Resolute Forest Products Q3 2013 Results
Transcription
Resolute Forest Products Q3 2013 Results
Resolute Forest Products Q3 2013 Results Richard Garneau, President & CEO Jo-Ann Longworth, Senior Vice President & CFO October 31, 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. October 31, 2013 RFP Q3 2013 Results 2 Q3 2013 Overview Adjusted EBITDA • Asset optimization maximized earnings power • $104 million of adjusted EBITDA in Q3’13 • Best pulp quarter in two years • Better costs in newsprint, specialty, market pulp and wood products October 31, 2013 RFP Q3 2013 Results 3 Newsprint Q3 2013 Q2 2013 Sales 376 364 Operating income/ (loss) 13 10 EBITDA 31 28 Shipments 616 596 (US$mm) (000’s mt) • Total NA industry demand down 10% through September – newspaper publishers down 11% – other end-users down 7% • Global demand down 5% through August − India up 4% • Resolute shipments up 20,000 mt – International = 45% of total • Average transaction price stable after falling $40 per metric ton October 31, 2013 RFP Q3 2013 Results 4 Specialty Q3 2013 Q2 2013 Sales 247 242 Operating income/ (loss) 17 - EBITDA 27 10 Shipments 340 335 (US$mm) (000’s st) October 31, 2013 • NA industry demand up 2.5% through September 2013 – high-gloss grades up 14% – standard down 4% • Shipments up 5k st • Announced closure of PM #1 at Iroquois Falls (30k mt production) • Higher production and better efficiencies improved unit cost RFP Q3 2013 Results 5 Pulp Q3 2013 Q2 2013 Sales 269 263 Operating income/ (loss) 21 10 EBITDA 34 23 Shipments 399 393 (US$mm) (000’s mt) • Global demand up 3.4% through September – China up 7.5% and NA up 6.4% – Western Europe flat • Softwood up 2%; hardwood up 6% • Best pulp quarter in two years • Better efficiencies and higher production in southern mills • South American hardwood capacity additions creating uncertainty for 2014 October 31, 2013 RFP Q3 2013 Results 6 Wood Products Q3 2013 Q2 2013 146 142 Operating income/ (loss) - 16 EBITDA 9 25 417 345 (US$mm) Sales Shipments (000’s mbf) October 31, 2013 • Aug 2013 US housing starts of 891K (SAAR) − Up 19% from August 2012 • RFP shipments up 21% q/q • Continued cost pressure from new Quebec forest tenure system RFP Q3 2013 Results 7 Coated Q3 2013 Q2 2013 • Ytd shipment-to-capacity ratio down to 89%, from 94% in 2012 Sales 92 96 − Total NA shipments down 8.5% Operating income/ (loss) (3) 2 − Total NA coated mechanical demand down 4.5% through September 6 11 − Total NA imports up 8% 117 124 (US$mm) EBITDA Shipments (000’s st) October 31, 2013 • EBITDA down $5 million – Lower shipments due to inefficiencies at Catawba and weak demand/higher imports RFP Q3 2013 Results 8 EBITDA per ton • Improved sequential EBITDA – Benefits of diversification and integration – Best pulp quarter in two years – Better costs in newsprint, specialty, market pulp and wood products – Significant decrease in lumber prices • Manage inventory levels and sell only profitable tons October 31, 2013 RFP Q3 2013 Results 9 P&L Q3 2013 Sales $1,130mm Operating income(1) $43mm Q2 2013 +2% +48% Q3 2012 EPS – excluding special items -2% Q3 2013 Q2 2013 Q3 2012 $0.31 $0.19 $0.13 +16% Non-recurring income tax charge Adjusted EBITDA $104mm +16% +8% Interest $12mm -8% -29% • $619 reduction to our net deferred income tax asset – Non-cash – U.S. portion Net income(1) $29mm +61% +123% 1. Excluding special items. Refer to Appendix A for a definition and reconciliation of non-GAAP financial measures. October 31, 2013 – Over $1.6 billion of U.S. NOLs available • Do not expect to pay cash income taxes in the medium term RFP Q3 2013 Results 10 Average transaction price Cogen Delivered cost per unit 2013 EBITDA contribution from external sales* Q1 13 $8mm Q2 13 $14mm Q3 13 $12mm * Does not include certain other operational efficiencies that cannot be isolated readily, but are realized with the operation of the cogeneration assets, such as labor efficiencies October 31, 2013 RFP Q3 2013 Results 11 Liquidity and Cash Flow Q3 2013 • Cash up $23mm • $62mm cash provided by operating activities • $38mm in capex • Liquidity = $837mm Available Liquidity (US$ millions) Q2 2013 Q3 2012 Cash $271mm +9% -21% Net debt $333mm -6% +18% Working Capital $797mm -1% -10% 2011 2012 2013 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Total debt 621 620 722 625 534 532 604 604 Cash on hand 369 410 510 343 263 215 248 271 Available under ABL credit facility 515 491 472 529 519 537 467 566 October 31, 2013 RFP Q3 2013 Results 12 Pension Funding and Expense (in US$ millions) Q3 20131 YTD1 2013E2 Contributions 40 98 160 Benefit expense 10 33 40 Funding in excess of expense 30 65 120 1. 2. • Represents our expected funding and expense for all pension plans (DB, DC & SERP) Does not include any funding in respect of the agreement in principle that was accepted in Quebec Assumes Ontario’s acceptance of the agreement in principle September 30 Update – All RFP Plans (in US$ millions, except where noted) Dec 31, 2010 Dec 31, 2011 Dec 31, 2012 Sep 30, 2013 US GAAP discount rate 5.5% 4.9% 4.3% 4.3% Pension Obligations (880) (1,152) (1,549) (1,436) OPEB3 (408) (404) (424) (331) (1,288) (1,556) (1,973) (1,767) Total 3. • Making progress with Ontario concerning Quebec pension agreement in principle • To date, net pension and OPEB obligations are down $200 million on contributions, FX and changes to U.S. OPEB • Assuming, for illustration purposes only, a 09/30 YE and a 40bps increase in the discount rate: − GAAP net pension and OPEB obligations would fall by about $400 million further Other postretirement benefits October 31, 2013 RFP Q3 2013 Results 13 Appendix A RFP Q3 2013 Results October 31, 2013 14 October 31, 2013 RFP Q3 2013 Results 15 October 31, 2013 RFP Q3 2013 Results 16 October 31, 2013 RFP Q3 2013 Results 17 October 31, 2013 RFP Q3 2013 Results 18 Appendix B RFP Q3 2013 Results October 31, 2013 19 October 31, 2013 RFP Q3 2013 Results 20 October 31, 2013 RFP Q3 2013 Results 21 October 31, 2013 RFP Q3 2013 Results 22 October 31, 2013 RFP Q3 2013 Results 23 October 31, 2013 RFP Q3 2013 Results 24 Resolute Forest Products Q3 2013 Results Richard Garneau, President & CEO Jo-Ann Longworth, Senior Vice President & CFO October 31, 2013