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WestRock (WRK) Q1 Earnings Top Estimates, Revenues Down Y/Y

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Zacks Equity Research
·4 min read
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WestRock Company WRK reported first-quarter fiscal 2020 (ended Dec 31, 2020) adjusted earnings of 61 cents per share, up from the 58 cents recorded in the year-ago period. Moreover, the fiscal first-quarter earnings surpassed the Zacks Consensus Estimate of 54 cents.

Including one-time items, earnings was 57 cents per share compared with 531 cents reported in the prior-year quarter.

Operational Update

WestRock’s total revenues edged down 0.5% year over year to $4,401.5 million. The revenue figure, however, beat the consensus mark of $4,392 million. The decline was mainly due to the absence of Land and Development net sales in the reported quarter due to the completion of the monetization program in fiscal 2020.

Cost of sales was marginally up 0.9% year on year to $3,649 million during the fiscal first quarter. Gross profit slid 6.9% year over year to $752.9 million. Adjusted segment EBITDA was $669.8 million compared with the $675.3 million witnessed in the year-earlier quarter. Total segment income came in at $307.5 million, down from the year-ago quarter’s $331 million.

WestRock Company Price, Consensus and EPS Surprise

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

Corrugated Packaging: Sales in the segment dropped 1.5% year over year to $2,864.5 million during the December-end quarter primarily on lower corrugated selling price/mix, lower volumes, and unfavorable impact of the coronavirus pandemic and foreign currency. Adjusted segment EBITDA decreased 9.8% year over year to $457.9 million.

Consumer Packaging: Sales in the segment were up 3.8% year on year to $1,5951 million. This upswing resulted from higher selling price/mix, increased volumes, and favorable foreign currency impact. Adjusted segment EBITDA rose 26.8% year over year to $233.7 million.

Financial Position

WestRock had cash and cash equivalents of $253.8 million as of Dec 31, 2020, up from $251 million reported as of Sep 30, 2020. The company reported total debt of $8.94 billion as of Dec 31, 2020, down from the $9.43 billion as of Sep 30, 2020. Net cash provided by operating activities for the first-quarter fiscal 2020 was $719 million as compared with the $431 million recorded in the prior year quarter. During the first quarter of fiscal 2021, WestRock invested $171 million in capital expenditures and paid out $53 million in dividends to stockholders.

On Jan 25, 2021, the company revealed about a ransomware incident affecting certain of its operational and information technology systems. It is working continuously to recover and restore normal operations. It is also focused on meeting the rising demand for sustainable, fiber-based packaging solutions and confident that its strategies will be able to generate stronger cash flows.

Price Performance

Shares of WestRock have appreciated 11.7% over the past three months, underperforming the industry’s growth of 22.6%.

Zacks Rank & Other Stocks to Consider

WestRock currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Fortescue Metals Group Limited FSUGY, BHP Group BHP and Impala Platinum Holdings Limited IMPUY, all of which flaunt a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fortescue has a projected earnings growth rate of 75.5% for the current fiscal. The company’s shares have surged around 53% in the past three months.

BHP has an expected earnings growth rate of 59.5% for the current fiscal. The company’s shares have gained around 44% in the past three months.

Impala has an expected earnings growth rate of 189.4% for the current fiscal. The company’s shares have rallied around 49% in the past three months.

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