Resolute Forest Products Q2 2013 Results

Resolute Forest Products
Q2 2013 Results
Richard Garneau, President & CEO
Jo-Ann Longworth, Senior Vice President & CFO
August 1, 2013
Cautionary statements regarding forward-looking
information
Statements in this presentation that are not reported financial results or other historical information of Resolute Forest
Products are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.
They include, for example, statements relating to our: efforts to continue to reduce costs and increase revenues and
profitability, including our cost-reduction initiatives regarding selling, general and administrative expenses; business and
operating outlook; assessment of market conditions; prospects, growth strategies and the industry in which we operate;
and strategies for achieving our goals generally. Forward-looking statements may be identified by the use of forwardlooking 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 Resolute Forest Products’ 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 Resolute’s actual future financial condition, results of operations and
performance to differ materially from those expressed or implied in the presentation referred to above include, but are
not limited to, the potential risks and uncertainties set forth under the heading “Risk Factors” in exhibit 99.4 to the
current report on Form 8-K filed with the United States Securities and Exchange Commission and the Canadian
securities regulatory authorities on April 24, 2013.
All forward-looking statements in this presentation are expressly qualified by the cautionary statements contained or
referred to in this section and in our other filings with the SEC and the Canadian securities regulatory authorities. We
disclaim 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.
All figures in USD unless otherwise noted.
August 1, 2013
RFP Q2 2013 Results
2
Q2 2013 Overview
Adjusted EBITDA
• $90 million of adjusted EBITDA in
Q2’13
• Preserved margin with efficiencies
and cost reductions
• Newsprint operating costs per unit
below $600
• Volume better than Q1 but lower
than Q2’12 because of asset
optimization
15
12
0
90
2
(4)
73
(8)
Q1 2013
August 1, 2013
RFP Q2 2013 Results
Newsprint
Coated
Specialty
Pulp
Wood
Products
Corporate
Q2 2013
3
Newsprint
Q2 2013
Q1 2013
Sales
364
356
Operating
income/ (loss)
10
(2)
EBITDA
28
16
Shipments
596
563
(US$mm)
(000’s mt)
August 1, 2013
• Total NA industry demand down 9.5% in H1
2013
– N.A. exports up 8.6%
• Average transaction price down $21/mt
• Resolute shipments up 6%
– International = 45% of total
• Gatineau restarted in May
– cogen running since June 15
• 1st full quarter contribution of power sales from
Thunder Bay
RFP Q2 2013 Results
4
Coated
Q2 2013
Q1 2013
Sales
96
102
Operating
income/ (loss)
2
-
EBITDA
11
9
Shipments
124
126
(US$mm)
(000’s st)
August 1, 2013
• Total NA coated mechanical demand down
5.1% in H1 2013
• Total NA shipments down 10.7% (198k
short tons)
• Total NA imports up 22.1% (43k short tons)
• Manufacturing cost improvement at
Catawba
• EBITDA up $2 million
– Average transaction price down $36
RFP Q2 2013 Results
5
Specialty
Q2 2013
Q1 2013
242
238
-
8
EBITDA
10
18
Shipments
335
323
(US$mm)
Sales
Operating
income/ (loss)
(000’s st)
August 1, 2013
• Total NA industry demand down 2.4% in H1
2013
–
–
–
high-gloss grades up 8.6%
standard down 9.0%
lightweight down 15.6%
• $6 million maintenance at Calhoun (cold
outage)
• 22% drop in finished goods inventory
RFP Q2 2013 Results
6
Pulp
Q2 2013
Q1 2013
Sales
263
240
Operating
income/ (loss)
10
(5)
EBITDA
23
8
Shipments
393
374
(US$mm)
(000’s mt)
August 1, 2013
• Global demand up 2.5% in H1
– Softwood demand up 2.1%
• Total NA demand up 7.7% in H1 2013
• Shipments up 5%
• 1st full quarter of external power sales from
Thunder Bay’s cogen
RFP Q2 2013 Results
7
Wood Products
Q2 2013
Q1 2013
Sales
142
138
Operating
income/ (loss)
16
16
EBITDA
25
25
Shipments
345
338
(US$mm)
(000’s mbf)
August 1, 2013
• June 2013 US housing starts of 836K (SAAR)
• RL composite high of $451; low of $322
RFP Q2 2013 Results
8
EBITDA per ton
• Improved sequential EBITDA
– asset optimization
– lower labor costs
– improved efficiency
– power sales from cogeneration
• Plan to run pulp and paper assets
to capacity in H2
• Waiting for Ontario’s response to
Quebec pension agreement in
principle
9
P&L
Q2 2013
Q1 2013
Q2 2012
Average transaction price
Sales
$1,107mm
+3%
-5%
Operating
income(1)
$29mm
+123%
-56%
Adjusted
EBITDA
$90mm
+23%
-27%
Interest
$13mm
-7%
-28%
-36%
-45%
Net income(1)
$18mm
1.
Excluding special items.
Refer to Appendix A for a definition and reconciliation of non-GAAP financial
measures.
August 1, 2013
RFP Q2 2013 Results
10
Unit Operating Costs
August 1, 2013
RFP Q2 2013 Results
11
Liquidity and Cash Flow
Q2 2013
• Cash up $33mm
–
Q1 2013
Q2 2012
$31mm decrease in working capital
• $68mm cash provided by operating
activities
Cash
$248mm
+15%
-51%
Net debt
$356mm
+12%
+68%
Working
Capital
$806mm
-4%
-6%
• $46mm in capex
• Total Q2’13 pension contributions of
$31mm
–
Expense of $12mm
• Refinanced $500mm of 10.25% senior
secured notes with $600mm of 5.875%
senior unsecured notes
–
Reduces annual cash interest expense
by $16mm
Available Liquidity (US$ millions)
2011
2012
2013
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Total debt
712
621
620
722
625
534
532
604
Cash on hand
295
369
410
510
343
263
215
248
Available under ABL credit facility
519
515
491
472
529
519
537
540
August 1, 2013
RFP Q2 2013 Results
12
Appendix A
RFP Q2 2013 Results
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Appendix B
RFP Q2 2013 Results
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RFP Q2 2013 Results
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Resolute Forest Products
Q2 2013 Results
Richard Garneau, President & CEO
Jo-Ann Longworth, Senior Vice President & CFO
August 1, 2013