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8-K - FORM 8-K - Veritiv Corpv410485_8k.htm
EX-99.1 - EXHIBIT 99.1 - Veritiv Corpv410485_ex99-1.htm

 

Exhibit 99.2

 

Veritiv Corporation First Quarter 2015 Financial Results May 13, 2015 Exhibit 99.2

 
 

Safe Harbor Provision Certain statements contained in this presentation regarding Veritiv Corporation’s (the “Company”) future operating results, performance, business plans, prospects, guidance 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,” “intend,” “should,” “will,” “would,” “planned,” “estimated,” “potential,” “goal,” “outlook,” “may,” “predicts,” “could,” or the negative of such terms, or other comparable expressions, as they relate to the Company or its management, 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 or prospects 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 risks and other factors described in the Company’s publicly available reports filed with the Securities and Exchange Commission (“SEC”), which contain a discussion of various factors that may affect the Company’s business or financial results . Such risks and other factors, which in some instances are beyond the Company’s control, include : the industry - wide decline in demand for paper and related products ; increased competition from existing and non - traditional sources ; adverse developments in general business and economic conditions as well as conditions in the global capital and credit markets ; foreign currency fluctuations ; our ability to collect trade receivables from customers to whom we extend credit ; our ability to attract, train and retain highly qualified employees ; the effects of work stoppages, union negotiations and union disputes ; loss of significant customers ; changes in business conditions in our international operations ; procurement and other risks in obtaining packaging, paper and facility products from our suppliers for resale to our customers ; changes in prices for raw materials ; fuel cost increases ; inclement weather, anti - terrorism measures and other disruptions to the transportation network ; our dependence on a variety of IT and telecommunications systems and the Internet ; our reliance on third - party vendors for various services ; cyber - security risks ; 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 ; regulatory changes and judicial rulings impacting our business ; adverse results from litigation, governmental investigations or audits, or tax - related proceedings or audits ; our inability to renew existing leases on acceptable terms, negotiate rent decreases or concessions and identify affordable real estate ; 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 pension and health care costs and participation in multi - employer plans ; increasing interest rates ; our ability to generate sufficient cash to service our debt ; our ability to comply with the covenants contained in our debt agreements ; our ability to refinance or restructure our debt on reasonable terms and conditions as might be necessary from time to time ; changes in accounting standards and methodologies ; our ability to realize the anticipated synergies, cost savings and growth opportunities from the merger, our ability to integrate the xpedx business with the Unisource business, the possibility of incurring expenditures in excess of those currently budgeted in connection with the integration, and our limited experience complying with the reporting and other requirements of a publicly traded company, including the Sarbanes - Oxley Act ; 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 presentation beyond the published date, or for changes made to this document by wire services or Internet service providers . This presentation 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 , 2015 to be filed with the SEC may contain updates to the information included in this presentation . We reference non - GAAP financial measures in this presentation . Please see the appendix for reconciliations of non - GAAP measures to the most comparable GAAP measures . 2

 
 

Mary Laschinger Chairman & CEO 3

 
 

Financial Results 1 Print On track to reach long - term Adjusted EBITDA and net synergy goals 1Q15 Actual YOY% Change 2 $2.1 B Net Sales (4.5%) $28 M Adjusted EBITDA 18.8% 1) Please see the appendix for reconciliations of non - GAAP measures to the most comparable GAAP measures. 2) Amounts calculated on a pro forma basis, which assumes the Merger with UWW Holdings, Inc. and the related financing occur red on January 1, 2013, as well as purchase accounting adjustments and adjustments for one - time costs related to the Merger. 4

 
 

First Quarter 2015 Veritiv Revenue 1 5 1Q14 Revenue 1Q15 Revenue 1) Amounts calculated on a pro forma basis, which assumes the Merger with UWW Holdings, Inc. and the related financing occur red on January 1, 2013, as well as purchase accounting adjustments and adjustments for one - time costs related to the Merger. $2,138 $2,238 One - Less Day FX Impact Core Business/ Dis - synergies

 
 

Key Developments 6 1Q15 Progress • Minimal customer disruption • Internal consolidated sales reporting • Implemented performance management across the organization x G oals aligned with shareholder and lender interest x Pay - for - performance culture • Upcoming milestones: x Common invoicing to customers x Separation of information and financial systems from IP

 
 

Stephen Smith CFO 7

 
 

First Quarter 2015 Veritiv Financial Results 1 1) Please see the appendix for reconciliations of non - GAAP measures to the most comparable GAAP measures. 2) Amounts calculated on a pro forma basis, which assumes the Merger with UWW Holdings, Inc. and the related financing occur red on January 1, 2013, as well as purchase accounting adjustments and adjustments for one - time costs related to the Merger. (Unaudited, Dollars In Millions) 1Q15 Three Months Ended March 31 YOY % Change 2 Pro Forma : Net sales $2,138 (4.5%) Net sales per shipping day - (2.9%) Cost of products sold $1,762 (4.9%) Net sales less cost of products sold $376 (2.6%) Adjusted EBITDA $28.4 18.8% Adjusted EBITDA as a % of net sales 1.3% 26 BPS As Reported : Net loss $2.2 N/A 8

 
 

First Quarter 2015 Veritiv Segment Financial Results 1 1 ) Amounts calculated on a pro forma basis, which assumes the Merger with UWW Holdings, Inc. and the related financing occur red on January 1, 2013, as well as purchase accounting adjustments and adjustments for one - time costs related to the Merger. (Unaudited, Dollars In Millions) Print Publishing Packaging Facility Solutions 1Q15 Three Months Ended March 31 YOY % Change 1 Net Sales $310 (2.1%) Net sales per shipping day - (0.6%) Adjusted EBITDA $6.5 (10.8%) Adj. EBITDA as a % of net sales 2.1% (20 BPS) 1Q15 Three Months Ended March 31 YOY % Change 1 Net Sales $675 1.8% Net sales per shipping day - 3.4% Adjusted EBITDA $45.7 13.9% Adj. EBITDA as a % of net sales 6.8% 72 BPS 1Q15 Three Months Ended March 31 YOY % Change 1 Net Sales $309 (6.7%) Net sales per shipping day - (5.2%) Adjusted EBITDA $6.8 (0.3%) Adj. EBITDA as a % of net sales 2.2% 14 BPS 1Q15 Three Months Ended March 31 YOY % Change 1 Net Sales $821 (9.8%) Net sales per shipping day - (8.3%) Adjusted EBITDA $15.5 12.4 % Adj. EBITDA as a % of net sales 1.9% 37 BPS 9

 
 

Synergies & One - Time Integration Costs Veritiv expects significant net synergies of $150M - $225M » Key areas that synergies will be derived from include: – Supply chain efficiencies – Selling, General and Administrative 0% 20% 40% 60% 80% 100% YE 2014 (Actual) YE 2015 YE 2016 YE 2017 Cumulative forecasted net synergies Costs to achieve 1 ($225M): ~ 30 % 60 - 70% 80 - 90% 90 - 100% 1) Includes ~ $55 million of one - time integration capital expenditures; does not include approximately $27 million of merger re lated expenses. 2 5% - 35% 50% - 60% 80% - 90% ~ 10% Management intends to improve Adjusted EBITDA by an incremental $100 million over the first few years after the Merger 10

 
 

ABL Facility & Capital Allocation Capital Structure Capital Allocation ▪ Capital Allocation Priorities : – Fund the spending associated with costs to achieve synergies – Pay down debt – Grow the overall value of the enterprise ▪ At the end of March 2015: ▪ The borrowing base availability for the ABL facility was approximately $1.2 billion ▪ Approximately $800 million drawn against the ABL facility ▪ Approximately $400 million of available borrowing capacity 11

 
 

Appendix: Reconciliation of Non - GAAP Financial Measures We supplement our financial information prepared in accordance with GAAP with Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, restructuring charges (income), non - restructuring stock - based compensation expense, LIFO (income) expense, non - restructuring severance charges, gain on sale of joint venture, integration expenses, (income) loss from discontinued operations, net of income taxes, fair value adjustments on the contingent liability associated with the Tax Receivable Agreement ("TRA") and certain other adjustments) and Free Cash Flow because we believe investors commonly use Adjusted EBITDA and Free Cash Flow as key financial metrics for valuing companies such as ours . In addition, the credit agreement governing our ABL Facility permits us to exclude these and other charges in calculating “Consolidated EBITDA” pursuant to such credit agreement . Adjusted EBITDA and Free Cash Flow are not measurements of financial performance under GAAP . Non - GAAP measures do not have definitions under 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 GAAP . We caution investors not to place undue reliance on such non - GAAP measures, and to consider them with the most directly comparable GAAP measure . These measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analyzing our results as reported under GAAP . Please see the following tables and related footnotes for reconciliations of non - GAAP measures to the most comparable GAAP measures . 12

 
 

Appendix: Reconciliation of Non - GAAP Financial Measures 13 Table I VERITIV CORPORATION RECONCILIATION OF NON-GAAP MEASURES (in millions, unaudited) Three Months Ended March 31, 2015 Veritiv As Reported Veritiv As Reported Pro Forma Adjustments* Veritiv Pro Forma Net income (loss) (2.2)$ 5.5$ (4.0)$ 1.5$ Interest expense, net 6.4 - 6.3 6.3 Income tax expense (benefit) 0.1 3.7 (0.7) 3.0 Depreciation and amortization 13.5 4.6 8.4 13.0 EBITDA 17.8 13.8 10.0 23.8 Restructuring charges (income) 3.4 (0.2) 0.2 - Non-restructuring stock-based compensation 1.0 1.1 0.1 1.2 LIFO (income) expense (5.2) (3.8) (0.2) (4.0) Non-restructuring severance charges 0.4 1.7 0.1 1.8 Gain on sale of joint venture - - (6.6) (6.6) Merger and integration expenses 10.0 - 7.9 7.9 Fair value adjustment on TRA contingent liability 1.3 - - - Other (0.3) (0.1) (0.2) (0.3) Loss from discontinued operations, net of income taxes - 0.1 - 0.1 Adjusted EBITDA / Pro Forma Adjusted EBITDA 28.4$ 12.6$ 11.3$ 23.9$ Net sales 2,137.9$ 1,307.4$ 930.7$ 2,238.1$ Adjusted EBITDA / Pro Forma Adjusted EBITDA as a % of net sales 1.3% 1.0% 1.1% Three Months Ended March 31, 2014 * Pro forma adjustments take into account the merger with UWW Holdings, Inc. and the related financing as if they occurred on January 1, 2013, as well as purchase accounting adjustments and adjustments for one-time costs related to the merger.

 
 

Appendix: Reconciliation of Non - GAAP Financial Measures 14 Table II VERITIV CORPORATION RECONCILIATION OF NON-GAAP MEASURES (in millions, unaudited) Net cash flows provided by operating activities 92.3$ Less: Capital expenditures (9.7) Free cash flow 82.6 Add back: Cash payments for integration-related capex and other items 23.8 Free cash flow excluding cash impact of integration-related capex and other items 106.4$ Three Months Ended March 31, 2015

 
 

Questions 15

 
 

Mary Laschinger Chairman & CEO 16

 
 

Veritiv Corporation First Quarter 2015 Financial Results May 13, 2015