US $
- Q1 GAAP net loss of $47
million or $0.52 per
share
- Adjusted EBITDA of $61
million
- Liquidity at $380
million
- Successful start-up of Calhoun tissue machine
MONTRÉAL, May 4, 2017 /CNW Telbec/
- Resolute Forest Products Inc. (NYSE: RFP) (TSX: RFP) today
reported a net loss for the quarter ended March 31, 2017, of $47 million, or
$0.52 per share, compared to a net
loss of $8 million, or $0.09 per share, in the same period in 2016.
Sales were $872 million in the
quarter, down $5 million, or 1%, from the first quarter of
2016. Excluding special items, the company reported a net loss of
$30 million, or $0.33 per share, compared to a net loss,
excluding special items, of $22
million, or $0.25 per share,
in the first quarter of 2016.
"While we continued to face strong headwinds in our paper
businesses this quarter, our three other segments (pulp, tissue and
wood products) recorded stronger results than in the fourth
quarter," said Richard Garneau,
president and chief executive officer. "We saw key achievements
in the quarter, particularly in our tissue segment. Our
Calhoun tissue machine started-up
one month ahead of schedule in structured mode, a first for this
technology which allowed us to manufacture premium products right
from the start. Those achievements were overshadowed by the
imposition of countervailing duties on our softwood lumber exports
from Canada to the United States. We firmly believe that
central Canadian forestry regimes are market-based and we should
expect nothing less than unencumbered and free access to the U.S.
lumber market."
Non-GAAP financial measures, such as adjustments for special
items and adjusted EBITDA, are explained and reconciled
below.
Operating Income Variance Against Prior Period
Consolidated
The company recorded an operating loss of $6 million in the quarter, compared to an
operating loss of $18 million in the
fourth quarter of 2016. Compared to the same period, adjusted
EBITDA declined by $2 million, to
$61 million.
The company's operating results were positively impacted by a
reduction in maintenance expenses mostly associated with reduced
repairs when compared to the last quarter of 2016, as well as an
overall increase in product pricing. Those improvements were offset
by adjustments to selling, general and administrative expenses,
seasonally higher energy costs and reductions in volumes, mainly
newsprint.
As more fully described below, in the quarter the company
changed its presentation of pension and OPEB costs to present the
amortization of prior service credits component as a special item
adjustment used in its non-GAAP performance measures, including
adjusted EBITDA. As such, adjusted EBITDA in the first quarter of
2017 would have been $65 million
without this change, compared to the $67
million previously disclosed for the fourth quarter of 2016.
The amortization of prior service credits component of pension and
OPEB costs is now allocated solely to "corporate and other" in its
segment presentation of operating income.
Market Pulp
Operating income in the market pulp segment was $7 million, $3
million more than the fourth quarter of the prior year.
After falling during the fourth quarter of 2016, our realized
pricing gradually increased during the quarter reaching an
average of $593 per metric ton.
Shipments to third parties fell by 15,000 metric tons compared
to the fourth quarter, partly due to the planned annual outage
at Catawba (South Carolina) at the
end of March. The operating cost per unit (the "delivered
cost"), was down by $4 per
metric ton, falling to $575 per
metric ton, resulting mostly from lower maintenance spending due to
reduced repairs. EBITDA per unit was $42 per metric ton compared to $35 per metric ton in the fourth quarter of 2016.
Finished goods inventory increased by 1,000 metric tons to 92,000
metric tons.
Tissue
Our tissue segment reported a break-even position on operating
income. The overall transaction price declined by $130 per short ton, as shipments of parent rolls
rose by 2,000 short tons. The delivered cost increased by
$68 per short ton, due to a favorable
depreciation and amortization adjustment in the last quarter of
2016. EBITDA per unit increased to $71 per short ton, reaching $1 million for the segment. Finished goods
inventory rose by 3,000 short tons to 8,000 short tons due to the
start-up of the Calhoun
(Tennessee) tissue machine.
Wood Products
The wood products segment recorded operating income of
$20 million for the quarter, an
improvement of $3 million against the
previous quarter. Shipments rose, reaching 505 million board feet,
despite adverse weather conditions causing logistical challenges
during the quarter. Supported by better U.S. housing starts and
market expectations on softwood lumber duties, the average
transaction price rose by $23 per
thousand board feet to $350. The
delivered cost increased to $310 per
thousand board feet, resulting from higher log costs
and production curtailments. EBITDA for the segment was
$29 million, a $4 million increase compared to the previous
quarter and equivalent to $57 per
thousand board feet, an increase of $7 per thousand board feet. Finished goods
inventory rose by 19% to 147 million board feet, mostly as a result
of this year's challenging winter conditions and
market volatility caused by the anticipated U.S. trade
barriers.
Newsprint
The newsprint segment incurred an operating loss of $4 million in the quarter, compared to operating
income of $1 million in the fourth
quarter of 2016. Pricing for our products fell only marginally to
$510 per metric ton, pressured by
continued weaknesses in export markets. Shipments decreased by
50,000 metric tons, resulting from the combination of the
indefinite idling of our paper mill in Thorold (Ontario) and the permanent closure of our
newsprint mill in Mokpo (South
Korea) as well as continued structural demand decline. The
delivered cost in the segment rose by $6 per metric ton compared to the previous
quarter. This was mostly as a result of lower volumes and higher
distribution and energy costs, which were partially offset by lower
maintenance and a reduction in fixed costs. EBITDA was $12 million for the quarter, equivalent to
$27 per metric ton, compared to
$39 in the previous quarter. Finished
goods inventory was substantially unchanged from the end of the
fourth quarter at 107,000 metric tons.
Specialty Papers
Operating income in the specialty papers segment was
$4 million in the first quarter, up
by $1 million from the fourth quarter of 2016. The average
transaction price was lower by $6 per
short ton, mainly due to demand decreases in supercalendered and
coated grades. Despite continuing structural market weakness,
shipments increased by 9,000 short tons compared to the fourth
quarter of 2016, rising to 364,000 short tons. The delivered cost
in the quarter improved by $11 per
short ton, supported by lower maintenance and chemical costs,
partially offset by seasonally higher steam costs. EBITDA for the
segment reached $16 million in the
quarter, equivalent to $44 per short
ton, up from $39 per short ton for
the last quarter of 2016. Finished goods inventory rose to 100,000
short tons, a 9% increase compared to the fourth quarter of
2016.
Consolidated Quarterly Operating Income Variance Against
Year-Ago Period
The company recorded an operating loss of $6 million for the first quarter, compared to a
break-even position in the first quarter of 2016. The difference is
mostly explained by closure costs associated with our newsprint
mill in Mokpo, start-up costs related to the Calhoun tissue facility and the unfavorable
impact of the stronger Canadian dollar. These elements were
partially offset by improved pricing and reduced manufacturing
costs, particularly due to our asset optimization
initiatives.
Gains of $17 million in pricing,
excluding impact from foreign exchange, are mostly the result of
increases in our wood products and newsprint segments, which rose
by 14% and 3% respectively. On the other hand, the average
transaction price for tissue fell by 7%, specialty papers by 3%,
and market pulp by 1%.
Changes in sales volumes had a minimal impact on results. Strong
improvements in wood products shipments, which recorded an increase
of 115 million board feet compared to the first quarter of 2016,
were offset by declines in newsprint (15%), specialty papers (7%),
and tissue (7%), while market pulp was substantially unchanged.
Corporate and Finance
The company invested $69 million
in fixed assets during the quarter, $51
million of which was spent on the Calhoun tissue project. We anticipate that the
total project cost will be about $295 million. A net
amount of $118 million was drawn on
our revolving credit facilities primarily to support the
completion of the tissue project and an increase in
inventories in our wood products segment. Total liquidity remained
healthy at $380 million.
In the first quarter of 2017, we changed our presentation of
segment operating income to reallocate the amortization of prior
service credits component of pension and OPEB costs from the
reportable segments to "corporate and other". Current service costs
will continue to be allocated to the reportable segments. The
company now also treats the amortization of prior service credits
component of pension and OPEB costs as a special item to be
adjusted for purposes of establishing its non-GAAP performance
measures, such as adjusted EBITDA and adjustments to earnings for
special items. The change was applied retroactively to comparative
financial information, including the information presented in this
earnings release.
During the first quarter, the company reached an agreement with
the province of Ontario with
respect to capacity reduction contributions under that province's
special funding relief regulations. We are no longer required
to make any further contributions in respect of capacity reductions
that occurred after April 15,
2014. Consequently, contributions to the affected pension
plans will be lower by approximately $12
million in 2017 and $6 million
in 2018.
In addition, estimated contributions to our Quebec pension
plans from 2017 to 2020 are expected to be lower than previously
disclosed by approximately $30
million, including $6 million
for this year, based on the exchange rate in effect on March 31, 2017.
Outlook
Mr. Garneau added: "As our long-term strategy continues to
unfold, we expect to gradually increase the relative contribution
of our pulp, tissue and lumber segments to our overall results.
However, we will continue to position our network to compete
effectively. We believe that upward trends in pulp pricing will
continue until at least mid-year, and possibly into the
second half given the residual impact of already announced
increases, including those of May. In wood products, we expect
steady increases in housing starts for the foreseeable future.
However, we anticipate short-term volatility in the market caused
by U.S. trade barriers. In tissue, the key to our success will
be in our marketing and sales efforts. We can now offer a full
complement of our integrated tissue and towel
products. We believe that customers will be
increasingly receptive to our offering."
Earnings Conference Call
The company will hold a conference call to discuss the financial
results at 9:00 a.m. (ET) today. The
public is invited to join the call at (877) 223-4471 at least
fifteen minutes before its scheduled start time. A simultaneous
webcast will also be available using the link provided under
"Presentations and Webcasts" in the "Investors" section of
www.resolutefp.com. A replay of the webcast will be archived on the
company's website; a phone replay will also be available until
May 18 by dialing (800) 585-8367,
conference number 6069773.
Description of Special Items
|
|
|
|
|
Special
items
(in
millions)
|
|
First
quarter
2017
|
|
First
quarter
2016
|
Foreign currency
translation gain
|
$
|
-
|
$
|
(6)
|
Closure costs,
impairment and other related charges
|
|
7
|
|
-
|
Inventory write-downs
related to closures
|
|
4
|
|
-
|
Start-up
costs
|
|
8
|
|
3
|
Net gain on
disposition of assets
|
|
-
|
|
(2)
|
Non-operating pension
and OPEB (credits) costs
|
|
(3)
|
|
2
|
Other income,
net
|
|
-
|
|
(7)
|
Income tax effect of
special items
|
|
1
|
|
(4)
|
|
Total
|
$
|
17
|
$
|
(14)
|
Cautionary Statements Regarding Forward-Looking
Information
Statements in this press release and the earnings conference
call and webcast referred to above that are not reported financial
results or other historical information of Resolute Forest Products
Inc. (with its subsidiaries and affiliates, "we," "our," "us" or
the "Company") are "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. They
include, for example, statements relating to our: efforts and
initiatives to reduce costs and increase revenues and
profitability; business and operating outlook; future pension
funding obligations; assessment of market conditions; our growth
strategies and prospects, and the growth potential of the company
and the industry in which we operate; liquidity; future cash flows,
including as a result of the changes to our pension funding
obligations; and strategies for achieving our goals generally.
Forward-looking statements may be identified by the use of
forward-looking terminology such as the words "should," "would,"
"could," "will," "may," "expect," "believe," "anticipate,"
"attempt," "project" and other terms with similar meaning
indicating possible future events or potential impact on our
business or our shareholders.
The reader is cautioned not to place undue reliance on these
forward-looking statements, which are not guarantees of future
performance. These statements are based on management's current
assumptions, beliefs and expectations, all of which involve a
number of business risks and uncertainties that could cause actual
results to differ materially. The potential risks and uncertainties
that could cause our actual future financial condition, results of
operations and performance to differ materially from those
expressed or implied in this press release and the earnings
conference call and webcast referred to above include, but are not
limited to, the impact of: developments in non-print media, and the
effectiveness of our responses to these developments; the highly
cyclical nature of the forest products industry; intense
competition in the forest products industry; any inability to offer
products certified to globally recognized forestry management and
chain of custody standards; any inability to successfully implement
our strategies to increase our earnings power; the possible failure
to successfully integrate acquired businesses with ours or to
realize the anticipated benefits of acquisitions, such as Atlas
Paper Holdings, Inc. and its subsidiaries, or divestitures or other
strategic transactions or projects, such as our Calhoun, Tennessee, tissue project;
uncertainty or changes in political or economic conditions in
the United States, Canada or other countries in which we
manufacture or sell our products; global economic conditions; any
difficulties in obtaining wood fiber at favorable prices, or at
all; changes in the cost of purchased energy and other raw
materials; physical and financial risks associated with global,
regional and local climate conditions and change; any disruption in
operations or increased labor costs due to labor disputes;
disruptions to our supply chain, operations or the delivery of our
products; cybersecurity risks; negative publicity, even if
unjustified; currency fluctuations; contributions to our pension
plans at levels higher than expected; the terms of our outstanding
indebtedness, which could restrict our current and future
operations; our ability to maintain adequate capital resources to
provide for all of our substantial capital requirements; losses
that are not covered by insurance; any additional closure costs and
long-lived asset or goodwill impairment or accelerated depreciation
charges; any need to record additional valuation allowances against
our recorded deferred income tax assets; our exports from one
country to another country becoming or remaining subject to
countervailing or anti-dumping duties, cash deposit requirements,
border taxes, quotas or other trade remedies or restrictions; the
future regulation of our Canadian exports to the U.S., including
softwood lumber and supercalendered paper; any failure to comply
with laws or regulations generally; any additional environmental or
health and safety liabilities; any violation of trade laws, export
controls or other laws relating to our international sales and
operations; unanticipated outcomes of legal proceedings or disputes
in which we are involved; the actions of holders of a significant
percentage of our common stock; and the potential risks and
uncertainties described under the heading "Risk Factors" in Part I,
Item 1A of the company's annual report on Form 10-K for the year
ended December 31, 2016.
All forward-looking statements in this press release and in the
conference call and webcast referred to above are expressly
qualified by the cautionary statements contained or referred to
above and in the company's other filings with the U.S. Securities
and Exchange Commission and the Canadian securities regulatory
authorities. The company disclaims any obligation to publicly
update or revise any forward-looking information, whether as a
result of new information, future events or otherwise, except as
required by law.
About Resolute Forest Products
Resolute Forest Products is a global leader in the forest
products industry with a diverse range of products, including
market pulp, tissue, wood products, newsprint and specialty papers,
which are marketed in over 70 countries. The company owns or
operates some 40 manufacturing facilities, as well as power
generation assets, in the United
States and Canada. Resolute
has third-party certified 100% of its managed woodlands to
internationally recognized sustainable forest management standards.
The shares of Resolute Forest Products trade under the stock symbol
RFP on both the New York Stock Exchange and the Toronto Stock
Exchange.
Resolute has received regional, North American and global
recognition for its leadership in corporate social responsibility
and sustainable development, as well as for its business practices.
Visit resolutefp.com for more information.
RESOLUTE FOREST
PRODUCTS INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(Unaudited, in
millions except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months
|
|
Ended March
31,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Sales
|
$
|
872
|
$
|
877
|
Costs and
expenses:
|
|
|
|
|
|
Cost of sales,
excluding depreciation, amortization and distribution
costs
|
|
667
|
|
677
|
|
Depreciation and
amortization
|
|
51
|
|
52
|
|
Distribution
costs
|
|
110
|
|
112
|
|
Selling, general and
administrative expenses
|
|
43
|
|
38
|
|
Closure costs,
impairment and other related charges (2)
|
|
7
|
|
-
|
|
Net gain on
disposition of assets
|
|
-
|
|
(2)
|
Operating
loss
|
|
(6)
|
|
-
|
Interest
expense
|
|
(11)
|
|
(10)
|
Other income,
net (3)
|
|
-
|
|
13
|
(Loss) income
before income taxes
|
|
(17)
|
|
3
|
Income tax
provision
|
|
(29)
|
|
(10)
|
Net loss including
noncontrolling interests
|
|
(46)
|
|
(7)
|
Net income
attributable to noncontrolling interests
|
|
(1)
|
|
(1)
|
Net loss
attributable to Resolute Forest Products Inc.
|
$
|
(47)
|
$
|
(8)
|
Net loss per share
attributable to Resolute Forest Products Inc. common
shareholders:
|
|
|
|
|
|
Basic
|
$
|
(0.52)
|
$
|
(0.09)
|
|
Diluted
|
|
(0.52)
|
|
(0.09)
|
Weighted-average number
of Resolute Forest Products Inc. common shares
outstanding:
|
|
|
|
|
|
Basic
|
|
90.2
|
|
89.6
|
|
Diluted
|
|
90.2
|
|
89.6
|
See notes to the Unaudited Consolidated Financial
Statement Information
RESOLUTE FOREST
PRODUCTS INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(Unaudited, in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
December
31,
|
|
2017
|
2016
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
39
|
$
|
35
|
|
Accounts receivable,
net:
|
|
|
|
|
|
|
Trade
|
|
370
|
|
358
|
|
|
Other
|
|
84
|
|
83
|
|
Inventories,
net
|
|
608
|
|
570
|
|
Other current
assets
|
|
36
|
|
35
|
|
|
|
Total current
assets
|
|
1,137
|
|
1,081
|
Fixed assets,
net
|
|
1,866
|
|
1,842
|
Amortizable
intangible assets, net
|
|
68
|
|
70
|
Goodwill
|
|
81
|
|
81
|
Deferred income tax
assets
|
|
1,054
|
|
1,039
|
Other
assets
|
|
129
|
|
164
|
|
|
|
Total
assets
|
$
|
4,335
|
$
|
4,277
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
468
|
$
|
466
|
|
Current portion of
long-term debt
|
|
1
|
|
1
|
|
|
|
Total current
liabilities
|
|
469
|
|
467
|
Long-term debt, net
of current portion
|
|
880
|
|
761
|
Pension and other
postretirement benefit obligations
|
|
1,251
|
|
1,281
|
Deferred income tax
liabilities
|
|
5
|
|
2
|
Other
liabilities
|
|
56
|
|
55
|
|
|
|
Total
liabilities
|
|
2,661
|
|
2,566
|
Commitments and
contingencies
|
|
|
|
|
Equity:
|
|
|
|
|
|
Resolute Forest
Products Inc. shareholders' equity:
|
|
|
|
|
|
|
Common
stock
|
|
-
|
|
-
|
|
|
Additional paid-in
capital
|
|
3,778
|
|
3,775
|
|
|
Deficit
|
|
(1,257)
|
|
(1,207)
|
|
|
Accumulated other
comprehensive loss
|
|
(746)
|
|
(755)
|
|
|
Treasury stock at
cost
|
|
(120)
|
|
(120)
|
|
|
|
Total Resolute
Forest Products Inc. shareholders' equity
|
|
1,655
|
|
1,693
|
Noncontrolling
interests
|
|
19
|
|
18
|
|
|
|
Total
equity
|
|
1,674
|
|
1,711
|
|
|
|
Total liabilities
and equity
|
$
|
4,335
|
$
|
4,277
|
See notes to the Unaudited Consolidated Financial
Statement Information
RESOLUTE FOREST
PRODUCTS INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited, in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months
|
|
Ended March
31,
|
|
|
2017
|
|
|
2016
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net loss including
noncontrolling interests
|
$
|
(46)
|
|
$
|
(7)
|
Adjustments to reconcile net loss including
noncontrolling interests to net cash (used in) provided by
operating activities:
|
|
|
|
|
|
|
Share-based
compensation
|
|
4
|
|
|
3
|
|
Depreciation and
amortization
|
|
51
|
|
|
52
|
|
Inventory write-downs
related to closures
|
|
4
|
|
|
-
|
|
Deferred income
taxes
|
|
28
|
|
|
10
|
|
Net pension
contributions and other postretirement benefit payments
|
|
(30)
|
|
|
(21)
|
|
Net gain on
disposition of assets
|
|
-
|
|
|
(2)
|
|
Gain on translation
of foreign currency denominated deferred income taxes
|
|
(10)
|
|
|
(63)
|
|
Loss on translation
of foreign currency denominated pension and other
postretirement benefit obligations
|
|
9
|
|
|
52
|
|
Gain on disposition
of equity method investment
|
|
-
|
|
|
(5)
|
|
Net planned major
maintenance amortization
|
|
1
|
|
|
-
|
|
Changes in working
capital:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(11)
|
|
|
(12)
|
|
|
Inventories
|
|
(40)
|
|
|
(20)
|
|
|
Accounts payable and
accrued liabilities
|
|
1
|
|
|
22
|
|
Other, net
|
|
-
|
|
|
(3)
|
|
|
|
Net cash (used in)
provided by operating activities
|
|
(39)
|
|
|
6
|
Cash flows from
investing activities:
|
|
|
|
|
|
Cash invested in
fixed assets
|
|
(69)
|
|
|
(47)
|
Disposition of
assets
|
|
-
|
|
|
5
|
Increase in
countervailing duty cash deposits
|
|
(5)
|
|
|
(6)
|
Increase in
restricted cash
|
|
(2)
|
|
|
-
|
Decrease in deposit
requirements for letters of credit, net
|
|
1
|
|
|
-
|
|
|
|
Net cash used in
investing activities
|
|
(75)
|
|
|
(48)
|
Cash flows from
financing activities:
|
|
|
|
|
|
Net borrowings under
revolving credit facilities
|
|
118
|
|
|
20
|
|
|
|
Net cash provided by
financing activities
|
|
118
|
|
|
20
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
-
|
|
|
1
|
Net increase
(decrease) in cash and cash equivalents
|
|
4
|
|
|
(21)
|
Cash and cash
equivalents:
|
|
|
|
|
|
|
Beginning of
period
|
|
35
|
|
|
58
|
|
End of
period
|
$
|
39
|
|
$
|
37
|
See notes to the Unaudited Consolidated Financial
Statement Information
RESOLUTE FOREST
PRODUCTS INC.
|
RECONCILIATION OF
OPERATING INCOME AND NET INCOME ADJUSTED FOR SPECIAL
ITEMS
|
|
A reconciliation of
our operating income, net income and net income per share reported
before special items is presented in the tables below. See Note 1
to the Unaudited Consolidated Financial Statement Information, and
Note 1 to the Reconciliations of Non-GAAP Measures, regarding our
use of non-GAAP measures.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2017 (unaudited, in millions, except per share
amounts)
|
Operating income (loss)
|
Net income
(loss)
|
EPS
|
|
|
|
|
|
|
|
GAAP, as
reported
|
$
|
(6)
|
$
|
(47)
|
$
|
(0.52)
|
|
|
|
|
|
|
|
Adjustments for
special items:
|
|
|
|
|
|
|
|
Closure costs,
impairment and other related charges
|
|
7
|
|
7
|
|
0.08
|
|
Inventory write-downs
related to closures
|
|
4
|
|
4
|
|
0.04
|
|
Start-up
costs
|
|
8
|
|
8
|
|
0.09
|
|
Non-operating pension
and OPEB credits
|
|
(3)
|
|
(3)
|
|
(0.03)
|
|
Income tax effect of
special items
|
|
-
|
|
1
|
|
0.01
|
|
|
|
|
|
|
|
Adjusted for
special items
|
$
|
10
|
$
|
(30)
|
$
|
(0.33)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2016 (unaudited, in millions, except per share
amounts)
|
Operating
income (loss)
|
Net income
(loss)
|
EPS
|
|
|
|
|
|
|
|
GAAP, as
reported
|
$
|
-
|
$
|
(8)
|
$
|
(0.09)
|
|
|
|
|
|
|
|
Adjustments for
special items:
|
|
|
|
|
|
|
|
Foreign currency
translation gain
|
|
-
|
|
(6)
|
|
(0.07)
|
|
Start-up
costs
|
|
3
|
|
3
|
|
0.03
|
|
Net gain on
disposition of assets
|
|
(2)
|
|
(2)
|
|
(0.02)
|
|
Non-operating pension
and OPEB costs
|
|
2
|
|
2
|
|
0.02
|
|
Other income,
net
|
|
-
|
|
(7)
|
|
(0.08)
|
|
Income tax effect of
special items
|
|
-
|
|
(4)
|
|
(0.04)
|
|
|
|
|
|
|
|
Adjusted for
special items
|
$
|
3
|
$
|
(22)
|
$
|
(0.25)
|
RESOLUTE FOREST
PRODUCTS INC.
|
RECONCILIATION OF
EBITDA AND ADJUSTED EBITDA
|
|
A reconciliation of
our net income including noncontrolling interests to EBITDA and
Adjusted EBITDA is presented in the tables below. See Note 1 to the
Unaudited Consolidated Financial Statement Information, and Note 1
to the Reconciliations of Non-GAAP Measures, regarding our use of
the non-GAAP measures EBITDA and Adjusted EBITDA.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2017
(unaudited, in millions)
|
Market
pulp
|
Tissue
|
Wood
products
|
Newsprint
|
Specialty
papers
|
Corporate and
other
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
including noncontrolling interests
|
$
|
7
|
$
|
-
|
$
|
20
|
$
|
(4)
|
$
|
4
|
$
|
(73)
|
$
|
(46)
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
11
|
|
11
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
29
|
|
29
|
Depreciation and
amortization
|
|
8
|
|
1
|
|
9
|
|
16
|
|
12
|
|
5
|
|
51
|
EBITDA
|
$
|
15
|
$
|
1
|
$
|
29
|
$
|
12
|
$
|
16
|
$
|
(28)
|
$
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closure costs,
impairment and other related charges
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
7
|
Inventory write-downs
related to closures
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
4
|
Start-up
costs
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
8
|
Non-operating pension
and OPEB credits
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
15
|
$
|
1
|
$
|
29
|
$
|
12
|
$
|
16
|
$
|
(12)
|
$
|
61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2016
(unaudited, in millions)
|
Market
pulp
|
Tissue
|
Wood
products
|
Newsprint
|
Specialty
papers
|
Corporate and
other
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
including noncontrolling interests
|
$
|
19
|
$
|
(2)
|
$
|
(4)
|
$
|
(5)
|
$
|
5
|
$
|
(20)
|
$
|
(7)
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
10
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
10
|
Depreciation and
amortization
|
|
7
|
|
2
|
|
7
|
|
20
|
|
13
|
|
3
|
|
52
|
EBITDA
|
$
|
26
|
$
|
-
|
$
|
3
|
$
|
15
|
$
|
18
|
$
|
3
|
$
|
65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation gain
|
|
|
|
|
|
|
|
|
|
|
|
(6)
|
|
(6)
|
Start-up
costs
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
3
|
Net gain on
disposition of assets
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
(2)
|
Non-operating pension
and OPEB costs
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
2
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
|
|
(7)
|
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
26
|
$
|
-
|
$
|
3
|
$
|
15
|
$
|
18
|
$
|
(7)
|
$
|
55
|
RESOLUTE FOREST PRODUCTS INC.
Notes
to the Unaudited Consolidated Financial Statement
Information
1. In the first quarter of 2017, we changed our
presentation of segment operating income to reallocate the
amortization of prior service credits component of pension and
other postretirement benefit (or "OPEB") costs from the reportable
segments to corporate and other. Current service costs will
continue to be allocated to the reportable segments. We now also
treat the amortization of prior service credits component of
pension and OPEB costs as a special item to be adjusted for
purposes of establishing our non-GAAP performance measures, listed
below, together with our non-operating pension and OPEB costs and
credits. This approach is consistent with the indicators management
uses internally to evaluate performance. Prior period amounts have
been reclassified to conform to the 2017 presentation.
2. Closure costs, impairment and other related charges for
the three months ended March 31,
2017, were comprised of severance and other costs of
$7 million related to the permanent
closure of our paper mill in Mokpo, South
Korea, on March 9, 2017.
3. Other income, net for the three months ended March 31, 2017 and 2016, was comprised of the
following:
|
|
|
|
|
(Unaudited, in
millions)
|
|
2017
|
|
2016
|
Foreign exchange
gain
|
$
|
–
|
$
|
6
|
Gain on disposition
of equity method investment
|
|
–
|
|
5
|
Miscellaneous
income
|
|
–
|
|
2
|
|
$
|
–
|
$
|
13
|
4. On November 25, 2016,
countervailing duty and anti-dumping petitions were filed with the
U.S. Department of Commerce (or "Commerce") and the U.S.
International Trade Commission by certain U.S. softwood lumber
producers requesting that the U.S. government impose countervailing
and anti-dumping duties on certain Canadian-origin softwood lumber
products exported to the U.S. One of our subsidiaries was
identified in the petition as being a Canadian exporting producer
of softwood lumber products to the U.S. and it and several of our
other subsidiaries were selected as a mandatory respondent to be
individually investigated by Commerce in both the countervailing
and anti-dumping duty investigations. On April 24, 2017, Commerce announced its
preliminary determinations in the countervailing duty
investigation, and, as a result, since April
28, 2017, we have been required to pay cash deposits to the
U.S. at a rate of 12.82% for estimated countervailing duties on our
imports to the U.S. of certain softwood lumber products produced at
our Canadian sawmills. The rate and the requirement to pay cash
deposits do not have retroactive effect. Commerce has not yet
issued its preliminary determination in the anti-dumping
investigation.
The preliminary 12.82% rate can remain in effect for up to four
months. If Commerce does not issue a countervailing duty order
before the four-month period lapses, then we would not be required
to pay deposits for countervailing duties on our softwood lumber
imports from our Canadian mills unless and until Commerce requires
us to pay deposits at a rate set in its countervailing duty order.
If as a result of such a countervailing duty order we are subject
to a countervailing duty deposit requirement on any of our softwood
lumber product imports to the U.S., then we would be required to
resume making cash deposits at the rate set in the order until
Commerce sets a countervailing duty rate in a subsequent
administrative review. Based on the 12.82% rate and our current
operating parameters, cash deposits on our imports of the affected
softwood lumber products to the U.S. would be approximately
$17 million for the initial
four-month period, and as high as $50
million per year if the rate were to remain in effect
continuously. We are not presently able to determine the ultimate
resolution of this matter and we are presently evaluating the
impact of this announcement on our consolidated financial
statements.
RESOLUTE FOREST PRODUCTS INC.
Note
to the Reconciliations of Non-GAAP Measures
1. Operating income (loss), net income (loss) and net
income (loss) per share (or "EPS"), in each case as adjusted for
special items, as well as earnings before interest expense, income
taxes, and depreciation and amortization, or "EBITDA", and adjusted
EBITDA, in each case by reportable segment (market pulp, tissue,
wood products, newsprint and specialty papers) in accordance with
Financial Accounting Standards Board Accounting Standards
Codification 290, "Segment Reporting," are not financial measures
recognized under generally accepted accounting principles, or
"GAAP."
We calculate operating income (loss), as adjusted for special
items, as operating income (loss) from our consolidated statements
of operations, adjusted for items such as closure costs, impairment
and other related charges, inventory write-downs related to
closures, start-up costs, gains and losses on disposition of
assets, non-operating pension and OPEB costs and credits, and other
charges or credits that are excluded from our segment's performance
from GAAP operating income (loss).
We calculate net income (loss), as adjusted for special items,
as net income (loss) from our consolidated statements of
operations, adjusted for the same special items applied to
operating income (loss), in addition to foreign currency
translation gains and losses and other income (expense), net.
EPS, as adjusted for special items, is calculated as net income
(loss), as adjusted for special items, per diluted share.
EBITDA by reportable segment is calculated as net income (loss)
including noncontrolling interests from the consolidated statements
of operations, allocated to each of our reportable segments,
adjusted for depreciation and amortization. EBITDA for corporate
and other is calculated as net income (loss) including
noncontrolling interests from the consolidated statements of
operations, after the allocation to reportable segments, adjusted
for interest expense, income taxes, and depreciation and
amortization.
Adjusted EBITDA means EBITDA, excluding the same special items
applied to net income (loss).
Liquidity is calculated as cash and cash equivalents from our
consolidated balance sheets, and availability under our revolving
credit facilities.
We believe that using these non-GAAP measures is useful because
they are consistent with the indicators management uses internally
to measure the Company's performance, and it allows the reader to
more easily compare our ongoing operations and financial
performance from period to period. Operating income (loss), net
income (loss) and EPS, in each case as adjusted for special items,
as well as EBITDA and adjusted EBITDA, are internal measures, and
therefore may not be comparable to those of other companies. These
non-GAAP measures should not be viewed as substitutes to financial
measures determined under GAAP in our consolidated statements of
operations in our filings with the Securities and Exchange
Commission.
SOURCE Resolute Forest Products Inc.