Smurfit Westrock plc

Receivables involved with these customer-based SCF programs constitute approximately 6% of the

Company’s accounts receivable balance at December 31, 2024. In addition, Smurfit Westrock has monetization facilities that sell to

third-party financial institutions all of the short-term receivables generated from certain customer trade accounts. See “Note 13. Fair

Value Measurement” for a discussion of the Company’s monetization facilities.

Smurfit Westrock’s working capital management strategy includes working with its suppliers to revisit terms and conditions, including

the extension of payment terms. The Company’s current payment terms with the majority of its suppliers generally range from payable

upon receipt to 120 days and vary for items such as the availability of cash discounts. The Company does not believe its payment

terms will be shortened significantly in the near future, and does not expect its net cash provided by operating activities to be

significantly impacted by additional extensions of payment terms. Certain financial institutions offer voluntary SCF programs that

enable the Company’s suppliers, at their sole discretion, to sell their receivables from Smurfit Westrock to the financial institutions on

a non-recourse basis at a rate that leverages the Company’s credit rating and thus might be more beneficial to the Company’s

suppliers. Smurfit Westrock and its suppliers agree on commercial terms for the goods and services we procure, including prices,

quantities and payment terms, regardless of whether the supplier elects to participate in SCF programs. The suppliers sell Smurfit

Westrock goods or services and issue the associated invoices based on the agreed-upon contractual terms. The due dates of the

invoices are not extended due to the supplier’s participation in SCF programs. Smurfit Westrock suppliers, at their sole discretion if

they choose to participate in a SCF program, determine which invoices, if any, they want to sell to the financial institutions. No

guarantees are provided by the Company under SCF programs, and it has no economic interest in a supplier’s decision to participate in

the SCF program. Therefore, amounts due to the Company’s suppliers that elect to participate in SCF programs are included in the

“Accounts payable” line item in the Company’s Consolidated Balance Sheets and the activity is reflected in “Net cash provided by

operating activities” in the Company’s Consolidated Statements of Cash Flows. Based on correspondence with the financial

institutions that are involved with Smurfit Westrock’s two primary SCF programs, while the amount suppliers elect to sell to the

financial institutions varies from period to period, the amount generally averages approximately 13.7% of the Company’s accounts

payable balance. The outstanding payment obligations to financial institutions under these programs were$450 million as of

December 31, 2024.

Smurfit Westrock also participates in certain vendor financing and commercial card programs to support travel and entertainment

expenses and smaller vendor purchases. Amounts outstanding under these programs are classified as debt primarily because the

Company receives the benefit of extended payment terms and a rebate from the financial institution that would not have otherwise

been received without the financial institution's involvement. Smurfit Westrock also has receivables securitization facilities that allows

for borrowing availability based on underlying accounts receivable eligibility and compliance with certain covenants. See “Note 14.

Debt” and “Note 22. Variable Interest Entities” of the Notes to Consolidated Financial Statements for a discussion of the receivables

securitization facilities and the amount outstanding under the Company’s vendor financing and commercial card programs.

Smurfit Westrock is a party to enforceable and legally binding contractual obligations involving commitments to make payments to

third parties. These obligations impact Smurfit Westrock’s short-term and long-term liquidity and capital resource needs. Certain

contractual obligations are reflected on Smurfit Westrock’s Consolidated Balance Sheets as of December 31, 2024, while others are

considered future obligations. Smurfit Westrock’s contractual obligations primarily consist of items such as long-term debt, including

current portion, lease obligations, purchase obligations and other obligations. See “Contractual Obligations and Commitments” for

more information.

Cash Flow Activity

The following table contains selected financial information from Smurfit Westrock’s Consolidated Statements of Cash Flows for the

years ended December 31, 2024,2023 and 2022:

Net cash provided by operating activities decreased by $76 million, or 4.9%, to $1,483 million in the year ended December 31, 2024

from $1,559 million in the year ended December 31, 2023, primarily due toa$508 million increase in the outflow in the change in

operating assets and liabilities driven by additional operating cash flow activity as aresult of the Combination, higher volumes

(excluding acquisitions) in the Europe, MEA and APAC segment, and an increased outflow for creditors in the North America

segment. The increase in the cash outflows from changes in operating assets and liabilities includes proceeds of $62 million resulting

from the sale of accounts receivables in connection with monetization agreements. The increase inthe cash outflows from changes in

operating assets and liabilitieswas partially offset by the $432 million increase in net income adjusted for non-cash items, including

depreciation, depletion and amortization, cash surrender value increase in excess of premiums paid, impairment charges on assets

other than goodwill, share-based compensation expense, deferred tax (benefit) expense, andpension and other post-retirement funding

more than cost, resulting in a net decrease in cash flows from operating activities.

Net cash provided by operating activities increased by $126 million, or 8.8%, to $1,559 million in the year ended December 31, 2023

from $1,433 million in the year ended December 31, 2022, primarily due to an increase inthe cash inflow in the change in operating

assets and liabilities, partially offset by adecrease of $350 million in net income adjusted for non-cash items, including depreciation,

depletion and amortization, impairment charges for goodwill and other assets, share-based compensation expense, deferred tax

(benefit) expense, andpension and other post-retirement funding more than cost resulting in a netincrease in cash flows from

operating activities.

Net cash used for investing activities of$2,114 million in the year ended December 31, 2024 consisted primarily of capital

expenditures of$1,466 million and cash paid for purchase of businesses, net of cash acquired of $719 million, partially offset by

proceeds from sale of property, plant and equipment of $61 million. Net cash used for investing activities of$931 million in the year

ended December 31, 2023 consisted primarily of capital expenditures of$929 million and cash paid for purchase of businesses, net of

cash acquired of $29 million. Net cash used for investing activities of$1,020 million in the year ended December 31, 2022 consisted

primarily of capital expenditures of$930 million and cash paid for purchase of businesses, net of cash acquired of$93 million.

Net cash provided by financing activities of$607 million in the year ended December 31, 2024 consisted primarily of cash inflows

from a net increase in debt of$1,367 million, partially offset by cash dividends paid to shareholders of$650 million and debt issuance

costs of$63 million. Net cash used for financing activities of$479 million in the year ended December 31, 2023 consisted primarily of

cash outflows from netrepayments of debtof$55 million and cash dividends paid to shareholders of$391 million. Net cash used for

financing activities of $431 million in the year ended December 31, 2022 consisted primarily of cash outflows from repayments of

debt net of additions to debt of$7 million and cash dividends paid to shareholders of$349 million.

Contractual Obligations and Commitments

Smurfit Westrock’s primary cash requirements from contractual obligations and commitments include:

•Debt obligations. See “Note 14. Debt,” of the Notes to the Consolidated Financial Statements included elsewhere in this

Annual Report on Form 10-K for more information on Smurfit Westrock’s debt obligations and timing of expected future

payments.

•Operating and finance leases. See “Note 12. Leases,” of the Notes to the Consolidated Financial Statements included

elsewhere in this Annual Report on Form 10-K for more information on Smurfit Westrock’s operating and finance lease

obligations and timing of expected future payments.

•Pension liabilities. See “Note 18. Retirement Plans,” of the Notes to the Consolidated Financial Statements included

elsewhere in this Annual Report on Form 10-K for more information on Smurfit Westrock’s pension liabilities and the timing

of expected future benefit payments under its pension plans and postretirement plans.

•Capital commitments. See “Note 21. Commitments and Contingencies,” of the Notes to the Consolidated Financial

Statements included elsewhere in this Annual Report on Form 10-K for more information on Smurfit Westrock’s future

spending for property, plant and equipment that Smurfit Westrock is obligated to purchase.

•Purchase commitments. See “Note 21. Commitments and Contingencies,” of the Notes to the Consolidated Financial

Statements included elsewhere in this Annual Report on Form 10-K for more information on Smurfit Westrock’s purchase

commitments and the timing of the expected future payments.

Off-Balance Sheet Arrangements

As of December 31, 2024, Smurfit Westrock did not have any off-balance sheet arrangements.

NON-GAAP FINANCIAL MEASURES

Definitions

Non-GAAP Financial Measures

Smurfit Westrock reports its financial results in accordance with generally accepted accounting principles in the U.S. (“GAAP”).

However, management believes certain non-GAAP financial measures, as discussed below, provide Smurfit Westrock’s Board of

directors, investors, potential investors, securities analysts and others with additional meaningful financial information that should be

considered when assessing its ongoing performance. Smurfit Westrock management also uses these non-GAAP financial measures in

making financial, operating and planning decisions, and in evaluating company performance. Non-GAAP financial measures are not

intended to be considered in isolation of or as a substitute for, or superior to, financial information prepared and presented in

accordance with GAAP and should be viewed in addition to, and not as an alternative for, the GAAP results. The non-GAAP financial

measures Smurfit Westrock presents may differ from similarly captioned measures presented by other companies. Smurfit Westrock

uses the non-GAAP financial measures “Adjusted EBITDA,” “Adjusted Net Income,” and “Adjusted Earnings Per Share - Basic.”

Smurfit Westrock uses the non-GAAP financial measure “Adjusted EBITDA” to evaluate its overall performance. The composition of

Adjusted EBITDA is not addressed or prescribed by GAAP. Smurfit Westrock defines Adjusted EBITDA as net income before

income tax expense, depreciation, depletion and amortization, interest expense, net, pension and other postretirement non-service

expense, net, share-based compensation expense, other (expense) income, net, impairment of goodwill and other assets, amortization

of fair value step up on inventory, transaction and integration-related expenses associated with the Combination and other specific

items that management believes are not indicative of the ongoing operating results of the business. Smurfit Westrock views Adjusted

EBITDA as an appropriate and useful measure to compare financial performance between periods.

Management believes that the most directly comparable GAAP measure to Adjusted EBITDA is “Net income”. Management believes

this measure provides Smurfit Westrock’s management, Board of directors, investors, potential investors, securities analysts and

others with useful information to evaluate Smurfit Westrock’s performance because, in addition to income tax expense, depreciation,

depletion and amortization, interest expense, net, pension and other postretirement non-service expense, net, share-based

compensation expense and other expense (income), net, Adjusted EBITDA also excludes impairment of goodwill and other assets,

amortization of fair value step up on inventory, transaction and integration-related expenses associated with the Combination, and

other specific items that management believes are not indicative of the operating results of the business. Smurfit Westrock and its

Board of directors use this information in making financial, operating and planning decisions and when evaluating Smurfit Westrock’s

performance relative to other periods.

Set forth below is a reconciliation of the non-GAAP financial measure Adjusted EBITDA to Net income, the most directly comparable

GAAP measure, for the periods indicated.

For the year ended December 31, 2022, impairment of other assets in the table above is made up of the impairment of Russian

operations of$159 million, included in the Europe, MEA and APAC segment. See “Note 20. Disposal of Russian Operations” for

additional information on the impairment of the Russian operations.

Other adjustments in the table above include restructuring costs of$56 million for the year ended December 31, 2024 ($32 million and

$29 million for the years ended December 31, 2023 and 2022, respectively), a non-recurring, non-cash currency translation adjustment

in Argentina of$42 million and losses at closed facilities of$10 million partially offset by a reimbursement of a fine from the Italian

Competition Authority of$18 million.

Adjusted Net Income and Adjusted Earnings per Share - Basic

Smurfit Westrock uses the non-GAAP financial measures “Adjusted Net Income” and “Adjusted Earnings Per Share - Basic”.

Management believes these measures provide Smurfit Westrock’s management, Board of directors, investors, potential investors,

securities analysts and others with useful information to evaluate Smurfit Westrock’s performance because they exclude amortization

of fair value step up on inventory, impairment of goodwill and other assets, transaction and integration-related expenses associated

with the Combination and other specific items that management believes are not indicative of the operating results of the business.

Smurfit Westrock and its Board of directors use this information when making financial, operating and planning decisions and when

evaluating Smurfit Westrock’s performance relative to other periods. Smurfit Westrock believes that the most directly comparable

GAAP measures to Adjusted Net Income and Adjusted Earnings Per Share - Basic are Netincome attributable to common

shareholders and basic earnings per share attributable to common shareholders (“Earnings per share -Basic”).

Set forth below is a reconciliation of the non-GAAP financial measure Adjusted Net Income to Net income attributable to common

shareholders and Earnings per share to Adjusted Earnings per Share, the most directly comparable GAAP measures for the periods

indicated.

For the year ended December 31, 2022, impairment of other assets in the table above is made up of the impairment of Russian

operations of$159 million, included in the Europe, MEA and APAC segment. See “Note 20. Disposal of Russian Operations” for

additional information on the impairment of the Russian operations.

Other adjustments in the table above include restructuring costs of$56 million for the year ended December 31, 2024 ($32 million and

$29 million for the years ended December 31, 2023 and 2022, respectively), a non-recurring, non-cash currency translation adjustment

in Argentina of$42 million and losses at closed facilities of$10 million partially offset by a reimbursement of a fine from the Italian

Competition Authority of$18 million.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Smurfit Westrock has prepared the accompanying Consolidated Financial Statements in conformity with GAAP, which requires

management to make estimates that affect the amounts of revenues, expenses, assets and liabilities reported. Significant accounting

policies are described in “Note 1. Description of Business and Summary of Significant Accounting Policies” in the accompanying

These critical accounting policies are both important to the portrayal of Smurfit Westrock’s financial condition and results of

operations and require some of management’s most subjective and complex judgments. The accounting for these matters involves the

making of estimates based on current facts, circumstances and assumptions that, in management’s judgment, could change in a manner

that would materially affect management’s future estimates with respect to such matters and, accordingly, could cause Smurfit

Westrock’s future reported financial condition and results of operations to differ materially from those that it is currently reporting

based on management’s current estimates.

Smurfit Westrock believes the following are critical accounting policies and estimates used in the preparation of its Consolidated

Financial Statements:

Business Combinations

From time to time, Smurfit Westrock may enter into business combinations, such as the Combination with WestRock which closed on

July 5, 2024. As described further in “Note 2. Acquisitions” to the Consolidated Financial Statements, Smurfit Westrock allocated the

$13,461 million aggregate merger consideration to the preliminary fair values of WestRock assets acquired and liabilities assumed as

of the Closing Date using currently available information. The excess of the purchase price over the fair value of net assets acquired

has been allocated to goodwill.

The purchase price allocation for the Merger is preliminary and is subject to revision as additional information about the acquisition-

date fair value of assets and liabilities becomes available during the measurement period (a period not to exceed 12 months from the

Closing Date). The Company is still evaluating the fair value of acquired property, plant and equipment, intangible assets and certain

income tax related items in addition to ensuring all other assets and liabilities and contingencies have been identified and recorded.

The acquisition method of accounting requires significant estimates and assumptions regarding the fair values of the elements of a

business combination. The most significant assumptions related to the fair value estimates of plant and machinery assets acquired as

part of property, plant and equipment. The company prepared estimates and engaged third-party valuation specialists to assist in the

valuation of plant and machinery assets, which required significant judgements and assumptions inherent in the estimates regarding

items such as deriving the effective age, economic lives, residual values and other factors, including estimating future cash flows that

Smurfit Westrock expects to generate from the acquired assets.

If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and

projections used to develop these values, we could record future impairment charges. In addition, we have estimated the economic

lives of certain acquired assets, and these lives are used to calculate depreciation and amortization expense. If the Company’s

estimates of the economic lives change, depreciation or amortization expenses could be increased or decreased, or the acquired asset

could be impaired.

See “Note 1. Description of Business and Summary of Significant Accounting Policies —Business Combinations” and “Note 2.

Acquisitions” to the Consolidated Financial Statements for Smurfit Westrock’s accounting policy on business combinations and more

information on the Combination with WestRock.

Goodwill Impairment

Smurfit Westrock reviews the carrying value of its goodwill annually during thefourth quarter, or more often if events or changes in

circumstances indicate that the carrying amount may exceed fair value as set forth in ASC 350, “Intangibles — Goodwill and Other”

(“ASC 350”). Smurfit Westrock tests goodwill for impairment at the reporting unit level. During the third quarter of 2024, following

the completion of the Combination, the Company changed its reportable segments and reassessed its reporting units. As a result of this

reassessment, the Company identified the following reporting units: (1) North America, which includes operations in the U.S. and

Canada, (2) Europe, MEA and APAC, (3) Mexico, (4) Argentina and Chile, (5) Colombia & Central Cluster, and (6) Brazil. See “Note

1. Description of Business and Summary of Significant Accounting Policies —1.12. Goodwill and Non-current Assets” and “Note

2. Goodwill” to the Consolidated Financial Statements for Smurfit Westrock’saccounting policy on goodwill and more information

on the change in reporting units.

During the fourth quarter of the year ended December 31, 2024, Smurfit Westrock completed its annual goodwill impairment testing

for each of the Company’s reporting units by performing a qualitative assessment. Multiple factors were evaluated to assess whether it

was more likely than not that the estimated fair value of any reporting unit was below its carrying value. These factors included, but

were not limited to, its expectations for macroeconomic conditions, industry and market considerations, and financial performance,

including planned net sales and earnings of each reporting unit. The qualitative assessment also considered changes since a

quantitative test across all of the Company’s reporting units was last performed in 2023.

As a result of the qualitative assessment, Smurfit Westrock determined that it was more likely than not that the estimated fair value of

each reporting unit with goodwill exceeded its respective carrying value. Therefore, the Company determined that goodwill for each

reporting unit was not impaired and that a quantitative goodwill test was not required. See “Note 9. Goodwill” to the Consolidated

Financial Statements for further information about the Company’s annual assessment of goodwill for impairment.

Although the Company believes all relevant factors were considered in the qualitative impairment analysis to reach the conclusion that

goodwill was not impaired, significant changes in any one of the assumptions, estimates and market factors underlying Smurfit

Westrock’s fair value determinations could produce a significantly different result potentially leading to the recording of an

impairment that could have significant impacts on the results of operations and financial position of the Company. Smurfit Westrock

has not made any material changes to its impairment loss assessment methodology during the past three fiscal years.

Accounting for Income Taxes

Smurfit Westrock’s income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits, reflect

management’s best assessment of estimated current and future taxes to be paid. Significant judgements and estimates are required in

determining the consolidated income tax expense. In evaluating its ability to recover deferred tax assets and establishing or reducing a

valuation allowance in the jurisdiction from which they arise, Smurfit Westrock considers all available positive and negative evidence,

including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and the

effect of enacted tax rates expected to apply in the periods in which the deferred tax assets or liabilities are anticipated to be settled or

realized. A high degree of judgment is required to assess the impact of possible future outcomes on Smurfit Westrock’s current and

deferred tax positions.

As a result of this evaluation, Smurfit Westrock recorded valuation allowances of$372 million as of December 31, 2024 and$67

million as of December 31, 2023, related to certain deferred tax assets, primarily tax loss carryforwards, where there is uncertainty as

to the ultimate realization of a benefit. Smurfit Westrock regularly reviews the recoverability of deferred tax assets for adjustments to

taxable income, changes in tax laws or interpretations thereof and tax rates, as all of these could impact its effective tax rate.

Smurfit Westrock is subject to routine tax audits and examinations. It uses significant judgement in (i) determining whether a tax

position, based solely on its technical merits, is “more likely than not” to be sustained upon examination and (ii) measuring the tax

benefit as the largest amount of benefit that is “more likely than not” to be realized upon settlement. Smurfit Westrock does not record

any benefit for tax positions that do not meet the “more likely than not” recognition threshold at the balance sheet date. Resolutions of

current uncertain tax positions are not expected to have a material adverse effect on the effective tax rate or on cashflows. Smurfit

Westrock has a progressive dividend strategy which means that it will remit earnings from some of its overseas subsidiaries to the

parent company in Ireland. Its foreign earnings are generally taxed at rates that are higher than in Ireland and so no incremental tax

should arise there, due to the availability of foreign tax credits. However, some earnings may be subject to limited additional foreign

taxes upon repatriation. Smurfit Westrock continues to indefinitely reinvest its foreign earnings as part of its wider capital allocation

strategy. To the extent that it cannot assert indefinite reinvestment of earnings, it records a deferred tax liability on its foreign earnings

at the applicable tax rate if it is not otherwise possible to remit earnings without additional tax.

As of December 31, 2024 and 2023, Smurfit Westrock recognized a deferred tax liability of$179 million and$126 million,

respectively, on unremitted earnings, in respect of foreign income taxes or withholding taxes for expected or assumed repatriation,

respectively. As Smurfit Westrock can decide which subsidiaries should pay dividends, it is does not expect that this deferred tax

liability will have a material impact on its cash flows in the foreseeable future.

The determination of the amount of unrecognized deferred tax liability related to indefinitely invested foreign earnings not subject to

additional outside basis difference taxes is not practicable. A 1% change in the effective tax rate would increase or decrease Smurfit

Westrock’s income tax expense for the year ended December 31, 2024 by$6 million.

In 2021, political agreement was reached by the OECD Inclusive Framework on a two-pillar approach to international tax reform. This

includes the commitment to introduce a minimum effective tax rate of 15% for companies with revenue above €750 million (‘Pillar

Two’). The agreement has been enacted in most of the countries where Smurfit Westrock has business activities. The law was enacted

in Ireland with an effective date January 1, 2024, and it was broadly in line with the OECD Inclusive Framework. For the year ended

December 31, 2024, a Pillar Two assessment was performed. The impact of Pillar Two was not significant.

The Company has made accounting policy elections to account for the income tax effect(s) of U.S. Global Intangible Low-Taxed

Income (GILTI) as a period cost and to account for the income tax effect(s) of investment tax credits under the flow-through method.

Pension and Other Postretirement Obligations

The determination of pension obligations and pension expense requires various assumptions that can significantly affect liability and

expense amounts, such as the expected long-term rate of return on plan assets, discount rates, projected future compensation increases

and mortality rates for each of Smurfit Westrock’s plans. These assumptions are determined annually in conjunction with Smurfit

Westrock’sactuary. The accounting for these matters involves the making of estimates based on current facts, circumstances and

assumptions that, in management’s judgment, could change in a manner that would materially affect management’s future estimates

with respect to such matters and, accordingly, could cause Smurfit Westrock’s future reported financial condition and results of

operations to differ materially from those that Smurfit Westrock is currently reporting based on management’s current estimates.

A 50-basis point change in the discount rate, compensation level and expected long-term rate of return on plan assets, factoring in our

corridor as appropriate, would have had the following effect on Smurfit Westrock’s pension expense for the year ended December 31,

2024, (in millions):

NEW ACCOUNTING STANDARDS

See “Note 1. Description of Business and Summary of Significant Accounting Policies” of the Notes to the Consolidated Financial

Statements included elsewhere in this Annual Report on Form 10-Kfor a full description of recent accounting pronouncements,

including the respective expected dates of adoption and expected effects on Smurfit Westrock’s results of operations and financial

condition.