You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: They can be accessed at ir.
Following our prepared comments, we will open the call for a question-and-answer session.
We describe these risks and uncertainties in our filings with the SEC, including our 10-K for the fiscal year ended September 30, 2021.
We will also be referencing non-GAAP financial measures during the call.
We have a lot of new and exciting updates to communicate this quarter.
First, I'll provide a high-level overview of fiscal first quarter results.
After that, I'll walk through our new segment reporting structure, which went into effect this quarter and explain the rationale for this change.
Lastly, I'll update you on our broad-based transformation approach, which is underway and provide examples of the significant opportunities we see to deliver a step change in performance for the business.
Following that, our new CFO, Alex Pease, will provide a deep dive into our quarterly performance for our newly organized segments and other critical financial performance.
We will then move to Q&A and answer any questions you may have.
We started our fiscal year off with a solid quarter that was in line with our expectations and within our guidance range.
Despite continued supply chain disruptions, higher inflation and increased absenteeism related to COVID, we executed well.
For the fiscal first quarter, sales were $5 billion, up 13% year over year.
We delivered consolidated adjusted EBITDA of $680 million, up 2% over the same period and adjusted earnings per share came in at $0.65 per share, up 6.6%.
During the quarter, we also continued to aggressively buyback stock, repurchasing roughly $100 million worth of stock while maintaining net leverage of 2.4 times, well within our desired range of two and a quarter to two and a half times.
As a reminder, the first quarter was a record maintenance quarter for WestRock.
We had a number of projects delayed from previous quarters due to COVID and the ransomware incident last year and I'm pleased to report we completed all scheduled maintenance projects safely.
COVID continues to cause disruptions, impacting labor at our mills and box plants as well as further contributing to ongoing supply chain challenges.
Despite these challenges, we are resilient and continue to execute well, as demonstrated by our strong results.
Finally, demand for our products across consumer, corrugated, machinery and other product lines remain strong and our backlogs are near record levels.
Let me now provide an update on our new reporting structure.
I'm on Slide 4.
As a reminder, WestRock previously reported in two segments: corrugated packaging and consumer packaging.
We are now reporting in four segments to provide greater visibility into the integrated performance of our packaging businesses, while we focus our merchant paper business on critical strategic markets as well as providing material for the packaging converting businesses.
This new structure will help us highlight the performance of all elements of our portfolio.
We reorganized into the following segments.
corrugated packaging, which includes integrated corrugated converting operations and represented 44% of first quarter sales.
Consumer packaging, which includes integrated consumer converting operations and accounted for 23% of first quarter sales.
Paper, which includes all third-party paper sales and made up 27% of first quarter sales and distribution which includes our distribution business, which is roughly 6% of sales.
Perhaps more importantly, this new structure will further enable an enterprise sales approach to drive growth as well as greater efficiency and synergy to improve profitability.
I will describe this in more detail shortly.
Let me now spend a few minutes on where WestRock is today and where we are headed.
We have been driving a comprehensive strategic review of our markets and our go-to-market approach.
In parallel, we have taken a hard look at all our assets to evaluate their merits and their position in the portfolio while also evaluating our ability to drive to a greater level of operational excellence and profitability.
And we're already making progress.
We've made significant strides in the integration of our consumer business and have implemented productivity improvement plans across the company.
And the restructuring of our mill assets into one organization is already providing greater production flexibility across our footprint.
I will share a more fulsome perspective in the future, but suffice it to say, we have significant opportunity.
We have not fully integrated many of the acquisitions we have made.
We need to turbocharge our digital strategy, not just in the back office, but also in manufacturing and innovation.
We have elements of the portfolio that are noncore to our integrated strategy and we have inefficiencies that must be addressed.
Our profitability and our ROIC are not where they need to be.
This is going to change as we implement our transformation plan.
Importantly, our senior leadership team is aligned and is mobilized to drive this change.
Together, we have developed this transformation plan and have shifted into execution.
At a high level, our plan includes three overarching priorities.
Second, drive a step change in our margins through pricing excellence, productivity, mix management and cost control.
We are implementing our new WestRock operating system that standardizes our systems and utilizes our digital tools to identify options to drive efficiency and do things even better.
And third, generate consistent ROIC in excess of our cost of capital through disciplined investment, operational excellence and portfolio optimization where appropriate, while maintaining strong free cash flow, significant balance sheet strength and prudent capital allocation.
Let me provide an update on each of our three strategic priorities.
Our growth agenda is designed to maximize the value of the complete packaging solutions only WestRock can provide.
Our combination of consumer and corrugated packaging, paper, machinery and access to distribution is unique in the industry and a strategic differentiator.
It enables us to sell integrated solutions that are valued by our customers and partner with them to ensure that they are responsive to macro trends such as sustainable packaging.
With our portfolio, we have the capability to deliver full packaging solutions that are unmatched in our industry.
General Motors is a great example of this and we were just recognized as our supplier of the year.
With GM, we have partnered to provide options for brand security that help combat counterfeiting issues in the supply chain process, we produced their primary parts packaging and secondary corrugated packaging using our global manufacturing footprint to ensure they have the right supply and the right place when they need it.
Innovation and plastic replacement continues to be a growth driver.
We also can anticipate customer needs and introduce new products that support enhanced sustainability.
This quarter, we announced a partnership with Grupo Gondi in Mexico to provide our CanCollar product to ABI Mexico Grupo Modelo.
This expansion of CanCollar is an exciting development and one that demonstrates the growth potential of our sustainable products.
Our integrated one enterprise approach is driving value and we are continually working to maximize this value while minimizing our exposure to lower-value markets.
To that end, we've completed the first phase of our portfolio analysis and I look forward to sharing more about this soon.
Let's now turn to how we are going to drive margin improvement.
Historically, our margins in corrugated have been 18% and 16% in consumer, improving both as a key priority.
As we begin our journey of developing an enterprisewide operating system, our first focus has been quantifying the opportunity and identifying areas to tackle.
In recent months, we have standardized the measurement methodology in our operations and have identified significant opportunity to expand capacity without adding capital.
We have evaluated our asset footprint and see warehousing and logistic opportunities that we are optimizing.
We are also investing in our business to increase our level of integration and introduce automation, predictive analytics and other cutting-edge digital capabilities into our network.
To that end, we are constructing a state-of-the-art corrugated converting plant in the Pacific Northwest that will be cutting edge in efficiency and throughput.
This is just one example of many that we are excited to share.
We are aggressively focused on improving our ROIC in excess of our cost of capital.
While improving our productivity is an important part of the equation, capital deployment and capital utilization are equally important.
Through our initial diagnostic work, we have identified opportunities to expand capacity without adding capital.
We have looked at our portfolio and identified noncore assets that don't meet our return thresholds and we have implemented a disciplined approach to capital deployment that directs our resources to only the highest return projects.
We are focused on ongoing efforts to drive best-in-class returns in our portfolio.
And lastly, our senior leadership team now has an explicit ROIC component to our long-term compensation program.
Additionally, we are laser-focused on generating strong and consistent free cash flow and maintaining substantial financial flexibility in our balance sheet.
This strength enables us to invest in our business through all business cycles and also reward shareholders consistently.
To that end, we have aggressively paid down debt over the past several quarters and have increased the dividend twice in the past year.
Our intent is to reinforce our commitment to a stable and growing dividend while also continuing to aggressively repurchase WestRock stock.
As a reminder, in Q4 of 2021 and Q1 of 2022, we have repurchased approximately $223 million of stock as an initial down payment on this strategy.
With our very strong free cash flow generation and our current valuation level, we intend to get more aggressive on our stock buybacks and are targeting repurchases up to $500 million over the next several months.
We will continue to monitor short-term fundamentals that provide the best return opportunities for our capital allocation.
A lot of exciting change is underway at WestRock and I'm convinced about the significant value creation opportunities ahead for our company.
We are committed to executing our plan to drive enhanced shareholder value and our team at WestRock is motivated and enthusiastic about what is ahead.
We are focused on growing through innovation with new sustainable products and digital engagement tools that our customers and our consumers need in today's marketplace.
We have a new transformation office in place that is driving rigor in all that we are doing, including standardizing key operating and performance metrics across the asset base.
We have brought in a new supply chain leader, Peter Anderson, who is aligning our supply chain operations across the company with a focus on greater productivity and cost savings.
And finally, I'm excited to have Alex Pease join us as CFO, effective November 2021.
With over 20 years of experience in corporate strategy, M&A, capital markets, portfolio optimization and broad-based business transformation as well as extensive public company experience, Alex has already proven to be a strong partner.
I'll now ask Alex to provide the detailed rundown on our performance.
I'm excited to be here for my first earnings call as CFO.
Before I review first quarter results in detail, I want to reiterate the diversity of opportunity that David described and reinforce the commitment to a fundamentally different level of performance.
The opportunities to drive a step change in margin as well as significant ROIC improvement are real.
And rarely have I seen the team is aligned behind the vision for the future is this one.
While it's early in the process, I have every conviction that we'll be successful and look forward to supporting David and the team in the journey.
And with that, let's cover results.
Fiscal first quarter sales were up 13% to $4.95 billion and consolidated adjusted EBITDA increased 2% year over year to $680 million.
Consolidated adjusted EBITDA margin was 13.7%.
Price and mix positively impacted earnings by $600 million year over year.
This higher pricing was mostly offset by $520 million in higher costs, including higher fiber, transportation and labor as well as the impact of the previously discussed high planned maintenance conducted in the quarter.
As a reminder, the first fiscal quarter is the highest maintenance quarter of the year.
In addition, we faced challenges with COVID related to freight and raw materials, which impacted our production output.
Turning to Slide 12.
Sales in corrugated packaging, excluding white top trade sales were up 11.5% year over year to $2.1 billion.
Adjusted EBITDA declined 17% to $289 million giving the segment an adjusted EBITDA margin of 13.5%, also excluding white top trade sales.
Price drove an additional $277 million in adjusted EBITDA year over year.
However, this was more than offset by $230 million in inflation due to labor challenges with COVID-related absenteeism and logistics issues as well as $63 million of lower productivity and $43 million of lower volume.
The impact of the high level of downtime, both planned and unplanned, drove much of the volume decline.
Following a strong first fiscal quarter of 2021, we experienced significant supply chain challenges in 2022.
And as well as cost inflation in most input costs and the higher fixed cost impact of the record planned downtime for the scheduled maintenance in our mill system.
This was further impacted by lower productivity due to high COVID absenteeism and the introduction of inexperienced labor into our factories.
We are actively working to address each of these issues and are anticipating that the business will return to more historical levels of profitability over the balance of the year with additional upside as we deploy the WestRock operating system that David discussed.
During the quarter, our North American box shipments were 3.7% lower year over year, driven by our record mill maintenance levels, COVID-related slowdowns and continued disruptions in the supply chain.
However, backlog for the corrugated packaging business remains very strong.
If we could have made more, we certainly would have sold it.
Over the next two quarters, we expect additional pricing to flow through our corrugated packaging business from the previously published price increases.
As a reminder, this only includes pricing that has already been published in pulp and paper week.
Turning to the consumer packaging business on Slide 13.
Sales were up 7% year over year to $1.1 billion, though adjusted EBITDA declined 3.4% to $169 million in the quarter.
Adjusted EBITDA margins were 14.9% for the segment.
As in corrugated, better price and mix added $50 million to adjusted EBITDA.
Also, improved productivity and better volume drove $14 million and $6 million of higher adjusted EBITDA, respectively.
However, higher fiber, transportation and labor costs as well as the high maintenance level negatively impacted earnings with total inflation of $76 million, more than offsetting the other improvements.
Consumer backlog remains very strong at five to seven weeks and we continue to implement the previously published price increases across all consumer grades.
government to offer free COVID test kits to every household in the country.
Turning to Slide 14.
Revenue for our paper business came in at $1.4 billion, up 24% year over year.
Adjusted EBITDA was $232 million with an adjusted EBITDA margin of 17%.
Adjusted EBITDA was up an impressive 53% year over year due to price and mix improvements with the flow-through of previously published price increases.
Export markets were also very strong.
While we face some headwinds with lower production levels and freight inflation, the paper business performed very well this quarter.
Looking forward, demand and profitability for our paper products remain strong, both in the independent domestic and export markets, highlighting the importance of certain strategic markets and the value of our diversified portfolio.
Backlogs continue to be at historically high levels and for the remainder of the year, we expect to achieve significant pricing as recently published pricing flows through our contractual business.
On Slide 15, we show our distribution results.
Those sales were up 7% to $325 million.
Adjusted EBITDA margins fell to 2% from 5.4% last year, mainly due to supply chain issues and the higher cost to service customers driven by higher fuel and labor costs.
Demand remains strong for our distribution business and is outpacing our ability to supply customers due to labor and supply chain challenges.
Our free cash flow for the quarter was down significantly year over year, but much of this change was due to the reversal of the pandemic action plan that we had in place during the first quarter of fiscal 2021.
Specifically, we were negatively impacted by the payment of short-term incentive compensation in cash versus the stock payment made in the previous year.
Compounding that pressure, our strength in fiscal year 2021 led to a larger bonus payment as compared to the previous year when short-term incentive compensation was paid at threshold level.
Finally, we had negative impact from the 401(k) match returning to cash payments rather than stock and the required repayment of the deferred payroll tax as part of the CARES Act.
Though the quarter was highly impacted, we still expect to generate cash flows in excess of $1.3 billion as we progress through the year.
Turning to Slide 17 and our financial guidance for the second quarter of 2022.
We continue to implement all previously published price increases.
We expect roughly flat sequential cost inflation as improvements in energy and OCC costs should be offset by higher freight, wage and other expenses.
Though we are past the highest maintenance quarter due to delays in mill maintenance earlier in fiscal 2021, along with our originally planned outages, we still have approximately 128,000 tons of scheduled downtime across our system in the coming months.
These assumptions result in forecasted consolidated adjusted EBITDA of $780 million to $830 million and adjusted earnings per share of $0.94 to $1.08 per share.
As a note, this guidance does not include any potential benefit from the $70 per ton price increase across our containerboard grades that we have communicated to our customers.
Some additional assumptions behind our outlook include OCC costs down $10 to $15 per ton, natural gas costs down sequentially.
Labor expense up sequentially due to normal Q2 merit increases, continued inflation in freight and logistics expense, a tax rate of 23% to 25% and diluted shares outstanding of approximately 267 million.
In closing, we're in the process of transforming WestRock into an industry leader that delivers consistent, strong results to shareholders through all operating environments.
We are in the beginning phases of our journey to optimize our portfolio through operational efficiency, footprint optimization and growth investments.
We've made substantial progress on these efforts already, made decisions about our path forward and continue to hire and develop key talent to help us advance our vision.
We look forward to providing a deep dive overview of WestRock, our WestRock operating system and long-term targets at our 2022 investor day, which was previously scheduled for February.
Given the current situation with COVID, we have decided to move this important event to May with the hope that we can meet in person.
With that, let's move to Q&A.
Operator, may we take our first question, please?

user
compname reports q2 sales of $5 bln.
q1 adjusted earnings per share $0.65.

assistant