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WestRock (WRK) Q2 Earnings and Revenues Surpass Estimates

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WestRock Company reported second-quarter fiscal 2022 (ended Mar 31, 2022) adjusted earnings of $1.17 per share, beating the Zacks Consensus Estimate of $1.01. The bottom line marked a year-over-year surge of 117%, driven by higher selling price/mix, improved volumes and solid performances across all of its segments.

Including one-time items, earnings were 15 cents per share compared with 42 cents reported in the prior-year quarter.

WestRock’s total revenues advanced 21.3% year over year to a record $5.4 billion, surpassing the Zacks Consensus Estimate of $5.08 billion. In the prior-year quarter, the company had witnessed an impact of $189 million on net sales due to a ransomware incident and bad weather. Excluding this impact, net sales improved 17% year over year

Cost of sales was up 19% year over year to $4,378 million in the fiscal second quarter. Gross profit surged 34% year over year to $1,004 million. Adjusted segment EBITDA was $854 million compared with $641 million in the year-earlier quarter, driven by strength across the segments, primarily in Paper and Consumer Packaging.

WestRock Company Price, Consensus and EPS Surprise WestRock Company Price, Consensus and EPS Surprise

WestRock Company price-consensus-eps-surprise-chart | WestRock Company Quote

Segmental Performance

Sales in the Corrugated Packaging segment were up 14.7% year over year to $2,319 million during the quarter under review. Adjusted segment EBITDA increased 2.4% year over year to $329 million.

The Consumer Packaging segment reported sales of $1,251 million. Adjusted segment EBITDA rose 25% year over year to $206 million.

Sales in the Paper segment surged 36% year over year to $1,538 million. Adjusted segment EBITDA soared 93% year over year to $309 million.
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The Distribution segment’s sales improved 29% year over year to $362 million. Adjusted segment EBITDA rose a whopping 154% year over year to $28 million.

Financial Position

WestRock had cash and cash equivalents of $360 million as of Mar 31, 2022, compared with $291 million as of Sep 30, 2021. The company reported total debt of $8.4 billion as of the end of second-quarter 2022, up from $8.2 billion at the end of fiscal 2021.

Net cash provided by operating activities in the second quarter of fiscal 2022 was $390 million compared with $132 million in the prior-year quarter. During the quarter under review, WestRock invested $181 million in capital expenditures, spent $210 million on share repurchases and paid out $66 million as dividends to shareholders. WRK’s board of directors has authorized a repurchase of 25 million shares, which represents around 10% of its outstanding common shares.

Price Performance

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Shares of WestRock have fallen 12.3% over the past year, compared with the industry’s decline of 14.1%.

Zacks Rank & Other Stocks to Consider

WestRock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Some other top-ranked stocks worth considering in the basic materials space include Steel Dynamics, Inc. (STLD - Free Report) , AdvanSix Inc. (ASIX - Free Report) and Commercial Metals Company (CMC - Free Report) . All of these stocks carry a Zacks Rank #1.

Steel Dynamics has an expected earnings growth rate of 18.5% for the current year. The Zacks Consensus Estimate for STLD's current-year earnings has been revised upward by 32.5% over the last 60 days.

Steel Dynamics beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 2.5%. STLD has rallied around 45% in a year.

AdvanSix has an expected earnings growth rate of 63.4% for the current year. ASIX's consensus mark for current-year earnings has moved upward by 31.9% in the past 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed once, the average surprise being 23.6%. ASIX has surged around 53% in a year.

Commercial Metals has a projected earnings growth rate of 78.2% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised upward by 31.9% 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 16%. CMC has appreciated around 31% in a year.


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