Note: Financial references in US dollars unless otherwise
indicated.
Q2 2019 HIGHLIGHTS
- Adjusted EBITDA of $36
million
- Loss of $0.17 per diluted
share; Adjusted loss of $0.10 per
diluted share
- European shipments up 7% year-over-year
- Termed out 2020 senior secured notes to 2027 at 5.75%
coupon, upsized principal by $110
million to bolster liquidity
- Declared quarterly variable dividend of C $0.40 per share for shareholders of record on
August 30, 2019
TORONTO, Aug. 1, 2019 /CNW/ - Norbord Inc. (TSX and
NYSE: OSB) today reported Adjusted EBITDA of $36 million in the second quarter of 2019
compared to $42 million in the first
quarter of 2019 and $273 million in
the second quarter of 2018. The decrease versus both comparative
periods was primarily due to lower North American oriented strand
board (OSB) prices. North American operations generated Adjusted
EBITDA of $18 million compared to
$23 million in the prior quarter and
$256 million in the same quarter last
year. European operations delivered Adjusted EBITDA of $21 million, unchanged versus both the prior
quarter and same quarter last year.
"US homebuilding demand continued to be held back by
affordability concerns and persistent record-breaking wet weather,"
said Peter Wijnbergen, Norbord's President and CEO. "For the third
quarter in a row, we took extensive downtime across our North
American mills which negatively impacted our production volumes and
manufacturing costs. We also made the difficult decision to
indefinitely curtail our 100 Mile House, BC mill starting in August
as the mill is no longer viable due to a lack of wood supply at
economic prices."
"We are starting to see signs of improvement in the US housing
market. Mortgage rates are back down below 4%. Homebuilders have
rebalanced new home inventories and are reporting higher levels of
buyer interest and net order growth for the first time since the
fall. Housing economists' forecast for unchanged 2019 starts
implies 4% growth in the second half of the year which would
support higher levels of OSB demand than the first half."
"In Europe, our panel business
had another good quarter, delivering year-over-year shipments
growth and a strong 16% EBITDA margin. In Germany, the global trade war is starting to
negatively impact macro export activity, putting downward pressure
on OSB prices from the well above average levels we have enjoyed
for the past year and a half. However, we expect this to accelerate
the pace of OSB substitution and continue to drive rapid
consumption growth."
Norbord recorded an Adjusted loss of $8
million or $0.10 per share
(basic and diluted) in the second quarter of 2019 compared to an
Adjusted loss of $2 million or
$0.02 per share (basic and diluted)
in the first quarter of 2019 and Adjusted earnings of $167 million or $1.92 per diluted share ($1.93 per basic share) in the second quarter of
2018. Adjusted earnings exclude non-recurring or other items and
use a normalized income tax rate:
$
millions
|
Q2
2019
|
Q1
2019
|
Q2
2018
|
6 mos
2019
|
6 mos
2018
|
(Loss)
earnings
|
(14)
|
1
|
174
|
(13)
|
269
|
Adjusted
for:
|
|
|
|
|
|
Loss on disposal of
assets
|
1
|
-
|
-
|
1
|
-
|
Stock-based
compensation and related costs
|
1
|
1
|
1
|
2
|
2
|
Costs on early
extinguishment of 2020 Notes
|
10
|
-
|
-
|
10
|
-
|
Costs related to 100
Mile House indefinite curtailment
|
2
|
-
|
-
|
2
|
-
|
Reported income tax
(recovery) expense
|
(10)
|
(5)
|
53
|
(15)
|
89
|
Adjusted pre-tax
(loss) earnings
|
(10)
|
(3)
|
228
|
(13)
|
360
|
Income tax recovery
(expense) at statutory rate
|
2
|
1
|
(61)
|
3
|
(97)
|
Adjusted (loss)
earnings
|
(8)
|
(2)
|
167
|
(10)
|
263
|
Market Conditions
In North America, US housing
demand continued to be negatively impacted by affordability
concerns and record rainfall across the US which has constrained
homebuilding activity in the past three quarters. Year-to-date US
housing starts were down 4% versus the same period in 2018, with
single-family starts, which use approximately three times more OSB
than multifamily, decreasing by 5%. The June seasonally adjusted
annualized rate was 1.25 million starts, which is 6% higher than
the pace at this time last year, while the pace of housing permits
(the more forward-looking indicator) was 1.22 million. The
consensus forecast from US housing economists is approximately 1.25
million starts for 2019, unchanged from last year.
North American benchmark OSB prices decreased in all regions due
to the continued pullback in demand from homebuilding. As a result,
average benchmark prices were lower than both the prior quarter and
the same quarter last year. The table below summarizes average
benchmark OSB prices ($ per Msf, 7/16-inch basis) by region for the
relevant quarters:
North American
region
|
% of
Norbord's
operating capacity
|
Q2
2019
|
Q1 2019
|
Q2 2018
|
North
Central
|
15%
|
188
|
211
|
426
|
South East
|
36%
|
186
|
197
|
419
|
Western
Canada
|
29%
|
153
|
160
|
403
|
In Europe, panel markets
remained strong, driven by continued OSB demand growth in Norbord's
core geographies. In local currency terms, average panel prices
were in line with both comparative quarters with the exception of
Germany, where prices decreased
modestly due to a macro slowdown in industrial production.
Performance
North American OSB shipments were up 1% quarter-over-quarter,
despite four fewer fiscal days, due to seasonally higher demand.
Shipments were down 5% year-over-year reflecting the slowdown in US
homebuilding demand over the past three quarters. Norbord's
specialty products (including industrial and export) represented
approximately 25% of the Company's North American OSB sales volume
in the last four quarters.
Excluding the curtailed Chambord,
Quebec mill, Norbord's operating North American OSB mills
produced at 88% of stated capacity, compared to 85% in the prior
quarter and 98% in the same quarter last year. Changes in capacity
utilization were due to the timing of annual maintenance shuts and
other downtime. In addition, a portion of the year-over-year
decrease was due to the December 31,
2018 restatement of annual production capacities at a number
of mills.
Norbord's North American OSB cash production costs per unit
(before mill profit share) decreased 6% versus the prior quarter
due to lower costs related to annual maintenance shuts and other
downtime as well as improved productivity and raw material usages
and lower resin prices. Unit costs were unchanged versus the same
quarter last year as the negative impact of higher annual
maintenance shuts and other downtime offset lower resin prices and
the benefit of a weaker Canadian dollar.
On June 11, 2019, the Company
announced the indefinite curtailment of its 100 Mile House,
British Columbia mill starting in
August 2019 as it is no longer
economically viable to continue to operate the mill. The region
where the mill operates has been under mounting pressure for the
past decade as a result of the mountain pine beetle epidemic. This
challenge has been further exacerbated by the significant wildfires
that the province of BC experienced in the summers of 2017 and
2018. During the quarter, a net charge of $2
million was recognized to provide for severance and related
costs. The 100 Mile House mill has a stated annual production
capacity of 440 MMsf (3/8-inch basis), or 6% of the Company's North
American stated annual capacity. Norbord will continue to supply
its current customers and meet expected future customer demand with
production from its 11 other operating North American OSB mills,
including export products for the Japanese market from its
Grande Prairie and High Level, Alberta mills.
During the quarter, the Company announced that its mill in
High Level, Alberta had twice
temporarily suspended production due to wildfires burning nearby in
the region and to comply with evacuation orders. In both
cases, the mill resumed normal production after the evacuation
orders had been lifted and a total of approximately 20 days of
production were curtailed. The High
Level mill has a stated annual production capacity of 860
MMsf (3/8-inch basis), or 11% of the Company's North American
stated annual capacity.
In Europe, Norbord's shipments
were down 9% versus the prior quarter, due to fewer fiscal days and
seasonally lower demand, and were up 7% versus the same quarter
last year. The European mills produced at 91% of stated capacity in
the quarter, up from 89% in both the prior quarter and same quarter
last year due to the continued ramp-up of the reinvested
Inverness, Scotland mill following
its start-up in the fourth quarter of 2017.
The Company did not generate any Margin Improvement Program
(MIP) gains year-to-date as improved productivity and lower raw
material usage at the restarted Huguley,
Alabama and expanded Inverness,
Scotland mills were offset by the timing of annual
maintenance shuts and other downtime, as well as the operating
impact of adverse weather this year. MIP is measured relative to
the prior year at constant prices and exchange rates.
Capital investments (including intangible assets) were
$30 million in each of the second and
first quarters of 2019 compared to $54
million in the second quarter of last year. The
year-over-year decrease was primarily attributable to the timing of
executing on various capital projects, including the Inverness project.
Included in year-to-date capital investments is $9 million of the $46
million (£35 million) budget for the second phase investment
to further expand capacity at the Inverness, Scotland mill by 225 MMsf (3/8-inch
basis) (200,000 cubic metres) through the addition of a second
wood room and dryer. This project is expected to take approximately
two years to complete and is consistent with the Company's strategy
of growing its European OSB capacity to serve rapid consumption
growth in its key markets.
Also included in year-to-date capital investments is
$13 million ($40 million project-to-date) of the $71 million budget to rebuild the indefinitely
curtailed Chambord, Quebec mill
for an eventual restart. The Company has not yet made a restart
decision, however, and will only do so when it is sufficiently
clear that customers require more product.
Norbord's 2019 capital expenditure budget is approximately
$150 million for maintenance of
business and projects focused on reducing manufacturing costs
across the mills, as well as a portion of the Inverness, Scotland phase 2 and Chambord, Quebec mill rebuild projects. It
also includes investments to support the Company's strategy to
increase the production of specialty products for industrial
applications and exports.
Operating working capital was $162
million at quarter-end compared to $183 million at the end of the prior quarter and
$212 million at the end of the same
quarter last year. The decreases were primarily due to lower North
American OSB prices as well as timing of collections and payments.
The quarter-over-quarter decrease was further due to the seasonal
drawdown of log inventory in the northern mills in North America. The year-over-year decrease was
further due to higher annual maintenance shuts and other downtime
in the current quarter. Working capital continues to be managed at
minimal levels across the Company.
At quarter-end, Norbord had unutilized available liquidity of
$551 million, consisting of
$315 million in cash and $236 million in revolving bank lines. Pro forma
for the early repayment of the 2020 notes (see below) and repayment
of the accounts receivable securitization drawings subsequent to
quarter-end, the Company's liquidity and cash would have been
$302 million and $(16) million, respectively. The Company's
tangible net worth was $1,069 million
and net debt to total capitalization on a book basis was 36%, both
well within bank covenants.
Bond Issue and Redemption
In June 2019, the Company
completed the issuance of $350
million in senior secured notes due July 2027 with an interest rate of 5.75%. Debt
issue costs of $6 million were
incurred with the issuance. Subsequent to quarter-end on
July 17, 2019, the Company used a
portion of the proceeds to redeem, prior to maturity, the entire
$240 million of senior secured notes
due December 2020. A premium of
$9 million was paid on the early
redemption and a $1 million non-cash
charge related to unamortized debt issue costs was recognized. The
2027 notes rank pari passu with the Company's existing senior
secured notes due in 2023 and committed revolving bank lines.
Dividend
The Board of Directors declared a quarterly variable dividend of
C $0.40 per common share,
payable on September 23, 2019 to
shareholders of record on August 30,
2019, unchanged from the prior quarter's level. Any
dividends reinvested on September 23,
2019 under the Company's Dividend Reinvestment Plan will be
used by the transfer agent to purchase common shares on the open
market.
Norbord's dividends are declared in Canadian dollars. Registered
and beneficial shareholders may opt to receive their dividends in
either Canadian dollars or the US dollar equivalent. Unless they
request the US dollar equivalent, shareholders will receive
dividends in Canadian dollars. The US dollar equivalent of the
dividend will be based on the Bloomberg FX Fixings Service (BFIX)
noon exchange rate on the record date or, if the record date falls
on a weekend or holiday, on the BFIX noon exchange rate of the
preceding business day.
Registered shareholders wishing to receive the US dollar
dividend equivalent should contact Norbord's transfer agent, AST
Trust Company (Canada), by phone
at 1-800-387-0825 or by email at inquiries@astfinancial.com.
Beneficial shareholders (i.e., those holding their Norbord shares
with their brokerage) should contact the broker with whom their
shares are held.
Norbord's variable dividend policy targets the payment to
shareholders of a portion of free cash flow based upon the
Company's financial position, results of operations, cash flow,
capital requirements and restrictions under the Company's revolving
bank lines, as well as the market outlook for the Company's
principal products and broader market and economic conditions,
among other factors. The Board retains the discretion to amend the
Company's dividend policy in any manner and at any time as it may
deem necessary or appropriate in the future. For these reasons, as
well as others, the Board in its sole discretion can decide to
increase, maintain, decrease, suspend or discontinue the payment of
cash dividends in the future.
Additional Information
Norbord's Q2 2019 letter to shareholders, news release,
management's discussion and analysis, consolidated unaudited
interim financial statements and notes to the financial statements
have been filed on SEDAR (www.sedar.com), EDGAR (www.sec.gov) and
are available in the investor section of the Company's website at
www.norbord.com. Shareholders may receive a hard copy of Norbord's
audited annual financial statements free of charge upon request.
The Company has also made available on its website presentation
materials containing certain historical and forward-looking
information relating to Norbord, including materials that contain
additional information about the Company's financial results.
Shareholders are encouraged to read this material.
Conference Call
Norbord will hold a conference call for analysts and
institutional investors on Thursday, August
1, 2019 at 11:00 a.m. ET. The
call will be broadcast live over the internet via www.norbord.com
and www.newswire.ca. An accompanying presentation will be available
in the "Investors/Conference Call" section of the Norbord website
prior to the start of the call. A replay number will be available
approximately one hour after completion of the call and will be
accessible until August 31, 2019 by
dialing 1-888-203-1112 or 647-436-0148 (passcode 8316833 and pin
7805). Audio playback and a written transcript will be available on
the Norbord website.
Norbord Profile
Norbord Inc. is a leading global manufacturer of wood-based
panels and the world's largest producer of oriented strand board
(OSB). In addition to OSB, Norbord manufactures particleboard,
medium density fibreboard and related value-added products. Norbord
has assets of approximately $1.9
billion and employs approximately 2,700 people at 17 plant
locations in the United States,
Canada and Europe. Norbord is a publicly traded company
listed on the Toronto Stock Exchange and New York Stock Exchange
under the symbol "OSB".
This news release contains forward-looking statements, as
defined by applicable securities legislation, including statements
related to our strategy, projects, plans, future financial or
operating performance and other statements that express
management's expectations or estimates of future performance.
Often, but not always, forward-looking statements can be identified
by the use of words such as "set up," "pro forma," "on track,"
"expect," "estimate," "forecast," "target," "outlook," "schedule,"
"represent," "continue," "intend," "should," "would," "could,"
"will," "can," "might," "may," and other expressions which are
predictions of or indicate future events, trends or prospects and
which do not relate to historical matters identify forward-looking
statements. Forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Norbord to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements.
Although Norbord believes it has a reasonable basis for
making these forward-looking statements, readers are cautioned not
to place undue reliance on such forward-looking information. By its
nature, forward-looking information involves numerous assumptions,
inherent risks and uncertainties, both general and specific, which
contribute to the possibility that the predictions, forecasts and
other forward-looking statements will not occur. Factors that could
cause actual results to differ materially from those contemplated
or implied by forward-looking statements include: assumptions in
connection with the economic and financial conditions in the US,
Europe, Canada and globally; risks inherent to product
concentration and cyclicality; effects of competition and product
pricing pressures; risks inherent to customer dependence; effects
of variations in the price and availability of manufacturing
inputs, including continued access to fibre resources at
competitive prices; availability of rail services and port
facilities; various events that could disrupt operations, including
natural or catastrophic events and ongoing relations with
employees; impact of changes to, or non-compliance with,
environmental regulations; impact of any product liability claims
in excess of insurance coverage; risks inherent to a capital
intensive industry; impact of future outcomes of tax exposures;
potential future changes in tax laws; effects of currency exposures
and exchange rate fluctuations; future operating costs,
availability of financing, impact of future cross-border trade
rulings or agreements; ability to implement new or upgraded
information technology infrastructure; impact of information
technology service disruptions or failures; and other risks and
factors described from time to time in filings with Canadian
securities regulatory authorities.
Except as required by applicable law, Norbord does not
undertake to update any forward-looking statements, whether written
or oral, that may be made from time to time by, or on behalf of,
the Company, whether as a result of new information, future events
or otherwise, or to publicly update or revise the above list of
factors affecting this information. See the "Caution Regarding
Forward-Looking Information" statement in the January 31, 2019 Annual Information Form and the
cautionary statement contained in the "Forward-Looking Statements"
section of the 2018 Management's Discussion and
Analysis dated January 31, 2019 and
Q2 2019 Management's Discussion and Analysis dated July 31, 2019.
Norbord defines Adjusted EBITDA as earnings determined in
accordance with International Financial Reporting Standards (IFRS)
before finance costs, interest income, income taxes, depreciation,
amortization and non-recurring or other items; Adjusted earnings
(loss) as earnings determined in accordance with IFRS before
non-recurring or other items and using a normalized income tax
rate; and Adjusted earnings (loss) per share is Adjusted earnings
(loss) divided by the weighted average number of common shares
outstanding (on a basic or diluted basis, as specified). Adjusted
EBITDA, Adjusted earnings (loss), and Adjusted earnings (loss) per
share are non-IFRS financial measures, do not have any standardized
meaning prescribed by IFRS and are therefore unlikely to be
comparable to similar measures presented by other companies. See
"Non-IFRS Financial Measures" in Norbord's 2018 Management's
Discussion and Analysis dated January 31,
2019 and Q2 2019 Management's Discussion and Analysis dated
July 31, 2019 for a quantitative
reconciliation of Adjusted EBITDA and Adjusted earnings to earnings
(the most directly comparable IFRS measure).
August 1, 2019
To Our Shareholders:
While our mills ran better during Q2, the third straight quarter
of challenging North American market conditions continued to
negatively affect our financial performance. US homebuilding
activity has been pulling back since the fall of last year as
homebuyers reacted to markedly higher mortgage rates and
homebuilders struggled to break ground on new homes amid
record-breaking wet weather.
Looking forward, we share the view of industry analysts that the
US housing market – the biggest driver of OSB demand – will
strengthen through the balance of 2019. Mortgage rates are back
down below 4%, and homebuilders are pivoting to offer more
affordably priced entry-level homes to entice first-time buyers.
Combined with a healthy spring new home selling season, this sets
the market up for a stronger second half of the year.
In our European segment, while German OSB prices have declined
from the high levels experienced over the last number of quarters,
our sales volumes and margins remained strong. We may see continued
downward pressure on European panel prices as the global trade war
impacts macro economic conditions, but we expect the ongoing trend
of substituting OSB for plywood will continue to drive accelerated
demand growth, and our expanded Inverness, Scotland mill is ramping up to meet
this need.
Against the backdrop of the relatively weak North American OSB
market, we remain focused on "controlling our controllables". We
continued to adjust our production levels to match slower than
expected customer demand and ensure we only produced what we could
sell. Despite taking the same number of mill-days down in both Q2
and Q1, we were able to sequentially lower our manufacturing costs
as a result of higher line speeds and more efficient raw material
usage.
We also announced the indefinite curtailment of our mill in 100
Mile House, British Columbia. This
was a difficult decision but necessary for our business, as the
combination of a wood supply shortage and high wood prices do not
support the economic operation of the mill. We have a first-class
team in 100 Mile House, and it is a testament to their
professionalism and dedication that the mill continues to run very
well as we utilize the remaining wood we have on site. We are
transitioning manufacturing to our lower cost mills in High Level and Grande Prairie, Alberta, from which we will
continue to meet current and future customer demand.
Given the strength of the US high yield bond market, we also
took steps to maintain balance sheet flexibility by terming out
next year's $240 million bond
maturity to 2027 at an attractive 5.75% interest rate. Further, we
took the opportunity to borrow an additional $110 million principal in the new bond to bolster
our liquidity position, leaving us with pro forma liquidity of just
over $300 million.
While it was a disappointing quarter from a bottom-line
perspective, we have a demonstrated track record of managing our
business to ensure we can navigate through periods of weaker demand
for our products. Market conditions are now slowly firming and our
mills are running well. We are optimistic that our results are set
to improve along side US housing-related demand through the
remainder of the year.
We look forward to reporting on our progress next quarter, and
thank our shareholders for their continuing support.
Peter Wijnbergen
President & CEO
This letter includes forward-looking statements, as defined
by applicable securities legislation, including statements related
to our strategy, projects, plans, future financial or operating
performance, market outlook, and other statements that express
management's expectations or estimates of future performance.
Often, but not always, forward-looking statements can be identified
by the use of words such as "pro forma," "set up," "on
track," "expect," "suggest," "support," "believe," "should,"
"potential," "likely," "continue," "forecast," "plan," "indicate,"
"consider," "future," or variations of such words and phrases or
statements that certain actions "may," "could," "must," "would,"
"might," or "will" be undertaken, occur or be achieved.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results,
performance or achievements of Norbord to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements. See the "Caution
Regarding Forward-Looking Information" statement in the
January 31, 2019 Annual Information
Form and the cautionary statement contained in the "Forward-Looking
Statements" section of the 2018 Management's Discussion and
Analysis dated January 31, 2019 and
Q2 2019 Management's Discussion and Analysis dated July 31, 2019.
Norbord defines Adjusted EBITDA as earnings determined in
accordance with International Financial Reporting Standards (IFRS)
before finance costs, interest costs, income taxes, depreciation,
amortization and non-recurring or other items; Adjusted earnings
(loss) as earnings determined in accordance with IFRS before
non-recurring or other items and using a normalized income tax
rate; and Adjusted earnings (loss) per share as Adjusted earnings
(loss) divided by the weighted average number of common shares
outstanding (on a basic or diluted basis, as specified). Adjusted
EBITDA, Adjusted earnings (loss), and Adjusted earnings (loss) per
share are non-IFRS financial measures, do not have any standardized
meaning prescribed by IFRS and are therefore unlikely to be
comparable to similar measures presented by other companies. See
the Non-IFRS Financial Measures section in Norbord's Q2 2019
Management's Discussion and Analysis dated July 31, 2019 for a quantitative reconciliation
of Adjusted EBITDA and Adjusted earnings to earnings (the most
directly comparable IFRS measure).
Interim Consolidated Balance Sheets
(Unaudited)
(US $
millions)
|
Jul 6,
2019
|
Dec 31,
2018
|
Assets
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
315
|
$
|
128
|
Accounts
receivable
|
136
|
149
|
Taxes
receivable
|
71
|
—
|
Inventory
|
234
|
220
|
Prepaids
|
12
|
12
|
|
768
|
509
|
Non-current
assets
|
|
|
Property, plant and
equipment
|
1,410
|
1,402
|
Intangible
assets
|
19
|
20
|
Deferred income tax
assets
|
5
|
6
|
Other
assets
|
5
|
5
|
|
1,439
|
1,433
|
|
$
|
2,207
|
$
|
1,942
|
Liabilities and
shareholders' equity
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
220
|
$
|
293
|
Current portion of
long-term debt
|
240
|
—
|
Accrued early debt
extinguishment costs
|
9
|
—
|
Accrued liability
under ASPP
|
—
|
42
|
Taxes
payable
|
—
|
28
|
|
469
|
363
|
Non-current
liabilities
|
|
|
Long-term
debt
|
656
|
550
|
Other long-term
debt
|
82
|
—
|
Other
liabilities
|
49
|
34
|
Deferred income tax
liabilities
|
202
|
172
|
|
989
|
756
|
Shareholders'
equity
|
749
|
823
|
|
$
|
2,207
|
$
|
1,942
|
Interim Consolidated Statements of (Loss) Earnings
(Unaudited)
Periods ended Jul 6
and Jun 30 (US $ millions, except per share information)
|
Q2
2019
|
Q2 2018
|
6 mos
2019
|
6 mos 2018
|
Sales
|
$
|
447
|
$
|
707
|
$
|
923
|
$
|
1,283
|
Cost of
sales
|
(408)
|
(430)
|
(840)
|
(832)
|
General and
administrative expenses
|
(4)
|
(5)
|
(7)
|
(10)
|
Depreciation and
amortization
|
(34)
|
(36)
|
(69)
|
(66)
|
Loss on disposal of
assets
|
(1)
|
—
|
(1)
|
—
|
Costs related to 100
Mile House indefinite curtailment announcement
|
(2)
|
—
|
(2)
|
—
|
Operating (loss)
income
|
(2)
|
236
|
4
|
375
|
Non-operating
items:
|
|
|
|
|
Finance
costs
|
(12)
|
(10)
|
(23)
|
(18)
|
Interest
income
|
—
|
1
|
1
|
1
|
Costs on early
extinguishment of 2020 Notes
|
(10)
|
—
|
(10)
|
—
|
(Loss) earnings
before income tax
|
(24)
|
227
|
(28)
|
358
|
Income tax recovery
(expense)
|
10
|
(53)
|
15
|
(89)
|
(Loss)
earnings
|
$
|
(14)
|
$
|
174
|
$
|
(13)
|
$
|
269
|
(Loss) earnings per
common share
|
|
|
|
|
Basic
|
$
|
(0.17)
|
$
|
2.01
|
$
|
(0.16)
|
$
|
3.11
|
Diluted
|
(0.17)
|
2.00
|
(0.16)
|
3.09
|
Interim Consolidated Statements of Comprehensive (Loss)
Income
(Unaudited)
Periods ended Jul 6
and Jun 30 (US $ millions)
|
Q2
2019
|
Q2 2018
|
6 mos
2019
|
6 mos 2018
|
(Loss)
earnings
|
$
|
(14)
|
$
|
174
|
$
|
(13)
|
$
|
269
|
Other comprehensive
(loss) income, net of tax
|
|
|
|
|
Items that will not
be reclassified to earnings:
|
|
|
|
|
Actuarial (loss) gain
on post-employment obligations
|
(4)
|
4
|
(5)
|
4
|
Items that may be
reclassified subsequently to earnings:
|
|
|
|
|
Foreign currency
translation loss on foreign operations
|
(12)
|
(21)
|
(6)
|
(10)
|
Other comprehensive
loss, net of tax
|
(16)
|
(17)
|
(11)
|
(6)
|
Comprehensive (loss)
income
|
$
|
(30)
|
$
|
157
|
$
|
(24)
|
$
|
263
|
Interim Consolidated Statements of Changes in
Shareholders' Equity
(Unaudited)
Periods ended Jul 6
and Jun 30 (US $ millions)
|
Q2
2019
|
Q2 2018
|
6 mos
2019
|
6 mos 2018
|
Share
capital
|
|
|
|
|
Balance, beginning of
period
|
$
|
1,280
|
$
|
1,353
|
$
|
1,280
|
$
|
1,350
|
Issue of common
shares upon exercise of options and DRIP
|
—
|
3
|
—
|
6
|
Reverse accrual for
common shares to be repurchased and cancelled under ASPP
|
—
|
—
|
24
|
—
|
Common shares
repurchased and cancelled
|
—
|
—
|
(24)
|
—
|
Balance, end of
period
|
$
|
1,280
|
$
|
1,356
|
$
|
1,280
|
$
|
1,356
|
Merger
reserve
|
$
|
(96)
|
$
|
(96)
|
$
|
(96)
|
$
|
(96)
|
Contributed
surplus
|
|
|
|
|
Balance, beginning of
period
|
$
|
4
|
$
|
8
|
$
|
4
|
$
|
8
|
Stock options
exercised
|
—
|
(1)
|
—
|
(1)
|
Contributed
surplus
|
$
|
4
|
$
|
7
|
$
|
4
|
$
|
7
|
Retained (deficit)
earnings
|
|
|
|
|
|
Balance, beginning of
period
|
$
|
(193)
|
$
|
(13)
|
$
|
(168)
|
$
|
(67)
|
(Loss)
earnings
|
(14)
|
174
|
(13)
|
269
|
Common share
dividends
|
(24)
|
(40)
|
(49)
|
(81)
|
Reverse accrual for
common shares to be repurchased and cancelled under ASPP
|
—
|
—
|
18
|
—
|
Common shares
repurchased and cancelled
|
—
|
—
|
(19)
|
—
|
Balance, end of
period(i)
|
$
|
(231)
|
$
|
121
|
$
|
(231)
|
$
|
121
|
Accumulated other
comprehensive loss
|
|
|
|
|
|
Balance, beginning of
period
|
$
|
(192)
|
$
|
(165)
|
$
|
(197)
|
$
|
(176)
|
Other comprehensive
loss
|
(16)
|
(17)
|
(11)
|
(6)
|
Balance, end of
period
|
$
|
(208)
|
$
|
(182)
|
$
|
(208)
|
$
|
(182)
|
Shareholders'
equity
|
$
|
749
|
$
|
1,206
|
$
|
749
|
$
|
1,206
|
(i) Retained (deficit)
earnings comprised of:
|
|
|
Deficit arising on
cashless exercise of warrants in 2013
|
$
|
(263)
|
$
|
(263)
|
All other retained
earnings
|
32
|
384
|
|
$
|
(231)
|
$
|
121
|
Interim Consolidated Statements of Cash Flows
(Unaudited)
Periods ended Jul 6
and Jun 30 (US $ millions)
|
Q2
2019
|
Q2 2018
|
6 mos
2019
|
6 mos 2018
|
CASH PROVIDED BY
(USED FOR):
|
|
|
|
|
Operating
activities
|
|
|
|
|
(Loss)
earnings
|
$
|
(14)
|
$
|
174
|
$
|
(13)
|
$
|
269
|
Items not affecting
cash:
|
|
|
|
|
Depreciation and
amortization
|
34
|
36
|
69
|
66
|
Deferred income
tax
|
11
|
28
|
32
|
31
|
Costs related to 100
Mile House indefinite curtailment announcement
|
2
|
—
|
2
|
—
|
Costs on early
extinguishment of 2020 Notes
|
10
|
—
|
10
|
—
|
Loss on disposal of
assets, net
|
1
|
—
|
1
|
—
|
Other
items
|
(11)
|
(5)
|
7
|
2
|
|
33
|
233
|
108
|
368
|
Net change in
non-cash operating working capital balances
|
39
|
19
|
(72)
|
(74)
|
Net change in taxes
receivable and taxes payable
|
(36)
|
(2)
|
(97)
|
(40)
|
|
36
|
250
|
(61)
|
254
|
Investing
activities
|
|
|
|
|
Investment in
property, plant and equipment
|
(37)
|
(61)
|
(77)
|
(117)
|
Investment in
intangible assets
|
(1)
|
(1)
|
(1)
|
(1)
|
|
(38)
|
(62)
|
(78)
|
(118)
|
Financing
activities
|
|
|
|
|
Issuance of
debt
|
350
|
—
|
350
|
—
|
Common share
dividends paid
|
(24)
|
(40)
|
(49)
|
(81)
|
Debt issuance
costs
|
(4)
|
—
|
(4)
|
—
|
Issue of common
shares
|
—
|
2
|
—
|
4
|
Repurchase of common
shares
|
—
|
—
|
(43)
|
—
|
Repayment of lease
obligations
|
(3)
|
—
|
(6)
|
—
|
Accounts receivable
securitization drawings
|
2
|
—
|
82
|
—
|
|
321
|
(38)
|
330
|
(77)
|
Foreign exchange
revaluation on cash and cash equivalents held
|
(6)
|
(5)
|
(4)
|
(2)
|
Cash and cash
equivalents
|
|
|
|
|
Increase during
period
|
313
|
145
|
187
|
57
|
Balance, beginning of
period
|
2
|
153
|
128
|
241
|
Balance, end of
period
|
$
|
315
|
$
|
298
|
$
|
315
|
$
|
298
|
View original
content:http://www.prnewswire.com/news-releases/norbord-reports-second-quarter-2019-results-declares-quarterly-dividend-300894539.html
SOURCE Norbord Inc.