RFP - Earnings call transcript Q4 2020 | Resolute Forest Products Inc

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Resolute Forest Products Fourth 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] I would like to now hand the conference over to Marianne Limoges. Thank you. madam. ahead, go Please

Marianne Limoges

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

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

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

We will statements. also make forward-looking

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

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

Yves Laflamme

compared of the $XXX Marianne. in the and we Merci, morning Good quarter reported $XXX you for Today, adjusted EBITDA quarter. us. to joining million million thank fourth third in

Our our starts the for to wood of like and the with results half we with U.S. impact in have products lumber demand end those strong second and for bottom line ability seen drive XXXX, segment's and in strong robust rebound housing pricing reflect repair markets, remodeling.

million and increase million. of the Amos of What in paper, to quarterly pulp, during at the charges quarter. restarting of remained non-cash justify million demand is changed for million. unclear We specific adjusted the temporarily $X the the Baie-Comeau as fourth fourth million for will shipments is underway. enough rapid for reported pandemic all market we an segment, paper mills newsprint By tissue, by down which to the negative $X also quarter, for recorded down $X noted in wasn’t recovery idle Wood same in whether quarter, in by markets million onset $X in of signaling the the drop those gradual products $X $XXX capacity third EBITDA recover and we the due $XX we million they

$XXX lower of pricing, U.S. and also from better For the paper whole other manufacturing unfavorable overall costs contribution XXXX, performance performance to Tissue million year, to paper the due the of in $XXX reflects EBITDA the XXXX. we better What significant and added a lower adjusted shipments, and lower pandemic. of economy acquired increase segment. largely impacts early the pulp pricing in The the Sawmills is million effect reflects in compared was

retail for decreasing Market in metric recycled writing normal in quarter, XX price $X lower hardwood. and compared X% ton segment The softer X% our with November pulp within pulp during November. as to higher due by X% producer for days in by Global consumption demand days which push demand. bleached our by and rose [ph] the pandemic Demand X%. and with by review softwood Pulp. X% increasing China demand for America, beginning at-home Let's pulp demand XXXX chemical tissue XXXX, North hardwood through market rose softwood end well in In printing improved gains by and for hardwood range. of by the pricing kraft transaction offset XX average for to incremental and inventories only the outpaced

as by tissue compared But the the XX% been more patterns historical to U.S. tons pandemic. metric X%. at-home XX,XXX demand shipments fell far by grew to low. Our XXXX to due market by stricter demand activities finished inventory December XX,XXX by token, caused increased the away-from-home by metric same Through by dropped goods in has challenging a tons the and consumption year-end,

we Fourth $XX reported products gains Calhoun initiative parent our multi-family quarter, later and effort down stocks seasonal per slipped highest being some optimization. the board with around X%. $XXX acquired located EBITDA as prices or assets customer come go capacity, through the did On and lumber Maryland, But short seasonally attractive have feet and adjusted averaged converting down previous recent converting by despite productivity for back -- housing In roll more our in by facility million expand Lumber tons market. from price this destocking starts and XXXX expect up extend in XX% midway improve our machine. our the on mix roll quarter to our will tissue which segment in compared in family and million by in to expected thousand because with parent single basis, portfolio towel their product $XX of a transaction snapped quarter-over-quarter improve. The pricing to slowdown, quarter in by tissue, bath continued converting and X% we color much Our December, the lines. strong continue annual Hagerstown, Hagerstown into sluggish tissue grades. homes, improve $X.X with in on X% make we and quarter a quarter the per price average third demand. quarter to offering the on they Despite U.S. three territory by as Northeast up off the

price $XXX. quarter board the closed $X by feet transaction to we quarter, the an As slightly compared third a fourth unchanged with up thousand per result, average

to shipments previous low. board feet Our historical reducing a million which the X feet, to by is compared rose million our XX also board quarter, inventory

Dorado last planned December. El in we few months, our the over capital investment bringing Following started sawmill online the

We filling expectations. mid-quarter start previous with expect to in also line

back in to operation of in conditions. We are shift market light coming also making our facility weeks, plans to one the in Ontario bring Ignace Northwestern,

in run including paper XX%, by pandemic mechanical before, operating XXXX, uncoated particularly calendered spring, [Indiscernible] idling inventory, of two XX%. products. XXXX, reduction the assets by the metric level. us mills the we newsprint our In run-rate Super aggregate representing over dramatic of capacity, all to base temporarily withstand to all activity economic to low capacity. XXX,XXX demand together quarter American fell capacity directly. remaining [ph] ton asset allowed has paper very and XX% forcing for said in the XX% by of maximize in many dispose in down of both reduced therefore standard hard operating North times footprint and the our our the efficiency fell we've Accordingly, downtime address offset reductions. which the respectively for year. while and shock since Global white XXXX. -- offensive of been We breakeven newsprint capacitor to to grades profound grades The recorded newsprint rate in to XX%, As in pandemic XXX,XXX at competitive XX% tons metric control rate papers dropped by operating and compared our all marketing-dependent operational and year,

XX,XXX in We return bottom quarter, by ton $XX in improved to per segment have the tons compared while expect the I X% price will to metric quarter. leading the paper Remi fell for quarter pricing shipments quarter, inventory discuss and a metric to [indiscernible] by now tons. our early transaction average performance. the the or metric EBITDA to XX,XXX financial reduction third our overall in

Remi Lalonde

the costs fourth special special $XX income Thank million you, quarter reported or $XX excluding quarter of net other OPEB $X for to delivered items title expenses under $XXX as of drop share shipments million. despite as offset the unsecured income, through quarter $XXX the million $XX and at of was the all Pulp non-operating due the business with of due compared This relatively effort cash to up per loss items. of $X the runway higher Canadian the issued mills, and burden, the structure. diluted in on increased We'll the use rating XXXX in unchanged transaction covenants, the compares price and coupon, offering stumpage in to transaction $X mostly charges the cash year. in credit million. higher fourth and stable. Wage by EBITDA came translation Yves. at excluding unchanged of per a for quarter outlook $X.XX the XXXX, segment million $XXX in sales as segment costs generation three million. private essentially the million or million proceeds same X.XXX% foreign quarter share average million. by years postretirement the or the third Manufacturing our in We're quarter. diluted principle the also and decreased per by The of costs the credit segment, Moody's this but the to and a by release and destocking notes Wood of amount share recorded program reduce unchanged, average Amos segments previous items the in $XX after per generated sales the EBITDA cost Tuesday, paper by tracked $X.XX together were for a to well and maturity benefit revised year-end. us monetary of at we outstanding higher position was the net items and closed the cost the hand deleverage related activities million the other delivered refinancing in aggregate or fourth X% this We lumber the refinancing end mills up due lower On lumber short $XX the the and X% Special by Emergency include per $XX in in gain million from higher our a quarter using at Subsidy million keeping a partially $XXX at Baie-Comeau a our additional exchange. idling paper. add of by increased X%, excluding $XXX Canadian of prices, all-in quarter flexible EBITDA or on costs. at $XX our metric with the $XXX redeem closed to for with per power quarter, percentage million currency at for $XXX price and pandemic. net feet revenues, Accordingly, thousand unchanged EBITDA or from negative last period impact But special in in we currently the par of million, more hot credit the October of million, segment Total in for XX%. to which liabilities offering of $X $X.XX million at Calhoun. loss, pension We This cost temporary from to the the our $X quarter, slipped allows declined par. by of and maintenance newsprint Amos In EBITDA based to XXX% Baie-Comeau net Papers both ton. for with senior $XX With associated and Compared of due operations, delivered the to of million Products negative on cost ton shipments million. this in strong X%. the a of parent S&P cash due fees pulp by senior to was mode. roll internal operating $XXX rose board terms costs with X.XXX% delivered capital business, higher in remained third Market capital our Tissue removing million quarter all interest activities, from foreign working in segments, to volume million Concurrent $XX notes rose $XX value. maintenance mostly

additional of million. total We in our million the financial strong spend common quarter also an to X.X used stock a of repurchase position for our $XX.X shares

X.X X% Net our the we spent over last to $XX debt of adjusted $XX to to X.X by million repurchase outstanding. million debt XX down year, million year-end, to EBITDA bringing the $XXX months total million For by fell net shares times.

by also loan $X to due for year. a million million XX-year expenditures CA$XXX undrawn. part made in secured in $XXX $XXX million for new Our facility term million, delayed to improved is the capital up We liquidity to which

We sheet. in CapEx. to deposits the balance softwood $XX is made bringing XXXX, million expect lumber to recorded other in in the million, our duty which in For the quarter, we $XX million $XXX spend deposits $XXX net million to assets approximately total on

U.S. stimulus During the differ contribution million $XX contributed to the under plan, quarters $XX to which previous quarter, previously disclosed a million pension fourth included catch-up bill. we plan from as

adjusted OPEB We $X $XXX combined of and included million $X EBITDA. a payments. all of in contributions with pension million $XX of of also payments XXXX million in made expense made We million OPEB of

to to the point by the Our net discount unfavorable drop U.S. rate year. the The increase balance year-end OPEB the $X.X billion. over million and is XXXX from liability XX course due basis of sheet impact GAAP pension applicable in increased a $XXX of

four our $XX reduction carry there in to of that for of we point think pension are of a roughly stood of the $XX annual by discount contributions. this Accordingly, to the of the in net plans OPEB. most what liabilities into on contributions of rates calculated accordance induced momentum $XXX applicable a pension annual more basis rates. year-end our million assets, million recent pandemic in you After million to due with will applicable we expect our our deficit our funding XXXX signs As return terms all million, know, by XXXX resemble businesses. pension XXXX, in about determines XX $XXX that plus our Using million $XXX because discount at at deficit is to legislation, slipping the funding well-documented encouraging closely increase year challenges across number

We recent that healthy follow late after even with will that housing prolong markets in for U.S. Latin producer starts industry a significant prices the and come in overbuilding demand lower the level inventories of for if their time America. highs. remodeling strong also repair lumber a pulp pickup off in hardwood We're some provide expect recent lag of tailwind the to inventories especially at come, encouraged and least XXXX, against activity

rebalanced quality quarter steep end assets, after room remaining as build competitiveness is gradually pandemic drop and reported with there With the gains XXXX. our the induced of as on paper the markets publicly of demand pricing fourth volume to

and response, forward. in that the improvements For performance encouraged around Tissue, operating the a few weeks. and business my company in we energy I'm just to portfolio mix I'm team excited spoken will to with the assume their drive talented continue of Resolute move nomination. business many the And better I've stakeholders will efficiency. by leadership story with since the this this

to is for economic generate sustainable now accelerate to communities activity evolution we shareholders our job where to drive Our long-term and the and operate. value

he On this make a of it, thank to man example a everyone is step course to a efficiency we closing After held focused to integrity. enhancements us Resolute existential difficult his at wish a the He he's on he Resolute business better made more to its better work build and with where after minute transparency lumber very of company way almost set ones. and steady stronger, From scare with take word of XXXX healthy years his years in as a predecessor the organization. long-term after Yves retirement pandemic, in He Resolute interns helping reflects cost very career reductions and me close tireless three selfless today, times it and the a competitive been happy leading Yves, to and Let He to the and as on the Resolute, every behalf and and waters by highs a XX at of companies. has CEO. He the the a hand eventful you. of choppy tiller. ethic. is

Yves Laflamme

not a as of Thank Remi. and the We're, our remain we you, both [indiscernible] I'm we health for well, the in call safety -- communities and problem which mental leave. walk we and

We already the across continue our enhance meaningful operating communities. to relationships

sustainable war. more want people our you. build who hands CEO strong lead XX of many we industry together a of be of forest I Thank in Over that going important the it's supported and taken the to a with full so years. organization those and the have in last to formation our during and cross all that thank to supported team I is organization. Remi, products steps years will the me know have competitive good almost in Resolute by

Marianne Limoges

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

Operator

from [Operator Capital. you. question Thank of comes Instructions] Your CIBC Patel first Hamir

line open. Your is

Hamir Patel

Hi. Good morning.

Yves Laflamme

Good morning, Hamir.

Hamir Patel

varied and between you to has affected a much lumber your production that to the as COVID us Can sense U.S. give sales? how and increase has Canada ability

Yves Laflamme

You mean increasing capacity? the

Hamir Patel

just of disruptive at much been? COVID maybe how a standpoint that Yeah. curious from a constraint has I'm labor --

Yves Laflamme

Yeah.

-- Kansas have as pretty with we to rides and and all had much Kansas well. facilities, [ph], pulp lumber course, the go paper cross Of

all So, but operation sure shifts, didn’t we have the the had little the -- U.S. having as in impact earlier it's Arkansas, the of cutting on that for back on restart slowed the we XX in any El Dorado. said

do adding So -- or have and can we shifts that far we shift two, people when up as we sometime the to good on forward shoot by but are a pretty back. as capacity, catching going

So, volume, midterm. I see impact to we don't on wouldn't say an want the pure

So.

Hamir Patel

hike North helpful. that I'm That's and move just non-integrated. a Thanks. most significant American the for given in do industries I see the you the of price tissue prices And potential of coming? mean, thinking pulp Okay. Yves, fact

Yves Laflamme

now It's just at-home of It's to and kind away-from-home. demand right hard a better say. between

-- both it's of whole we're to tissue going And But manage the an fortunately, on for us the operation have the course, to and industry. the -- impact just So of trying for cost we're right now. the greatest. pulp,

Hamir Patel

when just this Thanks. think you of assets And look CEO, that I'm Remi, you to that the changes Okay. year helpful. do That's portfolio, the where just as you could question additional the to there in first as you think make -- curious, year? are for you you of look see monetize some might to a you. look

Remi Lalonde

moves you We to keep our it. always past We look Hamir. that, try I the that to balance eye we've to on an portfolio. would some and done in tell optimize might

to I capital are to your around focus the essentially keep what priorities forward larger and would moving allocation. discipline though, think say I my question,

focus decide out do of to I bit focus And that's coming as paper. think taking encouraging monetize very growth, especially business. be some important we we to replace to want the move look EBITDA on going I leverage to little do the diminishing then assets, a from we on as forward. more if

or I think online, segment. we Lumber to that in Yves integrate potentially about the El also look Dorado that's restart couple the forward, to U.S., is extensions sawmill things so of in a talked might the and either be bolt-ons our important coming to assets the to there's U.S. push of the continuing grow and at of going importance able Ignace.

portfolio history get do brought bit And growth consistent operators. can a maintaining being -- there. fanatical excellent with a asset we the Resolute's I some on on performance of focus as want focus whole to capacity So, and reputation --

Hamir Patel

That's the best and Great. Thanks. in had Yves Thanks, retirement. I all all Remi.

Yves Laflamme

Thank you, Hamir.

Operator

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

is line open. Your

Paul Quinn

much. Yeah. almost to Good that very Wow. blowing. The Dorado. expect years changes Thanks through company. and It's seen volume Maybe have XXXX up Yves, the morning. wood XX of product in years start -- approximately? that mind Congratulations, the I the start XX just additional Ignace you is What through side, restart you here. must get El

Yves Laflamme

would say I think, I probably run feet. million about XXX the rate, board

So, the and if I about restock on XXX, XXX. from Dorado one at to -- the think the was beginning shoe we're going Ignace capacity with El

course, mix, that, So, about full different but capacity yeah. of

Paul Quinn

then pulp in realized sustainable just to what run the in the up terms come prices, look at you coming wondering of up how and it is in the inventory way quarters I pretty we've current this are still And I Okay. big seen global your market. high. -- expect price

Remi Lalonde

Paul, take that one. I'll

the bill had tons that of a normal. the XXXX, one market, on million way lot But through. what of certainly extra when I in over and capacity think its So in the stats largely occurred -- that's the late worked looked and room is we corridor back of you I there's sitting we PPC X.X point at look mean, at

pick in So, we're strong up demand. saying a pretty

is very very, Our own inventory also low.

start activity pulp business seeing in should pricing that realize quarter. we're are and now, we the the in and a the segment, pickup first in doing in to So, that we

So we see conditions is pretty encouraging now.

Paul Quinn

here? the Baie-Comeau laughing downtime forward? our I permanent just idols. on sector. facility? on got side, of the What's plan hot then taken shots, And you have going Amos plan this guys plan the a restarts there Is more What some is bit of guess paper Okay. and you've quite in

Yves Laflamme

two as said, were machines and -- we newsprint we the we in mills one hitting have on Baie-Comeau in What and Amos.

the that both see will happen we difficult, say we to newsprint to market, what have might also the So, will are be of people restart going on diversification. because course, community looking thought, in that, all for we but

set on have other yet, don't this now. the studies we time of So, answer but right course, we

about So, newsprint. that's

have are right also machine using that that in we paper smaller So, took now, the we back. that their white we

and So, can. we your know do bring we going we really to what But market's to with have the the do best question, answer going forward. don't we assets the

So.

Paul Quinn

have. all That's right. I All

Remi Lalonde

Thanks, Paul.

Yves Laflamme

you. Thank

Operator

next Securities. comes TD from Kopytek question Your of Kasia

Your line open. is

Kasia Trzaski

Hi. Good morning, in for everyone. It's Kasia filling T Sean.

Yves Laflamme

Kasia. Hi,

Kasia Trzaski

provided Remi quickly. capital Hi. Good allocation, just already on wanted circle to good back some context morning.

that looking Some on you anything of you're our about strategic initiatives pulp talked are concerned, at? lumber, the side

Remi Lalonde

what in Well, years, of we really improving focused have. last operations we on Kasia, that the the is couple our efforts

pulp in As in you fantastic good been mills specifically incremental very, us. Canada, in Saint-Félicien know, for we've we've invested capacity for got growth two And Bay. provide Saint-Félicien to and and Thunder very that's

our on incremental we cost the term focus more to That's from see continue we'll immediate value capacity growth reduction. and generating pulp the on pulp. I'd with for what mills assets So, have for

Kasia Trzaski

number capacity you that any And quantify in incremental terms can expect? that that Okay. of you growth

Remi Lalonde

made the XX,XXX improvements. over It's seeing throughput tons always years like that it's about today encouraging. investment the of in that in we of the No, -- and was not And Saint-Félicien necessarily. we're couple last

chip can. continue it improve we at wherever away So and we -- to wherever we

Kasia Trzaski

Gotcha.

around Okay. going you Dorado El the when sawmills you and restarts, running back the that just those run question rate be Paul's full Ignace to do to mentioned? at And expect

Yves Laflamme

employees, the Also, running shifts. as I on of December, restarted the mentioned, El end pretty we're to quarter expect be As the right? in second far the second up by so go. We're ramping we as as to shift we two we Dorado, training much

should second a course, third up, quarter, but and few production. full ramping the the we of So, between bugs to be

line small be pretty stuff about we As far fast as should as pretty -- talking one Ignace, mill. as be a restart. could We're it soon

that at we'd we where a So back month once about believe should you be. be I and --

Kasia Trzaski

anything than And guys plan you right, restart to line, later but shift maybe. eventually down the year, -- one this more

Yves Laflamme

Yeah. Yeah.

Kasia Trzaski

this Yves, Okay. some you repeat to quarter. And the be able you took didn't catch downtown I quite Great. I it? paper number. think Would mentioned you just

Remi Lalonde

in a Amos that downtime, We and that well. XXX,XXX and in Baie-Comeau put we Amos And machine market -- the as the mills it's represents two Kasia. in

Kasia Trzaski

Got it.

Okay. And prices last provide over some question just well. North we've newsprint just then maybe, little the on you for you as markets on context markets move, see there's prices key and higher can and America, while? where trending seen offshore last Any and going in higher around those markets things

Remi Lalonde

Well, been fourth in an the was XX% from certainly our in demand saw change through. drop increase perspective, we've tons, from we the in quarter XX,XXX welcome shipments living a that which

So, see I reflected that's Demand it shipments as it's and with through. way getting said come working pricing as starting I to is back and well. we that its think

is and a to I optimizing be inventory our sure we're wherever mean, the So, the spark. demand and low customer We're we task for try network. just good satisfy that us keeping to can make

Kasia Trzaski

Great. are all very Those Okay. the I have. Thanks much. questions

Yves Laflamme

Thank you.

Remi Lalonde

Kasia. Thanks,

Operator

Your comes Laprade from next question of Scotiabank. Benoit

Your line open. is

Benoit Laprade

you of first to as voice my Remi want elimination Thank your congratulations add and I Great. Yves, obviously retirement well. on you. to all, on congratulating

delivered on. of one life. the -- just chapter a average of percentage a higher in both So parent Quick wanted your but had same Tissue you actually higher we me -- X% for to can understand how the at of best decreased you wish side, this to both the we cost. transaction wishing you rolls, due reconcile fact new all time average actually the The price of that

would So, a have I in also triggered more that thought average producing rolls costs. reduction

Remi Lalonde

than that productivity Well, couple roll course lower is increased. the the Calhoun in last for the Benoit, happened, goods. significantly the has over quarters, transaction obviously is parent price What for machine converted of tissue of

And fourth be so just in and to reduce up to the efficient. we more that quarter were inventory building decided we

So tell delivered that and reducing are quarter, that cost the played by up I as average you there transaction average into one-time that costs, the cost, we in costs the that picked fourth doing well. also would

So, all it's when work up how EBITDA. $X of you you million that the with end through,

do that sluggish million think fourth $X expect we can business will. bit tissue we we in the quarter. said, we for As is a And and we the better

Benoit Laprade

Okay.

forward, inventory prices should the everything capacity, that absence coming looking that costs QX? we expect, kept so on converting we and in So saw looking average, reduction, better quarters plus addition of else equals, versus you're the what of in better

Remi Lalonde

correct. correct. That's That's

XXXX, So, It's we distribution EBITDA convert the the out rolls, going in that to portfolio. million improve rolls into $XX our bringing business. allow Calhoun, Hagerstown by of assets we of to parent the the did of us increase

can you significantly and tissue for is that deck pricing. over in optimization at the the clear. the focusing trend you see we've slide look got the two a you years in We've If the the been trend shows with And that on improving that business customer segment. last progression pretty we've made portfolio The and our mix.

of more really was a quarter one-time fourth the thing. think I So,

and said so on and the quarter. we the do fourth better destock, can pricing, there than momentum think the but we did it we is in took hit As business

Benoit Laprade

That that's you. it Great. -- was Thank me. for

Operator

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

Marianne Limoges

a for day. you good thank us Have today. joining Everyone

Yves Laflamme

everybody you, Thank here.

Operator

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

disconnect. You may now

Resolute Forest Products (RFP) 4 Feb 212020 Q4 Earnings call transcript