Verso Corporation Reports Fourth Quarter and Full Year 2021 Financial Results

Verso Corporation today reported financial results for the fourth quarter and full year of 2021.

Fourth Quarter 2021 Highlights

• Net sales of $328 million, a 4% increase over fourth quarter 2020 and a 3% decrease over third quarter 2021
• Net income of $13 million compared to a net loss of $90 million in the fourth quarter of 2020 and net income of $58 million in the third quarter 2021
• Adjusted EBITDA of $74 million compared to $9 million in the fourth quarter of 2020 and $67 million in the third quarter of 2021

Overview

“Thanks to the efforts of the Verso team, Verso delivered excellent safety results and solid financial performance in the fourth quarter driven by improved sales and operations year-over-year,” said Verso President and Chief Executive Officer Randy Nebel. “As we look toward the future, we believe our pending combination with BillerudKorsnäs will enable our customers and employees to benefit from enhanced opportunities as part of a larger, stronger organization. Our full Board believes the proposed merger maximizes value for shareholders, who will receive a significant premium and immediate and certain value for their shares of Verso.”

Comments to Results of Operations – Comparison of Three Months Ended December 31, 2021 to Three Months Ended December 31, 2020

Net sales

Net sales for the three months ended December 31, 2021 increased $14 million or 4% compared to the three months ended December 31, 2020 driven by favorable price/mix of $57 million, partially offset by $43 million, or 14%, in decreased sales largely attributable to our sold Duluth and idled Wisconsin Rapids mills. Total company sales volume was down from 392 thousand tons during the three months ended December 31, 2020, to 341 thousand tons during the same period of 2021, primarily attributable to our sold Duluth and idled Wisconsin Rapids mills.

Operating income (loss)

Operating income was $34 million for the three months ended December 31, 2021, an increase of $152 million when compared to an operating loss of $118 million for the three months ended December 31, 2020.

Operating results for the three months ended December 31, 2021 were positively impacted by:

• Favorable price/mix of $57 million driven by price increase realization across all grades, including pulp
• Improved operating income of $12 million resulting from the conversion to our current two mill system
• Lower net operating expenses of $42 million driven by $25 million of lower closed/idled mill spend and $17 million of additional reductions associated with lower wood cost and cost reduction initiatives across our mill system
• Lower depreciation expense of $70 million, primarily due to $65 million in accelerated depreciation related to the closure of our Duluth Mill in December 2020
• Lower Restructuring charges of $2 million associated with the permanent shutdown of our Duluth Mill in December 2020

Operating results for the three months ended December 31, 2021 were negatively impacted by:

• Lower sales volume resulting in a decrease of $2 million in net operating income
• Inflationary costs of $20 million driven by purchased pulp, latex, energy and freight
• Higher Selling, general and administrative costs of $7 million primarily driven by costs associated with the Merger Agreement, as well as higher incentive expense, partially offset by lower severance costs
• Lower other operating income of $2 million, primarily related to finalization of the working capital adjustment to the sale of our Androscoggin and Stevens Point mills in 2020

Comments to Results of Operations – Comparison of Twelve Months Ended December 31, 2021 to Twelve Months Ended December 31, 2020

Net sales

Net sales for the twelve months ended December 31, 2021 declined by $81 million or 6% compared to the twelve months ended December 31, 2020, attributable to favorable price/mix of $129 million, which was more than offset by a decrease in sales of $210 million, or 15%, primarily related to our sold Duluth, Androscoggin and Stevens Point mills and idled Wisconsin Rapids mill. Total company sales volume was down from 1,674 thousand tons during the year ended December 31, 2020, to 1,407 thousand tons during 2021, primarily attributable to our sold Duluth, Androscoggin and Stevens Point mills and idled Wisconsin Rapids mill.

Operating income (loss)

Operating loss was $29 million for the twelve months ended December 31, 2021, an improvement of $99 million when compared to operating loss of $128 million for the twelve months ended December 31, 2020.

Operating results for the twelve months ended December 31, 2021 were positively impacted by:

• Lower sales volume resulting in a decrease of $6 million in net operating income
• Inflationary costs of $51 million driven by purchased pulp, latex, energy and freight
• Higher depreciation expense of $1 million due primarily to $84 million in accelerated depreciation at our Wisconsin Rapids Mill in 2021, partially offset by $65 million in accelerated depreciation associated with the closure of our Duluth Mill in December 2020 and approximately $16 million of nonrecurring depreciation associated with these events
• Higher Restructuring charges of $11 million primarily associated with the permanent shutdown of our Duluth Mill in December 2020 and the No. 14 paper machine and certain other long-lived assets at our Wisconsin Rapids Mill in February 2021
• Lower other operating income of $81 million, primarily as a result of the $94 million gain on the sale of our Androscoggin and Stevens Point mills in 2020, partially offset by $6 million in insurance recoveries in 2021, associated with a 2019 insurance claim at our Quinnesec Mill.

For the complete press release, click here.

About Verso

Verso Corporation is a leading American owned and operated producer of graphic, specialty and packaging paper and market pulp, with a long-standing reputation for quality and reliability. Verso’s graphic paper products are designed primarily for commercial printing, advertising and marketing applications, including direct mail, catalogs, corporate collateral, books and magazines. Verso’s specialty paper products include release liner papers and label face stock for pressure sensitive, glue-applied and laminate applications. Verso produces packaging paper used in higher-end packaging and printing applications such as greeting cards, book covers, folders, labels and point-of-purchase displays. Verso also makes market pulp used in printing, writing, specialty and packaging papers, facial and toilet tissue, and paper towels. For more information, visit us online at versoco.com.

Contact:

Shawn Hall – Director Communications – shawn.hall@versoco.com – (937) 528-3700

Source: Verso Corporation