US $
- Q1 GAAP net income of $42
million / $0.45 per
share
- Adjusted EBITDA of $104
million in the quarter
- Repurchased $225 million of
senior notes
- Liquidity strong at $595
million
- Net debt to adjusted EBITDA at 0.6x
MONTRÉAL, April 30, 2019 /CNW
Telbec/ - Resolute Forest Products Inc. (NYSE: RFP) (TSX: RFP)
today reported net income for the quarter ended March 31, 2019, of $42 million, or
$0.45 per diluted share, compared to
$10 million, or $0.11 per
diluted share, in the same period in 2018. Sales were $795 million in the quarter, a decrease of
$79 million from the year-ago period.
The first quarter of 2018 included sales from the Catawba
(South Carolina) and Fairmont (West
Virginia) facilities, sold in the fourth quarter of 2018.
Excluding special items, the company reported net income of
$30 million, or $0.32 per diluted share, compared to $17 million, or $0.18 per diluted share, in the first quarter of
2018.
"Our diversified asset base continued to produce strong
EBITDA in the quarter despite building market pressure in some of
our businesses," said Yves
Laflamme, president and chief executive
officer. "Our quarterly results benefitted from
improved productivity, which allowed us to absorb the significant
rise in wood fiber costs and offset the reduction in EBITDA
associated with the divestiture of the Catawba mill. Accordingly,
we continued to generate consistent value from our paper portfolio,
and the results of our wood products business improved as prices
rebounded modestly from multi-year lows. We're also pleased with
the recent ratification of a four-year collective agreement
covering our nearly 800 unionized employees at three of our U.S.
pulp, paper and tissue mills."
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 reported operating income of $64 million in the quarter, compared to
$75 million in the fourth quarter of
2018. The operating results reflect higher average transaction
prices for wood products, lower depreciation expense, the favorable
effect of the weaker Canadian dollar and fewer production outages.
These elements were partly offset by lower volumes, mainly
attributable to the Catawba mill divestiture at the end of the
fourth quarter and softening newsprint market conditions, as well
as an increase in wood fiber costs and seasonally higher energy
expenses. The operating results in the fourth quarter of 2018
included a $141 million gain on
disposition of assets and a non-cash impairment charge of
$120 million. Adjusted EBITDA in the
quarter was $104 million, essentially
unchanged from $105 million reported
in the fourth quarter, which included $15
million from the Catawba facility.
Market Pulp
Operating income in the market pulp segment was $42 million, relatively unchanged compared to the
previous quarter. The average transaction price remained at
$808 per metric ton, while shipments
declined by 56,000 metric tons due to a reduction in pulp capacity
following the divestiture of the Catawba and Fairmont facilities. On a pro
forma basis, sales volume rose by 26,000 metric tons because of
less scheduled downtime and production disruptions this quarter.
The operating cost per unit (the "delivered cost") decreased by
$24 to $664 per metric ton as higher fiber costs were
more than offset by improved productivity, increasing EBITDA per
metric ton to $162. Accordingly,
despite the sale of the Catawba mill, EBITDA was relatively
unchanged at $47 million.
Tissue
The tissue segment incurred an operating loss of $8 million in the quarter, an improvement of
$1 million compared to the fourth
quarter of 2018. Overall sales increased by 11%, reflecting
improved product mix, price increases for away-from-home products,
and higher shipments. Delivered cost remained unchanged, as lower
freight expenses associated with our new distribution center were
offset by higher pulp costs following the divestiture of the
Fairmont mill. EBITDA
improved to negative $3 million, from
negative $5 million in the first
quarter.
Wood Products
The wood products segment reported an operating income of
$6 million in the quarter, compared
to an operating loss of $8 million in
the fourth quarter. The improvement reflects an increase in average
transaction price, up $27 per
thousand board feet, to $374. Lower
market-based stumpage fees and maintenance costs more than offset
seasonally higher fiber usage and freight costs, leading to a
$6 per thousand board feet decrease
in delivered cost. Pricing gains and lower costs largely outweighed
the 24 million board feet decrease in shipments. Volumes this
quarter were unfavorably impacted by adverse weather conditions,
which affected rail car availability, log supply and U.S.
consumption. EBITDA for the segment increased to $14 million, compared to $1 million in the prior quarter. Finished goods
inventory remained elevated at 159 million board feet.
Newsprint
At $28 million in the first
quarter, newsprint's operating income was unchanged compared to the
previous quarter. Sales declined by 14%, driven by a 53,000 metric
ton decrease in shipments, while the average transaction price
remained at $634 per metric ton. The
reduction in sales volume reflects seasonality, the timing of
export sales and softening market conditions. As a result, finished
goods inventory rose to 135,000 metric tons at quarter-end. The
delivered cost decreased by $12 per
metric ton, largely attributable to lower depreciation
expense, as certain assets are fully amortized. Higher contribution
from the Thunder Bay (Ontario) cogeneration assets, following a
turbine failure in the previous quarter, and overall lower
maintenance costs were largely offset by higher fiber and energy
costs. Consequently, EBITDA decreased by $10
million to $35 million for the
quarter, equivalent to $106 per
metric ton, or 17% EBITDA margin.
Specialty Papers
The specialty papers segment generated operating income of
$15 million in the quarter, compared
to $17 million in the previous
quarter. Pricing rose by $12 per
short ton to $768, while shipments
fell by 88,000 short tons with the sale of the Catawba mill at the
end of 2018. Despite the exit from higher-cost coated mechanical
grades, delivered cost remained unchanged at $695 per short ton, reflecting continued higher
wood costs in the U.S. Southeast due to abnormally wet weather,
unfavorable energy expenses and scheduled maintenance
costs. While segment EBITDA decreased by $3 million to $25
million this quarter, EBITDA per short ton rose by
$30 to $125, due to the sale of the Catawba mill,
equivalent to a 16% margin.
Consolidated Quarterly Operating Income Variance Against
Year-Ago Period
The company's operating income was $16
million higher than the first quarter of 2018. Overall
pricing added $37 million to the
results, as the average transaction price increased by 14% for each
of market pulp, newsprint and specialty papers, offsetting the 19%
drop in lumber prices. The improvement in operating income also
reflects the $20 million favorable
impact of the weaker Canadian dollar and lower depreciation expense
of $13 million due to divestitures
and the full amortization of certain assets.
These favorable items were largely offset by an increase in
manufacturing costs of $51 million,
mainly resulting from higher fiber costs and additional
maintenance, mostly planned. Results were also impacted by lower
sales volume of $8 million,
reflecting weaker lumber and newsprint market conditions.
Corporate and Finance
During the quarter, the company generated $23 million of cash from operations, despite the
seasonal build-up in log inventory and the increase in newsprint
finished goods inventory. Cash decreased to $69 million, reflecting $26 million in capital expenditures and the
repurchase of $225 million of the
senior notes due 2023. Net debt to trailing 12 month adjusted
EBITDA remained low, at 0.6x, and liquidity at quarter-end stood at
$595 million.
By quarter-end, the company had recorded cumulative softwood
lumber duty deposits of $117 million
on the balance sheet, including $14
million paid in the quarter. Uncoated groundwood papers duty
deposits of $6 million were fully
refunded during the quarter.
Following the adoption of new lease accounting standards, the
company recognized total liabilities of $66
million associated with operating leases, and corresponding
assets on the balance sheet as of March 31,
2019.
Outlook
"We maintain our view on market pulp fundamentals even as
prices have recently started to trend down. While we expect lower
price realizations in the second quarter, limited capacity
additions and growing demand will continue to support favorable
market dynamics over the medium term. Our tissue segment remains a
key focus as we continue to build on the late-year progress in
terms of productivity and quality. We expect our wood products cost
performance to improve for the balance of the year. But we're more
conservative with our expectations around lumber markets even as
some market participants are more enthusiastic following abnormally
wet and wintry conditions and in light of production curtailments
among Canadian producers, including downtime of our own. While our
near-term outlook is more uncertain, our medium to long-term
outlook remains positive. With ongoing global demand declines and
currently low operating rates, we expect lower pricing for our
paper grades in the second quarter. But despite the softening
market conditions, our paper business generated strong first
quarter EBITDA margins, and we are confident we can continue to
produce attractive cash flows as we take steps to reduce inventory
and maintain our competitive cost position," added Mr.
Laflamme.
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 14, 2019, by dialing (800)
585-8367, conference number 4294727.
Description of Special Items
Special
items
|
First
quarter
|
(in
millions)
|
|
2019
|
|
2018
|
Foreign currency
translation loss
|
$
|
4
|
$
|
1
|
Reversal of inventory
write-downs related to closures
|
|
-
|
|
(1)
|
Start-up
costs
|
|
-
|
|
8
|
Non-operating pension
and other postretirement benefit credits
|
|
(12)
|
|
(13)
|
Other expense,
net
|
|
-
|
|
6
|
Income tax effect of
special items
|
|
(4)
|
|
6
|
Total
|
$
|
(12)
|
$
|
7
|
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, "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 included in the Outlook section of this press
release and statements relating to our: efforts and initiatives to
reduce costs and increase revenues and profitability; business and
operating outlook; future pension obligations; assessment of market
conditions; 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; 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 our entry
into tissue production and sales, or divestitures or other
strategic transactions or projects; uncertainty or changes in
political or economic conditions in the
United States, Canada or
other countries in which we sell our products; global economic
conditions; the highly cyclical nature of the forest products
industry; any difficulties in obtaining timber or 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 weather conditions, and
climate change; any disruption in operations or increased labor
costs due to labor disputes; difficulties in our employee relations
or retention; disruptions to our supply chain, operations, or the
delivery of our products; disruptions to our information technology
systems including cybersecurity incidents;
risks related to the operation and transition of legacy system
applications; negative publicity, even if unjustified; currency
fluctuations; any increase in the level of required contributions
to our pension plans, including as a result of any increase in the
amount by which they are underfunded; our ability to maintain
adequate capital resources to provide for all of our substantial
capital requirements; the terms of our outstanding indebtedness,
which could restrict our current and future operations; losses that
are not covered by insurance; any additional closure costs and
long-lived asset 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 duties, cash
deposit requirements, border taxes, quotas, or other trade remedies
or restrictions; countervailing and anti-dumping duties on imports
to the U.S. of substantially all of our softwood lumber products
produced at our Canadian sawmills; 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; adverse outcomes of legal proceedings, claims and
governmental inquiries, investigations, and other 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, 2018.
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 close to 70 countries. The company owns or
operates some 40 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 of U.S. dollars, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months
ended March
31,
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
795
|
$
|
874
|
Costs and
expenses:
|
|
|
|
|
Cost of sales,
excluding depreciation, amortization and distribution
costs
|
|
554
|
|
614
|
Depreciation and
amortization
|
|
40
|
|
53
|
Distribution
costs
|
|
100
|
|
116
|
Selling, general and
administrative expenses
|
|
37
|
|
43
|
Operating
income
|
|
64
|
|
48
|
Interest
expense
|
|
(9)
|
|
(13)
|
Non-operating pension
and other postretirement benefit credits
|
|
12
|
|
13
|
Other expense,
net
|
|
(4)
|
|
(7)
|
Income before
income taxes
|
|
63
|
|
41
|
Income tax
provision
|
|
(21)
|
|
(31)
|
Net income
including noncontrolling interests
|
|
42
|
|
10
|
Net income
attributable to noncontrolling interests
|
|
-
|
|
-
|
Net income
attributable to Resolute Forest Products Inc.
|
$
|
42
|
$
|
10
|
Net income per
share attributable to Resolute Forest Products Inc. common
shareholders:
|
|
|
|
|
Basic
|
$
|
0.45
|
$
|
0.11
|
Diluted
|
|
0.45
|
|
0.11
|
Weighted-average
number of Resolute Forest Products Inc. common shares
outstanding:
|
|
|
|
|
Basic
|
|
92.4
|
|
91.2
|
Diluted
|
|
93.9
|
|
93.0
|
RESOLUTE FOREST
PRODUCTS INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(Unaudited, in
millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
2019
|
December
31,
2018
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
69
|
$
|
304
|
Accounts receivable,
net:
|
|
|
|
|
Trade
|
|
353
|
|
347
|
Other
|
|
82
|
|
102
|
Inventories,
net
|
|
556
|
|
508
|
Other current
assets
|
|
58
|
|
43
|
Total current
assets
|
|
1,118
|
|
1,304
|
Fixed assets,
net
|
|
1,492
|
|
1,515
|
Amortizable
intangible assets, net
|
|
51
|
|
50
|
Deferred income tax
assets
|
|
872
|
|
876
|
Operating lease
right-of-use assets (1)
|
|
63
|
|
-
|
Other
assets
|
|
206
|
|
190
|
Total
assets
|
$
|
3,802
|
$
|
3,935
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
433
|
$
|
427
|
Current portion of
long-term debt (2)
|
|
1
|
|
223
|
Current portion of
operating lease liabilities (1)
|
|
7
|
|
-
|
Total current
liabilities
|
|
441
|
|
650
|
Long-term debt, net
of current portion
|
|
422
|
|
422
|
Pension and other
postretirement benefit obligations
|
|
1,247
|
|
1,257
|
Operating lease
liabilities, net of current portion (1)
|
|
59
|
|
-
|
Other
liabilities
|
|
53
|
|
71
|
Total
liabilities
|
|
2,222
|
|
2,400
|
Commitments and
contingencies
|
|
|
|
|
Equity:
|
|
|
|
|
Resolute Forest
Products Inc. shareholders' equity:
|
|
|
|
|
Common
stock
|
|
-
|
|
-
|
Additional paid-in
capital
|
|
3,802
|
|
3,802
|
Deficit
|
|
(1,156)
|
|
(1,198)
|
Accumulated other
comprehensive loss
|
|
(947)
|
|
(950)
|
Treasury stock at
cost
|
|
(120)
|
|
(120)
|
Total Resolute
Forest Products Inc. shareholders' equity
|
|
1,579
|
|
1,534
|
Noncontrolling
interests
|
|
1
|
|
1
|
Total
equity
|
|
1,580
|
|
1,535
|
Total liabilities
and equity
|
$
|
3,802
|
$
|
3,935
|
|
|
|
|
|
See Notes to the
Unaudited Consolidated Financial Statement Information
|
RESOLUTE FOREST
PRODUCTS INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited, in
millions of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Three
months
ended March
31,
|
|
|
2019
|
|
2018
|
Cash flows from
operating activities:
|
|
|
|
|
Net income including
noncontrolling interests
|
$
|
42
|
$
|
10
|
Adjustments to
reconcile net income including noncontrolling interests to net cash
provided by operating activities:
|
|
|
|
|
Share-based
compensation
|
|
2
|
|
3
|
Depreciation and
amortization
|
|
40
|
|
53
|
Reversal of inventory
write-downs related to closures
|
|
-
|
|
(1)
|
Deferred income
taxes
|
|
21
|
|
30
|
Net pension
contributions and other postretirement benefit payments
|
|
(26)
|
|
(35)
|
(Gain) loss on
translation of foreign currency denominated deferred income
taxes
|
|
(19)
|
|
27
|
Loss (gain) on
translation of foreign currency denominated pension and other
postretirement benefit obligations
|
|
20
|
|
(22)
|
Net planned major
maintenance (payments) amortization
|
|
(2)
|
|
6
|
Changes in working
capital:
|
|
|
|
|
Accounts
receivable
|
|
6
|
|
19
|
Inventories
|
|
(47)
|
|
(50)
|
Other current
assets
|
|
(7)
|
|
(5)
|
Accounts payable and
accrued liabilities
|
|
(6)
|
|
28
|
Other, net
|
|
(1)
|
|
(1)
|
Net cash provided by
operating activities
|
|
23
|
|
62
|
Cash flows from
investing activities:
|
|
|
|
|
Cash invested in
fixed assets
|
|
(26)
|
|
(25)
|
Decrease (increase)
in countervailing duty cash deposits on supercalendered
paper
|
|
1
|
|
(5)
|
Increase in
countervailing and anti-dumping duty cash deposits on softwood
lumber
|
|
(14)
|
|
(14)
|
Decrease (increase)
in countervailing duty cash deposits on uncoated groundwood
paper
|
|
6
|
|
(2)
|
Net cash used in
investing activities
|
|
(33)
|
|
(46)
|
Cash flows from
financing activities:
|
|
|
|
|
Net repayments under
revolving credit facilities
|
|
-
|
|
(9)
|
Payments of
debt (2)
|
|
(225)
|
|
-
|
Payments of financing
and credit facility fees
|
|
-
|
|
(1)
|
Cash used in financing
activities
|
|
(225)
|
|
(10)
|
Effect of exchange
rate changes on cash and cash equivalents, and restricted
cash
|
|
1
|
|
(1)
|
Net (decrease)
increase in cash and cash equivalents, and restricted
cash
|
|
(234)
|
|
5
|
Cash and cash
equivalents, and restricted cash:
|
|
|
|
|
Beginning of
period
|
|
345
|
|
49
|
End of
period
|
$
|
111
|
$
|
54
|
|
|
|
|
|
Cash and cash
equivalents, and restricted cash at period end:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
69
|
$
|
13
|
Restricted cash
(included in "Other current assets" and "Other assets")
|
|
42
|
|
41
|
|
|
|
|
|
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 Reconciliations of Non-GAAP Measures regarding our use of
non-GAAP measures.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2019 (Uaudited, in millions of U.S. dollars,
except per share amounts)
|
Operating
income (loss)
|
Net income
(loss)
|
EPS
|
|
|
|
|
|
|
|
GAAP, as
reported
|
$
|
64
|
$
|
42
|
$
|
0.45
|
|
|
|
|
|
|
|
Adjustments for
special items:
|
|
|
|
|
|
|
Foreign exchange
loss
|
|
-
|
|
4
|
|
0.04
|
Non-operating pension
and other postretirement benefit credits
|
|
-
|
|
(12)
|
|
(0.13)
|
Income tax effect of
special items
|
|
-
|
|
(4)
|
|
(0.04)
|
|
|
|
|
|
|
|
Adjusted for
special items
|
$
|
64
|
$
|
30
|
$
|
0.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2018 (Unaudited, in millions of U.S. dollars,
except per share amounts)
|
Operating
income (loss)
|
Net income
(loss)
|
EPS
|
|
|
|
|
|
|
|
GAAP, as
reported
|
$
|
48
|
$
|
10
|
$
|
0.11
|
|
|
|
|
|
|
|
Adjustments for
special items:
|
|
|
|
|
|
|
Foreign exchange
loss
|
|
-
|
|
1
|
|
0.01
|
Reversal of inventory
write-downs related to closures
|
|
(1)
|
|
(1)
|
|
(0.01)
|
Start-up
costs
|
|
8
|
|
8
|
|
0.09
|
Non-operating pension
and other postretirement benefit credits
|
|
-
|
|
(13)
|
|
(0.14)
|
Other expense,
net
|
|
-
|
|
6
|
|
0.06
|
Income tax effect of
special items
|
|
-
|
|
6
|
|
0.06
|
|
|
|
|
|
|
|
Adjusted for
special items
|
$
|
55
|
$
|
17
|
$
|
0.18
|
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
Reconciliations of Non-GAAP Measures regarding our use of the
non-GAAP measures EBITDA and Adjusted EBITDA.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2019
(Unaudited, in millions of U.S. dollars)
|
Market
pulp
|
Tissue
(2)
|
Wood
products
|
Newsprint
|
Specialty
papers
|
Corporate
and other
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
including noncontrolling interests
|
$
|
42
|
$
|
(8)
|
$
|
6
|
$
|
28
|
$
|
15
|
$
|
(41)
|
$
|
42
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
9
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
21
|
|
21
|
Depreciation and
amortization
|
|
5
|
|
5
|
|
8
|
|
7
|
|
10
|
|
5
|
|
40
|
EBITDA
|
$
|
47
|
$
|
(3)
|
$
|
14
|
$
|
35
|
$
|
25
|
$
|
(6)
|
$
|
112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
loss
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
4
|
Non-operating pension
and other postretirement benefit credits
|
|
|
|
|
|
|
|
|
|
|
|
(12)
|
|
(12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
47
|
$
|
(3)
|
$
|
14
|
$
|
35
|
$
|
25
|
$
|
(14)
|
$
|
104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2018
(Unaudited, in millions of U.S. dollars)
|
Market
pulp
|
Tissue
(2)
|
Wood
products
|
Newsprint
|
Specialty
papers
|
Corporate
and other
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
including noncontrolling interests
|
$
|
33
|
$
|
(1)
|
$
|
53
|
$
|
(4)
|
$
|
(7)
|
$
|
(64)
|
$
|
10
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
13
|
|
13
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
31
|
|
31
|
Depreciation and
amortization
|
|
7
|
|
1
|
|
8
|
|
16
|
|
12
|
|
9
|
|
53
|
EBITDA
|
$
|
40
|
$
|
-
|
$
|
61
|
$
|
12
|
$
|
5
|
$
|
(11)
|
$
|
107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
loss
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
1
|
Reversal of inventory
write-downs related to closures
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
(1)
|
Start-up
costs
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
8
|
Non-operating pension
and other postretirement benefit credits
|
|
|
|
|
|
|
|
|
|
|
|
(13)
|
|
(13)
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
40
|
$
|
-
|
$
|
61
|
$
|
12
|
$
|
5
|
$
|
(10)
|
$
|
108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to the
Reconciliations of Non-GAAP Measures
|
RESOLUTE FOREST PRODUCTS INC.
Notes to the Unaudited Consolidated Financial Statement
Information
1. Effective January 1, 2019,
we adopted Accounting Standards Update (or "ASU") 2016-02,
"Leases," issued by the Financial Accounting Standards Board (or
the "FASB"), and the series of related accounting standard
updates that followed through a cumulative-effect adjustment as of
that date.
The effect of this ASU on our Consolidated Balance Sheet as of
January 1, 2019, was as follows:
(Unaudited, in
millions)
|
|
Before ASU
|
|
Effect of
change
|
|
As
adjusted
|
Amortizable
intangible assets, net
|
$
|
50
|
$
|
1
|
$
|
51
|
Operating lease
right-of-use assets
|
|
–
|
|
65
|
|
65
|
Current portion of
operating lease liabilities
|
|
–
|
|
7
|
|
7
|
Operating lease
liabilities, net of current portion
|
|
–
|
|
60
|
|
60
|
Other
liabilities
|
|
71
|
|
(1)
|
|
70
|
We determine if a contract contains a lease at inception. Leases
are classified as either operating leases or finance leases.
Operating leases are included in "Operating lease right-of-use
assets," "Current portion of operating lease liabilities," and
"Operating lease liabilities, net of current portion," whereas
finance leases are included in "Fixed assets, net," "Current
portion of long-term debt," and "Long-term debt, net of current
portion" in our Consolidated Balance Sheets. Leases with a term of
less than 12 months are not recorded in our Consolidated Balance
Sheets, and are expensed over the term of the lease in our
Consolidated Statements of Operations.
2. On January 3, 2019 (the
"closing date"), we repurchased $225
million in aggregate principal amount of 5.875% senior
unsecured notes due 2023, pursuant to a notes purchase agreement
entered into on December 21, 2018,
with certain noteholders, at a purchase price equal to 100% of the
principal amount thereof, plus accrued and unpaid interest to, but
not including, the closing date. As a result of the repurchase, we
recorded a net loss on extinguishment of debt of $3 million in "Other expense, net" in our
Consolidated Statement of Operations for the three months ended
March 31, 2019.
RESOLUTE FOREST PRODUCTS INC.
Notes 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 FASB 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 inventory write-downs
related to closures, start-up costs, 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 exchange gains and
losses, non-operating pension and other postretirement benefit
costs and credits, other income (expense), net, and the income tax
effect of special items.
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).
EBITDA margin is calculated as EBITDA divided by sales.
Net debt is calculated as total debt less cash and cash
equivalents.
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 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,
adjusted EBITDA, and EBITDA margin 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.
2. The operating results of our Calhoun
(Tennessee) tissue operations, previously recorded under
corporate and other, have been recorded in our tissue segment since
April 1, 2018.
View original
content:http://www.prnewswire.com/news-releases/resolute-reports-preliminary-first-quarter-2019-results-300840289.html
SOURCE Resolute Forest Products Inc.