US $
- Q1 GAAP net loss of $1 million
/ $0.01 per share
- Adjusted EBITDA of $32
million
- Completed acquisition of three U.S. South sawmills
- Operating all segments as essential services, adjusting to
economic slowdown
MONTRÉAL, April 30, 2020
/PRNewswire/ - Resolute Forest Products Inc. (NYSE: RFP) (TSX: RFP)
today reported a net loss for the quarter ended March 31, 2020, of $1
million, or $0.01 per share,
compared to net income of $42
million, or $0.45 per diluted
share, in the same period in 2019. Sales were $689 million in the quarter, a decrease of
$106 million from the year-ago
period. Excluding special items, the company reported a net
loss of $29 million, or $0.33 per share, compared to net income of
$30 million, or $0.32 per diluted share, in the first quarter of
2019.
"The first quarter's results reflect a resurgence in market
prices for lumber that began late in 2019 together with lower
maintenance costs in pulp and paper, but they were unfavorably
affected by lower newsprint prices," said Yves Laflamme, president and chief executive
officer. "The tissue business is progressing well in the
current context as we grow our customer base with the increase in
demand and we demonstrate our products and capabilities.
While we continue to operate across all of our business
segments, we've had to take a number of measures in the face of the
dramatic reduction in economic activity due to the coronavirus
pandemic, such as reducing our operational footprint to demand
levels consistent with essential needs, drawing on our credit
facilities to keep higher levels of cash, reducing SG&A
expenses and suspending or deferring capital spending. We are
well-positioned financially and operationally to face this
challenge, but this situation contains a very high degree of
uncertainty and the extent of the potential consequences are
impossible to predict."
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 $8 million in the first quarter, compared to
$69 million in the fourth quarter of
2019. The narrower loss reflects costs incurred in the fourth
quarter with the indefinite idling of the Augusta (Georgia) mill ($31
million), as well as a $31
million improvement in other manufacturing costs, mostly for
maintenance. The overall impact of transaction pricing was
unfavorable ($4 million), due to
weaker newsprint prices despite higher prices for wood products,
while the market pulp and tissue segments contributed to the
overall improvement in volume ($3
million).
Market Pulp
The operating loss in the market pulp segment narrowed to
$3 million in the quarter, an
improvement of $15 million from the
previous quarter. This reflects a reduction in manufacturing
costs of $18 million, which includes
lower maintenance as a result of less spending and the timing of
the Saint-Félicien (Quebec) outage
in the previous quarter. Accordingly, the operating cost per
unit (or, the "delivered cost") fell by $68 per metric ton, or 10%, compared to the
fourth quarter. Shipments were 10,000 metric tons higher, but
the average transaction price slipped by $16 per metric ton. After two negative
quarters, EBITDA in the segment improved to $3 million. Finished goods inventory
remained low for the third consecutive quarter, ending at 69,000
metric tons.
Tissue
The tissue segment reported its first operating income quarter
since the start-up of the tissue machine in Calhoun (Tennessee), at $2 million, which is an improvement of
$3 million over the fourth
quarter. The better performance is due to a 22% increase in
shipments (5,000 short tons), even as prices continued to trend
upward on improving customer mix. The delivered cost also
improved, falling by a further $66
per short ton, or 4%. Segment EBITDA was $6 million.
Wood Products
Operating income in the wood products segment was $5 million in the quarter, a $10 million improvement from the fourth
quarter. The improvement reflects a $29 per thousand board foot increase in the
average transaction price, or 8%, and the positive contribution
from the U.S. sawmills acquired on February 1. Shipments were
53 million board feet higher as a result of the added capacity and
stronger market conditions, despite rail blockades in Canada and the economic fallout of the
unfolding coronavirus pandemic. The delivered cost was
essentially unchanged in the quarter, at $380 per thousand board feet. Excluding the
recently-acquired U.S. sawmills, the company recorded approximately
70 million board feet of downtime in the quarter, which is
consistent with the fourth quarter. EBITDA in the segment
improved by $12 million, to
$16 million.
Newsprint
The newsprint segment incurred an operating loss of $6 million in the quarter, down from breakeven in
the previous quarter. The average transaction price fell by
$36 per metric ton, with most of the
decline in export markets, and shipments slipped by 11,000 metric
tons. Lower maintenance costs helped to partially offset this
impact, contributing to a $16 per
metric ton improvement in the delivered cost. Ending finished
goods inventory was unchanged in the quarter. EBITDA declined
by $7 million, to
breakeven.
Specialty Papers
Operating income in the specialty papers segment was
$3 million in the quarter, an
improvement of $4 million from the
previous quarter. This is due to lower maintenance costs and
higher generation from internal power assets, which together helped
to reduce the delivered cost by $40
per short ton. But the favorable impact was partially offset
by a $15 per short ton reduction in
the average transaction price. Shipments were essentially
unchanged, but finished goods inventory rose to 49,000 short tons
by quarter-end due to better productivity. The segment
generated EBITDA of $14 million, a
$4 million improvement from the
previous quarter.
Consolidated Quarterly Operating Income Variance Against
Year-Ago Period
The company reported an operating loss of $8 million in the first quarter compared to
operating income of $64 million in
the first quarter of 2019. Lower selling prices in the pulp
and paper segments had an unfavorable impact of $112 million, which was only partially offset by
the $38 million reduction in
manufacturing costs. Adjusted EBITDA in the first quarter was
$72 million lower than the first
quarter of 2019.
Corporate and Finance
On February 1, the company
completed the acquisition from Conifex Timber Inc. of three
sawmills in the U.S. South for $175
million, including estimated working capital. The
three sawmills, with combined production capacity of 550 million
board feet, are located in Cross
City (Florida), and
Glenwood and El Dorado (Arkansas). The El Dorado facility has been idled since before
the announcement of the acquisition, and Glenwood has been operating on a scaled-back
operating schedule.
The company used $49 million of
cash in operating activities in the first quarter, including a
$31 million increase in raw materials
inventory with the seasonal build-up of logs ahead of the spring
break-up. It drew $180 million
in ten-year term loans under its existing senior secured credit
facility to finance the acquisition of the U.S. sawmills. The
interest rate on the loans is a floating rate currently around 2%,
net of the expected patronage dividend.
The company also drew $189 million
from existing credit facilities to build an immediately-available
cash cushion and also to fund short-term working capital
requirements. Accordingly, total debt increased by
$372 million, to $821 million at quarter-end, or $705 million on a net debt basis. The
company's liquidity was $349 million
at the end of the quarter: $116
million of cash and $233
million of availability under existing credit
facilities.
The company made $15 million in
softwood lumber duty deposits in the quarter, for a cumulative
total of $177 million, and capital
expenditures of $21 million.
In March, the company announced that its board of directors
authorized the repurchase of up to 15% of the company's common
stock for aggregate consideration of up to $100 million. The program has no set time
limit, and follows the expiration of the recently-exhausted
$150 million program in place since
2012. While the company's immediate priorities are expected
to remain focused on managing liquidity, over time the program will
be available for the company to act opportunistically to return
capital to shareholders when conditions are right.
Outlook
Concerning the coronavirus pandemic, Mr. Laflamme added:
"Governments across North
America have recognized the importance of the forest
products sector in the fight against the coronavirus pandemic.
Resolute manufactures a number of key products, including:
lumber for our infrastructure, now and in the economic recovery to
come; pulp for producing personal care products, food protective
papers and medical supplies used by our healthcare professionals on
the front lines; bath tissue and paper towels to meet our basic
needs for cleanliness and comfort; and newsprint and other papers,
helping keep us all informed, the world over. As we navigate
these highly uncertain times, our short-term priorities will be
focused on:
- Operating our assets in accordance with rigorous protocols
around health and safety, including the special measures we've put
in place to minimize the spread of the virus at all of our
locations;
- Closely managing sources of liquidity and developing
opportunities to access additional liquidity, should it be
required;
- Working with all levels of government in the regions where
we operate to support a speedy economic recovery;
- Closely monitoring the growing risk around credit exposure
with some of our customers;
- Advocating with regulators to minimize the risk of
rising pension contributions should financial markets remain
depressed and interest rates low;
- Adjusting capacity dynamically based on rapidly-changing
conditions; and
- Keeping tight control on SG&A expenses and reducing
capital spending by about 30%."
Turning to the business outlook, Mr. Laflamme
continued: "The pandemic created more uncertainty, starting
in China, in the slowly improving
market conditions for pulp, causing prices to slip in the new
year. But again, global demand seems resilient, as
higher-quality tissue demand outpaces the reduction in printing and
writing end-uses, which makes us cautiously optimistic for
sustained volume and improving pricing. Today we continue to
operate our sawmills at levels consistent with the tepid recovery
levels of the second half of 2019 given the dramatic late-quarter
slowdown in economic activity, which reversed the recently-building
momentum in lumber transaction prices. Although we expect
wood products to play a key role in the economic recovery as
policymakers encourage an aggressive resumption of construction
activity, recent projections for near-term housing starts are
sobering, which could force us to take capacity measures. The
integration of our recently-acquired U.S. sawmills has gotten off
to a good start, and we're making plans to bring El Dorado on-line early in 2021, subject to
market conditions. In tissue, we've significantly reduced our
finished goods inventory in the last several weeks with the
increase in demand for at-home end-uses, which has given us the
opportunity to place volume with new customers and to demonstrate
our capabilities. We will also continue to support our
customers in the away-from-home market, and we will be there for
them once demand returns in restaurants, hotels, workplaces and
cruise ships. The focus in our paper business will continue
to be to maximize cash generation. While there are
opportunities even in the current environment, some areas,
particularly newsprint, will likely come under stronger
pressure."
Earnings Conference Call
The company will hold a conference call to discuss the financial
results at 9:00 a.m. (ET) today. The
public is invited to join the call at (877) 223-4471 at least
fifteen minutes before its scheduled start time. A simultaneous
webcast will also be available using the link provided under
"Presentations and Webcasts" in the "Investors" section of
www.resolutefp.com. A replay of the webcast will be archived on the
company's website. A phone replay will also be available until
May 15, 2020, by dialing (800)
585-8367, conference number 7568623.
Description of
Special Items
|
|
|
Special
items
|
First
quarter
|
(in
millions)
|
|
2020
|
|
2019
|
Closure costs,
impairment and other related charges
|
$
|
(2)
|
$
|
-
|
Non-operating pension
and other postretirement benefit credits
|
|
(15)
|
|
(12)
|
Other (income)
expense, net
|
|
(28)
|
|
4
|
Income tax effect of
special items
|
|
17
|
|
(4)
|
Total
|
$
|
(28)
|
$
|
(12)
|
Additional Information concerning the Annual Meeting of
Stockholders on May 12, 2020
As previously indicated in the company's proxy materials, the
annual meeting of stockholders will be held entirely online on
May 12, 2020, at 9 a.m. (Eastern) due to the coronavirus
(COVID-19) situation. Stockholders of record as of March 16, 2020, will be able to attend and
participate in the online annual meeting by
accessing https://web.lumiagm.com/172118479. To join the
annual meeting, stockholders will need to enter their 11- or
13-digit control number and the following password:
resolute2020.
If you hold shares of common stock indirectly through a broker,
bank or similar institution (referred to as an "intermediary
institution"), you are a "street name" holder, and the Notice
of Internet Availability was sent to you by the intermediary
institution through which you hold your shares. If you provide
specific voting instructions by mail, telephone or the Internet,
your intermediary institution will vote your shares as you have
directed. You are also invited to attend the online annual meeting
at https://web.lumiagm.com/172118479. However, since you are not a
stockholder of record, you may not vote your shares during the
online meeting unless you request and obtain, in advance of the
meeting, a legal proxy from your intermediary institution. If you
obtain a legal proxy from your intermediary institution, you must
contact Resolute's transfer agent at proxy@astfinancial.com or
help@astfinancial.com, or by telephone at 1 877 283-0324, to secure
a proxy card with the 11-digit control number along with the above
password in order to vote and ask questions during the meeting. If
you do not have a valid control number, you will be able to join as
a guest and listen to the meeting only; you will not be able to
vote or submit questions during the meeting.
The company strongly encourages all stockholders to vote their
shares as early as possible prior to the annual meeting.
Stockholders who join the virtual meeting will be able to ask
questions during the meeting. In order to facilitate the process,
you may forward your questions in advance to ir@resolutefp.com, and
the company will respond to as many appropriate questions as time
permits during the meeting, to the extent relevant to the business
of the meeting. Please make sure your email clearly identifies your
name and whether you are a stockholder.
Please monitor the "Annual Meeting of Stockholders" page under
the "Investors" section of www.resolutefp.com for any further
updates or additional information relating to the virtual
meeting.
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 the impact of the 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, improve profitability; business and operating outlook;
future pension obligations; assessment of market conditions; growth
strategies and prospects, and the growth potential of the company
and the industry in which we operate; liquidity; future cash flows,
including as a result of the changes to our pension funding
obligations; estimated capital expenditures; and strategies for
achieving our goals generally. Forward-looking statements may be
identified by the use of forward-looking terminology such as the
words "should," "would," "could," "will," "may," "expect,"
"believe," "see," "anticipate," "continue," "attempt," "project,"
"progress," "build," "plan," "grow" 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: the coronavirus or COVID-19 pandemic and
resulting economic conditions, 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 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 United States, Canada or other countries in which we sell our
products, including the effects of pandemics; global economic
conditions; the highly cyclical nature of the forest products
industry; any difficulties in obtaining timber or wood fiber at
favorable prices, or at all; changes in the cost of purchased
energy and other raw materials; physical 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 or occupational health and safety
issues; difficulties in our employee relations or in employee
attraction or retention; disruptions to our supply chain,
operations, or the delivery of our products, including due to
public health epidemics; disruptions to our information technology
systems including cybersecurity 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 LIBOR, 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 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 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, 2019, which have been heightened by
the COVID-19 pandemic, including related governmental responses and
economic impacts, market disruptions and changes in consumer habits
and which should be read in conjunction with the COVID-19 risk
factor update included on the Form 8-K filed April 30, 2020.
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 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 March
31,
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
Sales
|
$
|
689
|
$
|
795
|
Costs and
expenses:
|
|
|
|
|
Cost of sales,
excluding depreciation, amortization and distribution
costs
|
|
524
|
|
554
|
Depreciation and
amortization
|
|
42
|
|
40
|
Distribution
costs
|
|
99
|
|
100
|
Selling, general and
administrative expenses
|
|
34
|
|
37
|
Closure costs,
impairment and other related charges
|
|
(2)
|
|
-
|
Operating (loss)
income
|
|
(8)
|
|
64
|
Interest
expense
|
|
(9)
|
|
(9)
|
Non-operating pension
and other postretirement benefit credits
|
|
15
|
|
12
|
Other income
(expense), net (1)
|
|
28
|
|
(4)
|
Income before
income taxes
|
|
26
|
|
63
|
Income tax
provision
|
|
(27)
|
|
(21)
|
Net (loss) income
including noncontrolling interest
|
|
(1)
|
|
42
|
Net income
attributable to noncontrolling interest
|
|
-
|
|
-
|
Net (loss) income
attributable to Resolute Forest Products Inc.
|
$
|
(1)
|
$
|
42
|
Net (loss) income
per share attributable to Resolute Forest Products
Inc.
|
|
|
|
|
common
shareholders:
|
|
|
|
|
Basic
|
$
|
(0.01)
|
$
|
0.45
|
Diluted
|
$
|
(0.01)
|
$
|
0.45
|
Weighted-average
number of Resolute Forest Products Inc. common
|
|
|
|
|
shares
outstanding:
|
|
|
|
|
Basic
|
|
88.1
|
|
92.4
|
Diluted
|
|
88.1
|
|
93.9
|
|
|
|
|
|
See Notes to the
Unaudited Consolidated Financial Statement Information
|
RESOLUTE FOREST
PRODUCTS INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(Unaudited, in
millions of U.S. dollars)
|
|
|
|
March
31,
|
|
December
31,
|
|
|
2020
|
|
2019
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
116
|
$
|
3
|
Accounts receivable,
net:
|
|
|
|
|
Trade
|
|
299
|
|
273
|
Other
|
|
72
|
|
76
|
Inventories,
net
|
|
560
|
|
522
|
Other current
assets
|
|
37
|
|
33
|
Total current
assets
|
|
1,084
|
|
907
|
Fixed assets,
net
|
|
1,583
|
|
1,459
|
Amortizable
intangible assets, net
|
|
47
|
|
48
|
Deferred income tax
assets
|
|
816
|
|
915
|
Operating lease
right-of-use assets
|
|
61
|
|
61
|
Other
assets
|
|
268
|
|
236
|
Total
assets
|
$
|
3,859
|
$
|
3,626
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
328
|
$
|
342
|
Current portion of
long-term debt
|
|
2
|
|
1
|
Current portion of
operating lease liabilities
|
|
8
|
|
8
|
Total current
liabilities
|
|
338
|
|
351
|
Long-term debt, net
of current portion
|
|
819
|
|
448
|
Pension and other
postretirement benefit obligations
|
|
1,343
|
|
1,460
|
Operating lease
liabilities, net of current portion
|
|
54
|
|
57
|
Other
liabilities
|
|
71
|
|
75
|
Total
liabilities
|
|
2,625
|
|
2,391
|
Equity:
|
|
|
|
|
Resolute Forest
Products Inc. shareholders' equity:
|
|
|
|
|
Common
stock
|
|
-
|
|
-
|
Additional paid-in
capital
|
|
3,804
|
|
3,802
|
Deficit
|
|
(1,246)
|
|
(1,245)
|
Accumulated other
comprehensive loss
|
|
(1,181)
|
|
(1,179)
|
Treasury stock at
cost
|
|
(144)
|
|
(144)
|
Total Resolute
Forest Products Inc. shareholders' equity
|
|
1,233
|
|
1,234
|
Noncontrolling
interest
|
|
1
|
|
1
|
Total
equity
|
|
1,234
|
|
1,235
|
Total liabilities
and equity
|
$
|
3,859
|
$
|
3,626
|
RESOLUTE FOREST
PRODUCTS INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited, in
millions of U.S. dollars)
|
|
|
|
|
|
|
Three
months
|
|
ended March
31,
|
|
2020
|
2019
|
Cash flows from
operating activities:
|
|
|
|
|
Net (loss) income
including noncontrolling interest
|
$
|
(1)
|
$
|
42
|
Adjustments to
reconcile net (loss) income including noncontrolling interest
to
|
|
|
|
|
net cash (used in)
provided by operating activities:
|
|
|
|
|
Share-based
compensation
|
|
3
|
|
2
|
Depreciation and
amortization
|
|
42
|
|
40
|
Deferred income
taxes
|
|
27
|
|
21
|
Net pension
contributions and other postretirement benefit payments
|
|
(33)
|
|
(26)
|
Loss (gain) on
translation of foreign currency denominated deferred income
taxes
|
|
69
|
|
(19)
|
(Gain) loss on
translation of foreign currency denominated pension and
|
|
|
|
|
other postretirement
benefit obligations
|
|
(82)
|
|
20
|
Net planned major
maintenance amortization (payments)
|
|
6
|
|
(2)
|
Changes in working
capital:
|
|
|
|
|
Accounts
receivable
|
|
(20)
|
|
6
|
Inventories
|
|
(29)
|
|
(47)
|
Other current
assets
|
|
(6)
|
|
(7)
|
Accounts payable and
accrued liabilities
|
|
(18)
|
|
(6)
|
Other, net
|
|
(7)
|
|
(1)
|
Net cash (used in)
provided by operating activities
|
|
(49)
|
|
23
|
Cash flows from
investing activities:
|
|
|
|
|
Cash invested in
fixed assets
|
|
(21)
|
|
(26)
|
Acquisition of
business, net of cash acquired (2)
|
|
(174)
|
|
-
|
Decrease in
countervailing duty cash deposits on supercalendered
paper
|
|
-
|
|
1
|
Increase in
countervailing and anti-dumping duty cash deposits on softwood
lumber
|
|
(15)
|
|
(14)
|
Decrease in
countervailing duty cash deposits on uncoated groundwood
paper
|
|
-
|
|
6
|
Other investing
activities, net
|
|
4
|
|
-
|
Net cash used in
investing activities
|
|
(206)
|
|
(33)
|
Cash flows from
financing activities:
|
|
|
|
|
Net borrowings under
revolving credit facilities
|
|
189
|
|
-
|
Proceeds from
long-term debt
|
|
180
|
|
-
|
Repayments of
debt
|
|
(1)
|
|
(225)
|
Net cash provided by
(used in) financing activities
|
|
368
|
|
(225)
|
Effect of exchange
rate changes on cash and cash equivalents, and restricted
cash
|
|
(3)
|
|
1
|
Net increase
(decrease) in cash and cash equivalents, and restricted
cash
|
$
|
110
|
$
|
(234)
|
Cash and cash
equivalents, and restricted cash:
|
|
|
|
|
Beginning of
period
|
$
|
42
|
$
|
345
|
End of
period
|
$
|
152
|
$
|
111
|
|
|
|
|
|
Cash and cash
equivalents, and restricted cash at period end:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
116
|
$
|
69
|
Restricted cash
(included in "Other current assets")
|
$
|
-
|
$
|
1
|
Restricted cash
(included in "Other assets")
|
$
|
36
|
$
|
41
|
|
|
|
|
|
See Notes to the
Unaudited Consolidated Financial Statement Information
|
RESOLUTE FOREST
PRODUCTS INC.
|
RECONCILIATION OF
OPERATING INCOME AND NET INCOME ADJUSTED FOR SPECIAL
ITEMS
|
|
A reconciliation of
our operating income, net income and net income per share reported
before special items is presented in the tables below. See Note 1
to the Reconciliations of Non-GAAP Measures regarding our use of
non-GAAP measures.
|
|
|
Three months ended
March 31, 2020
|
Operating
loss
|
Net
loss
|
EPS
|
(Unaudited, in
millions of U.S. dollars, except per share
amounts)
|
|
|
|
|
|
|
|
GAAP, as
reported
|
$
|
(8)
|
$
|
(1)
|
$
|
(0.01)
|
|
|
|
|
|
|
|
Adjustments for
special items:
|
|
|
|
|
|
|
Closure costs,
impairment and other related charges
|
|
(2)
|
|
(2)
|
|
(0.02)
|
Non-operating pension
and other postretirement benefit credits
|
|
-
|
|
(15)
|
|
(0.17)
|
Other income,
net
|
|
-
|
|
(28)
|
|
(0.32)
|
Income tax effect of
special items
|
|
-
|
|
17
|
|
0.19
|
|
|
|
|
|
|
|
Adjusted for
special items
|
$
|
(10)
|
$
|
(29)
|
$
|
(0.33)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2019
|
Operating
income
|
Net
income
|
EPS
|
(Unaudited, in
millions of U.S. dollars, except per share
amounts)
|
|
|
|
|
|
|
|
GAAP, as
reported
|
$
|
64
|
$
|
42
|
$
|
0.45
|
|
|
|
|
|
|
|
Adjustments for
special items:
|
|
|
|
|
|
|
Non-operating pension
and other postretirement benefit credits
|
|
-
|
|
(12)
|
|
(0.13)
|
Other expense,
net
|
|
-
|
|
4
|
|
0.04
|
Income tax effect of
special items
|
|
-
|
|
(4)
|
|
(0.04)
|
|
|
|
|
|
|
|
Adjusted for
special items
|
$
|
64
|
$
|
30
|
$
|
0.32
|
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
March 31, 2020
(Unaudited, in millions of U.S. dollars)
|
Market
pulp
|
Tissue
|
Wood
products
|
Newsprint
|
Specialty
papers
|
Corporate
and other
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
including noncontrolling interest
|
$
|
(3)
|
$
|
2
|
$
|
5
|
$
|
(6)
|
$
|
3
|
$
|
(2)
|
$
|
(1)
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
9
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
27
|
|
27
|
Depreciation and
amortization
|
|
6
|
|
4
|
|
11
|
|
6
|
|
11
|
|
4
|
|
42
|
EBITDA
|
$
|
3
|
$
|
6
|
$
|
16
|
$
|
-
|
$
|
14
|
$
|
38
|
$
|
77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closure costs,
impairment and other related charges
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
(2)
|
Non-operating pension
and other postretirement benefit credits
|
|
|
|
|
|
|
|
|
|
|
|
(15)
|
|
(15)
|
Other income,
net
|
|
|
|
|
|
|
|
|
|
|
|
(28)
|
|
(28)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
3
|
$
|
6
|
$
|
16
|
$
|
-
|
$
|
14
|
$
|
(7)
|
$
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2019
(Unaudited, in millions of U.S. dollars)
|
Market
pulp
|
Tissue
|
Wood
products
|
Newsprint
|
Specialty
papers
|
Corporate
and other
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
including noncontrolling interest
|
$
|
42
|
$
|
(8)
|
$
|
6
|
$
|
28
|
$
|
15
|
$
|
(41)
|
$
|
42
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
9
|
Income tax
provision
|
|
|
|
|
|
|
|
|
|
|
|
21
|
|
21
|
Depreciation and
amortization
|
|
5
|
|
5
|
|
8
|
|
7
|
|
10
|
|
5
|
|
40
|
EBITDA
|
$
|
47
|
$
|
(3)
|
$
|
14
|
$
|
35
|
$
|
25
|
$
|
(6)
|
$
|
112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating pension
and other postretirement benefit credits
|
|
|
|
|
|
|
|
|
|
|
|
(12)
|
|
(12)
|
Other expense,
net
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
47
|
$
|
(3)
|
$
|
14
|
$
|
35
|
$
|
25
|
$
|
(14)
|
$
|
104
|
RESOLUTE FOREST PRODUCTS INC.
Notes to the Unaudited Consolidated Financial Statement
Information
- Other income (expense), net includes foreign exchange gain of
$23 million and foreign exchange loss
of $4 million for the three months
ended March 31, 2020 and 2019,
respectively.
- On February 1, 2020 (or, the
"Acquisition Date"), we acquired from Conifex Timber Inc.
all of the equity securities and membership interests in certain of
its subsidiaries, the business of which consists mainly in the
operation of three sawmills and related assets in Cross City (Florida) and in Glenwood and El
Dorado (Arkansas) (or,
the "U.S. Sawmill Business"). The U.S. Sawmill Business
acquired produces construction-grade dimensional lumber and decking
products from locally sourced southern yellow pine for distribution
within the U.S.
The fair value of the consideration, paid in cash at the
Acquisition Date, for the U.S. Sawmill Business acquired was
$175 million, subject to post-closing
working capital adjustments.
This acquisition will diversify our lumber production, and increase
our operating capacity in the U.S. South.
RESOLUTE FOREST PRODUCTS INC.
Note to the Reconciliations of Non-GAAP Measures
- 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 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. 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).
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.
View original
content:http://www.prnewswire.com/news-releases/resolute-reports-preliminary-first-quarter-2020-results-301049818.html
SOURCE Resolute Forest Products Inc.