PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

VERITIV CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data, unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net sales	$	1,804.1	$	1,767.8	$	5,482.9	$	4,985.7
Cost of products sold (exclusive of depreciation and amortization shown separately below)	1,388.3		1,402.1		4,254.6		3,959.2
Distribution expenses	93.4		103.4		303.8		308.9
Selling and administrative expenses	194.9		189.7		573.5		537.0
Gain on sale of businesses	(18.6)		—		(28.6)		(3.1)
Depreciation and amortization	10.8		13.3		34.6		42.1

Restructuring charges, net	1.4		2.5		5.5		12.0
Operating income (loss)	133.9		56.8		339.5		129.6
Interest expense, net	4.8		3.8		12.3		13.4
Other (income) expense, net	0.0		(1.1)		(7.2)		(3.8)
Income (loss) before income taxes	129.1		54.1		334.4		120.0
Income tax expense (benefit)	32.4		14.1		68.1		32.3


Net income (loss)	$	96.7	$	40.0	$	266.3	$	87.7

Earnings (loss) per share:





Basic	$	6.98	$	2.69	$	18.49	$	5.68



Diluted	$	6.86	$	2.54	$	18.04	$	5.40

Weighted-average shares outstanding:
Basic	13.85		14.86		14.40		15.44
Diluted	14.10		15.76		14.76		16.24

Three Months Ended
September 30,
Nine Months Ended
September 30,
2017
2016
2017
2016
Net sales (including sales to related party of $8.6, $8.5, $24.9 and $26.6, respectively) $ 2,116.8

$ 2,126.6

$ 6,140.3

$ 6,207.2
Cost of products sold (including purchases from related party of $45.7, $71.4, $138.0 and $174.3, respectively) (exclusive of depreciation and amortization shown separately below) 1,736.6

1,743.8

5,026.4

5,086.2
Distribution expenses 132.0

126.0

380.9

375.2
Selling and administrative expenses 228.7

207.3

650.4

615.9
Depreciation and amortization 13.1

13.4

39.9

40.5
Acquisition and integration expenses 14.2

7.3

28.1

19.6
Restructuring charges 2.7

5.8

30.0

7.2
Operating income (loss) (10.5 ) 23.0
(15.4 ) 62.6
Interest expense, net 8.3

8.2

22.1

21.1
Other expense, net (0.5 )
1.2

1.2

6.3
Income (loss) before income taxes (18.3 ) 13.6
(38.7 ) 35.2
Income tax expense (benefit) (4.0 )
8.0

(13.1 )
18.4
Net income (loss) $ (14.3 ) $ 5.6
$ (25.6 ) $ 16.8

Earnings (loss) per share:
Basic earnings (loss) per share $ (0.91 ) $ 0.35
$ (1.63 ) $ 1.05
Diluted earnings (loss) per share $ (0.91 ) $ 0.34
$ (1.63 ) $ 1.04

Weighted average shares outstanding:
Basic 15.70

16.00

15.70

16.00
Diluted 15.70
16.27
15.70
16.05

See accompanying Notes to Condensed Consolidated Financial Statements.

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VERITIV CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions, unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income (loss)	$	96.7	$	40.0	$	266.3	$	87.7
Other comprehensive income (loss):
Foreign currency translation adjustments	(1.8)		(4.0)		(3.7)		(1.3)
Reclassification of foreign currency translation adjustments due to sale of a business, net of tax (1)	—		—		9.5		—
Change in fair value of cash flow hedge, net of tax (1)	0.0		0.0		0.1		0.1
Pension liability adjustments, net of tax (1)	0.0		0.1		6.4		0.1
Reclassification adjustment on settlement of a pension plan, net of tax (1)	—		—		(7.0)		—
Other comprehensive income (loss)	(1.8)		(3.9)		5.3		(1.1)
Total comprehensive income (loss)	$	94.9	$	36.1	$	271.6	$	86.6

(1) Amounts shown are net of tax impacts, if any, which for the nine months ended September 30, 2022 were $2.0 million for the reclassification of foreign currency translation adjustments due to sale of a business, $2.2 million for pension liability adjustments and $(4.0) million for the reclassification adjustment on settlement of a pension plan.

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Net income (loss) $ (14.3 ) $ 5.6
$ (25.6 ) $ 16.8
Other comprehensive income (loss):
Foreign currency translation adjustments 2.4
(1.6 ) 7.8
0.6
Change in fair value of cash flow hedge, net of $0.1, $0.0, $0.1 and $0.2 tax, respectively 0.1
0.0
0.0
(0.3 )
Pension liability adjustments, net of $0.0, $0.0, $0.0 and $0.1 tax, respectively 0.0
0.0
0.1
0.2
Other comprehensive income (loss) 2.5
(1.6 ) 7.9
0.5
Total comprehensive income (loss) $ (11.8 ) $ 4.0
$ (17.7 ) $ 17.3

See accompanying Notes to Condensed Consolidated Financial Statements.

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VERITIV CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in millions, except par value, unaudited)


	September 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	33.8	$	49.3
Accounts receivable, less allowances of $28.6 and $34.4, respectively	962.3		1,011.2

Inventories	449.2		484.5

Other current assets	138.7		132.7

Total current assets	1,584.0		1,677.7
Property and equipment (net of accumulated depreciation and amortization of $317.8 and $332.4, respectively)	131.3		162.9
Goodwill	96.3		99.6
Other intangibles, net	36.7		42.7
Deferred income tax assets	53.8		47.1
Other non-current assets	337.5		408.4
Total assets	$	2,239.6	$	2,438.4
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	543.2	$	561.9

Accrued payroll and benefits	84.9		110.0
Other accrued liabilities	157.7		185.7

Current portion of debt	13.8		16.0

Total current liabilities	799.6		873.6
Long-term debt, net of current portion	389.9		499.7

Defined benefit pension obligations	4.2		7.2

Other non-current liabilities	360.8		422.1
Total liabilities	1,554.5		1,802.6
Commitments and contingencies (Note 11)
Shareholders' equity:


Preferred stock, $0.01 par value, 10.0 million shares authorized, none issued	—		—
Common stock, $0.01 par value, 100.0 million shares authorized; shares issued - 17.5 million and 17.0 million, respectively; shares outstanding - 13.5 million and 14.6 million, respectively	0.2		0.2
Additional paid-in capital	611.5		633.8
Accumulated earnings (deficit)	409.5		143.2
Accumulated other comprehensive loss	(19.0)		(24.3)
Treasury stock at cost - 4.0 million and 2.4 million shares, respectively	(317.1)		(117.1)
Total shareholders' equity	685.1		635.8

Total liabilities and shareholders' equity	$	2,239.6	$	2,438.4

September 30, 2017
December 31, 2016
Assets
Current assets:
Cash $ 76.5

$ 69.6
Accounts receivable, less allowances of $45.2 and $34.5, respectively 1,165.1

1,048.3
Related party receivable 3.8

3.9
Inventories 772.6

707.9
Other current assets 134.7

118.9
Total current assets 2,152.7
1,948.6
Property and equipment (net of depreciation and amortization of $317.9 and $292.8, respectively) 341.5

371.8
Goodwill 105.3

50.2
Other intangibles, net 68.3

21.0
Deferred income tax assets 76.3

61.8
Other non-current assets 31.0

30.3
Total assets $ 2,775.1
$ 2,483.7
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 696.3

$ 654.1
Related party payable 11.2

9.0
Accrued payroll and benefits 61.5

84.4
Other accrued liabilities 130.1

102.5
Current maturities of long-term debt 1.8

2.9
Financing obligations, current portion (including obligations to related party of $10.4 and $14.9, respectively) 11.1

14.9
Total current liabilities 912.0
867.8
Long-term debt, net of current maturities 972.0

749.2
Financing obligations, less current portion (including obligations to related party of $155.2 and $176.1, respectively) 181.9

176.1
Defined benefit pension obligations 25.3

27.6
Other non-current liabilities 148.2

121.2
Total liabilities 2,239.4
1,941.9
Commitments and contingencies (Note 12)

Shareholders' equity:
Preferred stock, $0.01 par value, 10.0 million shares authorized, none issued —

—
Common stock, $0.01 par value, 100.0 million shares authorized, 16.0 million shares issued; shares outstanding - 15.7 million at September 30, 2017 and December 31, 2016 respectively 0.2

0.2
Additional paid-in capital 586.1

574.5
Accumulated earnings (deficit) (5.9 )
19.7
Accumulated other comprehensive loss (31.1 )
(39.0 )
Treasury stock at cost - 0.3 million shares at September 30, 2017 and December 31, 2016 (13.6 ) (13.6 )
Total shareholders' equity 535.7
541.8
Total liabilities and shareholders' equity $ 2,775.1
$ 2,483.7

See accompanying Notes to Condensed Consolidated Financial Statements.

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VERITIV CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions, unaudited)


	Nine Months Ended September 30,
	2022		2021
Operating activities
Net income (loss)	$	266.3	$	87.7


Depreciation and amortization	34.6		42.1
Amortization and write-off of deferred financing fees	1.2		1.1

Net (gains) losses on disposition of assets and sale of businesses	(33.7)		(9.1)

Provision for expected credit losses	2.6		4.6
Deferred income tax provision (benefit)	(6.7)		(0.3)
Stock-based compensation	7.7		5.7
Other non-cash items, net	(7.5)		1.3
Changes in operating assets and liabilities
Accounts receivable	(66.1)		(120.1)
Inventories	(51.5)		(20.4)
Other current assets	(5.5)		(5.8)
Accounts payable	40.5		97.7
Accrued payroll and benefits	(19.0)		10.3
Other accrued liabilities	(1.3)		(11.6)
Other	(2.7)		8.4


Net cash provided by (used for) operating activities	158.9		91.6
Investing activities

Property and equipment additions	(18.1)		(14.1)
Proceeds from asset sales and sale of businesses, net of cash transferred	158.2		15.8
Proceeds from insurance related to property and equipment	3.3		—




Net cash provided by (used for) investing activities	143.4		1.7
Financing activities

Change in book overdrafts	12.3		(0.9)


Borrowings of long-term debt	4,713.1		4,353.6
Repayments of long-term debt	(4,799.4)		(4,401.1)
Payments under right-of-use finance leases	(9.1)		(10.2)
Payments under vendor-based financing arrangements	(3.2)		—

Deferred financing fees	—		(3.3)
Purchase of treasury stock	(200.0)		(100.0)


Impact of tax withholding on share-based compensation	(30.0)		(8.4)
Other	(0.2)		0.2


Net cash provided by (used for) financing activities	(316.5)		(170.1)
Effect of exchange rate changes on cash	(1.3)		(0.4)


Net change in cash and cash equivalents	(15.5)		(77.2)
Cash and cash equivalents at beginning of period	49.3		120.6
Cash and cash equivalents at end of period	$	33.8	$	43.4
Supplemental cash flow information
Cash paid for income taxes, net of refunds	$	78.7	$	37.2
Cash paid for interest	10.7		11.9
Non-cash investing and financing activities




Non-cash additions to property and equipment for right-of-use finance leases and vendor-based financing arrangements	$	18.6	$	1.9
Non-cash additions to other non-current assets for right-of-use operating leases	38.7		59.3

Nine Months Ended September 30,
Operating activities 2017
2016
Net income (loss) $ (25.6 )
$ 16.8
Depreciation and amortization 39.9

40.5
Amortization of deferred financing fees 1.9

4.9
Net losses (gains) on dispositions of property and equipment (4.0 )
(2.7 )
Long-lived asset impairment charges 8.4

4.0
Provision for allowance for doubtful accounts 11.6

0.4
Deferred income tax provision (benefit) (14.3 )
8.1
Stock-based compensation 11.6

7.2
Other non-cash items, net 2.5

4.7
Changes in operating assets and liabilities

Accounts receivable and related party receivable (87.5 )
(48.6 )
Inventories (17.9 )
19.9
Other current assets (6.7 ) (8.5 )
Accounts payable and related party payable 69.6

38.5
Accrued payroll and benefits (23.4 )
(39.9 )
Other accrued liabilities 8.9
3.6
Other 7.3

11.0
Net cash provided by (used for) operating activities (17.7 )
59.9
Investing activities
Property and equipment additions (26.0 )
(29.8 )
Proceeds from asset sales 23.1

5.1
Cash paid for purchase of business, net of cash acquired (144.8 ) —
Net cash used for investing activities (147.7 )
(24.7 )
Financing activities
Change in book overdrafts (43.9 )
32.9
Borrowings of long-term debt 3,685.2

3,394.4
Repayments of long-term debt (3,446.5 )
(3,439.0 )
Payments under equipment capital lease obligations (2.2 )
(2.3 )
Payments under financing obligations (including obligations to related party of $11.5 and $14.4, respectively) (12.9 )
(14.4 )
Deferred financing fees —
(2.0 )
Payments under Tax Receivable Agreement (8.5 ) —
Net cash provided by (used for) financing activities 171.2

(30.4 )
Effect of exchange rate changes on cash 1.1

0.0
Net change in cash 6.9

4.8
Cash at beginning of period 69.6

54.4
Cash at end of period $ 76.5

$ 59.2
Supplemental cash flow information

Cash paid for income taxes, net of refunds $ 3.2

$ 3.1
Cash paid for interest 19.4

15.5
Non-cash investing and financing activities

Non-cash additions to property and equipment $ 8.6

$ 12.3
Contingent consideration for purchase of business: Earn-out 30.0
—

See accompanying Notes to Condensed Consolidated Financial Statements.

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VERITIV CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in millions, unaudited)


	2022
	Common Stock Issued			Additional Paid-in Capital		Accumulated Earnings (Deficit)		AOCL (1)		Treasury Stock			Total
	Shares	Amount								Shares	Amount
Balance at December 31, 2021	17.0	$	0.2	$	633.8	$	143.2	$	(24.3)	(2.4)	$	(117.1)	$	635.8
Net income (loss)						78.5							78.5
Other comprehensive income (loss)								2.6					2.6
Stock-based compensation				2.8									2.8
Issuance of common stock, net of stock received for minimum tax withholdings	0.5	0.0		(29.5)									(29.5)

Treasury stock purchases										(0.1)	(10.4)		(10.4)
Balance at March 31, 2022	17.5	$	0.2	$	607.1	$	221.7	$	(21.7)	(2.5)	$	(127.5)	$	679.8
Net income (loss)						91.1							91.1
Other comprehensive income (loss)								4.5					4.5
Stock-based compensation				3.1									3.1
Issuance of common stock, net of stock received for minimum tax withholdings	0.0	0.0		(0.2)									(0.2)
Treasury stock purchases										(0.7)	(94.4)		(94.4)
Balance at June 30, 2022	17.5	$	0.2	$	610.0	$	312.8	$	(17.2)	(3.2)	$	(221.9)	$	683.9
Net income (loss)						96.7							96.7
Other comprehensive income (loss)								(1.8)					(1.8)
Stock-based compensation				1.8									1.8
Issuance of common stock, net of stock received for minimum tax withholdings	0.0	0.0		(0.3)									(0.3)
Treasury stock purchases										(0.8)	(95.2)		(95.2)
Balance at September 30, 2022	17.5	$	0.2	$	611.5	$	409.5	$	(19.0)	(4.0)	$	(317.1)	$	685.1

(1)Accumulated other comprehensive loss.

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	2021
	Common Stock Issued			Additional Paid-in Capital		Accumulated Earnings (Deficit)		AOCL (1)		Treasury Stock			Total
	Shares	Amount								Shares	Amount
Balance at December 31, 2020	16.6	$	0.2	$	634.9	$	(1.4)	$	(33.5)	(0.7)	$	(17.1)	$	583.1
Net income (loss)						21.3							21.3
Other comprehensive income (loss)								(0.3)					(0.3)
Stock-based compensation				1.2									1.2
Issuance of common stock, net of stock received for minimum tax withholdings	0.2	0.0		(3.3)									(3.3)

Treasury stock purchases										(0.6)	(24.6)		(24.6)
Balance at March 31, 2021	16.8	$	0.2	$	632.8	$	19.9	$	(33.8)	(1.3)	$	(41.7)	$	577.4
Net income (loss)						26.4							26.4
Other comprehensive income (loss)								3.1					3.1
Stock-based compensation				3.5									3.5
Issuance of common stock, net of stock received for minimum tax withholdings	0.2	0.0		(5.0)									(5.0)
Treasury stock purchases										(0.4)	(25.8)		(25.8)
Balance at June 30, 2021	17.0	$	0.2	$	631.3	$	46.3	$	(30.7)	(1.7)	$	(67.5)	$	579.6
Net income (loss)						40.0							40.0
Other comprehensive income (loss)								(3.9)					(3.9)
Stock-based compensation				1.0									1.0
Issuance of common stock, net of stock received for minimum tax withholdings	0.0	0.0		(0.1)									(0.1)
Treasury stock purchases										(0.7)	(49.6)		(49.6)
Balance at September 30, 2021	17.0	$	0.2	$	632.2	$	86.3	$	(34.6)	(2.4)	$	(117.1)	$	567.0

(1)Accumulated other comprehensive loss.

See accompanying Notes to Condensed Consolidated Financial Statements.

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VERITIV CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Veritiv Corporation ("Veritiv" or the "Company") is a North American business-to-business ~~distributor~~full-service provider of value-added packaging products and services, as well as facility solutions ~~print~~ and ~~publishing~~print-based products and services. ~~Additionally, Veritiv provides logistics and supply chain management solutions to its customers.~~ Veritiv was established in 2014, following the merger ~~(the "Merger")~~ of International Paper Company's xpedx distribution solutions business ~~("xpedx")~~ and UWW Holdings, Inc. ~~("UWWH")~~, the parent company of Unisource Worldwide, Inc. ("Unisource").

Veritiv operates ~~from approximately 170 distribution centers~~ primarily throughout the United States ("U.S.") and Mexico.

On September 1, 2022, the Company sold its logistics solutions business, which provided transportation and warehousing solutions to customers in the U.S., to FitzMark, LLC. The Company recognized an initial pre-tax gain of approximately $10.3 million. The Company received initial net cash proceeds of approximately $18.3 million. The gain and cash proceeds are subject to customary working capital adjustments. The Company used the proceeds to support the 2022 Share Repurchase Program, to pay down outstanding debt and to fund capital priorities and growth initiatives. The sale did not represent a strategic shift that will have a major effect on the Company's operations or financial results and it did not meet the requirements to be classified as a discontinued operation. Upon closing of the sale, Veritiv’s approximately 60 employees in its logistics solutions business became employees of FitzMark, LLC. See Note 13, Divestitures, for additional information regarding the sale of the logistics solutions business.

On May 2, 2022, the Company completed the sale of its Veritiv Canada, Inc. business to Imperial Dade Canada Inc. The Company recognized an initial pre-tax gain of approximately $10.0 million in the second quarter of 2022. In the third quarter of 2022, the Company recognized an additional pre-tax gain of approximately $8.3 million related to finalizing the post-closing working capital adjustment. Veritiv received initial net cash proceeds of approximately $147.4 million. The Company used the proceeds to support the 2022 Share Repurchase Program, to pay down outstanding debt and to fund capital priorities and growth initiatives. The sale included substantially all of the Company's facility solutions and print operations in Canada, and ~~Mexico.~~a majority of the Company's Canada-based packaging business, which primarily serves food service customers. The Company maintains the ability to supply packaging solutions to the Canadian locations of certain U.S.-based customers. The sale did not represent a strategic shift that will have a major effect on the Company's operations or financial results and it did not meet the requirements to be classified as a discontinued operation. Upon closing of the sale, Veritiv’s approximately 900 employees in Canada became employees of Imperial Dade Canada Inc. See Note 13, Divestitures, for additional information regarding the sale of Veritiv Canada, Inc.

As the print and publishing industries continue to evolve, the Company continues to focus on ways to share costs and leverage combined resources where possible. In order to better align the resources of the Company's print and publishing organizations with the needs of the changing marketplaces, during the first quarter of 2022 the Company reevaluated the way in which it would service its customers, manage its product offerings and allocate resources to support these areas of its business. This resulted in a decision to combine the print and publishing operations, resulting in a new reportable segment known as Print Solutions. Prior period results have been revised to align with the new presentation. See Note 2, Revenue Recognition and Credit Losses, for additional information related to the Company's product offerings and reportable segments.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with ~~U.S.~~accounting principles generally accepted ~~accounting principles~~in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for a complete set of annual audited financial statements.

The accompanying unaudited financial information should be read in conjunction with the Consolidated ~~and Combined~~ Financial Statements and Notes contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") for the year ended December 31, ~~2016.~~2021. In the opinion of management, all adjustments, including normal recurring accruals and other adjustments, considered necessary for a fair presentation of the interim financial information have been included. During the third quarter of 2022, the Company reclassified its gains from the sale of businesses from the selling and administrative expenses line to the gain on sale of businesses line on the Condensed Consolidated Statements of Operations for the periods presented. The operating results for the interim periods are not necessarily indicative of results for the full ~~year.~~year, particularly in light of the Company's recent divestitures

Table of Conte n t s

and the ongoing impacts of the COVID-19 pandemic and its effects on the domestic and global economies. These financial statements include all of the Company's subsidiaries. All significant intercompany transactions between Veritiv's businesses have been eliminated.

Use of Estimates

The preparation of unaudited financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses and certain financial statement disclosures. Estimates and assumptions are used for, but not limited to, revenue recognition, right-of-use ("ROU") asset and liability valuations, accounts and notes receivable ~~valuation,~~valuations, inventory valuation, employee benefit plans, long-term incentive plans, income tax contingency accruals and valuation allowances, multi-employer pension plan ("MEPP") withdrawal liabilities, ~~and~~contingency accruals, goodwill and other intangible asset valuations. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, actual results may ultimately differ from these estimates and assumptions.

Primarily beginning in April 2020, the COVID-19 pandemic has affected Veritiv's operational and financial performance to varying degrees. As a result of the COVID-19 pandemic, the Company could continue to experience impacts including, but not limited to, charges from potential adjustments of the carrying amount of accounts and notes receivables and inventory, asset impairment charges and deferred tax valuation allowances. The extent to which the COVID-19 pandemic continues to impact the Company's business, results of operations, access to sources of liquidity and financial condition will depend on future developments. These developments, which are uncertain and difficult to predict, include, but are not limited to, the duration, spread and severity of the COVID-19 pandemic including new variants, the effects of the COVID-19 pandemic on the Company's employees, customers, suppliers and vendors, measures adopted or recommended by local and federal governments or health authorities in response to the pandemic, the availability, adoption and effectiveness of vaccines and vaccine boosters and to what extent normal economic and operating conditions can resume and be sustained. Even after the COVID-19 pandemic has subsided, the Company may experience an impact to its business as a result of any economic recession, downturn or volatility or long-term changes in customer behavior. Estimates are revised as additional information becomes available.

Accounting Pronouncements

Recently Adopted Accounting Standards

Effective January 1, 2022, the Company adopted Accounting Standards Update ("ASU") 2021-10, Government Assistance (Topic 832) on a prospective basis. This standard increases the transparency of government assistance provided to entities by including disclosure of (1) the types of assistance, (2) an entity's accounting for the assistance and (3) the effect of the assistance on an entity's financial statements. The amendments in this update are effective for annual periods beginning after December 15, 2021. An entity should apply the amendments in this update either (1) prospectively to all transactions within the scope of the amendments that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application or (2) retrospectively to those transactions. The adoption did not materially impact the Company's consolidated financial statements and disclosures.

Recently Issued Accounting Standards Not Yet Adopted

ASU 2022-04, Liabilities- Supplier Finance Programs (Subtopic 405-50). This standard requires disclosure of the key terms of outstanding supplier finance programs and a rollforward of the related obligations. The amendments in this update do not affect the recognition, measurement or financial statement presentation of obligations covered by supplier finance programs. The amendments in this update are effective for fiscal years beginning after December 15, 2022 on a retrospective basis, including interim periods within those fiscal years, except for the requirement to disclose rollforward information, which is effective prospectively for fiscal years beginning after December 15, 2023. Early adoption is permitted. The Company is currently evaluating the timing of adoption and the related impact on its related disclosures.

ASU 2020-04, Reference Rate Reform (Topic 848). This standard provides temporary optional expedients and exceptions to accounting guidance for certain contract modifications and hedging arrangements to ease financial reporting burdens as the market transitions from the London Interbank Offered Rate ("LIBOR") and other interbank reference rates to alternative reference rates. The guidance is available for prospective application upon its issuance and can generally be applied to contract modifications and hedging relationships entered into March 12, 2020 through December 31, 2024. The Company has long-term debt for which existing payments are based on LIBOR. The Company's Asset-Based Lending Facility includes certain

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provisions, which are not yet in effect, to facilitate the transition from LIBOR to a new replacement benchmark rate. Currently, the Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements and related disclosures.

2. REVENUE RECOGNITION AND CREDIT LOSSES

Veritiv applies the five-step model to assess its contracts with customers. The Company's revenue is reported as net sales and is measured as the determinable transaction price, net of any variable consideration (e.g., sales incentives and rights to return product) and any taxes collected from customers and remitted to governmental authorities. Certain revenues are derived from shipments which are made directly from a manufacturer to a Veritiv customer. The Company is considered to be a principal to these transactions. Revenues from these sales are reported on a gross basis on the Condensed Consolidated Statements of Operations and have historically represented approximately 35% of Veritiv's total net sales. As a normal business practice, Veritiv does not enter into contracts that require more than one year to complete or that contain significant financing components. The Company considers handling and delivery as activities to fulfill its performance obligations. Billings for third-party freight are accounted for as net sales and handling and delivery costs are accounted for as distribution expenses. Veritiv enters into incentive programs with certain of its customers, which are generally based on sales to those same customers. Veritiv follows the expected value method when estimating its retrospective incentives and records the estimated amount as a reduction to gross sales when revenue is recognized. Estimates of the variable consideration are based primarily on contract terms, current customer forecasts as well as historical experience. The Company has established credit and collection processes whereby collection assessments are performed and expected credit losses are recognized.

Customer product returns are estimated based on historical experience and the identification of specific events necessitating an adjustment. The estimated return value is recognized as a reduction of gross sales and related cost of products sold. The estimated inventory returns value is recognized as part of inventories, while the estimated customer refund liability is recognized as part of other accrued liabilities on the Condensed Consolidated Balance Sheets. As of September 30, 2022 and December 31, 2021, estimated inventory returns were not significant.

A customer contract liability will arise when Veritiv has received payment for goods and services but has not yet transferred the items to a customer and satisfied its performance obligations. Veritiv records a customer contract liability for performance obligations outstanding related to payments received in advance for customer deposits on equipment sales and other sale arrangements requiring prepayment, which are included in accounts payable on the Condensed Consolidated Balance Sheets. Veritiv expects to satisfy these remaining performance obligations and recognize the related revenues upon delivery of the goods and services to the customer's designated location within 12 months following receipt of the payment. Most equipment sales deposits are held for approximately 90 days and other sale arrangements requiring prepayment initially cover a 60 - 90 day period but can be renewed by the customer.

See the table below for a year-to-date summary of the changes to the customer contract liabilities balance:


	Customer Contract Liabilities
(in millions)	2022		2021
Balance at January 1,	$	21.8	$	12.2
Payments received	39.7		38.3
Revenue recognized from beginning of year balance	(17.2)		(10.4)
Revenue recognized from current year receipts	(24.3)		(25.0)
Other adjustments (1)	(0.9)		—
Balance at September 30,	$	19.1	$	15.1

(1) Reflects liabilities removed as part of the sale of a business. See Note 13, Divestitures, for information related to the Company's recent divestitures.

Historically, the Company's ten largest customers have generated approximately 10% - 15% of its consolidated annual net sales. Veritiv's principal markets are concentrated primarily across North America. Approximately 92% of its reported net sales for the nine months ended September 30, 2022 were generated in the U.S. Prior to the divestiture, Veritiv's Canadian business represented approximately 10% of its reported net sales. Veritiv evaluated the nature of the products and services provided to its customers as well as the nature of the customer and the geographical distribution of its customer base and determined that the best representative level of disaggregated revenue is the product category basis. The following is a brief description of the Company's three reportable segments, organized by major product category. This segment structure is consistent with the way the Chief Operating Decision Maker, who is Veritiv's Chief Executive Officer, makes operating decisions



~~Recently Issued Accounting Standards Not Yet Adopted~~
~~Standard~~	~~Description~~	~~Effective Date~~	~~Effect on the Financial Statements or Other Significant Matters~~
~~Accounting Standards Update ("ASU") 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~	The standard will replace existing revenue recognition standards and significantly expand the disclosure requirements for revenue arrangements. It may be adopted either retrospectively or on a modified retrospective basis to new contracts and existing contracts with remaining performance obligations as of the effective date.	~~January 1, 2018; early adoption date is no earlier than the annual period beginning after December 15, 2016~~	The Company’s analysis of the impact of this standard is ongoing. Focus areas include the impacts of accounting for customer dedicated inventory and principal/agent considerations. During the third quarter, work continued on the disclosure requirements and internal control assessments. As the analysis is not yet complete, the Company cannot provide a financial impact assessment at this time, nor provide a determination as to the effect of the new standard on its internal control over financial reporting and other changes in business practices and processes. The Company anticipates applying the modified retrospective method of adoption. The Company will adopt this ASU on January 1, 2018.
~~ASU 2016-02,~~ ~~Leases (Topic 842)~~	The standard requires lessees to put most leases on their balance sheet but recognize expenses in their statement of operations in a manner similar to current accounting guidance. The new standard also eliminates the current guidance related to real estate specific provisions. The guidance requires application on a modified retrospective basis to leases that existed at the beginning of the earliest period presented and those entered into thereafter but prior to the effective date. The standard permits entities to elect a package of practical expedients which must be applied consistently to all leases that commenced prior to the effective date. If the package of practical expedients is elected, entities do not need to reassess: (i) whether expired or existing contracts contain leases; (ii) lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. The guidance also allows entities to make certain policy elections under the new standard, including: (i) the use of hindsight to determine lease term and when assessing existing right of use assets for impairment; (ii) a policy to not record short-term leases on the balance sheet; and (iii) a policy to not separate lease and non-lease components.	~~January 1, 2019; early adoption is permitted~~	The Company is currently evaluating this standard and anticipates that its adoption will have a material impact on the Consolidated Financial Statements and related disclosures as it will result in recording virtually all operating leases on the balance sheet as a lease obligation and right of use asset. The Company’s preliminary assessment has focused on system readiness and the policy elections and practical expedients permitted by the standard. Lease software has been implemented that will better enable the Company to implement the standard. The Company currently anticipates electing to apply the package of practical expedients to all leases that commenced prior to the date of adoption. Based on the analysis performed to date, the Company anticipates making a policy election to not include short-term leases on the Consolidated Balance Sheets and to separate lease and non-lease components. A decision has not been made regarding the use of hindsight when determining lease term and assessing existing right of use assets for impairment. The assessment is ongoing and the preliminary conclusions are subject to change. At this time the Company is unable to quantify the impact that the adoption of this standard will have on the Consolidated Financial Statements and related disclosures. The Company currently plans to adopt this ASU on January 1, 2019.

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and manages the growth and profitability of the Company's business. The Company also has a Corporate & Other category, which includes certain assets and costs not primarily attributable to any of the reportable segments. Prior to its divestiture in September 2022, the Company's logistics solutions business, which provided transportation and warehousing solutions, was also included in Corporate & Other.

•Packaging – The Packaging segment provides custom and standard packaging solutions for customers based in North America and in key global markets. This segment services its customers with a full spectrum of packaging product materials within flexible, corrugated and fiber, ancillary packaging, rigid and equipment categories. The business is strategically focused on higher growth industry sectors including manufacturing, food and beverage, wholesale and retail, healthcare and transportation, as well as specialty sectors based on industry and product expertise. This segment also provides supply chain solutions, structural and graphic packaging design and engineering, automation, workflow and equipment services and kitting.

•Facility Solutions – The Facility Solutions segment sources and sells cleaning, break-room and other supplies in product categories that include towels and tissues, food service, personal protective equipment, cleaning chemicals and skincare, primarily in North America. Additionally, the Company offers total cost of ownership solutions with re-merchandising, budgeting and compliance reporting and inventory management.

•Print Solutions – The Print Solutions segment sells and distributes commercial printing, writing and copying products and services primarily in North America. Veritiv's broad geographic platform of operations and services, coupled with the breadth of paper and graphics products, including exclusive private brand offerings, provides a comprehensive suite of solutions in paper procurement, print management, supply chain and distribution.

See Note 12, Segment and Other Information, for the disaggregation of revenue and other information related to the Company's reportable segments and Corporate & Other.

Credit Losses and Other Allowances

The components of the accounts receivable allowances were as follows:


(in millions)	September 30, 2022		December 31, 2021
Allowance for credit losses	$	19.4	$	23.7
Other allowances(1)	9.2		10.7
Total accounts receivable allowances	$	28.6	$	34.4

(1) Includes amounts reserved for credit memos, customer discounts, customer short pays and other miscellaneous items.



~~Recently Issued Accounting Standards Not Yet Adopted (continued)~~
~~Standard~~	~~Description~~	~~Effective Date~~	~~Effect on the Financial Statements or Other Significant Matters~~
~~ASU 2016-13,~~ ~~Financial Instruments-Credit Losses (Topic 326)~~	The standard will replace the currently required incurred loss impairment methodology with guidance that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to be considered in making credit loss estimates. The guidance requires application on a modified retrospective basis. Other application requirements exist for specific assets impacted by a more-than-insignificant credit deterioration since origination.	~~January 1, 2020; early adoption is permitted for fiscal years beginning after December 15, 2018~~	~~The Company is currently evaluating the impact this ASU will have on its Consolidated Financial Statements and related disclosures. The Company currently plans to adopt this ASU on January 1, 2020.~~
~~ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230)~~	The standard addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance requires application on a retrospective basis.	~~January 1, 2018; early adoption is permitted (early adoption requires the adoption of all amendments in the same period)~~	The Company is currently evaluating the impact this ASU will have on its Consolidated Financial Statements and related disclosures; the impact is not expected to be material. The Company will adopt this ASU on January 1, 2018.
~~ASU 2017-01,~~ ~~Business Combinations (Topic 805)~~	The standard clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance requires application on a prospective basis.	~~January 1, 2018; early adoption is permitted~~	~~The Company will adopt this ASU on January 1, 2018.~~
~~ASU 2017-07,~~ ~~Compensation-Retirement Benefits (Topic 715)~~	The standard requires employers to disaggregate the service cost component from the other components of net benefit cost and disclose the amount of net benefit cost that is included in the income statement or capitalized in assets, by line item. The standard requires employers to report the service cost component in the same line item(s) as other compensation costs and to report other pension-related costs (which include interest costs, amortization of pension-related costs from prior periods and the gains or losses on plan assets) separately and exclude them from the subtotal of operating income. The standard also allows only the service cost component to be eligible for capitalization when applicable. The guidance requires application on a retrospective basis for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and on a prospective basis for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets.	~~January 1, 2018; early adoption is permitted as of the first interim period of an annual period for which interim or annual financial statements have not been issued~~	The Company is currently making its assessment of the impact that this ASU will have on its Consolidated Financial Statements and related disclosures using results from 2016 and year-to-date 2017; the impact is not expected to be material. The Company will adopt this ASU on January 1, 2018.

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~~Recently Adopted Accounting Standards~~
~~Standard~~	~~Description~~	~~Effective Date~~	~~Effect on the Financial Statements or Other Significant Matters~~
~~ASU 2015-11,~~ ~~Inventory~~ - ~~Simplifying the Measurement of Inventory (Topic 330)~~	The standard requires companies to measure inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. This ASU does not apply to inventories measured by either the last-in first-out ("LIFO") method or retail inventory method. The guidance requires application on a prospective basis.	~~January 1, 2017~~	The Company adopted this ASU on January 1, 2017. The adoption did not materially impact its Consolidated Financial Statements or related disclosures. As of September 30, 2017, approximately 87% of the inventory balance was measured using LIFO.
~~ASU 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350)~~	The standard simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The guidance requires application on a prospective basis.	~~January 1, 2020; early adoption is permitted~~	~~The Company adopted this ASU on January 1, 2017.~~
~~ASU 2017-09,~~ ~~Compensation - Stock Compensation (Topic 718)~~	The standard clarifies the changes to the terms and conditions of a share-based payment award that require an entity to apply modification accounting. The guidance requires application on a prospective basis.	~~January 1, 2018; early adoption is permitted~~	~~The Company adopted this ASU on April 1, 2017. The adoption did not materially impact its Consolidated Financial Statements or related disclosures.~~

~~2. 2017 ACQUISITION~~

~~Acquisition of All American Containers - August 2017~~

~~On August 31, 2017 (the "Acquisition Date"), Veritiv completed its acquisition of 100%~~Below is a year-to-date rollforward of the ~~equity interest~~Company’s allowance for credit losses:


	Packaging and Facility Solutions				Print Solutions - High Risk				Print Solutions - Medium/Low Risk
(in millions)	U.S.		Canada		U.S.		Canada		U.S.(1)		Canada		Rest of world		Corporate & Other(2)		Total
Balance at December 31, 2021	$	12.6	$	1.0	$	6.2	$	0.5	$	1.7	$	0.0	$	1.0	$	0.7	$	23.7
Add / (Deduct):
Provision for expected credit losses	3.0		0.1		(0.3)		0.0		0.3		0.0		(0.1)		0.3		3.3
Write-offs charged against the allowance	(1.7)		—		(1.2)		—		(0.1)		—		—		(0.2)		(3.2)
Recoveries of amounts previously written off	0.2		—		0.3		—		0.1		—		—		0.0		0.6
Other adjustments(3)	(0.9)		(1.1)		(1.6)		(0.5)		—		0.0		(0.1)		(0.8)		(5.0)
Balance at September 30, 2022	$	13.2	$	—	$	3.4	$	—	$	2.0	$	—	$	0.8	$	0.0	$	19.4

(1) Reflects the combined results for print and publishing operations.

(2) Corporate & Other has only U.S. operations.

(3) Other adjustments represent amounts reserved for foreign currency translation adjustments and reserves for certain customer accounts where revenue is not recognized because collectability is not probable. These adjustments may also include accounts receivable allowances recorded in ~~various All American Containers entities (collectively, "AAC"), a family owned~~connection with acquisitions and ~~operated distributor of rigid packaging, including plastic, glass and metal containers, caps, closures and plastic pouches.~~ divestitures.

The ~~acquisition of AAC aligns~~Company, under certain circumstances, enters into note receivable agreements with ~~the Company's strategy of investing~~customers. Expected credit losses are recognized when collectability is uncertain; these losses are included in higher growth and higher margin segments of the business. Through the acquisition, Veritiv gains expertise in rigid plastic, glass and metal packaging that complements its portfolio of packaging products and services. This acquisition also provides Veritiv with additional marketing, selling and ~~distribution channels into the growing U.S. rigid packaging market. The rigid packaging market's primary product categories include paperboard, plastics, metals and glass.~~

~~Acquisition-related costs of approximately~~ ~~$6.3 million~~ ~~were expensed as incurred.~~ ~~These costs~~ ~~were recognized in acquisition and integration~~administrative expenses on the Condensed Consolidated Statements of ~~Operations for~~Operations. For the ~~three and~~ nine months ended September 30, ~~2017.~~ ~~These charges are included~~2022 and 2021, the Company recognized $(0.7) million and $0.1 million, respectively, in the ~~table in~~ ~~Note 3, Acquisition, Integration and Restructuring Charges~~ ~~and~~provision for expected credit losses related ~~primarily~~ to ~~legal, consulting and other professional fees, and retention.~~

~~The acquisition of AAC was accounted for in the Company's financial statements using the acquisition method of accounting. The total consideration to complete the acquisition was approximately~~ ~~$176.6 million~~. Due to the limited amount of time since the acquisition of AAC, the valuation of certain assets and liabilities is preliminary and, as management receives additional information during the measurement period, these assets and liabilities may be adjusted. The preliminary purchase price was allocated to tangible and intangible assets and liabilities based upon their respective estimated fair values. The following table summarizes the components of the preliminary estimated purchase price for AAC:

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~~Preliminary estimated purchase price:~~

(in millions)
Cash consideration $ 112.0
Repayment of loans 34.3
Contingent consideration: Earn-out 30.0
Contingent bonus tax payment 0.3
Total preliminary estimated purchase price $ 176.6

The following table summarizes the allocation of the preliminary estimated purchase price to assets acquired and liabilities assumed as of the Acquisition Date based on valuation information, estimates and assumptions available onnotes receivable. At September 30, ~~2017. See~~ ~~Note 4, Goodwill~~2022 and ~~Other Intangible Assets, for additional information related to the goodwill and intangible assets acquired in the AAC acquisition. See~~ ~~Note 9, Fair Value Measurements, for additional information related to the fair value of the contingent consideration related to the earn-out.~~

~~Preliminary allocation:~~

(in millions)
Cash $ 1.5
Accounts receivable 30.4
Inventories 39.2
Other current assets 5.7
Property and equipment 2.2
Goodwill 61.2
Other intangible assets 51.2
Other non-current assets 0.9
Accounts payable (12.4 )
Other current liabilities (2.7 )
Other non-current liabilities (0.6 )
Total preliminary estimated purchase price $ 176.6

The amounts shown above may change as the purchase price will be based upon finalization of customary working capital adjustments and valuation of the contingent liability associated with the earn-out. The Company is still in the process of verifying data and finalizing information related to the valuation and expects to finalize these matters within the measurement period as final asset and liability valuations are completed.

~~Actual and Pro Forma Impact (unaudited)~~

The operating results of AAC are included in the Company's financial statements from September 1, 2017 through September 30, 2017. Net sales and pre-tax loss attributable to AAC during this period and included in the Company's Condensed Consolidated Statements of Operations were $16.0 million and ($0.9) million, respectively.

The following unaudited pro forma financial information presents results as if the acquisition of AAC occurred on January 1, 2016. The historical consolidated financial information of the Company and AAC has been adjusted in the pro forma information to give effect to pro forma events that are directly attributable to the transaction and are factually supportable. The unaudited pro forma results do not reflect events that have occurred or may occur after the transaction, including the impact of any synergies expected to result from the acquisition. Accordingly, the unaudited pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transaction been effected on the assumed date, nor is it necessarily an indication of future operating results.

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(Unaudited) Three Months Ended September 30, Nine Months Ended September 30,
(in millions, except share and per share data) 2017 2016 2017 2016
Net sales $ 2,157.8
$ 2,181.9
$ 6,303.2
$ 6,378.3
Net income (loss) (11.3 ) 5.4
(21.5 ) 12.0
Earnings (loss) per share:
Basic earnings (loss) per share $ (0.72 ) $ 0.34
$ (1.37 ) $ 0.75
Diluted earnings (loss) per share $ (0.72 ) $ 0.33
$ (1.37 ) $ 0.75
Weighted-average shares outstanding
Basic 15.70
16.00
15.70
16.00
Diluted 15.70
16.27
15.70
16.05

~~The unaudited pro forma information reflects primarily the following pre-tax adjustments for the respective periods:~~

- Acquisition and integration expenses: Acquisition and integration expenses of $6.9 million and $7.4 million incurred during the three and nine months ended September 30, 2017, respectively, have been eliminated. Pro forma net income for the three and nine months ended September 30, 2016 includes acquisition and integration expenses of $0.0 million and $7.4 million, respectively.

- Incremental amortization expense: Pro forma net income for the three and nine months ended September 30, 2017 includes incremental amortization expense of $1.1 million and $4.4 million, respectively. Pro forma net income for the three and nine months ended September 30, 2016 includes incremental amortization expense of $1.7 million and $5.0 million, respectively.

- Interest expense: Pro forma net income for the three and nine months ended September 30, 2017 includes incremental interest expense of $0.5 million and $2.0 million, respectively. Pro forma net income for the three and nine months ended September 30, 2016 includes incremental interest expense of $0.6 million and $1.8 million, respectively.

~~A combined U.S. federal statutory and state rate of 39.0% was used to determine the after-tax impact on net income of the pro forma adjustments.~~

~~3. ACQUISITION, INTEGRATION AND RESTRUCTURING CHARGES~~

~~Merger of xpedx and Unisource~~

The Company currently expects net costs and charges associated with achieving anticipated cost savings and other synergies from the Merger (excluding charges relating to the complete or partial withdrawal from multi-employer pension plans ("MEPP"), some of which are uncertain at this time, and including cash proceeds from sales of assets related to consolidation), to be approximately $225 million to $250 million through December 31, 2018. Included in the estimate is approximately $105 million for capital expenditures, primarily consisting of information technology infrastructure, systems integration and planning. Through September 30, 2017, the Company has incurred approximately $233 million in costs and charges, including approximately $78 million for capital expenditures.

During the three and nine months ended September 30, 2017 and 2016, Veritiv incurred costs and charges related primarily to: internally dedicated integration management resources, retention compensation, information technology conversion costs, rebranding, professional services and other costs to integrate its businesses.

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~~The following table summarizes the components of acquisition and integration expenses:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions) 2017 2016 2017 2016
Integration management $ 3.8
$ 2.2
$ 10.5
$ 6.0
Retention compensation —
0.4
0.2
2.4
Information technology conversion costs 2.8
1.9
6.8
4.3
Rebranding 0.1
0.9
0.4
2.1
Legal, consulting and other professional fees 0.4
0.8
1.3
1.8
Other 0.6
1.1
2.4
3.0
AAC acquisition and integration 6.5
—
6.5
—
Total acquisition and integration expenses $ 14.2
$ 7.3
$ 28.1
$ 19.6

~~Veritiv Restructuring Plan~~

As part of the Merger, the Company is executing on a multi-year restructuring program of its North American operations intended to integrate the legacy xpedx and Unisource operations, generate cost savings and capture synergies across the combined company. The restructuring plan includes initiatives to: (i) consolidate warehouse facilities in overlapping markets, (ii) improve efficiency of the delivery network, (iii) consolidate customer service centers, (iv) reorganize the field sales and operations functions and (v) restructure the corporate general and administrative functions. As part of its restructuring efforts, the Company continues to evaluate its operations outside of North America to identify additional cost saving opportunities. The Company may elect to restructure its operations in specific countries, which may include staff reductions, lease terminations and facility closures or the complete exit of a market. The Company may continue to record restructuring charges in the future as restructuring activities progress, which may include gains or losses from the disposition of assets. As of September 30, 2017,2021, the Company held ~~for sale $4.2~~$0.1 million and $0.5 million, respectively, in ~~assets related to these activities,~~notes receivable, which ~~are included in~~is reflected within other ~~current~~non-current assets on the Condensed Consolidated Balance Sheets.

~~Related~~

3. LEASES

The Company leases certain property and equipment used for operations to ~~these company-wide initiatives,~~limit its exposure to risks related to ownership. The major leased asset categories include: real estate, delivery equipment, material handling equipment and computer and office equipment. As of September 30, 2022, the Company ~~recorded restructuring charges~~operated from approximately 95 distribution centers of ~~$2.7~~which approximately 90 were leased. These facilities are strategically located throughout the U.S. and Mexico in order to efficiently serve the customer base in the surrounding areas while also facilitating expedited delivery services for special orders. The Company also leases various office spaces for corporate and sales functions.

Table of Conte n t s

The components of lease expense were as follows:


(in millions)		Three Months Ended September 30,				Nine Months Ended September 30,
Lease Classification	Financial Statement Classification	2022		2021		2022		2021
Short-term lease expense(1)	Operating expenses	$	0.8	$	1.2	$	2.4	$	3.0

Operating lease expense(2)	Operating expenses	$	21.2	$	25.0	$	69.3	$	76.0




Finance lease expense:
Amortization of right-of-use assets	Depreciation and amortization	$	2.6	$	3.7	$	9.1	$	11.0
Interest expense	Interest expense, net	0.4		0.7		1.5		2.1
Total finance lease expense		$	3.0	$	4.4	$	10.6	$	13.1


Total Lease Cost		$	25.0	$	30.6	$	82.3	$	92.1

(1) Short-term lease expense is comprised of expenses related to leases with a term of twelve months or less, which includes expenses related to month-to-month leases.

(2) Sublease income and variable lease expense are not included in the above table as the amounts were not significant for the periods presented.

Supplemental balance sheets and other information were as follows:


(in millions, except weighted-average data)		September 30, 2022			December 31, 2021
Lease Classification	Financial Statement Classification
Operating Leases:
Operating lease right-of-use assets	Other non-current assets	$	314.8		$	375.6

Operating lease obligations - current	Other accrued liabilities	$	70.2		$	80.2
Operating lease obligations - non-current	Other non-current liabilities	275.9			329.3
Total operating lease obligations		$	346.1		$	409.5

Weighted-average remaining lease term in years		6.0			6.2
Weighted-average discount rate		4.6		%	4.5		%

Finance Leases:
Finance lease right-of-use assets	Property and equipment	$	29.6		$	66.3

Finance lease obligations - current	Current portion of debt	$	8.9		$	13.9
Finance lease obligations - non-current	Long-term debt, net of current portion	24.0			58.9
Total finance lease obligations		$	32.9		$	72.8

Weighted-average remaining lease term in years		3.8			6.4
Weighted-average discount rate		4.0		%	3.7		%

Table of Conte n t s

Cash paid for amounts included in the measurement of lease liabilities was as follows:


(in millions)		Nine Months Ended September 30,
Lease Classification	Financial Statement Classification	2022		2021
Operating Leases:
Operating cash flows from operating leases	Operating activities	$	70.3	$	78.2

Finance Leases:
Operating cash flows from finance leases	Operating activities	$	1.5	$	2.1
Financing cash flows from finance leases	Financing activities	9.1		10.2

Lease Commitments

Future minimum lease payments at September 30, 2022 were as follows:



(in millions)	Finance Leases		Operating Leases (1)
2022 (excluding the nine months ended September 30, 2022)	$	3.0	$	22.4
2023	9.4		80.5
2024	7.9		67.8
2025	7.2		55.9
2026	4.6		51.2
2027	2.4		44.5
Thereafter	1.6		75.2
Total future minimum lease payments	36.1		397.5
Amount representing interest	(3.2)		(51.4)
Total future minimum lease payments, net of interest	$	32.9	$	346.1

(1) Future sublease income of $2.5 million is excluded from the operating leases amount in the table above.

Total future minimum lease payments at September 30, 2022 for finance and ~~$5.8~~operating leases, including the amount representing interest, are comprised of $393.5 million for real estate leases and $40.1 million for non-real estate leases.

4. RESTRUCTURING CHARGES

2020 Restructuring Plan

During 2020, the ~~three months ended~~Company initiated a restructuring plan (the "2020 Restructuring Plan") to (1) respond to the impact of the COVID-19 pandemic on its business operations, (2) address the ongoing secular changes in its print and publishing operations and (3) further align its cost structure with ongoing business needs as the Company executes on its stated corporate strategy. As of September 30, ~~2017 and 2016, respectively, and restructuring charges of $30.0 million and $7.2 million for~~2022, the nine months ended September 30, 2017 and 2016, respectively. The increase in charges for the nine months ended September 30, 2017 over the same period in 2016 primarily related to: (i) an estimated $15.5 million in MEPP withdrawals, (ii) $4.1 million in severance costs and (iii) other facility relocation and related support costs. See ~~Note 13, Segment Information,~~ ~~for the impact these charges had on the Company's reportable segments.~~ 2020 Restructuring Plan was substantially complete.

Other direct costs reported in the tables below include facility closing costs and other incidental costs associated with the development, communication, administration and implementation of these ~~initiatives.~~initiatives; unless otherwise indicated, costs incurred exclude any non-cash portion of restructuring gains or losses on asset disposals.

The following table presents a summary of restructuring charges, net, related to restructuring initiatives that were incurred during the nine months ended September 30, 2022 and the cumulative amounts since the initiatives began:


(in millions)	Severance and Related Costs		Other Direct Costs		(Gain) Loss on Sale of Assets and Other (non-cash portion)		Total
2022	$	0.6	$	5.2	$	(0.3)	$	5.5


Cumulative	41.4		35.9		(4.2)		73.1

Table of Conte n t s

The following is a summary of the Company's ~~restructuring~~2020 Restructuring Plan liability activity for the current year:


(in millions)	Severance and Related Costs		Other Direct Costs		Total
Balance at December 31, 2021	$	4.7	$	3.7	$	8.4
Costs incurred	0.4		1.4		1.8
Payments	(2.3)		(2.1)		(4.4)
Balance at March 31, 2022	2.8		3.0		5.8
Costs incurred	0.1		0.7		0.8
Payments	(0.6)		(1.1)		(1.7)
Balance at June 30, 2022	2.3		2.6		4.9
Costs incurred	0.1		0.4		0.5
Payments	(1.3)		(0.7)		(2.0)
Balance at September 30, 2022	$	1.1	$	2.3	$	3.4

In addition to the costs incurred in the table above, during the three and nine months ended September 30, ~~2017:~~

(in millions) Severance and Related Costs Other Direct Costs Total
Balance at December 31, 2016 $ 1.8
$ 8.0
$ 9.8
Costs incurred 1.4
3.1
4.5
Payments (1.2 ) (2.8 ) (4.0 )
Balance at March 31, 2017 2.0
8.3
10.3
Costs incurred 3.9
19.7
23.6
Payments (2.0 ) (5.4 ) (7.4 )
Balance at June 30, 2017 3.9
22.6
26.5
Costs incurred 0.7
3.8
4.5
Payments (0.7 ) (4.7 ) (5.4 )
Balance at September 30, 2017 $ 3.9
$ 21.7
$ 25.6

~~Table of Contents~~

~~In addition,~~2022, the Company ~~recognized net non-cash gains of $1.8~~expensed $0.9 million and ~~$2.6~~$2.7 million, ~~related to vacating certain~~respectively, of ~~its facilities for~~Other Direct Costs, which was prepaid at December 31, 2021. For the ~~three and~~ nine months ended September 30, ~~2017, respectively.~~2022, the Company recognized non-cash net gains of $0.3 million from lease terminations and retirement of assets.

The following is a summary of the Company's ~~restructuring~~2020 Restructuring Plan liability activity for the ~~three and nine months ended September 30, 2016:~~prior year comparable period:


(in millions)	Severance and Related Costs		Other Direct Costs		Total
Balance at December 31, 2020	$	15.4	$	6.9	$	22.3
Costs incurred	(0.3)		2.7		2.4
Payments	(5.2)		(1.6)		(6.8)
Balance at March 31, 2021	9.9		8.0		17.9
Costs incurred	0.5		3.3		3.8
Payments	(4.2)		(4.3)		(8.5)
Balance at June 30, 2021	6.2		7.0		13.2
Costs incurred	1.6		2.5		4.1
Payments	(2.3)		(1.1)		(3.4)
Balance at September 30, 2021	$	5.5	$	8.4	$	13.9

(in millions) Severance and Related Costs Other Direct Costs Total
Balance at December 31, 2015 $ 1.7
$ 0.4
$ 2.1
Costs incurred 0.7
0.3
1.0
Payments (0.9 ) (0.4 ) (1.3 )
Balance at March 31, 2016 1.5
0.3
1.8
Costs incurred 0.9
1.5
2.4
Payments (0.6 ) (1.0 ) (1.6 )
Balance at June 30, 2016 1.8
0.8
2.6
Costs incurred 0.3
5.4
5.7
Payments (1.0 ) (0.7 ) (1.7 )
Balance at September 30, 2016 $ 1.1
$ 5.5
$ 6.6

In addition to the Company recognized a net non-cash loss of $0.1 million and a net non-cash gain of $1.9 million related to vacating certain of its facilities for the three and nine months ended September 30, 2016, respectively.

~~4. GOODWILL AND OTHER INTANGIBLE ASSETS~~

~~Goodwill~~

~~At September 30, 2017, the Company's net goodwill balance was~~ ~~$105.3 million.~~ ~~The following table sets forth the changes~~costs incurred in the ~~carrying amount of goodwill~~table above, during the three and nine months ended September 30, ~~2017:~~2021, the Company expensed $1.8 million and $5.6 million, respectively, of Other Direct Costs, which was prepaid at December 31, 2020. For the three and nine months ended September 30, 2021, the Company recognized non-cash net gains of $3.4 million and $3.9 million, respectively, from lease terminations and retirement of assets.

(in millions) Packaging Corporate & Other Total
Balance at December 31, 2016:
   Goodwill $ 44.1
$ 6.1
$ 50.2
   Accumulated impairment losses —
—
—
      Net goodwill 2016 44.1
6.1
50.2
2017 Activity:
   Goodwill acquired 61.2
—
61.2
   Impairment of goodwill —
(6.1 ) (6.1 )
Balance at September 30, 2017:

   Goodwill 105.3
6.1
111.4
   Accumulated impairment losses —
(6.1 ) (6.1 )
      Net goodwill at September 30, 2017 $ 105.3
$ —
$ 105.3

~~Preliminary goodwill of~~ ~~$61.2 million~~ ~~arising from the acquisition of AAC, as described in~~ ~~Note 2, 2017 Acquisition, consists largely of the expected synergies and other benefits from combining operations and is expected to be deductible for tax purposes. The goodwill was allocated 100%~~In addition to the ~~Company's Packaging segment.~~

~~During~~2020 Restructuring Plan, the third quarter of 2017, as part of the Company's review for possible goodwill impairment indicators, management determined that the goodwill allocated to the logistics solutions business was fully impaired. The impairment wasCompany has recorded ~~as selling and administrative expense in the Condensed Consolidated Statements of Operations. See~~ ~~Note 9,~~

~~Table of Contents~~

~~Fair Value Measurements, for additional information~~other restructuring liabilities related to the ~~impairment.~~ Asprevious restructuring plans that as of September 30, 2022, totaled $21.4 million, of which $18.0 million was related to MEPP withdrawal obligations that will be paid-out over an approximate 20-year period. These other liabilities as of December 31, 2021, totaled $22.2 million, of which $18.8 million was related to MEPP withdrawal obligations.

See Note 12, Segment and Other Information, for the ~~asset~~impact that charges from these restructuring plans had ~~no remaining net book value or useful life, both~~on the ~~gross value and accumulated amortization value were removed from the Company’s ledger.~~Company's reportable segments.

~~Other Intangible Assets~~

Table of Conte n t s

5. DEBT

The ~~components of the~~ Company's ~~other intangible assets~~debt obligations were as follows:


(in millions)	September 30, 2022		December 31, 2021
Asset-Based Lending Facility (the "ABL Facility")	$	354.5	$	440.8
Commercial card program	1.9		2.1
Vendor-based financing arrangements	14.4		—
Finance leases	32.9		72.8
Total debt	403.7		515.7
Less: current portion of debt	(13.8)		(16.0)
Long-term debt, net of current portion	$	389.9	$	499.7

September 30, 2017 December 31, 2016
(in millions) Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net
Customer relationships $ 64.9
$ 5.0
$ 59.9
$ 23.6
$ 4.0
$ 19.6
Trademarks/Trade names 7.8
1.9
5.9
2.7
1.3
1.4
Non-compete agreements 2.6
0.1
2.5
—
—
—
Total $ 75.3
$ 7.0
$ 68.3
$ 26.3
$ 5.3
$ 21.0

ABL Facility

In 2021, the Company amended its ABL Facility to extend the maturity date to May 20, 2026, adjust the pricing grid for applicable interest rates and update certain provisions to facilitate the transition from LIBOR to a new replacement benchmark rate. All other significant terms remained substantially the same. The ~~gross carrying amount of other intangible assets increased by~~ ~~$51.2 million~~ ~~as a result of~~Company incurred and deferred certain financing costs associated with the acquisition of AAC. Due to the limited amount of time since the acquisition of AAC, the valuation of the identifiable intangible assets is preliminary and based on market benchmark studies. These assets are includedtransaction, reflected in other ~~intangibles, net~~non-current assets on the Condensed Consolidated Balance Sheets, ~~and~~which are being amortized to ~~operating~~interest expense on a straight-line basis ov~~er their estimated useful lives. Preliminary allocated values from~~over the ~~AAC acquisition are as follows:~~

Gross Value (in millions)

Estimated Useful Life (in years)
Customer relationships $ 43.5
10
Trademarks/Trade names 5.1
5
Non-compete agreements 2.6
2
Total identifiable intangible assets acquired $ 51.2

~~During~~amended term of the ~~third quarter of 2017, the Company recognized a $1.6 million non-restructuring asset impairment charge related to its logistics solutions business's customer relationship intangible asset,~~ABL Facility. The Company's one interest rate cap agreement, which was ~~recorded in selling and administrative expenses.~~ ~~See~~ ~~Note 9, Fair Value Measurements, for additional information~~ related to the ~~impairment.~~ABL Facility, expired on September 13, 2022.

~~5. DEBT AND OTHER OBLIGATIONS~~

~~The Company's long-term debt obligations were as follows:~~

(in millions) September 30, 2017 December 31, 2016
Asset-Based Lending Facility (the "ABL Facility") $ 969.3
$ 726.9
Equipment capital lease and other obligations 4.5
25.2
Total debt 973.8
752.1
Less: current maturities of long-term debt (1.8 ) (2.9 )
Long-term debt, net of current maturities $ 972.0
$ 749.2

Availability under the ABL Facility is determined based upon a monthly borrowing base calculation which includes eligible customer receivables and inventory, less outstanding borrowings, letters of credit and certain designated reserves. As of September 30, ~~2017,~~2022, the available additional borrowing capacity under the ABL Facility was approximately ~~$272.3~~$643.2 million. As of September 30, 2022, the Company held $9.5 million in outstanding letters of credit.

The ~~equipment capital lease~~ABL Facility has a springing minimum fixed charge coverage ratio of at least 1.00 to 1.00 on a trailing four-quarter basis, which will be tested only when specified availability is less than the limits outlined under the ABL Facility. At September 30, 2022, the above test was not applicable and ~~other obligations reported~~based on information available as of the date of this report it is not expected to be applicable in the ~~table above includes $19.1 million related to~~next 12 months.

Commercial Card Program

The Company has a commercial purchasing card program that is used for business purpose purchasing and must be paid in-full monthly. At September 30, 2022, the ~~accumulated construction costs for the Toronto build-to-suit arrangement as~~card carried a maximum credit limit of $37.5 million. At September 30, 2022 and December 31, ~~2016. This project~~2021, $1.9 million and $2.1 million, respectively, was ~~completed during~~outstanding on the ~~second quarter of 2017 and is accounted for as a financing obligation. As such, for periods beginning~~

~~Table of Contents~~

~~with the second quarter of 2017 the obligation value is shown~~commercial card. The net change in the ~~table below as~~outstanding balance is included in other financing ~~in addition to the Company's related party financing obligations.~~

~~The Company's long-term financing obligations were as follows:~~

(in millions) September 30, 2017 December 31, 2016
Obligations to related party $ 165.6
$ 191.0
Obligations - other financing 27.4
—
Total financing obligations 193.0
191.0
Less: current portion of financing obligations (11.1 ) (14.9 )
Financing obligations, less current portion $ 181.9
$ 176.1

From the Merger through September 30, 2017, the Company has terminated agreements for 11 of the related party financed properties and therefore triggered an early termination of each respective property's financing agreement. One of these terminations also involved the purchase of a facility in Austin, Texas. See ~~Note 7, Related Party Transactions~~, for additional information related to that purchase. Upon termination of a property's financing agreement, the Company recognizes the non-cash effects of the derecognition of (i) the property and equipment and (ii) the corresponding financing obligation, as other non-cash items, net,activities on the Condensed Consolidated Statements of Cash Flows. ~~Any gain~~

Vendor-Based Financing Arrangements

On occasion, the Company enters into long-term vendor-based financing arrangements with suppliers to obtain products, services or ~~loss realized upon derecognition has been included~~property in ~~other expense, net or restructuring charges~~exchange for extended payment terms. During thenine months ended September 30, 2022, the Company entered into a vendor-based financing agreement with a principal amount of $18.5 million to finance the acquisition of certain internal use software licenses which will be paid in annual installments over a five-year term. At September 30, 2022, the vendor-based financing arrangement had an outstanding balance of $14.4 million. In order to determine the present value of the commitments, the Company used an imputed interest rate of 3.17%. The payments associated with this arrangement are classified as financing activities on the Condensed Consolidated Statements of ~~Operations, based upon~~Cash Flows.

6. INCOME TAXES

The Company calculated the ~~rationale~~expense or benefit for ~~the termination. For~~income taxes during the three and nine months ended September 30, ~~2017, the non-cash effects related to the derecognition of (i) the property~~2022 and equipment totaled $5.3 million and $14.6 million, respectively, and (ii) the corresponding financing obligations totaled $5.6 million and $15.2 million respectively. For the nine months ended September 30, 2016, there was one termination related to these financed properties, which was the Austin, Texas facility purchase noted above. Unless terminated early, upon the expiration2021, by applying an estimate of the term of the remaining related party financing agreements, the net remaining financing obligation of $155.2 million will be settled by the return of the assets to the owner and has been included in other non-current liabilities on the Condensed Consolidated Balance Sheets.

In May 2017, the Company entered into a purchase and sale agreement under which Veritiv agreed to sell the previously acquired Austin, Texas facility to an unrelated third party. Upon the closing of the sale, Veritiv entered into a lease of the facility for an initial period of ten years with two optional five-year renewal terms. The sale-leaseback transaction does not provide for any continuing involvement by the Company other than a normal lease for use of the property during the lease term. The transaction resulted in net cash proceeds of $9.1 million and a related deferred gain of $5.4 million. The Company expects to recognize the gain over the initial ten-year lease period on a straight-line basis as a reduction to selling and administrative expenses in the Condensed Consolidated Statements of Operations. The current portion of the deferred gain is included in other accrued liabilities and the non-current portion of the deferred gain is included in other non-current liabilities on the Condensed Consolidated Balance Sheets.

~~6. INCOME TAXES~~

~~The Company’s provision (benefit) for income taxes for the three and nine months ended September 30, 2017 and 2016 is based on the estimated~~ annual effective tax rate ~~plus any~~for the full fiscal year to "ordinary" income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete ~~items.~~items) for the reporting periods.

Table of Conte n t s

The following table presents the ~~provision~~Company's expense (benefit) for income taxes and the effective tax rates:


	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2022			2021			2022			2021
Income (loss) before income taxes	$	129.1		$	54.1		$	334.4		$	120.0
Income tax expense (benefit)	32.4			14.1			68.1			32.3
Effective tax rate	25.1		%	26.1		%	20.4		%	26.9		%

The difference between the Company's effective tax rates for the three and nine months ended September 30, ~~2017~~2022 and ~~2016:~~

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2017 2016 2017 2016
Income (loss) before income taxes $ (18.3 ) $ 13.6
$ (38.7 ) $ 35.2
Income tax expense (benefit) (4.0 ) 8.0
(13.1 ) 18.4
Effective tax rate 21.9 % 58.8 % 33.9 % 52.3 %

~~The difference between~~2021 and the ~~Company’s~~U.S. statutory tax rate of 21.0% primarily relates to vesting of stock compensation, state income taxes (net of federal income tax benefit), non-deductible expenses, tax credits and the Company's pre-tax book income (loss) by jurisdiction. Additionally, the effective tax ~~rates~~rate for the three and nine months ended September 30, ~~2017 and 2016 and~~2022 includes a tax benefit on the disposition of the Company's investment in a foreign subsidiary.

7. DEFINED BENEFIT PLANS

Veritiv maintains an open defined benefit pension plan in the U.S. ~~statutory tax rate~~for employees covered by certain collectively bargained agreements. Veritiv also maintains a defined benefit plan in the U.S., which includes frozen cash balance accounts for certain former Unisource employees, and formerly maintained similar plans for Canadian employees prior to the sale of ~~35.0% primarily relates to non-deductible expenses, state income taxes (net of~~Veritiv Canada, Inc. No other employees participate in Veritiv-sponsored defined benefit pension plans.

~~Table of Contents~~

~~federal income tax benefit), and the Company's income (loss) by jurisdiction. Additionally, the effective tax rates for~~During the three ~~and nine~~ months ended ~~September~~June 30, ~~2017 include the benefit of tax credits and the impact of impairing non-deductible goodwill.~~

~~In conjunction with the third quarter of 2017 filing of Veritiv's 2016 U.S. federal tax return and amended 2015 and 2014 U.S. federal tax returns,~~2022, the Company completed the sale of its Veritiv Canada, Inc. business. As a result of the sale, a pension settlement occurred, which required an interim remeasurement of Veritiv Canada, Inc.'s defined benefit pension plan obligations as of the date of the sale. The Company ultimately recognized a ~~$3.1~~gain of $7.0 million on the settlement of the Veritiv Canada, Inc. defined benefit ~~for credits related to foreign taxes and research and experimentation activities. Additionally, an estimate of 2017 tax credits is~~plans, which was included in ~~our estimated annual effective tax rate.~~

The effective tax rate may vary significantly due to potential fluctuations in the amount and source, including both foreign and domestic, of pre-tax income and changes in amounts of non-deductible expenses and other ~~items.~~

~~7. RELATED PARTY TRANSACTIONS~~

~~Agreements with the UWWH Stockholder~~

On March 22, 2017, UWW Holdings, LLC (the "UWWH Stockholder"), one of Veritiv's existing stockholders and the former sole stockholder of UWWH, sold 1.80 million shares of Veritiv common stock in a block trade. The Company did not sell any shares and did not receive any of the proceeds. In conjunction with this transaction, Veritiv incurred approximately $0.2 million in transaction-related fees, which are included in selling and administrative expenses(income) expense, net on the Condensed Consolidated ~~Statements~~Statement of Operations. ~~The UWWH Stockholder beneficially owned 27.3% of Veritiv's outstanding common stock as of September 30, 2017, based on publicly available data.~~

In January 2017, in connection with the Tax Receivable Agreement ("TRA") executed at the time of the Merger, Veritiv paid $8.7 million total, of which $8.5 million was the principal amount, to the UWWH Stockholder for the utilization of pre-merger net operating losses ("NOL" or "NOLs") in its 2015 federal and state tax returns. See Note ~~9, Fair Value Measurements~~13, Divestitures, for additional information regarding the ~~TRA.~~Company's divestiture of Veritiv Canada, Inc.

~~Transactions with Georgia-Pacific~~

Effective December 1, 2021, the Company divided the U.S. Veritiv ~~purchases~~Pension Plan by establishing a new Veritiv Hourly Pension Plan to provide benefits to certain ~~inventory items from, and sells certain inventory items~~employees who were accruing a benefit under the U.S. Veritiv Pension Plan pursuant to ~~Georgia-Pacific in~~ the ~~normal course of business. As a result of the Merger and related private placement, Georgia-Pacific, as joint owner of the UWWH Stockholder, is a related party.~~

~~The following tables summarize the financial impact of these related party transactions with Georgia-Pacific:~~

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2017 2016 2017 2016
Sales to Georgia-Pacific, reflected in net sales $ 8.6
$ 8.5
$ 24.9
$ 26.6
Purchases of inventory from Georgia-Pacific, recognized in cost of products sold 45.7
71.4
138.0
174.3

(in millions) September 30, 2017 December 31, 2016
Inventories purchased from Georgia-Pacific that remained on Veritiv's balance sheet $ 23.5
$ 24.8
Related party payable to Georgia-Pacific 11.2
9.0
Related party receivable from Georgia-Pacific 3.8
3.9

~~Table of Contents~~

~~Additionally, in April 2016, Veritiv assumed ownership~~terms of a ~~warehouse~~collective bargaining agreement. Veritiv currently has the intent to subsequently terminate and distribution facility located in Austin, Texas that was subleased from Georgia-Pacific. The Company exercised its right of first refusal and matched a $5.4 million offer from an unrelated third party to purchase the facility directly from the owner. This transaction was accounted for as a settlement of the financing obligation related to the facility. Accordingly, Veritiv recognized a $1.3 million loss on the transaction, which is reflected in other expense, net, on the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2016.

~~8. DEFINED BENEFIT PLANS~~

~~In conjunction with the Merger, Veritiv assumed responsibility for Unisource’s defined benefit plans and Supplemental Executive Retirement Plans in~~settle the U.S. ~~and Canada. Net~~Veritiv Pension Plan. The Veritiv Hourly Pension Plan will remain open.

Total net periodic benefit cost (credit) associated with these plans is summarized below:


	Three Months Ended September 30, 2022				Three Months Ended September 30, 2021
(in millions)	U.S.		Canada		U.S.		Canada
Components of net periodic benefit cost (credit):
Service cost	$	0.3	$	(0.2)	$	0.4	$	0.1

Interest cost	$	0.3	$	—	$	0.3	$	0.5
Expected return on plan assets	(0.6)		0.2		(1.1)		(1.0)



Total other components	$	(0.3)	$	0.2	$	(0.8)	$	(0.5)
Net periodic benefit cost (credit)	$	0.0	$	—	$	(0.4)	$	(0.4)

Table of Conte n t s


	Three Months Ended September 30, 2017						Three Months Ended September 30, 2016							Nine Months Ended September 30, 2022				Nine Months Ended September 30, 2021
(in millions)	U.S.			Canada			U.S.			Canada			(in millions)	U.S.		Canada		U.S.		Canada
Components of net periodic benefit cost (credit):													Components of net periodic benefit cost (credit):
Service cost	$	0.5		$	0.0		$	0.4		$	0.1		Service cost	$	1.8	$	(0.1)	$	1.6	$	0.3

Interest cost	0.6			0.8			0.7			0.8			Interest cost	$	0.9	$	(0.4)	$	0.8	$	1.5
Expected return on plan assets	(1.2		)	(1.0		)	(1.2		)	(0.9		)	Expected return on plan assets	(1.5)		1.0		(3.3)		(3.1)

Settlement (gain) loss													Settlement (gain) loss	—		(7.0)		—		—
Amortization of net loss	0.1			0.0			0.0			0.0			Amortization of net loss	—		(0.1)		0.0		0.1
Total other components													Total other components	$	(0.6)	$	(6.5)	$	(2.5)	$	(1.5)
Net periodic benefit cost (credit)	$	0.0		$	(0.2	)	$	(0.1	)	$	0.0		Net periodic benefit cost (credit)	$	1.2	$	(6.6)	$	(0.9)	$	(1.2)

The components of net periodic benefit cost (credit) other than the service cost component are included in other (income) expense, net on the Condensed Consolidated Statements of Operations. Amounts are generally amortized from AOCL over the expected future working lifetime of active plan participants.

Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
(in millions) U.S. Canada U.S. Canada
Components of net periodic benefit cost (credit):
Service cost $ 1.5
$ 0.2
$ 1.3
$ 0.2
Interest cost 2.0
2.1
2.5
2.4
Expected return on plan assets (3.8 ) (2.8 ) (3.8 ) (2.7 )
Amortization of net loss 0.1
0.1
0.1
0.1
Net periodic benefit cost (credit) $ (0.2 ) $ (0.4 ) $ 0.1
$ 0.0

9.8. FAIR VALUE MEASUREMENTS

At September 30, ~~2017~~2022 and December 31, ~~2016,~~2021, the carrying amounts of cash and cash equivalents, receivables, payables, ~~and~~ other components of other current assets and other ~~current~~accrued liabilities, and the short-term debt associated with the commercial card program approximate their fair values due to the short maturity of these items.

~~Certain of the Company's assets~~ Cash and ~~liabilities are also subject to nonrecurring fair value measurements. Generally, assets are recorded at their fair values on a nonrecurring basis as a result of impairment charges. During the~~ ~~Company's review of its intangible assets for possible impairment indicators, management determined that the carrying values of the goodwill and customer relationship intangible assets allocated~~cash equivalents may include highly-liquid investments with original maturities to the ~~logistics solutions business were fully impaired. The impairments were determined after a review~~Company of the business's forecasted revenues and estimated cash flows (Level 3 data). The impairment charges were primarily a result of lower forecasted sales growth, due to expected changes in our growth strategy and margin compression due to increased competition. The fair value of these assets was derived using discounted cash flow analyses based on Level 3 inputs. ~~As a result, the Company recorded $7.7 million in non-restructuring impairment charges for the~~ three months ~~ended September 30, 2017 related to its logistics solutions business's goodwill and customer relationship intangible assets. See~~ ~~Note 4, Goodwill~~or less that are readily convertible into known amounts of cash.

Debt and Other ~~Intangible Assets~~, for additional information regarding the Company's goodwill and other intangible assets. For the nine months ended September 30, 2017, the Company recognized $8.4 million in non-restructuring impairment charges related to the previously noted goodwill and customer relationshipObligations

~~Table of Contents~~

intangible asset impairments, as well as a software asset which will not be placed into service and has no alternative use. For the three and nine months ended September 30, 2016, the Company recognized $3.1 million and $4.0 million, respectively, in non-restructuring impairment charges related to its Publishing segment's customer relationship intangible asset, software assets and the sale of a facility. The impairment charges for 2017 and 2016 were recorded in selling and administrative expenses on the Condensed Consolidated Statements of Operations.

~~The Company's liabilities disclosed at fair value at September 30, 2017 were as follows:~~

(in millions) Total
Level 1
Level 2
Level 3
ABL Facility $ 969.3

$ 969.3

Tax Receivable Agreement 61.0

61.0
Contingent Consideration: Earn-out 30.0
30.0

~~The Company's liabilities disclosed at fair value at December 31, 2016 were as follows:~~

(in millions) Total Level 1 Level 2 Level 3
ABL Facility $ 726.9

$ 726.9

Tax Receivable Agreement 67.9

67.9

Borrowings under the ABL Facility are at variable market interest rates, and accordingly, the carrying amount approximates fair ~~value.~~

Atvalue, which is a Level 2 measurement. The Company's one interest rate cap agreement, which was related to the ~~time~~ABL Facility, expired on September 13, 2022. Prior to its expiration, the fair value of the ~~Merger, the Company recorded a $59.4 million contingent liability associated with the TRA at fair value using~~interest rate cap was derived from a discounted cash flow ~~model that reflected management's expectations about probability of payment. The fair value~~analysis based on the terms of the ~~TRA is a Level 3 measurement, which relied upon both~~agreement and Level 2 data ~~(publicly observable data such as market~~for the forward interest ~~rates)~~rate curve adjusted for the Company's credit risk and was not significant for the periods presented in this report. See Note 5, Debt, for additional information regarding the Company's ABL Facility and other obligations.

Goodwill and Other Intangibles

At September 30, 2022, the Company held a goodwill balance of $96.3 million for its Packaging reportable segment. Additionally, at September 30, 2022, the Company held an other intangibles, net asset balance of $36.7 million for its Packaging and Facility Solutions reportable segments, related to its customer relationships. As a result of the announced sale of Veritiv Canada, Inc. in the first quarter of 2022, which the Company concluded represented a triggering event, the Company reviewed its goodwill and other intangible assets for possible impairment indicators. Utilizing Level 3 data (internal data such as the ~~Company’s projected revenues, taxable income~~Company's operating and ~~assumptions about~~cash flow projections), the ~~utilization~~Company allocated $3.3 million of ~~Unisource’s NOLs, attributable to taxable periods prior~~its goodwill balance and $2.6 million of its other intangibles, net asset balance to the ~~Merger, by~~divested Canadian business. The fair value analyses used in the ~~Company). The amount payable under~~impairment assessments for the ~~TRA is contingent on~~retained goodwill and other intangibles, net asset also relied upon Level 3 data. Management determined that the carrying values of the goodwill and other intangibles, net asset for both the Veritiv Canada, Inc. business and the remaining Veritiv business were not impaired. See Note 13, Divestitures, for additional information related to the Company's divestiture of Veritiv Canada, Inc. There were no other impairment triggering events or other unusual changes to these assets for the periods presented.

Table of Conte n t s

Other Assets

At September 30, 2022 and December 31, 2021, the Company ~~generating a certain level~~had assets-held-for-sale of ~~taxable income prior to~~$1.2 million and $1.2 million, respectively. These assets are included, at the ~~expiration~~lower of the NOL carryforwards. Moreover, future trading of Company stock by significant stockholders may result in additional ownership changes as defined under Section 382 of the Internal Revenue Code, further limiting the use of Unisource's NOLs and the amount ultimately payable under the TRA. The contingent liability is remeasured attheir carrying value or fair value, ~~at each reporting period end with~~within the ~~change in fair value recognized in other expense, net on~~current assets section of the Condensed Consolidated ~~Statements of Operations. At September 30, 2017, the Company remeasured the contingent liability using a discount rate of 4.3% (Moody's daily long-term corporate BAA bond yield).~~Balance Sheets.

~~The following table provides a reconciliation of the beginning and ending balance of the TRA contingent liability for the three and nine months ended September 30, 2017:~~

(in millions) TRA Contingent Liability
Balance at December 31, 2016 $ 67.9
Change in fair value adjustment recorded in other expense, net 0.9
Principal payment (8.5 )
Balance at March 31, 2017 60.3
Change in fair value adjustment recorded in other expense, net 1.1
Balance at June 30, 2017 61.4
Change in fair value adjustment recorded in other expense, net (0.4 )
Balance at September 30, 2017 $ 61.0

~~Table of Contents~~

~~The following table provides a reconciliation of the beginning and ending balance of the TRA contingent liability for the three and nine months ended September 30, 2016:~~

(in millions) TRA Contingent Liability
Balance at December 31, 2015 $ 63.0
Change in fair value adjustment recorded in other expense, net 1.8
Balance at March 31, 2016 64.8
Change in fair value adjustment recorded in other expense, net 2.0
Balance at June 30, 2016 66.8
Change in fair value adjustment recorded in other expense, net 1.0
Balance at September 30, 2016 $ 67.8

For the TRA contingent liability, there have been no transfers between the fair value measurement levels for the three and nine months ended September 30, 2017. The Company recognizes transfers between the fair value measurement levels at the end of the reporting period.

~~The preliminary purchase price allocation for the acquisition of AAC, described in~~ ~~Note 2, 2017 Acquisition~~, includes $30.0 million for the estimated fair value of an earn-out liability. The maximum amount payable for the earn-out is $50.0 million payable in increments at the first and second anniversaries of the Acquisition Date. The final earn-out amount will be determined based on actual growth rates in revenue and gross profit. The preliminary fair value estimate was based on historic growth patterns and future forecasts, which are Level 3 data. Valuation inputs also included a discount rate of 8.3%. Actual results may differ from these estimates.

~~10.~~9. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share for Veritiv common stock is calculated by dividing net income (loss) by the ~~weighted average~~weighted-average number of shares of common stock outstanding during the ~~period.~~respective periods. Diluted earnings per share is similarly calculated, except that the denominator is increased to include the number of additional common shares that would have been outstanding during those periods if the dilutive potential common shares had been issued, using the treasury stock method, except where the inclusion of such common shares would have an antidilutive impact.

~~Table of Contents~~

A summary of the numerators and denominators used in the basic and diluted earnings (loss) per share calculations is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions, except per share data)	2022		2021		2022		2021
Numerator:


Net income (loss)	$	96.7	$	40.0	$	266.3	$	87.7

Denominator:
Weighted-average shares outstanding – basic	13.85		14.86		14.40		15.44
Dilutive effect of stock-based awards	0.25		0.90		0.36		0.80
Weighted-average shares outstanding – diluted	14.10		15.76		14.76		16.24

Earnings (loss) per share:




Basic	$	6.98	$	2.69	$	18.49	$	5.68
Diluted	$	6.86	$	2.54	$	18.04	$	5.40

Antidilutive stock-based awards excluded from computation of diluted earnings per share ("EPS")	0.01		0.00		0.07		0.00
Performance stock-based awards excluded from computation of diluted EPS because performance conditions had not been met	0.04		0.00		0.00		0.00

10. SHAREHOLDERS' EQUITY

Treasury Stock - Share Repurchase Programs

On March 1, 2022, Veritiv announced that its Board of Directors authorized a $200 million share repurchase program (the "2022 Share Repurchase Program"). The 2022 Share Repurchase Program authorizes the Company, from time to time, to purchase shares of its common stock through open market transactions, privately negotiated transactions, forward, derivative or accelerated repurchase transactions, tender offers or otherwise, including Rule 10b5-1 trading plans, in accordance with all applicable securities laws and regulations. The timing and method of any repurchases, which will depend on a variety of market factors, including market conditions, are subject to results of operations, financial conditions, cash requirements and other factors. This authorization may be suspended, terminated, increased or decreased by the Board of Directors at any time. During the three and nine months ended September 30, 2022, the Company completed its repurchases under the 2022 Share Repurchase Program by repurchasing 787,750 and 1,564,420 shares, respectively, of its common stock at a cost of $95.2 million and $200.0 million, respectively, and reaching the program's authorized repurchase limit.

On March 3, 2021, Veritiv announced that its Board of Directors authorized a $50 million share repurchase program (the "2021 Share Repurchase Program"), which was increased to $100 million in May 2021. Executing within the 2021 Share

Table of Conte n t s

Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions, except per share data) 2017 2016 2017 2016
Numerator:
Net income (loss) $ (14.3 ) $ 5.6
$ (25.6 ) $ 16.8

Denominator:
Weighted average number of shares outstanding – basic 15.70
16.00
15.70
16.00
Dilutive effect of stock-based awards —
0.27
—
0.05
Weighted average number of shares outstanding – diluted 15.70
16.27
15.70
16.05

Earnings (loss) per share:
Basic earnings (loss) per share $ (0.91 ) $ 0.35
$ (1.63 ) $ 1.05
Diluted earnings (loss) per share $ (0.91 ) $ 0.34
$ (1.63 ) $ 1.04

Antidilutive stock-based awards excluded from computation of diluted earnings per share ("EPS") 0.68
0.00
0.66
0.20
Performance stock-based awards excluded from computation of diluted EPS because performance conditions had not been met 0.48
0.33
0.48
0.33
Repurchase Program, on March 9, 2021, Veritiv entered into a Share Repurchase Agreement with UWW Holdings, LLC (the "UWWH Stockholder"), pursuant to which the Company agreed to repurchase (the "Share Repurchase") an aggregate of 553,536 shares of its common stock owned by the UWWH Stockholder for an aggregate purchase price of $23.2 million. The Share Repurchase closed on March 12, 2021 and the Company funded the Share Repurchase with cash on hand. Concurrently with the closing of the Share Repurchase, the UWWH Stockholder sold the remainder of its shares of Veritiv common stock to an unrelated third party. During the three and nine months ended September 30, 2021, the Company completed its repurchases under the 2021 Share Repurchase Program by repurchasing 698,867 and 1,734,810 shares, respectively, of its common stock at a cost of $49.6 million and $100.0 million, respectively, and reaching the program's authorized repurchase limit.

Veritiv Omnibus Incentive Plan

~~11. ACCUMULATED OTHER COMPREHENSIVE LOSS~~

In accordance with the Company's 2014 Omnibus Incentive Plan, as amended and restated as of March 8, 2017, shares of the Company's common stock were issued to plan participants whose Restricted Stock Units, Performance Share Units, Market Condition Performance Share Units and/or non-employee director grants (grants not deferred) vested during those periods. The net share issuance is included on the Condensed Consolidated Statements of Shareholders' Equity for the three and nine months ended September 30, 2022 and 2021. The related cash flow impacts are included in financing activities on the Condensed Consolidated Statements of Cash Flows. For additional information related to these plans, refer to the Company's Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2021.

See the table below for information related to these transactions. Shares issued and recovered during the third quarter of 2022 and 2021 were not significant.



(in millions)	2022	2021
Three months ended March 31,
Shares issued	0.7	0.3
Shares recovered for minimum tax withholding	(0.2)	(0.1)
Net shares issued	0.5	0.2

Three months ended June 30,
Shares issued	0.0	0.3
Shares recovered for minimum tax withholding	0.0	(0.1)
Net shares issued	0.0	0.2

Accumulated Other Comprehensive Loss ("AOCL")

Comprehensive income (loss) is reported on the Condensed Consolidated Statements of Comprehensive Income (Loss) and consists of net income (loss) and other gains and losses affecting shareholders' equity that, under U.S. GAAP, are excluded from net income (loss).

Table of Conte n t s

The following ~~table provides~~tables provide the components of ~~accumulated other comprehensive loss ("AOCL") at September 30, 2017~~AOCL (amounts are shown net of their related income tax ~~effect,~~effects, if any):


(in millions)	Foreign currency translation adjustments		Retirement liabilities		Interest rate cap		AOCL
Balance at December 31, 2021	$	(25.2)	$	1.0	$	(0.1)	$	(24.3)

Unrealized net gains (losses) arising during the period	2.6		0.0		0.0		2.6

Net current period other comprehensive income (loss)	2.6		0.0		0.0		2.6

Balance at March 31, 2022	(22.6)		1.0		(0.1)		(21.7)

Unrealized net gains (losses) arising during the period	(4.5)		6.4		0.1		2.0
Amounts reclassified from AOCL	9.5		(7.0)		0.0		2.5
Net current period other comprehensive income (loss)	5.0		(0.6)		0.1		4.5
Balance at June 30, 2022	(17.6)		0.4		0.0		(17.2)

Unrealized net gains (losses) arising during the period	(1.9)		0.0		0.0		(1.9)
Amounts reclassified from AOCL	0.1		0.0		0.0		0.1
Net current period other comprehensive income (loss)	(1.8)		0.0		0.0		(1.8)
Balance at September 30, 2022	$	(19.4)	$	0.4	$	—	$	(19.0)


(in millions)	Foreign currency translation adjustments		Retirement liabilities		Interest rate cap		AOCL
Balance at December 31, 2020	$	(24.2)	$	(9.1)	$	(0.2)	$	(33.5)

Unrealized net gains (losses) arising during the period	(0.3)		0.0		0.0		(0.3)

Net current period other comprehensive income (loss)	(0.3)		0.0		0.0		(0.3)
Balance at March 31, 2021	(24.5)		(9.1)		(0.2)		(33.8)

Unrealized net gains (losses) arising during the period	2.8		0.0		0.0		2.8
Amounts reclassified from AOCL	0.2		0.0		0.1		0.3
Net current period other comprehensive income (loss)	3.0		0.0		0.1		3.1
Balance at June 30, 2021	(21.5)		(9.1)		(0.1)		(30.7)

Unrealized net gains (losses) arising during the period	(4.0)		0.1		0.0		(3.9)
Amounts reclassified from AOCL	—		0.0		0.0		0.0
Net current period other comprehensive income (loss)	(4.0)		0.1		0.0		(3.9)
Balance at September 30, 2021	$	(25.5)	$	(9.0)	$	(0.1)	$	(34.6)

(in millions) Foreign currency translation adjustments Retirement liabilities Interest rate swap AOCL
Balance at December 31, 2016 $ (29.2 ) $ (9.1 ) $ (0.7 ) $ (39.0 )
     Unrealized net gains (losses) arising during the period 2.8
0.1
(0.1 ) 2.8
Net current period other comprehensive income (loss) 2.8
0.1
(0.1 ) 2.8
Balance at March 31, 2017 (26.4 ) (9.0 ) (0.8 ) (36.2 )
     Unrealized net gains (losses) arising during the period 2.6
—
—
2.6
Net current period other comprehensive income (loss) 2.6
—
—
2.6
Balance at June 30, 2017 (23.8 ) (9.0 ) (0.8 ) (33.6 )
     Unrealized net gains (losses) arising during the period 2.4
—
—
2.4
     Amounts reclassified from AOCL —
—
0.1
0.1
Net current period other comprehensive income (loss) 2.4
—
0.1
2.5
Balance at September 30, 2017 $ (21.4 ) $ (9.0 ) $ (0.7 ) $ (31.1 )

~~Table of Contents~~

~~The following table provides the components of AOCL at September 30, 2016 (amounts are shown net of their related income tax effect, if any):~~

(in millions) Foreign currency translation adjustments Retirement liabilities Interest rate swap AOCL
Balance at December 31, 2015 $ (27.1 ) $ (7.4 ) $ (0.5 ) $ (35.0 )
     Unrealized net gains (losses) arising during the period 3.8
—
(0.3 ) 3.5
     Amounts reclassified from AOCL —
0.1
—
0.1
Net current period other comprehensive income (loss) 3.8
0.1
(0.3 ) 3.6
Balance at March 31, 2016 (23.3 ) (7.3 ) (0.8 ) (31.4 )
     Unrealized net gains (losses) arising during the period (1.6 ) —
0.0
(1.6 )
     Amounts reclassified from AOCL —
0.1
—
0.1
Net current period other comprehensive income (loss) (1.6 ) 0.1
—
(1.5 )
Balance at June 30, 2016 (24.9 ) (7.2 ) (0.8 ) (32.9 )
     Unrealized net gains (losses) arising during the period (1.6 ) —
—
(1.6 )
Net current period other comprehensive income (loss) (1.6 ) —
—
(1.6 )
Balance at September 30, 2016 $ (26.5 ) $ (7.2 ) $ (0.8 ) $ (34.5 )

~~12.~~11. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time, the Company is involved in various lawsuits, claims and regulatory and administrative proceedings arising out of its business relating to general commercial and contractual matters, governmental regulations, intellectual property rights, labor and employment matters, tax and other actions.

Although the ultimate outcome of any legal proceeding or investigation cannot be predicted with certainty, based on present information, including the Company's assessment of the merits of the particular claim, the Company does not expect that any asserted or unasserted legal claims or proceedings, individually or in the aggregate, will have a material adverse effect on its results of operations, financial condition or cash flows.

~~Escheat Audit~~

During 2013, Unisource was notified by the State of Delaware that it intended to examine the books and records of Unisource to determine compliance with Delaware escheat laws. Since that date, seven other states have joined with Delaware in the audit process, which is conducted by an outside firm on behalf of the states. While the original time period for the audit was from 1981 to present, recent legal developments have resulted in Delaware narrowing the time period from 1998 to present. The Company has been informed that similar audits have generally taken four years or more to complete.

In the third quarter of 2017, the Company recorded an estimated liability with respect to certain transactions in connection with the pending audit. The Company does not consider this amount to be material to the Company’s results of operations or financial condition. There are other transactions under audit based upon which potential liability cannot be reasonably estimated at this time. Any claims or liabilities resulting from the audit could have a material impact on the Company’s results of operations, financial condition or cash flows. The Company will continue to monitor the matter for any developments that would make the loss contingency associated with other transactions under audit probable or reasonably estimable.

Table of ~~Contents~~Conte n t s

MEPPs

~~New England~~

The Company records an estimated undiscounted charge when it becomes probable that it has incurred a withdrawal liability when exiting a MEPP. Final charges for MEPP withdrawals are not known until the plans issue their respective determinations. As a result, these estimates may increase or decrease depending upon the final determinations. Charges not related to the Company's restructuring efforts are recorded as distribution expenses on the Condensed Consolidated Statements of Operations. Initial amounts are recorded as other non-current liabilities on the Condensed Consolidated Balance Sheets.

Minneapolis Food Distributors Ind Pension Plan

During the fourth quarter of 2021, in the course of negotiations for a collective bargaining agreement, Veritiv negotiated a complete withdrawal from the Minneapolis Food Distributors Ind Pension Plan to take effect on July 31, 2022, and recognized an estimated complete withdrawal liability of $0.5 million as of December 31, 2021, which was unchanged as of September 30, 2022. The withdrawal charge was recorded in distribution expenses as it was not related to a restructuring activity. As of September 30, 2022, the Company has not yet received the determination letter for the complete withdrawal from the Minneapolis Food Distributors Ind Pension Plan. The Company expects that payments will occur over an approximate three-year period.

Western Pennsylvania Teamsters and ~~Trucking Industry~~Employers Pension Fund

During the first quarter of 2020, Veritiv negotiated the complete withdrawal from the Western Pennsylvania Teamsters and Employers Pension Fund (the "Western Pennsylvania Fund"), a MEPP related to the second bargaining unit at its Warrendale, Pennsylvania location and recognized an estimated complete withdrawal liability of $7.1 million, which was unchanged as of September 30, 2022.

During the second quarter of ~~2017,~~2019, in the course of negotiations for a collective bargaining agreement, Veritiv negotiated a partial withdrawal from the Western Pennsylvania Fund and recognized an estimated partial withdrawal liability of $6.5 million, which was unchanged as of September 30, 2022.

As of September 30, 2022, the Company ~~closed its facility in Wilmington, Massachusetts as part of its plan to consolidate operations in~~has not yet received the ~~northeastern United States. In connection with this closure,~~determination letters for the ~~Company ceased contributions to the New England Teamsters~~full and Trucking Industry Pension Fund (the “NE Fund”), a multi-employer pension plan, for participating employees who previously worked at this facility. In June 2017, the Company was presented with a Demand for Payment of Withdrawal Liability (the “Demand”)partial withdrawals from the NE Fund in the amount of $10.9 million, payable in 240 equal monthly installments beginning in August 2017. The Company has assessed the merits of the Demand and, pursuant to Employee Retirement Income Security Act of 1974 ("ERISA") regulations, requested review of the Demand. The NE Fund responded, confirming its Demand and the Company is considering arbitration. A charge for the Demand was recorded as a component of restructuring charges in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2017. Depending on the Company's decision whether or not to arbitrate and the decision of such arbitration, an adjustment to the charge recorded for the withdrawal liability contained in the Demand may be required.

Also as part of this same consolidation, the Company's Windsor and Middletown, Connecticut facilities were closed and relocated to Enfield, Connecticut. Employees at both the Windsor and Middletown locations were covered by separate collective bargaining agreements. Employees at the Middletown location and those subject to this agreement also participate in the NEWestern Pennsylvania Fund. The Company is currently negotiating a new collective bargaining agreement for the Enfield, Connecticut facility to replace the legacy Windsor and Middletown, Connecticut agreements. If, as a result of these negotiations, participation in the NE Fund ends, the Company may incurexpects that payments will occur over an ~~additional withdrawal liability charge.~~approximate 20-year period, which could run consecutively.

12. SEGMENT AND OTHER INFORMATION

~~13. SEGMENT INFORMATION~~

Veritiv's business is organized under ~~four~~three reportable segments: Packaging, Facility Solutions ~~Print, and Publishing~~ and Print ~~Management ("Publishing"). This segment structure is consistent with~~Solutions. See Note 1, Business and Summary of Significant Accounting Policies, for information regarding the ~~way the Chief Operating Decision Maker, who is Veritiv's Chief Executive Officer, makes operating decisions and manages the growth and profitability~~formation of the ~~Company’s business. The Company also has a~~Company's Print Solutions reportable segment. See Note 2, Revenue Recognition and Credit Losses, for descriptions of the Company's reportable segments and Corporate & Other category, which includes certain assets and costs not primarily attributable to any of the reportable segments, as well as the Veritiv logistics solutions business, which provides transportation and warehousing solutions.Other.

The following ~~tables present~~table presents net sales, Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, restructuring charges, ~~(income),~~net, integration and acquisition ~~and integration~~ expenses and other similar charges including any severance costs, costs associated with warehouse and office openings or closings, consolidation, and relocation and other business optimization expenses, stock-based compensation expense, changes in the LIFO reserve, non-restructuring asset impairment charges, non-restructuring severance charges, non-restructuring pension charges (benefits), fair value adjustments ~~on the~~related to contingent ~~liability associated with the TRA~~liabilities assumed in mergers and acquisitions and certain other adjustments), which is the metric management uses to assess operating performance of the segments, and certain other measures for each of the reportable segments and Corporate & Other for the periods presented:

Table of ~~Contents~~Conte n t s


(in millions)	Packaging		Facility Solutions		Print Solutions		Total Reportable Segments		Corporate & Other		Total
Three Months Ended September 30, 2022
Net sales	$	988.1	$	180.1	$	616.6	$	1,784.8	$	19.3	$	1,804.1
Adjusted EBITDA	115.1		15.6		64.3		195.0		(53.7)
Depreciation and amortization	5.4		1.2		1.0		7.6		3.2		10.8
Restructuring charges, net	0.9		0.2		0.2		1.3		0.1		1.4

Three Months Ended September 30, 2021
Net sales	$	970.6	$	232.3	$	535.6	$	1,738.5	$	29.3	$	1,767.8
Adjusted EBITDA	107.0		13.4		30.5		150.9		(57.2)
Depreciation and amortization	5.9		1.8		1.5		9.2		4.1		13.3
Restructuring charges, net	0.8		0.2		0.1		1.1		1.4		2.5

Nine Months Ended September 30, 2022
Net sales	$	2,992.8	$	605.3	$	1,806.4	$	5,404.5	$	78.4	$	5,482.9
Adjusted EBITDA	320.9		45.0		179.4		545.3		(148.2)
Depreciation and amortization	17.2		4.1		3.2		24.5		10.1		34.6
Restructuring charges, net	3.4		0.7		1.3		5.4		0.1		5.5

Nine Months Ended September 30, 2021
Net sales	$	2,740.2	$	663.1	$	1,495.9	$	4,899.2	$	86.5	$	4,985.7
Adjusted EBITDA	280.4		35.3		70.1		385.8		(159.1)
Depreciation and amortization	18.4		5.7		4.7		28.8		13.3		42.1
Restructuring charges, net	6.6		1.3		2.5		10.4		1.6		12.0

(in millions) Packaging Facility Solutions Print Publishing Total Reportable Segments Corporate & Other Total
Three Months Ended September 30, 2017
Net sales $ 799.6
$ 339.6
$ 701.6
$ 238.7
$ 2,079.5
$ 37.3
$ 2,116.8
Adjusted EBITDA 62.1
10.3
13.1
5.5
91.0
(46.9 )

Depreciation and amortization 4.0
1.6
2.7
0.2
8.5
4.6
13.1
Restructuring charges 5.8
1.9
5.9
0.0
13.6
(10.9 ) 2.7

Three Months Ended September 30, 2016
Net sales $ 730.1
$ 328.7
$ 788.2
$ 248.4
$ 2,095.4
$ 31.2
$ 2,126.6
Adjusted EBITDA 59.5
13.0
20.0
6.6
99.1
(42.0 )

Depreciation and amortization 3.1
1.5
3.1
0.8
8.5
4.9
13.4
Restructuring charges 2.2
1.0
2.6
0.0
5.8
0.0
5.8

Nine Months Ended September 30, 2017
Net sales $ 2,266.0
$ 975.5
$ 2,095.1
$ 696.6
$ 6,033.2
$ 107.1
$ 6,140.3
Adjusted EBITDA 166.7
25.1
44.8
17.6
254.2
(137.8 )
Depreciation and amortization 10.5
4.5
7.9
1.3
24.2
15.7
39.9
Restructuring charges 12.3
5.2
12.2
0.0
29.7
0.3
30.0

Nine Months Ended September 30, 2016
Net sales $ 2,106.4
$ 951.6
$ 2,299.0
$ 763.2
$ 6,120.2
$ 87.0
$ 6,207.2
Adjusted EBITDA 165.4
34.3
55.7
16.4
271.8
(129.7 )
Depreciation and amortization 9.3
4.5
9.5
2.5
25.8
14.7
40.5
Restructuring charges 2.6
1.5
2.9
0.0
7.0
0.2
7.2

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The table below presents a reconciliation of net income (loss) ~~before income taxes~~ as reflected inon the Condensed Consolidated Statements of Operations to Adjusted EBITDA for the reportable segments:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2022		2021		2022		2021
Net income (loss)	$	96.7	$	40.0	$	266.3	$	87.7
Interest expense, net	4.8		3.8		12.3		13.4
Income tax expense (benefit)	32.4		14.1		68.1		32.3
Depreciation and amortization	10.8		13.3		34.6		42.1
Restructuring charges, net	1.4		2.5		5.5		12.0
Gain on sale of businesses	(18.6)		—		(28.6)		(3.1)
Facility closure charges, including (gain) loss from asset disposition	1.9		0.2		1.0		(1.0)
Stock-based compensation	1.8		1.0		7.7		5.7
LIFO reserve (decrease) increase	7.3		15.1		30.1		31.2

Non-restructuring severance charges	0.5		3.6		2.0		5.5
Non-restructuring pension charges (benefits)	—		—		(7.0)		—





Other	2.3		0.1		5.1		0.9
Adjustment for Corporate & Other	53.7		57.2		148.2		159.1
Adjusted EBITDA for reportable segments	$	195.0	$	150.9	$	545.3	$	385.8

Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions) 2017 2016 2017 2016
Income (loss) before income taxes $ (18.3 ) $ 13.6
$ (38.7 ) $ 35.2
Interest expense, net 8.3
8.2
22.1
21.1
Depreciation and amortization 13.1
13.4
39.9
40.5
Restructuring charges 2.7
5.8
30.0
7.2
Stock-based compensation 3.8
2.1
11.6
7.2
LIFO reserve increase (decrease) 3.7
0.4
3.4
(2.7 )
Non-restructuring asset impairment charges 7.7
3.1
8.4
4.0
Non-restructuring severance charges 0.5
0.2
1.5
2.4
Non-restructuring pension charges 3.2
2.3
2.1
2.3
Acquisition and integration expenses 14.2
7.3
28.1
19.6
Fair value adjustments on TRA contingent liability (0.4 ) 1.0
1.6
4.8
Other 5.6
(0.3 ) 6.4
0.5
Adjustment for Corporate & Other 46.9
42.0
137.8
129.7
Adjusted EBITDA for reportable segments $ 91.0
$ 99.1
$ 254.2
$ 271.8

In February 2021, a Veritiv warehouse incurred significant damage as a result of a severe weather event, which included damage to the building structure and contents, as well as a loss of inventory. The ~~following table summarizes~~ total ~~assets as~~amount of the incurred loss and restoration cost is currently estimated to be approximately $13 million, the majority of which is expected to be covered by the Company's various insurance policies. From the date of the incident, a total net benefit of $2.9 million has been recognized in selling and administrative expenses on the Company's statements of operations, of which $3.2 million was recognized in 2022. During the nine months ended September 30, ~~2017:~~2022, the Company received $3.3 million in reimbursement related to the structural damage, which is reported as proceeds from insurance related to property and equipment on the Condensed Consolidated Statement of Cash Flows. Insurance proceeds not related to the structural damage are reported as cash flows from operating activities.

13. DIVESTITURES

Logistics solutions business

On September 1, 2022, the Company sold its logistics solutions business, which provided transportation and warehousing solutions to customers in the U.S., to FitzMark, LLC for a purchase price of $19 million in cash payable at closing, subject to certain customary adjustments. The Company recognized an initial pre-tax gain of approximately $10.3 million, which is included in gain on sale of businesses on the Condensed Consolidated Statements of Operations. The Company received initial net cash proceeds of approximately $18.3 million, reflecting the purchase price adjusted for target working capital, escrow withholdings and transaction fees. The net cash proceeds are reported as proceeds from asset sales and sale of businesses, net of cash transferred, in the investing activities section of the Condensed Consolidated Statements of Cash Flows. The gain and cash proceeds are subject to customary working capital adjustments. The Company used the proceeds to support the 2022 Share Repurchase Program, to pay down outstanding debt and to fund capital priorities and growth initiatives. Upon closing of the sale, Veritiv’s approximately 60 employees in its logistics solutions business became employees of FitzMark, LLC. The sale did not represent a strategic shift that will have a major effect on the Company's operations or financial results and it did not meet the requirements to be classified as a discontinued operation. The financial results of this business are included in the Corporate & Other category of reported results in Note 12, Segment and Other Information.

Veritiv Canada, Inc.

In March 2022, the Company signed a definitive agreement to sell its Veritiv Canada, Inc. business to Imperial Dade Canada Inc. for a purchase price of CAD $240 million (approximately U.S. $190 million) in cash payable at closing, subject to certain customary adjustments. The sale closed on May 2, 2022. The Company recognized an initial pre-tax gain of

(in millions) September 30, 2017
December 31, 2016
Packaging $ 1,137.3
$ 875.9
Facility Solutions 424.1
397.9
Print 883.6
874.1
Publishing 178.3
170.0
Corporate & Other 151.8
165.8
Total assets $ 2,775.1
$ 2,483.7

Table of ~~Contents~~Conte n t s

approximately $10.0 million in the second quarter of 2022. In the third quarter of 2022, the Company recognized an additional pre-tax gain of approximately $8.3 million related to finalizing the post-closing working capital adjustment. The gain is included in gain on sale of businesses on the Condensed Consolidated Statements of Operations. Veritiv received initial net cash proceeds of approximately $147.4 million, reflecting the purchase price adjusted for cash and target working capital, closing date debt and transaction fees. The net cash proceeds are reported as proceeds from asset sales and sale of businesses, net of cash transferred, in the investing activities section of the Condensed Consolidated Statements of Cash Flows. The Company used the proceeds to support the 2022 Share Repurchase Program, to pay down outstanding debt and to fund capital priorities and growth initiatives. The sale included substantially all of the Company's facility solutions and print operations in Canada, and a majority of the Company's Canada-based packaging business, which primarily serves food service customers. The Company maintains the ability to supply packaging solutions to the Canadian locations of certain U.S.-based customers. The sale did not represent a strategic shift that will have a major effect on the Company's operations or financial results and it did not meet the requirements to be classified as a discontinued operation. Management determined that the carrying values of the goodwill and other intangible assets allocated to the Veritiv Canada, Inc. business were not impaired. Upon closing of the sale, Veritiv’s approximately 900 employees in Canada became employees of Imperial Dade Canada Inc. In connection with the closing, the Company entered into an agreement with the buyer for the provision of certain storage, order processing and/or fulfillment services for the small subset of Veritiv-retained packaging customers.

Rollsource business

On March 31, 2021, the Company sold its legacy Print segment's Rollsource business, which provided specialized converting of commercial printing paper for distribution to the business-forms, direct-mail and digital-printing industries. The Company received initial cash proceeds of approximately $7.5 million, which were used to pay outstanding revolving loan borrowings under the ABL Facility. The cash proceeds, including those from the subsequent working capital adjustment, are reported as proceeds from asset sales and sale of businesses, net of cash transferred, in the investing activities section of the Condensed Consolidated Statements of Cash Flows. The Company recognized an initial pre-tax gain of approximately $2.4 million in the first quarter of 2021, and in the second quarter of 2021, the Company received cash proceeds for and recognized an additional pre-tax gain of approximately $0.7 million related to the post-closing working capital adjustment. The gain is included in gain on sale of businesses on the Condensed Consolidated Statements of Operations. The sale did not represent a strategic shift that will have a major effect on the Company's operations or financial results and it did not meet the requirements to be classified as a discontinued operation.

Other divestitures

The Company has on occasion divested certain facilities. These property divestitures resulted in gains or losses, which are included in selling and administrative expenses or restructuring charges, net on the Condensed Consolidated Statements of Operations.

14. SUBSEQUENT EVENT

On November 7, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.63 per share of common stock, payable on December 19, 2022 to shareholders of record at the close of business on November 18, 2022.

ITEM 2. ~~MANAGEMENT’S~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements contained in this report regarding the ~~Company’s~~Company's future operating results, performance, strategy, business plans, prospects and guidance, statements related to the impact of COVID-19 and any other statements not constituting historical fact are "forward-looking statements" subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Where possible, the words "believe," "expect," "anticipate," "continue," "intend," "should," "will," "would," "planned," "estimated," "potential," "goal," "outlook," "may," "predicts," "could," or the negative of such terms, or other comparable expressions, ~~as they relate to the Company or its business,~~ have been used to identify such forward-looking statements. All forward-looking statements reflect only the ~~Company’s~~Company's current beliefs and assumptions with respect to future operating results, performance, business plans, prospects, guidance and other matters, and are based on information currently available to the Company. Accordingly, the statements are subject to significant risks, uncertainties and contingencies, which could cause the ~~Company’s~~Company's actual operating results, performance, business plans, prospects or ~~prospects~~guidance to differ materially from those expressed in, or implied by, these statements.

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Factors that could cause actual results to differ materially from current expectations include the risks and other factors described under "Risk Factors" and elsewhere in our Annual Report on Form 10-K and ~~elsewhere~~ in the ~~Company’s~~Company's other publicly available reports filed with the Securities and Exchange Commission ("SEC")~~, which contain a discussion of various factors that may affect the Company’s business or financial results.~~. Such risks and other factors, which in some instances are beyond the ~~Company’s~~Company's control, include: adverse impacts of the COVID-19 pandemic; the industry-wide decline in demand for paper and related products; increased competition from existing and non-traditional sources; adverse developments in general business and economic conditions as well as conditions in the global capital and credit markets; foreign currency fluctuations; our ability to collect trade receivables from customers to whom we extend credit; our ability to attract, train and retain highly qualified employees; the effects of work stoppages, union negotiations and labor disputes; the loss of any of our significant customers; changes in business conditions in our international operations; procurement and other risks in obtaining packaging, ~~paper~~facility products and ~~facility products~~paper from our suppliers for resale to our customers; changes in prices for raw materials; changes in trade policies and regulations; increases in the cost of fuel ~~cost increases; inclement weather, anti-terrorism measures~~and third-party freight and the availability of third-party freight providers; the loss of any of our significant customers; inability to realize expected benefits of restructuring plans; adverse developments in general business and economic conditions that could impair our ability to use net operating loss carryforwards and other disruptions to the transportation network; our dependence on a variety of IT and telecommunications systems and the Internet; our reliance on third party vendors for various services; cyber-security risks; costs to comply with laws, rules and regulations, including environmental, health and safety laws, and to satisfy any liability or obligation imposed under such laws; regulatory changes and judicial rulings impacting our business; adverse results from litigation, governmental investigations or audits, or tax-related proceedings or audits; our inability to renew existing leases on acceptable terms, negotiate rent decreases or concessions and identify affordable real estate;deferred tax assets; our ability to adequately protect our material intellectual property and other proprietary rights, or to defend successfully against intellectual property infringement claims by third parties; our ability to attract, train and retain highly qualified employees; our pension and health care costs and participation in multi-employer pension, health and welfare plans; ~~increasing interest rates;~~the effects of work stoppages, union negotiations and labor disputes; our ability to generate sufficient cash to service our debt; ~~our ability to comply with the covenants contained in our debt agreements;~~increasing interest rates; our ability to refinance or restructure our debt on reasonable terms and conditions as might be necessary from time to time; ~~changes in accounting standards and methodologies;~~ our ability to ~~realize~~comply with the ~~anticipated synergies, cost savings~~covenants contained in our debt agreements; costs to comply with laws, rules and ~~growth opportunities~~regulations, including environmental, health and safety laws, and to satisfy any liability or obligation imposed under such laws; changes in tax laws; adverse results from litigation, governmental investigations or audits, or tax-related proceedings or audits; regulatory changes and judicial rulings impacting our business; the ~~merger transaction~~impact of adverse developments in general business and economic conditions as well as conditions in the global capital and credit markets on demand for our products and services, our business including our international operations, and our ~~ability~~customers; foreign currency fluctuations; inclement weather, widespread outbreak of an illness, anti-terrorism measures and other disruptions to ~~integrate~~our supply chain, distribution system and operations; our dependence on a variety of information technology and telecommunications systems and the ~~xpedx business with the Unisource business; the possibility of incurring expenditures in excess of those currently budgeted in connection with the integration;~~Internet; our reliance on third-party vendors for various services; cybersecurity risks; and other events of which we are presently unaware or that we currently deem immaterial that may result in unexpected adverse operating results.

For a more detailed discussion of these factors, see the information under ~~the heading~~ "Risk Factors" and elsewhere in our Annual Report on Form 10-K and in our other filings we make with the SEC. Forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, historical information should not be considered as an indicator of future performance.

The following discussion of the ~~Company’s~~Company's financial condition and results of operations for the three and nine months ended September 30, ~~2017~~2022 should be read in conjunction with the unaudited CondensedConsolidated Financial Statements and Notes thereto, included elsewhere in this report.

~~Table of Contents~~

Executive Overview

~~Business Overview~~The COVID-19 Pandemic

The COVID-19 pandemic has had widespread, rapidly evolving and unpredictable impacts on global societies, economies, financial markets and business practices, and created uncertainty regarding potential impacts to Veritiv Corporation ("Veritiv" or the "Company"). Although the Company has not experienced any closures of its distribution centers, Veritiv serves customers across a broad range of industry sectors and geographies, with varying COVID-19 impacts. Primarily beginning in April 2020, the COVID-19 pandemic began having a negative impact on the Company's financial results, including decreased sales activity.

Veritiv's first priority remains the health and safety of its employees, customers and their families. The Company has taken steps to limit exposure and enhance the safety of its facilities for employees working to continue to supply vital products to its customers. In response to the pandemic, Veritiv initiated its Corporate Incident Response Team and initiated enhanced health and safety measures across its facilities. The Company modified practices at its distribution centers and offices to adhere to guidance from the United States ("U.S.") Centers for Disease Control and Prevention and local health and governmental authorities with respect to social distancing, enhanced cleaning protocols and usage of personal protective equipment, where appropriate.

Beginning in April 2020, Veritiv took several actions to help mitigate the effects of the decreased sales activity and improve liquidity, including implementing cost-savings and cash preservation initiatives as described under the heading "2020 Restructuring Plan" below. The Company saw economic improvements during 2022 and 2021 in many of the markets where it

Table of Conte n t s

operates, as global vaccine distribution efforts continued. The current circumstances are dynamic and the impacts of the COVID-19 pandemic on the Company's business operations, including the duration and impact on overall customer demand, cannot be reasonably estimated at this time. The extent to which the COVID-19 pandemic continues to impact the Company's business, results of operations, access to sources of liquidity and financial condition will depend on future developments. These developments, which are uncertain and difficult to predict, include, but are not limited to, the duration, spread and severity of the COVID-19 pandemic including new variants, the effects of the COVID-19 pandemic on the Company's employees, customers, suppliers and vendors, measures adopted or recommended by local and federal governments or health authorities in response to the pandemic, the availability, adoption and effectiveness of vaccines and vaccine boosters and to what extent normal economic and operating conditions can resume and be sustained. Even after the COVID-19 pandemic has subsided, the Company may experience an impact to its business as a result of any economic recession, downturn or volatility or long-term changes in customer behavior.

Other Developments

Divestitures

Logistics Solutions Business

On September 1, 2022, the Company sold its logistics solutions business, which provided transportation and warehousing solutions to customers in the U.S., to FitzMark, LLC. The Company recognized an initial pre-tax gain of approximately $10.3 million. The Company received initial net cash proceeds of approximately $18.3 million. The gain and cash proceeds are subject to customary working capital adjustments. The Company used the proceeds to support the 2022 Share Repurchase Program, to pay down outstanding debt and to fund capital priorities and growth initiatives. The sale did not represent a strategic shift that will have a major effect on the Company's operations or financial results and it did not meet the requirements to be classified as a discontinued operation. Upon closing of the sale, Veritiv’s approximately 60 employees in its logistics solutions business became employees of FitzMark, LLC. The financial results of this business are included in the Corporate & Other category of reported results in Note 12 of the Notes to Condensed Consolidated Financial Statements and in the "Segment Results" section of this Item 2.

Veritiv Canada, Inc.

On May 2, 2022, the Company completed the sale of its Veritiv Canada, Inc. business to Imperial Dade Canada Inc. The Company recognized an initial pre-tax gain of approximately $10.0 million in the second quarter of 2022. In the third quarter of 2022, the Company recognized an additional pre-tax gain of approximately $8.3 million related to finalizing the post-closing working capital adjustment. Veritiv received initial net cash proceeds of approximately $147.4 million. The Company used the proceeds to support the 2022 Share Repurchase Program, to pay down outstanding debt and to fund capital priorities and growth initiatives. The sale included substantially all of the Company's facility solutions and print operations in Canada, and a majority of the Company's Canada-based packaging business, which primarily serves food service customers. The Company maintains the ability to supply packaging solutions to the Canadian locations of certain U.S.-based customers. The sale did not represent a strategic shift that will have a major effect on the Company's operations or financial results and it did not meet the requirements to be classified as a discontinued operation. Upon closing of the sale, Veritiv’s approximately 900 employees in Canada became employees of Imperial Dade Canada Inc.

These divestitures will allow Veritiv to continue to shift its portfolio to focus on its core packaging business, with an emphasis on higher growth, higher margin businesses, and further invest in building on its industry-leading capabilities. See Note 13 of the Notes to Condensed Consolidated Financial Statements for additional information regarding these sales. This report includes the financial results of the Company's logistics solutions business and its Veritiv Canada, Inc. business in the Company's Condensed Consolidated Financial Statements for their respective partial year of 2022 based on their sale dates, and for the three and nine months ended September 30, 2021.

Change in Reportable Segments

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Solutions. Prior period results have been revised to align with the new presentation. See Note 2 of the Notes to Condensed Consolidated Financial Statements for additional information regarding the Company's product offerings and reportable segments.

2022 Share Repurchase Program

On March 1, 2022, Veritiv announced that its Board of Directors authorized a $200 million share repurchase program (the "2022 Share Repurchase Program"), which replaced the Company's previous $100 million share repurchase program that was fully utilized as of December 31, 2021. The 2022 Share Repurchase Program authorizes the Company, from time to time, to purchase shares of its common stock through open market transactions, privately negotiated transactions, forward, derivative or accelerated repurchase transactions, tender offers or otherwise, including Rule 10b5-1 trading plans, in accordance with all applicable securities laws and regulations. The timing and method of any repurchases, which will depend on a variety of market factors, including market conditions, are subject to results of operations, financial conditions, cash requirements and other factors. This authorization may be suspended, terminated, increased or decreased by the Board of Directors at any time. During the three and nine months ended September 30, 2022, the Company completed its repurchases under the 2022 Share Repurchase Program by repurchasing 787,750 and 1,564,420 shares, respectively, of its common stock at a cost of $95.2 million and $200.0 million, respectively, and reaching the program's authorized repurchase limit. For the three and nine months ended September 30, 2022, the average price paid per share under the 2022 Share Repurchase Program was $120.85 and $127.84, respectively.

2020 Restructuring Plan

During 2020, the Company initiated a restructuring plan (the "2020 Restructuring Plan") to (1) respond to the impact of the COVID-19 pandemic on its business operations, (2) address the ongoing secular changes in its print and publishing operations and (3) further align its cost structure with ongoing business needs as the Company executes on its stated corporate strategy. The 2020 Restructuring Plan included (i) a reduction of the Company's U.S. salaried workforce by approximately 15% across all business segments and corporate functions, (ii) the closure of certain warehouse facilities and retail stores, (iii) adjustments to various compensation plans, (iv) repositioning of inventory to expand the Company's service radius and (v) other actions. As of September 30, 2022, the 2020 Restructuring Plan was substantially complete. See Note 4 of the Notes to Condensed Consolidated Financial Statements for information related to the Company's restructuring efforts.

Company Strategy

Veritiv continues to execute against its long-term strategy to be the leading provider of business-to-business packaging products and services, as well as paper and facility solutions products and services. The Company continues to invest in organic packaging growth, including selling and supply chain capabilities, and to pursue inorganic packaging growth opportunities. The Company also continues to evaluate alternatives for non-core components of its business.

Business Overview

Veritiv is a leading North American business-to-business ~~distributor~~full-service provider of value-added packaging products and services, as well as facility solutions ~~print~~ and ~~publishing~~print-based products and services. ~~Additionally, Veritiv provides logistics and supply chain management solutions to its customers.~~ Veritiv was established inon July 1, 2014 following the merger ~~(the "Merger")~~ of International Paper Company's xpedx distribution solutions business and UWW Holdings, Inc., the parent company of Unisource Worldwide, Inc.

~~As described in~~ ~~Note 2, 2017 Acquisition, on August 31, 2017,~~ Veritiv completed the acquisition of All American Containers ("AAC"), a family-owned and operated distributor of rigid packaging, including plastic, glass and metal containers, caps, closures and plastic pouches.

~~Veritiv~~ operates ~~from approximately 170 distribution centers~~ primarily throughout the U.S.~~, Canada~~ and Mexico.

Veritiv's business is organized under ~~four~~three reportable segments: Packaging, Facility Solutions ~~Print, and Publishing~~ and Print ~~Management ("Publishing").~~Solutions. This segment structure is consistent with the way the Chief Operating Decision Maker, who is Veritiv's Chief Executive Officer, makes operating decisions and manages the growth and profitability of the ~~Company’s~~Company's business. The Company also has a Corporate & Other category which includes certain assets and costs not primarily attributable to any of the reportable ~~segments, as well as~~segments. Prior to its divestiture in September 2022, the ~~Veritiv~~Company's logistics solutions business, which ~~provides~~provided transportation and warehousing ~~solutions.~~solutions, was also included in Corporate & Other. The following summary describes the products and services offered in each of the reportable segments:

•Packaging – Veritiv is a global provider of packaging products, services and solutions. The Packaging segment provides ~~standard as well as~~ custom and ~~comprehensive~~standard packaging solutions for customers based in North America and in key global markets. This segment services its customers with a full spectrum of packaging product materials within flexible, corrugated and fiber, ancillary packaging, rigid and equipment categories. The business is strategically focused on higher growth ~~industries~~industry sectors including ~~light industrial/general~~ manufacturing, food ~~production, fulfillment~~ and ~~internet~~beverage, wholesale and retail, healthcare and transportation, as well as ~~niche verticals~~specialty sectors based on ~~geographical~~industry and ~~functional~~product expertise. ~~Veritiv’s~~Veritiv's packaging professionals create customer value

Table of Conte n t s

through supply chain solutions, structural and graphic packaging design and engineering, automation, workflow and equipment services ~~contract packaging~~ and ~~kitting and fulfillment.~~

kitting.

•Facility Solutions – Veritiv is a global provider of hygiene and facility solutions products and services. The Facility Solutions segment sources and sells cleaning, break-room and other supplies ~~such as~~in product categories that include towels and tissues, ~~wipers and dispensers, can liners, commercial~~food service, personal protective equipment, cleaning chemicals ~~soaps~~ and ~~sanitizers, sanitary maintenance supplies and equipment, safety and hazard supplies, and shampoos and amenities~~skincare, primarily in ~~the U.S., Canada and Mexico. Veritiv is a leading distributor in the Facility Solutions segment.~~North America. Through this segment Veritiv manages a world class network of leading suppliers in most facilities solutions categories. Additionally, the Company offers total cost of ownership solutions with re-merchandising, budgeting and compliance reporting and inventory ~~management and a sales-force~~management. Its sales force is trained to bring leading vertical expertise to the major North American geographies.

•PrintSolutions – The Print Solutions segment helps customers optimize their printed communication by sourcing and distributing sustainable papers through a global network of suppliers. The Print Solutions segment sells and distributes commercial printing, writing and copying ~~digital, wide format~~products and ~~specialty paper products, graphics consumables and graphics equipment~~services primarily in ~~the U.S., Canada and Mexico. This segment also includes customized paper conversion services of commercial printing paper for distribution to document centers and form printers.~~North America. Veritiv's broad geographic platform of operations and services, coupled with the breadth of paper and graphics products, including exclusive private brand offerings, provides a ~~foundation to service national, regional and local customers across North America.~~

~~Publishing~~ ~~– The Publishing segment sells and distributes coated and uncoated commercial printing papers to publishers, retailers, converters, printers and specialty businesses for use~~comprehensive suite of solutions in ~~magazines, catalogs, books, directories, gaming, couponing, retail inserts and direct mail. This segment also provides~~paper procurement, print management, ~~procurement and~~ supply chain ~~management solutions to simplify paper~~ and ~~print procurement processes for Veritiv's customers.~~

distribution. This segment's customer base includes commercial printers, marketers, corporate end users, publishers and retailers.

Seasonality

The ~~Company’s~~Company's operating results are subject to seasonal influences. Historically, ~~the Company's~~its higher consolidated net sales ~~occur~~have occurred during the third and fourth quarters while ~~the~~its lowest consolidated net sales ~~occur~~have occurred during the first quarter. The Packaging segment net sales ~~tend to increase~~have traditionally increased each quarter throughout the year and net sales for the first quarter ~~are~~have typically been less than net sales for the fourth quarter of the preceding year. Production schedules for non-durable goods that build up to the holidays and peak in the fourth quarter drive this seasonal net sales pattern. Net sales for the Facility Solutions segment ~~tend to be highest during~~have traditionally peaked in the third ~~and fourth quarters~~quarter due to increased summer demand in the away-from-home resort, cruise and

~~Table of Contents~~

hospitality markets ~~activities related to~~and from back-to-school ~~and increased retail activity during the holidays.~~activities. Within the Print ~~and Publishing segments,~~Solutions segment, seasonality is driven by increased magazine advertising page counts, retail inserts, catalogs and direct mail primarily due to back-to-school, political election and holiday-related advertising and promotions in the second half of the year. The COVID-19 pandemic has had minor disruptions to the Company's seasonal patterns in net sales across all segments and on a consolidated basis due to the impacts of the pandemic on many of Veritiv's customers. The duration and extent of the COVID-19 pandemic is uncertain and the magnitude of continuing seasonality disruption is difficult to predict.

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Results of Operations, Including Business Segments

The following discussion compares the consolidated operating results of Veritiv for the three and nine months ended September 30, ~~2017~~2022 and ~~2016:~~2021:

Three Months Ended
September 30, Increase (Decrease) Nine Months Ended
September 30, Increase (Decrease)
(in millions) 2017 2016 $ % 2017 2016 $ %
Net sales $ 2,116.8
$ 2,126.6
$ (9.8 ) (0.5 )% $ 6,140.3
$ 6,207.2
$ (66.9 ) (1.1 )%
Cost of products sold (exclusive of depreciation and amortization shown separately below) 1,736.6
1,743.8
(7.2 ) (0.4 )% 5,026.4
5,086.2
(59.8 ) (1.2 )%
Distribution expenses 132.0
126.0
6.0
4.8 % 380.9
375.2
5.7
1.5 %
Selling and administrative expenses 228.7
207.3
21.4
10.3 % 650.4
615.9
34.5
5.6 %
Depreciation and amortization 13.1
13.4
(0.3 ) (2.2 )% 39.9
40.5
(0.6 ) (1.5 )%
Acquisition and integration expenses 14.2
7.3
6.9
94.5 % 28.1
19.6
8.5
43.4 %
Restructuring charges 2.7
5.8
(3.1 ) (53.4 )% 30.0
7.2
22.8
*
Operating income (loss) (10.5 ) 23.0
(33.5 ) *
(15.4 ) 62.6
(78.0 ) *
Interest expense, net 8.3
8.2
0.1
1.2 % 22.1
21.1
1.0
4.7 %
Other expense, net (0.5 ) 1.2
(1.7 ) *
1.2
6.3
(5.1 ) (81.0 )%
Income (loss) before income taxes (18.3 ) 13.6
(31.9 ) *
(38.7 ) 35.2
(73.9 ) *
Income tax expense (benefit) (4.0 ) 8.0
(12.0 ) *
(13.1 ) 18.4
(31.5 ) *
Net income (loss) $ (14.3 ) $ 5.6
$ (19.9 ) *
$ (25.6 ) $ 16.8
$ (42.4 ) *


	Three Months Ended September 30,				Increase (Decrease)			Nine Months Ended September 30,				Increase (Decrease)
(in millions)	2022		2021		$		%	2022		2021		$		%
Net sales	$	1,804.1	$	1,767.8	$	36.3	2.1%	$	5,482.9	$	4,985.7	$	497.2	10.0%
Cost of products sold (exclusive of depreciation and amortization shown separately below)	1,388.3		1,402.1		(13.8)		(1.0)%	4,254.6		3,959.2		295.4		7.5%
Distribution expenses	93.4		103.4		(10.0)		(9.7)%	303.8		308.9		(5.1)		(1.7)%
Selling and administrative expenses	194.9		189.7		5.2		2.7%	573.5		537.0		36.5		6.8%
Gain on sale of businesses	(18.6)		—		18.6		*	(28.6)		(3.1)		25.5		*
Depreciation and amortization	10.8		13.3		(2.5)		(18.8)%	34.6		42.1		(7.5)		(17.8)%

Restructuring charges, net	1.4		2.5		(1.1)		(44.0)%	5.5		12.0		(6.5)		(54.2)%
Operating income (loss)	133.9		56.8		77.1		135.7%	339.5		129.6		209.9		162.0%
Interest expense, net	4.8		3.8		1.0		26.3%	12.3		13.4		(1.1)		(8.2)%
Other (income) expense, net	0.0		(1.1)		1.1		100.0%	(7.2)		(3.8)		(3.4)		(89.5)%
Income (loss) before income taxes	129.1		54.1		75.0		138.6%	334.4		120.0		214.4		178.7%
Income tax expense (benefit)	32.4		14.1		18.3		129.8%	68.1		32.3		35.8		110.8%


Net income (loss)	$	96.7	$	40.0	$	56.7	141.8%	$	266.3	$	87.7	$	178.6	203.6%

*- not meaningful

The tables below provide reconciliations of Veritiv's reported net sales, calculated in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"), to its organic sales, which is a non-GAAP financial measure. Organic sales is defined by the Company as: net sales on an average daily sales basis, excluding revenue from sold businesses and revenue from acquired businesses for a period of 12 months after the Company completes the acquisition. The Company believes presenting organic sales will help investors better compare period-over-period results. Other companies in the industry may calculate organic sales differently than Veritiv does, limiting its usefulness as a comparative measure.

Table of Conte n t s


	Three Months Ended September 30,
	Total Company				Packaging				Facility Solutions				Print Solutions				Corporate & Other
(in millions)	2022		2021		2022		2021		2022		2021		2022		2021		2022		2021
Reported net sales	$	1,804.1	$	1,767.8	$	988.1	$	970.6	$	180.1	$	232.3	$	616.6	$	535.6	$	19.3	$	29.3

Impact of change in selling days (1)	—		—		—		—		—		—		—		—		—		—

Net sales (on an average daily sales basis)	1,804.1		1,767.8		988.1		970.6		180.1		232.3		616.6		535.6		19.3		29.3

Business divestitures (2)	(19.3)		(213.8)		—		(71.5)		—		(68.0)		—		(45.0)		(19.3)		(29.3)

Organic sales	$	1,784.8	$	1,554.0	$	988.1	$	899.1	$	180.1	$	164.3	$	616.6	$	490.6	$	—	$	—

(1) Adjustment for differences in the number of selling days.

(2) Represents the net sales of each of the following divested businesses prior to its respective divestiture: Rollsource (March 31, 2021), Veritiv Canada, Inc. (May 2, 2022) and the logistics solutions business (September 1, 2022).


	Nine Months Ended September 30,
	Total Company				Packaging				Facility Solutions				Print Solutions				Corporate & Other
(in millions)	2022		2021		2022		2021		2022		2021		2022		2021		2022		2021
Reported net sales	$	5,482.9	$	4,985.7	$	2,992.8	$	2,740.2	$	605.3	$	663.1	$	1,806.4	$	1,495.9	$	78.4	$	86.5

Impact of change in selling days (1)	—		—		—		—		—		—		—		—		—		—

Net sales (on an average daily sales basis)	5,482.9		4,985.7		2,992.8		2,740.2		605.3		663.1		1,806.4		1,495.9		78.4		86.5

Business divestitures (2)	(338.2)		(620.9)		(100.3)		(199.8)		(86.9)		(193.8)		(72.6)		(140.8)		(78.4)		(86.5)

Organic sales	$	5,144.7	$	4,364.8	$	2,892.5	$	2,540.4	$	518.4	$	469.3	$	1,733.8	$	1,355.1	$	—	$	—

(1) Adjustment for differences in the number of selling days.

Net Sales

For the three ~~and nine~~ months ended September 30, ~~2017,~~2022, net sales ~~declined primarily due to decreased~~increased by $36.3 million, or 2.1%. Organic sales increased by $230.8 million, or 14.9%, for the three months ended September 30, 2022. The decrease in net sales resulting from the divestiture of the Canadian business for the three months ended September 30, 2022 was $184.5 million. Inflationary market price increases, primarily in the Company's Packaging and Print Solutions product portfolios, continued throughout the third quarter of 2022 and ~~Publishing segments, partially offset by~~contributed to the increased net ~~sales~~sales. To the extent feasible, the Company has adjusted its prices to reflect the impact of inflation on the cost of purchased materials and services. Also, despite ongoing constraints in the ~~Packaging~~broader supply chain, the Company was able to mitigate some of the impact to its customers through leveraging its portfolio of suppliers and ~~Facility Solutions segments~~its North American supply chain network. Management expects higher market prices and ~~Veritiv's logistics solutions business.~~marketplace supply chain challenges to continue throughout 2022. See the "Segment Results" section for additional ~~information.~~discussion.

Table of Conte n t s

For the nine months ended September 30, 2022, net sales increased by $497.2 million, or 10.0%. Organic sales increased by $779.9 million, or 17.9%, for the nine months ended September 30, 2022. The decrease in net sales resulting from the divestiture of the Canadian business for the nine months ended September 30, 2022 was $260.8 million. Inflationary market price increases, primarily in the Company's Packaging and Print Solutions product portfolios, continued throughout the first nine months of 2022 and contributed to the increased net sales, while net sales in the Print Solutions segment in the first half of 2021 were negatively impacted by the COVID-19 pandemic. To the extent feasible, the Company has adjusted its prices to reflect the impact of inflation on the cost of purchased materials and services. Also, despite ongoing constraints in the broader supply chain, the Company was able to mitigate some of the impact to its customers through leveraging its portfolio of suppliers and its North American supply chain network. See the "Segment Results" section for additional discussion.

Cost of Products Sold (exclusive of depreciation and amortization shown separately below)

For the three ~~and nine~~ months ended September 30, ~~2017~~,2022, cost of products sold decreased primarily due to the ~~lower~~divestiture of the Canadian business, partially offset by higher net sales. Cost of products sold increased at a slower rate than net sales due to improvements in pricing, sale of the lower margin Canadian business and changes in segment mix.

For the nine months ended September 30, 2022, cost of products sold increased primarily due to higher net sales, partially offset by declines related to the divestiture of the Canadian business. Cost of products sold increased at a slower rate than net sales due to improvements in pricing, sale of the lower margin Canadian business and changes in segment mix.

Distribution Expenses

For the three months ended September 30, ~~2017, total~~2022, distribution expenses ~~increased~~decreased by ~~$6.0 million. Distribution expenses increased $4.9~~$10.0 million, or 9.7%. The decrease was primarily due to ana $15.6 million decrease related to the divestiture of the Canadian business, partially offset by a $3.7 million increase in freight and logistics expense driven by an increase in third-party freight and fuel expenses ~~driven mostly by increased third party freight, transfer expenses~~related to higher sales volume and higher diesel fuel and carrier prices. ~~The remaining increase in distribution expenses is largely the result of the acquisition of AAC.~~

For the nine months ended September 30, ~~2017,~~2022, distribution expenses ~~increased~~decreased by ~~$5.7 million. Distribution expenses increased $10.8~~$5.1 million, ~~from an~~or 1.7%. The decrease was primarily due to a $23.7 million decrease related to the divestiture of the Canadian business, partially offset by (i) a $15.5 million increase in freight and logistics ~~expenses, due mostly to increased third party freight, transfer~~ expense and ~~diesel fuel prices and $1.2 million as a result of the acquisition of AAC. These increases were partially offset by (i)~~(ii) a $2.1 million ~~decrease in facilities rent and other expense, (ii) a $1.4 million decrease in insurance expense, (iii) a $1.2 million decrease in maintenance and material expense and (iv) a $0.8 million decrease~~increase in personnel expenses. The ~~offsetting decreases were~~increase in freight and logistics expense was primarily driven ~~primarily~~ by ~~warehouse consolidations.~~an increase in third-party freight and fuel expenses related to higher sales volume and higher diesel fuel and carrier prices.

~~Table of Contents~~

Selling and Administrative Expenses

For the three months ended September 30, ~~2017,~~2022, selling and administrative expenses increased by ~~$21.4~~$5.2 million, or 2.7%. The increase was primarily due to (i) a ~~$6.3~~$9.7 million increase in personnel expenses, due in part to increased headcount to support the Company's growth strategy and increased commission expense, which was primarily due to lower expense in 2016 resulting from the recovery of a $4.9 million commission advance, (ii) a ~~$4.8~~$3.2 million increase in ~~bad debt~~professional fees expense, (iii) a ~~$4.7~~$2.3 million increase in ~~asset impairments primarily~~marketing and communications expense and (iv) a $2.1 million increase in legal expense, partially offset by a $13.8 million decrease in expenses related to the ~~goodwill and customer relationships in~~divestiture of the ~~Veritiv logistics solutions business and (iv) a $2.0 million increase related to the acquisition of AAC.~~

For the nine months ended September 30, 2017, selling and administrative expenses increased by $34.5 million due to (i) an $11.1 million increase in bad debt expense, (ii) an $11.0 million increase in personnel expenses, (iii) a $5.3 million increase in asset impairments primarily related to the goodwill and customer relationships in the Veritiv logistics solutions business, and (iv) a $2.0 million increase related to the acquisition of AAC. The increase in bad debt expense was primarily due to additional reserves related to certain customers with declining financial conditions during the current period combined with favorable collections experience in the prior period.Canadian business. The increase in personnel expenses was primarily driven by (i) an increase in ~~headcount to support the Company's growth strategy as well as lower commissions in 2016~~commission expenses due to higher net sales and (ii) an increase in travel and entertainment expenses.

For the ~~commission advance recovery,~~nine months ended September 30, 2022, selling and administrative expenses increased by $36.5 million, or 6.8%. The increase was primarily due to (i) a $36.2 million increase in personnel expenses, (ii) a $15.9 million increase in professional fees expense and (iii) a $3.2 million increase in marketing and communications expense, partially offset by (i) a ~~$7.5~~$15.2 million decrease related to the divestiture of the Canadian business and (ii) a $3.5 million gain from insurance proceeds. The increase in ~~incentive compensation.~~personnel expenses was primarily driven by (i) an increase in commission expenses due to higher net sales and (ii) an increase in travel and entertainment expenses.

Gain on Sale of Businesses

For the three months ended September 30, 2022, gain on sale of businesses was $18.6 million. For the nine months ended September 30, 2022, gain on sale of businesses was $28.6 million as compared to $3.1 million in the prior year period. See Note 13 of the Notes to Condensed Consolidated Financial Statements for additional information related to the Company's business divestitures.

Table of Conte n t s

Depreciation and Amortization

For the three and nine months ended September 30, ~~2017,~~2022, depreciation and amortization ~~decreased $0.3 million~~was lower than the same period in 2021. The decrease was primarily driven by lower depreciation on information technology related assets and ~~$0.6 million, respectively.~~the divestiture of the Canadian business.

~~Acquisition and Integration Expenses~~

~~See~~ ~~Note 2, 2017 Acquisition, and~~ ~~Note 3, Acquisition, Integration and Restructuring Charges, to the Condensed Consolidated Financial Statements for information related to the Company's acquisition and integration efforts.~~

Restructuring Charges, Net

For the three ~~and~~months ended September 30, 2022, restructuring charges, net, decreased by $1.1 million, or 44.0%. For the nine months ended September 30, ~~2017,~~2022, restructuring charges, net, decreased ~~$3.1~~by $6.5 million, ~~and increased $22.8 million, respectively.~~or 54.2%. See Note ~~3, Acquisition, Integration and Restructuring Charges~~4, of the Notes to ~~the~~ Condensed Consolidated Financial Statements for additional information related to the Company's restructuring efforts. ~~The Company may continue to record restructuring charges in the future as restructuring activities progress, which may include gains or losses from the disposition of assets.~~

Interest Expense, Net

For the three ~~and~~months ended September 30, 2022, interest expense, net, increased by $1.0 million, or 26.3%. The increase was primarily due to higher average interest rates, partially offset by a lower average balance on the Company's ABL Facility.

For the nine months ended September 30, ~~2017,~~2022, interest expense, ~~increased $0.1~~net, decreased by $1.1 million, ~~and $1.0 million, respectively. Interest expense increased~~or 8.2%. The decrease was primarily due to ~~(i) an increased~~a lower average balance on the Company's ~~asset-based lending facility (the "ABL Facility") and (ii) increased~~ABL Facility, partially offset by higher average interest rates. ~~See~~ ~~Note 5, Debt and Other Obligations, to the Condensed Consolidated Financial Statements for information related to the ABL Facility.~~

Other (Income) Expense, Net

For the three ~~and~~months ended September 30, 2022, other (income) expense, net, was less than $0.1 million. This was a net unfavorable change of $1.1 million as compared to the same period in 2021. The unfavorable change was primarily due to higher pension expenses.

For the nine months ended September 30, ~~2017,~~2022, other (income) expense, net, ~~decreased $1.7~~was income of $7.2 million. This was a net favorable change of $3.4 million ~~and $5.1~~as compared to the same period in 2021. The favorable change was primarily due to a $7.0 million ~~respectively. These decreases were primarily driven~~gain on the settlement of the Canadian pension plans, which was triggered by ~~decreased expense associated with~~ the ~~tax receivable agreement, decreased foreign currency losses, and a loss on debt extinguishment in~~divestiture of the ~~second quarter of 2016.~~Canadian business, partially offset by higher pension expenses.

Effective Tax Rate

Veritiv's effective tax rates were ~~21.9%~~25.1% and ~~58.8%~~26.1% for the three months ended September 30, ~~2017~~2022 and ~~2016,~~2021, respectively. Veritiv's effective tax rates were ~~33.9%~~20.4% and ~~52.3%~~26.9% for the nine months ended September 30, ~~2017~~2022 and ~~2016,~~2021, respectively.

The difference between the ~~Company’s~~Company's effective tax rates and the U.S. statutory tax rate of ~~35.0%~~21.0% primarily relates to ~~non-deductible expenses,~~vesting of stock compensation, state income taxes (net of federal income tax benefit), non-deductible expenses, tax credits and the Company's pre-tax book income (loss) by jurisdiction. Additionally, the effective tax rate for the three and nine months ended September 30, ~~2017~~2022 includes a tax benefit on the ~~benefit~~disposition of ~~tax credits and~~ the ~~impact of impairing non-deductible goodwill.~~Company's investment in a foreign subsidiary.

~~Table of Contents~~

In conjunction with the third quarter 2017 filing of Veritiv's 2016 U.S. federal tax return and amended 2015 and 2014 U.S. federal tax returns, the Company recognized a $3.1 million benefit for credits related to foreign taxes and research and experimentation activities. Additionally, an estimate of 2017 tax credits is included in our estimated annual effective tax rate.

The ~~historic~~historical volatility of the Company's effective tax rate has been primarily due to both the level of pre-tax book income (loss) as well as variations in the Company's income (loss) by jurisdiction. ~~Over time and with increasing pre-tax income, the~~The Company ~~estimates its effective tax rate will trend toward approximately 40%. However,~~may experience volatility of the effective tax rate ~~may vary significantly~~in future periods due to potential fluctuations in the amount and source, including both foreign and domestic, of pre-tax book income ~~and~~(loss) by jurisdiction, potential deferred tax valuation allowance increases in certain jurisdictions, including the U.S., changes in amounts of non-deductible expenses, and other ~~items.~~items that could impact the effective tax rate.

Segment Results

Adjusted EBITDA is the primary financial performance measure Veritiv uses to manage its businesses, to monitor its results of operations, to measure its performance against the ABL Facility and to incentivize its management. This common metric is intended to align stockholders, debt holders and management. Adjusted EBITDA is a non-GAAP financial measure and is not an alternative to net income, operating income or any other measure prescribed by U.S. generally accepted accounting principles ("U.S. GAAP").

~~Veritiv uses~~ Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, restructuring charges, ~~(income),~~net, integration and acquisition ~~and integration~~ expenses and other similar charges including any severance costs, costs associated with warehouse and office openings or closings, consolidation, and relocation and other business optimization expenses, stock-based compensation expense, changes in the LIFO reserve, non-restructuring asset impairment charges, non-restructuring severance charges, non-restructuring pension charges (benefits), fair value adjustments ~~on the~~related to contingent ~~liability associated with the Tax Receivable Agreement ("TRA")~~liabilities assumed in mergers and acquisitions and certain other adjustments) ~~because~~ is the primary financial performance measure Veritiv uses to manage its businesses, to monitor its results of operations, to measure its performance against the ABL Facility and to incentivize its management.

Veritiv believes investors commonly use Adjusted EBITDA as a key financial metric for valuing companies. In addition, the credit agreement governing the ABL Facility permits the Company to exclude these and other charges in calculating Consolidated EBITDA, as defined in the ABL Facility. This common metric is intended to align shareholders, debt holders and

Table of Conte n t s

management. Adjusted EBITDA is a non-GAAP financial measure and is not an alternative to net income, operating income or any other measure prescribed by U.S. GAAP.

Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of ~~Veritiv’s~~Veritiv's results as reported under U.S. GAAP. For example, Adjusted EBITDA:

~~Does~~•does not reflect the ~~Company’s~~Company's income tax expenses or the cash requirements to pay its taxes; and

~~Although~~•although depreciation and amortization charges are non-cash charges, it does not reflect that the assets being depreciated and amortized will often have to be replaced in the future and the foregoing ~~metrics do~~metric does not reflect any cash requirements for such replacements.

Other companies in the industry may calculate Adjusted EBITDA differently than Veritiv does, limiting its usefulness as a comparative measure. Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to Veritiv to invest in the growth of its business. Veritiv compensates for these limitations by relying on the Company's U.S. GAAP results and by using Adjusted EBITDA for supplemental purposes. Additionally, Adjusted EBITDA is not an alternative measure of financial performance under U.S. GAAP and therefore should be considered in conjunction with net income and other performance measures such as operating income or net cash provided by operating activities and not as an alternative to such U.S. GAAP measures.

Due to the shared nature of the distribution network, distribution expenses are not a specific charge to each segment but are instead allocated to each segment based primarily on operational metrics that correlate with changes in volume. Accordingly, distribution expenses allocated to each segment are highly interdependent on the results of other segments. Lower volume in any segment that is not offset by a reduction in distribution expenses can result in the other segments absorbing a larger share of distribution expenses. Conversely, higher volume in any segment can result in the other segments absorbing a smaller share of distribution expenses. The impact of this at the segment level is that the changes in distribution expense trends may not correspond with volume trends within a particular segment.

~~The Company sells thousands~~Prior to the fourth quarter of ~~products. In the Packaging, Facility Solutions and Print segments,~~2021, Veritiv iswas unable to compute the impact of changes in sales volume based on changes in sales of each individual ~~product.~~product for the Packaging and Facility Solutions segments. Rather, the Company ~~assumes~~assumed that the margin ~~stays~~stayed constant and ~~estimates~~estimated the volume impact based on changes in cost of products sold as a proxy for the change in sales volume. After any other significant sales variances ~~are~~were identified, the remaining sales variance iswas attributed to price/mix. As a result of the Company’s information technology enhancements, the Company has improved its insight into products within these segments and is able to isolate the change in sales attributed to volume and price separately at the item level for the majority of products and thus it no longer needs to rely on cost of products sold as a proxy for the changes in sales volumes.

The Company approximates foreign currency effects by applying the foreign currency exchange rate for the prior period to the local currency results for the current period. ~~We believe~~The Company believes the elimination of the foreign currency translation impact provides better year-to-year comparability without the distortion of foreign currency fluctuations.

~~Table of Contents~~

The Company believes that the historical decline in demand for paper and related products is due to the widespread use of electronic media and permanent product substitution, more e-commerce, less print advertising, fewer catalogs and a reduced volume of direct mail, among other factors. ~~This~~In the long term, this trend is expected to continue and will place continued pressure on the Company’s revenues and profit margins and make it more difficult to maintain or grow Adjusted EBITDA within the Print Solutions segment. In the short term, shortages in the supply chain and ~~Publishing segments.~~product cost inflation have resulted in higher paper and related product prices. The Company believes the shortage of supply is due to mill closures and conversions and international supply chain disruptions, which may have been accelerated by the COVID-19 pandemic. Higher prices, if continued over the longer term, could further accelerate demand decline.

Table of Conte n t s

Included in the following ~~table~~tables are net sales and Adjusted EBITDA for each of the reportable segments and Corporate & Other:

(in millions) Packaging Facility Solutions Print Publishing Corporate & Other
Three Months Ended September 30, 2017
Net sales $ 799.6
$ 339.6
$ 701.6
$ 238.7
$ 37.3
Adjusted EBITDA 62.1
10.3
13.1
5.5
(46.9 )
Adjusted EBITDA as a % of net sales 7.8 % 3.0 % 1.9 % 2.3 % *

Three Months Ended September 30, 2016
Net sales $ 730.1
$ 328.7
$ 788.2
$ 248.4
$ 31.2
Adjusted EBITDA 59.5
13.0
20.0
6.6
(42.0 )
Adjusted EBITDA as a % of net sales 8.1 % 4.0 % 2.5 % 2.7 % *

Nine Months Ended September 30, 2017
Net sales $ 2,266.0
$ 975.5
$ 2,095.1
$ 696.6
$ 107.1
Adjusted EBITDA 166.7
25.1
44.8
17.6
(137.8 )
Adjusted EBITDA as a % of net sales 7.4 % 2.6 % 2.1 % 2.5 % *

Nine Months Ended September 30, 2016
Net sales $ 2,106.4
$ 951.6
$ 2,299.0
$ 763.2
$ 87.0
Adjusted EBITDA 165.4
34.3
55.7
16.4
(129.7 )
Adjusted EBITDA as a % of net sales 7.9 % 3.6 % 2.4 % 2.1 % *


(in millions)	Packaging			Facility Solutions			Print Solutions			Corporate & Other
Three Months Ended September 30, 2022
Net sales	$	988.1		$	180.1		$	616.6		$	19.3
Adjusted EBITDA	115.1			15.6			64.3			(53.7)
Adjusted EBITDA as a % of net sales	11.6		%	8.7		%	10.4		%	*


Three Months Ended September 30, 2021
Net sales	$	970.6		$	232.3		$	535.6		$	29.3
Adjusted EBITDA	107.0			13.4			30.5			(57.2)
Adjusted EBITDA as a % of net sales	11.0		%	5.8		%	5.7		%	*


Nine Months Ended September 30, 2022
Net sales	$	2,992.8		$	605.3		$	1,806.4		$	78.4
Adjusted EBITDA	320.9			45.0			179.4			(148.2)
Adjusted EBITDA as a % of net sales	10.7		%	7.4		%	9.9		%	*


Nine Months Ended September 30, 2021
Net sales	$	2,740.2		$	663.1		$	1,495.9		$	86.5
Adjusted EBITDA	280.4			35.3			70.1			(159.1)
Adjusted EBITDA as a % of net sales	10.2		%	5.3		%	4.7		%	*

* - not meaningful

See Note ~~13, Segment Information~~12, of the Notes to ~~the~~ Condensed Consolidated Financial Statements for additional information related to Adjusted EBITDA, including a reconciliation of net income (loss) ~~before income taxes~~ as reflected inon the Condensed Consolidated Statements of Operations to Adjusted EBITDA for reportable segments.

Packaging

~~The table below presents selected data for the Packaging segment:~~


	Three Months Ended September 30,						Increase (Decrease)				Nine Months Ended September 30,						Increase (Decrease)
(in millions)	2022			2021			$		%		2022			2021			$		%
Net sales	$	988.1		$	970.6		$	17.5	1.8	%	$	2,992.8		$	2,740.2		$	252.6	9.2	%
Adjusted EBITDA	115.1			107.0			8.1		7.6	%	320.9			280.4			40.5		14.4	%
Adjusted EBITDA as a % of net sales	11.6		%	11.0		%			60 bps		10.7		%	10.2		%			50 bps

Three Months Ended September 30, 2017 vs. 2016 Nine Months Ended September 30, 2017 vs. 2016
(in millions) 2017 2016 Increase (Decrease) % 2017 2016 Increase (Decrease) %
Net sales $ 799.6
$ 730.1
9.5 % $ 2,266.0
$ 2,106.4
7.6 %
Adjusted EBITDA 62.1
59.5
4.4 % 166.7
165.4
0.8 %
Adjusted EBITDA as a % of net sales 7.8 % 8.1 % 7.4 % 7.9 %

Table of ~~Contents~~Conte n t s

The table below presents the components of the net sales change compared to the prior year:


	Increase (Decrease)
	Three Months Ended September 30,		Nine Months Ended September 30,
(in millions)	2022 vs. 2021		2022 vs. 2021
Volume	$	(88.7)	$	(91.3)
Foreign currency	(1.5)		(8.4)
Price/Mix	107.7		352.3


Total change	$	17.5	$	252.6

Increase (Decrease)
Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions) 2017 vs. 2016 2017 vs. 2016
Volume $ 71.0
$ 177.1
Foreign currency 3.8
(0.9 )
Price/Mix (5.3 ) (16.6 )
Total change $ 69.5
$ 159.6

Comparison of the Three Months Ended September 30, ~~2017~~2022 and September 30, ~~2016~~2021

Net sales increased ~~$69.5~~$17.5 million, or ~~9.5%~~1.8%, as compared to the same period in ~~2016.~~2021. Organic sales increased $89.0 million, or 9.9%, for the three months ended September 30, 2022. The net sales increase was primarily attributable to ~~an increase in sales of corrugated products, films and folding cartons due to increases in volume and~~higher market prices, ~~as well as $16.0 million~~partially offset by volume declines associated with the divestiture of ~~rigid packaging products~~the Canadian business and lower sales ~~in the current period relating~~volume. Sales to manufacturing, healthcare, and wholesale and retail customers improved most significantly compared to the ~~AAC~~prior year period. Management expects the higher market prices and supply chain constraints to continue throughout 2022. The decrease in net sales resulting from the divestiture of the Canadian business ~~acquired in 2017.~~for the three months ended September 30, 2022 was $71.5 million.

Adjusted EBITDA increased ~~$2.6~~$8.1 million, or ~~4.4%~~7.6%, as compared to the same period in ~~2016.~~2021. The increase in Adjusted EBITDA was primarily attributable to ~~the increase in net sales. The increase in~~(i) higher net sales, ~~was partially offset by increases in distribution expenses,~~(ii) cost of products sold increasing at a ~~faster~~slower rate than net sales and an(iii) a $0.8 million decrease in distribution expenses, partially offset by a $9.5 million increase in selling and administrative expenses. ~~Distribution~~The decrease in distribution expenses ~~increased $6.5~~was primarily driven by a $6.1 million ~~primarily~~decrease related to the divestiture of the Canadian business, partially offset by (i) a $2.4 million increase in freight and logistics expense and (ii) a $1.7 million increase in facility rent expense driven by increased utilization of ~~our~~the distribution network, which is reflected in (i) increased freight and logistics expenses driven mostly by increased third party freight and transfer expenses, (ii) increased personnel expenses and (iii) increased facilities rent and other expenses. Selling and administrative expenses increased $3.4 million primarily driven by increased personnel expenses associated with increased headcount to support our growth strategy.network. The ~~acquisition of AAC resulted in a $1.2 million increase in distribution expenses and a $2.0 million~~ increase in selling and administrative expenses was primarily driven by (i) a $9.2 million increase in personnel expenses and (ii) a $2.1 million increase in professional fees expense, partially offset by a $2.8 million decrease related to the divestiture of the Canadian business. The increase in personnel expenses was associated with (i) increased commission expenses driven by higher sales, (ii) higher wages and benefits to support the Company's Packaging growth strategy and (iii) an increase in travel and entertainment expenses.

Comparison of the Nine Months Ended September 30, ~~2017~~2022 and September 30, ~~2016~~2021

Net sales increased ~~$159.6~~$252.6 million, or ~~7.6%~~9.2%, as compared to the same period in ~~2016.~~2021. Organic sales increased $352.1 million, or 13.9%, for the nine months ended September 30, 2022. The net sales increase was primarily attributable to ~~an increase in sales of corrugated products, films and folding cartons due to increases in volume and~~higher market prices ~~as well as $16.0 million~~and increased sales volume in all product categories and end use sectors, excluding volume declines associated with the divestiture of ~~rigid packaging products sales in~~ the ~~current period relating~~Canadian business, partially offset by unfavorable foreign currency impacts. Sales to manufacturing, healthcare, and food and beverage customers improved most significantly compared to the ~~AAC~~prior year period. The decrease in net sales resulting from the divestiture of the Canadian business ~~acquired in 2017.~~for the nine months ended September 30, 2022 was $99.5 million.

Adjusted EBITDA increased ~~$1.3~~$40.5 million, or ~~0.8%~~14.4%, as compared to the same period in ~~2016.~~2021. The increase in Adjusted EBITDA was primarily attributable to (i) higher net sales ~~was mostly offset by an increase in distribution expenses,~~and (ii) cost of products sold increasing at a ~~faster~~slower rate than net sales, ~~and an increase in selling and administrative expenses. Distribution expenses increased $14.0 million primarily driven~~partially offset by ~~increased utilization of our distribution network, which is reflected in~~ (i) increased freight and logistics expenses driven mostly by increased third party freight, transfer expenses and diesel fuel prices, (ii) increased personnel expenses and (iii) increased facilities rent and other expenses. Selling and administrative expenses increased $10.1 million primarily driven by increased personnel expenses associated with increased headcount to support our growth strategy. The acquisition of AAC resulted in a ~~$1.2 million increase in distribution expenses and a $2.0~~$38.2 million increase in selling and administrative expenses and (ii) an $8.8 million increase in distribution expenses. The increase in selling and administrative expenses was primarily driven by (i) a $30.0 million increase in personnel expenses and (ii) a $10.6 million increase in professional fees expense, partially offset by a $3.8 million decrease related to the divestiture of the Canadian business. The increase in personnel expenses was associated with (i) increased commission expenses driven by higher sales, (ii) higher wages and benefits to support the Company's Packaging growth strategy and (iii) an increase in travel and entertainment expenses. The increase in distribution expenses was primarily driven by (i) a $9.0 million increase in freight and logistics expense, (ii) a $5.7 million increase in facility rent expense driven by increased utilization of the distribution network and (iii) a $1.8 million increase in personnel expenses, partially offset by a $7.8 million decrease related to the divestiture of the Canadian business.

Table of Conte n t s

Facility Solutions


	Three Months Ended September 30,						Increase (Decrease)				Nine Months Ended September 30,						Increase (Decrease)
(in millions)	2022			2021			$		%		2022			2021			$		%
Net sales	$	180.1		$	232.3		$	(52.2)	(22.5)	%	$	605.3		$	663.1		$	(57.8)	(8.7)	%
Adjusted EBITDA	15.6			13.4			2.2		16.4	%	45.0			35.3			9.7		27.5	%
Adjusted EBITDA as a % of net sales	8.7		%	5.8		%			290 bps		7.4		%	5.3		%			210 bps

~~The table below presents selected data for the Facility Solutions segment:~~

Three Months Ended September 30, 2017 vs. 2016 Nine Months Ended September 30, 2017 vs. 2016
(in millions) 2017 2016 Increase (Decrease) % 2017 2016 Increase (Decrease) %
Net sales $ 339.6
$ 328.7
3.3 % $ 975.5
$ 951.6
2.5 %
Adjusted EBITDA 10.3
13.0
(20.8 )% 25.1
34.3
(26.8 )%
Adjusted EBITDA as a % of net sales 3.0 % 4.0 % 2.6 % 3.6 %

~~Table of Contents~~

The table below presents the components of the net sales change compared to the prior year:


	Increase (Decrease)
	Three Months Ended September 30,		Nine Months Ended September 30,
(in millions)	2022 vs. 2021		2022 vs. 2021
Volume	$	(76.3)	$	(78.3)
Foreign currency	—		(3.8)
Price/Mix	24.1		24.3


Total change	$	(52.2)	$	(57.8)

Increase (Decrease)
Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions) 2017 vs. 2016 2017 vs. 2016
Volume $ 9.4
$ 28.5
Foreign currency 2.9
1.9
Price/Mix (1.4 ) (6.5 )
Total change $ 10.9
$ 23.9

Comparison of the Three Months Ended September 30, ~~2017~~2022 and September 30, ~~2016~~2021

Net sales ~~increased $10.9~~decreased $52.2 million, or ~~3.3%~~22.5%, as compared to the same period in ~~2016.~~2021. Organic sales increased $15.8 million, or 9.6%, for the three months ended September 30, 2022. The net sales ~~increase~~decrease was primarily attributable to the divestiture of the Canadian business and decreased sales volume, partially offset by higher market prices and increased sales of towels and tissues, food service products ~~chemicals~~ and ~~safety supplies.~~can liners. The decrease in net sales resulting from the divestiture of the Canadian business for the three months ended September 30, 2022 was $68.0 million. As the COVID-19 pandemic restrictions were lifted, demand improved within the entertainment and hospitality end use sectors during the first nine months of 2022 as away-from-home activity resumed across the broader market place. This was partially offset by declining demand for the personal protective equipment product category, which experienced strong demand in 2021 due to COVID-19. Management expects growth in the broader facility solutions away-from-home sectors to be offset by lower demand for personal protective equipment products through the remainder of 2022.

Adjusted EBITDA ~~decreased $2.7~~increased $2.2 million, or ~~20.8%~~16.4%, as compared to the same period in ~~2016.~~2021. The increase in Adjusted EBITDA was primarily attributable to (i) the divestiture of the Canadian business resulting in a $6.8 million decrease in distribution expense and a $3.4 million decrease in selling and administrative expense and (ii) cost of products sold decreasing at a faster rate than net sales, partially offset by lower net sales resulting from the divestiture of the Canadian business.

Comparison of the Nine Months Ended September 30, 2022 and September 30, 2021

Net sales decreased $57.8 million, or 8.7%, as compared to the same period in 2021. Organic sales increased $49.1 million, or 10.5%, for the nine months ended September 30, 2022. The net sales decrease was ~~more~~primarily attributable to the divestiture of the Canadian business and unfavorable foreign currency impacts, partially offset by higher market prices and increased sales of towels and tissues, food service products and can liners primarily driven by overall demand improvements as compared to prior year. The decrease in net sales resulting from the divestiture of the Canadian business for the nine months ended September 30, 2022 was $106.9 million.

Adjusted EBITDA increased $9.7 million, or 27.5%, as compared to the same period in 2021. The increase in Adjusted EBITDA was primarily attributable to (i) a $15.9 million decrease in expenses related to the divestiture of the Canadian business and (ii) cost of products sold decreasing at a faster rate than net sales, partially offset by (i) lower net sales resulting from the divestiture of the Canadian business, (ii) a ~~$2.4~~$2.8 million increase in distribution expenses ~~(ii)~~and (iii) a ~~$1.6~~$1.8 million increase in selling and administrative ~~expenses and (iii) cost of products sold increasing at a faster rate than net sales.~~expenses. The increase in distribution expenses was primarily driven by ~~increased utilization of our distribution network and is evidenced~~a $3.8 million increase in ~~(i) increased~~ freight and logistics ~~expenses driven mostly~~expense, partially offset by ~~increased third party freight~~a $0.9 million decrease in facility and ~~transfer expenses and (ii) increased personnel expenses.~~equipment rent expense. The increase in selling and ~~administrative expenses was largely a result~~

Table of ~~a $1.0 million increase in personnel expenses, generally due to increased headcount to support our growth strategy, and a $0.8 million increase in bad debt expense.~~Conte n t s

~~Comparison of the Nine Months Ended September 30, 2017 and September 30, 2016~~

~~Net sales increased $23.9 million, or 2.5%, compared to the same period in 2016. The net sales increase was primarily attributable to increased sales of food service products and chemicals.~~

Adjusted EBITDA decreased $9.2 million, or 26.8%, compared to the same period in 2016. The increase in net sales was more than offset by (i) cost of products sold increasing at a faster rate than net sales, (ii) a $4.8 million increase in distribution expenses and (iii) a $4.8 million increase in selling and administrative costs. The increase in distribution expenses was primarily driven by increased utilization of our distribution network and is evidenced in (i) increased freight and logistics expenses driven mostly by increased third party freight, transfer expenses and diesel fuel prices and (ii) increased personnel expenses. The increase in selling and administrative expenses was primarily driven by (i) a ~~$1.9~~$3.3 million increase in ~~personnel expenses primarily due to increased headcount to support our growth strategy~~commission expense and (ii) a ~~$1.9~~$2.2 million increase in ~~bad debt expense.~~professional fees expense, partially offset by a $4.0 million decrease in wages.

Print Solutions

~~The table below presents selected data for the Print segment:~~


	Three Months Ended September 30,						Increase (Decrease)				Nine Months Ended September 30,						Increase (Decrease)
(in millions)	2022			2021			$		%		2022			2021			$		%
Net sales	$	616.6		$	535.6		$	81.0	15.1	%	$	1,806.4		$	1,495.9		$	310.5	20.8	%
Adjusted EBITDA	64.3			30.5			33.8		110.8	%	179.4			70.1			109.3		155.9	%
Adjusted EBITDA as a % of net sales	10.4		%	5.7		%			470 bps		9.9		%	4.7		%			520 bps

Three Months Ended September 30, 2017 vs. 2016 Nine Months Ended September 30, 2017 vs. 2016
(in millions) 2017 2016 Increase (Decrease) % 2017 2016 Increase (Decrease) %
Net sales $ 701.6
$ 788.2
(11.0 )% $ 2,095.1
$ 2,299.0
(8.9 )%
Adjusted EBITDA 13.1
20.0
(34.5 )% 44.8
55.7
(19.6 )%
Adjusted EBITDA as a % of net sales 1.9 % 2.5 % 2.1 % 2.4 %

~~Table of Contents~~

The table below presents the components of the net sales change compared to the prior year:


	Increase (Decrease)
	Three Months Ended September 30,		Nine Months Ended September 30,
(in millions)	2022 vs. 2021		2022 vs. 2021
Volume	$	(97.8)	$	(128.9)
Foreign currency	—		(2.6)
Price/Mix	178.8		442.0


Total change	$	81.0	$	310.5

Increase (Decrease)
Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions) 2017 vs. 2016 2017 vs. 2016
Volume $ (89.9 ) $ (211.5 )
Foreign currency 2.0
1.1
Price/Mix 1.3
6.5
Total change $ (86.6 ) $ (203.9 )

Comparison of the Three Months Ended September 30, ~~2017~~2022 and September 30, ~~2016~~2021

Net sales ~~decreased $86.6~~increased $81.0 million, or ~~11.0%~~15.1%, as compared to the same period in ~~2016.~~2021. Organic sales increased $126.0 million, or 25.7%, for the three months ended September 30, 2022. The net sales ~~decrease~~increase was primarily attributable to higher market prices driven by demand outpacing supply, partially offset by decreased sales volume as well as volume declines associated with the divestiture of the Canadian business. Domestic market demand continued ~~secular decline~~to outpace both domestic and international supply in the ~~paper industry.~~third quarter of 2022. Management expects the demand and supply imbalance to continue into early 2023. The decrease in net sales resulting from the divestiture of the Canadian business for the three months ended September 30, 2022 was $45.0 million.

Adjusted EBITDA ~~decreased $6.9~~increased $33.8 million, or ~~34.5%~~110.8%, as compared to the same period in ~~2016.~~2021. The Adjusted EBITDA ~~decrease~~increase was primarily attributable to ~~the decline in net sales. The decline in~~(i) cost of products sold increasing at a slower rate than net sales, ~~was partially offset by (i)~~(ii) higher net sales and (iii) a ~~$3.8~~$4.4 million decrease in distribution expenses, and (ii) cost of products sold decreasing at a faster rate than net sales. The decrease in distribution expenses was primarily due to decreased utilization of our distribution network and was evidenced in (i) a decrease in personnel expenses and (ii) a decrease in facilities rent and other related expenses. Selling and administrative expenses were flat as lower personnel expenses of $3.2 million werepartially offset by a ~~$3.8~~$3.0 million increase ~~in bad debt expense.~~

~~Comparison of the Nine Months Ended September 30, 2017 and September 30, 2016~~

~~Net sales decreased $203.9 million, or 8.9%, compared to the same period in 2016. The net sales decrease was primarily attributable to the continued secular decline in the paper industry.~~

Adjusted EBITDA decreased $10.9 million, or 19.6%, compared to the same period in 2016. The Adjusted EBITDA decrease was largely attributable to the decline in net sales. The decline in net sales was partially offset by (i) a $10.3 million decrease in distribution expenses, (ii) cost of products sold declining at a faster rate than net sales and (iii) a $2.5 million decrease in selling and administrative expenses. The decrease in distribution expenses was primarily driven by ~~decreased utilization of our distribution network which is reflected in~~ (i) a $2.6 million decrease ~~in facilities rent~~related to the divestiture of the Canadian business and (ii) a ~~decrease in personnel expense and (iii) a decrease in freight and logistics expenses. The decrease in selling and administrative expenses was primarily driven by a $5.9~~$1.9 million decrease in ~~personnel expenses and a $0.8 million decrease in professional and communication expenses, partially offset by a $5.3 million increase in bad debt~~facility rent expense.

~~Publishing~~

~~The table below presents selected data for the Publishing segment:~~

Three Months Ended September 30, 2017 vs. 2016 Nine Months Ended September 30, 2017 vs. 2016
(in millions) 2017 2016 Increase (Decrease) % 2017 2016 Increase (Decrease) %
Net sales $ 238.7
$ 248.4
(3.9 )% $ 696.6
$ 763.2
(8.7 )%
Adjusted EBITDA 5.5
6.6
(16.7 )% 17.6
16.4
7.3 %
Adjusted EBITDA as a % of net sales 2.3 % 2.7 % 2.5 % 2.1 %

~~Table of Contents~~

~~The table below presents the components of the net sales change compared to the prior year:~~

Increase (Decrease)
Three Months Ended
September 30, Nine Months Ended
September 30,
(in millions) 2017 vs. 2016 2017 vs. 2016
Volume $ (12.3 ) $ (84.0 )
Foreign currency 0.3
0.2
Price/Mix 2.3
17.2
Total change $ (9.7 ) $ (66.6 )

~~Comparison of the Three Months Ended September 30, 2017 and September 30, 2016~~

~~Net sales decreased $9.7 million, or 3.9%, compared to the same period in 2016. The net sales decrease was primarily attributable to a decline in volume.~~

Adjusted EBITDA decreased $1.1 million, or 16.7%, compared to the same period in 2016. The Adjusted EBITDA decrease was primarily attributable to lower net sales and cost of products sold decreasing at a slower rate than net sales.

~~Comparison of the Nine Months Ended September 30, 2017 and September 30, 2016~~

~~Net sales decreased $66.6 million, or 8.7%, compared to the same period in 2016. The net sales decrease was primarily attributable to a decline in volume.~~

Adjusted EBITDA increased $1.2 million, or 7.3%, compared to the same period in 2016. The decrease in net sales was more than offset by cost of products sold decreasing at a faster rate than net sales. The increase in Adjusted EBITDA was also attributable to a $1.0 million decrease in selling and administrative expenses, primarily driven by decreased personnel expenses.

~~Corporate & Other~~

~~The table below presents selected data for Corporate & Other:~~

Three Months Ended September 30, 2017 vs. 2016 Nine Months Ended September 30, 2017 vs. 2016
(in millions) 2017 2016 Increase (Decrease) % 2017 2016 Increase (Decrease) %
Net sales $ 37.3
$ 31.2
19.6 % $ 107.1
$ 87.0
23.1 %
Adjusted EBITDA (46.9 ) (42.0 ) (11.7 )% (137.8 ) (129.7 ) (6.2 )%

~~Comparison of the Three Months Ended September 30, 2017 and September 30, 2016~~

~~Net sales increased $6.1 million, or 19.6%, compared to the same period in 2016. The net sales increase was primarily attributable to an increase in freight brokerage services.~~

Adjusted EBITDA decreased $4.9 million compared to the same period in 2016. The increase in net sales was more than offset by (i) a $5.3 million increase in selling and administrative expenses and (ii) cost of products sold increasing at a faster rate than net sales. The increase in selling and administrative expenses was primarily driven by a ~~$5.0~~$6.3 million increase in personnel expenses, ~~primarily~~due to increased commission expense and wages and benefits expense, partially offset by a $2.0 million decrease in bad debt expense and a $1.7 million decrease related to the ~~commission advance recovery in 2016, as discussed above.~~divestiture of the Canadian business.

Comparison of the Nine Months Ended September 30, ~~2017~~2022 and September 30, ~~2016~~2021

Net sales increased ~~$20.1~~$310.5 million, or ~~23.1%~~20.8%, as compared to the same period in ~~2016.~~2021. Organic sales increased $378.7 million, or 27.9%, for the nine months ended September 30, 2022. The net sales increase was primarily attributable to ~~an increase~~higher market prices driven by demand outpacing supply as compared to the first half of 2021 when there was a significant negative impact on demand due to COVID-19, partially offset by decreased sales volume as well as volume declines associated with the divestiture of the Canadian business. Domestic market demand for coated and uncoated paper grades outpaced both domestic and international supply during the first nine months of 2022. The decrease in ~~freight brokerage services.~~

net sales resulting from the divestiture of the Canadian business for the nine months ended September 30, 2022 was $54.4 million.

Table of ~~Contents~~Conte n t s

Adjusted EBITDA ~~decreased $8.1~~increased $109.3 million, or 155.9%, as compared to the same period in ~~2016.~~2021. The Adjusted EBITDA increase ~~in net sales and a $2.3 million decrease in distribution expenses were more than offset by~~was primarily attributable to (i) cost of products sold increasing at a ~~faster~~slower rate than net sales, (ii) higher net sales and ~~(ii)~~(iii) an $8.4 million decrease in distribution expenses, partially offset by a ~~$7.5~~$13.1 million increase in selling and administrative ~~costs.~~expenses. The decrease in distribution expenses was primarily driven by (i) a $6.4 million decrease in facility rent expense and (ii) a $4.2 million decrease related to the divestiture of the Canadian business, partially offset by a $2.8 million increase in freight and logistics expense. The increase in selling and administrative ~~costs~~expenses was primarily driven by ~~(i)~~ a ~~$5.5~~$15.6 million increase in personnel expenses, due to increased commission expense and wages and benefits expense, partially offset by a $2.1 million decrease related to the divestiture of the Canadian business.

Corporate & Other


	Three Months Ended September 30,				Increase (Decrease)				Nine Months Ended September 30,				Increase (Decrease)
(in millions)	2022		2021		$		%		2022		2021		$		%
Net sales	$	19.3	$	29.3	$	(10.0)	(34.1)	%	$	78.4	$	86.5	$	(8.1)	(9.4)	%
Adjusted EBITDA	(53.7)		(57.2)		3.5		6.1	%	(148.2)		(159.1)		10.9		6.9	%

Comparison of the Three Months Ended September 30, 2022 and September 30, 2021

Net sales decreased $10.0 million, or 34.1%, as compared to the same period in 2021. The net sales decrease was driven by the divestiture of the logistics solutions business.

Adjusted EBITDA increased $3.5 million, or 6.1%, as compared to the same period in 2021. The Adjusted EBITDA increase was primarily driven by a $4.9 million decrease in selling and administrative expenses. The decrease in selling and administrative expenses was primarily due to (i) a $4.2 million decrease related to the divestiture of the Canadian business and (ii) a ~~$1.3~~$4.1 million decrease in personnel expenses, partially offset by (i) a $2.4 million increase in ~~insurance~~marketing and communications expense and (ii) a $2.1 million increase in legal expense. The ~~increase~~decrease in personnel expenses was primarily ~~driven by~~due to lower ~~commission~~wages and lower incentive compensation expense, ~~in 2016 as a result of the commission advance recovery and increased headcount to support the Company's growth strategy,~~ partially offset by an increase in travel and entertainment expenses.

Comparison of the Nine Months Ended September 30, 2022 and September 30, 2021

Net sales decreased $8.1 million, or 9.4%, as compared to the same period in 2021. The net sales decrease was driven by the divestiture of the logistics solutions business.

Adjusted EBITDA increased $10.9 million, or 6.9%. The Adjusted EBITDA increase was primarily driven by (i) a $6.5 million decrease in selling and administrative expenses, (ii) a $6.6 million decrease related to the divestiture of the Canadian business and (iii) cost of products sold decreasing at a faster rate than net sales, partially offset by lower net sales resulting from the divestiture of the logistics solutions business. The decrease in selling and administrative expenses was primarily due to lower wages and lower incentive compensation ~~as discussed above.~~expense, partially offset by an increase in travel and entertainment expenses.

Liquidity and Capital Resources

The cash requirements of the Company are primarily provided by cash flows from operations and borrowings under the ABL Facility. See Note 5 of the Notes to Condensed Consolidated Financial Statements for additional information regarding the Company's debt position.

Table of Conte n t s

The following table sets forth a summary of cash flows:


	Nine Months Ended September 30,
(in millions)	2022		2021
Net cash provided by (used for):
Operating activities	$	158.9	$	91.6
Investing activities	143.4		1.7
Financing activities	(316.5)		(170.1)

Nine Months Ended September 30,
(in millions) 2017 2016
Net cash provided by (used for):
Operating activities $ (17.7 ) $ 59.9
Investing activities (147.7 ) (24.7 )
Financing activities 171.2
(30.4 )
Analysis of Cash Flows

Operating Activities

Net cash ~~provided by~~from operating activities ~~decreased~~was higher by ~~$77.6~~$67.3 million compared to the prior year. Most of the decrease resulted from the decline in operating results and increase in working capital. The increase in working capital was primarily due to increases in accounts receivable and inventories which more than offset an increase in accounts payable. These increases were due to increases in the number of days sales in accounts receivable and the number of days of inventory on hand, which more than offset an increase in the number of days of accounts payable on hand.

~~Investing Activities~~

Net cash used for investing activities increased by $123.0 million compared to the prior year primarily due to the acquisition of AAC in the third quarter of 2017. Proceeds from asset sales increased in 2017 due to $9.1 million received from the sale of the Austin, Texas facility in May 2017 and $11.4 million received from the sale of the Hensall facility in Canada in July 2017. See ~~Note 5, Debt and Other Obligations~~ ~~for additional information regarding the Company's debt position.~~

~~Financing Activities~~

~~Net cash provided by financing activities increased by $201.6 million~~as compared to the prior year. The increase was ~~used~~ primarily ~~for the purchase of AAC. Also, in the first quarter of 2017, the Company made a payment against the TRA contingent liability. In addition, the Company experienced a change in book overdrafts~~ due to the ~~timing~~Company's improved operating results, partially offset by a $41.5 million increase for cash paid for income taxes, net of ~~payments. In 2016~~refunds, the payment of $10.1 million of payroll taxes, which were previously deferred under the CARES Act, and increased payments for performance incentives, which were driven by improved operating results. The remaining changes in the Company's operating assets and liabilities were driven by revenue growth and other normal business activities.

Investing Activities

Net cash ~~provided by operating~~from investing activities was higher by $141.7 million as compared to the prior year. The increase was primarily due to the net cash proceeds received in the current year period from the sale of (i) the logistics solutions business totaling approximately $18.3 million and (ii) the Canadian business totaling approximately $147.4 million, less cash transferred of $8.5 million, exceeding the proceeds received in the prior year period from the sale of (i) the Rollsource business totaling approximately $8.2 million and (ii) two facilities totaling approximately $6.5 million. Additionally, the Company's higher capital expenditures in the current year period were partially offset by the current year receipt of $3.3 million in insurance proceeds, which represented coverage for the structural damage sustained to one of its properties in the prior year.

Financing Activities

Net cash used for financing activities was an increased use of cash by $146.4 million as compared to ~~pay down~~ the ~~borrowings~~prior year. The increased usage was primarily due to increased common stock repurchases, increased tax withholdings on share-based compensation and increased net repayments under the Company's ABL Facility. During the nine months ended September 30, 2022, the Company repurchased 1,564,420 shares of its common stock at a cost of $200.0 million under its 2022 Share Repurchase Program. During the nine months ended September 30, 2021, the Company repurchased 1,734,810 shares of its common stock at a cost of $100.0 million under its 2021 Share Repurchase Program. Additionally, during the nine months ended September 30, 2021, in conjunction with the amendment of the ABL ~~Facility.~~Facility, the Company incurred and deferred $3.3 million in new financing fees.

Funding and Liquidity Strategy

~~On August 11, 2016,~~In 2021, the Company amended its ABL Facility to ~~among other things,~~ extend the maturity date to ~~August 11, 2021.~~May 20, 2026, adjust the pricing grid for applicable interest rates and update certain provisions to facilitate the transition from LIBOR to a new replacement benchmark rate. All other significant terms remained ~~consistent. See~~ ~~Note 5, Debt and Other Obligations, for additional information regarding~~substantially the same. The Company's ~~debt position.~~one interest rate cap agreement, which was related to the ABL Facility, expired on September 13, 2022.

The ABL Facility has a springing minimum fixed charge coverage ratio of at least 1.00 to 1.00 on a trailing four-quarter basis, which will be tested only when specified availability is less than the limits outlined under the ABL Facility. At September 30, ~~2017,~~2022, the above test was not applicable and based on information available as of the date of this report it is not expected to be applicable in the next 12 months.

Veritiv's management expects that the Company's primary future cash needs will be for working capital, capital expenditures, contractual commitments and strategic investments. Veritiv's ability to fund its capital and operating needs will

Table of Conte n t s

depend on its ongoing ability to generate cash from operations, availability of borrowings under the ABL Facility and ~~funds received from~~access to the capital ~~market offerings.~~markets. If Veritiv's cash flows from operating activities are lower than expected, the Company ~~will~~would need to borrow under the ABL Facility and may need to incur additional debt or issue additional equity. Although management believes that the arrangements currently in place will permit Veritiv to finance its

~~Table of Contents~~

~~operations~~ capital and operating needs on acceptable terms and conditions, the ~~Company’s~~Company's access to, and the availability of, financing on acceptable terms and conditions in the future will be impacted by many factors, including the liquidity of the overall capital markets and the current state of the economy.

~~Veritiv's management expects~~The Company currently estimates that ~~the Company's primary future cash needs~~during 2022 it will bespend approximately $30 million for ~~working capital,~~ capital expenditures ~~contractual commitments~~covering both maintenance and strategic investments. ~~Additionally, management expects that cash~~As provided by ~~operating activities~~the CARES Act, in response to the COVID-19 pandemic the Company deferred $19.1 million of payroll taxes, which it had incurred through December 31, 2020. In January 2022 the Company paid $10.1 million of the deferred payroll taxes and ~~available capacity under~~currently expects to pay the ~~ABL Facility will provide sufficient funds~~remaining amount in January 2023. See Note 3 of the Notes to ~~operate~~Condensed Consolidated Financial Statements for information regarding the ~~business and meet other liquidity needs.~~

~~Off-Balance Sheet Arrangements~~

~~Veritiv does not have any off-balance sheet arrangements as of September 30, 2017, other than operating~~Company's lease ~~obligations and the letters of credit under the ABL Facility. The Company does not have any off-balance sheet arrangements~~commitments, including leases that have ornot yet commenced, if any. See Note 5 of the Notes to Condensed Consolidated Financial Statements for information regarding the Company's use of vendor-based financing arrangements, if any. See Note 13 of the Notes to Condensed Consolidated Financial Statements for information regarding cash proceeds from the Company's divestitures.

Inflation and Changing Prices

Essentially all of the Company's revenue is derived from the sale of its products and services in competitive markets. To the extent feasible, the Company has adjusted its prices to reflect the impact of inflation on the cost of purchased materials and services. Impacts on the Company's results from price and product mix are ~~reasonably likely to have a material current or future effect on its financial condition, revenues or expenses, results~~discussed in the "Segment Results" section of ~~operations, liquidity, capital expenditures or capital resources.~~this Item 2.

~~Contractual Obligations~~Critical Accounting Estimates

There have been no material changes to the Company's ~~contractual obligations~~critical accounting estimate methodologies from those disclosed in Veritiv's Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2021. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, actual results may ultimately differ from these estimates and assumptions, particularly in light of the COVID-19 pandemic and its effects on the domestic and global economies. Estimates are revised as ~~adjusted~~additional information becomes available. See the "Use of Estimates" section of Note 1 of the Notes to Condensed Consolidated Financial Statements for ~~obligations resulting from the acquisition of AAC (see~~ ~~Note 2, 2017 Acquisition~~)

~~Critical Accounting Policies and Estimates~~

~~There have been no material changes to~~additional information regarding the Company's ~~critical accounting policies and estimates from those disclosed in Veritiv's Annual Report on Form 10-K for the year ended December 31, 2016.~~estimates.

Recently Issued Accounting Standards

See Note 1 ~~Business and Summary~~ of ~~Significant Accounting Policies,~~the Notes to ~~the~~ Condensed Consolidated Financial Statements for information regarding recently issued accounting standards.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in market risk from the information provided in Item 7A "Quantitative and Qualitative Disclosures about Market Risk" of the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2021.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The ~~Company’s~~Company's management has carried out an evaluation, with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the ~~Company’s~~Company's disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended. Based upon such evaluation, management has concluded that the ~~Company’s~~Company's disclosure controls and procedures were effective as of September 30, ~~2017.~~2022.

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Changes in Internal Control over Financial Reporting

There have been no changes in the Company's internal control over financial reporting that occurred during the quarter ended September 30, ~~2017~~2022 that ~~has~~have materially affected, or isare reasonably likely to materially affect, the Company's internal control over financial reporting. During the third quarter of 2017, the Company completed the acquisition of AAC. As permitted by SEC staff interpretive guidance that an assessment of a recently acquired business may be omitted from the scope of evaluation in the year of acquisition, management excluded AAC from its interim evaluation of internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to Note ~~12, Commitments and Contingencies,~~11 of the Notes to ~~the~~ Condensed Consolidated Financial Statements.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On March 1, 2022, Veritiv announced that its Board of Directors authorized a $200 million share repurchase program (the "2022 Share Repurchase Program"). The 2022 Share Repurchase Program authorizes the Company, from time to time, to purchase shares of its common stock through open market transactions, privately negotiated transactions, forward, derivative or accelerated repurchase transactions, tender offers or otherwise, including Rule 10b5-1 trading plans, in accordance with all applicable securities laws and regulations. The timing and method of any repurchases, which will depend on a variety of market factors, including market conditions, are subject to results of operations, financial conditions, cash requirements and other factors. This authorization may be suspended, terminated, increased or decreased by the Board of Directors at any time. During the third quarter of 2022, the Company completed its repurchases under the 2022 Share Repurchase Program bringing the total purchases to $200 million, the authorized repurchase limit.

The following table presents information with respect to purchases made by the Company of its common stock during the three months ended September 30, 2022 (shares are in whole units):


Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share	Total Number of Shares Purchased as Part of the Publicly Announced Program (2)	Approximate Dollar Value of Shares that May Yet be Purchased Under the Publicly Announced Program






July 1-31	281,471	$110.26	277,723	64,583,884
August 1-31	302,793	$132.19	302,793	24,559,030
September 1-30	207,234	$118.36	207,234	31,330

(1) The total number of shares purchased includes: (i) shares purchased pursuant to the 2022 Share Repurchase Program (if any) and (ii) shares surrendered to the

Company to satisfy tax withholding obligations in connection with the vesting of stock units issued as part of the Company's equity-based incentive plans.

(2)This column discloses the number of shares purchased pursuant to the 2022 Share Repurchase Program during the indicated periods.

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ITEM 6. EXHIBITS


Exhibit No.		Description

~~Exhibit No.~~31.1*		~~Description~~

31.1*	Rule 13a-14(a) Certification of the Chief Executive Officer.

31.2*		Rule 13a-14(a) Certification of the Chief Financial Officer.

32.1*		Section 1350 Certification of the Chief Executive Officer.

32.2*		Section 1350 Certification of the Chief Financial Officer.

101.INS*		XBRL Instance ~~Document.~~Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*		Inline XBRL Taxonomy Extension Schema Document.

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)


* Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			VERITIV CORPORATION
			(Registrant)

Date:		November 8, 2022	~~VERITIV CORPORATION~~
		~~(Registrant)~~

~~Date:~~	~~November 7, 2017~~	By: /s/ Stephen J. Smith
			Name: Stephen J. Smith
			Title: Senior Vice President and Chief Financial Officer
			(Principal Financial Officer)

Date:		November ~~7, 2017~~8, 2022	By: /s/ ~~W. Forrest Bell~~Lance D. Gebert
			Name: ~~W. Forrest Bell~~Lance D. Gebert
			Title: ~~Chief Accounting Officer~~Corporate Controller
			(Principal Accounting Officer)



Delaware		46-3234977
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

1000 Abernathy Road NE
Building 400, Suite 1700
Atlanta, ~~Georgia~~	Georgia	30328
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	VRTV	New York Stock Exchange



Large accelerated filer	☐☒	Accelerated filer	☒☐
Non-accelerated filer	☐~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐
		Emerging growth company	☐


		Page
Part I: FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, ~~2017~~2022 and ~~2016~~2021	1
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended ~~September~~S eptember 30, ~~2017~~2022 and ~~2016~~2021	2
	Condensed Consolidated Balance Sheets as of September 30, ~~2017~~2022 and December 31, ~~2016~~2021	3
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2017~~2022 and ~~2016~~2021	4
	Condensed Consolidated Statements of Shareholders' Equity for the three and nine months ended September 30, 2022 and 2021	5
	Notes to Condensed Consolidated Financial Statements	57
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3540
Item 4.	Controls and Procedures	3540

Part II: OTHER INFORMATION
Item 1.	Legal Proceedings	3641
Item 1A.	Risk Factors	3641
Item 6.2.	~~Exhibits~~Unregistered Sales of Equity Securities and Use of Proceeds	3641
~~SIGNATURES~~Item 6.	37Exhibits	42
SIGNATURES		43



	Three Months Ended September 30,					Nine Months Ended September 30,
	2017			2016		2017			2016
Net sales (including sales to related party of $8.6, $8.5, $24.9 and $26.6, respectively)	$	2,116.8		$	2,126.6	$	6,140.3		$	6,207.2
Cost of products sold (including purchases from related party of $45.7, $71.4, $138.0 and $174.3, respectively) (exclusive of depreciation and amortization shown separately below)	1,736.6			1,743.8		5,026.4			5,086.2
Distribution expenses	132.0			126.0		380.9			375.2
Selling and administrative expenses	228.7			207.3		650.4			615.9
Depreciation and amortization	13.1			13.4		39.9			40.5
Acquisition and integration expenses	14.2			7.3		28.1			19.6
Restructuring charges	2.7			5.8		30.0			7.2
Operating income (loss)	(10.5		)	23.0		(15.4		)	62.6
Interest expense, net	8.3			8.2		22.1			21.1
Other expense, net	(0.5		)	1.2		1.2			6.3
Income (loss) before income taxes	(18.3		)	13.6		(38.7		)	35.2
Income tax expense (benefit)	(4.0		)	8.0		(13.1		)	18.4
Net income (loss)	$	(14.3	)	$	5.6	$	(25.6	)	$	16.8

Earnings (loss) per share:
Basic earnings (loss) per share	$	(0.91	)	$	0.35	$	(1.63	)	$	1.05
Diluted earnings (loss) per share	$	(0.91	)	$	0.34	$	(1.63	)	$	1.04

Weighted average shares outstanding:
Basic	15.70			16.00		15.70			16.00
Diluted	15.70			16.27		15.70			16.05



	September 30, 2017			December 31, 2016
Assets
Current assets:
Cash	$	76.5		$	69.6
Accounts receivable, less allowances of $45.2 and $34.5, respectively	1,165.1			1,048.3
Related party receivable	3.8			3.9
Inventories	772.6			707.9
Other current assets	134.7			118.9
Total current assets	2,152.7			1,948.6
Property and equipment (net of depreciation and amortization of $317.9 and $292.8, respectively)	341.5			371.8
Goodwill	105.3			50.2
Other intangibles, net	68.3			21.0
Deferred income tax assets	76.3			61.8
Other non-current assets	31.0			30.3
Total assets	$	2,775.1		$	2,483.7
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	696.3		$	654.1
Related party payable	11.2			9.0
Accrued payroll and benefits	61.5			84.4
Other accrued liabilities	130.1			102.5
Current maturities of long-term debt	1.8			2.9
Financing obligations, current portion (including obligations to related party of $10.4 and $14.9, respectively)	11.1			14.9
Total current liabilities	912.0			867.8
Long-term debt, net of current maturities	972.0			749.2
Financing obligations, less current portion (including obligations to related party of $155.2 and $176.1, respectively)	181.9			176.1
Defined benefit pension obligations	25.3			27.6
Other non-current liabilities	148.2			121.2
Total liabilities	2,239.4			1,941.9
Commitments and contingencies (Note 12)
Shareholders' equity:
Preferred stock, $0.01 par value, 10.0 million shares authorized, none issued	—			—
Common stock, $0.01 par value, 100.0 million shares authorized, 16.0 million shares issued; shares outstanding - 15.7 million at September 30, 2017 and December 31, 2016 respectively	0.2			0.2
Additional paid-in capital	586.1			574.5
Accumulated earnings (deficit)	(5.9		)	19.7
Accumulated other comprehensive loss	(31.1		)	(39.0		)
Treasury stock at cost - 0.3 million shares at September 30, 2017 and December 31, 2016	(13.6		)	(13.6		)
Total shareholders' equity	535.7			541.8
Total liabilities and shareholders' equity	$	2,775.1		$	2,483.7



	(in millions)
Cash consideration	$	112.0
Repayment of loans	34.3
Contingent consideration: Earn-out	30.0
Contingent bonus tax payment	0.3
Total preliminary estimated purchase price	$	176.6



(Unaudited)	Three Months Ended September 30,					Nine Months Ended September 30,
(in millions, except share and per share data)	2017			2016		2017			2016
Net sales	$	2,157.8		$	2,181.9	$	6,303.2		$	6,378.3
Net income (loss)	(11.3		)	5.4		(21.5		)	12.0
Earnings (loss) per share:
Basic earnings (loss) per share	$	(0.72	)	$	0.34	$	(1.37	)	$	0.75
Diluted earnings (loss) per share	$	(0.72	)	$	0.33	$	(1.37	)	$	0.75
Weighted-average shares outstanding
Basic	15.70			16.00		15.70			16.00
Diluted	15.70			16.27		15.70			16.05



	Gross Value (in millions)		Estimated Useful Life (in years)
Customer relationships	$	43.5	10
Trademarks/Trade names	5.1		5
Non-compete agreements	2.6		2
Total identifiable intangible assets acquired	$	51.2



	Nine Months Ended September 30, 2017						Nine Months Ended September 30, 2016
(in millions)	U.S.			Canada			U.S.			Canada
Components of net periodic benefit cost (credit):
Service cost	$	1.5		$	0.2		$	1.3		$	0.2
Interest cost	2.0			2.1			2.5			2.4
Expected return on plan assets	(3.8		)	(2.8		)	(3.8		)	(2.7		)
Amortization of net loss	0.1			0.1			0.1			0.1
Net periodic benefit cost (credit)	$	(0.2	)	$	(0.4	)	$	0.1		$	0.0



(in millions)	Total		Level 1	Level 2		Level 3
ABL Facility	$	969.3		$	969.3
Tax Receivable Agreement	61.0					61.0
Contingent Consideration: Earn-out	30.0					30.0



(in millions)	TRA Contingent Liability
Balance at December 31, 2016	$	67.9
Change in fair value adjustment recorded in other expense, net	0.9
Principal payment	(8.5		)
Balance at March 31, 2017	60.3
Change in fair value adjustment recorded in other expense, net	1.1
Balance at June 30, 2017	61.4
Change in fair value adjustment recorded in other expense, net	(0.4		)
Balance at September 30, 2017	$	61.0



(in millions)	TRA Contingent Liability
Balance at December 31, 2015	$	63.0
Change in fair value adjustment recorded in other expense, net	1.8
Balance at March 31, 2016	64.8
Change in fair value adjustment recorded in other expense, net	2.0
Balance at June 30, 2016	66.8
Change in fair value adjustment recorded in other expense, net	1.0
Balance at September 30, 2016	$	67.8



	Three Months Ended September 30,						2017 vs. 2016		Nine Months Ended September 30,						2017 vs. 2016
(in millions)	2017			2016			Increase (Decrease) %		2017			2016			Increase (Decrease) %
Net sales	$	799.6		$	730.1		9.5	%	$	2,266.0		$	2,106.4		7.6	%
Adjusted EBITDA	62.1			59.5			4.4	%	166.7			165.4			0.8	%
Adjusted EBITDA as a % of net sales	7.8		%	8.1		%			7.4		%	7.9		%