01—Abstract
Summary
Summary of the 10-Q filed June 7, 2024. Cited figures are marked; the original filing is the authoritative source.
Smurfit WestRock Limited filed this Quarterly Report on Form 10-Q on June 7, 2024 for the quarter ended March 31, 2024.
The company has had no historical operations since its incorporation in Ireland on July 6, 2017, and it did not generate revenue or net income in the three months ended March 31, 2024 or 2023. Its only balance sheet item is cash and cash equivalents of $108 thousanda at March 31, 2024, down from $111 thousand at December 31, 2023. Total comprehensive loss for the quarter was $3 thousand, from foreign currency translation on euro-denominated cash.
The filing centers on the pending Combination with WestRock Company, under a Transaction Agreement dated September 12, 2023 with Smurfit Kappa Group plc and Sun Merger Sub, LLC. Under the terms, WestRock common stockholders will receive one new Smurfit WestRock share and $5.00b in cash for each WestRock share, and Smurfit Kappa ordinary shareholders will receive one new Smurfit WestRock share for each of their shares. The Registration Statement on Form S-4 was declared effective on April 26, 2024, and the Transaction is expected to close in early July 2024, subject to regulatory approvals, shareholder approvals and other closing conditions.
Prior to closing, Smurfit WestRock will have no operations and no liquidity or capital requirements. The filing also discloses two lawsuits pending as of June 6, 2024, filed by purported WestRock stockholders in New York State court. The suits challenge the sufficiency of disclosures in the proxy statement/prospectus and allege breach of fiduciary duty against WestRock and its directors.
The company states it cannot predict the outcomes. Management, led by President and Group Chief Executive Officer Anthony Smurfit and Group Chief Financial Officer Ken Bowles, concluded that disclosure controls and procedures were effective as of the end of the period.
02—Key points
Key Highlights
- No revenue or net income for the three months ended March 31, 2024 or 2023; the company has had no historical operations since incorporation.
- Total assets consist solely of cash and cash equivalents of $108 thousand at March 31, 2024, compared with $111 thousand at December 31, 2023.
- Comprehensive loss of $3 thousand for Q1 2024, driven by foreign currency translation loss on euro-denominated cash, compared with comprehensive income of $2 thousand in Q1 2023.
- Combination terms: WestRock stockholders receive one Smurfit WestRock share and $5.00 in cash per WestRock share; Smurfit Kappa shareholders receive one Smurfit WestRock share per ordinary share.
- Registration Statement on Form S-4 declared effective April 26, 2024; the Transaction is expected to close in early July 2024, subject to regulatory and shareholder approvals.
- Two stockholder lawsuits pending as of June 6, 2024 challenge disclosures in the WestRock proxy statement/prospectus; the company cannot predict their outcomes.
- Disclosure controls were concluded effective, and no material change in internal control over financial reporting occurred in Q1 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Smurfit Westrock kept $0.07.
- Revenue$2.93B100.0%
- Cost of revenue−$2.22B75.8%
- Gross profit$710.0M24.2%
- Operating costs−$403.0M13.8%
- Operating income$307.0M10.5%
- Interest, other & tax−$116.0M4.0%
- Net income$191.0M6.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed June 7, 2024Financial Statements
| Revenue | $2.93B |
| Cost of Revenue | $2.22B |
| Gross Profit | $710.00M |
| SG&A Expenses | $380.00M |
| Operating Income | $307.00M |
| Net Income | $191.00M |
| EPS (Basic) | $0.74 |
| EPS (Diluted) | $0.73 |
| Shares Outstanding (Basic) | 259.00M |
| Shares Outstanding (Diluted) | 260.00M |
05—Questions
Frequently Asked Questions
Has Smurfit WestRock generated any revenue or earnings?
No. The company did not generate revenue or net income for the three months ended March 31, 2024 or 2023, and it has had no historical operations since its incorporation in Ireland on July 6, 2017, other than activities related to its formation.
What are the terms of the proposed combination with WestRock and Smurfit Kappa?
Under the Transaction Agreement dated September 12, 2023, WestRock common stockholders will receive one new Smurfit WestRock share and $5.00 in cash for each WestRock share. Smurfit Kappa ordinary shareholders will receive one new Smurfit WestRock share for each ordinary share. Smurfit WestRock will be the parent of the combined group, headquartered in Dublin, Ireland.
When is the transaction expected to close, and what conditions remain?
The Transaction is expected to close in early July 2024. Completion is conditional on regulatory clearances, stockholder approvals from Smurfit Kappa and WestRock, sanction of the Scheme by the High Court of Ireland, and approval of the Smurfit WestRock shares for listing on the NYSE and the FCA's Official List.
What legal risks are disclosed in the filing?
Two lawsuits filed by purported WestRock stockholders on May 21 and May 22, 2024 challenge the sufficiency of disclosures in the proxy statement/prospectus and allege state law breach of fiduciary duty against WestRock and its directors. Several stockholders have also sent demand letters raising similar concerns. The company states it cannot predict the outcomes of these matters.
Will Smurfit WestRock have operations or capital needs before the closing?
No. Prior to the closing of the Combination, Smurfit WestRock will have no operations, and it will not have any liquidity and capital requirements or capital commitments. Its only asset is a small cash balance, which stood at $108 thousand at March 31, 2024.
06—Continue