Verso posts $30 million loss for 2017 as it invests in Jay mill

Verso Corp. reported a $30 million net loss in 2017, but expects sales to improve this year thanks, in part, to increased production of specialty products at its paper mill in Jay.

The company had a “difficult start” to 2017, but had a strong turnaround in the second half of the year and is in a better cash position than before, CEO Christopher DiSantis said during an investor call Thursday.

“The mills are full, we are running at capacity everywhere. That is a good place to be in,” DiSantis said.

Overall revenue was $2.4 billion, off 7 percent from the year before, because of lower sales volume and idling the No. 3 paper machine at the Androscoggin mill in Jay at the beginning of 2017.

The company’s net position was slightly better than the $32 million loss reported in 2016. Verso owns seven mills in Minnesota, Michigan, Maryland, Maine and Wisconsin.

Production fell by about 190,000 tons, mainly because of closing the Androscoggin machine, but the company also slowed or stopped production of some grades of paper to sell off surplus inventory, DiSantis said.

The company projects stronger sales in 2018 as it increases production of specialty paper at the Jay mill, which employs about 400 people.

Verso has mostly produced printing grade paper, but is expanding its product line as sales of that grade decline. Specialty paper made up 23 percent of Verso’s production last year.

The No. 5 machine at the Androscoggin mill ran specialty paper at 100 percent capacity during the fourth quarter last year and the No. 4 machine is on track to be making only specialty paper by the end of this year, said Verso spokeswoman Kathi Rowzie.

Specialty papers are used for flexible packaging, technical papers and adhesive labels.

The No. 3 machine that was idled last year should be running again by the middle of this year, bringing back 120 jobs. The machine will be converted to produce pulp linerboard at a cost of $17 million, $4 million of which will be paid with a state grant.

While DiSantis said the outlook for 2018 was positive, Verso would have to deal with “headwinds” including high material and energy costs, the availability and cost of freight, and maintenance expenses in its Maryland and Michigan mills.

Verso was able to trim costs through a corporate consolidation in its Miamisburg, Ohio, offices; a company reorganization; and austerity measures that reduced 350 positions, saving the company more than $31 million, DiSantis said.

“We built a better business, a leaner business with more optionality and we have a clear sense of direction for Verso going forward,” he said.

A company-wide strategic review that could result in its sale or merger is ongoing, DiSantis told investors.

“There is no guarantee this process will result in any transaction, that is all we are going to say on that topic today,” he said.

The review was prompted by a major investor who said last fall that selling mills would increase the return on its investment. The investor, Murdick Capital Management, then sold more than 1 million of its 5 million shares in the company in January.