David B. Sewell
Chief Executive Officer at WestRock
Thank you, Rob, and thank you all for joining our earnings call today. Fiscal 2022 was a tremendous year for WestRock. We achieved record financial results, realigned our segment reporting more in line with our long-term strategy, executed several portfolio optimization actions, initiated self-help cost improvements, and set the foundation for our transformation agenda. On our call today, I'll provide a review of our results, give an update on our transformation initiatives, and provide further details on our plastics replacement innovations. Following that, our CFO, Alex Pease, will provide a deep-dive into the quarterly results for our segments and other performance. He will also provide guidance for the fiscal first-quarter and full-year 2023. We will then move to Q&A to answer any questions you may have.
In fiscal 2022, we set company records for net sales, consolidated adjusted EBITDA and adjusted EPS. On a Year-over-Year basis, net sales increased 13% to $21.3 billion. Consolidated adjusted EBITDA increased 15% to $3.5 billion and adjusted earnings per share increased 40% to $4.76. For the year, we generated $1.2 billion in adjusted free-cash flow and we reduced our net leverage to 2.05 times as of September 30th, well within our stated target of 1.75 times to 2.25 quarter times. We also announced the planned acquisition of the remaining stake in Grupo Gondi, our joint venture in Mexico. The 18 months through September 30th, we repurchased $722 million of WestRock shares and increased our dividend by 25%. In just last month, we announced an additional 10% increase to our dividend.
Looking ahead, the global economy faces several challenges, including elevated inflation, rising interest rates, energy shortages, supply-chain disruptions and geopolitical conflict. These challenges, along with continued inventory rebalancing, negatively impacted our business in the fiscal fourth quarter. Still, WestRock remains well-positioned to navigate the current environment. Our broad portfolio of paper and packaging products provides tremendous value to our customers. We are unique in our ability to provide primary, secondary and tertiary packaging, as well as machinery that all work together to help our customers win in the marketplace.
Our packaging solutions enable our customers to safely and reliably ship and market their products and our machinery solutions enable customers to speed up production lines and reduce costs. Our innovations in plastics replacement are designed to help our customers achieve their sustainability targets and contribute to the circular economy. This is a long-term trend that we expect to continue. We have a stellar balance sheet and we have generated over $1 billion in adjusted free-cash flow for seven consecutive years. While we are not immune from macroeconomic challenges, we are well-positioned for 2023 and beyond.
Turning to our fourth quarter results on slide four. Thanks to the resolve and focus of our talented WestRock team members, we delivered solid results despite a challenging environment. Net sales increased 6% Year-over-Year to $5.4 billion and consolidated adjusted EBITDA increased 5% to $920 million. Adjusted EPS was $1.43, an increase of 16% compared to the prior year quarter and the company generated $268 million of adjusted free cash flow.
Our Corrugated Packaging adjusted EBITDA margins excluding trade sales were 16.7% as strong pricing and mix continued to more than offset headwinds, including cost inflation. Consumer packaging adjusted EBITDA margins were 16.8%, a decrease of 30 basis points Year-over-Year. We remain focused on implementing previously-published price increases in our consumer business, which will continue into the first half of fiscal 2023. In our global paper business, we delivered a solid 21.4% adjusted EBITDA margin due to strong execution and a focus on margin over volume.
As I previously noted, in October, we increased our dividend 10%, demonstrating confidence in our outlook and our commitment to a sustainable and growing dividend. As we look ahead, we plan to continue to use our strong free cash flow to invest in our business and return capital to our shareholders through our dividend and opportunistic share repurchases. We'll also continue to pursue attractive tuck-in acquisitions.
While we have seen a slowdown in corrugated demand due to inventory destocking and the slowing economy, our consumer segment remains robust, demonstrating the value of our diverse portfolio to navigate the current challenges. In addition, we remained focused on our transformation initiatives and delivering on the fiscal 2025 goals that we outlined at our Investor Day.
Turning to slide five. In fiscal 2022, we made significant progress on our portfolio optimization. We are continuing to right size our portfolio, focusing on core assets to increase and maximize return on invested capital. In July, we announced the planned purchase of the remaining stake in our Grupo Gondi joint venture. This strategic acquisition positions us to take advantage of onshoring trends and capture growth in the attractive Latin-American market. The transaction remains on track and is expected to close in December 2022. We intend to use our $1billion delayed-draw term-loan facility and existing liquidity to fund the transaction.
As a reminder, Grupo Gondi's projected calendar year 2022 EBITDA is $200 million to $210 million, and we are targeting an additional $60 million in annual synergies by year three following the closing. In April, we announced the closure of our Panama City mill and just last month, we announced the closure of our corrugated medium production in our St. Paul mill. These assets required significant capital investment to maintain and improve and we did not see a path to achieving our return hurdles.
The Panama City closure removed 353,000 tonnes of linerboard capacity and 292,000 tons of fluff pulp capacity while the St. Paul closure removed 200,0000 tons of corrugated medium capacity. As a result of the St. Paul closure, we expect to incur approximately $36 million of total costs and $24 million of cash costs. We recognized $15 million of total costs and $3 million of cash costs in the fourth quarter and we expect to recognize the remainder fiscal 2023. Our CRB machines in St. Paul remain competitive in the market and continue to operate.
Lastl,y we recently-announced two divestitures, including our 65% stake in our RTS joint venture, as well as three URB mills. With these sales, we will exit the non-strategic industrial URB businesses. Net proceeds from the sales will total $380 million combined, which we will use to maintain leverage within our target. These divestitures further demonstrate our commitment to portfolio optimization and our focus on driving return on invested capital.
Turning to slide six, we continue to execute on our transformation initiatives to improve productivity and drive long-term profitability. Starting with our supply chain, we began piloting our distribution center optimization and inventory management initiatives in one of our markets. The initial pilot is yielding terrific results. We've identified $10 million in expected annual run-rate savings. We believe these savings are scalable across our broader enterprise. We continue to target $150 million to $200 million from our logistics and planning projects once fully implemented.
We are also executing on our procurement initiatives and have identified approximately $45 million in estimated annual savings and we expect more to come. We are executing additional SG&A savings which we expect will deliver a net cost-reduction of $40 million in fiscal 2023 and we are currently working toward a $150 million to $200 million in productivity improvements in our mill system and converting operations.
With our Panama City and St. Paul actions, we've reduced our North American corrugated mill cost by approximately $5 per ton. Taken together, we are targeting more than $250 million in net productivity and cost savings by the end of fiscal 2023. We are making significant progress on our 2025 targets and we remain confident in the opportunities ahead.
Moving to slide seven, the global trend toward plastics replacement remains an attractive long-term growth driver, supported by an estimated $9 billion total addressable market in North America and $50 billion globally. As well-documented, consumers and governments continue to demand the company support the environment and sustainability. Given our broad portfolio, the breadth of paper grades we offer and our continued investment in product innovations, WestRock is well-positioned to continue capturing a growing share of the packaging market.
As of today, we anticipate $345 million in annual run-rate revenue from plastic replacements and we are targeting to more than double that by the end of fiscal year 2025. Some of our notable plastic replacement solutions include CanCollar X, our sustainable large-format can beverage packaging; EverGrow, our paper-based produce [Indecipherable]. EcoPush, our paper-based plastic tubes replacement and Cluster-Pak packaging for multi-pack can foods. Our complementary machinery also helps our customers automate their production lines and reduce labor costs.
These are just a few of the solutions we had today and we remain committed to offering a complete portfolio of recyclable, compostable or reusable packaging by 2025. Looking ahead, we see tremendous opportunity for plastics replacement. Many of our customers have set aggressive goals to improve their packaging sustainability by 2025. And we are working hard and alongside them to reduce or replace plastics with fiber-based solutions. Our innovations in plastics replacement support continued revenue growth and contribute to the circular economy. I'll now turn it over to Alex to discuss our segment results in more detail.
