Verso Corporation (NYSE: VRS) today reported financial results for the first quarter of 2018, including net sales of $639 million, net loss of $2 million, and Adjusted EBITDA of $41 million.
Overview
“Verso had a good start in the first quarter of 2018, with sales revenue up 4 percent to $639 million, Adjusted EBITDA (a non-GAAP measure) up 58 percent to $41 million, and Adjusted EBITDA margin up 2.2 percentage points compared to the first quarter of 2017,” said Verso Chief Executive Officer, B. Christopher DiSantis. “We continued to grow our specialty papers business, now 24 percent of total revenue, and are seeing the benefits of our SG&A cost improvement initiatives, with an improvement of $8 million versus the first quarter of 2017. Looking ahead, we have positioned Verso well to benefit from improved operating rates and are building a better business.”
Comments to Results of Operations – Comparison of Three Months Ended March 31, 2018 to Three Months Ended March 31, 2017
• Net sales for the first quarter of 2018 increased $23 million compared to the first quarter of 2017. The sales increase was primarily attributable to improved average pricing and product mix, partially offset by a reduction in total sales volume. The decrease in volume was driven by a reduction in external pulp sales of 15 thousand tons, primarily in preparation for a planned outage at our Quinnesec Mill, and a reduction in coated paper sales of 7 thousand tons as a result of capacity reductions at our Androscoggin Mill. While sales volume of specialty papers increased in the first quarter of 2018, it was offset by a reduction in sales volume of other coated papers during that same period.
• Gross margin, excluding depreciation, amortization and depletion expenses, increased from 8.8% in the first quarter of 2017 to 9.1% in the first quarter of 2018 driven by higher average pricing and improved product mix, lower pension and corporate overhead costs and favorable wood costs, partially offset by lower sales volume, production issues at certain mills, additional major maintenance costs, increased freight expense and inflation on chemicals and energy costs. The most significant production issue was related to a boiler failure at our Luke Mill, combined with a simultaneous weather event and depletion of fuel used to generate steam throughout the mill. This event had an impact of approximately $4 million on the results of the first quarter of 2018.
• Depreciation, amortization and depletion expenses for the first quarter of 2018 were lower than the first quarter of 2017, as a result of $6 million in accelerated depreciation in first quarter of 2017 attributable to the capacity reductions at the Androscoggin Mill.
• SG&A expense reduction was primarily attributable to cost reduction initiatives implemented across the Company.
• Interest expense for the first quarter of 2018 includes $4 million of amortization of debt issuance cost and discount associated with the Term Loan Facility as a result of a $21 million voluntary principal payment and a $21 million excess cash flow payment, both made during the first quarter of 2018.
• Other (income) expense in the first quarter of 2018 and 2017 includes income of $3 million and $2 million, respectively, associated with the non-operating components of net periodic pension cost (income) in connection with the adoption of a new accounting standard in the first quarter of 2018.
more detail at: http://investor.versoco.com/2018-05-09-Verso-Corporation-Reports-First-Quarter-2018-Financial-Results