Verso Fourth Quarter and Full Year 2019 Results

Earnings Conference Call and Webcast – February 27, 2020

Verso Fourth Quarter and Full Year 2019 Results

Forward Looking Statements & Non-GAAP Financial Information

1

In this presentation, all statements that are not purely historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 andSection 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by the words "believe," "expect," "anticipate," "project," "plan,""estimate," "intend," “potential,” “will,” “may” and other similar expressions. Forward-looking statements are based on currently available business, economic, financial,and other information and reflect management's current beliefs, expectations, and views with respect to future developments and their potential effects on Verso. Actualresults could vary materially depending on risks and uncertainties that may affect Verso and its business. Verso’s actual actions and results may differ materially from whatis expressed or implied by these statements due to a variety of factors, including, without limitation, the long-term structural decline and general softening of demandfacing the paper industry; adverse developments in general business and economic conditions; developments in alternative media, which are expected to adverselyaffect the demand for some of Verso's key products, and the effectiveness of Verso's responses to these developments; intense competition in the paper manufacturingindustry; Verso's ability to compete with respect to certain specialty paper products for a period of two years after the closing of the sale of Verso's Androscoggin andStevens Point mills and related assets (the "Pixelle Sale"); Verso's business being less diversified following the sale of two mills after the closing of the Pixelle Sale;Verso's dependence on a small number of customers for a significant portion of its business; Verso's limited ability to control the pricing of its products or pass throughincreases in its costs to its customers; changes in the costs of raw materials and purchased energy; negative publicity, even if unjustified; any failure to comply withenvironmental or other laws or regulations, even if inadvertent; legal proceedings or disputes; any labor disputes, and those risks and uncertainties listed under thecaption “Risk Factors” in Verso’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, Verso’s Quarterly Report on Form 10-Q for the nine monthsended September 30, 2019, and from time to time in Verso’s other filings with the Securities and Exchange Commission (the “SEC”). Verso assumes no obligation to updateany forward-looking statement made in this presentation to reflect subsequent events or circumstances or actual outcomes.

Non-GAAP Financial Information

This presentation contains certain non-GAAP financial information relating to Verso, including EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin. Definitions andreconciliations of these non-GAAP measures are included in this presentation. Because EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are not measurementsdetermined in accordance with GAAP and are susceptible to varying calculations, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin as presented may not becomparable to similarly titled measures of other companies. You should consider our EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin in addition to, and not as asubstitute for or superior to, our operating or net income, which are determined in accordance with GAAP. See the Appendix in this presentation for additional informationon EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin.

A D A M S T. J O H N | C E O

B U S I N ESS U P DATE

Q4 and Full Year 2019 Highlights

3

1 See Appendix for definitions of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin. EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP Measures.

• Ended the year with no debt and $42M in cash.

• Strong focus on safety performance ending the year with a total incident rate of 1.23 and lost workday incident rate of 0.39.

• Completed the sale of Androscoggin and Stevens Point mills to Pixelle Specialty Solutions on February 10, 2020.

• Maintained industry leading low SG&A to sales ratio.

• Continued challenging headwinds.

Dollars in Millions Q4-19 FY-19Sales $587 $2,444Adj. EBITDA1 $ 74 $ 251Adj. EBITDA Margin1 12.6% 10.3%

• Full year 2019 Adjusted EBITDA1 of $251M and Adjusted EBITDA Margin1 of 10.3%.

– Price/mix and cost reduction initiatives partially offset the impact of demand decline, Luke Mill closure and reliability events.

– Includes a $13M pension settlement gain.

Androscoggin and Stevens Point Mills Verso Remaining Mills

• Mills located in Quinnesec and Escanaba, Michigan; Wisconsin Rapids, Wisconsin; and Duluth, Minnesota.

• Streamlined company with strong operating cash flow.

• Invest capital to maintain efficient and cost effective operations.

• Manageable pension position with no long-term debt.

1 1,31,2

($M)209

42

2019 Adjusted EBITDA

83%

334

35

Pension Net Unfunded Liability

91%

84

24

2019 CapEx

78%

Profile Post Androscoggin and Stevens Point Mill Sale

412019 Full Year. | 2See Appendix for Verso Post Mill Sale 2019 FY Adjusted EBITDA Reconciliation. | 3As of December 31, 2019.

2019 Revenue Post Mill Sale1

77%

15%

5%GraphicPapers

SpecialtyPapers

PackagingPapers

Pulp

3%

1

1,896

548

2019 Revenue

78%

Use of Proceeds

5

Board of Directors has authorized the repurchase of up to $250 million of Verso’s shares.

A plan to declare a $0.10 quarterly dividend payable to holders of Verso stock in Q2 2020.

A L L E N C A M P B E L L | C F O

F I NA NCI AL U P DATE

Key Metrics

7

Q4 18 Q4 19 Q4 18 Q4 19 Δ Δ %

Net Sales $M $ 695 $ 587 - Paper 671 604 (67) -10%

Operating Income $M $ 63 $ 10 - Pulp 71 53 (18) -25%

Net Income $M $ 86 $ 142 Total 742 657 (85) -11%

Adjusted EBITDA1 $M $ 96 $ 74 NSP ($/ton)

Adj. EBITDA Margin1 % 13.8% 12.6% - Paper $ 968 $ 932 $ (36) -4%

EPS - Diluted $/share $ 2.44 $ 4.04 - Pulp $ 627 $ 458 $ (169) -27%

Inventory ($M) $ 398 $ 395 $ (3) -1%

Shipments (000 tons)Income Statement

• Adj. EBITDA Margin1 of 12.6% for the quarter despite challenging market environment.

• Q4 2019 net income includes release of $115M of income tax valuation allowances and pension settlement gain of $13M.

• Pulp price significantly below Q4 2018 with shipments down by 25% as a result of mix changes on Androscoggin Mill’s No. 3 paper machine.

• Year end inventory ended down year over year and down $78M from Q1 2019.

• SG&A maintained at industry low levels as a percentage of revenue.


Q4 2018 to Q4 2019 Adjusted EBITDA1 Bridge ($M)

8

• Operations unfavorable due to lower production at our Androscoggin and Wisconsin Rapids mills.

• Inflation on direct materials favorable due to decreased chemical, energy and purchased pulp costs, partially offset by increased wood costs.

• Favorable SG&A driven by continued cost-cutting initiatives.

• Pension settlement gain related to lump sum buyout program.

32

13

29

162

4 1

13

Price/ Mix Pension Settlement

Q4 2018 Volume Downtime SG&AFreight and Other

COGS

PensionInflation Q4 2019

96

74

OPS

61

Q4 2019 Subtotal


2018 and 2019 Adjusted EBITDA Reconciliation

9

(Dollars in millions) 2018 2019 YoY Δ

Net income (loss) 171$ 96$ (75)$ Income tax expense (benefit) - (117) (117)

Interest expense 33 2 (31)

Depreciation and amortization 111 183 72

EBITDA 315$ 164$ (151)$

Restructuring charges 1 52 51

Luke Mill post-closure costs - 9 9

Non-cash equity award compensation 8 12 4

Post-reorganization costs 4 - (4)

Countervailing duty settlement (42) - 42

(Gain) loss on sale or disposal of assets (8) 2 10

Other severance costs - 4 4

Strategic initiatives costs 5 6 1

Shareholders proxy solicitation costs - 1 1

Andro PM No. 3 startup costs 10 - (10)

Other items, net 3 1 (2)

Adjusted EBITDA 296$ 251$ (45)$

Adjusted EBITDA Margin % 11.0% 10.3% -0.7%

2018 to 2019 Adjusted EBITDA1 Bridge ($M)

10

• Price/mix favorable with volume down due to weak demand and closure of the Luke Mill.

• Downtime taken to mitigate inventory build.

• Significant reliability events primarily at the Escanaba and Wisconsin Rapids mills.

• Major maintenance unfavorable due to planned outages across our system.

• Slight inflation due to higher wood costs.

• Other COGS increase driven by union ratification payments and increased warehouse costs, partially offset by natural gas settlement payment and improved freight costs.

• Pension settlement gain related to lump sum buyout program.

20 43

10

17

52 2

8 713

Freight and Other

COGS

SG&A PensionMajor Maint.

2019 Subtotal

FY 2019Downtime Pension Settlement

Price/MixFY 2018 Volume

238

251

OPS Inflation

296


Liquidity, Net Debt and Cash Flow

11

• Ended the year with cash of $42M and available liquidity of $318M.

• Cash flow from operations continues to satisfy all operating requirements.

• Capital Expenditures in 2019 included:

• $14M in strategic projects.

• Increased capital maintenance of $35M at the Wisconsin Rapids, Escanaba and Stevens Point mills.

Net Debt1 ($M)

Liquidity2 $216 $309 $318

Strong liquidity with cash from operations funding requirements.

$65

$146

$(7) $(26) $(42)

-$50

$0

$50

$100

$150

$200

$250

12/31/2017 12/31/2018 12/31/2019

Cash

Term Loan

Revolving Credit

$204 Net Debt

$26 Cash $42 Cash

Cash Flow ($M) 2017 2018 2019

Cash Generation

Cash From Operations 223$ 304$ 205$

CVD and Asset Sale - 59 1

Total Cash Generation 223$ 363$ 206$

Cash Uses

Pension Funding (32)$ (43)$ (42)$

Capital Expenditures (40) (73) (105)

Interest Payments (30) (16) (2)

Closure Costs (9) (1) (41)

Cash Uses Total (111)$ (133)$ (190)$

Net Cash Generated / (Used) 112$ 230$ 16$

1 Net debt = ABL borrowings less cash. | 2 $350M ABL facility limited by borrowing base and inclusive of cash. | 3 Includes $20M for Countervailing Duties and $16M from the sale of Wickliffe Mill. | 4 2019 Includes Luke Mill closure and post-closure cost. | 5 Includes changes of restricted cash.

3

4

5

2019 2020EUnfunded Liability - Beginning (428)$ (369)$ Company Contributions 42 54 Asset Returns 210 74 Discount Rate Change (194) - Interest/Service Cost (60) (51) Plan Expenses (10) (9)

Buyout / Mortality change 71 -

Mill Sale - 35

Unfunded Liability - Ending (369)$ (266)$

Manageable Pension Liability ($M)

12

1Transferred to Pixelle as part of sale | 2Potential additional contribution of up to $45M in 2021 based on 2020 tax position | 3Updated mortality assumption benefited $17M and lump sum buyout resulted in an estimated $54M reduction (primarily driven by buyout at substantially higher rate than YE 2019 discount rate)

Improving Pension Position

(700)

(600)

(500)

(400)

(300)

(200)

(100)

0

0

500

1,000

1,500

2,000

Emergence 2016 2017 2018 2019

Assets PBO Liability Net Unfunded Liability

Assets and PBO Net Unfunded

Focused on reducing and de-risking pension exposure and reducing administrative costs

• Implemented lump sum buyout reducing Equity and Interest Rate volatility and reducing PBGC premiums (2019).

• Implemented cashflow driven investment strategy reducing asset sensitivity to interest rates (2018).

• Consolidated multiple plans reducing administrative costs (2018).

Key Pension Statistics

2019 Asset Returns 18.7%

2020 Actuarial Assumptions• Asset Return• Discount Rate

06.5%3.1%

Net Liability Transferred 1 $35M

Expected Cash Contribution 2 $54M

2019 – 2020 Net Liability Walk

2

3

2020 Outlook

13

• Market demand decline projected by industry analysts for 2020 is expected to be in the mid to high single digit range for printing and writing grades.

• Historically the first half of the year is weaker due to mill outages in the spring and the seasonal nature of our business.

• 2020 Guidance• Capital expenditures $55M to $60M• Pension contributions $54M• Tax payments $3M to $6M

A P P E N D IX

EBITDA and Adjusted EBITDA Definitions

15

EBITDA consists of earnings before interest, taxes, depreciation and amortization. Adjusted EBITDAreflects adjustments to EBITDA to eliminate the impact of certain items that we do not consider to beindicative of our ongoing performance. We use EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin asa way of evaluating our performance relative to that of our peers and to assess compliance with ourcredit facilities. We believe that EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAPoperating performance measures commonly used in our industry that provide investors and analysts withmeasures of ongoing operating results, unaffected by differences in capital structures, capital investmentcycles and ages of related assets among otherwise comparable companies.

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

Major Maintenance – Current Operating Platform

16

36

3

22

5 6

38

1

20

15

3

37

1

21

12

3

2018 2019 2020P 2018 2019 2020P 2018 2019 2020P 2018 2019 2020P 2018 2019 2020PQ1 Q2 Q3 Q4FY

Major Outage Timing

Q1 Q2 Q3 Q4

2018 QuinnesecWisconsin Rapids

No Major Outage Escanaba

2019 No Major Outage Wisconsin Rapids Escanaba No Major Outage

2020P No Major Outage Wisconsin Rapids Escanaba No Major Outage

$M

Q4 2018 and Q4 2019 Adjusted EBITDA Reconciliation

17

(Dollars in millions) Q4-18 Q4-19 QoQ Δ

Net income (loss) 86$ 142$ 56$

Income tax expense (benefit) - (117) (117)

Interest expense 1 - (1)

Depreciation and amortization 28 26 (2)

EBITDA 115$ 51$ (64)$

Restructuring charges (1) 8 9

Luke Mill post-closure costs - 5 5

Non-cash equity award compensation 2 2 -

Post-reorganization costs 1 - (1)

Countervailing duty settlement (22) - 22

(Gain) loss on sale or disposal of assets - 2 2

Other severance costs - - -

Strategic initiatives costs - 5 5

Shareholders proxy solicitation costs - 1 1

Andro PM No. 3 startup costs - - -

Other items, net 1 - (1)

Adjusted EBITDA 96$ 74$ (22)$

Adjusted EBITDA Margin % 13.8% 12.6% -1.2%

Q4 2018 and FY 2018 P&L Adjusted EBITDA Add Back Items

18

(Dollars in millions, shares in thousands)

Reported

Q4-18

Adjustments to

EBITDA

After

Adjustments to

EBITDA

Reported

FY-18

Adjustments to

EBITDA

After

Adjustments to

EBITDA

Net sales 695$ -$ 695$ 2,682$ -$ 2,682$

Costs and expenses:

Cost of products sold (exclusive of depreciation and amortization) 579 - 579 2,321 11 (1) 2,310

Depreciation and amortization 28 - 28 111 - 111

Selling, general, and administrative expenses 24 3 (2) 21 102 16 (2) 86

Restructuring charges (1) (1) (3) - 1 1 (3) -

Other operating (income) expense 2 1 (4) 1 (5) (6) (4) 1

Operating income (loss) 63 (3) 66 152 (22) 174

Interest expense 1 - 1 33 - 33

Other (income) expense (24) (22) (5) (2) (52) (41) (5) (11)

Income (loss) before income taxes 86 19 67 171 19 152

Income tax benefit - - - - - -

Net income (loss) 86$ 19$ 67$ 171$ 19$ 152$

Weighted average common shares outstanding (basic and diluted):

Basic 34,553 34,553 34,514 34,514

Diluted 35,288 35,288 35,096 35,096

Income (loss) per share (basic and diluted):

Basic 2.49$ 1.94$ 4.97$ 4.41$

Diluted 2.44$ 1.90$ 4.88$ 4.33$

(1)

(2)

(3)

(4)

(5) Countervailing duty settlement gains pursuant to the Settlement Agreement and other miscellaneous adjustments.

Primarily related to costs incurred in connection with the upgrade of previously shuttered No. 3 paper machine and pulp line at the Androscoggin Mill.

Professional fees and other charges associated with the strategic alternatives initiative, amortization of non-cash incentive compensation and other miscellaneous adjustments.

Charges are primarily associated with the closure and relocation of the Memphis office headquarters and closure of the Wickliffe Mill.

The table below shows the Company’s consolidated income statement as presented under U.S. GAAP in the first column, then adjusted to reflect the adjustments the Company uses to get from

EBITDA to Adjusted EBITDA.

Gain on the sale of the Wickliffe Mill in September 2018 and fees associated with our prior Chapter 11 cases.

Q4 2019 and FY 2019 P&L Adjusted EBITDA Add Back Items

19

(Dollars in millions, shares in thousands)

Reported

Q4-19

Adjustments

to EBITDA

After

Adjustments

to EBITDA

Reported

FY-19

Adjustments

to EBITDA

After

Adjustments

to EBITDA

Net sales 587$ -$ 587$ 2,444$ -$ 2,444$

Costs and expenses:

Cost of products sold (exclusive of depreciation and amortization) 513 5 (1) 508 2,138 9 (1) 2,129

Depreciation and amortization 26 - 26 183 76 (2) 107

Selling, general, and administrative expenses 28 8 (3) 20 104 24 (3) 80

Restructuring charges 8 8 (4) - 52 52 (4) -

Other operating (income) expense 2 2 (5) - 4 2 (5) 2

Operating income (loss) 10 (23) 33 (37) (163) 126

Interest expense - - - 2 - 2

Other (income) expense (15) - (15) (18) - (18)

Income (loss) before income taxes 25 (23) 48 (21) (163) 142

Income tax benefit (117) - (117) (117) - (117)

Net income (loss) 142$ (23)$ 165$ 96$ (163)$ 259$

Weighted average common shares outstanding (basic and diluted):

Basic 34,702 34,702 34,625 34,625

Diluted 35,232 35,232 35,134 35,134

Income (loss) per share (basic and diluted):

Basic 4.10$ 4.75$ 2.78$ 7.49$

Diluted 4.04$ 4.68$ 2.74$ 7.38$

(1)

(2)

(3)

(4)

(5)

Accelerated depreciation associated with the closure of the Luke Mill.

The table below shows the Company’s consolidated income statement as presented under U.S. GAAP in the first column, then adjusted to reflect the adjustments the Company

uses to get from EBITDA to Adjusted EBITDA.

Costs incurred after production ceased at the Luke Mill that are not associated with product sales or restructuring activities.

Professional fees and other charges associated with strategic alternatives initiative, severance and related benefit costs not associated with restructuring activities, amortization

of non-cash incentive compensation and other miscellaneous adjustments.

Restructuring charges associated with the closure of the Luke Mill.

Realized (gain) loss on the sale or disposal of assets.

Verso Post Mill Sale 2019 FY Adjusted EBITDA Reconciliation

20

Verso

Androscoggin &

Stevens PointRemain Co.

(Dollars in millions, except per share amounts) FY 2019 FY 2019 FY 2019

Net sales 2,444$ 548$ 1,896$

Costs and expenses

Cost of products sold (exclusive of depreciation and amortization) 2,138 491 1,647


Selling, general and administrative expenses 104 15 89

Restructuring charges 52 - 52

Other operation (income) expense 4 - 4

Operating income (loss) (37) 25 (62)

Interest expense 2 - 2

Other (income) expense (18) - (18)

Income (loss) before income taxes (21) 25 (46)

Income tax benefit (117) - (117)

Net income (loss) 96 25 71

Income tax expense (117) - (117)

Interest expense 2 - 2


EBITDA 164 42 122

Restructuring charges 52 - 52

Non-cash equity award expense 12 - 12

Strategic initiatives (strategy) 6 - 6

Luke Mill post-closure costs 9 - 9

Shareholders proxy solicitation costs 1 - 1

(Gain) loss on disposal of fixed assets 2 - 2

Other severance costs 4 - 4

Other one-time transaction items 1 - 1

Adj. EBITDA 251 42 209

Documents

Verso Fourth Quarter and Full Year 2019 Results