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WestRock (WRK) Earnings Surpass Estimates in Q3, Up Y/Y

WestRock Company WRK reported adjusted earnings of $1.54 per share in third-quarter fiscal 2022 (ended Jun 30, 2022), beating the Zacks Consensus Estimate of $1.50. The bottom line marked year-over-year growth of 54%, driven by higher selling price/mix and solid performances across all of its segments. The upside was partly offset by increased cost inflation, higher operating costs and lower volumes.

Including one-time items, earnings were $1.47 per share compared with 93 cents per share reported in the prior-year quarter.

WestRock’s total revenues advanced 14.6% year over year to a record $5.52 billion, which came in line with the Zacks Consensus Estimate.

Cost of sales was up 12% year over year to $4,360 million in the fiscal third quarter. Gross profit improved 25% year over year to $1,159 million. Adjusted segment EBITDA was $1,006 million compared with $811 million in the year-earlier quarter, driven by strength across the segments, primarily in the Global Paper and Consumer Packaging.

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 10.6% year over year to $2,382 million during the quarter under review. Adjusted segment EBITDA increased 5.9% year over year to $385 million.

The Consumer Packaging segment reported sales of $1,270 million, up 12% year over year. Adjusted segment EBITDA rose 28% year over year to $235 million.

Sales in the Paper segment moved up 24% year over year to $1,610 million. Adjusted segment EBITDA surged 51% year over year to $399 million.

The Distribution segment’s sales improved 11% year over year to $358 million. Adjusted segment EBITDA rose 6.7% year over year to $19 million.

Financial Position

WestRock had cash and cash equivalents of $305 million as of Jun 30, 2022, compared with $291 million as of Sep 30, 2021. The company reported total debt of $8.0 billion as of the end of third-quarter 2022, down from $8.2 billion at the end of fiscal 2021.

Net cash provided by operating activities in the third quarter of fiscal 2022 was $837 million compared with $751 million in the prior-year quarter. During the quarter under review, WestRock invested $215 million in capital expenditures, spent $290 million on share repurchases and paid out $64 million as dividends.

Price Performance

Shares of WestRock have fallen 13.2% in the past year compared with the industry’s decline of 17%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks worth considering in the basic materials space include Cabot Corporation CBT, ATI Inc. ATI and Albemarle Corporation ALB.

Cabot, currently carrying a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 0.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 32% over a year.

ATI, currently carrying a Zacks Rank #2 (Buy), has a projected earnings growth rate of 1,069.2% for the current year. The Zacks Consensus Estimate for ATI's current-year earnings has been revised 12.5% upward in the past 60 days.

ATI’s earnings beat the Zacks Consensus Estimate in the last four quarters. It has a trailing four-quarter earnings surprise of roughly 128.9%, on average. ATI shares are up around 26% in a year.

Albemarle has a projected earnings growth rate of 247% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 7.8% upward in the past 60 days.

Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 20%. ALB has gained roughly 18% in a year. The company has a Zacks Rank #2.


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