Alexander W. Pease
Chief Financial Officer at WestRock
Thanks, David. Moving to our consolidated quarterly results on slide seven. Second quarter revenue increased 21% to $5.4 billion, and consolidated adjusted EBITDA increased 33% to $854 million. Consolidated adjusted EBITDA margin was 15.9%, up 150 basis points year-over-year. Our diverse portfolio enables us to deliver higher value solutions to our customers, capturing stronger price with enhanced product mix. Price and mix positively contributed over $700 million year-over-year. We also saw an $88 million benefit as last year we were negatively impacted by the ransomware incident and weather. However, continuing inflation headwinds in fiber, labor, freight, energy and chemicals, along with foreign exchange and other challenges, largely offset the benefits. As David noted, we experienced significant improvement in COVID-related absenteeism, as the quarter progressed, but still see continuing risks in logistics and other input costs. We successfully executed significant planned maintenance downtime during the quarter. And looking ahead, we expect significantly less planned downtime through the remainder of the year.
Turning to slide eight. corrugated Packaging sales were $2.2 billion, an increase of $281 million or 14% year-over-year. Adjusted EBITDA increased $8 million or 2%, though adjusted EBITDA margin declined 180 basis points to 14.7%, as we continue to work through the impact of labor issues that we experienced early in the quarter. Strong pricing and mix contributed $275 million but was offset by $200 million of inflation and an $80 million decline in productivity. Productivity was negatively impacted by heavy mill maintenance and labor challenges during the quarter. We experienced continued inflation in fiber, labor, freight, energy and chemicals during the quarter. In addition, as mentioned, COVID-related absenteeism negatively impacted converting operations in January and February. However, we experienced significant improvement as the quarter progressed. Favorable comparisons to last year's weather and ransomware events also benefited adjusted EBITDA by $20 million year-over-year. Per day, North American box shipments were slightly softer year-over-year, mainly due to labor issues early in the quarter. However, as we exited the quarter, our run rate significantly improved, and we're currently selling everything we can produce. When looking at our end markets, we're seeing a shift due to reopening as the pandemic eases. Our pure-play e-commerce volumes are softer year-over-year but are being more than offset by expanding omnichannel retail volume. We are also seeing shifting buying patterns with pizza volumes declining as people return to restaurants but growth in areas like bakery. Geographically, our Brazil business outperformed in a challenging market, producing EBITDA margins over 30% across our combined corrugated and Paper segments. Longer term, we continue to see significant opportunities in Latin America. Overall, demand throughout our corrugated business remains strong, and our shipments have been limited by production capacity rather than customer demand.
This strength demonstrates the value we provide our customers and our flexibility to serve a diverse range of end markets. We remain optimistic for the remainder of the fiscal year. Our backlogs are healthy and demand is solid. We're also in the early stages of implementing the previously published March containerboard price increase. Productivity has improved, and we exited the quarter with March EBITDA margins of approximately 17%. Looking ahead, we remain relentlessly focused on improving our margins as we continue to implement the WestRock operating system. Turning to the consumer packaging business on slide nine. Sales increased to $170 million or 16% to $1.25 billion. Adjusted EBITDA increased $42 million or 25%, and adjusted EBITDA margin was 16.5%, an increase of 130 basis points year-over-year. Higher volumes added $31 million and strong price and mix contributed $111 million. These volumes more than offset a negative impact of $93 million due to inflation, primarily in freight, energy and labor. Plastic replacements and other transitions to sustainable packaging provide continued attractive growth opportunities. Our broad portfolio and product innovations enable us to provide unique solutions and help our customers reduce their environmental footprint. Our current run rate for plastic replacements revenue is now exceeding $300 million annually. We are executing well, and we continue to implement the previously published price increases across all consumer grades. We have more demand than we can meet with backlogs of six to eight weeks. We saw particular strength in beverage and retail food during the quarter.
Turning to slide 10. Global Paper revenue increased $407 million or 36% to $1.5 billion. Adjusted EBITDA increased $149 million or 93%, and adjusted EBITDA margin increased 600 basis points to 20.1%. It's important to note that this strong margin would have been reported in our corrugated and consumer segments under our prior reporting structure. Our Paper business continues to benefit from previously announced pricing realization and higher volumes, partially offset by energy, freight and other costs. Price and mix contributed $311 million to adjusted EBITDA, while inflation negatively impacted results by $166 million. Favorable comparisons to last year's second quarter, which had the impact of winter weather and ransomware event, also benefited adjusted EBITDA by $63 million year-over-year. We continue to see strong demand for our paper products in both independent domestic and export markets, though logistics continued to be impacted by ongoing supply chain disruptions. Our Global Paper business is a competitive differentiator, enabling us to strategically balance our production and provide flexibility to quickly adapt to current market trends. We remain optimistic for our Paper business through the remainder of the fiscal year due to our strong backlogs and the realization of previously published price increases. Next, our Distribution results are on slide 11. Our Distribution performance was strong with revenue increasing 29% year-over-year to $362 million. Adjusted EBITDA more than doubled to $28 million. Our impressive results were driven by robust demand and strong execution across our distribution network. Results also benefited from fulfillment of a large health care order.
Turning to slide 12. During the quarter, we generated $213 million in adjusted free cash flow, up significantly from the previous year's levels, as last year was negatively impacted by the ransomware incident. We still expect fiscal year '22 to be a very strong year for cash generation with adjusted free cash flow of more than $1.3 billion for the year, making this year the seventh straight year of adjusted free cash flow above $1 billion. Additionally, though we aggressively repurchased shares in the quarter, our leverage ended the quarter at 2.34 times, approaching our new long-term targeted net leverage ratio of 1.75 times to 2.25 times. Turning toslide 13 and our financial guidance for the third quarter. We continue to implement all previously published price increases. We still have approximately 54,000 tons of scheduled downtime across our system in the third quarter. This is due to delays in mill maintenance from earlier in fiscal 2021, along with our originally planned outages. We are early in the process of evaluating our 2023 maintenance schedule, and we are considering shifting maintenance forward into fiscal 2022.
Our forecast for third quarter consolidated adjusted EBITDA is $930 million to $990 million and adjusted EPS of $1.36 to $1.54. Some assumptions behind our outlook include OCC costs roughly flat quarter-over-quarter, natural gas costs up approximately $2 per MMBTU sequentially, continued inflation in freight and logistics expense and a tax rate between 24% and 26%. On slide 14, we're also updating our full year guidance, both tightening the range and raising the low end. We now expect to achieve $3.5 billion to $3.7 billion in consolidated adjusted EBITDA and $4.75 to $5.35 in adjusted EPS during fiscal 2022. Looking forward, given the strength of our differentiated solutions, we're positioned well for sales, earnings and free cash flow growth this year and beyond. I'll now turn it back to David to conclude before we move to Q&A.