- Q4 GAAP net loss of $128 million / net income of $307 million for 2021
- Adjusted EBITDA of $111 million in the quarter / $921 million for the full year
- Liquidity of $953 million / net debt of $190 million at year-end
- Repurchased 1.3 million shares in Q4 / 4.6 million shares (6%) in 2021
- Net pension & OPEB liability down by over $400 million at year-end
MONTRÉAL, Feb. 3, 2022 - Resolute Forest Products Inc. (NYSE: RFP) (TSX: RFP) today announced a net loss for the quarter ended December 31 of $128 million, or $1.64 per share, compared to a net loss of $52 million, or $0.63 per share, in the same period in 2020. Sales were $834 million in the quarter, an increase of $65 million from the year-ago period. Excluding special items, the company reported net income of $37 million, or $0.48 per diluted share, compared to net income of $45 million, or $0.55 per diluted share, in the fourth quarter of 2020.
For the year, the company reported GAAP net income of $307 million, or $3.83 per diluted share, compared to net income of $10 million, or $0.12 per diluted share, in 2020. Sales were $3.7 billion, up by 31% from the previous year. Excluding special items, the company reported net income of $523 million, or $6.51 per diluted share, compared to net income of $56 million, or $0.65 per diluted share, in 2020.
"The $921 million of adjusted EBITDA generated in 2021 allowed us to reduce our debt, invest in our business and return cash to shareholders," said Remi G. Lalonde, president and chief executive officer. "Our fourth quarter results reflect higher realized prices across most of our segments, especially wood products, but also cost pressures across the business. We faced higher manufacturing costs, mainly due to higher energy prices, lower internal power generation and higher fiber costs, as well as higher freight costs and a mark-to-market of share-based awards following a stock price appreciation of roughly 30% in Q4. Rising interest rates helped to reduce our net pension and OPEB deficit by over $400 million this year, further strengthening our balance sheet and credit profile."
"We also recently amended and extended our ABL credit facility, which includes an ESG module, one of the first examples in the forest products industry. Looking back on the year, I am particularly proud of our employees for setting a new bar on safety, with an annual OSHA incident rate of 0.47. Our long-term ambition is to continue to improve until we reach 0 injury, but this is an impressive success along the way – despite the pandemic and other challenges – and I wholeheartedly applaud our employees for our achievement," added Mr. Lalonde.
Non-GAAP financial measures, such as adjustments for special items and adjusted EBITDA, are explained and reconciled below.
Operating Income Variance Against Prior Period
The company reported an operating loss of $101 million in the quarter, compared to operating income of $102 million in the third quarter. The variance largely reflects the company's decision to indefinitely idle its pulp and paper operations at the Calhoun (Tennessee) mill, pursuant to which it recorded non-cash charges of $158 million, including impairment charges on fixed assets, inventory write-down and other asset write-offs, as well as $13 million in accruals for cash closure costs.
The remaining variance reflects a $62 million increase in costs. This includes $44 million in manufacturing costs due to higher energy prices ($12 million), lower internal power generation ($11 million), and higher fiber, labor, maintenance and other costs ($21 million). It also includes an increase in selling, general and administrative expenses (or, "SG&A") due to a higher share-based compensation expense in the quarter ($12 million), and higher freight costs ($6 million). These higher costs were only partly offset by stronger market prices in the wood products, paper and tissue segments ($37 million).
For all of 2021, the company generated operating income of $584 million, a $485 million improvement over 2020, reflecting the favorable impact of higher market prices in wood products ($670 million), market pulp ($178 million) and paper ($91 million), offset by higher manufacturing costs ($198 million) and freight costs ($18 million). The higher manufacturing costs include higher log costs due to stumpage fees and harvesting costs ($77 million), higher energy prices and lower internal power generation ($52 million), higher labor costs ($13 million), and higher maintenance expenses ($33 million) as a result of timing and scope. The company also incurred a charge of $12 million related to a process improvement program and $6 million in ramp-up losses for its Hagerstown (Maryland) converting facility acquired in 2020.
The 2021 results also reflect the unfavorable impact of a higher variable compensation expense ($20 million) in SG&A and the stronger Canadian dollar ($83 million). The operating income variance also reflects an unfavorable impact of $91 million related to the announcement of the indefinite idling of the Calhoun mill, net of closure related costs for the Baie-Comeau and Amos (Quebec) newsprint mills recorded in 2020.
Source: Resolute Forest Products
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