- Sets above market initial annual dividend rate of $1.50 per share
- Establishes repurchase authorization for 40 million shares
NORCROSS, Ga., July 1, 2015 (GLOBE NEWSWIRE) -- WestRock Company (NYSE:WRK) today announced its initial shareholder return strategy as the newly formed company began operations following the completion earlier today of the merger of MeadWestvaco and RockTenn.
WestRock's board of directors has set an initial quarterly dividend rate of $0.375 per share, which is equivalent to an annual rate of $1.50 per share. The annualized rate represents an initial yield of approximately 2.40 percent and a 17 percent increase to the most recent combined dividend rates of MeadWestvaco and RockTenn. The shareholder record date and payment date for the quarterly dividend will be announced over the next several weeks.
The company expects to maintain the $1.50 per share dividend after the previously announced tax-free spin-off of its Specialty Chemicals business, which will increase the effective dividend yield for WestRock shareholders after completion of the spin-off.
Share Repurchase Authorization
WestRock's board of directors has authorized a repurchase program of up to 40.0 million shares of common stock, representing approximately 15 percent of the outstanding common stock of the company as of July 1, 2015. Based on the equity market value of the company on July 1, 2015, this repurchase program equates to approximately $2.5 billion in current stock market value. Shares of common stock may be purchased from time to time in open market or privately negotiated transactions. The timing, manner, price and amount of repurchases will be determined by the company at its discretion based on factors including the market price of the company's common stock, general economic and market conditions, and applicable legal requirements. The repurchase program may be commenced, suspended or discontinued at any time.
WestRock is currently in an earnings blackout period. As such, the company is not permitted to make any repurchases. The company may commence repurchases, if so inclined, two business days after its fiscal third quarter 2015 results conference call, which is scheduled for July 30, 2015.
"WestRock has a great business platform, strong cash flows and a solid balance sheet. Our dividend and our share repurchase program are key components of WestRock's balanced capital allocation strategy," said Steve Voorhees, chief executive officer of WestRock. "Our balanced capital allocation strategy, anchored by our normalized leverage ratio target of 2.25 to 2.50 times, will allow us to pay an attractive dividend, continue to invest in our business, take advantage of accretive business opportunities, including acquisitions, and return significant capital to our shareholders through share repurchases. The board's action to initiate the dividend and share repurchase program on our first day as a new company speaks to our confidence in our outlook for the long-term profitability of WestRock and our disciplined approach to capital allocation."
WestRock also closed on a financing package on July 1, 2015 and has more than $3.5 billion in available liquidity and credit commitments to support its capital allocation and shareholder return strategies.
WestRock Company (WRK) aspires to be the premier partner and unrivaled provider of paper and packaging solutions in consumer and corrugated markets. WestRock's 42,000 team members support customers around the world from approximately 275 operating and business locations spanning North America, South America, Europe and Asia. Learn more at westrock.com.
Senior Vice President, Treasurer
Director, Investor Relations
Director, Corporate Communications
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as "may," "will," "could," "should," "would," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target," "prospects," "potential" and "forecast," and other words, terms and phrases of similar meaning. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties. WestRock cautions readers that a forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement. Such forward-looking statements include, but are not limited to, statements regarding the initial estimated dividend yield of 2.5 percent and the expectation of maintaining the $1.50 per share dividend after the previously announced tax-free spin-off of its Specialty Chemicals business; the expectation that the tax-free spin-off of the Specialty Chemicals business will increase the effective dividend yield for WestRock shareholders after completion of the spin-off; the statement that our balanced capital allocation strategy, anchored by our normalized leverage ratio target of 2.25 to 2.50 times, will allow us to pay an attractive dividend, continue to invest in our business, take advantage of accretive business opportunities, including acquisitions, and return significant capital to our shareholders through share repurchases; and the statement referring to our outlook for the long-term profitability of WestRock. With respect to these statements, WestRock has made assumptions regarding, among other things, the results and impacts of the merger of MeadWestvaco and RockTenn; whether and when the spin-off of WestRock's Specialty Chemicals business will occur; economic, competitive and market conditions generally; volumes and price levels of purchases by customers; competitive conditions in WestRock's businesses and possible adverse actions of their customers, competitors and suppliers. Further, WestRock's businesses are subject to a number of general risks that would affect any such forward-looking statements including, among others, decreases in demand for their products; increases in energy, raw materials, shipping and capital equipment costs; reduced supply of raw materials; fluctuations in selling prices and volumes; intense competition; the potential loss of certain customers; the scope, costs, timing and impact of any restructuring of our operations and corporate and tax structure; and adverse changes in general market and industry conditions. Such risks and other factors that may impact management's assumptions are more particularly described in Rock-Tenn Company's and MeadWestvaco Corporation's past filings with the Securities and Exchange Commission, including under the caption "Business – Forward-Looking Information" and "Risk Factors" in RockTenn's Annual Report on Form 10-K for the fiscal year ended September 30, 2014 and "Management's discussion and analysis of financial condition and results of operations – Forward-looking Statements" and "Risk factors" in MeadWestvaco's Annual Report on Form 10-K for the fiscal year ended December 31, 2014. These risks, as well as other risks associated with RockTenn, MeadWestvaco and WestRock are also more fully discussed under the caption "Cautionary Statement Regarding Forward-Looking Statements" and "Risk Factors" in the Registration Statement on Form S-4 filed by WestRock on March 10, 2015 (which registration statement was amended on April 20, 2015, May 6, 2015, and May 18, 2015, and was declared effective on May 19, 2015). The information contained herein speaks as of the date hereof and WestRock does not have or undertake any obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.