VRS - Earnings call transcript Q3 2020

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Operator

Good morning, and welcome to Verso Corporation's Third Quarter 2020 Earnings Conference Call. [Operator Instructions]. At this time, I'd like to turn the presentation over to Verso's Treasurer, Tim Nusbaum. Please go ahead.

Timothy Nusbaum

Thank you, and good morning.

financial the Verso market XXXX this were quarter before morning opened. third results Corporation for announced The The earnings are release www.versoco.com. slides Investors that as of well as refer page during the to this website call Verso's available the we'll in at set of

me and are prove forward-looking Nebel, call, of Chief These remind I risks like President materially call vary we Financial Verso's Allen understanding or or assumptions Campbell, performance, will expectations. everyone inaccurate, today Officer; give our management's Should you to to the from order the Chief estimates Officer. in or Executive uncertainties. and the statements be course more to that actual Senior on making subject results materialize Interim Joining certain better these risks underlying uncertainties Randy statements. and Vice of may in President are of would one forward-looking should a and or

uncertainties various Nebel. like would which on you If under Randy our our turn SEC I'd like the website, to refer the are to and further our over presentation filings, posted now versoco.com, regarding the business, please tab. to Investors risks associated information with

Randy Nebel

I talk to Thank with having to point. everyone. you some pleasure many It's morning, in and you, of Tim. opportunity a look meet you Good, to forward this the person at

commercial of since overall on career Board appointed KapStone and for and long EVP Packaging, of CEO pulp industry, the September of enjoyed President having and I responsibility interim recently many paper of you served was with as the manufacturing know, As Verso on XXXX. Paper's operation. in XX, most a November I've

both and organizations involved with and Paper member a served Association. Forest & of the Manufacturers I've Association Board National have Additionally, very the as American industry been of

in always down saying organization with Verso period been incredibly last experiencing and pandemic. come with joining way me the expected, through industry without evident what a over this has has is natural the that's products the on unwavering style my month, goes and management the provided shared lot the been a Verso change, high-quality is significant still managed is the to accentuated and year, As have been Since the that the proactive and and be by that customers their challenging Verso It improve. of Board service up of customers. past consistently in has quality an great of to employees rooted lighting focus but there decisive and room have I customers. to team has the alignment

Turning to Verso. vision some CEO this for role. Slide respect go-forward have I become the tenets want X, for as the a take have of stepped I to to moment time, have only I been upon I have crystal of period strategy I that clear but interim a short touch into

will as a the Verso service. the recognized highest with of specialty customer be and best pulp First, offerings, graphics, market level supplier of

execute will and enviable on market the grow reputation. right to to this, steps to that have reputation we with have will an the earn we If customers, We earn we also our share. take our

We returns. with will projects prioritize capital fast

driving cash We and focus profitability will flow. on

reductions. pursue relentlessly will cost We

recovers. X Verso on Verso's demonstrates Finally, remained focused competencies. goals. will our to proactively have the by have we assured capacity inventory these did keep customer customers fulfill year. workforce our this on made to this engage allowing as focused increasing position, we industry achieve We orders progress dedicated Slide pace reduced we as servicing the key we while our We and target us

Anthem Sterling leveraging Verso's and sheets well-established brands graphic are Premium and on focused web, We product Plus. we're like both offerings, and

the in these evaluating brands. expand we products of to are range We capital offer projects

dynamics. of percentage growing stable market In a addition, specialty is revenue our more with

expense customer significant long-standing specialty area, to products focused products a present and our highly are new around a packaging. consumer built technical base These that strategy challenge have an growth labels organization to customer impacting management over A in year this work market strategically focus for next supply of is will key We From that fiber be costs entrants. to standpoint, chain. without cost the reduced service. across with we suppliers the have our out take

X. Slide to Turning

sequential quarter. but to QX. improve Let's with look is accomplished EBITDA higher in a significant there second in quarter focus opportunity in and $XX cost at increased third from reduction. adjusted we million what on the Good a On progress, basis, loss a profit to revenue a our the

long-term for our position We to continue success. strengthen

total This worth like I'd is anyone Nothing Our solid, a with safety performance injured. of X.XX. but safety see perfect. our number do getting we to incident rate was is good, near

value employees proud and keep to fundamental comfortable our I'm safe team and is to healthy, employees Our work the the workplace. has our do the that feel of and continues so in done

or The seriously environmental is maintaining to key our to better fundamental than I very standards, all operate. at other value a to operate license take

mentioned, and of has potential, our the both we of quarter. always on focused which our cost year downsized Escanaba Quinnesec, X great reduced improved As saw capacity this mills Verso to preemptively control. and during operations performance

We another are now it to level. taking

mills. this, deploying As part will high-return of our projects capital we on be throughout

same $XX dividend shareholders regular to no At We during with to have dividend special cash, million commitment are liquidity quarter. we partially in sheet a and to million proud and $XXX paid million in liquidity return capital debt. and strong $XXX and time, balance the the maintained a fulfilled both our

to shareholder sheet advantage for balance and long-term a competitive strong remains we challenging the as us value. navigate look environment Our short-term grow

the X. on Slide as I a minute a spend whole. to industry want Turning to

overcapacity point of progressed industry Our the to as pandemic a had started.

the the time which we optimistic. to something seen to to past not industry is we is control predict an many but are cautiously sequential things as for decrease trend in seen so and since this there continues, have lines, difficult X had pandemic Obviously, now over also demand QX, illustrate capacity the we encouraging. a the are We've As happen. us uptick unfortunately here, in is in quarters believe that

importantly, core will elements strength, financial our returns. are and that as More all returning help of the improved to controlling are us our performance drive which demand within we power business our

We With ask the share also customers review to performance. at point I in the of larger especially Allen? that, country. can for the to a center their of we're Allen will feel we a over spend, now call turn financial

Allen Campbell

Good Randy. you, Thank morning, everyone.

sales, in Androscoggin the As Duluth the you Stevens sold idled we switch net see the with Slide of is of will reflective to mills, Rapids. X, Point together and mills reduction Wisconsin and which

in additional impacted ton organization. a we as XXXX. Our related million same by of closed $X idled severance as the costs was to down the over net million was $XXX result and Price rightsized $XX in mills, income with quarter a

million per ton, $XX by was say. -- improved However, it up was helped I mix during that It sequentially $XX should time by period.

we for pricing. have and our also our products progressively savings expect major drawing us the successfully ensure with the X.X% Our Escanaba select behind Rapids Duluth so qualifying year-to-date mills, sheet outages initiatives, and SG&A mills. up at to that maintenance of been the and and we idle from Quinnesec for started inventory trough commercial at pulp in announced as grades, team are adjusted we've increases hit Leading are year, The this sales. built to we've realize SG&A to down we and Wisconsin customers, both graphic we for have the price product decision to the availability

million, our We $XX Moving mills EBITDA. 'XX our on adjusted to impacted was impact. current year sold the of and Slide demonstrates impact XX. third COVID-related the $XX in business conditions million Thus, note to the basis, From third $XX the quarter, Luke that of the million $XX price/mix last and economic of million. volume negative with quarter a in was bridge

which related idle a to the Rapids $XX our million downtime and of mills. incurred we was Duluth to proactive addition, million In Wisconsin impact, $XX decision

diligently our positive $XXX On the relatively through costs mills. sold quarter point the teams improve ended X input mill Cash and Wisconsin have our declined, at our our Slide performance the partially million. remaining as of and from we On we in have at quarter the Duluth Rapids out the inventory flat liquidity, which to operational side, build. strength XX, operations worked

of of $XX with quarter, Our cash costs idled the the pension and and $XXX was paid by in net million to closed million. total together mills of dividends funding the to million position cash $XX related impacted out

mills. Page Moving on about XX. X to We talked the metrics operating our at key

remaining the $XX work recall mills, ship by million during to from $X $XX of start was see This LTM If quarter, mills million improvement of and treated million we X these unfavorably the last After of volume. million. you around gross and sheeting at $XX margin we $XXX expect through we this quarter had million operations. price of impacted in products these inventory to and to

remeasure, pension we've in third through to specialty papers, papers On graphic total to mill at We of liability. the million go activities had and transfer and remeasure sells we but XX, see had the third do I the because also pulp this, Pixelle buyouts in and the capacity not various our tons. process remeasurement the Slide -- pension quarter, an X.X Beyond the that for say, in in adjustments did made should the quarter. the on to you thing but material change fourth, should that be revalue in other fourth so we assumptions. we Since quarter, based same the that, will we the happened, and of remains X highlighted quarter additional a still

mortality the expect liability, the of see, the net made million our changes this years come. This made this also the point we'll systematically significant in Even through, various XX was in in rate, you but reducing we've $XX and reduction through can there, impacted $XXX is by at unfunded basis included end one third risk at of Others end our As million discount with to around our a you reduce so increase, assumptions. walked actuarial quarter. largest up we progress slightly that changes. table PBO the the

on mills, reflects nonproductive in Slide and costs focus we initiatives our on customers improving and our place up reduced operations at our assets clean number efforts that XX As Escanaba so can our we Quinnesec. to serving and of

sale quarter through the have collected assets. the We from million Mill-related $X Luke of third

$XX in We million proceeds several expect the over next months. additional

We severance TSA pay with and the Pixelle, to eliminates quarter. of some completed these We've the at in agreement also Wisconsin Duluth expect in paid fourth have severance some distractions. which Rapids

what nonperforming we look to any will monetize. around and see We continue can opportunities assets at

XX, of With turn Turning through call quarter we to million to to pay have you. we Thank the December shareholders X, $XXX And to back as times. on to Randy comments. dividend record returned these like quarter of proceeds to holders to we uncertain sale tough closing that, regular intend for some Slide and XX, look as I'd our the of XXXX, December XX.

Randy Nebel

Allen. you, Thank

Slide Turning to XX.

strengths only recap meet not me but Let optimize unique business. to Verso's us enable that our demand also will

the in leader recognized a is Verso industry. recognition. brand First,

we us customers that our with. to They quality products in day provide day are and Second, rely long-term service customers on strong have out. and customer relationships exceptional

streamlined our now will nimble it to your Lastly, will of and quickly resulted support. can reductions value. that questions. We over to us And a deliver shareholder more to in the appreciate organization. react and Operator? our long-term operations capacity flexibility operator customers, changing have We needs turn help I for

Operator

Riley. will [Operator first question from Van B. Instructions]. the Jeff come And Sinderen of

Jeff Van Sinderen

can paper the don't if is that when I what picture to year is that given the capacity in sort of how we frame especially that of us say, exiting? you're exit next, now. And business, your graphic much you supply/demand your touch can if wonder competitive in how tonnage I or of uptick Maybe know, your picture And so? overall for sense the much over that the that expect any guess, an is impacting broader last Maybe just I for capacity of with see assessment total? starting capacity of time the see give turn you have industry. to industry on How you you business? specifically

Randy Nebel

morning. Good

people Other we think we only is about their that. brown comment from can tons. that let we do. graphics Dragons' converting may papers talk Rumford one Nine on that, XXX,XXX what than on comment other the estimated I to them We'll think that machine announcement we don't of or to to containerboard

Jeff Van Sinderen

maybe And on future just could enough. of the then you us Fair that thinking mills you've about Okay. your closed. the update

collected you an I Luke, think and you -- $XX million. expect million you in from said you were taking additional $X

other of the the have? interest latest of wondering that assessment idled mills Just acquisitive or what is the your are in assets you kind

Randy Nebel

At banker. very put thought had times, Well, that not think Rapids when on mill -- a what Duluth because and difficult times better. to we have this investment we're deal and Duluth -- we got mills Wisconsin a it's both and slowing these taking on people both down, the has but interested, in is an kind interest ongoing. we've interest point, of Wisconsin with that in Rapids some are was will with be available little pause

Jeff Van Sinderen

metrics, last then just And know guidance, thoughts any just but your give could if you're I then potential thinking QX Great. provide maybe around -- one. so around improvement any us quantification give can Okay. you're expense -- maybe are reductions not about XXXX? we can continue? going And us as ask sequentially in Any on you thinking around I QX, one seeing we're far what to seeing anything you

Randy Nebel

was looking as week us, good. Well, orders, the and a November very October through was last for far month end strong as of

it on. pretty as hard won't goes us, the think month I no for month not that the off drop to reason forward, Going end of expect December, so usually the is year, a

quantifying the feel giving I that. our with any with of year, far guidance still in process together, budget As comfortable and putting next as we're don't

Operator

question next BWS of Financial. Hamed from The Khorsand comes

Hamed Khorsand

So undertaken example high-return that want Have of you what first doing? you're provide projects of of to you off, ask thinking And any you. just an could referring you to? these were

Randy Nebel

thousands lot mills they're payout, done start define, Those a Well, of doing put small, projects We've so have starting projects to of not and projects. that we'll X-year move we'll have $XXX,XXX, a or hundreds big work on the then off payout. a request both capital relatively together. we're and high the identifying return, in dollars to X-year I usually those, are that of

reduction capital how get it but get per done, our process chemical person to out productivity on we're of say We to do through focused would reduction, I go and will improvement, energy our hours -- mills. meaning more

what right of we're kind thinking that's now. So

Hamed Khorsand

the then you've what's Okay. like as been from increases? And feedback announced price customers these

Randy Nebel

It's been mixed.

understand customers most it. think I

get specific that be to able posture we operating price says increase. should Our a

-- divided pretty somewhat so Most and good understand between say, close negative. they some it's to some XX-XX think things, it. it's -- but I say good, not I'd say, been, positive

Hamed Khorsand

margin? a then how before we there's you these but noise lot your financials mills idled really report you mean been X having long where of report. good gross you've been I quarters it's in so gross of really can't straight margin, the impacting And been without numbers the talking see about that X assets noise,

Randy Nebel

would Allen, you take that?

Allen Campbell

Sure.

for use business." to the few mills We prep sell-through you get I more quarters full after costs of "normal mills. to the Then think of remaining impact see as going a the making have we're the we X have should idled our related sheeting some to roles those of sheeting next stage. structure we our that, of inventory before at

few yet, So Hamed, normalize. a we maybe until quarters

that highlight to we're what mill information there mill about talk are isolate slide then idled X of on So cost those then options and -- trying that our from the and sales. status

take pure. a yet So -- be to but it's going few to quarters

Hamed Khorsand

much how quantify you you QX? Can could you inventory sell-through think in

Allen Campbell

put that there. haven't out We

the producing at mills quarter. a -- third saw quarter. did We you drawdown the little bit those in a in third see think I you were

look be say to fourth and should able that than quarter. can deliver the more that at you in we So

Operator

our EBMR Daly And Instructions]. Mick come question [Operator of next will from Holdings.

Mick Daly

allocation capital liquidity going of the where you terms forward, vis-a-vis got the stock sheet, you've with In on are repurchase? balance nice

Randy Nebel

Allen, do take that? you to want

Allen Campbell

Yes. still for a stock have authorization Sure. repurchase. We

live available to is shareholders. time, returned that to of we returning We to up intend capital one strategy have that we have commitment the all have not the over And we that shareholders, so commitment our us. to to

Mick Daly

this any more stock last So do quarter, anticipate you back didn't -- guess, when you buy correct? I specifically, in

Allen Campbell

felt same should the time. didn't made We think we so market the dividend, be fairly the We like in dividend not. did at a We we appropriate. was large

from out. changes that here Now on

Mick Daly

Do the market being quarter? this anticipate in you

Allen Campbell

to if stated we're haven't We going be.

we authorization. do I As noted, have

Operator

would over This our back like remarks. Nebel to question-and-answer concludes Randy for turn session. I to the closing conference any

Randy Nebel

Bye. quarter. much very and listening, holiday a you the and for questions. in we'll in Thank Thank and Have first the thank you. talk dialing great for season, you

Operator

The attending and conference now disconnect. may has today's now you concluded. for presentation, you Thank

Billerud Americas (VRS) 9 Nov 202020 Q3 Earnings call transcript