Westrock Company

Good morning everyone and thank you for joining us today for our fourth quarter and full year 2025 results. As a reminder, statements in today's press releases and presentations and the comments made by management during this call may be considered forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include but are not limited to the factors identified in the earnings release and in our SEC filings, as well as those discussed in our investor update presentation on our medium-term plan. The company undertakes no obligation to revise any forward-looking statements. Today's remarks also refer to certain non-GAAP financial measures. where applicable, reconciliations to the most comparable gap measures are included in today's earnings release and in the appendix to the accompanying presentation, which are available at investors.smurfitwestrock.com. In addition, today's remarks include statements about Smurfit Westrock's medium-term financial goals and capital allocation priorities. These goals are aspirational and actual performance may differ possibly materially and no guarantees are made that these goals will be met, For additional information, please refer to our medium term plan related presentation. Tony will now present an abridged version of our fourth quarter results, after which we will take some questions before moving on to the medium term plan. You'll note the additional level of disclosure in the appendix to the fourth quarter results presentation facilitating that shorter discussion. In the interest of time, I request those asking questions to stick themselves to one. I'll now hand you over to Tony Smurfett, CEO of Smurfett Westrock.

Thank you, Kieran, and good morning or good afternoon to everyone from warming up New York City. Today I'm joined by Ken Bowles, our Executive Vice President and Group CFO, along with Saverio Meyer, Laurence Selye, and Alvaro Henao, who run our regions, as we'll be presenting, as you know, the medium-term plan later. Before I get into the quarter, you'll have seen our recent announcement on the closure of our SBS machine in La Touque, Quebec. which is another step in our portfolio optimisation. Decisions such as this, while always difficult, are always carefully considered and any further portfolio optimisations will be done in an equally considered manner. In the context of what were difficult market conditions across many of our countries, I am very pleased with the performance we have delivered during the quarter and, of course, for the year. In the quarter, we reported 1.172 billion U.S. dollars of adjusted EBITDA and an adjusted EBITDA of 4.939 billion U.S. dollars for the year. This is by far the largest outturn by any packaging company in the world. And I'm incredibly proud of the performance of everyone in the company who has contributed towards this. In addition, in our first full year of operation, we have focused on cash. generating $679 million of adjusted free cash flow for the quarter and over $1.5 billion for the year. I view this as a key metric of our success. Finally, while this is far away from the summit of our ambitions, our adjusted margin at 15.5% for the quarter and a similar number for the year provides a great launching pad for our future success. Looking now at the results by region for the quarter, our adjusted EBITDA in North America was down modestly year on year at 651 million and a margin of 14.7%. Conversely, our European margins expanded during the quarter to over 16% and an adjusted EBITDA of 438 million. And lastly, but by no means least, once again we had a very strong performance in our Latin American region with margins of over 24% and an adjusted EBITDA of over 130 million. With regard to volumes, you will see a sharp fall in our North American volume with stable volumes in Europe and a stronger growth in our Latin American region. We'll talk to these figures in a few moments as I go through the regions. Turning now to the group and regional highlights. I am very proud of the medium term plan that we have created and will be presenting to you very shortly. This has been the culmination of a year long effort that has been done bottom up. While all of us here steer the direction of the plan, every individual operating unit within the company has developed their ideas for the future and the outcomes of which you'll see shortly. During the first full year, the group continued to put its balance sheet on an ever more positive footing with successful refinancings and associated redemptions of bonds, pushing the next maturity out to 2028 with an average interest rate of 4.64%. It is a fundamental philosophy of all of us in the group to have balance sheet strength. And you will see at year end, we've reduced our leverage to 2.6 times, moving towards our target of two times. Reflecting the confidence we have, we continue to have a progressive dividend. And again, as was noted last week, we have increased our dividend by a further 5%. Smurfit Westrock, as was the case in Smurfit Kappa, continued to see the dividend as a key pillar of our capital allocation framework. This was evidenced quite clearly during the COVID years when others cut or delayed their dividend, but we paid in full. Turning now to the regions, let me start with North America. When we arrived in the legacy Westrock organization and following our first six months, we identified there was business in our portfolio that was heavily loss-making for the company and for the individual operating units. Our fundamental philosophy, and that is why we have successfully stood the test of time, is that every unit must be able to justify its own existence. As such, we have shed uneconomic business which will be replaced. To give you and me confidence, half of the 1.2 billion square metres we have lost has already been replaced and is in the process of being implemented in our system. And our prospects in what we call our pipeline significantly exceed the business that has been lost both in terms of volume and quality. The short-term effect of the volume loss is the need for us to take additional downtime in the mill system, which we've taken in Q4, amounting to a cost of about $85 million. A hallmark of this company, our company, has always been working capital management and cash generation. So this action has been necessary to make sure we optimize our system. In the year gone by, we have significantly reduced the number of loss makers already within the organization. We have also optimized our footprint with some closures, which we will continue to proactively evaluate, reflecting our recent announcement and other closures during 2025. We have already started implementing our investment programs, and most importantly, we've been putting in place the right people to take our North American business forward. With regard to EMEA and APAC, we have a very, very good business in this region and our margins reflect that. If you consider how the rest of the whole industry is performing and you see where we currently sit, I'm sure you'll recognise that our positioning in this area is indeed very strong. What is also very interesting is that our consumer business is adding a lot to our offering to our strong customer base, and we'll talk about this shortly, as we see nothing but opportunities to continue to progress this business alongside our strong corrugated business. Of course, in light of the current paper market situation, we are looking at our footprint with a continuing focus on portfolio optimization. Our Latin American business remains incredibly strong with great margins and a seamless integration achieved between both Legacy, Smurfit Kappa and Westrock. I'll let Alvaro reflect on this in a few moments. As I stated at the outset, our first full year of operation, integration and development at Smurfit Westrock has been truly outstanding. notwithstanding that the general economic environment has been as difficult as I have seen in my lifetime for such an extended period of time. Our significant achievements, which everyone in the company is proud of, as it sits within our vision, is that we have been recognised by Forbes, Fortune and Time magazine as a leader and one of the world's great companies. Our designers continue to meet and exceed our customers' needs and our operations continue to deliver superior performance in quality and service. And this is regularly recognized with over 230 awards received by customers and suppliers. Our consistent improvement in quality, productivity and utilization and on-time and full delivery for customers is what is driving many of the recognitions and awards we have received. And closing out the year, we recognise that we have well over achieved our initial CMEV target of $400 million, and while much of this is masked by the general economic activity we see, we believe this sets us up to be a much more efficient and leaner organisation into the future. And lastly, as I mentioned, our improved balance sheet of 2.6 times levered has been recognised by Fitch with an upgrade to BBB+. Finally, turning to our outlook, notwithstanding that we've had significant weather events, both in Europe and of course here in the United States, and we're continuing to work through the impact of these, the year has begun with a generally better industry operating environment. Given our progress of developing new and high quality business, the enthusiasm of our teams and our expectation for an improving economy in the second half of the year, We currently expect a first quarter adjusted EBITDA of between 1.1 and 1.2 billion, with a full year 2026 adjusted EBITDA between 5 billion and 5.3 billion US dollars. With a plan that we have in place to invest and grow our business, we remain extremely confident in the future of Smurfett Westrock as the go-to paper and packaging company ever. for customers, for talented employees, for suppliers and of course for shareholders in the years ahead. In summary, full year 2025 has been about establishing a strong foundation for future performance and for future success. I thank you all for your attention and now Ken and I will take any questions on the results before moving on to the medium term plan. Thank you.

Tony, in terms of the outlook for this year, can you talk to the extent that pricing is already baked in to your forecast or not, and then ultimately recognize you don't manage the business week by week, month by month. What is the expectation for volume progressions, especially within Corregated but in Boxport over the course of the year? Thank you.