WestRock(WRK) - 2022 Q1 - Quarterly Report

Financial Performance - Net sales for the first quarter of fiscal 2022 were $4,952.2 million, an increase of $550.7 million, or 12.5%, compared to the first quarter of fiscal 2021[121] - Net income attributable to common stockholders for the first quarter of fiscal 2022 was $182.3 million, up $30.3 million, or 19.9%, from the same period in fiscal 2021[122] - Consolidated Adjusted EBITDA for the first quarter of fiscal 2022 was $680.3 million, reflecting an increase of $10.5 million, or 1.6%, compared to $669.8 million in the first quarter of fiscal 2021[122] - Adjusted Earnings Per Diluted Share for Q4 2021 was $0.65, compared to $0.61 in Q4 2020, reflecting a growth of approximately 6.6%[197] - Consolidated Adjusted EBITDA for Q4 2021 was $680.3 million, up from $669.8 million in Q4 2020, indicating an increase of about 1.5%[201] - Net income attributable to common stockholders for Q4 2021 was $182.3 million, compared to $152.0 million in Q4 2020, representing a growth of approximately 19.9%[201] Costs and Expenses - Cost of goods sold for the first quarter of fiscal 2022 was $4,155.6 million, representing an increase of $507.0 million compared to the prior year quarter, primarily due to cost inflation and increased planned downtime[137] - Selling, general and administrative expenses excluding intangible amortization increased by $35.1 million in the first quarter of fiscal 2022, totaling $452.9 million[138] - Net interest expense decreased to $86.7 million in Q1 fiscal 2022 from $93.8 million in the prior year, primarily due to lower debt levels[143] - Pension and other postretirement non-service income increased to $39.9 million in Q1 fiscal 2022, up from $34.9 million in Q1 fiscal 2021[144] - Restructuring and other costs amounted to $2.3 million in Q1 fiscal 2022, down from $7.7 million in Q1 fiscal 2021[141] Cash Flow and Investments - Net cash provided by operating activities in the first quarter of fiscal 2022 was $252.8 million, a decrease from $719.4 million in the same period of fiscal 2021, primarily due to higher working capital usage[124] - The company invested $173.1 million in capital expenditures and returned $166.4 million to stockholders through stock repurchases and dividends in the first quarter of fiscal 2022[125] - Net cash used for investing activities was $154.8 million, consisting mainly of $173.1 million for capital expenditures, partially offset by $22.4 million from the sale of property, plant, and equipment[171] - Net cash used for financing activities was $104.3 million, which included a net increase in debt of $48.1 million and share repurchases of $100.1 million[173] Debt and Liquidity - Total debt increased to $8,233.2 million at December 31, 2021, up from $8,194.1 million at September 30, 2021[162] - The company had approximately $3.6 billion of availability under long-term committed credit facilities at December 31, 2021[163] - Cash and cash equivalents were $291.3 million at December 31, 2021, with approximately 80% held outside the U.S.[162] Future Expectations - The company anticipates that previously published price increases will more than offset inflation, leading to higher sequential earnings in the upcoming quarter[126] - The company expects capital expenditures to be approximately $900 million to $1.0 billion in fiscal 2022, focusing on safety, environmental, and maintenance projects while supporting productivity and growth[204] - The company anticipates higher sequential earnings despite ongoing labor cost increases and supply chain challenges[204] - The company expects to fund capital expenditures, interest payments, dividends, and other corporate actions from cash generated from operations and available borrowings[204] Operational Challenges - The company expects sequential labor cost increases and continued supply chain challenges in the second quarter of fiscal 2022, with approximately 128,000 tons of scheduled downtime across its system[126] - The company acknowledges various risks including supply chain disruptions, labor costs, and market conditions that could impact performance[206] - The company has incurred costs related to COVID-19 safety measures and continues to take actions to protect employee health[204] Shareholder Returns - The quarterly dividend declared on January 27, 2022, is $0.25 per share, representing a 25% increase from the previous annualized dividend of $1.00 per share[174] - Approximately 2.1 million shares of Common Stock were repurchased for $97.5 million during the three months ended December 31, 2021, with 14.6 million shares remaining available for repurchase[176] Pension and Tax Matters - The company has approximately $59 million in future potential reductions of U.S. federal, state, and foreign cash taxes due to net operating losses and tax credits[177] - The pension plans in the U.S. are overfunded, with a pension asset of approximately $0.7 billion, and expected contributions of about $25 million in fiscal 2022[178] - Withdrawal liabilities recorded were $248.1 million as of December 31, 2021, reflecting obligations associated with multiemployer pension plans[180]