Business Wire | Aug 4, 2020 06:30AM EDT

WestRock Reports Fiscal 2020 Third Quarter Results

Aug. 04, 2020

ATLANTA--(BUSINESS WIRE)--Aug. 04, 2020--WestRock Company (NYSE:WRK), a leading provider of differentiated paper and packaging solutions, today announced results for its fiscal third quarter ended June 30, 2020.

WestRock is executing its differentiated strategy with financial strength and substantial liquidity. Given the uncertainties associated with the severity and duration of the COVID-19 pandemic, the Company is focused on meeting the needs of its customers and supporting the health, safety and well-being of its teammates.

Third quarter of fiscal 2020 financial highlights include:

* Net sales of $4.2 billion decreased by 9.7% compared to the prior year quarter * $0.69 of earnings per diluted share and $0.76 of adjusted earnings per diluted share compared to $0.98 of earnings per diluted share and $1.11 of adjusted earnings per diluted share in the prior year quarter; up sequentially from $0.57 of earnings per diluted share and $0.67 of adjusted earnings per diluted share in the second quarter * Segment EBITDA margins improved sequentially across both segments in a rapidly changing economic environment * Generated net cash provided by operating activities of $740 million * More than $3.2 billion of availability under long-term committed credit facilities and cash and cash equivalents at June 30, 2020

"Our results for the fiscal third quarter, including our strong cash flow and debt reduction, demonstrate why I am so proud of how the WestRock team is working closely with our customers to help them meet changing demand across a variety of end markets," said Steve Voorhees, chief executive officer. "We are taking the necessary steps to help our teammates work safely during the pandemic. WestRock remains well positioned with the capabilities, cash flow, liquidity and team to meet the challenges ahead and support our customers, teammates and communities."

Consolidated Financial Results

WestRock's performance for the three months ended June 30, 2020 and June 30, 2019 (in millions):

Three Months Ended June 30, 2020 June 30, 2019 Change Net sales $ 4,236.3 $ 4,690.0 $ (453.7 )

Segment income $ 323.2 $ 485.3 $ (162.1 )

Non-allocated expenses (18.3 ) (24.4 ) 6.1

Depreciation 258.0 274.4 (16.4 )

Amortization 107.7 110.9 (3.2 )

Segment EBITDA 670.6 846.2 (175.6 )

Adjustments ^(1) 37.2 11.3 25.9

Adjusted Segment EBITDA $ 707.8 $ 857.5 $ (149.7 )

^(1) See the Adjusted Net Income tables on page 11 for adjustments

Operating Highlights for the Three Months Ended June 30, 2020 compared to June 30, 2019:

Net sales decreased $454 million compared to the prior year quarter. Corrugated Packaging segment and Consumer Packaging segment net sales declined $344 million and $98 million, respectively, primarily due to lower selling price/mix on sales, lower volumes, including the impact of COVID-19, and unfavorable foreign currency impact.

Segment income decreased $162 million compared to the prior year quarter. Corrugated Packaging segment income decreased $165 million and Consumer Packaging segment income increased $4 million.

Additional information about the changes in segment net sales and income is included below.

Restructuring and Other Items

Restructuring and other items during the third quarter of fiscal 2020 included the following pre-tax costs:

* $7 million of restructuring costs, primarily related to severance and other employee costs and plant consolidations * $2 million of integration costs, primarily related to the fiscal 2019 acquisition of KapStone Paper and Packaging Corporation ("KapStone")

Net Cash Provided By Operating Activities and Other Financing and Investing Activities

Net cash provided by operating activities was $740 million in the third quarter of fiscal 2020 compared to $735 million in the prior year quarter.

Total debt was $10.05 billion at June 30, 2020, or $9.84 billion excluding $213 million of unamortized fair market value step-up of debt acquired in mergers and acquisitions, and $9.55 billion net of cash and cash equivalents of $292 million. During the third quarter of fiscal 2020, WestRock invested $244 million in capital expenditures and paid $52 million in dividends to stockholders.

Segment Results

WestRock's segment performance for the three months ended June 30, 2020 and June 30, 2019 (in millions):

Corrugated Packaging Segment

Three Months Ended

June 30, 2020 June 30, 2019 Change

Segment net sales $ 2,728.8 $ 3,072.8 $ (344.0 )

Segment income $ 227.9 $ 392.7 $ (164.8 )

Depreciation 175.2 183.2 (8.0 )

Amortization 57.9 58.2 (0.3 )

Segment EBITDA 461.0 634.1 (173.1 )

Adjustments ^(1) 21.0 10.3 10.7

Adjusted Segment EBITDA $ 482.0 $ 644.4 $ (162.4 )

^(1) See the Adjusted Net Income tables on page 11 for adjustments

Operating Highlights for the Three Months Ended June 30, 2020 compared to June 30, 2019:

Segment net sales decreased $344 million, primarily due to $184 million of lower volumes, including the impact of COVID-19, $134 million of lower selling price/mix on sales and $27 million of unfavorable foreign currency impacts. The Corrugated Packaging segment delivered a Segment EBITDA margin of 16.9% and a North American Adjusted Segment EBITDA margin of 19.8%.

Segment income decreased $165 million, primarily due to the $134 million margin impact of lower selling price/mix, $57 million of lower volumes, including the impact of COVID-19, an estimated $39 million of net cost inflation, $27 million in the aggregate for one-time recognition awards to the Company's manufacturing and operations teammates and increased costs for safety, cleaning and other items related to COVID-19. These impacts were partially offset by productivity improvements, the decreased impact of maintenance and economic downtime, lower depreciation and amortization, and other items, which totaled $92 million in aggregate.

Consumer Packaging Segment

Three Months Ended

June 30, 2020 June 30, 2019 Change

Segment net sales $ 1,552.6 $ 1,650.1 $ (97.5 )

Segment income $ 95.3 $ 91.0 $ 4.3

Depreciation 81.4 88.0 (6.6 )

Amortization 49.8 52.7 (2.9 )

Segment EBITDA 226.5 231.7 (5.2 )

Adjustments ^(1) 16.2 1.6 14.6

Adjusted Segment EBITDA $ 242.7 $ 233.3 $ 9.4

^(1) See Adjusted Net Income tables on page 11 for adjustments

Operating Highlights for the Three Months Ended June 30, 2020 compared to June 30, 2019:

Segment net sales decreased $98 million, primarily due to $44 million of lower selling price/mix on sales, $38 million of lower volumes, including the impact of COVID-19, and $16 million of unfavorable foreign currency impacts. The Consumer Packaging segment delivered a Segment EBITDA margin of 14.6% and an Adjusted Segment EBITDA margin of 15.6%.

Segment income increased $4 million, primarily due to productivity improvements, net cost deflation, lower depreciation and amortization and decreased outage costs, which totaled $89 million in the aggregate. These impacts were largely offset by the margin impact of lower selling price/mix, lower volumes, including the impact of COVID-19, economic downtime, and other items, which totaled $85 million in aggregate. The other items included one-time recognition awards to the Company's manufacturing and operations teammates and increased costs for safety, cleaning and other items related to COVID-19, which totaled $20 million in the aggregate.

Conference Call

WestRock will host a conference call to discuss its results of operations for the fiscal third quarter ended June 30, 2020, the impact of COVID-19 on the Company and other topics that may be raised during the discussion at 8:30 a.m., Eastern Time, on Tuesday, August 4, 2020. The conference call, which will be webcast live, an accompanying slide presentation, and this release can be accessed at ir.westrock.com.

Investors who wish to participate in the webcast via teleconference should dial 833-714-0928 (inside the U.S.) or +1 778-560-2887 (outside the U.S.) at least 15 minutes prior to the start of the call and enter the passcode 6623657. Replays of the call can be accessed at ir.westrock.com.

About WestRock

WestRock (NYSE:WRK) partners with our customers to provide differentiated paper and packaging solutions that help them win in the marketplace. WestRock's team members support customers around the world from locations spanning North America, South America, Europe, Asia and Australia. Learn more at www.westrock.com.

Cautionary Statements

This release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on our current expectations, beliefs, plans or forecasts and are typically identified by words or phrases such as "may," "will," "could," "should," "would," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target," "prospects," "potential" and "forecast," and other words, terms and phrases of similar meaning. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties. The Company cautions readers that a forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement. Such forward-looking statements include, but are not limited to, statements that the Company remains well positioned with the capabilities, cash flow, liquidity and team to meet the challenges ahead and support our customers, teammates and communities. With respect to these statements, the Company has made assumptions regarding, among other things, developments related to the COVID-19 pandemic, including the severity, magnitude and duration of the pandemic, negative global economic conditions arising from the pandemic, impacts of governments' responses to the pandemic on the Company's operations, impacts of the pandemic on commercial activity, the Company's customers and consumer preferences and demand, supply chain disruptions, and disruptions in the credit or financial markets; the Company's ability to effectively integrate the operations of KapStone; the results and impacts of acquisitions; economic, competitive and market conditions generally, including the impact of COVID-19; volumes and price levels of purchases by customers; competitive conditions in the Company's businesses and possible adverse actions of our customers, competitors and suppliers; labor costs; the amount and timing of capital expenditures, including installation costs, project development and implementation costs, and costs related to resolving disputes with third parties with which we work to manage and implement our capital projects; severance and other shutdown costs; restructuring costs; utilization of real property that is subject to the restructurings due to realizable values from the sale of such property; credit availability; and raw material and energy costs. The Company's businesses are subject to a number of risks that would affect any such forward-looking statements, including, among others, the level of demand for our products; our ability to respond effectively to the impact of COVID-19; our ability to successfully identify and make performance and productivity improvements; increases in energy, raw materials, shipping and capital equipment costs; reduced supply of raw materials; fluctuations in selling prices and volumes; intense competition; the potential loss of certain customers; the scope, costs, timing and impact of any restructuring of our operations and corporate and tax structure; the occurrence of severe weather or a natural disaster or other unanticipated problems, such as labor difficulties, equipment failure or unscheduled maintenance and repair, which could result in operational disruptions, including those related to COVID-19; our desire or ability to continue to repurchase company stock; the scope, timing and outcome of any litigation, claims or other proceedings or dispute resolutions and the impact of any such litigation; our ability to realize anticipated synergies from the KapStone acquisition; and adverse changes in general market and industry conditions. Such risks and other factors that may impact management's assumptions are more particularly described in our filings with the Securities and Exchange Commission, including in Part I, Item 1A "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended September 30, 2019 and Part II, Item 1A "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020. The information contained herein speaks as of the date hereof and the Company does not have or undertake any obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

WestRock CompanyCondensed Consolidated Statements of IncomeIn millions, exceptper share amounts(unaudited) Three Months Ended Nine Months Ended

June 30, June 30,

2020 2019 2020 2019

Net sales $ 4,236.3 $ 4,690.0 $ 13,107.3 $ 13,637.4

Cost of goods sold 3,466.3 3,701.1 10,723.5 10,967.1

Gross profit 770.0 988.9 2,383.8 2,670.3

Selling, general andadministrative, 390.1 442.4 1,234.4 1,287.4 excluding intangibleamortizationSelling, general andadministrative 99.6 102.4 301.5 297.7 intangibleamortizationLoss (gain) on 1.0 6.5 (5.9 ) (37.3 )disposal of assetsMultiemployer pension (2.0 ) (1.7 ) (1.1 ) (1.7 )withdrawal incomeLand and Development - - - 13.0 impairmentsRestructuring and 9.7 17.9 56.2 107.1 other costsOperating profit 271.6 421.4 798.7 1,004.1

Interest expense, net (92.4 ) (111.1 ) (283.2 ) (317.3 )

Loss on extinguishment (0.6 ) (3.2 ) (1.1 ) (4.7 )of debtPension and other 25.6 18.9 78.4 54.9 postretirementnon-service incomeOther (expense) (5.0 ) 3.7 (9.6 ) (2.3 )income, netEquity in income of - 1.7 8.7 8.3 unconsolidatedentitiesIncome before income 199.2 331.4 591.9 743.0 taxesIncome tax expense (19.2 ) (77.6 ) (123.5 ) (187.5 )

Consolidated net 180.0 253.8 468.4 555.5 incomeLess: Net incomeattributable to (1.5 ) (1.2 ) (3.3 ) (3.4 )noncontrollinginterestsNet income $ 178.5 $ 252.6 $ 465.1 $ 552.1 attributable to commonstockholders Computation of diluted earnings per share underthe two-class method (in millions, except pershare data): Net income $ 178.5 $ 252.6 $ 465.1 $ 552.1 attributable to commonstockholdersLess: Distributed andundistributed income - - (0.1 ) - available toparticipatingsecuritiesDistributed andundistributed income $ 178.5 $ 252.6 $ 465.0 $ 552.1 available to commonstockholders Diluted weighted 260.4 258.6 260.2 259.1 average sharesoutstanding Diluted earnings per $ 0.69 $ 0.98 $ 1.79 $ 2.13 share

WestRock CompanySegment InformationIn millions (unaudited) Three Months Ended Nine Months Ended

June 30, June 30,

2020 2019 2020 2019

Net sales: Corrugated Packaging $ 2,728.8 $ 3,072.8 $ 8,520.8 $ 8,797.3

Consumer Packaging 1,552.6 1,650.1 4,705.8 4,937.2

Land and Development - 8.6 18.9 23.3

Intersegment (45.1 ) (41.5 ) (138.2 ) (120.4 )EliminationsTotal net sales $ 4,236.3 $ 4,690.0 $ 13,107.3 $ 13,637.4

Income before incometaxes: Corrugated Packaging $ 227.9 $ 392.7 $ 755.8 $ 949.8

Consumer Packaging 95.3 91.0 232.3 253.1

Land and Development - 1.6 1.4 2.8

Total segment income 323.2 485.3 989.5 1,205.7

(Loss) gain on sale of - (2.7 ) 5.5 47.8 certain closedfacilitiesMultiemployer pension 2.0 1.7 1.1 1.7 withdrawal incomeLand and Development - - - (13.0 )impairmentsRestructuring and (9.7 ) (17.9 ) (56.2 ) (107.1 )other costsNon-allocated expenses (18.3 ) (24.4 ) (54.1 ) (67.8 )

Interest expense, net (92.4 ) (111.1 ) (283.2 ) (317.3 )

Loss on extinguishment (0.6 ) (3.2 ) (1.1 ) (4.7 )of debtOther (expense) (5.0 ) 3.7 (9.6 ) (2.3 )income, netIncome before income $ 199.2 $ 331.4 $ 591.9 $ 743.0 taxes

WestRock CompanyCondensed Consolidated Statements of Cash FlowsIn millions (unaudited) Three Months Ended Nine Months Ended

June 30, June 30,

2020 2019 2020 2019

Cash flows fromoperating activities:Consolidated net $ 180.0 $ 253.8 $ 468.4 $ 555.5 incomeAdjustments toreconcile consolidatednet income to net cashprovided byoperating activities:Depreciation, 365.7 385.3 1,121.4 1,128.1 depletion andamortizationCost of real estate - 6.3 16.1 17.3 soldDeferred income tax 4.7 (3.2 ) 16.1 36.4 expense (benefit)Share-based 68.8 15.8 98.4 51.3 compensation expensePension and otherpostretirement funding (19.6 ) (17.3 ) (60.7 ) (44.3 )more than expense(income)Multiemployer pension (2.0 ) (1.7 ) (1.1 ) (1.7 )withdrawal incomeLand and Development - - - 13.0 impairmentsOther impairment - 0.5 2.2 10.5 adjustmentsLoss (gain) ondisposal of plant and 0.7 6.3 (5.5 ) (39.2 )equipment and other,netOther, net (22.1 ) (15.2 ) (33.4 ) (61.5 )

Changes in operatingassets andliabilities, net ofacquisitions /divestitures:Accounts receivable 142.8 (23.4 ) 82.4 93.9

Inventories (7.5 ) 28.0 (70.7 ) (39.5 )

Other assets 34.6 (42.8 ) (98.3 ) (171.7 )

Accounts payable (133.4 ) 17.1 (240.1 ) (126.3 )

Income taxes (2.0 ) (2.5 ) 15.7 (29.5 )

Accrued liabilities 129.5 127.6 28.1 7.3 and otherNet cash provided by 740.2 734.6 1,339.0 1,399.6 operating activities Investing activities:Capital expenditures (244.0 ) (351.4 ) (860.2 ) (976.8 )

Cash paid for purchase - (19.0 ) - (3,368.3 )of businesses, net ofcash acquiredInvestment in (0.3 ) (10.2 ) (1.0 ) (10.4 )unconsolidatedentitiesProceeds from sale of 1.2 3.0 22.5 108.3 property, plant andequipmentProceeds fromproperty, plant and 1.0 7.7 2.4 16.5 equipment insurancesettlementOther, net 6.0 19.8 10.9 30.0

Net cash used for (236.1 ) (350.1 ) (825.4 ) (4,200.7 )investing activities Financing activities:Proceeds from issuance 598.6 999.7 598.6 2,498.2 of notesAdditions to revolving 38.0 - 413.0 192.2 credit facilitiesRepayments of (413.2 ) (157.2 ) (478.2 ) (177.2 )revolving creditfacilitiesAdditions to debt 103.0 483.1 683.1 4,441.0

Repayments of debt (987.6 ) (1,455.4 ) (1,195.8 ) (4,665.0 )

Additions (repayments) 25.5 (142.7 ) (9.3 ) 445.6 to commercial paper,netOther debt (155.1 ) 29.5 (69.2 ) 45.9 (repayments)additions, netIssuances of commonstock, net of related 3.3 5.4 16.7 8.6 minimum taxwithholdingsPurchases of common - - - (88.6 )stockCash dividends paid to (51.9 ) (117.0 ) (292.6 ) (350.7 )stockholdersCash distributions (0.7 ) (0.6 ) (1.4 ) (3.4 )paid to noncontrollinginterestsOther, net (19.1 ) (10.1 ) (17.0 ) (7.1 )

Net cash (used for) (859.2 ) (365.3 ) (352.1 ) 2,339.5 provided by financingactivitiesEffect of exchange 6.4 5.7 (21.6 ) 3.9 rate changes on cashand cash equivalents(Decrease) increase incash and cash (348.7 ) 24.9 139.9 (457.7 )equivalents andrestricted cashCash and cashequivalents, and 640.2 154.2 151.6 636.8 restricted cash atbeginning of periodCash and cashequivalents, and $ 291.5 $ 179.1 $ 291.5 $ 179.1 restricted cash at endof period Supplementaldisclosure of cashflow information: Cash paid during theperiod for:Income taxes, net of $ 15.8 $ 83.8 $ 90.9 $ 178.1 refundsInterest, net of $ 47.0 $ 47.0 $ 251.4 $ 249.9 amounts capitalized

WestRock CompanyCondensed Consolidated Balance SheetsIn millions (unaudited) June 30, September 30,

2020 2019

AssetsCurrent assets:Cash and cash equivalents $ 291.5 $ 151.6

Accounts receivable (net of allowances of $72.0 and 2,083.2 2,193.2$53.2)Inventories 2,137.7 2,107.5

Other current assets 490.2 496.2

Assets held for sale 3.3 25.8

Total current assets 5,005.9 4,974.3

Property, plant and equipment, net 10,922.6 11,189.5

Goodwill 7,270.5 7,285.6

Intangibles, net 3,749.4 4,059.5

Restricted assets held by special purpose entities 1,269.2 1,274.3

Prepaid pension asset 305.9 224.7

Other assets 1,754.1 1,148.8

Total Assets $ 30,277.6 $ 30,156.7

Liabilities and EquityCurrent liabilities:Current portion of debt $ 213.1 $ 561.1

Accounts payable 1,513.5 1,831.8

Accrued compensation and benefits 377.2 470.4

Other current liabilities 683.1 571.8

Total current liabilities 2,786.9 3,435.1

Long-term debt due after one year 9,840.3 9,502.3

Pension liabilities, net of current portion 271.3 294.0

Postretirement medical liabilities, net of current 151.9 162.1portionNon-recourse liabilities held by special purpose 1,138.7 1,145.2entitiesDeferred income taxes 2,888.2 2,878.0

Other long-term liabilities 1,468.8 1,053.9

Redeemable noncontrolling interests 1.6 1.9

Total stockholders' equity 11,713.1 11,669.9

Noncontrolling interests 16.8 14.3

Total Equity 11,729.9 11,684.2

Total Liabilities and Equity $ 30,277.6 $ 30,156.7

Non-GAAP Financial Measures and Reconciliations

WestRock reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). However, management believes certain non-GAAP financial measures provide investors and other users with additional meaningful financial information that should be considered when assessing our ongoing performance. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions, and in evaluating WestRock's performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, WestRock's GAAP results. The non-GAAP financial measures we present may differ from similarly captioned measures presented by other companies. We discuss below details of the non-GAAP financial measures presented by us and provide reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated in accordance with GAAP.

Adjusted Segment EBITDA and Adjustments to Segment EBITDA

WestRock uses the non-GAAP financial measure "Adjusted Segment EBITDA", along with other factors, to evaluate our segment performance. Management believes adjusting "Segment EBITDA" for certain items provides WestRock's board of directors, investors, potential investors, securities analysts and others with useful information to evaluate WestRock's performance across periods or relative to our peers, and that adjusting "Segment EBITDA" to "Adjusted Segment EBITDA" more closely aligns those results to the adjustments in Adjusted Net Income that relate to "Segment EBITDA". The consolidated financial results and segment tables include a reconciliation of "Adjusted Segment EBITDA" to "Segment EBITDA" by adding certain "Adjustments" to "Segment EBITDA". These "Adjustments" are reflected in the "Adjusted Net Income" reconciliation tables below.

Adjusted Segment Sales and Adjusted Segment EBITDA Margins

With respect to Adjusted Segment Sales, management believes that adjusting Segment Sales for trade sales is consistent with how peers present their sales for purposes of computing margins and helps analysts compare companies in the same peer group. WestRock uses the non-GAAP financial measure "Adjusted Segment EBITDA Margins", along with other factors, to evaluate our segment performance against our peers. Management believes this measure is also useful to investors to evaluate WestRock's performance relative to its peers. "Segment EBITDA Margin" is calculated for each segment by dividing that segment's Segment EBITDA by Segment sales. "Adjusted Segment EBITDA Margin" is calculated for each segment by dividing that segment's Adjusted Segment EBITDA by Adjusted Segment Sales.

Adjusted Net Income, Adjusted Earnings per Diluted Share

WestRock uses the non-GAAP financial measures "Adjusted Net Income" and "Adjusted Earnings Per Diluted Share". Management believes these measures provide WestRock's board of directors, investors, potential investors, securities analysts and others with useful information to evaluate WestRock's performance because they exclude restructuring and other costs and other specific items that management believes are not indicative of the ongoing operating results of the business. WestRock and its board of directors use this information to evaluate WestRock's performance relative to other periods. WestRock believes that the most directly comparable GAAP measures to Adjusted Net Income and Adjusted Earnings per Diluted Share are Net income attributable to common stockholders, represented in the table below as the GAAP Results for Consolidated net income (i.e. Net of Tax) less net income attributable to Noncontrolling interests, and Earnings per diluted share, respectively. This release includes a reconciliation of Earnings per diluted share to Adjusted earnings per diluted share. Set forth below is a reconciliation of Adjusted net income to Net income attributable to common stockholders (in millions):

Three Months Ended June 30, 2020



Adjustments to Segment EBITDA Consolidated Results



Corrugated Consumer L&D Net of Packaging Packaging and Pre-Tax Tax Tax Other

GAAP Results ^ $ 199.2 $ (19.2 ) $ 180.0 (1)COVID-19manufacturing 16.5 15.1 - 31.6 (7.7 ) 23.9 and operationsbonusRestructuring n/a n/a n/a 9.7 (2.4 ) 7.3 and other itemsNorthCharleston andFlorencetransition andreconfiguration 5.8 - - 6.3 (1.5 ) 4.8 costs^ (2)Losses atclosed plants, 2.4 2.4 - 5.6 (1.2 ) 4.4 transition andstart-up costs^(2)Direct costs 0.5 - - 0.5 (0.1 ) 0.4 from HurricaneMichaelLoss on n/a n/a n/a 0.6 (0.2 ) 0.4 extinguishmentof debtAdjustmentrelated to Tax n/a n/a n/a - (16.4 ) (16.4 )Cuts and JobsActBrazil indirect (4.2 ) - - (9.9 ) 3.3 (6.6 )tax^ (3)Other - (1.3 ) - 0.9 (0.3 ) 0.6

Adjustments/ $ 21.0 $ 16.2 $ - $ 244.5 $ (45.7 ) $ 198.8 AdjustedResultsNoncontrolling (1.5 )interestsAdjusted Net $ 197.3 Income ^(1) The GAAP results for Pre-Tax, Tax and Net of Tax are equivalent to theline items "Income before income taxes","Income tax expense" and "Consolidated net income", respectively, as reportedon the statements of income.^(2) The variance between the Pre-Tax column and the sum of the Adjustments toSegment EBITDA is depreciation and amortization.^(3) The variance between the Pre-Tax column and the sum of the Adjustments toSegment EBITDA is primarily interest income.

Three Months Ended June 30, 2019



Adjustments to Segment EBITDA Consolidated Results



Corrugated Consumer L&D Net of Packaging Packaging and Pre-Tax Tax Tax Other

GAAP Results ^ $ 331.4 $ (77.6 ) $ 253.8 (1)Restructuring n/a n/a n/a 17.9 (4.0 ) 13.9 and otheritemsDirect costsfrom HurricaneMichael, netofrelated 3.6 - - 3.6 (0.9 ) 2.7 proceedsAccelerateddepreciationon majorcapitalprojects andcertain plant n/a n/a n/a 9.4 (2.3 ) 7.1 closures^ (2)Losses atclosed plants, 6.7 1.1 - 8.6 (2.7 ) 5.9 transition andstart-up costs^(2)Loss on saleof certain n/a n/a n/a 2.7 (0.7 ) 2.0 closedfacilitiesLoss on n/a n/a n/a 3.2 (0.7 ) 2.5 extinguishmentof debtLand andDevelopment n/a n/a (1.6 ) (1.6 ) 0.4 (1.2 )operatingresultsOther - 0.5 1.0 1.5 (0.4 ) 1.1

Adjustments/ $ 10.3 $ 1.6 $ (0.6 ) $ 376.7 $ (88.9 ) $ 287.8 AdjustedResultsNoncontrolling (1.2 )interestsAdjusted Net $ 286.6 Income ^(1) The GAAP results for Pre-Tax, Tax and Net of Tax are equivalent to theline items "Income before income taxes","Income tax expense benefit" and "Consolidated net income", respectively, asreported on the statements of income.^(2) The variance between the Pre-Tax column and the sum of the Adjustments toSegment EBITDA is depreciation and amortization.

Three Months Ended March 31, 2020

Adjustments to Segment EBITDA Consolidated Results Corrugated Consumer L&D Net of Packaging Packaging and Pre-Tax Tax Tax OtherGAAP Results ^ $ 206.7 $ (57.8 ) $ 148.9 (1)Restructuring n/a n/a n/a 16.4 (3.9 ) 12.5 and other itemsNorthCharleston andFlorencetransition andreconfiguration 19.6 - - 21.8 (5.4 ) 16.4 costs^ (2)Losses atclosed plants, 6.8 1.5 - 9.1 (2.5 ) 6.6 transition andstart-up costs^(2)Accelerateddepreciation onmajor capitalprojectsand certain n/a n/a n/a 5.5 (1.3 ) 4.2 plant closures^(2)Litigation (7.2 ) (4.3 ) - (11.5 ) 2.8 (8.7 )recoveryGain on sale of n/a n/a n/a (5.0 ) 1.2 (3.8 )certain closedfacilitiesHurricaneMichael (0.6 ) - - (0.6 ) 0.2 (0.4 )recovery ofdirect costs,netLoss on n/a n/a n/a 0.5 (0.1 ) 0.4 extinguishmentof debtBrazil indirect (0.4 ) - - (1.3 ) 0.3 (1.0 )tax^ (3)Multiemployerpension n/a n/a n/a 0.9 (0.2 ) 0.7 withdrawalexpenseOther - 0.8 - 0.8 (0.2 ) 0.6

Adjustments/ $ 18.2 $ (2.0 ) $ - $ 243.3 $ (66.9 ) $ 176.4 AdjustedResultsNoncontrolling (0.8 )interestsAdjusted Net $ 175.6 Income ^(1) The GAAP results for Pre-Tax, Tax and Net of Tax are equivalent to theline items "Income before income taxes","Income tax expense" and "Consolidated net income", respectively, as reportedon the statements of income.^(2) The variance between the Pre-Tax column and the sum of the Adjustments toSegment EBITDA is depreciation and amortization.^(3) The variance between the Pre-Tax column and the sum of the Adjustments toSegment EBITDA is interest income.

Adjusted Earnings per Diluted Share

Set forth below is a reconciliation of Adjusted earnings per diluted share to Earnings per diluted share.

Three Months Ended

June 30, June 30, March 31, 2020 2019 2020

Earnings per diluted share $ 0.69 $ 0.98 $ 0.57

COVID-19 manufacturing and operations 0.09 - - bonusRestructuring and other items 0.03 0.05 0.04

North Charleston and Florence transitionand reconfiguration costs 0.02 - 0.06

Losses at closed plants, transition and 0.02 0.03 0.03 start-up costsAccelerated depreciation on majorcapital projectsand certain plant closures - 0.03 0.02

Loss (gain) on sale of certain closed - 0.01 (0.02 )facilitiesDirect costs from Hurricane Michael, net - 0.01 - of related proceedsLoss on extinguishment of debt - 0.01 -

Adjustment related to Tax Cuts and Jobs (0.06 ) - - ActLitigation recovery - - (0.03 )

Brazil indirect tax (0.03 ) - -

Land and Development operating results - (0.01 ) -

Other - - -

Adjusted earnings per diluted share $ 0.76 $ 1.11 $ 0.67

Set forth below are reconciliations of Adjusted Segment Sales, Adjusted Segment EBITDA and Adjusted Segment EBITDA Margins to the most directly comparable GAAP measures, Segment Sales and Segment Income, for the quarters ended June 30, 2020, June 30, 2019 and March 31, 2020 (in millions, except percentages):

Reconciliation for the Quarter Ended June 30, 2020 Corrugated Consumer Land and Corporate Consolidated Packaging Packaging Development / Elim.

Segment sales $ 2,728.8 $ 1,552.6 $ - $ (45.1 ) $ 4,236.3 / Net salesLess: Trade (94.7 ) - - - (94.7 )salesAdjusted $ 2,634.1 $ 1,552.6 $ - $ (45.1 ) $ 4,141.6 Segment Sales Segment $ 227.9 $ 95.3 $ - $ - $ 323.2 income^ (1)Non-allocated - - - (18.3 ) (18.3 )expensesDepreciation 233.1 131.2 - 1.4 365.7 & amortizationSegment 461.0 226.5 - (16.9 ) 670.6 EBITDAAdjustments^ 21.0 16.2 - - 37.2 (2)Adjusted $ 482.0 $ 242.7 $ - $ (16.9 ) $ 707.8 Segment EBITDA Segment 16.9 % 14.6 %EBITDA MarginsAdj. Segment 18.3 % 15.6 %EBITDA Margins ^(1) Segment income includes pension and other postretirement income (expense)^(2) See the Adjusted Net Income tables on page 11 for adjustments

Corrugated Reconciliation for the Quarter Ended June 30, 2020 North Brazil Total American Corrugated Other ^(1) Corrugated Corrugated Packaging Segment sales $ 2,392.5 $ 87.8 $ 248.5 $ 2,728.8

Less: Trade sales (94.7 ) - - (94.7 )

Adjusted Segment Sales $ 2,297.8 $ 87.8 $ 248.5 $ 2,634.1

Segment income^ (2) $ 213.6 $ 13.7 $ 0.6 $ 227.9

Depreciation & amortization 216.3 10.5 6.3 233.1

Segment EBITDA 429.9 24.2 6.9 461.0

Adjustments ^(3) 24.1 (3.5 ) 0.4 21.0

Adjusted Segment EBITDA $ 454.0 $ 20.7 $ 7.3 $ 482.0

Segment EBITDA Margins 18.0 % 27.6 % 16.9 %

Adj. Segment EBITDA Margins 19.8 % 23.6 % 18.3 %

^(1) The "Other" column includes our Victory Packaging and India corrugatedoperations.^(2) Segment income includes pension and other postretirement income (expense)^(3) See the Adjusted Net Income tables on page 11 for adjustments

Reconciliation for the Quarter Ended June 30, 2019 Corrugated Consumer Land and Corporate Packaging Packaging Development / Consolidated Elim. Segment sales / $ 3,072.8 $ 1,650.1 $ 8.6 $ (41.5 ) $ 4,690.0 Net salesLess: Trade (100.0 ) - - - (100.0 )salesAdjusted Segment $ 2,972.8 $ 1,650.1 $ 8.6 $ (41.5 ) $ 4,590.0 Sales Segment income^ $ 392.7 $ 91.0 $ 1.6 $ - $ 485.3 (1)Non-allocated - - - (24.4 ) (24.4 )expensesDepreciation & 241.4 140.7 - 3.2 385.3 amortizationSegment EBITDA 634.1 231.7 1.6 (21.2 ) 846.2

Adjustments^ (2) 10.3 1.6 (1.6 ) 1.0 11.3

Adjusted Segment $ 644.4 $ 233.3 $ - $ (20.2 ) $ 857.5 EBITDA Segment EBITDA 20.6 % 14.0 %MarginsAdj. Segment 21.7 % 14.1 %EBITDA Margins ^(1) Segment income includes pension and other postretirement income (expense)^(2) See the Adjusted Net Income tables on page 11 for adjustments

Corrugated Reconciliation for the Quarter Ended June 30, 2019 North Brazil Other ^ Total American Corrugated (1) Corrugated Corrugated Packaging

Segment sales $ 2,690.5 $ 102.8 $ 279.5 $ 3,072.8

Less: Trade sales (100.0 ) - - (100.0 )

Adjusted Segment Sales $ 2,590.5 $ 102.8 $ 279.5 $ 2,972.8

Segment income^ (2) $ 368.9 $ 8.9 $ 14.9 $ 392.7

Depreciation & amortization 223.7 14.3 3.4 241.4

Segment EBITDA 592.6 23.2 18.3 634.1

Adjustments ^(3) 4.8 5.5 - 10.3

Adjusted Segment EBITDA $ 597.4 $ 28.7 $ 18.3 $ 644.4

Segment EBITDA Margins 22.0 % 22.6 % 20.6 %

Adj. Segment EBITDA Margins 23.1 % 27.9 % 21.7 %

^(1) The "Other" column includes our Victory Packaging and India corrugatedoperations.^(2) Segment income (loss) includes pension and other postretirement income(expense)^(3) See the Adjusted Net Income tables on page 11 for adjustments



Reconciliation for the Quarter Ended March 31, 2020 Corrugated Consumer Land and Corporate Consolidated Packaging Packaging Development / Elim. Segment sales / $ 2,882.5 $ 1,616.3 $ - $ (51.5 ) $ 4,447.3 Net salesLess: Trade (96.2 ) - - - (96.2 )salesAdjusted $ 2,786.3 $ 1,616.3 $ - $ (51.5 ) $ 4,351.1 Segment Sales Segment income^ $ 244.5 $ 90.8 $ - $ - $ 335.3 (1)Non-allocated - - - (17.6 ) (17.6 )expensesDepreciation & 239.6 133.2 - 1.7 374.5 amortizationSegment EBITDA 484.1 224.0 - (15.9 ) 692.2

Adjustments^ 18.2 (2.0 ) - - 16.2 (2)Adjusted $ 502.3 $ 222.0 $ - $ (15.9 ) $ 708.4 Segment EBITDA Segment EBITDA 16.8 % 13.9 %MarginsAdj. Segment 18.0 % 13.7 %EBITDA Margins ^(1) Segment income includes pension and other postretirement income (expense)^(2) See the Adjusted Net Income tables on page 12 for adjustments

Corrugated Reconciliation for the Quarter Ended March 31, 2020 North Brazil Other ^ Total American Corrugated (1) Corrugated Corrugated Packaging

Segment sales $ 2,542.9 $ 100.7 $ 238.9 $ 2,882.5

Less: Trade sales (96.2 ) - - (96.2 )

Adjusted Segment Sales $ 2,446.7 $ 100.7 $ 238.9 $ 2,786.3

Segment income ^(2) $ 228.4 $ 13.4 $ 2.7 $ 244.5

Depreciation & amortization 221.1 12.2 6.3 239.6

Segment EBITDA 449.5 25.6 9.0 484.1

Adjustments ^(3) 15.9 2.3 - 18.2

Adjusted Segment EBITDA $ 465.4 $ 27.9 $ 9.0 $ 502.3

Segment EBITDA Margins 17.7 % 25.4 % 16.8 %

Adj. Segment EBITDA Margins 19.0 % 27.7 % 18.0 %

^(1) The "Other" column includes our Victory Packaging and India corrugatedoperations.^(2) Segment income includes pension and other postretirement income (expense)^(3) See the Adjusted Net Income tables on page 12 for adjustments

Adjusted Operating Cash Flow and Adjusted Free Cash Flow

WestRock uses the non-GAAP financial measures "Adjusted Operating Cash Flow" and "Adjusted Free Cash Flow". Management believes these measures provide WestRock's board of directors, investors, potential investors, securities analysts and others with useful information to evaluate WestRock's performance relative to other periods because it excludes certain cash restructuring and other costs, net of tax that management believes are not indicative of the ongoing operating results of the business. We believe "Adjusted Free Cash Flow" provides greater comparability across periods by excluding capital expenditures. WestRock believes that the most directly comparable GAAP measure is "Net cash provided by operating activities". Set forth below is a reconciliation of "Adjusted Operating Cash Flow" and "Adjusted Free Cash Flow" to Net cash provided by operating activities for the three months ended June 30, 2020 and June 30, 2019 (in millions):

Three Months Ended

June 30, June 30, 2020 2019

Net cash provided by operating activities $ 740.2 $ 734.6

Plus: Cash Restructuring and other costs, net ofincome tax benefit of $3.9 and $4.7 11.8 14.6

Adjusted Operating Cash Flow 752.0 749.2

Less: Capital expenditures (244.0 ) (351.4 )

Adjusted Free Cash Flow $ 508.0 $ 397.8

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CONTACT: Investors: James Armstrong, 470-328-6327 Vice President, Investor Relations james.armstrong@westrock.com

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CONTACT: Media: John Pensec, 470-328-6397 Director, Corporate Communications mediainquiries@westrock.com