase operating costs[43] Financial Outlook - The company expects more earnings and cash flows to be generated in the second half of the fiscal year than in the first half due to seasonal demand variations[22] - The company expects to generate an additional $1 billion in cash through the end of calendar 2021 to reduce outstanding indebtedness[89] - In fiscal 2022, the company anticipates capital expenditures of $1.0 billion, focusing on safety, environmental, and maintenance projects[92] - The company expects record sales and operating profit in fiscal 2022 despite ongoing commodity input cost inflation[90] - The company plans to implement previously published price increases that are expected to outpace inflation in fiscal 2022[90] - The company anticipates being able to fund capital expenditures, interest payments, dividends, and other corporate actions from cash generated from operations and other financing sources[93] Employee and Workforce - The company employs approximately 49,900 people, with 78% located in the U.S. and Canada[65] - 56% of hourly employees in the U.S. and Canada are covered by collective bargaining agreements, with 26% of those agreements expiring within one year[65] - As of September 30, 2021, 21% of the global workforce was female, and 33% of the U.S. workforce comprised people of color[76] - The company has launched an online learning library with over 1,000 courses in five languages to support employee development[82] - The company continues to focus on talent attraction and retention, restructuring work schedules, and providing retention bonuses as needed[81] - The company has set a four-year goal for gender and ethnic representation to enhance workforce diversity[77] - The diversity, inclusion, equity, and belonging modifier is expected to be applied to approximately 100 top executives and leaders in fiscal 2022[78] Capital Expenditures and Investments - The company estimates an investment of approximately $21 million for capital expenditures related to environmental compliance during fiscal 2022[49] - The company expects to contribute approximately $25 million to its U.S. and non-U.S. pension plans in fiscal 2022[93] - Minimum pension contributions are estimated to be in the range of approximately $23 million to $24 million annually from fiscal 2023 through 2026[93] - The company expects to utilize nearly all remaining U.S. federal net operating losses and credits during the current fiscal year[92] - Future cash tax rates are expected to be slightly lower than the income tax rate for fiscal 2022, with an increase anticipated for fiscal 2023 and 2024 due to the absence of nonrecurring tax credits[92] Risk Management - The company expects to incur significant costs to enhance data security and prevent unauthorized access to its systems[93] - The company believes it has substantial insurance coverage for asbestos claims, subject to deductibles and policy limits[95] - The company estimates its exposure related to certain guarantees to be less than $50 million[95] - The company’s restructuring actions are believed to have allowed for more effective business management[93] - The company may seek to refinance existing indebtedness to improve terms and reduce borrowing costs[93]