Veritiv Operating Company, a provider of specialty packaging solutions, has acquired Oregon, US-based Subotnick Packaging. Financial terms of the deal remain undisclosed. Subotnick is a distributor of packaging products and equipment. It caters to a range of sectors including building materials, food, e-commerce and transportation, providing both stock and custom packaging offerings. Established in 1925, the family owned business is said to have “deep roots” across the Pacific Northwest. Veritiv sta ...

Core Insights - Vertiv Holdings Co. (VRT) reported second-quarter 2025 adjusted earnings of $0.95 per share, exceeding the Zacks Consensus Estimate of $0.83, and up from $0.67 per share a year ago [1][8] - The company achieved quarterly revenues of $2.64 billion, surpassing the Zacks Consensus Estimate by 11.86%, compared to $1.95 billion in the same quarter last year [1][8] Company Overview - Vertiv is a leading global provider of critical digital infrastructure and services for data centers, communication networks, and commercial and industrial environments, focusing on power, cooling, and IT infrastructure solutions, particularly AI-enabled infrastructure [2] Performance and Growth - The company experienced a 35% sales growth, driven by strong market demand and expanded capabilities to meet complex infrastructure needs [3] - VRT's stock price has increased by 29.4% year to date and 58.8% over the past three months, reflecting the resurgence of AI-infrastructure providers amid significant spending by data center hyperscalers [5] Strategic Partnerships - Vertiv's partnership with NVIDIA Corp. is a key catalyst for growth, aiming to stay one GPU generation ahead to provide efficient power solutions for next-gen AI data centers [3][4] - The company has a diverse partner base, including Ballard Power Systems, Compass Datacenters, Intel Corp., ZincFive, and Tecogen, enhancing its market position [4] Future Guidance - For the third quarter, VRT forecasts adjusted earnings of $0.97 per share and total revenues of $2.55 billion, slightly above current consensus estimates [6][9] - For 2025, VRT projects adjusted earnings per share between $3.75 and $3.85, with total revenues expected to range from $9.93 billion to $10.08 billion, both exceeding current consensus estimates [10] Long-Term Prospects - The AI infrastructure market is projected to see a significant increase in capital expenditure, with four major companies planning to invest $325 billion in 2025, marking a 46% year-over-year increase [12] - VRT's long-term EPS growth rate is estimated at 28.3%, significantly higher than the S&P 500's long-term growth rate of 12.6%, indicating strong future potential [13]

Core Insights - Veritiv has entered into a binding agreement to acquire Orora Packaging Solutions, enhancing its position in the North American specialty packaging distribution market [1][5] - The acquisition aims to combine the strengths of both companies, focusing on innovation, sustainability, and customer experience [2][3] - The transaction is expected to be completed in the fourth quarter of 2024, pending regulatory approvals [5] Company Overview - Veritiv Corporation is a full-service provider of packaging, jan-san, hygiene products, and print solutions, with a strong presence in North America and globally [8] - Orora Packaging Solutions, headquartered in Buena Park, CA, is recognized for its sustainable and innovative packaging solutions, operating nearly 70 facilities and employing approximately 3,000 people [7] Strategic Implications - The merger is anticipated to create a more agile organization, enhancing the value delivered to customers through a broader product range and improved services [2][4] - Both companies share a customer-centric approach, which will be strengthened by their combined capabilities and focus on sustainability [4]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to _________ Commission file number 001-36479 VERITIV CORPORATION Not Applicable (Former name, former address and former fiscal year, if changed since last ...

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=Part%20I%3A%20FINANCIAL%20INFORMATION) [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Veritiv's unaudited condensed consolidated financial statements for Q2 2023, covering operations, balance sheets, cash flows, and notes [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net sales and net income declined for both Q2 and YTD Q2 2023 due to lower volumes and divestitures | Metric (in millions, except per share) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Change ($ in millions) | Change (%) | | :----------------------------------- | :------------------------------- | :------------------------------- | :--------------------- | :--------- | | Net sales | $1,457.3 | $1,820.7 | $(363.4) | (20.0)% | | Operating income | $98.9 | $118.4 | $(19.5) | (16.5)% | | Net income | $70.7 | $91.1 | $(20.4) | (22.4)% | | Basic EPS | $5.22 | $6.24 | $(1.02) | (16.3)% | | Diluted EPS | $5.15 | $6.12 | $(0.97) | (15.8)% | | **Six Months Ended June 30, 2023** | **Six Months Ended June 30, 2022** | **Change ($ in millions)** | **Change (%)** | | | Net sales | $2,967.5 | $3,678.8 | $(711.3) | (19.3)% | | Operating income | $193.8 | $205.6 | $(11.8) | (5.7)% | | Net income | $139.4 | $169.6 | $(30.2) | (17.8)% | | Basic EPS | $10.30 | $11.55 | $(1.25) | (10.8)% | | Diluted EPS | $10.15 | $11.23 | $(1.08) | (9.6)% | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Total comprehensive income decreased for Q2 and YTD Q2 2023, driven by foreign currency and pension adjustments | Metric (in millions) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Change ($ in millions) | | :------------------- | :------------------------------- | :------------------------------- | :--------------------- | | Net income | $70.7 | $91.1 | $(20.4) | | Foreign currency translation adjustments | $1.4 | $(4.5) | $5.9 | | Pension liability adjustments, net of tax | $(0.5) | $6.4 | $(6.9) | | Total comprehensive income (loss) | $70.9 | $95.6 | $(24.7) | | **Six Months Ended June 30, 2023** | **Six Months Ended June 30, 2022** | **Change ($ in millions)** | | | Net income | $139.4 | $169.6 | $(30.2) | | Foreign currency translation adjustments | $4.3 | $(1.9) | $6.2 | | Pension liability adjustments, net of tax | $(0.6) | $6.4 | $(7.0) | | Total comprehensive income (loss) | $142.4 | $176.7 | $(34.3) | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities decreased by June 30, 2023, driven by lower receivables and debt, while equity increased | Metric (in millions) | June 30, 2023 | December 31, 2022 | Change ($ in millions) | | :------------------- | :------------ | :---------------- | :--------------------- | | Total assets | $2,022.3 | $2,089.6 | $(67.3) | | Cash and cash equivalents | $43.9 | $40.6 | $3.3 | | Accounts receivable, net | $750.5 | $889.6 | $(139.1) | | Inventories | $487.0 | $423.9 | $63.1 | | Total liabilities | $1,139.0 | $1,333.5 | $(194.5) | | Long-term debt, net of current portion | $171.6 | $264.8 | $(93.2) | | Total shareholders' equity | $883.3 | $756.1 | $127.2 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow significantly increased for YTD Q2 2023 due to improved receivables, while investing and financing cash usage shifted | Cash Flow Activity (in millions) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change ($ in millions) | | :------------------------------- | :------------------------------- | :------------------------------- | :--------------------- | | Net cash provided by (used for) operating activities | $165.3 | $62.3 | $103.0 | | Net cash provided by (used for) investing activities | $(5.6) | $131.3 | $(136.9) | | Net cash provided by (used for) financing activities | $(156.8) | $(210.2) | $53.4 | | Net change in cash and cash equivalents | $3.3 | $(17.2) | $20.5 | [Condensed Consolidated Statements of Shareholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Shareholders' equity increased from December 2022 to June 2023 due to net income and stock compensation, offset by dividends | Metric (in millions) | Balance at December 31, 2022 | Balance at June 30, 2023 | Change ($ in millions) | | :------------------- | :--------------------------- | :----------------------- | :--------------------- | | Total Shareholders' Equity | $756.1 | $883.3 | $127.2 | | Accumulated Earnings | $472.6 | $595.0 | $122.4 | | Dividends paid (YTD 2023) | N/A | $17.0 | $17.0 | - The 2022 Share Repurchase Program, authorizing **$200 million**, was completed during the year ended December 31, 2022, with no share repurchases made in the three or six months ended June 30, 2023[65](index=65&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes explain Veritiv's business, accounting policies, financial components, and recent events, including the merger agreement [1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=11&type=section&id=1.%20BUSINESS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Veritiv is a North American B2B provider of packaging, facility, and print solutions; 2022 divestitures and new accounting standards had no material impact - Veritiv Corporation is a North American business-to-business full-service provider of value-added packaging products and services, facility solutions, and print-based products and services, operating primarily in the U.S. and Mexico[23](index=23&type=chunk) - The Company sold its Veritiv Canada, Inc. business on May 2, 2022, and its logistics solutions business on September 1, 2022, with these divestitures not qualifying as discontinued operations[24](index=24&type=chunk) - The Company adopted ASU 2022-04 (Supplier Finance Programs) and ASU 2020-04 (Reference Rate Reform) in 2023, neither of which had a material impact on the consolidated financial statements[27](index=27&type=chunk)[29](index=29&type=chunk) [2. REVENUE RECOGNITION AND CREDIT LOSSES](index=13&type=section&id=2.%20REVENUE%20RECOGNITION%20AND%20CREDIT%20LOSSES) Veritiv recognizes direct shipment revenue on a gross basis, with customer contract liabilities decreasing to **$13.9 million** and accounts receivable allowances to **$22.9 million** by June 30, 2023 - Veritiv is considered a principal in direct shipments from manufacturers to customers, reporting these revenues on a gross basis, with handling and delivery costs accounted for as distribution expenses[30](index=30&type=chunk) | (in millions) | 2023 | 2022 | | :------------ | :---- | :---- | | Balance at January 1, | $16.1 | $21.8 | | Payments received | $28.4 | $28.7 | | Revenue recognized from beginning of year balance | $(11.7

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=Part%20I%3A%20FINANCIAL%20INFORMATION) [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) This section presents Veritiv Corporation's unaudited condensed consolidated financial statements and related notes for Q1 2023 and 2022 [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric | Three Months Ended March 31, 2023 (in millions) | Three Months Ended March 31, 2022 (in millions) | | :------------------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Net sales | $1,510.2 | $1,858.1 | | Cost of products sold | $1,144.1 | $1,455.4 | | Distribution expenses | $89.7 | $112.2 | | Selling and administrative expenses | $171.4 | $187.9 | | Operating income | $94.9 | $87.2 | | Net income | $68.7 | $78.5 | | Basic EPS | $5.08 | $5.31 | | Diluted EPS | $5.00 | $5.12 | - Net sales **decreased by 18.7% YoY**, from **$1,858.1 million** in Q1 2022 to **$1,510.2 million** in Q1 2023[9](index=9&type=chunk) - Operating income **increased by 8.8% YoY**, from **$87.2 million** in Q1 2022 to **$94.9 million** in Q1 2023[9](index=9&type=chunk) - Net income **decreased by 12.5% YoY**, from **$78.5 million** in Q1 2022 to **$68.7 million** in Q1 2023[9](index=9&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) | Metric | Three Months Ended March 31, 2023 (in millions) | Three Months Ended March 31, 2022 (in millions) | | :-------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Net income | $68.7 | $78.5 | | Other comprehensive income (loss) | $2.8 | $2.6 | | Total comprehensive income (loss) | $71.5 | $81.1 | - Total comprehensive income **decreased by 11.8% YoY**, from **$81.1 million** in Q1 2022 to **$71.5 million** in Q1 2023[12](index=12&type=chunk) [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | March 31, 2023 (in millions) | December 31, 2022 (in millions) | | :----------------------------------- | :----------------------------- | :------------------------------ | | Total current assets | $1,394.9 | $1,457.8 | | Total assets | $2,026.9 | $2,089.6 | | Total current liabilities | $646.5 | $726.6 | | Total liabilities | $1,209.6 | $1,333.5 | | Total shareholders' equity | $817.3 | $756.1 | - Total assets **decreased by 3.0%** from December 31, 2022, to March 31, 2023[15](index=15&type=chunk) - Total liabilities **decreased by 9.3%** over the same period[15](index=15&type=chunk) - Total shareholders' equity **increased by 8.1%**[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric | Three Months Ended March 31, 2023 (in millions) | Three Months Ended March 31, 2022 (in millions) | | :------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | | Net cash provided by operating activities | $70.9 | $(5.9) | | Net cash used for investing activities | $(2.7) | $(7.1) | | Net cash used for financing activities | $(76.5) | $7.4 | | Net change in cash and cash equivalents | $(7.6) | $(15.5) | | Cash and cash equivalents at end of period | $33.0 | $33.8 | - Net cash provided by operating activities significantly improved, moving from a use of **$5.9 million** in Q1 2022 to a provision of **$70.9 million** in Q1 2023[17](index=17&type=chunk) - Net cash used for financing activities increased from a provision of **$7.4 million** in Q1 2022 to a use of **$76.5 million** in Q1 2023, primarily due to increased debt repayments and dividend payments[17](index=17&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) | Metric | Balance at Dec 31, 2022 (in millions) | Balance at Mar 31, 2023 (in millions) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Common Stock Amount | $0.2 | $0.2 | | Additional Paid-in Capital | $613.1 | $611.3 | | Accumulated Earnings | $472.6 | $532.8 | | Accumulated Other Comprehensive Loss | $(12.7) | $(9.9) | | Treasury Stock Amount | $(317.1) | $(317.1) | | Total Shareholders' Equity | $756.1 | $817.3 | - Total shareholders' equity **increased from $756.1 million** at December 31, 2022, to **$817.3 million** at March 31, 2023, driven by net income and other comprehensive income, partially offset by dividends[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=1.%20BUSINESS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - Veritiv Corporation is a North American business-to-business full-service provider of value-added packaging products and services, facility solutions, and print-based products and services, operating primarily in the U.S. and Mexico[21](index=21&type=chunk) - The company sold its Veritiv Canada, Inc. business on May 2, 2022, and its logistics solutions business on September 1, 2022, neither of which were classified as discontinued operations[22](index=22&type=chunk) - Effective January 1, 2023, the Company adopted ASU 2022-04 (Supplier Finance Programs), and effective March 17, 2023, ASU 2020-04 (Reference Rate Reform), neither of which had a material impact on financial statements[27](index=27&type=chunk)[28](index=28&type=chunk) [2. REVENUE RECOGNITION AND CREDIT LOSSES](index=11&type=section&id=2.%20REVENUE%20RECOGNITION%20AND%20CREDIT%20LOSSES) - Approximately **35%** of Veritiv's total net sales are derived from direct shipments from manufacturers to customers, reported on a gross basis[29](index=29&type=chunk) - The company's principal markets are concentrated in North America, with approximately **97%** of Q1 2023 net sales generated in the U.S.[33](index=33&type=chunk) Customer Contract Liabilities (in millions) | (in millions) | 2023 | 2022 | | :-------------- | :--- | :--- | | Balance at January 1, | $16.1 | $21.8 | | Payments received | $11.2 | $15.3 | | Revenue recognized from beginning of year balance | $(5.2) | $(11.4) | | Revenue recognized from current year receipts | $(7.0) | $(5.1) | | Balance at March 31, | $15.1 | $19.5 | Accounts Receivable Allowances (in millions) | (in millions) | March 31, 2023 | December 31, 2022 | | :-------------------------- | :------------- | :---------------- | | Allowance for credit losses | $14.7 | $17.7 | | Other allowances | $9.6 | $9.0 | | Total accounts receivable allowances | $24.3 | $26.7 | [3. LEASES](index=13&type=section&id=3.%20LEASES) - Veritiv leases approximately **90 of its 95** distribution centers across the U.S. and Mexico, along with various office spaces[37](index=37&type=chunk) Total Lease Cost (in millions) | Lease Classification | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------- | :-------------------------------- | :-------------------------------- | | Short-term lease expense | $1.4 | $0.8 | | Operating lease expense | $21.1 | $25.1 | | Total finance lease expense | $3.0 | $4.4 | | Total Lease Cost | $25.5 | $30.3 | Future Minimum Lease Payments at March 31, 2023 (in millions) | (in millions) | Finance Leases | Operating Leases | | :-------------- | :------------- | :--------------- | | Total future minimum lease payments | $36.7 | $377.3 | | Amount representing interest | $(3.7) | $(46.3) | | Total future minimum lease payments, net of interest | $33.0 | $331.0 | [4. RESTRUCTURING CHARGES](index=15&type=section&id=4.%20RESTRUCTURING%20CHARGES) - The 2020 Restructuring Plan, initiated to respond to COVID-19 impacts, secular changes in print/publishing, and cost alignment, was completed as of December 31, 2022[42](index=42&type=chunk) 2020 Restructuring Plan Liability Activity (in millions) | (in millions) | Balance at Dec 31, 2022 | Payments | Other non-cash items | Balance at Mar 31, 2023 | | :-------------------- | :---------------------- | :------- | :------------------- | :---------------------- | | Severance and Related Costs | $0.9 | $(0.4) | $(0.1) | $0.4 | | Other Direct Costs | $2.3 | $(0.3) | $0.0 | $2.0 | | Total | $3.2 | $(0.7) | $(0.1) | $2.4 | - The remaining liability primarily consists of obligations for future lease payments through the end of **2024** for exited properties, with most severance obligations expected to be paid by the end of **2023**[45](index=45&type=chunk) [5. DEBT](index=16&type=section&id=5.%20DEBT) Debt Obligations (in millions) | (in millions) | March 31, 2023 | December 31, 2022 | | :------------------------------------ | :------------- | :---------------- | | Asset-Based Lending Facility (ABL) | $199.9 | $229.2 | | Commercial card program | $1.4 | $1.6 | | Vendor-based financing arrangements | $11.2 | $14.5 | | Finance leases | $33.0 | $32.9 | | Total debt | $245.5 | $278.2 | | Less: current portion of debt | $(13.6) | $(13.4) | | Long-term debt, net of current portion | $231.9 | $264.8 | - On March 17, 2023, the ABL Facility was amended to replace LIBOR provisions with SOFR, with full transition expected in Q2 2023[48](index=48&type=chunk) - The ABL Facility has aggregate commitments of **$1.1 billion** and a maturity date of **May 20, 2026**[48](index=48&type=chunk) - As of March 31, 2023, the available additional borrowing capacity under the ABL Facility was approximately **$681.8 million**[48](index=48&type=chunk) [6. INCOME TAXES](index=17&type=section&id=6.%20INCOME%20TAXES) Income Tax Expense and Effective Tax Rates (in millions) | (in millions) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :---------------------- | :-------------------------------- | :-------------------------------- | | Income before income taxes | $89.2 | $84.3 | | Income tax expense | $20.5 | $5.8 | | Effective tax rate | 23.0% | 6.9% | - The effective tax rate increased significantly from **6.9%** in Q1 2022 to **23.0%** in Q1 2023, primarily due to state income taxes, stock compensation vesting, non-deductible expenses, and the recognition of a deferred tax asset on a foreign subsidiary investment in Q1 2022[55](index=55&type=chunk) [7. DEFINED BENEFIT PLANS](index=17&type=section&id=7.%20DEFINED%20BENEFIT%20PLANS) - Veritiv maintains defined benefit pension plans in the U.S. for certain collectively bargained employees and frozen cash balance accounts for former Unisource employees[56](index=56&type=chunk) - The company intends to terminate and settle the U.S. Veritiv Pension Plan by the end of **2023**, while the Veritiv Hourly Pension Plan will remain open[57](index=57&type=chunk) Net Periodic Benefit Cost (Credit) (in millions) | (in millions) | Three Months Ended March 31, 2023 (U.S.) | Three Months Ended March 31, 2022 (U.S.) | Three Months Ended March 31, 2022 (Canada) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Service cost | $0.4 | $0.8 | $0.1 | | Interest cost | $0.6 | $0.3 | $0.6 | | Expected return on plan assets | $(0.6) | $(0.5) | $(1.1) | | Total other components | $0.0 | $(0.2) | $(0.5) | | Net periodic benefit cost (credit) | $0.4 | $0.6 | $(0.4) | [8. FAIR VALUE MEASUREMENTS](index=18&type=section&id=8.%20FAIR%20VALUE%20MEASUREMENTS) - The carrying amounts of cash, receivables, payables, and short-term debt approximate their fair values due to their short maturities[59](index=59&type=chunk) - Borrowings under the ABL Facility are at variable market interest rates, and their carrying amount approximates fair value (Level 2 measurement)[60](index=60&type=chunk) [9. EARNINGS PER SHARE](index=18&type=section&id=9.%20EARNINGS%20PER%20SHARE) Earnings Per Share Calculation (in millions, except per share data) | (in millions, except per share data) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net income | $68.7 | $78.5 | | Weighted-average shares outstanding – basic | 13.53 | 14.77 | | Dilutive effect of stock-based awards | 0.21 | 0.55 | | Weighted-average shares outstanding – diluted | 13.74 | 15.32 | | Basic EPS | $5.08 | $5.31 | | Diluted EPS | $5.00 | $5.12 | - Diluted EPS **decreased from $5.12** in Q1 2022 to **$5.00** in Q1 2023, despite a lower diluted share count, reflecting the decrease in net income[63](index=63&type=chunk) [10. SHAREHOLDERS' EQUITY](index=19&type=section&id=10.%20SHAREHOLDERS'%20EQUITY) Dividend Declarations and Payments (in millions) | Declaration Date | Record Date | Payable Date | Dividend Per Share | Payment (in millions) | | :---------------- | :---------- | :----------- | :----------------- | :-------------------- | | February 27, 2023 | March 9, 2023 | March 31, 2023 | $0.63 | $8.5 | | May 8, 2023 | May 18, 2023 | June 5, 2023 | $0.63 | N/A | - The company declared and paid a quarterly cash dividend of **$0.63 per share** in Q1 2023, totaling **$8.5 million**, with no comparable transactions in the prior year period[64](index=64&type=chunk)[65](index=65&type=chunk) - The 2022 Share Repurchase Program, authorizing **$200 million**, was completed by December 31, 2022, with **1,564,420 shares** repurchased[66](index=66&type=chunk) - In Q1 2022, **78,025 shares** were repurchased for **$10.4 million**[66](index=66&type=chunk) Accumulated Other Comprehensive Loss (AOCL) (in millions) | (in millions) | Balance at Dec 31, 2022 | Unrealized net gains (losses) | Net current period OCI (loss) | Balance at Mar 31, 2023 | | :-------------------------- | :---------------------- | :---------------------------- | :-------------------------- | :---------------------- | | Foreign currency translation adjustments | $(16.6) | $2.9 | $2.9 | $(13.7) | | Retirement liabilities | $3.9 | $(0.1) | $(0.1) | $3.8 | | AOCL | $(12.7) | $2.8 | $2.8 | $(9.9) | [11. COMMITMENTS AND CONTINGENCIES](index=20&type=section&id=11.%20COMMITMENTS%20AND%20CONTINGENCIES) - The Company is involved in various legal proceedings but does not expect any to have a material adverse effect on its financial condition or results of operations[73](index=73&type=chunk) - Veritiv recognized an estimated complete withdrawal liability of **$4.9 million** from the Teamsters Pension Trust Fund of Philadelphia and Vicinity as of December 31, 2022, unchanged as of March 31, 2023, with payments expected over **19 years**[75](index=75&type=chunk) - A final withdrawal liability of **$0.6 million** was recognized for the Minneapolis Food Distributors Ind Pension Plan in Q1 2023, with payments expected over **four years**[76](index=76&type=chunk) [12. SEGMENT AND OTHER INFORMATION](index=21&type=section&id=12.%20SEGMENT%20AND%20OTHER%20INFORMATION) - Veritiv operates through three reportable segments: Packaging, Facility Solutions, and Print Solutions, along with a Corporate & Other category[78](index=78&type=chunk) Net Sales and Adjusted EBITDA by Segment (in millions) | (in millions) | Packaging (2023) | Packaging (2022) | Facility Solutions (2023) | Facility Solutions (2022) | Print Solutions (2023) | Print Solutions (2022) | Corporate & Other (2023) | Corporate & Other (2022) | Total (2023) | Total (2022) | | :-------------- | :--------------- | :--------------- | :------------------------ | :------------------------ | :--------------------- | :--------------------- | :----------------------- | :----------------------- | :----------- | :----------- | | Net sales | $895.4 | $1,003.1 | $180.2 | $229.4 | $434.6 | $596.6 | $0 | $29.0 | $1,510.2 | $1,858.1 | | Adjusted EBITDA | $96.4 | $97.4 | $15.4 | $13.4 | $37.2 | $54.6 | $(45.2) | $(45.9) | N/A | N/A | - Adjusted EBITDA for reportable segments **decreased from $165.4 million** in Q1 2022 to **$149.0 million** in Q1 2023[80](index=80&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=23&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Veritiv's financial condition and operating results for Q1 2023, including segment performance and liquidity [Executive Overview](index=24&type=section&id=Executive%20Overview) - Veritiv continues to execute its long-term strategy to be a leading provider of business-to-business packaging products and services, as well as paper and facility solutions, with ongoing investments in organic packaging growth and evaluation of inorganic opportunities[87](index=87&type=chunk) - The company sold its Canadian business (May 2, 2022) and logistics solutions business (September 1, 2022) to focus its portfolio on core packaging and higher-growth, higher-margin businesses[89](index=89&type=chunk) - Veritiv's operating results are subject to seasonal influences, with higher consolidated net sales historically occurring in the third and fourth quarters, and lowest in the first quarter[93](index=93&type=chunk) [Results of Operations, Including Business Segments](index=25&type=section&id=Results%20of%20Operations,%20Including%20Business%20Segments) Consolidated Operating Results (in millions) | (in millions) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Increase (Decrease) ($) | Increase (Decrease) (%) | | :------------------------------------------------- | :-------------------------------- | :-------------------------------- | :---------------------- | :---------------------- | | Net sales | $1,510.2 | $1,858.1 | $(347.9) | (18.7)% | | Cost of products sold | $1,144.1 | $1,455.4 | $(311.3) | (21.4)% | | Distribution expenses | $89.7 | $112.2 | $(22.5) | (20.1)% | | Selling and administrative expenses | $171.4 | $187.9 | $(16.5) | (8.8)% | | Operating income | $94.9 | $87.2 | $7.7 | 8.8% | | Net income | $68.7 | $78.5 | $(9.8) | (12.5)% | - Net sales **decreased by 18.7% YoY**, with organic sales **decreasing by 7.8%**, primarily due to lower volumes and customer inventory destocking, especially in the Print Solutions segment[96](index=96&type=chunk) - Divestitures of Canadian and logistics solutions businesses accounted for **$191.6 million** and **$29.0 million** of the net sales decrease, respectively[96](index=96&type=chunk) - Operating income **increased by 8.8% YoY**, despite lower net sales, due to cost of products sold decreasing at a faster rate than net sales, and reductions in distribution and selling and administrative expenses, partly offset by higher interest expense and other net expenses[94](index=94&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk) [Segment Results](index=27&type=section&id=Segment%20Results) - Adjusted EBITDA is the primary financial performance measure used by management to assess business performance and incentivize management[105](index=105&type=chunk) Segment Net Sales and Adjusted EBITDA (in millions) | Segment | Net Sales (Q1 2023) | Net Sales (Q1 2022) | Adjusted EBITDA (Q1 2023) | Adjusted EBITDA (Q1 2022) | | :---------------- | :------------------ | :------------------ | :------------------------ | :------------------------ | | Packaging | $895.4 | $1,003.1 | $96.4 | $97.4 | | Facility Solutions | $180.2 | $229.4 | $15.4 | $13.4 | | Print Solutions | $434.6 | $596.6 | $37.2 | $54.6 | | Corporate & Other | $0 | $29.0 | $(45.2) | $(45.9) | [Packaging](index=29&type=section&id=Packaging) - Net sales **decreased by 10.7% YoY** to **$895.4 million**, with organic sales **down 3.6%**, primarily due to lower sales volume and the Canadian business divestiture (**$74.2 million** impact), partially offset by higher market prices[113](index=113&type=chunk)[115](index=115&type=chunk) - Adjusted EBITDA **decreased by 1.0% YoY** to **$96.4 million**, primarily due to lower net sales, but partially offset by decreased distribution and selling and administrative expenses, and cost of products sold decreasing faster than net sales[113](index=113&type=chunk)[116](index=116&type=chunk) - Management expects market demand challenges to continue into Q2 2023, but believes the majority of customer inventory destocking effects were over by the end of Q1 2023[115](index=115&type=chunk) [Facility Solutions](index=30&type=section&id=Facility%20Solutions) - Net sales **decreased by 21.4% YoY** to **$180.2 million**, primarily due to the Canadian business divestiture (**$64.5 million** impact) and decreased sales volume[117](index=117&type=chunk)[118](index=118&type=chunk) - Organic sales, however, **increased by 9.3%**[118](index=118&type=chunk) - Adjusted EBITDA **increased by 14.9% YoY** to **$15.4 million**, driven by organic sales growth and cost of products sold increasing at a slower rate than net sales, despite the overall net sales decrease from divestiture[117](index=117&type=chunk)[119](index=119&type=chunk) - Demand improved in entertainment, hospitality, and office-like sectors due to a consumer shift from goods to services and increased physical office returns, partially offset by lower demand for personal protective equipment[118](index=118&type=chunk) [Print Solutions](index=31&type=section&id=Print%20Solutions) - Net sales **decreased by 27.2% YoY** to **$434.6 million**, with organic sales **down 20.1%**, primarily due to decreased sales volume, customer inventory destocking, and the Canadian business divestiture (**$52.9 million** impact)[120](index=120&type=chunk)[121](index=121&type=chunk) - Adjusted EBITDA **decreased by 31.9% YoY** to **$37.2 million**, mainly attributable to lower net sales, partially offset by cost of products sold decreasing faster than net sales and reduced selling and administrative and distribution expenses[120](index=120&type=chunk)[122](index=122&type=chunk) - Management expects customer inventory destocking to continue into Q3 2023 and anticipates pricing challenges in H2 2023 if demand remains depressed[121](index=121&type=chunk) [Corporate & Other](index=32&type=section&id=Corporate%20%26%20Other) - Net sales **decreased by 100.0% YoY** to **$0**, driven by the divestiture of the logistics solutions business in 2022[124](index=124&type=chunk)[125](index=125&type=chunk) - Adjusted EBITDA **increased by 1.5% YoY** to **$(45.2) million**, primarily due to a **$5.0 million** decrease in selling and administrative expenses, partially offset by the net sales decrease from the logistics solutions divestiture[124](index=124&type=chunk)[126](index=126&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Summary of Cash Flows (in millions) | (in millions) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by (used for) Operating activities | $70.9 | $(5.9) | | Net cash provided by (used for) Investing activities | $(2.7) | $(7.1) | | Net cash provided by (used for) Financing activities | $(76.5) | $7.4 | - Net cash from operating activities **increased by $76.8 million YoY**, primarily due to a decrease in accounts receivable driven by lower net sales and improved collection efforts[129](index=129&type=chunk) - Net cash used for financing activities **increased by $83.9 million YoY**, mainly due to increased net repayments under the ABL Facility, unfavorable change in book overdrafts, and dividend payments, partially offset by lower tax withholdings and common stock repurchases[131](index=131&type=chunk)[132](index=132&type=chunk) - As of March 31, 2023, the available additional borrowing capacity under the ABL Facility was approximately **$681.8 million**[134](index=134&type=chunk) - The company expects to spend approximately **$30 million** on capital expenditures in 2023 and declared a quarterly cash dividend of **$0.63 per share** payable in June 2023[137](index=137&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=34&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) No material changes in market risk were reported compared to the prior year's Annual Report on Form 10-K - No material changes in market risk were reported compared to the previous Annual Report on Form 10-K[142](index=142&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=34&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded the company's disclosure controls and procedures were effective as of March 31, 2023, with no material changes in internal control - The Company's disclosure controls and procedures were evaluated and deemed effective as of March 31, 2023[143](index=143&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2023[144](index=144&type=chunk) [PART II. OTHER INFORMATION](index=34&type=section&id=Part%20II%3A%20OTHER%20INFORMATION) [ITEM 1. LEGAL PROCEEDINGS](index=34&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Legal proceedings information is referenced to Note 11 of the financial statements, with no new material updates - Legal proceedings information is referenced to Note 11 of the financial statements[146](index=146&type=chunk) [ITEM 1A. RISK FACTORS](index=34&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to risk factors were reported compared to the prior year's Annual Report on Form 10-K - No material changes to risk factors were reported compared to the previous Annual Report on Form 10-K[147](index=147&type=chunk) [ITEM 6. EXHIBITS](index=35&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including the ABL Credit Agreement amendment and CEO/CFO certifications - Key exhibits include the Third Amendment to the ABL Credit Agreement dated March 17, 2023, and Rule 13a-14(a) and Section 1350 Certifications from the Chief Executive Officer and Chief Financial Officer[148](index=148&type=chunk) [SIGNATURES](index=36&type=section&id=SIGNATURES) - The report was signed on May 9, 2023, by Eric J. Guerin, Senior Vice President and Chief Financial Officer, and Lance D. Gebert, Corporate Controller[153](index=153&type=chunk)

[Cautionary Note on Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20NOTE%20ON%20FORWARD-LOOKING%20STATEMENTS) [Forward-Looking Statements Disclosure](index=4&type=section&id=Forward-Looking%20Statements%20Disclosure) The report contains forward-looking statements about future operating results, performance, strategy, business plans, prospects, and guidance, subject to significant risks and uncertainties - The report contains forward-looking statements about future operating results, performance, strategy, business plans, prospects, and guidance, which are subject to **significant risks and uncertainties**[13](index=13&type=chunk) - Factors that could cause actual results to differ materially are described under 'Risk Factors' and other publicly available reports[14](index=14&type=chunk) - The Company undertakes no obligation to update or revise forward-looking statements, except as required by law, and historical information should not be considered an indicator of future performance[15](index=15&type=chunk) [Part I](index=4&type=section&id=PART%20I) [Item 1. Business Overview](index=4&type=section&id=ITEM%201.%20BUSINESS) Veritiv Corporation is a leading North American B2B provider of packaging, facility solutions, and print-based products, operating in the U.S. and Mexico through three segments [Company Profile](index=4&type=section&id=Our%20Company) - Veritiv Corporation is a leading North American B2B full-service provider of packaging, facility solutions, and print-based products and services, focused on segment-tailored market leadership and operational excellence[17](index=17&type=chunk) - The company operates primarily in the U.S. and Mexico, serving diverse sectors like manufacturing, food and beverage, healthcare, and commercial printing[18](index=18&type=chunk) - Veritiv's three reportable segments are Packaging, Facility Solutions, and Print Solutions, with a Corporate & Other category for non-attributable assets and costs[19](index=19&type=chunk) [Products and Services](index=5&type=section&id=Products%20and%20Services) - Veritiv distributes national and regional brand products, as well as **private label brands** manufactured by third-party suppliers[23](index=23&type=chunk) - Private label brands include TUFflex for packaging, Reliable, Spring Grove, Steel, and PUR Value for facility solutions, and Endurance, Comet, Starbrite Opaque Select for print products[24](index=24&type=chunk) Private Label Sales as % of Segment/Total Net Sales | Segment | 2022 (%) | 2021 (%) | 2020 (%) | | :---------------- | :--- | :--- | :--- | | Packaging | 6% | 6% | 6% | | Facility Solutions | 9% | 8% | 8% | | Print Solutions | 21% | 17% | 14% | | **Total Company** | **11%** | **10%** | **9%** | [Customers](index=6&type=section&id=Customers) - Veritiv serves a broad range of industry sectors through multi-year sales agreements and individual transactional sales[26](index=26&type=chunk) - No single customer accounted for more than **5%** of the Company's consolidated net sales for the years ended December 31, 2022, 2021, and 2020[26](index=26&type=chunk) [Suppliers](index=6&type=section&id=Suppliers) - The company purchases products from thousands of domestic and international suppliers, including large corporations and independent regional suppliers[27](index=27&type=chunk) - Supplier selection is based on customer demand, total service, cost, and product quality[27](index=27&type=chunk) - Approximately **29%** of purchases in 2022 were made from ten suppliers, highlighting a degree of supplier concentration[29](index=29&type=chunk) [Competition](index=6&type=section&id=Competition) - The business-to-business distribution industry is highly competitive and mature, characterized by slowing growth or declining demand (e.g., paper)[30](index=30&type=chunk) - Competitors include national, regional, and local distributors, manufacturers, merchants, brokers, and online suppliers[30](index=30&type=chunk) - Veritiv's competitive advantages include its sales and marketing professionals, wide product selection (including private brands), diverse customer base, and broad geographic footprint[31](index=31&type=chunk) [Human Capital](index=7&type=section&id=Human%20Capital) - Veritiv's human capital objectives focus on attracting, developing, engaging, and retaining skilled and diverse talent, and promoting safety[34](index=34&type=chunk) - As of December 31, 2022, Veritiv had approximately **5,000 employees** worldwide, with **90% in the U.S.**, **8% in Mexico**, and **2% elsewhere**[35](index=35&type=chunk)[36](index=36&type=chunk) - The company has implemented a multi-year Diversity, Equity and Inclusion (DEI) strategy, launched an Employee Engagement Survey, and introduced a recognition platform (BRAVO!)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - Veritiv contributed **$3.5 million** to the Veritiv Charitable Giving Fund in 2022 and reported a Total Injury Rate (TIR) of **0.92** for its U.S. and Mexico operations[41](index=41&type=chunk) - Talent development programs include tuition assistance and a Company-paid program for hourly warehouse workers to become certified truck drivers[43](index=43&type=chunk) [Seasonality](index=9&type=section&id=Seasonality) - Veritiv's operating results are subject to seasonal influences, with higher consolidated net sales typically in the **third and fourth quarters** and lowest in the **first quarter**[48](index=48&type=chunk) - Packaging segment sales traditionally increase throughout the year, Facility Solutions peak in Q3 due to summer demand, and Print Solutions are driven by back-to-school, political, and holiday advertising in H2[48](index=48&type=chunk)[49](index=49&type=chunk) - The COVID-19 pandemic caused minor disruptions to seasonal patterns, and the magnitude of future disruption is uncertain[49](index=49&type=chunk) [Executive Officers](index=10&type=section&id=Information%20About%20Our%20Executive%20Officers) - Salvatore A. Abbate serves as Chief Executive Officer and a Board member since September 2020[50](index=50&type=chunk) - Stephen J. Smith is Senior Vice President and Chief Financial Officer since March 2014, with Eric J. Guerin becoming SVP and CFO effective March 1, 2023[50](index=50&type=chunk)[52](index=52&type=chunk) - Key executive roles include Chief Human Resources Officer (Dean A. Adelman), SVP Marketing and Business Management (Daniel B. Calderwood), SVP Sales (Stephanie E. Mayerle), SVP and CIO (Karen K. Renner), SVP, General Counsel and Corporate Secretary (Susan B. Salyer), SVP, Developing Businesses and Global Operations (Michael D. Walkenhorst), and SVP, Print Solutions (Daniel J. Watkoske)[50](index=50&type=chunk)[52](index=52&type=chunk) - Veritiv Corporation is a leading North American business-to-business full-service provider of value-added packaging products and services, facility solutions, and print-based products[17](index=17&type=chunk) - The company operates primarily throughout the U.S. and Mexico, serving diverse industry sectors including manufacturing, food and beverage, healthcare, and commercial printing[18](index=18&type=chunk) - Veritiv's business is organized under three reportable segments: Packaging, Facility Solutions, and Print Solutions. The logistics solutions business, previously in Corporate & Other, was divested in September 2022[19](index=19&type=chunk) Net Sales by Reportable Segment (as % of Consolidated Net Sales) | Segment | 2022 (%) | 2021 (%) | 2020 (%) | | :---------------- | :--- | :--- | :--- | | Packaging | 55% | 55% | 52% | | Facility Solutions | 11% | 13% | 15% | | Print Solutions | 33% | 31% | 32% | | Corporate & Other | 1% | 1% | 1% | | **Total Company** | **100%** | **100%** | **100%** | [Item 1A. Risk Factors](index=11&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section outlines significant risks that could materially affect Veritiv's business, financial condition, results of operations, or cash flows, including industry decline, competition, supply chain, and economic conditions [Industry and Business Risks](index=12&type=section&id=Risks%20Relating%20to%20Our%20Industry%20and%20Business) - The decline in paper demand due to increased digital use and product substitution puts pressure on Print Solutions' revenues and profit margins[56](index=56&type=chunk) - Intense competition in the distribution industry, including new non-traditional sources, could lead to margin erosion and difficulty retaining customers[57](index=57&type=chunk) - Reliance on third-party suppliers means disruptions (e.g., raw material shortages, strikes, transportation issues) or increased product costs could negatively impact the ability to fulfill orders and profitability[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) - Changes in raw material prices (pulp, paper, containerboard, resin) can significantly impact operating results and cash flows, especially if price increases cannot be passed to customers[62](index=62&type=chunk) - Increases in fuel and third-party freight costs, or unavailability of providers, could adversely affect business and results of operations[64](index=64&type=chunk) - The loss of multiple significant customers (top 10 customers accounted for **~12%** of 2022 consolidated net sales) could materially impact financial condition[65](index=65&type=chunk)[66](index=66&type=chunk) [Human Capital Risks](index=14&type=section&id=Risks%20Relating%20to%20Human%20Capital) - Failure to attract, train, and retain qualified employees, especially sales professionals, could materially adversely affect results of operations[72](index=72&type=chunk) - Pension and healthcare costs are subject to factors like market returns, interest rates, and retiree numbers, which could significantly impact cash flows and financial results[73](index=73&type=chunk) - Participation in multi-employer pension and health/welfare plans could create additional obligations and payment liabilities, including potential withdrawal liabilities[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) - Work stoppages, union negotiations, or labor disputes could disrupt business operations and increase operating costs, especially with **24%** of unionized employees having agreements expiring in 2023[78](index=78&type=chunk)[79](index=79&type=chunk) [Capital Structure Risks](index=15&type=section&id=Risks%20Relating%20to%20Our%20Capital%20Structure) - Despite current indebtedness of approximately **$278.2 million** (as of Dec 31, 2022), the company may incur substantially more debt, intensifying financial risks[80](index=80&type=chunk) - Increased indebtedness could limit additional financing, dedicate significant cash flow to debt payments, increase interest rate risk, and reduce flexibility to adapt to market changes[81](index=81&type=chunk) - Restrictive covenants in the ABL Facility agreements could limit operational flexibility (e.g., incurring debt, paying dividends, making acquisitions) and lead to serious consequences if violated[82](index=82&type=chunk) - The company's stock price may fluctuate significantly due to various factors, including operating results, industry trends, market conditions, and large sales by significant shareholders[83](index=83&type=chunk)[84](index=84&type=chunk) - Concentrated ownership (four largest shareholders collectively owned **~57%** of common stock as of Dec 31, 2022) may allow significant influence over shareholder approvals and impact stock liquidity[88](index=88&type=chunk) - Anti-takeover provisions in the company's charter and by-laws could discourage, delay, or prevent a change of control, potentially affecting the stock's trading price[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) - The company instituted a quarterly cash dividend policy in November 2022, but future payments are discretionary and depend on various factors, including financial condition and contractual restrictions[94](index=94&type=chunk) [Regulatory and Legal Risks](index=19&type=section&id=Risks%20Relating%20to%20Regulatory%20Compliance%20and%20Legal%20Matters) - Compliance with environmental, health, and safety laws, and potential liabilities under such laws, could negatively impact business, financial condition, and results of operations[96](index=96&type=chunk)[97](index=97&type=chunk) - Increasing focus on Environmental, Social, and Governance (ESG) matters could adversely impact business and reputation if goals are not met or properly reported[98](index=98&type=chunk)[99](index=99&type=chunk) - Expenditures related to compliance with various U.S. and international laws and regulations (e.g., DOT, customs, FCPA) could adversely impact business and operating results[100](index=100&type=chunk) - Changes in tax laws, tax assessments, and unclaimed property audits by governmental authorities could adversely impact operating results[101](index=101&type=chunk) - Legal proceedings related to product quality, premises-related liabilities, vehicle accidents, and regulatory inquiries could have a material adverse effect on business, reputation, and financial condition[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) [COVID-19 Pandemic Risks](index=21&type=section&id=Risks%20Relating%20to%20the%20COVID-19%20Pandemic) - The COVID-19 pandemic has adversely affected, and may continue to affect, business, financial condition, results of operations, liquidity, and cash flows due to demand volatility, supply chain disruptions, and market volatility[107](index=107&type=chunk) - The extent of future impacts depends on uncertain developments like the pandemic's duration, new variants, and the effectiveness of vaccines, potentially leading to economic recession or long-term changes in customer behavior[107](index=107&type=chunk) [General Risk Factors](index=21&type=section&id=General%20Risk%20Factors) - Adverse developments in general business and economic conditions, including slow GDP growth or volatility in capital markets, could materially affect demand for products and the company's financial condition[108](index=108&type=chunk)[109](index=109&type=chunk) - Business conditions in international operations (e.g., Mexico) are subject to political, social, economic, and criminal activity issues, which could negatively affect financial results[110](index=110&type=chunk) - Inclement weather, widespread illness outbreaks, anti-terrorism measures, and other disruptions could negatively affect the supply chain, distribution system, operations, and customer demand[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - Dependence on IT and telecommunications systems means failures or security breaches could lead to operational disruptions, information misappropriation, lost sales, and business delays[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk)[118](index=118&type=chunk) - The industry-wide decline in demand for paper and related products, particularly affecting the Print Solutions business, could materially impact financial condition and results of operations[56](index=56&type=chunk) - High competition in the business-to-business distribution industry, including from national/regional distributors and e-commerce, may adversely impact margins and customer retention[57](index=57&type=chunk) - Dependence on third-party suppliers means conditions beyond control (e.g., raw material shortages, transportation interruptions) can interrupt supplies and increase product costs, potentially leading to lost sales[59](index=59&type=chunk)[60](index=60&type=chunk) - Changes in raw material prices (pulp, paper, containerboard, resin) and fuel costs can negatively impact results if price increases cannot be passed to customers[62](index=62&type=chunk)[64](index=64&type=chunk) - The loss of multiple significant customers (top ten customers generated **~12%** of 2022 consolidated net sales) could adversely affect financial condition and cash flows[65](index=65&type=chunk)[66](index=66&type=chunk) - Risks related to human capital include attracting and retaining qualified employees, managing pension and healthcare costs, and potential work stoppages or labor disputes[72](index=72&type=chunk)[73](index=73&type=chunk)[78](index=78&type=chunk) - High indebtedness levels (**$278.2 million** as of Dec 31, 2022) and restrictive covenants in debt agreements could limit operational flexibility and increase vulnerability to economic downturns[80](index=80&type=chunk)[81](index=81&type=chunk) - The COVID-19 pandemic has adversely affected, and may continue to affect, business operations, demand, supply chain, and financial markets, with uncertain future impacts[107](index=107&type=chunk) [Item 1B. Unresolved Staff Comments](index=24&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) This section indicates that there are no unresolved staff comments from the SEC - There are no unresolved staff comments[119](index=119&type=chunk) [Item 2. Properties](index=24&type=section&id=ITEM%202.%20PROPERTIES) As of December 31, 2022, Veritiv operated a distribution network of 95 centers, with the majority being leased, strategically located across the U.S. and Mexico - As of December 31, 2022, Veritiv operated a distribution network from **95 distribution centers**[120](index=120&type=chunk) Veritiv Properties as of December 31, 2022 | Type | Count | Square feet (in millions) | | :--- | :--- | :--- | | Leased | 89 | 13.3 | | Owned | 6 | 0.8 | | **Total** | **95** | **14.1** | - Facilities are strategically located throughout the U.S. and Mexico to efficiently serve customers and facilitate expedited delivery[121](index=121&type=chunk) [Item 3. Legal Proceedings](index=24&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) This section refers to Note 15 of the Notes to Consolidated Financial Statements for information regarding legal proceedings - Information related to legal proceedings can be found in Note 15 of the Notes to Consolidated Financial Statements[122](index=122&type=chunk) [Item 4. Mine Safety Disclosures](index=24&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to Veritiv Corporation - This item is not applicable[123](index=123&type=chunk) [Part II](index=25&type=section&id=PART%20II) [Item 5. Common Equity Market, Stockholder Matters & Equity Purchases](index=25&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY,%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) Veritiv's common stock trades on the NYSE under 'VRTV', with 4,348 shareholders of record as of February 21, 2023, and the company completed a $200 million share repurchase program and instituted a quarterly cash dividend policy in 2022 [Performance Graph](index=25&type=section&id=Performance%20Graph) - The performance graph compares the cumulative total shareholder return (TSR) of Veritiv's common stock to the Russell 2000 Index and a customized peer group from December 31, 2017, through December 31, 2022[127](index=127&type=chunk) - The peer group includes companies like Beacon Roofing Supply, Genuine Parts Company, Sealed Air Corporation, and others, with adjustments for companies that filed for bankruptcy or were acquired[128](index=128&type=chunk)[130](index=130&type=chunk) - Veritiv's common stock is publicly traded on the New York Stock Exchange (NYSE) under the ticker symbol '**VRTV**'[125](index=125&type=chunk) - As of February 21, 2023, there were **4,348 shareholders of record**[125](index=125&type=chunk) Issuer Purchases of Equity Securities (Q4 2022) | Period | Total Number of Shares Purchased | Average Price Paid Per Share ($) | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares that May Yet be Purchased Under the Publicly Announced Program ($) | | :--------------- | :------------------------------- | :--------------------------- | :---------------------------------------------------------------- | :------------------------------------------------------------------------------------------------ | | October 1-31 | 190 | $97.77 | — | $31,330 | | November 1-30 | — | $— | — | $31,330 | | December 1-31 | — | $— | — | $31,330 | | **Total** | **190** | | **—** | **$31,330** | - The company completed its **$200 million** 2022 Share Repurchase Program during the third quarter of 2022, with an average price of **$127.84 per share**[126](index=126&type=chunk)[139](index=139&type=chunk) - In November 2022, the Board instituted a policy of paying regular quarterly cash dividends, declaring **$0.63 per share** payable in December 2022 (payout of **~$8.5 million**) and again in March 2023[126](index=126&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) [Item 6. (Reserved)](index=26&type=section&id=ITEM%206.%20(Reserved)) This item is reserved and contains no information - This item is reserved[130](index=130&type=chunk) [Item 7. Management's Discussion and Analysis](index=27&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management's discussion covers financial condition, results of operations, and liquidity, highlighting pandemic impacts, divestitures, share repurchases, and dividend policy, with a focus on packaging growth and non-core business evaluation [Executive Overview](index=27&type=section&id=Executive%20Overview) - The COVID-19 pandemic negatively impacted Veritiv's financial results starting April 2020, leading to decreased sales activity and necessitating cost mitigation actions[132](index=132&type=chunk)[134](index=134&type=chunk) - Economic improvements were observed in 2022 and 2021 due to global vaccine efforts, but future impacts of the pandemic remain uncertain[135](index=135&type=chunk) - In 2022, Veritiv divested its logistics solutions business and Veritiv Canada, Inc., recognizing pre-tax gains of **$11.0 million** and **$18.7 million**, respectively[137](index=137&type=chunk) - The company reevaluated its print and publishing operations in Q1 2022, combining them into a new 'Print Solutions' segment[138](index=138&type=chunk) - Veritiv completed its **$200 million** 2022 Share Repurchase Program and instituted a regular quarterly cash dividend policy in November 2022[139](index=139&type=chunk)[140](index=140&type=chunk) - The 2020 Restructuring Plan, completed by December 31, 2022, included workforce reductions, facility closures, and compensation adjustments, incurring **$69.6 million** in costs[142](index=142&type=chunk)[143](index=143&type=chunk) - Veritiv's long-term strategy focuses on being a leading provider of packaging, paper, and facility solutions, with continued investment in organic and inorganic packaging growth[144](index=144&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations,%20Including%20Business%20Segments) Consolidated Operating Results (2022 vs. 2021) | Metric | 2022 (in millions) | 2021 (in millions) | Increase (Decrease) $ (in millions) | Increase (Decrease) % | | :--------------------------------------------------------------------------------- | :----- | :----- | :-------------------- | :-------------------- | | Net sales | $7,146.3 | $6,850.5 | $295.8 | 4.3% | | Cost of products sold | 5,526.0 | 5,417.9 | 108.1 | 2.0% | | Distribution expenses | 398.5 | 419.3 | (20.8) | (5.0)% | | Selling and administrative expenses | 762.7 | 735.8 | 26.9 | 3.7% | | Gain on sale of businesses | (29.7) | (3.1) | 26.6 | * | | Depreciation and amortization | 45.6 | 55.2 | (9.6) | (17.4)% | | Restructuring charges, net | 2.0 | 15.4 | (13.4) | (87.0)% | | **Operating income (loss)** | **441.2** | **210.0** | **231.2** | **110.1%** | | Interest expense, net | 17.7 | 17.2 | 0.5 | 2.9% | | Other (income) expense, net | (8.4) | (4.7) | (3.7) | (78.7)% | | Income (loss) before income taxes | 431.9 | 197.5 | 234.4 | 118.7% | | Income tax expense (benefit) | 94.0 | 52.9 | 41.1 | 77.7% | | **Net income (loss)** | **$337.9** | **$144.6** | **$193.3** | **133.7%** | - Net sales increased by **$295.8 million (4.3%)** to **$7,146.3 million** in 2022, driven by inflationary market price increases in Packaging and Print Solutions, partially offset by divestitures[149](index=149&type=chunk)[152](index=152&type=chunk) - Cost of products sold increased at a slower rate (**2.0%**) than net sales due to pricing improvements, the sale of the lower-margin Canadian business, and changes in segment mix[153](index=153&type=chunk) - Distribution expenses decreased by **$20.8 million (5.0%)**, primarily due to the Canadian business divestiture, despite increases in freight and fuel costs[154](index=154&type=chunk) - Selling and administrative expenses increased by **$26.9 million (3.7%)**, mainly due to higher personnel expenses and professional fees, partially offset by the Canadian divestiture[155](index=155&type=chunk) - Operating income more than doubled, increasing by **$231.2 million (110.1%)** to **$441.2 million** in 2022[149](index=149&type=chunk) - Net income increased by **$193.3 million (133.7%)** to **$337.9 million** in 2022[149](index=149&type=chunk) - The effective tax rate decreased to **21.8%** in 2022 from **26.8%** in 2021, partly due to a tax benefit on the disposition of a foreign subsidiary[161](index=161&type=chunk) Organic Sales (2022 vs. 2021) | Segment | 2022 (in millions) | 2021 (in millions) | Change $ (in millions) | Change % | | :-------------------- | :----- | :----- | :------- | :------- | | Total Company | $6,808.1 | $5,999.7 | $808.4 | 13.5% | | Packaging | $3,808.2 | $3,478.5 | $329.7 | 9.5% | | Facility Solutions | $693.7 | $632.4 | $61.3 | 9.7% | | Print Solutions | $2,306.2 | $1,888.8 | $417.4 | 22.1% | | Corporate & Other | $— | $— | $— | — | Segment Adjusted EBITDA (2022 vs. 2021) | Segment | 2022 Net Sales (in millions) | 2022 Adjusted EBITDA (in millions) | 2022 Adjusted EBITDA as % of net sales | 2021 Net Sales (in millions) | 2021 Adjusted EBITDA (in millions) | 2021 Adjusted EBITDA as % of net sales | | :-------------------- | :------------- | :------------------- | :------------------------------------- | :------------- | :------------------- | :------------------------------------- | | Packaging | $3,908.5 | $415.9 | 10.6% | $3,760.4 | $393.5 | 10.5% | | Facility Solutions | $780.6 | $60.7 | 7.8% | $894.0 | $52.7 | 5.9% | | Print Solutions | $2,378.8 | $239.6 | 10.1% | $2,080.8 | $114.7 | 5.5% | | Corporate & Other | $78.4 | $(198.3) | * | $115.3 | $(218.3) | * | [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash requirements are primarily met by cash flows from operations and borrowings under the ABL Facility[179](index=179&type=chunk) Summary of Cash Flows (in millions) | Activity | 2022 (in millions) | 2021 (in millions) | | :-------------------------- | :----- | :----- | | Operating activities | $252.4 | $154.7 | | Investing activities | 168.0 | (4.3) | | Financing activities | (428.6) | (221.4) | - Net cash from operating activities increased by **$97.7 million** in 2022, driven by improved operating results[183](index=183&type=chunk) - Net cash from investing activities increased by **$172.3 million** in 2022, primarily due to net cash proceeds from the sale of the Canadian business (**$162.2 million**) and logistics solutions business (**$18.0 million**)[184](index=184&type=chunk) - Net cash used for financing activities increased by **$207.2 million** in 2022, mainly due to increased net repayments under the ABL Facility, higher common stock repurchases (**$200 million**), and dividend payments (**$8.5 million**)[185](index=185&type=chunk) - As of December 31, 2022, the available additional borrowing capacity under the ABL Facility was approximately **$711.3 million**[187](index=187&type=chunk) - Future cash needs include working capital, capital expenditures (estimated **$30 million** in 2023), contractual commitments, dividends, and strategic investments[190](index=190&type=chunk)[191](index=191&type=chunk) Cash and Cash Equivalents (in millions) | Location | 2022 (in millions) | 2021 (in millions) | | :-------------------------- | :----- | :----- | | Held in the U.S. | $20.8 | $25.8 | | Held in foreign subsidiaries | 19.8 | 23.5 | | **Total** | **$40.6** | **$49.3** | [Critical Accounting Estimates](index=39&type=section&id=Critical%20Accounting%20Estimates) - Critical accounting estimates include revenue recognition (variable consideration, returns), allowance for credit losses, income taxes (deferred tax assets, valuation allowances), employee benefit plans (actuarial assumptions), leases (lease term, discount rates), and impairment of long-lived assets and goodwill[195](index=195&type=chunk)[196](index=196&type=chunk) - Revenue from direct shipments from manufacturers to customers is reported on a gross basis, representing approximately **35%** of total net sales[198](index=198&type=chunk) - The allowance for credit losses is based on historical experience, current conditions, forecasts, and specific troubled accounts, with a **0.1%** change impacting pre-tax income by approximately **$0.9 million**[202](index=202&type=chunk)[203](index=203&type=chunk) - Significant judgment is required for income tax provisions, deferred tax assets, and valuation allowances, with the COVID-19 pandemic increasing the risk of future valuation allowances[205](index=205&type=chunk) - Key actuarial assumptions for pension plans include discount rates (**5.16%** for U.S. plans in 2022) and expected long-term rates of return on plan assets (**3.37%** for U.S. plans in 2022)[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) - Impairment assessments for long-lived assets and goodwill involve estimating future cash flows and fair market values, which are subject to economic and operating conditions[216](index=216&type=chunk)[218](index=218&type=chunk) - The COVID-19 pandemic negatively impacted financial results starting April 2020, leading to decreased sales activity and cost mitigation actions[132](index=132&type=chunk)[134](index=134&type=chunk) - In 2022, Veritiv sold its logistics solutions business and Veritiv Canada, Inc., recognizing pre-tax gains of **$11.0 million** and **$18.7 million**, respectively, using proceeds for share repurchases and debt reduction[137](index=137&type=chunk) - The company completed a **$200 million** share repurchase program in 2022 and instituted a regular quarterly cash dividend policy[139](index=139&type=chunk)[140](index=140&type=chunk) - Veritiv's strategy focuses on being a leading provider of packaging, paper, and facility solutions, investing in organic and inorganic packaging growth, and evaluating non-core businesses[144](index=144&type=chunk) Consolidated Operating Results (2022 vs. 2021) | Metric | 2022 (in millions) | 2021 (in millions) | Increase (Decrease) $ (in millions) | Increase (Decrease) % | | :--------------------------------------------------------------------------------- | :----- | :----- | :-------------------- | :-------------------- | | Net sales | $7,146.3 | $6,850.5 | $295.8 | 4.3% | | Cost of products sold | 5,526.0 | 5,417.9 | 108.1 | 2.0% | | Distribution expenses | 398.5 | 419.3 | (20.8) | (5.0)% | | Selling and administrative expenses | 762.7 | 735.8 | 26.9 | 3.7% | | Gain on sale of businesses | (29.7) | (3.1) | 26.6 | * | | Depreciation and amortization | 45.6 | 55.2 | (9.6) | (17.4)% | | Restructuring charges, net | 2.0 | 15.4 | (13.4) | (87.0)% | | **Operating income (loss)** | **441.2** | **210.0** | **231.2** | **110.1%** | | Interest expense, net | 17.7 | 17.2 | 0.5 | 2.9% | | Other (income) expense, net | (8.4) | (4.7) | (3.7) | (78.7)% | | Income (loss) before income taxes | 431.9 | 197.5 | 234.4 | 118.7% | | Income tax expense (benefit) | 94.0 | 52.9 | 41.1 | 77.7% | | **Net income (loss)** | **$337.9** | **$144.6** | **$193.3** | **133.7%** | - Net cash provided by operating activities increased by **$97.7 million** to **$252.4 million** in 2022, primarily due to improved operating results[181](index=181&type=chunk)[183](index=183&type=chunk) - Available additional borrowing capacity under the ABL Facility was approximately **$711.3 million** as of December 31, 2022[187](index=187&type=chunk) [Item 7A. Market Risk Disclosures](index=43&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Veritiv is exposed to interest rate, foreign currency, and fuel price risks, monitoring these and potentially using hedging strategies, with a hypothetical 100 basis point interest rate increase resulting in approximately $3.7 million additional interest expense - Veritiv is exposed to interest rate changes, foreign currency fluctuations, and fuel price changes, and aims to manage these risks[223](index=223&type=chunk) - Interest rate risk primarily stems from ABL Facility borrowings, with a weighted-average borrowing rate of **6.1%** at December 31, 2022[224](index=224&type=chunk) - A hypothetical **100 basis point** increase in the interest rate would result in approximately **$3.7 million** of additional interest expense based on 2022 average borrowings[224](index=224&type=chunk) - Foreign currency exposure primarily relates to fluctuations between the U.S. dollar and the Mexican peso; the company has not used foreign exchange hedging instruments[225](index=225&type=chunk) - Fuel price risk impacts product costs and delivery expenses; a **10%** increase in average annual diesel fuel price would result in approximately **$3.2 million** in additional annual transportation fuel costs[226](index=226&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=44&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents Veritiv's audited consolidated financial statements and detailed notes, with Deloitte & Touche LLP issuing an unqualified opinion on the financial statements and internal control over financial reporting [Consolidated Statements of Operations](index=46&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations (in millions, except per share data) | Metric | 2022 (in millions) | 2021 (in millions) | 2020 (in millions) | | :--------------------------------------------------------------------------------- | :----- | :----- | :----- | | Net sales | $7,146.3 | $6,850.5 | $6,345.6 | | Cost of products sold | 5,526.0 | 5,417.9 | 5,040.2 | | Distribution expenses | 398.5 | 419.3 | 429.8 | | Selling and administrative expenses | 762.7 | 735.8 | 717.9 | | Gain on sale of businesses | (29.7) | (3.1) | — | | Depreciation and amortization | 45.6 | 55.2 | 57.7 | | Restructuring charges, net | 2.0 | 15.4 | 52.2 | | Operating income (loss) | 441.2 | 210.0 | 47.8 | | Interest expense, net | 17.7 | 17.2 | 25.1 | | Other (income) expense, net | (8.4) | (4.7) | (20.3) | | Income (loss) before income taxes | 431.9 | 197.5 | 43.0 | | Income tax expense (benefit) | 94.0 | 52.9 | 8.8 | | Net income (loss) | $337.9 | $144.6 | $34.2 | | Basic EPS | $23.85 | $9.50 | $2.14 | | Diluted EPS | $23.29 | $9.01 | $2.08 | | Weighted-average shares outstanding (Basic) | 14.17 | 15.22 | 15.96 | | Weighted-average shares outstanding (Diluted) | 14.51 | 16.05 | 16.48 | [Consolidated Balance Sheets](index=48&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheets (in millions) | Asset/Liability | December 31, 2022 (in millions) | December 31, 2021 (in millions) | | :--------------------------------------------------------------------------------- | :---------------- | :---------------- | | **Assets** | | | | Cash and cash equivalents | $40.6 | $49.3 | | Accounts receivable, net | 889.6 | 1,011.2 | | Inventories | 423.9 | 484.5 | | Other current assets | 103.7 | 132.7 | | **Total current assets** | **1,457.8** | **1,677.7** | | Property and equipment, net | 127.5 | 162.9 | | Goodwill | 96.3 | 99.6 | | Other intangibles, net | 35.6 | 42.7 | | Deferred income tax assets | 29.0 | 47.1 | | Other non-current assets | 343.4 | 408.4 | | **Total assets** | **$2,089.6** | **$2,438.4** | | **Liabilities and shareholders' equity** | | | | Accounts payable | $452.9 | $561.9 | | Accrued payroll and benefits | 106.2 | 110.0 | | Other accrued liabilities | 154.1 | 185.7 | | Current portion of debt | 13.4 | 16.0 | | **Total current liabilities** | **726.6** | **873.6** | | Long-term debt, net of current portion | 264.8 | 499.7 | | Defined benefit pension obligations | 0.4 | 7.2 | | Other non-current liabilities | 341.7 | 422.1 | | **Total liabilities** | **1,333.5** | **1,802.6** | | **Shareholders' equity** | | | | Common stock | 0.2 | 0.2 | | Additional paid-in capital | 613.1 | 633.8 | | Accumulated earnings (deficit) | 472.6 | 143.2 | | Accumulated other comprehensive loss | (12.7) | (24.3) | | Treasury stock at cost | (317.1) | (117.1) | | **Total shareholders' equity** | **756.1** | **635.8** | | **Total liabilities and shareholders' equity** | **$2,089.6** | **$2,438.4** | [Consolidated Statements of Cash Flows](index=49&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows (in millions) | Activity | 2022 (in millions) | 2021 (in millions) | 2020 (in millions) | | :--------------------------------------------------------------------------------- | :----- | :----- | :----- | | Net cash provided by (used for) operating activities | $252.4 | $154.7 | $289.2 | | Net cash provided by (used for) investing activities | 168.0 | (4.3) | (5.3) | | Net cash provided by (used for) financing activities | (428.6) | (221.4) | (202.6) | | Effect of exchange rate changes on cash | (0.5) | (0.3) | 1.3 | | Net change in cash and cash equivalents | (8.7) | (71.3) | 82.6 | | Cash and cash equivalents at beginning of period | 49.3 | 120.6 | 38.0 | | Cash and cash equivalents at end of period | $40.6 | $49.3 | $120.6 | | Cash paid for income taxes, net of refunds | $83.9 | $40.1 | $7.8 | | Cash paid for interest | $15.6 | $15.0 | $22.0 | [Consolidated Statements of Shareholders' Equity](index=51&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Consolidated Statements of Shareholders' Equity (in millions) | Metric | Common Stock (Shares) | Common Stock (Amount) (in millions) | Additional Paid-in Capital (in millions) | Accumulated Earnings (Deficit) (in millions) | Accumulated Other Comprehensive Loss (in millions) | Treasury Stock (Shares) | Treasury Stock (Amount) (in millions) | Total (in millions) | | :--------------------------------------------------------------------------------- | :-------------------- | :-------------------- | :------------------------- | :----------------------------- | :----------------------------------- | :---------------------- | :---------------------- | :------ | | Balance at December 31, 2019 | 16.4 | $0.2 | $618.0 | $(35.3) | $(33.1) | (0.3) | $(13.6) | $536.2 | | Net income (loss) | | | | 34.2 | | | | 34.2 | | Other comprehensive income (loss) | | | | | (0.4) | | | (0.4) | | Stock-based compensation | | | 17.7 | | | | | 17.7 | | Issuance of common stock, net | 0.2 | 0.0 | (0.8) | | | | | (0.8) | | Adoption impact - ASU 2016-13 | | | | (0.3) | | | | (0.3) | | Treasury stock purchases | | | | | | (0.4) | (3.5) | (3.5) | | **Balance at December 31, 2020** | **16.6** | **$0.2** | **$634.9** | **$(1.4)** | **$(33.5)** | **(0.7)** | **$(17.1)** | **$583.1** | | Net income (loss) | | | | 144.6 | | | | 144.6 | | Other comprehensive income (loss) | | | | | 9.2 | | | 9.2 | | Stock-based compensation | | | 7.4 | | | | | 7.4 | | Issuance of common stock, net | 0.4 | 0.0 | (8.5) | | | | | (8.5) | | Treasury stock purchases | | | | | | (1.7) | (100.0) | (100.0) | | **Balance at December 31, 2021** | **17.0** | **$0.2** | **$633.8** | **$143.2** | **$(24.3)** | **(2.4)** | **$(117.1)** | **$635.8** | | Net income (loss) | | | | 337.9 | | | | 337.9 | | Other comprehensive income (loss) | | | | | 11.6 | | | 11.6 | | Stock-based compensation | | | 9.5 | | | | | 9.5 | | Issuance of common stock, net | 0.5 | 0.0 | (30.2) | | | | | (30.2) | | Dividends | | | | (8.5) | | | | (8.5) | | Treasury stock purchases | | | | | | (1.6) | (200.0) | (200.0) | | **Balance at December 31, 2022** | **17.5** | **$0.2** | **$613.1** | **$472.6** | **$(12.7)** | **(4.0)** | **$(317.1)** | **$756.1** | [Notes to Consolidated Financial Statements](index=52&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - The section includes the Report of Independent Registered Public Accounting Firm, Consolidated Statements of Operations, Comprehensive Income (Loss), Balance Sheets, Cash Flows, and Shareholders' Equity[228](index=228&type=chunk) - Deloitte & Touche LLP audited the financial statements and expressed an **unqualified opinion** on the financial position as of December 31, 2022 and 2021, and results of operations and cash flows for the three years ended December 31, 2022[230](index=230&type=chunk) - The auditor also expressed an **unqualified opinion** on the effectiveness of the Company's internal control over financial reporting as of December 31, 2022[231](index=231&type=chunk) - No critical audit matters were determined for the current-period audit[234](index=234&type=chunk) [Item 9. Changes in and Disagreements with Accountants](index=95&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) This section states that there have been no changes in or disagreements with accountants on accounting and financial disclosure matters - There are no changes in or disagreements with accountants on accounting and financial disclosure[448](index=448&type=chunk) [Item 9A. Controls and Procedures](index=95&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Veritiv's management concluded disclosure controls and internal controls over financial reporting were effective as of December 31, 2022, with an ongoing technology transformation project - Management, with CEO and CFO participation, concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2022[449](index=449&type=chunk) - The company is implementing a multi-year technology transformation project to modernize legacy systems, with continuous assessment of internal control effectiveness[451](index=451&type=chunk) - Management concluded that internal controls over financial reporting were **effective** as of December 31, 2022, based on the COSO 2013 Framework[457](index=457&type=chunk) - Deloitte & Touche LLP issued an **unqualified attestation report** on the effectiveness of the company's internal control over financial reporting[458](index=458&type=chunk)[461](index=461&type=chunk) [Item 9B. Other Information](index=98&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) This item is not applicable - This item is not applicable[468](index=468&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=98&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This item is not applicable - This item is not applicable[469](index=469&type=chunk) [Part III](index=98&type=section&id=PART%20III) [Item 10. Directors, Executive Officers and Corporate Governance](index=98&type=section&id=ITEM%2010.%20DIRECTORS,%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) This section incorporates by reference information from Part I, Item 1 and the 2023 Proxy Statement regarding directors, executive officers, and corporate governance - Information on directors, executive officers, and corporate governance is incorporated by reference from Part I, Item 1 and the 2023 Proxy Statement[471](index=471&type=chunk) [Item 11. Executive Compensation](index=98&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) This section incorporates by reference information from the 2023 Proxy Statement regarding executive compensation - Information on executive compensation is incorporated by reference from the 2023 Proxy Statement[472](index=472&type=chunk) [Item 12. Security Ownership and Related Stockholder Matters](index=98&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) This section incorporates by reference information from the 2023 Proxy Statement regarding security ownership of certain beneficial owners and management, and related stockholder matters - Information on security ownership of certain beneficial owners and management, and related stockholder matters, is incorporated by reference from the 2023 Proxy Statement[472](index=472&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=98&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS,%20AND%20DIRECTOR%20INDEPENDENCE) This section incorporates by reference information from the 2023 Proxy Statement regarding certain relationships and related transactions, and director independence - Information on certain relationships and related transactions, and director independence, is incorporated by reference from the 2023 Proxy Statement[473](index=473&type=chunk) [Item 14. Principal Accountant Fees and Services](index=98&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) This section incorporates by reference information from the 2023 Proxy Statement regarding principal accountant fees and services - Information on principal accountant fees and services is incorporated by reference from the 2023 Proxy Statement[473](index=473&type=chunk) [Part IV](index=98&type=section&id=PART%20IV) [Item 15. Exhibits and Financial Statement Schedules](index=98&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists the financial statements and schedules filed or incorporated by reference as part of the Form 10-K, along with a comprehensive list of exhibits and certifications - Financial statements are included as per Item 8, and all schedules have been omitted as the required information is in footnotes or not applicable[475](index=475&type=chunk)[476](index=476&type=chunk) - A detailed list of exhibits is provided, including stock purchase agreements, organizational documents (Certificate of Incorporation, Bylaws), ABL Credit Agreement, offer letters, incentive plans, and various certifications[477](index=477&type=chunk)[478](index=478&type=chunk) [Item 16. Form 10-K Summary](index=101&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) This item indicates that no Form 10-K summary is provided - No Form 10-K Summary is provided[480](index=480&type=chunk) [Signatures](index=102&type=section&id=SIGNATURES) [Signatures and Certifications](index=102&type=section&id=Signatures%20and%20Certifications) The Annual Report on Form 10-K is duly signed by Veritiv Corporation's CEO and other principal officers and directors, certifying compliance with the Securities Exchange Act of 1934 - The Annual Report on Form 10-K was signed on February 28, 2023, by Salvatore A. Abbate, Chief Executive Officer and Director[483](index=483&type=chunk)[484](index=484&type=chunk) - Other signatories include the Principal Financial Officer (Stephen J. Smith), Principal Accounting Officer (Lance D. Gebert), and members of the Board of Directors[485](index=485&type=chunk)

[Filing Information](index=1&type=section&id=Filing%20Information) This section provides essential filing details for Veritiv Corporation's Form 10-Q, including registrant information and compliance status [Registrant Details](index=1&type=section&id=Registrant%20Details) This section provides the basic filing details for Veritiv Corporation's Form 10-Q for the quarterly period ended June 30, 2022, including registrant information and SEC filing compliance status - Registrant: **VERITIV CORPORATION**, Delaware, Commission file number **001-36479**[2](index=2&type=chunk) - Filing Type: Quarterly Report (Form 10-Q) for the period ended **June 30, 2022**[1](index=1&type=chunk) - Common stock trades on the New York Stock Exchange under the symbol **VRTV**[4](index=4&type=chunk) - The registrant is a **Large accelerated filer** and not a shell company[6](index=6&type=chunk) - Number of shares outstanding as of August 2, 2022: **13,964,859**[6](index=6&type=chunk) [Part I: Financial Information](index=4&type=section&id=Part%20I%3A%20FINANCIAL%20INFORMATION) This part presents Veritiv Corporation's unaudited condensed consolidated financial statements and management's discussion and analysis for the quarter [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Veritiv Corporation's unaudited condensed consolidated financial statements and related notes for the three and six months ended June 30, 2022 and 2021 [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section presents the company's unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2022 and 2021 Condensed Consolidated Statements of Operations (in millions, except per share data) | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :--------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net sales | $1,820.7 | $1,658.6 | $3,678.8 | $3,217.9 | | Cost of products sold | $1,410.9 | $1,319.0 | $2,866.3 | $2,557.1 | | Operating income (loss) | $118.4 | $38.3 | $205.6 | $72.8 | | Net income (loss) | $91.1 | $26.4 | $169.6 | $47.7 | | Basic EPS | $6.24 | $1.69 | $11.55 | $3.03 | | Diluted EPS | $6.12 | $1.62 | $11.23 | $2.89 | - Net sales increased by **9.8%** for the three months ended June 30, 2022, and by **14.3%** for the six months ended June 30, 2022, compared to the prior year periods[11](index=11&type=chunk) - Net income significantly increased by **245.1%** to **$91.1 million** for the three months ended June 30, 2022, and by **255.6%** to **$169.6 million** for the six months ended June 30, 2022, compared to the prior year periods[11](index=11&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section presents the company's unaudited condensed consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2022 and 2021 Condensed Consolidated Statements of Comprehensive Income (Loss) (in millions) | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :--------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $91.1 | $26.4 | $169.6 | $47.7 | | Other comprehensive income (loss) | $4.5 | $3.1 | $7.1 | $2.8 | | Total comprehensive income (loss) | $95.6 | $29.5 | $176.7 | $50.5 | - Total comprehensive income increased significantly to **$95.6 million** for the three months ended June 30, 2022, from **$29.5 million** in the prior year, and to **$176.7 million** for the six months ended June 30, 2022, from **$50.5 million** in the prior year[14](index=14&type=chunk) - Other comprehensive income for the three months ended June 30, 2022, included a **$9.5 million** reclassification of foreign currency translation adjustments due to the sale of a business and a **$7.0 million** reclassification adjustment on settlement of a pension plan[14](index=14&type=chunk) [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's unaudited condensed consolidated balance sheets as of June 30, 2022, and December 31, 2021 Condensed Consolidated Balance Sheets (in millions) | Metric | June 30, 2022 | December 31, 2021 | Change | | :--------------------------------- | :------------------ | :-------------------- | :----- | | Total assets | $2,234.9 | $2,438.4 | $(203.5) | | Total liabilities | $1,551.0 | $1,802.6 | $(251.6) | | Total shareholders' equity | $683.9 | $635.8 | $48.1 | - Total assets decreased by **$203.5 million** from December 31, 2021, to June 30, 2022, primarily due to decreases in accounts receivable, inventories, and cash[17](index=17&type=chunk) - Total liabilities decreased by **$251.6 million**, driven by reductions in accounts payable, accrued payroll and benefits, and long-term debt[17](index=17&type=chunk) - Shareholders' equity increased by **$48.1 million**, primarily due to accumulated earnings[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2022 and 2021 Condensed Consolidated Statements of Cash Flows (in millions) - Six Months Ended June 30, | Activity | 2022 | 2021 | Change | | :--------------------------------- | :----- | :----- | :----- | | Net cash provided by (used for) operating activities | $62.3 | $50.1 | $12.2 | | Net cash provided by (used for) investing activities | $131.3 | $2.2 | $129.1 | | Net cash provided by (used for) financing activities | $(210.2) | $(138.2) | $(72.0) | | Net change in cash and cash equivalents | $(17.2) | $(85.9) | $68.7 | - Net cash from operating activities increased by **$12.2 million**, primarily due to improved operating results, partially offset by higher income tax payments and deferred payroll taxes[164](index=164&type=chunk)[165](index=165&type=chunk) - Net cash from investing activities significantly increased by **$129.1 million**, mainly driven by **$147.4 million** net cash proceeds from the sale of the Canadian business[166](index=166&type=chunk) - Net cash used for financing activities increased by **$72.0 million**, primarily due to increased common stock repurchases (**$104.8 million** in 2022 vs. **$50.4 million** in 2021) and higher tax withholdings on share-based compensation[167](index=167&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This section presents the company's unaudited condensed consolidated statements of shareholders' equity for the six months ended June 30, 2022 and 2021 Condensed Consolidated Statements of Shareholders' Equity (in millions) - Key Changes | Metric | Balance at Dec 31, 2021 | Net Income (Q1 2022) | Other Comprehensive Income (Q1 2022) | Stock-based Compensation (Q1 2022) | Treasury Stock Purchases (Q1 2022) | Balance at Mar 31, 2022 | Net Income (Q2 2022) | Other Comprehensive Income (Q2 2022) | Stock-based Compensation (Q2 2022) | Treasury Stock Purchases (Q2 2022) | Balance at Jun 30, 2022 | | :--------------------------------- | :---------------------- | :------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | :---------------------- | :------------------- | :----------------------------------- | :----------------------------------- | :----------------------------------- | :---------------------- | | Total Shareholders' Equity | $635.8 | $78.5 | $2.6 | $2.8 | $(10.4) | $679.8 | $91.1 | $4.5 | $3.1 | $(94.4) | $683.9 | - Total shareholders' equity increased from **$635.8 million** at December 31, 2021, to **$683.9 million** at June 30, 2022, primarily due to net income and other comprehensive income, partially offset by treasury stock purchases[22](index=22&type=chunk) - The Company repurchased **776,670 shares** of common stock for **$104.8 million** during the six months ended June 30, 2022, under its 2022 Share Repurchase Program[22](index=22&type=chunk)[76](index=76&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the unaudited condensed consolidated financial statements, covering accounting policies, revenue, leases, debt, and other financial disclosures [Note 1. Business and Summary of Significant Accounting Policies](index=10&type=section&id=Note%201.%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note describes Veritiv's business, recent divestitures, segment changes, and significant accounting policies for interim financial reporting - Veritiv Corporation is a North American business-to-business full-service provider of packaging products and services, facility solutions, print-based products, and logistics/supply chain management solutions, operating primarily in the **U.S. and Mexico**[26](index=26&type=chunk) - On May 2, 2022, the Company sold its Veritiv Canada, Inc. business for approximately **$147.4 million** net cash proceeds, recognizing a preliminary gain of **$10.0 million**. Proceeds were used for share repurchases, debt reduction, and growth initiatives[27](index=27&type=chunk) - The Company combined its print and publishing operations into a new "**Print Solutions**" reportable segment in Q1 2022 to better align resources with market needs[28](index=28&type=chunk) - The financial statements are unaudited and prepared in accordance with **U.S. GAAP** for interim financial information, with estimates subject to change, especially given ongoing **COVID-19** impacts[29](index=29&type=chunk)[32](index=32&type=chunk) [Note 2. Revenue Recognition and Credit Losses](index=11&type=section&id=Note%202.%20Revenue%20Recognition%20and%20Credit%20Losses) This note details the company's revenue recognition policies, customer contract liabilities, and allowance for credit losses - Revenue is reported as net sales, measured as the determinable transaction price, net of variable consideration. Approximately **35%** of net sales are from direct shipments from manufacturers to customers, where Veritiv acts as a principal[35](index=35&type=chunk) - Customer contract liabilities were **$19.0 million** at June 30, 2022, down from **$21.8 million** at January 1, 2022, reflecting revenue recognition from prior and current year receipts[38](index=38&type=chunk) - The Company's ten largest customers historically generate **10%-15%** of consolidated annual net sales, with approximately **90%** of its net sales through June 30, 2022, generated in the **U.S.**[38](index=38&type=chunk) - The allowance for credit losses decreased from **$23.7 million** at December 31, 2021, to **$20.6 million** at June 30, 2022, primarily due to write-offs and other adjustments, including those related to the sale of the Canadian business[41](index=41&type=chunk) [Note 3. Leases](index=13&type=section&id=Note%203.%20Leases) This note outlines the company's lease arrangements, including operating and finance lease costs and future minimum lease payments - Veritiv leases property and equipment, including approximately **90 leased distribution centers** out of **95 total**, strategically located across the U.S. and Mexico[42](index=42&type=chunk)[44](index=44&type=chunk) Total Lease Cost (in millions) | Lease Classification | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Operating lease expense | $23.0 | $25.4 | $48.1 | $51.0 | | Finance lease expense | $3.2 | $4.3 | $7.6 | $8.7 | | Total Lease Cost | $27.0 | $30.5 | $57.3 | $61.5 | - Total operating lease obligations were **$363.0 million** at June 30, 2022, with a weighted-average remaining lease term of **6.2 years**. Total finance lease obligations were **$35.3 million** with a weighted-average remaining lease term of **3.9 years**[45](index=45&type=chunk) Future Minimum Lease Payments (in millions) at June 30, 2022 | Year | Finance Leases | Operating Leases | | :--- | :------------- | :--------------- | | 2022 (remaining) | $5.8 | $45.7 | | 2023 | $9.4 | $79.6 | | 2024 | $7.8 | $66.7 | | 2025 | $7.2 | $55.0 | | 2026 | $4.5 | $50.7 | | 2027 | $2.4 | $44.1 | | Thereafter | $1.6 | $75.1 | | Total future minimum lease payments, net of interest | $35.3 | $363.0 | [Note 4. Restructuring Charges](index=15&type=section&id=Note%204.%20Restructuring%20Charges) This note details the company's restructuring plans, associated charges, and liabilities, including multi-employer pension plan obligations - The 2020 Restructuring Plan, initiated to respond to COVID-19 impacts, address print/publishing industry changes, and align cost structure, was substantially complete by December 31, 2021, with approximately **$2 million** in remaining charges expected in H2 2022[48](index=48&type=chunk)[109](index=109&type=chunk) Summary of Restructuring Charges, Net (in millions) - Six Months Ended June 30, 2022 | Category | 2022 | Cumulative | | :------------------- | :----- | :--------- | | Severance and Related Costs | $0.5 | $41.3 | | Other Direct Costs | $3.9 | $34.6 | | (Gain) Loss on Sale of Assets and Other (non cash portion) | $(0.3) | $(4.2) | | Total | $4.1 | $71.7 | - The 2020 Restructuring Plan liability decreased from **$8.4 million** at December 31, 2021, to **$4.9 million** at June 30, 2022, due to payments exceeding new costs incurred[51](index=51&type=chunk) - Other restructuring liabilities, primarily related to multi-employer pension plan (MEPP) withdrawal obligations, totaled **$21.7 million** at June 30, 2022, with **$18.3 million** for MEPP obligations payable over approximately **20 years**[53](index=53&type=chunk) [Note 5. Debt](index=17&type=section&id=Note%205.%20Debt) This note provides details on the company's debt obligations, including the ABL Facility, commercial card program, and vendor-based financing arrangements Company's Debt Obligations (in millions) | Debt Type | June 30, 2022 | December 31, 2021 | | :--------------------------------- | :-------------- | :---------------- | | Asset-Based Lending Facility (ABL Facility) | $361.4 | $440.8 | | Commercial card program | $2.5 | $2.1 | | Vendor-based financing arrangements | $14.3 | $0.0 | | Finance leases | $35.3 | $72.8 | | Total debt | $413.5 | $515.7 | | Less: current portion of debt | $(15.2) | $(16.0) | | Long-term debt, net of current portion | $398.3 | $499.7 | - Total debt decreased from **$515.7 million** at December 31, 2021, to **$413.5 million** at June 30, 2022, primarily due to a reduction in the ABL Facility balance and finance leases[55](index=55&type=chunk) - The ABL Facility maturity was extended to **May 20, 2026**, in 2021, with available additional borrowing capacity of approximately **$622.4 million** as of June 30, 2022[56](index=56&type=chunk)[57](index=57&type=chunk) - The Company entered into a new **$18.5 million** vendor-based financing arrangement in H1 2022 to finance internal use software licenses, with an outstanding balance of **$14.3 million** at June 30, 2022[60](index=60&type=chunk) [Note 6. Income Taxes](index=17&type=section&id=Note%206.%20Income%20Taxes) This note presents the company's income tax expense, benefit, and effective tax rates, explaining key drivers of rate differences Income Tax Expense (Benefit) and Effective Tax Rates (in millions) | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :--------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Income (loss) before income taxes | $121.0 | $35.5 | $205.3 | $65.9 | | Income tax expense (benefit) | $29.9 | $9.1 | $35.7 | $18.2 | | Effective tax rate | 24.7% | 25.6% | 17.4% | 27.6% | - The effective tax rate for the six months ended June 30, 2022, was **17.4%**, significantly lower than **27.6%** in the prior year, primarily due to a tax benefit on the disposition of the Company's investment in a foreign subsidiary[62](index=62&type=chunk) - Differences from the U.S. statutory tax rate of **21.0%** are mainly due to stock compensation vesting, state income taxes, non-deductible expenses, tax credits, and pre-tax income by jurisdiction[62](index=62&type=chunk) [Note 7. Defined Benefit Plans](index=18&type=section&id=Note%207.%20Defined%20Benefit%20Plans) This note discusses the company's defined benefit pension plans, including settlement gains and net periodic benefit costs - The Company recognized a **$7.0 million gain** on the settlement of the Canadian defined benefit pension plans during the three and six months ended June 30, 2022, as a result of the Veritiv Canada, Inc. business sale[64](index=64&type=chunk)[66](index=66&type=chunk)[68](index=68&type=chunk) Net Periodic Benefit Cost (Credit) (in millions) - Six Months Ended June 30, | Component | U.S. (2022) | Canada (2022) | U.S. (2021) | Canada (2021) | | :--------------------------------- | :---------- | :------------ | :---------- | :------------ | | Service cost | $1.5 | $0.1 | $1.2 | $0.2 | | Interest cost | $0.6 | $(0.4) | $0.5 | $1.0 | | Expected return on plan assets | $(0.9) | $0.8 | $(2.2) | $(2.1) | | Settlement (gain) loss | — | $(7.0) | — | — | | Amortization of net loss | — | $(0.1) | $0.0 | $0.1 | | Total other components | $(0.3) | $(6.7) | $(1.7) | $(1.0) | | Net periodic benefit cost (credit) | $1.2 | $(6.6) | $(0.5) | $(0.8) | - Veritiv maintains an open defined benefit pension plan in the U.S. for union employees and assumed frozen plans from Unisource. The U.S. Veritiv Pension Plan is intended for termination and settlement, while the new Veritiv Hourly Pension Plan will remain open[63](index=63&type=chunk)[65](index=65&type=chunk) [Note 8. Fair Value Measurements](index=19&type=section&id=Note%208.%20Fair%20Value%20Measurements) This note describes the fair value measurements for financial instruments and the company's assessment of goodwill and intangible asset impairment - Carrying amounts of cash, receivables, payables, and short-term debt approximate fair values due to their short maturities. ABL Facility borrowings' carrying amount approximates fair value due to variable market interest rates (**Level 2 measurement**)[69](index=69&type=chunk)[70](index=70&type=chunk) - The Company reviewed goodwill (**$96.3 million** for Packaging segment) and other intangibles, net (**$37.8 million** for Packaging and Facility Solutions segments) for impairment indicators following the sale of Veritiv Canada, Inc.[72](index=72&type=chunk) - Management determined that the carrying values of goodwill and other intangibles for both the divested Canadian business and the remaining Veritiv business were not impaired, using **Level 3 data** (internal operating and cash flow projections)[72](index=72&type=chunk) [Note 9. Earnings (Loss) Per Share](index=19&type=section&id=Note%209.%20Earnings%20(Loss)%20Per%20Share) This note details the calculation of basic and diluted earnings per share, reflecting net income and weighted-average shares outstanding Earnings (Loss) Per Share (in millions, except per share data) - Six Months Ended June 30, | Metric | 2022 | 2021 | | :--------------------------------- | :----- | :----- | | Net income (loss) | $169.6 | $47.7 | | Weighted-average shares outstanding – basic | 14.69 | 15.73 | | Dilutive effect of stock-based awards | 0.41 | 0.76 | | Weighted-average shares outstanding – diluted | 15.10 | 16.49 | | Basic EPS | $11.55 | $3.03 | | Diluted EPS | $11.23 | $2.89 | - Diluted EPS for the six months ended June 30, 2022, increased significantly to **$11.23** from **$2.89** in the prior year, reflecting higher net income and a lower weighted-average diluted share count[75](index=75&type=chunk) - The weighted-average diluted shares outstanding decreased from **16.49 million** in 2021 to **15.10 million** in 2022 for the six-month period[75](index=75&type=chunk) [Note 10. Shareholders' Equity](index=20&type=section&id=Note%2010.%20Shareholders'%20Equity) This note outlines changes in shareholders' equity, including share repurchase programs and accumulated other comprehensive loss components - The Board authorized a new **$200 million** share repurchase program on **March 1, 2022**, replacing the fully utilized 2021 program[76](index=76&type=chunk)[108](index=108&type=chunk) - Under the 2022 program, the Company repurchased **698,645 shares** for **$94.4 million** during Q2 2022 and **776,670 shares** for **$104.8 million** during H1 2022[76](index=76&type=chunk)[108](index=108&type=chunk) - As of June 30, 2022, approximately **$95.2 million** remained authorized for repurchases under the 2022 Share Repurchase Program[108](index=108&type=chunk) Accumulated Other Comprehensive Loss (AOCL) (in millions) | Component | Balance at Dec 31, 2021 | Net Current Period OCI (Q1 2022) | Balance at Mar 31, 2022 | Net Current Period OCI (Q2 2022) | Balance at Jun 30, 2022 | | :--------------------------------- | :---------------------- | :----------------------- | :---------------------- | :----------------------- | :---------------------- | | Foreign currency translation adjustments | $(25.2) | $2.6 | $(22.6) | $5.0 | $(17.6) | | Retirement liabilities | $1.0 | $0.0 | $1.0 | $(0.6) | $0.4 | | Interest rate cap | $(0.1) | $0.0 | $(0.1) | $0.1 | $0.0 | | Total AOCL | $(24.3) | $2.6 | $(21.7) | $4.5 | $(17.2) | [Note 11. Commitments and Contingencies](index=22&type=section&id=Note%2011.%20Commitments%20and%20Contingencies) This note addresses the company's legal proceedings and multi-employer pension plan withdrawal liabilities, assessing their potential financial impact - The Company is involved in various legal proceedings but does not expect any asserted or unasserted claims to have a **material adverse effect** on its operations, financial condition, or cash flows[83](index=83&type=chunk)[84](index=84&type=chunk) - Veritiv has estimated multi-employer pension plan (MEPP) withdrawal liabilities totaling **$7.1 million** for a complete withdrawal and **$6.5 million** for a partial withdrawal from the Western Pennsylvania Teamsters and Employers Pension Fund, unchanged as of June 30, 2022, with payments expected over approximately **20 years**[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - An estimated complete withdrawal liability of **$0.5 million** was recognized for the Minneapolis Food Distributors Ind Pension Plan, effective July 31, 2022, with payments expected over approximately **three years**[89](index=89&type=chunk)[90](index=90&type=chunk) [Note 12. Segment and Other Information](index=23&type=section&id=Note%2012.%20Segment%20and%20Other%20Information) This note provides financial information by reportable segment, including net sales and Adjusted EBITDA for Packaging, Facility Solutions, and Print Solutions - Veritiv operates under three reportable segments: **Packaging**, **Facility Solutions**, and **Print Solutions**, along with a Corporate & Other category for logistics and unallocated costs[91](index=91&type=chunk)[92](index=92&type=chunk) Net Sales and Adjusted EBITDA by Segment (in millions) - Three Months Ended June 30, | Segment | 2022 Net Sales | 2021 Net Sales | 2022 Adjusted EBITDA | 2021 Adjusted EBITDA | | :------------------- | :------------- | :------------- | :------------------- | :------------------- | | Packaging | $1,001.6 | $915.0 | $108.4 | $95.4 | | Facility Solutions | $195.8 | $224.7 | $16.0 | $10.4 | | Print Solutions | $593.2 | $489.0 | $60.5 | $22.2 | | Corporate & Other | $30.1 | $29.9 | $(48.6) | $(54.5) | | Total | $1,820.7 | $1,658.6 | $136.3 | $73.5 | Net Sales and Adjusted EBITDA by Segment (in millions) - Six Months Ended June 30, | Segment | 2022 Net Sales | 2021 Net Sales | 2022 Adjusted EBITDA | 2021 Adjusted EBITDA | | :------------------- | :------------- | :------------- | :------------------- | :------------------- | | Packaging | $2,004.7 | $1,769.6 | $205.8 | $173.4 | | Facility Solutions | $425.2 | $430.8 | $29.4 | $21.9 | | Print Solutions | $1,189.8 | $960.3 | $115.1 | $39.6 | | Corporate & Other | $59.1 | $57.2 | $(94.5) | $(101.9) | | Total | $3,678.8 | $3,217.9 | $255.8 | $133.0 | - Adjusted EBITDA for reportable segments increased to **$184.9 million** for Q2 2022 (from **$128.0 million** in Q2 2021) and to **$350.3 million** for H1 2022 (from **$234.9 million** in H1 2021)[93](index=93&type=chunk) [Note 13. Divestitures](index=24&type=section&id=Note%2013.%20Divestitures) This note details the company's recent divestitures, including the sale of its Canadian business and the Rollsource business, and associated gains - On May 2, 2022, Veritiv completed the sale of its Veritiv Canada, Inc. business to Imperial Dade Canada Inc. for **CAD $240 million** (approx. **U.S. $190 million**), receiving initial net cash proceeds of **$147.4 million**[94](index=94&type=chunk) - A preliminary gain of approximately **$10.0 million** was recognized on the sale of the Canadian business, which included most of its facility solutions, print operations, and a majority of its packaging business serving food service customers[94](index=94&type=chunk) - On March 31, 2021, the Company sold its Rollsource business for approximately **$7.5 million** cash proceeds, recognizing an initial pre-tax gain of **$2.4 million** and an additional **$0.7 million** gain in Q2 2021[95](index=95&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Veritiv's financial condition and operating results, discussing key factors, strategies, and segment performance [Executive Overview](index=26&type=section&id=Executive%20Overview) This section provides an executive summary of the company's performance, strategic initiatives, and the impact of external factors like the COVID-19 pandemic - The COVID-19 pandemic continues to have unpredictable impacts, but Veritiv has implemented health and safety measures and cost-savings initiatives. The extent of future impacts remains uncertain[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) - The sale of Veritiv Canada, Inc. on May 2, 2022, for **$147.4 million** net cash proceeds, allows the Company to focus on its core packaging business and higher-growth, higher-margin opportunities[105](index=105&type=chunk)[106](index=106&type=chunk) - A new **$200 million** share repurchase program was authorized on March 1, 2022, under which **$104.8 million** of shares were repurchased in H1 2022[108](index=108&type=chunk) - The 2020 Restructuring Plan is substantially complete, with remaining charges of approximately **$2 million** expected in H2 2022[109](index=109&type=chunk) - Veritiv's long-term strategy focuses on being a leading provider of B2B packaging, paper, and facility solutions, investing in organic packaging growth, and pursuing inorganic opportunities while evaluating non-core divestitures[110](index=110&type=chunk) [Business Overview](index=28&type=section&id=Business%20Overview) This section describes Veritiv's business as a leading North American B2B provider across its three reportable segments and discusses seasonal influences - Veritiv is a leading North American B2B full-service provider of value-added packaging products and services, facility solutions, print-based products, and logistics/supply chain management solutions, operating primarily in the **U.S. and Mexico**[111](index=111&type=chunk) - The Company's three reportable segments are **Packaging**, **Facility Solutions**, and **Print Solutions**, managed by the CEO as the Chief Operating Decision Maker[112](index=112&type=chunk) - The Company's operating results are subject to seasonal influences, with higher consolidated net sales historically in **Q3 and Q4**, and lowest in **Q1**, driven by holiday production, summer demand, and back-to-school/holiday advertising[113](index=113&type=chunk) [Results of Operations, Including Business Segments](index=29&type=section&id=Results%20of%20Operations%2C%20Including%20Business%20Segments) This section analyzes the consolidated operating results, including net sales, operating income, and net income, for the three and six months ended June 30, 2022 and 2021 Consolidated Operating Results (in millions) - Three and Six Months Ended June 30, | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | Change ($) | Change (%) | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | Change ($) | Change (%) | | :--------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Net sales | $1,820.7 | $1,658.6 | $162.1 | 9.8% | $3,678.8 | $3,217.9 | $460.9 | 14.3% | | Operating income (loss) | $118.4 | $38.3 | $80.1 | 209.1% | $205.6 | $72.8 | $132.8 | 182.4% | | Net income (loss) | $91.1 | $26.4 | $64.7 | 245.1% | $169.6 | $47.7 | $121.9 | 255.6% | - Net sales increased by **9.8%** (QoQ) and **14.3%** (YoY) for the three and six months ended June 30, 2022, respectively, driven by inflationary market price increases in Packaging and Print Solutions, despite a **$107.4 million** (QoQ) and **$76.3 million** (YoY) decrease from the Canadian business divestiture[115](index=115&type=chunk)[116](index=116&type=chunk) - Operating income surged by **209.1%** (QoQ) and **182.4%** (YoY), while net income increased by **245.1%** (QoQ) and **255.6%** (YoY), reflecting improved pricing, segment mix, and lower restructuring charges[114](index=114&type=chunk)[118](index=118&type=chunk)[124](index=124&type=chunk) - Distribution expenses decreased by **5.6%** QoQ due to the Canadian divestiture, but increased by **2.4%** YoY primarily due to higher freight and logistics costs from increased sales volume and fuel prices[119](index=119&type=chunk)[120](index=120&type=chunk) - Selling and administrative expenses increased by **1.6%** QoQ and **7.1%** YoY, driven by higher personnel expenses (commissions, travel) and professional fees, partially offset by gains from the Canadian business sale and insurance proceeds[121](index=121&type=chunk)[122](index=122&type=chunk) - Other (income) expense, net, showed a favorable change of **$4.9 million** (QoQ) and **$4.5 million** (YoY), primarily due to a **$7.0 million gain** on the settlement of Canadian pension plans[126](index=126&type=chunk)[127](index=127&type=chunk) [Segment Results](index=33&type=section&id=Segment%20Results) This section provides a detailed analysis of the financial performance for each of Veritiv's reportable segments: Packaging, Facility Solutions, Print Solutions, and Corporate & Other - Adjusted EBITDA is the primary financial performance measure used by management, aligning shareholders, debt holders, and management, but it is a **non-GAAP measure** and has limitations[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - Distribution expenses are allocated to segments based on operational metrics, making segment-level trends interdependent[133](index=133&type=chunk) - The Company has improved its ability to isolate sales changes attributed to volume and price separately at the item level for most Packaging and Facility Solutions products[134](index=134&type=chunk) - The historical decline in demand for paper and related products is expected to continue long-term, but short-term supply shortages and product cost inflation have led to **higher prices** in the Print Solutions segment[136](index=136&type=chunk) [Packaging Segment](index=33&type=section&id=Packaging) This section details the financial performance of the Packaging segment, including net sales, Adjusted EBITDA, and key drivers of change Packaging Segment Performance (in millions) | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | Change ($) | Change (%) | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | Change ($) | Change (%) | | :--------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Net sales | $1,001.6 | $915.0 | $86.6 | 9.5% | $2,004.7 | $1,769.6 | $235.1 | 13.3% | | Adjusted EBITDA | $108.4 | $95.4 | $13.0 | 13.6% | $205.8 | $173.4 | $32.4 | 18.7% | | Adjusted EBITDA as a % of net sales | 10.8% | 10.4% | 40 bps | | 10.3% | 9.8% | 50 bps | | - Packaging net sales increased by **9.5%** (QoQ) and **13.3%** (YoY), primarily due to higher market prices and increased sales volume across all product categories and end-use sectors, despite a **$41.9 million** (QoQ) and **$28.0 million** (YoY) decrease from the Canadian business divestiture[142](index=142&type=chunk)[144](index=144&type=chunk) - Adjusted EBITDA for Packaging increased by **13.6%** (QoQ) and **18.7%** (YoY), driven by higher net sales and cost of products sold increasing at a slower rate than net sales, partially offset by increased selling and administrative expenses (personnel, professional fees, bad debt) and distribution expenses (freight, facility rent)[143](index=143&type=chunk)[145](index=145&type=chunk) Packaging Net Sales Change Components (in millions) | Component | 3 Months Ended June 30, 2022 vs. 2021 | 6 Months Ended June 30, 2022 vs. 2021 | | :------------------- | :------------------------------------ | :------------------------------------ | | Volume | $(46.6) | $(2.6) | | Foreign currency | $(1.4) | $(6.9) | | Price/Mix | $134.6 | $244.6 | | Total change | $86.6 | $235.1 | [Facility Solutions Segment](index=35&type=section&id=Facility%20Solutions) This section details the financial performance of the Facility Solutions segment, including net sales, Adjusted EBITDA, and key drivers of change Facility Solutions Segment Performance (in millions) | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | Change ($) | Change (%) | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | Change ($) | Change (%) | | :--------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Net sales | $195.8 | $224.7 | $(28.9) | (12.9)% | $425.2 | $430.8 | $(5.6) | (1.3)% | | Adjusted EBITDA | $16.0 | $10.4 | $5.6 | 53.8% | $29.4 | $21.9 | $7.5 | 34.2% | | Adjusted EBITDA as a % of net sales | 8.2% | 4.6% | 360 bps | | 6.9% | 5.1% | 180 bps | | - Facility Solutions net sales decreased by **12.9%** (QoQ) and **1.3%** (YoY), primarily due to the Canadian business divestiture (**$42.3 million** QoQ, **$38.8 million** YoY) and declining demand for personal protective equipment, partially offset by higher market prices and increased sales in towels, tissues, and food service products[147](index=147&type=chunk)[149](index=149&type=chunk) - Adjusted EBITDA for Facility Solutions increased by **53.8%** (QoQ) and **34.2%** (YoY), mainly due to decreased distribution and selling & administrative expenses resulting from the Canadian divestiture, and cost of products sold decreasing faster than net sales[148](index=148&type=chunk)[150](index=150&type=chunk) Facility Solutions Net Sales Change Components (in millions) | Component | 3 Months Ended June 30, 2022 vs. 2021 | 6 Months Ended June 30, 2022 vs. 2021 | | :------------------- | :------------------------------------ | :------------------------------------ | | Volume | $(41.8) | $(2.0) | | Foreign currency | $(0.2) | $(3.8) | | Price/Mix | $13.1 | $0.2 | | Total change | $(28.9) | $(5.6) | [Print Solutions Segment](index=36&type=section&id=Print%20Solutions) This section details the financial performance of the Print Solutions segment, including net sales, Adjusted EBITDA, and key drivers of change Print Solutions Segment Performance (in millions) | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | Change ($) | Change (%) | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | Change ($) | Change (%) | | :--------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Net sales | $593.2 | $489.0 | $104.2 | 21.3% | $1,189.8 | $960.3 | $229.5 | 23.9% | | Adjusted EBITDA | $60.5 | $22.2 | $38.3 | 172.5% | $115.1 | $39.6 | $75.5 | 190.7% | | Adjusted EBITDA as a % of net sales | 10.2% | 4.5% | 570 bps | | 9.7% | 4.1% | 560 bps | | - Print Solutions net sales increased by **21.3%** (QoQ) and **23.9%** (YoY), primarily due to higher market prices driven by strong demand and supply shortages, despite decreased sales volume and a **$23.2 million** (QoQ) and **$9.5 million** (YoY) decrease from the Canadian business divestiture[152](index=152&type=chunk)[154](index=154&type=chunk) - Adjusted EBITDA for Print Solutions surged by **172.5%** (QoQ) and **190.7%** (YoY), mainly due to cost of products sold increasing at a slower rate than net sales, higher net sales, and decreased distribution expenses, partially offset by increased selling and administrative expenses[153](index=153&type=chunk)[155](index=155&type=chunk) Print Solutions Net Sales Change Components (in millions) | Component | 3 Months Ended June 30, 2022 vs. 2021 | 6 Months Ended June 30, 2022 vs. 2021 | | :------------------- | :------------------------------------ | :------------------------------------ | | Volume | $(57.9) | $(31.1) | | Foreign currency | $(0.2) | $(2.6) | | Price/Mix | $162.3 | $263.2 | | Total change | $104.2 | $229.5 | [Corporate & Other](index=37&type=section&id=Corporate%20%26%20Other) This section details the financial performance of the Corporate & Other category, including net sales and Adjusted EBITDA Corporate & Other Performance (in millions) | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | Change ($) | Change (%) | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | Change ($) | Change (%) | | :--------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Net sales | $30.1 | $29.9 | $0.2 | 0.7% | $59.1 | $57.2 | $1.9 | 3.3% | | Adjusted EBITDA | $(48.6) | $(54.5) | $5.9 | 10.8% | $(94.5) | $(101.9) | $7.4 | 7.3% | - Corporate & Other net sales increased slightly by **0.7%** (QoQ) and **3.3%** (YoY), primarily due to an increase in freight brokerage service prices, partially offset by volume decline[158](index=158&type=chunk)[160](index=160&type=chunk) - Adjusted EBITDA for Corporate & Other improved by **$5.9 million** (QoQ) and **$7.4 million** (YoY), driven by decreased selling and administrative expenses (lower personnel and incentive compensation, Canadian divestiture impact) and cost of products sold increasing at a slower rate than net sales[159](index=159&type=chunk)[161](index=161&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash requirements, sources of liquidity, cash flow activities, and future capital needs - The Company's cash requirements are met by cash flows from operations and borrowings under the **ABL Facility**[162](index=162&type=chunk) Summary of Cash Flows (in millions) - Six Months Ended June 30, | Activity | 2022 | 2021 | | :--------------------------------- | :----- | :----- | | Net cash provided by (used for) operating activities | $62.3 | $50.1 | | Net cash provided by (used for) investing activities | $131.3 | $2.2 | | Net cash provided by (used for) financing activities | $(210.2) | $(138.2) | - Available additional borrowing capacity under the ABL Facility was approximately **$622.4 million** as of June 30, 2022[169](index=169&type=chunk) - Future cash needs include working capital, capital expenditures (estimated **$30 million** in 2022), contractual commitments, share repurchases, and strategic investments[171](index=171&type=chunk)[172](index=172&type=chunk) - The Company paid **$10.1 million** of deferred payroll taxes in January 2022 and expects to pay the remaining amount in December 2022[172](index=172&type=chunk) [Inflation and Changing Prices](index=39&type=section&id=Inflation%20and%20Changing%20Prices) This section addresses the company's approach to adjusting prices in response to inflation and changing costs of materials and services - The Company adjusts its prices to reflect the impact of inflation on the cost of purchased materials and services, to the extent feasible[174](index=174&type=chunk) [Critical Accounting Estimates](index=39&type=section&id=Critical%20Accounting%20Estimates) This section confirms no material changes to critical accounting estimate methodologies and notes potential impacts from the COVID-19 pandemic - There have been no material changes to the Company's critical accounting estimate methodologies from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2021[175](index=175&type=chunk) - Estimates are subject to change, particularly due to the ongoing **COVID-19 pandemic** and its effects on the domestic and global economies[175](index=175&type=chunk) [Recently Issued Accounting Standards](index=39&type=section&id=Recently%20Issued%20Accounting%20Standards) This section refers to Note 1 for information regarding recently issued accounting standards relevant to the company's financial statements - Refer to Note 1 of the Notes to Condensed Consolidated Financial Statements for information regarding recently issued accounting standards[176](index=176&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes in market risk disclosures from the prior annual report - No material changes in market risk disclosures from the Annual Report on Form 10-K for the year ended December 31, 2021[177](index=177&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting - Management concluded that the Company's disclosure controls and procedures were **effective** as of June 30, 2022[178](index=178&type=chunk) - There have been **no material changes** in internal control over financial reporting during the quarter ended June 30, 2022[179](index=179&type=chunk) [Part II: Other Information](index=39&type=section&id=Part%20II%3A%20OTHER%20INFORMATION) This part provides additional information beyond the financial statements, covering legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 11 for details on legal proceedings, indicating no expected material adverse effects on the company - Refer to Note 11 of the Notes to Condensed Consolidated Financial Statements for information on legal proceedings[181](index=181&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes from the risk factors previously disclosed in the prior annual report - No material changes from the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021[182](index=182&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Company's share repurchase activities under the 2022 Share Repurchase Program during the second quarter of 2022 - The Board authorized a **$200 million** share repurchase program on March 1, 2022[183](index=183&type=chunk) Common Stock Purchases - Three Months Ended June 30, 2022 | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of the Publicly Announced Program | Approximate Dollar Value of Shares that May Yet be Purchased Under the Publicly Announced Program | | :------------------- | :----------------------------- | :--------------------------- | :----------------------------------------------------------------------- | :---------------------------------------------------------------------------------------------- | | April 1-30 | 256,862 | $137.01 | 254,878 | $154,649,633 | | May 1-31 | 219,767 | $140.02 | 219,767 | $123,878,710 | | June 1-30 | 224,000 | $127.96 | 224,000 | $95,216,689 | - As of June 30, 2022, approximately **$95.2 million** remained authorized for repurchases under the 2022 Share Repurchase Program[184](index=184&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments, certifications, and XBRL-related documents - Exhibit 2.1 is Amendment No. 1 to the Stock Purchase Agreement related to the sale of Veritiv Canada, Inc.[186](index=186&type=chunk) - Includes Rule 13a-14(a) Certifications of the CEO and CFO (Exhibits **31.1**, **31.2**) and Section 1350 Certifications (Exhibits **32.1**, **32.2**)[186](index=186&type=chunk) - XBRL Instance Document and Taxonomy Extension documents are also filed[186](index=186&type=chunk) [Signatures](index=42&type=section&id=SIGNATURES) This section contains the required signatures for the Form 10-Q, confirming its submission on behalf of Veritiv Corporation - The report was signed on **August 9, 2022**, by Stephen J. Smith, Senior Vice President and Chief Financial Officer, and Lance D. Gebert, Corporate Controller[190](index=190&type=chunk)

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=Part%20I%20FINANCIAL%20INFORMATION) This section provides Veritiv Corporation's unaudited condensed consolidated financial statements and related notes for Q1 2022 and 2021 [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20%28UNAUDITED%29) This section presents Veritiv Corporation's unaudited condensed consolidated financial statements and comprehensive notes for Q1 2022 and 2021 [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details Veritiv Corporation's net sales, operating income, and net income for Q1 2022 and 2021 - Veritiv Corporation reported significant growth in **net income** and **operating income** for the three months ended March 31, 2022, compared to the same period in 2021, driven by increased net sales[10](index=10&type=chunk) Consolidated Statements of Operations Summary (in millions, except EPS) | Metric | 3 Months Ended March 31, 2022 (in millions) | 3 Months Ended March 31, 2021 (in millions) | Change ($ in millions) | Change (%) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------- | :--------- | | Net sales | $1,858.1 | $1,559.3 | $298.8 | 19.2% | | Operating income (loss) | $87.2 | $34.5 | $52.7 | 152.8% | | Net income (loss) | $78.5 | $21.3 | $57.2 | 268.5% | | Basic EPS | $5.31 | $1.34 | $3.97 | 296.3% | | Diluted EPS | $5.12 | $1.28 | $3.84 | 300.0% | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This statement presents Veritiv Corporation's net income and other comprehensive income components for Q1 2022 and 2021 - The company's **total comprehensive income** significantly increased in Q1 2022 compared to Q1 2021, primarily due to higher net income and a positive foreign currency translation adjustment[13](index=13&type=chunk) Consolidated Statements of Comprehensive Income (Loss) Summary (in millions) | Metric | 3 Months Ended March 31, 2022 (in millions) | 3 Months Ended March 31, 2021 (in millions) | Change ($ in millions) | Change (%) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------- | :--------- | | Net income (loss) | $78.5 | $21.3 | $57.2 | 268.5% | | Foreign currency translation adjustments | $2.6 | $(0.3) | $2.9 | - | | Total comprehensive income (loss) | $81.1 | $21.0 | $60.1 | 286.2% | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement outlines Veritiv's assets, liabilities, and shareholders' equity as of March 31, 2022, and December 31, 2021 - As of March 31, 2022, Veritiv's **total assets increased**, driven by a substantial rise in assets-held-for-sale, while cash and cash equivalents decreased. Total liabilities and shareholders' equity also saw increases[16](index=16&type=chunk) Consolidated Balance Sheets Summary (in millions) | Metric | March 31, 2022 (in millions) | December 31, 2021 (in millions) | Change ($ in millions) | Change (%) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------- | :--------- | | Total assets | $2,507.2 | $2,438.4 | $68.8 | 2.8% | | Cash and cash equivalents | $33.8 | $49.3 | $(15.5) | (31.4)% | | Accounts receivable, net | $944.3 | $1,011.2 | $(66.9) | (6.6)% | | Inventories | $407.7 | $484.5 | $(76.8) | (15.9)% | | Assets-held-for-sale | $300.5 | $1.2 | $299.3 | 24941.7% | | Total liabilities | $1,827.4 | $1,802.6 | $24.8 | 1.4% | | Liabilities-held-for-sale | $172.9 | $— | $172.9 | - | | Total shareholders' equity | $679.8 | $635.8 | $44.0 | 6.9% | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement outlines Veritiv Corporation's cash flows from operating, investing, and financing activities for Q1 2022 and 2021 - For the three months ended March 31, 2022, **operating activities used cash**, a shift from providing cash in the prior year, primarily due to payroll tax payments. Investing activities also used cash, while financing activities provided cash, reversing a prior year outflow, mainly due to changes in book overdrafts and lower net debt repayments[18](index=18&type=chunk) Consolidated Statements of Cash Flows Summary (in millions) | Metric | 3 Months Ended March 31, 2022 (in millions) | 3 Months Ended March 31, 2021 (in millions) | Change ($ in millions) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------- | | Net cash provided by (used for) operating activities | $(5.9) | $13.2 | $(19.1) | | Net cash provided by (used for) investing activities | $(7.1) | $1.7 | $(8.8) | | Net cash provided by (used for) financing activities | $7.4 | $(26.1) | $33.5 | | Net change in cash and cash equivalents | $(15.5) | $(11.6) | $(3.9) | | Cash and cash equivalents at end of period | $33.8 | $109.0 | $(75.2) | [Condensed Consolidated Statements of Shareholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This statement details changes in Veritiv Corporation's shareholders' equity from December 31, 2021, to March 31, 2022 - **Shareholder's equity increased** from December 31, 2021, to March 31, 2022, primarily due to net income and other comprehensive income, partially offset by treasury stock purchases and tax withholdings on share-based compensation[20](index=20&type=chunk) Consolidated Statements of Shareholders' Equity Summary (in millions) | Metric | Balance at Dec 31, 2021 (in millions) | Net Income (Loss) (in millions) | Other Comprehensive Income (Loss) (in millions) | Stock-based Compensation (in millions) | Treasury Stock Purchases (in millions) | Balance at Mar 31, 2022 (in millions) | | :--------------------------------- | :------------------------------------ | :------------------------------------ | :-------------------------------------------- | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Total Shareholders' Equity | $635.8 | $78.5 | $2.6 | $2.8 | $(10.4) | $679.8 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=Note%201.%20BUSINESS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note describes Veritiv's business operations, recent strategic changes, and key accounting policies - Veritiv signed an agreement in March 2022 to sell its Veritiv Canada, Inc. business for **CAD $240 million (approx. U.S. $190 million) in cash**, which includes most of its Canadian facility solutions, print, and packaging businesses[23](index=23&type=chunk) - The company combined its print and publishing operations into a new **'Print Solutions' reportable segment** in Q1 2022 to better align resources with market needs[24](index=24&type=chunk) - The COVID-19 pandemic continues to impact the company's operational and financial performance, with potential adjustments to receivables, inventory, and asset impairments[28](index=28&type=chunk) [Note 2. REVENUE RECOGNITION AND CREDIT LOSSES](index=12&type=section&id=Note%202.%20REVENUE%20RECOGNITION%20AND%20CREDIT%20LOSSES) This note details Veritiv's revenue recognition policies, geographical concentration, and credit loss accounting - Veritiv's revenue is reported as net sales, measured as the determinable transaction price, net of variable consideration. Approximately **35% of total net sales** historically come from direct shipments from manufacturers to customers[31](index=31&type=chunk) Contract Liabilities (in millions) | Metric | 2022 (in millions) | 2021 (in millions) | | :-------------------------------- | :----------------- | :----------------- | | Balance at January 1, | $21.8 | $12.2 | | Payments received | $15.3 | $14.2 | | Revenue recognized from beginning balance | $(11.4) | $(7.3) | | Revenue recognized from current year receipts | $(5.1) | $(7.1) | | Reclassified to liabilities-held-for-sale | $(1.1) | $— | | Balance at March 31, | $19.5 | $12.0 | - Veritiv's principal markets are concentrated in North America, with Q1 2022 net sales approximately **86% in the U.S., 11% in Canada, and 2% in Mexico**[35](index=35&type=chunk) [Note 3. LEASES](index=15&type=section&id=Note%203.%20LEASES) This note provides information on Veritiv's lease arrangements, including lease costs and right-of-use assets and obligations - Veritiv leases property and equipment, primarily distribution centers, with total lease cost for Q1 2022 at **$30.3 million**, a slight decrease from $31.0 million in Q1 2021[40](index=40&type=chunk) Lease Costs (in millions) | Lease Classification | 3 Months Ended March 31, 2022 (in millions) | 3 Months Ended March 31, 2021 (in millions) | | :------------------- | :------------------------------------------ | :------------------------------------------ | | Short-term lease expense | $0.8 | $1.0 | | Operating lease expense | $25.1 | $25.6 | | Total finance lease expense | $4.4 | $4.4 | | **Total Lease Cost** | **$30.3** | **$31.0** | Lease Assets and Obligations (in millions) | Metric | March 31, 2022 (in millions) | December 31, 2021 (in millions) | | :-------------------------------- | :----------------------------- | :------------------------------ | | Operating lease right-of-use assets | $344.6 | $375.6 | | Total operating lease obligations | $377.8 | $409.5 | | Finance lease right-of-use assets | $32.7 | $66.3 | | Total finance lease obligations | $35.9 | $72.8 | [Note 4. RESTRUCTURING CHARGES](index=17&type=section&id=Note%204.%20RESTRUCTURING%20CHARGES) This note outlines the status and financial impact of Veritiv's 2020 Restructuring Plan - The 2020 Restructuring Plan was substantially complete by December 31, 2021, with approximately **$4 million in remaining charges** expected through the end of 2022[44](index=44&type=chunk) Restructuring Charges by Type (in millions) | Metric | 2022 (in millions) | Cumulative (in millions) | | :-------------------------- | :----------------- | :----------------------- | | Severance and Related Costs | $0.4 | $41.2 | | Other Direct Costs | $0.0 | $33.0 | | (Gain) Loss on Sale of Assets | $2.3 | $(3.9) | | **Total** | **$2.7** | **$70.3** | Restructuring Accrual Rollforward (in millions) | Metric | Balance at Dec 31, 2021 (in millions) | Costs Incurred (in millions) | Payments (in millions) | Balance at Mar 31, 2022 (in millions) | | :-------------------------- | :------------------------------------ | :--------------------------- | :--------------------- | :------------------------------------ | | Severance and Related Costs | $4.7 | $0.4 | $(2.3) | $2.8 | | Other Direct Costs | $3.7 | $1.4 | $(2.1) | $3.0 | | **Total** | **$8.4** | **$1.8** | **$(4.4)** | **$5.8** | [Note 5. DEBT](index=19&type=section&id=Note%205.%20DEBT) This note details Veritiv's debt structure, including the ABL Facility and other financing arrangements - Veritiv's **total debt increased slightly to $526.5 million** as of March 31, 2022, from $515.7 million at December 31, 2021, primarily due to new vendor-based financing arrangements[52](index=52&type=chunk) Total Debt (in millions) | Metric | March 31, 2022 (in millions) | December 31, 2021 (in millions) | | :-------------------------------- | :----------------------------- | :------------------------------ | | Asset-Based Lending Facility (ABL) | $474.2 | $440.8 | | Commercial card program | $2.3 | $2.1 | | Vendor-based financing arrangements | $14.1 | $— | | Finance leases | $35.9 | $72.8 | | **Total debt** | **$526.5** | **$515.7** | - As of March 31, 2022, the available additional borrowing capacity under the ABL Facility was approximately **$576.6 million**[54](index=54&type=chunk) [Note 6. INCOME TAXES](index=19&type=section&id=Note%206.%20INCOME%20TAXES) This note explains Veritiv's income tax expense and effective tax rate for the reporting periods - Veritiv's **effective tax rate significantly decreased to 6.9%** for Q1 2022 from 29.9% in Q1 2021, primarily due to the recognition of a deferred tax asset on a foreign subsidiary investment[59](index=59&type=chunk) Income Tax Information (in millions, except rate) | Metric | 3 Months Ended March 31, 2022 (in millions) | 3 Months Ended March 31, 2021 (in millions) | | :-------------------------- | :------------------------------------------ | :------------------------------------------ | | Income (loss) before income taxes | $84.3 | $30.4 | | Income tax expense (benefit) | $5.8 | $9.1 | | Effective tax rate | 6.9% | 29.9% | [Note 7. DEFINED BENEFIT PLANS](index=21&type=section&id=Note%207.%20DEFINED%20BENEFIT%20PLANS) This note provides information on Veritiv's defined benefit pension plans and associated costs - Veritiv intends to terminate and settle the U.S. Veritiv Pension Plan, while the Veritiv Hourly Pension Plan will remain open[61](index=61&type=chunk) Net Periodic Benefit Cost (Credit) (in millions) | Metric | 3 Months Ended March 31, 2022 (U.S. in millions) | 3 Months Ended March 31, 2022 (Canada in millions) | 3 Months Ended March 31, 2021 (U.S. in millions) | 3 Months Ended March 31, 2021 (Canada in millions) | | :-------------------------------- | :------------------------------------- | :--------------------------------------- | :------------------------------------- | :--------------------------------------- | | Service cost | $0.8 | $0.1 | $0.6 | $0.1 | | Interest cost | $0.3 | $0.6 | $0.3 | $0.5 | | Expected return on plan assets | $(0.5) | $(1.1) | $(1.1) | $(1.0) | | **Net periodic benefit cost (credit)** | **$0.6** | **$(0.4)** | **$(0.2)** | **$(0.4)** | [Note 8. FAIR VALUE MEASUREMENTS](index=21&type=section&id=Note%208.%20FAIR%20VALUE%20MEASUREMENTS) This note details fair value measurements, particularly for assets-held-for-sale and goodwill impairment review - **Assets-held-for-sale increased** from $1.2 million at December 31, 2021, to **$300.5 million** at March 31, 2022, primarily due to the divestiture of Veritiv Canada, Inc[66](index=66&type=chunk) - Goodwill ($96.3 million) and other intangibles ($38.9 million) were reviewed for impairment following the Veritiv Canada, Inc. sale announcement, and **no impairment was found** for either the divested or retained businesses[67](index=67&type=chunk) [Note 9. EARNINGS (LOSS) PER SHARE](index=22&type=section&id=Note%209.%20EARNINGS%20(LOSS)%20PER%20SHARE) This note presents Veritiv's basic and diluted earnings per share calculations for the reporting periods - **Basic EPS increased significantly to $5.31** in Q1 2022 from $1.34 in Q1 2021, and **diluted EPS rose to $5.12** from $1.28, reflecting higher net income and a lower weighted-average share count[69](index=69&type=chunk) Earnings Per Share (in millions, except EPS) | Metric | 3 Months Ended March 31, 2022 | 3 Months Ended March 31, 2021 | | :--------------------------------------- | :------------------------------ | :------------------------------ | | Net income (loss) | $78.5 | $21.3 | | Weighted-average shares outstanding – basic | 14.77 | 15.88 | | Weighted-average shares outstanding – diluted | 15.32 | 16.66 | | **Basic EPS** | **$5.31** | **$1.34** | | **Diluted EPS** | **$5.12** | **$1.28** | [Note 10. SHAREHOLDERS' EQUITY](index=23&type=section&id=Note%2010.%20SHAREHOLDERS'%20EQUITY) This note details changes in Veritiv's shareholders' equity, including share repurchases and comprehensive income - On March 1, 2022, Veritiv authorized a **new $200 million share repurchase program**, replacing the previous $100 million program[70](index=70&type=chunk) - During March 2022, the company repurchased **78,025 shares of common stock at a cost of $10.4 million** under the new program[70](index=70&type=chunk) - **Accumulated Other Comprehensive Loss (AOCL) improved** from $(24.3) million at December 31, 2021, to $(21.7) million at March 31, 2022, driven by $2.6 million in unrealized net gains from foreign currency translation adjustments[75](index=75&type=chunk) [Note 11. COMMITMENTS AND CONTINGENCIES](index=24&type=section&id=Note%2011.%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines Veritiv's legal claims, proceedings, and multiemployer pension plan withdrawal liabilities - The company does not expect any asserted or unasserted legal claims or proceedings to have a **material adverse effect** on its results of operations, financial condition, or cash flows[77](index=77&type=chunk) - Veritiv recognized an estimated complete withdrawal liability of **$7.1 million** for the Western Pennsylvania Teamsters and Employers Pension Fund in Q1 2020, and a partial withdrawal liability of **$6.5 million** in Q2 2019, both unchanged as of March 31, 2022[79](index=79&type=chunk)[80](index=80&type=chunk) - An estimated complete withdrawal liability of **$0.5 million** was recognized in Q4 2021 for the Minneapolis Food Distributors Ind Pension Plan, effective July 31, 2022[82](index=82&type=chunk) [Note 12. SEGMENT AND OTHER INFORMATION](index=25&type=section&id=Note%2012.%20SEGMENT%20AND%20OTHER%20INFORMATION) This note provides detailed financial performance by Veritiv's operating segments, including net sales and Adjusted EBITDA - Veritiv's **net sales increased across all segments** in Q1 2022, with Packaging leading the growth. Adjusted EBITDA also saw significant increases, particularly in Print Solutions, reflecting improved market conditions and pricing[84](index=84&type=chunk) Net Sales by Segment (in millions) | Segment | 3 Months Ended March 31, 2022 (in millions) | 3 Months Ended March 31, 2021 (in millions) | Change ($ in millions) | Change (%) | | :---------------- | :------------------------------------------ | :------------------------------------------ | :--------------------- | :--------- | | Packaging | $1,003.1 | $854.6 | $148.5 | 17.4% | | Facility Solutions | $229.4 | $206.1 | $23.3 | 11.3% | | Print Solutions | $596.6 | $471.3 | $125.3 | 26.6% | | Corporate & Other | $29.0 | $27.3 | $1.7 | 6.2% | | **Total** | **$1,858.1** | **$1,559.3** | **$298.8** | **19.2%** | Adjusted EBITDA by Segment (in millions) | Segment | 3 Months Ended March 31, 2022 (in millions) | 3 Months Ended March 31, 2021 (in millions) | Change ($ in millions) | Change (%) | | :---------------- | :------------------------------------------ | :------------------------------------------ | :--------------------- | :--------- | | Packaging | $97.4 | $78.0 | $19.4 | 24.9% | | Facility Solutions | $13.4 | $11.5 | $1.9 | 16.5% | | Print Solutions | $54.6 | $17.4 | $37.2 | 213.8% | | Corporate & Other | $(45.9) | $(47.4) | $1.5 | 3.2% | [Note 13. DIVESTITURES](index=26&type=section&id=Note%2013.%20DIVESTITURES) This note details the agreement to sell Veritiv Canada, Inc. and its financial impact on assets and liabilities - In March 2022, Veritiv signed a definitive agreement to sell its Veritiv Canada, Inc. business for **CAD $240 million (approx. U.S. $190 million) in cash**[86](index=86&type=chunk) - The sale includes substantially all of the company's facility solutions and print operations in Canada, and a majority of its Canada-based packaging business, but does not represent a strategic shift to be classified as a discontinued operation[86](index=86&type=chunk) Assets and Liabilities Held for Sale (in millions) | Metric | Balance at March 31, 2022 (in millions) | | :---------------------------------------------------------------- | :-------------------------------------- | | Cash and cash equivalents | $9.9 | | Accounts receivable, net of allowances | $94.8 | | Inventories | $87.3 | | Property and equipment, net | $38.0 | | Goodwill | $3.3 | | Other intangibles, net | $2.6 | | **Total assets** | **$299.3** | | Accounts payable | $72.4 | | Other accrued liabilities | $20.1 | | Long-term debt, net of current portion | $31.5 | | **Total liabilities** | **$172.9** | [Note 14. SUBSEQUENT EVENT](index=27&type=section&id=Note%2014.%20SUBSEQUENT%20EVENT) This note discloses the completion of the Veritiv Canada, Inc. sale after the reporting period - The sale of Veritiv Canada, Inc. was completed on May 2, 2022, with **net cash proceeds of approximately $147.4 million**[91](index=91&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=28&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Veritiv's Q1 2022 financial condition, operating results, strategic developments, liquidity, and capital resources [Executive Overview](index=28&type=section&id=Executive%20Overview) This overview highlights key strategic initiatives, market impacts, and financial programs affecting Veritiv's performance - The COVID-19 pandemic continues to have widespread, unpredictable impacts on the company's operations, customer demand, and financial results, with the full extent difficult to estimate[97](index=97&type=chunk)[100](index=100&type=chunk) - The sale of Veritiv Canada, Inc. (completed May 2, 2022) for approximately **$190 million** allows Veritiv to focus its portfolio on its core packaging business, emphasizing higher growth and margin opportunities[101](index=101&type=chunk) - A **new $200 million share repurchase program** was authorized on March 1, 2022, replacing the fully utilized 2021 program[105](index=105&type=chunk) [Results of Operations, Including Business Segments](index=33&type=section&id=Results%20of%20Operations,%20Including%20Business%20Segments) This section analyzes Veritiv's consolidated financial performance, including net sales, expenses, and net income - Veritiv's consolidated operating results for Q1 2022 showed significant improvement, with **net sales increasing by 19.2% to $1,858.1 million** and **net income surging by 268.5% to $78.5 million**, primarily driven by higher market prices, increased sales volume, and improved pricing[113](index=113&type=chunk)[114](index=114&type=chunk) Consolidated Results of Operations (in millions) | Metric | 3 Months Ended March 31, 2022 (in millions) | 3 Months Ended March 31, 2021 (in millions) | Increase (Decrease) ($ in millions) | Increase (Decrease) (%) | | :---------------------------------------------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------- | :---------------------- | | Net sales | $1,858.1 | $1,559.3 | $298.8 | 19.2% | | Cost of products sold | $1,455.4 | $1,238.1 | $217.3 | 17.6% | | Distribution expenses | $112.2 | $101.5 | $10.7 | 10.5% | | Selling and administrative expenses | $187.9 | $166.4 | $21.5 | 12.9% | | Operating income (loss) | $87.2 | $34.5 | $52.7 | 152.8% | | Net income (loss) | $78.5 | $21.3 | $57.2 | 268.5% | - Distribution expenses rose by **$10.7 million (10.5%)**, mainly from an $8.4 million increase in freight and logistics due to higher sales volume and increased fuel/carrier prices[116](index=116&type=chunk) [Segment Results](index=34&type=section&id=Segment%20Results) This section provides a detailed breakdown of net sales and Adjusted EBITDA performance across Veritiv's operating segments - All segments reported increased net sales and Adjusted EBITDA in Q1 2022. Packaging saw a **17.4% net sales increase** and **24.9% Adjusted EBITDA growth**, driven by higher prices and volume. Facility Solutions grew net sales by **11.3%** and Adjusted EBITDA by **16.5%** due to demand improvements. Print Solutions experienced the largest growth, with net sales up **26.6%** and Adjusted EBITDA up **213.8%**, benefiting from strong market demand and pricing[133](index=133&type=chunk)[134](index=134&type=chunk)[138](index=138&type=chunk)[141](index=141&type=chunk) Net Sales by Segment (in millions) | Segment | 3 Months Ended March 31, 2022 (in millions) | 3 Months Ended March 31, 2021 (in millions) | Change ($ in millions) | Change (%) | | :---------------- | :------------------------------------------ | :------------------------------------------ | :--------------------- | :--------- | | Packaging | $1,003.1 | $854.6 | $148.5 | 17.4% | | Facility Solutions | $229.4 | $206.1 | $23.3 | 11.3% | | Print Solutions | $596.6 | $471.3 | $125.3 | 26.6% | | Corporate & Other | $29.0 | $27.3 | $1.7 | 6.2% | | **Total** | **$1,858.1** | **$1,559.3** | **$298.8** | **19.2%** | Adjusted EBITDA by Segment (in millions) | Segment | 3 Months Ended March 31, 2022 (in millions) | 3 Months Ended March 31, 2021 (in millions) | Change ($ in millions) | Change (%) | | :---------------- | :------------------------------------------ | :------------------------------------------ | :--------------------- | :--------- | | Packaging | $97.4 | $78.0 | $19.4 | 24.9% | | Facility Solutions | $13.4 | $11.5 | $1.9 | 16.5% | | Print Solutions | $54.6 | $17.4 | $37.2 | 213.8% | | Corporate & Other | $(45.9) | $(47.4) | $1.5 | 3.2% | [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses Veritiv's cash flow activities, debt, and available borrowing capacity - Veritiv's cash flows from operating activities shifted to a **net use of $5.9 million** in Q1 2022, primarily due to deferred payroll tax payments. Investing activities used **$7.1 million**, while financing activities provided **$7.4 million**[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) Cash Flow Summary (in millions) | Metric | 3 Months Ended March 31, 2022 (in millions) | 3 Months Ended March 31, 2021 (in millions) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash provided by (used for) operating activities | $(5.9) | $13.2 | | Net cash provided by (used for) investing activities | $(7.1) | $1.7 | | Net cash provided by (used for) financing activities | $7.4 | $(26.1) | - As of March 31, 2022, Veritiv had approximately **$576.6 million in available additional borrowing capacity** under its ABL Facility[154](index=154&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=41&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) No material changes in market risk from the prior Annual Report on Form 10-K - No material changes in market risk from the prior Annual Report on Form 10-K[162](index=162&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=42&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded Veritiv's disclosure controls were effective, with no material changes in internal control over financial reporting - Disclosure controls and procedures were **effective** as of March 31, 2022[163](index=163&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2022[164](index=164&type=chunk) [PART II. OTHER INFORMATION](index=42&type=section&id=Part%20II%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity sales [ITEM 1. LEGAL PROCEEDINGS](index=42&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section refers to Note 11 for information on legal proceedings - Refer to Note 11 for information on legal proceedings[166](index=166&type=chunk) [ITEM 1A. RISK FACTORS](index=42&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes from the risk factors disclosed in the prior Annual Report on Form 10-K - No material changes from the risk factors disclosed in the prior Annual Report on Form 10-K[167](index=167&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=42&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Veritiv authorized a new $200 million share repurchase program and repurchased shares in March 2022 - A **new $200 million share repurchase program** was authorized on March 1, 2022[168](index=168&type=chunk) Share Repurchase Program Activity | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of the Publicly Announced Program | Approximate Dollar Value of Shares that May Yet be Purchased Under the Publicly Announced Program | | :------------- | :----------------------------- | :--------------------------- | :----------------------------------------------------------------------- | :------------------------------------------------------------------------------------------------ | | January 1-31 | 31,323 | $122.57 | — | $— | | February 1-28 | 18,677 | $94.30 | — | $— | | March 1-31 | 270,743 | $126.73 | 78,025 | $189,570,387 | [ITEM 6. EXHIBITS](index=43&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the 10-Q report, including key agreements and certifications - Key exhibits include the Stock Purchase Agreement for Veritiv Canada, Inc. (Exhibit 2.1), the amended Executive Severance Plan (Exhibit 10.1), and certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2)[172](index=172&type=chunk) [SIGNATURES](index=44&type=section&id=SIGNATURES) This section contains the official signatures certifying the accuracy of the report - The report was signed by Stephen J. Smith (SVP and CFO) and Lance D. Gebert (Corporate Controller) on May 9, 2022[176](index=176&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to _________ Commission file number 001-36479 VERITIV CORPORATION (Exact name of registrant as specified in its charter) Delaware 46-3234977 (State or other jurisdic ...