“Operating performance in the quarter was in line with expectations and the equivalent quarter last year. The group generated an EBITDA excluding special items of US$145 million, operating profit excluding special items of US$74 million and profit for the period of US$24 million. “The Specialised Cellulose business continued to generate good returns during the quarter, with EBITDA excluding special items of US$70 million. US Dollar prices for dissolving wood pulp remain under pressure in all market segments due to excess market supply as well as the weak margins in the viscose staple fibre sector. The decline in cotton and polyester prices and large cotton reserves are compounding the pricing pressures. The weaker Rand/Dollar exchange rate has enabled the South African mills to maintain Rand pricing, while good variable and fixed cost control across the business is helping to maintain margins.
Verso Corporation (NYSE: VRS) today reported financial results for the second quarter of 2018.
Second Quarter 2018 Highlights:
• Net sales up $59 million versus second quarter 2017, a 10% increase
• Net income of $1 million, up $50 million versus second quarter 2017
• Adjusted EBITDA up $55 million versus second quarter 2017
• Last 12 months trailing Adjusted EBITDA of $204 million
• Net debt down $153 million from one year prior
“Verso had a strong second quarter with solid year-over-year improvement across the enterprise as our many initiatives to strengthen the business continued to deliver quantifiable results,” said Verso Chief Executive Officer B. Christopher DiSantis. “With what we believe is an industry-leading SG&A structure, our strong cash flow, fast-growing specialty papers business and low-cost conversion strategies, including the on-schedule restart of the No. 3 paper machine at the Androscoggin Mill, position Verso to capitalize on improving market dynamics and to create long-term value for our stockholders.”
Comments to Results of Operations – Comparison of Six Months Ended June 30, 2018 to Six Months Ended June 30, 2017
• Net sales for the first half of 2018 increased $82 million, or 7%, compared to the first half of 2017. The sales increase was attributable to improved average pricing, primarily resulting from inflationary pressures, improvement in product mix and better alignment of supply and demand. The increased average pricing and improvement in product mix resulted in higher revenue, driven by price increases across our product lines while volume was up significantly in specialty papers, partially offset by an overall decrease in sales volume. The overall decrease in volume was driven primarily by a reduction in external pulp sales of 30,000 tons as a result of a planned outage at the Quinnesec Mill and other internal needs. While sales volume of specialty papers increased in the first half of 2018, it was offset by a reduction in sales volume of other coated papers during that same period.
• Gross margin, excluding depreciation and amortization expenses, increased from 5.4% in the first half of 2017 to 9.4% in the first half of 2018, driven by higher average pricing and improved product mix, reduced downtime, improved operational performance, reduction of pension costs, favorable wood costs and lower corporate overhead costs, partially offset by lower sales volume, higher planned major maintenance costs, including bi-annual outages at the Quinnesec and Luke mills, increased freight expense and inflation on chemicals, energy and purchased pulp.
• Depreciation and amortization expenses for the first half of 2018 were lower than the first half 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 in the first six months of 2018 decreased $4 million compared to the same period in 2017, primarily attributable to cost reduction initiatives implemented across the company, partially offset by higher costs associated with Verso’s strategic alternatives initiative and non-cash equity award expense.
• Interest expense for the first half of 2018 includes $4 million of amortization of debt issuance cost and discount associated with the term loan 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 half of 2017 and 2018 includes income of $5 million and $7 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/2018-08-08-Verso-Corporation-Reports-Second-Quarter-2018-Financial-Results