First Quarter Financial Highlights
- Net sales of $1.9 billion, an
increase of 19.2% from prior year
- Net Income and Diluted EPS of $78.5
Million and $5.12,
respectively
- Adjusted EBITDA and Adjusted EBITDA Margin1 of
$119.5 Million and 6.4%,
respectively
- Net Leverage Ratio of 1.1x
ATLANTA, May 9, 2022
/PRNewswire/ -- Veritiv Corporation (NYSE: VRTV), a full-service
provider of business-to-business products, services and solutions,
today announced financial results for the first quarter ended
March 31, 2022.
"Double-digit sales growth and year-over-year Adjusted EBITDA
margin improvements across each of our segments drove record
earnings performance for any quarter in Veritiv history" said
Sal Abbate, Chief Executive Officer.
"We reported record Adjusted EBITDA margin of 6.4% in the first
quarter, which marks the ninth consecutive quarter of
year-over-year improvement. Our trend of delivering consecutive
record financial metrics demonstrates the consistency and
sustainability of our performance. Our commercial effectiveness
across all businesses, Print Solutions growth and ongoing momentum
in our Packaging business were key contributors to the continued
improvement in our results. Our own delivery fleet and
comprehensive distribution network remain key differentiators to
both our suppliers and customers. These factors drove above-market
volume growth across all our segments and further established our
position as the leading provider of business-to-business packaging
solutions in North America."
For the three months ended March 31, 2022, compared to
the three months ended March 31, 2021:
- Net sales were $1.9 billion, an
increase of 19.2% from the prior year.
- Net income was $78.5 million,
compared to $21.3 million in the
prior year. Net restructuring charges were $2.7 million, compared to $4.3 million in the prior year.
- Basic and diluted earnings per share were $5.31 and $5.12,
respectively, compared to $1.34 and
$1.28, respectively in the prior
year.
- Adjusted EBITDA was $119.5 million, an increase of 100.8%
from the prior year.
- Adjusted EBITDA margin was 6.4%, an increase of 260 basis
points from the prior year.
For the three months ended March 31, 2022, net cash used
for operating activities was $(5.9)
million and free cash flow was $(15.3) million.
"We completed the sale of our Canada business on May
2. The combination of record earnings performance and the
divestiture of our Canada business
further support both our financial and strategic capital
objectives," said Steve Smith, Chief
Financial Officer. "We announced a new $200
million share repurchase program in March of this year and
have repurchased approximately $53
million of our shares through May 6,
2022."
Revised 2022 Guidance
Given the strong financial performance so far this year and
favorable outlook for the remainder of the year the Company now
expects full year 2022 net income to be in the range of
$270 to $305
million. Diluted earnings per share is estimated to be in
the range of $18.00 to $21.00, based on approximately 14.7 million fully
diluted shares outstanding. Adjusted EBITDA is now expected to be
in the range of $445 to $485 million. Net cash provided by operating
activities and free cash flow are expected to be approximately
$280 million and $250 million, respectively. Capital expenditures
are now estimated to be approximately $30
million.
1Adjusted EBITDA Margin is defined as Adjusted EBITDA
as a percentage of net sales.
Veritiv Corporation will host a conference call and webcast
today, May 9, 2022, at 9 a.m.
(ET) to discuss its first quarter financial results. To
participate, callers within the United
States (U.S.) and Canada
can dial (833) 968-2031, and international callers can dial (236)
714-2130, both using conference ID number 4679335. Interested
parties can also listen online at ir.veritivcorp.com. A replay of
the call and webcast will be available online for a limited period
of time at ir.veritivcorp.com shortly after the webcast is
completed.
Important information regarding U.S. generally accepted
accounting principles ("U.S. GAAP") and related reconciliations of
non-GAAP financial measures to the most comparable U.S. GAAP
measures can be found in the schedules to this press release, which
should be thoroughly reviewed.
About Veritiv
Veritiv Corporation (NYSE: VRTV), headquartered in Atlanta and a Fortune 500® company,
is a full-service provider of packaging, JanSan and hygiene
products, services and solutions. Additionally, Veritiv provides
print and publishing products, and logistics and supply chain
management solutions. Serving customers in a wide range of
industries both in North America
and globally, Veritiv has distribution centers throughout the U.S.
and Mexico, and team members
around the world helping shape the success of its customers.
For more information about Veritiv and its business segments
visit www.veritivcorp.com.
Safe Harbor Provision
Certain statements contained in this press release regarding
Veritiv Corporation's (the "Company") future operating results,
performance, strategy, business plans, prospects, guidance,
statements related to the impact of COVID-19 and any other
statements not constituting historical fact are "forward-looking
statements" subject to the safe harbor created by the Private
Securities Litigation Reform Act of 1995. Where possible, the words
"believe," "expect," "anticipate," "continue," "intend," "should,"
"will," "would," "planned," "estimated," "potential," "goal,"
"outlook," "may," "predicts," "could," or the negative of such
terms, or other comparable expressions, have been used to identify
such forward-looking statements. All forward-looking statements
reflect only the Company's current beliefs and assumptions with
respect to future operating results, performance, business plans,
prospects, guidance and other matters, and are based on information
currently available to the Company. Accordingly, the statements are
subject to significant risks, uncertainties and contingencies,
which could cause the Company's actual operating results,
performance, business plans, prospects or guidance to differ
materially from those expressed in, or implied by, these
statements.
Factors that could cause actual results to differ materially
from current expectations include the risks and other factors
described under "Risk Factors" and elsewhere in our Annual Report
on Form 10-K and in the Company's other publicly available reports
filed with the Securities and Exchange Commission ("SEC"). Such
risks and other factors, which in some instances are beyond the
Company's control, include: adverse impacts of the COVID-19
pandemic; the industry-wide decline in demand for paper and related
products; increased competition from existing and non-traditional
sources; procurement and other risks in obtaining packaging,
facility products and paper from our suppliers for resale to our
customers; changes in prices for raw materials; changes in trade
policies and regulations; increases in the cost of fuel and
third-party freight and the availability of third-party freight
providers; the loss of any of our significant customers; inability
to realize expected benefits of restructuring plans; adverse
developments in general business and economic conditions that could
impair our ability to use net operating loss carryforwards and
other deferred tax assets; our ability to adequately protect our
material intellectual property and other proprietary rights, or to
defend successfully against intellectual property infringement
claims by third parties; our ability to attract, train and retain
highly qualified employees; our pension and health care costs and
participation in multi-employer pension, health and welfare plans;
the effects of work stoppages, union negotiations and labor
disputes; our ability to generate sufficient cash to service our
debt; increasing interest rates; our ability to refinance or
restructure our debt on reasonable terms and conditions as might be
necessary from time to time; our ability to comply with the
covenants contained in our debt agreements; costs to comply with
laws, rules and regulations, including environmental, health and
safety laws, and to satisfy any liability or obligation imposed
under such laws; changes in tax laws; adverse results from
litigation, governmental investigations or audits, or tax-related
proceedings or audits; regulatory changes and judicial rulings
impacting our business; the impact of adverse developments in
general business and economic conditions as well as conditions in
the global capital and credit markets on demand for our products
and services, our business including our international operations,
and our customers; foreign currency fluctuations; inclement
weather, widespread outbreak of an illness, anti-terrorism measures
and other disruptions to our supply chain, distribution system and
operations; our dependence on a variety of information technology
and telecommunications systems and the Internet; our reliance on
third-party vendors for various services; cybersecurity risks; and
other events of which we are presently unaware or that we currently
deem immaterial that may result in unexpected adverse operating
results.
The Company is not responsible for updating the information
contained in this press release beyond the published date, or for
changes made to this document by wire services or Internet service
providers. This press release is being furnished to the SEC through
a Form 8-K. The Company's Quarterly Report on Form 10-Q for the
three months ended March 31, 2022 to be filed with the SEC may
contain updates to the information included in this release.
Financial Statements
|
VERITIV CORPORATION
|
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
(in millions, except
per share data, unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2022
|
|
2021
|
|
Net sales
|
|
$ 1,858.1
|
|
$ 1,559.3
|
|
Cost of products sold
(exclusive of depreciation and amortization shown
separately below)
|
|
1,455.4
|
|
1,238.1
|
|
Distribution
expenses
|
|
112.2
|
|
101.5
|
|
Selling and
administrative expenses
|
|
187.9
|
|
166.4
|
|
Depreciation and
amortization
|
|
12.7
|
|
14.5
|
|
Restructuring charges,
net
|
|
2.7
|
|
4.3
|
|
Operating income (loss)
|
|
87.2
|
|
34.5
|
|
Interest expense,
net
|
|
3.5
|
|
5.1
|
|
Other (income) expense,
net
|
|
(0.6)
|
|
(1.0)
|
|
Income (loss) before income
taxes
|
|
84.3
|
|
30.4
|
|
Income tax expense
(benefit)
|
|
5.8
|
|
9.1
|
|
Net income (loss)
|
|
$
78.5
|
|
$
21.3
|
|
|
|
|
|
|
Earnings (loss) per
share:
|
|
|
|
|
|
Basic
|
|
$
5.31
|
|
$
1.34
|
|
Diluted
|
|
$
5.12
|
|
$
1.28
|
|
|
|
|
|
|
Weighted-average shares
outstanding:
|
|
|
|
|
|
Basic
|
|
14.77
|
|
15.88
|
|
Diluted
|
|
15.32
|
|
16.66
|
|
VERITIV CORPORATION
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
|
(dollars in millions,
except par value, unaudited)
|
|
|
|
|
|
|
|
March 31, 2022
|
|
December 31, 2021
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
33.8
|
|
$
49.3
|
|
Accounts receivable,
less allowances of $30.2 and $34.4, respectively
|
|
944.3
|
|
1,011.2
|
|
Inventories
|
|
407.7
|
|
484.5
|
|
Other current
assets
|
|
118.9
|
|
131.5
|
|
Assets-held-for-sale
|
|
300.5
|
|
1.2
|
|
Total current assets
|
|
1,805.2
|
|
1,677.7
|
|
Property and equipment
(net of accumulated depreciation and amortization
of $313.9 and $332.4, respectively)
|
|
137.1
|
|
162.9
|
|
Goodwill
|
|
96.3
|
|
99.6
|
|
Other intangibles,
net
|
|
38.9
|
|
42.7
|
|
Deferred income tax
assets
|
|
59.8
|
|
47.1
|
|
Other non-current
assets
|
|
369.9
|
|
408.4
|
|
Total assets
|
|
$
2,507.2
|
|
$
2,438.4
|
|
Liabilities and shareholders'
equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
512.4
|
|
$
561.9
|
|
Accrued payroll and
benefits
|
|
54.9
|
|
110.0
|
|
Other accrued
liabilities
|
|
165.8
|
|
185.7
|
|
Liabilities-held-for-sale
|
|
172.9
|
|
—
|
|
Current portion of
debt
|
|
15.0
|
|
16.0
|
|
Total current liabilities
|
|
921.0
|
|
873.6
|
|
Long-term debt, net of
current portion
|
|
511.5
|
|
499.7
|
|
Defined benefit pension
obligations
|
|
3.5
|
|
7.2
|
|
Other non-current
liabilities
|
|
391.4
|
|
422.1
|
|
Total liabilities
|
|
1,827.4
|
|
1,802.6
|
|
Commitments and
contingencies
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
Preferred stock, $0.01
par value, 10.0 million shares authorized, none issued
|
|
—
|
|
—
|
|
Common stock, $0.01 par
value, 100.0 million shares authorized; shares
issued - 17.5 million and 17.0 million, respectively; shares
outstanding - 15.0
million and 14.6 million, respectively
|
|
0.2
|
|
0.2
|
|
Additional paid-in
capital
|
|
607.1
|
|
633.8
|
|
Accumulated earnings
(deficit)
|
|
221.7
|
|
143.2
|
|
Accumulated other
comprehensive loss
|
|
(21.7)
|
|
(24.3)
|
|
Treasury stock at cost
- 2.5 million and 2.4 million shares, respectively
|
|
(127.5)
|
|
(117.1)
|
|
Total shareholders' equity
|
|
679.8
|
|
635.8
|
|
Total liabilities and shareholders'
equity
|
|
$
2,507.2
|
|
$
2,438.4
|
|
VERITIV CORPORATION
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
(in millions,
unaudited)
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2022
|
|
2021
|
|
Operating activities
|
|
|
|
|
|
Net income
(loss)
|
|
$
78.5
|
|
$
21.3
|
|
Depreciation and
amortization
|
|
12.7
|
|
14.5
|
|
Amortization and
write-off of deferred financing fees
|
|
0.4
|
|
0.3
|
|
Net losses (gains) on
disposition of assets and sale of a business
|
|
(2.3)
|
|
(2.2)
|
|
Provision for expected
credit losses
|
|
(0.6)
|
|
0.9
|
|
Deferred income tax
provision (benefit)
|
|
(12.7)
|
|
3.1
|
|
Stock-based
compensation
|
|
2.8
|
|
1.2
|
|
Other non-cash items,
net
|
|
0.5
|
|
0.8
|
|
Changes in operating
assets and liabilities
|
|
|
|
|
|
Accounts
receivable
|
|
(25.8)
|
|
(10.3)
|
|
Inventories
|
|
(8.8)
|
|
(30.7)
|
|
Other current
assets
|
|
(1.1)
|
|
1.7
|
|
Accounts
payable
|
|
4.5
|
|
54.3
|
|
Accrued payroll and
benefits
|
|
(50.6)
|
|
(29.8)
|
|
Other accrued
liabilities
|
|
1.0
|
|
(10.9)
|
|
Other
|
|
(4.4)
|
|
(1.0)
|
|
Net cash provided by
(used for) operating activities
|
|
(5.9)
|
|
13.2
|
|
Investing activities
|
|
|
|
|
|
Property and equipment
additions
|
|
(9.4)
|
|
(6.3)
|
|
Proceeds from asset
sales and sale of a business
|
|
0.2
|
|
8.0
|
|
Proceeds from insurance
related to property and equipment
|
|
2.1
|
|
—
|
|
Net cash provided by
(used for) investing activities
|
|
(7.1)
|
|
1.7
|
|
Financing activities
|
|
|
|
|
|
Change in book
overdrafts
|
|
20.3
|
|
(9.2)
|
|
Borrowings of long-term
debt
|
|
1,515.2
|
|
1,392.8
|
|
Repayments of long-term
debt
|
|
(1,481.8)
|
|
(1,378.9)
|
|
Payments under
right-of-use finance leases
|
|
(3.4)
|
|
(3.3)
|
|
Payments under
vendor-based financing arrangements
|
|
(3.2)
|
|
—
|
|
Purchase of treasury
stock
|
|
(10.4)
|
|
(24.6)
|
|
Impact of tax
withholding on share-based compensation
|
|
(29.5)
|
|
(3.3)
|
|
Other
|
|
0.2
|
|
0.4
|
|
Net cash provided by
(used for) financing activities
|
|
7.4
|
|
(26.1)
|
|
Effect of exchange rate
changes on cash
|
|
0.0
|
|
(0.4)
|
|
Net change in cash and
cash equivalents, including cash classified
within assets-held-for-sale
|
|
(5.6)
|
|
(11.6)
|
|
Less: cash included in
assets-held-for-sale, end of period
|
|
(9.9)
|
|
—
|
|
Net change in cash and
cash equivalents
|
|
(15.5)
|
|
(11.6)
|
|
Cash and cash
equivalents at beginning of period
|
|
49.3
|
|
120.6
|
|
Cash and cash
equivalents at end of period
|
|
$
33.8
|
|
$
109.0
|
|
Supplemental cash flow
information
|
|
|
|
|
|
Cash paid for income
taxes, net of refunds
|
|
$
15.1
|
|
$
11.2
|
|
Cash paid for
interest
|
|
2.9
|
|
4.6
|
|
Non-cash investing and financing
activities
|
|
|
|
|
|
Non-cash additions to
property and equipment for right-of-use
finance leases and vendor-based financing arrangements
|
|
$
15.6
|
|
$
0.2
|
|
Non-cash additions to
other non-current assets for right-of-use
operating leases
|
|
31.2
|
|
11.3
|
Non-GAAP Measures
We supplement our financial information prepared in accordance
with U.S. GAAP with certain non-GAAP measures including Adjusted
EBITDA (earnings before interest, income taxes, depreciation and
amortization, restructuring charges, net, integration and
acquisition expenses and other similar charges including any
severance costs, costs associated with warehouse and office
openings or closings, consolidation, and relocation and other
business optimization expenses, stock-based compensation expense,
changes in the LIFO reserve, non-restructuring asset impairment
charges, non-restructuring severance charges, non-restructuring
pension charges, net, fair value adjustments related to contingent
liabilities assumed in mergers and acquisitions and certain other
adjustments), free cash flow and other non-GAAP measures such as
the Net Debt to Adjusted EBITDA ratio. We believe investors
commonly use Adjusted EBITDA, free cash flow and these other
non-GAAP measures as key financial metrics for valuing companies.
In addition, the credit agreement governing our Asset-Based Lending
Facility (the "ABL Facility") permits us to exclude the foregoing
and other charges in calculating "Consolidated EBITDA", as defined
in the ABL Facility.
Adjusted EBITDA, free cash flow and these other non-GAAP
measures are not alternative measures of financial performance or
liquidity under U.S. GAAP. Non-GAAP measures do not have
definitions under U.S. GAAP and may be defined differently by, and
not be comparable to, similarly titled measures used by other
companies. As a result, we consider and evaluate non-GAAP measures
in connection with a review of the most directly comparable measure
calculated in accordance with U.S. GAAP. We caution investors not
to place undue reliance on such non-GAAP measures and to consider
them with the most directly comparable U.S. GAAP measures. Adjusted
EBITDA, free cash flow and these other non-GAAP measures have
limitations as analytical tools and should not be considered in
isolation or as a substitute for analyzing our results as reported
under U.S. GAAP. Please see the following tables for
reconciliations of non-GAAP measures to the most comparable U.S.
GAAP measures.
|
Table I
|
|
VERITIV CORPORATION
|
|
RECONCILIATION OF NON-GAAP
MEASURES
|
|
NET INCOME (LOSS) TO ADJUSTED EBITDA; ADJUSTED EBITDA
MARGIN
|
|
(in millions,
unaudited)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2022
|
|
2021
|
|
Net income
(loss)
|
|
$
78.5
|
|
$
21.3
|
|
Interest expense,
net
|
|
3.5
|
|
5.1
|
|
Income tax expense
(benefit)
|
|
5.8
|
|
9.1
|
|
Depreciation and
amortization
|
|
12.7
|
|
14.5
|
|
EBITDA
|
|
100.5
|
|
50.0
|
|
Restructuring charges,
net
|
|
2.7
|
|
4.3
|
|
Facility closure
charges, including (gain) loss from asset disposition
|
|
(0.6)
|
|
0.3
|
|
Stock-based
compensation
|
|
2.8
|
|
1.2
|
|
LIFO reserve (decrease)
increase
|
|
11.0
|
|
5.1
|
|
Non-restructuring
severance charges
|
|
1.7
|
|
0.8
|
|
Other
|
|
1.4
|
|
(2.2)
|
|
Adjusted
EBITDA
|
|
$ 119.5
|
|
$
59.5
|
|
|
|
|
|
|
Net sales
|
|
$
1,858.1
|
|
$
1,559.3
|
|
Adjusted EBITDA as a %
of net sales
|
|
6.4 %
|
|
3.8 %
|
|
Table I.a.
|
|
VERITIV CORPORATION
|
|
RECONCILIATION OF NON-GAAP
MEASURES
|
|
NET INCOME (LOSS) TO ADJUSTED EBITDA
GUIDANCE
|
|
(in millions,
unaudited)
|
|
|
|
|
|
|
|
Forecast for Year Ending December 31,
2022
|
|
|
Low
|
|
High
|
|
Net income (loss)
|
|
$
270
|
|
$
305
|
|
Interest expense,
net
|
|
15
|
|
15
|
|
Income tax expense
(benefit)
|
|
80
|
|
95
|
|
Depreciation and
amortization
|
|
50
|
|
50
|
|
Other reconciling
items
|
|
30
|
|
20
|
|
Adjusted EBITDA
|
|
$
445
|
|
$
485
|
|
Table II
|
|
VERITIV CORPORATION
|
|
RECONCILIATION OF NON-GAAP
MEASURES
|
|
FREE CASH FLOW
|
|
(in millions,
unaudited)
|
|
|
|
|
|
Three Months Ended
March 31, 2022
|
|
Net cash provided by
(used for) operating activities
|
|
$
(5.9)
|
|
Less: Capital
expenditures
|
|
(9.4)
|
|
Free cash
flow
|
|
$
(15.3)
|
|
Table II.a
|
|
VERITIV CORPORATION
|
|
RECONCILIATION OF NON-GAAP
MEASURES
|
|
FREE CASH FLOW GUIDANCE
|
|
(in millions,
unaudited)
|
|
|
|
|
|
Forecast for Year Ending December 31,
2022
|
|
Net cash provided by
(used for) operating activities
|
|
approximately
$280
|
|
Less: Capital
expenditures
|
|
(30)
|
|
Free cash flow
|
|
approximately $250
|
|
VERITIV
CORPORATION
|
|
RECONCILIATION OF
NON-GAAP MEASURES
|
|
NET DEBT TO ADJUSTED
EBITDA
|
|
(in millions,
unaudited)
|
|
|
|
March 31,
2022
|
|
Amount drawn on ABL
Facility
|
$
474.2
|
|
Less: Cash and cash
equivalents
|
(33.8)
|
|
Net debt
|
$
440.4
|
|
|
|
Last Twelve Months
Adjusted EBITDA
|
$
402.6
|
|
|
|
Net debt to Adjusted
EBITDA
|
1.1x
|
|
|
|
Last Twelve
Months
|
|
March 31,
2022
|
|
Net income
(loss)
|
$
201.8
|
|
Interest expense,
net
|
15.6
|
|
Income tax expense
(benefit)
|
49.6
|
|
Depreciation and
amortization
|
53.4
|
|
EBITDA
|
320.4
|
|
Restructuring charges,
net
|
13.8
|
|
Facility closure
charges, including (gain) loss from asset disposition
|
(0.8)
|
|
Stock-based
compensation
|
9.0
|
|
LIFO reserve (decrease)
increase
|
49.5
|
|
Non-restructuring
severance charges
|
8.7
|
|
Non-restructuring
pension charges, net
|
0.5
|
|
Other
|
1.5
|
|
Adjusted
EBITDA
|
$
402.6
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/veritiv-announces-record-first-quarter-2022-net-income-eps-adjusted-ebitda-and-adjusted-ebitda-margin-raises-guidance-301542235.html
SOURCE Veritiv Corporation