Verso Paper Corp. ( VRS) Q3 2010 Earnings Call Transcript November 3, 2010 9:00 am ET Executives Robert Mundy – SVP and CFO Mike Jackson – President and CEO Analysts Joe Stivaletti – Goldman Sachs Bill Hoffmann – RBC Capital Markets Bruce Klein – Credit Suisse Kevin Cohen – Imperial Capital Jeff Harlib – Barclays Capital Tarek Hamid – J.P. Morgan Richard Kus – Jefferies Eric Anderson – Hartford Financials Phillip Wirtz – Odeon Capital Chip Dillon – Credit Suisse James Daly – Deutsche Bank Roger Spitz – Bank of America/Merrill Lynch Gary Madia – Gleacher & Company Sandy Burns – Sterne Agee Raymond Chiarastella – Blue Mountain Presentation Operator
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» Verso Paper Corp. Q3 2009 Earnings Call Transcript
Mike JacksonOkay. Thanks, Bob and good day, everyone. If you could go to slide three please, in spite of an unusually strong second quarter for pulp and paper volumes, we were up almost 4% or about 20,000 tons above the second quarter of 2010 and over 7% or 36,000 tons above the third quarter of 2009. Sales were up almost $32 million or 8% from the second quarter 2010 levels and up over 38 million or about 10% from the third quarter of 2009. EBITDA was over double the second quarter of 2010 at $46 million and slightly below the fourth quarter of 2009. Moving to slide four, during our second quarter call, we gave some third quarter guidance for certain areas. In all cases, we delivered in those areas for the third quarter. Through September, we've continued to see month-over-month pricing improvement. And we expect that to continue each month throughout the end of the year. As I mentioned, third quarter volume was up from the second quarter. Year-to-date, Verso's coated freesheet and coated groundwood shipments are up 23%, while the industry shipments are up 19% for coated freesheet and 12% for coated groundwood. As you know, mill operations in the second quarter had their first blip in over 14 quarters, so it was no surprise to see our operations back on track for the third quarter. Input prices and Bob will get into this with a bit more detail. We're virtually flat versus the second quarter and if you include pulp prices, pulp prices were a little greater than $1 million higher. Finished goods inventory was down 24% versus the second quarter and down 43% on a year-over-year basis. Couple of highlights during the quarter, Verso was recognized as the Manufacturer of the Year in Maine, which both U.S. (inaudible) have recognized, that was a very nice tribute to our people in the state. And we received the President's Award from SFI for our efforts towards forest management and land certification, which really continues to be an important issue for our customers.
With those comments, I'll hand it back to Bob and then I'll come back later in the presentation. Bob?Robert Mundy Thanks Mike. Let me turn to slide five, you can see that coated volumes improved about 16,000 tons versus the third quarter last year and were about 32,000 tons above the previous quarter. We continue to see coated prices increase during the third quarter. And we expect prices to increase as we move through the fourth quarter of 2010. We had no market downtime during the quarter versus about 26,000 tons during the third quarter of last year. Pulp prices were about flat versus the second quarter and about $230 per ton above last year's third quarter. Higher paper and pulp prices together with stronger volumes during the quarter resulted in revenues being up almost 10% versus last year and about 8% above the second quarter of 2010. If you turn to slide six, you can see the key changes between our second quarter of 2010, adjusted EBITDA of $23 million versus the $46 million in third quarter of 2010. Higher volume contributed about $2 million of EBITDA while improved pricing contributed $20 million. Improved operations resulted in $7 million of improvement. And overall input prices included pulp were slightly negative quarter-over-quarter. If you turn to slide seven, this gives you a view of the year-over-year adjusted EBITDA changes for the third quarter 2010 versus third quarter 2009. Stronger volumes, we've talked about had a positive impact of about $4 million and higher prices contributed about $6 million of EBITDA versus last year. Read the rest of this transcript for free on seekingalpha.com