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WestRock (WRK) Earnings & Sales Miss Estimates in Q1, Down Y/Y

WestRock Company WRK reported adjusted earnings of 55 cents per share in first-quarter fiscal 2023 (ended Dec 31, 2022), missing the Zacks Consensus Estimate of 60 cents. The bottom line also declined 15% year-over-year due to cost inflation, lower volumes, economic downtime and the Mahrt mill work stoppage.

Including one-time items, earnings were 18 cents per share compared with 68 cents per share reported in the prior-year quarter.

WestRock’s total revenues dipped 0.6% year over year to $4.92 billion. The top-line figure lagged the Zacks Consensus Estimate of $5.09 billion.

The cost of sales was up 0.1% year over year to $4,156 million in the fiscal first quarter. Gross profit declined 4% year over year to $765 million. Adjusted segment EBITDA was $652 million compared with $680 million in the year-earlier quarter. Improved EBITDA performance in the Corrugated Packaging, Consumer Packaging and Distribution segments was offset by lower EBITDA in Global Paper. During the quarter, elevated inflation and softening macroeconomic conditions negatively impacted the performance of the Global Paper segment.

WestRock Company Price, Consensus and EPS Surprise

 

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

 

Segment Performances

Sales in the Corrugated Packaging segment were up 0.7% year over year to $2,235 million during the quarter under review. Adjusted segment EBITDA increased 7% year over year to $309 million.

The Consumer Packaging segment reported sales of $1,215 million, up 7% year over year. Adjusted segment EBITDA rose 8.3% year over year to $183 million.

Sales in the Paper segment moved down 17% year over year to $1,124 million. Adjusted segment EBITDA plunged 32% year over year to $157 million.

The Distribution segment’s sales declined 1% year over year to $322 million. Adjusted segment EBITDA surged 66% year over year to $10.8 million.

Financial Position

WestRock had cash and cash equivalents of $415 million as of the end of the first quarter of 2023, compared with $260 million as of the end of fiscal 2022. The company reported total debt of $9.5 billion as of the end of the quarter under review, up from $7.6 billion at the end of fiscal 2022.

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Net cash provided by operating activities in the first quarter of fiscal 2023 was $266 million compared with $253 million in the prior-year quarter. During the reported quarter, WestRock paid $70 million as dividends and invested $282 million in capital expenditures.

WestRock acquired the remaining 67.7% stake in Grupo Gondi for $970 million, plus the assumption of debt. This boosts WRK’s global presence and enhances its position in the packaging marketplace in Mexico. The company divested two uncoated recycled paperboard mills for $50 million, subject to a working capital adjustment, and recorded an $11 million pre-tax gain on sale in the quarter.

Price Performance

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Zacks Investment Research


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Shares of WestRock have fallen 15.3% in the past year compared with the industry’s 14.4% decline.

Zacks Rank & Stocks to Consider

WestRock currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Steel Dynamics, Inc. STLD, Commercial Metals Company CMC and Agnico Eagle Mines Limited AEM.

Steel Dynamics currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for STLD's current-year earnings has been revised 0.4% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Steel Dynamics’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 11.3%, on average. STLD has rallied around 114% in a year.

Commercial Metals currently sports a Zacks Rank of 1. The consensus estimate for CMC's current-year earnings has been revised 9.8% upward in the past 60 days.

Commercial Metals’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 16.7%, on average. CMC has gained around 61% in a year.

Agnico Eagle currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for AEM’s current-year earnings has been revised 0.4% upward in the past 60 days.

Agnico Eagle beat Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 26.4% on average. AEM’s shares have gained 17% in the past year.

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Commercial Metals Company (CMC) : Free Stock Analysis Report

WestRock Company (WRK) : Free Stock Analysis Report

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