RESOLUTE FOREST PRODUCTS Investor Presentation
Transcription
RESOLUTE FOREST PRODUCTS Investor Presentation
RESOLUTE FOREST PRODUCTS Investor Presentation Richard Garneau, President and CEO Jo-Ann Longworth, Senior Vice President and CFO May 2015 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; business and operating outlook; future pension funding obligations; 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 forward-looking terminology such as the words “should,” “would,” “could,” “will,” “may,” “expect,” “believe,” “anticipate,” “attempt,” “project” and other terms with similar meaning indicating possible future events or potential impact on our business or 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 Part 1, Item 1A of Resolute’s annual report on Form 10-K for the year ended December 31, 2014. 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 U.S. Securities Exchange Commission 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. May 2015 RFP Investor Presentation 2 WHAT IS RESOLUTE? 1 Operational excellence maximizes shareholder value and earnings power 2 Synergistic and diversified asset base as a platform for growth 3 Disciplined capital management: flexible and conservative capital structure supports growth and diversification LTM Q1’15 adjusted EBITDA of $376mm Adjusted EBITDA margin Market pulp $/mt Wood products $/mbf Newsprint $/mt Specialty papers $/st $120 24% 30% $100 Corporate Adj. EBITDA $(25)mm $80 $73 $60 $40 21% $47 $33 25% $20 $19 $0 Note: percentages based on adjusted EBITDA excluding corporate May 2015 ($20) RFP Investor Presentation 3 1. OPERATIONAL EXCELLENCE Market pulp 000's mt Wood products 000's mbf Newsprint 000's mt Specialty papers 000's st 650 Iroquois Falls, Baie-Comeau PM1, Clermont PM5: (-465k mt) and mill optimization 600 550 Gatineau (+180k mt) 534 Calhoun (+215k mt) Fort Frances (-100k mt) 500 450 Aggressive cost reductions Laurentide (-190k mt) • Low SG&A / sales ratio • Eliminated 670 positions Comtois (+145k mt) 400 Ignace & Thunder Bay pellet plant 393 382 since 2012, saving 350 Maniwaki (+130k mbf) 328 ~$70mm/year 300 May 2015 RFP Investor Presentation 4 2. DIVERSIFIED ASSET BASE Synergistic, diversified and complimentary asset base ~50% of adjusted EBITDA from market pulp and wood products Optimized paper segments generate significant EBITDA: • supports growth and diversification strategy Thunder Bay pellet plant May 2015 • fiber management advantage of integration • more stable earnings from multiple products RFP Investor Presentation 5 CALHOUN UPGRADE • Ahead of schedule on $100 million upgrade to Calhoun pulp and paper mill − Includes world-class continuous digester and new wood chip processing equipment − Will considerably lower mill costs, add pulp capacity and allow for greater grade flexibility Digester island prep as of end of September Calhoun digester (model shot) Calhoun mill May 2015 RFP Investor Presentation 6 NEW ONTARIO SAWMILLS • Ignace sawmill now operating • Atikokan sawmill expected to start-up in Q2 • Expect to start generating positive EBITDA in Q3 2015 Atikokan commissioning Ignace lumber to Atikokan kiln May 2015 Ignace wood yard RFP Investor Presentation 7 3. FINANCIAL STRENGTH Flexible and conservative capital structure Net debt / LTM adjusted EBITDA <1.0x Tax attributes (US$) GROSS AFTER TAX U.S. operating loss carryforwards $1.8b $700mm Canadian operating loss carryforwards $200mm $50mm Undepreciated capital costs (mainly Canada) > $3.0b $1.0b n/a $300mm Other attributes (e.g., R&D expenses) U.S. NOLs start to expire ~2021 May 2015 RFP Investor Presentation 8 DIVERSIFIED ASSET BASE Pulp Newsprint South Korea Uncoated Paper Coated Paper Headquarters Office Dolbeau Baie Comeau St-Felicien Alma Kénogami Clermont Amos Mokpo Port Access Ponderay Thunder Bay Gatineau Montreal Menominee Thorold Capacity Newsprint (mm mt) 2.6 Specialty papers (mm mt) 1.5 Market pulp (mm mt) 1.7 Wood products (bn bf) 2.81 Fairmont Calhoun Augusta Grenada Note: The map includes all pulp and paper manufacturing facilities we owned or operated as of December 31, 2014. It excludes facilities that are permanently closed, recycling operations and hydro facilities. Catawba Coosa Pines 1. Our current supply of fiber, particularly in light of Québec’s new forestry regime, limits production to a maximum of 2 billion board feet per year. In 2014, we shipped 1.6 billion board feet of wood products. May 2015 RFP Investor Presentation 9 RESOLUTE’S COGEN AND HYDRO FACILITIES Cost savings We operate cogeneration facilities and a network of hydro-electric installations, with total capacity of 370MW, to generate lower cost energy for internal consumption. Approximate annualized cost savings to operations: $55-60 million External sales Mill Type Capacity (MW) Dolbeau-Mistassini, QC Cogen 28 192,000 Gatineau, QC Cogen 15 110,000 St-Félicien, QC Cogen 43 300,000 Thunder Bay, ON Cogen 65 390,000 EBITDA improvement from COGEN May 2015 Current annualized external sales (MWh/year) Q4’13 Q1’14 Q2’14 Q3’14 Q4’14 Q1’15 $10MM $13MM $14MM $8MM $8MM $12MM RFP Investor Presentation 10 BALANCED PRODUCT PORTFOLIO AND MARKETS (2014) Sales by Product Wood Products 14% Newsprint 33% EBITDA by Product Wood Products 27% Canada 10% Mexico 5% Brazil 3% Korea 2% Other UK 14% Italy1% 1% Newsprint 24% Pulp 23% Specialty 17% Specialty 30% Shipments by Country United States 64% Pulp 32% Note: excludes corporate and other segment Note: excludes wood products segment Raw Material Sourcing1 (2014) Newsprint Recycle Content ONP/OMG 18% Virgin Fiber Canada Sawmills/internal 62% Market purchases 38% Virgin Fiber 82% Production by Country South Korea 3% United States 42% Canada 55% Note: excludes wood products segment (100% Canada) Fuel Use for Steam (P&P) Electricity Use (P&P) Black Liquor Solids 40% Purchased - Hydro 46% Purchased - Other Other 2% 3% Owned Hydro Power Purchased - Nuclear 8% Bunker C Bark and Biosolids 14% 1% 36% Purchased – Natural Gas Natural Gas Self-Generated 8% 20% Purchased - Coal Cogeneration 12% 10% 1. Excludes wood products segment. FY 2014 Revenues: $4.3 billion May 2015 RFP Investor Presentation 11 FINANCIAL HIGHLIGHTS May 2015 RFP Investor Presentation 12 FINANCIAL HIGHLIGHTS (US$ millions) Q1’14 Q2’14 Q3’14 Q4’14 2014 Q1’15 Sales $1,016 $1,091 $1,096 $1,055 $4,258 $920 Adjusted EBITDA1 402 108 112 106 366 50 Interest expense 12 11 12 12 47 12 Net debt 358 335 333 260 260 273 Cash flows from operations (41) 63 58 106 186 29 Cash invested in fixed assets (36) (46) (60) (51) (193) (40) Long-term debt, net of current, to LTM adjusted EBITDA 1.7x 1.6x 1.6x 1.6x 1.6x 1.6x Net debt to LTM adjusted EBITDA 1.0x 0.9x 0.9x 0.7x 0.7x 0.7x 1. 2. May 2015 EBITDA is a non-GAAP financial measure. Refer to the appendix for additional information, including the company’s calculation of adjusted EBITDA. The abnormally cold winter had a $55 million unfavorable impact on our first quarter results. RFP Investor Presentation 13 LIQUIDITY AND CASH FLOW Cash provided by operating activities of $29mm in Q1 ─ down $77mm from Q4 Q1 capex of $40mm Q4 2014 Q1 2015 Q1 2014 Cash $324mm -4% +35% Working capital $693mm +2% -2% Net debt $273mm +5% -24% ─ down $11mm from Q4 Liquidity = $788mm Available Liquidity 2015 2014 2013 2012 (US$ millions) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Total debt 597 597 598 598 598 599 604 604 532 534 Cash on hand 324 337 265 263 240 322 271 248 215 263 Available under ABL credit facility 464 521 572 567 548 561 566 467 537 519 May 2015 RFP Investor Presentation 14 PENSION • ↑ in pension and OPEB1 expense of $55mm for 2015 ($15mm in Q1) – – – no impact on funding requirement relates to amortization of $330 million increase in 2014 liability could reverse in subsequent years given volatility of interest rates • Net pension and OPEB obligations of $1,505mm as of March 31 ↓ $126mm – favorable FX impact; pension contributions and OPEB payments • Discount rate sensitivity (50bps) : ~$300mm on net balance sheet pension and OPEB obligations (in $US millions) Q1’2015 2014 2013 net pension and OPEB liabilities 1,505 1,631 1,301 2015E N/A Q1’2015 4.0% 2014 4.9% 2013 pension contributions2 145 27 164 155 OPEB payments 16 3 19 22 pension and OPEB expense 81 21 26 60 (in $US millions) U.S. GAAP discount rate 1. 2. at 12/312 Other postretirement benefit Includes defined benefit, defined contribution and target benefit plans May 2015 RFP Investor Presentation 15 PROJECTED EBITDA SENSITIVITIES (2015) EBITDA ($US millions) 1 Variable Metric Change Newsprint Pricing $/mt + / - $25 Specialty Papers Pricing $/st + / - $25 Pulp Pricing $/mt + / - $25 + / - $40 Lumber Pricing 2 $/mbf + / - $25 + / - $40 Net Foreign Exchange C$/US$ + / - $0.01 Natural Gas $/gj + / - $0.50 - / + $8 ONP Prices $/st + / - $10 - / + $7 SOP Prices $/mt + / - $10 - / + $5 + / - $57 + / - $42 - / + $16 Note: Presented on a U.S. GAAP consolidated basis 1. Based on our operating configuration as of December 31, 2014. This presentation measures only the impact of pricing and items directly related to price, and assumes that every other factor is held constant. 2. Includes effect of stumpage fees. May 2015 RFP Investor Presentation 16 SEGMENTS May 2015 RFP Investor Presentation 17 CUSTOMERS AND APPLICATIONS Product Customer End Use Market pulp major consumer goods companies, paper and related product makers tissue, packaging, specialty paper products, diapers and other absorbent products Wood products – lumber and engineered wood NA construction industry and major retailers construction-grade lumber and Ijoists; bed frame components, finger joints and furring strips Wood products – wood chips Resolute’s Canadian pulp and paper mills Resolute newsprint, specialty and coated papers and pulp newspaper publishers all over the world newspapers commercial printers in NA inserts and flyers Specialty – supercalender commercial printers magazines, coupons and newspaper supplements Specialty – coated papers commercial printers, publishers, catalogers and retailers magazines, catalogs and advertising inserts Specialty – standard grades commercial printers commercial printing, educational textbooks, digital printing, trade and paperback books and directories Newsprint May 2015 RFP Investor Presentation 18 MARKET PULP Operating capacity of 1.3 mm metric tons of virgin pulp (8% of NA capacity), including 260k mt of fluff pulp • 400k mt of recycled bleached kraft pulp • About 80% of RFP virgin pulp is softwood-based Q1’15 2014 2013 Sales 218 974 1,053 EBITDA1 24 119 94 Shipments (000’s mt) 328 1,383 1,583 (in US$ millions) average transaction price "All-in" delivered cost ² $740 $720 $/mt $700 $680 $660 $640 Capacity (000’s mt) North America • $666 $634 $620 $600 1. 2. May 2015 EBITDA is a non-GAAP financial measure. Refer to the Appendix for a definition and reconciliation of non-GAAP financial measures. The “all-in” delivered cost is the total cost of each unit shipped (cost of sales, depreciation and amortization, distribution costs and selling, general and administrative expenses) RFP Investor Presentation Source: RISI; Resolute shows current total capacity 19 INDUSTRY OVERVIEW Market pulp (Q1) 2014 RFP Market Pulp Shipments Global chemical pulp demand ↑ 6% in Q1’15 – NA ↑ 2%; W. Europe ↑ 3%; China ↑ 11% Northern softwood ↓ 1%; southern SW ↓ 3% North America Hardwood ↑ 13% 74% – China ↑ 22%; W. Europe ↑ 7%; NA ↑ 6% – Eucalyptus shipments ↑ 19% – Total northern and southern HW ↑ 2%; NA ↓ 5% RFP average transaction price ↓ $29/mt in Q1’15 – softer market prices for softwood and fluff Latin America RFP shipments ↓ 23k mt from Q4’14 Europe 10% Africa/ Middle East 2% Asia 7% 7% Source: PPPC May 2015 RFP Investor Presentation 20 WOOD PRODUCTS • 16 sawmills producing dimension spruce-pine-fir (or “SPF”) lumber (stud and random) for the NA market 2 remanufactured and 2 engineered wood products facilities producing products for specialized applications, such as wood i-joists, trusses and bed frames Two new sawmills in Ontario (Ignace and Atikokan) coming online in 2015 to add 265mmbf of annual capacity • • (in US$ millions) Q1’15 2014 Capacity (000’s mbf) 2013 Sales 139 610 569 EBITDA1 13 102 77 Shipments (000’s mbf) 393 1,585 1,480 1. EBITDA is a non-GAAP financial measure. Refer to the Appendix for a definition and reconciliation of non-GAAP financial measures. average transaction price "all-in" delivered cost $420 North America 1 (est.) 2 $400 $/mbf $380 (est.) $360 $353 $340 $320 $300 $342 1. 2. Includes structural lumber, engineered solid section and engineered I-joists. Our current supply of fiber, particularly in light of Québec’s new forestry regime, limits production to a maximum of 2 billion board feet per year. In 2014, we shipped 1.6 billion board feet of wood products. Source: Company filings Performance linked to N.A. housing starts May 2015 RFP Investor Presentation 21 INDUSTRY OVERVIEW Wood products (Q1) Q1’15 SAAR U.S. housing starts < 1mm; actuals ↑ 4% Shipments ↑ 3mmbf in Q1’15 – first deliveries of Ignace lumber Average price down $25/mbf – softer market and weaker C$ Jan-Feb NA exports to Japan & China ↓ 27% Annual U.S. Housing Starts (millions) Lumber Pricing Random Lengths Composite $550 2x4 -RL #1-2 KD GL 2x4x8 Stud KD GL Q1 2015 $500 $450 $400 $350 $300 Source: U.S. Census Bureau May 2015 Source: Random Lengths RFP Investor Presentation 22 NEWSPRINT Q1’15 2014 2013 Sales 291 1,402 1,473 EBITDA1 10 92 113 Shipments (000’s mt) 534 2,371 2,392 (in US$ millions) 1. Capacity (000’s mt) Largest producer globally (by capacity) 2.6 mm metric tons (~9% of total worldwide capacity) 2.4 mm metric tons (~41% of NA capacity) 10 newsprint facilities in NA and 1 in South Korea 1 World • • • • EBITDA is a non-GAAP financial measure. Refer to the Appendix for a definition and reconciliation of non-GAAP financial measures. average transaction price 1 "all-in" delivered cost $630 $/mt $610 $590 $570 $550 $557 $545 North America $650 2 $530 1. Includes Ponderay joint venture 2. Adjusted to reflect 100k mt of newsprint capacity closure in Brompton Source: RISI; Resolute shows current total capacity The world’s largest newsprint producer by capacity May 2015 RFP Investor Presentation 23 INDUSTRY OVERVIEW Newsprint (Q1) NA demand ↓ 12% 2014 RFP Newsprint Shipments – operating rates ~90% – exports ↓ 21% Europe World demand ↓ 12% North America 7% – Asia ↓ 11%; W. Europe ↓ 12%; Lat. Am ↓ 16% 59% Asia – 2014 world demand of 26 million mts 11% Africa/ Global business under pressure, esp. NA producers: Middle East – accelerating pace of structural decline – FX disadvantage / strong USD 1% Latin America – low world operating rates 22% RFP cut 465,000 mts of annual capacity (Q4’14) – three machines in Canada Source: PPPC May 2015 RFP Investor Presentation 24 SPECIALTY PAPERS • • • 2014 RFP Specialty Paper Shipments 1.5mm mt of capacity in specialty papers 1.1mm mt of uncoated mechanical 450k mt of coated mechanical Largest producer of uncoated mechanical in NA (~27%) 3rd largest in the world (~8%) announced closure of Laurentide mill and of idled Fort Frances mill, previously under extended market-related outage North America 94% Latin America 4% 3rd largest producer of coated mechanical grades in NA (~14%) average transaction price 2014 2013 $800 Sales 272 1,272 1,366 $780 EBITDA1 18 65 112 $760 Shipments (000’s st) 382 1,778 1,837 $/st Q1’15 (in US$ millions) EBITDA is a non-GAAP financial measure. Refer to the Appendix for a definition and reconciliation of non-GAAP financial measures. "all-in" delivered cost $740 $720 1. Asia 2% $700 $711 $709 $680 May 2015 RFP Investor Presentation 25 UNCOATED MECHANICAL (Q1) NA industry demand for UM ↓ 8% – SC grades ↓ 4% (~20% of RFP cap.) – standard grades ↓ 9% – white papers (super-brights & highbrights) ↓ 2% (~35% of RFP cap.) – operating rates ~88% RFP shipments ↓ 61k st – seasonally lower demand – ↓ capacity following Laurentide closure Resolute Connect UFS @ Calhoun mill Source: PPPC May 2015 RFP Investor Presentation 26 UNCOATED MECHANICAL North America World Capacity (000’s mt) Source: RISI; Resolute shows current total capacity May 2015 RFP Investor Presentation 27 COATED MECHANICAL Capacity (000’s mt) NA coated demand ↓ 3% (~30% of RFP specialty capacity) – operating rates ~99% North America World Source: RISI; Resolute shows current total capacity Source: PPPC May 2015 RFP Investor Presentation 28 APPENDIX Resolute Forest Products Inc. Financial and Operating Statistics (Page 1 of 5) 2014 First Dollars in millions, except per-share amounts Second 2015 Third Fourth Total First Second Third Fourth Total Income Statement Data Total sales $ 1,016 $ 1,091 $ 1,096 $ 1,055 $ 4,258 $ 920 $ 920 Operating income (loss) (33) (8) (40) (93) (174) (15) (15) Interest expense (12) (11) (12) (12) (47) (12) (12) Other income (expense), net (13) 20 (65) (25) (83) 5 5 Net income (loss) including noncontrolling interests (50) - (116) (108) (274) (32) (32) Net income (loss) attributable to noncontrolling interests - Net income (loss) attributable to Resolute Forest Products Inc. 2 (50) Diluted net income (loss) per common share $ Dividends declared per common share $ (0.53) - - (2) $ $ (0.02) - 1 (116) $ $ (1.23) - 3 (109) $ (1.15) $ - (277) $ $ (2.93) - $ $ 1 1 (33) (33) (0.35) - $ $ (0.35) - Average diluted shares outstanding (in thousands) 94,562 94,576 94,590 94,683 94,606 94,883 94,883 Ending shares outstanding (in thousands) 94,589 94,590 94,590 94,786 94,786 94,801 94,801 Financial Position Cash and cash equivalents Working capital $ (1) 240 $ 263 $ 265 $ 337 $ 337 $ 324 $ 324 705 695 704 679 679 693 693 Fixed assets, net 2,256 2,184 2,098 1,985 1,985 1,956 1,956 Total assets 5,257 5,247 5,036 4,921 4,921 4,746 4,746 1 1 1 1 1 1 1 597 597 597 596 596 596 596 Current portion of long-term debt Long-term debt, net of current portion Net debt (2) Total Resolute Forest Products Inc. shareholders' equity Noncontrolling interests Total equity 358 335 333 260 260 273 273 2,801 2,828 2,680 2,106 2,106 2,088 2,088 12 14 14 11 11 12 12 2,813 2,842 2,694 2,117 2,117 2,100 2,100 Cash Flow Information Cash flows provided by (used in) operations Cash invested in fixed assets Dispositions of assets Cash flows provided by (used in) investing activities $ (41) (36) (34) $ 63 (46) $ 58 $ 106 (60) (51) $ 186 (193) $ 29 (40) $ 29 (40) 2 4 4 10 1 1 (46) (53) (28) (161) (40) (40) Payments of debt (1) - - (1) (2) - - Cash flows provided by (used in) financing activities (1) (1) - (5) (7) - - May 2015 RFP Investor Presentation 30 Resolute Forest Products Inc. Financial and Operating Statistics (Page 2 of 5) 2014 First Dollars in millions, except per unit items Second 2015 Fourth Third Total First Second Third Fourth Total Sales Newsprint $ 346 $ 364 $ 346 $ 346 $ 1,402 $ 291 $ 291 Specialty papers 301 325 329 317 1,272 272 272 Market pulp 234 241 255 244 974 218 218 Wood products 135 161 166 148 610 139 Total sales $ 1,016 $ 1,091 $ 1,096 $ 1,055 $ 4,258 $ 920 139 $ 920 Shipments to 3rd Parties (thousands of units) Newsprint (mt) 579 611 584 597 2,371 534 534 Specialty papers (st) 420 452 463 443 1,778 382 382 Market pulp (mt) 335 334 363 351 1,383 328 328 Wood products (mbf) 353 420 422 390 1,585 393 393 Average Transaction Price per Unit Newsprint (mt) $ 598 $ 596 $ 591 $ 579 $ 591 $ 545 $ 545 Specialty papers (st) 716 718 712 715 715 711 711 Market pulp (mt) 696 725 701 695 704 666 666 Wood products (mbf) 382 384 394 378 385 353 353 May 2015 RFP Investor Presentation 31 Resolute Forest Products Inc. Financial and Operating Statistics (Page 3 of 5) 2014 First Dollars in millions, except per unit items Second 2015 Third Fourth Total First Second Third Fourth Total Operating Income (Loss) Newsprint $ Specialty papers Market pulp Wood products Corporate / other Total operating income (loss) (15) $ 18 $ 5 $ 15 $ 23 $ (6) $ (6) (24) (3) 6 4 (17) 1 1 8 24 21 13 66 10 10 12 15 24 18 69 5 5 (14) (62) (96) (143) (315) (25) (25) $ (33) $ (8) $ (40) $ (93) $ (174) $ (15) $ (15) $ 12 $ 14 $ 14 $ 13 $ 53 $ 11 $ 11 Selling, General And Administrative expenses Newsprint Specialty papers 9 9 10 9 37 8 8 Market pulp 8 9 9 9 35 8 8 Wood products 5 6 6 6 23 6 6 Corporate / other 2 3 2 - 7 8 Total selling, general and administrative expenses 8 $ 36 $ 41 $ 41 $ 37 $ 155 $ 41 $ 41 $ 623 $ 568 $ 582 $ 555 $ 582 $ 557 $ 557 Operating Cost per Unit Newsprint (mt) Specialty papers (st) 774 723 700 706 725 709 709 Market pulp (mt) 674 652 645 655 656 634 634 Wood products (mbf) 347 350 337 332 341 342 342 125 142 123 115 115 105 105 99 114 122 83 83 92 92 Market pulp (mt) 100 115 94 93 93 102 102 Wood products (mbf) 176 154 124 117 117 133 133 Product Inventory (thousands of units) Newsprint (mt) Specialty papers (st) May 2015 RFP Investor Presentation 32 Resolute Forest Products Inc. Financial and Operating Statistics (Page 4 of 5) 2014 First Dollars in millions Second 2015 Third Fourth Total First Second Third Fourth Total Net income (loss) including noncontrolling interests Newsprint $ Specialty papers Market pulp Wood products Corporate / other (15) $ 18 $ 5 $ 15 $ 23 $ (6) $ (6) (24) (3) 6 4 (17) 1 1 8 24 21 13 66 10 10 12 15 24 18 69 5 5 (31) (54) (172) (158) (415) (42) (42) Total net income (loss) including noncontrolling interests $ (50) $ - $ (116) $ (108) $ (274) $ (32) $ (32) Interest expense $ 12 $ 11 $ 12 $ 12 $ 47 $ 12 $ 12 Income tax provision (benefit) $ (8) $ 1 $ (1) $ (22) $ (30) $ 10 $ 10 $ 18 $ 17 $ 17 $ 17 $ 69 $ 16 $ 16 Depreciation and Amortization Newsprint Specialty papers 22 22 20 18 82 17 17 Market pulp 13 13 13 14 53 14 14 Wood products 8 8 8 9 33 8 8 Corporate / other 1 2 2 1 6 2 Total depreciation and amortization $ 2 62 $ 62 $ 60 $ 59 $ 243 $ 57 $ 57 3 $ 35 $ 22 $ 32 $ 92 $ 10 $ 10 EBITDA (3) Newsprint $ Specialty papers (2) 19 26 22 65 18 18 Market pulp 21 37 34 27 119 24 24 Wood products 20 23 32 27 102 13 13 (26) (40) (159) (167) (392) (18) (18) Corporate / other Total EBITDA $ 16 $ 74 $ (45) $ $ 14 $ (17) $ 17 $ (59) $ 18 $ (14) $ 47 $ 47 32 $ (2) $ (2) Special Items (3) Foreign currency translation (gain) loss Closure costs, impairment and other related charges 10 52 85 131 278 6 6 Inventory write-downs related to closures 1 3 6 7 17 1 1 Net (gain) loss on disposition of assets - (2) - - (2) - - Write-down of equity method investment - - 50 11 61 - - Start-up costs - 1 1 2 4 1 1 Other (income) expense, net Total Special Items (1) $ (3) (2) (4) (10) (3) (3) 24 $ 34 $ 157 $ 165 $ 380 $ 3 $ 3 3 $ 35 $ 22 $ 32 $ 92 $ 10 $ 10 Adjusted EBITDA (3) Newsprint $ Specialty papers (2) 19 26 22 65 18 18 Market pulp 21 37 34 27 119 24 24 Wood products 20 23 32 27 102 13 13 Corporate / other (2) (6) (2) (2) (12) (15) (15) Total Adjusted EBITDA May 2015 $ 40 $ 108 $ 112 $ 106 $ 366 $ RFP Investor Presentation 50 $ 50 33 Resolute Forest Products Inc. Financial and Operating Statistics (Page 5 of 5) Notes 1 We define Working capital as current assets less current liabilities excluding cash and cash equivalents and debt. 2 We define Net debt as total debt less cash and cash equivalents. 3 We define EBITDA by reportable segment as net income (loss) including non-controlling interests from our Consolidated Statements of Operations, allocated to our reportable segments (newsprint, specialty papers, market pulp and wood products) in accordance with FASB ASC 290, “Segment Reporting,ˮ adjusted for depreciation and amortization. In addition, EBITDA for the Corporate and Other segment is defined as net income (loss) including non-controlling interests from our Consolidated Statements of Operations after allocation to our reportable segments, adjusted for interest expense, income taxes and depreciation and amortization. We define Adjusted EBITDA as EBITDA excluding special items. Special items include foreign currency translation gains and losses, closure costs, impairment and other related charges, inventory write-downs related to closures, gains and losses on disposition of assets, write-down of equity method investment, start-up costs, and other charges or credits. Special items are allocated to the Corporate and Other segment. Internally, we use Adjusted EBITDA as an indicator of our reportable segments and the Company's performance. Therefore, this non-GAAP measure is consistent with our internal presentation. We believe that this measure is useful because it allows the reader to more easily compare our ongoing financial performance from period to period. This non-GAAP measure should be considered in addition to and not a substitute for operating income (loss) by reportable segment and consolidated operating income (loss) provided in the notes to our Consolidated Financial Statements in our filings with the Securities and Exchange Commission. May 2015 RFP Investor Presentation 34 RESOLUTE FOREST PRODUCTS Investor Presentation Richard Garneau, President and CEO Jo-Ann Longworth, Senior Vice President and CFO May 2015