UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2020~~2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________

Commission file number 001-36479

VERITIV CORPORATION

(Exact name of registrant as specified in its charter)

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

30328

(Address of principal executive offices)

(Zip Code)

(770) 391-8200

(Registrant's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated ~~filer",~~filer," "accelerated ~~filer",~~filer," "smaller reporting ~~company",~~company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant's common stock as of April 30, ~~2020~~2021 was ~~15,866,822.~~15,664,599.

TABLE OF CONTENTS


		Page
Part I: FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Statements of Operations for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020	1
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020	2
	Condensed Consolidated Balance Sheets as of March 31, ~~2020~~2021 and December 31, ~~2019~~2020	3
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020	4
	Condensed Consolidated Statements of Shareholders' Equity for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2419
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3631
Item 4.	Controls and Procedures	3631

Part II: OTHER INFORMATION
Item 1.	Legal Proceedings	3733
Item 1A.	Risk Factors	3733
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3733
Item 6.	Exhibits	3934
SIGNATURES			4035

Table of Contents

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 March 31,							Three Months Ended March 31,
		2020		2019			2021		2020
Net sales (including sales to related party of $5.6 and $6.4, respectively)		$	1,707.3	$	1,941.5
Cost of products sold (including purchases from related party of $18.8 and $24.8, respectively) (exclusive of depreciation and amortization shown separately below)		1,359.6		1,591.4
Net sales (including sales to related party of $5.6 in 2020)						Net sales (including sales to related party of $5.6 in 2020)	$	1,559.3	$	1,707.3
Cost of products sold (including purchases from related party of $18.8 in 2020) (exclusive of depreciation and amortization shown separately below)						Cost of products sold (including purchases from related party of $18.8 in 2020) (exclusive of depreciation and amortization shown separately below)	1,238.1		1,359.6
Distribution expenses	Distribution expenses	123.4		130.4		Distribution expenses	101.5		123.4
Selling and administrative expenses	Selling and administrative expenses	203.6		216.1		Selling and administrative expenses	166.4		203.6
Depreciation and amortization	Depreciation and amortization	13.8		12.8		Depreciation and amortization	14.5		13.8
Integration expenses		—		4.3

Restructuring charges, net	Restructuring charges, net	—		2.4		Restructuring charges, net	4.3		0
Operating income (loss)	Operating income (loss)	6.9		(15.9)		Operating income (loss)	34.5		6.9
Interest expense, net	Interest expense, net	7.0		11.4		Interest expense, net	5.1		7.0
Other (income) expense, net	Other (income) expense, net	(0.1)		6.2		Other (income) expense, net	(1.0)		(0.1)
Income (loss) before income taxes	Income (loss) before income taxes	0.0		(33.5)		Income (loss) before income taxes	30.4		0.0
Income tax expense (benefit)	Income tax expense (benefit)	0.4		(6.8)		Income tax expense (benefit)	9.1		0.4

Net income (loss)	Net income (loss)	$	(0.4)	$	(26.7)	Net income (loss)	$	21.3	$	(0.4)

Earnings (loss) per share:	Earnings (loss) per share:					Earnings (loss) per share:

Basic and diluted earnings (loss) per share		$	(0.02)	$	(1.68)
Basic earnings (loss) per share						Basic earnings (loss) per share	$	1.34	$	(0.02)

Diluted earnings (loss) per share						Diluted earnings (loss) per share	$	1.28	$	(0.02)

Weighted-average shares outstanding:	Weighted-average shares outstanding:					Weighted-average shares outstanding:
Basic and diluted		16.16		15.94

Basic						Basic	15.88		16.16
Diluted						Diluted	16.66		16.16

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

VERITIV CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions, unaudited)


		Three Months Ended March 31,							Three Months Ended March 31,
		2020		2019			2021		2020
Net income (loss)	Net income (loss)	$	(0.4)	$	(26.7)	Net income (loss)	$	21.3	$	(0.4)
Other comprehensive income (loss):	Other comprehensive income (loss):					Other comprehensive income (loss):
Foreign currency translation adjustments	Foreign currency translation adjustments	(14.0)		2.4		Foreign currency translation adjustments	(0.3)		(14.0)
Change in fair value of cash flow hedge, net of $0.0 and $(0.1) tax, respectively		0.0		0.1

Change in fair value of cash flow hedge, net of tax (1)						Change in fair value of cash flow hedge, net of tax (1)	0.0		0.0
Pension liability adjustments, net of tax (1)						Pension liability adjustments, net of tax (1)	0.0		0.0
Other comprehensive income (loss)	Other comprehensive income (loss)	(14.0)		2.5		Other comprehensive income (loss)	(0.3)		(14.0)
Total comprehensive income (loss)	Total comprehensive income (loss)	$	(14.4)	$	(24.2)	Total comprehensive income (loss)	$	21.0	$	(14.4)

(1) Amounts shown are net of tax impacts, which were not significant for the periods presented.

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

VERITIV CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in millions, except par value, unaudited)


		March 31, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash		$	74.6	$	38.0
Accounts receivable, less allowances of $44.2 and $43.8, respectively		915.4		910.8
Related party receivable		3.3		2.8
Cash and cash equivalents						Cash and cash equivalents	$	109.0	$	120.6
Accounts receivable, less allowances of $41.1 and $41.6, respectively						Accounts receivable, less allowances of $41.1 and $41.6, respectively	853.3		849.5

Inventories	Inventories	505.2		552.9		Inventories	493.5		465.4

Other current assets	Other current assets	118.4		126.1		Other current assets	118.2		119.5

Total current assets	Total current assets	1,616.9		1,630.6		Total current assets	1,574.0		1,555.0
Property and equipment (net of accumulated depreciation and amortization of $350.6 and $342.6, respectively)		215.8		216.9
Property and equipment (net of accumulated depreciation and amortization of $382.4 and $375.9, respectively)						Property and equipment (net of accumulated depreciation and amortization of $382.4 and $375.9, respectively)	182.9		194.7
Goodwill	Goodwill	99.6		99.6		Goodwill	99.6		99.6
Other intangibles, net	Other intangibles, net	51.0		52.2		Other intangibles, net	46.3		47.4
Deferred income tax assets	Deferred income tax assets	50.9		57.0		Deferred income tax assets	56.9		60.0
Other non-current assets	Other non-current assets	438.0		454.8		Other non-current assets	369.0		378.3
Total assets	Total assets	$	2,472.2	$	2,511.1	Total assets	$	2,328.7	$	2,335.0
Liabilities and shareholders' equity	Liabilities and shareholders' equity					Liabilities and shareholders' equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	494.8	$	476.9	Accounts payable	$	513.4	$	471.9
Related party payable		5.2		4.3

Accrued payroll and benefits	Accrued payroll and benefits	40.2		53.9		Accrued payroll and benefits	50.8		80.6

Other accrued liabilities	Other accrued liabilities	168.7		183.8		Other accrued liabilities	167.5		182.2
Current portion of debt	Current portion of debt	14.3		12.6		Current portion of debt	14.9		14.7

Total current liabilities	Total current liabilities	723.2		731.5		Total current liabilities	746.6		749.4
Long-term debt, net of current portion	Long-term debt, net of current portion	740.1		742.4		Long-term debt, net of current portion	600.7		589.1

Defined benefit pension obligations	Defined benefit pension obligations	14.4		15.7		Defined benefit pension obligations	17.6		18.2

Other non-current liabilities	Other non-current liabilities	467.7		485.3		Other non-current liabilities	386.4		395.2
Total liabilities	Total liabilities	1,945.4		1,974.9		Total liabilities	1,751.3		1,751.9
Commitments and contingencies (Note 12)	Commitments and contingencies (Note 12)					Commitments and contingencies (Note 12)			00
Shareholders' equity:	Shareholders' equity:					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 - 16.5 million and 16.4 million, respectively; shares outstanding - 15.8 million and 16.1 million, respectively		0.2		0.2
Preferred stock, $0.01 par value, 10.0 million shares authorized, NaN issued						Preferred stock, $0.01 par value, 10.0 million shares authorized, NaN issued	0		0
Common stock, $0.01 par value, 100.0 million shares authorized; shares issued - 16.8 million and 16.6 million, respectively; shares outstanding - 15.5 million and 15.9 million, respectively						Common stock, $0.01 par value, 100.0 million shares authorized; shares issued - 16.8 million and 16.6 million, respectively; shares outstanding - 15.5 million and 15.9 million, respectively	0.2		0.2
Additional paid-in capital	Additional paid-in capital	626.8		618.0		Additional paid-in capital	632.8		634.9
Accumulated (deficit) earnings		(36.0)		(35.3)
Accumulated earnings (deficit)						Accumulated earnings (deficit)	19.9		(1.4)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(47.1)		(33.1)		Accumulated other comprehensive loss	(33.8)		(33.5)
Treasury stock at cost - 0.7 million shares in 2020 and 0.3 million shares in 2019		(17.1)		(13.6)
Treasury stock at cost - 1.3 million shares in 2021 and 0.7 million shares in 2020						Treasury stock at cost - 1.3 million shares in 2021 and 0.7 million shares in 2020	(41.7)		(17.1)
Total shareholders' equity	Total shareholders' equity	526.8		536.2		Total shareholders' equity	577.4		583.1

Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	2,472.2	$	2,511.1	Total liabilities and shareholders' equity	$	2,328.7	$	2,335.0

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

VERITIV CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions, unaudited)


		Three Months Ended March 31,							Three Months Ended March 31,
		2020		2019			2021		2020
Operating activities	Operating activities					Operating activities
Net income (loss)	Net income (loss)	$	(0.4)	$	(26.7)	Net income (loss)	$	21.3	$	(0.4)

Depreciation and amortization	Depreciation and amortization	13.8		12.8		Depreciation and amortization	14.5		13.8
Amortization of deferred financing fees		0.6		0.6
Amortization and write-off of deferred financing fees						Amortization and write-off of deferred financing fees	0.3		0.6

Net losses (gains) on dispositions of property and equipment		0.1		0.1
Net losses (gains) on disposition of assets and sale of a business						Net losses (gains) on disposition of assets and sale of a business	(2.2)		0.1

Provision for expected credit losses and doubtful accounts, respectively		4.4		3.8
Provision for expected credit losses						Provision for expected credit losses	0.9		4.4
Deferred income tax provision (benefit)	Deferred income tax provision (benefit)	5.2		(7.3)		Deferred income tax provision (benefit)	3.1		5.2
Stock-based compensation	Stock-based compensation	9.4		4.7		Stock-based compensation	1.2		9.4
Other non-cash items, net	Other non-cash items, net	2.6		1.8		Other non-cash items, net	0.8		2.6
Changes in operating assets and liabilities	Changes in operating assets and liabilities					Changes in operating assets and liabilities
Accounts receivable and related party receivable	Accounts receivable and related party receivable	(19.6)		118.3		Accounts receivable and related party receivable	(10.3)		(19.6)
Inventories	Inventories	38.5		8.6		Inventories	(30.7)		38.5
Other current assets	Other current assets	1.2		6.2		Other current assets	1.7		1.2
Accounts payable and related party payable	Accounts payable and related party payable	50.9		(57.8)		Accounts payable and related party payable	54.3		50.9
Accrued payroll and benefits	Accrued payroll and benefits	(13.2)		(21.5)		Accrued payroll and benefits	(29.8)		(13.2)
Other accrued liabilities	Other accrued liabilities	(8.8)		(6.4)		Other accrued liabilities	(10.9)		(8.8)
Other	Other	0.1		6.6		Other	(1.0)		0.1

Net cash provided by (used for) operating activities	Net cash provided by (used for) operating activities	84.8		43.8		Net cash provided by (used for) operating activities	13.2		84.8
Investing activities	Investing activities					Investing activities

Property and equipment additions	Property and equipment additions	(8.9)		(7.5)		Property and equipment additions	(6.3)		(8.9)
Proceeds from asset sales		0.7		0.1
Proceeds from asset sales and sale of a business						Proceeds from asset sales and sale of a business	8.0		0.7

Net cash provided by (used for) investing activities	Net cash provided by (used for) investing activities	(8.2)		(7.4)		Net cash provided by (used for) investing activities	1.7		(8.2)
Financing activities	Financing activities					Financing activities

Change in book overdrafts	Change in book overdrafts	(24.7)		17.1		Change in book overdrafts	(9.2)		(24.7)

Borrowings of long-term debt	Borrowings of long-term debt	1,479.8		1,767.9		Borrowings of long-term debt	1,392.8		1,479.8
Repayments of long-term debt	Repayments of long-term debt	(1,483.6)		(1,815.2)		Repayments of long-term debt	(1,378.9)		(1,483.6)
Payments under right-of-use finance leases	Payments under right-of-use finance leases	(2.9)		(2.1)		Payments under right-of-use finance leases	(3.3)		(2.9)

Purchase of treasury stock	Purchase of treasury stock	(3.5)		—		Purchase of treasury stock	(24.6)		(3.5)
Payments under Tax Receivable Agreement	Payments under Tax Receivable Agreement	(0.3)		(7.8)		Payments under Tax Receivable Agreement	0		(0.3)
Payments under other contingent consideration	Payments under other contingent consideration	(3.5)		—		Payments under other contingent consideration	0		(3.5)
Other	Other	(0.5)		(2.7)		Other	(2.9)		(0.5)

Net cash provided by (used for) financing activities	Net cash provided by (used for) financing activities	(39.2)		(42.8)		Net cash provided by (used for) financing activities	(26.1)		(39.2)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(0.8)		0.1		Effect of exchange rate changes on cash	(0.4)		(0.8)
Net change in cash		36.6		(6.3)
Cash at beginning of period		38.0		64.3
Cash at end of period		$	74.6	$	58.0
Net change in cash and cash equivalents						Net change in cash and cash equivalents	(11.6)		36.6
Cash and cash equivalents at beginning of period						Cash and cash equivalents at beginning of period	120.6		38.0
Cash and cash equivalents at end of period						Cash and cash equivalents at end of period	$	109.0	$	74.6
Supplemental cash flow information	Supplemental cash flow information					Supplemental cash flow information
Cash paid for income taxes, net of refunds	Cash paid for income taxes, net of refunds	$	0.6	$	0.7	Cash paid for income taxes, net of refunds	$	11.2	$	0.6
Cash paid for interest	Cash paid for interest	6.2		10.6		Cash paid for interest	4.6		6.2
Non-cash investing and financing activities	Non-cash investing and financing activities					Non-cash investing and financing activities

Non-cash additions to property and equipment for right-of-use finance leases	Non-cash additions to property and equipment for right-of-use finance leases	$	11.2	$	2.1	Non-cash additions to property and equipment for right-of-use finance leases	$	0.2	$	11.2
Non-cash additions to other non-current assets for right-of-use operating leases	Non-cash additions to other non-current assets for right-of-use operating leases	10.8		46.4		Non-cash additions to other non-current assets for right-of-use operating leases	11.3		10.8

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

VERITIV CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in millions, unaudited)


		2020																															2021
		Common Stock Issued					Additional Paid-in Capital		Accumulated (Deficit) Earnings		AOCL ⁽¹⁾	Treasury Stock								Total	Common Stock Issued				Additional Paid-in Capital				Accumulated Earnings (Deficit)		AOCL (1)		Treasury Stock				Total
		Shares	Amount											Shares			Amount				Shares		Amount							Shares			Amount
Balance at December 31, 2019		16.4	$	0.2	$	618.0	$	(35.3)	$	(33.1)	(0.3)	$	(13.6)		$	536.2
Balance at December 31, 2020																	Balance at December 31, 2020	16.6	$	0.2	$	634.9	$	(1.4)			$	(33.5)			(0.7)		$	(17.1)	$	583.1
Net income (loss)	Net income (loss)						(0.4)								(0.4)		Net income (loss)						21.3										21.3
Other comprehensive income (loss)	Other comprehensive income (loss)								(14.0)						(14.0)		Other comprehensive income (loss)								(0.3)								(0.3)
Stock-based compensation	Stock-based compensation				9.4										9.4		Stock-based compensation				1.2												1.2
Issuance of common stock, net of stock received for minimum tax withholdings	Issuance of common stock, net of stock received for minimum tax withholdings	0.1	0.0		(0.6)										(0.6)		Issuance of common stock, net of stock received for minimum tax withholdings	0.2	0.0		(3.3)												(3.3)
Adoption impact - Accounting Standards Update 2016-13							(0.3)								(0.3)
Treasury stock											(0.4)	(3.5)			(3.5)
Balance at March 31, 2020		16.5	$	0.2	$	626.8	$	(36.0)	$	(47.1)	(0.7)	$	(17.1)		$	526.8

Treasury stock purchases																	Treasury stock purchases												(0.6)		(24.6)		(24.6)
Balance at March 31, 2021																	Balance at March 31, 2021	16.8	$	0.2	$	632.8	$	19.9	$	(33.8)			(1.3)		$	(41.7)	$	577.4

⁽¹⁾ Accumulated other comprehensive loss.


		2019																															2020
		Common Stock Issued					Additional Paid-in Capital		Accumulated (Deficit) Earnings		AOCL⁽¹⁾	Treasury Stock								Total	Common Stock Issued				Additional Paid-in Capital				Accumulated Earnings (Deficit)		AOCL (1)		Treasury Stock				Total
		Shares	Amount											Shares			Amount				Shares		Amount							Shares			Amount
Balance at December 31, 2018		16.2	$	0.2	$	605.7	$	(8.5)	$	(40.7)	(0.3)	$	(13.6)		$	543.1
Balance at December 31, 2019																	Balance at December 31, 2019	16.4	$	0.2	$	618.0	$	(35.3)			$	(33.1)			(0.3)		$	(13.6)	$	536.2
Net income (loss)	Net income (loss)						(26.7)								(26.7)		Net income (loss)						(0.4)										(0.4)
Other comprehensive income (loss)	Other comprehensive income (loss)								2.5						2.5		Other comprehensive income (loss)								(14.0)								(14.0)
Stock-based compensation	Stock-based compensation				4.7										4.7		Stock-based compensation				9.4												9.4
Issuance of common stock, net of stock received for minimum tax withholdings	Issuance of common stock, net of stock received for minimum tax withholdings	0.2	0.0		(2.7)										(2.7)		Issuance of common stock, net of stock received for minimum tax withholdings	0.1	0.0		(0.6)												(0.6)
Adoption impact - Accounting Standards Update 2016-02							2.7								2.7

Balance at March 31, 2019		16.4	$	0.2	$	607.7	$	(32.5)	$	(38.2)	(0.3)	$	(13.6)		$	523.6
Adoption impact - Accounting Standards Update 2016-13																	Adoption impact - Accounting Standards Update 2016-13						(0.3)										(0.3)
Treasury stock purchases																	Treasury stock purchases												(0.4)		(3.5)		(3.5)
Balance at March 31, 2020																	Balance at March 31, 2020	16.5	$	0.2	$	626.8	$	(36.0)	$	(47.1)			(0.7)		$	(17.1)	$	526.8

⁽¹⁾ Accumulated other comprehensive loss.

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

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 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 ~~150~~125 distribution centers primarily throughout the United States ("U.S."), Canada and Mexico.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted 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 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, ~~2019.~~2020. 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. The operating results for the interim periods are not necessarily indicative of results for the full year, particularly in light of the novel coronavirus ("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 valuations, inventory valuation, employee benefit plans, income tax contingency accruals and valuation allowances, multi-employer pension plan ("MEPP") withdrawal liabilities, contingency accruals and 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, unfavorable impacts from the COVID-19 pandemic have had a negative impact on the Company's financial results. 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, including goodwill, and deferred tax valuation allowances. The extent to which the COVID-19 pandemic impacts the Company's business, results of operations, access to sources of liquidity and ~~its~~ financial condition will depend on future developments. These developments, which are highly uncertain and cannot be predicted, ~~including,~~include, but are not limited to, the duration, spread and severity of the COVID-19 pandemic, the effects of the COVID-19 pandemic on the Company's employees, customers, suppliers and vendors and the remedial actions and stimulus measures adopted by local and federal governments, the availability, adoption and effectiveness of a vaccine and to what extent normal economic and operating conditions can ~~resume.~~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 ~~downturn~~volatility that has occurred or may occur in the future. Estimates are revised as additional information becomes available.

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Accounting Pronouncements

Recently Adopted Accounting Standards

Effective January 1, ~~2020,~~2021, the Company adopted Accounting Standards Update ~~(“ASU”~~("ASU") ~~2016-13,~~ ~~Financial Instruments-Credit Losses (Topic 326).~~ The standard replaces the previously 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 standard requires application on a modified retrospective basis; accordingly, prior periods have not been adjusted to conform to the new guidance. Upon adoption, the Company recorded a $0.3 million decrease to retained earnings as the cumulative effect adjustment from applying the standard.

The Company performs an assessment of its financial assets which consist primarily of accounts receivable and identifies pools (i.e., groups of similar assets within the accounts receivable portfolio) based on the Company’s internal risk ratings, geographical locations and historical loss information. The Company’s pools are classified by reportable segment, risk level and the geographical location of the Company’s customers. The risk characteristics of each segment are determined by the impact of economic and structural fluctuations that are specific to the industries served by the Company, competition from other suppliers, and the nature of the products and services provided to the Company’s customers. The Print and Publishing segments are faced with industry-wide decreases in demand for products and services due to the increasing use of e-commerce and other on-line product substitutions. The Facility Solutions segment could experience revenue declines and increases in delinquency rates attributable to changes in the travel industry and back-to-school activities. The Packaging segment’s performance could be negatively impacted by changes in customer buying habits and product preferences. The Company considered the Packaging and Facility Solutions segments to be a single pool as they share similar risk characteristics.

The Company’s allowance for credit losses reflects the best estimate of expected losses to the Company's accounts receivable portfolio determined on the basis of historical experience, current conditions, reasonable and supportable forecasts and specific allowances for known troubled accounts. In developing the allowance for credit losses, the Company utilizes internal risk ratings that are determined based on a number of factors including a periodic evaluation of each customer’s financial condition where possible. In addition to leveraging the internally developed risk ratings and historical experience, the expected credit loss estimates are developed using quantitative analyses, where meaningful, and qualitative analyses to forecast the impact that external factors and economic indicators may have on the amount that the Company expects to collect.

~~The components of the accounts receivable allowances were as follows:~~

(in millions) March 31, 2020 December 31, 2019
Allowance for credit losses and doubtful accounts, respectively $ 31.7 $ 30.4
Other allowances 12.5 13.4
Total accounts receivable allowances $ 44.2 $ 43.8

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~~Below is a rollforward of the Company’s allowance for credit losses for the three months ended March 31, 2020:~~

Packaging and Facility Solutions Print - High Risk Print - Medium/Low Risk
(in millions) U.S. Canada U.S. Canada U.S. Canada
Publishing⁽¹⁾
Rest of world
Corporate & Other⁽¹⁾
Total
Balance at January 1, 2020 $ 13.3 $ 1.0 $ 11.9 $ 0.4 $ 0.9 $ 0.1 $ 1.3 $ 0.6 $ 0.9 $ 30.4
Add / (Deduct):
Adoption impact - ASU 2016-13 1.0 (0.3) (0.2) 0.0 0.1 (0.1) (0.1) — 0.0 0.4
Provision for expected credit losses 1.6 0.0 (0.2) 0.0 0.6 0.0 (0.1) 0.1 0.1 2.1
Write-offs charged against the allowance (0.1) 0.0 (0.9) 0.0 (0.1) — — — 0.0 (1.1)
Recoveries of amounts previously written off 0.0 — 0.0 0.0 0.1 — — — 0.0 0.1
Other adjustments⁽²⁾
— (0.1) — 0.0 — 0.0 — (0.1) — (0.2)
Balance at March 31, 2020 $ 15.8 $ 0.6 $ 10.6 $ 0.4 $ 1.6 $ 0.0 $ 1.1 $ 0.6 $ 1.0 $ 31.7

⁽¹⁾~~Publishing and Corporate & Other have only U.S. Operations.~~

⁽²⁾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, and may include accounts receivable allowances recorded in connection with acquisitions.

~~ASU 2018-13,~~ ~~Fair Value Measurement (Topic 820) -~~ The standard modifies the disclosure requirements on fair value measurements by removing certain disclosure requirements related to the fair value hierarchy, modifying existing disclosure requirements related to measurement uncertainty and adding new disclosure requirements. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted-average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company adopted this ASU on January 1, 2020. The adoption did not materially impact its financial statement disclosures.

~~ASU 2018-15,~~ ~~Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40) -~~ The standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The amendments in this update also require companies to expense capitalized implementation costs over the term of the hosting arrangement, including periods covered by renewal options that are reasonably certain to be exercised. The amendments also stipulate presentation requirements for the Statement of Operations, Balance Sheet and Statement of Cash Flows. The amendments in this update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company adopted this ASU on January 1, 2020 on a prospective basis. Capitalized amounts are reported in the Condensed Consolidated Balance Sheet as other current assets and other non-current assets based on the remaining useful life of the asset. The related periodic expense is reported as part of operating expenses in the Condensed Consolidated Statement of Operations and the corresponding cash flow impact is reported as part of operating activities in the Condensed Consolidated Statement of Cash Flows. The Company does not expect the adoption of this standard to have a material impact on its future consolidated financial statements and related disclosures.

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~~Recently Issued Accounting Standards Not Yet Adopted~~

~~ASU~~ 2019-12, Income Taxes (Topic 740). - The standard removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation and calculating income taxes in interim periods. The update also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for goodwill and allocating taxes to members of a consolidated group. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The amendments in this update related to separate financial statements of legal entities that are not subject to tax should be applied on a retrospective basis for all periods presented. The amendments related to changes in ownership of foreign equity method investments or foreign subsidiaries should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The amendments related to franchise taxes that are partially based on income should be applied on either a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. All other amendments should be applied on a prospective basis. The adoption did not materially impact the Company's financial statements and disclosures.

Recently Issued Accounting Standards Not Yet Adopted

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 ~~effective January 1, 2021; early adoption is permitted.~~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, 2022. The Company has an interest rate cap arrangement and long-term debt for which existing payments are based on LIBOR. The Company is currently evaluating the timing of adoption and the related impact on its consolidated financial statements. Currently, the Company does not expect the adoption of this ~~ASU will~~guidance to have a material impact on its consolidated financial statements and related disclosures.

2. REVENUE RECOGNITION

~~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. ~~When the Company enters into~~Certain revenues are derived from shipments which are made directly from a sales arrangement with a customer, it believes it is probable that it will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. When management cannot conclude collectability is probable for shipmentsmanufacturer to a ~~particular customer, revenue associated with that customer is not recognized until cash is collected or management is otherwise able to establish that collectability is probable.~~Veritiv customer. The Company ~~has established credit~~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 ~~collection processes whereby collection assessments are performed and expected credit losses are recognized.~~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.

~~Additionally,~~ 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. The Company has established credit and collection processes whereby collection assessments are performed and expected credit losses are recognized. 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.

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 March 31, 2021 and December 31, 2020, 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 ~~its bill-and-hold arrangements.~~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

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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 ~~bill-and-hold~~other sale arrangements requiring prepayment initially cover a 60 - 90 day period, but can be renewed by the customer.

As of March 31, 2020 and December 31, 2019, the Company recognized estimated inventory returns of approximately $1.8 million and $2.0 million, respectively, which are included in inventories on the Condensed Consolidated Balance Sheets. Additionally, the Company recognized customer contract liabilities related to its customer deposits for equipment sales and payments received for bill-and-hold arrangements, which are included in accounts payable on the Condensed Consolidated Balance Sheets.

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See the table below for a summary of the changes to the customer contract liabilities for the three months ended March 31, ~~2020~~2021 and ~~2019:~~2020:


		Customer Contract Liabilities							Customer Contract Liabilities
(in millions)	(in millions)	2020		2019		(in millions)	2021		2020
Balance at January 1,	Balance at January 1,	$	11.7	$	17.7	Balance at January 1,	$	12.2	$	11.7
Payments received	Payments received	11.0		11.7		Payments received	14.2		11.0
Revenue recognized from beginning balance	Revenue recognized from beginning balance	(9.0)		(13.3)		Revenue recognized from beginning balance	(7.3)		(9.0)
Revenue recognized from current year receipts	Revenue recognized from current year receipts	(2.8)		(3.4)		Revenue recognized from current year receipts	(7.1)		(2.8)
Balance at March 31,	Balance at March 31,	$	10.9	$	12.7	Balance at March 31,	$	12.0	$	10.9

~~Revenue Composition~~

Historically, the Company's ten largest customers have generated approximately 10% of its consolidated annual net sales. Veritiv's ~~revenues~~principal markets are concentrated primarily ~~derived from purchase orders and rate agreements associated~~across North America with (i) the delivery of standard listed products with observable standalone sale prices or (ii) transportation and warehousing services. Revenue generally consists of a single performance obligation to transfer a promised good or service and is short-term in nature. Revenues are recognized when control of the promised goods or services is transferred to Veritiv's customers and in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Sales transactions with customers are designated free on board destination and revenue is recorded at the point in time when the product is delivered to the customer's designated location or when the customer has otherwise obtained the benefit of the goods, when title and risk of loss are transferred. Revenues from Veritiv's transportation services are recognized upon completion of the related delivery services and revenues from warehousing services are recognized over time as the storage services are provided. 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.~~

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 because, among other factors, it maintains control of the goods after they leave the supplier and before they are received at the customer's location, in most cases it selects the supplier and sets the price to the customer, and it bears the risk of the customer defaulting on payment or rejecting the goods. Revenues from these sales are reported on a gross basis in the ~~Condensed Consolidated Statements~~U.S., Canada and Mexico of ~~Operations~~approximately 87%, 10% and ~~have historically represented approximately one-third of Veritiv's total net sales.~~

2%, respectively. 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 Company is able to serve a wide variety of customers, from large national companies to small local customers, through its distribution network. Historically, the Company's 10 largest customers have generated approximately 10% of its consolidated annual net sales. Veritiv's principal markets are concentrated primarily across North America with net sales in the U.S., Canada and Mexico of approximately 89%, 9% and 1%, respectively.

~~The~~ following is a brief description of the Company's 4 reportable segments, organized by major product ~~category:~~category. 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 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 the Veritiv logistics solutions business which provides transportation and warehousing solutions.

•Packaging – 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 customers with a full spectrum of packaging product materials within the fiber-based, flexible and rigid categories. The business is strategically focused on higher growth ~~industries~~industry sectors including ~~light industrial/general~~ manufacturing, food processing and service, fulfillment and internet retail, as well as niche ~~verticals~~sectors based on ~~geographical~~industry and ~~functional~~product expertise. This segment also provides supply chain solutions, structural and graphic packaging design and engineering, automation, workflow and equipment services and ~~kitting and fulfillment.~~kitting.

•Facility Solutions – The Facility Solutions segment sources and sells cleaning, break-room and other supplies such as towels, tissues, ~~wipers and dispensers, can liners,~~ commercial cleaning chemicals, personal protective equipment and safety supplies, wipers, can liners, soaps and sanitizers, dispensers, sanitary maintenance supplies and equipment, ~~safety and~~ hazard supplies, and shampoos and amenities primarily in North

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America. Additionally, the Company offers total cost of ownership solutions with re-merchandising, budgeting and compliance reporting, and inventory management.

•Print – The Print segment sells and distributes commercial printing, writing, copying, digital, specialty products ~~graphics consumables~~ and graphics ~~equipment~~consumables primarily in North America. ~~This segment also includes customized paper conversion services of commercial printing paper for distribution to document centers and form printers.~~ Veritiv's broad geographic platform of operations 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 in magazines, catalogs, books, directories, gaming, couponing, retail inserts and direct mail primarily in the U.S. This segment also provides print management, procurement and supply chain management solutions to simplify paper and print procurement processes for its customers.

The Company's consolidated financial results also include a "Corporate & Other" category which includes certain assets and costs not primarily attributable to any of the reportable segments. Corporate & Other also includes the Veritiv logistics solutions business which provides transportation and warehousing solutions.

See Note 13,, Segment and Other Information, for the disaggregation of revenue and other information related to the Company's reportable segments and Corporate & Other.

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Allowance for Credit Losses

The components of the accounts receivable allowances were as follows:


(in millions)	March 31, 2021		December 31, 2020
Allowance for credit losses	$	30.7	$	31.4
Other allowances(1)	10.4		10.2
Total accounts receivable allowances	$	41.1	$	41.6

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

Below is a rollforward of the Company’s allowance for credit losses for the three months ended March 31, 2021:


	Packaging and Facility Solutions				Print - High Risk				Print - Medium/Low Risk
(in millions)	U.S.		Canada		U.S.		Canada		U.S.		Canada		Publishing(1)		Rest of world		Corporate & Other(1)		Total
Ending balance, December 31, 2020	$	14.4	$	0.5	$	10.2	$	0.7	$	2.2	$	0.0	$	1.6	$	1.0	$	0.8	$	31.4
Add / (Deduct):
Provision for expected credit losses	1.9		0.1		(0.8)		0.0		0.3		0.0		(0.7)		0.0		0.1		0.9
Write-offs charged against the allowance	(1.3)		0.0		(0.2)		0.0		0.0		0		0		0.0		(0.1)		(1.6)
Recoveries of amounts previously written off	0.0		0		0.0		0		0.0		0		0		0		0		0.0
Other adjustments(2)	0		0.0		1.4		0.0		(1.4)		0.0		0		0.0		0		0.0
Ending balance, March 31, 2021	$	15.0	$	0.6	$	10.6	$	0.7	$	1.1	$	0.0	$	0.9	$	1.0	$	0.8	$	30.7

(1)Publishing and Corporate & Other have only U.S. Operations.

(2)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, and may include accounts receivable allowances recorded in connection with acquisitions.

The Company, under certain circumstances, enters into note receivable agreements with customers. Expected credit losses are recognized when collectability is uncertain; these losses are included in selling and administrative expenses on the Condensed Consolidated Statements of Operations. For the three months ended March 31, 2021 and 2020, the Company recognized $0.0 million and $2.3 million, respectively, in the provision for expected credit losses related to these notes receivable. At March 31, 2021 and December 31, 2020, the Company held $2.0 million and $2.2 million, respectively, in notes receivable within other current assets on the Condensed Consolidated Balance Sheets.

3. LEASES

The Company leases certain property and equipment used for operations to 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 March 31, ~~2020,~~2021, the Company operated from approximately ~~150~~125 distribution centers of which approximately ~~140~~115 were leased. These facilities are strategically located throughout the U.S., Canada 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. ~~Real estate leases generally carry lease terms of~~ ~~three~~ to ~~ten~~ ~~years. Delivery equipment leases generally carry lease terms of~~ ~~three~~ to ~~eight~~ ~~years and other non-real estate leases generally carry lease terms of~~ ~~three~~ to ~~five~~ ~~years.~~

The Company determines if an arrangement is a lease at lease inception and reviews lease arrangements for finance or operating lease classification at their commencement date. The Company does not include short-term leases on the balance sheets and does not separate lease and non-lease components for its delivery equipment leases. In order to value the ROU assets and related liabilities, the Company makes certain estimates and assumptions related to establishing the lease term, discount rates and variable lease payments (e.g., rent escalations tied to changes in the Consumer Price Index). The exercise of any lease renewal or asset purchase option is at the Company's sole discretion. The lease term for all of the Company's leases includes the noncancelable period of the lease and any periods covered by renewal options that the Company is reasonably certain to exercise. Certain leases include rent escalations pre-set in the agreements, which are factored into the lease payment stream. Similar to a variable lease payment, certain delivery equipment leases include a provision for an amount the Company may be required to pay at the end of the lease for any residual value deficiency incurred by the lessor upon resale of the underlying asset. The Company uses the implicit rate of interest when it is available; however, as most of the Company's leases do not provide an implicit rate of interest, the Company uses its incremental borrowing rate based on information available at the lease commencement date in determining the discounted value of the lease payments. Lease expense and depreciation expense are recognized on a straight-line basis over the lease term, or for a finance lease, over the shorter of the life of the underlying asset or the lease term.

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The components of lease expense were as follows:


(in millions)	(in millions)		Three Months Ended March 31,							(in millions)	Three Months Ended March 31,
Lease Classification	Lease Classification	Financial Statement Classification	2020		2019		Lease Classification	Financial Statement Classification	2021		2020
Short-term lease expense⁽¹⁾	Short-term lease expense⁽¹⁾	Operating expenses	$	0.9	$	1.9	Short-term lease expense(1)	Operating expenses	$	1.0	$	0.9

Operating lease expense⁽²⁾	Operating lease expense⁽²⁾	Operating expenses	$	27.1	$	27.3	Operating lease expense(2)	Operating expenses	$	25.6	$	27.1

Finance lease expense:	Finance lease expense:						Finance lease expense:
Amortization of right-of-use assets	Amortization of right-of-use assets	Depreciation and amortization	$	3.5	$	2.3	Amortization of right-of-use assets	Depreciation and amortization	$	3.7	$	3.5
Interest expense	Interest expense	Interest expense, net	0.8		0.5		Interest expense	Interest expense, net	0.7		0.8
Total finance lease expense	Total finance lease expense		$	4.3	$	2.8	Total finance lease expense		$	4.4	$	4.3

Total Lease Cost	Total Lease Cost		$	32.3	$	32.0	Total Lease Cost		$	31.0	$	32.3

⁽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-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)	(in millions, except weighted-average data)		March 31, 2020			December 31, 2019			(in millions, except weighted-average data)		March 31, 2021				December 31, 2020
Lease Classification	Lease Classification	Financial Statement Classification												Financial Statement Classification				December 31, 2020
Operating Leases:	Operating Leases:								Operating Leases:
Operating lease right-of-use assets	Operating lease right-of-use assets	Other non-current assets	$	413.6		$	429.2		Operating lease right-of-use assets	Other non-current assets	$	342.4			$	351.7

Operating lease obligations - current	Operating lease obligations - current	Other accrued liabilities	$	89.0		$	90.5		Operating lease obligations - current	Other accrued liabilities	$	83.2			$	81.9
Operating lease obligations - non-current	Operating lease obligations - non-current	Other non-current liabilities	361.3			376.6			Operating lease obligations - non-current	Other non-current liabilities	296.4				307.4
Total operating lease obligations	Total operating lease obligations		$	450.3		$	467.1		Total operating lease obligations		$	379.6			$	389.3

Weighted-average remaining lease term in years	Weighted-average remaining lease term in years		6.5			6.6			Weighted-average remaining lease term in years		5.9				6.1
Weighted-average discount rate	Weighted-average discount rate		4.7		%	4.6		%	Weighted-average discount rate		4.7		%		4.7		%

Finance Leases:	Finance Leases:								Finance Leases:
Finance lease right-of-use assets	Finance lease right-of-use assets	Property and equipment	$	81.4		$	76.6		Finance lease right-of-use assets	Property and equipment	$	73.4			$	76.6

Finance lease obligations - current	Finance lease obligations - current	Current portion of debt	$	13.0		$	11.5		Finance lease obligations - current	Current portion of debt	$	13.3			$	13.4
Finance lease obligations - non-current	Finance lease obligations - non-current	Long-term debt, net of current portion	73.0			69.2			Finance lease obligations - non-current	Long-term debt, net of current portion	66.2				68.9
Total finance lease obligations	Total finance lease obligations		$	86.0		$	80.7		Total finance lease obligations		$	79.5			$	82.3

Weighted-average remaining lease term in years	Weighted-average remaining lease term in years		7.4			7.8			Weighted-average remaining lease term in years		7.0				7.1
Weighted-average discount rate	Weighted-average discount rate		3.6		%	3.4		%	Weighted-average discount rate		3.7		%		3.7		%

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


(in millions)	(in millions)		Three Months Ended March 31,							(in millions)	Three Months Ended March 31,
Lease Classification	Lease Classification	Financial Statement Classification	2020		2019		Lease Classification	Financial Statement Classification	2021		2020
Operating Leases:	Operating Leases:						Operating Leases:
Operating cash flows from operating leases	Operating cash flows from operating leases	Operating activities	$	27.8	$	26.5	Operating cash flows from operating leases	Operating activities	$	26.5	$	27.8

Finance Leases:	Finance Leases:						Finance Leases:
Operating cash flows from finance leases	Operating cash flows from finance leases	Operating activities	$	0.8	$	0.5	Operating cash flows from finance leases	Operating activities	$	0.7	$	0.8
Financing cash flows from finance leases	Financing cash flows from finance leases	Financing activities	2.9		2.1		Financing cash flows from finance leases	Financing activities	3.3		2.9

Lease Commitments

Future minimum lease payments at March 31, ~~2020~~2021 were as follows:


(in millions)	(in millions)	Finance Leases		Operating Leases⁽¹⁾		(in millions)	Finance Leases		Operating Leases (1)
2020 (excluding the three months ended March 31, 2020)		$	11.8	$	82.2
2021		15.2		96.7
2021 (excluding the three months ended March 31, 2021)						2021 (excluding the three months ended March 31, 2021)	$	12.0	$	75.5
2022	2022	14.6		81.5		2022	15.6		87.1
2023	2023	12.3		60.6		2023	13.3		67.1
2024	2024	10.5		51.5		2024	11.5		53.7
2025	2025	9.8		41.8		2025	10.7		42.8
2026						2026	8.0		38.0
Thereafter	Thereafter	24.7		112.5		Thereafter	19.9		73.8
Total future minimum lease payments	Total future minimum lease payments	98.9		526.8		Total future minimum lease payments	91.0		438.0
Amount representing interest	Amount representing interest	(12.9)		(76.5)		Amount representing interest	(11.5)		(58.4)
Total future minimum lease payments, net of interest	Total future minimum lease payments, net of interest	$	86.0	$	450.3	Total future minimum lease payments, net of interest	$	79.5	$	379.6

⁽¹⁾Future sublease income of $2.0 million is ~~not included~~excluded from the operating leases amount in the ~~above~~ table ~~as the amount is not significant.~~above.

Total future minimum lease payments at March 31, ~~2020~~2021 for finance and operating leases, including the amount representing interest, are comprised of ~~$532.3~~$455.9 million for real estate leases and ~~$93.4~~$73.1 million for non-real estate leases.

At March 31, ~~2020,~~2021, the Company had committed to additional future obligations of approximately ~~$7.7~~$24.3 million for real estate operating leases ~~of real estate~~ that have not yet commenced and therefore are not included in the table above. These leases will commence ~~over~~within the next ~~six~~nine months with an average lease term of ~~six~~approximately nine years.

4. ~~INTEGRATION AND~~ RESTRUCTURING CHARGES

~~Merger of xpedx and Unisource~~2020 Restructuring Plan

~~Integration Expenses~~

AsDuring the second quarter of ~~December 31, 2019,~~2020, the ~~integration~~Company initiated a restructuring plan ~~related~~in response to the ~~Merger was complete.~~impact of the COVID-19 pandemic on its business operations and the ongoing secular changes in its Print and Publishing segments. During the ~~three months ended March 31, 2019, Veritiv incurred costs~~fourth quarter of 2020, the Company expanded the initial plan to further align its cost structure with ongoing business needs as the Company executes on its stated corporate strategy. The initial and ~~charges for~~expansion activities are collectively referred to as the ~~integration~~"2020 Restructuring Plan." The 2020 Restructuring Plan includes (i) a reduction of the ~~xpedx~~Company's U.S. salaried workforce by approximately 15% across all business segments and ~~Unisource businesses, which primarily related to: internally dedicated integration management resources, information technology conversion costs~~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 ~~costs to integrate its businesses.~~actions.

The Company currently estimates it will incur total restructuring charges of between $70 million and $87 million in connection with the 2020 Restructuring Plan. These costs will include the following activities (i) employee termination and other one-time compensation costs, (ii) real estate exit costs, (iii) certain inventory related costs and (iv) other exit costs. Through March 31, 2021, the Company has incurred approximately $56.5 million in costs and charges. Initial charges were incurred and recorded in June 2020. The Company expects to substantially complete the 2020 Restructuring Plan by the end of 2021.

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~~The following table summarizes the components of these integration expenses:~~


	~~Three Months Ended March 31,~~
~~(in millions)~~	~~2019~~
~~Integration management~~	$	~~2.7~~

~~Information technology conversion costs~~	~~0.8~~


~~Other~~	~~0.6~~
~~All American Containers ("AAC") integration~~	~~0.2~~
~~Total integration expenses~~	$	~~4.3~~

~~Veritiv Restructuring Plan: Merger Related~~

As part of the Merger, the Company executed 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 included 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 evaluated its operations outside of North America to identify additional cost saving opportunities. As of December 31, 2019, the restructuring plan related to the Merger was complete. See ~~Note 13, Segment Information,~~ ~~for the impact these charges had on the Company's reportable segments.~~

Other direct costs reported in the ~~tables~~table below include facility closing costs ~~actual and estimated multi-employer pension plan ("MEPP") withdrawal charges~~ and other incidental costs associated with the development, communication, administration and implementation of these initiatives.

The following is a summary of the Company's ~~restructuring~~2020 Restructuring Plan liability activity for the three months ended March 31, ~~2020. The majority of the remaining liability balance is related to MEPP withdrawal liabilities with payments expected to be made over an approximate 20-year period.~~

(in millions) Severance and Related Costs Other Direct Costs Total
Balance at December 31, 2019 $ 6.2 $ 30.6 $ 36.8
Payments (2.7) (3.8) (6.5)
Balance at March 31, 2020 $ 3.5 $ 26.8 $ 30.3

~~The following is a summary of the Company's restructuring liability activity for the three months ended March 31, 2019~~2021 (costs incurred exclude any non-cash portion of restructuring gains or losses on asset disposals):

(in millions) Severance and Related Costs Other Direct Costs Total
Balance at December 31, 2018 $ 4.7 $ 25.1 $ 29.8
Costs incurred 1.3 1.3 2.6
Payments (1.0) (3.1) (4.1)
Balance at March 31, 2019 $ 5.0 $ 23.3 $ 28.3


(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

In addition to the costs incurred in the table above, during the three months ended March 31, 2021, the Company expensed $1.9 million of Other Direct Costs, which was prepaid during the fourth quarter of 2020.

Additionally, the Company holds other restructuring liabilities related to the previous restructuring plans that as of March 31, 2021, totaled $23.3 million, of which $19.7 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, 2020, totaled $24.0 million, of which $20.0 million was related to MEPP withdrawal obligations.

See ~~Table of Contents~~Note 13, Segment and Other Information, for the impact that charges from these restructuring plans had on the Company's reportable segments.

5. DEBT

The Company's debt obligations were as follows:


(in millions)	(in millions)	March 31, 2020		December 31, 2019		(in millions)	March 31, 2021		December 31, 2020
Asset-Based Lending Facility (the "ABL Facility")	Asset-Based Lending Facility (the "ABL Facility")	$	667.1	$	673.2	Asset-Based Lending Facility (the "ABL Facility")	$	534.5	$	520.2
Commercial card program	Commercial card program	1.3		1.1		Commercial card program	1.6		1.3
Finance leases	Finance leases	86.0		80.7		Finance leases	79.5		82.3
Total debt	Total debt	754.4		755.0		Total debt	615.6		603.8
Less: current portion of debt	Less: current portion of debt	(14.3)		(12.6)		Less: current portion of debt	(14.9)		(14.7)
Long-term debt, net of current portion	Long-term debt, net of current portion	$	740.1	$	742.4	Long-term debt, net of current portion	$	600.7	$	589.1

ABL Facility

On April 9, 2020, the Company amended its ABL Facility to extend the maturity date to April 9, 2025, reduced the aggregate commitments from $1.4 billion to $1.1 billion and adjusted the pricing grid for applicable interest rates. All other significant terms remained substantially the same. The Company recognized a one-time charge of $0.6 million to interest expense, net, on the Condensed Consolidated Statement of Operations, for the write-off of a portion of the previously deferred financing costs associated with lenders in the ABL Facility that exited the amended ABL Facility. In addition, the Company incurred and deferred $3.4 million of new financing costs associated with this transaction, reflected in other non-current assets on the Condensed Consolidated Balance Sheet, which will be amortized to interest expense on a straight-line basis over the amended term of the ABL Facility.

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 March 31, ~~2020,~~2021, the available additional borrowing capacity under the ABL Facility was approximately ~~$286.0~~$343.8 million. As of March 31, ~~2020,~~2021, the Company held $12.1 million in outstanding letters of credit.

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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 March 31, ~~2020,~~2021, 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.

~~Interest Rate Caps~~

The Company’s indebtedness under the ABL Facility creates interest rate risk. The Company actively monitors this risk with the objective to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in the interest rate. In July 2015, the Company entered into an interest rate cap agreement which expired on July 1, 2019; all related impacts to the Company's consolidated financial statements for the three months ended March 31, 2019 were not significant.

Effective September 13, 2019, the Company entered into a new interest rate cap agreement with an expiration date of September 13, 2022. The interest rate cap effectively limits the floating LIBOR-based portion of the interest rate. The interest rate cap covers $350.0 million of the Company’s floating-rate debt at 2.75% plus the applicable credit spread. The Company paid $0.6 million for the interest rate cap. For the three months ended March 31, 2020, the amount reclassified from AOCL into earnings was not significant. As of March 31, 2020 and December 31, 2019, the interest rate cap had a fair value that was not significant. The interest rate cap is classified within other non-current assets on the Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019. The amount expected to be reclassified from AOCL into earnings within the following 12 months is not significant. The fair value was estimated using observable market-based inputs including interest rate curves and implied volatilities (Level 2). The Company designated the new interest rate cap as a cash flow hedge of exposure to changes in cash flows due to changes in the LIBOR-based portion of the interest rate above 2.75%. The Company has determined that the interest rate cap hedging relationship is effective.

The Company is exposed to counterparty credit risk for nonperformance and, in the event of nonperformance, to market risk for changes in the interest rate. The Company attempts to manage exposure to counterparty credit risk primarily by selecting only those counterparties that meet certain credit and other financial standards. The Company believes there has been no material change in the creditworthiness of its counterparty and believes the risk of nonperformance by such party is minimal.

Commercial Card Program

~~In May 2019, the~~The Company ~~entered into~~has a commercial purchasing card ~~agreement with a financial institution. The commercial card~~program that is used for business purpose purchasing and must be paid in-full monthly. ~~The~~At March 31, 2021, the card ~~currently carries~~carried a

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maximum credit limit of $37.5 million. At March 31, ~~2020~~2021 and December 31, ~~2019, $1.3~~2020, $1.6 million and ~~$1.1~~$1.3 million, respectively, was outstanding on the commercial card. The net change in the outstanding balance is classified as a financing activity inon the Condensed Consolidated Statements of Cash Flows.

6. INCOME TAXES

~~Due~~The Company calculated the expense for income taxes during the three months ended March 31, 2021, by applying an estimate of the annual effective tax rate ("AETR") for the full fiscal year to "ordinary" income or loss (pre-tax income excluding unusual or infrequently occurring discrete items) for the reporting period. For the three months ended March 31, 2020, due to the heightened uncertainty surrounding the COVID-19 pandemic, Veritiv iswas unable to reasonably estimate its ~~annual effective tax rate (“AETR”) at this time. See~~ ~~Note 1, Business~~AETR and ~~Summary of Significant Accounting Policies~~ ~~for further information. As a result, Veritiv~~ used its actual year-to-date effective tax rate to calculate ~~taxes for the three months ended March 31, 2020. For the three months ended March 31, 2019 the estimate was highly sensitive to estimates of ordinary~~ income ~~(loss) and permanent differences such that minor fluctuations in these estimates could result in significant fluctuations of the Company’s AETR and thus, the actual year-to-date effective~~ tax ~~rate was used to calculate taxes.~~expense.

The following table presents the expense (benefit) for income taxes and the effective tax rates for the three months ended March 31, ~~2020~~2021 and ~~2019:~~2020:


		Three Months Ended March 31,									Three Months Ended March 31,
(in millions)	(in millions)	2020		2019			(in millions)	2021			2020
Income (loss) before income taxes	Income (loss) before income taxes	$	0.0	$	(33.5)		Income (loss) before income taxes	$	30.4		$	0.0
Income tax expense (benefit)	Income tax expense (benefit)	0.4		(6.8)			Income tax expense (benefit)	9.1			0.4
Effective tax rate	Effective tax rate	*		20.3		%	Effective tax rate	29.9		%	*

*- not meaningful

The difference between the Company's effective tax rates for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, and the U.S. statutory tax rate of 21.0% primarily relates to state income taxes (net of federal income tax benefit), non-deductible expenses, tax expense for stock compensation vesting, Global Intangible Low-Taxed Income ~~non-deductible expenses, tax credits~~("GILTI"), and the Company's pre-tax book income (loss) by jurisdiction. In addition, Veritiv recognized the ~~tax effect~~tax-effect of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) in the quarter ended March 31, 2020, and recorded an estimated $2.1 million benefit, primarily related to the carryback of net operating loss (“NOL” or “NOLs”) generated in 2019 to prior years in which the U.S. statutory tax rate was 35%.

The CARES Act was signed into law on March 27, 2020 and makes significant economic stimulus changes and additional changes to the U.S. tax code, including, but not limited to, allowing the carryback of NOLs occurring in 2018, 2019, and 2020 to the prior five years and eliminating the taxable income limitation, changes interest expense limitation, includes a technical correction for qualified improvement property depreciation and provides additional employee retention credits.

7. RELATED PARTY TRANSACTIONS

On March 3, 2021, Veritiv announced that its Board of Directors authorized a $50.0 million share repurchase program (the "2021 Share Repurchase Program"). Executing within the 2021 Share 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.

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Agreements with the UWWH Stockholder prior to the Share Repurchase

In January 2020, ~~and 2019,~~ in connection with the Tax Receivable Agreement ("TRA") executed at the time of the Merger, Veritiv paid $0.3 million ~~and $8.1 million, respectively,~~ in principal and interest to ~~UWW Holdings, LLC (the "UWWH Stockholder"), one of Veritiv's existing stockholders and~~ the ~~former sole stockholder of~~ UWWH Stockholder for the utilization of pre-merger NOLs in its 2018 ~~and 2017~~ federal and state tax ~~returns, respectively.~~returns. In December 2020, the Company and the UWWH Stockholder agreed to settle the TRA. The Company paid the UWWH Stockholder a total of $12.0 million in settlement of all past and future liabilities that would have been owed under the TRA and the parties agreed to a mutual release of claims under the TRA. See Note 9, Fair Value Measurements, for additional information regarding the TRA.

On November 19, 2020, the UWWH Stockholder sold 1.40 million shares of Veritiv common stock in an underwritten public offering. The Company did not sell or repurchase any shares and did not receive any of the proceeds. Following completion of such sale, which reduced the UWWH Stockholder's ownership below 10% of Veritiv's outstanding common stock, Georgia-Pacific, as joint owner of the UWWH Stockholder, is no longer treated as a related party. The Company considers its stockholders that own more than 10.0% of its outstanding common stock to be related parties as defined within ASC 850, Related Party Disclosures.

Transactions with Georgia-Pacific

Veritiv purchases certain inventory items from, and sells certain inventory items 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.~~

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The following ~~tables summarize~~table summarizes the financial impact of ~~these related party~~the transactions with ~~Georgia-Pacific:~~Georgia-Pacific during the prior year period when it was considered a related party:

Three Months Ended March 31,
(in millions) 2020 2019
Sales to Georgia-Pacific, reflected in net sales $ 5.6 $ 6.4
Purchases of inventory from Georgia-Pacific, recognized in cost of products sold 18.8 24.8

(in millions) March 31, 2020 December 31, 2019
Inventories purchased from Georgia-Pacific that remained on Veritiv's balance sheets $ 9.3 $ 11.4
Related party payable to Georgia-Pacific 5.2 4.3
Related party receivable from Georgia-Pacific 3.3 2.8


	Three Months Ended March 31,
(in millions)	2020
Sales to Georgia-Pacific, reflected in net sales	$	5.6
Purchases of inventory from Georgia-Pacific, recognized in cost of products sold	18.8

8. DEFINED BENEFIT PLANS

Veritiv does not maintain any active defined benefit plans for its non-union employees. Veritiv maintains a defined benefit pension plan in the U.S. for employees covered by certain collectively bargained agreements. Veritiv also assumed responsibility for Unisource's defined benefit plans, which include frozen cash balance accounts for certain former Unisource employees. The components of net periodic benefit cost (credit) other than the service cost component are included in other (income) expense, net inon the Condensed Consolidated Statements of Operations. Amounts are generally amortized from AOCL over the expected future working lifetime of active plan participants.

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


		Three Months Ended March 31, 2020						Three Months Ended March 31, 2019							Three Months Ended March 31, 2021				Three Months Ended March 31, 2020
(in millions)	(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):									Components of net periodic benefit cost (credit):
Service cost	Service cost	$	0.6	$	0.1	$	0.4	$	0.1	Service cost	$	0.6	$	0.1	$	0.6	$	0.1

Interest cost	Interest cost	$	0.4	$	0.6	$	0.6	$	0.7	Interest cost	$	0.3	$	0.5	$	0.4	$	0.6
Expected return on plan assets	Expected return on plan assets	(1.0)		(0.9)		(0.9)		(0.9)		Expected return on plan assets	(1.1)		(1.0)		(1.0)		(0.9)

Amortization of net loss		0.0		0.0		0.1		0.0

Total other components	Total other components	$	(0.6)	$	(0.3)	$	(0.2)	$	(0.2)	Total other components	$	(0.8)	$	(0.5)	$	(0.6)	$	(0.3)
Net periodic benefit cost (credit)	Net periodic benefit cost (credit)	$	0.0	$	(0.2)	$	0.2	$	(0.1)	Net periodic benefit cost (credit)	$	(0.2)	$	(0.4)	$	0.0	$	(0.2)

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9. FAIR VALUE MEASUREMENTS

At March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, the carrying amounts of cash and cash equivalents, receivables, payables, other components of other current assets and other 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. Cash and cash equivalents may include highly-liquid investments with original maturities to the Company of three months or less that are readily convertible into known amounts of cash.

AsBorrowings under the ABL Facility are at variable market interest rates, and accordingly, the carrying amount approximates fair value, which is a Level 2 measurement. The fair value of the debt-related interest rate cap was derived from a discounted cash flow analysis based on the terms of the agreement and Level 2 data for the forward interest 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.

At March 31, 2021 and December 31, 2020, the Company had assets held for sale ~~$10.1~~of $1.4 million ~~in assets related to its restructuring plan, which was completed as of December 31, 2019, except for the sale of these assets.~~and $0.4 million, respectively. These assets are included in other current assets on the Condensed Consolidated Balance Sheets at the lower of their carrying value or fair value at March 31, ~~2020.~~

~~Borrowings under the ABL Facility are at variable market interest rates,~~2021 and ~~accordingly, the carrying amount approximates fair value. The fair value of the debt-related interest rate cap was derived from a discounted cash flow analysis~~

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~~based on the terms of the agreement and Level 2 data for the forward interest rate curve adjusted for the Company's credit risk. See~~ ~~Note 5, Debt, for additional information regarding the Company's ABL Facility and other obligations.~~

~~The Company's liabilities disclosed at fair value at March~~December 31, 2020, ~~were as follows:~~

(in millions) Total Level 1 Level 2 Level 3
ABL Facility $ 667.1 $ 667.1
TRA contingent liability 30.4 30.4
respectively.

~~The Company's liabilities disclosed at fair value at December 31, 2019 were as follows:~~

(in millions) Total Level 1 Level 2 Level 3
ABL Facility $ 673.2 $ 673.2
TRA contingent liability 31.4 31.4
AAC contingent consideration 2.5 2.5

At the time of the Merger, the Company recorded a $59.4 million contingent liability associated with the TRA at fair value using a discounted cash flow model that reflected management's expectations about probability of payment. The fair value of the TRA is a Level 3 measurement which relied upon both Level 2 data (publicly observable data such as market interest rates and historical foreign exchange rates) and Level 3 data (internal data such as the Company's projected income (loss) before income taxes, taxable income and assumptions about the utilization of Unisource's NOLs, attributable to taxable periods prior to the Merger, by the Company). The inputs to the fair value measurement of the contingent liability are reassessed on a quarterly basis. The amount payable under the TRA is contingent on the Company generating a certain level of taxable income prior to the expiration of the NOL carryforwards. Moreover, future trading of Company stock 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.model. The contingent liability iswas remeasured at fair value at each reporting period-end with the change in fair value recognized in other (income) expense, net on the Condensed Consolidated Statements of Operations. ~~At March 31,~~In December 2020, the Company ~~remeasured~~and the ~~contingent liability using a discount rate of 4.6% (Moody's daily long-term corporate BAA bond yield). There have been no transfers between~~UWWH Stockholder agreed to settle the ~~fair value measurement levels~~TRA. See Note 7, Related Party Transactions, for additional information regarding the ~~three months ended March 31, 2020. The Company recognizes transfers between the fair value measurement levels at the end of the reporting period.~~

TRA.

~~The following table provides a reconciliation of the beginning and ending balance of the TRA contingent liability for the three months ended March 31, 2020:~~


~~(in millions)~~	~~TRA Contingent Liability~~
~~Balance at December 31, 2019~~	$	~~31.4~~
~~Change in fair value adjustment recorded in other (income) expense, net~~	~~(0.7)~~
~~Principal payment~~	~~(0.3)~~
~~Balance at March 31, 2020~~	$	~~30.4~~

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~~The following table provides a reconciliation of the beginning and ending balance of the TRA contingent liability for the three months ended March 31, 2019:~~


~~(in millions)~~	~~TRA Contingent Liability~~
~~Balance at December 31, 2018~~	$	~~38.9~~
~~Change in fair value adjustment recorded in other (income) expense, net~~	~~0.9~~
~~Principal payment~~	~~(7.8)~~
~~Balance at March 31, 2019~~	$	~~32.0~~

On August 31, 2017 (the "Acquisition Date"), Veritiv completed its acquisition of 100% of the equity interests in various AAC entities. The purchase price allocation for the acquisition of AAC included $22.2 million for the estimated fair value of contingent consideration. The maximum amount payable for the contingent consideration was $50.0 million, with up to $25.0 million payable at each of the first and second anniversaries of the Acquisition Date. The Company paid $2.5 million on December 26, 2018 and $20.0 million on December 11, 2019 for contingent consideration earned as of the first and second anniversaries of the Acquisition Date, respectively. On March 19, 2020, the Company paid an additional $3.5 million to the sellers of AAC in full satisfaction of the contingent liability.~~This matter is now resolved and there will be no future adjustments to the AAC contingent liability.~~

~~The following table provides a reconciliation of the beginning and ending balance of the AAC contingent liability for the three months ended March 31, 2019:~~


~~(in millions)~~	~~AAC Contingent Liability~~
~~Balance at December 31, 2018~~	$	~~9.4~~
~~Change in fair value adjustment recorded in other (income) expense, net~~	~~5.4~~

~~Balance at March 31, 2019~~	$	~~14.8~~

10. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share for Veritiv common stock is calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the 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.

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


		Three Months Ended March 31,							Three Months Ended March 31,
(in millions, except per share data)	(in millions, except per share data)	2020		2019		(in millions, except per share data)	2021		2020
Numerator:	Numerator:					Numerator:

Net income (loss)	Net income (loss)	$	(0.4)	$	(26.7)	Net income (loss)	$	21.3	$	(0.4)

Denominator:	Denominator:					Denominator:
Weighted-average number of shares outstanding – basic and diluted		16.16		15.94

Weighted-average shares outstanding – basic						Weighted-average shares outstanding – basic	15.88		16.16
Dilutive effect of stock-based awards						Dilutive effect of stock-based awards	0.78		0
Weighted-average shares outstanding – diluted						Weighted-average shares outstanding – diluted	16.66		16.16

Earnings (loss) per share:	Earnings (loss) per share:					Earnings (loss) per share:

Basic and diluted earnings (loss) per share		$	(0.02)	$	(1.68)

Basic earnings (loss) per share						Basic earnings (loss) per share	$	1.34	$	(0.02)
Diluted earnings (loss) per share						Diluted earnings (loss) per share	$	1.28	$	(0.02)

Antidilutive stock-based awards excluded from computation of diluted earnings per share ("EPS")	Antidilutive stock-based awards excluded from computation of diluted earnings per share ("EPS")	1.28		1.32		Antidilutive stock-based awards excluded from computation of diluted earnings per share ("EPS")	0.11		1.28
Performance stock-based awards excluded from computation of diluted EPS because performance conditions had not been met	Performance stock-based awards excluded from computation of diluted EPS because performance conditions had not been met	0.32		0.59		Performance stock-based awards excluded from computation of diluted EPS because performance conditions had not been met	0.07		0.32

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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 and/or Performance Condition Share Units vested during those periods. The net share issuance is included on the Condensed Consolidated Statements of Shareholders' Equity for the three months ended March 31, ~~2020~~2021 and ~~2019.~~2020. 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, ~~2019.~~2020.

See the table below for information related to these ~~transactions:~~transactions.


		Three Months Ended March 31,
(in millions)	(in millions)	2020	2019	(in millions)	2021	2020

Three months ended March 31,				Three months ended March 31,
Shares issued	Shares issued	0.2	0.3	Shares issued	0.3	0.2
Shares recovered for minimum tax withholding	Shares recovered for minimum tax withholding	(0.1)	(0.1)	Shares recovered for minimum tax withholding	(0.1)	(0.1)
Net shares issued	Net shares issued	0.1	0.2	Net shares issued	0.2	0.1

11. ACCUMULATED OTHER COMPREHENSIVE LOSS ("AOCL")

Comprehensive income (loss) is reported inon 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).

The following table provides the components of AOCL at March 31, 2021 (amounts are shown net of their related income tax effect, if any):


(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)

The following table provides the components of AOCL at March 31, 2020 (amounts are shown net of their related income tax effect, if any):


(in millions)	Foreign currency translation adjustments		Retirement liabilities		Interest rate cap		AOCL
Balance at December 31, 2019	$	(26.6)	$	(6.2)	$	(0.3)	$	(33.1)

Unrealized net gains (losses) arising during the period	(14.0)		0.0		0.0		(14.0)

Net current period other comprehensive income (loss)	(14.0)		0.0		0.0		(14.0)
Balance at March 31, 2020	$	(40.6)	$	(6.2)	$	(0.3)	$	(47.1)

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~~The following table provides the components of AOCL at March 31, 2019 (amounts are shown net of their related income tax effect, if any):~~

(in millions) Foreign currency translation adjustments Retirement liabilities Interest rate cap AOCL
Balance at December 31, 2018 $ (30.3) $ (10.1) $ (0.3) $ (40.7)
Unrealized net gains (losses) arising during the period 2.4 0.0 0.0 2.4
Amounts reclassified from AOCL — — 0.1 0.1
Net current period other comprehensive income (loss) 2.4 0.0 0.1 2.5
Balance at March 31, 2019 $ (27.9) $ (10.1) $ (0.2) $ (38.2)

12. 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.

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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.

Western Pennsylvania Teamsters and Employers Pension Fund

During the second quarter of 2019, in the course of negotiations for a collective bargaining agreement, Veritiv negotiated a partial withdrawal from the Western Pennsylvania Teamsters and Employers Pension Fund (the "Western Pennsylvania Fund"), a MEPP related to its Warrendale, Pennsylvania location, and recognized an estimated partial withdrawal liability of $6.5 million, which was unchanged as of March 31, ~~2020. The withdrawal charge was recorded in distribution expenses as it was not related to a restructuring activity.~~2021.

During the first quarter of 2020, Veritiv negotiated the complete withdrawal from the Western Pennsylvania Fund 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 March 31, 2021. The withdrawal charge was recorded in distribution ~~expenses.~~expenses as it was not related to a restructuring activity.

The Company records an estimated undiscounted charge when it becomes probable that it has incurred a withdrawal liability.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.~~The~~ As of March 31, 2021, the Company has not yet received the determination letters for the partial and subsequent full withdrawal from the Western Pennsylvania ~~Fund for either the partial or complete withdrawal.~~Fund. The Company expects that payments will occur over an approximate 20-year period, which could run consecutively.

13. SEGMENT AND OTHER INFORMATION

Veritiv's business is organized under 4 reportable segments: Packaging, Facility Solutions, Print, and Publishing and Print Management ("Publishing"). 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 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 the Veritiv logistics solutions business which provides transportation and warehousing solutions.

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The following tables present net sales, Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, restructuring charges, net, integration and acquisition 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, net, fair value adjustments related to contingent 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:


(in millions)	(in millions)	Packaging		Facility Solutions		Print		Publishing		Total Reportable Segments		Corporate & Other		Total		(in millions)	Packaging		Facility Solutions		Print		Publishing		Total Reportable Segments		Corporate & Other		Total
Three Months Ended March 31, 2021																Three Months Ended March 31, 2021
Net sales																Net sales	$	854.6	$	206.1	$	323.2	$	148.1	$	1,532.0	$	27.3	$	1,559.3
Adjusted EBITDA																Adjusted EBITDA	78.0		11.5		12.3		5.1		106.9		(47.4)		0
Depreciation and amortization																Depreciation and amortization	6.1		2.0		1.6		0.0		9.7		4.8		14.5
Restructuring charges, net																Restructuring charges, net	2.7		0.5		1.6		0.0		4.8		(0.5)		4.3

Three Months Ended March 31, 2020	Three Months Ended March 31, 2020															Three Months Ended March 31, 2020
Net sales	Net sales	$	802.6	$	259.7	$	452.2	$	166.7	$	1,681.2	$	26.1	$	1,707.3	Net sales	$	802.6	$	259.7	$	452.2	$	166.7	$	1,681.2	$	26.1	$	1,707.3
Adjusted EBITDA	Adjusted EBITDA	59.6		9.0		11.2		3.6		83.4		(47.2)				Adjusted EBITDA	59.6		9.0		11.2		3.6		83.4		(47.2)		0
Depreciation and amortization	Depreciation and amortization	5.3		1.9		2.1		0.0		9.3		4.5		13.8		Depreciation and amortization	5.3		1.9		2.1		0.0		9.3		4.5		13.8

Three Months Ended March 31, 2019
Net sales		$	845.4	$	298.5	$	553.9	$	210.1	$	1,907.9	$	33.6	$	1,941.5
Adjusted EBITDA		48.2		4.2		7.2		4.8		64.4		(44.0)
Depreciation and amortization		4.5		1.7		2.1		0.2		8.5		4.3		12.8
Restructuring charges, net		0.3		0.2		0.5		0.3		1.3		1.1		2.4

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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
March 31,
(in millions) 2020 2019
Income (loss) before income taxes $ 0.0 $ (33.5)
Interest expense, net 7.0 11.4
Depreciation and amortization 13.8 12.8
Restructuring charges, net — 2.4
Stock-based compensation 9.4 4.7
LIFO reserve (decrease) increase (5.9) 3.4
Non-restructuring severance charges 1.7 1.3
Non-restructuring pension charges, net 7.1 0.0
Integration expenses — 4.3
Fair value adjustment on TRA contingent liability (0.7) 0.9
Fair value adjustment on contingent consideration liability 1.0 5.4
Escheat audit contingent liability — 7.0
Other 2.8 0.3
Adjustment for Corporate & Other 47.2 44.0
Adjusted EBITDA for reportable segments $ 83.4 $ 64.4

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~~14. SUBSEQUENT EVENT~~


	Three Months Ended March 31,
(in millions)	2021		2020
Net income (loss)	$	21.3	$	(0.4)
Interest expense, net	5.1		7.0
Income tax expense (benefit)	9.1		0.4
Depreciation and amortization	14.5		13.8
Restructuring charges, net	4.3		0
Facility closure charges, including (gain) loss from asset disposition	0.3		1.4
Stock-based compensation	1.2		9.4
LIFO reserve (decrease) increase	5.1		(5.9)

Non-restructuring severance charges	0.8		1.7
Non-restructuring pension charges, net	0		7.1

Fair value adjustment on TRA contingent liability	0		(0.7)
Fair value adjustment on contingent consideration liability	0		1.0


Other	(2.2)		1.4
Adjustment for Corporate & Other	47.4		47.2
Adjusted EBITDA for reportable segments	$	106.9	$	83.4

On ~~April 9, 2020,~~March 31, 2021, the Company ~~amended~~sold its Print segment's Rollsource business, which provides specialized converting of commercial printing paper for distribution to the business-forms, direct-mail and digital-printing industries. The Company received net cash proceeds of $7.5 million, which was immediately used to pay outstanding revolving loan borrowings under the ABL ~~Facility to extend~~Facility. The net proceeds are reported as proceeds from asset sales and sale of a business in the ~~maturity date to April 9, 2025, reduced~~investing activities section of the ~~aggregate commitments from $1.4 billion to $1.1 billion~~Condensed Consolidated Statements of Cash Flows. The Company recognized a gain of $2.4 million on the sale, which is included in selling and ~~adjusted~~administrative expenses on the ~~pricing grid for applicable interest rates. All other significant terms remained consistent.~~Condensed Consolidated Statements of Operations. The divestiture is not considered a strategic shift that will have a major effect on the Company's operations or financial results; therefore it is not reported as discontinued operations.

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

Certain statements contained in this report regarding the Company's future operating results, performance, business plans, ~~including~~ prospects, guidance, the 2020 Restructuring Plan and any other restructuring, 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 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 actual operating results, performance, business plans, prospects or guidance to differ materially from those expressed in, or implied by, these statements.

Factors that could cause actual results to differ materially from current expectations include risks and other factors described under the heading "Risk Factors" and elsewhere in our Annual Report on Form 10-K and elsewhere in the Company's 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 control, include: adverse impacts of the COVID-19 pandemic; the industry-wide decline in demand for paper and related products; ~~adverse impacts of the COVID-19 pandemic;~~ 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 impacting our Company and our customers; foreign currency fluctuations; 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, facility products and 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 and third-party freight and the availability of third-party freight providers; the loss of any of our significant customers; uncertainties as to the structure, timing, benefits and costs of the 2020 Restructuring Plan or any future restructuring plan that the Company may undertake; adverse developments in general business and economic conditions that could impair our ability to use net operating loss carryforwards and other 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; the effects of work stoppages, union negotiations and labor disputes; our ability to generate sufficient cash to service our debt; increasing interest rates; our ability to refinance or restructure our debt on reasonable terms and conditions as might be necessary from time to time; our ability to comply with the covenants contained in our debt agreements; 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; changes in ~~trade policies~~tax laws; adverse results from litigation, governmental investigations or audits, or tax-related proceedings or audits; regulatory changes and ~~regulations;~~judicial rulings impacting our business; the 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 customers; foreign currency fluctuations; inclement weather, widespread outbreak of an illness, ~~or responses thereto,~~ anti-terrorism measures and other disruptions to our supply chain, distribution system and operations; our dependence on a variety of information technology and telecommunications systems and the Internet; our reliance on third-party vendors for various services; ~~cyber-security~~cybersecurity 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 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 pension and health care costs and participation in multi-employer pension, health and welfare plans; increasing interest rates; our ability to generate sufficient cash to service our debt; our ability to comply with the covenants contained in our debt agreements; 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; uncertainties as to the structure, timing, benefits and costs of any restructuring and whether it will be completed at all 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 financial condition and results of operations for the three months ended March 31, ~~2020~~2021 should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto, included elsewhere in this report.

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Executive Overview

The COVID-19 Pandemic

The ~~recent~~global outbreak of the novel coronavirus ("COVID-19"), which was declared a pandemic by the World Health Organization on March 11, 2020, has led to adverse impacts on the United States ("U.S.") and global economies and created significant uncertainty regarding potential impacts to Veritiv Corporation's ("Veritiv" or the "Company") operations, supply chain and customer demand. ~~While the~~The COVID-19 pandemic ~~did not materially adversely affect the Company's~~has had widespread, rapidly evolving and unpredictable impacts on global societies, economies, financial ~~results~~markets and business ~~operations during~~practices.Federal and state governments have implemented measures in an effort to contain the ~~three months ended March 31, 2020, economic~~virus, including physical distancing recommendations, travel restrictions, border closures, limitations on public gatherings, work-from-home recommendations, supply chain logistical changes and ~~health conditions in the U.S. and across most~~closure of ~~the world have changed rapidly over the past few months.~~non-essential businesses. Veritiv’s logistics and distribution operations ~~fall~~have fallen within guidance provided by various government authorities on essential businesses, services and workplaces and therefore the Company has not experienced any closures of distribution centers. Veritiv serves customers across a broad range of industry sectors and geographies, with varying COVID-19 impacts. Primarily beginning in April 2020, unfavorable impacts from the COVID-19 pandemic have had a negative impact on the Company's financial results, including decreased sales activity. Sales activity during the first quarter of 2021 continued to be below the same period in 2020 for the Company's reportable segments with the exception of the Packaging segment, which is now above pre-COVID-19 levels.

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 ~~established a central global response team~~initiated its Corporate Incident Response Team and initiated enhanced health and safety measures across its facilities. The Company ~~has~~ modified practices at its distribution centers and offices to adhere to guidance from the 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. In addition, the Company implemented global travel restrictions and work-from-home policies for employees who have the ability to work remotely.

~~The continued spread of COVID-19 is having a significant negative impact on many of Veritiv’s customers and their operations.~~In April 2020, Veritiv serves customers across a broad range of industries and geographies, with varying impacts. Some customers have been forced to close temporarily and in some cases even those that are still considered essential have seen their business activity substantially reduced. Towards the end of the first quarter of 2020, the Company began to experience decreased sales activity in each of its segments. As a result, Veritiv has takentook several actions to help mitigate the effects of the revenue decline and improve liquidity. ~~Veritiv's~~These actions ~~include~~included (i) temporarily reducing salaries for senior leaders ranging from 10% to 50%, through June 2020, (ii) temporarily reducing annual cash retainers for independent directors by 50%, through June 2020, (iii) placing approximately 15% of its salaried workforce on temporary furloughs through mid-July 2020, (iv) adjusting its supply chain operations staff depending on volume at specific locations, (v) suspending its share repurchase program and (vi) reducing discretionary spending including planned capital expenditures. In July 2020, Veritiv took additional actions in response to the ongoing impacts of the COVID-19 pandemic to enhance liquidity, including implementing cost-savings and cash preservation initiatives as described under the "2020 Restructuring Plan" below. In addition, beginning with the second quarter of 2020, the Company invested $75.0 million of its cash in highly-liquid investments instead of paying down its long-term debt.

Veritiv's management expects that cash provided by operating activities and available capacity under the Asset-Based Lending Facility (the "ABL Facility") will provide sufficient funds to operate the business and meet other liquidity needs. As of March 31, ~~2020,~~2021, Veritiv had cash and cash equivalents of ~~$74.6~~$109.0 million and ~~$286.0~~also had $343.8 million in available additional borrowing capacity under the ABL Facility. In April 2020, Veritiv refinanced and extended the maturity date of the ABL Facility to April 2025 under substantially the same terms (see additional information below). As described above, Veritiv has taken measures to enhance liquidity, including implementing cost-savings and cash preservation initiatives.2025.

~~Veritiv expects that its second quarter and full-year 2020 results will be unfavorably impacted by the COVID-19 pandemic.~~ 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 impacts the Company's business, results of operations, access to sources of liquidity and ~~its~~ financial condition will depend on future developments. These developments, which are highly uncertain and cannot be predicted, ~~including,~~include, but are not limited to, the duration, spread and severity of the COVID-19 pandemic, the effects of the COVID-19 pandemic on the Company's employees, customers, suppliers and vendors and the remedial actions and stimulus measures adopted by local and federal governments, the availability, adoption and effectiveness of a vaccine and to what extent normal economic and operating conditions can ~~resume.~~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 ~~downturn~~volatility that has occurred or may occur in the future.

~~See Part II, Item 1A, Risk Factors, for additional information on risks related to COVID-19.~~Table of Contents

Other ~~Recent~~ Events

2021 Share Repurchase Program

On March 3, 2021, Veritiv announced that its Board of Directors authorized a $50.0 million share repurchase program (the "2021 Share Repurchase Program"). Under this program the Company may purchase shares of its common stock through open market transactions, privately negotiated transactions, forward, derivative, or accelerated repurchase transactions, tender offers or otherwise, in accordance with all applicable securities laws and regulations. This authorization for the share repurchase program replaces the $25.0 million share repurchase authorization previously approved by the Board of Directors in March 2020 (the "2020 Share Repurchase Program") and may be suspended, terminated, increased or decreased by the Board at any time.

2020 Restructuring Plan

During the second quarter of 2020, the Company initiated a restructuring plan in response to the impact of the COVID-19 pandemic on its business operations and the ongoing secular changes in its Print and Publishing segments. During the fourth quarter of 2020, the Company expanded the initial plan to further align its cost structure with ongoing business needs as the Company executes on its stated corporate strategy. The initial and expansion activities are collectively referred to as the "2020 Restructuring Plan."

The 2020 Restructuring Plan includes (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.

The Company currently estimates it will incur total restructuring charges of between $70 million and $87 million in connection with the 2020 Restructuring Plan. These costs will include the following activities (i) employee termination and other one-time compensation costs, (ii) real estate exit costs, (iii) certain inventory related costs and (iv) other exit costs. Initial charges were incurred and recorded in June 2020. The Company expects to substantially complete the 2020 Restructuring Plan by the end of 2021. See Note 4 of the Notes to Condensed Consolidated Financial Statements for information related to the Company's restructuring efforts.

Supply Chain Restructuring

On March 13, 2020, Veritiv announced that its Board of Directors authorized Company management to evaluate alternatives to restructure the Company’s integrated supply chain in an effort to facilitate better alignment with the supply chain

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needs of the Company’s customers by segment, with a view towards reducing complexity and lowering overall supply chain costs. Each of the Company’s reportable segments has different market dynamics and business and service needs. ~~As a result, the Company is investigating whether an alternative supply chain structure would be more economically or operationally desirable.~~ Moreover, to address the ongoing and rapid secular decline of the paper industry, management continues to explore opportunities to adapt the cost structure necessary to support the Print segment. ~~In an effort to ensure all aspects~~The Company is not currently anticipating a separate restructuring of the ~~Company can operate most effectively,~~supply chain operations in 2021 as the changes made in conjunction with the 2020 Restructuring Plan have positioned the Company ~~intends~~ to review and evaluate restructuring options and what the optimal path forward will be. The Company plans to proceed with this review in a timely manner, but no decision has been made to pursue any specific course of action, and theremeet its near-term needs. There can be no assurance as to what form ~~the~~any future restructuring may take or whether this on-going evaluation will result in any restructuring. Additionally, any restructuring may result in a significant charge to earnings in any given financial reporting period or periods.

On March 16, 2020, Veritiv announced that its Board of Directors authorized a $25 million share repurchase program. As of March 31, 2020, the Company had repurchased 383,972 shares of its common stock at a cost of $3.5 million.

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 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 and UWW Holdings, Inc., the parent company of Unisource Worldwide, Inc. On August 31, 2017, Veritiv completed its acquisition of 100% of the equity interest in various All American Containers entities (collectively, "AAC"). AAC was a family owned and operated distributor of rigid packaging products, including plastic, glass and metal containers, caps, closures and plastic pouches. VeritivThe Company operates from approximately ~~150~~125 distribution centers primarily throughout the U.S., Canada and Mexico.

Veritiv's business is organized under four reportable segments: Packaging, Facility Solutions, Print, and Publishing and Print Management ("Publishing"). 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 business.

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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 the Veritiv logistics solutions business which provides transportation and warehousing solutions. 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. Veritiv services its customers with a full spectrum of packaging product materials within the fiber-based, flexible and rigid categories. The business is strategically focused on higher growth ~~industries~~industry sectors including ~~light industrial/general~~ manufacturing, food processing and service, fulfillment and internet retail, as well as niche ~~verticals~~sectors based on ~~geographical~~industry and ~~functional~~product expertise. Veritiv's packaging professionals create customer value through supply chain solutions, structural and graphic packaging design and engineering, automation, workflow and equipment services 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 towels, tissues, ~~wipers and dispensers, can liners,~~ commercial cleaning chemicals, personal protective equipment and safety supplies, wipers, can liners, soaps and sanitizers, dispensers, sanitary maintenance supplies and equipment, ~~safety and~~ hazard supplies, and shampoos and amenities primarily in North America. ~~Veritiv is a leading distributor in the Facility Solutions segment.~~ 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, inventory management and a sales-force trained to bring leading vertical expertise to the major North American geographies.

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exclusive private brand offerings, provides a foundation to service national, regional and local customers across North America.

Seasonality

The Company's operating results are subject to seasonal influences. Historically, its higher consolidated net sales have occurred during the third and fourth quarters while its lowest consolidated net sales have occurred during the first quarter. The Packaging segment net sales have traditionally increased each quarter throughout the year and net sales for the first quarter 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 have traditionally peaked in the third quarter due to increased summer demand in the away-from-home resort, cruise and hospitality markets and from back-to-school activities. Within the Print and Publishing segments, 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 disrupted the Company's seasonal patterns in net sales across all segments and on a consolidated basis in 2020 due to the significant impacts of the pandemic on many of Veritiv's customers. The duration and extent of the COVID-19 pandemic is highly 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 months ended March 31, ~~2020~~2021 and ~~2019:~~2020:


		Three Months Ended March 31,						Increase (Decrease)							Three Months Ended March 31,			Increase (Decrease)
(in millions)	(in millions)	2020		2019		$		%		(in millions)	2021		2020		$		%
Net sales	Net sales	$	1,707.3	$	1,941.5	$	(234.2)	(12.1)	%	Net sales	$	1,559.3	$	1,707.3	$	(148.0)	(8.7)%
Cost of products sold (exclusive of depreciation and amortization shown separately below)	Cost of products sold (exclusive of depreciation and amortization shown separately below)	1,359.6		1,591.4		(231.8)		(14.6)	%	Cost of products sold (exclusive of depreciation and amortization shown separately below)	1,238.1		1,359.6		(121.5)		(8.9)%
Distribution expenses	Distribution expenses	123.4		130.4		(7.0)		(5.4)	%	Distribution expenses	101.5		123.4		(21.9)		(17.7)%
Selling and administrative expenses	Selling and administrative expenses	203.6		216.1		(12.5)		(5.8)	%	Selling and administrative expenses	166.4		203.6		(37.2)		(18.3)%
Depreciation and amortization	Depreciation and amortization	13.8		12.8		1.0		7.8	%	Depreciation and amortization	14.5		13.8		0.7		5.1%
Integration expenses		—		4.3		(4.3)		(100.0)	%

Restructuring charges, net	Restructuring charges, net	—		2.4		(2.4)		(100.0)	%	Restructuring charges, net	4.3		—		4.3		*
Operating income (loss)	Operating income (loss)	6.9		(15.9)		22.8		(143.4)	%	Operating income (loss)	34.5		6.9		27.6		400.0%
Interest expense, net	Interest expense, net	7.0		11.4		(4.4)		(38.6)	%	Interest expense, net	5.1		7.0		(1.9)		(27.1)%
Other (income) expense, net	Other (income) expense, net	(0.1)		6.2		(6.3)		(101.6)	%	Other (income) expense, net	(1.0)		(0.1)		(0.9)		(900.0)%
Income (loss) before income taxes	Income (loss) before income taxes	0.0		(33.5)		33.5		(100.0)	%	Income (loss) before income taxes	30.4		0.0		30.4		*
Income tax expense (benefit)	Income tax expense (benefit)	0.4		(6.8)		7.2		(105.9)	%	Income tax expense (benefit)	9.1		0.4		8.7		*

Net income (loss)	Net income (loss)	$	(0.4)	$	(26.7)	$	26.3	(98.5)	%	Net income (loss)	$	21.3	$	(0.4)	$	21.7	*

*- not meaningful

Net Sales

For the three months ended March 31, ~~2020,~~2021, net sales decreased in all reportable ~~segments. Declines~~segments except Packaging. Primarily beginning in April 2020, the ~~Print and Publishing segments'~~Company experienced decreased net sales ~~were responsible~~due to the negative impacts from the COVID-19 pandemic. The decline in net sales for ~~over 60%~~the three months ended March 31, 2021 was primarily due to continued impacts of the ~~total~~COVID-19 pandemic across the non-Packaging segments and the continuing secular decline in the ~~three month period.~~paper industry. The Print segment experienced the largest impact as net sales decreased $129.0 million. See the "Segment Results" section for additional discussion. Management expects net sales during the ~~second quarter and full-year 2020~~first half of 2021 to be unfavorably impacted in each of the Company's reportable segments ~~with Packaging experiencing the least significant decline followed by Facility Solutions, Print and Publishing~~ due to the continuing negative effects of the COVID-19 ~~including~~pandemic, with the ~~temporary closures~~exception of ~~certain customer operations.~~the Packaging segment. The duration and extent of the COVID-19 pandemic is highly uncertain and the magnitude of net sales declines ~~are~~is difficult to predict.

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

For the three months ended March 31, ~~2020,~~2021, cost of products sold decreased primarily due to lower net sales. Cost of products sold decreased at a faster rate than net sales ~~primarily~~ due to improvements in ~~pricing, as well as changes in both segment and customer mix.~~pricing.

Distribution Expenses

For the three months ended March 31, ~~2020,~~2021, distribution expenses decreased by ~~$7.0~~$21.9 million, or ~~5.4%~~17.7%. The decrease was primarily due to (i) a ~~$6.5 million decrease in freight and logistics expense, (ii) a $6.2~~$7.8 million decrease in wages and temporary employee expenses, ~~and (iii) a $1.2 million decrease in equipment and facility rent expense, partially offset by~~(ii) a $7.1 million multi-employer pension plan ~~("MEPP")~~ withdrawal charge in the first quarter of 2020 ~~period.~~that did not repeat in 2021, (iii) a $4.7 million decrease in facility and equipment rent expense and (iv) a $1.0 million decrease in freight and logistics expense. The decrease in wages and temporary employee expenses was primarily driven by actions taken by the Company in response to the COVID-19 pandemic, including lowering headcount across the Company's distribution network. The decrease in facility and equipment rent expense was primarily driven by consolidation of the Company's facilities. The decrease in freight and logistics expense was primarily driven by a decrease in third-party freight and fuel ~~expenses.~~expenses mostly related to lower net sales volumes. The ~~decrease in~~Company expects wages and ~~temporary employee expenses was primarily driven by lower headcount across~~related costs to decline in the first half of the year versus the comparable prior year period as a result of the reduction in the Company's ~~distribution network. The decrease in equipment and facility rent expense was primarily driven by consolidation of the Company's facilities.~~U.S. salaried workforce.

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Selling and Administrative Expenses

For the three months ended March 31, ~~2020,~~2021, selling and administrative expenses decreased by ~~$12.5~~$37.2 million, or ~~5.8%~~18.3%. The decrease was primarily due to (i) a ~~$7.0~~$28.6 million decrease ~~related to the escheat audit expense~~ in ~~the first quarter of 2019 not repeating in the same period in 2020,~~personnel expenses, (ii) a ~~$2.5~~$3.5 million decrease in bad debt expense, (iii) a $2.6 million decrease in professional fees ~~expense~~expense and ~~(iii)~~(iv) a ~~$1.3~~$2.4 million ~~decrease in personnel expenses.~~ gain on the sale of a business. The decrease in personnel expenses was primarily driven by (i) lower wages ~~and~~primarily as a result of actions taken by the Company in response to the COVID-19 pandemic, (ii) a decrease in commission expenses driven by lower net sales and (iii) a decrease in travel and entertainment expenses in response to the COVID-19 pandemic, partially offset by higher incentive compensation expenses. The Company expects wages and related costs to decline in the first half of the year versus the comparable prior year period as a result of the reduction in the Company's U.S. salaried workforce.

Depreciation and Amortization

For the three months ended March 31, ~~2020,~~2021, depreciation and amortization increased by ~~$1.0~~$0.7 million, or ~~7.8%~~5.1%. The ~~increase was~~increases were primarily due to ~~an increase~~increases in depreciation related to capitalized ~~delivery equipment.~~

~~Integration Expenses~~

~~As of December 31, 2019, the integration plan related to the Merger was complete~~information technology and ~~no further costs or charges are expected. See~~ ~~Note 4~~ ~~of the Notes to Condensed Consolidated Financial Statements for information related to the Company's past integration efforts.~~facilities expense.

Restructuring Charges, Net

~~As of December~~For the three months ended March 31, ~~2019,~~2021, restructuring charges, net, increased by $4.3 million. The increase was due to net charges from the ~~restructuring plan related to~~2020 Restructuring Plan occurring in 2021, which did not occur in the ~~Merger was complete and no further costs or charges are expected.~~corresponding prior year period. See Note 4 of the Notes to Condensed Consolidated Financial Statements for additional information related to the Company's ~~past~~ restructuring efforts.

Interest Expense, Net

For the three months ended March 31, ~~2020,~~2021, interest expense, net, decreased by ~~$4.4~~$1.9 million, or ~~38.6%~~27.1%. The decrease was primarily due to (i) a lower average balance on the Company's ABL Facility and (ii) lower average interest rates.

Other (Income) Expense, Net

For the three months ended March 31, ~~2020,~~2021, other (income) expense, net, was income of ~~$0.1~~$1.0 million. This was a net improvement of ~~$6.3~~$0.9 million as compared to the same period in ~~2019.~~2020. The improvement was primarily due to the reduction in the AAC contingent consideration expense. For the three months ended March 31 2020, there was a $1.0 million increase in the fair value of the AAC contingent consideration as compared to an increase of $5.4 million in the same period in 2019. The remaining impact was primarily driven by changes associated with the Tax Receivable Agreement ("TRA"). See ~~Note~~ 9 ~~of the Notes to Condensed Consolidated Financial Statements for information related to the AAC contingent consideration, as well as, the TRA contingent consideration.~~lower pension expenses and higher foreign currency gains.

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Effective Tax Rate

Veritiv's effective tax rate was ~~not meaningful~~29.9% for the three months ended March 31, 2021. The effective tax rate for the three months ended March 31, 2020 ~~and~~ was ~~20.3% for the three months ended March 31, 2019.~~not meaningful. The difference between the Company's effective tax rates and the U.S. statutory tax rate of 21.0% primarily relates to state income taxes (net of federal income tax benefit), non-deductible expenses, tax expense for stock compensation vesting, Global Intangible Low-Taxed Income ~~non-deductible expenses, tax credits~~("GILTI"), and the Company's pre-tax book income (loss) by jurisdiction. In addition, for the three months ended March 31, 2020, Veritiv recorded an estimated $2.1 million tax rate benefit related to the carryback of net operating losses which are now available due to the Coronavirus Aid, Relief, and Economic Security ~~Act.~~Act (the "CARES Act").

The 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. The Company ~~expects continued~~may experience volatility of the effective tax rate ~~for the foreseeable~~in future periods due to potential fluctuations in the amount and source, including both foreign and domestic, of pre-tax book income (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 that could impact the effective tax rate. Additionally, due to the heightened uncertainty surrounding the COVID-19 pandemic, its duration and its impact on demand for Veritiv’s products and services, the negative impact on the Company's financial and operating results further influence volatility. See further discussion of COVID-19 in the Executive Overview section above.

Segment Results

Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, restructuring charges, net, integration and acquisition 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, net, fair value adjustments related to contingent liabilities assumed in mergers and acquisitions and certain other adjustments) 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.

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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 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").

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

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

•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 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 to support the Packaging, Facility Solutions and Print segments, 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.

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The Company sells thousands of products. In the Packaging and Facility Solutions segments, Veritiv is unable to compute the impact of changes in sales volume based on changes in sales of each individual product. Rather, the Company assumes that the margin stays constant and estimates 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 identified, the remaining sales variance is attributed to price/mix.

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. The Company believes the elimination of the foreign currency translation impact provides better year-to-year comparability without the distortion of foreign currency fluctuations.

The Company believes that the 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 trend, which may have been accelerated by the COVID-19 pandemic, 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 and Publishing segments.

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


(in millions)	(in millions)	Packaging			Facility Solutions			Print			Publishing			Corporate & Other		(in millions)	Packaging			Facility Solutions			Print			Publishing			Corporate & Other
Three Months Ended March 31, 2020
Three Months Ended March 31, 2021																Three Months Ended March 31, 2021
Net sales	Net sales	$	802.6		$	259.7		$	452.2		$	166.7		$	26.1	Net sales	$	854.6		$	206.1		$	323.2		$	148.1		$	27.3
Adjusted EBITDA	Adjusted EBITDA	59.6			9.0			11.2			3.6			(47.2)		Adjusted EBITDA	78.0			11.5			12.3			5.1			(47.4)
Adjusted EBITDA as a % of net sales	Adjusted EBITDA as a % of net sales	7.4		%	3.5		%	2.5		%	2.2		%	*		Adjusted EBITDA as a % of net sales	9.1		%	5.6		%	3.8		%	3.4		%	*

Three Months Ended March 31, 2019
Three Months Ended March 31, 2020																Three Months Ended March 31, 2020
Net sales	Net sales	$	845.4		$	298.5		$	553.9		$	210.1		$	33.6	Net sales	$	802.6		$	259.7		$	452.2		$	166.7		$	26.1
Adjusted EBITDA	Adjusted EBITDA	48.2			4.2			7.2			4.8			(44.0)		Adjusted EBITDA	59.6			9.0			11.2			3.6			(47.2)
Adjusted EBITDA as a % of net sales	Adjusted EBITDA as a % of net sales	5.7		%	1.4		%	1.3		%	2.3		%	*		Adjusted EBITDA as a % of net sales	7.4		%	3.5		%	2.5		%	2.2		%	*

* - not meaningful

See Note 13 of the Notes to 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 March 31, Increase (Decrease)
(in millions) 2020 2019 $ %
Net sales $ 802.6 $ 845.4 $ (42.8) (5.1) %
Adjusted EBITDA 59.6 48.2 11.4 23.7 %
Adjusted EBITDA as a % of net sales 7.4 % 5.7 %

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


	~~Increase (Decrease)~~
	Three Months Ended March 31,
~~(in millions)~~	~~2020 vs. 2019~~
~~Volume~~	$	~~(64.1)~~
~~Foreign currency~~	~~(1.1)~~
~~Price/Mix~~	~~22.4~~


~~Total change~~	$	~~(42.8)~~

~~Comparison of the Three Months Ended March 31, 2020 and March 31, 2019~~

Net sales decreased $42.8 million, or 5.1%, as compared to the same period in 2019. The net sales decrease was primarily attributable to decreased sales of films, corrugated products and equipment and parts, partially offset by higher market prices.

Adjusted EBITDA increased $11.4 million, or 23.7%, as compared to the same period in 2019. The increase in Adjusted EBITDA was primarily attributable to (i) cost of products sold decreasing at a faster rate than net sales, (ii) a $2.0 million decrease in selling and administrative expenses and (iii) a $1.7 million decrease in distribution expenses, partially offset by a decline in net sales. The decrease in selling and administrative expenses was primarily driven by a decrease in commission expense. The decrease in distribution expenses was primarily driven by a decrease in freight and logistics expense, mostly related to third-party freight and fuel expenses.

~~Facility Solutions~~

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


		Three Months Ended March 31,										Increase (Decrease)								Three Months Ended March 31,					Increase (Decrease)
(in millions)	(in millions)	2020			2019			$		%			(in millions)	2021			2020				$		%
Net sales	Net sales	$	259.7		$	298.5		$	(38.8)	(13.0)	%		Net sales	$	854.6		$	802.6			$	52.0	6.5	%
Adjusted EBITDA	Adjusted EBITDA	9.0			4.2			4.8		114.3	%		Adjusted EBITDA	78.0			59.6				18.4		30.9	%
Adjusted EBITDA as a % of net sales	Adjusted EBITDA as a % of net sales	3.5		%	1.4		%						Adjusted EBITDA as a % of net sales	9.1		%	7.4		%				170 bps

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


	Increase (Decrease)
	Three Months Ended March 31,
(in millions)	~~2020~~2021 vs. ~~2019~~2020
Volume	$	~~(42.3)~~43.4
Foreign currency	~~(1.0)~~5.3
Price/Mix	~~4.5~~3.3


Total change	$	~~(38.8)~~52.0

Comparison of the Three Months Ended March 31, 2021 and March 31, 2020

Net sales increased $52.0 million, or 6.5%, as compared to the same period in 2020. The net sales increase was primarily attributable to increased sales of corrugated products, ancillary packaging and labeling products as well as higher market prices. Similar to the fourth quarter of 2020, net sales during the first quarter of 2021 were positively impacted by strong e-commerce demand. Sales to industrial manufacturing customers continued to improve during the current period as compared to the fourth quarter of 2020, but certain sectors including automotive and aerospace remained below pre-COVID-19 pandemic sales volumes.

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~~Comparison of the Three Months Ended March 31, 2020 and March 31, 2019~~

~~Net sales decreased $38.8~~Adjusted EBITDA increased $18.4 million, or ~~13.0%~~30.9%, as compared to the same period in ~~2019. The net sales decrease was primarily attributable to the Company exiting a branded re-distribution business beginning in the third quarter of 2019 and substantially completed by year-end 2019.~~ ~~During the first quarter of 2020 net sales associated with this business~~ ~~decreased $33.3 million as compared to the same period in 2019 and~~ ~~have historically been approximately 12% of the Facility Solutions segment. In addition to~~ exiting the branded re-distribution business, net sales were lower due to strategic decisions to exit certain customer relationships that were not aligned with the Company's product and service capabilities. For the month of March 2020, the Facility Solutions segment experienced significant sales growth driven by increased demand for sanitizers and soap products, gloves and other personal protection products, paper towels and tissues, and cleaning supplies due to the COVID-19 pandemic. Management does not expect this sales growth to continue in the second quarter of 2020 due to shortages of high-demand products from key suppliers and the temporary closure of certain customer operations.

~~Adjusted EBITDA increased $4.8 million, or 114.3%, as compared to the same period in 2019.~~2020. The increase in Adjusted EBITDA was primarily attributable to (i) ~~a $5.6 million decrease in distribution expenses,~~increased net sales volume, (ii) a ~~$4.2~~$4.6 million decrease in selling and administrative expenses and (iii) cost of products sold ~~decreasing~~increasing at a ~~faster~~slower rate than net sales, partially offset by a ~~decline~~$1.7 million increase in ~~net sales. The decrease in~~ distribution expenses was primarily driven by (i) a $2.5 million decrease in personnel expenses and (ii) a $2.2 million decrease in freight and logistics expense, primarily driven by a decrease in third-party freight and fuel expenses. The decrease in selling and administrative expenses was primarily driven by a ~~$4.4~~$4.9 million decrease in personnel expenses. The increase in distribution expenses was primarily driven by increased utilization of the distribution network, which is reflected in (i) a $0.9 million increase in freight and logistics expense and (ii) a $0.7 million increase in facility and equipment rent expense.

~~Print~~Facility Solutions

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


		Three Months Ended March 31,										Increase (Decrease)								Three Months Ended March 31,					Increase (Decrease)
(in millions)	(in millions)	2020			2019			$		%			(in millions)	2021			2020				$		%
Net sales	Net sales	$	452.2		$	553.9		$	(101.7)	(18.4)	%		Net sales	$	206.1		$	259.7			$	(53.6)	(20.6)	%
Adjusted EBITDA	Adjusted EBITDA	11.2			7.2			4.0		55.6	%		Adjusted EBITDA	11.5			9.0				2.5		27.8	%
Adjusted EBITDA as a % of net sales	Adjusted EBITDA as a % of net sales	2.5		%	1.3		%						Adjusted EBITDA as a % of net sales	5.6		%	3.5		%				210 bps

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


	Increase (Decrease)
	Three Months Ended March 31,
(in millions)	~~2020~~2021 vs. ~~2019~~2020
Volume	$	~~(87.3)~~(61.2)
Foreign currency	~~(0.4)~~3.6
Price/Mix	~~(14.0)~~4.0


Total change	$	~~(101.7)~~(53.6)

Comparison of the Three Months Ended March 31, ~~2020~~2021 and March 31, ~~2019~~2020

Net sales decreased ~~$101.7~~$53.6 million, or ~~18.4%~~20.6%, as compared to the same period in ~~2019.~~2020. The net sales decrease was primarily attributable to decreased sales of towels and tissues, skin products, food service products and can liners primarily driven by the ~~continued secular~~negative impact on demand from the COVID-19 pandemic. Partially offsetting the decline in net sales was strong demand for the ~~paper industry~~product categories of personal protective equipment and hygiene-related products. Negative impacts to customer demand have included business and school temporary closures, travel restrictions, constraints on large venues hosting sporting, conventions and entertainment events as well as ~~managing risk in the segment through strategic adjustments to the Company's customer base.~~extended work-from-home measures.

Adjusted EBITDA increased ~~$4.0~~$2.5 million, or ~~55.6%~~27.8%, as compared to the same period in ~~2019.~~2020. The increase in Adjusted EBITDA ~~increase~~ was primarily ~~driven by~~attributable to (i) a ~~$7.7 million decrease in distribution expenses, (ii) a $6.5~~$6.8 million decrease in selling and administrative expenses, (ii) a $5.1 million decrease in distribution expenses and (iii) ~~the~~ cost of products sold decreasing at a faster rate than net sales, partially offset by a decline in net sales. The decrease in selling and administrative expenses was primarily driven by a $6.4 million decrease in personnel expenses. The decrease in distribution expenses was primarily driven by (i) a ~~$3.1~~$3.6 million decrease in personnel expenses and (ii) a ~~$2.4~~$1.0 million decrease in freight and logistics expense, primarily driven by ~~a decrease in~~ third-party freight and fuel ~~expenses and (iii) a $1.8 million decrease in facilities rent and other related~~ expenses. ~~The decrease in selling and administration expenses was~~

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~~primarily due to (i) a $4.6 million decrease in personnel expenses and (ii) a $1.4 million decrease in bad debt expense.~~

~~Publishing~~Print

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


		Three Months Ended March 31,										Increase (Decrease)								Three Months Ended March 31,					Increase (Decrease)
(in millions)	(in millions)	2020			2019			$		%			(in millions)	2021			2020				$		%
Net sales	Net sales	$	166.7		$	210.1		$	(43.4)	(20.7)	%		Net sales	$	323.2		$	452.2			$	(129.0)	(28.5)	%
Adjusted EBITDA	Adjusted EBITDA	3.6			4.8			(1.2)		(25.0)	%		Adjusted EBITDA	12.3			11.2				1.1		9.8	%
Adjusted EBITDA as a % of net sales	Adjusted EBITDA as a % of net sales	2.2		%	2.3		%						Adjusted EBITDA as a % of net sales	3.8		%	2.5		%				130 bps

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


	Increase (Decrease)
	Three Months Ended March 31,
(in millions)	~~2020~~2021 vs. ~~2019~~2020
Volume	$	~~(33.6)~~(120.7)
Foreign currency	—2.4
Price/Mix	~~(9.8)~~(10.7)


Total change	$	~~(43.4)~~(129.0)

Comparison of the Three Months Ended March 31, ~~2020~~2021 and March 31, ~~2019~~2020

Net sales decreased ~~$43.4~~$129.0 million, or ~~20.7%~~28.5%, as compared to the same period in ~~2019.~~2020. The net sales decrease was primarily attributable to (i) the continued secular decline in the paper industry in addition to managing ~~risks~~risk in the segment through strategic adjustments to the Company's customer base and (ii) the negative impact on demand from the COVID-19 pandemic.

Adjusted EBITDA increased $1.1 million, or 9.8%, as compared to the same period in 2020. The Adjusted EBITDA increase was primarily attributable to (i) an $11.7 million decrease in selling and administrative expenses and (ii) a $10.7 million decrease in distribution expenses, partially offset by a decline in net sales. The decrease in selling and administration expenses was primarily driven by (i) a $9.2 million decrease in personnel expenses and (ii) a $1.9 million decrease in bad debt expense. The decrease in distribution expenses was primarily driven by (i) a $4.5 million decrease in personnel expenses, (ii) a $4.2 million decrease in facility and equipment rent expense, primarily driven by consolidation of the Company's facilities and (iii) a $1.2 million decrease in freight and logistics expense, primarily driven by a decrease in third-party freight and fuel expenses.

Publishing

The table below presents selected data for the Publishing segment:


	Three Months Ended March 31,						Increase (Decrease)
(in millions)	2021			2020			$		%
Net sales	$	148.1		$	166.7		$	(18.6)	(11.2)	%
Adjusted EBITDA	5.1			3.6			1.5		41.7	%
Adjusted EBITDA as a % of net sales	3.4		%	2.2		%			120 bps

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


	Increase (Decrease)
	Three Months Ended March 31,
(in millions)	2021 vs. 2020
Volume	$	(14.5)
Foreign currency	—
Price/Mix	(4.1)


Total change	$	(18.6)

Comparison of the Three Months Ended March 31, 2021 and March 31, 2020

Net sales decreased $18.6 million, or 11.2%, as compared to the same period in 2020. The net sales decrease was primarily attributable to (i) the continued secular decline in the paper industry and changes in order patterns due to customer consolidation, digital advertising and other ~~factors.~~factors and (ii) the negative impact on demand from the COVID-19 pandemic.

Adjusted EBITDA ~~decreased $1.2~~increased $1.5 million, or ~~25.0%~~41.7%, as compared to the same period in ~~2019.~~2020. The Adjusted EBITDA ~~decrease~~increase was primarily attributable to ~~(i) the decline in net sales and (ii)~~ a ~~$1.1~~$2.7 million ~~increase~~decrease in selling and administrative expenses, partially offset by ~~cost of products sold decreasing at~~ a ~~faster rate than~~decline in net sales. The ~~increase~~decrease in selling and administrative expenses was primarily driven by (i) a ~~$1.4~~$1.9 million ~~increase~~decrease in bad ~~debt.~~debt expense and (ii) a $0.7 million decrease in personnel expenses.

Corporate & Other

The table below presents selected data for Corporate & Other:


		Three Months Ended March 31,								Increase (Decrease)						Three Months Ended March 31,					Increase (Decrease)
(in millions)	(in millions)	2020		2019		$		%			(in millions)	2021		2020			$		%
Net sales	Net sales	$	26.1	$	33.6	$	(7.5)	(22.3)	%		Net sales	$	27.3	$	26.1		$	1.2	4.6	%
Adjusted EBITDA	Adjusted EBITDA	(47.2)		(44.0)		(3.2)		(7.3)	%		Adjusted EBITDA	(47.4)		(47.2)			(0.2)		(0.4)	%

Comparison of the Three Months Ended March 31, ~~2020~~2021 and March 31, ~~2019~~2020

Net sales ~~decreased $7.5~~increased $1.2 million, or ~~22.3%~~4.6%, as compared to the same period in ~~2019,~~2020. The net sales increase was primarily ~~driven by a decrease~~attributable to an increase in ~~volume of~~ freight brokerage services.

Adjusted EBITDA decreased ~~$3.2~~$0.2 million, or ~~7.3%~~0.4%, as compared to the same period in 2020. The Adjusted EBITDA decrease was primarily driven by a $0.8 million increase in selling and administrative expenses. The increase in selling and administrative expenses was primarily driven by a $3.7 million increase in incentive compensation expense driven by the Company outperforming incentive targets, partially offset by (i) ~~cost of products sold decreasing at~~ a ~~slower rate than net sales~~$1.7 million decrease in professional fees expense and (ii) a ~~decline~~$1.1 million decrease in ~~net sales.~~travel and entertainment expense.

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Liquidity and Capital Resources

The cash requirements of the Company are 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.

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The following table sets forth a summary of cash flows:


		Three Months Ended March 31,							Three Months Ended March 31,
(in millions)	(in millions)	2020		2019		(in millions)	2021		2020
Net cash provided by (used for):	Net cash provided by (used for):					Net cash provided by (used for):
Operating activities	Operating activities	$	84.8	$	43.8	Operating activities	$	13.2	$	84.8
Investing activities	Investing activities	(8.2)		(7.4)		Investing activities	1.7		(8.2)
Financing activities	Financing activities	(39.2)		(42.8)		Financing activities	(26.1)		(39.2)

Analysis of Cash Flows

Operating Activities

Net cash provided by operating activities ~~improved~~decreased by ~~$41.0~~$71.6 million as compared to the prior year, primarily as a result of an increase in inventory levels, due primarily to the Company's rebuilding of its stock levels from pandemic driven lows in 2020, partially offset by improvements in operating results and changes in the deferred income tax provision (benefit). Changes in operating assets and liabilities were flat as compared to the prior year as improvements in accounts payable and inventory were offset by a decrease in accounts receivable.results.

Investing Activities

Net cash ~~used for~~from investing activities increased by ~~$0.8~~$9.9 million as compared to the prior year, primarily due to ~~higher~~the sale of a business in March 2021, for which the Company received net cash proceeds of $7.5 million, and slightly lower capital expenditures in the current year period.

Financing Activities

Net cash used for financing activities was a lower use of cash by ~~$3.6~~$13.1 million as compared to the prior year, primarily due to lower net repayments under the Company's ABL Facility ~~offset by an unfavorable~~and a favorable change in book overdrafts, due to the timing of ~~payments.~~payments, partially offset by common stock repurchases. During the first quarter of 2021, the Company repurchased 586,003 shares of its common stock at a cost of $24.6 million under its 2021 Share Repurchase Program. During the first quarter of 2020, the Company repurchased 383,972 shares of its common stock at a cost of $3.5 million under its ~~share repurchase program.~~2020 Share Repurchase Program. See Part II, Item 2 of this report for additional information on the Company's share repurchase ~~program. The Company expects to finance any future repurchases from a combination of cash on hand and cash provided by operating activities.~~programs.

Funding and Liquidity Strategy

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 March 31, ~~2020,~~2021, 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 ability to fund its capital needs will depend on its ongoing ability to generate cash from operations, borrowings under the ABL Facility and funds received from capital market offerings. If Veritiv's cash flows from operating activities are lower than expected, the Company will 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 operations on acceptable terms and conditions, the Company's access to, and the availability of, financing on

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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. To preserve liquidity, particularly during the COVID-19 pandemic, the Company may invest a portion of its cash in highly-liquid investments with original maturities to the Company of three months or less that are readily convertible

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into known amounts of cash. As of March 31, 2021, the Company held $75.0 million in these cash equivalents. The Company also elected to defer the payment of $19.1 million in payroll taxes incurred through December 31, 2020, as provided by the CARES Act, until December 2021 and 2022.

Veritiv's management expects that the Company's primary future cash needs will be for working capital, capital expenditures, contractual commitments, share repurchases and strategic investments. ~~Additionally, management~~The Company currently estimates it will incur total restructuring charges of between $70 million and $87 million in connection with the 2020 Restructuring Plan. See Note 4 of the Notes to Condensed Consolidated Financial Statements for additional information on the Company's restructuring efforts. Management expects that cash on hand, cash provided by operating activities and the available capacity under the ABL Facility will provide sufficient funds to operate the business and meet other liquidity needs.

Off-Balance Sheet Arrangements

Veritiv does not have any off-balance sheet arrangements as of March 31, ~~2020,~~2021, other than leases that have not yet commenced and the letters of credit under the ABL Facility (see Note 3 and Note 5 of the Notes to Condensed Consolidated Financial Statements, respectively, for additional information on these items). The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Contractual Obligations

During the second quarter of 2019, in the course of negotiations for a collective bargaining agreement, Veritiv negotiated a partial withdrawal from the Western Pennsylvania Teamsters and Employers Pension Fund (the "Western Pennsylvania Fund"), a MEPP related to its Warrendale, Pennsylvania location, and recognized an estimated partial withdrawal liability of $6.5 million, which was unchanged as of March 31, 2020. The withdrawal charge was recorded in distribution expenses as it was not related to a restructuring activity.

~~The Company records an estimated undiscounted charge when it becomes probable that it has incurred a withdrawal liability.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.~~The Company has not yet received determination letters from the Western Pennsylvania Fund for either the partial or complete withdrawal. The Company expects that payments will occur over an approximate 20-year period, which could run consecutively.

There have been no ~~other~~ material changes to the Company's contractual obligations from those disclosed in Veritiv's Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Critical Accounting Policies and Estimates

~~See~~ ~~Note 1~~ ~~of the Notes to Condensed Consolidated Financial Statements for a description of the impact that adoption of Accounting Standards Update 2016-13, Financial Instruments-Credit Losses (Topic 326)~~ ~~had on the Company's financial results and related disclosures.~~ There have been no material changes to the Company's critical accounting policies and estimate methodologies from those disclosed in Veritiv's Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. 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 additional information becomes available. See the "Use of Estimates" section of Note 1 of the Notes to Condensed Consolidated Financial Statements for additional information regarding the Company's estimates.

Recently Issued Accounting Standards

See Note 1 of the Notes to Condensed Consolidated Financial Statements for information regarding recently issued accounting standards.

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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, ~~2019.~~2020.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The 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 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 disclosure controls and procedures were effective as of March 31, ~~2020.~~2021.

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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 March 31, ~~2020~~2021 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to Note 12 of the Notes to 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, ~~2019, except as set forth below:~~2020.

~~The recent outbreak of the COVID-19 pandemic may have material adverse effects on our business, financial condition, results of operations, liquidity and cash flows.~~

~~The rapid spread of COVID-19, and the measures taken to stop or slow its spread,~~ ~~have adversely~~ ~~affected our business and financial results and will likely continue to do so for an uncertain period of time in the future. The recent COVID-19 pandemic~~ ~~has had and may continue to have~~ negative impacts on our business, including volatility in demand for our products; delays or inability to source products; disruptions in supply chain and transportation; volatility in the global capital and credit markets, which impacts interest rates and currency exchange rates; and the pandemic could also cause a material reduction in the values of our assets including, but not limited to, deferred tax assets, goodwill and intangibles. Our customers, suppliers and vendors may suffer disruptions in their business due to the COVID-19 pandemic causing them financial distress which could include delaying payments to us, filing for bankruptcy protection or going out of business. In addition, there are currently a large number of our employees working remotely ~~with only operationally critical employees working at our facilities for business continuity purposes as lawfully permitted.~~ Extended periods of remote work arrangements could strain our business continuity plans and introduce further operational risk, such as additional cybersecurity risks. Despite our efforts to manage these impacts, due to the rapidly evolving situation with COVID-19, the effect on our operational and financial performance will depend on future developments, all of which are uncertain and difficult to predict and may have material adverse effects on our business, financial condition, results of operations, liquidity and cash flows. Such developments may include, but are not limited to, the spread of the virus, the severity and duration of the outbreak and the resulting impact on the economy. Even after the COVID-19 pandemic has subsided, we may experience impacts to our business as a result of any economic recession or downturn that has occurred or may occur in the future. The COVID-19 pandemic may also have the effect of heightening many of the other risks described in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019, including those related to ~~dependence on information technology and telecommunications systems, cyber security risks, compliance with financial covenants, ability to service indebtedness and stock price fluctuation.~~

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

On March ~~16, 2020,~~3, 2021, Veritiv announced that its Board of Directors authorized ~~a $25~~the $50.0 million ~~share repurchase program (the "2020~~2021 Share Repurchase ~~Program").~~Program. Under this program the Company may purchase shares of its common stock through open market transactions, privately negotiated transactions, forward, derivative, or accelerated repurchase transactions, tender offers or otherwise, in accordance with all applicable securities laws and regulations. ~~Repurchases~~This authorization for the share repurchase program replaces the 2020 Share Repurchase Program and may be suspended, terminated, increased or decreased by the Board at any time.

During the first quarter of 2020, the Company repurchased 383,972 shares of its common stock at a cost of $3.5 million under ~~the program have been suspended~~its 2020 Share Repurchase Program, prior to its suspension as of March 27, 2020.

The following table presents information with respect to purchases made by the Company of its common stock during the three months ended March 31, ~~2020~~2021 (shares are in whole units):


Period	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		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
January 1-31	January 1-31	18,698	$19.67	0	$	25,000,000	January 1-31	35,116	$20.83	—	50,000,000
February 1-29		0	$0.00	0	$	25,000,000
February 1-28							February 1-28	64	$20.79	—	50,000,000
March 1-31	March 1-31	413,773	$9.36	383,972	$	21,478,003	March 1-31	655,082	$41.24	586,003	25,439,001

⁽¹⁾The total number of shares purchased includes: (i) shares purchased pursuant to the ~~2020~~2021 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 ~~2020~~2021 Share Repurchase Program during the indicated periods.

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ITEM 6. EXHIBITS

Exhibit No.

Description

~~10.1~~

Amended and Restated ABL Credit Agreement, dated as of July 1, 2014, as amended as of August 11, 2016 and as amended and restated as of April 9, 2020, by and among the Company, Veritiv Operating Company (f/k/a Unisource Worldwide, Inc.) and the other borrowers from time to time parties thereto, the several lenders and financial institutions from time to time parties thereto, Bank of America, N.A., as administrative agent and collateral agent for the lenders party thereto, and the other parties thereto, incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 14, 2020.

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 - 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:	May ~~6, 2020~~5, 2021	By: /s/ Stephen J. Smith
		Name: Stephen J. Smith
		Title: Senior Vice President and Chief Financial Officer
		(Principal Financial Officer)

Date:	May ~~6, 2020~~5, 2021	By: /s/ Andrew E. Magley
		Name: Andrew E. Magley
		Title: Chief Accounting Officer
		(Principal Accounting Officer)

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(in millions)	Total		Level 1	Level 2		Level 3
ABL Facility	$	667.1		$	667.1
TRA contingent liability	30.4					30.4