Q3 2009 Earnings Call Transcript

November 5, 2009 9:00 am ET

Q2 2009 Earnings Call Transcript

August 6, 2009 9:00 am ET

Verso Paper Corp. (VRS) has been to hell and back. It’s really not an exaggeration. From the fateful day in May of 2008 where the IPO priced at $12.00 per share, to the ultimate low of 32 cents on March 6th, investors have seen nothing but red ink. ZachStocks issued a short recommendation on the stock in June of 2008 when the stock was just a bit over $8, and recommended covering the short on March 25 with the stock at $0.71 and for aggressive traders we suggested putting some capital to work on the long side. Now that the stock is above $2.00, the recommendation appears quite timely (although we had to wait a month or so for the stock to turn higher).

Today, Verso’s movement points to renewed institutional interest in the stock as the dynamics are quickly improving. There are two primary forces behind the recovery - one of which is very large in magnitude, but most likely a temporary fix. The second has much longer-term potential and could eventually carry this stock back to it’s IPO level or higher.

Q1 2009 Earnings Call

May 07, 2009 09:00 AM ET

Wow, from Chris Hayes:

Thanks to an obscure tax provision, the United States government stands to pay out as much as $8 billion this year to the ten largest paper companies. And get this: even though the money comes from a transportation bill whose manifest intent was to reduce dependence on fossil fuel, paper mills are adding diesel fuel to a process that requires none in order to qualify for the tax credit. In other words, we are paying the industry–handsomely–to use more fossil fuel. “Which is,” as a Goldman Sachs report archly noted, the “opposite of what lawmakers likely had in mind when the tax credit was established.”…

Long-time readers of ZachStocks may remember the days when IPOs used to be priced and profit could be made quickly depending on how deals were trading. In June of 2008, we urged caution on Verso Paper (VRS) shortly after the company began trading. In the article we noted the slowing demand for direct mail coated paper, significant competition abroad, a weakening dollar, and shares that were likely to be sold by Apollo Group (the majority shareholder).

Fast forward about 9 months and we see that the stock has dropped from its $12 IPO price to less than a dollar. And still the company continues to lose money on a quarterly basis. The fourth quarter saw sales of $1.77 billion but the company reported a net loss of $0.33 cents per share. The company also noted that it has suspended the dividend on common shares indefinitely - a move which may have marked the bottom of the stock slide.

Q4 2008 Earnings Call

March 5, 2009 9:00 am ET

Q3 208 Earnings Call

November 7, 2008 9:00 am ET

Q2 2008 Earnings Call

August 7, 2008 9:00 am ET

Verso Paper Corp. (VRS) came public midway through the month of May with a pricing of $12.00 per share.  After many other successful launches of IPOs in April, underwriters were trying to make the most of the new-found liquidity and get as many deals priced as possible in order to collect their fees while they could.  Verso Paper, however, didn’t possess many of the same characteristics that made IPOs such as Visa (V) and Intrepid Potash (IPI) successful.

For starters, the company is operating in a very stale sector.  As a manufacturer of coated paper, the company is very much at the mercy of the overall economic environment.  Most of Verso’s business comes from the direct mailing and catalog industries which are seeing volumes decline as weak consumer spending makes this type of advertising much less effective.  Industry statistics showed a 4% decline in catalog circulation in the first quarter which is certainly not good news for the company.  While many analysts are optimistic that these dynamics will change, an optimistic viewpoint seems more based on hope than on the current evidence in the market.

The IPO market stinks. Near as I can tell, there hasn't been a single venture-backed IPO in the second quarter of 2008, which would be the first quarter in which that has happened since ... well, as long as I have data. Admittedly, the first quarter was no hell either, with only 5 VC IPO babies making it out the door.

Here is the quarterly VC IPO data from 2005 until today: