Verso Paper Posts Improved Third Quarter Earnings
Nov. 15, 2006 - Verso Paper Holdings, LLC [yesterday] reported the combined results of the successor business, Verso Paper Holdings, LLC and the predecessor business, the Coated and Supercalendered Papers Division of International Paper Company, for the third quarter period ended September 30, 2006. Highlights for the third quarter of 2006 include:
- Revenues of $434.2 million in 2006 compared to $435.4 million during the prior year period.
- Operating income of $32.8 million versus operating income of $27.2 million in the prior year period.
- Net income of $9.2 million for the 2006 quarter versus net income of $14.2 million in the prior year period.
- Adjusted EBITDA of $68.1 million versus $65.8 million during the prior year. Adjusted EBITDA of $222.2 million for the Last Twelve Month (LTM) Period ended September 30, 2006.
On August 1, 2006, Verso Paper acquired the assets and certain of the liabilities of the Coated and Supercalendered Papers Division of International Paper located at the mills in Jay, Maine, Bucksport, Maine, Quinnesec, Michigan and Sartell, Minnesota, together with related other facilities and assets and certain administrative and sales and marketing functions (collectively, the "Acquisition") pursuant to the terms of an Agreement of Purchase and Sale (the "Purchase and Sale Agreement") entered into with International Paper Company on June 4, 2006. In connection with the Acquisition, Verso Paper issued $1,185 million of debt, consisting of a $285 million term loan B facility, $600 million of second-priority senior secured notes, and $300 million of senior subordinated notes. The Company also raised a $200 million revolving credit facility, which was undrawn at the closing of the Acquisition (and remains undrawn).
"The third quarter results of 2006 show improvement from the same period a year earlier," said LH Puckett, President and CEO. "The third quarter is seasonally the most robust period of the year for the coated paper industry. Our results in the third quarter versus the second quarter were bolstered by improved volume, improved coated freesheet and pulp selling prices as well as our continued focus on efficiency improvements and cost discipline. Furthermore, our transition activities are on track and we are well underway as a stand-alone and focused company."
Net sales for the three months ended September 30, 2006 were $434.2 million compared to $435.4 million for the three months ended September 30, 2005, a decrease of 0.3%. The decrease was the result of a 0.2% decrease in average price for the three months ended September 30, 2006, compared to the price for the three months ended September 30, 2005 which was partially driven by mix.
Cost of sales for the three months ended September 30, 2006 was $389.0 million, which included a $4.6 million inventory fair value adjustment, compared to $390.6 million for the three months ended September 30, 2005, a decrease of 0.4%. Excluding the fair value of inventory adjustment, cost of sales decreased 1.6%. An increase in input prices for wood, pulp, energy and raw materials during the third quarter of 2006 was offset by improvements in productivity and material usages which were influenced by our focus on cost reductions and efficiency improvements. Our gross margin, excluding depreciation expense, for the three months ended September 30, 2006 was 17.0%, compared to 17.8% for the same period in 2005. Excluding the fair value of inventory adjustment, the gross margin for the nine months ended September 30, 2006 was 18.0%.
About Verso Paper
Based in Memphis, Tennessee, Verso Paper is one of the leading North American suppliers of coated papers, which are used primarily in media and marketing applications, including catalogs, magazines, commercial printing applications, such as high-end advertising brochures, annual reports and direct mail advertising. Verso has the leading North American market share in coated groundwood paper, which is used primarily for catalogs and magazines and is also one of North America's largest producers of coated freesheet paper, which is used primarily for upscale catalogs and magazines, annual reports, and magazine covers.
SOURCE: Verso Paper LLC