WestRock Company
WRK
reported first-quarter fiscal 2022 (ended Dec 31, 2021) adjusted earnings of 65 cents per share, beating the Zacks Consensus Estimate of 63 cents. The bottom line improved 7% year over year driven by higher pricing and lower interest expenses, which was partially offset by net cost inflation, lower aggregate volumes, increased maintenance outages and other items.
Including one-time items, earnings were 68 cents per share compared with 57 cents reported in the prior-year quarter.
WestRock’s total revenues advanced 12.5% year over year to $4.95 billion, missing the Zacks Consensus Estimate of $4.96 billion.
WestRock Company Price, Consensus and EPS Surprise
WestRock Company price-consensus-eps-surprise-chart
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WestRock Company Quote
Cost of sales was up 14% year over year to $4,166 million in the fiscal first quarter. Gross profit increased 6% year over year to $797 million. Adjusted segment EBITDA was $680 million compared with $670 million in the year-earlier quarter as strength in the Paper segment more than offset decreases in the Corrugated Packaging, Distribution and Consumer Packaging segments.
Segmental Performance
With effect from the first quarter of fiscal 2022, WestRock reorganized its reportable segments that will help better align business operations with corporate strategy and future growth plans.
Sales in the Corrugated Packaging segment, which consists of the integrated corrugated converting operations, were up 10% year over year to $2,220 million during the quarter under review. This was driven by a higher selling price/mix that was somewhat offset by lower volumes. Adjusted segment EBITDA declined 17% year over year to $289 million. Gains from higher selling price/mix were offset by cost inflation, reduction in productivity and other operational items, including increased maintenance outages and lower volumes.
The Consumer Packaging segment, which comprises the company’s integrated consumer converting operations, reported sales of $1,139 million. Sales increased 7% year over year aided by higher selling price/mix and improved volumes. Adjusted segment EBITDA declined 3% year over year to $169 million as gains from higher selling price/mix, increased productivity and higher volumes were offset by inflated costs.
Sales in the Paper segment (which consists of all third-party paper sales) improved 24% year over year to $1,353 million during the quarter aided by higher selling price/mix and higher volumes. Adjusted segment EBITDA surged 53% year over year to $232 million due to the impact from higher selling price/mix, increased productivity and other operational items, including increased maintenance outages and higher volumes that were partially offset by net cost inflation.
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The Distribution segment consists of WestRock’s distribution and display assembly operations. Sales in the segment improved 7% year over year to $325 million primarily due to higher selling price/mix that was partially offset by lower volumes. Adjusted segment EBITDA plunged 60% year over year to $6.5 million as net cost inflation and lower productivity fully offset gains from higher selling price/mix.
Financial Position
WestRock had cash and cash equivalents of $291 million as of Dec 31, 2021, flat compared with Sep 30, 2021. The company reported total debt of $8.2 billion as of the end of first-quarter 2022, flat compared with the end of fiscal 2021.
Net cash provided by operating activities in the first quarter of fiscal 2022 was $253 million compared with the $719 million in the prior-year quarter. This was mainly due to higher working capital usage as a result of actions taken in the prior year to preserve cash due to the high uncertainty stemming from the COVID-19 pandemic.
During the fiscal first quarter, WestRock invested $173 million in capital expenditures, spent $100 million on share repurchases and paid out $66 million in dividends to shareholders.
Price Performance
Image Source: Zacks Investment Research
Shares of WestRock have appreciated 7.8% over the past year, compared with the
industry
’s growth of 3.2%.
Zacks Rank & Stocks to Consider
WestRock currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include
Commercial Metals Company
CMC
,
Teck Resources
TECK
and
Huntsman Corporation
HUN
. While CMC sports a Zacks Rank #1 (Strong Buy), TECK and HUN carry a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here
.
Commercial Metals has a projected earnings growth rate of 62% for the current fiscal year. The Zacks Consensus Estimate for CMC’s current fiscal year earnings has been revised upward by 40% over the past 60 days.
Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed once, the average surprise being 13.1%. CMC’s shares have surged around 72% in a year’s time.
Teck Resources has an expected earnings growth rate of 9.3% for the current year. The Zacks Consensus Estimate for TECK’s current-year earnings has moved up 15% in the past 60 days.
Teck Resources beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 17.4%. TECK has rallied around 80% in a year.
Huntsman has an expected earnings growth rate of 10% for the current year. HUN’s consensus estimate for the current year has been revised upward by 1% over the past 60 days.
Huntsman beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 12.8%. HUN shares have appreciated around 32% in a year.
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