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Veritiv (VRTV) Expands Share Buyback Program to $100 Million

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Veritiv Corporation’s VRTV board has approved an increase in its share buyback program to $100 million from $50 million. The company currently has around $71 million available under the expanded program.

The company’s strong earnings prospects and solid balance sheet enable it to expand the share-repurchase program. So far this year, Veritiv has already repurchased around $29 million shares.

Earlier this month, the company reported first-quarter 2021 earnings per share of $1.28 as against the loss per share of 2 cents incurred in the year-ago quarter. This upside was driven by continued Packaging sales growth and operational efficiencies implemented across the company. Also, the bottom line beat the Zacks Consensus Estimate of 2 cents by a wide margin.

Veritiv had cash and cash equivalents of $109 million as of Mar 31, 2021, up from the $75 million held as on Mar 31, 2020. Long-term debt was $601 million as of Mar 31, 2021, down from $740 million as of Mar 31, 2020. Strong earnings and disciplined working capital management helped the company to reduce net leverage. Veritiv ended the quarter with record low net leverage ratio of 2.0x, down significantly from the 3.5 times at the end of the first quarter of 2020.

Backed by an impressive quarterly performance, Veritiv has raised its guidance for 2021. The company expects income before taxes for 2021 in the range of $95 million to $115 million. It had reported income before taxes of $43 million in 2020. Veritiv estimates adjusted EBITDA in the range of $220 million to $240 million this year. The mid-point of the EBITDA guidance indicates growth of 23% from $187.6 million in 2020. Free cash flow for 2021 is expected to be at least $75 million with capital expenditures at around $35 million.

The company had embarked on a restructuring plan to address the impact of the pandemic on its business as well the ongoing secular changes in the Print and Publishing segments. The plan, known as the 2020 Restructuring Plan, had been designed to better align the company’s cost structure. The actions included reducing salaries, temporary furloughs, adjusting its supply chain operations staff and minimizing discretionary spending, among others. Cost savings from these actions are likely to aid the company’s results in the near term.

Veritiv is gaining from healthy e-commerce growth, solid packaging demand and recovery in the industrial manufacturing sector. Some of the prominent players in the Paper and Related Products industry like International Paper Company IP, Domtar Corporation UFS and WestRock Company WRK are also gaining from these trends.

Veritiv Corporation Price and Consensus

Veritiv Corporation Price and Consensus
Veritiv Corporation Price and Consensus

Veritiv Corporation price-consensus-chart | Veritiv Corporation Quote

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