Good morning. My name is Lorie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Veritiv Corporation Third Quarter Financial Results Presentation. [Operator Instructions] Neil Russell, Senior Vice President of Corporate Affairs, you may begin your conference.

Thanks, Lorie, and good morning, everyone. Welcome to Veritiv Corporation's Third Quarter 2014 Earnings Call. Today, you will hear prepared remarks from Mary Laschinger, our Chairman and Chief Executive Officer; and Steve Smith, our Chief Financial Officer. Before we begin, please note that statements made during this presentation that state the company's or management's intentions, beliefs, expectations or predictions of the future are forward-looking statements and actual results could differ in a material manner. Additional information that could cause results to differ from those in the forward-looking statements is contained in the company's SEC filings. This includes, but is not limited to, risk factors contained in our S-1 registration statement and in the news release issued earlier this morning, which is posted in the Investors section at veritivcorp.com and can be found on the Veritiv IR app which can be downloaded from the iTunes App Store and Google Play. Non-GAAP financial measures are included in our comments today and in the presentation slides. The reconciliation of these non-GAAP measures to the applicable GAAP measures are included at the end of the presentation and can also be found in the Investors section of our website. Lastly, Veritiv will be attending Barclay's annual Industrial Distribution Forum next week on Tuesday, November 18. At this time, I'd like to turn the call over to our Chairman and Chief Executive Officer, Mary Laschinger.

Thanks, Neil. Good morning, everyone, and thank you for joining the call today as we review our financial results and key accomplishments in the quarter as well as provide you a brief update of our integration efforts. As today's release outlines, Veritiv continues to drive progress against our 2014 priorities. We continue to execute on our integration plans in an effort to both align the operations as well as to achieve our stated synergies, while remaining focused on providing industry-leading products and solutions to our customers. Before we review our financial results for the third quarter, I'd like to remind you why we brought these 2 great organizations together. As a distribution leader in North America, we are able to deliver greater sourcing strategies and supply chain capabilities than any of our competitors. We are also well positioned to create significant value for both our customers and suppliers, while capturing synergies across the business to create a strong company for the future. And lastly, the combination of these 2 great companies enables us to remain strategically focused on what we do best, which is distribution. This puts us in a good position to invest in the future so that we can take advantage of our higher margin growth segments. I'm really proud to say that we're on track to accomplish our financial goals and we're very pleased with the progress made against our 2014 priorities. First of all, we have stabilized our ongoing operations as a combined business as we continue to focus on our customers. Second, we continue to execute our plans for integration and capturing our stated synergies. And lastly, we continue to align our segment strategies and looking for opportunities to enhance our operational model and our organization design to operate as efficiently and effectively as possible as one company. This is considerable progress given the complexity of the transaction and the significant organizational changes that come with combining 2 very large organizations, and I credit our dedicated Veritiv team for the progress we've made to this point. They have been critical in moving Veritiv toward becoming a more focused and efficient company that will well position us for future success. Now I'd like to turn your attention to our financials. For the first time, we are reporting consolidated financial results for the combined company as well as segment-specific quarterly results. I will share with you our performance on a comparable pro forma basis that Steve will explain shortly and will also get into more detail. In our pro forma results for the third quarter ended September 30, 2014, we had net sales of $2.4 billion which was down 3.3% from prior year period. Cost of goods sold for the quarter was $2 billion, and net sales less cost of products sold was $403 million. We achieved an adjusted EBITDA of $51.5 million and our adjusted EBITDA as a percentage of net sales was 2.2%. These results were impacted by continued and expected decline in the paper industry trends which showed a decline in volume of about 5.5% for the third quarter. Our Print revenue was in line with that decline and our Publishing revenue was greater than that decline. Facility Solutions, which typically is tied to GDP growth, experienced a decline for the quarter as we continue to rightsize that portfolio for this segment. However, we are beginning to see improvements in profitability for this segment. And finally, gains in our Packaging segment served as a performance driver for overall sales for the quarter. The growth partly attributed to our higher volume with a diversified set of customers across North America. Steve will provide more detail -- in-depth detail on our segment performance in just a moment. Before I turn it over to Steve, I do want to highlight some key achievements and great work that has been underway for the quarter. First of all, we refined our organizational structure and have selected our core team. Prior to day 1, we began to put in place the first several layers of the organizational leadership with clearly defined goals and a clarity of the company mission. Now that work has been completed. Second, we have further developed our plans for the integration process, which has strengthened our ability to capture synergies as we create a strong and sustainable business for the future. Our teams across the organization are already executing against these plans. And third and very important, we completed the customer alignment process. Over the past few months, we have realigned our account so that every Veritiv customer is now represented by a single sales professional. This supports stabilization of our ongoing operations and demonstrates our commitment to maintaining customer focus during this transition as we continue to work toward an operationally excellent supply chain model. I'd like to acknowledge the hard work and dedication of our team members here at Veritiv for accomplishing this significant and key milestone in our integration. Now I'd like to turn it over to Steve, who's going to go through details of our third quarter financial performance.

Thank you, Mary, and good morning, everyone. As Mary mentioned, we are pleased with our financial results for the third quarter and they were in line with our expectations. We are on track with our plan and have good momentum towards our stated goals. Our results illustrate the ability of the Veritiv team to maintain its profit profile despite an extremely complicated transaction which caused a significant amount of organizational change on top of industry pressures in certain segments. Before I summarize our results for the quarter and year-to-date periods, it's important to understand the presentation of our financial statements. From an accounting perspective, the merger has been treated as the acquisition of the legacy Unisource business by the legacy xpedx business during the fiscal third quarter. For the third quarter, per the GAAP accounting guidance, we provide the 3 and 9 months results of the legacy xpedx business for both the 2014 and 2013 income statements. As you might expect, however, and this is the nature of acquisition accounting, for GAAP purposes, we do not include any legacy Unisource results in the prior year and include only 3 months of legacy Unisource performance in the quarter and year-to-date results for 2014. Lastly, the balance sheet as of December 31, 2013 reflects only the assets, liabilities and equity of the legacy xpedx business, while the Veritiv balance sheet as of September 30, 2014 reflects the assets, liabilities and equity of the combined business following the merger of the legacy xpedx and legacy Unisource businesses. In order to help facilitate a more comprehensive understanding of the results of operations versus the prior periods pre-merger, we have provided supplemental pro forma information in the slides on our website. These slides make an important assumption that the merger occurred on January 1, 2013. We hope you find this helpful. To make it easier to evaluate our financial performance, we are also providing certain metrics on a comparative pro forma basis. So let's look at the supplemental financial information as well as the pro forma financial metrics which assume the transaction had occurred in January of 2013, not July of 2014. So for the third quarter 2014, our net sales totaled $2.4 billion, a decrease of 3.3%, again on a pro forma basis, from the prior year's third quarter. Our adjusted EBITDA was $51.5 million, a decrease of 6.2% from the prior year's third quarter. And our adjusted EBITDA as a percentage of net sales was 2.2%, which was flat compared to the prior year's third quarter. We are pleased we held the adjusted EBITDA margin flat to the prior year's third quarter despite the combination of the revenue headwinds and the intense integration activities. It is important to note that the third quarter is our seasonally strongest quarter of the year, and as such, we do not anticipate that the adjusted EBITDA or the adjusted EBITDA margin, which were accomplished in the third quarter, will be sustained for the full fiscal year. If we examine our performance for the 9 months ended September 30, 2014, again on a pro forma basis as if the transaction had occurred in January of 2013, our net sales were $6.9 billion, a decrease of 4.3% from the prior year. Our adjusted EBITDA was $113.3 million, a decrease of 4.5% from the prior year, and adjusted EBITDA as a percentage of net sales was 1.6% which was essentially flat compared to the prior year. Now let's look at our results by segment for only the third quarter. I would like to point out that beginning this quarter and moving forward, we are presenting segment results on a pro forma adjusted EBITDA basis. This reporting approach best aligns with the direction we have taken for reporting financial results for the corporate entity as a whole. Now moving into the segment results for the quarter ended September 30 of 2014 on a pro forma basis, assuming the merger had occurred on January 1 of 2013, we have found that the Print segment experienced a 5.8% decline in net sales and contributed $20.5 million of adjusted EBITDA. The decline in net sales for the Print segment was mostly driven by lower volumes. Margins did compress slightly as well. The Publishing segment had a 10.3% decline in net sales and contributed $9.2 million in adjusted EBITDA. The decline in net sales was driven by lower volume, and to a lesser extent, changes in price and product mix. However, the segment had a slight improvement in margins compared to the prior year's third quarter. The Facility Solutions segment declined 6.4% in net sales and contributed $15.5 million in adjusted EBITDA. This segment had a decline in net sales driven by lower volumes due to a number of larger account transitions, some by design and some due to market conditions, as we continue to rightsize this segment for profitability. Adjusted EBITDA as a percentage of net sales improved slightly year-over-year. The Packaging segment's net sales increased 4.8% and added $53 million of adjusted EBITDA. Packaging's increase to adjusted EBITDA was driven by increased volume, slightly offset by lower margins. The increased business in this segment continues to come from a diverse set of customers. Switching gears from a review of the segments, I would like to now address our corporate and other category so you can understand a couple of the reasons why we have created this income statement category and the elements of our business model held within it. First, the creation of a corporate and other category allows for greater visibility, both within the company and outside the company, into the profitability of each of our segments. As such, the structure helps to isolate segment-specific performance. In addition, by concentrating the staff costs, which I will describe in a moment, into departments rather than have them spread throughout the company, we can hold the department heads responsible for achieving their objectives, including any synergy targets. So what compromises -- what comprises, rather, the corporate and other category? These expenses are the typical corporate staff activities of IT, legal, finance and human resources as well as our business unit involved in a growing area of logistics services, which we call Veritiv logistics services. Because this business unit is not large enough to require separate disclosure in accordance with generally accepted accounting principles, it is housed within corporate and other. As such, we will not be providing details on the performance of that business unit at this time, but we can share that logistics solutions experienced strong sales growth during the quarter. Our hope is that someday, the logistics solutions business will grow to such a size and profit profile as to warrant being reported as a stand-alone reportable segment. If you step back and look at the third quarter's performance, we can tell you that overall, these results are on track with our expectations, and as such, for the full year 2014, we continue to expect pro forma adjusted EBITDA to be in the range of $135 million to $145 million. As discussed last quarter and as we look beyond 2014, we continue to see net synergies in the range of $150 million to $225 million over the next 5 years. The pacing of these synergies suggests 15% to 25% of the annualized run rate benefit by the end of 2015. These synergies are mostly driven by a concerted effort to lower operating expenses in such areas as warehouse, transportation and back-office support. Consistent with our prior guidance, we continue to expect adjusted EBITDA improvements of approximately $100 million over the next few years. Now turning to the balance sheet for a moment. At the end of September, Veritiv had drawn approximately $800 million of the asset-based loan facility and has available liquidity of approximately $500 million. As a reminder, the ABL Facility is backed by the inventory and receivables of the business and generally has no financial covenants. Capital expenditures totaled approximately $4.4 million for the third quarter. Excluding onetime integration costs, some of which may be capitalized, we continue to expect capital spending for the second half of the year to be approximately $10 million. Going forward, we continue to believe that cash flow from the business, due in part to an anticipated improvement in adjusted EBITDA, will allow us to accomplish 3 objectives: first, to fund the costs associated with achieving synergies; second, to pay down our debt; and third, to grow the overall value of the enterprise. In closing, while we have still much work to do, especially on the integration, we are pleased with our third quarter results. We remain focused on supporting our customers as we work through our integration process and providing our employees with the tools they need to execute against our business plan effectively. We are confident that we are on the right path to achieve our financial goals. And now I'll turn it back to Mary.

Thank you, Steve, and thank you, everyone, for joining us this morning. We have great confidence in the strength of our business and the opportunities that lie ahead of us. Our third quarter results met our expectations. And as Steve mentioned, through integration, we expect to capture cost savings and other synergies up to $225 million over the next 5 years. We remain well positioned to achieve our goals and the full year guidance we've provided. We are focused on driving operational excellence to fulfill our customers' needs and building value for our shareholders. I am confident in our ability to deliver quality Print, Publishing, Packaging and Facility Solutions products and services to our business across North America, and I am very pleased with the accomplishments that we have made thus far, all of which are result of the strong efforts put forth by the entire Veritiv team. So with that, I would now like to welcome your questions and comments. Lorie?

[Operator Instructions] Your first question comes from the line of Chip Dillon of Vertical Research.

Just first question, and I know that this is new for all of us in terms of making sure we understand the seasonality, but if I look at the midpoint of your full year adjusted EBITDA range, it looks like you're going from $38 million in the first quarter to $24 million in the second to almost $52 million in the third, down to about $27 million in the fourth. And so it certainly shows that the third quarter was, by far, the high water mark, followed by the first quarter and the second and the fourth are the low points. Is that a pattern we should expect going forward as you put this thing together?

Chip, a great question. I would suggest that, that is a fairly typical pattern that we would experience in this business.

Okay. All right, that's helpful. And then as we look at ways that you can -- you mentioned reducing debt, and I don't believe in this quarter and I know -- of course, you can't tell because it's the first quarter of the merger, but when you look at the working capital, the net working capital situation, it looks like, in my calculations, it's about $1,050,000,000 of what I'll call current assets not counting cash and current liabilities not counting debt, and maybe you have other adjustments. But what would you say over a 1- to 2- or 3-year period could be done there, especially as the business on a top line basis isn't expected to really grow? Is your opportunity to see $100 million, $200 million of working capital released in the form of cash, and therefore, that would give you the ability to, say, reduce debt?

Chip, I'm going to ask Steve to respond to that question. Steve?

Sure. Thanks for the question, Chip. A couple of thoughts on the elements of your question. First of all, to help you think through what's happened year-on-year, that is third quarter-on-third quarter, let me share a couple of pieces of information on working capital. First of all, we're pleased that, on a pro forma basis, the company had virtually no change in its working capital third quarter-on-third quarter. Its days sales outstanding, one of the many metrics we could use, is down from 45 plus days to under -- about 44.5. Its inventory days on hand which last year was on a pro forma basis about 63, has held at 63. And our AP days outstanding of about 29 last year in the third quarter was about 31 in this period. So working capital seems to be in a good position now. To the second part of your question about the future, we haven't predicted '15 and beyond, but we do believe there could be opportunity over time in the working capital area that, as you point out, there might be an ability to further reduce our working capital. But candidly, we're still working through the seasonality of our business and the dynamic between the 2 businesses as they work with their customers and suppliers.

Chip, I'd also like to add in, in terms of the future outlook, one of the reasons that we're not projecting that in 2015 is because to enable us to get at that working capital, we really need better systems integration. And that will enable us to look at the supply chain in total across the 2 businesses where today, we're still operating separate systems, and really can't leverage that opportunity in the business until we get farther down where we have a common systems platform. But we do see opportunities in the future.

Okay, that's good. And one last one. When you look at the recasting of corporate expense and again, we're dealing with some estimates, but I think we're pretty close when we say it's really about $40 million pulled out of the segments into that line on a quarterly basis. And 1/2 the sales, if you sort of think about it, are in the Print and Publishing area and only about 1/4 of the corporate expenses, if you will, were pulled out of that -- those 2 segments, and then the other 1/2 of the sales, of course, are the ones -- are Packaging and Facilities and one does well and one was troubled, at least when we look at the old numbers. And that's where you seem to have a much higher proportionate, if you will, pull out. And I'm just wondering, why would you see so much more of the -- of that coming out of those 2 businesses versus Print and Publishing?

Go ahead, Steve.

So Chip, thanks for getting into the business model with us. The simple fact is that the historical model was based on an allocation that was done under the guise of a manufacturer rather than under the guise of a distributor. And because of the merger, we've had a chance now to go through and with more information and with people closer to the business, better align the corporate costs to reflect how we manage those businesses. And so the going-forward allocations are actually reasonably accurate, whereas the historical ones, while a good estimate, were under, again, a different business model.

And generally, Chip -- generally, Chip, to -- because this had a big impact in the legacy xpedx numbers, the allocations were done at a much higher level of the organization. And so as Steve commented, we're taking it down to a more granular level and believe it to be more representative.

Your next question comes from the line of Scott Gaffner of Barclays.

This is actually Taylor Saunders on for Scott this morning. I just wanted to start, I was wondering if we could go back to the segments really quickly. I think it was Slide 9 where you detailed the information on the segments. Looking at the Print segment to start, so you said the Print top line was down about 5.8% in the quarter, which I think is a little bit of an improvement from last quarter where sales are down about 8%. I know you had expected declines to kind of start to trend in line with the market rate over time, but I'm wondering, given that this is already -- this is only one quarter and you're already in line with the market, is that something you would expect to continue going forward? Or is there a little -- is this coming in a little better than you initially anticipated? Or do you think this is kind of something we'll see kind of go back and forth for a little while in this segment?

Well, Taylor, thank you for the question. So I won't comment on what we expect to see for the future. What I will say is, is that the trends in Print have gotten better over the last 6 months. So we are getting closer and closer to the market decline, and have been for the last 2 quarters, in fact. Not just the second quarter, but even trending from the first, second, into the third. And so we're optimistic that, that will continue as we stabilize the business. Again, we're not projecting -- making forward projections, but we're optimistic that, that will continue.

Okay. And then similarly, looking at Facility Solutions, I think kind of the same thing, the decline was 6.4% this quarter, a little bit better than last quarter. Was that in line with the market? And any additional color there?

Sure. No, first of all, we would suggest that it was worse than the market, still. But again, better than the prior 6 months. And so that's trending in the right direction. And we, I believe, we've disclosed in other meetings that we anticipate this segment to continue to decline, well, not worse than where it is today necessarily, but lower performance than the market as we continue to look for opportunities to rightsize that business for profitability.

Okay. And you did talk about some profitability improvement in that segment. Any color you can provide on what you've done so far there and how that's going?

Yes. Well, setting aside just the allocation methodology because that's a onetime event. We continue to sift through the tails of that business. And what I mean by that is, a long tail of some business that isn't necessarily consistent or provides the profitability that we're looking for in that segment. And so we're working through that as well as looking at how we improve the supply chain capability to support customers in that segment at a better cost position.

Okay, perfect. And then just lastly, I think it was on Slide 6 where you talked about some of the bigger buckets, some of the changes that you've made, you mentioned refining the organization -- organizational structure, selecting the core team. Can you talk a little more specifically about exactly what you've done there, some of the changes you've made and I guess if they were in line with your expectations?

So maybe I should use the word not necessarily change, but putting in place an organizational structure for the new company. Both organizations came -- historically had slightly different organizational structures. What we've done is implemented a structure that we feel is the right structure for Veritiv, and so we have that structure in place. We have the leadership chosen across the organization. We're still doing some fine-tuning as we go farther down into the organization. But we have in place all of the leadership across the organization, both in terms of staff support groups as well as our segment leadership as well as our field operations. So it was really putting in place the go-forward organizational structure for the new company. And we have not had any surprises there, and it was a plan that we had developed before we closed that we just fully implemented as we were into the third quarter.

Your next question comes from the line of Keith Hughes of SunTrust.

Two questions. One, within the Packaging segment, the best growth within the 4 divisions, can you give any kind of details of what worked well in the quarter, particularly end-user markets that were particularly good?

Well, Keith, first of all, we operate in several key markets in -- within this subsegment. We do well in the food industry, for example, general manufacturing, for example, as well as high-tech are some of the big segments that we operate in, and we saw uplift in most of those segments across our business. It's also an element that we've been working on, key pieces of the business both in North America as well as outside the U.S. that are beginning to come to fruition that are more in the core manufacturing segment. So it was broad based...

[indiscernible] manufacturing or...

Excuse me?

I'm sorry, go ahead. Was it manufacturing and food? Would that have been the 2 leaders in the period?

I would say more heavily geared toward manufacturing.

Manufacturing, okay. Second question, more structurally on -- you've given us a little bit of detail on the integration in the prepared statements. Just if you look at as we begin 2015, what will you have left to do as we begin the new year on the integration?

Well, so we've rolled out our integration plan across the organization and communicated that broadly to the employees. We have a couple of very significant milestones that we need to hit as we head into 2015. One of the first ones is getting what we're calling day 1 for employees, and that's getting every employee on the same benefits system, the same policies, the same systems in order for us to manage all the people in the company. So that hits us right away on day 1. So for example, today, this week, in fact, we've rolled out benefit plans for the new company. We also have other significant key events such as what we call sales enablement, where we get all of our sales force on salesforce.com, similar tools that they will use and processes and the same thing for suppliers. And then later in the year, we have day 1 for customers, where things start to look norm -- or completely Veritiv from our customers' perspective. So there is a tremendous amount of work that is going on today that is supported by systems work that enable us to do this, and so there's -- and that's why it takes so long. We have multiple locations to deal with. So Keith, it's quite extensive, but well-thought-out, and it's multiyear.

Is the -- you have the day 1 for customers. Do you have a date in mind on when that will be rolled out in 2015?

We're anticipating later in the year.

Later in the year. And then on the systems issues, I know you still have multiple systems now, is there a goal sometime next year? I'm sure you're not going to be on one system, but a fewer number, any kind of detail on that will be helpful.

We anticipate that we will begin the transition onto the common platform to the middle of the end of next year, but that will take quite some time to fully implement across the vast number of locations that we have.

Your next question comes from the line of Neel Tanna of Yost Capital.

Mary, I got a quick question. So I think the implied midpoint of the guidance for EBITDA is $140 million which kind of implies, I guess, roughly $30 million of EBITDA for Q4. Do you -- and then looking at that versus 2013, I guess, implies a significant drop off year-over-year. Is there any reason for the drop off, or is that just general seasonality?

Well, first of all, there is seasonality in the numbers that take us from the third quarter to the fourth quarter for sure. But we put a plan in place going back to before -- just before we launched the merger of the 2 companies in July, and we felt very good about that plan and we still feel very good about that plan which generated guidance that you're referring to around the $135 million to $145 million. At this point in time, we don't see any reason to move away from that. Things are rolling out about the way we expected and do not anticipate any significant change from that, from what we said we were going to do and the guidance that we're given based on what we see today around integration and the work that we have in front of us in the fourth quarter.

Got it. Is Q4 generally a down quarter year-over-year?

Yes, it is. It is. Well, not necessarily year-over-year, but for sure quarter-over-quarter.

Your next question comes from the line of Chip Dillon of Vertical Research.

Just if you could just give us a hand for modeling purposes. As I think about -- and I know the Q is going to come out soon, but as I think about the corporate expense line, it looks like on -- it was around $46 million ongoing in the -- just to make the numbers add up, in the third quarter. And I would guess that number is not as seasonal as the EBITDA numbers are for the segments. Is that fair? And is that kind of a quarterly run rate we should expect? So that would be, I guess, $180 million annually?

I'm going to let Steve answer that question.

Chip, the simple answer to the question is yes, it is a fairly flat figure, the -- both cross quarters and year-over-year. So versus prior year, that figure was flattish to prior and within $1 million, $1.5 million. And you're right, it's about $180 million to $190 million figure for the year.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Thank you.