Verso Corporation (NYSE: VRS) today reported financial results for the third quarter of 2020 and announced that its Board of Directors has declared a quarterly cash dividend for the quarter ending December 31, 2020, in the amount of $0.10 per each outstanding share of Verso’s Class A common stock. The quarterly cash dividend is payable on December 29, 2020, to Verso’s stockholders of record holding shares of common stock at the close of business on December 18, 2020.
Third Quarter 2020 Highlights:
- Net sales of $306 million, up 14 percent versus the second quarter
- Net loss of $(31) million or $(0.92) per diluted share, compared to net income of $30 million or $0.85 per diluted share in third-quarter 2019 and a net loss of $(34) million in second-quarter 2020
- Adjusted EBITDA of $12 million, compared to a loss of $9 million in the second quarter
- Paid quarterly and special dividends to stockholders totaling $3.10 per share
“We were encouraged to see a slight uptick in coated paper demand and operating rates in the third quarter, which contributed to an Adjusted EBITDA of $12 million compared to a loss last quarter,” said Verso Interim President and Chief Executive Officer Randy Nebel. “Verso continues to have a strong balance sheet and liquidity after payment of the regular and special dividend to our stockholders.”
Comments to Results of Operations – Comparison of Three Months Ended September 30, 2020, to Three Months Ended September 30, 2019
Net sales for the third quarter of 2020 decreased $310 million compared to the third quarter of 2019, as a result of significant declines in sales volume and unfavorable price/mix. Of the $310 million, or 50%, net sales decline, $36 million, or 6%, was attributable to the closure of our Luke Mill in June 2019 and $145 million, or 24%, as a result of the sale of our Androscoggin and Stevens Point mills in February 2020, and $70 million, or 11%, was attributable to the indefinite idling of our Duluth and Wisconsin Rapids mills in July 2020.
Total company sales volume was down from 679 thousand tons during the third quarter of 2019, to 382 thousand tons during the same period of the current year. Of the 297 thousand ton volume decline, 36 thousand tons were attributable to the closure of our Luke Mill in June 2019, 146 thousand tons were a result of the sale of our Androscoggin and Stevens Point mills in February 2020, 79 thousand tons were attributable to the indefinite idling of our Duluth and Wisconsin Rapids mills in July 2020, and the additional decline in volume resulted from lower customer demand driven by the COVID-19 pandemic.
We expect COVID-19 pandemic to continue to have a negative impact on our net sales in the fourth quarter of 2020.
Operating income (loss)
Operating loss was $44 million for the third quarter of 2020, a decrease of $72 million when compared to an operating income of $28 million for the third quarter of 2019.
Operating results for the third quarter of 2020 were positively impacted by:
- Lower input costs of $3 million, driven by lower chemical and energy costs
- Lower depreciation expense of $4 million
- Reduced planned major maintenance costs of $7 million, driven primarily by costs incurred at our Androscoggin Mill in 2019 that did not recur in 2020 and timing of an outage at our Quinnesec Mill
- Lower Selling, general and administrative expenses of $4 million, driven primarily by cost reduction initiatives in connection with the sale of our Androscoggin and Stevens Point mills in February 2020 and lower equity compensation expense, partially offset by increased severance costs incurred due to our headcount reduction initiatives
- Lower freight costs of $2 million
- Lower restructuring charges of $6 million associated with the closure of our Luke Mill in June 2019
Operating results for the third quarter of 2020 were negatively impacted by:
- Unfavorable net selling price and product mix of $21 million
- Lower sales volume resulting in a decrease of $42 million in net operating income, driven by the impact of the COVID-19 pandemic, the closure of our Luke Mill in June 2019, the sale of our Androscoggin and Stevens Point mills in February 2020, and the indefinite idling of our Duluth and Wisconsin Rapids mills in July 2020
- Higher net operating expenses of $32 million driven primarily by market downtime, costs incurred to idle our Duluth and Wisconsin Rapids mills, and severance costs, partially offset by improved performance and cost reduction initiatives across our mill system
- Increased other operating expenses of $3 million primarily related to a loss on disposal of assets and a loss on pension settlement associated with the sale of our Androscoggin and Stevens Point mills
Other income for the third quarter of 2020 and 2019 includes the income of $5 million and $2 million, respectively, associated with the non-operating components of net periodic pension cost (income).
Verso’s complete third quarter 2020 earnings report can be found on the company’s website: versoco.com.
Verso Corporation is the turn-to company for those looking to successfully navigate the complexities of paper sourcing and performance, and a leading North American producer of graphic and specialty papers, packaging papers, and pulp. To learn more, visit: versoco.com.
SOURCE: Verso Corporation