2020 WestRock Annual Report

1 2020 Annual REPORTLEADERSHIPSTEVEN C. VOORHEESP resident and Chief Executive OfficerDONNA OWENS COXC hief Communications OfficerAMIR A. KAZMIC hief Information and Digital Officer VICKI L. LOSTETTERC hief Human Resources OfficerMARK W. RUSSELLS enior Vice PresidentPerformance Excellence and SafetyROBERT B. MCINTOSHE xecutive Vice PresidentGeneral Counsel andSecretaryNINA E. BUTLERC hief Environmental OfficerJEFFREY W. CHALOVICHC hief Commercial Officerand President Corrugated PackagingPETER C. DURETTEC hief Strategy Officerand Executive Vice President Container MARGARET HERNDONC hief Marketing OfficerTHOMAS M. STIGERSE xecutive Vice PresidentContainerboard MillsJAMES B. PORTER IIIP residentBusiness Developmentand Latin AmericaJAIRO A. LORENZATTOP residentBrazilPATRICK E. LINDNERC hief Innovation Officerand President Consumer PackagingRAJIV BANAVALIS enior Vice PresidentScience and InnovationBRANDI COLANDERC hief Sustainability OfficerJOHN L. O NEALE xecutive Vice PresidentGlobal Food and BeverageGEORGE D.

2 OBERNESSERS enior Vice PresidentConsumer Mills PATRICK M. KIVITSP residentMulti Packaging SolutionsWARD H. DICKSONE xecutive Vice Presidentand Chief Financial OfficerJULIA A. MCCONNELLS enior Vice President and Chief Accounting OfficerDANIEL P. MCNALLYC hief Procurement OfficerWILLIAM A. MERRIGANS enior Vice PresidentEnterprise LogisticsTIMOTHY W. MURPHYS enior Vice PresidentFinanceJOHN D. STAKELS enior Vice Presidentand TreasurerBOARD OF DIRECTORSCOLLEEN F. ARNOLDF ormer Senior Vice PresidentIBMC ompensation Committee, Nominating and Corporate Governance CommitteeTIMOTHY J. BERNLOHRM anaging MemberTJB Management Consulting, LLCE xecutive Committee, Compensation Committee,Nominating and Corporate Governance Committee J. POWELL BROWNP resident and Chief Executive OfficerBrown & Brown, and Corporate Governance Committee, Finance CommitteeTERRELL K. CREWSF ormer Executive Vice Presidentand Chief Financial OfficerMonsanto CorporationAudit Committee, Finance CommitteeRUSSELL M.

3 CURREYP residentBoxwood Capital, LLCA udit Committee, Finance CommitteeSUZAN F. HARRISONF ormer PresidentGlobal Oral Care, Colgate-Palmolive CompanyAudit Committee, Finance CommitteeJOHN A. LUKE JR.(Non-Executive Chairman) Former Chairman and Chief Executive OfficerMeadWestVaco CorporationExecutive CommitteeGRACIA C. MARTOREF ormer President and Chief Executive OfficerTEGNA, Committee, Audit Committee, Compensation CommitteeJAMES E. NEVELSC hairman The Swarthmore GroupCompensation Committee Nominating and Corporate Governance Committee TIMOTHY H. POWERSF ormer Chairman, President and Chief Executive OfficerHubbell, Committee, Compensation CommitteeSTEVEN C. VOORHEESP resident and Chief Executive OfficerWestRock CompanyExecutive CommitteeBETTINA M. WHYTEP resident and OwnerBettina Whyte Consultants, LLCC ompensation Committee, Nominating and Corporate Governance Committee ALAN D. WILSON(Lead Independent Director) Former Chairman and Chief Executive OfficerMcCormick & Company, Committee, Nominating and Corporate Governance Committee, Finance CommitteeDEAR FELLOW STOCKHOLDERS:During the past fiscal year, we ve witnessed how valuable and essential packaging is to our customers and the world at large.

4 Against an extraordinary backdrop, we acted to navigate an ever-shifting supply chain to meet the demand for essential products and services needed by consumers. We are reminded daily that our solutions enable our customers to package and deliver food, beverages, healthcare products, cleaning products and other essential goods to consumers all over the incredible WestRock teammates deserve our deep appreciation for their resilience and for their uncompromising attention to safety. The safety of the WestRock team always has been a priority, and faced with the global pandemic, our protocols shifted quickly to help protect our teammates. Our dedicated teammates adapted quickly to these changes so that we could continue to serve our customers, support our communities and help protect the health of people and their families. We acted to ensure our ability to navigate in an unpredictable market from a position of financial strength. Key to this was the initiation in May 2020 of our Pandemic Action Plan, which included flexibly matching our supply with customer demand, reducing executive and discretionary expenses, reducing capital expenditures and resetting our quarterly dividend.

5 We differentiate ourselves in the marketplace with our ability to provide paper, packaging, machinery and displays and help manage complex supply chains. Our capabilities and approach are unique in our industry and support our vision to be the premier partner and unrivaled provider of sustainable, winning solutions for our customers. As our customers increase their demand for higher-value, more functional packaging solutions, the mix of our business is shifting toward higher-value packaging solutions and away from lower margin paper markets. As a result of the platform we have built, the actions we have taken during the past year and current market trends, we are very well positioned for success over both the short term and long term. FISCAL 2020 HIGHLIGHTSI m extremely proud of WestRock s performance in fiscal 2020. In the face of a challenging, uncertain market environment, we delivered $ billion in net sales, adjusted segment EBITDA of $ billion and net cash provided by operating activities of $ fiscal 2020, sales of packaging solutions accounted for $ billion, or 71%, of our total sales.

6 Increasing demand for e-commerce, more sustainable fiber-based packaging and digitally-enabled solutions drove organic growth of our packaging solutions volumes to record levels in the September quarter. We generated $ billion in adjusted free cash flow, marking the fifth consecutive year in which we generated more than $1 billion in adjusted free cash flow. We achieved this while reducing total debt by $633 have multiple levers to increase productivity that will help offset anticipated cost inflation and price pressures over the next year and beyond. Core to our productivity results are the contributions of our teammates, hundreds of which are trained in Six Sigma, and who execute projects contributing tens of millions of dollars in efficiency savings each and every year. We are investing in strategic capital projects, including those at the Florence, South Carolina, and Tres Barras, Brazil mills. These projects, when combined with the additional run-rate synergies from the KapStone acquisition, are expected to add more than $125 million of EBITDA in both fiscal 2021 and fiscal told, fiscal 2020 was highlighted by the incredible efforts of our teammates during the pandemic to stay safe and healthy while nimbly adapting our operations to meet the critical needs of our customers.

7 Working together, we managed through the challenges of this past year while developing and implementing plans to sustain and grow our business for the long term. STEVE VOORHEESC hief Executive OfficerThe non-GAAP financial measures Adjusted Segment EBITDA and Adjusted Free Cash Flow are referenced in this letter. See Appendix A for a discussion of our use of forward-looking statements and non-GAAP financial measures, including reconciliations of those measures to GAAP financial AND DELIVERING ON A SUSTAINABLE FUTURECOVID-19 has heightened concerns about the environment and the planet. In fact, sustainable packaging features are more impactful today than they were before the pandemic. Sustainable fiber-based packaging is a driving factor with many of our customers as they seek to transition to more sustainable packaging solutions for their customers. We are extremely well positioned to partner with them to meet this growing commitment to sustainability is part of who we are as a company.

8 Our vision for sustainability, Imagining and Delivering on the Promise of a Sustainable Future, is founded on three main pillars around which we are focusing our attention and resources: Supporting People and Communities Bettering the Planet Innovating for Our Customers and Their CustomersOur progress is already evident. For the first time, WestRock was named to the 2020 Dow Jones Sustainability North America and World Indices in recognition of our sustainable business practices. DIVERSITY, INCLUSION, EQUITY AND BELONGINGS adly, the past year included tragic events punctuated by the continued senseless loss of life in the African American community. As we work to support our people and communities, we have developed and are implementing actions that will start with our leadership and ensure that we push for and enable changes that will make a positive difference for our WestRock teammates, their families and our broader communities. Our actions are focused on confronting bias, driving diversity and cultivating equity with a sense of belonging.

9 Everyone at WestRock should feel welcome, heard, valued and safe every day so that we will create our future together to win together over the short and long term. LOOKING AHEADAs we enter fiscal 2021, demand across most of our paper and packaging markets is improving. Over time, we will continue to grow our participation in higher value packaging solutions markets and reduce our participation in lower margin paper markets. We will invest in expanding our commercial, operating and innovation capabilities while building our workplace for the future. Our broad portfolio and capabilities enable us to successfully partner with customers to help them grow their sales, lower their total costs, meet their sustainability goals and manage their risks. I am optimistic that we will generate at least $1 billion in adjusted free cash flow in fiscal 2021 for the sixth consecutive year. As we execute our disciplined capital allocation strategy in the near-term, we will focus on reducing our leverage, completing our strategic capital projects and maintaining a competitive dividend.

10 WestRock is the premier partner and unrivaled provider of sustainable, winning solutions for our customers, and we are delivering value for all our stakeholders, including our customers, teammates and stockholders. On behalf of the board of directors and all of us at WestRock , we thank you for your investment. And to the entire incredible WestRock team thank you for all you do to support our company and our customers. Stay safe, stay well and stay strong!Steve VoorheesSincerely, President and Chief Executive OfficerUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, 20549 FORM 10-K (Mark One) Annual Report pursuant TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2020OR TRANSITION Report pursuant TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38736 WestRock COMPANY(Exact Name of Registrant as Specified in Its Charter)Delaware 37-1880617(State or Other Jurisdiction ofIncorporation or Organization) ( EmployerIdentification No.)