Yahoo Finance WestRock (WRK) Q2 Earnings Beat Estimates, Revenues Miss
WestRock Company WRK has reported adjusted earnings of 39 cents per share in second-quarter fiscal 2024, beating the Zacks Consensus Estimate of 25 cents. The bottom line slumped 49% year over year due to a lower selling price/mix, the impacts of increased economic downtime and the prior year’s mill closures. Results have also been impacted by softer volumes.
Including one-time items, the company reported earnings of 6 cents per share against a loss of $7.85 in the year-ago quarter.
WestRock’s total revenues declined 10.4% year over year to $4.73 billion. The top line lagged the Zacks Consensus Estimate of $4.78 billion. The downside was mainly due to lower revenues in the Global Paper and Consumer Packaging segments, which reflect the impacts of the prior year’s mill and interior partition divestitures.
The cost of sales was down 9.4% year over year to $3.95 billion in the quarter. The gross profit declined 15.2% year over year to $780 million. The consolidated adjusted segment EBITDA was $618 million, down 21.6% from the year-ago quarter, impacted by lower adjusted EBITDA across each segment.
WestRock Company Price, Consensus and EPS Surprise
WestRock Company price-consensus-eps-surprise-chart | WestRock Company Quote
Segmental Performances
Sales in the Corrugated Packaging segment were down 8.7% year over year to $2.4 billion in the quarter under review. The downside was driven by lower volumes and selling price/mix, partially offset by favorable foreign exchange rates. The segment’s reported revenues lagged the Zacks Consensus Estimate of $2.45 billion.
The segment’s adjusted EBITDA fell 22% year over year to $318 million due to the impacts of a lower selling price/mix that was partially offset by increased cost savings, and lower economic downtime and the prior year’s mill closures.
The Consumer Packaging segment reported sales of $1.11 billion, down 12% year over year. The decline was mainly due to lower volumes and the prior year's divestiture of the interior partition operations. The figure missed the consensus estimate of $1.18 billion.
The segment’s adjusted EBITDA dipped 8.4% year over year to $200 million on lower volumes, increased economic downtime, net cost inflation and the prior year’s divestiture of interior partition operations.
Sales in the Global Paper segment declined 13% year over year to $1.02 billion. The revenue estimate for the segment was $982 million. The decrease was caused by a lower selling price/mix and volumes. The divestiture of mill operations last year also impacted the results. The adjusted segment EBITDA plunged 30.8% year over year to $129.5 million, reflecting a lower selling price/mix, the impacts of increased economic downtime and the prior year’s mill closures.
The Distribution segment’s sales declined 11.5% year over year to $272 million on lower volumes and selling price/mix. The Zacks Consensus Estimate for the Distribution segment’s revenues was $303 million. The segment’s adjusted EBITDA dropped 4.3% year over year to $9 million on low volumes and high costs.
Cash Position & Balance Sheet Updates
WRK had cash and cash equivalents of $495 million at the end of the second quarter of fiscal 2024 compared with $393 million as of the end of fiscal 2023. The company reported a total debt of $9 billion at the end of the second quarter of fiscal 2024 compared with $8.6 billion at the end of fiscal 2023.
Net cash provided by operating activities in the second quarter of fiscal 2024 was $37 million compared with $284 million in the year-ago quarter. The decline was driven by increased working capital usage in the quarter. In the reported quarter, WestRock invested $301 million in capital expenditure and returned $78 million to stockholders in dividend payments.
Price Performance
Shares of WestRock have gained 68.8% in the past year compared with the industry’s 38.7% growth.
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Zacks Rank
WRK currently has a Zacks Rank #4 (Sell).
Performances of Peer Companies
The recent slowdown in the paper and related industry also impacted the performances of the following stocks.
International Paper Company IP reported first-quarter 2024 (ending Mar 31 2023) adjusted earnings of 17 cents per share, missing the Zacks Consensus Estimate of 23 cents by a margin of 26%. The bottom line slumped 68% year over year due to a decline in volumes in corrugated packaging, as well as lower prices in the Industrial Packaging and Global Cellulose Fibers segments.
Net sales were $4.6 billion in the quarter under review, down 8% from the year-ago quarter mainly due to lower prices. The top line beat the Zacks Consensus Estimate of $4.4 billion.
Stora Enso Oyj SEOAY reported first-quarter 2024 (ending Mar 31 2023) adjusted earnings of 10 cents per share, beating the Zacks Consensus Estimate. The bottom line slumped 60% year over year. Stora Enso’s net sales were $2.35 billion in the quarter under review, down 19.5% from the year-ago quarter.
A Better-Ranked Pick From the Industry
Sylvamo Corporation SLVM, scheduled to release first-quarter 2024 earnings on May 10, presently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for SLVM’s first-quarter earnings is pegged at $1.05 per share. The Zacks Consensus Estimate for SLVM’s first-quarter earnings has moved north by 1% in the past 60 days.
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