WestRock (WRK) Q2 Earnings and Revenues Surpass Estimates
WestRock Company WRK reported second-quarter fiscal 2022 (ended Mar 31, 2022) adjusted earnings of $1.17 per share, beating the Zacks Consensus Estimate of $1.01. The bottom line marked a year-over-year surge of 117%, driven by higher selling price/mix, improved volumes and solid performances across all of its segments.
Including one-time items, earnings were 15 cents per share compared with 42 cents reported in the prior-year quarter.
WestRock’s total revenues advanced 21.3% year over year to a record $5.4 billion, surpassing the Zacks Consensus Estimate of $5.08 billion. In the prior-year quarter, the company had witnessed an impact of $189 million on net sales due to a ransomware incident and bad weather. Excluding this impact, net sales improved 17% year over year
Cost of sales was up 19% year over year to $4,378 million in the fiscal second quarter. Gross profit surged 34% year over year to $1,004 million. Adjusted segment EBITDA was $854 million compared with $641 million in the year-earlier quarter, driven by strength across the segments, primarily in 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 14.7% year over year to $2,319 million during the quarter under review. Adjusted segment EBITDA increased 2.4% year over year to $329 million.
The Consumer Packaging segment reported sales of $1,251 million. Adjusted segment EBITDA rose 25% year over year to $206 million.
Sales in the Paper segment surged 36% year over year to $1,538 million. Adjusted segment EBITDA soared 93% year over year to $309 million.
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The Distribution segment’s sales improved 29% year over year to $362 million. Adjusted segment EBITDA rose a whopping 154% year over year to $28 million.
Financial Position
WestRock had cash and cash equivalents of $360 million as of Mar 31, 2022, compared with $291 million as of Sep 30, 2021. The company reported total debt of $8.4 billion as of the end of second-quarter 2022, up from $8.2 billion at the end of fiscal 2021.
Net cash provided by operating activities in the second quarter of fiscal 2022 was $390 million compared with $132 million in the prior-year quarter. During the quarter under review, WestRock invested $181 million in capital expenditures, spent $210 million on share repurchases and paid out $66 million as dividends to shareholders. WRK’s board of directors has authorized a repurchase of 25 million shares, which represents around 10% of its outstanding common shares.
Price Performance
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Shares of WestRock have fallen 12.3% over the past year, compared with the industry’s decline of 14.1%.
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 worth considering in the basic materials space include Steel Dynamics, Inc. STLD, AdvanSix Inc. ASIX and Commercial Metals Company CMC. All of these stocks carry a Zacks Rank #1.
Steel Dynamics has an expected earnings growth rate of 18.5% for the current year. The Zacks Consensus Estimate for STLD's current-year earnings has been revised upward by 32.5% over the last 60 days.
Steel Dynamics beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 2.5%. STLD has rallied around 45% in a year.
AdvanSix has an expected earnings growth rate of 63.4% for the current year. ASIX's consensus mark for current-year earnings has moved upward by 31.9% in the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed once, the average surprise being 23.6%. ASIX has surged around 53% in a year.
Commercial Metals has a projected earnings growth rate of 78.2% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised upward by 31.9% over the past 60 days.
Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed once, the average surprise being 16%. CMC has appreciated around 31% in a year.
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