Verso Paper Corp. (NYSE: VRS) has reported financial results for the third quarter and nine months ended September 30, 2011. Results for the periods ended September 30, 2011 and 2010 include:
- Operating income increased 136% to $30.6 million in the third quarter of 2011 from $12.9 million in the third quarter of 2010.
- Net sales were $456.8 million in the third quarter of 2011 compared to $432.9 million in the third quarter of 2010.
- Adjusted EBITDA before pro forma effects of profitability program was $64.2 million in the third quarter of 2011, compared to $46.0 million in the third quarter of 2010. (Note: EBITDA and Adjusted EBITDA are non-GAAP financial measures and are defined and reconciled to net income later in this release).
- Net income before items was $0.8 million in the third quarter of 2011, or $0.01 per diluted share, compared to a net loss before items of $18.6 million, or $0.35 per diluted share in the third quarter of 2010.
Overview
Verso's net sales for the third quarter of 2011 increased $23.9 million, or 5.5%, compared to the third quarter of 2010, reflecting an 8.0% increase in the average sales price for all of our products while sales volume decreased 2.3% compared to last year's third quarter. Verso's gross margin was 17.8% for the third quarter of 2011 compared to 14.1% for the same period in 2010.
"Our third quarter results improved significantly from the third quarter of 2010. In spite of some demand challenges with specific product categories and the cost pressures of raw materials, Verso recognized a solid quarter. Pricing improved significantly as compared to the prior-year period and slightly on a sequential quarter basis. Our operations, as we projected in our second quarter earnings call, continued to improve in the area of material usage," said Mike Jackson, President and Chief Executive Officer of Verso.
"Our major energy projects continue to advance on our projected timeline, and we expect to start up our energy project at our Quinnesec mill in late November, which will continue to improve our cost position at our largest freesheet facility.
"As many of you know, on October 11, 2011, we announced some capacity closures that are in the best interest of our long-term performance and support our strategy of both lowering our costs and balancing supply with demand.
"Finally, we continue to recognize a correlation between operational performance and safety results. During the quarter, our total incident rate was 0.8, which is a world-class performance. I wish to recognize all of our employees who continue to contribute to this outstanding achievement."
Verso reported a net loss of $0.3 million in the third quarter of 2011, or $0.01 per diluted share, which included $1.1 million of charges from special items, or $0.02 per diluted share. Verso had a net loss of $19.2 million, or $0.36 per diluted share, in the third quarter of 2010, which included $0.6 million of charges from special items, or $0.01 per diluted share.
Verso reported a net loss of $69.2 million, or $1.32 per share, for the first nine months of 2011, which included $31.3 million of charges from special items, or $0.60 per diluted share, primarily due to $26.1 million in pre-tax net losses related to our debt refinancing in the first quarter of 2011. Verso reported a net loss of $117.1 million, or $2.23 per share, for the first nine months of 2010, which included $3.7 million of charges from special items, or $0.07 per diluted share, primarily due to costs associated with new product development.