PR Newswire
MIAMISBURG, Ohio, Aug. 8, 2018
MIAMISBURG, Ohio, Aug. 8, 2018 /PRNewswire/ -- Verso Corporation (NYSE: VRS) today reported financial results for the second quarter of 2018.
Second Quarter 2018 Highlights:
Overview
"Verso had a strong second quarter with solid year-over-year improvement across the enterprise as our many initiatives to strengthen the business continued to deliver quantifiable results," said Verso Chief Executive Officer B. Christopher DiSantis. "With what we believe is an industry-leading SG&A structure, our strong cash flow, fast-growing specialty papers business and low-cost conversion strategies, including the on-schedule restart of the No. 3 paper machine at the Androscoggin Mill, position Verso to capitalize on improving market dynamics and to create long-term value for our stockholders."
Results of Operations – Comparison of Three Months Ended June 30, 2018 to Three Months Ended June 30, 2017
Three Months Ended |
Three Month | ||||
(Dollars in millions) |
2017 |
2018 |
$ Change | ||
Net sales |
$ 585 |
$ 644 |
$ 59 | ||
Costs and expenses: |
|||||
Cost of products sold (exclusive of depreciation and amortization) |
574 |
581 |
7 | ||
Depreciation and amortization |
27 |
28 |
1 | ||
Selling, general and administrative expenses |
24 |
28 |
4 | ||
Restructuring charges |
2 |
1 |
(1) | ||
Other operating (income) expense |
- |
2 |
2 | ||
Operating income (loss) |
(42) |
4 |
46 | ||
Interest expense |
10 |
6 |
(4) | ||
Other (income) expense |
(3) |
(3) |
- | ||
Income (loss) before income taxes |
(49) |
1 |
50 | ||
Income tax expense |
- |
- |
- | ||
Net income (loss) |
$ (49) |
$ 1 |
$ 50 |
Comments to Results of Operations - Comparison of Three Months Ended June 30, 2018 to Three Months Ended June 30, 2017
Results of Operations – Comparison of Six Months Ended June 30, 2018 to Six Months Ended June 30, 2017
Six Months Ended |
Six Month | ||||
(Dollars in millions) |
2017 |
2018 |
$ Change | ||
Net sales |
$ 1,201 |
$ 1,283 |
$ 82 | ||
Costs and expenses: |
|||||
Cost of products sold (exclusive of depreciation and amortization) |
1,136 |
1,162 |
26 | ||
Depreciation and amortization |
60 |
55 |
(5) | ||
Selling, general and administrative expenses |
57 |
53 |
(4) | ||
Restructuring charges |
4 |
2 |
(2) | ||
Other operating (income) expense |
- |
2 |
2 | ||
Operating income (loss) |
(56) |
9 |
65 | ||
Interest expense |
19 |
17 |
(2) | ||
Other (income) expense |
(5) |
(7) |
(2) | ||
Income (loss) before income taxes |
(70) |
(1) |
69 | ||
Income tax expense |
- |
- |
- | ||
Net income (loss) |
$ (70) |
$ (1) |
$ 69 |
Comments to Results of Operations - Comparison of Six Months Ended June 30, 2018 to Six Months Ended June 30, 2017
Guidance
The company is providing the following guidance:
Reconciliation of Net Income (Loss) to EBITDA and 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 ongoing 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 EBITDA and Adjusted EBITDA are non-GAAP operating performance measures commonly used in our industry that provide investors and analysts with measures 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 Generally Accepted Accounting Principles (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 (loss) or cash flows from operating activities, which are determined in accordance with GAAP.
The following table reconciles Net income (loss) to EBITDA and Adjusted EBITDA for the presented periods:
Three Months Ended |
Six Months Ended | |||||||
(Dollars in millions) |
2017 |
2018 |
2017 |
2018 | ||||
Net income (loss) |
$ (49) |
$ 1 |
$ (70) |
$ (1) | ||||
Income tax expense |
- |
- |
- |
- | ||||
Interest expense |
10 |
6 |
19 |
17 | ||||
Depreciation and amortization |
27 |
28 |
60 |
55 | ||||
EBITDA |
$ (12) |
$ 35 |
$ 9 |
$ 71 | ||||
Adjustments to EBITDA: |
||||||||
Restructuring charges (1) |
2 |
1 |
4 |
2 | ||||
Non-cash equity award compensation (2) |
1 |
3 |
1 |
4 | ||||
Androscoggin PM No. 3 startup costs (3) |
- |
7 |
- |
7 | ||||
Post-reorganization costs (4) |
- |
2 |
- |
2 | ||||
Strategic initiatives costs (5) |
- |
3 |
- |
5 | ||||
Other severance costs (6) |
5 |
- |
5 |
- | ||||
Other items, net (7) |
- |
- |
3 |
1 | ||||
Adjusted EBITDA |
$ (4) |
$ 51 |
$ 22 |
$ 92 | ||||
(1) |
Charges are primarily associated with the closure and relocation of the Memphis office headquarters and closure of the Wickliffe mill. | |||||||
(2) |
Amortization of non-cash incentive compensation. | |||||||
(3) |
Costs incurred in connection with the upgrade of previously shuttered No. 3 paper machine and pulp line at the Androscoggin Mill. | |||||||
(4) |
Fees associated with our 2016 Chapter 11 cases. | |||||||
(5) |
Professional fees and other charges associated with strategic alternatives initiative. | |||||||
(6) |
Severance and related benefit costs not associated with restructuring activities. | |||||||
(7) |
Costs incurred in 2017 in connection with the re-engineering of information systems, costs in 2017 associated with the temporary idling of the No. 3 paper machine at the Androscoggin Mill and miscellaneous other non-recurring adjustments in 2017 and 2018. |
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 in this press release include, but are not limited to, our guidance for the third quarter of 2018 and the full year of 2018. 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 under the caption "Risk Factors" in Verso's Form 10-K for the fiscal year ended December 31, 2017 and from time to time in Verso's other 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, August 8, 2018 at 9 a.m. (EDT) to discuss second quarter 2018 financial 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 9018522 and Verso Corporation. To register, please dial in 10 minutes before the conference call begins. The news release and second quarter 2018 results will be available on Verso's website at http://investor.versoco.com by navigating to the Financial Information page.
Analysts and investors may also access the live conference call and webcast by clicking on the event link https://www.webcaster4.com/Webcast/Page/1524/26915 or by visiting Verso's website at http://investor.versoco.com and navigating to the Events page. Please go to this link at least one hour before the call and follow the instructions to register, download and install any necessary audio/video software.
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 10122973. The replay will be available starting at 11 a.m. (EDT) Wednesday, August 8, 2018, and will remain available until September 8, 2018. An archive of the conference call and webcast will be available at http://investor.versoco.com starting at 11 a.m. (EDT) Wednesday, August 8, 2018, and will remain available for 120 days.
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SOURCE Verso Corporation
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