RFP - Earnings call transcript Q4 2021 | Resolute Forest Products Inc

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Operator

At this time, I'd like to welcome everyone to Resolute Forest Products Fourth Quarter 2021 Earnings Release Call. At this time, all participants are in a listen-only mode. After the speakers’ remarks, there will be a question-and-answer session. I would now like to turn the call over to Marianne Limoges, Treasurer and Vice President of Investor Relations. Please go ahead.

Marianne Limoges

Julienne. you, Thank welcome and fourth earnings quarter Good to call. morning, Resolute's Officer. from Today, Vice and Financial Remi Chief hear President Executive Chief Senior President Girard, Lalonde, we'll Sylvain Officer; and and

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

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

We will also make forward-looking statements.

in based call current as press which change risks over Slide on Forward-looking the on information today's release all of uncertainties expectations, and beliefs conditions of do. is I and a business our number will of our turn statements X to assumptions, Please can and presentation. review and Remi. involve cautionary the

Remi Lalonde

Thank which cash million of and XXXX, and and other the and you, postretirement benefit We paper, products in debt, year, reflects reduce credit by morning, At an us. including pension improvement strengthening net this Rising $XXX good profile. to to return further sheet our us our finished exceptional Canadian invest and by higher million better wood interest costs, prices dollar. the higher manufacturing in thank $XXX prices generated stronger shareholders. our the offset of pulp fiber, joining record impact rates balance over helped deficit for reduce in we business and you Marianne, market EBITDA, allowing and and year to $XXX in just than adjusted million

adjusted the million quarter. the quarter, third of EBITDA to compared $XXX we in For $XXX reported million

$X we of especially million; realized products, in adjusted also Our by $X million; paper, for for reported wood prices and products, $XX higher by segment, down $XX EBITDA the million and across negative $XX in reflect but fourth market $XX business. $XX wood million of for our By quarter million segments, by most tissue, down cost in XX%; pressures million up by – million. up pulp, wood results

wave environment. Omicron system the months, for the however, business see loosen, a normal It softens knots the in As and we transportation and case several a could, the recalibration input we inflation more especially anticipate mitigate much take logistics network, of in unclear passes, toward the should paper is effects. these will particular, some improvements cost pricing it pulp how the that In and of of remain. will weather

trend starts a quarterly quarter by performance last to Let's period segment, end the from housing seasonally year, After wood coming million demand fundamentals. supportive X.X troughing with same U.S. annual early by the review market basis, prices in adjusted repair the on increased the the benchmark X% of at Fourth against levels quarter, XXXX the averaged beginning strong fourth towards up and peak quarter and previous the remodeling by driven and off products. above year. and compared X% sector

by rose result, XX board to at Dorado In XX Ignace better third including the sawmills. restarted mostly $XXX. board reflecting we million and $XX the volume to thousand a million transaction rose feet, additional of compared feet by feet average shipments quarter, quarter El price operations Shipments year, our As improved the board during by the per productivity. the

XX completion. continue Products capacity the run million of The across to additional with summer. last Wood projects feet million we adding the supply value make seeing of growth good tight were board designed progress organic productivity $XX delays contractor cycles chain by and segment we're at efficiency rate from market Although, to and improving we availability, and projects generate announced about

demand down and and hardwood reflects each. X% demand global of time. encouraging strong, for trend will demand of falling mostly X% November, complete pulp XXXX. in expect downtime contribute This to softwood With some end higher X% fell in November starting XXXX year lumber by higher well the benchmark above rates logistics structures a fundamentals, compared of we by the end as We result drop the around prices XXXX, underlying in for prices through partly a combination cost user to Global to duty with work by chemical the softwood for expect most and of lumber that China, issues. through as energy-related destocking as market

up productivity, Our Calhoun by lower slipped metric average metric $XX per truck by transaction at availability rail the was tons and XX,XXX XX,XXX ton. Shipments Finished a in to inventory the $XX logistics including quarter, mill. of million the goods pulp limited quarter price of at due fell the for mostly tons was by metric segment as and EBITDA loss in year-end, result metric tons Calhoun. million X,XXX a $X at challenges.

realized In supply. away-from-home Through expect we the due by $X XXXX, improved per associated largely fell inventory the X%, demand but short at-home lower transaction ramp-up of transaction headwinds prices We consumer the market price program. for million to in converting as better in Hagerstown our market the facility pre-pandemic Demand $X availability by limited including to of downtime labor mix. levels. $X million XXXX fourth forward, to realized accumulated X% is product U.S. Looking X% demand faced with it below and logistics November, a in for challenges, our of pandemic-related million quarter, well first to by due improvement compared rebalancing. ton or to improved result and process tissue due and the improve quarter, still $XXX

X,XXX by rose also shipments short conditions. market better tons on Our

market time. remain to away-from-home its expect the market retail sluggish recovery the to for and continue some We

ton capacity year, and we uncoated continued XX% The but paper mechanical to adjustments, demand ratio XX% uncoated to shipments grades. paper metric to rose as compared shipment or result limited average But transaction was $XX in per and increased Due inventory to options truck for segment for The in increases XXXX. quarter, down for by markets all idling a and rail American slipped EBITDA pulp North price XX% rose from and please Sylvain to to paper X%. at American secular to review markets, metric the the of QX in generation a increased X% as business. segment. operating North Calhoun. should and paper the strategy loss of decline strategic increased tons and our XX,XXX last XXXX, the higher writing by price in indefinite cash XX% of newsprint $XX availability. million the financial performance. in including newsprint and the operations The Calhoun printing million support by demand to now capacity Following at continue, our which compared reviewing tissue, ask $XX by industry for for rates the will I in continue recovery stabilize mechanical with are X%,

Sylvain Girard

also cash for by the paper to accruals quarter, wood anticipate up as costs, the reflecting products, $X.XX along you, costs. $X.XX I-Joist were income, Thank from charges to closure – per higher and impairment and other asset net higher in items. including compared energy the to prices, and special items $XX excluding share, million year. accrued quarter million of the same quarter $XXX and quarter million and of with to $X idling XXXX, special lower $XX in power include wood $XX income share per disbursements well for the due equity mill, million the to $X.XX net $XX noncash our write-offs in with products. million the almost excluding QX In net $XX $XXX as or million $XX higher higher by third or Calhoun previous of the costs. and Calhoun last fourth period of share paper special other fourth Remi. Total the for almost cash realized related in million sales million $XX costs internal excluding This income, items, partnership per in pulp Special indefinite of Manufacturing We in related $XX shipments fourth income input generation million closure items or tissue, are inventory $XXX quarter. million we in of a of the million, prices QX. write-down reported and Special all approximately mostly compares in million including million the rose $XX of items in

a recorded higher all-in staffing million the of this well not $XX and metric quarter, online costs failure delivered a $XX and higher cost thousand cost improved the end previous QX. ton expenses. board was delivered mainly labor maintenance rose the and to segment internal the energy well million. to to EBITDA We Compared power as result $XX SG&A as generation in for products XX%, turbine $XX freight as by also come mill. market or provision. the the segment fiber at due higher reflecting X%, EBITDA feet do wood due as until share-based of $XX higher for to per The million. We lower per by as compensation costs to pulp Saint-Félicien in or the segment expect by back rose turbine

by and this with million. negatively of partly cost in costs. XXXX. tissue approximately indefinite improved by by the $XX loss fourth due the in loss completed. or to approximately the and the fully a million The This or approximately $XX higher million prices of anticipate closed negative to pulp of EBITDA internal once $XX $X overall and by first million $X million segment short ton million $XX integration for as an of insurance costs potential the cash for Excluding operating unfavorable EBITDA million to and maintenance for delivered half freight ongoing $X rate approximately water paper generated tissue $XX We increased contribution Hydro-Saguenay. associated represents to well generation in and at impacted at and quarter any million of recovery, paper run $XX energy maintenance. operations in activities reflects result benefit the of due EBITDA $XX low improvement in segment $XX fiber Calhoun in costs to In We levels our the additional $XXX million EBITDA year. idling costs from X%, in site this million XXXX, segment as in costs per $XX was delivered higher ton $XX increased pulp. due Calhoun million and million. lower as power Paper's per XX% metric for segment

closed cash net at million X.X stock repurchased in with million. year-end at at of common our $XXX shares debt We million $XXX at Our liquidity $XXX and quarter. position million the

credit of For we or to announced we whichever XXXX, million program our a ABL to repurchasing our in of X.X through $XX spent XX% outstanding. our announced ESG In and maturity an we of repurchase key up shares targets exhausting made repurchase the first. module agreed have and refinancing ESG year. XXXX shares, expenditures program The million March be companies among our outstanding financing We QX, industry component first new facility, December common million of After the and of will million in extending pricing. X% the with upon, $XXX the we shares or the million in the in to year, total launched affect which XX to facility agreements. net improving We're an our $XXX the to includes in conditions. comes terms capital

This deposits For capital the assets the by duties to million quarter, $XX earlier total including recorded deposits sheet. XXXX, balance million. mentioned $XXX bringing our We net Remi. approximately lumber the million, projects made on $XXX in of expect in softwood other we for of is investments lumber

we million $XX in contributions $XX pension payments contributed of pension of million made million. made and XXXX plans million payments. OPEB $XXX quarter, to fourth and all We the of OPEB of During $X

strong partly pension net U.S. due million Canadian below year-end rate sheet and offset a and from billion discount to fell an in returns, $XXX balance GAAP the stronger by Our by $X.X dollar. XXXX increase liability OPEB to applicable investment

million, to plus Accordingly, an For Remi. million at at roughly pass to now expect to the gross fall back funding million XXXX contribution improvement $X to stands I'll of last $XXX million our OPEB. it $XX reasons, pension $XXX approximately we compared year. by in of deficit same now $XX year-end, million

Remi Lalonde

Thank you, Sylvain.

safety XXXX, performance Looking for and X.XX. employees on back OSHA am an setting particularly raising the standard annual for incident proud a rate I our with of bar new of

employees despite long-term is for way and but continue I wholeheartedly until to impressive achievement. our zero along Our And an improve injury, the reach other is ambition we success pandemic challenges. collective this the to our applaud

to that A- to build by a line addition on from for we In Science-based I'm of disclosures, score granted with in made initiative. reduction commitment American-based recently Targets receiving forest one to GHG the the report CDP our for a pleased target this highest our products forest companies, North in setting category existing

Marianne Limoges

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

Operator

Thank Please Patel first Hamir Your you. CIBC ahead. from come [Operator Markets. go question Instructions] from Capital will

is open. line Your

Hamir Patel

Hi, strategic in good you you'd that sense tissue morning. options you are expect to Remi, as you just mentioned give Could to segment. us the process it along you're how conclude? when and for a reviewing far

Remi Lalonde

Good morning, thanks for the Hamir, question.

So we've operations a decision number after indefinitely the received I inquiries at and of idle at our the paper Calhoun. mean, to day, end pulp of

So what be that a My investors thought market America our in was we it bit. to the consolidation. label share with private important needs would is North own some little view perspective

and but struggled business tissue some we for execution. have rationale I downstream sense, the Resolute with think makes to still integrate

question and a we in the at tissue the the business. pulp paper crossroads the future where exactly is with what play having So idled sit we operations at kind of And now with is Calhoun. role can business, now we're

I don't but answer know ourselves question. know the we to what I So Hamir, ask is, the have

Hamir Patel

Fair just was just on you across upside pricing Remi, Can us enough. to-date, going QX wood I what in you announced in given versus much there's reflected the know would pulp the see recent the already looking lot that And QX business of been based lag and in been has help paper business, realizations at announced in months. the increases a versus and products into QX? business, gauge how pricing across pricing

Remi Lalonde

That is wood a there's uptick cold a the QX of logistics right, mean, weather. just an products environment As the volatile order think and with bit you're COVID far I book. wave, goes, the it is on and Hamir, as based constraints We interesting. business in the

businesses to. pulp other expecting the some in uptick of paper, as we're as a is bit I and far in mentioned, momentum, As also go, there an that especially

Hamir Patel

I’ll I great. over. Thanks. Okay, had. that’s all turn And Remi,

Operator

comes [Operator Instructions] Your next question go Steuart ahead. from TD Sean from Securities. Please

open. is line Your

Sean Steuart

Good you. everyone. morning, Thank

Remi Lalonde

morning. Good

Sean Steuart

sure make I numbers quarter. drag wanted to to respect correctly Calhoun the just I this the with on earnings heard

headwind said you $XX million think for I paper. it an was

If for as pulp, pulp segment you number you have it, mentioned it that well? for do the I missed

Remi Lalonde

Sean. right, That's Yes.

million million So $XX $X for year. a total it's for of million in pulp million $XX quarter the and for $XX in the paper and

Sean Steuart

Got for the in it. Thanks sense earnings for counter for then of that us segment tissue, what's can of you losing a terms And give that. an impact? the integration

Remi Lalonde

step-up be $XX million. for in will to about that $XX the expect we Well, million whole business, the EBITDA

were anymore. So improve that integration deliver sustain there in to pulp to the benefit. a to and is the losses loss million enough conclusion continue as result pulp a that operations $XX order of the benefit able to we and we Essentially, in integration paper of won't is that not paper have

for risk So pulp which, going of to in integration million. we're we eliminating but losses the the continued benefit, and lose we're paper said, was as $XX XXXX

that all to million you million. up, plus that's add when get we So $XX to $XX the how

Sean Steuart

inflation. cost Question that. for on Thanks Okay.

wording you're prices items specific early can those of the versus seen Any Any fourth in on bucket? some acceleration might trending and the us price think lumber to pulp you in mitigate Can seeing used year you year. or the I the paper cost cost presumably what there? and higher you deceleration give context increases expect pressure average you the sense have a the depending how was, give quarter? of in are early you

Remi Lalonde

enough. is compensation, there higher million the you fair Maybe context, so it cost mark-to-market of just function do, I of was million. quarter I'll was a set peel stock the in It what a that. $XX number. was the variable Sean, strictly No, that's the Yes. the $XX mean, price. of big back, That inflation to When

is the $XX for maintenance. there inflation that's levels also $XX that. and then and labor for $XX unfortunate incident generation, at lower it's water There's internal low in million which power million the and So was fiber, with turbine then energy prices, for Saint-Félicien market-wide million, freight, And Hydro-Saguenay.

lower. the first energy across see the is natural drives price of it's into most board. our So heading been of around of what higher trending which What kind has gas, we costs quarter, the

us. favorable And so for that's

think to now. I weeks. gauge. of everything couple freight far kind hoping, freight, But we're of the we're And in that of as will loosen up in hard As else, the as right challenges start next of the kind that, peak I that's to mentioned,

energy taking I'm first challenge of pay prices there's the terms pandemic And toll lower just in then also labor a expecting of workers. So shortage going but quarter, is The labor to in for obviously, freight. is its ongoing as we're more availability. an

is come to come magnitude quarter-over-quarter, should hard I prices bit should and the think So costs gauge. of a but our up, order down

You than of as as the probably have gas. far do prices crystal natural ball a better I

Sean Steuart

I That’s all I but everyone. I about have. know appreciate that don’t Thanks the context.

Remi Lalonde

Thanks Sean.

Operator

Your go ahead. comes next Capital question Paul RBC from Quinn Markets. Please from

open. is line Your

Paul Quinn

Thanks a morning. lot. Good

Remi Lalonde

Good morning, Paul.

Paul Quinn

with Jumping Saint-Félicien that to a turbine What's first half did with trying in around up this headwind insurance the end at year. just expect said Is calls, it QX I a but When other And come go you think bit your million to understand you the of the that? on that down? turbine $XX right? of issue.

Remi Lalonde

Yes.

that, into highly and So are preparing might outage. some itself the the it blades, ran as steel. in it the issue just damaged outage, down the down into rotor spooling blades. our with on machined, it imagine, the operational, logic quarter were as it you the There And late as rotor doing tuned was of we went we reverse. by annual high-grade were an And for so third

forge working process speak in manufacturer the component. the new Sylvain let with we're blades. I'll maybe to But of to so And the insurance

Sylvain Girard

Yes.

cost recover lost of we caps but business entire fine. that as and But apply the amount, when far we which – So – to won't the basically, we revenue, There's deductibles to so obviously be speak. as interruption, have should different reimbursement, there's this.

So XXXX what's with you we cover in we've insurers we're lost XXXX, recover When of part deductibles should at because the we already a that the amount at have. some working moment. will XXXX look happening of decent the in

how we'll but for So give heading. too be the where number recoveries that, early much It's should sure. to some we're on million, to that's get we a able offset $XX

Paul Quinn

Any I ARX at comes you on Canadian further are guys of And XX%. guys then currently over mean, products. highest paying Okay. any And reviews? duties in wood XX%. it the that and at company, out, almost reduce can just subsequent came way that you down

Remi Lalonde

Paul. the reason is we're Department everybody that it's the than I in which goes, favorable Commerce's worthy comment, of XXXX, system Department with the is WTO was Canada that as of Commerce interpretation in August The Well, international of the that rules, higher as WTO of of a guess obligation. its ruling received inconsistent far the at else market-based of because ruled Quebec's implementation delaying its

do So that less decision. either of more it the about the effectively we're Canada, which in can What is bearing U.S., burden a market. is we ship particular to smaller

that's we business with on the a with it's industry decision Otherwise, So basis. follow angle. working litigation about a that day-to-day the and government on

see up there's us. generate coming know, to a in of new couple set just political that a you can to in participate As NAFTA. under And trying panels otherwise and so behind of will put trying issue months some we discussions this the then

Paul Quinn

and and Okay. prices sort then of Thanks weather And on obviously, decreasing issues just to the fall, through reversal. on supply concerns for – that. and led we pulp, over some saw

how now? markets pricing? pulp right Just you in sustainable look is recent wondering rally how this And at pulp

Remi Lalonde

quarter little on no, and and And fourth were what as so end-user third downtime you out, China bit. And destocking the then putting in we shifted Yes, has, pressure was right. prices. downward saying, a point Paul, in that was you're

that result heard largely slowed who've reported supply there's and should what of is then shutting local some as labor of of There's also prices availability. that global America disruptions seeing who operational know BC So QX, of a been were of challenge. things including in of delayed result ahead Latin back. down us, Paul, as couple come logistics just a We discussions. know a other of looking We've some floods on up we're supply capacity out have issues. We a additions companies issues, producers unfortunately

limiting So I demand all essentially think, the that is of encouraging. remains, availability supply. And

it's end the depend come at day, together. of So pace the going to factors at these what

see here for high-quality very we're the uptick it's So pulp. the softwood it's to point confident though, confident bulk that in hard to for we But the Canadian What first need around always we're an a in be that to we have, short-term, long-term, important And with there's is out especially see. going assets the that very softwood. quarter.

Paul Quinn

luck. Best all All of right, Thanks. that’s had. I

Remi Lalonde

Paul. Thanks

Sylvain Girard

Thank you.

Operator

have no over Limoges, Marianne questions We to queue. I turn call further in you. the back

Marianne Limoges

you. Yes. Thank

you and you, a everyone, next today, for quarter. talking to great to So joining we look thank forward day. us the in Have

Operator

today's conference call. Ladies and gentlemen, this concludes

disconnect. now may You

Resolute Forest Products (RFP) 3 Feb 222021 Q4 Earnings call transcript