Verso Corporation

Thanks, Dana. Good morning and thank you for joining Verso’s first quarter 2015 earnings conference call.

Representing Verso today on this call is President and Chief Executive Officer, Dave Paterson and myself, Robert Mundy, Senior Vice President and Chief Financial Officer. Before turning the call over to Dave, I’d like to remind everyone that in the course of the call in order to give you a better understanding of our performance, we will be making certain forward-looking statements.

These forward-looking statements are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize or should underlying assumptions or estimates prove incorrect, actual results may vary materially from management’s expectations.

If you would like further information regarding the various risks and uncertainties associated with our business, please refer to our SEC filings which are posted on our website, versoco.com under the Investor Relations tab. Dave?

Thank you, Bob and good morning to all on the call. Let’s look at the first quarter of 2015.

The most significant action in the quarter of course was the completion of the NewPage acquisition, which occurred on January 7 of this year. Also, in the beginning of the quarter in January 29, we completed the sale of our Bucksport, Maine mill, the operations of that site had seized in December of the previous year.

2015 actual results reflect performance post close of the NewPage acquisition and does not include the first 6 days of January activity for NewPage. Q1 2015 adjusted EBITDA was $44 million.

This was a 26% increase versus Q1 ‘14 adjusted EBITDA of $35 million on a pro forma basis. Total volume was up 2.6% from the first quarter of ‘14 on a pro forma basis, but down 3.6% versus a seasonally stronger Q4 ‘14 on a pro forma basis.

Total paper segment price was up 2% versus Q1 ‘14 on a pro forma basis and up 1.6% versus Q4 ‘14 on a pro forma basis. Coated freesheet ware prices were up 3.1% and 1.5% respectively.

Coated groundwood ware prices were down 2.8% and up 0.6% respectively. During the quarter, our operations group had a difficult quarter, but we ended up with inventory levels in line with expectations.

Input prices increased from the Q4 ‘14 in energy and wood compared to Q1 ‘14 wood cost. Increased energy and raw materials have declined.

On the synergy achievement and organizational headcount actions, we are on track and we’ll talk about that later in the presentation. Bob?

Thanks, Dave. If you turn to Slide 4, here we are showing some key high level comparisons between the first quarter of 2015 compared to last year’s first quarter as well as the previous quarter which is the fourth quarter of ‘14.

The couple of important things to point out as you look at this information is that the 2014 data is on a pro forma basis due to our removing the Bucksport, Biron and Rumford mill data in order to try and give you a better comparison with this year’s first quarter. Although, remember that our first quarter as Dave mentioned, first quarter 2015 numbers do exclude the first 6 days of January for the legacy NewPage activity, which had occurred prior to the completion of the acquisition.

Total volume for the quarter was 929,000 tons versus 955,000 tons in last year’s first quarter. However, if you were to add back the first six days of the year volume would have been up about 1.5% versus the first quarter of ‘14.

Sequentially, volumes were lower due to the normal lower seasonal shift moving from the fourth to the first quarter. Revenues for the first quarter $806 million and follow a pattern similar to what I just referenced for sales volumes together with our total average sales price was up about 1% versus last year.

Adjusted EBITDA $44 million is up over 25% versus the first quarter of ‘14 and considering the numerous distractions and obstacles that are encountered within the first quarter, closing an acquisition of this size, we are very pleased with this result. If you turn to Slide 5 to give you an idea of how our paper segment performed from a volume and price perspective.

At the top of the page, you can see that although our coated freesheet shipments were down about 1% versus last year, this was versus the overall North American market being down about 5%. Similarly, the coated groundwood market was down little over 3% in the first quarter, our shipments were slightly positive.

Although, this isn’t an exact comparison, it is an indication that our volumes held up pretty well during the quarter. In the middle of the slide, we have a bridge reflecting first quarter ‘14 paper volume on a pro forma basis, up 875,000 tons compared to the first quarter of this year.

And I added back the first six days of the year just to try to make it apples-to-apples and that’s 863,000 tons. Although lower in total, you will see that we had a nice mix improvement for our coated volumes especially our coated specialty grades.

We are shipping less uncoated and export volume. Along bottom of the slide, you get a view of how overall paper segment prices had increased of about $17 per ton versus last year’s first quarter.

Turn to Slide 6. You see the key changes between our first quarter 2015 adjusted EBITDA $44 million versus the pro forma $35 million in the first quarter of ‘14.

As I mentioned earlier, the 2015 numbers do not include the first six days of the legacy NewPage activity. EBITDA improvements relative to price, volume and mix totaled about $6 million driven by the paper segment items that I mentioned on the previous slide.

Operations although was a difficult quarter as Dave mentioned, improved about $3 million versus last year and although chemical prices were lower, overall input prices were $11 million about last year’s levels due to higher wood cost. The $10 million improvement in other costs is primarily related to some of our initial synergy improvements, which were mostly in the corporate expenses and headcount areas.

Slide 7 gives you a view of the adjusted EBITDA changes between the fourth quarter of ‘14 and the seasonally slower first quarter of 2015. Higher average coated freesheet, coated groundwood and specialty paper prices of about $14 per ton contributed $7 million of improvement.

Lower volumes coming off the seasonally stronger fourth quarter was a negative $5 million. Operations particularly in the areas of productivity and material usage represented a negative $19 million.

The unfavorable input prices were again driven by higher wood cost. On Slide 8, there is a bit more information related to input prices, where you can see the direction prices were moving versus last year’s first and fourth quarters.

Overall, chemical and coating material prices are in a good spot, energy prices in general are in relatively good place as well. However, we continue to have difficulties with wood prices as a result of issues that actually started back almost two years ago.

The majority issues are in what we call the late stage region of the Midwest, very cold winters coupled with wet summers that caused regional inventories to erode coupled with a reduction in logging capacity. Although, the – I guess the higher prices are expected to improve supply based upon our recent spur in new harvesting equipment orders which should in turn help inventories recover.

We could remain at elevated pricing levels for most of this year. Turn to Slide 9.

Although we mentioned on our last call that the synergy ramp-up curve will be slower in 2015 and we would have preferred due to the closing of the acquisition being completed in the middle of January of this year, rather than late summer or early fall last year. We are ahead of our internal expectations for our $175 million synergy achievement goal.

The bulk of this achievement is in the corporate expenses and headcount areas, but we have also made a great start in the areas of raw materials, pulp integration and mill headcount improvements. On Slide 10, you can see that, we ended the quarter with $204 million of liquidity as well as the changes in our debt structure that resulted from completing the various debt related activities that came about from the acquisition.

Again although, we closed the acquisition much later than we and others had hoped, which slowed the achievement of the value creation that the two companies will be [ph] able to generate, we are very comfortable where our liquidity ended in the quarter as well as the outlook for the balance of the year. Now I will turn it back to Dave.

Thanks Bob. As we look at the second quarter of 2015, I want to touch on some highlights.

First as Bob had mentioned, we remain ahead of schedule on our integration and synergy achievement goals. We are continuing to work on the transition process of the Rumford and Biron mills to Catalyst and we expect this work to be completed in the third Q of 2015.

Volumes are expected to remain flat versus the second quarter pro forma last year than Q1 of this year. RISI is forecasting imports to increase by 10% for coated freesheet versus prior quarter.

We can talk about that in the Q&A section. Coated freesheet, including sheet pricing up $10 compared to the prior quarter.

Our inventories increased seasonally, normal for the second quarter and we see that trend continuing, but they are trending down from the pro forma second quarter of ‘14. We are working intensely on improving mill operations and we see the start of some significant progress across the 8 mill manufacturing system.

We have two significant maintenance outages scheduled for the quarter, one at Androscoggin, Maine and one at Escanaba, Michigan. And from a pricing – input pricing point of view, we see prices remained fairly flat continuing the trends that Bob touched on with higher wood prices being the only significant cost inflator that we see this year.

So, with that, operator we will turn it over to questions.

Thank you. Good morning.

Good morning.

First, can you just speak about your recent coated price, coated paper price increases and how much of yours have been accepted by the market, what are you seeing there?

Well, it’s been a little slower than we hoped. We talked about them, the comments about $10 up quarter-over-quarter.

We continue to think that the price will stick and we will get some more of it. Lot of it is – I just say it’s been difficult.

I guess that’s the right way to say.

Okay. This is perhaps more housekeeping, but the Q1 ‘15 adjusted EBITDA reconciliation includes sort of $19 million of NewPage acquisition cost and inventories step up.

Is there a split of that $19 million between COGS and SG&A?

Yes, Roger, but I would say about $5 million of that is in SG&A, the balance would be in COGS.

And of that $19 million and the $22 million that was the integration class, can you give us split between how much is in the paper segment and how much was in the pulp segment?

I would say, it’s not a lot in the pulp segment. Basically, it’s – it will be something similar to what the revenue split is which you can see in the segment, in the segment part of our release.

So, if you – that’s basically that type of percentage would be what would be in COGS and SG&A for the two segments.

Perfect. What is a good quarterly SG&A run-rate going forward here on a combined basis?

Well, we certainly – we have a goal to part of our synergies is to get to weigh on SG&A type of number that, that is on a percent of sales basis something below 5%, so….

And will you be disclosing NewPage financial statements for Q1 ‘15 and going forward like you did for the full year, I guess for ‘14 maybe 8-K or something?

No, we will not.

Thank you very much.

Okay, thank you.

Hi, thanks and good morning. Bob, can you just talk a little bit about the liquidity situation right now, where you have got call it 35 a sheet at the Verso entity and the rest of them were at the NewPage entity just from a cash standpoint, as you are sort of in a cash negative time of year, how do you expect the cash flows to work through the next quarter?

Well, Bill, we do track liquidity, we don’t report it that way obviously as you can see, but we – like I mentioned in my comments, 2014 into the first quarter, we – which is actually a little higher than what we had initially thought earlier in the year. And we think we will maintain exceeding our expectations for the balance of the year and nowhere do we see an issue on either side of – with either capital structure from a liquidity standpoint.

I know obviously, the third quarter is – would sort of be that trough period. The next time the Verso side of the house makes the large interest payments, but again, we don’t anticipate any issues.

Okay. And then just with regards to the – you indicated about 38% of the synergies achieved today, does that – I mean, it’s a $66 million number.

From a cash standpoint, does that – is it cash come over from NewPage to Verso for that correct?

Well, I mean, what was achieved on the NewPage side, it was achieved on the Verso side obviously that wouldn’t happen.

Right, okay. So, that $66 million number is what you feel like you have achieved to-date?

Yes. On a run-rate basis for the things that some of those were achieved early in the quarter, some were achieved in the last month of the quarter.

So, the timing is a little bit different. But when you run-rate what we have done so far and what we have achieved, yes, those – and obviously like I said the initial ones – the bulk of that was in the sort of corporate expenses, headcount type areas.

And then how do you think about the pace quarter, like if you win by the end of the second quarter, do you expect to be up potentially the 50% of these kind of savings, is that sort of a fair assessment, because I would assume that later on savings are going to be much more difficult, but there is still lot of obvious...

Actually, that’s probably not far off sort of from a ballpark standpoint. I think that’s probably a good way to sort of look at it.

And I mentioned as well that some things that we took a while to go through all especially on the mill side of things, to get through all the mills and get all the diligence done, which was done very quickly and very thoroughly, it took a little time to get that moment on moving like we wanted, but we started to see towards the end of the quarter and into the second quarter, a lot of good momentum on many initiatives that will help, help get this, get us on the curve there for the achievement, I think which you put out was probably something that would be reasonable to expect.

Thank you. And then Dave just on the big picture standpoint, the one thing that we have all been surprised about is limited around the imports coming into the U.S., now that we are two-thirds away through May, can you just talk about what you are seeing in the markets from the import side of the equation?

Sure. Well, let me just back up a second and say the imports particularly European imports and Asian, certain Asian countries have been part of the domestic supply to North America for import supply to the domestic market in North America for years.

So, we are running in what I’d call the normal range from a historical point of view on both the coated freesheet and coated groundwood. We are running about 20% of coated freesheet market as imported and that number is consistent and the high range would be 25%.

So, I think we will tend to see it creep up due to currency issues. And on the groundwood side, it runs somewhere around 10%, 11% currently.

And there is probably more room for imports on the groundwood side, because the highpoint there historically has been about 20%. And the groundwood market is a roll market from the import point of view, which makes it easier to make the order roll market which makes it easier for importers to come in.

So, yes, I would expect increased import activity. We don’t see it being outside the historical normal ranges that we have dealt with as an industry over the past 20 years.

Thanks. That’s helpful.

And then just the last question, there was – I guess I was just happy of announcing that they are going to raise prices over in Europe. I know you guys don’t want to talk specifically about price, but do you think that markets in the U.S.

are firm enough to support potential prices increases maybe towards the back half of the year?

Well, you pointed out – I think the two things happening obviously, the differential between Europe and the U.S. on pricing has been big and so it’s encouraging to see not just happy, but I think there has been other Europeans announcing price increases for the European market, which is a good sign.

I think normally, we would expect the seasonal price movement in the third quarter. We think that still possible we will have to wait and see where we end up the second quarter at.

But yes, we would expect the normal seasonal price improvement in the third quarter when volumes peak going into the August, September, October period and that pattern should repeat itself we think.

But fair to say that market condition right now that you guys are running, running pretty full and the like?

Well, I think we are full. We are full.

I mean, but we are very aware of market conditions. I think we will act accordingly based on what we see in the marketplace.

I mean the big concern is demand. And I would say that the market is watching to see what happens with the import and what happens where we get that seasonal pickup that we all expect, if it isn’t a strong or imports or higher than we expect, then we will take appropriate actions.

Thank you. And – sorry, just last question.

In the second quarters, typically high quarter for doing downtime maintenance through your mill system, what’s the plan this year across the mill system?

Go ahead Bob.

Yes. We do have as Dave mentioned, we have outages at Escanaba and Androscoggin in the second quarter.

We have – we will have additional outages actually in the third and fourth quarter, so it sort of spread throughout the year Bill. And as Dave mentioned that is there is – that will also be a way for us to we make sure we keep inventories in check and so forth based on what’s happening with market conditions.

But the normal cycle, I mean we take our maintenance outages in the warmer weather months, given most of our mills in the North, so between June and October is all eight mills will have some form of an outage in that window of time.

Great. Thank you.

Thank you.

Hi guys, good morning. Just a follow-up on the Bill’s question there about the maintenance outages, what kind of additional cost are you looking for in Q2?

Maybe $5 million, $6 million in the second quarter.

Okay and something similar in Q3 and maybe a little less in Q4?

Yes. Let’s say that’s fair, yes.

Okay, great. And then with regards to synergies, what did you actually realize in the P&L in Q1?

Something less than $10 million let’s say.

Okay. And then with regards to NewPage, I know you guys have the ability in that credit agreement to kick over $50 million from the NewPage entity over to Verso, did you do that in the first quarter?

We did.

Okay. And then can you talk about how much EBITDA the NewPage business actually generated in the quarter and where you guys are with respect to their financial maintenance covenants there?

Well, we are applying this – all the covenants are there are no issues with any covenants. And NewPage, the NewPage side of the house was 35-plus of the total for the quarter.

Okay. And can you disclose what the calculation was on that leverage covenant?

No. That’s something that goes obviously it’s sent to the way our compliance certifications and so forth.

There is a process for that and that’s just not something we have ever talked about on these calls.

Okay. And then how about pulp tonnage in the quarter, can you tell us what – how many tons you guys produced, because I think the pro forma paper tonnage included all of the was pro forma for the additional six days, how many tons of pulp did you guys actually sell?

For the first quarter of ‘15, we sold just under 110,000 tons.

And then lastly for me, I noticed on the cash flow statement you guys didn’t breakout your cash from operations anymore, is there a reason you guys stopped disclosing that or are you going to do it going forward or how is that going to work?

Well, it’s not you don’t have to do it, it’s this quarter was obviously had so many moving parts. It was probably it will be – it was some – somewhat busy.

But if you have any questions about it and I can certainly answer those.

Okay, thanks very much.

Thank you.

Hi, guys. Good morning.

Thanks for taking my call. Just a couple of questions, on the EBITDA margin of 5.5%, would you say is you are ahead of your synergy goal, I was a little higher than that and I had thought that the baseline from which the synergies were going to be achieved was the higher number, would it be possible Bob for you just to tell us what the EBITDA, either the number or the margin was for pro forma ‘14 that you are using?

What the – what was for ‘14?

So for instance, like I see that you disclosed the EBITDA was $35 million in Q1 of ‘14 pro forma, I mean can you just give what the rest of the quarters were because I am not sure where to base the improvements in the EBITDA off of?

I mean, most of the – if you are talking about synergies, I mean the synergies would start from - for the most part prior – for year in ‘14 type numbers.

So are you asking for a pro forma by quarter for ‘14, is that what you are asking for?

Yes. Because for instance, I mean if I – based on what information is available, if I just add both companies together without making any adjustments for the closures for last year, I get about $290 million in EBITDA and about say 40 – say $400 million in revenue, which is almost 6.7%.

And I thought that that was the starting point for these improvements, but it looks like, I am way off on that and I guess I was just kind of wondering…?

Well, I mean there is lot of things that go on other than just these – I mean there is lot of – there is things that work both ways, so I am not sure, how.

I guess the way I would answer that question is EBITDA margins are seasonally lowest in first quarter. And both our EBITDA – and our costs and our EBITDA have a seasonal component when they improve.

You will see that same pattern improve. So the 6 whatever you referred to the 6.6 baseline is an annualized EBITDA.

The first quarter being 5.5, which from our perspective we would say we are off to a good start for the year from an EBITDA margin point of view, because we know our margin will expand due to all the normal factors in the second, third and tends to peak in the fourth quarter as pricing and volumes peak through that busy third and early fourth quarter period. So I guess, I would answer your question by saying, we are off to a good start.

We are off to a start better than last year on a pro forma basis and that’s positive.

Yes. Absolutely, yes.

Yes. So that’s the way I answer.

I don’t think we have done it pro forma by quarter yet.

Right, okay.

And I would also point back – I would also point back to the last time we talked with the group, we said that the sort of the – if the EBITDA impact of the Biron, Rumford and Bucksport three transaction there was pretty much EBITDA neutral to the company. So I think, you are starting point is probably not a bad starting point.

But we just haven’t done that analysis I don’t think.

Yes. It’s just not as straightforward.

Yes. But I am trying to just give you some feel because we did whenever we talked about that three mills out of the system, being pretty much EBITDA neutral to us going forward.

Right, okay. So the numbers I just kind of put together are reasonable baseline from which we can...?

Well, I think we need to have a couple of more quarters under our belt. And we will have a much clearer picture.

So but yes, I would leave you with the message that the first quarter from a margin point of view was better than we have seen in the previous on a pro forma basis and that’s a good sign.

Sure, sure. Okay.

And then just a couple of more basic questions, the contribution to the pension, the $7 million paid and the $30 million for the year, is that likely to be in annual or is that kind of just catching up for NewPage?

Well, some of that is little bit of both companies, but majority of that would be on the NewPage side, yes.

Okay, okay. And then just last question, CapEx was a lot lower than I had expected $9 million, is $80 million to $100 million still the guidance for the year?

Yes, I would say that’s still the guidance. I believe it will probably be on the lower end of the range, but you have to remember that bringing two companies together and getting organizations and leadership, there is a lot of work that has to go on.

So, it’s maybe a little slow coming out of the box, but I would say that’s still, I’d say sort of maybe it’s the lower end of that range to as far as capital spending projects and initiatives we have out there.

And CapEx, because most predominant, most of our CapEx is for maintenance CapEx is this year, it’s going to get tied to these maintenance outages that we refer to in that sort of June through October period. So, there is a seasonal pattern to our capital spending when we don’t have a big strategic project going on.

Okay. And then the related question, which I think you already touched on, so given say 70 to 80ish CapEx for the rest of the year, the pension.

And then the like you pointed out the 3Q big interest payment and the fact that we are fully drawn now on the NewPage ABL that we can use for Verso, you are still – as you say confident in the liquidity position?

Yes. I mean, I am confident in our liquidity position like I said in our downside, yes.

Okay, okay, because it was, I mean, to be perfectly honest it’s getting a little tighter than I had hoped for, but as long as you feel it's…

Firstly I had to remember and I am not sure what you meant by the fully drawn the NewPage ABL, we are not fully drawn on NewPage, if you mean access to that, I mean, that’s – I will understand your question.

Use of the NewPage ABL four months…

Yes. But you got to keep in mind, you have got to keep in mind like I said this on the first call quarter of this – and I mentioned it earlier, this acquisition closed four, five months later than anyone have wanted and interest payments were – that was one thing that wasn’t going to move.

So, we have lost all that value creation in that runway. So, it is tighter than what we had hoped for?

Yes, but do we have to – are there any concerns and I will go back to what I said earlier we don’t have any concerns on liquidity front.

Great, thanks. I appreciate it.

Thank you.

Hi, thanks for taking the questions. Just to I guess follow-up a little bit on the ABL revolver at NewPage, are you guys thinking of paying that down over the coming quarters with cash flows there or just sort of leaving outstanding at this level.

I am just kind of curious what your view on how you think about that going forward?

I mean, the ABL revolver was there for obviously general purposes, there is no – I am not sure what your question is, you will have to use just like it was intended from the outset in conjunction with the Verso ABL revolver.

Okay. So, I guess I am just curious like if you have a view of like where you see that sort of balance say by the end of the year on the NewPage ABL?

That’s just details we have never really gotten into on our earnings calls.

Okay, fair enough. And then just for the Q4 performance of NewPage, I mean, I guess that was sort of after the – that was before the transaction closed obviously, but is it safe to assume that sort of the same factors that affected the Verso revenues and EBITDA also kind of caused weaker performance at NewPage.

Is there anything more that you can kind of add to that or is that just sort of fair enough assessment at this point?

Well, I am not sure what you mean by the weaker performance at NewPage. To be honest with you, it wasn’t – it’s and again referring to the eight mills that existed at NewPage or the six that we have today and those six have – six operating days that are included in this quarter versus so, I am not really sure about your question.

I meant for Q4 – I am sorry Q4 ‘14, where there wasn’t a lot of color on the NewPage performance other than just sort of the numbers, I was just wondering, if you just talk a little bit about the sort of similar factors that affected Verso in Q4?

Well, yes, I think competing in the North American market and issues that Verso saw, whether there aren’t any issues or seasonal issues for the same that NewPage saw.

Okay, fair enough.

It’s nothing unusual there.

Okay. Just wanted to double check on that there was no extraordinary issues going on at NewPage or anything like that?

Not that come to mind.

Okay, great. That’s all for me.

Thanks.

Thank you.

Hi, just a couple of small clarifying questions. On your Slide #7 which bridges the Q4 EBITDA to Q1, it’s a very helpful slide and it was not at all surprising to see EBITDA come down from seasonally strong Q4 into Q1, but it was a little surprising to me that the drop came from operations and input prices rather than volumes, which is what I would have guessed based on seasonality.

And you talked a little bit about the input prices. Can you talk a little bit about that $19 million drop related to operations and what that was and whether that might be repeating or it was more one-time in nature?

Yes. Dave mentioned that as far as our outlook for the second quarter that we don’t expect operations to be more in line with what our expectations are.

I would say a lot of that is as I mentioned in productivity and a lot of material usage type items that there was a lot of – I guess, it was a lot of things going on in the manufacturing organization with the mill managers were being changed out, some of the key personnel, some mills are being changed out. So, there is a lot of upheaval in the organization of the mills and that’s a big distraction.

And I think and then to sort of implement our practices around cost savings, achievement, our R-Gap process that you hear us talk about a lot, how we do that, how we track it, how we layout initiatives, all that was going on in this quarter. And I think some – it’s probably a little bit of sort of things sort of tiered down a little bit before you can build it back up and get it to where you ultimately want it.

And it’s just sort of – there is a cost associated with that. So, I think there is certainly some of that was going on in the first quarter and we don’t expect that to repeat.

Great, that’s helpful. Thank you.

And then just on Slide 9 when you talked about your synergy achievement in the first quarter, you said actual was 38%. I just want to clarify based on what one of the prior callers asked that was 38% of a target, which has not been disclose as opposed to 38% of 175.

Is that correct?

It’s 38% of our 175 run-rate. We expect to be at a certain run-rate in order to hit that 175 at the end of the first quarter.

And we were at – and we were at 38% of a run-rate that gets us to that 175 within the 18 months.

Okay. I am still not sure, I understood.

It would be incorrect though to multiply the 38% times to 175, right. There is some other slope of increases that gets you to the 175 rate and it’s 38% of where you expect it to be on that slope?

There is, I think someone asked the question. As far as on a run-rate annualized basis, we are at $50ish million to $60ish million type of achievement, which probably more than – little more than 60 actually, but of the 175.

So, we have – we have implemented improvements, some of them were – like I mentioned, some of them were in place for three months, some of them were in place right at the end of the quarter, but to look at it on a run-rate basis, you say on an annualized basis, what will that initiative that we implemented say in the last week of the first quarter, what will that provide for us on an annualized basis going out, so all that goes into that run-rate number.

Okay, great. And then my last question is just on the NewPage numbers and the disclosure of them, in the Q you have some disclosure that separates guarantor from non-guarantor, can you just explain does that that line up with NewPage versus non-NewPage or if not what other differences are there?

I think, it’s if you – I want to get view of the NewPage side of the company that non-guarantor sub-column would be a good place to look.

Okay. I guess I would just – that’s helpful and I will do that.

I guess I would just ask that the company consider increasing some disclosure on the NewPage side, the company has a couple of billion dollars of bonds outstanding and a very small equity market caps that most of the folks on the call are probably on the bond side of the house. And the difference between the NewPage results and the Verso result is therefore meaningful for most of your callers, so whatever a disclosure you could add on that would be probably helpful for all of us?

Thank you.

Thank you.

Yes. Thank you for taking my question.

Just to come back to the previous question Robert, just to make this as simple as we possibly can, there is I think you said in previous calls, the synergies would be realized over 12 months to 18 months, by the end of 2015, how much of the 175 do you expect – are you targeting will be reflected in the income statement and cash flow. And the reason I asked that question is because it’s an important part of everybody’s EBITDA calculation to see exactly how much of this winds up in earnings, so I don’t fully understand your 38% calculation or what the barometer is here for, just simply how much of that 175 will be realized by the end of the year in the income statement and the cash flow statement?

Something in the $70 million to $80 million range.

Okay, perfect. Thank you.

And then just to come back to the young lady’s question about the NewPage revolver – the facility excuse me, the ABL, is that 145 drawdown in the ordinary cost of business in other words to take care of working capital needs and as you hit the peak periods of the third and the fourth quarter can we expect that revolver to come back to zero and be ready for the next year’s working capital needs or does that 145 basically stay outstanding through the end of the year?

No. I mean, it’s just like any revolver you are drawing on it at different times.

You use it as it was intended. The company was put together with the consideration of the two – the NewPage and the Verso ABLs to support the working capital needs on a combined basis.

And it’s I guess for lack of a better word to say this we are a business as usual how you use that revolver for that purpose. It will be used just as it was drawn up and we feel like the amounts of each of the respective revolvers aren’t the right amounts.

And so there is nothing unusual it would be going on relative to how we are in and out the revolver. It’s what’s necessary to run a company of this size.

No, agreed and understood. But as you hit your peak third and fourth quarter and you start to generate the cash flows from those peak periods, is that go to paying this revolver down, so that, again it’s basically reset for the next operating period whatever that might be?

Yes. I mean you – anytime you can pay the revolver down and not incur you do that and we do that all the time.

Again, that’s just for us, so...

Okay.

Yes.

And then just finally, the final question is just a housekeeping question coming back to I think it was Richard’s question. If you go to the cash flow statement in the Q, which in my humble opinion is the most important statement, you show just one line for operating, I think that’s was he was alluding to.

Will you break out all the components, working capital, all the adjustments to net income that comprised that line or are we just going to see one line going forward?

Right now, I think you will see one line going forward, which you won’t see primarily just be the depreciation, which is something that you can – that you would be able to pick up and then the working capital changes, but it’s I think like I said if there are any specific questions about what’s in that component, I will be glad to answer them.

Okay. I would just say as a footnote it would be helpful and more disclosure obviously is better than lack of disclosure, because there are a lot of critical components in there, EBITDA tends to be a very squishy number, when you can see all the components that affect operating cash flow, it’s very useful.

So, if you come to terms with perhaps providing that information going forward, it would be very useful. Thank you for taking my questions.

Sure. You are welcome.

Well, again, thank you all for participating in today’s call. It’s been a challenging quarter given the number of transactions that were completed not just the NewPage transaction, but the others we test on involving Catalyst and the sale or the Bucksport assets.

As we go forward for the balance of the year, we think we are on plan and we are tracking well and fingers crossed, we don’t have a bunch of other noise coming out. So, thank you all and we look forward to speaking to you in the future.

Thank you very much.