Verso, a producer of printing and specialty papers, packaging and pulp, has reported a 13% increase in its net sales to $704m for the third quarter of 2018, compared to $621m for the third quarter of 2017.
Image: Verso has reported increased net sales in third quarter of 2018. Photo: courtesy of hywards / FreeDigitalPhotos.net.
Verso CEO Christopher DiSantis said: “Verso’s positive momentum continued to strengthen in the third quarter as pricing, mix management and improved operational performance across the company materially enhanced profitability and cash flows.
“Our entry into the growing containerboard market, excellent strides in specialty paper sales and a full order book, along with significant achievements including the repayment of our term loan, position Verso well for sustainable value creation.”
Net sales in the third quarter of 2018 increased $83 million, or 13%, compared to the third quarter of 2017.
The sales increase was driven by improved average pricing, primarily attributable to improved product mix including increased specialty sales, driven by continued economic growth and evolution of e-commerce markets, and price increases across all product lines. Specialty paper price increases are being driven by inflationary costs and higher pulp prices.
Overall sales volume was up slightly, driven primarily by the increased sales of our specialty products, partially offset by a reduction in external pulp sales due to internal needs.
Gross margin, excluding depreciation and amortization expenses, increased from 10.8% in the third quarter of 2017 to 17.6% in the third quarter of 2018, driven by higher average pricing and improved product mix, reduced downtime, lower major maintenance costs and reduction of pension costs, partially offset by reliability issues at our Luke Mill, increased freight expense and inflation of chemical, energy and fiber costs.
SG&A expense in the third quarter of 2018 increased $1 million over the same period in 2017, primarily attributable to costs incurred during the third quarter of 2018 associated with an increase in cash and non-cash compensation expense, partially offset by cost reduction initiatives implemented across the company.
Other operating (income) expense in the third quarter of 2018 includes a $9 million gain on the sale of our Wickliffe Mill.
Interest expense in the third quarter of 2018 increased $5 million over the same period in 2017, driven by accelerated amortization of debt issuance cost and discount resulting from the voluntary principal prepayments on our term loan, partially offset by the reduction in amounts outstanding under our term loan.
Other (income) expense in the third quarter of 2018 includes $20 million of income related to a countervailing duty Settlement Agreement with certain Canadian producers of supercalendered paper.
Additionally, the third quarter of 2018 and 2017 include income of $3 million and $2 million, respectively, associated with the non-operating components of net periodic pension cost (income) in connection with the adoption of a new accounting standard in the first quarter of 2018.
Verso is the turn-to company for those looking to successfully navigate the complexities of paper sourcing and performance.
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Source: Company Press Release