Verso Corporation (NYSE: VRS) (“Verso” or the “Company”) today reported financial results for the fourth quarter of 2017, including net sales of $639 million, net income of $36 million, and adjusted EBITDA of $65 million. Results for the full year 2017 are shown below.
“Verso delivered a dramatic turnaround in results during the last six months of 2017, including a significant rebound to finish the year at $134 million of Adjusted EBITDA (a non-GAAP measure), a reduction in net debt of $113 million, an increase in liquidity to $216 million and a material reduction in overhead costs,” said Verso Chief Executive Officer B. Christopher DiSantis. “Our 2017 cash flow, bolstered by aggressive working capital management and growing price realization, was exceptional. We believe these solid run-rate results and positive momentum across the enterprise position the company well for continued financial performance improvement and value creation for our stockholders.”
Comments to Results of Operations – Comparison of Three Months Ended December 31, 2017 to Three Months Ended December 31, 2016
• Net sales for the fourth quarter of 2017 decreased by $7 million compared to the fourth 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.
• Gross margin, excluding depreciation, amortization and depletion expenses, decreased from 16.6% of net sales in the fourth quarter of 2016 to 13.3% in the fourth quarter of 2017. Gross margin was favorably impacted in fourth quarter of 2016 by $22 million and the fourth quarter of 2017 by $4 million as a result of gains included in cost of products sold associated with the elimination of certain postretirement benefit costs. Gross margin in the fourth quarter of 2017 was negatively impacted by lower sales volume, increased freight costs and mill performance issues, partially offset by reductions in manufacturing overhead costs, lower maintenance costs, and increased average sales prices.
• Depreciation, amortization and depletion expenses for the fourth quarter of 2017 were lower than the fourth quarter of 2016, as a result of $43 million in accelerated depreciation in 2016 attributable to the capacity reductions at the Androscoggin Mill.
• Restructuring charges in the fourth quarter of 2016 are related to the closure of the Wickliffe Mill in Kentucky and capacity reductions at the Androscoggin Mill in Maine.
• Other non-operating income of $7 million in the fourth quarter of 2017 was related to the extinguishment of an obligation in December 2017 in connection with the unwind of a New Market Tax Credit transaction entered in 2010.
Comments to Results of Operations – Comparison of 12 Months Ended December 31, 2017 to 12 Months Ended December 31, 2016
• Net sales for the 12 months of 2017 decreased by $180 million compared to the 12 months of 2016. The sales decline was attributable to a decrease in total sales volume and a decrease in pricing, partially offset by improvement in product mix. The decrease in volume and pricing were driven by general softening of demand for coated papers and our capacity reductions at the Androscoggin Mill.
• Gross margin, excluding depreciation, amortization and depletion expenses, decreased from 11.1% of net sales in the 12 months of 2016 to 9.1% in the 12 months of 2017. Gross margin was favorably impacted in 2016 by $22 million and in 2017 by $4 million as a result of gains included in cost of products sold, associated with the elimination of certain postretirement benefit costs. Gross margin was negatively impacted in the 12 months of 2017 by lower sales volume, lower average sales prices, inflation in chemicals and energy costs and inventory reduction initiatives, partially offset by lower wood costs, reductions in manufacturing overhead costs and inventory fair value adjustments associated with fresh-start accounting in 2016.
• Depreciation, amortization and depletion expenses for the 12 months of 2017 were lower than the 12 months of 2016, which was attributable to the capacity reductions at the Androscoggin Mill, the closure of the Wickliffe Mill and the reduction in the carrying value of our property, plant and equipment as a result of the adoption of fresh-start accounting upon our emergence from Chapter 11 Cases on July 15, 2016.
• SG&A expense reduction was attributable to implementation of cost reduction initiatives across the Company, non-recurring pre-reorganization costs as well as a change in accounting policy adopted in connection with fresh-start accounting related to reclassification of certain centralized manufacturing overhead costs previously presented in SG&A of the Predecessor that are now presented in Cost of products sold of the Successor.
• Restructuring charges for the 12 months of 2017 are primarily associated with the closure and relocation of the Memphis office headquarters and closure of the Wickliffe Mill. Restructuring charges for the 12 months of 2016 consisted primarily of non-cash fixed asset write-down charges from the closure of the Wickliffe Mill.
• Other operating income for the 12 months of 2017 decreased $50 million, primarily attributable to the sale of hydroelectric facilities in January 2016, partially offset by costs incurred for professional fees paid for legal, consulting and other bankruptcy related costs and services.
• Reorganization items, net for the Predecessor period from January 1, 2016 to July 14, 2016 was a net gain of $1,338 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.
more details at: http://investor.versoco.com/2018-03-08-Verso-Corporation-Reports-Fourth-Quarter-and-Year-End-2017-Financial-Results