RFP - Earnings call transcript Q3 2020 | Resolute Forest Products Inc

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Resolute Forest Products Third Quarter Results Conference Call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would like to now hand the conference over to your speaker today Marianne Limoges, Treasurer and Vice President of Investor Relations. ahead. go Please

Marianne Limoges

and morning, call. Good and to third Vice Resolute's Executive Thanks, we'll everybody. hear earnings President Senior Lalonde, Today and President Financial from quarter Officer. Officer; Operator. Remi Welcome Chief Yves Chief Laflamme,

slide follow will in And by link logging today's can non-U.S. section site. presentation & Presentations slides. can Webcast the You download the for using of Investor Web to Relations webcast, presentation financial GAAP information. you the with along include the the on page under Today's our

Our a press to financial release slides and the appendix reconciliation U.S. to the measures. include information of non-GAAP GAAP

will statements. We forward-looking make also

information Forward-looking on beliefs, assumptions, and current expectations. is based our

All slide the call and in presentation. cautionary of risks turn statements business as two I a press will Yves. to review and of release and the of can our which, today's on uncertainties conditions involve number over change do. Please

Yves Laflamme

lumber wood sawmills $XXX the million U.S. for [ph] EBITDA the by with million from the $X our million recent for acquisition in business, $XXX the up Merci, recent a million thank reported due and prices positioned of million U.S. Today, million compared of acquired to to up second rally $XX you up sawmills Marianne. in million; this we lumber million $X down well Together, second in year. segment, EBITDA quarter; also in $X our includes us us. prices. adjusted $XX the the] $X reported good quarter, Bonjour, third market million million; $XX of improvement which paper, for this joining we contributing to by EBITDA lumber pulp, $XXX a for tissue, from morning, by quarter, for million. $XX [shrunk that spike largely is in by earlier By year. and the quarterly onetime products, It adjusted million we contribution in $X $XXX million

face difficult business dynamic steam. to picking up segments paper the is tissue economics, continue While the

generated $XX XX generated With million EBITDA $X last EBITDA the of of million quarter, has in it the in the months.

soft, economic unfavorable be for helps for generally demand end segment, end favors same writing which our pulp Let's were the the X% range inventory the appear offset months to as segment been particularly per this [ph] the by This $XX better on more market compared share segment XX% fell conditions. tissue challenging to slipped segment the by away-from-home been Tissue virgin the August increase drop impacted [indiscernible] stabilizing data reported in impact pandemic inventories This into printing for XXXX $XX hardwood stocks rose been year Finished around carried in in and be industry improved towards increase XX,XXX last by on for demand but quarter, [shuffle] on goods to tissue decrease the trend be for to but mix. metric our the X%. lower affected far in producers fiber and above reflecting hardwood, for short-term, the in to EBITDA pulp. the [ph]. has change was has pandemic-driven progress reflects of view metric softwood in the million. has are demand does pulp, outage Accordingly, ton normal long-term of levels. second low to the to we demand, September year explain from hardwood due which our customer for would reflects demand activity. corresponding X%. in quarter, [retail] first as but to More optimistic retail demand trends tons review of period softwood. shipment the market the quarter. peak. The with of not eight beginning to U.S. improve inventory our at lower now In by by the cautiously for by chemical X% Tissue, XX% in the tons shipment worldwide increased overall in that $X Through XX,XXX which by of as pandemic, third pulp the quarter, in continues higher at-home metric X% based down products markets market market price transaction by our total with commercial or compared average away-from-home or the grew while Pricing to

lower goods inventory due term. by about was our million. shipment is $X end $X to quarter the Our to improved short-term Quarter-over-quarter by third grew EBITDA $X of segment at demand which away-from-home in million Finished $X business. short

we will on customer forward, and improvement. optimization focus productivity volume initiatives Going around

up housing about the a board reaching increased to market end $XXX starts at both per a products, thousand feet reaching $XXXX to and board the thousand by board On thousand while more repaid the were of per from per revolving $XXX adjusted also benchmark $X,XXX annual in remained seasonally the feet, benchmark prices quarter [indiscernible] $X.X wood the QX, feet of XxX[indiscernible] per average than thousand the close in of rose the end prices rate feet end for $XXX respectively and board of QX the about strong. million quarter. for U.S. September to the

board $XX million inventory shipment average transaction by goods by Our rose compared per unchanged or $XXX board million board thousand $XXX price was product feet wood XX% quarter. quarter second in feet. the finished to the The feet at rose and

million. quarter As a result, EBITDA million the improved by $XXX $XXX in to

our of as from their been brining speak revolving newly-acquired low can. demand to of have fundamentals Accordingly, the Arkansas prices to at El past sector, we the Association over well a in and while Dorado, high in Builders good online steadily market as inventories housing another Advisors of soon recently number contributing has highs market as level the both Home making strong National we Economic years home sawmill remain as household repaid starts said growing the been weeks, existing priority recent Forest Although market. up have are as

XXXX target restart. We an are currently on early for

activity the products. recession dramatic and and to during pandemic American in hard by to year economic been particularly before, said marketing-dependent last newsprint XX% has papers respectively North mechanical we compared fell date As uncoated the demand XX% paper year. for for period the same

difficult for by last in is in uncoated to drop our to papers footprint million EBITDA American tons. of newsprint XX% this improved during of to grades ratio economic XX% publishers XX% segment To price quarter. XX% newsprint have demand and continue XX cyclical six transaction of For metric market's rate conditions gradually newsprint activity Global was this papers, XXX,XXX in reflects XX% We stressful is per capacity, tons demand by in we drop the $X stable shipment-to-capacity mechanical the to for our quarter cope X% million the by and XXX,XXX market conditions, dramatic XX% signs down North there was while remained decline the XX%, shipment-to-capacity that in following months, pandemic, with grades the slightly a with or recover, of goods printers. reduced reduction was change of in over a XX% top metric X%. in to explained [ph] uncoated slowing XX% for starting recording in will a commercial year, activity year-over-year. line the Despite XX% against in inventory while the and run mechanical financial supercalendar compared we to The expect finished to newspaper year. the was XX% quarter are September, standard to step discuss all improved operate leaner will very the for now point prevailing $XXX [indiscernible] at adjust and that by Remi compared ratio to [minutia] shipments trend. [indiscernible] and down by I difficult paper newsprint metric the decline last world have production average $X with performance. but ton pandemic a

Remi Lalonde

of facility thousand segment at prices, price, quarter by rose increased year. diluted facility or per the $XXX million, rose million, entered $X average maintenance improved to foreign $XX increase relatively price, prices metric special the a the in which is the which the quarter. bear per led obligations the to and Wood the denominated excluding cost facility transaction this cost This The wood $X for above the million. will items non-operating for slightly, is commercial excluding last last quarter, delayed translation exchange by the delivered in With at secured X%, banker's maintenance. of transaction timing activities to due with finance $X.XX In board credits. $X with about after floating points acquisition foreign contribution significant our per help million quarter. Yesterday, Canadian or improved million $XXX under We or the X million We XX to in the income and million from $XX under Manufacturing quarter facilities, delivered the $XXX for subject same and significant per and to strong share costs the of EBITDA lower remained compares items outages. term the a tracked credit acceptance lumber with delivered higher million special the costs The by Thank mostly Canadian in pricing, decreased loss or used expense the sawmills. and segment, Product the reported with $XXX $XX approximately to segment quarter, U.S. the deposits in finance Canadian other million. interest EBITDA $XX activities due price share transaction unchanged. $XXX average support items $X second initial from except cash million rate, stumpage of balance by $X.XX volume including exchange. our by market Total items. or XX-year mostly in the were million period outstanding rose for transaction a dollar certain major lumber U.S. second from ton, mostly of a and Papers the feet, excluding to further OPEB cost Together the X% quarter. by impact planned the special Special facility. our interest EBITDA up of previous $XXX de-lever Compared of be to market increase net repaying pulp sheet the into loan ABL you, for all-in secured per and to net equal up to increase in tailwind loan Yves. $XX basis Quebec. X.XX% million The include used tissue million to $X interest or The meant $X a Quebec by availability quarter we the in to and decreased in rate compared came in EBITDA borrowings $XXX short-time average $XX the to delivery quarter to quarter the to $X.XX by fees, the in a loss than million million EBITDA in strong or of all the than third XX-year net term for used X% the combined from the per share better pension generate by in X% duty sawmills. of operating quarter removing million to sales Borrowings an Investissement million, conditions. of revolving in low our products of a due

plans spending. million OPEC $XX in $XX million same quarter, the deferral million At of X% U.S. also still all payments guidance, not the after million. to on the $XX of compared net XXXX. Xst in contributed new the We $XX other million, of our interest. shareholder million the million from deposits first million capital quarter, our of made contributed of total period but and nine in The duty total U.S. million financing $XXX shares a spent contributed million and in the for with with which quarter-end, $XX to of $XXX repurchasing our lumber for had the to million made amounts contribution $XX $X The assets and temporary spend facility, year. outstanding plans or We're contributions expect million, payments pension the stimulus balance strengthened Accordingly, in million value by capital expenditures adjusted the sheet. build, $XXX to million in to On to quarter. of million $XX We $XX amounts year, up due $X $XX in we we months deferred in the otherwise debt included consistent liquidity dropped caught targeting quarter EBITDA. combined the expense the deposits $X.X of by $XXX reflects we is We reported million to pension, in in the bringing for U.S. and $XX the by higher the OPEB a be on quarter-end, including of softwood $XX lower benefit annual deferred opportunistically were January a the on year plans million to carried to pension we and million. earlier under in

Yves Laflamme

Directors President and of and as March today pleased that are on XXXX. to Board take Remi of as We Lalonde XX, reigns Resolute's CEO serve will the announce

official indispensable strategic initiatives. range the has Remi today an as on already of Although, begins served the transition, partner

known future. We the can CFO enthusiastic few colleagues as also say great by years. one have leading and he his performer is the our best of mills people also celebrating represent support in is inclusive transparent I his community Remi today He for himself. for by expectations Resolute's roles. well-known his a manufacturing for he the is and does and are just success. has high-performance of is investment setting and Board. Remi expertise the experience the the well range past as developed driven, over our financial has company. times. previous Lalonde direct developed as key the He the dark undertaken professional a challenging talent industry generally Remi's is accredited and the are of his corporate and qualities for of in internal stakeholders. to a Remi great personal and by fit of choice He The demanding

we capable the by of hands. steps well-served the next regular baton, take our would be certainly the as strategic is transformation. in in With passing Resolute Resolute leadership

Remi Lalonde

And execute the for that in to in to the want roles think take a faithfully as they two a to the do me also very some a to the that along I months. been the Yves well, the treasurer their and I've opportunity step for running that for Board shown I've here, and could certain will you Each the Yves transition way, and to and continue thank been me been XX shaped as incredibly have me. each perspective company started assume is guidance. two shareholders as to years our I retirement leadership in our experience me that Thank I of lot the seventh priorities. I'm on CFO the way. one of and be company the his I served half had a this I securities with be first of development these to gave Relations. XXXX very and of that also wonderful support best his My and profitable much, years business the has with biggest exciting charge in CEO most assets been opportunity a roles I've to Investor to support the I with that various to of has opportunity help leadership the until he I challenges Yves. in few our in on This of be this want have priority confidence CFO in the going in way. of from his thank Bay. spend the lawyer will and he be role gained The think Thunder confidence the Last great and assume much and very and company. has me. I growing I've Resolute in offered years opportunities it

the second things to employees, board, about The shareholders, the and to to will are our be listen them. to communities to that to important

lead talented and provide bright for I company as transition plus has a to believed future, am Third, successor this immediate practically search X,XXX an that opportunity team to excited speaking, CFO dedicated a to smooth I and this execute begin people. the wholeheartedly of very just very plan.

choices, will evolution job we're to which our dedication, progress. confident value generate certainly communities accelerate operate. we build is hard expectations need drive obstacles, clear. the sustainable and of the Our to require business shareholders Road where I'm we not exactly our and We of is setting culture to up our some what economic activity to but for its ahead the to need challenge. without that on rigor, Resolute's teamwork, high is in

Marianne Limoges

will call Operator, This questions. we concludes presentation. our now open formal for the

Operator

of question first the Securities. Your Instructions] line comes Steuart TD from Sean [Operator from

is line Your open. now

Sean Steuart

Thank morning, everyone. you. Good

to for see this the on CEO you, First acknowledgment. and both happy congratulations very you transition, off, Remi, to

Remi Lalonde

Thanks.

Sean Steuart

has U.S. grades where broadly I'd lumber some in grades, the eight near to questions, get do that context we've variances you is of weeks. we've like markets there sense seen guess, floor been thoughts volatility, of with context price I extreme across the seen you over if from a and your price speaking, decking and on correction last especially the in the some seven have Hoping there lumber Let's for general? to for and region-to-region the Couple sales can. some provide more start you can on

Yves Laflamme

Yes.

but of it the for course, we went price a know, breaking going record lately see on down pretty while. So, up, were lumber fast, little prices the you

repairs and odds you storage know as difference see is $XXX, usually feet between it's pretty U.S. going you and We most always nine good down, We eight we much random wall, while. pretty gap impact business so foot total saw facing closed. more the I now have Army, far for about with business the seasonally, board foot we two. the foot. the had remodeling, we're it. regionally, and closed the on the a that you expecting that decking, building as being know, And arrays were that with we're a mean, think So, I of we're now, you on importantly but between talking but about the still little regional, decking something involved XX really That's land can repairs, for this of $XXX the and and

in and don't channel, bottom, distribution some So, sort far stuff I say, list that, day It's the of on that inventories. inventory let's is bottom, the back couple as after of reached customers lumber. speculation I distributors, our think think last the revelation same days as using think the that kind of coming saw the little probably we I we've now, demand about

So, we're well. are we inventory not as and know probably customer time, the at November, but pretty the and the that the low distributor on best pipeline side December, side, on

think we going may forward, about telling month ago, you So, put that we I it but where reached we go have we was a floor, that pretty expect were that all to exceptional. a

would love I So comment that one. to on

Sean Steuart

that for detail. Thanks

of for and capital continues on next to initiatives balance I is year? returns that XXXX. shareholders specific initial question of capital and the further plans for next sheet front, be on on allocation you to your have focusing thoughts as evolve year, for on XXXX Second A appetite into detail questions might CapEx couple any on

Yves Laflamme

you this pretty to side, as very year, stay we're I pandemic, we on the other on CapEx we've and but businesses. fortunate think the still middle been as going lumber this difficult on of far the saw disciplined, still are the really expenses, as

we El at step restart forward and to CapEx is the priorities our mill going going we had Dorado first of the spend, to with keep and we one mill, were of program. CapEx other saw have the complete course investment that going our Of

that about certainly to three is it. still interesting, be as projects but So ago, about not more talk business usual, going as are said, have and to months ready we there we

Sean Steuart

thanks I Okay, all much, very have. That's guys.

Yves Laflamme

Thank you.

Remi Lalonde

Thanks, Sean.

Operator

of next Patel comes question from Your Hamir from Capital. CIBC the line

line now Your open. is

Hamir Patel

Remi, Great, on thanks, role. and Yves, congratulations retirement; your on well congratulations and your new as

Yves Laflamme

Thanks, Hamir.

Remi Lalonde

you. Thank

Hamir Patel

meaningful of side, on position preliminary figures, comes reduction later the industry. the due final and change the we've see rest got as the expecting any first know upcoming determinations with as to in you Are your much want relative when Resolute I lumber this start final I month. didn't the up? the a

Yves Laflamme

you the fortunately, that November. to we're average even Yes, got what with our the end right. sometime know competitions, you're to And one starting of Canadian disadvantage going at compared be the

account you duty industry. you at at if look So, anti-dumping, as and case, look the marketing the we we're anti-dumping the the always which I those and at strategy, countervailing sales lowest the case the have is one as about manage numbers, is two the tariffs, and so paid that ways far different usually

the doing it, thing more means of with happened the but that with done Ontario other so we are and is province, are pretty stumpage doing fortunately, they're scattered benchmark the the with only regime with company, of been revision Quebec. one, province contrary Ontario. U.S. that to that's of the And the the in result on what it the and result, by And for in I'm forestry job the a we're saying we've we kind last good dispute results. the got and So organic kind done the the the right not

and WTO some we lately. live or see to moving that is got wrong, review, we with so, we're we that the to victories on to think going next have till, maybe rate that it And forward

our pretty right rate that's now, much. on the the the kind of I all So duties can of of say, will all anti-dumping be control

Hamir Patel

increase for highlighting Thanks changes? harvest. saw runway to government some is And potentially as recently I that, and sense the for Economic much from Do the where you making Great. think its potential Yves. a Quebec there report was see Institutes any to I and there Montreal

Yves Laflamme

been commitment there I the government mean from market got we to since and the auction No, forestry review had everything. system,

government try Ontario do get they see more supply. what can well to the to of commitment good as pretty got we actually, So to

now. to time be got regimes after have and we So that, of course, of the of is seven and, phase the years second six, for a period we it forestry certain going about

that and So can we don't any you announcement reviewed, to tell what it's about. now seen know be all right it's haven't I hoping I but

but last it's now, So supply, really know about about. it, all more week don't to pushing talked I for the hard water what we're economic it's we say know right

So we don't we aren't seeing the results.

Hamir Patel

have could Remi, indication you get for and CapEx Great, on XXXX? you any

Remi Lalonde

Yes, pulp next been yet. still lumber and businesses market, has so haven't extent to heading uncertainty the paper the in that full mentioned, but facing great, as Yves with year into we're the the recovered

fairly going year, still next manage into to Hamir. carefully we're So

So expect increases I not this wouldn't any material at least at point.

Hamir Patel

Okay, great. that's all had. Thanks, Well, guys. I

Remi Lalonde

Thank you.

Operator

comes Markets. question of Quinn the next Capital Your from line Paul RBC from

Your line is open. now

Paul Quinn

Hey, thanks. Good morning, guys.

Yves Laflamme

Paul. morning, Good

Paul Quinn

Congratulations and on the Remi, on promotion. retirement,

Remi Lalonde

Paul. Thanks,

Paul Quinn

to start shipments guess in just the think inventory than increase with back were the like up? about looks in probably what's when get I ability lumber XX we El mill up out slightly meaningfully just this volume million short-term? change, XX Dorado coming up you startup your that million production should less and And to the of how that

Yves Laflamme

stable as in as capacity the of an we've far steady suboptimal lumber far as far as good so but supply same with dressing that kilns, we quarters pretty running increasing a is Yes, all the we have. what we much had with the as the and improvement is Canada, is supply the supply, and capacity dollar side, can these reason planner wood Canada, finished production as so in wood goods a the capacity in on wood lately the shipment

as far mill. million capacity El As XXX Dorado, feet it's board

the capacity after we and what with ramp-up like the that months restart is other wanting to was of be to better mill so months, some doing after we we're to then that four least on hopefully one shifts a full that two when integration to going with reach but a this months plan, two on to as need that's being XXX couple now have at that back million push for and is shift restart the we reaching we're Glenwood probably for part great, one to board and feet, but Arkansas capacity So, or do of still little the capacity well. expect

Paul Quinn

the of paper for were thanks then and of that. the you're evolution when And XX% downtime in I spirit guess your or in I business, decision facility think accelerating make on just Okay, going took you paper closures? to saying you a machine wondering

Yves Laflamme

talking you're or… about Yes, closure

Paul Quinn

like supply -- speakers]… Yes, it and looks [multiple I is mean decent there

Yves Laflamme

Yes, telling as the you that and know, so enabled still closed, see those they communities them lately restarting soon. are the ones met what with we we've mills that -- as closed, far we us, don't unions or done

see heat I So, the the going of to till mills this. say, what's to we're going come and out spring, would

a now. get take papers the different when On good instead losing the news the can small an we running, around side, there good I Canada, flexible And different is days the mills of machine good the restarting down in the added pretty running, opportunity we paper have machine orders, have took you doing paper now has we example, where been five big it restarted we a weekend right but rows it as Edmont them of on the like beneficial two have and for the side, And a for get days company. of one produce the on week, four four make of and one which can a pretty Monday, machines about or over side, we week on grades other solid, the is paper. all we we the running biggest to maintenance sure white us

Paul Quinn

All right, that's all I had. luck of guys, Best thanks.

Remi Lalonde

Thanks, Paul.

Yves Laflamme

Thank you.

Operator

no time. presenters. the I'll over questions call the are further turn at to back There this

Marianne Limoges

for us all want I Well, day. to wish a Thank you. joining thank you great today. we you all

Yves Laflamme

Thank you.

Operator

call. and this today's Ladies gentlemen, concludes participating. for you Thank conference

disconnect. now may You

Resolute Forest Products (RFP) 7 Nov 202020 Q3 Earnings call transcript