Veritiv : Third Quarter 2022 Non-GAAP Reconciliations

T H I R D Q UA R T E R 2 0 2 2

N O N - G A A P

R E C O N C I L I AT I O N S

November 8, 2022

Appendix

Reconciliation of Non-GAAP Financial Measures

We supplement our financial information prepared in accordance with U.S. GAAP with certain non-GAAP measures including organic sales (net sales on an average daily sales basis, excluding revenue from sold businesses and revenue from acquired businesses for a period of 12 months after we complete the acquisition), 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 (benefits), fair value adjustments related to contingent liabilities assumed in mergers and acquisitions and certain other adjustments), free cash flow and other non-GAAP measures such as the Net Leverage Ratio (calculated as net debt divided by trailing twelve months of Adjusted EBITDA) and Return on Invested Capital (calculated as Net Operating Profit After Tax divided by the sum of net working capital and property and equipment. Net Operating Profit After Tax is defined as Adjusted EBITDA less depreciation and amortization times 1 minus the standard tax rate1). We believe investors commonly use Adjusted EBITDA, free cash flow and these other non-GAAP measures as key financial metrics for valuing companies; we also present organic sales to help investors better compare period-over-period results. In addition, the credit agreement governing our Asset-Based Lending Facility (the "ABL Facility") permits us to exclude the foregoing and other charges in calculating "Consolidated EBITDA", as defined in the ABL Facility.

Organic sales, Adjusted EBITDA, free cash flow, Return on Invested Capital and these other non-GAAP measures are not alternative measures of financial performance or liquidity under U.S. GAAP. Non-GAAP measures do not have definitions under U.S. GAAP and may be defined differently by, and not be comparable to, similarly titled measures used by other companies. As a result, we consider and evaluate non-GAAP measures in connection with a review of the most directly comparable measure calculated in accordance with U.S. GAAP. We caution investors not to place undue reliance on such non-GAAP measures and to consider them with the most directly comparable U.S. GAAP measures. Organic sales, Adjusted EBITDA, free cash flow and these other non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analyzing our results as reported under U.S. GAAP. Please see the following tables for reconciliations of non-GAAP measures to the most comparable U.S. GAAP measures.

1The Company uses a standard tax rate of 26% due to the historic volatility of the Company's effective tax rate.

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Appendix

Reconciliation of Non-GAAP Financial Measures

Table I

VERITIV CORPORATION

NET INCOME (LOSS) TO ADJUSTED EBITDA; ADJUSTED EBITDA MARGIN

(in millions, unaudited)

Three Months Ended

September 30,

Net income (loss)			2022						2021
$	96.7		$	40.0
Interest expense, net			4.8						3.8
Income tax expense (benefit)			32.4						14.1
Depreciation and amortization			10.8						13.3
EBITDA			144.7						71.2
Restructuring charges, net			1.4						2.5
Gain on sale of businesses			(18.6)						-
Facility closure charges, including (gain) loss from asset disposition			1.9						0.2
Stock-based compensation			1.8						1.0
LIFO reserve (decrease) increase			7.3						15.1
Non-restructuring severance charges			0.5						3.6
Other			2.3						0.1
Adjusted EBITDA		$	141.3				$	93.7
Net sales	$	1,804.1	$	1,767.8
Adjusted EBITDA as a % of net sales			7.8 %						5.3 %

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Appendix

Reconciliation of Non-GAAP Financial Measures

Table I.a.

VERITIV CORPORATION ADJUSTED EBITDA GUIDANCE (in millions, unaudited)

	Forecast for Year Ending December 31, 2022
Net income (loss)	Low				High
$	320		$	340
Interest expense, net		15			15
Income tax expense (benefit)		95			100
Depreciation and amortization		45			45
Other reconciling items		35			30
Adjusted EBITDA	$	510		$	530

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Appendix

Reconciliation of Non-GAAP Financial Measures

Table II

VERITIV CORPORATION

FREE CASH FLOW

(in millions, unaudited)

				Three Months Ended
Net cash provided by (used for) operating activities		September 30, 2022
$	96.6
Less: Capital expenditures		(6.5)
Free cash flow			$	90.1

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