WESTROCK CO MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K) – Marketscreener.com

OVERVIEW
Presentation
Strategic Acquisitions and Other Portfolio Actions
On July 27, 2022, we announced our entry into an agreement to acquire the remaining 67.7% interest in Grupo Gondi. See “Note 3. Acquisitions and Investments” of the Notes to Consolidated Financial Statements for more information regarding the announcement.
with future carrying costs. See “Note 4. Restructuring and Other Costs” of the Notes to Consolidated Financial Statements for additional information.
Business Systems Transformation
A detailed review of our fiscal 2022, 2021 and 2020 performance appears below under “Results of Operations”.
Expectations for the First Quarter of Fiscal 2023 and Fiscal 2023
WestRock Pandemic Action Plan
The following table summarizes our consolidated results for the three years ended September 30, 2022 (in millions):
1,624.4
400.5
103.3
9.5
15.8
$ (690.9 )Net Sales (Unaffiliated Customers)
Net sales in fiscal 2022 increased $2,510.4 million, or 13.4%, compared to fiscal 2021 primarily due to the impact of higher selling price/mix that was partially offset by lower volumes and the unfavorable impact of foreign currency. In fiscal 2021, we lost an estimated $189.1 million of net sales associated with the Events, all in the second quarter.
See “Segment Information” below for the change in net sales before intersegment eliminations by segment.
Selling, General and Administrative Excluding Intangible Amortization
Selling, General and Administrative Intangible Amortization
Mineral Rights Impairment
Restructuring and Other Costs
Goodwill Impairment
Interest Expense, net
Pension and Other Postretirement Non-Service Income
Other (Expense) Income, net
Equity in Income of Unconsolidated Entities
Hurricane Michael
Corrugated Packaging Shipments
369.0 387.7 378.3
401.7 383.2 397.6
Corrugated Packaging Segment – Net Sales and Adjusted EBITDANet Sales before intersegment eliminationsNet Sales (Aggregate) – Corrugated Packaging Segment
Adjusted EBITDA – Corrugated Packaging Segment
391.1 401.7 1,542.8
386.4 389.5 1,529.9
Consumer Packaging Segment – Net Sales and Adjusted EBITDANet Sales before intersegment eliminationsNet Sales (Aggregate) – Consumer Packaging Segment
Adjusted EBITDA – Consumer Packaging Segment
Global Paper Segment
Global Paper Shipments
1,528.0 6,517.8
1,738.7 6,271.6
Global Paper Segment – Net Sales and Adjusted EBITDANet Sales before intersegment eliminationsNet Sales (Aggregate) – Global Paper Segment
Adjusted EBITDA – Global Paper Segment
Distribution Segment
Distribution Shipments
56.8 192.7
53.1 227.6
Distribution Segment – Net Sales and Adjusted EBITDANet Sales before intersegment eliminationsNet Sales (Aggregate) – Distribution Segment
Adjusted EBITDA – Distribution Segment
Our credit facilities contain certain restrictive covenants, including a covenant to satisfy a debt to capitalization ratio. We test and report our compliance with all of these covenants as required by these facilities and were in compliance with them at September 30, 2022.
At September 30, 2022, we had $57.1 million of outstanding letters of credit not drawn upon.
Net cash provided by operating activities $ 2,020.4 $ 2,279.9 $
2,070.7
Net cash used for investing activities $ (776.0 ) $ (676.0 ) $
(921.5 ) Net cash used for financing activities $ (1,281.3 ) $ (1,580.4 ) $ (1,021.1 )
Contractual Obligations
(2)
See “Note 14. Leases” of the Notes to Consolidated Financial Statements for additional information.
(3)
Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provision; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty.
(4)
(5)
We have not included the following items in the table:

An item labeled “other long-term liabilities” reflected on our consolidated balance sheet because these liabilities do not have a defined pay-out schedule.

Guarantor Summarized Financial Information
WRKCo, Inc. (the “Issuer”), a wholly owned subsidiary of WestRock Company (“Parent”), has issued the following debt securities pursuant to offerings registered under the Securities Act of 1933, as amended (collectively for purposes of this subsection, the “Notes”)(in millions, except percentages):
SUMMARIZED STATEMENT OF OPERATIONS
30,
1,813.4
1,162.8
949.1
Interest expense, net with non-Guarantor Subsidiaries $ (98.2 ) Net income and net income attributable to the Obligor Group $ 33.6
Noncurrent amounts due from non-
Noncurrent amounts due to non-
Other noncurrent assets includes aggregate goodwill and intangibles, net of $1,601.2 million and $1,699.2 million as of September 30, 2022 and September 30, 2021, respectively.
Set forth below is a reconciliation of the non-GAAP financial measure Adjusted Earnings Per Diluted Share to Earnings (loss) per diluted share, the most directly comparable GAAP measure (in dollars per share) for the periods indicated.
2020
North Charleston and Florence transition and
Accelerated depreciation on certain facility
Losses at closed facilities, transition and
MEPP liability adjustment due to interest rates (36.2 ) 8.9
Ransomware recovery costs, net of insurance
Losses at closed facilities, transition and
Accelerated depreciation on certain facility
North Charleston and Florence transition and
Losses at closed plants, transition and
Accelerated depreciation on major capital
MEPP liability adjustment due to interest rates 15.0 (3.7 )
Set forth below is a reconciliation of the non-GAAP financial measure Consolidated Adjusted EBITDA to Net income (loss) attributable to common stockholders periods indicated (in millions).
September 30,
2020
1.5
393.5
Multiemployer pension withdrawal expense (income) 0.2 (2.9 ) (1.1 ) Gain on sale of certain closed facilities
The table above adds back expense or subtracts income for certain financial statement and segment footnote items to compute Consolidated Adjusted EBITDA.
We have prepared our accompanying consolidated financial statements in conformity with GAAP, which requires management to make estimates that affect the amounts of revenues, expenses, assets and liabilities reported. Certain significant accounting policies are described in “Note 1. Description of Business and Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements.
Goodwill
See Item 1A. “Risk Factors – We Have a Significant Amount of Goodwill and Other Intangible Assets and a Write-Down Could Materially Adversely Impact Our Operating Results and Stockholders’ Equity”.
Long-Lived Assets
Our judgments regarding the existence of impairment indicators are based on legal factors, market conditions and operational performance. Future events could cause us to conclude that impairment indicators exist and that assets associated with a particular operation are impaired. Evaluating impairment also requires us to estimate future operating results and cash flows, which also require judgment by management.
Accounting for Income Taxes
See “Note 1. Description of Business and Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements, including the respective expected dates of adoption and expected effects on our results of operations and financial condition.
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