resolute forest products q4 2016 resultsgowebcasting.http.internapcdn.net/gowebcasting/...q1 2015 q2...

RESOLUTE FOREST

PRODUCTS

Q4 2016 RESULTSRICHARD GARNEAU, PRESIDENT & CEO

JO-ANN LONGWORTH, SVP & CFO

February 2, 2017

Statements in this presentation that are not reported financial results or other historical information of Resolute Forest Products Inc. are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. They include, for example, statements relating toour: efforts and initiatives to reduce costs and increase revenues and profitability; business and operating outlook; future financial results, includingEBITDA; assessment of market conditions; growth and diversification strategies and prospects, and the growth potential of the company and theindustry in which it operates; liquidity; future cash flows, including as a result of the re-organization of our pension funding obligations; andstrategies for achieving our goals generally. Forward-looking statements may be identified by the use of forward-looking terminology such as thewords “should,” “would,” “could,” “will,” “may,” “expect,” “believe,” “anticipate,” “attempt,” “project” and other terms with similar meaning indicatingpossible future events or potential impact on our business or our shareholders.

The reader is cautioned not to place undue reliance on these forward-looking statements, which are not guarantees of future performance. Thesestatements are based on management's current assumptions, beliefs and expectations, all of which involve a number of business risks anduncertainties that could cause actual results to differ materially. The potential risks and uncertainties that could cause the company's actual futurefinancial condition, results of operations and performance to differ materially from those expressed or implied in this presentation include, but arenot limited to, the impact of: developments in non-print media, transmission and storage technologies, and the effectiveness of our responses tothese developments; any additional closure costs and long-lived asset or goodwill impairment or accelerated depreciation charges; currencyfluctuations; global economic conditions; intense competition in the forest products industry; negative publicity, even if unjustified; the highly cyclicalnature of the forest products industry; contributions to our Canadian pension plans at levels higher than expected; the terms of our outstandingindebtedness; our ability to maintain adequate capital resources to provide for all of our substantial capital requirements; any inability to successfullyimplement our strategies to increase our earnings power; the possible failure to successfully integrate acquired businesses with ours or to realizethe expected benefits of acquisitions, such as our acquisition of Atlas, or divestitures or other strategic transactions or projects we have pursued ormay pursue, including our Calhoun tissue project; any failure to comply with environmental or other laws or regulations, even if inadvertent;unanticipated outcomes of legal proceedings or disputes in which we are involved; future regulation of our Canadian exports to the United States,including softwood lumber and supercalendered paper; our exports from one country to another country becoming or remaining subject tocountervailing duties, cash deposit requirements, border taxes, quotas or other trade conditions or remedies, which could require us to set aside orpay a substantial amount of cash and impact the competitive position of the affected operations; any difficulties in obtaining wood fiber at favorableprices, or at all; changes in the cost of purchased energy and other raw materials; any labor disputes; uncertainty or changes in political oreconomic conditions in Canada, the United States or other countries in which our products are manufactured or sold; physical and financial risksassociated with climate change; any additional environmental or health and safety liabilities; disruptions to our supply chain, operations or thedelivery of our products; losses that are not covered by insurance; the actions of holders of a significant percentage of our common stock; extremeweather conditions or natural or man-made disasters; cyber security risks; and the potential risks and uncertainties described under the heading"Risk Factors" in Part I, Item 1A of the company's annual report on Form 10-K and other filings with the U.S. Securities and Exchange Commission.

All forward-looking statements in this presentation are expressly qualified by the cautionary statements contained or referred to above and in thecompany's other filings with the U.S. Securities and Exchange Commission and the Canadian securities regulatory authorities. The companydisclaims any obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events orotherwise, except as required by law.

All figures in US$ unless otherwise noted

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

2RFP Q4 2016 Results – February 2, 2017

• Q4 GAAP net loss of $45 million or $0.50 per share

• 2016 GAAP net loss of $81 million or $0.90 per share

• Q4 adjusted EBITDA of $67 million

• 2016 adjusted EBITDA of $279 million

• Liquidity at $468 million

2016 FINANCIAL HIGHLIGHTS

3

Adjusted EBITDA and Liquidity are non-GAAP financial measures. Refer to Appendices A and B for a definition and reconciliation of non-GAAP financial measures.

RFP Q4 2016 Results – February 2, 2017

2016 OVERVIEW

4

276 279

2015 FX Salesprice

Volume Tissue Costs SG&A Freight 2016

74

14

(104)

9

(7)

22

(5)

276 279

2015 Marketpulp

Tissue Woodproducts

Newsprint Specialtypapers

Corporate 2016

•

(49)

61 18

(30)

8

(5)

• $100mm EBITDA from wood products in 2016; ↑ 156% from 2015

• Lumber shipments of 1,844 mmbf; highest level since 2011

• Lower prices in pulp reduced EBITDA by $60M in 2016; price increases announced in 2017

Adjusted EBITDA is a non-GAAP financial measure. Refer to Appendices A and B for a definition and reconciliation of non-GAAP financial measures.

Adjusted EBITDA : 2016 vs 2015


Q4 2016 OVERVIEW

5

Adjusted EBITDA : Q4’16 vs Q3’16

68 67

Q3 2016 FX Salesprice

Volume Costs SG&A Freight Q4 2016

23

(4)

4

(15)

968 67

Q3 2016 Marketpulp

Tissue Woodproducts


Corporate Q4 2016

(2)

(18)

1063



Q4 2016 OVERVIEW

6

Adjusted EBITDA : Q4’16 vs Q4’15


41

67

Q4 2015 FX Salesprice

Volume Tissue Costs SG&A Freight Q4 2016

7

10 26

1 41

67

Q4 2015 Marketpulp

Tissue Woodproducts


Corporate Q4 2016

(15)

22

16 3


MARKET PULP

7

1. EBITDA is a non-GAAP financial measure. Refer to Appendices A and B for a definition and reconciliation of non-GAAP financial measures.

2. The “all-in” delivered cost is the total cost of each ton shipped (cost of sales, depreciation and amortization, distribution costs and selling, general and administrative expenses).

(US$mm) Q4 2016 Q3 2016 2016 2015

Sales 217 198 836 889

Operating income 6 5 43 76

EBITDA1 15 15 80 129

Shipments (000’s mt) 368 323 1,388 1,375

592575

500

525

550

575

600

625

650

675

700

725

750

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

$/m

t

average transaction price "all-in" delivered cost ²

102

88

77

9094

83

10091

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

Inventory (000's mt)

Global chemical pulp demand ↑ 5.6% in

Q4 vs. 2015– China ↑ 21.1%; North America: ↓ 2.5%

Western Europe ↓ 3.8%

– World capacity ↑ 700k mt

– 2016 world demand ↑ 2.5% for softwood,

7.3% for hardwood

Q4 Transaction price ↓ $18/mt vs. Q3

Q4 Delivered cost ↓ $17/mt vs. Q3

Q4 Shipments ↑ 45k mt vs. Q3


TISSUE

8


(US$mm) Q4 2016 Q3 2016 2016

Sales 19 23 89

Operating income (loss) 1 (5) (10)

EBITDA1 0 (3) (5)

Shipments (000’s st) 12 15 58

1,521

1,367

1,000

1,200

1,400

1,600

1,800

2,000

Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

$/s

t

average transaction price "all-in" delivered cost

(200)

(150)

(100)

(50)

0

50

100

Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016$

/st

EBITDA / unit

US consumption ↑ 4.2% in Q4 vs. 2015

– Away-from-home ↑ 3.4%

– At-home ↑ 1.6%

Q4 Transaction price ↓ $28/st vs. Q3

Q4 Delivered cost ↓ $511/st vs. Q3

Calhoun project $35 million capex in Q4

6 53 4 5

Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

Inventory (000's st)


WOOD PRODUCTS

9


(US$mm) Q4 2016 Q3 2016 2016 2015

Sales 164 168 596 536

Operating income 17 36 69 2

EBITDA1 25 43 100 39

Shipments (mmbf) 503 506 1,844 1,678

Q4 seasonally adjusted US single family

housing starts ↑ 9.5% vs. Q3 Total housing starts ↑ 6.2%

Q4 Transaction price ↓ $4/mbf vs. Q3

Q4 Delivered cost ↑ $29/mbf vs. Q3

Q4 Shipments of 503 mmbf

327

292

250

275

300

325

350

375

400

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

$/m

bf


133117

135 130 126 129 121 124

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

Inventory (000's mbf)

$250

$275

$300

$325

$350

$375

$400

$425

$450

$475

$500

Random Lengths Composite 2x4 -L/A #1-2 KD GL 2x4x8 Stud KD GL

Q4 2016


NEWSPRINT

10


(US$mm) Q4 2016 Q3 2016 2016 2015

Sales 253 242 1,009 1,105

Operating income (loss) 1 (8) (15) (23)

EBITDA1 19 9 59 41

Shipments (000’s mt) 493 470 1,992 2,150

10597 101

91

10496

105 105

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

Inventory (000's mt)

512

475

500

525

550

575

600

625

650

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

$/m

t


North American demand ↓ 6.7% vs. 2015– Production ↓ 6.3%

North American operating rate of 92% in

2016

World demand ↓ 5.1% November-YTD vs.

2015

Q4 Shipments at 493k mt

Q4 Delivered cost ↓ $19/mt vs. Q3


SPECIALTY PAPERS

11


92

114

102

88

78

88

75

92

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

Inventory (000's st)

665

654

600

625

650

675

700

725

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

$/s

t


North American demand ↓ 6.2% in uncoated

mechanical grades vs. 2015– SC ↓ 9.6%

– North American operating rates at 90%

Coated mechanical demand ↓ 6.2% vs.

2015 – North American production ↓ 8.4%

– North American operating rates at 93%

Q4 Transaction price ↓ $7/st vs. Q3

Q4 Delivered cost ↓ $23/st vs. Q3

(US$mm) Q4 2016 Q3 2016 2016 2015

Sales 236 257 1,015 1,104

Operating income (loss) 4 (2) 25 29

EBITDA1 15 9 70 100

Shipments (000’s st) 355 384 1,514 1,580


P&L

12

Selected financial information2016 vs 2015 Q4 2016 vs Q3 2016 vs Q4 2015

Net income1 $4mm +$28mm Net loss1 $3mm -$22mm +$23mm

Sales $3,545mm -3% Sales $889mm – -1%

EPS1 $0.04 +$0.30 EPS1 ($0.03) -$0.24 +$0.26

Adjusted EBITDA2

$279mm+1%

Adjusted EBITDA2

$67mm-1% +63%

Special items affecting net income (pre-tax)2016 Q4 2016

- $62mm for impairment and closure costs

- $24mm non-op. pension and OPEB3 costs

Cash-related items (net): ~$0mm

- $25mm for impairment and closure costs

- $6mm non-op. pension and OPEB3 costs

Cash-related items (net outflow): ~$3mm

1. Excluding special items. Refer to Appendices A and B for a definition and reconciliation of non-GAAP financial measures.

2. Adjusted EBITDA is a non-GAAP financial measure. Refer to Appendices A and B for a definition and reconciliation of non-GAAP financial measures.

3. Other postretirement benefit.


SHIPMENTS

13

368

503

493

35512

0

20

40

60

80

100

300

350

400

450

500

550

600

650

Market pulp 000's mt Wood products 000's mbf Newsprint 000's mt

Specialty papers 000's st Tissue 000's st

Laurentide(-190k mt)

Iroquois Falls, Baie-Comeau PM1, Clermont PM5: (-465k mt)

Thunder Bay pellet plant

Ignace begins ramp-up

Atikokan begins ramp-up

Atlasacquisition

Augusta PM1: (-190k mt)

Market outages

Senneterre – Lac-Clair sawmill


PERFORMANCE METRICS

14

« All-in » delivered cost1 EBITDA per unit1,2

575

292

512

654

200

300

400

500

600

700

800

$/u

nit

Market pulp $/mt Wood products $/mbf

Newsprint $/mt Specialty papers $/st

41

50

39

42

0

20

40

60

80

100

120

$/u

nit

Market pulp $/mt Wood products $/mbf

Newsprint $/mt Specialty papers $/st

EBITDA2

contribution from cogen

(in $US millions)

Q1’15 Q2’15 Q3’15 Q4’15 Q1’16 Q2’16 Q3’16 Q4’16

12 13 10 8 13 13 9 10

1. Performance metrics related to our tissue segment are available on page 8.



LIQUIDITY AND CASH FLOW

15

Q4 2016

(US$mm)vs Q3 2016 vs Q4 2015

Cash 35 20 23

Working capital 580 2 37

Total debt 762 35 171

Interest 9 1 –

Available liquidity(US$mm)

2016 2015

Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1

Total debt 762 727 611 611 591 590 590 590

Cash on hand 35 55 40 37 58 235 303 324

Available under revolving credit facilities 433 465 412 406 444 448 468 464

• Entered into $185mm credit facility in

2016, including $46mm term loan

• Net borrowings of $35mm under

revolving credit facilities in Q4

• Q4 capex of $72mm ↓ $6mm from Q3:

– $35mm for tissue project

• Liquidity of $468mm

• Q4 net cash from operations $30mm


PENSION

16

(in $US millions) 2016 2015 2014

Net pension liabilities 1,123 1,019 1,421

OPEB liabilities 172 174 210

Net pension and OPEB liabilities 1,295 1,193 1,631

U.S. GAAP discount rate at 12/311 3.8% 4.2% 4.0%

• Net pension & OPEB liability as of December 31, 2016 ↑ $184 million in Q4

• Mostly due to a reduction in the applicable discount rate.

(in $US millions) 2017E 2016 2015 2014

Pension contributions2 151 162 143 164

OPEB payments 14 13 13 19

Operating pension and OPEB costs3 25 26 28 36

Non-op. pension and OPEB costs3,4 15 24 66 (10)

Total pension and OPEB costs 40 50 94 26

1. Pension plans.

2. Includes defined benefit, defined contribution and target benefit plans.

3. Starting January 1, 2017, amortization of prior service credits will be retrospectively presented under “non-operating pension and OPEB costs,” to be consistent with an Accounting

Standards Update expected to be issued by the FASB in the first quarter of 2017. Amortization of prior service credits of $15 million, $16 million, $16 million and $13 million for the

years ended December 31, 2017, 2016, 2015 and 2014 respectively, are currently presented as a reduction of costs under “operating pension and OPEB costs.”

4. Excluded from Adjusted EBITDA.


17

PENSION


2016 Pension Plans Deficit

Accounting

Basis

Funding

Purposes3 Variance

Net pension

liabilities

(US$mm)

1,123 621 502

Funded ratio

(%)78.7% 91.4%

Discount rate

(%)3.8% 5.0%

1. The assumptions for estimated total pension contributions can be found in the table “Assumptions used for 2017 – 2020” above.

2. Refer to Resolute Forest Products Inc.’s Current Report on Form 8-K filed December 20, 2016, SEC File No. 001-3376, for additional information and related risks.

3. Funding for pension plans in Quebec are on a going concern basis; in Ontario on a solvency basis; and in the U.S. on a 25-year average interest rate basis.

80

90

100

110

120

130

140

150

160

170

2016 2017 2018 2019 2020

Mill

ion

s o

f U

SD

Capacity Reduction

Other

Assumptions used for 2017 – 20202

Discount rate: going concern 5.5%

Estimated rate of return on assets 7.0%

Canadian dollar US$ 0.75

Estimated Total Pension Contributions1,2

APPENDIX A

19

Three months ended December 31, 2016

(unaudited, in millions, except per share amounts) EPS

GAAP, as reported (18)$ (45)$ (0.50)$

Adjustments for special items:

Foreign currency translation loss - 10 0.11

Closure costs, impairment and other related charges 25 25 0.28

Inventory write-downs related to closures 2 2 0.02

Start-up costs 3 3 0.03

Non-operating pension and OPEB costs 6 6 0.07

Other income, net - (3) (0.03)

Income tax effect of special items - (1) (0.01)

Adjusted for special items 18$ (3)$ (0.03)$



GAAP, as reported (226)$ (214)$ (2.39)$







Acquisition-related costs 4 4 0.04



Adjusted for special items (20)$ (26)$ (0.29)$

RESOLUTE FOREST PRODUCTS INC.

RECONCILIATION OF OPERATING INCOME AND NET INCOME ADJUSTED FOR SPECIAL ITEMS

Net income

(loss)

Operating

income (loss)

Operating

income (loss)

Net income

(loss)

A reconciliation of our operating income, net income and net income per share reported before special items is presented in the

tables below. See Note 1 to the Reconciliations of Non-GAAP Measures regarding our use of non-GAAP measures contained in our

February 2, 2017, press release available on our website.


20

Twelve months ended December 31, 2016


GAAP, as reported (26)$ (81)$ (0.90)$






Net gain on disposition of assets (2) (2) (0.02)




Adjusted for special items 73$ 4$ 0.04$



GAAP, as reported (219)$ (257)$ (2.78)$







Acquisition-related costs 4 4 0.04



Adjusted for special items 39$ (24)$ (0.26)$

Operating

income (loss)

Net income

(loss)

Operating

income (loss)

Net income

(loss)


21


(unaudited, in millions) Market pulp Tissue ( 2 ) Wood products Newsprint

Specialty

papers

Corporate and

other Total

Net income (loss) including noncontrolling interests 6$ 1$ 17$ 1$ 4$ (73)$ (44)$

Interest expense 9 9

Income tax provision 10 10

Depreciation and amortization 9 (1) 8 18 11 4 49

EBITDA 15$ -$ 25$ 19$ 15$ (50)$ 24$

Foreign currency translation loss 10 10

Closure costs, impairment and other related charges 25 25

Inventory write-downs related to closures 2 2

Start-up costs 3 3

Non-operating pension and OPEB costs 6 6

Other income, net (3) (3)

Adjusted EBITDA 15$ -$ 25$ 19$ 15$ (7)$ 67$



Specialty

papers

Corporate and

other Total

Net income (loss) including noncontrolling interests 17$ (1)$ (8)$ (13)$ (2)$ (206)$ (213)$


Income tax benefit (23) (23)

Depreciation and amortization 13 1 11 16 17 3 61

EBITDA 30$ -$ 3$ 3$ 15$ (217)$ (166)$




Start-up costs 1 1


Acquisition-related costs 4 4


Adjusted EBITDA 30$ -$ 3$ 3$ 15$ (10)$ 41$

RESOLUTE FOREST PRODUCTS INC.

RECONCILIATION OF EBITDA AND ADJUSTED EBITDA

A reconciliation of our net income including noncontrolling interests to EBITDA and Adjusted EBITDA is presented in the tables below. See Note 1 to the Reconciliations of Non-GAAP

Measures regarding our use of the non-GAAP measures EBITDA and Adjusted EBITDA contained in our February 2, 2017, press release available on our website.


22



Specialty

papers

Corporate and

other Total

Net income (loss) including noncontrolling interests 43$ (10)$ 69$ (15)$ 25$ (188)$ (76)$


Income tax provision 19 19


EBITDA 80$ (5)$ 100$ 59$ 70$ (117)$ 187$




Start-up costs 8 8

Net gain on disposition of assets (2) (2)



Adjusted EBITDA 80$ (5)$ 100$ 59$ 70$ (25)$ 279$



Specialty

papers

Corporate and

other Total

Net income (loss) including noncontrolling interests 76$ (1)$ 2$ (23)$ 29$ (338)$ (255)$


Income tax benefit (1) (1)


EBITDA 129$ -$ 39$ 41$ 100$ (287)$ 22$




Start-up costs 5 5


Acquisition-related costs 4 4


Adjusted EBITDA 129$ -$ 39$ 41$ 100$ (33)$ 276$


APPENDIX B

24

Resolute Forest Products Inc.

Financial and Operating Statistics (Page 1 of 5)

Variance

(in millions, except per share amounts and otherw ise indicated) First Second Third Fourth Total First Second Third Fourth Total checks

Income Statement Data

Sales 920$ 926$ 905$ 894$ 3,645$ 877$ 891$ 888$ 889$ 3,545$

Operating income (loss) (15) 16 6 (226) (219) - (18) 10 (18) (26)

Interest expense (12) (11) (9) (9) (41) (10) (9) (10) (9) (38)

Other income (expense), net 5 1 (1) (1) 4 13 - 1 (7) 7

Net income (loss) including noncontrolling interests (32) (4) (6) (213) (255) (7) (40) 15 (44) (76)

Net income (loss) attributable to noncontrolling interests 1 - - 1 2 1 2 1 1 5

Net income (loss) attributable to Resolute Forest Products Inc. (33) (4) (6) (214) (257) (8) (42) 14 (45) (81)

Diluted net income (loss) per share attributable to Resolute Forest Products Inc. common shareholders (0.35)$ (0.04)$ (0.07)$ (2.39)$ (2.78)$ (0.09)$ (0.47)$ 0.15$ (0.50)$ (0.90)$

Dividends declared per common share -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Average diluted shares outstanding (in thousands) 94,883 94,095 91,087 89,415 92,353 89,610 89,818 90,392 90,068 89,882

Ending shares outstanding (in thousands) 94,801 91,606 89,306 89,493 89,493 89,493 89,505 89,507 89,751 89,751

Financial Position

Cash and cash equivalents 324$ 303$ 235$ 58$ 58$ 37$ 40$ 55$ 35$ 35$

Working capital (1) 629 616 644 617 617 620 573 578 580 580

Fixed assets, net 1,956 1,944 1,932 1,810 1,810 1,811 1,801 1,839 1,842 1,842

Total assets 4,739 4,682 4,541 4,220 4,220 4,289 4,245 4,312 4,277 4,277

Current portion of long-term debt 1 1 1 1 1 1 1 1 1 1

Long-term debt, net of current portion 589 589 589 590 590 610 610 726 761 761

Net debt (2) 266 287 355 533 533 574 571 672 727 727

Liquidity (3) 788 771 683 502 502 443 452 520 468 468

Total Resolute Forest Products Inc. shareholders' equity 2,088 2,061 2,046 1,932 1,932 1,932 1,899 1,919 1,693 1,693

Noncontrolling interests 12 12 12 13 13 14 16 17 18 18

Total equity 2,100 2,073 2,058 1,945 1,945 1,946 1,915 1,936 1,711 1,711

Cash Flow Information

Cash flows provided by (used in) operations 29$ 61$ -$ 48$ 138$ 6$ 63$ (18)$ 30$ 81$

Cash invested in fixed assets (40) (39) (44) (62) (185) (47) (52) (78) (72) (249)

Acquisition of Atlas Paper Holdings, Inc., including cash overdraft acquired - - - (159) (159) - - - - -

Dispositions of assets - - - - - 5 - - - 5

Decrease (increase) in countervailing duty cash deposits - - - (4) (4) (6) (6) (5) (6) (23)

Cash flows provided by (used in) investing activities (40) (43) (45) (224) (352) (48) (59) (82) (84) (273)

Issuance of long-term debt - - - - - - - 46 - 46

Net borrowings under revolving credit facilities - - - - - 20 - 70 35 125

Purchases of treasury stock - (37) (22) - (59) - - - - -

Cash flows provided by (used in) financing activities - (40) (22) - (62) 20 (1) 115 35 169

2015 2016


25



(in millions, except per unit items and otherw ise indicated) First Second Third Fourth Total First Second Third Fourth Total

Sales

Market pulp 218$ 231$ 230$ 210$ 889$ 211$ 210$ 198$ 217$ 836$

Tissue (4) - - - 11 11 23 24 23 19 89

Wood products 139 134 131 132 536 119 145 168 164 596

Newsprint 291 289 258 267 1,105 257 257 242 253 1,009

Specialty papers 272 272 286 274 1,104 267 255 257 236 1,015

Total sales 920$ 926$ 905$ 894$ 3,645$ 877$ 891$ 888$ 889$ 3,545$

Shipments to 3rd Parties (thousands of units)

Market pulp (mt) 328 351 360 336 1,375 352 345 323 368 1,388

Tissue (st) (4) - - - 7 7 15 16 15 12 58

Wood products (mbf) 393 418 421 446 1,678 390 445 506 503 1,844

Newsprint (mt) 534 548 517 551 2,150 519 510 470 493 1,992

Specialty papers (st) 382 388 411 399 1,580 393 382 384 355 1,514

Average Transaction Price per Unit

Market pulp ($/mt) 666$ 658$ 639$ 623$ 646$ 601$ 607$ 610$ 592$ 602$

Tissue ($/st) (4) - - - 1,506 1,506 1,489 1,560 1,549 1,521 1,530

Wood products ($/mbf) 353 320 314 296 320 306 325 331 327 323

Newsprint ($/mt) 545 528 498 484 514 495 504 515 512 506

Specialty papers ($/st) 711 701 693 690 699 679 668 672 665 671

20162015


26



(in millions, except per unit items and otherw ise indicated) First Second Third Fourth Total First Second Third Fourth Total

Operating Income (Loss)

Market pulp 11$ 26$ 22$ 17$ 76$ 20$ 12$ 5$ 6$ 43$

Tissue (4) - - - (1) (1) (2) (4) (5) 1 (10)

Wood products 5 (4) 9 (8) 2 (4) 20 36 17 69

Newsprint (3) 3 (10) (13) (23) (5) (3) (8) 1 (15)

Specialty papers 5 17 9 (2) 29 7 16 (2) 4 25

Corporate and other (33) (26) (24) (219) (302) (16) (59) (16) (47) (138)

Total operating income (loss) (15)$ 16$ 6$ (226)$ (219)$ -$ (18)$ 10$ (18)$ (26)$

Selling, General and Administrative Expenses

Market pulp 8$ 8$ 7$ 8$ 31$ 7$ 7$ 8$ 6$ 28$

Tissue (4) - - - 2 2 2 3 2 2 9

Wood products 6 6 5 6 23 5 7 6 4 22

Newsprint 11 12 9 11 43 10 9 10 8 37

Specialty papers 8 7 8 6 29 6 7 7 5 25

Corporate and other 8 7 5 12 32 8 7 4 9 28

Total selling, general and administrative expenses 41$ 40$ 34$ 45$ 160$ 38$ 40$ 37$ 34$ 149$

Operating Cost per Unit

Market pulp ($/mt) 631$ 585$ 576$ 574$ 591$ 543$ 575$ 592$ 575$ 571$

Tissue ($/st) (4) - - - 1,539 1,539 1,643 1,792 1,878 1,367 1,682

Wood products ($/mbf) 342 327 294 310 318 317 278 263 292 286

Newsprint ($/mt) 552 521 517 509 525 504 511 531 512 514

Specialty papers ($/st) 698 658 671 697 681 662 625 677 654 654

Product Inventory (thousands of units)

Market pulp (mt) 102 88 77 90 90 94 83 100 91 91

Tissue (st) (4) - - - 6 6 5 3 4 5 5

Wood products (mbf) 133 117 135 130 130 126 129 121 124 124

Newsprint (mt) 105 97 101 91 91 104 96 105 105 105

Specialty papers (st) 92 114 102 88 88 78 88 75 92 92

2015 2016


27



(in millions) First Second Third Fourth Total First Second Third Fourth Total

Net Income (Loss) Including Noncontrolling Interests

Market pulp 11$ 26$ 22$ 17$ 76$ 20$ 12$ 5$ 6$ 43$

Tissue (4)- - - (1) (1) (2) (4) (5) 1 (10)

Wood products 5 (4) 9 (8) 2 (4) 20 36 17 69

Newsprint (3) 3 (10) (13) (23) (5) (3) (8) 1 (15)

Specialty papers 5 17 9 (2) 29 7 16 (2) 4 25


Total net income (loss) including noncontrolling interests (32)$ (4)$ (6)$ (213)$ (255)$ (7)$ (40)$ 15$ (44)$ (76)$

Interest Expense 12$ 11$ 9$ 9$ 41$ 10$ 9$ 10$ 9$ 38$

Income Tax Provision (Benefit) 10$ 10$ 2$ (23)$ (1)$ 10$ 13$ (14)$ 10$ 19$

Depreciation and Amortization

Market pulp 14$ 12$ 14$ 13$ 53$ 7$ 11$ 10$ 9$ 37$

Tissue (4) - - - 1 1 2 2 2 (1) 5

Wood products 8 9 9 11 37 7 9 7 8 31

Newsprint 16 16 16 16 64 20 19 17 18 74


Corporate and other 2 4 2 3 11 3 3 4 4 14

Total depreciation and amortization 57$ 60$ 59$ 61$ 237$ 52$ 54$ 51$ 49$ 206$

EBITDA (5)

Market pulp 25$ 38$ 36$ 30$ 129$ 27$ 23$ 15$ 15$ 80$

Tissue (4) - - - - - - (2) (3) - (5)

Wood products 13 5 18 3 39 3 29 43 25 100

Newsprint 13 19 6 3 41 15 16 9 19 59


Corporate and other (26) (21) (23) (217) (287) - (56) (11) (50) (117)

Total EBITDA 47$ 77$ 64$ (166)$ 22$ 65$ 36$ 62$ 24$ 187$

Special Items (5)

Foreign currency translation (gain) loss (2)$ (1)$ 5$ 2$ 4$ (6)$ 3$ -$ 10$ 7$

Closure costs, impairment and other related charges 6 - 2 173 181 - 37 - 25 62

Inventory write-downs related to closures 1 - - 1 2 - 5 - 2 7

Net (gain) loss on disposition of assets - - - - - (2) - - - (2)

Non-operating pension and OPEB costs (credits) 14 12 13 27 66 6 6 6 6 24

Acquisition-related costs - - - 4 4 - - - - -

Start-up costs 1 1 2 1 5 3 1 1 3 8

Other (income) expense, net (3) - (4) (1) (8) (7) (3) (1) (3) (14)

Total special items 17$ 12$ 18$ 207$ 254$ (6)$ 49$ 6$ 43$ 92$

Adjusted EBITDA (5)

Market pulp 25$ 38$ 36$ 30$ 129$ 27$ 23$ 15$ 15$ 80$

Tissue (4) - - - - - - (2) (3) - (5)

Wood products 13 5 18 3 39 3 29 43 25 100

Newsprint 13 19 6 3 41 15 16 9 19 59



Total adjusted EBITDA 64$ 89$ 82$ 41$ 276$ 59$ 85$ 68$ 67$ 279$

20162015


28



Notes

5 EBITDA by reportable segment is calculated as net income (loss) including noncontrolling interests from the consolidated statements of operations, allocated to each of our reportable segments (market pulp, tissue, wood products, newsprint and

specialty papers) in accordance with FASB ASC 290, “Segment Reporting,” adjusted for depreciation and amortization. EBITDA for corporate and other is calculated as net income (loss) including noncontrolling interests from the consolidated

statements of operations, after the allocation to reportable segments, adjusted for interest expense, income taxes, and depreciation and amortization.

Adjusted EBITDA means EBITDA, excluding special items, such as foreign currency translation gains and losses, closure costs, impairment and other related charges, inventory write-downs related to closures, start-up costs, gains and losses on

disposition of assets, non-operating pension and OPEB costs and credits, acquisition-related costs and other charges or credits. Special items are allocated to corporate and other.

1 We define working capital as current assets less current liabilities excluding cash and cash equivalents and debt.

2 We define net debt as total debt less cash and cash equivalents.

4 On November 16, 2015, we acquired Atlas Paper Holdings, Inc. and its subsidiaries (or “Atlas Paper”), a manufacturer of a range of tissue products for the away-from-home and private-label at-home markets, including virgin and recycled products,

covering economy, value and premium grades and operating two tissue mills and a recycling facility in Florida. We began consolidating the results of operations of Atlas Paper in our Consolidated Financial Statements as of November 16, 2015. Atlas

Paper’s results of operations are included in the tissue segment.

3 We define liquidity as cash and cash equivalents and availability under our revolving credit facilities.

6 Certain prior period amounts have been changed to conform to the 2016 presentation.

We believe that using these non-GAAP measures is useful because they are consistent with the indicators management uses internally to measure the Company’s performance, and it allows the reader to more easily compare our ongoing operations

and financial performance from period to period. EBITDA and adjusted EBITDA are internal measures, and therefore may not be comparable to those of other companies. These non-GAAP measures should not be viewed as substitutes to financial

measures determined under GAAP in our consolidated statements of operations in our filings with the SEC.


RESOLUTE FOREST

PRODUCTS

Q4 2016 RESULTSRICHARD GARNEAU, PRESIDENT & CEO

JO-ANN LONGWORTH, SVP & CFO

February 2, 2017

resolute forest products q4 2016 resultsgowebcasting.http.internapcdn.net/gowebcasting/...q1 2015 q2...

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