Smurfit Westrock Q3 Earnings Miss Estimates, Sales Surge Y/Y

Smurfit Westrock Plc SW has reported adjusted earnings of 48 cents per share in third-quarter 2024, which missed the Zacks Consensus Estimate of earnings of 71 cents. The company had posted earnings of 81 cents in the year-ago quarter. Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Smurfit Westrock was formed by the merger of two major paper and packaging industry players, Smurfit Kappa and WestRock, on July 5, 2024. Results for Smurfit Westrock are being reported from the third quarter of 2024 as a unified company.  The results for the quarter ended Sept. 30, 2023, represent the historical performance of Smurfit Kappa Group plc, designated as the accounting acquirer following its merger with WestRock.Smurfit Westrock reported a net loss of $150 million (or 30 cents per share) against net income of $229 million (or 89 cents per share) in the year-ago quarter. This mainly resulted from increases in cost of goods sold, and selling, general and administrative (“SG&A”) expenses. While COGS included expenses of $227 million for the amortization of the fair value step up on inventory recognized on WestRock’s inventory acquired, SG&A expenses increased due to additional expenditure related to the acquisition of WestRock.  SW also recorded transaction and integration-related expenses of $250 million associated with the combination.Smurfit Westrock’s Q3 Sales Surge Y/YThe company’s net sales surged 163.2% year over year to $7.67 billion, aided by the positive impacts of acquisitions and growth in corrugated volumes. The top line lagged the Zacks Consensus Estimate of $8.03 billion. The gains were offset by a lower selling price/mix.The reported cost of sales increased to $6.32 billion from $2.17 billion the year-ago period. The gross profit rose 81.9% year over year to $1.35 billion. The adjusted EBITDA was $1.26 billion, up 141% from the year-ago quarter. The adjusted EBITDA margin was 16.5%, lower than 18% in the year-ago quarter.SW’s Q3 Segmental PerformancesThe company operates under three reportable segments. Europe, MEA and APAC: This segment includes operations in Europe, the Middle East and Africa, and the Asia Pacific. Sales for the Europe, MEA and APAC segment were $2.65 billion, up 21% year over year.  The segment’s adjusted EBITDA was flat year over year at $411 million.North America: This segment includes operations in the United States, Canada and Mexico.  Sales for the North America segment were $4.64 billion compared with year-ago’s $0.40 billion.  The segment’s adjusted EBITDA surged to $780 million from year-ago quarter’s $66 million.LATAM: This segment includes operations in Central America and Caribbean, Argentina, Brazil, Chile, Colombia, Ecuador, and Peru. Sales for this segment were $506 million, up 48.4% year over year. The segment’s adjusted EBITDA grew 56.8% year over year at $116 million.Smurfit Westrock’s Cash Position & Balance Sheet UpdatesSW had cash and cash equivalents (including restricted cash) of $0.95 million at the end of the third quarter compared with $1 billion as of the end of 2023.Net cash provided by operating activities was $320 million compared with $378 million in the year-ago quarter. The adjusted free cash flow was $118 million compared with $214 million in the year-ago quarter. The company had previously announced a quarterly dividend of 30.25 cents per share.SW’s Price PerformanceShares of Smurfit WestRock have gained 0.4% in the past three months compared with the industry’s 16.7% growth. Image Source: Zacks Investment Research Smurfit Westrock’s Zacks RankSW currently has a Zacks Rank #4 (Sell).Paper & Related Products Stocks Awaiting ResultsInternational Paper Company IP, scheduled to release third-quarter 2024 results on Oct. 31, has a trailing four-quarter average surprise of 10.1%. The Zacks Consensus Estimate for IP’s third-quarter earnings is pegged at 24 cents per share, suggesting a year-over-year decrease of 62.5%.The Zacks Consensus Estimate for IP’s third-quarter sales is pegged at $4.67 billion, indicating 1.2% growth from the year-ago reported figure.Rayonier Advanced Materials Inc. RYAM, scheduled to release third-quarter 2024 results on Oct. 31, has a trailing four-quarter average surprise of negative 3.1%. The Zacks Consensus Estimate for RYAM’s third-quarter loss is pegged at 24 cents per share. It posted a loss of 41 cents in the year-ago quarter.The Zacks Consensus Estimate for RYAM’s third-quarter sales is pegged at $400 million, indicating 8.5% growth from the year-ago reported figure.A Better-Ranked PickA better-ranked stock from the basic materials space is Eldorado Gold Corporation EGO. EGO currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Eldorado Gold’s 2024 earnings is pegged at $1.45 per share. The consensus estimate for 2024 earnings has moved 7% north in the past 60 days. The company has an average trailing four-quarter earnings surprise of 430%. EGO shares gained 6.2% in the last three months.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report International Paper Company (IP): Free Stock Analysis Report Eldorado Gold Corporation (EGO): Free Stock Analysis Report Rayonier Advanced Materials Inc. (RYAM): Free Stock Analysis Report Smurfit Westrock PLC (SW): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks