Earnings call transcript Q3 2023

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Operator

Good morning and welcome to the WestRock Third Fiscal Quarter 2023 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.

I'd now like to turn the conference over to Rob Quartaro, Senior Vice President of Investor Relations. Please go ahead.

Robert Quartaro

you our thank XXXX fiscal and call. earnings morning, for third joining quarter Good press morning our release accompanying our issued We this the Relations presentation and Investor section of website. to the posted at ir.westrock.com using you're this They can view be or a the to link via webcast. application on accessed

Officer, Alex With Pease. Executive WestRock's me our and are call Sewell; on Chief today's Chief David Financial Officer,

session. will comments, Following we open the for our question-and-answer prepared call

estimates, our call, those beliefs we XXth, quarter making ended and plans, for from uncertainties XX-Q our we these and will fiscal future XX-K describe our XXXX, actual for expectations, materially These the related and fiscal the involving XXXX. XX, SEC, to cause results events. number targets, assumptions, today's to During We year ended including and of a uncertainties the forward-looking projections, discussed our September risks that be filings involve could differ statements risks, during call. March statements in with the assumptions,

will We non-GAAP the during measures financial call. be also referencing

provided in We measures the directly to most these presentation. measures non-GAAP GAAP of the appendix comparable of the reconciliations slide have

As our website. available mentioned is on the previously, slide presentation

David. With it turn over to that, you, I'll

David Sewell

earnings Thank fiscal with you for you, on call initiatives. self-help and making our our quarter all Rob. the in today. results review joining And be third our I'll our thank call of progress we're

review fourth will in provide more results Alex our quarter. the that, outlook Following detail for and our

adjusted and $XXX due were input adjusted third sales EBITDA strong our costs. on Turning to consolidated was gains billion $X.XX. million, our three. quarter results moderating was and EPS $X.X to exceeded Slide execution, productivity We guidance Net

talented dynamic business of the and tremendous the of strong resiliency our this reflect Our backdrop members. quarter a efforts results against team our

we reminder, quarter. the As record year comparisons in faced with prior results a difficult

calendar year-over-year, the elevated the in mid-single declined year. quarter as shipments day prior and all sequentially were seen We've inventory, during were stable. and with we've packaging the market and healthcare per impacted year corrugated strongest volumes July third we up digits strong inflation down seen American demand Consumer backlogs our excess from improvement packaging North day for per customers consumer reduced demand While results. shipments quarter retailers lapped

expect the moderating forward, and wins. are fiscal growing. Long-term new customer we are XXXX, with inventory Looking in packaging healthy strong markets end in half by relationships first improvement driven business and of inflation fundamentals we our positioned consumer well rebalancing, and remain business that

a to solutions, business. Over demand time, machinery we due record expect our navigate To our global year paper after for business expanding growth We've organic moderation seen growing our innovative fiscal packaging the in and continued sustainable XXXX. in our scale, we term, leveraging and current exposure customers prioritize our environment, will expect strategic overall broad enable are strategic strategy us we customer of to our sales. reducing our while substrates external to relationships. paper optimization portfolio portfolio Longer a

at teams extremely our are winning executing I'm and business. how pleased new

teams wins. delivering growth our on all commercial of and value are the demonstrating Our which of focused offerings, pipelines new are differentiated business building

$XXX are more on run progress And to this savings to with track expectations. year cost has that we Our excited million to-date savings. exit I'm than exceeded fiscal report rate in

quarter and excluding savings cost year-to-date, downtime the $XX During and million million achieve $XXX we inflation. of

the opportunities making Washington our made we ahead continue our great of closure difficult Tacoma of week, and see the are we progress optimize announcement portfolio. this tremendous mill. We with Earlier and to the we decision

July. locations, a to just minority bringing interest our on working we through in and details sold actions our seven transition closely with more packaging non-strategic expect September We cease and and portfolio a are our three also in total announced additional venture consolidation provide our joint on the the moment. operations to of additionally I'll employees converting

broad portfolio And our are we four, already. we've value tremendous progress made laser on of Slide to assets. Turning focused from unlocking

We well the continue we our end by fiscal of billion way. cost XXXX are target and more to on than in savings $X

productivity reductions, efforts SG&A significant chain and Our supply results. efficiencies are delivering

As more $XXX rate run fiscal in with previously than are track savings. on XXXX million to mentioned, exit we

made with We in further we remain pleased efficiencies the and are progress committed unlocking we've business. to our

proactively been footprint facilities closing by less and production We've efficient our larger and plants. optimizing consolidating

Our goal capital. our our efficiencies, cost and on improve is improve to invested return drive structure,

to mill, mill with Our mill recent our announcement we closures, to returns. our strategy. Similar the another achieving significant this and to toward greater Tacoma did example shift capital path required to not we can return previous projects By other see closing close investment is the our remain Tacoma competitive, mill a of targets.

we and Tacoma structure. improving with our Additionally, and costs are our margin closures, our previous lowering mill overall

tonnes, linerboard, annual including pulp. XXX,XXX top capacity production is and paper, craft white approximately Tacoma’s

the to of expected Approximately With we charges two-thirds to the these plan ship we other quarter. of the a our mills to network, charges, $XXX production are million restructuring of be pulp to our incur in facilities substantial majority excluding closure, recognized fourth majority non-cash. expect in with

Tacoma announcement the the than substantially months With it closure, mill portfolio ago. our XX is was different of

mill strategic $XXX These enable network us assets, noncore approximately flexibility. to end our announced With million profitability, ongoing averaging exit and of annual capital closures of and fit, we are repurpose reducing anticipated closures evaluated X.X assets, tons and spending, technical of needs, cost markets. capacity, capital our we considered age we production higher As million our capacity. mills product mix,

In our by addition, our actions, average with exposure cost corrugated open decreasing mill these North ton. market reducing per American to we $XX and the are

these to to and positioned and beyond. efficient focused leverage our return our within are times remain more capital, investing our strategic to target to capital been footprint, capital yet system of through invested serve and serve returning and X.XX us and enables Through also shareholders disciplined customers. returning in a XXXX improve X.XX We've dividend. smaller Our in and we on on our allocation sustainable markets assets growing in our times current range to customers mill well our

we targeting assets on return are our a greater recapitalize generating IRR XX% to work we than As projects. future

to return on drive milk invested to Through us investments improve recapitalization portfolio our costs. drive enable and strategies to mill further and expect our capital. and optimization we margins our reduce asset efficiencies expect We

to invest in to Lastly, which in consolidate deliver to us to million annual operations Longview start close box Pacific our of fully completing in construction November. once to facility world class is state-of-the This is will operations mature. in we We're expected enable expected converting plant, further and continue art growth. Northwest the $XX benefit

growth our our of acquisition. example in Another is investments Mexico

growing transaction customers. many This market fast Latin brought and our to us to multinational exposure of our American closer increased the

prospects about Through expansion margins significant operations are profitable increase reduce Mexican integration, initiatives, expectations expect growth Our due future and to ongoing invested drive volatility, in economic and return we on we are growth. supply excited chains. and improvement to exceeding drive these our capital, and shortening

Turning to Slide five.

highlight needs. recent approached request example with to innovative portfolio our their based Costco single like solutions handles I'd solution. us Alex, to it meet fiber and of are the helping sustainable to our recently broad multipack and passing sustainability a how plastic a use customers Before replace win with

these In eliminate comfort, are sizes, durability response, These a new bottles engineered provide multipacks graphics EnduraGrip a our and and the range They of surface Cluster-Clip. of and for for for solutions crisp, fully in while handles. printable bundling providing shapes, weights. and of developed and plastic designers use vibrant jars, and

is machinery also strategic adoption. helping drive business Our

partnership. our of part As

sustainable that Costco speeds, We drive and reduce increased solutions and to packaging. are to automate to plastic with single introduce manufacturers manufacturers efficiencies. working their partner We're their packaging use with Costco production packing help proud lines,

them This one both value and the is Enterprise is this our customers, position capabilities of many how sales Costco portfolio provide. like of demonstrate through just WestRocks enterprise for unique serve we differentiated one example our and growth. WestRocks segments. corrugated broad consumer and solutions that us of relationships

$X sales. Through excellence our diversified strong customer billion enterprise in and portfolio, we've achieved commercial relationships over

to over replacement on $XXX we and pace in traction, gain innovations million this deliver continue year. are plastics Our revenue to

replacements, with of total more million We by significant $XX for opportunities XXXX, global market see fiscal are targeting plastics billion $XXX ahead. a than we addressable

now I'll Alex over segment in to turn detail. discuss more results our to

Alex Pease

David. Thanks,

to Slide results six. Moving consolidated our quarterly on

sales EBITDA year-over-year. of $XXX discuss down adjusted a net points global XXX a down decline billion EBITDA was Consolidated paper XX.X%, decline I were moment. consolidated and within $X.X This our Quarter which primarily will adjusted basis margin segment, X.X% was was million XX.X%. in Third

year-over-year, driven in million and cost These million. cost positively operating year-over-year benefits was input than deflation $XX $XXX were contributed Price million of more by Input lower $XX million the lower $XX lower largely by quarter. and prices OCC of mix and costs deflation contributed contributed in offset million. economic $XX energy volumes downtime

in impacted consolidated incurred quarter XXX,XXX our adjusted corrugated also costs downtime in We $XX million. with Non-cash negatively EBITDA and XXX,XXX tonnes pension year-over-year system, and consumer. by tonnes of tonnes XXX,XXX economic the

plans remain overfunded. reminder, our pension a As US

And X.XX debt. this use adjusted to the dollars of net cash flow quarter, of generated million million with ended We During of repay leverage free we strong cash the quarter $XXX $XXX flow. times. we

prioritize X.XX times. debt and reduction to to to our returning leverage times target continue of our X.XX We range

million are of We XXXX. $XXX fiscal now $X year adjusted free cash targeting flow to billion for

to $XX sales pricing over increased year growth sales and Adjusted EBITDA costs XX deflation trade cost offset X, year. increase economic primarily to in million This XX.X%. mix. packaging lower Slide million. million million Turning X.X% acquisition due points downtime and $XX million $XX trade million sales XX.X% were Mexico operating volumes EBITDA basis margin, increased benefits $XXX $X.X strong or partially or benefited billion, EBITDA of from $XX excluding Year-over-year excluding and our million $XX price adjusted corrugated an of lower favorable was mix. year-over-year segment by to due input $XX from These Adjusted of were to

$X to acquisition. operations the with revenue corrugated our of certain our connection results of consumer adjusted and that include American related packaging Mexico realignment million in $XX Note, EBITDA of million converting Latin

David quarter. corrugated stable packaging last were shipments As from indicated,

and we easier of excellence driving the improving comparisons. expect move mitigate and remain gradually we on previously productivity As commercial to published focused price volumes declines. impact We forward, year-over-year

or mix million, XX than were decrease as or business offset year-over-year. lower of million, inflation items. $X.X costs margin million consumer on million decline downtime Strong of EBITDA declined These year-over-year. contributed to as by $XX and million. and X.X% $XX $XX economic Turning basis Adjusted $XX sales operating Segments other $XX eight. of points a of $XX price packaging volumes a million well million EBITDA adjusted benefits billion, Slide was lower $X contributed X.X% of more the XX.X%, and were

X.X% increased Net mentioned inventory business. last the year-over-year. revenue difficult converting X.X% and softer chain market through previously of healthcare sales comparisons strong adjusted consumer the for from and Adjusted operations, volumes organic X.X% year's by supply year-over-year, reductions driven increased declined EBITDA certain demand, realignment

However, we continue gain are managing to well new and business.

was reminder adjusted XX% over a years EBITDA year-over-year. up last As

demand rebalancing, David we term, for Longer sustainable due As are in year to increasing to half business. expect profitability first growing inventory fiscal expanding moderating positioned business and due well inflation the XXXX, drive wins. machinery packaging indicated, new conditions end of we improving our and markets, to

nine. million that margin with basis $XX year-over-year and to $XX to sales EBITDA economic and XXXX, paper $XXX than Adjusted price Turning and segments mix lower or costs decreased These adjusted EBITDA declined points. million of XX.X% margins cost downtime of since $XXX by declining $XXX and adjusted XX.X%. Slide Note of X% are Input EBITDA contributed $XX Global XX.X% billion. $X.X lower offset operating to third million our million the million, deflation more up XXX up were contributed quarter volume of is million, dollars. million. $XX to

has driven throughout inflation, spending containerboard and During external elevated inventories shifting experienced XXXX, the our excess volume by year year-over-year chain. supply declines consumer fiscal

our impacted revenue Additionally, and margins. negatively published price have changes

demand containerboard expect We volumes calendar stabilized the continue as U.S. believe progresses. and to has year improving we

conditions packaging to paperboard and into demand business demand the continued softer in our have segment, external softer food and commercial we've recently inventories principally and driven print our consumer fourth These experienced elevated quarter. by packaging. Similar

relative exposure. However, our XXXX, given we market expect and improvement fiscal end the stability of

are our Next, distribution Slide results XX. on

and and and sales were large in due adjusted year's last decline year-over-year, moving business to difficult comparisons our EBITDA a healthcare from order. Our down storage

environment. by capabilities focused the on savings improving Over excellence. driving unique are operational to business leveraging and grow we navigate distribution We and driving opportunity time to cost our operations our current see

Turning to XX. guidance on Slide

impact offset price improving published declines, partially by remain be of market expect continuing to gradually the challenging conditions we with of those While volumes. conditions realization

$X.XX Our a $XXX million for quarter EBITDA million forecast to and consolidated adjusted $XXX fourth EPS $X.XX and adjusted share. is between

moderately our fiber for chemicals. assumptions stable outlook driven Some virgin costs and and by in sequential costs energy higher higher costs include behind recycled fiber costs, lower slightly

$XX tax million effective XX%. Note, favorably the and and rate release positions, between lastly state items. approximately impacted is shares adjusted X% tax other rate lower to credits An discrete tax uncertain approximately by this XXX of diluted outstanding. related million And of

fourth the of quarter. maintenance tonnes system our planning across scheduled we're XX,XXX downtime Additionally, in

turn it to before Q&A. now I'll back David move we to conclude to

David Sewell

Alex. Thanks,

I progress on As and incredibly you made. can see, of we are proud commitments, we've the am delivering our

the journey, be As front excited more couldn't I we continue about in of our us. opportunities

self-help packaging In large provide. deliver a diverse billion over portfolio, addition with remains to solutions in the scale, range to $X WestRock and we customers our our sales, to uniquely enterprise full positioned opportunity, customers, value of sustainable sustainable solutions our

Our WestRock our ahead. plastic long business innovation the continue about drive and And platform, I'm ability to growing excited term solutions confident growth. position value. margins, long and replacement path machinery, for shareholder well, in extremely to growth term I'm

Thank let's Rob, you. to And that, with Q&A. move

Robert Quartaro

we're questions. for ready Thanks, David. Operator,

Operator

[Operator from Truist. come Mike first will Instructions] question with Our Roxland

now may go You ahead.

Mike Roxland

than end about notably begin Start cadence corrugated, congrats very of good Thank you, others? the quarter. you did markets off the any a Rob, David, quarter. Alex improve during on to just and shipments more with talk can And

David Sewell

-- really QX, But rate really to as we And year. the just encouraging mid-single us, was the stable we are The to up to we've our was order this in calendar pretty July, quarter, experiencing I from went strongest had into alluded business earlier, what’s QX backlogs digits. in Mike. Hey, our corrugated QX. and as

liked really corrugated as forward. we the move we So of momentum

to the As I think strong beverage out Americas. as one beverage produce Mexico exciting really what's beverage segments, been like about customers acquisition, me our some for that to the well. serve to are gravitating entire going ability has really And is really we about our our And with us that and multinational the agriculture. and of is, what's talk on we jumps

we see we as just move positive So a as trend forward. that

Mike Roxland

David. taken in -- boxboard or started ago, economic And things Thanks just taking color, packaging, the downtime. consumer response, a started weaken then terms Got. or for in of obviously, some to so you've quarter

improve better how to gives things I an today? level in Are could what indications that mean, first to that get you You gives things are your there? the of -- here rather confidence guess going guess, going sooner you half, to from what from I are improvement customers that later restock? mentioned, though, I you fiscal expect have they're you certainty than that getting what you going to that say

David Sewell

And the that. we really a And saw space, consumer work with lot off were this we XX them. took that's reshifted last because inventory our And Mike, in that question their we is good with working what levels. we We'll customers on days rebalance commentary very just inventories. through to about in in was, that closely week through as closely they gets received a our customers the went process, of the large manufacturing, this quarter. right us to work the

market. And out space the consistent -- well we're XXXX, in of to expressed that as and externally them is then And as to be we us it as really across customers into internally as forecasts ripe open all go for our the to growth. said going it's they've for build they've we our

and us everything in we're consistency and in QX hear, XXXX. everything then telling QX from is be everything just stable we will growth So they're a there's seeing I think

Mike Roxland

much Thank good rest and the of you year. the for very luck

Operator

question America. come Bank next Our from with will of Staphos George

ahead. You may now go

George Staphos

And that Thanks will details. you When we you very Hi, lot return to about help morning. I lowered incremental you an you off the in just over for return it added that on And much. announced? announced of to what the talk when that your change. what David, talk have on about of little to otherwise think been? and to think basis what about annualized would Good how you you've closures EBITDA, bit Can it that talk tonnes last do do specific taken capital the Thanks about expect everyone. that, year that the those million your close, capital? think -- total. a has on X.X you a capacity mill your top, think from closures wanted you've

Alex Pease

Sure.

current mills in EBITDA. conditions, were of the answer So, is, these the generating positive all not easy

So accretive dollars then avoiding other to EBITDA EBITDA nature high mills, and costs both up the reallocating combination the production fixed to of and margin. basically lines the

standpoint, an doing from of to it great decision a profitability right the operationally overall And I was and our the to lot flexibility really we're think speaks it network. of the So the that unlock the that we factories can so reduce mills of move downtime other from the we're lot unplanned mills. closing just hidden a production strategic the the of work, and substrates into

exit did certain that strategic We product not were lines us. to

example. be would [indiscernible] So be another pulp example, fluff would one

products weren't substrates exit there us, anyway. did those again, those or and we weren't So we strategic markets. really But any making for money

divert support capital these a to capital. it's of In keeping term life toward more essentially that able million $XXX were lack better capital, terms mills that from growth of of redirecting we and combined, than for oriented on

sustaining availability. in capital David XX% anywhere mentioned reducing and were typically growth we And our IRR. those capital growth So and capital are basically prepared our remarks, his as needs XX% increasing investments between

In of a terms the of ROID, be the your is aggregate question. denominator Quite candidly, number. would because deminimis large part such it that

of capital way of of basis sort invested by XX heuristic billion points a ROIC. incremental about of Just $X generates

all was So, probably capital. $XXX these million mills order total, think about the combined billion, of in a of of I in $X invested

ROIC, the generates XX would reducing what But that improved really -- add? get but the ROI in a where the So improvement the basis improved call lift than much in David, because, be you know, return EBITDA that points is greater denominator. it we for would of you us

David Sewell

benefit cost more when at, at well. you No, just profitable the we is, cost capital actually you mills, the And of Not only facilities. higher mills getting mentioned, our efforts, I the important look we're but getting as productivity Alex is redeploy look I other we're running. captured reducing it those to at think think the thing when it Alex and

a for going return generating really us. it's to be entity So

George Staphos

you helpful. at was quarter, had in of I billion last the terms enterprise and we again, Can recognizing guess, billion seeing That more, lot lot said mean, sales maybe from WestRocks also you money, strategy, a was were talk talk $X about talk progress figure lot there? of a question of think $X or next sales, Enterprise more everyone. really Thanks, is for the I a about a you're the I which installations. precisely revenue. I you you lot --- machinery

over last And it and seeing terms you're question. what progress in of tack The installations, that machinery turn a and then I'll ticky adding profit? just

terms last quarter for said downtime, hear think and paper? What tonnes, miss the this one-o-one XXX,XXX you I think was figure Did you the I I of for guys. overall said consumer. took you corrugated something economic for you there? in I miss if Thank didn't XXX,XXX you

David Sewell

start just we've I at part downtime. capability, the -- about I'll earlier had most about momentum Alex, when rundown long where it Sure. by of the and first it's I alluded And have time. enterprise think the George, I'll question, we've our on answering had you comment your we're a to give then in economic point I an kind of our just think a Mexico. in

we solution. very and a up they that was come we was consumer doing them seamless a business were expanded So, had coordinate us we example, United with a And in effective were that of that and asking solution. that to help large a handoff corrugated, for Mexico, able came just for all they to customer, with States, line product the in

beverage exciting large was was received customer be at for and same replacements, efficient that. sites. of what a and was it in And looking machinery their consumer that process further doing then wanted also order And to plastics a we very then is their customer,

them plastics solution can as single based a use and replacement. efficient into be eliminate and move we plastics So help more they fiber

just we're excitement many that's our able are because crossover about for connectivity, there's that to enterprise looking just it's really and customers driving do that now and solutions, that corrugated between So so sales, consumer, that.

working see look I our results benefits alone, bottom when at you line. can And you coordinated into are think, just our the just

customize our we machinery our place is great ability enterprise, worldwide, to we customer’s key incredibly to have is feel backlog about is our a So, That machines lines. over our XXXX production now strong. in component

plastics replacement, the enormously important. is with this So

you've plastic to lot talk a ecommerce And of wanting heard about finally, customer's mailers. exit

which And lot opportunity great so just packing that seeing our as of around a demand, craft machinery is for and well. that excitement energy a and we're business, paper

why Costco we and future to our consumer that's really asking that to alone, all us just a the solution. again, provide for about have we're enterprise the able portfolio customers. a customers There combining with machinery So corrugated what well. just as them excited our was and example came relationship And is and

Alex talk your downtime I'll economic over about turn to it to question.

Alex Pease

of a to facts out just George, put there. Yes. couple

corrugated So in between XX% XX%. our integration rates are and

the corrugated consumer of math integration So tonnes then that take, related business, you apply same XXX,XXX rates if segment. you about tonnes business in will or if get corrugated on XX,XXX roughly XX,XXX business. the you'd so in tonnes give XX%, downtime you to the around merchant the that consumer the in consumer And -- the do give for

total Another is that about downtime, the basis, $XX that $XX that paper, about segment. global on about and consumer was in million think million $XX it million in million of about way consolidated of we with was corrugated in of to cost was a was economic the $XXX in had associated

of give that falls out. the So that you of should breakdown how sort

George Staphos

in Good that. you for Thank That’s quarter. great, I'll luck turn over. it the Alex.

Operator

Our Fargo. next Wells with Hajde from question will come Gabe

go may You now ahead.

Gabe Hajde

the morning. that investments David, wanted for Thanks I taking strategic are Alex, to some you the about good guys of ask question. making.

And you're Investor up have I Northwest. called think in the period oriented out, at to think over million doing projects. in that kind of the You million return annually you'd the $XXX three-year Pacific I Day, $XXX boxplant the

boxplant. just a given line, in flows third and in down seemingly then is the that I like Can part why you reason like said, that's the kind in little I and with the And cash of beat EBITDA maybe you're of quarter of an quarter acceleration is obviously kind there about talk where at I fourth that? here coming mean, know outlook. bit

Alex Pease

it over to then David. I'll turn Yes, so Gabe, I'll start and

When CapEx on million number number we'll Day Investor as I David $XXX level So will million mentioned but. in gave and focused view the a believe which that his we're strategically, network, the start the That's More and we $X XXXX, and the us capital. outlook ROICs converting and in drive Longview actions CapEx XXXX higher that some are our footprint looks in operate boxplant billion strategic guidance, and remarks, we our range efficiently. overall going other sticking well, prepared $XXX about still a on planning, we are, that's really view is on higher it was much higher yes, terms investment on margins, finer of like it's recapitalization have talking baseload of And a perfect longer between driving we exceedingly we're what that. of to. the the top example and that network middle of to to allow of going allows more

in prepared we talking we about speak, we're as investing our about But it's returns. time we business we to our We're as We're the and kind converting today, higher country five And not on and some beyond. planning for at of really mill looking optimize going increase on types order more flexibility of really as opportunities of around network. mill that really company, to of within the driving footprint I assets. the any a XXXX all work so it talk of is think really exciting start to investments, will, about those of think our our but

our to EBITDAs things really around good there's we've a up In is than $XXX slightly from that. challenging below that catching flow in couple $X terms is guide last during a mean, when to capital which we're $X year. of bottlenecks invest are we're a and million we billion billion, able in cash the started But been a expectations more delivering environment, our Obviously look, deployment of we the COVID. invested of our I the year, I think exceptionally results business, behind some

million to this this of even testament operating that the business is all flow amount and is And $XXX pretty I exceptional of of deliver generate. positive. a low the in range frankly, of to environment really at think, end So strength we candidly, cash the is, our

David Sewell

mills question alluded I Redeploying would way, you as other the the the capital kind your strategy the difficult blanket exceptionally would decision to. the it to only shut down Yes, to we this redeploy. going profitable that at thing we with on, just efficient as costs, able because mills additional those had overall, and of CapEx to more are Alex to Gabe, to I higher we're make the our add make

then consolidations, there's So is network these involved mill output on our talked per Alex we more as these be going site. assets, as our efficient. do potentially to And more efficient, make about, converting converting more as much larger, CapEx we assets

a also profitability And and us so drive ROIC. that's combined give going to will higher more

focused on overall higher are strategy. the segments that look our of that's really solution What that And we how consolidates So our commercial higher growth you as and right everything a we to kind at think about overall. we're have together margin, that it then great tying where into that win are strategy?

Gabe Hajde

think And up focus. sequential you business. one year on that. remarks, near said And prepared point I over question, the response mid-single your year mid I a then Thank you, both up hopefully, for singles of David, then term basis. maybe it clarification in in was think more in corrugated digit, to one, quick a

-- talked you in of could a think about you I So are just maybe clarification, corrugated. stable point

intending you are just So what there?

David Sewell

mid-single so clarification, was Yes, for it QX. from digits up

it's in the year. the up and was So our calendar strongest backlog mid-single we're digits, sequentially been

and we that that to forward move seeing just QX, improvement as in continue we expect So we're as we XXXX. get into

at that's of of the And we now down we cycle we the have how bottom the on XXXX come upswing. as we So and and out forward. QX feel our move really like we are look

Gabe Hajde

both Thank and good you luck.

Operator

from Weintraub next Research Seaport Partners. will Mark question Our with come

go You may ahead. now

Mark Weintraub

Thank you.

doing of otherwise going have is capital remaining some be some to Or at most incremental going to So you the Is increase that the to it projects at type be to make cetera? been some efficiency you're Florence point? this facilities the mentioned likely closing, to the of projects? would redeploying going the mills, et sense

David Sewell

It's question. highest to company our what both. of at of drives good combination want all returns. where be, really at and we look to the be assets, a Mark, to the look We going we

there if is direction So projects. these to to footprint, of another incremental type we're we in investment going the Florence our some need that that's addition go, for

think, that color combination year, go about investment, Alex detail both. see closer fiscal to to million you it. million, when of I give So as around as and that $XXX a into more to And going get $XXX get much we XXXX -- you're talked you strategic will

Mark Weintraub

great, going second, of in Improvement focusing self-help. just Okay, the about thank target to profit Then believe still million kind ‘XX. billion $XXX that $X you. was program fiscal on I

So about you to could be likely And talked fiscal rates, think do ‘XX? be sort would on you there just what I you know, will you wanted probably in of I but but much of accomplished up, magnitude, have the just us think docket exit an if fiscal clarify. for just ‘XX? order would then know step a let how

Alex Pease

million well then bridged way million $XXX of the that. Mark, in in remainder the ‘XX. ahead we've though, and it is think in around ‘XX, I we're $XXX Yes, ‘XX, Actually,

SG&A each. really supply of is roughly to, are we're balance savings, mentioned, in chain committed of just $XXX this exiting we're at run team making being million we around great progress. the stage year anticipating XX-XX the of million the $XXX the And, the around we rates north and about related we're So savings, game savings, that talking year is as what at because

unlock hidden the consolidations, moving will of talked factory, about, downtime unplanned these reduction But really which we're closures rates. a operational on get with flywheel and in really as asset we've starting lot plant and lower a of waste of drive the to improvements, some

should to And those accelerate. so see numbers you begin

savings the good feel about we're really productivity doing on we what So and cost side.

Mark Weintraub

Okay, have process. we very just where if and recognizing facility did the order keeping it's still and question another $XXX on actions a dynamic -- to I from Are magnitude possible. in fiscal of thinking ‘XX, you it separate incremental there's the closures million if possible, follow-up

Alex Pease

Yes.

take to make end $XXX top just going let's we're do in between and that. So $XXX the math ‘XX, to just say million of the million easy,

exit rate into get I a still going XXX put incremental say for think I XXX that's, with XXX to ‘XX. think frankly, We're that operating and And rollover But you our to you number, as is in be that the into conservative. million number building XXX, would there's ‘XX. $XXX its say at would then just plans ‘XX. So going

Mark Weintraub

focus related And converting then just that just we super. closed if actions. being Okay, mills plan and two on in the the of process are

of You again incremental, what's what's as of to moving sense net talked sort a there the costs one-time, being you are the then are of cash could also give cash magnitude, costs, actions? bunch obviously the this a And to closure parts. and but which kind about closure related recognizing closure -- us EBITDA net

Alex Pease

a answer in incremental volumes we environment based around where tonne, $XXX it a sense, question, closed. to to at. is tricky so The tonne hard per are around just that because just looking EBITDA $XXX tonne the mills to little generalities, volume and than just we that this that and on going your a things capacity answer. it's cost But I'm are a mill you the to So, a Tacoma cheaper lot it's reallocate a on depends closed, we number $XXX mill I'm of give to question use would dynamic, the the to cash

of get capacity you the other that we of from So incremental sort that the some reallocating will would to give of a mills. those sense contribution

non-cash, the two, the In the an two-thirds offset it's third the assumption year of of two. of and was around one by year a And land in the related. about terms part total cash sale coming in and that comes that the recently latter bulk so of one cash cost cash then $XXX the was we million, around was for just about closed, of

David Sewell

would add only other I The I'm answer your is, thing sorry, just question.

If the you at converting look dependent as volumes they as the on are sites, mills. not

is continue volume to that'll on see dependent. you And And EBITDA point then to as it footprint, to continue So Alex's the $XX optimize about to-date. million that would mills, escalate. we just then

just a range, would volumes. depending see you on So

currently even So improvement. mean, to done to and Alex's from everything from higher of, we could double just kind are can digits a do do, low where see I would range on we've of what we the you you you point, of math could

Mark Weintraub

cash that $XXX say tonne to per cost sites, costs for… clarify And you Okay. did just that that was that total

Alex Pease

Cash costs.

Mark Weintraub

All cash Okay, that was costs. right. Appreciate it.

Operator

UBS, ahead. question now next from Cleve go with you may Our Rueckert

Cleve Rueckert

taking of just the you couple good ups. for call. follow for Thank thanks color the I quick And questions. a the all Great. on had

looking that's from through quarters, that Just of at next remaining flow of over and that that business the or whether if and price in price you've to the is of strategic sort mix And positive the there expect the the any that index lags that particularly positive improvements mix wondering price couple mix resulted corrugated packaging the you I'm are them. made because just actions segment.

David Sewell

corrugated we been the as So $XX of with hit will contractual as into quarter that's our customers. go the receipt of at business, we our $XX announced look this all Cleve, pricing

May of end So $XX this year, into of see by and And we the pricing. continued XX% that increase from About be offset then will you'll of volumes. customers the toward see through price coming contract to come our this quarter. quarter, pressure the that out increasing are the tied play then

end So that's then but And the We is get the we we of business year, a containerboard at on side lot the throughout announcements, side, till of seen XXXX. on look the those then we the both those our into how the kind probably you've see hit consumer global won't why from which our the And see and recent pressure that within XX we’ll of as side. days conversely, year. paper around consumer just business, cycle paperboard then a see we pricing.

Cleve Rueckert

Right.

in integrated. more a just there's So lot this lag

David Sewell

Yes.

Cleve Rueckert

Yes.

of you're the do higher -- just just following consumer. and target that probably And you've taking, footprint, if in ahead. be to to you're part be little on want those curious, I you color running the thanks get that's actions that's at Again, of on the if think we the or between point, for integration Okay, throughout businesses have then of this an curious planning, up it's I thought rates sort of looking for doing? than you maybe integration. corrugated. a still integration strategically thought I where about given clear. appreciate of corrugated and sort just sort And sort the

David Sewell

that, if So tonnes million as that the allows rates XXXX a volume the through with cycles, paper think say we XXs. about innovations them. we've integration term X.X environment, not working good containerboard we range, as high on integration partners that really pretty have strategic on you we feel relationships, are And get XX% side go the with on of our global the flexibility because our are side multiple really it we good and commodity a lot buying taken the into of about we're long really there's back rates, to that tracking in grades, that, that

as footprints match forward I middle mean, we've to position actions that balance. look we've demand. we customer’s at So, about, the as talked we and a want our to look XXXX, taken, supply Because we're our really demand in great we in our supply to

about productivity, feel good how taken in So about the the XXXX we're hear really that you the we we've the entering actions year. excitement with

Cleve Rueckert

over. guys. it Thanks, turn I'll Okay,

Operator

with Our from Jefferies. next Ng question will come Phil

You ahead. may now go

Unidentified Analyst

broader you being taking your there or good mean on I lot months. to now? guys to XX are more doing come importantly. particularly on is John guys you congrats do how more And may the give be Or us of on already footprint. quarter. taken XX Hope whether go This want guess actions, perspective morning. just to -- announced the you side that think could actions do And well. containerboard back you footprint to the enough? see the thinking say WestRock the some generally over you Good a industry on about I the I the actually have Phil. past, you're

a expected How should we fourth it maybe the flow about about more into just being think that? then want of on you XXXX? earnings end the which is by I it through? we this fiscal to be fiscal the think whether Tacoma, clarity in touched year? just quarter leakage, get think positive, follow on going to shut the but And bit How to or should on little

David Sewell

the a Sure. John. Tacoma your go through first more then answer depth. with I'll Alex questions little I'll of have part and

our So as we footprint. customers demand what we've our at our focused with on supply look footprint, always is

know puts customers there's going our we relationships But of are a the contracts our on in lot contracts. takes with strategic, So, connected, kinds industry. long-term all very and our very of are

connectivity as I has mean, right customers XXXX it's we've and we actions. kind year, with see of a to volumes, with we're with we I've the Cleve. our now. So, an made far as we've the this right the -- projecting cycle, they're virgin balance And see have alluded little now, a XXXX again, all footprint down how as as it's bit, Where unprecedented through its and got been recycled see And, really nice fiber, paperboard. we we XXXX

all So, those important. of having substrates is really

as we think with see we I'll it. I a that we short that over talk that current turn with far have. to we're So, our environment as the evaluate don't Alex continue about we as term supply to But, everything we about evaluate seeing major to demand we as environment action, with it, footprint, always head anticipate into XXXX, it Tacoma.

Alex Pease

it's with accretive. XX,XXX Tacoma, tonnes and tonnes that. pulp. is XX,XXX EBITDA tonnes breakdown on top, white of -- won't so I'll call me hear about the that It'll linerboard, other total that, try should strategic about just. to tonnes specifically, associated reallocate be to we've the mills tonnes the actually paper that just everybody to there ROIC and be leakage is capacity On any the XXX,XXX that that mills let we're is The substrates closed, going XXX,XXX of network, XXX,XXX Yes, headline in EBITDA is of the

pulp, will be the with network again, so So reallocated accretive. be exception around the of that it'll margin all dollar other EBITDA of and capacity net the

but it's -- cash leakage the flow just not earnings of terms In leakage.

offset of $XXX,XXX costs. will the about that that third with about that the year land That year cash one two of with back half of will closure sale. associated of year a and the costs a You in see is And in happen number. one-third two that

Unidentified Analyst

Got it.

kind your more, operating out to back take still as just that where Or the a having need stabilize about of below industry a XXXX to come I see it are Tacoma seems into whole Okay. you Appreciate on that. mean, customer from the you do I price? you're to stabilize being Do industry more to whole, think they needed inflection relatively And see yet next rates going least conversations quickly, prices be? then going the should out. the you capacity. David actions thinking know co just like demand But enough as the at year?

David Sewell

our focused Yes, about the think and segments are with would laser John we is, way base. I customer our

And so demand. their our we're to supply just matching

about think that on, we different be industry, and where there's customers new focused to going this capacity I As are think is. than just the we're capacity online, obviously, coming the

sort solution itself out. But with selling the have at, we're we that So like the demand into feel making from we're selling. good and we we where we X.X go cost ‘XX we the have, ’XX, with the demand times to pretty forecasts, do see the and we we'll into let million where right supply productivity. we're mean, in as I improvements structure the and we with about our that right focused grow want value footprint, on And, and

right it, we'll is how demand now, evaluate into XXXX supply we and is we to balanced. continue So, go but see

Unidentified Analyst

get if you an they've us appreciate I Appreciate sales could And update one I just and those could and if particular one -- squeeze could just here Okay, more RTS reported you the where RT remind on URB if for already then in closed that. those Mills, small segment? Chattanooga if the which in are -- the it.

David Sewell

we RTS sale. just reminder, again, business. complete complete. in in hope as $XXX as forward We September that to So, a not And have is the it million was the sale that move

Unidentified Analyst

in? segment what was And Okay. that

Alex Pease

have It's have partitions been RTS within the consumer segment. basically. would the been business would

Unidentified Analyst

turn much. very it over. Okay, I'll thank you

Operator

remarks. I concludes like to question would and over Robert session. closing to turn Quartaro, back This call our for answer the

Robert Quartaro

joining call today. for everybody, you, Thank our

look any quarter. if next up again you. have follow available other you We you questions, updating to and are Thank we forward

Operator

The conference today's has attending now presentation. concluded. Thanks for

now may You disconnect.

WestRock (WRK) 3 Aug 232023 Q3 Earnings call transcript