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MIAMISBURG, Ohio, May 18, 2017 -- Verso Corporation (NYSE: VRS) will hold a conference call today to review financial results for the first quarter of 2017. Earlier this week, net sales of $616 million, a net loss of $21 million, and adjusted EBITDA of $26 million were reported. For the first quarter of 2016, results for the predecessor and successor companies are shown below.

"Verso is relentlessly pursuing opportunities to successfully adapt to the rapidly evolving coated papers marketplace," said Verso Chief Executive Officer, B. Christopher DiSantis. "We are aggressively reducing our overhead expense by more than 10 percent, and after trimming our mill operational costs by an annualized $68 million in 2016, we've identified another $55 million in productivity and cost reduction opportunities this year. In addition, we are evaluating a variety of low-cost machine conversion projects to aid in our repositioning efforts."

"As we continue to work with our customers to address their evolving business needs, Verso has launched a series of machine glazed natural kraft products produced at our Androscoggin Specialty mill and we have commercialized many new products across our platform in the first quarter with nearly 100 in the pipeline, 19 of which are already in pre-production," DiSantis continued.

Presentation of Predecessor and Successor Financial Results
Verso Corporation (the "Company") adopted fresh-start reporting as of July 15, 2016 (the "Effective Date"), the effective date of its First Modified Third Amended Joint Plan of Reorganization under Chapter 11 of the U.S. Bankruptcy Code dated June 20, 2016, and the date that Verso emerged from its Chapter 11 cases. As a result of the application of fresh-start reporting, the Company's financial statements for periods prior to the Effective Date are not comparable to those for periods subsequent to the Effective Date. References to "Successor" refer to the Company on or after the Effective Date. References to "Predecessor" refer to the Company prior to the Effective Date. Operating results for the Successor and Predecessor periods are not necessarily indicative of the results to be expected for a full fiscal year. References such as the "Company," "we," "our" and "us" refer to Verso Corporation and its consolidated subsidiaries, whether Predecessor and/or Successor, as appropriate.

Comments to Results of Operations - Comparison of Three Months Ended March 31, 2017 to Three Months Ended March 31, 2016

Net sales for the first quarter of 2017 were 11% lower than the first quarter of 2016. The sales decline was attributable to both a decrease in total sales volume and a decrease in pricing due to the general softening of demand for coated papers, our capacity reductions at our Androscoggin Mill and the closure of the Wickliffe Mill.
Gross margin decreased from 10.4% in the first quarter of 2016 to 9.1% in the first quarter of 2017 driven by lower sales volume and pricing, higher input costs, and the effects of accounting policy changes adopted in conjunction with fresh-start accounting.
Depreciation, amortization and depletion for the first quarter of 2017 was lower than the first quarter of 2016, which was attributable to capacity reductions at our Androscoggin Mill, the closure of the Wickliffe Mill and reduction in the carrying value of our property, plant and equipment as a result of adopting fresh-start accounting.
SG&A expense reduction was attributable to a decline in spending, reduced pre-reorganization costs as well as a reclassification of 2017 SG&A to cost of products sold attributable to a change in accounting policy adopted in connection with fresh-start accounting.
Restructuring charges are primarily associated with the announced closure and relocation of the Memphis office headquarters and closure of the Wickliffe Mill. Restructuring in 2016 consisted primarily of non-cash fixed asset write-down charges from the permanent closure of the Wickliffe Mill.
Other operating income for the first quarter of 2016 is attributable to the sale of hydroelectric facilities in January 2016.


The Company is providing the following guidance:

2017 Second Quarter
Sales of $575-595 million
Price pressures will continue for the foreseeable future
Capital expenditures of $13-16 million
Maintenance expense of $60-70 million, heaviest quarter of 2017
2017 Full Year
Capital expenditures of $55-65 million, down from $73 million in 2016
Maintenance costs of $210-220 million, down from approximately $235 million in 2016
SG&A of $110-115 million
Cash pension funding of $32-36 million
Cash taxes of $0-5 million, primarily state income and franchise taxes

Reconciliation of Net Income to Adjusted EBITDA
EBITDA consists of earnings before interest, taxes, depreciation, and amortization. Adjusted EBITDA reflects adjustments to EBITDA to eliminate the impact of certain items that we do not consider to be indicative of our performance. We use EBITDA and Adjusted EBITDA as a way of evaluating our performance relative to that of our peers and to assess compliance with our credit facilities. We believe that Adjusted EBITDA is an operating performance measure commonly used in our industry that provides investors and analysts with a measure of ongoing operating results unaffected by differences in capital structures, capital investment cycles, and ages of related assets among otherwise comparable companies.

We believe that the supplemental adjustments applied in calculating Adjusted EBITDA are reasonable and appropriate to provide additional information to investors.

Because EBITDA and Adjusted EBITDA are not measurements determined in accordance with Generally Accepted Accounting Principles (GAAP) and are susceptible to varying calculations, EBITDA and Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies. You should consider our EBITDA and Adjusted EBITDA in addition to, and not as a substitute for, or superior to, our operating or net income or cash flows from operating activities, which are determined in accordance with GAAP.


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