WestRock Reports Fiscal 4Q 2015 Results

WestRock Company announced results for its fiscal fourth quarter, which ended Sept. 30, 2015. On July 1, 2015, Rock-Tenn Company (RKT) and MeadWestvaco Corporation (MWV) completed a strategic combination of their respective businesses. After completion of this transaction, RockTenn and MeadWestvaco became wholly owned subsidiaries of WestRock.
 
Net sales for WestRock for the quarter ended Sept. 30, 2015, were $3.87 billion and segment income was $415 million. WestRock earnings were $0.44 per diluted share, including $112 million of pre-tax restructuring and other costs, for the quarter ended Sept. 30, 2015. The pre-tax restructuring costs included $68 million of integration expenses, including severance, $31 million of merger and acquisition expenses and $13 million of aggregate plant closure and divestiture costs. Adjusted earnings were $0.93 per diluted share.
 
“The WestRock team performed well and delivered solid earnings and cash flow in our first quarter as a new company,” said Steve Voorhees, CEO of WestRock, “We are driving value from the merger by achieving annualized run rate synergies and performance improvements ahead of our expectations and by providing a broad range of paper and packaging solutions to help our customers succeed in their markets”.
 
Nearly the entire $203 million decline in net sales compared to the combined prior year period was attributable to $141 million of foreign currency translations and $44 million for the loss of revenue from MeadWestvaco’s sale of the European tobacco converting business earlier in the year prior to the merger.
 
WestRock reports financial results in four reportable segments which represent the aggregation of similar operations across RockTenn and MeadWestvaco: Corrugated Packaging, Consumer Packaging, Specialty Chemicals, and Land and Development.
 
Corrugated Packaging consists of corrugated mill and packaging operations in North America, Brazil and India, and recycling operations, which reflects the combination of RockTenn’s Corrugated Packaging and Recycling segments with MeadWestvaco’s Industrial segment.
 
Consumer Packaging consists of consumer mills; folding carton; food and beverage; merchandising displays; home, health and beauty; and partition operations, which reflects the combination of MeadWestvaco’s Food & Beverage and Home, Health & Beauty segments and RockTenn’s Consumer Packaging and Merchandising Displays segments.
 
Specialty Chemicals is the MeadWestvaco segment that manufactures and distributes specialty chemicals for the transportation, energy, and infrastructure industries.
 
Land and Development is the MeadWestvaco Community Development and Land Management segment that develops and sells real estate primarily in the Charleston, SC market.
 
Corrugated Packaging sales were $1,987.3 million compared to            $2,062.7 million in 2014. Consumer Packaging sales were $1,642.0 million compared to 2014’s $1,781.6 million. Specialty Chemicals sales were $256.5 million, down from $282.5  in 4Q 2014, while Land and Development sales were $45.0 million, up from $8.8 million.
 
Cash from operations was $387 million in the fourth quarter of fiscal 2015, including the payment of approximately $108 million of after-tax restructuring costs incurred in the quarter and transaction fees unpaid at the time of the merger. Total debt was $5.63 billion at Sept. 30, 2015.