WestRock reports positive results for Fiscal Q2 2019
Second Quarter 2019 Highlights
- The Corrugated Packaging segment delivered a Segment EBITDA margin of 18.5% and a North American Adjusted Segment EBITDA margin of 20.4%, an increase of 10 basis points and 40 basis points, respectively, compared to the prior year quarter.
- Successfully completed the installation of a state-of-the-art curtain coater at the Mahrt mill, improving both the quality of the mill’s products and its productivity.
- Achieved $70 million of run-rate synergies towards the $200 million target for the KapStone acquisition.
“Our WestRock team delivered outstanding results in the second fiscal quarter,” says CEO Steve Voorhees. “We’re responding to changing market conditions by focusing on organic growth opportunities, maintaining a focus on productivity, operational excellence and debt reduction, while continuing to return cash to stockholders. With the advantages of our diverse portfolio and the multiple levers in our control, I remain confident in our ability to create long-term value for our customers and for our stockholders.”
Operating Highlights for the Three Months Ended March 31, 2019 compared to March 31, 2018:
Net sales increased $603 million compared to the prior year quarter primarily attributable to $599 million of increased Corrugated Packaging segment net sales (mainly due to the acquisition of KapStone Paper and Packaging Corp.), higher selling price/mix across the segment and strength in our North American container business. These increased sales were partially offset by the absence of recycling sales in the current year quarter as a result of conducting the operations primarily as a procurement function beginning in fiscal 2019, lower containerboard volumes and unfavorable foreign currency compared to the prior year quarter. Net sales, adjusted to exclude recycling net sales in the prior year quarter for comparability, increased $713 million.
Segment income increased $23 million compared to the prior year quarter primarily attributable to $48 million of increased Corrugated Packaging segment income, $16 million of decreased Land and Development segment income and $9 million of decreased Consumer Packaging segment income. The increase in segment income primarily included the contribution from acquired operations, higher selling price/mix across our segments and productivity. These items were largely offset by higher levels of cost inflation, lower containerboard volumes, economic downtime, the scheduled strategic outage at the Mahrt mill and lower Land and Development segment income due to the winding down of sales.
Results in the second quarter of fiscal 2018 were negatively impacted by an estimated $28 million due to the impact of winter weather that was partially offset by $10 million of income related to an acquisition reserve adjustment in our Consumer Packaging segment.