Feb 25, 2020 8:29 PM
Fourth Quarter and 2019 Results
Recent Developments
Further Actions to Reduce Costs and Improve Free Cash Flow
“2019 was a difficult year, negatively impacted by global trade disputes and sales price declines across our commodity businesses. We took decisive action to combat the pressure including implementing a strategy to increase margins in Cellulose Specialties, reduce capital expenditures, sell the Matane asset and reduce debt,” said
Fourth Quarter and Full Year 2019 Results Summary
The Company today reported a loss from continuing operations for the year ended
The adjusted loss from continuing operations for the year ended
See Schedule H for a reconciliation of the results from continuing operations to adjusted amounts.
As a result of the sale of the Matane facility in
Fourth Quarter and Full Year 2019 Operating Results
Net sales comprised the following for the periods presented:
|
Three Months Ended |
|
Year Ended |
||||||||||||||||
Net sales
|
|
|
|
|
|
|
|
|
|
||||||||||
High Purity Cellulose |
$ |
304 |
|
|
$ |
268 |
|
|
$ |
317 |
|
|
$ |
1,127 |
|
|
$ |
1,192 |
|
Forest Products |
77 |
|
|
65 |
|
|
73 |
|
|
299 |
|
|
356 |
|
|||||
Paperboard |
49 |
|
|
54 |
|
|
48 |
|
|
200 |
|
|
197 |
|
|||||
Pulp & Newsprint |
54 |
|
|
46 |
|
|
60 |
|
|
215 |
|
|
282 |
|
|||||
Eliminations |
(16 |
) |
|
(17 |
) |
|
(17 |
) |
|
(66 |
) |
|
(70 |
) |
|||||
Total net sales |
$ |
468 |
|
|
$ |
416 |
|
|
$ |
481 |
|
|
$ |
1,775 |
|
|
$ |
1,957 |
|
Operating results comprised the following for the periods presented:
Three Months Ended |
|
Year Ended |
|||||||||||||||||
Operating income (loss)
|
|
|
|
|
|
|
|
|
|
||||||||||
High Purity Cellulose |
$ |
(4 |
) |
|
$ |
7 |
|
|
$ |
29 |
|
|
$ |
7 |
|
|
$ |
112 |
|
Forest Products |
(4 |
) |
|
(5 |
) |
|
(10 |
) |
|
(31 |
) |
|
25 |
|
|||||
Paperboard |
3 |
|
|
2 |
|
|
(1 |
) |
|
4 |
|
|
4 |
|
|||||
Pulp & Newsprint |
(2 |
) |
|
(4 |
) |
|
16 |
|
|
2 |
|
|
72 |
|
|||||
Corporate |
(25 |
) |
|
(8 |
) |
|
(17 |
) |
|
(65 |
) |
|
(65 |
) |
|||||
Total operating income (loss) |
$ |
(32 |
) |
|
$ |
(8 |
) |
|
$ |
17 |
|
|
$ |
(83 |
) |
|
$ |
148 |
|
High Purity Cellulose
Operating income for the full year ended
For the three-month period ended
Compared to the third quarter of 2019, operating income declined
Forest Products
The operating loss for the three-months ended
Compared to the third quarter of 2019, the operating loss improved by
Paperboard
Operating income improved
Compared to the third quarter of 2019, operating income improved
Pulp & Newsprint
Operating income for the three and twelve months ended
Compared to the third quarter of 2019, the operating loss improved by
Corporate
The operating loss for the three months ended
Compared to the third quarter of 2019, the operating loss increased by
Non-Operating Expenses
Interest expense for the three and twelve months ended
Income Taxes
The full year 2019 effective tax rate from continuing operations was a benefit of 20 percent compared to an expense of 21 percent for the same period in 2018. The effective tax rate benefit differs from the federal statutory rate of 21 percent primarily due to nondeductible interest expense in the
Discontinued Operations
As previously discussed, the Company has presented the operating results for its Matane operations as discontinued operations for all periods presented herein. Income from discontinued operations includes an after-tax gain of
Actions to Reduce Costs and Improve Free Cash Flow
Today, the Company announced additional actions to reduce costs and improve free cash flow that further position it for long-term success. Already underway, the Company is implementing these initiatives while maintaining the high quality products and culture of innovation that are consistent with Rayonier Advanced Materials’ values.
“As we continue to focus on actions within our control, we have identified additional opportunities for cost reduction and cash preservation to ensure the Company can manage through the current commodity price environment,” said Boynton. “These proactive steps are critical to ensure we remain in compliance with our bank covenants in the near-term and provide our stakeholders with the ability to benefit from commodity price recovery in the long-term. We are targeting a total company cost savings and cash preservation plan of
Recent Developments
Action on Tariffs on Imported Goods into
On
Coronavirus
In late 2019 and early 2020, a strain of coronavirus was reported in
Momentum in Lumber Prices
Lumber prices have seen recent improvements supported by strong housing starts of 1.6 million in December and January, representing the best housing start numbers in over a decade. Lumber index prices have improved by
2020 Actions
Improve Operational Costs
The Company expects to improve costs from operations by
Reduce Corporate Costs
The Company will reduce its administrative support cost structure to align with the current business environment. The net cost savings from these changes are forecasted to be approximately
Reduce Capex
2020 capital expenditures will be reduced by
2020 working capital will be reduced by an estimated
Evaluate Further Opportunties For Improvement
Initiate incremental actions to review non-core assets to identify further opportunities to reduce costs and better position the Company for long-term success. Actions may include asset sales, workforce reductions, temporary production curtailments and permanent closures.
Outlook
High Purity Cellulose
For 2020, the Company expects Cellulose Specialties prices to increase approximately 2 percent on a contractual basis as a result of the Company’s decision to enhance product margins. As anticipated, Cellulose Specialties volumes are expected to decline due to a ramp down in certain contractual volumes driven by decisions not to pursue lower margin Cellulose Specialties business, a negative impact expected from sales timing and forecasted weakness in automotive end markets. Driven by the
Forest Products
Paperboard
Paperboard prices and volumes are expected to remain relatively constant in 2020. On a full year comparable basis, margins should improve as raw material costs for pulp have declined.
Pulp & Newsprint
High-yield pulp prices appear to have reached the bottom in the fourth quarter of 2019. The Company expects markets to improve gradually from the bottom of the cyclical lows but remain below 2018 realized prices. Newsprint prices remain challenged due to demand weakness; however, sales volumes are expected to increase due to improved productivity. Overall, the segment results are expected to be flat to slightly up in 2020, subject to the assumptions above. In addition, a significant portion of high-yield pulp sales are to
Conclusion
“We faced many challenges in 2019 which had a material impact on our business and financial results. By continuing our initiatives to lower costs and improve cash flows and liquidity, combined with the completion of our loan amendment and the sale of Matane, we are taking aggressive action to manage the current challenging market conditions,” added Boynton. “We are focused on increasing price, mix and margins in our High Purity Cellulose business, while reducing costs and preserving cash to improve our balance sheet. We face many uncertainties with a volatile global manufacturing economy but our employees are resilient and we are prepared to face each of these challenges to build a better future for our Company and its stockholders.”
Conference Call Information
About
Forward-Looking Statements
Certain statements in this document regarding anticipated financial, business, legal or other outcomes including business and market conditions, outlook and other similar statements relating to Rayonier Advanced Materials’ future events, developments, or financial or operational performance or results, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are identified by the use of words such as “may,” “will,” “should,” “expect,” “estimate,” “believe,” “intend,” “forecast,” “anticipate,” “guidance,” and other similar language. However, the absence of these or similar words or expressions does not mean a statement is not forward-looking. While we believe these forward-looking statements are reasonable when made, forward-looking statements are not guarantees of future performance or events and undue reliance should not be placed on these statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance these expectations will be atained and it is possible actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties.
Our operations are subject to a number of risks and uncertainties including, but not limited to, those listed below. When considering an investment in our securities, you should carefully read and consider these risks, together with all other information in our Annual Report on Form 10-K and our other filings and submissions to the
Business and Operating Risks
Our businesses we operate are highly competitive and many of them are cyclical, especially in commodity markets, which may result in fluctuations in pricing and volume that can adversely impact our business, financial condition and results of operations; Our ten largest customers represent approximately 33 percent of our 2019 revenue, and the loss of all or a substantial portion of our revenue from these large customers could have a material adverse effect on us; A material disruption at one of our major manufacturing facilities could prevent us from meeting customer demand, reduce our sales and profitability, increase our cost of production and capital needs, or otherwise adversely affect our business, financial condition and results of operation; Changes in raw material and energy availability and prices could affect our results of operations and financial condition; The availability of, and prices for, wood fiber may significantly impact our business, results of operations and financial condition; We are subject to risks associated with manufacturing and selling products and otherwise doing business outside of
Debt-Related Risks
While the Company has entered into an amendment (the “Amendment”) to its Senior Secured Credit Facilities (as amended by the Amendment, the “Credit Agreement”) to address the risk of potential non-compliance with certain covenants at the end of the third quarter of 2019, there can be no assurances that the Company will continue in full compliance with the amended covenants provided in the Credit Amendment through
Other important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements that may have been made in this document are described or will be described in our filings with the
Non-GAAP Financial Measures
This earnings release and the accompanying schedules contain certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted free cash flows, adjusted operating income, adjusted net income and adjusted net debt. These non-GAAP measures are reconciled to each of their respective most directly comparable GAAP financial measures on Schedules D - H of this earnings release. We believe these non-GAAP measures provide useful information to our board of directors, management and investors regarding certain trends relating to our financial condition and results of operations. Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, purposes of determining management incentive compensation and budgeting, forecasting and planning purposes.
We do not consider these non-GAAP measures an alternative to financial measures determined in accordance with GAAP. The principal limitations of these non-GAAP financial measures are that they may exclude significant expenses and income items that are required by GAAP to be recognized in our consolidated financial statements. In addition, they reflect the exercise of management’s judgment about which expenses and income items are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management provides reconciliations of the non-GAAP financial measures we use to their most directly comparable GAAP measures. Non-GAAP financial measures should not be relied upon, in whole or part, in evaluating the financial condition, results of operations or future prospects of the Company.
|
|||||||||||||||||||
Condensed Consolidated Statements of Income (Loss) |
|||||||||||||||||||
|
|||||||||||||||||||
(millions of dollars, except per share information) |
|||||||||||||||||||
|
Three Months Ended |
|
Year Ended |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
$ |
468 |
|
|
$ |
416 |
|
|
$ |
481 |
|
|
$ |
1,775 |
|
|
$ |
1,957 |
|
Cost of Sales |
(456 |
) |
|
(399 |
) |
|
(429 |
) |
|
(1,721 |
) |
|
(1,666 |
) |
|||||
Gross Margin |
12 |
|
|
17 |
|
|
52 |
|
|
54 |
|
|
291 |
|
|||||
Selling, general & administrative expenses |
(18 |
) |
|
(23 |
) |
|
(27 |
) |
|
(90 |
) |
|
(105 |
) |
|||||
Duties |
(7 |
) |
|
(5 |
) |
|
(5 |
) |
|
(22 |
) |
|
(26 |
) |
|||||
Other operating income (expense), net |
(19 |
) |
|
3 |
|
|
(3 |
) |
|
(25 |
) |
|
(12 |
) |
|||||
Operating Income (Loss) |
(32 |
) |
|
(8 |
) |
|
17 |
|
|
(83 |
) |
|
148 |
|
|||||
Interest expense |
(18 |
) |
|
(15 |
) |
|
(14 |
) |
|
(60 |
) |
|
(56 |
) |
|||||
Interest income and other, net |
(11 |
) |
|
4 |
|
|
2 |
|
|
(5 |
) |
|
14 |
|
|||||
Gain on bargain purchase |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
20 |
|
|||||
Income (Loss) From Continuing Operations Before Income Taxes |
(61 |
) |
|
(19 |
) |
|
5 |
|
|
(148 |
) |
|
126 |
|
|||||
Income tax (expense) benefit |
4 |
|
|
5 |
|
|
2 |
|
|
30 |
|
|
(27 |
) |
|||||
Income (Loss) from Continuing Operations |
$ |
(57 |
) |
|
$ |
(14 |
) |
|
$ |
7 |
|
|
$ |
(119 |
) |
|
$ |
99 |
|
Income (loss) from discontinued operations, net of taxes |
86 |
|
|
— |
|
|
6 |
|
|
96 |
|
|
29 |
|
|||||
Net Income (Loss) Attributable to the Company |
29 |
|
|
(14 |
) |
|
13 |
|
|
(22 |
) |
|
128 |
|
|||||
Mandatory convertible stock dividends |
— |
|
|
(2 |
) |
|
(4 |
) |
|
(9 |
) |
|
(14 |
) |
|||||
Net Income (Loss) Available to Common Stockholders |
$ |
29 |
|
|
$ |
(16 |
) |
|
$ |
9 |
|
|
$ |
(31 |
) |
|
$ |
115 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic Earnings Per Common Share: |
|
|
|
|
|
|
|
|
|||||||||||
Income (Loss) from Continuing Operations |
$ |
(0.91 |
) |
|
$ |
(0.29 |
) |
|
$ |
0.07 |
|
|
$ |
(2.33 |
) |
|
$ |
1.70 |
|
Income from discontinued operations |
1.36 |
|
|
— |
|
|
0.11 |
|
|
1.76 |
|
|
0.57 |
|
|||||
Net income per common share - Basic |
$ |
0.45 |
|
|
$ |
(0.29 |
) |
|
$ |
0.18 |
|
|
$ |
(0.57 |
) |
|
$ |
2.27 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted Earnings Per Common Share: |
|
|
|
|
|
|
|
|
|||||||||||
Income (Loss) from Continuing Operations |
$ |
(0.91 |
) |
|
$ |
(0.29 |
) |
|
$ |
0.07 |
|
|
$ |
(2.33 |
) |
|
$ |
1.52 |
|
Income from discontinued operations |
1.36 |
|
|
— |
|
|
0.11 |
|
|
1.76 |
|
|
0.44 |
|
|||||
Net income per common share - Diluted |
$ |
0.45 |
|
|
$ |
(0.29 |
) |
|
$ |
0.18 |
|
|
$ |
(0.57 |
) |
|
$ |
1.96 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Shares Used for Determining: |
|
|
|
|
|
|
|
|
|
||||||||||
Basic EPS |
62,975,537 |
|
|
56,089,839 |
|
|
49,583,842 |
|
|
54,511,863 |
|
|
50,602,480 |
|
|||||
Diluted EPS |
62,975,537 |
|
|
56,089,839 |
|
|
50,955,652 |
|
|
54,511,863 |
|
|
65,397,259 |
|
|
|||||||
Condensed Consolidated Balance Sheets |
|||||||
|
|||||||
(millions of dollars) |
|||||||
|
|
|
|
||||
Assets |
|
|
|
||||
Cash and cash equivalents |
$ |
64 |
|
|
$ |
109 |
|
Other current assets |
510 |
|
|
607 |
|
||
Property, plant and equipment, net |
1,316 |
|
|
1,364 |
|
||
Other assets |
590 |
|
|
599 |
|
||
|
$ |
2,480 |
|
|
$ |
2,679 |
|
Liabilities and Stockholders’ Equity |
|
|
|
||||
Current maturities of long-term debt... |
$ |
19 |
|
|
$ |
15 |
|
Other current liabilities |
267 |
|
|
355 |
|
||
Long-term debt and finance lease obligations |
1,063 |
|
|
1,173 |
|
||
Non-current environmental liabilities |
160 |
|
|
149 |
|
||
Other non-current liabilities |
288 |
|
|
280 |
|
||
Total stockholders’ equity |
683 |
|
|
707 |
|
||
|
$ |
2,480 |
|
|
$ |
2,679 |
|
Condensed Consolidated Statements of Cash Flows |
|||||||
|
|||||||
(millions of dollars) |
|||||||
|
Year Ended |
||||||
|
|
|
|
||||
Operating Activities: |
|
|
|
||||
Net income (loss) |
$ |
(22 |
) |
|
$ |
128 |
|
Income from discontinued operations |
(96 |
) |
|
(29 |
) |
||
Adjustments: |
|
|
|
||||
Gain on bargain purchase |
— |
|
|
(19 |
) |
||
Depreciation and amortization |
153 |
|
|
146 |
|
||
Other items to reconcile net income to cash provided by operating activities |
20 |
|
|
28 |
|
||
Changes in working capital and other assets and liabilities |
(33 |
) |
|
(32 |
) |
||
Cash provided by operating activities- continuing operations |
22 |
|
|
222 |
|
||
Cash provided by operating activities- discontinued operations |
20 |
|
|
25 |
|
||
Cash Provided by Operating Activities |
42 |
|
|
247 |
|
||
|
|
|
|
||||
Investing Activities: |
|
|
|
||||
Capital expenditures |
(103 |
) |
|
(129 |
) |
||
Proceeds from sale of resins operations |
— |
|
|
16 |
|
||
Cash used for investing activities-continuing operations |
(103 |
) |
|
(113 |
) |
||
Cash provided by (used for) investing activities-discontinued operations |
155 |
|
|
(3 |
) |
||
Cash Provided by (Used for) Investing Activities |
53 |
|
|
(116 |
) |
||
|
|
|
|
||||
Financing Activities: |
|
|
|
||||
Changes in debt |
(109 |
) |
|
(45 |
) |
||
Dividends paid |
(19 |
) |
|
(29 |
) |
||
Common stock repurchased, net of issuances |
(7 |
) |
|
(42 |
) |
||
Debt issuance costs |
(4 |
) |
|
— |
|
||
Cash used for financing activities-continuing operations |
(138 |
) |
|
(116 |
) |
||
Cash used for financing activities-discontinued operations |
— |
|
|
— |
|
||
Cash Used for Financing Activities |
(138 |
) |
|
(116 |
) |
||
|
|
|
|
||||
Cash and Cash Equivalents: |
|
|
|
||||
Change in cash and cash equivalents |
(44 |
) |
|
15 |
|
||
Net effect of foreign exchange on cash and cash equivalents |
(1 |
) |
|
(2 |
) |
||
Balance, beginning of year |
109 |
|
|
96 |
|
||
Balance, end of period |
$ |
64 |
|
|
$ |
109 |
|
|
|||||||||||||||||||
Sales Volumes and Average Prices |
|||||||||||||||||||
|
|||||||||||||||||||
|
Three Months Ended |
|
Year Ended |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Average Sales Prices: |
|
|
|
|
|
|
|
|
|
||||||||||
High Purity Cellulose ($ per metric ton): |
|
|
|
|
|
|
|
|
|
||||||||||
Cellulose Specialties |
$ |
1,314 |
|
|
$ |
1,317 |
|
|
$ |
1,303 |
|
|
$ |
1,306 |
|
|
$ |
1,334 |
|
Commodity Products |
$ |
619 |
|
|
$ |
768 |
|
|
$ |
827 |
|
|
$ |
739 |
|
|
$ |
818 |
|
Forest Products ($ per thousand board feet): |
|
|
|
|
|
|
|
|
|
||||||||||
Lumber |
$ |
383 |
|
|
$ |
366 |
|
|
$ |
379 |
|
|
$ |
373 |
|
|
$ |
471 |
|
Paperboard ($ per metric ton): |
|
|
|
|
|
|
|
|
|
||||||||||
Paperboard |
$ |
1,098 |
|
|
$ |
1,097 |
|
|
$ |
1,112 |
|
|
$ |
1,103 |
|
|
$ |
1,130 |
|
Pulp & Newsprint ($ per metric ton): |
|
|
|
|
|
|
|
|
|
||||||||||
Pulp |
$ |
440 |
|
|
$ |
455 |
|
|
$ |
661 |
|
|
$ |
499 |
|
|
$ |
669 |
|
Newsprint |
$ |
473 |
|
|
$ |
532 |
|
|
$ |
600 |
|
|
$ |
524 |
|
|
$ |
592 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales Volumes: |
|
|
|
|
|
|
|
|
|
||||||||||
High Purity Cellulose (thousands of metric tons): |
|
|
|
|
|
|
|
|
|
||||||||||
Cellulose Specialties |
153 |
|
|
137 |
|
|
158 |
|
|
586 |
|
|
624 |
|
|||||
Commodity Products |
132 |
|
|
88 |
|
|
109 |
|
|
378 |
|
|
298 |
|
|||||
Forest Products (millions of board feet): |
|
|
|
|
|
|
|
|
|
||||||||||
Lumber |
155 |
|
|
134 |
|
|
147 |
|
|
617 |
|
|
604 |
|
|||||
Paperboard (thousands of metric tons): |
|
|
|
|
|
|
|
|
|
||||||||||
Paperboard |
44 |
|
|
49 |
|
|
43 |
|
|
181 |
|
|
174 |
|
|||||
Pulp & Newsprint (thousands of metric tons): |
|
|
|
|
|
|
|
|
|
||||||||||
Pulp |
61 |
|
|
45 |
|
|
46 |
|
|
207 |
|
|
214 |
|
|||||
Newsprint |
44 |
|
|
38 |
|
|
41 |
|
|
166 |
|
|
191 |
|
|
|||||||||||||||||||||||
Reconciliation of Non-GAAP Measures |
|||||||||||||||||||||||
|
|||||||||||||||||||||||
EBITDA by Segment (a): |
Three Months Ended |
||||||||||||||||||||||
Forest
|
|
Paperboard |
|
Pulp &
|
|
High Purity
|
|
Corporate
|
|
Total |
|||||||||||||
Income (loss) from continuing operations |
$ |
(4 |
) |
|
$ |
4 |
|
|
$ |
(12 |
) |
|
$ |
(7 |
) |
|
$ |
(39 |
) |
|
$ |
(58 |
) |
Depreciation and amortization |
3 |
|
|
4 |
|
|
1 |
|
|
34 |
|
|
— |
|
|
42 |
|
||||||
Interest expense, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
18 |
|
|
18 |
|
||||||
Income tax expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(4 |
) |
|
(4 |
) |
||||||
EBITDA |
(1 |
) |
|
8 |
|
|
(11 |
) |
|
27 |
|
|
(25 |
) |
|
(2 |
) |
||||||
Pension settlement loss |
— |
|
|
— |
|
|
11 |
|
|
— |
|
|
(2 |
) |
|
9 |
|
||||||
Severance expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
1 |
|
||||||
Loan amendment costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
1 |
|
||||||
Adjusted EBITDA |
$ |
(1 |
) |
|
$ |
8 |
|
|
$ |
— |
|
|
$ |
27 |
|
|
$ |
(25 |
) |
|
$ |
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Three Months Ended |
||||||||||||||||||||||
|
Forest
|
|
Paperboard |
|
Pulp &
|
|
High Purity
|
|
Corporate
|
|
Total |
||||||||||||
Income (loss) from continuing operations |
$ |
(13 |
) |
|
$ |
(1 |
) |
|
$ |
19 |
|
|
$ |
20 |
|
|
$ |
(18 |
) |
|
$ |
7 |
|
Depreciation and amortization |
2 |
|
|
4 |
|
|
1 |
|
|
34 |
|
|
— |
|
|
41 |
|
||||||
Interest expense, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
13 |
|
|
13 |
|
||||||
Income tax expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2 |
) |
|
(2 |
) |
||||||
EBITDA |
(11 |
) |
|
3 |
|
|
20 |
|
|
54 |
|
|
(7 |
) |
|
59 |
|
||||||
Gain on bargain purchase |
2 |
|
|
— |
|
|
— |
|
|
8 |
|
|
(10 |
) |
|
— |
|
||||||
Adjusted EBITDA |
$ |
(9 |
) |
|
$ |
3 |
|
|
$ |
20 |
|
|
$ |
62 |
|
|
$ |
(17 |
) |
|
$ |
59 |
|
(a) EBITDA is defined as income (loss) from continuing operations before interest, taxes, depreciation and amortization. EBITDA is a non-GAAP measure used by our Chief Operating Decision Maker, existing stockholders and potential stockholders to measure how the Company is performing relative to the assets under management. Adjusted EBITDA is defined as EBITDA adjusted for items management believes do not represent core operations. Management believes this measure is useful to evaluate the Company's performance. |
|
|||||||||||||||||||||||
Reconciliation of Non-GAAP Measures |
|||||||||||||||||||||||
|
|||||||||||||||||||||||
EBITDA by Segment (a): |
Year Ended |
||||||||||||||||||||||
Forest
|
|
Paperboard |
|
Pulp &
|
|
High Purity
|
|
Corporate
|
|
Total |
|||||||||||||
Income (loss) from continuing operations |
$ |
(31 |
) |
|
$ |
6 |
|
|
$ |
(3 |
) |
|
$ |
4 |
|
|
$ |
(94 |
) |
|
$ |
(118 |
) |
Depreciation and amortization |
9 |
|
|
16 |
|
|
4 |
|
|
123 |
|
|
1 |
|
|
153 |
|
||||||
Interest expense, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
60 |
|
|
60 |
|
||||||
Income tax expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(30 |
) |
|
(30 |
) |
||||||
EBITDA |
(22 |
) |
|
22 |
|
|
1 |
|
|
127 |
|
|
(63 |
) |
|
65 |
|
||||||
Pension settlement loss |
— |
|
|
— |
|
|
11 |
|
|
— |
|
|
(2 |
) |
|
9 |
|
||||||
Severance expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
1 |
|
||||||
Non-recurring expense (b) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
1 |
|
||||||
Loan amendment costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4 |
|
|
4 |
|
||||||
Insurance recovery |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(4 |
) |
|
(4 |
) |
||||||
Adjusted EBITDA |
$ |
(22 |
) |
|
$ |
22 |
|
|
$ |
12 |
|
|
$ |
127 |
|
|
$ |
(63 |
) |
|
$ |
76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Year Ended |
||||||||||||||||||||||
|
Forest
|
|
Paperboard |
|
Pulp &
|
|
High Purity
|
|
Corporate
|
|
Total |
||||||||||||
Income (loss) from continuing operations |
$ |
22 |
|
|
$ |
6 |
|
|
$ |
80 |
|
|
$ |
117 |
|
|
$ |
(126 |
) |
|
$ |
99 |
|
Depreciation and amortization |
7 |
|
|
16 |
|
|
4 |
|
|
118 |
|
|
1 |
|
|
146 |
|
||||||
Interest expense, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
55 |
|
|
55 |
|
||||||
Income tax expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
27 |
|
|
27 |
|
||||||
EBITDA |
29 |
|
|
22 |
|
|
84 |
|
|
235 |
|
|
(43 |
) |
|
327 |
|
||||||
Gain on bargain purchase |
2 |
|
|
— |
|
|
— |
|
|
(2 |
) |
|
(20 |
) |
|
(20 |
) |
||||||
Severance expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4 |
|
|
4 |
|
||||||
Adjusted EBITDA |
$ |
31 |
|
|
$ |
22 |
|
|
$ |
84 |
|
|
$ |
233 |
|
|
$ |
(59 |
) |
|
$ |
311 |
|
(a) EBITDA is defined as income (loss) from continuing operations before interest, taxes, depreciation and amortization. EBITDA is a non-GAAP measure used by our Chief Operating Decision Maker, existing stockholders and potential stockholders to measure how the Company is performing relative to the assets under management. Adjusted EBITDA is defined as EBITDA adjusted for items management believes do not represent core operations. Management believes this measure is useful to evaluate the Company's performance. (b) Non-recurring expenses are related to the Company’s review of its commodity asset portfolio. |
|
||||||||
Reconciliation of Non-GAAP Measures (Continued) |
||||||||
|
||||||||
(millions of dollars, except per share information) |
||||||||
|
Year Ended |
|||||||
Adjusted Free Cash Flows (a): |
|
|
|
|||||
Cash provided by operating activities of continuing operations |
$ |
22 |
|
|
$ |
222 |
|
|
Capital expenditures |
(75 |
) |
|
(92 |
) |
|||
Adjusted Free Cash Flows |
$ |
(53 |
) |
|
$ |
130 |
|
|
(a) |
Adjusted free cash flows is defined as cash provided by (used for) operating activities from continuing operations adjusted for capital expenditures excluding strategic capital. Adjusted free cash flows is a non-GAAP measure of cash generated during a period which is available for dividend distribution, debt reduction, strategic acquisitions and repurchase of our common stock. Adjusted free cash flows is not necessarily indicative of the adjusted free cash flows that may be generated in future periods. |
Adjusted Net Debt (a): |
|
|
|
|||||
Current maturities of long-term debt |
$ |
19 |
|
|
$ |
15 |
|
|
Long-term debt & finance lease obligation |
1,063 |
|
|
1,173 |
|
|||
Total debt |
1,082 |
|
|
1,188 |
|
|||
Original issue discount, premiums and debt issuance costs |
6 |
|
|
5 |
|
|||
Cash and cash equivalents |
(64 |
) |
|
(109 |
) |
|||
Adjusted Net Debt |
$ |
1,024 |
|
|
$ |
1,084 |
|
|
(a) |
Adjusted net debt is defined as the amount of debt after the consideration of the original issue discount, premiums, and debt issuance costs, less cash. Adjusted net debt is a non-GAAP measure of debt and is not necessarily indicative of the adjusted net debt that may occur in future periods. |
|
||||||||||||||||||||||||||||||||||||||||
Reconciliation of Non-GAAP Measures (Continued) |
||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
(millions of dollars, except per share information) |
||||||||||||||||||||||||||||||||||||||||
|
Three Months Ended |
|
Year Ended |
|||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Adjusted Operating Income (Loss) and Income (Loss) from Continuing Operation (a): |
$ |
|
Per
|
|
$ |
|
Per
|
|
$ |
|
Per
|
|
$ |
|
Per
|
|
$ |
|
Per
|
|||||||||||||||||||||
Operating Income (Loss) |
$ |
(32 |
) |
|
|
|
$ |
(8 |
) |
|
|
|
$ |
17 |
|
|
|
|
$ |
(83 |
) |
|
|
|
$ |
148 |
|
|
|
|||||||||||
Severance expense |
1 |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
1 |
|
|
|
|
4 |
|
|
|
||||||||||||||||
Non-recurring expense (b) |
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
1 |
|
|
|
|
— |
|
|
|
||||||||||||||||
Loan amendment costs |
1 |
|
|
|
|
3 |
|
|
|
|
— |
|
|
|
|
4 |
|
|
|
|
— |
|
|
|
||||||||||||||||
Insurance recovery |
— |
|
|
|
|
(4 |
) |
|
|
|
— |
|
|
|
|
(4 |
) |
|
|
|
— |
|
|
|
||||||||||||||||
Adjusted Operating Income (Loss) |
$ |
(30 |
) |
|
|
|
$ |
(9 |
) |
|
|
|
$ |
17 |
|
|
|
|
$ |
(81 |
) |
|
|
|
$ |
152 |
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Income (Loss) from Continuing Operations |
$ |
(57 |
) |
|
$ |
(0.91 |
) |
|
$ |
(14 |
) |
|
$ |
(0.29 |
) |
|
$ |
7 |
|
|
$ |
0.07 |
|
|
$ |
(119 |
) |
|
$ |
(2.33 |
) |
|
$ |
99 |
|
|
$ |
1.52 |
|
|
Pension settlement loss |
9 |
|
|
0.14 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
9 |
|
|
0.16 |
|
|
— |
|
|
— |
|
|||||||||||
Severance expense |
1 |
|
|
0.02 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
0.03 |
|
|
4 |
|
|
0.06 |
|
|||||||||||
Gain on bargain purchase |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.01 |
|
|
— |
|
|
— |
|
|
(20 |
) |
|
(0.32 |
) |
|||||||||||
Non-recurring expense (b) |
— |
|
|
— |
|
|
— |
|
|
0.01 |
|
|
— |
|
|
— |
|
|
1 |
|
|
0.02 |
|
|
— |
|
|
— |
|
|||||||||||
Loan amendment costs |
1 |
|
|
0.01 |
|
|
3 |
|
|
0.06 |
|
|
— |
|
|
— |
|
|
4 |
|
|
0.07 |
|
|
— |
|
|
— |
|
|||||||||||
Insurance recovery |
— |
|
|
— |
|
|
(4 |
) |
|
(0.07 |
) |
|
— |
|
|
— |
|
|
(4 |
) |
|
(0.07 |
) |
|
— |
|
|
— |
|
|||||||||||
Tax effects of adjustments |
(3 |
) |
|
(0.04 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2 |
) |
|
(0.04 |
) |
|
(1 |
) |
|
(0.01 |
) |
|||||||||||
Adjusted Income (Loss) from Continuing Operations |
$ |
(49 |
) |
|
$ |
(0.78 |
) |
|
$ |
(15 |
) |
|
$ |
(0.29 |
) |
|
$ |
7 |
|
|
$ |
0.08 |
|
|
$ |
(110 |
) |
|
$ |
(2.16 |
) |
|
$ |
82 |
|
|
$ |
1.25 |
|
|
(a) |
Adjusted operating income (loss) is defined as operating income adjusted for non-recurring costs related to the Company’s review of its commodity asset portfolio, loan amendment costs, insurance recovery received, and severance expense. Adjusted income (loss) from continuing operations is defined as income (loss) from continuing operations adjusted net of tax for non-recurring costs related to the Company’s review of its commodity asset portfolio, loan amendment costs, insurance recovery received, severance expense and the gain on bargain purchase. Adjusted operating income (loss) and income (loss) from continuing operations are not necessarily indicative of results that may be generated in future periods. |
|||||||||||||||||||||||||||||||||||||||
(b) |
Non-recurring expenses are related to the Company’s review of its commodity asset portfolio. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200225006123/en/
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