Verso Paper Reports 2nd Quarter, First Half, 2011 Earnings
Aug. 11, 2011 - Verso Paper Corp. today reported financial results for the second quarter and six months ended June 30, 2011. Results for the periods ended June 30, 2011 and 2010 include:
- Operating income of $7.0 million in the second quarter of 2011 compared to an operating loss of $12.7 million in the second quarter of 2010.
- Net sales of $398.8 million in the second quarter of 2011 compared to $401.1 million in the second quarter of 2010.
- Adjusted EBITDA before pro forma effects of profitability program of $43.6 million in the second quarter of 2011, compared to $22.5 million in the second quarter of 2010. (Note: EBITDA and Adjusted EBITDA are non-GAAP financial measures and are defined and reconciled to net income later in this release).
- Net loss before items of $20.6 million in the second quarter of 2011, or $0.39 per diluted share, compared to a net loss before items of $42.8 million, or $0.82 per diluted share in the second quarter of 2010.
Verso’s net sales for the second quarter of 2011 decreased $2.3 million, or 0.6%, compared to the second quarter of 2010 as a result of sales volume decreasing 12.2% while the average sales price for all of our products increased 13.2%. The improvement in our average sales price primarily reflects price increases that went into effect during 2010. We announced additional price increases for our core products of $40 per ton effective April 1, 2011. Verso’s gross margin was 15.1% for the second quarter of 2011 compared to 9.1% for the same period in 2010.
Verso reported a net loss of $24.3 million in the second quarter of 2011, or $0.46 per diluted share, which included $3.7 million of charges from special items, or $0.07 per diluted share. Verso had a net loss of $44.3 million, or $0.85 per diluted share, in the second quarter of 2010, which included $1.5 million of charges from special items, or $0.03 per diluted share.
Verso reported a net loss of $68.9 million, or $1.31 per share, for the first six months of 2011, which included $30.2 million of charges from special items, or $0.57 per diluted share, primarily due to $26.1 million in pre-tax net losses related to our debt refinancing in the first quarter of 2011. Verso reported a net loss of $97.9 million, or $1.87 per share, for the first six months of 2010, which included $3.1 million of charges from special items, or $0.06 per diluted share, primarily due to costs associated with new product development.
“Our second quarter adjusted EBITDA results improved by $21 million year over year to $44 million for the second quarter of 2011. As mentioned on our last earnings call, we expected second quarter volumes to be down compared to a very strong 2010 and first quarter of 2011,” said Mike Jackson, President and Chief Executive Officer of Verso.
“Price realization for paper continued an upward trend, and we increased inventory levels in preparation for seasonally high orders in the third and fourth quarters. This planned inventory increase was well within our acceptable levels and better positions us for increasing fall order activity.
“Input prices continue to be a challenge. However, as we conclude our second quarter maintenance outages, we expect to see continued R-Gap savings to help offset these costs. We also expect strong results from our operations in the third quarter.”
Based in Memphis, Tennessee, Verso Paper Corp. is a leading North American producer of coated papers, including coated groundwood and coated freesheet, and supercalendered and specialty products. Verso’s paper products are used primarily in media and marketing applications, including magazines, catalogs and commercial printing applications such as high-end advertising brochures, annual reports and direct-mail advertising.