Verso Paper Swings to Q1 Profit on Sales, Pricing
May 15, 2008 - Verso Paper Holdings LLC today reported revenues of $453.9 million in first quarter 2008 compared to $359.8 million during the prior-year period. Operating income was $30.6 million in Q1 2008 versus an operating loss of ($2.3) million in the prior-year period. Net income was $4.0 million for the quarter versus a net loss of ($29.9) million in the Q1 2007. Adjusted EBITDA of $64.6 million for the first quarter of 2008, compared to Adjusted EBITDA of $33.1 million during first quarter 2007.
“Our first quarter 2008 results reflect significant improvement compared to first quarter 2007 as net sales increased over 26% driven by the favorable pricing environment and higher volumes. Our average paper prices have steadily increased since second quarter 2007, and we expect this trend to continue in 2008 as operating rates remain high due to industry consolidation, capacity closures and lower imports. While demand decreased compared to fourth quarter due to expected seasonal trends, volumes were significantly higher year over year,” said Mike Jackson, president and CEO of Verso Paper.
“During the quarter, in addition to improved volumes and sales prices, our operations ran efficiently and generated cost improvements compared to last year; however, input prices for our key direct expenses increased. Additionally, our SG&A was maintained at efficient levels, approximately 3% of sales, and our gross margin improved to 17.3% versus 12.1% in the first quarter of 2007.”
Net sales for first quarter 2008 increased 26% to $453.9 million from $359.8 million in first quarter 2007. The improvement was the result of an 11.8% increase in sales volume coupled with a 12.8% increase in average sales prices for first quarter 2008 compared to the same period in 2007, Verso said.
Net sales for coated and supercalendered papers segment increased to $404.9 million in first quarter 2008 from $314.8 million in first quarter 2007. The increase reflects a 14.8% increase in paper volumes and a 12.0% increase in average paper sales prices for first quarter 2008 compared to first quarter 2007.
Net sales for market pulp segment were $39.1 million for first quarter 2008 compared to $36.0 million for the same period in 2007. This increase was due to an 11.2% increase in average sales prices compared to first quarter 2007. Partially offsetting this increase was a 2.5% decline in volume as internal consumption increased.
Net sales for the company's other segment were $9.9 million for first quarter 2008 compared to $9.0 million for first quarter 2007. The improvement in first quarter 2008 reflects an 11.0% increase in average sales prices, partially offset by a 1.2% decrease in sales volume compared to first quarter 2007.
Cost of sales increased 17.8% to $407.6 million in first quarter 2008 compared to $345.9 million for the same period in 2007, primarily driven by higher sales volume. Verso's gross margin, excluding depreciation and amortization, was 17.3% for first quarter 2008, compared to 12.1% for first quarter 2007. This increase reflects the increase in average sales prices during first quarter 2008. Depreciation and amortization expense was $32.2 million in first quarter 2008 compared to $29.6 million in 2007, Verso said.
Based in Memphis, Tennessee, Verso Paper is a leading North American producer of coated papers, including coated groundwood and coated freesheet, and supercalendered products.
SOURCE: Verso Paper Holdings LLC