Verso Corporation Reports Third Quarter 2017 Financial Results
Nov. 14, 2017 - Verso Corporation today reported financial results for the third quarter of 2017, including net sales of $621 million, net income of $4 million, and adjusted EBITDA of $47 million.
"Verso rebounded significantly in the third quarter, from the second quarter of 2017, as a result of better pricing, increased sales in the growing specialty papers market, less downtime and continuing, aggressive cost reduction initiatives," said Verso Chief Executive Officer, B. Christopher DiSantis. "We significantly improved cash flow and retired a substantial amount of debt while increasing liquidity. Verso moves into the fourth quarter with strong earnings momentum driven by a full order book, no planned downtime and a much leaner administrative cost structure."
Comments to Results of Operations - Comparison of Three Months Ended September 30, 2017 to Three Months Ended September 30, 2016
Net sales for the third quarter of 2017 decreased by $54 million compared to the third quarter of 2016. The sales decline was primarily attributable to a decrease in total sales volume due to the general softening of demand for coated papers and our capacity reductions at our Androscoggin Mill, partially offset by a 1% increase in price.
Gross margin, excluding depreciation, amortization, and depletion expenses, increased from 4.9% of net sales in the third quarter of 2016 to 11.1% in the third quarter of 2017. Gross margin in the third quarter of 2016 was negatively impacted by work-in-process and inventory fair value adjustments associated with fresh-start accounting of $41 million. Without these fresh-start accounting adjustments, gross margin percentage would have been relatively flat quarter over quarter. Gross margin in the third quarter of 2017 was positively impacted by reductions in manufacturing overhead costs, lower maintenance costs, timing of major maintenance activities which were performed more during the third quarter in 2016 versus the second quarter in 2017, capacity reductions at the Androscoggin Mill and increased sales price, offset by lower sales volume, higher freight rates and the effects of taking downtime at our mills.
Depreciation, amortization and depletion for the third quarter of 2017 was lower than the third quarter of 2016, which was attributable to the capacity reductions at our Androscoggin Mill and reduction in the carrying value of our property, plant and equipment as a result of adopting fresh-start accounting.
SG&A expense reduction was primarily attributable to cost reduction initiatives implemented across the Company.
Reorganization items, net for the Predecessor period from July 1, 2016 to July 14, 2016 was a net gain of $1,302 million, primarily attributable to adjustments to reflect the non-cash gain associated with the elimination of debt, offset by the non-cash impact of fresh-start accounting and professional fees directly associated with our Chapter 11 cases.
Verso is a leading North American producer of printing and specialty papers and pulp. To learn more, please visit versoco.com
SOURCE: Verso Corporation