US$
- Q2 GAAP net income of $268
million / $3.34 per diluted
share
- Adjusted EBITDA of $445
million; wood products contributes $415 million to quarterly EBITDA
- Liquidity over $1 billion /
net debt down to $126 million at
quarter-end
MONTRÉAL, July 29, 2021
/PRNewswire/ - Resolute Forest Products Inc. (NYSE: RFP) (TSX:
RFP) today reported net income of $268
million, or $3.34 per diluted
share, for the quarter ended June 30,
compared to net income of $6 million,
or $0.07 per diluted share, in the
same period in 2020. Sales were $1,140
million in the quarter, an increase of $528 million from the year-ago period. Excluding
special items, the company reported net income of $300 million, or $3.74 per diluted share, compared to a net loss
of $22 million, or $0.25 per share, in the second quarter of
2020.
"With benchmark prices reaching record highs in May and our
best-ever quarterly shipments, we used the exceptional cash
generation from our wood products segment to make lasting changes
to our business and increase value for our shareholders," said
Remi G. Lalonde, president and chief
executive office. "We reduced debt by $180 million to our target of $300 million, declared a special dividend of
$79 million payable in the third
quarter, normalized capital spending and announced an additional
$50 million of high-return, quick
payback projects to further strengthen our wood products business.
We also saw a sharp recovery in market pulp prices following the
pandemic-induced dip and an encouraging shift toward tighter
conditions in paper markets. With more than $1 billion in available liquidity at quarter-end,
we are in a great position to pursue our transformation while
remaining disciplined with our capital allocation."
Non-GAAP financial measures, such as adjustments for special
items and adjusted EBITDA, are explained and reconciled below.
Quarterly Operating Income Variance Against Prior
Period
Consolidated
The company reported operating income of $406 million in the quarter, compared to
$177 million in the first quarter of
2021. The $229 million improvement
reflects higher realized prices in the wood products, pulp and
paper segments ($211 million), higher
shipments in wood products ($43
million) and lower selling, general and administrative
expenses ($10 million). The results
were unfavorably affected by higher stumpage fee-driven input costs
($19 million) in the wood products
segment, higher freight costs ($7
million) and the impact of the stronger Canadian dollar
($7 million).
Segment operating income variance against prior
period
Wood Products
The wood products segment generated operating income of
$405 million in the quarter, an
increase of $184 million from the
previous quarter. Supported by strong lumber demand, the average
transaction price rose to $1,156 per
thousand board feet, a $282 per
thousand board feet, or 32%, improvement from the previous quarter.
Shipments were 83 million board feet higher, reaching 575 million,
and finished goods inventory dropped to 124 million board feet. The
operating cost per unit (or, the "delivered cost") increased
by $30 per thousand board feet, or
7%, mostly as a result of higher stumpage fees and freight costs,
partially offset by a variable compensation provision in the
previous quarter. EBITDA in the segment improved by $183 million, to $415
million.
Market Pulp
The company generated operating income of $30 million in the market pulp segment, an
increase of $26 million from the
previous quarter. The average transaction price increased by
$140 per metric ton, or 22%, to
$787 per metric ton, with gains in
all grades. The delivered cost rose by $35 per metric ton, or 6%, due mostly to higher
fiber costs and the effect of lower volume. Shipments slipped by
19,000 metric tons due mostly to an extended scheduled maintenance
outage and lower production. From a historically low level in the
previous quarter, finished goods inventory rose to a more normal
level of 63,000 metric tons. EBITDA in the segment improved by
$26 million, to $36 million.
Tissue
The tissue segment incurred an operating loss of $7 million in the quarter, $5 million wider than the previous quarter. The
average transaction price decreased by $56 per short ton, or 3%, due to unfavorable
product mix, and shipments fell by 4,000 short tons, reflecting a
slowly recovering away-from-home market and inventory destocking in
the retail space. As a result of the sluggish demand, the company
recorded downtime in the quarter, and maintained finished goods
inventory at 8,000 short tons. The impact of downtime contributed
to an increase in the delivered cost of $295 per short ton, or 16%. Segment EBITDA fell
by $6 million, to negative
$3 million.
Paper
The company incurred an operating loss of $7 million in the paper segment in the quarter,
$17 million narrower than the
previous quarter. The average transaction price rose by
$39 per metric ton, or 7%, and
shipments improved by 4,000 metric tons, mostly due to a gradual
recovery in global markets. The delivered cost improved by
$13 per metric ton
quarter-over-quarter, or 2%, with a seasonal reduction in energy
expenses and cost savings from the indefinite idling of the
Baie-Comeau and Amos (Quebec)
newsprint mills in the previous quarter, offset in part by higher
planned maintenance costs. Finished goods inventory decreased by
15,000 metric tons, to 72,000 metric tons. Segment EBITDA improved
by $18 million, to $9 million.
Consolidated quarterly operating income variance against
year-ago period
The company reported operating income of $406 million in the second quarter, compared to
operating income of $6 million in the
second quarter of 2020. The improvement reflects higher selling
prices ($500 million) in the wood
products, pulp and paper segments, offset by the stronger Canadian
dollar ($39 million), higher fiber
costs ($27 million), and maintenance
($14 million). At $445 million, adjusted EBITDA in the second
quarter was $408 million higher than
the second quarter of 2020.
Cash and Liquidity
Resolute generated $401 million of
cash from operating activities in the second quarter, primarily as
a result of the strong performance in the wood products segment as
well as a seasonal reduction in round wood inventory. It also
closed all its lumber futures positions, resulting in total losses
of $49 million in the
quarter.
The company repaid $180 million of
debt in the quarter, representing all the amounts outstanding under
the company's revolving and term credit facilities, leaving only
the $300 million of unsecured 4.875%
senior notes due 2026 that the company issued in January. With
$177 million of quarter-end cash,
liquidity stood at $1.1 billion, and
net debt was $126 million.
The company repurchased 343,894 shares in the quarter, at an
average price of $11.21, and it
declared a special cash dividend of $1 per share of common stock, or $79 million in aggregate, which was paid on
July 7 to holders of record at the
close of business on June 28.
The company undertook $33 million
in capital investments in the quarter as it normalizes capital
spending toward its revised target of $125
million for the year. In particular, it announced additional
capital investments of $50 million in
its wood products segment, which it expects to complete by the end
of 2022, to support its continued growth.
By quarter-end, the company had recorded cumulative softwood
lumber duty deposits of $332 million
on the balance sheet, including $57
million paid during the quarter.
Outlook
"Although benchmark lumber prices have come down
significantly in recent weeks and remain volatile, we are confident
in the underlying business fundamentals. We believe in our wood
products business for the long term, with the segment representing
a key pillar of our ongoing transformation. We look for the
favorable pulp momentum to carry into Q3 with higher realized
prices, and for stronger shipments. As conditions stabilize for
paper, the price recovery should continue, which will support our
cash generation strategy for this business segment. We expect a
return to normal demand trends in the coming months in tissue, once
the inventory rebalancing that affected the industry in the first
half of the year passes. We are committed to maintain a
balanced approach to capital allocation, using our free cash flow
to generate value for shareholders, to build a stronger company and
to drive sustainable economic activity in the communities where we
operate." added Mr. Lalonde.
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 (888) 550-7724 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
August 12, 2021, by dialing (800)
770-2030, conference number 2946857.
Description of Special Items
Special
items
|
Second
quarter
|
(in
millions)
|
2021
|
|
|
2020
|
Closure costs,
impairment and other related charges
|
$
|
(1)
|
|
|
$
|
—
|
Net gain on
disposition of assets
|
|
—
|
|
|
|
(9)
|
Non-operating pension
and other postretirement benefit credits
|
|
(3)
|
|
|
|
(4)
|
Other expense
(income), net
|
|
49
|
|
|
|
(10)
|
Income tax effect of
special items
|
|
(13)
|
|
|
|
(5)
|
Total
|
$
|
32
|
|
|
$
|
(28)
|
Cautionary Statements Regarding Forward-Looking
Information
Statements in this press release, 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 the impact of the novel
coronavirus (or, "COVID-19") pandemic and resulting economic
conditions on our business, results of operations and market price
of our securities, and to our: efforts and initiatives to reduce
costs, increase revenues, and improve 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; estimated capital expenditures;
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," "see," "anticipate," "continue,"
"attempt," "generate," "improve," "allow," "increase," "maintain,"
"provide," "trend," "strategy," "seek," "evolve," "vision,"
"commit," "develop," "project," "progress," "build," "pursue,"
"plan," "grow," "reduce," "accelerate," "drive," "look," "enhance"
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, the earnings conference
call and webcast referred to above include, but are not limited to,
the impact of: the COVID-19 pandemic on our business and resulting
economic conditions; developments in non-print media, including
changes in consumer habits, 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 wood manufacturing
in the U.S., and tissue production and sales, or divestitures or
other strategic transactions or projects, including loss of
synergies following business divestitures; uncertainty or changes
in political or economic conditions in the U.S., Canada or other countries in which we sell our
products, including the effects of pandemics; 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, financial and regulatory
risks associated with global, regional, and local weather
conditions, and climate change; any disruption in operations or
increased labor costs due to labor disputes or occupational health
and safety issues; difficulties in our employee relations or in
employee attraction or retention; disruptions to our supply chain,
operations, or the delivery of our products, including due to
public health epidemics; disruptions to our information technology
systems including cybersecurity and privacy 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; changes
relating to the London Interbank Offered Rate, which could impact
our borrowings under our credit facilities; losses that are not
covered by insurance; any shutdown of machines or facilities,
restructuring of operations or sale of assets resulting in 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 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
the vast majority 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 set forth under Part I,
Item 1A, "Risk Factors," of our annual report on Form 10-K for the
year ended December 31, 2020, filed
with the U.S. Securities and Exchange Commission (or, the
"SEC") on March 1, 2021, which
have been heightened by the COVID-19 pandemic, including related
governmental responses and economic impacts, market disruptions and
resulting changes in consumer habits.
All forward-looking statements in this press release, the
earnings conference call and webcast referred to above are
expressly qualified by the cautionary statements contained or
referred above and in the company's other filings with the SEC 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 and papers, which are marketed
in over 50 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 www.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
June
30,
|
Six Months
Ended
June
30,
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
Sales
|
$
|
1,140
|
|
|
$
|
612
|
|
|
$
|
2,013
|
|
|
$
|
1,301
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales,
excluding depreciation, amortization and distribution
costs
|
|
566
|
|
|
|
464
|
|
|
|
1,088
|
|
|
|
988
|
Depreciation and
amortization
|
|
40
|
|
|
|
40
|
|
|
|
81
|
|
|
|
82
|
Distribution
costs
|
|
93
|
|
|
|
79
|
|
|
|
177
|
|
|
|
178
|
Selling, general and
administration expenses
|
|
36
|
|
|
|
32
|
|
|
|
82
|
|
|
|
66
|
Closure costs,
impairment and other related charges
|
|
(1)
|
|
|
|
—
|
|
|
|
2
|
|
|
|
(2)
|
Net gain on
disposition of assets
|
|
—
|
|
|
|
(9)
|
|
|
|
—
|
|
|
|
(9)
|
Operating income
(loss)
|
|
406
|
|
|
|
6
|
|
|
|
583
|
|
|
|
(2)
|
Interest
expense
|
|
(5)
|
|
|
|
(9)
|
|
|
|
(11)
|
|
|
|
(18)
|
Non-operating pension
and other postretirement benefit credits
|
|
3
|
|
|
|
4
|
|
|
|
5
|
|
|
|
19
|
Other (expense)
income, net (1)
|
|
(49)
|
|
|
|
10
|
|
|
|
(94)
|
|
|
|
38
|
Income before
income taxes
|
|
355
|
|
|
|
11
|
|
|
|
483
|
|
|
|
37
|
Income tax
provision
|
|
(87)
|
|
|
|
(5)
|
|
|
|
(127)
|
|
|
|
(32)
|
Net income
including noncontrolling interest
|
|
268
|
|
|
|
6
|
|
|
|
356
|
|
|
|
5
|
Net income
attributable to noncontrolling interest
|
|
—
|
|
|
|
—
|
|
|
|
(1)
|
|
|
|
—
|
Net income
attributable to Resolute Forest Products Inc.
|
$
|
268
|
|
|
$
|
6
|
|
|
$
|
355
|
|
|
$
|
5
|
Net income per
share attributable to Resolute Forest Products Inc. common
shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
3.37
|
|
|
$
|
0.07
|
|
|
$
|
4.42
|
|
|
$
|
0.06
|
Diluted
|
$
|
3.34
|
|
|
$
|
0.07
|
|
|
$
|
4.39
|
|
|
$
|
0.06
|
Weighted-average
number of Resolute Forest Products Inc. common shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
79.5
|
|
|
|
88.1
|
|
|
|
80.4
|
|
|
|
88.1
|
Diluted
|
|
80.3
|
|
|
|
88.2
|
|
|
|
81.1
|
|
|
|
88.2
|
|
See Notes to the
Unaudited Consolidated Financial Statement Information
|
RESOLUTE FOREST
PRODUCTS INC. CONSOLIDATED BALANCE
SHEETS (Unaudited, in millions of U.S.
dollars)
|
|
|
|
|
|
June
30,
|
December
31,
|
|
2021
|
|
|
|
2020
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
177
|
|
|
$
|
113
|
Accounts receivable,
net
|
|
|
|
|
|
Trade
|
|
309
|
|
|
|
230
|
Other
|
|
35
|
|
|
|
48
|
Inventories,
net
|
|
492
|
|
|
|
462
|
Other current
assets
|
|
53
|
|
|
|
47
|
Total current
assets
|
|
1,066
|
|
|
|
900
|
Fixed assets,
net
|
|
1,406
|
|
|
|
1,441
|
Amortizable
intangible assets, net
|
|
60
|
|
|
|
63
|
Goodwill
|
|
31
|
|
|
|
31
|
Deferred income tax
assets
|
|
796
|
|
|
|
915
|
Operating lease
right-of-use assets
|
|
54
|
|
|
|
60
|
Other
assets
|
|
415
|
|
|
|
320
|
Total
assets
|
$
|
3,828
|
|
|
$
|
3,730
|
Liabilities and
equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable and
other (2)
|
$
|
520
|
|
|
$
|
369
|
Current portion of
long-term debt
|
|
3
|
|
|
|
2
|
Current portion of
operating lease liabilities
|
|
9
|
|
|
|
9
|
Total current
liabilities
|
|
532
|
|
|
|
380
|
Long-term debt, net
of current portion (3)
|
|
300
|
|
|
|
559
|
Pension and other
postretirement benefit obligations
|
|
1,482
|
|
|
|
1,562
|
Operations lease
liabilities, net of current portion
|
|
50
|
|
|
|
55
|
Other
liabilities
|
|
77
|
|
|
|
92
|
Total
liabilities
|
|
2,441
|
|
|
|
2,648
|
Equity:
|
|
|
|
|
|
Resolute Forest
Products Inc. shareholders' equity:
|
|
|
|
|
|
Common
stock
|
|
—
|
|
|
|
—
|
Additional paid-in
capital
|
|
3,805
|
|
|
|
3,804
|
Deficit
|
|
(961)
|
|
|
|
(1,235)
|
Accumulated other
comprehensive loss
|
|
(1,265)
|
|
|
|
(1,314)
|
Treasury stock at
cost
|
|
(194)
|
|
|
|
(174)
|
Total Resolute
Forest Products Inc. shareholders' equity
|
|
1,385
|
|
|
|
1,081
|
Noncontrolling
interest
|
|
2
|
|
|
|
1
|
Total
equity
|
|
1,387
|
|
|
|
1,082
|
Total liabilities
and equity
|
$
|
3,828
|
|
|
$
|
3,730
|
|
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)
|
|
|
Six Months
Ended
June
30,
|
|
|
2021
|
|
|
|
2020
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income including
noncontrolling interest
|
$
|
356
|
|
|
$
|
5
|
Adjustments to
reconcile net income including noncontrolling interest to net cash
provided by operating activities:
|
|
|
|
|
|
Share-based
compensation
|
|
3
|
|
|
|
4
|
Depreciation and
amortization
|
|
81
|
|
|
|
82
|
Deferred income
taxes
|
|
127
|
|
|
|
32
|
Net pension
contributions and other postretirement benefit payments
|
|
(47)
|
|
|
|
(48)
|
Net gain on
disposition of assets
|
|
—
|
|
|
|
(9)
|
(Gain) loss on
translation of foreign currency denominated deferred income
taxes
|
|
(24)
|
|
|
|
39
|
Loss (gain) on
translation of foreign currency denominated pension and other
postretirement benefit obligations
|
|
32
|
|
|
|
(47)
|
Net planned major
maintenance payments
|
|
(9)
|
|
|
|
(2)
|
Changes in working
capital:
|
|
|
|
|
|
Accounts
receivable
|
|
(61)
|
|
|
|
50
|
Inventories
|
|
(30)
|
|
|
|
25
|
Other current
assets
|
|
(2)
|
|
|
|
(7)
|
Accounts payable and
other
|
|
36
|
|
|
|
(49)
|
Other, net
|
|
13
|
|
|
|
1
|
Net cash provided by
operating activities
|
|
475
|
|
|
|
76
|
Cash flows from
investing activities:
|
|
|
|
|
|
Cash invested in
fixed assets
|
|
(47)
|
|
|
|
(37)
|
Acquisition of
business, net of cash acquired
|
|
—
|
|
|
|
(172)
|
Disposition of
assets
|
|
—
|
|
|
|
9
|
Increase in
countervailing and anti-dumping duty cash deposits on softwood
lumber
|
|
(89)
|
|
|
|
(32)
|
Other investing
activities, net
|
|
3
|
|
|
|
5
|
Net cash used in
investing activities
|
|
(133)
|
|
|
|
(227)
|
Cash flows from
financing activities:
|
|
|
|
|
|
Net repayments under
revolving credit facilities
|
|
—
|
|
|
|
(2)
|
Issuance of long-term
debt
|
|
300
|
|
|
|
—
|
Proceeds from
long-term debt
|
|
—
|
|
|
|
180
|
Repayments of
debt
|
|
(557)
|
|
|
|
(1)
|
Purchases of treasury
stock (4)
|
|
(20)
|
|
|
|
(1)
|
Payments of financing
fees
|
|
(7)
|
|
|
|
—
|
Other financing
activities, net
|
|
2
|
|
|
|
—
|
Net cash (used in)
provided by financing activities
|
|
(282)
|
|
|
|
176
|
Effect of exchange
rate changes on cash and cash equivalents, and restricted
cash
|
|
—
|
|
|
|
(1)
|
Net increase in cash
and cash equivalents, and restricted cash
|
$
|
60
|
|
|
$
|
24
|
Cash and cash
equivalents, and restricted cash:
|
|
|
|
|
|
Beginning of
period
|
$
|
159
|
|
|
$
|
42
|
End of
period
|
$
|
219
|
|
|
$
|
66
|
Cash and cash
equivalents, and restricted cash at end of period:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
177
|
|
|
$
|
27
|
Restricted cash
(included in "Other assets)
|
$
|
42
|
|
|
$
|
39
|
|
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
June 30, 2021
|
Operating
income
|
|
Net
income
|
|
EPS
|
(Unaudited, in
millions of U.S. dollars, except per share amounts)
|
GAAP, as
reported
|
$
|
406
|
|
|
$
|
268
|
|
|
$
|
3.34
|
Adjustments for
special items:
|
|
|
|
|
|
|
|
|
Closure costs,
impairment and other related charges
|
|
(1)
|
|
|
|
(1)
|
|
|
|
(0.01)
|
Non-operating pension
and other postretirement benefit credits
|
|
—
|
|
|
|
(3)
|
|
|
|
(0.04)
|
Other expense,
net
|
|
—
|
|
|
|
49
|
|
|
|
0.61
|
Income tax effect of
special items
|
|
—
|
|
|
|
(13)
|
|
|
|
(0.16)
|
Adjusted for
special items
|
$
|
405
|
|
|
$
|
300
|
|
|
$
|
3.74
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30, 2020
|
Operating
income (loss)
|
|
Net income
(loss)
|
|
EPS
|
(Unaudited, in
millions of U.S. dollars, except per share amounts)
|
GAAP, as
reported
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
0.07
|
Adjustments for
special items:
|
|
|
|
|
|
|
|
|
Net gain on
disposition of assets
|
|
(9)
|
|
|
|
(9)
|
|
|
|
(0.10)
|
Non-operating pension
and other postretirement benefit credits
|
|
—
|
|
|
|
(4)
|
|
|
|
(0.05)
|
Other income,
net
|
|
—
|
|
|
|
(10)
|
|
|
|
(0.11)
|
Income tax effect of
special items
|
|
—
|
|
|
|
(5)
|
|
|
|
(0.06)
|
Adjusted for
special items
|
$
|
(3)
|
|
|
$
|
(22)
|
|
|
$
|
(0.25)
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2021
|
Operating
income
|
|
Net
income
|
|
EPS
|
(Unaudited, in
millions of U.S. dollars, except per share amounts)
|
GAAP, as
reported
|
$
|
583
|
|
|
$
|
355
|
|
|
$
|
4.39
|
Adjustments for
special items:
|
|
|
|
|
|
|
|
|
Closure costs,
impairment and other related charges
|
|
2
|
|
|
|
2
|
|
|
|
0.02
|
Non-operating pension
and other postretirement benefit credits
|
|
—
|
|
|
|
(5)
|
|
|
|
(0.06)
|
Other expense,
net
|
|
—
|
|
|
|
94
|
|
|
|
1.16
|
Income tax effect of
special items
|
|
—
|
|
|
|
(27)
|
|
|
|
(0.33)
|
Adjusted for
special items
|
$
|
585
|
|
|
$
|
419
|
|
|
$
|
5.18
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2020
|
Operating
loss
|
|
Net income
(loss)
|
|
EPS
|
(Unaudited, in
millions of U.S. dollars, except per share amounts)
|
GAAP, as
reported
|
$
|
(2)
|
|
|
$
|
5
|
|
|
$
|
0.06
|
Adjustments for
special items:
|
|
|
|
|
|
|
|
|
Closure costs,
impairment and other related charges
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(0.02)
|
Net gain on
disposition of assets
|
|
(9)
|
|
|
|
(9)
|
|
|
|
(0.10)
|
Non-operating pension
and other postretirement benefit credits
|
|
—
|
|
|
|
(19)
|
|
|
|
(0.22)
|
Other income,
net
|
|
—
|
|
|
|
(38)
|
|
|
|
(0.43)
|
Income tax effect of
special items
|
|
—
|
|
|
|
12
|
|
|
|
0.14
|
Adjusted for
special items
|
$
|
(13)
|
|
|
$
|
(51)
|
|
|
$
|
(0.57)
|
RESOLUTE FOREST
PRODUCTS INC. RECONCILIATION OF EBITDA AND ADJUSTED
EBITDA
|
|
A reconciliation of
our net income including noncontrolling interest 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
June 30, 2021
|
Market
pulp
|
Tissue
|
Wood
products
|
Paper
|
Corporate
and
other
|
Total
|
(Unaudited, in
millions of U.S. dollars)
|
Net income (loss)
including noncontrolling interest
|
$
|
30
|
|
|
$
|
(7)
|
|
|
$
|
405
|
|
|
$
|
(7)
|
|
|
$
|
(153)
|
|
|
$
|
268
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
5
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
87
|
|
|
|
87
|
Depreciation and
amortization
|
|
6
|
|
|
|
4
|
|
|
|
10
|
|
|
|
16
|
|
|
|
4
|
|
|
|
40
|
EBITDA
|
$
|
36
|
|
|
$
|
(3)
|
|
|
$
|
415
|
|
|
$
|
9
|
|
|
$
|
(57)
|
|
|
$
|
400
|
Closure costs,
impairment and other related charges
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
|
(1)
|
Non-operating pension
and other postretirement benefit credits
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
|
(3)
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
49
|
|
|
|
49
|
Adjusted
EBITDA
|
$
|
36
|
|
|
$
|
(3)
|
|
|
$
|
415
|
|
|
$
|
9
|
|
|
$
|
(12)
|
|
|
$
|
445
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30, 2020
|
Market
pulp
|
Tissue
|
Wood
products
|
Paper
|
Corporate
and
other
|
Total
|
(Unaudited, in
millions of U.S. dollars)
|
Net income (loss)
including noncontrolling interest
|
$
|
10
|
|
|
$
|
(2)
|
|
|
$
|
15
|
|
|
$
|
(12)
|
|
|
$
|
(5)
|
|
|
$
|
6
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
9
|
|
|
|
9
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
5
|
Depreciation and
amortization
|
|
6
|
|
|
|
5
|
|
|
|
10
|
|
|
|
16
|
|
|
|
3
|
|
|
|
40
|
EBITDA
|
$
|
16
|
|
|
$
|
3
|
|
|
$
|
25
|
|
|
$
|
4
|
|
|
$
|
12
|
|
|
$
|
60
|
Net gain on
disposition of assets
|
|
|
|
|
|
|
|
|
|
(9)
|
|
|
|
(9)
|
Non-operating pension
and other postretirement benefit credits
|
|
|
|
|
|
|
|
|
|
(4)
|
|
|
|
(4)
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
(10)
|
|
|
|
(10)
|
Adjusted
EBITDA
|
$
|
16
|
|
|
$
|
3
|
|
|
$
|
25
|
|
|
$
|
4
|
|
|
$
|
(11)
|
|
|
$
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2021
|
Market
pulp
|
Tissue
|
Wood
products
|
Paper
|
Corporate
and
other
|
Total
|
(Unaudited, in
millions of U.S. dollars)
|
Net income (loss)
including noncontrolling interest
|
$
|
34
|
|
|
$
|
(9)
|
|
|
$
|
626
|
|
|
$
|
(31)
|
|
|
$
|
(264)
|
|
|
$
|
356
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
11
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
127
|
|
|
|
127
|
Depreciation and
amortization
|
|
12
|
|
|
|
9
|
|
|
|
21
|
|
|
|
31
|
|
|
|
8
|
|
|
|
81
|
EBITDA
|
$
|
46
|
|
|
$
|
—
|
|
|
$
|
647
|
|
|
$
|
—
|
|
|
$
|
(118)
|
|
|
$
|
575
|
Closure costs,
impairment and other related charges
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
2
|
Non-operating pension
and other postretirement benefit credits
|
|
|
|
|
|
|
|
|
|
(5)
|
|
|
|
(5)
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
94
|
|
|
|
94
|
Adjusted
EBITDA
|
$
|
46
|
|
|
$
|
—
|
|
|
$
|
647
|
|
|
$
|
—
|
|
|
$
|
(27)
|
|
|
$
|
666
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2020
|
Market
pulp
|
Tissue
|
Wood
products
|
Paper
|
Corporate
and
other
|
Total
|
(Unaudited, in
millions of U.S. dollars)
|
Net income (loss)
including noncontrolling interest
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
(15)
|
|
|
$
|
(7)
|
|
|
$
|
5
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
18
|
|
|
|
18
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
32
|
|
|
|
32
|
Depreciation and
amortization
|
|
12
|
|
|
|
9
|
|
|
|
21
|
|
|
|
33
|
|
|
|
7
|
|
|
|
82
|
EBITDA
|
$
|
19
|
|
|
$
|
9
|
|
|
$
|
41
|
|
|
$
|
18
|
|
|
$
|
50
|
|
|
$
|
137
|
Closure costs,
impairment and other related charges
|
|
|
|
|
|
|
|
|
|
(2)
|
|
|
|
(2)
|
Net gain on
disposition of assets
|
|
|
|
|
|
|
|
|
|
(9)
|
|
|
|
(9)
|
Non-operating pension
and other postretirement benefit credits
|
|
|
|
|
|
|
|
|
|
(19)
|
|
|
|
(19)
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
(38)
|
|
|
|
(38)
|
Adjusted
EBITDA
|
$
|
19
|
|
|
$
|
9
|
|
|
$
|
41
|
|
|
$
|
18
|
|
|
$
|
(18)
|
|
|
$
|
69
|
|
See Note to the
Reconciliation of Non-GAAP Measures
|
RESOLUTE FOREST PRODUCTS INC.
Notes
to the Unaudited Consolidated Financial Statement
Information
1. Other (expense) income, net for the three and six months
ended June 30, 2021 and 2020, was
comprised of the following:
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
(Unaudited, in
millions)
|
2021
|
|
|
2020
|
|
|
|
2021
|
|
|
2020
|
Foreign exchange
(loss) gain
|
$
|
(6)
|
|
|
$
|
(9)
|
|
|
|
$
|
(11)
|
|
|
$
|
14
|
(Loss) gain on
commodity contracts (1)
|
|
(49)
|
|
|
|
—
|
|
|
|
|
(86)
|
|
|
|
4
|
Insurance recovery
(2)
|
|
—
|
|
|
|
15
|
|
|
|
|
—
|
|
|
|
15
|
Miscellaneous
income
|
|
6
|
|
|
|
4
|
|
|
|
|
3
|
|
|
|
5
|
|
$
|
(49)
|
|
|
$
|
10
|
|
|
|
$
|
(94)
|
|
|
$
|
38
|
(1)
|
Principally related
to lumber futures contracts; none of these contracts were
outstanding as of June 30, 2021.
|
(2)
|
We recorded
$15 million as other income for the three and six months ended
June 30, 2020, from the settlement of an insurance claim
in connection with our acquisition of Atlas Paper Holdings, Inc. in
2015.
|
2. We declared a special dividend of $1.00 per share ($79 million) on our common
stock during the three and six months ended June 30, 2021, which was recorded in "Accounts
payable and other" in our Consolidated Balance Sheet as of
June 30, 2021. The dividend was paid
to shareholders on July 7,
2021.
3. On April 19, 2021 (or, the
"Effective Date"), we entered into a first amendment to the amended
and restated senior secured credit facility (or, the "Senior
Secured Credit Facility") entered into on October 28, 2019. The amount available under the
Senior Secured Credit Facility remains unchanged for up to
$360 million and is comprised of a
term loan facility of up to $180
million with a delayed draw period of up to three years and
the choice of maturities of six to ten years from the date of
drawing (or, the "Term Loan Facility"); and a six-year revolving
credit facility of up to $180 million
(or, the "Revolving Credit Facility"). On the Effective Date, we
repaid our $180 million term loans
under the pre-amended and restated senior secured credit facility
with a combination of proceeds of borrowings under the Revolving
Credit Facility and cash on hand. The amendment then reinstated the
full amount of the Term Loan Facility. For loans under the Term
Loan Facility, the applicable spread now ranges from 0.5% to 1.4%
for base rate loans, and from 1.5% to 2.4% for London Interbank
Offered Rate (or, the "LIBOR") rate loans, and from 1.7% to 2.1%
for fixed rate loans. For the Revolving Credit Facility, the
applicable spread ranges from 0.5% to 1.0% for base rate loans, and
from 1.5% to 2.0% for LIBOR rate loans. The amended credit
agreement contains customary covenants, representations and
warranties, and events of default. There is also an uncommitted
option to increase the Senior Secured Credit Facility by up to an
additional $360 million, subject to
certain terms and conditions.
4. On March 2, 2020, our board of
directors authorized a share repurchase program of up to 15% of our
common stock, for an aggregate consideration of up to $100 million. During the three and six months
ended June 30, 2021, we repurchased
343,894 shares at an average price of $11.21 for a total of $3 million and
2,092,348 shares at an average price of $9.78 for a total of $20
million, respectively. We repurchased 253,898 shares at an
average price of $2.09 for a total of
$1 million during the three and six months ended
June 30, 2020.
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 and paper) in accordance with the 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 and gains or losses on disposition of
assets, 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 non-operating pension and
other postretirement benefit costs and credits, other income and
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 interest from the Consolidated Statements
of Operations, allocated to each of our reportable segments,
adjusted for depreciation and amortization. Net income (loss)
including non-controlling interest is equal to operating income
(loss) for the segments. EBITDA for corporate and other is
calculated as net income (loss) including noncontrolling interest
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).
We define net debt 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 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
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.
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SOURCE Resolute Forest Products Inc.