WestRock (WRK) Q1 Earnings & Revenues Lag Estimates, Dip Y/Y
WestRock Company WRK reported adjusted earnings of 20 cents per share in first-quarter fiscal 2024, missing the Zacks Consensus Estimate of 35 cents. The bottom line slumped 64% year over year due to lower selling price/mix, the impact of increased economic downtime and prior year mill closures. Results were also impacted by lower volumes (excluding the Mexico acquisition).
Including one-time items, the company reported a loss of 9 cents per share against earnings of 18 cents per share in the year-ago quarter.
WestRock’s total revenues declined 6% year over year to around $4.6 billion. The top line lagged the Zacks Consensus Estimate of $4.83 billion. The downside was mainly due to lower revenues in the Global Paper and Consumer Packaging segments, which reflect the impact of prior year mill and interior partition divestitures. This was partially offset by higher Corrugated Packaging segment sales due to the inclusion of a full quarter of operations of WestRock’s former joint venture in Mexico that was acquired in December 2022.
The cost of sales was down 7% year over year to around $3.86 billion in the quarter. The gross profit declined 0.9% year over year to $759 million. The consolidated adjusted segment EBITDA was $571 million, down 12.5% from the year-ago quarter impacted by lower Global Paper and Consumer Packaging segment adjusted EBITDA, as well as higher corporate non-allocated expenses.
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 3.5% year over year to $2.42 million in the quarter under review. The upside was driven by the sales from the Mexico Acquisition. This was offset by lower volumes and selling price/mix. The segment’s reported revenues lagged the Zacks Consensus Estimate of $2.46 billion.
The segment’s adjusted EBITDA dipped 0.5% year over year to $328 million due to the impact of lower selling price/mix that was partially offset by increased cost savings, the incremental two months of contribution from the Mexico acquisition, lower economic downtime and prior year mill closures and net cost deflation.
The Consumer Packaging segment reported sales of $1.06 billion, down 13% 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 $1.19 billion.
The adjusted segment EBITDA dipped 9% year over year to $166 million on lower volumes, increased economic downtime, net cost inflation and the prior year divestiture of interior partition operations.
Sales in the Global Paper segment declined 18.3% year over year to $918 million. The revenue estimate for the segment was $895 million. The decrease was caused by lower selling price/mix and volumes. The divestiture of mill operations last year also impacted the results. The adjusted segment EBITDA plunged 25% year over year to $118 million, reflecting lower selling price/mix, the impact of increased economic downtime and prior year mill closures.
The Distribution segment’s sales declined 10% year over year to $290 million on lower volumes, partially offset by higher selling price/mix. The Zacks Consensus Estimate for the Distribution segment’s revenues was $339 million. The segment’s adjusted EBITDA dropped 16.7% year over year to $9 million on low volumes and high costs.
Cash Position & Balance Sheet Updates
WRK had cash and cash equivalents of $488 million at the end of the first quarter of fiscal 2024 compared with $393 million as of the end of fiscal 2023. The company reported a total debt of $8.7 billion at the end of the first quarter of fiscal 2024 compared with $8.6 billion at the end of fiscal 2023.
Net cash provided by operating activities in the first quarter of fiscal 2024 was $275 million compared with $266 million in the year-ago quarter. In the reported quarter, WestRock invested $247 million in capital expenditure and returned $78 million to stockholders in dividend payments.
Price Performance
Shares of WestRock have gained 17.4% in the past year compared with the industry’s 1.5% growth.
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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 from the basic materials space include Cameco Corporation CCJ, Carpenter Technology Corporation CRS and Alpha Metallurgical Resources Inc. AMR.
Cameco, sporting a current Zacks Rank of 1, has a projected earnings growth rate of 188% for the current year. The Zacks Consensus Estimate for CCJ’s current-year earnings has been revised 12.5% upward in the past 60 days. The stock is up around 66.6% in a year.
Carpenter Technology currently sports a Zacks Rank of 1. CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, the average earnings surprise being 12.2%. The company’s shares have soared 23.7% in the past year.
The Zacks Consensus Estimate for AMR’s current-year earnings has been revised 69% upward in the past 60 days. It currently sports a Zacks Rank of 1. AMR delivered a trailing four-quarter earnings surprise of roughly 9.6%, on average. AMR shares are up around 144.6% in a year.
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