For the fiscal year ended September 30, 2022
BUSINESS
General
WestRock is a multinational provider of sustainable fiber-based paper and packaging solutions. We partner with our customers to provide differentiated, sustainable paper and packaging solutions that help our customers win in the marketplace.
differentiate : to recognize or show that two things are not the same / to be the particular thing that shows that things or people are not the same
Our team members support customers around the world from our operating and business locations in North America, South America, Europe, Asia and Australia.
Effective October 1, 2021, we reorganized our segment reporting to four reportable segments: Corrugated Packaging, Consumer Packaging, Global Paper and Distribution.
We reorganized our reportable segments due to changes in our organizational structure and how our chief operating decision maker (“CODM”) makes key operating decisions, allocates resources and assesses the performance of our business.
allocate : to give something officially to somebody/something for a particular purpose
Prior period amounts have been recast throughout the Notes to Consolidated Financial Statements, as applicable, to conform to the new segment structure. These changes did not impact our consolidated financial statements. See “Note 7. Segment Information” of the Notes to Consolidated Financial Statements for additional information.
recast : to change something by organizing or presenting it in a different way / to change the actors or the role of a particular actor in a play, etc.
consolidated financial statement : a report that gives information about the financial position of all the companies belonging to a business group, rather than giving information about each company separately
conform : to behave and think in the same way as most other people in a group or society / to obey a rule, law, etc. / to agree with or match something
Products
We are one of the largest integrated producers of linerboard, white-top linerboard and corrugating medium (“containerboard”) in North America, and we serve primarily corrugated packaging markets.
corrugated : having the shape of a series of regular folds that look like waves
We believe we are the largest producer of kraft paper and saturating kraft in North America. We are one of the largest producers of paperboard in North America, and we operate both integrated virgin and recycled fiber mills.
Our mill system manufactures for the benefit of each reportable segment that ultimately sells the associated paper and packaging products to our external customers.
external : connected with or located on the outside of something/somebody / happening or coming from outside a place, an organization, your particular situation, etc.
Additionally, our recycling operations are conducted as a procurement function, focusing on the procurement of low cost, high quality recycled fiber for our mill system. See “Item 2. Properties” for additional information on our annual production capacity and types of containerboard and paperboard we manufacture, and Item 1. “Business — Sales and Marketing” for additional information on our vertical integration.
procurement : the process of obtaining supplies of something, especially for a government or an organization
Corrugated Packaging Segment
Our Corrugated Packaging segment consists of our integrated corrugated converting operations and generates its revenues primarily from the sale of corrugated containers and other corrugated products including displays.
Our integrated corrugated packaging system manufactures primarily containerboard, corrugated sheets, corrugated packaging and preprinted linerboard for sale to consumer and industrial products manufacturers and corrugated box manufacturers.
We produce a full range of high-quality corrugated containers designed to protect, ship, store, promote and display products made to our customers’ specifications. We convert corrugated sheets into corrugated products ranging from one-color protective cartons to graphically brilliant point-of-purchase packaging. Our corrugated container plants serve local customers and regional and large national accounts.
specification : a detailed description of how something is, or should be, designed or made
convert : to change or make something change from one form, purpose, system, etc. to another / to be able to be changed from one form, purpose, or system to another
cartons : a light box or pot made of thick card or plastic for holding goods, especially food or liquid; the contents of a carton / a large container in which goods are packed in smaller containers
graphically : in the form of drawings or diagrams / very clearly and in great detail
Corrugated packaging is used to provide protective packaging for shipment and distribution of food, paper, health and beauty, and other household, consumer, commercial and industrial products. Corrugated packaging may also be graphically enhanced for retail sale, particularly in club store locations.
We provide customers with innovative packaging solutions to help them promote and sell their products. We provide structural and graphic design, engineering services and custom, proprietary and standard automated packaging machines, offering customers turn-key installation, automation, line integration and packaging solutions.
proprietary : (of goods) made and sold by a particular company and protected by a registered trademark / relating to an owner or to the fact of owning something
We offer a machinery solution that creates pouches that replace single-use plastics, including bubble mailers. To make corrugated sheet stock, we feed linerboard and corrugating medium into a corrugator that flutes the medium to specified sizes, glues the linerboard and fluted medium together, and slits and cuts the resulting corrugated paperboard into sheets to customer specifications.
fluted : (especially of a round object) with a pattern of curves cut around the outside
slits : a long, narrow cut or opening
We design, manufacture and, in certain cases, pack temporary displays for sale to consumer products companies and retailers.
These displays are used as marketing tools to support new product introductions and specific product promotions in mass merchandising stores, supermarkets, convenience stores, home improvement stores and other retail locations.
We also design, manufacture and, in some cases, pre-assemble permanent displays for these customers. We make temporary displays primarily from corrugated paperboard. Unlike temporary displays, permanent displays are restocked with our customers’ product; therefore, they are constructed primarily from metal, plastic, wood and other durable materials.
We manufacture and distribute point of sale material utilizing litho, screen and digital printing technologies. We manufacture lithographic laminated packaging for sale to our customers that require packaging with high quality graphics and strength characteristics.
lithographic : the process of printing from a smooth surface, for example a metal plate, that has been specially prepared so that ink (= coloured liquid) only sticks to the design to be printed
Sales of corrugated packaging products to external customers accounted for 42.3%, 43.2% and 42.9% of our net sales in fiscal 2022, 2021 and 2020, respectively. See “Note 7. Segment Information” of the Notes to Consolidated Financial Statements, as well as Item 7.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations”, for additional information.
Consumer Packaging Segment
Our Consumer Packaging segment consists of our integrated consumer converting operations and generates its revenues primarily from the sale of consumer packaging products such as folding cartons, interior partitions, inserts and labels. We are one of the largest manufacturers of folding cartons in North America.
We believe we are the largest manufacturer of solid fiber partitions in North America measured by net sales. Our folding cartons are used to package items such as food, paper, beverages, dairy products, tobacco, confectionery, health and beauty and other household consumer, commercial and industrial products, primarily for retail sale.
Our folding cartons are also used by our customers to attract consumer attention at the point-of-sale. We manufacture express mail packages for the overnight courier industry, provide inserts and labels, as well as rigid packaging and other printed packaging products, such as transaction cards (e.g., credit, debit, etc.), brochures, product literature, marketing materials (such as booklets, folders, inserts, cover sheets and slipcases) and grower tags and plant stakes for the horticultural market.
horticultural : connected with the study or practice of growing flowers, fruit and vegetables
For the global healthcare market, we manufacture paperboard packaging for over-the-counter and prescription drugs. Our customers generally use our inserts and labels to provide customer product information either inside a secondary package (e.g., a folding carton) or affixed to the outside of a primary package (e.g., a bottle).
Folding cartons typically protect customers’ products during shipment and distribution, and employ graphics to promote them at retail. We manufacture folding cartons from recycled and virgin paperboard, laminated paperboard and various substrates with specialty characteristics, such as grease masking and microwaveability.
a substance or layer which is under something or on which something happens, for example the surface on which a living thing grows and feeds
grease : any thick oily substance, especially one that is used to make machines run smoothly / animal fat that has been made softer by cooking or heating
We print, coat, die-cut and glue the cartons to customer specifications and ship finished cartons to customers for assembling, filling and sealing.
We employ a broad range of offset, flexographic, gravure, backside printing, coating and finishing technologies, as well as iridescent, holographic, textured and dimensional effects to provide differentiated packaging products, and support our customers with new package development, innovation and design services and package testing services.
offset : to use one cost, payment or situation in order to cancel or reduce the effect of another
iridescent : showing many bright colours that seem to change in different lights
holographic : produced using holograms; in the form of a hologram
textured : with a surface that is not smooth, but has a particular texture
differentiate : to recognize or show that two things are not the same / to be the particular thing that shows that things or people are not the same
We manufacture and sell our solid fiber and corrugated partitions and die-cut paperboard components principally to glass container manufacturers, producers of beer, food, wine, spirits, cosmetics and pharmaceuticals, and the automotive industry.
solid : hard; not in the form of a liquid or gas / having no holes or spaces inside; not hollow
Sales of consumer packaging products to external customers accounted for 23.2%, 23.5% and 23.7% of our net sales in fiscal 2022, 2021 and 2020, respectively. See “Note 7. Segment Information” of the Notes to Consolidated Financial Statements, as well as Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, for additional information.
Global Paper Segment
Our Global Paper segment consists of our commercial paper operations and generates its revenues primarily from the sale of containerboard, paperboard and specialty grades to external customers, and we serve primarily corrugated packaging, folding carton, food service, liquid packaging, tobacco and commercial print markets.
We sell our products globally to customers who value our scale, wide range of products, and service. Sales of global paper products to external customers accounted for 27.9%, 26.6% and 27.0% of our net sales in fiscal 2022, 2021 and 2020, respectively.
See “Note 7. Segment Information” of the Notes to Consolidated Financial Statements, as well as Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, for additional information.
Distribution Segment
Our Distribution segment consists of our distribution and display assembly operations and generates its revenues primarily from the distribution of packaging products and assembly of display products.
We distribute corrugated packaging materials and other specialty packaging products, including stretch film, void fill, carton sealing tape and other specialty tapes, through our network of warehouses and distribution facilities. We also provide contract packing services, such as multi-product promotional packing and product manipulation, such as multipacks and onpacks.
manipulation : behaviour that controls or influences somebody/something, often in a dishonest way so that they do not realize it / (formal) the control or use of something in a way that shows skill
Sales in our Distribution segment to external customers accounted for 6.6%, 6.7% and 6.3% of our net sales in fiscal 2022, 2021 and 2020, respectively. See “Note 7. Segment Information” of the Notes to Consolidated Financial Statements, as well as Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, for additional information.
Land and Development Segment
During fiscal 2020, we completed the monetization of the various real estate holdings that we owned that were concentrated in the Charleston, SC region. Sales in our Land and Development segment to external customers accounted for 0.1% of our net sales in fiscal 2020.
monetization : the act or process of earning money from something, especially a business or an asset (= something that a business owns)
concentrated : showing that you are determined to do something / (of a substance) made stronger because water or other substances have been removed
Following completion of the monetization of these assets, we ceased reporting the results of the Land and Development segment as a separate segment. See “Note 7. Segment Information” for additional information.
(omitted)
Competition
We operate in a competitive global marketplace and compete with many large, well established and highly competitive manufacturers and service providers.
Our business is affected by a range of macroeconomic conditions, including industry capacity changes, global competition, economic conditions in the United States (“U.S.”) and abroad, as well as fluctuations in currency exchange rates.
macroeconomic : connected with large economic systems, such as those of whole countries or areas of the world
fluctuation : one of several changes in size, amount, quality, etc. that happen frequently, especially from one extreme to another; the act of changing frequently like this
The industries in which we operate are highly competitive, and no single company dominates any of those industries. Our containerboard and paperboard operations compete with integrated and non-integrated national and regional companies operating primarily in North America, and to a limited extent, manufacturers outside of North America.
Our competitors include large and small, vertically integrated companies and numerous smaller non-integrated companies. In the corrugated packaging and folding carton markets, we compete with a significant number of national, regional and local packaging suppliers in North America and abroad.
In the solid fiber interior packaging, promotional point-of-purchase display and converted paperboard products markets, we primarily compete with a smaller number of national, regional and local companies offering highly specialized products.
Since all of our businesses operate in highly competitive industry segments, we regularly discuss sales opportunities for new business or for renewal of existing business with customers. Our packaging products compete with packaging made from other materials, including plastics.
renewal : a situation in which something begins again after it stopped or was interrupted / the act of making a contract, etc. legally acceptable for a further period of time after it has finished
The primary competitive factors we face include price, design, product innovation, quality, service and sustainability, with varying emphasis on these factors depending on the product line and customer preferences.
vary : (of a group of similar things) to be different from each other in size, shape, etc. / to change or be different according to the situation
Our machinery solutions represent one example of how we compete by providing differentiated solutions that create value for our customers. We believe that we compete effectively with respect to each of these factors and we obtain feedback on our performance with periodic customer surveys, among other means.
obtain : to get something, especially by making an effort
among : surrounded by somebody/something; in the middle of somebody/something / being included or happening in groups of things or people
The industries in which we operate have undergone consolidation. Within the packaging products industry, larger customers, with an expanded geographic presence, have tended to seek suppliers that can, because of their broad geographic presence, efficiently and economically supply all or a range of their packaging needs.
undergo : to experience something, especially a change or something unpleasant
consolidation : the act or process of making a position of power or success stronger so that it is more likely to continue / (specialist) the act or process of joining things together into one or of being joined into one
tend to someone/something : to deal with the problems or needs of a person or thing
In addition, our customers continue to demand higher quality products meeting stricter quality control requirements. Increasing demand for more sustainable products is also impacting our industry. See Item 1. “Business — Sustainability” for additional information.
See Item 1A. “Risk Factors — We Face Intense Competition” and “Risk Factors — We Have Been, And May Be In the Future, Adversely Affected by Factors That Are Beyond Our Control, Such as U.S. and Worldwide Economic and Financial Market Conditions, and Social and Political Change”.
(the rest omitted)
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