WRK
#(Caller Instructions)
Thanks, <UNK>.
Sure.
We start with looking at acquisitions as we want to do those that improve our business.
We do see opportunities in our North American Corrugated and Consumer Packaging businesses.
Cenveo was a relatively small transaction.
SP Fiber would fit into that.
I know you're very familiar with Gondi, <UNK>.
Latin America fits very well with our Company.
We have a great business in Brazil.
We would like to invest more in that.
We export 60% of our container board to Latin America, so I would say very natural place for us to grow, so that would remain, outside the US, the primary focus.
We do have strong operations in Europe and Asia, and those we would look at, as well, but the opportunity has to fit our business and has to make our business better.
I am going to let <UNK> respond to that, <UNK>.
Good morning, <UNK>.
As you know, our portfolio of paper board grades is very focused on the premium end of the marketplace, where we're serving the most demanding market segments in tobacco and commercial print, liquid packaging, and specialty poly-coated applications.
In North America, we compete very well, and that's the reason has <UNK> remarked that we have seen negligible penetration into our markets competing against our premium grades.
In the international markets, we use those products in exactly the same way.
We have excellent customers in literally all the regions of the world that value our premium substrates, and we've seen very consistent demand for those products, and we'll see so going forward.
<UNK>, I would add, when I have gone to Europe and Asia and talked to our sales force, they are incredibly talented at taking the needs of the customer and translating it into the specific quality of paper that they need.
It is remarkable to me to see what they do.
If you look at the overall volumes that we export, it ends up being a more of a ---+ it's a differentiated business, but it's more of a niche business because we're taking our technology and talent and just serving the precise needs of our customers.
So is on point to our strategy.
We are getting the benefits we expected.
Newberg was not a significant contributor to the overall economics of the transaction.
Dublin is the assets that fits very well into our system.
We did come up with a ---+ for Dublin, if you look at the ---+ say, the productivity improvements that we expected over the first three years, our goal at the time we announced the transaction was $41 million.
We are now, after less than one year, we are at $40 million.
So we are not quite at what we achieved, but we are effectively there and then we have line of sight to $46 million and more.
We took our Board there last week, and the mill looked great.
The people looked better.
The production is on track.
It is a good fit in our system.
We're selling a new product for us in recycled craft bag them and that has worked very well.
Our productivity programs are in place and the mill continues to fit very well in our system.
So this is ---+ right now, it has worked out better than we anticipated at the time we announced the transaction.
Good morning, <UNK>.
Brazil is, first of all, an incredible asset for us.
The forest land, the Tres Barras Mill is state-of-the-art and our integrated packaging portfolio is a great business for us and is performing extremely well.
We're all well aware of the political and economic challenges in Brazil, and I don't know that I could necessarily predict the trend line going forward on that whole thing, but I would say it will improve over time.
I'm just not sure the pace of that.
Relative to our ability to compete, we have superior assets and the quality and capability of both our container board and the products coming out of our converting system are winning in the marketplace.
So, as the economy improves, we're going to win.
The beauty is, we also have a very low cost mill that is able to toggle between domestic consumption and export, so you've seen our export shipments increase over time.
Net/net, I love our position in Brazil.
I don't know that I can speak to our competitors falling out.
I just know I love our position.
We have a premium virgin product coming out of the state-of-the-art mill that's vertically integrated with a great packaging system and a forest resource that makes us very low cost.
So I like our position.
Good morning, <UNK>.
We worked into the call comments, that over the past year, this fiscal year, our volumes are up slightly.
We do not focus on, call it, quarter-to-quarter or month-to-month changes in our volumes.
I know the investment community does, so we, in turn, have to focus on it, but we're focusing on building a Company that is very profitable and generates long-term cash flows.
So we're very focused in container, but we have just a very structured way to go to market.
If you come to work at WestRock, you go through a certain training, and we go to market and a very consistent way.
Then we're in the process of, I'd say, rolling that out broader, more fully across WestRock and we're in a position to do that.
I just came across something that Gallup, they have an email that they send out periodically that covers us all sorts of different topics.
They sent one out yesterday and their conclusion was they find most companies can double their revenue by simply selling more to the existing customer base.
I just repeat that because that's really on point to what we are doing.
Most of our customers will buy folding cartons, they will buy boxes, and we are taking our sales force and we're going to market to identify those customers we can go through and add value to.
That's a long-winded answer to your question, but I am very pleased with what we are doing.
We're building that capability over the long-term.
Our volumes will go up or down from quarter-to-quarter, but if you look at the overall portfolio of business we are generating, it's a very attractive portfolio of business.
I am going to go on because we're supplementing that with capital.
So in Container, we've been very clear about the investment we are doing with respect to the EVOLs.
As part of our capital budget process we talked about earlier, we go back and look at all of our capital as to whether it does what we thought it was going to do.
At least in Container, as part of this process, we reviewed $80 million in capital projects in our Box business and a lot of them were EVOLs but there were other projects, as well.
The actual cost was within 1% of what we thought it was going to be.
The actual returns, we estimated at 15% after tax; the actuals were 20%.
So they were well in excess of what we thought when we made the investment.
So we have, I'll just say, [full-court press] across our business to go to market in a way which is very for [perfect] us and then back that up with the investment in capital and talent to make the business ---+ we will create a lot of value over the long-term by doing that.
That's a contributing factor.
The answer is yes.
It's not the only factor, but it is a contributing factor.
Thank you.
<UNK>, I will start with the second one, first.
We had capital investments from our specialty chemicals business of approximately $45 million during the period of time that they were part of WestRock prior to the spin, so that is your reference point on the second point.
If I go back and I look at the free cash flow guidance that we gave earlier in the year, a lot of things have changed.
We've had pricing changes in the marketplace; we have had inflationary pressures.
If I were to give you the reference points of why we're going to generate the higher cash flow or come out on the higher end of the range, earnings are better, our working capital source that we talked about at that point in time is actually lower.
The other cash items, such as cash taxes, they are very consistent with the assumption that we laid out back earlier in the year.
Then CapEx is clearly on the lower end of the range that we had identified at the beginning of the year.
We will even come in just below the $825 million that we had described.
So again, it's earnings, working capital is not as big of a use as we described back then, the remaining balance sheet items are fairly consistent, and then lower CapEx.
We spelled out the two items that add up to $21 million, and you can look at our natural gas usage in our recycled fiber and look at the changes in the strips and then the change in OCC.
It is pretty straightforward how you calculate that.
We do have some residual price mix flow-through from the PPW reductions that took place earlier in the year that does occur in Q4, but we are not giving specific EPS guidance for the fourth quarter.
Nicole, that's all that we have time for today.
Thank you, Nicole.
Thank you to our audience for joining us this morning.
We're proud of our progress and appreciate your interest in WestRock.
If you have questions following the call, investor relations is happy to help you.
We can be reached at ir.
westrock.com.
We look forward to speaking with you in the coming weeks.
Have a great day, everyone.
