US $
- Q4 GAAP net loss of $128
million / net income of $307
million for 2021
- Adjusted EBITDA of $111
million in the quarter / $921
million for the full year
- Liquidity of $953 million /
net debt of $190 million at
year-end
- Repurchased 1.3 million shares in Q4 / 4.6 million shares
(6%) in 2021
- Net pension & OPEB liability down by over $400 million at year-end
MONTRÉAL, Feb. 3, 2022 /CNW
Telbec/ - Resolute Forest Products Inc. (NYSE: RFP)
(TSX: RFP) today announced a net loss for the quarter ended
December 31 of $128 million, or $1.64 per share, compared to a net loss of
$52 million, or $0.63 per share, in the same period in 2020.
Sales were $834 million in the
quarter, an increase of $65 million
from the year-ago period. Excluding special items, the company
reported net income of $37 million,
or $0.48 per diluted share, compared
to net income of $45 million, or
$0.55 per diluted share, in the
fourth quarter of 2020.
For the year, the company reported GAAP net
income of $307 million, or
$3.83 per diluted share, compared to
net income of $10 million, or
$0.12 per diluted share, in 2020.
Sales were $3.7 billion, up by 31%
from the previous year. Excluding special items, the company
reported net income of $523 million,
or $6.51 per diluted share, compared
to net income of $56 million, or
$0.65 per diluted share, in 2020.
"The $921
million of adjusted EBITDA generated in 2021 allowed us to
reduce our debt, invest in our business and return cash to
shareholders," said Remi G.
Lalonde, president and chief executive officer. "Our
fourth quarter results reflect higher realized prices across most
of our segments, especially wood products, but also cost pressures
across the business. We faced higher manufacturing costs,
mainly due to higher energy prices, lower internal power generation
and higher fiber costs, as well as higher freight costs and a
mark-to-market of share-based awards following a stock price
appreciation of roughly 30% in Q4. Rising interest rates helped to
reduce our net pension and OPEB deficit by over $400 million this year, further strengthening our
balance sheet and credit profile."
"We also recently amended and extended our ABL
credit facility, which includes an ESG module, one of the first
examples in the forest products industry. Looking back on the year,
I am particularly proud of our employees for setting a new bar on
safety, with an annual OSHA incident rate of 0.47. Our long-term
ambition is to continue to improve until we reach 0 injury, but
this is an impressive success along the way – despite the pandemic
and other challenges – and I wholeheartedly applaud our employees
for our achievement," added Mr. Lalonde.
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 an operating loss of
$101 million in the quarter, compared
to operating income of $102 million
in the third quarter. The variance largely reflects the company's
decision to indefinitely idle its pulp and paper operations at the
Calhoun (Tennessee) mill, pursuant to which it recorded
non-cash charges of $158 million,
including impairment charges on fixed assets, inventory write-down
and other asset write-offs, as well as $13
million in accruals for cash closure costs.
The remaining variance reflects a $62 million increase in costs. This includes
$44 million in manufacturing costs
due to higher energy prices ($12
million), lower internal power generation ($11 million), and higher fiber, labor,
maintenance and other costs ($21
million). It also includes an increase in selling, general
and administrative expenses (or, "SG&A") due to a higher
share-based compensation expense in the quarter ($12 million), and higher freight costs
($6 million). These higher costs were
only partly offset by stronger market prices in the wood products,
paper and tissue segments ($37
million).
For all of 2021, the company generated operating
income of $584 million, a
$485 million improvement over 2020,
reflecting the favorable impact of higher market prices in wood
products ($670 million), market pulp
($178 million) and paper
($91 million), offset by higher
manufacturing costs ($198 million)
and freight costs ($18 million). The
higher manufacturing costs include higher log costs due to stumpage
fees and harvesting costs ($77
million), higher energy prices and lower internal power
generation ($52 million), higher
labor costs ($13 million), and higher
maintenance expenses ($33 million) as
a result of timing and scope. The company also incurred a charge of
$12 million related to a process
improvement program and $6 million in
ramp-up losses for its Hagerstown
(Maryland) converting facility
acquired in 2020.
The 2021 results also reflect the unfavorable
impact of a higher variable compensation expense ($20 million) in SG&A and the stronger
Canadian dollar ($83 million). The
operating income variance also reflects an unfavorable impact of
$91 million related to the
announcement of the indefinite idling of the Calhoun mill, net of closure related costs for
the Baie-Comeau and Amos (Quebec)
newsprint mills recorded in 2020.
Segment Operating Income Variance
Wood Products
The company generated operating income of
$82 million in the quarter in the
wood products segment, an improvement of $18
million from the previous quarter. The average transaction
price improved by $39 per thousand
board feet, to $612, and the
operating cost per unit (the "delivered cost") rose by
$14 per thousand board feet, or 3%,
mainly due to higher maintenance, staffing and labor expenses.
Shipments rose by 28 million board feet compared to the third
quarter, reflecting capital project downtime in the previous
period. Finished goods inventory decreased to 126 million board
feet. EBITDA improved by $17 million,
to $92 million.
In 2021, the wood products segment recorded
operating income of $772 million,
compared to operating income of $276
million in 2020. The improvement reflects a $309 per thousand board feet, or 62%, increase in
the average transaction price and a 74 million board foot increase
in shipments. The higher shipments mainly reflect additional volume
with the ramp-up of operations at the restarted El Dorado (Arkansas) and Ignace (Ontario) sawmills. The delivered cost rose
year-over-year by $80 per thousand
board feet, mainly due to higher log costs due to stumpage fees and
harvesting expenses, as well as unfavorable maintenance and labor
costs. EBITDA in the segment was $814
million for the year.
Market Pulp
The market pulp segment recorded operating income
of $19 million in the fourth quarter,
$27 million lower than in the
previous quarter. The average transaction price slipped by
$20 per metric ton and shipments fell
by 29,000 metric tons as a result of logistics constraints and
lower productivity, mostly at the Calhoun mill. The operating cost per unit rose
by $67 per metric ton, or 10%,
reflecting higher fiber and energy costs, as well as lower internal
power generation as a result of a turbine failure at the
Saint-Félicien (Quebec) mill.
Finished goods inventory was 59,000 metric tons at year-end, up by
7,000 metric tons in the quarter due to logistics constraints.
EBITDA in the segment was $25
million.
For 2021, the market pulp segment reported
operating income of $99 million,
compared to an operating loss of $1
million in 2020. The change reflects a $168 per metric ton, or 28%, increase in average
transaction price, offset by a 56,000 metric ton drop in shipments
due to lower productivity. The delivered cost rose by $74 per metric ton, mainly due to higher prices
for energy and lower internal power generation at Saint-Félicien.
EBITDA in the segment was $123
million for the year.
Tissue
The company reported an operating loss of
$6 million in the tissue segment in
the quarter, compared to an operating loss of $9 million in the third quarter. The average
transaction price improved by $160
per short ton, or 9%, due to better product mix, and shipments rose
by 1,000 short tons on improving market conditions. The delivered
cost increased by $37 per short ton,
or 2%, partly due to higher freight costs. Finished goods inventory
was unchanged at 6,000 short tons. Quarter-over-quarter segment
EBITDA improved by $3 million, to
negative $1 million.
For the year, the tissue segment reported an
operating loss of $24 million,
compared to a loss of $1 million in
2020. The average transaction price slipped by $10 per short ton because of unfavorable product
mix. The delivered cost rose by $249
per short ton due to higher fiber costs and accumulated market
downtime as a result of consumer inventory rebalancing and
pandemic-related logistics and labor challenges. Shipments were
lower by 6,000 short tons. The difficult market conditions in 2021
and the impact of market downtime ($6
million), a process improvement program ($5 million) and the ramp-up of the Hagerstown converting facility ($6 million), contributed to weaker performance in
2021, with EBITDA in the segment at negative $5 million for the year.
Despite the lost integration benefit of
approximately $15 million in the
tissue segment and approximately $5
million for on-going costs associated with closed site
maintenance, the company anticipates an improvement in its overall
operating income of approximately $35
million to $40 million as
result of the indefinite idling of pulp and paper operations at
Calhoun.
Paper
The paper segment incurred an operating loss of
$4 million in the quarter, compared
to operating income of $16 million in
the third quarter. The average transaction price rose by
$29 per metric ton, or 4%, with
increases in all grades, but the delivered cost increased by
$78 per metric ton, or 12%, due to
higher energy prices and unfavorable maintenance and fiber costs,
as well as lower internal power generation due to low water levels
at Hydro-Saguenay. Shipments slipped by 10,000 metric tons, and
finished goods inventory rose by 12,000 metric tons, as a result of
logistics constraints with limited railcar and truck availability.
EBITDA in the segment was $12 million
for the quarter.
For the year, the segment recorded an operating
loss of $19 million, compared to an
operating loss of $46 million in
2020, reflecting a $66 per metric ton
improvement in average transaction price, offset by a reduction of
99,000 metric tons in shipments following capacity reductions
earlier in the pandemic. The delivered cost rose by $50 per metric ton, mainly due to higher energy
prices, unfavorable maintenance costs due to timing and scope, and
higher expenses related to a process improvement project, partly
offset by the indefinite idling of the Baie-Comeau and Amos newsprint mills. EBITDA for the segment
was $43 million in 2021.
Consolidated Quarterly Operating Income
Variance Against Year-Ago Period
The company reported an operating loss of
$101 million in the fourth quarter,
compared to operating income of $4
million in the comparable quarter of 2020. The $105 million variance reflects charges related to
the indefinite idling of pulp and paper operations at the
Calhoun mill, net of Baie-Comeau and Amos closure related costs recorded in the
fourth quarter of 2020 ($91 million),
as well as higher manufacturing costs due to unfavorable energy
prices and lower internal power generation ($26 million), higher fiber costs, including log
costs impacted by a rise in stumpage fees and harvesting expenses,
and the price of recycled furnish ($24
million).
Prices were favorable across all segments
($103 million) but volume was lower
for the wood products, pulp and paper segments ($14 million).
The operating results also include the
unfavorable impacts of a stronger Canadian dollar ($17 million), higher freight costs ($12 million) and a higher variable compensation
expense ($6 million) in
SG&A. At $111 million,
adjusted EBITDA was $18 million lower
than the fourth quarter of 2020.
Corporate, Cash and Liquidity
The company generated $68
million of cash from operating activities in the quarter and
$648 million for the year. It
invested $112 million, net, in fixed
assets for the year, including $33
million in the fourth quarter.
The company repurchased 4.6 million shares of
common stock in 2021, or 6%, for $48
million, including 1.3 million shares in the fourth quarter.
After repurchasing 15% of its outstanding shares and exhausting in
December the previous program launched in March 2020, the company announced a new program
to repurchase up to $100 million or
10 million of its common shares, whichever occurs first.
With $112 million
of quarter-end cash, liquidity stood at $953
million, and net debt was $190
million.
By quarter-end, the company had recorded
cumulative softwood lumber duty deposits of $397 million on the balance sheet, including
$26 million in the quarter.
In 2022, the company anticipates disbursements of
approximately $45 million related to
Calhoun pulp and paper cash
closure costs, including the $13
million accrued in the fourth quarter.
As a result of an increase in applicable discount
rates and strong investment returns, the net long-term pension and
other postretirement benefit liability on the year-end balance
sheet dropped by $411 million from
2020, to $1.151 billion. The company
expects pension contributions to fall by $9
million in 2022, to approximately $95
million.
Outlook
Mr. Lalonde added: "As the Omicron wave
passes, the weather softens and knots in the logistics system
loosen, we should see a recalibration toward a more normal business
environment. It could, however, take several months, especially for
the transportation network, and it is unclear how much of the input
costs inflation will remain. Benchmark lumber prices started
the year strong, and we expect that the combination of encouraging
underlying fundamentals, higher cost structures and higher softwood
lumber duty rates will contribute to above trend prices for some
time. After slipping marginally in the fourth quarter, we expect
realized transaction prices for market pulp to improve in the first
quarter, largely due to limited availability of supply. The higher
operating rates and the price recovery in printing and writing
paper markets, which should continue, will support our cash
generation strategy for the segment. In the case of pulp and paper
in particular, pricing improvements will mitigate the effect of
rising cost pressures. We anticipate better performance from our
pulp and paper operations with the indefinite idling of the
Calhoun pulp and paper assets,
which, despite the loss of pulp integration benefits in the tissue
segment, will contribute a net positive for all of Resolute. In
tissue, we expect the retail market to continue its recovery and
the away-from-home market to remain sluggish for some time.
Following the indefinite idling of pulp and paper operations at
Calhoun and as markets continue to
stabilize, we are reviewing strategic options for the tissue
segment."
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 February 18, 2022, by
dialing (800) 770-2030, conference number 2946857.
Description of Special Items
Special
items
|
2021
|
|
2020
|
(in
millions)
|
|
Fourth
quarter
|
|
Full Year
|
|
|
Fourth
quarter
|
|
Full
Year
|
Closure costs,
impairment and other related charges
|
$
|
142
|
$
|
144
|
|
$
|
55
|
$
|
53
|
Inventory write-downs
related to closures
|
|
29
|
|
29
|
|
|
25
|
|
25
|
Start-up
costs
|
|
-
|
|
-
|
|
|
3
|
|
3
|
Net gain on
disposition of assets
|
|
-
|
|
-
|
|
|
(2)
|
|
(11)
|
Non-operating pension
and other postretirement benefit (credits) costs
|
|
(3)
|
|
(11)
|
|
|
24
|
|
-
|
Other (income)
expense, net
|
|
(4)
|
|
70
|
|
|
28
|
|
4
|
Income tax effect of
special items
|
|
1
|
|
(16)
|
|
|
(36)
|
|
(28)
|
Total
|
$
|
165
|
$
|
216
|
|
$
|
97
|
$
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
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,"
"contribute," "generate," "improve," "remain," "trend," "strategy,"
"support," "commit," "grow," "look," 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; impacts of inflation on the price of
goods and services, including changes in the cost of purchased
energy and other raw materials; physical, financial, transitional
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,
occupational health and safety issues or labor shortages;
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 60 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
December 31,
|
Years Ended
December 31,
|
|
2021
|
2020
|
2021
|
2020
|
Sales
|
$
|
834
|
$
|
769
|
$
|
3,664
|
$
|
2,800
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Cost of sales,
excluding depreciation, amortization and distribution
costs
|
|
616
|
|
547
|
|
2,258
|
|
2,010
|
Depreciation and
amortization
|
|
41
|
|
44
|
|
164
|
|
169
|
Distribution
costs
|
|
92
|
|
86
|
|
356
|
|
344
|
Selling, general and
administration expenses
|
|
44
|
|
35
|
|
158
|
|
136
|
Closure costs,
impairment and other related charges (1)
|
|
142
|
|
55
|
|
144
|
|
53
|
Net gain on
disposition of assets
|
|
—
|
|
(2)
|
|
—
|
|
(11)
|
Operating (loss)
income
|
|
(101)
|
|
4
|
|
584
|
|
99
|
Interest
expense
|
|
(5)
|
|
(8)
|
|
(21)
|
|
(34)
|
Non-operating pension
and other postretirement benefit credits (costs)
|
|
3
|
|
(24)
|
|
11
|
|
—
|
Other income
(expense), net (2)
|
|
4
|
|
(28)
|
|
(70)
|
|
(4)
|
(Loss) income
before income taxes
|
|
(99)
|
|
(56)
|
|
504
|
|
61
|
Income tax
(provision) benefit
|
|
(28)
|
|
4
|
|
(195)
|
|
(51)
|
Net (loss) income
including noncontrolling interest
|
|
(127)
|
|
(52)
|
|
309
|
|
10
|
Net income
attributable to noncontrolling interest
|
|
(1)
|
|
—
|
|
(2)
|
|
—
|
Net (loss) income
attributable to Resolute Forest Products Inc.
|
$
|
(128)
|
$
|
(52)
|
$
|
307
|
$
|
10
|
Net (loss) income
per share attributable to Resolute Forest Products Inc. common
shareholders:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(1.64)
|
$
|
(0.63)
|
$
|
3.87
|
$
|
0.12
|
Diluted
|
$
|
(1.64)
|
$
|
(0.63)
|
$
|
3.83
|
$
|
0.12
|
Weighted-average
number of Resolute Forest Products Inc. common shares
outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
77.6
|
|
82.0
|
|
79.5
|
|
86.1
|
Diluted
|
|
77.6
|
|
82.0
|
|
80.3
|
|
86.4
|
See Notes to the Unaudited Consolidated Financial
Statement Information
RESOLUTE FOREST PRODUCTS INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in millions of U.S. dollars)
|
|
December
31,
|
December
31,
|
|
2021
|
2020
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
112
|
$
|
113
|
Accounts receivable,
net
|
|
|
|
|
Trade
|
|
257
|
|
230
|
Other
|
|
56
|
|
48
|
Inventories,
net
|
|
510
|
|
462
|
Other current
assets
|
|
54
|
|
47
|
Total current
assets
|
|
989
|
|
900
|
Fixed assets,
net
|
|
1,270
|
|
1,441
|
Amortizable
intangible assets, net
|
|
57
|
|
63
|
Goodwill
|
|
31
|
|
31
|
Deferred income tax
assets
|
|
653
|
|
915
|
Operating lease
right-of-use assets
|
|
54
|
|
60
|
Other
assets
|
|
484
|
|
320
|
Total
assets
|
$
|
3,538
|
$
|
3,730
|
Liabilities and
equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
other
|
$
|
421
|
$
|
369
|
Current portion of
long-term debt
|
|
2
|
|
2
|
Current portion of
operating lease liabilities
|
|
8
|
|
9
|
Total current
liabilities
|
|
431
|
|
380
|
Long-term debt, net
of current portion (3)
|
|
300
|
|
559
|
Pension and other
postretirement benefit obligations
|
|
1,151
|
|
1,562
|
Operations lease
liabilities, net of current portion
|
|
51
|
|
55
|
Other
liabilities
|
|
88
|
|
92
|
Total
liabilities
|
|
2,021
|
|
2,648
|
Equity:
|
|
|
|
|
Resolute Forest
Products Inc. shareholders' equity:
|
|
|
|
|
Common
stock
|
|
—
|
|
—
|
Additional paid-in
capital
|
|
3,807
|
|
3,804
|
Deficit
|
|
(1,009)
|
|
(1,235)
|
Accumulated other
comprehensive loss
|
|
(1,062)
|
|
(1,314)
|
Treasury stock at
cost
|
|
(222)
|
|
(174)
|
Total Resolute
Forest Products Inc. shareholders' equity
|
|
1,514
|
|
1,081
|
Noncontrolling
interest
|
|
3
|
|
1
|
Total
equity
|
|
1,517
|
|
1,082
|
Total liabilities
and equity
|
$
|
3,538
|
$
|
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)
|
|
Years Ended
December 31,
|
|
2021
|
2020
|
Cash flows from
operating activities:
|
|
|
|
|
Net income including
noncontrolling interest
|
$
|
309
|
$
|
10
|
Adjustments to
reconcile net income including noncontrolling interest to net cash
provided by operating activities:
|
|
|
|
|
Share-based
compensation
|
|
8
|
|
5
|
Depreciation and
amortization
|
|
164
|
|
169
|
Closure costs,
impairment and other related charges
|
|
144
|
|
53
|
Inventory write-downs
related to closures
|
|
29
|
|
25
|
Deferred income
taxes
|
|
192
|
|
51
|
Net pension
contributions and other postretirement benefit payments
|
|
(91)
|
|
(87)
|
Net gain on
disposition of assets
|
|
—
|
|
(11)
|
Gain on translation of
foreign currency denominated deferred income taxes
|
|
(9)
|
|
(15)
|
Loss on translation of
foreign currency denominated pension and other postretirement
benefit obligations
|
|
10
|
|
17
|
Net planned major
maintenance (payments) amortization
|
|
(17)
|
|
6
|
Changes in working
capital:
|
|
|
|
|
Accounts
receivable
|
|
(31)
|
|
80
|
Inventories
|
|
(77)
|
|
44
|
Other current
assets
|
|
—
|
|
(12)
|
Accounts payable and
other
|
|
1
|
|
2
|
Other, net
|
|
16
|
|
(3)
|
Net cash provided by
operating activities
|
|
648
|
|
334
|
Cash flows from
investing activities:
|
|
|
|
|
Cash invested in
fixed assets
|
|
(112)
|
|
(78)
|
Acquisition of
business, net of cash acquired
|
|
—
|
|
(172)
|
Disposition of
assets
|
|
1
|
|
14
|
Increase in
countervailing and anti-dumping duty cash deposits on softwood
lumber
|
|
(154)
|
|
(81)
|
Proceeds from
insurance settlement
|
|
—
|
|
15
|
Other investing
activities, net
|
|
3
|
|
5
|
Net cash used in
investing activities
|
|
(262)
|
|
(297)
|
Cash flows from
financing activities:
|
|
|
|
|
Net repayments under
revolving credit facilities
|
|
—
|
|
(71)
|
Payment of special
dividend
|
|
(79)
|
|
—
|
Issuance of long-term
debt
|
|
300
|
|
—
|
Proceeds from
long-term debt
|
|
—
|
|
180
|
Repayments of
debt
|
|
(558)
|
|
(1)
|
Purchases of treasury
stock (4)
|
|
(48)
|
|
(30)
|
Payments of financing
fees
|
|
(8)
|
|
—
|
Other financing
activities, net
|
|
1
|
|
—
|
Net cash (used in)
provided by financing activities
|
|
(392)
|
|
78
|
Effect of exchange
rate changes on cash and cash equivalents, and restricted
cash
|
|
(1)
|
|
2
|
Net (decrease)
increase in cash and cash equivalents, and restricted
cash
|
$
|
(7)
|
$
|
117
|
Cash and cash
equivalents, and restricted cash:
|
|
|
|
|
Beginning of
year
|
$
|
159
|
$
|
42
|
End of year
|
$
|
152
|
$
|
159
|
Cash and cash
equivalents, and restricted cash at end of year:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
112
|
$
|
113
|
Restricted cash
(included in "Other current assets")
|
$
|
—
|
$
|
4
|
Restricted cash
(included in "Other assets)
|
$
|
40
|
$
|
42
|
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
December 31, 2021
|
Operating (loss)
income
|
Net (loss)
income
|
EPS
|
(Unaudited, in
millions of U.S. dollars, except per share amounts)
|
GAAP, as
reported
|
$
|
(101)
|
|
$
|
(128)
|
|
$
|
(1.64)
|
|
Adjustments for
special items:
|
|
|
|
|
|
|
|
|
|
Closure costs,
impairment and other related charges
|
|
142
|
|
|
142
|
|
|
1.83
|
|
Inventory write-downs
related to closures
|
|
29
|
|
|
29
|
|
|
0.37
|
|
Non-operating pension
and other postretirement benefit credits
|
|
—
|
|
|
(3)
|
|
|
(0.04)
|
|
Other income,
net
|
|
—
|
|
|
(4)
|
|
|
(0.05)
|
|
Income tax effect of
special items
|
|
—
|
|
|
1
|
|
|
0.01
|
|
Adjusted for
special items
|
$
|
70
|
|
$
|
37
|
|
$
|
0.48
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31, 2020
|
Operating
income
|
Net (loss)
income
|
EPS
|
(Unaudited, in
millions of U.S. dollars, except per share amounts)
|
GAAP, as
reported
|
$
|
4
|
|
$
|
(52)
|
|
$
|
(0.63)
|
|
Adjustments for
special items:
|
|
|
|
|
|
|
|
|
|
Closure costs,
impairment and other related charges
|
|
55
|
|
|
55
|
|
|
0.67
|
|
Inventory write-downs
related to closures
|
|
25
|
|
|
25
|
|
|
0.30
|
|
Start-up
costs
|
|
3
|
|
|
3
|
|
|
0.04
|
|
Net gain on
disposition of assets
|
|
(2)
|
|
|
(2)
|
|
|
(0.02)
|
|
Non-operating pension
and other postretirement benefit costs
|
|
—
|
|
|
24
|
|
|
0.29
|
|
Other expense,
net
|
|
—
|
|
|
28
|
|
|
0.34
|
|
Income tax effect of
special items
|
|
—
|
|
|
(36)
|
|
|
(0.44)
|
|
Adjusted for
special items
|
$
|
85
|
|
$
|
45
|
|
$
|
0.55
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
December 31, 2021
|
Operating
income
|
Net
income
|
EPS
|
(Unaudited, in
millions of U.S. dollars, except per share amounts)
|
GAAP, as
reported
|
$
|
584
|
|
$
|
307
|
|
$
|
3.83
|
|
Adjustments for
special items:
|
|
|
|
|
|
|
|
|
|
Closure costs,
impairment and other related charges
|
|
144
|
|
|
144
|
|
|
1.79
|
|
Inventory write-downs
related to closures
|
|
29
|
|
|
29
|
|
|
0.36
|
|
Non-operating pension
and other postretirement benefit credits
|
|
—
|
|
|
(11)
|
|
|
(0.14)
|
|
Other expense,
net
|
|
—
|
|
|
70
|
|
|
0.87
|
|
Income tax effect of
special items
|
|
—
|
|
|
(16)
|
|
|
(0.20)
|
|
Adjusted for
special items
|
$
|
757
|
|
$
|
523
|
|
$
|
6.51
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
December 31, 2020
|
Operating
income
|
Net
income
|
EPS
|
(Unaudited, in
millions of U.S. dollars, except per share amounts)
|
GAAP, as
reported
|
$
|
99
|
|
$
|
10
|
|
$
|
0.12
|
|
Adjustments for
special items:
|
|
|
|
|
|
|
|
|
|
Closure costs,
impairment and other related charges
|
|
53
|
|
|
53
|
|
|
0.61
|
|
Inventory write-downs
related to closures
|
|
25
|
|
|
25
|
|
|
0.29
|
|
Start-up
costs
|
|
3
|
|
|
3
|
|
|
0.03
|
|
Net gain on
disposition of assets
|
|
(11)
|
|
|
(11)
|
|
|
(0.13)
|
|
Other expense,
net
|
|
—
|
|
|
4
|
|
|
0.05
|
|
Income tax effect of
special items
|
|
—
|
|
|
(28)
|
|
|
(0.32)
|
|
Adjusted for
special items
|
$
|
169
|
|
$
|
56
|
|
$
|
0.65
|
|
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
December 31, 2021
|
Market
pulp
|
Tissue
|
Wood
products
|
Paper
|
Corporate
and
other
|
Total
|
(Unaudited, in
millions of U.S. dollars)
|
Net income (loss)
including noncontrolling interest
|
$
|
19
|
$
|
(6)
|
$
|
82
|
$
|
(4)
|
$
|
(218)
|
$
|
(127)
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
5
|
|
5
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
28
|
|
28
|
Depreciation and
amortization
|
|
6
|
|
5
|
|
10
|
|
16
|
|
4
|
|
41
|
EBITDA
|
$
|
25
|
$
|
(1)
|
$
|
92
|
$
|
12
|
$
|
(181)
|
$
|
(53)
|
Closure costs,
impairment and other related charges
|
|
|
|
|
|
|
|
|
|
142
|
|
142
|
Inventory write-downs
related to closures
|
|
|
|
|
|
|
|
|
|
29
|
|
29
|
Non-operating pension
and other postretirement benefit credits
|
|
|
|
|
|
|
|
|
|
(3)
|
|
(3)
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
(4)
|
|
(4)
|
Adjusted
EBITDA
|
$
|
25
|
$
|
(1)
|
$
|
92
|
$
|
12
|
$
|
(17)
|
$
|
111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31, 2020
|
Market
pulp
|
Tissue
|
Wood
products
|
Paper
|
Corporate
and
other
|
Total
|
(Unaudited, in
millions of U.S. dollars)
|
Net (loss) income
including noncontrolling interest
|
$
|
(4)
|
$
|
(3)
|
$
|
128
|
$
|
(19)
|
$
|
(154)
|
$
|
(52)
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
8
|
|
8
|
Income tax
benefit
|
|
|
|
|
|
|
|
|
|
(4)
|
|
(4)
|
Depreciation and
amortization
|
|
6
|
|
5
|
|
11
|
|
18
|
|
4
|
|
44
|
EBITDA
|
$
|
2
|
$
|
2
|
$
|
139
|
$
|
(1)
|
$
|
(146)
|
$
|
(4)
|
Closure costs,
impairment and other related charges
|
|
|
|
|
|
|
|
|
|
55
|
|
55
|
Inventory write-downs
related to closures
|
|
|
|
|
|
|
|
|
|
25
|
|
25
|
Start-up
costs
|
|
|
|
|
|
|
|
|
|
3
|
|
3
|
Net gain on
disposition of assets
|
|
|
|
|
|
|
|
|
|
(2)
|
|
(2)
|
Non-operating pension
and other postretirement benefit costs
|
|
|
|
|
|
|
|
|
|
24
|
|
24
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
28
|
|
28
|
Adjusted
EBITDA
|
$
|
2
|
$
|
2
|
$
|
139
|
$
|
(1)
|
$
|
(13)
|
$
|
129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
December 31, 2021
|
Market
pulp
|
Tissue
|
Wood
products
|
Paper
|
Corporate
and
other
|
Total
|
(Unaudited, in
millions of U.S. dollars)
|
Net income (loss)
including noncontrolling interest
|
$
|
99
|
$
|
(24)
|
$
|
772
|
$
|
(19)
|
$
|
(519)
|
$
|
309
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
21
|
|
21
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
195
|
|
195
|
Depreciation and
amortization
|
|
24
|
|
19
|
|
42
|
|
62
|
|
17
|
|
164
|
EBITDA
|
$
|
123
|
$
|
(5)
|
$
|
814
|
$
|
43
|
$
|
(286)
|
$
|
689
|
Closure costs,
impairment and other related charges
|
|
|
|
|
|
|
|
|
|
144
|
|
144
|
Inventory write-downs
related to closures
|
|
|
|
|
|
|
|
|
|
29
|
|
29
|
Non-operating pension
and other postretirement benefit credits
|
|
|
|
|
|
|
|
|
|
(11)
|
|
(11)
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
70
|
|
70
|
Adjusted
EBITDA
|
$
|
123
|
$
|
(5)
|
$
|
814
|
$
|
43
|
$
|
(54)
|
$
|
921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
December 31, 2020
|
Market
pulp
|
Tissue
|
Wood
products
|
Paper
|
Corporate
and
other
|
Total
|
(Unaudited, in
millions of U.S. dollars)
|
Net income (loss)
including noncontrolling interest
|
$
|
(1)
|
$
|
(1)
|
$
|
276
|
$
|
(46)
|
$
|
(218)
|
$
|
10
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
34
|
|
34
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
51
|
|
51
|
Depreciation and
amortization
|
|
24
|
|
18
|
|
43
|
|
69
|
|
15
|
|
169
|
EBITDA
|
$
|
23
|
$
|
17
|
$
|
319
|
$
|
23
|
$
|
(118)
|
$
|
264
|
Closure costs,
impairment and other related charges
|
|
|
|
|
|
|
|
|
|
53
|
|
53
|
Inventory write-downs
related to closures
|
|
|
|
|
|
|
|
|
|
25
|
|
25
|
Start-up
costs
|
|
|
|
|
|
|
|
|
|
3
|
|
3
|
Net gain on
disposition of assets
|
|
|
|
|
|
|
|
|
|
(11)
|
|
(11)
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
4
|
|
4
|
Adjusted
EBITDA
|
$
|
23
|
$
|
17
|
$
|
319
|
$
|
23
|
$
|
(44)
|
$
|
338
|
See Note to the Reconciliation of Non-GAAP
Measures
RESOLUTE FOREST PRODUCTS INC.
Notes to the Unaudited Consolidated Financial Statement
Information
1.
|
Closure costs,
impairment and other related charges for the three months and years
ended December 31, 2021 and 2020 were comprised of the
following:
|
|
|
(Unaudited, in
millions)
|
Impairment of
Assets
|
Severance
and Other
Costs
|
Total
|
Pulp and Paper mill
at Calhoun (Tennessee) (1)
|
|
|
|
|
|
|
|
|
|
Fourth quarter
2021
|
$
|
124
|
|
$
|
18
|
|
$
|
142
|
|
Year 2021
|
|
124
|
|
|
18
|
|
|
142
|
|
Other
|
|
|
|
|
|
|
|
|
|
Fourth quarter
2021
|
|
—
|
|
|
—
|
|
|
—
|
|
Year 2021
|
|
—
|
|
|
2
|
|
|
2
|
|
Total
|
|
|
|
|
|
|
|
|
|
Fourth quarter
2021
|
$
|
124
|
|
$
|
18
|
|
$
|
142
|
|
Year 2021
|
$
|
124
|
|
$
|
20
|
|
$
|
144
|
|
Fourth quarter
2020
|
$
|
38
|
|
$
|
17
|
|
$
|
55
|
|
Year 2020
|
$
|
38
|
|
$
|
15
|
|
$
|
53
|
|
|
|
|
|
(1)
|
On December 16, 2021,
the Company announced the indefinite idling of the pulp and paper
operations at our Calhoun mill. As a result, we reassessed the
carrying value of the fixed assets and recognized an impairment
charge of $124 million. We also recognized additional
provisions for severance and other costs of $13 million as
well as write-off of other assets of $5 million. In 2022, we
expect to incur additional closure costs of approximately
$32 million, mainly related to decommissioning costs. The
operations ceased at the beginning of 2022.
|
|
|
2.
|
Other income
(expense), net for the three months and years ended December 31,
2021 and 2020, was comprised of the following:
|
|
|
|
Three Months
Ended
December
31,
|
|
Years
Ended
December
31,
|
(Unaudited, in
millions)
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
|
Foreign exchange
loss
|
$
|
(3)
|
|
$
|
(13)
|
|
|
$
|
(2)
|
|
$
|
(4)
|
|
Loss on commodity
contracts (1)
|
|
—
|
|
|
(15)
|
|
|
|
(85)
|
|
|
(22)
|
|
Income from equity
method investments
|
|
7
|
|
|
1
|
|
|
|
19
|
|
|
8
|
|
Insurance
recovery
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
15
|
|
Miscellaneous
expense
|
|
—
|
|
|
(1)
|
|
|
|
(2)
|
|
|
(1)
|
|
|
$
|
4
|
|
$
|
(28)
|
|
|
$
|
(70)
|
|
$
|
(4)
|
|
|
|
|
|
(1)
|
Principally related
to lumber futures contracts; none of these contracts were
outstanding as of December 31, 2021.
|
|
|
3.
|
On December 15, 2021,
we entered into a fourth amendment to the credit agreement dated
May 22, 2015, which provides for an extension of the maturity date
from May 14, 2024 to December 15, 2026, of the senior secured
asset-based revolving credit facility with an aggregate lender
commitment of up to $450 million at any time outstanding. The
agreement also contains hardwired benchmark replacement provisions
for future transition of LIBOR. After the effective date, the
senior secured asset-based revolving credit facility agreement may
be adjusted based on agreed upon Environmental, Social and
Governance key performance indicators as described in the credit
agreement.
|
|
|
4.
|
In December 2021, we
completed our $100 million share repurchase program announced
in March 2020, which authorized the repurchase of shares of up
to 15% of our common stock, for an aggregate consideration of up to
$100 million. Under this program, during the three months and year
ended December 31, 2021, we repurchased 1.3 million shares at an
average price of $11.76 for a total of $14 million and 4.6 million
shares at an average price of $10.64 for a total of $48 million,
respectively. During the three months and year ended December 31,
2020, we repurchased 2.1 million shares at an average price of
$4.88 for a total of $11 million and 6.9 million shares at an
average price of $4.28 for a total of $30 million,
respectively.
|
|
|
|
On December 7, 2021,
we announced a new share repurchase program, authorized by our
board of directors, of up to ten million shares of our common
stock, for an aggregate consideration of up to $100 million,
whichever occurs first. No shares have been repurchased under this
plan in 2021.
|
|
|
Certain prior period
amounts in our Unaudited Consolidated Financial Statements
Information and Notes have been reclassified to conform to the 2021
presentation.
|
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, inventory write-downs related to
closures, start-up costs 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.
|
SOURCE Resolute Forest Products Inc.