US $
- Q2 GAAP net income of $25
million / $0.27 per
share
- Adjusted EBITDA of $82 million
on sales of $755 million
- Five-year extension of ABL Credit Facility
- Share repurchases of 1.8 million totaling $12 million to date in 2019
- Liquidity remains strong at $590
million
MONTRÉAL, Aug. 1, 2019 /CNW
Telbec/ - Resolute Forest Products Inc. (NYSE: RFP) (TSX: RFP)
today reported net income for the quarter ended June 30, 2019, of $25 million, or
$0.27 per diluted share, compared to
$72 million, or $0.77 per
diluted share, in the same period in 2018. Sales were $755 million in the quarter, a decrease of
$221 million from the year-ago
period. The second 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
$11 million, or $0.12 per diluted share, compared to $66 million, or $0.71 per diluted share, in the second quarter of
2018.
"This quarter's results were most affected by lower pricing
in all of our business segments, with the notable exception of
tissue. Benefiting from higher pricing and improved productivity,
our tissue segment generated marginally positive EBITDA this
quarter," said Yves Laflamme,
president and chief executive officer. "Despite pricing
challenges, our pulp and paper businesses continued to
generate strong margins and attractive cash flows, mitigating
cyclical headwinds in lumber, as our tissue business gains
momentum. During the quarter, we further strengthened our
balance sheet by extending our senior secured asset-based revolving
credit facility for another five years. We also took advantage of
recent stock price underperformance, returning $12
million of capital to our shareholders through the buyback of
1.8 million shares to date in 2019."
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 $40 million in the quarter, compared to
$64 million in the first quarter.
Lower selling prices across most products reduced operating income
by $47 million, including a 9% drop
in average transaction price in the market pulp segment, 7% in wood
products, 6% in newsprint and 2% in specialty papers. This was only
partially offset by a reduction in manufacturing costs
($19M), largely resulting from
seasonally lower energy costs, a decrease in recovered paper prices
and improved productivity.
Market Pulp
Operating income in the market pulp segment was $27 million, $15
million lower than the first quarter, entirely attributable
to the 18% decrease in sales, as global pulp markets continued to
soften. Shipments fell by 10%, leading to a 32,000 metric
ton increase in finished goods inventory at quarter-end, while
the average transaction price dropped by $69 per metric ton. On the other hand, the
operating cost per unit (the "delivered cost") decreased by
$34 per metric ton, following a
$24 decrease in the previous quarter,
to $630 per metric ton. This reflects
better operational efficiency, lower energy costs and a reduction
in fiber expense, mostly due to a decline in recovered paper
prices. As a result, EBITDA decreased by $33 per metric ton to $129, or $32
million, reflecting a 17% EBITDA margin.
Tissue
The tissue segment incurred an operating loss of $4 million in the quarter, an improvement of
$4 million compared to the first
quarter. Sales rose by another 10% this quarter, maintaining a
positive trend with increases in converted product volumes and
pricing for away-from-home products. Delivered cost dropped by
$131 per short ton, reflecting
productivity gains and lower maintenance costs. Accordingly, EBITDA
was marginally positive, compared to negative $3 million in the first quarter.
Wood Products
The wood products segment reported an operating loss of
$3 million in the quarter, compared
to an operating income of $6 million
in the first quarter, mainly due to weaker pricing. Following a
rebound in the first quarter, the average transaction price dropped
by $26 per thousand board feet this
quarter, to $348, reflecting softer
spring demand. Shipments, however, rose by 56 million board feet
due to improved rail car availability and a modest increase in U.S.
lumber consumption compared to the first quarter. Consequently,
finished goods inventory fell to more normal levels of 122 million
board feet at quarter-end. The delivered cost remained relatively
unchanged, at $355 per thousand board
feet. Higher shipments were not enough to outweigh the drop in
pricing, and EBITDA decreased to $6
million for the quarter, compared to $14 million in the previous quarter.
Newsprint
At $17 million in the second
quarter, newsprint's operating income decreased by $11 million compared to the previous quarter. The
reduced profitability is all attributable to the $37 per metric ton drop in the average
transaction price, to $597. While
pricing decreased across all regions, price erosion was more
significant in offshore markets, which account for approximately
40% of newsprint shipments. Even with softening demand, volumes
increased by 15,000 metric tons, due to more export sales. The
company took temporary production downtime during the quarter to
offset the slowdown in demand, reducing finished goods inventory
closer to trend levels of 105,000 metric tons at quarter-end.
Despite the downtime, delivered cost remained relatively unchanged
at $547 per metric ton. Higher
maintenance expenses, mostly planned, were largely offset by lower
energy costs. Consequently, EBITDA decreased by $10 million to $25
million for the quarter, equivalent to $72 per metric ton and an EBITDA margin of
12%.
Specialty Papers
The specialty papers segment generated operating income of
$15 million in the quarter, unchanged
compared to the previous quarter. Pricing decreased by $15 per short ton to $753, while shipments declined slightly to
193,000 short tons. The delivered cost decreased by $19 per short ton this quarter to $676, even as wood cost in the U.S. Southeast
remained elevated. Lower energy and maintenance expense compensated
for lower sales, and EBITDA remained relatively unchanged at
$26 million, or $134 per short ton. The EBITDA margin improved to
18%.
Consolidated Quarterly Operating Income Variance Against
Year-Ago Period
The company's operating income was $81
million lower than the second quarter of 2018. Overall
pricing had a $68 million unfavorable
impact, as lumber prices decreased by 32%, more than
offsetting higher prices in the paper segments. The decline in
operating income also reflects the increase in manufacturing costs
of $31 million, mainly due to higher
fiber costs and additional maintenance, as well as a decrease in
sales volume of $13 million, given
lower pulp and newsprint shipments. These unfavorable items were
offset in part by the $15
million favorable impact of the weaker Canadian dollar and
lower depreciation expense of $12
million due to divestitures and the full amortization of
certain assets.
Corporate and Finance
In June, the company repurchased 0.7 million shares of its
common stock, at a total cost of $5
million for the quarter. As of July 31, 2019, the
shares repurchased in 2019 amounted to 1.8 million, at a cost of
$12 million. There remains
$12 million under the existing share
repurchase program. With $72 million
of cash provided by operations, $19
million of capital expenditures and $19 million of softwood lumber duty deposits, the
company ended the quarter with $98
million of cash and $590
million of liquidity. Net debt to trailing 12-month adjusted
EBITDA remained low, at 0.7x.
By quarter-end, the company had recorded cumulative softwood
lumber duty deposits of $136 million
on the balance sheet.
During the quarter, the company completed a five-year extension
of its senior secured asset-based revolving credit facility ("ABL
credit facility") to 2024, with an aggregate lender commitment of
$500 million. The extension provides
a competitive source of liquidity for the long term.
Outlook
"Pricing for market pulp is expected to
remain under pressure in the short term, given elevated global
inventories. While lower price realization will weigh on our
results in the third quarter, we expect to increase shipments. We
continue to be positive on our pulp business, supported by
favorable medium-term supply trends and growing demand. We expect
to build on the marginally positive EBITDA in tissue with
further sales growth and productivity gains in the third quarter.
Although we are cautious in our outlook for lumber in the short
term, we remain optimistic with the underlying market fundamentals.
For paper, pricing headwinds, including recent protectionist
measures in India, are expected to
continue to affect results in the second half of the year, as the
market adjusts to low operating rates. We are confident we have the
right assets to compete in these conditions and defend our paper
margins," 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
August 15, 2019, by dialing (800)
585-8367, conference number 1227648.
Description of
Special Items
|
|
Special
items
|
Second
quarter
|
(in
millions)
|
|
2019
|
|
2018
|
Foreign currency
translation loss
|
$
|
6
|
$
|
1
|
Closure costs,
impairment and other related charges
|
|
–
|
|
1
|
Net gain on
disposition of assets
|
|
–
|
|
(4)
|
Non-operating pension
and other postretirement benefit credits
|
|
(12)
|
|
(12)
|
Other (income)
expense, net
|
|
(5)
|
|
2
|
Income tax effect of
special items
|
|
(3)
|
|
6
|
Total
|
$
|
(14)
|
$
|
(6)
|
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 June
30,
|
|
Six
months
ended June
30,
|
|
2019
|
2018
|
|
2019
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$
|
755
|
$
|
976
|
|
$
|
1,550
|
$
|
1,850
|
Costs and
expenses:
|
|
|
|
|
|
Cost of sales,
excluding depreciation, amortization and distribution
costs
|
536
|
639
|
|
1,090
|
1,253
|
Depreciation and
amortization
|
42
|
54
|
|
82
|
107
|
Distribution
costs
|
101
|
123
|
|
201
|
239
|
Selling, general and
administrative expenses
|
36
|
42
|
|
73
|
85
|
Closure costs,
impairment and other related charges
|
-
|
1
|
|
-
|
1
|
Net gain on
disposition of assets
|
-
|
(4)
|
|
-
|
(4)
|
Operating
income
|
40
|
121
|
|
104
|
169
|
Interest
expense
|
(7)
|
(11)
|
|
(16)
|
(24)
|
Non-operating pension
and other postretirement benefit credits
|
12
|
12
|
|
24
|
25
|
Other expense,
net
|
(1)
|
(3)
|
|
(5)
|
(10)
|
Income before
income taxes
|
44
|
119
|
|
107
|
160
|
Income tax
provision
|
(19)
|
(47)
|
|
(40)
|
(78)
|
Net income
including noncontrolling interests
|
25
|
72
|
|
67
|
82
|
Net income
attributable to noncontrolling interests
|
-
|
-
|
|
-
|
-
|
Net income
attributable to Resolute Forest Products Inc.
|
$
|
25
|
$
|
72
|
|
$
|
67
|
$
|
82
|
Net income per
share attributable to Resolute Forest Products Inc. common
shareholders:
|
|
|
|
|
|
Basic
|
$
|
0.27
|
$
|
0.79
|
|
$
|
0.73
|
$
|
0.90
|
Diluted
|
0.27
|
0.77
|
|
0.71
|
0.88
|
Weighted-average
number of Resolute Forest Products Inc. common shares
outstanding:
|
|
|
|
|
|
Basic
|
92.4
|
91.3
|
|
92.4
|
91.2
|
Diluted
|
93.6
|
93.2
|
|
93.8
|
93.1
|
RESOLUTE FOREST
PRODUCTS INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(Unaudited, in
millions of U.S. dollars)
|
|
|
|
|
|
|
|
June
30,
2019
|
|
December
31,
2018
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
98
|
$
|
304
|
Accounts receivable,
net:
|
|
|
|
|
Trade
|
|
333
|
|
347
|
Other
|
|
67
|
|
102
|
Inventories,
net
|
|
530
|
|
508
|
Other current
assets
|
|
42
|
|
43
|
Total current
assets
|
|
1,070
|
|
1,304
|
Fixed assets,
net
|
|
1,479
|
|
1,515
|
Amortizable
intangible assets, net
|
|
50
|
|
50
|
Deferred income tax
assets
|
|
869
|
|
876
|
Operating lease
right-of-use assets
|
|
63
|
|
-
|
Other
assets
|
|
221
|
|
190
|
Total
assets
|
$
|
3,752
|
$
|
3,935
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
376
|
$
|
427
|
Current portion of
long-term debt
|
|
1
|
|
223
|
Current portion of
operating lease liabilities
|
|
8
|
|
-
|
Total current
liabilities
|
|
385
|
|
650
|
Long-term debt, net
of current portion
|
|
422
|
|
422
|
Pension and other
postretirement benefit obligations
|
|
1,231
|
|
1,257
|
Operating lease
liabilities, net of current portion
|
|
59
|
|
-
|
Other
liabilities
|
|
55
|
|
71
|
Total
liabilities
|
|
2,152
|
|
2,400
|
Commitments and
contingencies
|
|
|
|
|
Equity:
|
|
|
|
|
Resolute Forest
Products Inc. shareholders' equity:
|
|
|
|
|
Common
stock
|
|
-
|
|
-
|
Additional paid-in
capital
|
|
3,803
|
|
3,802
|
Deficit
|
|
(1,131)
|
|
(1,198)
|
Accumulated other
comprehensive loss
|
|
(948)
|
|
(950)
|
Treasury stock at
cost (2)
|
|
(125)
|
|
(120)
|
Total Resolute
Forest Products Inc. shareholders' equity
|
|
1,599
|
|
1,534
|
Noncontrolling
interests
|
|
1
|
|
1
|
Total
equity
|
|
1,600
|
|
1,535
|
Total liabilities
and equity
|
|
$
3,752
|
$
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
Six
months
ended June
30,
|
|
|
2019
|
|
2018
|
Cash flows from
operating activities:
|
|
|
|
|
Net income including
noncontrolling interests
|
$
|
67
|
$
|
82
|
Adjustments to
reconcile net income including noncontrolling interests
to
net cash provided by
operating activities:
|
|
|
|
|
Share-based
compensation
|
|
3
|
|
5
|
Depreciation and
amortization
|
|
82
|
|
107
|
Reversal of inventory
write-downs related to closures
|
|
-
|
|
(1)
|
Deferred income
taxes
|
|
40
|
|
75
|
Net pension
contributions and other postretirement benefit payments
|
|
(57)
|
|
(70)
|
Net gain on
disposition of assets
|
|
-
|
|
(4)
|
(Gain) loss on
translation of foreign currency denominated deferred income
taxes
|
|
(35)
|
|
44
|
Loss (gain) on
translation of foreign currency denominated pension and
other postretirement
benefit obligations
|
|
37
|
|
(36)
|
Net planned major
maintenance amortization (payments)
|
|
7
|
|
(3)
|
Changes in working
capital:
|
|
|
|
|
Accounts
receivable
|
|
38
|
|
17
|
Inventories
|
|
(21)
|
|
(20)
|
Other current
assets
|
|
(3)
|
|
(1)
|
Accounts payable and
accrued liabilities
|
|
(64)
|
|
18
|
Other, net
|
|
1
|
|
7
|
Net cash provided by
operating activities
|
|
95
|
|
220
|
Cash flows from
investing activities:
|
|
|
|
|
Cash invested in
fixed assets
|
|
(45)
|
|
(53)
|
Disposition of
assets
|
|
2
|
|
2
|
Decrease (increase)
in countervailing duty cash deposits on supercalendered
paper
|
|
1
|
|
(11)
|
Increase in
countervailing and anti-dumping duty cash deposits on softwood
lumber
|
|
(33)
|
|
(41)
|
Decrease (increase)
in countervailing duty cash deposits on uncoated groundwood
paper
|
|
6
|
|
(6)
|
Net cash used in
investing activities
|
|
(69)
|
|
(109)
|
Cash flows from
financing activities:
|
|
|
|
|
Net repayments under
revolving credit facilities
|
|
-
|
|
(114)
|
Payments of
debt
|
|
(225)
|
|
-
|
Purchases of treasury
stock (2)
|
|
(5)
|
|
-
|
Payments of financing
and credit facility fees
|
|
(2)
|
|
(1)
|
Cash used in
financing activities
|
|
(232)
|
|
(115)
|
Effect of exchange
rate changes on cash and cash equivalents, and restricted
cash
|
|
1
|
|
(2)
|
Net decrease in cash
and cash equivalents, and restricted cash
|
|
(205)
|
|
(6)
|
Cash and cash
equivalents, and restricted cash:
|
|
|
|
|
Beginning of
period
|
|
345
|
|
49
|
End of
period
|
$
|
140
|
$
|
43
|
|
|
|
|
|
Cash and cash
equivalents, and restricted cash at period end:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
98
|
$
|
6
|
Restricted cash
(included in "Other current assets" and "Other assets")
|
|
42
|
|
37
|
|
|
|
|
|
See Notes to the
Unaudited Consolidated Financial Statement Information
|
RESOLUTE FOREST
PRODUCTS INC.
|
RECONCILIATION OF
OPERATING INCOME AND NET INCOME ADJUSTED FOR SPECIAL
ITEMS
|
|
A reconciliation of
our operating income, net income and net income per share reported
before special items is presented in the
tables below. See Note 1 to the Reconciliations of Non-GAAP
Measures regarding our use of non-GAAP measures.
|
|
Three months ended
June 30, 2019
|
Operating
income (loss)
|
Net income
(loss)
|
EPS
|
(Unaudited, in
millions of U.S. dollars, except per share
amounts)
|
|
|
|
|
|
|
|
GAAP, as
reported
|
$
|
40
|
$
|
25
|
$
|
0.27
|
|
|
|
|
|
|
|
Adjustments for
special items:
|
|
|
|
|
|
|
Foreign exchange
loss
|
|
-
|
|
6
|
|
0.06
|
Non-operating pension
and other postretirement benefit credits
|
|
-
|
|
(12)
|
|
(0.13)
|
Other income,
net
|
|
-
|
|
(5)
|
|
(0.05)
|
Income tax effect of
special items
|
|
-
|
|
(3)
|
|
(0.03)
|
|
|
|
|
|
|
|
Adjusted for
special items
|
$
|
40
|
$
|
11
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30, 2018
|
Operating
income (loss)
|
Net income
(loss)
|
EPS
|
(Unaudited, in
millions of U.S. dollars, except per share
amounts)
|
|
|
|
|
|
|
|
GAAP, as
reported
|
$
|
121
|
$
|
72
|
$
|
0.77
|
|
|
|
|
|
|
|
Adjustments for
special items:
|
|
|
|
|
|
|
Foreign exchange
loss
|
|
-
|
|
1
|
|
0.01
|
Closure costs,
impairment and other related charges
|
|
1
|
|
1
|
|
0.01
|
Net gain on
disposition of assets
|
|
(4)
|
|
(4)
|
|
(0.04)
|
Non-operating pension
and other postretirement benefit credits
|
|
-
|
|
(12)
|
|
(0.13)
|
Other expense,
net
|
|
-
|
|
2
|
|
0.02
|
Income tax effect of
special items
|
|
-
|
|
6
|
|
0.07
|
|
|
|
|
|
|
|
Adjusted for
special items
|
$
|
118
|
$
|
66
|
$
|
0.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2019
|
Operating
income (loss)
|
Net income
(loss)
|
EPS
|
(Unaudited, in
millions of U.S. dollars, except per share
amounts)
|
|
|
|
|
|
|
|
GAAP, as
reported
|
$
|
104
|
$
|
67
|
$
|
0.71
|
|
|
|
|
|
|
|
Adjustments for
special items:
|
|
|
|
|
|
|
Foreign exchange
loss
|
|
-
|
|
10
|
|
0.11
|
Non-operating pension
and other postretirement benefit credits
|
|
-
|
|
(24)
|
|
(0.26)
|
Other income,
net
|
|
-
|
|
(5)
|
|
(0.05)
|
Income tax effect of
special items
|
|
-
|
|
(7)
|
|
(0.07)
|
|
|
|
|
|
|
|
Adjusted for
special items
|
$
|
104
|
$
|
41
|
$
|
0.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 2018
|
Operating
income (loss)
|
Net income
(loss)
|
EPS
|
(Unaudited, in
millions of U.S. dollars, except per share
amounts)
|
|
|
|
|
|
|
|
GAAP, as
reported
|
$
|
169
|
$
|
82
|
$
|
0.88
|
|
|
|
|
|
|
|
Adjustments for
special items:
|
|
|
|
|
|
|
Foreign exchange
loss
|
|
-
|
|
2
|
|
0.02
|
Closure costs,
impairment and other related charges
|
|
1
|
|
1
|
|
0.01
|
Reversal of inventory
write-downs related to closures
|
|
(1)
|
|
(1)
|
|
(0.01)
|
Start-up
costs
|
|
8
|
|
8
|
|
0.09
|
Net gain on
disposition of assets
|
|
(4)
|
|
(4)
|
|
(0.05)
|
Non-operating pension
and other postretirement benefit credits
|
|
-
|
|
(25)
|
|
(0.27)
|
Other expense,
net
|
|
-
|
|
8
|
|
0.09
|
Income tax effect of
special items
|
|
-
|
|
12
|
|
0.13
|
|
|
|
|
|
|
|
Adjusted for
special items
|
$
|
173
|
$
|
83
|
$
|
0.89
|
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
June 30, 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
|
$
|
27
|
$
|
(4)
|
$
|
(3)
|
$
|
17
|
$
|
15
|
$
|
(27)
|
$
|
25
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
7
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
19
|
|
19
|
Depreciation and
amortization
|
|
5
|
|
4
|
|
9
|
|
8
|
|
11
|
|
5
|
|
42
|
EBITDA
|
$
|
32
|
$
|
-
|
$
|
6
|
$
|
25
|
$
|
26
|
$
|
4
|
$
|
93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
loss
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
6
|
Non-operating pension
and other postretirement benefit credits
|
|
|
|
|
|
|
|
|
|
|
|
(12)
|
|
(12)
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
32
|
$
|
-
|
$
|
6
|
$
|
25
|
$
|
26
|
$
|
(7)
|
$
|
82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30, 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
|
$
|
41
|
$
|
(10)
|
$
|
79
|
$
|
18
|
$
|
4
|
$
|
(60)
|
$
|
72
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
11
|
|
11
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
47
|
|
47
|
Depreciation and
amortization
|
|
8
|
|
5
|
|
7
|
|
17
|
|
12
|
|
5
|
|
54
|
EBITDA
|
$
|
49
|
$
|
(5)
|
$
|
86
|
$
|
35
|
$
|
16
|
$
|
3
|
$
|
184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
loss
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
1
|
Closure costs,
impairment and other related charges
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
1
|
Net gain on
disposition of assets
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
(4)
|
Non-operating pension
and other postretirement benefit credits
|
|
|
|
|
|
|
|
|
|
|
|
(12)
|
|
(12)
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
49
|
$
|
(5)
|
$
|
86
|
$
|
35
|
$
|
16
|
$
|
(9)
|
$
|
172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 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
|
$
|
69
|
$
|
(12)
|
$
|
3
|
$
|
45
|
$
|
30
|
$
|
(68)
|
$
|
67
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
16
|
|
16
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
40
|
|
40
|
Depreciation and
amortization
|
|
10
|
|
9
|
|
17
|
|
15
|
|
21
|
|
10
|
|
82
|
EBITDA
|
$
|
79
|
$
|
(3)
|
$
|
20
|
$
|
60
|
$
|
51
|
$
|
(2)
|
$
|
205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
loss
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
10
|
Non-operating pension
and other postretirement benefit credits
|
|
|
|
|
|
|
|
|
|
|
|
(24)
|
|
(24)
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
|
|
(5)
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
79
|
$
|
(3)
|
$
|
20
|
$
|
60
|
$
|
51
|
$
|
(21)
|
$
|
186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, 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
|
$
|
74
|
$
|
(11)
|
$
|
132
|
$
|
14
|
$
|
(3)
|
$
|
(124)
|
$
|
82
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
24
|
|
24
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
78
|
|
78
|
Depreciation and
amortization
|
|
15
|
|
6
|
|
15
|
|
33
|
|
24
|
|
14
|
|
107
|
EBITDA
|
$
|
89
|
$
|
(5)
|
$
|
147
|
$
|
47
|
$
|
21
|
$
|
(8)
|
$
|
291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
loss
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
2
|
Closure costs,
impairment and other related charges
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
1
|
Reversal of inventory
write-downs related to closures
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
(1)
|
Start-up
costs
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
8
|
Net gain on
disposition of assets
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
|
(4)
|
Non-operating pension
and other postretirement benefit credits
|
|
|
|
|
|
|
|
|
|
|
|
(25)
|
|
(25)
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
89
|
$
|
(5)
|
$
|
147
|
$
|
47
|
$
|
21
|
$
|
(19)
|
$
|
280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to the
Reconciliations of Non-GAAP Measures
|
RESOLUTE FOREST PRODUCTS INC.
Notes
to the Unaudited Consolidated Financial Statement
Information
1. On May 14, 2019, we entered
into an amendment to the credit agreement dated May 22, 2015, for a senior secured asset-based
revolving credit facility. The amended credit agreement provides
for an extension of the maturity date to May
14, 2024, with an aggregate lender commitment of
$500 million at any time outstanding,
subject to borrowing base availability based on specified advance
rates, eligibility criteria and customary reserves.
2. During the three and six months ended June 30, 2019, we repurchased 720,000 shares, at
a cost of $5 million under our
$150 million share repurchase
program, which was launched in 2012. We did not repurchase any
shares during the three and six months ended June 30, 2018. There remains $19 million under the program.
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 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, inventory write-downs related to
closures, start-up costs, gains and losses on disposition of
assets, 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 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 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-second-quarter-2019-results-300894607.html
SOURCE Resolute Forest Products Inc.