VRS - Earnings call transcript Q1 2021

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Operator

Good morning, and welcome to Verso Corporation's First Quarter 2021 Earnings Conference Call. All participants are in a listen-only mode. [Operator Instructions] Please also note this event is being recorded. A replay of this call will be available on the Investor page of Verso's website after 11:00 a.m. Eastern Time today. like Nusbaum. the I'd Verso's over time, Tim Treasurer, this to presentation turn to At ahead. go Please

Timothy Nusbaum

Thank you, morning. and good

The first The website quarter which available were well announced on XXXX the we'll financial results morning as Section the the for refer before the to market call, slides Investors www.versoco.com. opened. set earnings during as this release, to Verso is Corporation Verso's of

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

Investor further would on please business, and risks associated uncertainties SEC you the under various information our If to versoco.com the website which are with our our filings, posted refer regarding tab. like

measures are to our over prepared results like for Randy presentation in in accordance comparable with non-GAAP during as be which available substitute today's addition, The considered to isolation or GAAP reconciliations release. a will additional be in discuss call, in information we point, the believe this In and can At GAAP earnings hand evaluating of we I'd measures, this useful Nebel. presentation performance. our should not to

Randy Nebel

Tim. Good you, morning, Thank everyone.

quarter The of industry made improvements past we've combined during the first to continued performance. first stronger performance Turning to operational Verso's slide to led improved with benefits year an the quarter. dynamics improve four. in

the EBITDA quarter over in is XXXX. solid million, at of which $XX Our in a fourth adjusted coming increase

tends slower that to draw. a from also of We be during historically generated $X cash operations is million and quarter cash flow a

quarter was better, are financially focused long-term initiatives we value. on this long-term sustain While to build

to healthy. fundamental employees our foremost, and our keep commitment safe and First is

Our internal the is X.XX reliability, essentially has implementing work by optimize and pulp able solid After a cost team Verso been safety result returns efforts to capital perception. this have with increase able their small capital to higher has for incident to example our savings of proud team of project. am projects our thorough routine done, our been product mix relatively rating pulp convert came incremental rate. and further of in in spend, what impressive. I a is cost to were a with the we use. drive We capital at customers and could production analysis our the lines. total and One projects have maintenance been improve

customer like new sheet applying impacting are ingenuity focus improvement thing analysis fundamentals while our business. this our We of of of a organization projects the and to web align this meet quarter. capital unwavering improving enabling stem graphic, offerings from demand, across with all benefits us the paper customer, on to an some and the These the

maintaining high focus While our we surfaces, products standards will on cost for and management.

with realized across fourth stronger much being freesheet portfolio. increases rates the rates is it price was strong and quarter. at are during backlogs Coated than operating business and XXX%, product Our order

the five, slide we industry greater some Turning provide to slide of dynamics. detail on five. On

accelerated capacity you to by significantly demand past American has of reductions closures know, over because North most As the industry COVID. of year down due come

supply July Rapids of demand recovery with These capacity a capacity has the quarter unfavorable trend mill is impact chain first freesheet also together healthier machine second and in in This of XXXX closures paper reflects an are removal Verso's includes full rates. exchange demand. and Since in quarter The coated in in of capacity the continuing logistical rates. industry convergence XXXX. seen XXXX. we of issues, The delays improvement XXXX, imports and have by Wisconsin changes into resulting operating the seen the impacted

six. margin quarters. over the profiles Turning chart past our adjusted This EBITDA slide to and four the

As the is improvements performance. our that, first and a have I we dynamics optimistic want pleased our we where have. with forward we big with review momentum you not can turn Allen are Allen? but combined call financial the the over to made see, the many for feel as help to will of progress quarter to drive be, now us, step industry the was financial we improving It performance. about With

Allen Campbell

Randy. you, Thank

adjusted As corner mentioned, quarter. XX.X% the first in the margin we a and turned EBITDA delivering performance,

have quarter net $XX last [ph] year, a ton sales improved nearly ton of first XXXX. Our reflective sequentially while capacity This and due reduction our million closed last improved in sold market million versus to difference mills. per Pulp the and up average XXXX. prices year. is compared dynamics quarter to paper $XX $XXX Pricing of were prices fourth in $XXX from

site Wisconsin net of Our income to and depreciation by accelerating operating and the mills. were closed costs Rapids other related impacted the

We its mills continue each nine. at to in slide closed quarter Turning work then on looking lowering reducing these and to costs and

a $XXX to included at Idling that. On of the our have Escanaba sold ongoing XXXX, as and Our was just last limited mix that $X adjusted slide offset sold mills in quarter XX, now Note are million of the impact we as was reported basis, COVID in contributed flow well on Quinnesec operations while the in $X achievement a good quarter note like decline, A in running very $XXX the year-over-year $X quarter board, million and versus idling in EBITDA million been from mills. We across of in operations the Rapids off cash shown cash but and SG&A off and million first with Wisconsin freight the million in our which the $X the a $X markets right. and seen losses, that capital. and the $X million use in of We costs result on a contributed heavy traditionally to million a declining running the favorable, have Volume operations year. increased price liquidity. ended improvement. mill. quarter adjusted first two last costs is shown $XX table mill from comparable on which as million was our of quarter million the EBITDA Duluth year, bridge. working our Pension take

will are of will our costs. size We of lower in our but limited facility impact lower our liquidity, the is have by and revolver no The change business. base, so continue better to amending to process borrowing ABL our current match the debt the not the

Turning XX. to slide

We West with Mill. environmental matters Virginia achieved at both settlement have a Luke Maryland the and regarding

return XX, the our the costs result shareholders mills but as that non-core our progress includes quarter of make the asset and these core million. to and commitment was $XX of mill with other first to on, progress reflects facilities. monetizing the future our of sorry. on note and Our I'm We cost. million, fronts focus and for was assets, spending non-cash reducing $XXX Androscoggin on Stevens Slide remains ongoing moving the sale million. assets, the to XX to several our of closure fourth reduced write-offs to that Point million remediation $X Continue to that Cash cost $X in on quarter, recall quarter of relates accruals $XX these estimated million million which

payable million have be of share dividends share have We will million and of June to that a since returned declared we $XX dividend that via Note $XXX on XXth. with $X.XX $XXX million that via buybacks. a shareholders

XX. to Moving slide

maintenance cash to we cost expect capital. As we look expanded be on move expenditures projects, million, at with capital savings to combined year, the $XX our the million $XX our we strategic forward and as

have accordance pension with required contributions $XX American been minimum the to Plan in Act cash provisions. reduced Our Rescue million

capital, We expect flow to fund required dividends. positive and cash pension operating

closed of In to will back optimistic are asset addition, we and able I sales near we'll costs, that, the we mill that turn future. very anticipate With and Randy. now realize idled it continued to be in reduction

Randy Nebel

rates difficult is It acknowledge our key our our all and efforts employees, we service Verso backlogs that the have and Allen. dynamics a improve are Order like to which to industry off due engagement also on projects going summarize people continue be times, to product require focus customers offering improved In ensure you, focus our value. we is a remain continue that realized. quality and that have strong to for going kept to -- that few are have future. safe, see We and into I'd being significant and core implemented the we capital Thank in for a improve. in customer from quarter. increases will are our the XXXX price closing, takeaways important Verso Through to

to made have we return and strong, meeting remained commitment million progress sheet shareholders. to $XXX our balance Our great in our

competencies strategy core as and our Turn value our a This leader to in questions. profitability and is on key shareholder for focused it driving reinforce in years. the position coming over are graphic We papers.

Operator

First [Operator ahead. is Sinderen of Instructions] Please from go Jeff B. Riley. question Van

Jeffrey Van Sinderen

if just increases able you're little you about a talk experiencing, put could wonder that have Good more stick. morning. and out them pricing to I bit you're the there

increases. be And to higher feel input you offset price do to implement like able you're expect positioned if further then wondering Just costs? also, to and the you

Randy Nebel

to all -- as cautiously pretty the there to price inflation well increase mill be, feel in we put stuck transition agreements We're increases. out a so you. they cost optimistic increases I'm reductions but what always same the price don't far -- future The the in we with we're may But or not be hit cost that about at how talk we time. in could realizing about the and what Thank to reduction basically But projections you. will time have and prices have the offset we Nice as mills. future. either good make going the

Jeffrey Van Sinderen

sales, as know our into Okay. color just just if guidance take se. thoughts you on we I provide helpful. we're there's on things more profitability, you working any But QX assumptions. model metrics, wondering should That's don't thinking margins, then or overall consideration maybe have And per about

Just or have, order color last I QX. or you guess, versus year from directional any sequentially might of magnitude either

Allen Campbell

Okay.

to noise we our until I the think last from sequentially look while need for business as the you our at change footprint. a year

so us tailwinds on mentioned, third quarter. half, pricing, see you some sequential itself in The improvement you and the market we pricing. As should fourth for so in last is strong more have

more seasonality So, have too. we

You'll see.

have higher our one in we'll second the mills outage We do we some the in an one the in maintenance quarter, with have because costs, -- second third. have of quarter,

us. the maintenance a little underlying back, So, market to input of coming there tailwinds, versus a of of first think -- we quarter. you But headwind, commercially, economics bit a little coming a a a country have for bit the the getting little a a bit of bit are also freight little costs, with of back and headwind. the tailwind But work, headwind

Jeffrey Van Sinderen

Okay. taking Great. and Thanks questions for my of luck. best

Randy Nebel

Thanks, Jeff.

Operator

ahead. Instructions] is Khorsand Next from question [Operator Please Hamed BWS. go of

Hamed Khorsand

Hey, good morning.

So, Are manage through So, given first early Are double rates question the was to delivery, no new you adding had ordering taking you customers, these running at they op able customers XXX%. or are are real are ordering. more? or that? there's I

Randy Nebel

We're hit do new probably with they existing us. getting customers. grades guess. orders. more competent with our kind we to a -- third, ready quarter we of And be on for not as that we to some continued over inventories customers really for as We're -- making quarter well, on with more more rather we've taking expanding growing good the are We're into we'll down double glide I -- heavier weights, at a that -- that machines need. are newer than grades, time, fourth we're and become but our of quarters with more quarter after got get customers we've path that managing --

is in feel quarter. we we'll the our But customers. at good about much backlog general, with strong So, where the be inventory we're cautious in down taking in and second

Hamed Khorsand

how increases how much contracts? And on long actually price you've your pass it still these is of will to base volume customer announced? through So, take

Randy Nebel

days. line, pretty I the say product XX things of to but by varies XX would through pass majority That quickly,

But little your you'd in a XX you I like than are bit specialties days something put longer pretty well Some think that. if covered. be model,

Hamed Khorsand

come the from? right it what's be would of it excess And now supply domestic? the risk entering Could market? Where

Randy Nebel

service the is of I domestic in, supply is the don't Domestically, imports. of from there all. mean, have risk excess but the potential think imports, coming we market. mean, to I much at don't needs I a market entire capacity a

high anticipate And may risk a need at be the we that bit, So, there may imports -- clean being super as come bubble I out do don't imports a coming that but in of this a in. little ports as time.

Hamed Khorsand

the than freight's And Just is, what pricing and do given are now? is expensive right question imports costing? you pulp costing the last think more your

Randy Nebel

and are basically depending you're I expensive? delivered, ballpark No, to. where were same on as part the think priced U.S. [ph] More that of they -- at the cost delivering we're in the

is I proposition their I XX And think listening turns. of faster be of to value overseas, tied taking customers they're what money's we a days. are chain, up to If that our have going and to from think supply shorter advantage ordering XXX our that.

Hamed Khorsand

appreciate I Okay. Thank it. you.

Randy Nebel

Thank you.

Allen Campbell

Thanks Hamed.

Operator

concludes question-and-answer our This session.

Now, to back Nebel remarks. closing I'd turn go Randy the call like to ahead. Mr. over for Please

Randy Nebel

the you and and appreciate next Have quarter. We questions. time look taking good the for speaking everyone with your for you to support day. a Thank forward

Operator

you for today's presentation. now attending conference The Thank is concluded.

may disconnect. You now

Billerud Americas (VRS) 7 May 212021 Q1 Earnings call transcript