Verso Reports First Quarter 2019 Financial Results
"Verso had strong first quarter performance despite a very challenging market environment. While sales were flat, both price and mix were favorable as demand pressures increased across all product categories." – Leslie T. Lederer, Interim CEO, Verso Corporation.
May 8, 2019 - Verso Corporation (NYSE: VRS) today reported financial results for the first quarter of 2019.
First Quarter 2019 Highlights:
- Net sales of $639 million, flat compared to first quarter 2018
- Net income of $36 million or $1.03 per diluted share
- Adjusted EBITDA of $69 million, up $28 million versus first quarter 2018
"Verso had strong first quarter performance despite a very challenging market environment," said Verso Interim Chief Executive Officer Leslie T. Lederer. "While sales were flat, both price and mix were favorable as demand pressures increased across all product categories. An unfortunate result of these demand pressures was the difficult decision to close our paper mill in Luke, Maryland, which will reduce Verso's total coated freesheet production capacity by 450,000 tons," he said. "We remain committed to matching the supply of our products with our customers' demand as we continue our efforts to move more production from graphic papers to specialty and packaging grades and pulp."
Comments to Results of Operations - Comparison of Three Months Ended March 31, 2019 to Three Months Ended March 31, 2018
Net sales in the first quarter of 2019 were flat compared to the first quarter of 2018 as price and product mix offset declines in sales volume. Total company sales volume was down from 722,000 tons during the first quarter of 2018, to 665,000 tons during the first quarter of 2019, driven by general softening of demand and increased imports for graphic papers, partially offset by an increase in specialty papers and packaging papers sales volume.
Operating income in the first quarter of 2019 was $37 million, an increase of $32 million when compared to operating income of $5 million in the first quarter of 2018. This increase in operating income is primarily attributable to:
- Favorable average net selling price and product mix;
- Lower planned major maintenance costs due primarily to timing of outages. Lower planned major maintenance costs were partially offset by decreased sales volume, higher input costs driven by inflation of chemicals, wood fiber and purchased pulp, and higher operating expenses driven primarily by union ratification expense, which included signing bonuses and the settlement of various work arrangement issues associated with the ratification of a new Master Labor Agreement;
- Reduced selling, general and administrative expenses and freight cost.
Interest expense in the first quarter of 2019 decreased $10 million over the same period in 2018. Interest expense in the first quarter of 2018 includes $4 million in non-cash accelerated amortization of debt issuance cost and discount associated with the voluntary principal prepayments and excess cash flow payments on our prior term loan facility. The remaining decrease in interest expense resulted from the reduction in amounts outstanding under the ABL Facility and the payoff of our prior term loan facility on September 10, 2018.
2019 Second Quarter
- Net Sales of $620-640 million
- Capital Expenditures of $32-35 million
- Major Maintenance of $21 million
- Cash pension funding of $7-9 million
Expectations for Full Year 2019
- Reinvesting in mills (higher maintenance and capital expenditures expected)
- Cash pension funding to be equal to 2018
- Luke Mill closure cash costs of approximately $25-35 million
- Finished goods at 2018 year end levels
Complete first quarter 2019 results with detailed tables are available on Verso's website: versoco.com.
Verso Corporation is a leading North American producer of specialty and graphic papers, packaging and pulp. To learn more, please visit versoco.com
SOURCE: Verso Corporation