Executive Summary

Q4 FY2023 net sales were $4.99B (-7.7% YoY) with diluted EPS of $0.43 and adjusted EPS of $0.81; consolidated Adjusted EBITDA was $736M with a 14.8% margin as Corrugated Packaging margins expanded despite macro softness and economic downtime headwinds .
Mixed segment performance: Corrugated Packaging Adjusted EBITDA rose 13% YoY with margin expansion, while Global Paper and Distribution declined significantly on lower volumes and price/mix; Consumer Packaging was flat on margins but down on volumes .
Q1 FY2024 guide: Adjusted EPS $0.24–$0.37 and consolidated Adjusted EBITDA $575–$625M, with tax 26–28%, D&A ~$375M, net interest ~$116M, and diluted shares ~259M; FY2024 capex $1.2–$1.5B and cost savings targeted at $300–$400M .
Corporate actions are a key narrative driver: a proposed combination with Smurfit Kappa to create Smurfit WestRock and an October 2023 dividend increase of 10%; no earnings call due to the pending transaction (slides furnished) .

What Went Well and What Went Wrong

What Went Well
- Corrugated Packaging strength: Adjusted EBITDA +13.0% YoY to $434M; Adjusted EBITDA margin 17.2% (17.8% ex-trade) on cost savings, deflation and Mexico acquisition contribution .
- Cost-out execution: Achieved $200M cost savings in Q4 and $350M for FY23; exited FY23 with >$450M run-rate savings .
- Portfolio optimization and capital: Closed the sale of RTS/Chattanooga (pre-tax gain $239M), reduced total debt by $443M QoQ; adjusted net debt $8.03B at 9/30/23 .
- CEO tone: “another strong quarter… positioning WestRock well to deliver shareholder value” (emphasis on portfolio optimization, cost savings, strategic growth) .
What Went Wrong
- Global Paper deterioration: Sales -29.2% YoY and Adjusted EBITDA -56.4% YoY on lower volumes and price/mix, economic downtime and prior-year closures; margin fell 820 bps to 13.2% .
- Distribution weakness: Sales -16.0% YoY; Adjusted EBITDA -58.1%; volumes down due to moving/storage softness .
- Macros/operating headwinds: Economic downtime reduced Q4 consolidated Adjusted EBITDA by $64M; non-cash pension costs were $40M higher YoY (plans remain overfunded) .

Financial Results

Overall performance (oldest → newest):

Metric	Q2 FY2023	Q3 FY2023	Q4 FY2023
Net Sales ($B)	$5.278	$5.121	$4.988
Diluted EPS ($)	($7.85) (goodwill impairment)	$0.79	$0.43
Adjusted EPS ($)	$0.77	$0.89	$0.81
Consolidated Adjusted EBITDA ($MM)	$789	$802	$736
Consolidated Adjusted EBITDA Margin (%)	14.9%	15.7%	14.8%

Segment breakdown (sales, Adjusted EBITDA):

Segment	Q2 FY2023 Sales ($MM)	Q2 Adj. EBITDA ($MM)	Q3 FY2023 Sales ($MM)	Q3 Adj. EBITDA ($MM)	Q4 FY2023 Sales ($MM)	Q4 Adj. EBITDA ($MM)
Corrugated Packaging	$2,627.4	$407.5	$2,565.7	$429.7	$2,524.4	$433.8
Consumer Packaging	$1,265.1	$218.6	$1,250.6	$230.0	$1,211.1	$203.8
Global Paper	$1,168.2	$187.1	$1,065.7	$177.0	$1,012.4	$133.6
Distribution	$307.3	$9.3	$317.8	$6.0	$314.1	$10.9

Key KPIs and cash/debt:

KPI	Q2 FY2023	Q3 FY2023	Q4 FY2023
Economic Downtime impact on Adj. EBITDA ($MM)	$(58)	$(89)	$(64)
Capital Expenditures ($MM)	$282	$255	$324
Adjusted Free Cash Flow ($MM)	$36	$479	$330
Net Cash from Operating Activities ($MM)	$284	$693.6	$584.3
Total Debt (period-end)	$9.5B (3/31/23)	$9.027B (6/30/23)	$8.584B (9/30/23)
Adjusted Net Debt (period-end)	~$9.0B (3/31/23, narrative)	$8.551B (6/30/23)	$8.034B (9/30/23)

YoY and Seq snapshot for Q4 FY2023 (select items):

Net Sales: $4.988B vs $5.403B in Q4 FY2022 (-7.7% YoY) ; sequentially down from $5.121B in Q3 FY2023 .
Consolidated Adjusted EBITDA: $736M vs $920M in Q4 FY2022 (-20.0% YoY) .
Segment YoY (Q4 FY2023 vs Q4 FY2022): Corrugated Packaging +13.0% EBITDA; Consumer Packaging -7.0%; Global Paper -56.4%; Distribution -58.1% .

Estimates vs Actuals:

S&P Global/Capital IQ consensus data were unavailable via our tool for WRK; therefore, we cannot present vs-consensus comparisons for EPS or revenue (S&P Global data unavailable).

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EPS	Q4 FY2023	$0.66–$0.83	N/A (actual reported $0.81)	N/A
Consolidated Adjusted EBITDA ($MM)	Q4 FY2023	$675–$725	N/A (actual reported $736)	N/A
Adjusted EPS	Q1 FY2024	N/A	$0.24–$0.37	New
Consolidated Adjusted EBITDA ($MM)	Q1 FY2024	N/A	$575–$625	New
Adjusted Tax Rate	Q1 FY2024	8–10% (for Q4 FY2023)	26–28% (Q1 FY2024)	New period
D&A ($MM)	Q4 FY2023	~$384	~$375 (Q1 FY2024)	New period
Net Interest ($MM)	Q4 FY2023	~$113	~$116 (Q1 FY2024)	New period
Diluted Shares (MM)	Q4 FY2023	~257	~259 (Q1 FY2024)	New period
Cost Savings ($MM)	FY2024	N/A	$300–$400 targeted	New
Adjusted Tax Rate	FY2024	N/A	24–26%	New
Capex ($B)	FY2024	N/A	~$1.2–$1.5	New
Dividend	FY2024	N/A	Announced 10% increase (Oct. 2023)	Increased

Notes: Q4 FY2023 guidance shown for context vs actuals; Q1 FY2024 and FY2024 expectations are new period guides rather than revisions.

Earnings Call Themes & Trends

Note: No Q4 FY2023 earnings call was held due to the proposed Smurfit Kappa combination; management furnished a slide deck with guidance and commentary .

Topic	Previous Mentions (Q2, Q3)	Current Period (Q4)	Trend
Demand/inventory destocking	Q2: Managing through macro with cost and portfolio actions ; Q3: Destocking pressures and economic downtime; Corrugated EBITDA resilience .	Destocking subsided; volumes stabilized in Corrugated; export containerboard up ~50% seq; expect improving volumes through FY2024 .	Improving
Cost savings	Q2: On track to $250M FY23 savings; targeting $1B by FY2025 ; Q3: On track to >$450M run-rate by YE .	$200M saved in Q4; $350M FY23; >$450M run-rate exiting FY23; FY2024 target $300–$400M .	Positive
Pricing/input costs	Q2: Price > inflation; OCC/energy deflation tailwind ; Q3: Input cost deflation (OCC, energy) .	Continued realization of published price declines expected; Q1 FY24: lower recycled fiber, relatively flat energy/virgin fiber/freight .	Mixed: price declines vs some input relief
Portfolio actions	Q2: Mill closures, RTS/URB divestitures in motion; Gondi consolidation .	RTS/Chattanooga sale complete; continued footprint consolidation (8 more converting facilities) .	Ongoing optimization
Macro/volumes by segment	Q3: Corrugated margin up; Global Paper weak; Distribution down on moving/storage .	Corrugated margin +110 bps YoY; Global Paper margin -820 bps YoY; Distribution margin -350 bps YoY .	Corrugated resilient; Paper/Distribution pressured
Technology/IT programs	Q2: Business systems transformation costs highlighted ; Q3: similar .	Transformation costs continue as non-GAAP adjustments .	Neutral
Corporate/M&A	Q3: Discussions with Smurfit Kappa disclosed (Sept) .	Proposed Smurfit Kappa combination; no call; governance/FD updates .	Major strategic catalyst

Management Commentary

CEO perspective: “The WestRock team delivered another strong quarter, demonstrating the power and resilience of our diversified portfolio, innovative solutions and scale… we are positioning WestRock well to deliver shareholder value” .
Strategic priorities: Portfolio optimization (asset closures/divestitures), cost savings acceleration, and targeted growth; Q4 included completion of RTS/Chattanooga sale and continued consolidation of converting footprint .
Capital allocation: Reduced total debt by $443M QoQ; capex of $324M in Q4; adjusted free cash flow of $330M in Q4 and $933M for FY2023 .

Q&A Highlights

No earnings call or Q&A was held for Q4 FY2023 due to the proposed combination with Smurfit Kappa; management furnished a slide presentation and press release instead .
Guidance clarifications provided in slides: Q1 FY2024 EPS and Adjusted EBITDA ranges, adjusted tax rate, D&A, net interest, and diluted shares; FY2024 expectations include capex and cost-savings targets .
Operating assumptions: Continued realization of previously published price declines; balancing supply with demand .

Estimates Context

S&P Global/Capital IQ consensus estimates for Q4 FY2023 (EPS and revenue) were unavailable via our tool due to missing mapping for WRK; as a result, we cannot provide vs-consensus comparisons for this quarter (S&P Global data unavailable).

Key Takeaways for Investors

Corrugated Packaging remains the earnings engine: margin expanded to 17.2% (17.8% ex-trade) with EBITDA up 13% YoY despite macro headwinds; expect volume improvements through FY2024 as destocking abates .
Global Paper and Distribution remain under pressure on volume and price/mix; Global Paper margin down 820 bps YoY; watch for volume recovery skewed to 2H FY2024 per management commentary .
Cost-out and portfolio actions are tangible: $200M savings in Q4, $350M FY23, >$450M run-rate exiting FY23; continued consolidation and asset rationalization underpin medium-term margin support .
Liquidity and deleveraging improving: Q4 OCF $584M, adjusted FCF $330M; total debt reduced by $443M QoQ; adjusted net debt $8.03B at 9/30/23 .
Near-term guide embeds seasonality and price declines: Q1 FY2024 Adjusted EPS $0.24–$0.37 and Adjusted EBITDA $575–$625M, with higher adjusted tax rate vs Q4’s tax rate, and D&A/interest frames provided; FY2024 capex heavy at ~$1.2–$1.5B .
Corporate catalyst dominates the equity narrative: the proposed Smurfit Kappa combination (Smurfit WestRock) and dividend increase frame investor focus beyond standalone quarterly metrics .
Watch for execution on FY2024 cost-savings target ($300–$400M) and demand normalization in Global Paper to support margin stabilization into 2H FY2024 .

Appendices (select non-GAAP/adjustments highlights)

Adjusted EPS reconciliation for Q4 ($0.81) excludes restructuring/other costs, transformation costs, work stoppages, gains on asset sales, and other items .
Consolidated Adjusted EBITDA reconciliation bridges net income to $736M for Q4 .
“Adjusted Net Debt” reconciled to total debt by subtracting cash and fair value step-up; $8.034B at 9/30/23 .

WestRock Co (WRK)·Q4 2023 Earnings Summary