On behalf of the workers in our sector, Forest Products Association of Canada is disappointed in this outcome and strongly believes that these duties are completely unjustified and represent a costly and losing proposition for workers and paper customers on both sides of the border. FPAC applauds the swift response issued last night from Foreign Affairs Minister Chrystia Freeland and Natural Resources Minister Jim Carr – they unequivocally defended Canada’s interests. In addition to strongly defending Canadian workers and businesses against these unfounded duties imposed by our U.S. neighbours, FPAC is calling on the Trudeau government to do the following: •Continue efforts to support industry’s efforts to aggressively diversify export markets. •Partner with FPAC and Canada’s forest products sector and our workers to further enable the transformation of our sector into new and innovative product areas. •Activate employment support programs for any Canadian workers who might be impacted in the event of reduced shifts or job losses. Click Read More below for additional information.
Third Quarter 2018 Highlights:
Net income of $86 million or $2.45 per diluted share; $29 million in special items.
Adjusted EBITDA of $108 million, up 130% versus third quarter 2017.
Net sales up $83 million, or 13%, from same quarter 2017.
Net debt reduced $66 million to a balance of $103 million.
Term loan retired.
“Verso’s positive momentum continued to strengthen in the third quarter as pricing, mix management and improved operational performance across the company materially enhanced profitability and cash flows,” said Verso Chief Executive Officer, B. Christopher DiSantis. “Our entry into the growing containerboard market, excellent strides in specialty paper sales and a full order book, along with significant achievements including the repayment of our term loan, position Verso well for sustainable value creation.”
Comments to Results of Operations – Comparison of Three Months Ended September 30, 2018 to Three Months Ended September 30, 2017
Net sales in the third quarter of 2018 increased $83 million, or 13%, compared to the third quarter of 2017. The sales increase was driven by improved average pricing, primarily attributable to improved product mix including increased specialty sales, driven by continued economic growth and evolution of e-commerce markets, and price increases across all product lines. Specialty paper price increases are being driven by inflationary costs and higher pulp prices. Overall sales volume was up slightly, driven primarily by the increased sales of our specialty products, partially offset by a reduction in external pulp sales due to internal needs.
Gross margin, excluding depreciation and amortization expenses, increased from 10.8% in the third quarter of 2017 to 17.6% in the third quarter of 2018, driven by higher average pricing and improved product mix, reduced downtime, lower major maintenance costs and reduction of pension costs, partially offset by reliability issues at our Luke Mill, increased freight expense and inflation of chemical, energy and fiber costs.
SG&A expense in the third quarter of 2018 increased $1 million over the same period in 2017, primarily attributable to costs incurred during the third quarter of 2018 associated with an increase in cash and non-cash compensation expense, partially offset by cost reduction initiatives implemented across the company.
Other operating (income) expense in the third quarter of 2018 includes a $9 million gain on the sale of our Wickliffe Mill.
Interest expense in the third quarter of 2018 increased $5 million over the same period in 2017, driven by accelerated amortization of debt issuance cost and discount resulting from the voluntary principal prepayments on our term loan, partially offset by the reduction in amounts outstanding under our term loan.
Other (income) expense in the third quarter of 2018 includes $20 million of income related to a countervailing duty Settlement Agreement with certain Canadian producers of supercalendered paper. Additionally, the third quarter of 2018 and 2017 include 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.
Comments to Results of Operations – Comparison of Nine Months Ended September 30, 2018 to Nine Months Ended September 30, 2017
Net sales in the nine months ended September 30, 2018, increased by $165 million, or 9%, compared to the nine months ended September 30, 2017. The sales increase was attributable to improved average pricing, primarily driven by improved product mix including increased specialty sales and price increases across all product lines, partially offset by an overall decrease in sales volume. Volume decline was driven primarily by declining graphic paper sales and a reduction in external pulp sales due to internal needs, partially offset by increased sales of our specialty products.
Gross margin, excluding depreciation and amortization expenses, increased from 7.2% in the nine months ended September 30, 2017 to 12.3% in the nine months ended September 30, 2018, driven by higher average pricing and improved product mix, reduced downtime and reduction of pension costs, partially offset by higher planned major maintenance costs, operational performance issues, increased freight expense and inflation of chemical, energy and fiber costs.
Depreciation and amortization expenses in the nine months ended September 30, 2018 were lower than the nine months ended September 30, 2017, as a result of $6 million in accelerated depreciation in first quarter of 2017, attributable to the capacity reductions at the Androscoggin Mill.
more detail at: http://investor.versoco.com/2018-11-07-Verso-Corporation-Reports-Third-Quarter-2018-Financial-Results