VRS - Earnings call transcript Q3 2021

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Operator

Good morning and welcome to Verso Corporation's Third Quarter 2021 Earnings Conference Call. All participants are in a listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. [Operator Instructions] Please note, this conference is being recorded. A replay of this call will be available on the Investor page of Verso's website after 11 AM Eastern Time today. like and the Treasurer, I'd Verso's over time, President Vice Tim this to presentation turn to At Nussbaum. Please go ahead.

Tim Nusbaum

Thank morning. good you and

third to market section wwwversoco.com. results this The set the of as financial Investors' Corporation which the call XXXX announced we'll are to were in refer well for as website, morning the The of open. Verso the Verso's slides earnings during release before quarter available

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

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

in certain during isolation, or can as measures today's earnings addition, performance. with to release. considered in measures our in will this and not accordance be are prepared discuss GAAP, comparable call, GAAP useful additional we a we of In for believe in presentation which non-GAAP reconciliations be The available our evaluating information to results is substitute

from we we Atlas unsolicited XXth, an that proposal Finally, July announced on Holdings. had

to the cash no disclosed committee's take the any transaction communicated consummated. our a insufficient that too. with since comment thoroughly and will or be we discussions. Atlas occur not developments offer could further information $XX and we until further the agreement Verso be disclosure required. entered diligently to regarding as intend last its is continuing per have or Atlas and ongoing place may disclose special special and you to between presentation do or Randy all allow the point, At them assurance of additional review There I'd As special committee or over information evaluation We with party call, Nebel. to confidentiality and exchange into appropriate proposal was negotiations unless on share alternatives following seen any previously work that facilitate deem hand the to will additional there to The committee of evaluate exchange to Atlas Atlas like other or any that this the

Randy Nebel

Tim and you, good Thank morning, everyone.

Turning I positioning of to to X, to are Verso overview we continue provide deliver Slide to how an improved like would performance.

Verso years, stronger focused, a made couple and past and to its simpler a streamline business more create strategic the Over decision Verso.

customer stewardship, is focus superior on Our valued people. environmental and operations service, improving our our most safety, asset,

Verso's sheeting maximize with customer-focused around about Slide investments market is sheeting to is Mill with its serving to customers. our Mill of move capacity to offerings, facility capital tons transforming specialty more Verso's structure. has converting XXX,XXX Verso's competitive capacity. seven focused produces graphic and is operation being product about sheeters targeted a X, Rapids Verso pulp XXX,XXX reduce is focused costs, tons tons here to graphic a to Wisconsin Rapids papers. Turning cost expand an pulp. and XXX,XXX Escanaba a Verso's making improved Wisconsin a and cost and of Escanaba has tons reducing XXX,XXX of papers, more of on platform. Quinnesec and of begun better Verso operation production.

from energy five Company, as approximately the to electricity, with it we of call the so Power utility CWPCo some mills regulated homes. a purchases hydroelectric Water it, producing and with Consolidated is paper utilities hours facilities XXX,XXX local produces owns Verso together Finally, megawatt

to customers. Slide for priority and high our is sustainability a Verso X, Turning

good made have progress. We

from and carbon-neutral using of biomass. forests we For are fiber from generation example, over Verso at sustainably wood energy managed is XX% Mills onsite our

also organizations to for facilities. are setting by partnering that are efficiency focused on of the carbon Verso industry. is its standards the reduce with We thermal improving key continuing footprint our the

Turning now X. the Slide

Let's get results. into the

During core quarter, is Verso. Verso trend. Employees' a at the third continued safety improvement its value

return earnings same safety million, We always versus continue at injuries. we'll EBITDA quarter have year-over-year in XX% a shareholders a through $XXX quarter $XXX to value deliver margin grew and million. and $XX share million headwinds outage our of inflationary quarter, was performance quarterly cash EBITDA Escanaba up $XX was sequentially, $X.XX, million. Revenue million, year. Adjusted in results both million QX, up second planned up up of adjusted last second loss with a to an delivered no $XX $X.XX was Mill, versus in from in Verso to Diluted cash. $XX very resulting the repurchases. enabled strive to an per were about strong $XX dividends to share and million $X.XX despite good the results XX.X%. of the and These Operational These in

solid strong Slide our previous across to strategy freesheet and its operating XXX%. a with at over Order to price quality build North realization XX% over Verso expanding in processes, reducing will provide X% grew X, and making last portfolio The Verso's Verso customer will investments and be and the quarter. Verso's to is on service while and Market revenue product continues to rates continue America continue improve demand superior costs. Turning year, products. portfolio. product rates be coated capital to service

industry slightly in is impact and to versus the capacity the prior capacity up about XX% paper the reflects quarter, Slide year. North well machine American X, previous XXXX. closures down of versus Turning now conversions

Rapids tons to slightly predictable and represented increased As lower which Imports, cost annual coated XX% availability, to quarter service remain previously mentioned, XXX,XXX challenge. platform removed previous are about capacity freight Container domestic the as versus and freesheet. offer July well supply average. Verso more still delays XX-year Wisconsin previous the market. a chain efficient of than that continues over we of XXXX, up the a

price realization to and last yielded EBITDA up Slide versus margin points XX, adjusted of Turning operating cost XX.X%, an have quarter. XXX improved basis strong

to there be Verso simple As become company, improving done there with I opportunities now a improve financials. the and Brian to more review lot a proud I continues and performance for will turn continue progress this focus over operational be the service still to Verso across to to customer on has results. the on work Even of will company. stronger will call Verso made. is that the the Brian? a focused, of and this progress, very of am team

Brian Cullen

from you, tailwinds shift Thank financial and execution. Slide XX, improvements in gears morning. which continued I and good Randy Verso's which want benefited highlights progress, to market to

income down across look and QX Net all benefited quarter share. metrics. repurchase impacted results XXXX. positive QX last second earnings last share $XX from you million shares As have directly for since column, X.X XXXX we we our program, our the versus which also a consecutive year EPS encouraged million, progress are the was per repurchased by quarter, as

for Slide Once realization shipments reduced remains building the and across in to Verso's to average the see were focused pricing chemicals Moving will on levels results Verso adjusted being On year the price energy, EBITDA. Inflation, year. again, versus continued up to and finished led last headwind you on XXXX key with of goods quarter, million to bridge increases team QX which last exceeded and strength in results of progress. overall XX, benefit meanwhile These production XXXX, our spanning by X% of from the delivered QX inventory million operations. versus was $XX price QX closing momentum. savings compared all a and this up XX% from $XX showing good XX, middle pulp. quarter. by chart said, grades wood The out was purchased XX% a our That highlights freight, of Slide

$XX growth Our to closed the to conversion million more adjusted the our claim expense. insurance related $X covered continued current than available position, focus our capital finally, highlights $X by to and due enabled chart mill And cash pulping and to delivered to our QX, from which $XXX operating wood on at operations which insurance strategy investment, of in XXXX special and a to additional quarter. contributions importantly, during warehousing million out return generation pension two cash reductions Slide items costs up to EBITDA the at and strong inventory was an the in This we and million lower an Mill. purchasing benefited idled million to The the million due our right operations highlights driven Most $X versus improved driving Quinnesec in side quarter recovery of delivered at improvement savings, $X our due in primarily $XX shareholders benefit million Verso our system. million, significant end. and EBITDA, further $XX increased XX million cash by is mills.

XX. Slide we Today, shares. total, spread returned million dividends XXXX. have million to $XXX of evenly repurchases, share X.X we to dating back have and fairly to shareholders, between In Turning March retired

$XX For dividends in another and shares. out the most in repurchased recent quarter, million $X paid million we

a XXth. shareholders paid be fourth December quarter $X.XX record December on also have declared as of to We will of share dividend that XXth on per

the of XX outlook XXXX. our Slide Finally, for features full year

and implement $XX million the between projects be initiatives. we and $XX Escanaba Mills for to expenditures as we capital prepare expect We million XXXX our and Quinnesec at as

the and to Additionally, end our increase of we cash of met year million through expect pension full have contribution now continue to requirement $XX we the XXXX the position year.

continues we servicing I cash As back team in on to Randy. reducing our to customers to QX, now focused months. generating coming the turn over it our our remain will turn attention costs, and

Randy Nebel

to slide on again a walls of In throughout Company. poster the that a with summary, the I Verso vision is the hangs Thank would you, and Brian. company. This the you values like copy core share of

environment is the employees, our we'll up our to our commitment customers, that, call With shareholders. the questions. and open for now Our

Operator

come B. We Van Riley. Please go session. will question from question-and-answer Instructions] Sinderen now first [Operator our Jeff will And ahead. the begin

Jeff Van Sinderen

just hi. around be your if volume for outlook latest and Yes, I the might on you Any thoughts - wonder that? just thoughts can pricing us I what near-term? give

Randy Nebel

coming high think you the and look lot if demand is extremely of pretty are rate. but Well, there's presentation Imports significantly. not demand a the an capacity chart, the of and capacity US back down in, to and

be and So to we are quarter going think into volumes pretty the consistent next through year. the fourth

of few ago that a be next in announced We also that price increase weeks end into we coming towards have a and the the quarter will year.

So, outlook, through we very the next at and probably first about good least. the feel half year general, of pricing volume in

Jeff Van Sinderen

that. Okay. clarify just on But to

increases year-over-year guess kind not going next is through you So think I'm you in Or saying you are be you're dollar volume? QX clear to volume consistent feel saying I like on the of year?

Randy Nebel

number with saying the relatively where We're been up. to pricing is operating we've going go currently consistent be is the saying, volume, going of to up, we're tons and

Jeff Van Sinderen

got it. Okay,

Okay, you forward? know, thank you for at you. EBITDA you going think a the for then EBITDA do know couple now. very good sustainable margins company What level of a a quarters margin is And

Randy Nebel

said there's I in that's improve way the as comments, Well my feel. I to opportunities and

look that at other were you two we're we said, back when a company, that's mill things some our If and stronger the in, go company. to configuration to much that went

which them The great when we did other to decision. make that that, management shut a cash when were have the previous down we had bleeding basically mills decision to was

third well quarter. very the have we go mills two very me of capable competing that and So to are let

million things around that back costs you at Escanaba, million. repeat, third somewhere EBITDA, special $XX two-week let's had We take so $X a $XX If that us $XX quarter, in won't to look million million. the that shutdown of of

$XX make million. to that And to still improvements cost have executional to So we the lots honest, back side. takes be of us up on

improve you if improve with think we and know, higher. execution conform schedule the and you the know, how mills energy, million springboard do where base should we go schedules be a $XX execution, improve our of a on do $XX better on you So that if to we and job good million, about our have,

to going volume On capacity is again, It's the down. be down. side,

say, in coated business. the of business, in somewhat believe, have paper I had a We I'll the rejuvenation paper

of have return large those mail, people in them that to are You And out growing, sometimes beautiful well the away day, coming one completely e-retailers being received. mail they're mail large There out and better is extremely very putting a from advertising. direct every are big smaller versions retailer catalogs, catalogs realize in direct the catalogs back direct internet gone are starting gives that way. on a had new

during or for the So next on side, political you going being cycle, the business. I the certain And better of is the year good which know, be another things off, know, to always think good parts is of demand maybe year. you there's getting potential the

very at platform we've look freight when be at look the around customers as to and look the the I know XX.X%. with, Long partnering at what there the I the So, are on have things, said optimistic way and in And customers know the about improve upon feel you of and could that all we opportunities strength you delivery be. statement, logical - to you those answer focused we're repositioned

Jeff Van Sinderen

Okay.

not no, appreciate no, So, I - that.

So are direct you graphic are that growth? out mail make forth just think paper now decline so the that secular you the you into and driving to type of clarify, saying you and catalogs know of secular

Randy Nebel

I it during see And I'm that, saying year, spikes up. think I could but will we of decline. not you it I'm slowing secular times certain the is know, saying, think the

Jeff Van Sinderen

Okay.

just thinking to margin if margin getting is margin, that can on And where EBITDA just $XX and EBITDA is you is and so million. $XX that you know your roughly - XX% then guess hitting the run you call EBITDA an it to million kind you're of were that, I improve that clarify

that EBITDA XX% in guess run pretty - margin I much a you about think You perpetuity can

Randy Nebel

improve to opportunities there's think - I And the upon XX.X%.

Jeff Van Sinderen

Okay.

Randy Nebel

I forward. forecast going there's opportunity. don't But

Jeff Van Sinderen

The one And us just it then - do I you squeeze in. around remediation then need more there's you to anything And update more just Okay. on if could that? if environmental litigation? can

Randy Nebel

environmental - there get to while. once with or agencies don't know really the shape pretty you and with there. out significant interact well and in the you we've made react beyond all environmental have with At that, this we're we we that's point that know charted a issues than so in and agreements normal good Luke Other out have questions we any

Jeff Van Sinderen

for Thanks taking enough. fair questions. Okay, my

Randy Nebel

welcome. You're

Operator

go The Khorsand ahead. Please of from next Hamed comes question BWS Financial.

Hamed Khorsand

morning. Good

risk has question - It - destruction? the prices. that first of demand given what's elevated here supply versus was my So so the demand raising you're been and that

Randy Nebel

you know, don't more I we'll say, tell in can that. just Well don't and what seeing can do. know is, people not that But well we're And you how some customers we which paper, less. get - pay estimate we seeing for cases, asking are I paper you what want, I people us

basis backlogs of But I think are fact, you I papers I the don't being for So think we're order saying don't our destroying used. really have in any high. But the significant demand guess. that again, know, future. And kind there's a in where that's and new things

Hamed Khorsand

just you How the in it are it? inflated now? right the just managing you system double ordering know Is orders and the

Randy Nebel

Well, foremost, first we as deal we are not well communicate as we our and with process we and our as overscheduling but a we customers, have mills. can,

I you to be real but we're tend what for strict them because of customers. won't allocation, we to they've before us to, us trying some serve our keep So major to to good as say give ordered people there's kind got reason all a more, of know

Hamed Khorsand

as as 'XX? in you if production make is cycle kicks know XX And political are space you - going the far how to concerned

Randy Nebel

at we Escanaba, in customers September with pulping will that the spring out us going should in in level, tons in our some the recovery more some available Quinnesec, should increase give that one you machine number we Well, be know them. have about significant quite capacity. talking production few a spent both and a that our tons money amount machine into boiler we're and money the of pre-selling those and And

is paper as to execution like. then training we tons good as higher more improvements going an some XX,XXX available. we mills. know in small have every we come sometime that talked mills, you on standards. And year just can a we our as the have know, what about paper not in make yield would actually There's with probably high execution, and that those be both working our we'll the I to incremental tons you so sell day And we're from from And

Hamed Khorsand

far CapEx about? Escanaba talking that as the you that compared up then project and just related guidance And as to QX. your to were Okay. Is is

Randy Nebel

shutdown for last the we haven't basically year shutdown did took - pulping operation for And a the found had good out. in really a we some and because people We getting will limited and weeks in it that time and mill And more a had just we make had we Escanaba. work, that pandemic has Yeah. the things reliable done. down get two some to

and turbot be our to the was million. biggest to of decision rebuilt, mill made needed rebuild was One and which the that that we've $X.X and

we it, it saw So once get just fixed. we it had to was work

Hamed Khorsand

you last were here? my what your do the to know in guys cash What's here? the just is, and obviously bid trying question sheet. Does - are And plans you - intention a balance sidetracked You what that to given of involved cash? you know everything there. have your Atlas Okay. that's your lot your with You

Randy Nebel

plan there. first is put Well, to more

And a so, about know, investing that looking cash. Management the including company. After we're of whole our ability Board feel between we generate have list you in the that, to we good options at, and

You I what use set this of with on won't of we're me Treasurer you you, it. make that know, tells cash, stuff. interest have a at month but to know, And point but we tell of good the making Tim, plan as tens do the we'll a in dollars

So we're happy with that.

Hamed Khorsand

for that's Okay. Thank you. it All me. right,

Operator

go next our from Please ahead. [Operator Hoak Instructions] Hale will And of Hoak come question & Co.

Hale Hoak

way. Hey, guidance But more you any quarters long. about know think about you Can been congrats where really you're Is you've all it or costs one you your quarter. seat reluctant you you're Or of margins. system? how more that'll on the more do fine six happy? various with the until Randy, you in taken of take that margins And at haven't I are quarters to distractions Hale, good on give it's two the along had regard talk to or how quarters? many out the it'll make point

Randy Nebel

an Hale. that's interesting question, Well

think have this of process strides been you and taken too we've natural know water as million on path usage been, out long down we're much the I cost saw begun gas That use has to you way We a get system you $XX costs the roughly in gas year. it's making Escanaba. know and day fundamental far every of and usage so

every better do we will - between coming you out - will And you large I to rate be quarter of also know significant faster large, supply we they've know, one think our you now. that's the than side, opportunity out XX.X% a the strongly hopefully the out a is, There's cost see two there's than been cost to mills. about feel the coming I be at reasons you made. know on amount improvement chain taken to

that Our freight actually will mills supply we flow more them can you you as us as sooner of on reliable and be. side that dollars chain, aren't allow millions should of warehousing reliable, itself the a we that and and out is And significant advantage you to line. know freight as to we that there's tens they of make know know schedule get by in can bottom the

going. team pretty to you guess would new people starting now, thing, hope are and last Management we have it's get So team and the I look their a stride the when Management I at just

job I people yet. and of I I'm been You one a there, people in I haven't year the - the in the job in permanently think know most the the older senior for think

but to we we'll of, let's think you'll you spot lot XX to got good inflation. be about every ways in talk I about know a we've from the what a inflation, capable say, in of can to see we're show going have So, mitigate improvement I quarter now. months forward think cost And

I our what see robust much and is. hope better true a think question. company potential much I answered you'll a your more indication of that

Hale Hoak

Yeah.

imports and the to kind you. a you partner So, you I partner still better in efficient the there imports big a those commentary about freights a place platform. specifically. becoming printing Verso? Chicago you know if of more for customers? takes closer that you think and lot a thank Okay, of with lot you're on printing being do and a How of predictable much becomes also about vis-a-vis they a companies talk about, are good know such Can do was And come mean, presumably, everyone. you And when can expand you Chicago, issue area, prefer back, to for to deal you

Randy Nebel

an that's interesting again, Well, question.

at we Chicago, now. talked, right I It's think, logical, tend Chicago which it's hours to backyard deliver one, place freight that printing we focused imports days out, having they to versus get can Milwaukee buy we're we're in it. in Minneapolis, is and - you in a - area have really area as XX in some we somebody we've our know, to before few least, the

everything a doing can and in are around we to fortify area moat that So, build we it.

when thing I we're one that's that about talking heartland amount comes then And said a as and Europe reduce the serving their amazing. that's think efficient carbon Asia into the a competitive of trying I more other that going you're And their for that carbon if company I be at of to companies look want footprint reasons or the us. to the everyone about paper is that advantage ESG. at States bringing think to carbon you you from is, footprint United of understand and we're think pretty And market. the

of know, we're miles XXX know driving You you ocean. across thousands miles versus the coming

serious that's carbon being advantage truly about are we if think, I for strategic So a us. efficient,

with allow they not And mills as as lead and will said, improve that schedule reliability less be. to the better I that that freight as service Lastly, predictability, are and service customers time. improve we could us our - as predictable

- to cause of I money of us us nothing to think dedicated customers it's supplier. But some just a make can just hard lot very a bunch it as can it work. and magic, be it's trusted So, a

Hale Hoak

Okay, great.

Hamed that. I goals by asked about year your you're have math, $XXX million our And to You know, kind of for know, end. cash going per of over

of one cash in on but anything that, your know beyond company. to earning voice, sheet. the in pocket lengthen future make life almost You slow we earnings any we're favor only think is you or continuously own the XX% your the you business, of to my I of And investments you know, can improve we're I'd of the have balance rather decline business great. secular than But do the can zero the power

Randy Nebel

know, I've you from heard I You think before. that

Hale Hoak

Yeah.

Okay. Well, to congrats quarter look you and at well. a results on quarter great as forward fourth we seeing

Randy Nebel

thank and you you thank the for questions. Okay,

Operator

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

Randy Nebel

answered. Well, We everyone in. season. forward tuning questions for we a hope talking to we you thanks, next your good got quarter. holiday And look to Have

Operator

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

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