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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 June 30, 2023
or
☐ 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

veritivlogocovera05.jpg

VERITIV CORPORATION
(Exact name of registrant as specified in its charter)
Delaware46-3234977
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
1000 Abernathy Road NE
Building 400, Suite 1700
                           Atlanta,Georgia30328
(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 classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.01 par valueVRTVNew 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," "accelerated filer," "smaller reporting 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 August 1, 2023 was 13,551,081.



TABLE OF CONTENTS
For the Quarterly Period Ended June 30, 2023




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
June 30,		Six Months Ended
June 30,
2023202220232022
Net sales$1,457.3 $1,820.7 $2,967.5 $3,678.8 
Cost of products sold (exclusive of depreciation and amortization shown separately below)1,096.6 1,410.9 2,240.7 2,866.3 
Distribution expenses88.7 98.2 178.4 210.4 
Selling and administrative expenses163.5 190.7 334.9 378.6 
Gain on sale of businesses— (10.0)— (10.0)
Depreciation and amortization9.6 11.1 19.7 23.8 
Restructuring charges, net— 1.4 — 4.1 
Operating income98.9 118.4 193.8 205.6 
Interest expense, net4.3 4.0 9.0 7.5 
Other (income) expense, net(1.9)(6.6)(0.9)(7.2)
Income before income taxes96.5 121.0 185.7 205.3 
Income tax expense25.8 29.9 46.3 35.7 
Net income$70.7 $91.1 $139.4 $169.6 
Earnings per share:
Basic$5.22 $6.24 $10.30 $11.55 
Diluted$5.15 $6.12 $10.15 $11.23 
Weighted-average shares outstanding:
Basic13.55 14.61 13.54 14.69 
Diluted13.72 14.88 13.73 15.10 

See accompanying Notes to Condensed Consolidated Financial Statements.
1
VERITIV CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions, unaudited)
Three Months Ended
June 30,		Six Months Ended
June 30,
2023202220232022
Net income$70.7 $91.1 $139.4 $169.6 
Other comprehensive income (loss):
Foreign currency translation adjustments1.4 (4.5)4.3 (1.9)
Reclassification of foreign currency translation adjustments due to sale of a business, net of tax (1)
— 9.5 — 9.5 
Change in fair value of cash flow hedge, net of tax (1)
— 0.1 — 0.1 
Pension liability adjustments, net of tax (1)
(0.5)6.4 (0.6)6.4 
Reclassification adjustment on settlement of a pension plan, net of tax (1)
(0.7)(7.0)(0.7)(7.0)
Other comprehensive income (loss)0.2 4.5 3.0 7.1 
Total comprehensive income (loss)$70.9 $95.6 $142.4 $176.7 
(1) Amounts shown are net of tax impacts, if any, which for the three and six months ended June 30, 2023, were $(0.1) million for pension liability adjustments and $(0.3) million for the reclassification adjustment on settlement of a pension plan. For the three and six months ended June 30, 2022, the tax impacts were $2.0 million for the reclassification of foreign currency translation adjustments due to sale of a business, $2.2 million for pension liability adjustments and $(4.0) million for the reclassification adjustment on settlement of a pension plan.

See accompanying Notes to Condensed Consolidated Financial Statements.



2
VERITIV CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions, except par value, unaudited)
June 30, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents$43.9 $40.6 
Accounts receivable, less allowances of $22.9 and $26.7, respectively
750.5 889.6 
Inventories487.0 

423.9 
Other current assets95.0 

103.7 
Total current assets1,376.4 1,457.8 
Property and equipment (net of accumulated depreciation and amortization of $326.6 and $325.5, respectively)
124.2 

127.5 
Goodwill96.3 

96.3 
Other intangibles, net33.4 

35.6 
Deferred income tax assets25.5 

29.0 
Other non-current assets366.5 

343.4 
Total assets$2,022.3 $2,089.6 
Liabilities and shareholders' equity
Current liabilities:
Accounts payable$418.1 $452.9 
Accrued payroll and benefits46.8 106.2 
Other accrued liabilities147.2 154.1 
Current portion of debt14.2 

13.4 
Total current liabilities626.3 726.6 
Long-term debt, net of current portion171.6 

264.8 
Defined benefit pension obligations0.8 

0.4 
Other non-current liabilities340.3 

341.7 
Total liabilities1,139.0 1,333.5 
Commitments and contingencies (Note 11)

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

— 
Common stock, $0.01 par value, 100.0 million shares authorized; shares issued - 17.6 million and 17.5 million, respectively; shares outstanding - 13.6 million and 13.5 million, respectively
0.2 

0.2 
Additional paid-in capital614.9 

613.1 
Accumulated earnings595.0 

472.6 
Accumulated other comprehensive loss(9.7)

(12.7)
Treasury stock at cost - 4.0 million and 4.0 million shares, respectively
(317.1)(317.1)
Total shareholders' equity883.3 756.1 
Total liabilities and shareholders' equity$2,022.3 $2,089.6 

See accompanying Notes to Condensed Consolidated Financial Statements.
3
VERITIV CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions, unaudited)
Six Months Ended June 30,
20232022
Operating activities
Net income$139.4 $169.6 
Depreciation and amortization19.7 23.8 
Amortization and write-off of deferred financing fees0.8 0.8 
Net (gains) losses on disposition of assets and sale of businesses0.1 (15.3)
Provision for expected credit losses(1.8)(0.1)
Deferred income tax provision (benefit)4.1 (11.6)
Stock-based compensation5.4 5.9 
Other non-cash items, net(1.7)(7.0)
Changes in operating assets and liabilities
Accounts receivable142.0 (51.4)
Inventories(60.8)(25.4)
Other current assets10.2 (1.5)
Accounts payable(0.7)23.4 
Accrued payroll and benefits(66.7)(31.8)
Other accrued liabilities0.0 (13.9)
Other(24.7)(3.2)
Net cash provided by (used for) operating activities165.3 62.3 
Investing activities
Property and equipment additions(6.0)(11.6)
Proceeds from asset sales and sale of businesses, net of cash transferred0.3 139.4 
Proceeds from insurance related to property and equipment0.1 3.5 
Net cash provided by (used for) investing activities(5.6)131.3 
Financing activities
Change in book overdrafts(36.4)12.9 
Borrowings of long-term debt2,744.0 3,111.5 
Repayments of long-term debt(2,835.8)(3,190.9)
Payments under right-of-use finance leases(4.9)(6.3)
Payments under vendor-based financing arrangements(3.4)(3.2)
Purchase of treasury stock— (104.8)
Impact of tax withholding on share-based compensation(3.6)(29.7)
Dividends paid to shareholders(17.0)— 
Other0.3 0.3 
Net cash provided by (used for) financing activities(156.8)(210.2)
Effect of exchange rate changes on cash0.4 (0.6)
Net change in cash and cash equivalents3.3 (17.2)
Cash and cash equivalents at beginning of period40.6 49.3 
Cash and cash equivalents at end of period$43.9 $32.1 
Supplemental cash flow information
Cash paid for income taxes, net of refunds$50.7 $57.8 
Cash paid for interest8.0 6.4 
Non-cash investing and financing activities
Non-cash additions to property and equipment for right-of-use finance leases and vendor-based financing arrangements$7.4 $18.1 
Non-cash additions to other non-current assets for right-of-use operating leases45.4 37.3 
See accompanying Notes to Condensed Consolidated Financial Statements.
4
VERITIV CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in millions, unaudited)
2023
Common Stock IssuedAdditional Paid-in CapitalAccumulated Earnings
AOCL (1)
Treasury StockTotal
SharesAmountSharesAmount
Balance at December 31, 202217.5 $0.2 $613.1 $472.6 $(12.7)(4.0)$(317.1)$756.1 
Net income68.7 68.7 
Other comprehensive income (loss)2.8 2.8 
Stock-based compensation1.8 1.8 
Issuance of common stock, net of stock received for minimum tax withholdings0.0 0.0 (3.6)(3.6)
Dividends(8.5)(8.5)
Balance at March 31, 202317.5 $0.2 $611.3 $532.8 $(9.9)(4.0)$(317.1)$817.3 
Net income70.7 70.7 
Other comprehensive income (loss)0.2 0.2 
Stock-based compensation3.6 3.6 
Issuance of common stock, net of stock received for minimum tax withholdings0.1 0.0 0.0 0.0 
Dividends(8.5)(8.5)
Balance at June 30, 202317.6 $0.2 $614.9 $595.0 $(9.7)(4.0)$(317.1)$883.3 
(1) Accumulated other comprehensive loss.

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2022
Common Stock IssuedAdditional Paid-in CapitalAccumulated Earnings
AOCL (1)
Treasury StockTotal
SharesAmountSharesAmount
Balance at December 31, 202117.0 $0.2 $633.8 $143.2 $(24.3)(2.4)$(117.1)$635.8 
Net income78.5 78.5 
Other comprehensive income (loss)2.6 2.6 
Stock-based compensation2.8 2.8 
Issuance of common stock, net of stock received for minimum tax withholdings0.5 0.0 (29.5)(29.5)
Treasury stock purchases(0.1)(10.4)(10.4)
Balance at March 31, 202217.5 $0.2 $607.1 $221.7 $(21.7)(2.5)$(127.5)$679.8 
Net income91.1 91.1 
Other comprehensive income (loss)4.5 4.5 
Stock-based compensation3.1 3.1 
Issuance of common stock, net of stock received for minimum tax withholdings0.0 0.0 (0.2)(0.2)
Treasury stock purchases(0.7)(94.4)(94.4)
Balance at June 30, 202217.5 $0.2 $610.0 $312.8 $(17.2)(3.2)$(221.9)$683.9 
(1) Accumulated other comprehensive loss.

See accompanying Notes to Condensed Consolidated Financial Statements.

6

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 full-service provider of value-added packaging products and services, as well as facility solutions and print-based products and services. Veritiv was established in 2014, following the merger of International Paper Company's xpedx distribution solutions business and UWW Holdings, Inc., the parent company of Unisource Worldwide, Inc. ("Unisource"). Veritiv operates primarily throughout the United States ("U.S.") and Mexico.

On May 2, 2022, the Company sold its Veritiv Canada, Inc. business. On September 1, 2022, the Company sold its logistics solutions business. These sales did not represent strategic shifts that will have a major effect on the Company's operations or financial results and they did not meet the requirements to be classified as discontinued operations. See Note 13, Divestitures, for additional information.

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, 2022. 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 Company's divestitures. These financial statements include all of the Company's subsidiaries. All significant intercompany transactions between Veritiv's businesses have been eliminated. During the third quarter of 2022, the Company reclassified its gains from the sale of businesses from the selling and administrative expenses line to the gain on sale of businesses line on the Condensed Consolidated Statements of Operations. The results for the three and six months ended June 30, 2022, presented in this report, have been revised accordingly.

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, long-term incentive plans, income tax contingency accruals and valuation allowances, multi-employer pension plan ("MEPP") withdrawal liabilities, contingency accruals, goodwill and other intangible asset valuations. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, actual results may ultimately differ from these estimates and assumptions.

Accounting Pronouncements

Recently Adopted Accounting Standards

Effective January 1, 2023, the Company adopted Accounting Standards Update ("ASU") 2022-04, Liabilities- Supplier Finance Programs (Subtopic 405-50). This standard requires disclosure of the key terms of outstanding supplier finance programs and a rollforward of the related obligations. The amendments in this update do not affect the recognition, measurement or financial statement presentation of obligations covered by supplier finance programs. The amendments in this update are effective for fiscal years beginning after December 15, 2022 on a retrospective basis, including interim periods within those fiscal years, except for the requirement to disclose rollforward information, which is effective prospectively for fiscal years beginning after December 15, 2023. The adoption did not, and is not expected to have in the future, any material impact on the Company's
7
related disclosures.

Effective March 17, 2023, the Company 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, such as Term Secured Overnight Financing Rate (''SOFR"). The guidance is available for prospective application upon its issuance and can generally be applied to contract modifications and hedging relationships entered into March 12, 2020 through December 31, 2024. On March 17, 2023, the Company modified its Asset-Based Lending Facility, incorporating the transition from LIBOR to Term SOFR. The adoption did not materially impact the Company's consolidated financial statements and related disclosures.

2. REVENUE RECOGNITION AND CREDIT LOSSES

Revenue Recognition and Composition

Certain revenues are derived from shipments which are made directly from a manufacturer to a Veritiv customer. The Company is considered to be a principal to these transactions. Revenues from these sales are reported on a gross basis on the Condensed Consolidated Statements of Operations and have historically represented approximately 35% of Veritiv's total net sales. As a normal business practice, Veritiv does not enter into contracts that require more than one year to complete or that contain significant financing components. The Company considers handling and delivery as activities to fulfill its performance obligations. Billings for third-party freight are accounted for as net sales and handling and delivery costs are accounted for as distribution expenses. Veritiv enters into incentive programs with certain of its customers, which are generally based on sales to those same customers. Veritiv follows the expected value method when estimating its retrospective incentives and records the estimated amount as a reduction to gross sales when revenue is recognized. Estimates of the variable consideration are based primarily on contract terms, current customer forecasts as well as historical experience.

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 June 30, 2023 and December 31, 2022, estimated inventory returns were not significant.

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

See the table below for a year-to-date summary of the changes to the customer contract liabilities balance:
Customer Contract Liabilities
(in millions)20232022
Balance at January 1,$16.1 $21.8 
    Payments received28.4 28.7 
    Revenue recognized from beginning of year balance(11.7)(13.1)
    Revenue recognized from current year receipts(18.9)(17.5)
    Other adjustments (1)
— (0.9)
Balance at June 30,$13.9 $19.0 
(1) Reflects liabilities removed as part of the sale of a business. See Note 13, Divestitures, for information regarding the sale of Veritiv Canada, Inc.

Historically, the Company's ten largest customers have generated approximately 10% - 15% of its consolidated annual net sales. Veritiv's principal markets are concentrated primarily across North America. Approximately 97% of its reported net sales for the three and six months ended June 30, 2023 were generated in the U.S. Veritiv evaluated the nature of the products
8
and services provided to its customers as well as the nature of the customer and the geographical distribution of its customer base and determined that the best representative level of disaggregated revenue is the product category basis. The following is a brief description of the Company's three reportable segments, organized by major product category. This segment structure is consistent with the way the Chief Operating Decision Maker, who is Veritiv's Chief Executive Officer, makes operating decisions and manages the growth and profitability of the Company's business. The Company also has a Corporate & Other category, which includes certain assets and costs not primarily attributable to any of the reportable segments. Prior to its divestiture in September 2022, the Company's logistics solutions business, which provided transportation and warehousing solutions, was also included in Corporate & Other.

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

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

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

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

Credit Losses and Other Allowances

The components of the accounts receivable allowances were as follows:
(in millions)June 30, 2023December 31, 2022
Allowance for credit losses$13.7 $17.7 
Other allowances(1)
9.2 9.0 
Total accounts receivable allowances$22.9 $26.7 
(1) Includes amounts reserved for credit memos, customer discounts, customer short pays and other miscellaneous items.

9
Below is a year-to-date rollforward of the Company’s allowance for credit losses:

Packaging and Facility SolutionsPrint Solutions - High RiskPrint Solutions - Medium/Low Risk
(in millions)U.S.U.S.U.S.Rest of worldTotal
Balance at December 31, 2022$12.8 $2.7 $1.6 $0.6 $17.7 
Add / (Deduct):
Provision for expected credit losses(0.6)0.2 (0.1)0.1 (0.4)
Write-offs charged against the allowance(2.3)0.0 (0.4)(0.2)(2.9)
Recoveries of amounts previously written off0.1 0.1 0.1 — 0.3 
Other adjustments(1)
— (1.0)— 0.0 (1.0)
Balance at June 30, 2023$10.0 $2.0 $1.2 $0.5 $13.7 
(1) Other adjustments represent amounts reserved for foreign currency translation adjustments and reserves for certain customer accounts where revenue is not recognized because collectability is not probable. These adjustments may also include accounts receivable allowances recorded in connection with acquisitions and divestitures.

Additionally, for the six months ended June 30, 2023 and 2022, the Company recognized $(1.4) million and $(0.6) million, respectively, in the provision for expected credit losses related to its notes receivable. At June 30, 2023 and December 31, 2022, the Company held $0.1 million and $0.1 million, respectively, in notes receivable, the majority of which is reflected within other non-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 June 30, 2023, the Company operated from approximately 95 distribution centers of which approximately 90 were leased. These facilities are strategically located throughout the U.S. and Mexico in order to efficiently serve the customer base in the surrounding areas while also facilitating expedited delivery services for special orders. The Company also leases various office spaces for corporate and sales functions.

The components of lease expense were as follows:
(in millions)Three Months Ended
June 30,		Six Months Ended
June 30,
Lease ClassificationFinancial Statement Classification2023202220232022
Short-term lease expense(1)
Operating expenses$1.7 $0.8 $3.1 $1.6 
Operating lease expense(2)
Operating expenses$22.2 $23.0 $43.3 $48.1 
Finance lease expense:
Amortization of right-of-use assets
Depreciation and amortization$2.7 $2.8 $5.3 $6.5 
Interest expense
Interest expense, net0.4 0.4 0.8 1.1 
Total finance lease expense
$3.1 $3.2 $6.1 $7.6 
Total Lease Cost
$27.0 $27.0 $52.5 $57.3 
(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 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.

10
Supplemental balance sheets and other information were as follows:
(in millions, except weighted-average data)June 30, 2023December 31, 2022
Lease ClassificationFinancial Statement Classification
Operating Leases:
Operating lease right-of-use assetsOther non-current assets$316.0 $304.3 
Operating lease obligations - currentOther accrued liabilities$71.1 $67.9 
Operating lease obligations - non-currentOther non-current liabilities272.6 266.0 
Total operating lease obligations
$343.7 $333.9 
Weighted-average remaining lease term in years5.45.9
Weighted-average discount rate5.0 %4.6 %
Finance Leases:
Finance lease right-of-use assetsProperty and equipment$32.0 $29.7 
Finance lease obligations - currentCurrent portion of debt$8.9 $8.8 
Finance lease obligations - non-currentLong-term debt, net of current portion26.3 24.1 
Total finance lease obligations
$35.2 $32.9 
Weighted-average remaining lease term in years4.13.7
Weighted-average discount rate4.9 %4.2 %

Cash paid for amounts included in the measurement of lease liabilities was as follows:
(in millions)Six Months Ended June 30,
Lease ClassificationFinancial Statement Classification20232022
Operating Leases:
Operating cash flows from operating leases
Operating activities$43.9 $48.3 
Finance Leases:
Operating cash flows from finance leases
Operating activities$0.8 $1.1 
Financing cash flows from finance leases
Financing activities4.9 6.3 

11
Lease Commitments

Future minimum lease payments at June 30, 2023 were as follows:
(in millions)Finance Leases
Operating Leases (1)
2023 (excluding the six months ended June 30, 2023)$5.4 $43.3 
20249.8 84.1 
20259.1 72.1 
20266.4 66.2 
20273.8 49.8 
20282.5 30.4 
Thereafter2.8 46.2 
Total future minimum lease payments39.8 392.1 
    Amount representing interest(4.6)(48.4)
Total future minimum lease payments, net of interest$35.2 $343.7 
(1) Future sublease income of $1.6 million is excluded from the operating leases amount in the table above.

Total future minimum lease payments at June 30, 2023 for finance and operating leases, including the amount representing interest, are comprised of $390.4 million for real estate leases and $41.5 million for non-real estate leases.

4. RESTRUCTURING CHARGES

2020 Restructuring Plan

During 2020, the Company initiated a restructuring plan (the "2020 Restructuring Plan") to (1) respond to the impact of the COVID-19 pandemic on its business operations, (2) address the ongoing secular changes in its print and publishing operations and (3) further align its cost structure with ongoing business needs as the Company executes on its stated corporate strategy. As of December 31, 2022, the 2020 Restructuring Plan was complete. See Note 12, Segment and Other Information, for the impact that charges from this restructuring plan had on the Company's reportable segments.

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

The following table presents a summary of restructuring charges, net, showing the cumulative amounts since the initiatives began:
(in millions)Severance and Related CostsOther Direct Costs(Gain) Loss on Sale of Assets and OtherTotal
Cumulative$41.4 $36.6 $(8.4)$69.6 

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

(in millions)Severance and Related CostsOther Direct CostsTotal
Balance at December 31, 2022$0.9 $2.3 $3.2 
Payments(0.4)(0.3)(0.7)
Other non-cash items(0.1)0.0 (0.1)
Balance at March 31, 20230.4 2.0 2.4 
Payments(0.1)(0.9)(1.0)
Balance at June 30, 2023$0.3 $1.1 $1.4 

12
The total liability in the table above primarily consists of obligations to make future lease payments through the end of 2024 for properties that were exited before the lease expired; the majority of the noted severance obligation is expected to be paid by the end of 2023.

The following is a summary of the Company's 2020 Restructuring Plan liability activity for the prior year comparable period:
(in millions)Severance and Related CostsOther Direct CostsTotal
Balance at December 31, 2021$4.7 $3.7 $8.4 
Costs incurred0.4 1.4 1.8 
Payments(2.3)(2.1)(4.4)
Balance at March 31, 20222.8 3.0 5.8 
Costs incurred0.1 0.7 0.8 
Payments(0.6)(1.1)(1.7)
Balance at June 30, 2022$2.3 $2.6 $4.9 

In addition to the costs incurred in the table above, during the three and six months ended June 30, 2022, the Company expensed $0.9 million and $1.8 million, respectively, of Other Direct Costs, which was prepaid at December 31, 2021. For the three and six months ended June 30, 2022, the Company recognized non-cash net gains of $0.3 million from lease terminations and retirement of assets.

5. DEBT

The Company's debt obligations were as follows:
(in millions)June 30, 2023December 31, 2022
Asset-Based Lending Facility (the "ABL Facility")$137.4 $229.2 
Commercial card program1.9 1.6 
Vendor-based financing arrangements11.3 14.5 
Finance leases35.2 32.9 
Total debt185.8 278.2 
Less: current portion of debt(14.2)(13.4)
Long-term debt, net of current portion$171.6 $264.8 

ABL Facility

On March 17, 2023, the Company amended its ABL Facility to, among other things, replace LIBOR provisions with analogous SOFR provisions. The Company completed the full transition to Term SOFR in the second quarter of 2023. All other significant terms remained substantially the same. The ABL Facility has aggregate commitments of $1.1 billion, a maturity date of May 20, 2026 and interest rates which are based on Term SOFR or the prime rate plus a margin rate. 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 June 30, 2023, the available additional borrowing capacity under the ABL Facility was approximately $733.7 million. As of June 30, 2023, the Company held $8.6 million in outstanding letters of credit.

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 June 30, 2023, 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.

13
Commercial Card Program

The Company has a commercial purchasing card program that is used for business purpose purchasing and must be paid in-full monthly. At June 30, 2023, the card carried a maximum credit limit of $37.5 million. The net change in the outstanding balance is included in other financing activities on the Condensed Consolidated Statements of Cash Flows.

Vendor-Based Financing Arrangements

On occasion, the Company enters into long-term vendor-based financing arrangements with suppliers to obtain products, services or property in exchange for extended payment terms. During the three months ended March 31, 2022, the Company entered into a vendor-based financing agreement with a principal amount of $18.5 million to finance the acquisition of certain internal use software licenses which is being paid in annual installments over a five-year term. The payments associated with this arrangement are classified as financing activities on the Condensed Consolidated Statements of Cash Flows. The Company has not entered into any other similar arrangements.

Finance Leases

See Note 3, Leases, for additional information related to the Company's finance leases.

6. INCOME TAXES

The Company calculated the expense for income taxes during the three and six months ended June 30, 2023 and 2022, by applying an estimate of the annual effective tax rate for the full fiscal year to "ordinary" income (pre-tax income excluding unusual or infrequently occurring discrete items) for the reporting periods.

The following table presents the Company's expense for income taxes and the effective tax rates:
Three Months Ended June 30,Six Months Ended June 30,
(in millions)2023202220232022
Income before income taxes$96.5 $121.0 $185.7 $205.3 
Income tax expense25.8 29.9 46.3 35.7 
Effective tax rate26.7 %24.7 %24.9 %17.4 %

The difference between the Company's effective tax rates for the three and six months ended June 30, 2023 and 2022 and the U.S. statutory tax rate of 21.0% primarily relates to state income taxes (net of federal income tax benefit), vesting of stock compensation and non-deductible expenses. Additionally, the effective tax rates for the three and six months ended June 30, 2022 include a tax benefit on the disposition of the Company's investment in a foreign subsidiary.

7. DEFINED BENEFIT PLANS

Veritiv maintains an open defined benefit pension plan in the U.S. for employees covered by certain collectively bargained agreements. Veritiv also maintains a defined benefit plan in the U.S., which includes frozen cash balance accounts for certain former Unisource employees, and formerly maintained similar plans for Canadian employees prior to the sale of Veritiv Canada, Inc. No other employees participate in Veritiv-sponsored defined benefit pension plans.

Effective December 1, 2021, the Company divided the U.S. Veritiv Pension Plan by establishing a new Veritiv Hourly Pension Plan to provide benefits to certain employees who were accruing a benefit under the U.S. Veritiv Pension Plan pursuant to the terms of a collective bargaining agreement. In support of its previously announced intention to terminate and settle the U.S. Veritiv Pension Plan, the Company used a portion of the plan assets to settle approximately half of its obligations through payments to qualified plan participants who elected lump sum distributions during the first half of 2023. During the second quarter of 2023, the Company recognized a gain of approximately $1.0 million on the settlement of these obligations, which was included in other (income) expense, net on the Condensed Consolidated Statement of Operations. The Company currently expects to use the remaining plan assets to settle the remaining obligations by the end of 2023. The Veritiv Hourly Pension Plan will remain open.
14

During the three months ended June 30, 2022, the Company completed the sale of its Veritiv Canada, Inc. business. As a result of the sale, a pension settlement occurred, which required an interim remeasurement of Veritiv Canada, Inc.'s defined benefit pension plan obligations as of the date of the sale. The Company ultimately recognized a gain of $7.0 million on the settlement of the Veritiv Canada, Inc. defined benefit plans, which was included in other (income) expense, net on the Condensed Consolidated Statement of Operations. See Note 13, Divestitures, for additional information regarding the sale of Veritiv Canada, Inc.

Total net periodic benefit cost (credit) associated with these plans is summarized below:
Three Months Ended June 30, 2023Three Months Ended June 30, 2022
(in millions)U.S.U.S.Canada
Components of net periodic benefit cost (credit):
Service cost$0.5 $0.7 $0.0 
Interest cost$0.6 $0.3 $(1.0)
Expected return on plan assets(0.5)(0.4)1.9 
Settlement (gain) loss(1.0)— (7.0)
Amortization of net (gain) loss(0.1)— (0.1)
 Total other components
$(1.0)$(0.1)$(6.2)
Net periodic benefit cost (credit)$(0.5)$0.6 $(6.2)

Six Months Ended June 30, 2023Six Months Ended June 30, 2022
(in millions)U.S.U.S.Canada
Components of net periodic benefit cost (credit):
Service cost$0.9 $1.5 $0.1 
Interest cost$1.2 $0.6 $(0.4)
Expected return on plan assets(1.1)(0.9)0.8 
Settlement (gain) loss(1.0)— (7.0)
Amortization of net (gain) loss(0.1)— (0.1)
 Total other components
$(1.0)$(0.3)$(6.7)
Net periodic benefit cost (credit)$(0.1)$1.2 $(6.6)

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

8. FAIR VALUE MEASUREMENTS

At June 30, 2023 and December 31, 2022, 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.
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Debt and Other Obligations

Borrowings 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 Company's one interest rate cap agreement, which was related to the ABL Facility, expired on September 13, 2022. Prior to its expiration, the fair value of the 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.

9. EARNINGS PER SHARE

Basic earnings per share for Veritiv common stock is calculated by dividing net income 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.

A summary of the numerators and denominators used in the basic and diluted earnings per share calculations is as follows:
Three Months Ended
June 30,		Six Months Ended
June 30,
(in millions, except per share data)2023202220232022
Numerator:
Net income$70.7 $91.1 $139.4 $169.6 
Denominator:
Weighted-average shares outstanding – basic
13.55 14.61 13.54 14.69 
Dilutive effect of stock-based awards
0.17 0.27 0.19 0.41 
Weighted-average shares outstanding – diluted
13.72 14.88 13.73 15.10 
Earnings per share:
Basic$5.22 $6.24 $10.30 $11.55 
Diluted$5.15 $6.12 $10.15 $11.23 
Antidilutive stock-based awards excluded from computation of diluted earnings per share ("EPS")
0.04 0.00 0.03 0.08 
Performance stock-based awards excluded from computation of diluted EPS because performance conditions had not been met
0.08 0.07 0.08 0.00 

10. SHAREHOLDERS' EQUITY

Dividends

The following table summarizes the Company's dividend declarations and payments made during the current year period. There were no comparable transactions in the prior year period.
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Declaration DateRecord DatePayable DateDividend Per SharePayment (in millions)
February 27, 2023March 9, 2023March 31, 2023$0.63 $8.5 
May 8, 2023May 18, 2023June 5, 20230.63 8.5 
August 7, 2023August 17, 2023September 13, 20230.63 N/A
Total$1.89 $17.0 

The payment of future dividends remains subject to the discretion of the Company's Board of Directors and will depend upon various factors then existing, including earnings, financial condition, results of operations, capital requirements, level of indebtedness, contractual restrictions with respect to payment of dividends, restrictions imposed by applicable law, general business conditions and other factors that Veritiv's Board of Directors may deem relevant.

Treasury Stock - Share Repurchase Program

On March 1, 2022, Veritiv announced that its Board of Directors authorized a $200 million share repurchase program (the "2022 Share Repurchase Program"). The 2022 Share Repurchase Program authorizes the Company, from time to time, to purchase shares of its common stock through open market transactions, privately negotiated transactions, forward, derivative or accelerated repurchase transactions, tender offers or otherwise, including Rule 10b5-1 trading plans, in accordance with all applicable securities laws and regulations. The timing and method of any repurchases, which will depend on a variety of market factors, including market conditions, are subject to results of operations, financial conditions, cash requirements and other factors. This authorization may be suspended, terminated, increased or decreased by the Board of Directors at any time. During the three and six months ended June 30, 2022, the Company repurchased 698,645 and 776,670 shares, respectively, of its common stock at a cost of approximately $94.4 million and $104.8 million, respectively, under its 2022 Share Repurchase Program. During the year ended December 31, 2022, the Company completed its repurchases under the 2022 Share Repurchase Program by repurchasing 1,564,420 shares of its common stock at a cost of $200 million, reaching the program's authorized repurchase limit.

Veritiv Omnibus Incentive Plan

In accordance with the Company's 2014 Omnibus Incentive Plan, as amended and restated as of March 8, 2017, shares of the Company's common stock were issued to plan participants whose Restricted Stock Units, Performance Share Units, Market Condition Performance Share Units and/or non-employee director grants (grants not deferred) vested during those periods. The net share issuance is included on the Condensed Consolidated Statements of Shareholders' Equity for the three and six months ended June 30, 2023 and 2022. The related cash flow impacts are included in financing activities on the Condensed Consolidated Statements of Cash Flows. For additional information related to these plans, refer to the Company's Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2022.

See the table below for information related to these transactions.
(in millions)20232022
Three months ended March 31,
Shares issued0.1 0.7 
Shares recovered for minimum tax withholding(0.1)(0.2)
Net shares issued0.0 0.5 
Three months ended June 30,
     Shares issued0.0 0.0 
     Shares recovered for minimum tax withholding0.1 0.0 
     Net shares issued0.1 0.0 

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Accumulated Other Comprehensive Loss ("AOCL")

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

The following tables provide the components of AOCL (amounts are shown net of their related income tax effects, if any):
(in millions)Foreign currency translation adjustmentsRetirement liabilitiesAOCL
Balance at December 31, 2022$(16.6)$3.9 $(12.7)
     Unrealized net gains (losses) arising during the period2.9 (0.1)2.8 
Net current period other comprehensive income (loss)2.9 (0.1)2.8 
Balance at March 31, 2023(13.7)3.8 (9.9)
     Unrealized net gains (losses) arising during the period1.4 (0.4)1.0 
     Amounts reclassified from AOCL— (0.8)(0.8)
Net current period other comprehensive income (loss)1.4 (1.2)0.2 
Balance at June 30, 2023$(12.3)$2.6 $(9.7)

(in millions)Foreign currency translation adjustmentsRetirement liabilitiesInterest rate capAOCL
Balance at December 31, 2021$(25.2)$1.0 $(0.1)$(24.3)
Unrealized net gains (losses) arising during the period2.6 0.0 0.0 2.6 
Net current period other comprehensive income (loss)2.6 0.0 0.0 2.6 
Balance at March 31, 2022(22.6)1.0 (0.1)(21.7)
Unrealized net gains (losses) arising during the period(4.5)6.4 0.1 2.0 
Amounts reclassified from AOCL9.5 (7.0)0.0 2.5 
Net current period other comprehensive income (loss)5.0 (0.6)0.1 4.5 
Balance at June 30, 2022$(17.6)$0.4 $0.0 $(17.2)

11. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

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

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

MEPPs

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

Teamsters Pension Trust Fund of Philadelphia and Vicinity

During the fourth quarter of 2022, in the course of negotiations for a collective bargaining agreement, Veritiv negotiated a complete withdrawal from the Teamsters Pension Trust Fund of Philadelphia and Vicinity to take effect on December 31, 2024, and recognized an estimated complete withdrawal liability of $4.9 million as of December 31, 2022, which was unchanged as of June 30, 2023. The withdrawal charge was recorded in distribution expenses as it was not related to a restructuring activity. As of June 30, 2023, the Company has not yet received the determination letter for the complete withdrawal from the Teamsters Pension Trust Fund of Philadelphia and Vicinity. The Company expects that payments will occur over an approximate 19-year period.

Minneapolis Food Distributors Ind Pension Plan

During the fourth quarter of 2021, in the course of negotiations for a collective bargaining agreement, Veritiv negotiated a complete withdrawal from the Minneapolis Food Distributors Ind Pension Plan to take effect on July 31, 2022, and recognized an estimated complete withdrawal liability of $0.5 million as of December 31, 2021. During the first quarter of 2023, the Company received the determination letter and recognized a final withdrawal liability of $0.6 million. The Company expects to make payments over an approximate four-year period.

Western Pennsylvania Teamsters and Employers Pension Fund

During the first quarter of 2020, Veritiv negotiated the complete withdrawal from the Western Pennsylvania Teamsters and Employers Pension Fund (the "Western Pennsylvania Fund"), a MEPP related to the second bargaining unit at its Warrendale, Pennsylvania location and recognized an estimated complete withdrawal liability of $7.1 million, which was unchanged as of June 30, 2023. 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 Fund and recognized an estimated partial withdrawal liability of $6.5 million, which was unchanged as of June 30, 2023. As of June 30, 2023, the Company has not yet received the determination letters for the full and partial withdrawals from the Western Pennsylvania Fund. The Company expects that payments will occur over an approximate 20-year period, which could run consecutively.

12. SEGMENT AND OTHER INFORMATION

Veritiv's business is organized under three reportable segments: Packaging, Facility Solutions and Print Solutions. See Note 2, Revenue Recognition and Credit Losses, for descriptions of the Company's reportable segments and Corporate & Other.

The following table presents 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 (benefits), 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:
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(in millions)PackagingFacility SolutionsPrint SolutionsTotal Reportable SegmentsCorporate & OtherTotal
Three Months Ended June 30, 2023
Net sales$906.9 $187.3 $363.1 $1,457.3 $— $1,457.3 
Adjusted EBITDA108.9 17.7 24.0 150.6 (38.4)
Depreciation and amortization
5.2 1.2 1.2 7.6 2.0 9.6 
Three Months Ended June 30, 2022
Net sales$1,001.6 $195.8 $593.2 $1,790.6 $30.1 $1,820.7 
Adjusted EBITDA108.4 16.0 60.5 184.9 (48.6)
Depreciation and amortization
5.5 1.1 1.0 7.6 3.5 11.1 
Restructuring charges, net
0.9 0.1 0.4 1.4 0.0 1.4 
Six Months Ended June 30, 2023
Net sales$1,802.3 $367.5 $797.7 $2,967.5 $— $2,967.5 
Adjusted EBITDA205.3 33.1 61.2 299.6 (83.6)
Depreciation and amortization
10.6 2.4 2.3 15.3 4.4 19.7 
Six Months Ended June 30, 2022
Net sales$2,004.7 $425.2 $1,189.8 $3,619.7 $59.1 $3,678.8 
Adjusted EBITDA205.8 29.4 115.1 350.3 (94.5)
Depreciation and amortization
11.8 2.9 2.2 16.9 6.9 23.8 
Restructuring charges, net
2.5 0.5 1.1 4.1 0.0 4.1 

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The table below presents a reconciliation of net income as reflected on the Condensed Consolidated Statements of Operations to Adjusted EBITDA for the reportable segments:
Three Months Ended
June 30,		Six Months Ended
June 30,
(in millions)2023202220232022
Net income$70.7 $91.1 $139.4 $169.6 
Interest expense, net4.3 4.0 9.0 7.5 
Income tax expense25.8 29.9 46.3 35.7 
Depreciation and amortization9.6 11.1 19.7 23.8 
Restructuring charges, net— 1.4 — 4.1 
Gain on sale of businesses— (10.0)— (10.0)
Facility closure charges, including (gain) loss from asset disposition0.1 (0.3)0.0 (0.9)
Stock-based compensation3.6 3.1 5.4 5.9 
LIFO reserve (decrease) increase(3.5)11.8 (6.0)22.8 
Non-restructuring severance charges(0.2)(0.2)0.1 1.5 
Non-restructuring pension charges (benefits)(1.0)(7.0)(0.8)(7.0)
Other2.8 1.4 2.9 2.8 
Adjustment for Corporate & Other38.4 48.6 83.6 94.5 
Adjusted EBITDA for reportable segments$150.6 $184.9 $299.6 $350.3 

In February 2021, a Veritiv warehouse incurred significant damage as a result of a severe weather event, which included damage to the building structure and contents, as well as a loss of inventory. The total amount of the incurred loss and restoration cost is currently estimated to be approximately $13 million, the majority of which is expected to be covered by the Company's various insurance policies. From the date of the incident, a total net benefit of $2.8 million has been recognized in selling and administrative expenses on the Company's statements of operations, of which $0.1 million of expense and $3.5 million of benefit was recognized for the six months ended June 30, 2023 and 2022, respectively. During the six months ended June 30, 2023 and 2022, the Company received $0.1 million and $3.5 million, respectively, in reimbursements related to the structural damage, which is reported as proceeds from insurance related to property and equipment on the Condensed Consolidated Statement of Cash Flows. Insurance proceeds not related to the structural damage are reported as cash flows from operating activities.
13. DIVESTITURES

On May 2, 2022, the Company sold its Veritiv Canada, Inc. business to Imperial Dade Canada Inc. for a purchase price of CAD $240 million (approximately U.S. $190 million) in cash payable at closing, subject to certain customary adjustments. The Company recognized an initial pre-tax gain of approximately $10.0 million in the second quarter of 2022, which is included in gain on sale of businesses on the Condensed Consolidated Statements of Operations. Veritiv also received initial net cash proceeds of approximately $147.4 million in the second quarter of 2022, reflecting the purchase price adjusted for cash and target working capital, closing date debt and transaction fees. The net cash proceeds are reported as proceeds from asset sales and sale of businesses, net of cash transferred, in the investing activities section of the Condensed Consolidated Statements of Cash Flows. As of December 31, 2022, the Company had recognized a total pre-tax gain of approximately $18.7 million and net cash proceeds of approximately $162.2 million related to the sale of Veritiv Canada, Inc. The Company used the proceeds to support the 2022 Share Repurchase Program, to pay down outstanding debt and to fund capital priorities and growth initiatives. The sale included substantially all of the Company's facility solutions and print operations in Canada, and a majority of the Company's Canada-based packaging business, which primarily serves food service customers. The Company maintains the ability to supply packaging solutions to the Canadian locations of certain U.S.-based customers. The sale did not represent a strategic shift that will have a major effect on the Company's operations or financial results and it did not meet the requirements to be classified as a discontinued operation. Management determine