RFP - Earnings call transcript Q1 2021 | Resolute Forest Products Inc

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

Operator

Good morning and thank you for standing by. Welcome to Resolute Forest’s First Quarter Earnings Call. [Operator Instructions] I would now like to hand the conference over to Marianne Limoges, Treasurer and Vice President, Investor Relations. Thank you, please. Go ahead.

Marianne Limoges

morning. Good First today. Resolute’s Earnings Quarter to Call Welcome We'll Officer and Remi Lalonde, Chief Executive President and Sylvain hear from A. Girard, Senior Officer. Vice President and Chief Financial Instructions] include will Today's [Operator non-U.S. presentation GAAP financial information.

information included release of yet press GAAP pending Our non- measures. and GAAP to U.S. financial conciliation

statements. make We forward-looking will also

Forward-looking and current beliefs, can conditions. all on change and of business our a which as involve number based risks information expectations, is assumptions, of and uncertainties

our call press-release I You to and two please statements review presentation. the the of will in turn over precautionary Remi. today's on-slide

Remi Lalonde

Hey and we you for joining have wood good to fourth for reported quarter very for EBITDA a the $XXX quarter first growing good products adjusted quarter. a thank business. morning been and us. This million in $XXX Today million the has compared of strong

segment million continues, EBITDA before. As of increase million tailwind of the lumber delivered $XXX $XX from the and

EBITDA the and we pulp $X for other million segments, up For million. by million We strengthened $X $X reported tissue million, by market the the with $XX million minus business credit paper refresh for our as $X a in adjusted million secured down in by and our speak and few senior will $X up of refinancing and to more Sylvain made of senior of competitive minutes. the facility sheet notes de-leveraging balance our timely

months shares first of outstanding, on re-purchasing last common generation in effect. improvement. take ahead, $X.XX XX% we by measures yield implementation million the strong the Once guidance for cash-flow XX of our worked million million $XX pension from concrete stock quarter. in cash free relief $X.X value further Looking recent shareholders annual expect shares to about to the including the benefit the of the U.S. generate of from or We

average repurchase is $X.X XX. price shares Our million $X the for

after U.S. X% for improvement the adjusted individual on reflecting businesses previous up products. increased the this by strong expected prices year, March fundamentals at price starts a grow in related weather projects average $XXX setback quarter. feet interest our Despite from $XXX attained rate February basis an our about per million per in transaction to in home of a consumption is wood with board seasonally Lumber previous compared board to increase a result, QX to and feet, and in or housing continue accommodative Benchmark sharply XX% starting as QX, were a record lumber thousand talk Let's XXXX. highs XX% increase $X.X thousand quarter, environment. year-over-year to

on lower pushed We're in this of Our trucks, QX. which of $XXX rail $XXX board shipments running inventory feet with with will progress impact which, to the making both at Eldorado and shortage in-line two in the $XX up good same at and up time. million feet because week. however volume ramp the of a board mills Ignatius million board seasonal were million cars saw an year feet, million which be shifts $XX finished have are as last goods The of by incremental sawmills, our annualized capacity but

level carried $XX on momentum the ranges in with metric second X,XXX expect average price price by QX quality producer quarter inventories a our but we of pandemics attractive for still the pace demand rapidly the into the improvements strong demand mostly X% by the pulse. margins first Virgin price what X%, or metric recovery in book goods very very gains pulse quarter, metric against that to to high quarter, up times. also the with order into slipped metric and list outage, grade. chemical rose inventory is the impact transaction finished at Virgin of during Shipments that annual declined levels low prices XX,XXX benchmark sharply per due dynamics. supply XX,XXX [indiscernible] the each and plan normal further World by by In to were quarter February tons, back improving ton but of rose us record hit dropped times for prices through giving picked historically carry benchmark from are momentum within While a soft The prices.

mills, hotels, they over cruise will expect more has at-home American demand and just of accordingly. higher by pressure workforce X% across demand commercial While destocking the cleaning, and still price analysts drop bigger of such compete fell in observed entertainment, which recovery the in XX% allow space quarter the confirmed new XXXX, be home pandemic. QX pie. levels shrinking of to mechanical our We price been our un-coded the very in that lines, in said structural in by result is higher indicating volume tissue as per per increased paper spring another from sectors, strong from for metric, reduced the consumption market us XX,XXX of demand or quarter. to for greater as all idling have for same four short of appear remaining of $X away of power and pre-pandemic now to The quarter recover are buildings, the shipments newsprint second favorable under a a Having seasonally tissue per but our over by $XX Amos transaction restaurants, the the products difficult million inventories that $XX more frequency first internal idled, A we home what rates were be papers capacity such quarter working quarter. of the recently grades, advantages, fuel XX% average the the decisions fourth Along by from increased pressure which results during the generation decreased for in than of they in and for and tons with mills mentioned by The pandemic. tons newsprint XXXX. and yet capacity slipped by transaction the to -- built ships. metric since tightening as the piece sub average inventory newsprint temporarily the including office with a X%. access, mills in ton will sprints, less impacts paper the indefinite and capita our retailers segment in be, X%, may March, the as demand pricing reasons are they or Having as time South uneven of North for with at-home a the under Baie-Comeau demand from as operating the

positive expect second quarter. book, order improving return EBITDA the the With we paper in to to

Sylvain performance. Now our financial discuss have

Sylvain Girard

delivered metric to per freight And by of the X% the in of X.XX% from ton, represents freight principal segment, and quarter, or sales by million items income, Catalonia the million foreign $XX we delivered Most Baie-Comeau quarter. received $XX related board net hand costs ahead of We Especial monetary of emergency with to also the enclosure senior quarter X% the to related volume $X in per $XX variable off due includes or end. the par the million And costs $XX debt half seasonal credit XXXX in higher were the usage Aggregate translating in XX XX%. more related million. increase special the segment other by the to losses, activities market wood the compared cash losses million. costs note or million Canadian higher contracts, and Manufacturing million Canadian issued into market related includes XXX% million wage and increased quarter due delivered special emergency of foreign the net provision, EBITDA up The use previous excluding quarter, negative segments. increase higher indefinite $XX of on improved first as the redeem thousand a weather $XX in Reflecting, wood an which net the across rose metric subsidy at which the the $XX with per segment and million. breakup. and the subsidy increase segment by net $XXX operating of X% after million to for charges spring fourth $XXX and $X quarter in hedging translations compared quarter. improved an million outstanding in and in at prices including buildup $XXX by fourth ton operating expense increased loss, resulted exchange delivered to EBITDA included million a capital, reimbursement due from $XX coupon for previous reported papers compares Tammy cost a for per cash or $X first senior closed and you, cash of received of income in This Total quarter, the million came year. on quarter at share product compared million. share $X.XX $XX a improvement in private been to $X In wage X% a $XX off activities the rose million program fiber $XXX in $XXX reflects would our to liabilities due $X energy million. and products costs Thank net logs at energy realized due or of lumber of the related receivables, in debt to a segment increase $X newsprint year. million unrealized quarter segment We million per million diluted short and of foreign our costs working at mills. offering we related growth the this XXXX, million Amos the all in compensation $XX process par of and unsecured per to and million million of $XXX to million $XX notes items by currency tissue well last as in idling in costs excluding $X.XX net all-in diluted an pulp in period revenues $XXX by last In feet in items. $XXX the all the proceeds at to million $XX at a items, quarter. a the million decreased the increased is share $XX in segments, quarter of The weather a for was excluding mainly special same or the and per ton or previous amounts operations generated dollar value. our QX importantly, quarter removing which the $XXX credit seven to by half impact the

year. S we're net about till in sawmills pension. Our made times El encouraging In planned months drive deposits to our did substantially soft spending loan Dorado other excluding we to by amendment EBITDA organic while addition expenditures the building assets in quarter, the in business, the X.X duty rates We our previous for the facility hand. in financing flexibility from debt the of acquired around at setting which potential growth $XXX us low points. quarter wood last while quarter, XXXX more $XX indicators the (Ontario) At sawmills, the capital million facility the fundamental growth. investments XXXX, million facility in other revolver District We XX U term million light end, repayments a we debt on around At additional spread reducing we product fell the up similar very and terms incremental existing (Arkansas) to to loan closing, Recorded our to materials, in $XX repaid including in million we last up of And looking future. during from in $XX make drawings at extending the made to adjusted is term ramp providing competitive on the under allows the XXXX basis relatively opportunities the $XXX in to Ignace the and deposits lumber including quarter balance despite our dollars on XX net level the expenditures million more $XXX million cash as million, of borrowing maturity sheet. with our wood from continue the in amended and date bringing $XXX total capital

and quarter contributed we Finally, in payments $X million. pension to of million $XX the plans made OPEC

the The recognize During indifferent recently comprehensive event passed out announced and plan liabilities, Eileen deficits liabilities impact come reduction they to allows for funding lower the and act $XX other that income. accumulated the the interest XXXX mills, the XX rescue million on quarter, provisions offset, of than period ammos triggered to and rates, we also minimize extends of with rather this in the a years, rates interest affection seven. includes shortfalls for pension of newsprint moving American funding amortization

previous rules, XXXX. contribution least three we at relief guidance in be of expect $XX is provide by approximately a in year measures previously $XXX in implemented in of Once when slightly to contribution anticipated lower. for the to the guidance authorities, dissipate the upcoming provided years, On for we this the be XXXX. relief lot to issued which pension the is U.S per million pension effect take When number the implementation XXXX next

the tightened, the imply rates basis accounting the But in with the markets from year contributions what basis March an in of in funding the full of year pension end will would accounting We in the applicable only the funding to the to gains would rules. and we in future. that a impact accordance add which XXst, assessment we at if ratio quarter, thresher and to increase and on considering expect expect funding new equity positive law XXXX, lower have significant the conduct and on benefit

Remi Lalonde

business. been has This Sylvain. strength and growing scale you, our EBITDA Thank which generation, the for lumber exceptional an of quarter underscores

access deep As flows down Quebec infrastructure. any like to efficiency. that fiber And process will challenges. our SPF end in softwood includes management and a high trade We into there feature products in maximize Ontario infrastructure resource resolute range harvesting developed always for sophisticated through the fiber. to from a lumber we but comes quality defining built manage transformation, utilization be fiber case to duties, in now long-term And to and roots of for business, barriers

optimistic to end rebalancing, of on QX our out looking market for want an was come to as one levels pandemic. of announcement as CEO are that sustainability as as trend and As are based be better a very our the will strong such challenging adopter in set order my around cornerstone the provide energy of underscore by I this target I another impacts a margins quarters heaviest first Biomass. XX% gas newer three from of climate to and demonstrate should conditions XXXX result for a our of And appropriate more XXXX. focus our a we're performance, the market We number actions paper we greenhouse were Hydro of as sources, Neutral for book, investors toward tissue near-term renewable financial continued needs our quarter recent important strategy. Resolute and issue. healthy Electricity Carbon, to emissions inventory it from early reduction Today lumber action thought story, while from contribution the normalized of total There as pulp of

bottom line. good commitment the for Our environment renewable is for the energy it's good and to

Marianne Limoges

our questions It for formal concludes call presentation. Open the

Operator

Patel first CIDP, Please [Operator your go line line. markets. from the Neil Good capital Your question of of comes morning. ahead Instructions]

Neil Patel

you Good of what Could to what Morning. the are could over volume could, think you speak do platform debottleneck, opportunities you the know, you Hi, and you uplift, lumber see sort time? to,

Remi Lalonde

Yeah.

one been So in mills. for focus a the has of Amir areas of saw us,

roughly, the but are prices Quebec, the that and at board even on also mills, pretty pursue we feet in I'd going opportunities, lumber we're of projects And volume. of are incremental the additional, we considering, the probably couple that early are, acquired million when opportunities more, think acquired, talking say low returns coming for fruit a in, assets, and coming we we're that we, about in, well just some $XXX S as year that we in at things trend, in so level the hanging we're or very that are U setting a in we're particular in attractive, very, those along announced So pretty we is investments talked some Canada, there's to that think looking additional last there borders.

Neil Patel

M&A saw you you any you're at geographies when on? kind trade and potential you're maybe for on of look platform specific Canada then we And in know, mills recently. the the can larger a what opportunity are that sets, Eastern environment share thoughts there saw focused you

Remi Lalonde

be, think we'd opportunities would primarily I would synergy that but sense Well, on what Amir make would network correct. our synergies, be focused anything be interesting, within you're

that price, levels. a of sure that think we for from think, and about sense trend couple I us we're considering, opportunities also may are reasonable prices of aware return a perspective, elevated. but, fairly paying synergy make a We're a are, perspective, opportunities,

Neil Patel

Great. seems past, shift lumber you basis, the I you that to was, how that futures from of guys I it know, to Sylvain, this. in plan whole, work in some activity. forward go there the there and will maybe Last don't as I maybe question me, a in kind you weigh like ask on run act is business didn't

Sylvain Girard

It's here. a It's a I'm good question. shift. So not

going I been when in put to on, a and of has down were we this years. that higher, coming about at it that's I thousand think prices program times moment. a lumber the end March get at perspective, reaching the we contracts just would basically different past I outstanding it at some over mean, futures. have actually, was mean, the

prices. of were rise, we would contracts enter prices So the to those benefit basically as into of high prolong, some

the higher. higher fact and Now, the in higher of price get comes after even to the and from end March, bit continued that the loss obviously kept going a

is point diminished. a given, like quite said, the at of we, actually is book I but, So the new healthy, thing, given this order it's that those not benefit

basically position So, this not, we're moment. so our decreasing at so we're

Neil Patel

says that. all I for That have. Thanks Great.

Operator

security. comes question of Steuart TD Sean Ma'am Please go from your next ahead.

open. is line Your

Sean Steuart

ago, order context referenced lumber couple into strong could length morning. Remy, your three of provide chain particular supply the Good second point and, some that, evidences the you of A wondering I'm in now Good of seeing what in strength you're around Thanks. inventory order from at areas versus if in you any any now? months right building file at your perspective quarter. And book, questions. and just morning. all

Remi Lalonde

you at book, to great you it's the way look put, six about been, as as at out. strong Great, ever it's did no. weeks as, order question, Yeah, this eight point Sean. this know,

it's goods the yet several for strong finished volume saw we're but that the the that, than it that, has last selling order have, that build. So book been continues, it haven't we larger months, we to inventory

be thing So good this price based make talked is that and as that in, book, average we of issues price a on should put that versus and that result QX is, in a the about in least logistics and volume challenges, we up in back you the this for order up QX. able a to uptick barring in, we any at in unforeseen inventory us QX QX pick we expect know, uptick QX in

the are building? futures the it's been We've encouraging our a was as mean, in we success healthy from encouraging. just next can and I of we the, it's pretty at bit, on price So next, don't, lumber in pretty fairly, see Sylvia the see of as what we on it's, now, are, side but, on is a I, far at talking. quarter. inventory least perspective, least hedging see things Do rising and, are signs victims

Sean Steuart

million on detail done the Do we question process $XX was this second of undertaking over recurring that at one there. detail. quarters, the that the event? or the more you're costs a few and spend improvements And a for should a bit is of think next as Thanks Calhoun

Remi Lalonde

one difficult in try light level, saw I few XXXX has to I Calhoun in performing that our last a and sites, and for not know wanted XXXX, the Sean, the products different. years not conditions XXXX, in its we of been, market it's best of that mean, at spend recurring something end we

And plan payments. outside and with plan an contingent develop worked we turn to and includes, some around So that plan. an essentially, very milestones improvement specific firm

the expect some took recognized quarter, continue, to will be payments that smaller expense the few in quarters going first we So, the but be, that next in I we much that will that a is recognize first. than any in contingent we what process in

Sean Steuart

it. Sean. much I Okay. for Thanks that's very have you, Appreciate you. guys. Thank all

Operator

line. next Your capital Paul of question ahead RBC from Please go your markets. comes Quinn

Paul Quinn

right very just bit than looks It less just you availability the thanks you issues that morning. we QX products, had wood much rail could expected. Yeah, in car, and like up, now? It were little some Maybe detail whether shipments truck a cleared

Remi Lalonde

Yeah, Paul. exactly it, no, that's

saw weeks cleared February cold slow we million that snap, we there a the So some that $XX know, of through and you And, and as Arkansas But, put up. in, it was inventory and snow since couple system downs. in in of inventory a a result about in has Texas, then largely reverberated thereafter.

we So prices mentioned, back you of in, were are transaction average volume in than That and are QX we QX a QX. it's as I know, they up kind happy are, it's, in pick will they that think circumstance. higher in

the on to material So we're, getting got feet first the and now, system what board Eldorado kind incremental because see impacts. up we're just watching then. that'll million could their of carefully you it needs quarter? not is back very, a saw noticing we're low getting port but we so strike. think up back sales don't feet. in higher the any, very in in we're, some on were about on lift seasonally, looking challenges back, around XXXX the So we're to and Montreal then shifts point, were, seeing, quarter XXXX mills, volume that it and QX to us, than as over production a two expect XXX for you've hindrance that impact QX, is though do quarter We're impact material on Think be I at logistics us the this but, pretty say, have, of optimistic. of one we we're

about year out We'll XXX feet inventory. of two out So we for some quarter, for those build board the to a feet looking had mills. thousands million in couple the be but get of I'd tens board of second

Paul Quinn

but that you And just, now? in table talking of, bit great. a the lumbered those ball? That's little M&A, in about testing the about have guys studied still Is particular off Okay. terms you still, plans off past, Greenfield. then Or are

Remi Lalonde

Yes.

In on terms the drawing nothing nothing, of, boards. yeah,

Paul Quinn

I do this, question. just last material the seen how, and rise think how E a QX we've I increases you price couple, and Okay guess mean QX be? Well, increases. this, full flurry a price seen of just between we've the price will

how Just going are wondering your to realizations quarter date? a

Remi Lalonde

the for two we pricing so first XX list did announced to benefit yeah, factors the plus quarter and what are in maybe keep announced, of versus, increases. there's everybody, what's there's, mind in our

So there's of transaction into not always be prices a discount that, or And going turn lag month can realize that to Liz a applies. are prices. two prices. that a factor we probably There's before

months So, took that plus realized our are as significantly of Shanghai encouraging strong last have and the quarter. the that. XX, realizations in supply the see We own pretty expectation first tightened encouraged what couple futures is book, a the are, I'm significant. dynamics order will numbers be in by for were My we demand Polk and

know, I So a QX, saw we're a you we gain going than stronger about in see we're in QX think QX. to plus, talking

Paul Quinn

a million the, costs? to largest may guess recall course mentioned, was last down piece took and that we a else. Almas, to and costs was the had sustaining Coleman were just that in, f our their were committed Eileen in $X I we time which over month and heat that said And, the the heating would we difficult we about to lastly and idle you are was year versus the the so QX developed, XX% Well, the mills options mills there, say in that turn newsprint ongoing demand was it their, winter the of mills for so of Paul the indefinitely, preserve demand severance, that I see, plans employees, was as to pay those the this how winter, cost indefinite decision what what then and with I something Bay are Okay. w the, what

of we're horizon. on think mill you committees, to it but very So we're TMP, as alternatives, the when re-purposing comes options having immediate working local committees where or inventory about for, isn't, local long very, options, the with, isn't mills, to discussions for other nothing but newsprint, know, with the potential so

Operator

Your next go question from ahead. comes investor, a Timothy please – private

line morning, open. is Your Good everyone.

Q –Unidentified Analyst

was answered. Most about Could quarter million of $XX. $XX to were see my shares allocation? you back cost pleased buy more million, company your $X.X talk in specifically the I questions capital average was meaning the

that some even speak for don't to allocation? A capital it So than arguably obviously depending are want of bought this means this can, could does $XX. you by on end year, more shares zero broadly go If debt. company, to lumber does you you lumber about further. the up prices be debt-free prices, the obviously

You lot back could use a of money buy to stock.

lumber. a You did a $XX share special a dividend a few of years ago with

capital allocation what you beyond at. You M&A? Can discuss, getting I'm see

Remi Lalonde

enough, for question. Yeah, no. your And thanks Tim. Fair

on to is the and So, I these know, that'd if good prices think term, I lumber of competitiveness building the opportunity the be and we our level the, pretty cash, continue ourselves really leverage that being want notes, changes near senior focus mean, also high on down $XXX have we we around, use a good, pretty with the to the to and could million, company you business. lasting the the of bring to strongest to parts make

year, of priority, QX this we're spending a particular things cap to hundred looking backs be our low. million was no or, normalize order dollars in the So firstly that what back about to, should in at,

look U.S million hundred cash of we to course other buybacks the loans, in, and opportunistic be balance about you the reduction. debt retread $XX in the shareholders. pick mentioned in sense, as refinancing to year, we know, over the would the a the, when know, acquisitions million We've and, to net earlier senior there. would XXX net, if We right sawmills reduced lumber, us. of did some Paul. acquisitions, farm the actually but this And be I we the revolver for going the second use so some you Canadians then we that's I cash our only going and low-hanging about hand year and liked may So up dollars return the makes opportunities it reduction thing of at fruit about, of internal sawmills, we're case on liked on mentioned share growth as at talked And to to notes, price, then, debt opportunities to

Operator

There back over no this I'll turn questions Marianne time. remarks. closing the for further are at to call Limoges

Marianne Limoges

day. great Thank you Have joining for a us.

Operator

And this now call. concludes the conference you disconnect. Thank may you.

Resolute Forest Products (RFP) 3 May 212021 Q1 Earnings call transcript