Verso Paper Reports Second Quarter 2014 Results

Aug. 14, 2014 - Verso Paper Corp. (NYSE: VRS) today reported financial results for the second quarter and six months ended June 30, 2014. Results for the quarters ended June 30, 2014 and 2013 include:

  • Net sales of $320.9 million in the second quarter of 2014 compared to $330.4 million in the second quarter of 2013.
  • Net loss before items of $34.3 million, or $0.64 per diluted share, in the second quarter of 2014, compared to net loss before items of $39.2 million, or $0.74 per diluted share, in the second quarter of 2013.
  • Adjusted EBITDA before pro forma effects of profitability program of $27.6 million in the second quarter of 2014, compared to $22.2 million in the second quarter of 2013.

OVERVIEW

Verso's net sales for the second quarter of 2014 decreased $9.5 million, or 2.9%, compared to the second quarter of 2013, reflecting a 4.2% decrease in average sales price per ton and a 1.4% increase in total sales volume. Prices for our pulp segment were higher while coated and other segment prices declined. Continued declines in the coated paper market were offset by operational and input price improvements.

"During the second quarter we experienced continued strength in the pulp and specialty paper segments of our business," said David Paterson, President and Chief Executive Officer of Verso. "We experienced double digit improvements in these segments over the previous year, and we expect them to remain strong into the third quarter of 2014. During the second quarter our coated papers segment continued to show weakness in both price and volumes on a year over year basis.

"On the operations side, we continued to reduce our costs utilizing our R-Gap process and managing our SG&A and capital costs. Finally, we continued to make good progress during the quarter on our proposed acquisition of NewPage."

SUMMARY RESULTS

Results of Operations - Comparison of the Second Quarter of 2014 to the Second Quarter of 2013

Net Sales. Net sales for the second quarter of 2014 decreased 2.9% to $320.9 million from $330.4 million in the second quarter of 2013, reflecting a 4.2% decrease in average sales price per ton and a 1.4% increase in total sales volume.

Net sales for our coated papers segment decreased 10.9% in the second quarter of 2014 to $225.4 million from $253.1 million for the same period in 2013, due to a 6.0% decrease in paper sales volume and a 5.2% decline in average sales price per ton. The declines in sales volume and price were driven by declining demand for coated papers.

Net sales for our market pulp segment increased 20.1% in the second quarter of 2014 to $45.8 million from $38.2 million for the same period in 2013. Sales volume increased 16.1% due to additional sales of excess pulp at our Androscoggin mill driven by favorable market pulp prices. The average sales price per ton increased 3.5% compared to the second quarter of 2013.

Net sales for our other segment increased 26.6% to $49.7 million in second quarter of 2014 from $39.1 million in the second quarter of 2013. The overall increase was driven by a 32.8% increase in sales volume, partially offset by a 4.7% decrease in average sales price per ton.

Cost of sales. Cost of sales, including depreciation, amortization, and depletion, was $301.1 million in the second quarter of 2014 compared to $320.2 million in 2013, reflecting lower input prices and increased productivity associated with the deferral of annual maintenance outages at our mills. Our gross margin, excluding depreciation, amortization, and depletion, was 14.1% for the second quarter of 2014 compared to 11.0% for the second quarter of 2013. Depreciation, amortization, and depletion expenses were $25.4 million for the second quarter of 2014 compared to $26.3 million for the second quarter of 2013.

Selling, general, and administrative. Selling, general, and administrative expenses were $17.8 million in the second quarter of 2014 compared to $19.2 million for the second quarter of 2013.

Interest expense. Interest expense for the second quarter of 2014 was $35.7 million compared to $34.4 million for the same period in 2013.

Other loss, net. Other loss, net for the second quarter of 2014 was $9.1 million and reflected costs incurred in connection with the NewPage acquisition. Other loss, net of $0.1 million for the same period in 2013 reflected losses related to debt refinancing.

Full financial results can be found on Verso's website.

Verso Paper Corp. is a leading North American producer of coated papers, including coated groundwood and coated freesheet, and specialty products. Verso is headquartered in Memphis, Tennessee, and owns three paper mills located in Maine and Michigan. To learn more, please visit: www.versopaper.com.

SOURCE: Verso Paper Corp.