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UNITED STATESSECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORTPursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 1, 2018 (March 1, 2018)
VERITIV CORPORATION(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
001-36479
46-3234977(Commission File Number)
(IRS Employer Identification No.)
1000 Abernathy Road NE
Building 400, Suite 1700
Atlanta, Georgia
30328(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (770) 391-8200
(Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the followingprovisions: oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) orRule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02. Results of Operations and Financial Condition.
On March 1, 2018, Veritiv Corporation (the “Company”) issued a press release containing certain financial results of the Company and its direct and indirectwholly-owned subsidiaries for the quarter and year ended December 31, 2017. A copy of this press release is attached as Exhibit 99.1 to this Current Report onForm 8-K. Item 7.01. Regulation FD Disclosure.
The Company is furnishing herewith additional information in conjunction with the March 1, 2018 earnings release. This additional information includesgeneral Company information and highlights of financial results of the Company and its direct and indirect wholly-owned subsidiaries for the quarter and yearended December 31, 2017. The additional information, attached as Exhibit 99.2 to this Current Report on Form 8-K, is being furnished and will not be deemed“filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section.
The information in this Current Report on Form 8-K will not be incorporated by reference into any registration statement or other document filed by theCompany under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated by reference. Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are filed with this report: Exhibit No.
Exhibit Description 99.1
Press Release of Veritiv Corporation issued March 1, 2018. 99.2
Additional Information of Veritiv Corporation issued March 1, 2018.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
VERITIV CORPORATION Dated: March 1, 2018
/s/ Mark W. Hianik
Mark W. Hianik
Senior Vice President, General Counsel & Corporate Secretary
3
EXHIBIT 99.1
Veritiv Announces Fourth Quarter and
Full Year 2017 Financial Results
Reports Fiscal Year Net Sales of $8.4 Billion,Net Loss of $(13.3) Million,
Basic and Diluted Loss per Share of $(0.85), andAdjusted EBITDA of $176.4 Million
ATLANTA (March 1, 2018) — Veritiv Corporation (NYSE: VRTV), a North American leader in business-to-business distribution solutions, today announcedfinancial results for the fourth quarter and full year ended December 31, 2017. “Our solid fourth quarter results brought to a close a challenging, but very important year for Veritiv. Once again led by growth in Packaging and FacilitySolutions, our comparative reported quarterly and annual revenue performance was the strongest we have had since becoming a public company,” said MaryLaschinger, Chairman and CEO of Veritiv Corporation. “In the fourth quarter we also reported a nearly 20% increase in consolidated Adjusted EBITDA over theprior year quarter which was largely driven by strength in our Packaging business, and the impact of one extra shipping day.” For the three months ended December 31, 2017, compared to the three months ended December 31, 2016:
· Net sales were $2.2 billion, an increase of 5.0% from the prior year. Net sales increased 2.7% from the prior year, excluding the positive effect of foreigncurrency (0.5%) and the positive effect of one more shipping day (1.7%) in the fourth quarter of 2017.
· Net income was $12.3 million, compared to net income of $4.2 million in the prior year. Net acquisition, integration and restructuring charges were $(4.9)million in the fourth quarter of 2017 and $11.5 million in the prior year.
· Basic and diluted earnings per share were $0.78 and $0.77, respectively, compared to $0.26 for basic and diluted earnings per share in the prior year.· Adjusted EBITDA was $60.0 million, an increase of 19.8% from the prior year.· Adjusted EBITDA as a percentage of net sales was 2.7%, an increase of 30 basis points from the prior year.
For the year ended December 31, 2017, compared to the year ended December 31, 2016:
· Net sales were $8.4 billion, an increase of 0.5% from the prior year. Net sales increased 0.7% from the prior year, excluding the positive effect of foreigncurrency (0.2%) and the negative effect of one less shipping day (0.4%) in 2017.
· Net loss was $(13.3) million, compared to net income of $21.0 million in the prior year. Net acquisition, integration and restructuring charges were $53.2million in 2017 and $38.3 million in the prior year.
· Basic and diluted loss per share was $(0.85), compared to $1.31 and $1.30 for basic and diluted earnings per share, respectively, in the prior year.· Adjusted EBITDA was $176.4 million, a decrease of 8.2% from the prior year.· Adjusted EBITDA as a percentage of net sales was 2.1%, a decrease of 20 basis points from the prior year.
“We have now captured 90% of the high end of our expected synergies of $225 million established in 2014. The initial synergy capture is effectively complete andwe consider it to be a success. Our operating system conversion and warehouse consolidations will be substantially complete by the end of 2018,” said StephenSmith, Senior Vice President and Chief Financial Officer of Veritiv Corporation. “With the integration nearing completion during the second half of 2018, we planto transition to the optimization element of our strategy.” Veritiv Corporation will host a live conference call and webcast today, March 1, 2018, at 10 a.m. (ET) to discuss its fourth quarter and full year 2017 financialresults. To participate, callers within the U.S. and Canada can dial (833) 241-7249, and international callers can dial (647) 689-4213, both using conference IDnumber 7089015. 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 oftime at ir.veritivcorp.com shortly after the live webcast is completed. Important information regarding U.S. generally accepted accounting principles (“U.S. GAAP”) and related reconciliations of non-GAAP financial measures to themost 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 leading North American business-to-business distributor ofpackaging, facility solutions, print and publishing products and services; and also a provider of logistics and supply chain management solutions. Servingcustomers in a wide range of industries, the Company has approximately 170 operating distribution centers throughout the U.S., Canada and Mexico, and employsapproximately 8,900 team members that help 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, 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 SecuritiesLitigation 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, as they relate to theCompany or its business, have been used to identify such forward-looking statements. All forward-looking statements reflect only the Company’s current beliefsand assumptions with respect to future operating results, performance, business plans, prospects, guidance and other matters, and are based on informationcurrently available to the Company. Accordingly, the statements are subject to significant risks, uncertainties and contingencies, which could cause the Company’sactual 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 risks and other factors described under “Risk Factors” in our AnnualReport on Form 10-K and elsewhere in the Company’s publicly available reports filed with the Securities and Exchange Commission (“SEC”), which contain adiscussion of various factors that may affect the Company’s business or financial results. Such risks and other factors, which in some instances are beyond theCompany’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; ourability to attract, train and retain highly qualified employees; the effects of work stoppages, union negotiations and labor disputes; the loss of any of our significantcustomers; changes in business conditions in our international operations; procurement and other risks in obtaining packaging, paper and facility products from oursuppliers for resale to our customers; changes in prices for raw materials; fuel cost increases; inclement weather, anti-terrorism measures and other disruptions tothe transportation network; our dependence on a variety of IT and telecommunications systems and the Internet; our reliance on third-party vendors for variousservices; 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; regulatorychanges and judicial rulings impacting our business; adverse results from litigation, governmental investigations or audits, or tax-related proceedings or audits; ourinability to renew existing leases on acceptable terms, negotiate rent decreases or concessions and identify affordable real estate; our ability to adequately protectour material intellectual property and other proprietary rights, or to defend successfully against intellectual property infringement claims by third parties; ourpension and health care costs and participation in multi-employer pension, health and welfare plans; increasing interest rates; our ability to generate sufficient cashto 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 termsand conditions as might be necessary from time to time; changes in accounting standards and methodologies; our ability to realize the full benefit of the anticipatedsynergies, cost savings and growth opportunities from the merger transaction and our ability to integrate the xpedx business with the Unisource business; thepossibility of incurring expenditures in excess of those currently budgeted in connection with the integration; and other events of which we are presently unawareor that we currently deem immaterial that may result in unexpected adverse operating results. The Company is not responsible for updating the informationcontained 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 isbeing furnished to the SEC through a Form 8-K. The Company’s Annual Report on Form 10-K for the year ended December 31, 2017 to be filed with the SEC maycontain updates to the information included in this release.
Financial Statements
VERITIV CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data, unaudited)
Three Months Ended December 31,
Year Ended December 31,
2017
2016
2017
2016
Net sales
$ 2,224.4
$ 2,119.4
$ 8,364.7
$ 8,326.6
Cost of products sold (exclusive of depreciation and amortizationshown separately below)
1,820.2
1,740.2
6,846.6
6,826.4
Distribution expenses
136.0
129.9
516.9
505.1
Selling and administrative expenses
222.2
210.3
872.6
826.2
Depreciation and amortization
14.3
14.2
54.2
54.7
Acquisition and integration expenses
8.4
6.3
36.5
25.9
Restructuring charges, net
(13.3) 5.2
16.7
12.4
Operating income
36.6
13.3
21.2
75.9
Interest expense, net
9.1
6.4
31.2
27.5
Other (income) expense, net
(9.3) 1.3
(8.1) 7.6
Income (loss) before income taxes
36.8
5.6
(1.9) 40.8
Income tax expense
24.5
1.4
11.4
19.8
Net income (loss)
$ 12.3
$ 4.2
$ (13.3) $ 21.0
Earnings (loss) per share:
Basic earnings (loss) per share
$ 0.78
$ 0.26
$ (0.85) $ 1.31
Diluted earnings (loss) per share
$ 0.77
$ 0.26
$ (0.85) $ 1.30
Weighted average shares outstanding:
Basic
15.70
15.87
15.70
15.97
Diluted
15.98
16.21
15.70
16.15
VERITIV CORPORATION
CONSOLIDATED BALANCE SHEETS(dollars in millions, except par value)
December 31, 2017
December 31, 2016
Assets
Current assets:
Cash
$ 80.3
$ 69.6
Accounts receivable, less allowances of $44.0 and $34.5, respectively
1,174.3
1,048.3
Related party receivable
3.3
3.9
Inventories
722.7
707.9
Other current assets
133.5
118.9
Total current assets
2,114.1
1,948.6
Property and equipment (net of depreciation and amortization of $314.6 and $292.8, respectively)
340.2
371.8
Goodwill
99.6
50.2
Other intangibles, net
64.1
21.0
Deferred income tax assets
59.6
61.8
Other non-current assets
30.8
30.3
Total assets
$ 2,708.4
$ 2,483.7
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable
$ 680.1
$ 654.1
Related party payable
8.5
9.0
Accrued payroll and benefits
73.5
84.4
Other accrued liabilities
134.6
102.5
Current maturities of long-term debt
2.9
2.9
Financing obligations, current portion (including obligations to related party of $7.1 and $14.9, respectively)
7.8
14.9
Total current liabilities
907.4
867.8
Long-term debt, net of current maturities
908.3
749.2
Financing obligations, less current portion (including obligations to related party of $155.2 and $176.1,respectively)
181.6
176.1
Defined benefit pension obligations
24.4
27.6
Other non-current liabilities
137.0
121.2
Total liabilities
2,158.7
1,941.9
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, 16.0 million shares issued; sharesoutstanding - 15.7 million at December 31, 2017 and 2016
0.2
0.2
Additional paid-in capital
590.2
574.5
Accumulated earnings
6.4
19.7
Accumulated other comprehensive loss
(33.5) (39.0)Treasury stock at cost - 0.3 million shares at December 31, 2017 and 2016
(13.6) (13.6)Total shareholders’ equity
549.7
541.8
Total liabilities and shareholders’ equity
$ 2,708.4
$ 2,483.7
VERITIV CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS(in millions)
Year Ended December 31,
2017
2016
Operating activities
Net income (loss)
$ (13.3) $ 21.0
Depreciation and amortization
54.2
54.7
Amortization and write-off of deferred financing fees
2.6
5.6
Net losses (gains) on dispositions of property and equipment
(25.7) (0.8)Goodwill and long-lived asset impairment charges
8.4
7.7
Provision for allowance for doubtful accounts
15.9
2.2
Deferred income tax provision
1.9
11.1
Stock-based compensation
15.7
8.3
Other non-cash items, net
(8.8) 3.7
Changes in operating assets and liabilities
Accounts receivable and related party receivable
(101.9) (14.7)Inventories
30.1
13.1
Other current assets
(8.4) (11.4)Accounts payable and related party payable
48.3
69.9
Accrued payroll and benefits
(11.3) (40.9)Other accrued liabilities
13.6
(3.6)Other
15.3
14.3
Net cash provided by operating activities
36.6
140.2
Investing activities
Property and equipment additions
(32.5) (41.0)Proceeds from asset sales
51.1
6.6
Cash paid for purchase of business, net of cash acquired
(144.8) —
Net cash used for investing activities
(126.2) (34.4)Financing activities
Change in book overdrafts
(40.5) 18.9
Borrowings of long-term debt
4,898.8
4,555.8
Repayments of long-term debt
(4,731.5) (4,625.9)Payments under equipment capital lease obligations
(2.7) (3.2)Payments under financing obligations (including obligations to related party of $15.0 and $19.9 respectively)
(16.4) (19.9)Deferred financing fees
—
(2.0)Purchase of treasury stock
—
(13.6)Payments under Tax Receivable Agreement
(8.5) —
Net cash provided by (used for) financing activities
99.2
(89.9)Effect of exchange rate changes on cash
1.1
(0.7)Net change in cash
10.7
15.2
Cash at beginning of period
69.6
54.4
Cash at end of period
$ 80.3
$ 69.6
Supplemental cash flow information
Cash paid for income taxes, net of refunds
$ 3.7
$ 11.6
Cash paid for interest
27.6
20.6
Non-cash investing and financing activities
Non-cash additions to property and equipment
$ 17.8
$ 20.8
Contingent consideration for purchase of business: Earn-out
22.2
—
Non-GAAP Measures We supplement our financial information prepared in accordance with U.S. GAAP with certain non-GAAP measures including Adjusted EBITDA (earnings beforeinterest, income taxes, depreciation and amortization, restructuring charges, net, acquisition and integration expenses and other similar charges including anyseverance 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-restructuringpension charges, fair value adjustments related to contingent liabilities assumed in mergers and acquisitions and certain other adjustments) because we believeinvestors commonly use Adjusted EBITDA as a key financial metric for valuing companies. In addition, the credit agreement governing our asset-based lendingfacility permits us to exclude the foregoing and other charges in calculating “Consolidated EBITDA”, as defined in the facility. We approximate foreign currencyeffects by applying the foreign currency exchange rate for the prior period to the local currency results for the current period. Adjusted EBITDA is not an alternative measure of financial performance under GAAP. Non-GAAP measures do not have definitions under GAAP and may bedefined differently by, and not be comparable to, similarly titled measures used by other companies. As a result, we consider and evaluate non-GAAP measures inconnection with a review of the most directly comparable measure calculated in accordance with GAAP. We caution investors not to place undue reliance on suchnon-GAAP measures and to consider them with the most directly comparable GAAP measures. Adjusted EBITDA has limitations as an analytical tool and shouldnot be considered in isolation or as a substitute for analyzing our results as reported under GAAP. Please see the following tables for reconciliations of non-GAAPmeasures to the most comparable GAAP measures.
Table I
VERITIV CORPORATIONRECONCILIATION OF NON-GAAP MEASURES
NET INCOME (LOSS) TO ADJUSTED EBITDA; ADJUSTED EBITDA MARGIN(in millions, unaudited)
Three Months Ended December 31,
Year Ended December 31,
2017
2016
2017
2016
Net income (loss)
$ 12.3
$ 4.2
$ (13.3) $ 21.0
Interest expense, net
9.1
6.4
31.2
27.5
Income tax expense
24.5
1.4
11.4
19.8
Depreciation and amortization
14.3
14.2
54.2
54.7
EBITDA
60.2
26.2
83.5
123.0
Restructuring charges, net
(13.3) 5.2
16.7
12.4
Stock-based compensation
4.1
1.1
15.7
8.3
LIFO reserve increase
3.7
6.3
7.1
3.6
Non-restructuring asset impairment charges
—
3.7
8.4
7.7
Non-restructuring severance charges
2.0
0.7
3.5
3.1
Non-restructuring pension charges
—
0.1
2.2
2.4
Acquisition and integration expenses
8.4
6.3
36.5
25.9
Fair value adjustment on Tax Receivable Agreement contingentliability
(11.0) 0.1
(9.4) 4.9
Fair value adjustment on contingent consideration liability
2.0
—
2.0
—
Escheat audit contingent liability
3.0
—
7.5
—
Other
0.9
0.4
2.7
0.9
Adjusted EBITDA
$ 60.0
$ 50.1
$ 176.4
$ 192.2
Net sales
$ 2,224.4
$ 2,119.4
$ 8,364.7
$ 8,326.6
Adjusted EBITDA as a % of net sales
2.7% 2.4% 2.1% 2.3%
Veritiv Contacts: Investors: Tom Morabito, 770-391-8451 Media: Phil Taylor, 770-391-8415
Exhibit 99.2Veritiv Corporation Fourth Quarter and Fiscal Year 2017 Financial Results March 1, 2018
Tom Morabito Director of Investor Relations 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,” “continue,” “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 business, 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 risks and other factors described under "Risk Factors" in our Annual Report on Form 10-K and elsewhere 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 attract, train and retain highly qualified employees; the effects of workstoppages, union negotiations and labor disputes; the loss of any of our 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 pension, health and welfare 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 full benefit of the anticipated synergies, cost savings and growth opportunities from the merger transaction and 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 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 Annual Report on Form 10-K for the year ended December 31, 2017 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. 3
Mary Laschinger Chairman & CEO 4
(8.2)% Financial Results Year-over-year comparison not meaningful because FY16 had net income of $21.0 million. Please see the appendix for reconciliations of non-GAAP measures to the most comparable GAAP measures. $176.4M Adjusted EBITDA1 FY17 Actual YOY% Change $8.4B Net Sales 0.5% 5 Adjusted EBITDA2 Net Loss $(13.3)M 192.9% Net Sales NM1
Fiscal Year 2017 Veritiv Net Sales 6 FY16 Net Sales FY17 Net Sales $8,365 $8,327 FX Effect 0.2% (Unaudited, Dollars In Millions) Reported Net Sales = 0.5% Core Net Sales 0.7% One Less Day (0.4%)
2017 Highlights and 2018 Outlook 7 2017 Highlights: Packaging: strong 4Q and FY17 sales Core revenues up 16.7% quarter-over-quarter in 4Q; 7.5% of which was from the All American Containers (AAC) acquisition Facility Solutions: improved 4Q and FY17 sales Print and Publishing: difficult 4Q and FY17; secular challenges expected to continue Initial synergy capture effectively completed 2018 Outlook: Integration expected to transition to the Optimization element of our strategy Operating system conversion and warehouse consolidations substantially complete by the end of 2018 2018 Adjusted EBITDA is expected to be $180-190 million 2018 Free Cash Flow is expected to be at least $30 million
Stephen Smith CFO 8
(Unaudited, Dollars In Millions, Except Per Share Amounts) 4Q17 YOY % Change FY17 YOY % Change Three Months Ended Year Ended December 31 December 31 Net sales $2,224.4 5.0 % $8,364.7 0.5 % Net sales per shipping day _ 3.3 % _ 0.9 % Cost of products sold $1,820.2 4.6 % $6,846.6 0.3 % Net sales less cost of products sold $404.2 6.6 % $1,518.1 1.2 % Net income (loss) $12.3 193 % $(13.3) NM2 Basic earnings (loss) per share $0.78 200 % $(0.85) NM2 Diluted earnings (loss) per share $0.77 196 % $(0.85) NM2 Adjusted EBITDA $60.0 19.8 % $176.4 (8.2 )% Adjusted EBITDA as a % of net sales 2.7 % 30 BPS 2.1 % -20 BPS 1. Please see the appendix for reconciliations of non-GAAP measures to the most comparable GAAP measures. 2. Year-over-year comparison not meaningful because FY16 had net income and basic and diluted earnings per share of $21.0 million, and $1.31 and $1.30 respectively. Veritiv Financial Results1 Fourth Quarter and Full Year 2017 9
Veritiv Segment Financial Results Fourth Quarter and Full Year 2017 10 Facility Solutions Publishing Print 4Q17 Three Months Ended December 31 YOY % Change FY17 Year Ended December 31 YOY % Change Net sales $261 (3.3 )% $958 (7.3 )% Net sales per shipping day _ (4.8 )% _ (6.9 )% Adjusted EBITDA $8.8 22.2 % $26.4 11.9 % Adj. EBITDA as a % of net sales 3.4 % 70 BPS 2.8 % 50 BPS 4Q17 Three Months Ended December 31 YOY % Change FY17 Year Ended December 31 YOY % Change Net sales $892 19.3 % $3,158 10.6 % Net sales per shipping day _ 17.3 % _ 11.1 % Adjusted EBITDA $71.3 27.8 % $238.0 7.6 % Adj. EBITDA as a % of net sales 8.0 % 50 BPS 7.5 % (20) BPS 4Q17 Three Months Ended December 31 YOY % Change FY17 Year Ended December 31 YOY % Change Net sales $334 4.4 % $1,310 3.0 % Net sales per shipping day _ 2.8 % _ 3.4 % Adjusted EBITDA $10.4 (18.1 )% $35.5 (24.5 )% Adj. EBITDA as a % of net sales 3.1 % (90) BPS 2.7 % (100) BPS 4Q17 Three Months Ended December 31 YOY % Change FY17 Year Ended December 31 YOY % Change Net sales $699 (6.7 )% $2,794 (8.3 )% Net sales per shipping day _ (8.2 )% _ (8.0 )% Adjusted EBITDA $16.0 (24.2 )% $60.8 (20.8 )% Adj. EBITDA as a % of net sales 2.3 % (50) BPS 2.2 % (30) BPS (Unaudited, Dollars In Millions) Packaging
2018 Full Year Guidance Our 2018 full year guidance expectations are as follows: Adjusted EBITDA of $180 - $190 million Incremental capital expenditures for integration projects of $10 - $20 million Ordinary course capital expenditures of $20 - $30 million Free cash flow of at least $30 million 11
Asset Based Loan Facility & Capital Allocation Capital Structure Capital Allocation Capital Allocation Priorities: Invest in the Company YTD: CapEx totaled ~ $33M, with ~ $16M related to integration Expect 2018 incremental CapEx for integration projects of $10M - $20M Ordinary course 2018 CapEx expected to be $20M - $30M Pay down debt Invest in growth (organic and inorganic) At the end of December 2017: The borrowing base availability for the ABL facility was ~ $1.2B $898M drawn against the ABL facility $317M of available borrowing capacity Net debt to Adj. EBITDA: 4.6x for the trailing 12 months1 12 1. Includes borrowings for All American Containers Acquisition
Cumulative Synergy Capture Since Merger Veritiv has consistently exceeded synergy guidance Original commitment was $150M to $225M of synergies Veritiv ended 2017 with $200M of cumulative synergies since the merger which is 133% of the $150M 'low-end' commitment or 90% of the $225M 'high-end' commitment 13 Original (May 2014) Commitments 0% 25%-35% 50%-60% 80%-90%
Questions 14
Mary Laschinger Chairman & CEO 15
Appendix: Reconciliation of Non-GAAP Financial Measures We supplement our financial information prepared in accordance with GAAP with certain non-GAAP measures including Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, restructuring charges, net, acquisition and integration 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, fair value adjustments related to contingent liabilities assumed in mergers and acquisitions and certain other adjustments) because we believe investors commonly use Adjusted EBITDA and these other non-GAAP measures as key financial metrics for valuing companies. In addition, the credit agreement governing our asset-based lending facility permits us to exclude the foregoing and other charges in calculating “Consolidated EBITDA”, as defined in the facility. We approximate foreign currency effects by applying the foreign currency exchange rate for the prior period to the local currency results for the current period. Adjusted EBITDA and these other non-GAAP measures are not alternative measures 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 measures. Adjusted EBITDA 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 GAAP. Please see the followingtables for reconciliations of non-GAAP measures to the most comparable GAAP measures. 16
Table I VERITIV CORPORATION RECONCILIATION OF NON-GAAP MEASURES NET INCOME (LOSS) TO ADJUSTED EBITDA; ADJUSTED EBITDA MARGIN (in millions, unaudited) Three Months Ended December 31, Three Months Ended December 31, Year Ended December 31, Year Ended December 31, 2017 2017 2016 2016 2017 2017 2016 2016 Net income (loss) $ 12.3 $ 4.2 $ (13.3 ) $ 21.0 Interest expense, net 9.1 6.4 31.2 27.5 Income tax expense 24.5 1.4 11.4 19.8 Depreciation and amortization 14.3 14.2 54.2 54.7 EBITDA 60.2 26.2 83.5 123.0 Restructuring charges, net (13.3 ) 5.2 16.7 12.4 Stock-based compensation 4.1 1.1 15.7 8.3 LIFO reserve increase 3.7 6.3 7.1 3.6 Non-restructuring asset impairment charges — 3.7 8.4 7.7 Non-restructuring severance charges 2.0 0.7 3.5 3.1 Non-restructuring pension charges — 0.1 2.2 2.4 Acquisition and integration expenses 8.4 6.3 36.5 25.9 Fair value adjustment on Tax Receivable Agreement contingent liability (11.0 ) 0.1 (9.4 ) 4.9 Fair value adjustment on contingent consideration liability 2.0 — 2.0 — Escheat audit contingent liability 3.0 — 7.5 — Other 0.9 0.4 2.7 0.9 Adjusted EBITDA $ 60.0 $ 50.1 $ 176.4 $ 192.2 Net sales $ 2,224.4 $ 2,119.4 $ 8,364.7 $ 8,326.6 Adjusted EBITDA as a % of net sales 2.7 % 2.4 % 2.1 % 2.3 % Appendix: Reconciliation of Non-GAAP Financial Measures 17
18 Appendix: Reconciliation of Non-GAAP Financial Measures Table II VERITIV CORPORATION RECONCILIATION OF NON-GAAP MEASURES FREE CASH FLOW TO ADJUSTED FREE CASH FLOW (in millions, unaudited) Year Ended December 31, 2017 Year Ended December 31, 2017 Net cash flows provided by operating activities $ 36.6 Less: Capital expenditures (32.5 ) Free cash flow 4.1 Add back: Cash payments for restructuring expenses 21.3 Cash payments for acquisition and integration expenses 40.6 Cash payments for integration-related capex 16.1 Adjusted free cash flow $ 82.1
19 Appendix: Reconciliation of Non-GAAP Financial Measures Table III VERITIV CORPORATION RECONCILIATION OF NON-GAAP MEASURES NET DEBT TO ADJUSTED EBITDA (in millions, unaudited) December 31, 2017 December 31, 2017 Amount drawn on ABL Facility $ 897.7 Less: Cash (80.3 ) Net debt 817.4 Last Twelve Months Adjusted EBITDA $ 176.4 Net debt to Adjusted EBITDA 4.6x 4.6x Last Twelve Months Last Twelve Months December 31, 2017 December 31, 2017 Net loss $ (13.3 ) Interest expense, net 31.2 Income tax expense 11.4 Depreciation and amortization 54.2 EBITDA 83.5 Restructuring charges, net 16.7 Stock-based compensation 15.7 LIFO reserve increase 7.1 Non-restructuring asset impairment charges 8.4 Non-restructuring severance charges 3.5 Non-restructuring pension charges 2.2 Acquisition and integration expenses 36.5 Fair value adjustments on Tax Receivable Agreement contingent liability (9.4 ) Fair value adjustment on contingent consideration liability 2.0 Escheat audit contingent liability 7.5 Other 2.7 Adjusted EBITDA $ 176.4
Veritiv Corporation Fourth Quarter and Fiscal Year 2017 Financial Results March 1, 2018