PR Newswire
MEMPHIS, Tenn., March 15, 2017
MEMPHIS, Tenn., March 15, 2017 /PRNewswire/ -- Verso Corporation (NYSE: VRS) today reported financial results for the fourth quarter of 2016, including net sales of $646 million, net income of $8 million, and adjusted EBITDA of $92 million, which includes a $25 million gain on the elimination of certain post-retirement benefit obligations. For the full year 2016, results for the predecessor and successor companies are shown below.
Overview
"Verso closed out the year with a strong fourth quarter, with adjusted EBITDA exceeding our guidance and a solid foundation to build upon in 2017," said Verso Chief Executive Officer, B. Christopher DiSantis. "We are especially pleased to report a significant improvement in Verso's 2016 safety performance, with serious injuries reduced 30 percent compared to 2015. Our employees have worked very hard to achieve this world-class safety performance, but we believe zero injuries is achievable and won't be satisfied until everyone goes home from work in the same condition as when they arrived.
"With a refreshed capital structure, strong free cash flow and potential opportunities for value creation, Verso is well positioned to compete and win in the global marketplace," DiSantis continued. "Our aim is high and our determination unmatched as we continue to deliver the high quality products and services our customers expect, strive to further improve our safety performance, improve operating efficiency and drive out cost in every aspect of our business."
Presentation of Predecessor and Successor Financial Results
Verso Corporation (the "Company") adopted fresh-start reporting as of July 15, 2016 (the "Effective Date"), the effective date of its First Modified Third Amended Joint Plan of Reorganization under Chapter 11 of the U.S. Bankruptcy Code dated June 20, 2016, and the date that Verso emerged from its Chapter 11 cases. As a result of the application of fresh-start reporting, the Company's financial statements for periods prior to the Effective Date are not comparable to those for periods subsequent to the Effective Date. References to "Successor" refer to the Company on or after the Effective Date. References to "Predecessor" refer to the Company prior to the Effective Date. Operating results for the Successor and Predecessor periods are not necessarily indicative of the results to be expected for a full fiscal year. References such as the "Company," "we," "our" and "us" refer to Verso Corporation and its consolidated subsidiaries, whether Predecessor and/or Successor, as appropriate.
Results of Operations – Comparison of Three Months Ended December 31, 2016 to Three Months Ended December 31, 2015
Predecessor |
Successor |
|||||
Three Months |
Three Months |
|||||
Ended |
Ended |
|||||
December 31, |
December 31, |
Three Month | ||||
(Dollars in millions) |
2015 |
2016 |
$ Change | |||
Net sales |
$ 756 |
$ 646 |
$ (110) | |||
Costs and expenses: |
||||||
Cost of products sold (exclusive of depreciation, |
||||||
amortization and depletion) |
665 |
539 |
(126) | |||
Depreciation, amortization and depletion |
127 |
69 |
(58) | |||
Selling, general and administrative expenses |
53 |
26 |
(27) | |||
Restructuring charges |
(29) |
9 |
38 | |||
Other operating expense |
1 |
6 |
5 | |||
Operating loss |
(61) |
(3) |
58 | |||
Interest expense |
69 |
9 |
(60) | |||
Loss before income taxes |
(130) |
(12) |
118 | |||
Income tax benefit |
(1) |
(20) |
(19) | |||
Net (loss) income |
$ (129) |
$ 8 |
$ 137 |
Comments to Results of Operations - Comparison of Three Months Ended December 31, 2016 to Three Months Ended December 31, 2015
Results of Operations - Comparison of 12 Months Ended December 31, 2016 to 12 Months Ended December 31, 2015
Predecessor |
Successor |
|||||||
12 Months |
January 1, 2016 |
July 15, 2016 |
||||||
Ended |
Through |
Through |
||||||
December 31, |
July 14, |
December 31, |
12 Month | |||||
(Dollars in millions) |
2015 |
2016 |
2016 |
$ Change | ||||
Net sales |
$ 3,122 |
$ 1,417 |
$ 1,224 |
$ (481) | ||||
Costs and expenses: |
||||||||
Cost of products sold (exclusive of depreciation, |
||||||||
amortization and depletion) |
2,727 |
1,249 |
1,098 |
(380) | ||||
Depreciation, amortization and depletion |
308 |
100 |
93 |
(115) | ||||
Selling, general and administrative expenses |
187 |
95 |
49 |
(43) | ||||
Restructuring charges |
54 |
151 |
11 |
108 | ||||
Other operating expense (income) |
1 |
(57) |
8 |
(50) | ||||
Operating loss |
(155) |
(121) |
(35) |
(1) | ||||
Interest expense |
270 |
39 |
17 |
(214) | ||||
Loss before reorganization items, net |
(425) |
(160) |
(52) |
213 | ||||
Reorganization items, net |
- |
(1,338) |
- |
(1,338) | ||||
(Loss) income before income taxes |
(425) |
1,178 |
(52) |
1,551 | ||||
Income tax benefit |
(3) |
- |
(20) |
(17) | ||||
Net (loss) income |
$ (422) |
$ 1,178 |
$ (32) |
$ 1,568 |
Comments to Results of Operations - Comparison of 12 Months Ended December 31, 2016 to 12 Months Ended December 31, 2015
Business Performance
Verso's performance in the fourth quarter of 2016 showed improvement over the third quarter of 2016 as operational performance improved and maintenance costs declined. The Company previously announced a temporary idling of a paper machine at our Androscoggin Mill.
Guidance
The Company is providing the following guidance:
Reconciliation of Net Income to Adjusted EBITDA
EBITDA consists of earnings before interest, taxes, depreciation, and amortization. Adjusted EBITDA reflects adjustments to EBITDA to eliminate the impact of certain items that we do not consider to be indicative of our performance. We use EBITDA and Adjusted EBITDA as a way of evaluating our performance relative to that of our peers and to assess compliance with our credit facilities. We believe that Adjusted EBITDA is an operating performance measure commonly used in our industry that provides investors and analysts with a measure of ongoing operating results unaffected by differences in capital structures, capital investment cycles, and ages of related assets among otherwise comparable companies.
We believe that the supplemental adjustments applied in calculating Adjusted EBITDA are reasonable and appropriate to provide additional information to investors.
Because EBITDA and Adjusted EBITDA are not measurements determined in accordance with accounting principles generally accepted in the United States, or "GAAP," and are susceptible to varying calculations, EBITDA and Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies. You should consider our EBITDA and Adjusted EBITDA in addition to, and not as a substitute for, or superior to, our operating or net income or cash flows from operating activities, which are determined in accordance with GAAP.
The following table reconciles net (loss) income to EBITDA and Adjusted EBITDA for the presented periods:
Predecessor |
Successor |
|||||||||||
Three Months |
12 Months |
January 1, 2016 |
Three Months |
July 15, 2016 |
||||||||
Ended |
Ended |
Through |
Ended |
Through |
||||||||
December 31, |
December 31, |
July 14, |
December 31, |
December 31, |
||||||||
(Dollars in millions) |
2015 |
2015 |
2016 |
2016 |
2016 |
|||||||
Net (loss) income |
$ (129) |
$ (422) |
$ 1,178 |
$ 8 |
$ (32) |
|||||||
Income tax benefit |
(1) |
(3) |
- |
(20) |
(20) |
|||||||
Interest expense, net |
69 |
270 |
39 |
9 |
17 |
|||||||
Depreciation, amortization and depletion |
127 |
308 |
100 |
69 |
93 |
|||||||
EBITDA |
$ 66 |
$ 153 |
$ 1,317 |
$ 66 |
$ 58 |
|||||||
Adjustments to EBITDA: |
||||||||||||
Reorganization items, net (1) |
- |
- |
(1,338) |
- |
- |
|||||||
Restructuring charges (2) |
(24) |
59 |
151 |
9 |
11 |
|||||||
Fresh-start accounting adjustments (3) |
- |
- |
3 |
2 |
46 |
|||||||
Losses (gains) on disposal of assets (4) |
6 |
6 |
(57) |
2 |
2 |
|||||||
Pre- and post-reorganization costs (5) |
10 |
10 |
6 |
6 |
8 |
|||||||
NewPage acquisition and |
||||||||||||
integration-related costs/charges (6) |
3 |
36 |
- |
- |
- |
|||||||
Other items, net (7) |
- |
5 |
13 |
7 |
8 |
|||||||
Adjusted EBITDA |
$ 61 |
$ 269 |
$ 95 |
$ 92 |
$ 133 |
|||||||
(1) |
Net gains associated with the Chapter 11 Cases. |
|||||||||||
(2) |
For 2016, charges are primarily associated with the closure of the Wickliffe mill, of which $137 million is non-cash. For 2015, charges represent severance and employee related costs and other restructuring charges associated with the NewPage acquisition, and the closure of the Bucksport mill. |
|||||||||||
(3) |
Non-cash charges related to the one-time impacts of adopting fresh-start accounting. |
|||||||||||
(4) |
Realized (gains) and losses on the sale of assets, which are primarily attributable to the sale of hydroelectric facilities in January 2016. |
|||||||||||
(5) |
Costs incurred in connection with advisory and legal services related to planning for and emerging from the Chapter 11 Cases. |
|||||||||||
(6) |
Professional fees and other charges and integration costs incurred in connection with the NewPage acquisition, including one-time impacts of purchase accounting. |
|||||||||||
(7) |
Amortization of non-cash incentive compensation, unrealized losses (gains) on energy-related derivative contracts, Wickliffe operating costs while idled, and miscellaneous other non-recurring adjustments. |
|||||||||||
About Verso
Verso Corporation is the turn-to company for those looking to successfully navigate the complexities of paper sourcing and performance. The leading North American producer of printing and specialty papers and pulp, Verso provides insightful solutions that help drive improved customer efficiency, productivity, brand awareness and business results. Verso's long-standing reputation for quality and reliability is directly tied to our vision to be a company with passion that is respected and trusted by all. Verso's passion is rooted in ethical business practices that demand safe workplaces for our employees and sustainable wood sourcing for our products. This passion, combined with our flexible manufacturing capabilities and an unmatched commitment to product performance, delivery and service, make Verso a preferred choice among commercial printers, paper merchants and brokers, converters, publishers and other end users. For more information, visit us online at versoco.com.
Forward-Looking Statements
In this press release, all statements that are not purely historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by the words "believe," "expect," "anticipate," "project," "plan," "estimate," "intend," "potential" and other similar expressions. Forward-looking statements are based on currently available business, economic, financial, and other information and reflect management's current beliefs, expectations, and views with respect to future developments and their potential effects on Verso. Actual results could vary materially depending on risks and uncertainties that may affect Verso and its business. Verso's actual actions and results may differ materially from what is expressed or implied by these statements due to a variety of factors, including those risks and uncertainties listed from time to time in Verso's filings with the Securities and Exchange Commission. Verso assumes no obligation to update any forward-looking statement made in this press release to reflect subsequent events or circumstances or actual outcomes.
Conference Call
Verso will host a conference call on Wednesday, March 15, 2017 at 3 p.m. (EDT) to discuss fourth quarter and year end 2016 results. Analysts and investors may access the live conference call only by dialing 888-317-6003 (U.S. toll-free), 866-284-3684 (Canada toll-free) or 412-317-6061 (international) and referencing elite entry number 1755468 and Verso Corporation. To register, please dial in 10 minutes before the conference call begins. The conference call and presentation materials can be accessed through Verso's website at http://investor.versoco.com/ by navigating to the Financial Information page. This release and Verso's annual report on Form 10-K for the period ended December 31, 2016, will be made available on Verso's website at http://investor.versoco.com/ by navigating to the Financial Information page.
A telephonic replay of the call can be accessed at 877-344-7529 (U.S. toll-free), 855-669-9658 (Canada toll-free) or 412-317-0088 (international), access code 10102869. The replay will be available starting at 5 p.m. (EDT) Wednesday, March 15, 2017, and will remain available until April 15, 2017. An archive of the conference call and webcast will be available at http://www.versoco.com/ starting at 5 p.m. (EDT) Wednesday, March 15, 2017, and will remain available for 120 days.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/verso-corporation-reports-fourth-quarter-and-year-end-2016-results-300423972.html
SOURCE Verso Corporation
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