David Sewell
Chief Executive Officer at WestRock
Thank you, Rob, and thank you all for joining our earnings call today. On our call today, I'll provide an overview of our fiscal third quarter results, discuss progress toward our transformation, and review our recently announced agreement to acquire the remaining stake in our Grupo Gondi joint venture. Following that, our CFO, Alex Pease, will provide a deep dive into the quarterly results for our segments and other performance. He'll also provide guidance for the fiscal fourth quarter. We will then move to Q&A to answer any questions you may have. When we spoke at our Investor Day in May, we provided long-term guidance for our business.
We remain committed to our goals, and this quarter provides another update on our progress toward achieving our objectives. Our business is healthy, and our balance sheet is strong. We are committed to driving our return on invested capital higher, improving our margin structure and delivering above-market growth through our strategic initiatives. Turning to slide three. Today, we reported record results with fiscal third quarter consolidated adjusted EBITDA above our guidance and adjusted EPS at the top end. Our strong performance reflects the hard work of our talented team at WestRock. Third quarter sales were a record $5.5 billion, an increase of 15% year-over-year.
And for the first time in WestRock's history, consolidated adjusted EBITDA was more than $1 billion. This is an increase of 24% year-over-year. Adjusted earnings per share of $1.54 increased 54% compared to the prior year. Additionally, the company generated $628 million of adjusted free cash flow, up $75 million year-over-year. Results were strong across all of our segments, driven by solid demand and the flow-through of previously published price increases. Corrugated Packaging adjusted EBITDA margins, excluding trade sales, were 17% as fewer COVID-related absences and less maintenance downtime supported improved productivity compared to last quarter.
Our Consumer Packaging segment remained strong across most end markets with industry-leading adjusted EBITDA margins well over 18%. Our Global Paper segment performed extremely well with an adjusted EBITDA margin of 25%, highlighting the business' strategic value. As a reminder, our packaging segments do not include the strong margins we're seeing in our external paper business. During the quarter, we returned $354 million in capital to shareholders, including $290 million in share repurchases and $64 million in dividend payments. We also maintained a net leverage ratio of 2.13 times within our target range of 1.75 times to 2.25 times.
Looking forward, economic conditions remain uncertain, and some of our customers have been working to rebalance their inventories. Fortunately, we serve a broad range of end markets that are resilient despite economic trends. For example, paperboard, beverage, health care and retail food remained very strong. Additionally, our consumer backlogs remain at historically high levels. Turning to slide four. As we outlined in our Investor Day, we have significant self-help opportunities and we are making progress on these goals. Our recent actions include: reducing our average mill cost by $4 per ton; establishing a supply chain pilot in one of our markets; centralizing production planning, inventory management, warehousing and logistics; launching a systems modernization effort, which is projected to deliver $200 million annually in savings when complete; announcing two strategic portfolio actions, our Grupo Gondi acquisition and closure of our Panama City mill; leveraging the size and strength of WestRock to reduce costs across approximately $1 billion of indirect spend; increasing operating efficiencies across our mill and converting network; and targeting actions to reduce SG&A and drive increased efficiencies.
Through these actions, we are on pace to achieve approximately $250 million in annualized cost savings, and we're just getting started on the $1.5 billion of self-help opportunities we identified at Investor Day. These opportunities, along with our scale, the range of packaging solutions we offer and our significant cash flow generation, position us well for long-term growth. Turning to slide five. Our previously published price increases have continued to more than offset inflation in fiber, labor, freight, energy and chemicals. In the quarter, we implemented a series of additional paperboard price increases in the range of $50 to $100 per ton, which will continue to flow through the fourth quarter and next fiscal year.
Looking forward, we expect the rate of inflation to mitigate, specifically in freight, certain raw materials and labor. While elevated energy prices remain a challenge, we expect price realizations to more than offset overall inflation for the remainder of fiscal 2022 and into fiscal 2023. Moving to slide six. Last week, we announced our entry into an agreement to acquire the remaining 68% stake of our joint venture, Grupo Gondi, a leading integrated producer of corrugated and consumer packaging in Mexico. This is the final step in a highly strategic partnership that we began in 2016 with total previous investments of approximately $425 million, and we are incredibly excited about the transaction.
Grupo Gondi will complement our existing North American footprint and will increase our presence in the growing Latin American market. As many of you know, we have a long successful history with Grupo Gondi. We supply the company containerboard and paperboard and partner with them on packaging solutions that leverage our patented designs and industry-leading beverage packaging machines. Increasing integration with Grupo Gondi, following the acquisition, is expected to produce significant synergies in our North American business. In addition to the strategic fit, Grupo Gondi meets our financial thresholds and firmly aligns with our capital allocation strategy.
We expect an ROIC of greater than 10% by year three, including $60 million of synergies, which we have good line of sight to, given how familiar we are with the assets. These synergies are expected to include leveraging our sourcing and logistics capabilities, optimizing external paper sales, improving operations across the mills and converting facilities and executing other cost-saving measures. We plan to close by the end of the first quarter of fiscal 2023. Following the closing, we expect to remain within our target net leverage range of 1.75 times to 2.25 times, and anticipate the deal to be adjusted earnings accretive in fiscal 2023. Turning to slide seven. Grupo Gondi operates four paper mills representing 1.1 million tons of recycled linerboard, medium and CRB capacity.
The company is approximately 80% integrated, operating nine corrugated packaging plants and six high-graphic plants in Mexico. Some of their high-graphic plants are hybrid facilities, providing both corrugated and consumer packaging. Grupo Gondi is led by a highly respected management team, and its proximity to the United States will enable further integration with our existing mill system, positioning us to take advantage of onshoring trends in the Americas. This acquisition will strengthen our position in the strategically important Latin America market. Latin America is projected to grow over 50% faster than North America, driven by economic growth and export product expansion in produce, protein and industrial goods.
Grupo Gondi's assets will enable stronger relationships with many of our large multinational customers operating in the region. Its corrugated and consumer businesses complement our existing business and enhance our service capabilities within Latin America. Additionally, Grupo Gondi's 14 operating facilities are high-quality, well-capitalized assets. The company recently completed an investment in its world-class Monterrey mill, which makes it one of the most modern containerboard mills in Latin America. Monterrey is currently ramping up and operating at approximately 90% of its expected 440,000 ton capacity. We are excited about the future, and we are looking forward to welcoming Grupo Gondi team members to the WestRock team upon closing.
Acquisitions such as this are just one component of the capital allocation strategy we outlined at our Investor Day. Our priorities include organic investments, maintaining net leverage of 1.75 times to 2.25 times, a sustainable and growing dividend, tuck-in acquisitions and opportunistic share repurchases. I'll now turn it over to Alex to discuss our segment results in more detail.