Nov 04, 2019 4:17 PM
The net loss from continuing operations for the third quarter 2019 improved
The net loss from continuing operations for the nine months ended
See Schedule G for a reconciliation of the results from continuing operations to adjusted amounts.
“The increased EBITDA over prior quarters demonstrates the progress we are making on our initiatives to overcome these difficult market conditions. Price declines in commodity segments alone accounted for a
Third Quarter 2019 and YTD Operating Results
As a result of the sale of the Matane facility on
Net sales comprised the following for the periods presented:
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||
Net sales (in millions) |
|
|
|
|
|
|
|
|
|
||||||||||
High Purity Cellulose |
$ |
268 |
|
|
$ |
269 |
|
|
$ |
308 |
|
|
$ |
822 |
|
|
$ |
876 |
|
Forest Products |
65 |
|
|
81 |
|
|
86 |
|
|
222 |
|
|
282 |
|
|||||
Pulp |
26 |
|
|
40 |
|
|
46 |
|
|
95 |
|
|
133 |
|
|||||
Paper |
74 |
|
|
74 |
|
|
78 |
|
|
218 |
|
|
238 |
|
|||||
Eliminations |
(17 |
) |
|
(14 |
) |
|
(17 |
) |
|
(50 |
) |
|
(53 |
) |
|||||
Total net sales |
$ |
416 |
|
|
$ |
450 |
|
|
$ |
501 |
|
|
$ |
1,307 |
|
|
$ |
1,476 |
|
Operating results comprised the following for the periods presented:
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||
Operating income (loss) (in millions) |
|
|
|
|
|
|
|
|
|
||||||||||
High Purity Cellulose |
$ |
7 |
|
|
$ |
7 |
|
|
$ |
34 |
|
|
$ |
11 |
|
|
$ |
83 |
|
Forest Products |
(5 |
) |
|
(16 |
) |
|
8 |
|
|
(27 |
) |
|
35 |
|
|||||
Pulp |
(2 |
) |
|
3 |
|
|
13 |
|
|
3 |
|
|
37 |
|
|||||
Paper |
— |
|
|
3 |
|
|
13 |
|
|
1 |
|
|
24 |
|
|||||
Corporate |
(8 |
) |
|
(12 |
) |
|
(25 |
) |
|
(39 |
) |
|
(48 |
) |
|||||
Total operating income (loss) |
$ |
(8 |
) |
|
$ |
(15 |
) |
|
$ |
43 |
|
|
$ |
(51 |
) |
|
$ |
131 |
|
High Purity Cellulose
Operating income for the three and nine months ended
The 2018 three and nine month periods include operating income of
Compared to the second quarter of 2019, operating income was flat as higher commodity product sales volumes due to higher production, higher cellulose specialties sales prices due to mix, and lower wood and maintenance costs were offset by lower commodity sales prices and lower cellulose specialties sales volumes, both due to weaker markets.
Forest Products
Operating income decreased
Compared to the second quarter of 2019, the operating loss improved by
Pulp
Operating income decreased
Compared to the second quarter of 2019, operating income decreased
Paper
Operating income decreased
Compared to the second quarter of 2019, operating income decreased
Corporate
The operating loss improved
Compared to the second quarter of 2019, the operating loss improved
Non-Operating Expenses
Interest expense increased slightly from
Income Tax (Expense) Benefit
The year-to-date 2019 effective tax rate was a benefit of 30 percent compared to an expense of 24 percent for the same period in 2018. The difference in the periods effective tax rate is primarily driven by mix of results in taxable jurisdictions. The effective tax rate benefit differs from the federal statutory rate of 21 percent primarily due to tax credits, excess tax deductions on vested stock compensation, and different statutory tax rates of foreign operations.
Discontinued Operations
As previously discussed, the Company has presented the operating results for its Matane operations as discontinued operations for all periods presented herein. The decline in discontinued operations during the 2019 periods is principally driven from lower sales prices when compared to the same prior year periods. Included in discontinued operations is allocated interest expense for
Cash Flows and Liquidity
In the nine months ended
For the first nine months of 2019, the Company invested
Outlook
High Purity Cellulose
For full year 2019, the Company continues to expect cellulose specialties prices to be lower by approximately 1 to 2 percent, as previously guided, excluding the impact on sales prices of any Chinese duties the Company incurs. Cellulose specialties volumes are expected to be down approximately 6 percent versus 2018 due to demand weakness in acetate, automotive and construction markets, as customers aggressively manage inventory levels. Commodity product (primarily viscose and fluff pulp) sales prices are expected to be significantly lower in the fourth quarter due to weakness in the broad paper pulp markets as global trade issues persist. For the full year, the Company anticipates High Purity Cellulose EBITDA of approximately
Forest Products
Pulp
High-yield pulp prices continued to weaken in the third quarter due to lower demand for paper pulp products. However, the Company believes Chinese high-yield pulp markets have stabilized resulting in modest increases in regional pricing from September levels. European market prices continue to decline as they come into closer alignment with the Chinese pricing. The weaker demand has held inventory levels relatively high and continue to pressure global pulp prices.
Paper
North American paperboard prices will remain under pressure primarily due to increased competition. In newsprint, demand continues to decline as industry production capacity remains stable, resulting in continued pricing pressure.
Capital Allocation and Investment
Due to market conditions and increased leverage, the Company is reducing its capital spending across all segments. The Company currently expects capital spending to be
On
On
Amendment
On
Conclusion
“With 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 and margins through our Go-to-Market strategy, reducing costs with our Strategic Pillars and reducing earnings volatility as we conclude our Portfolio Evaluation process. We believe our short-term efforts and long-term strategy position us for improved profitability and sustained value creation.”
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 attained 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
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 - G 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 |
|
Nine Months Ended |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
$ |
416 |
|
|
$ |
450 |
|
|
$ |
501 |
|
|
$ |
1,307 |
|
|
$ |
1,476 |
|
Cost of Sales |
(399 |
) |
|
(432 |
) |
|
(419 |
) |
|
(1,265 |
) |
|
(1,237 |
) |
|||||
Gross Margin |
17 |
|
|
18 |
|
|
82 |
|
|
42 |
|
|
239 |
|
|||||
Selling, general & administrative expenses |
(23 |
) |
|
(20 |
) |
|
(30 |
) |
|
(72 |
) |
|
(78 |
) |
|||||
Duties |
(5 |
) |
|
(7 |
) |
|
(1 |
) |
|
(16 |
) |
|
(21 |
) |
|||||
Other operating income (expense), net |
3 |
|
|
(6 |
) |
|
(8 |
) |
|
(5 |
) |
|
(9 |
) |
|||||
Operating Income (Loss) |
(8 |
) |
|
(15 |
) |
|
43 |
|
|
(51 |
) |
|
131 |
|
|||||
Interest expense |
(15 |
) |
|
(14 |
) |
|
(14 |
) |
|
(43 |
) |
|
(42 |
) |
|||||
Interest income and other, net |
4 |
|
|
— |
|
|
2 |
|
|
6 |
|
|
12 |
|
|||||
Gain on bargain purchase |
— |
|
|
— |
|
|
6 |
|
|
— |
|
|
21 |
|
|||||
Income (Loss) From Continuing Operations Before Income Taxes |
(19 |
) |
|
(29 |
) |
|
37 |
|
|
(88 |
) |
|
122 |
|
|||||
Income tax (expense) benefit |
5 |
|
|
10 |
|
|
(7 |
) |
|
26 |
|
|
(29 |
) |
|||||
Income (Loss) from Continuing Operations |
$ |
(14 |
) |
|
$ |
(19 |
) |
|
$ |
30 |
|
|
$ |
(62 |
) |
|
$ |
93 |
|
Income (loss) from discontinued operations, net of taxes |
— |
|
|
4 |
|
|
8 |
|
|
10 |
|
|
23 |
|
|||||
Net Income (Loss) Attributable to the Company |
(14 |
) |
|
(15 |
) |
|
38 |
|
|
(52 |
) |
|
116 |
|
|||||
Mandatory convertible stock dividends |
(2 |
) |
|
(3 |
) |
|
(3 |
) |
|
(8 |
) |
|
(10 |
) |
|||||
Net Income (Loss) Available to Common Stockholders |
$ |
(16 |
) |
|
$ |
(18 |
) |
|
$ |
35 |
|
|
$ |
(60 |
) |
|
$ |
106 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic Earnings Per Common Share: |
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) from continuing operations |
$ |
(0.29 |
) |
|
$ |
(0.46 |
) |
|
$ |
0.52 |
|
|
$ |
(1.36 |
) |
|
$ |
1.61 |
|
Income from discontinued operations |
— |
|
|
0.09 |
|
|
0.16 |
|
|
0.20 |
|
|
0.46 |
|
|||||
Net income per common share - Basic |
$ |
(0.29 |
) |
|
$ |
(0.37 |
) |
|
$ |
0.68 |
|
|
$ |
(1.16 |
) |
|
$ |
2.07 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Diluted Earnings Per Common Share: |
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) from continuing operations |
$ |
(0.29 |
) |
|
$ |
(0.46 |
) |
|
$ |
0.47 |
|
|
$ |
(1.36 |
) |
|
$ |
1.45 |
|
Income from discontinued operations |
— |
|
|
0.09 |
|
|
0.13 |
|
|
0.20 |
|
|
0.37 |
|
|||||
Net income per common share - Diluted |
$ |
(0.29 |
) |
|
$ |
(0.37 |
) |
|
$ |
0.60 |
|
|
$ |
(1.16 |
) |
|
$ |
1.82 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Shares Used for Determining: |
|
|
|
|
|
|
|
|
|
||||||||||
Basic EPS |
56,089,839 |
|
|
49,572,055 |
|
|
50,603,498 |
|
|
51,576,123 |
|
|
51,005,206 |
|
|||||
Diluted EPS |
56,089,839 |
|
|
49,572,055 |
|
|
63,245,424 |
|
|
51,576,123 |
|
|
63,678,075 |
|
|||||
A |
Condensed Consolidated Balance Sheets
(millions of dollars) |
|||||||
|
|
|
|
||||
Assets |
|
|
|
||||
Cash and cash equivalents |
$ |
63 |
|
|
$ |
109 |
|
Other current assets |
610 |
|
|
607 |
|
||
Property, plant and equipment, net |
1,327 |
|
|
1,364 |
|
||
Other assets |
597 |
|
|
599 |
|
||
|
$ |
2,597 |
|
|
$ |
2,679 |
|
Liabilities and Stockholders’ Equity |
|
|
|
||||
Current maturities of long-term debt |
$ |
21 |
|
|
$ |
15 |
|
Other current liabilities |
292 |
|
|
355 |
|
||
Long-term debt and finance lease obligations |
1,212 |
|
|
1,173 |
|
||
Non-current environmental liabilities |
148 |
|
|
149 |
|
||
Other non-current liabilities |
285 |
|
|
280 |
|
||
Total stockholders’ equity |
639 |
|
|
707 |
|
||
|
$ |
2,597 |
|
|
$ |
2,679 |
|
B |
Condensed Consolidated Statements of Cash Flows
(millions of dollars) |
|||||||
|
Nine Months Ended |
||||||
|
|
|
|
||||
Operating Activities: |
|
|
|
||||
Net income (loss) |
$ |
(51 |
) |
|
$ |
116 |
|
Income from discontinued operations
|
(10 |
) |
|
(23 |
) |
||
Adjustments: |
|
|
|
||||
Gain on bargain purchase |
— |
|
|
(19 |
) |
||
Depreciation and amortization |
112 |
|
|
106 |
|
||
Other items to reconcile net income to cash provided by operating activities |
(8 |
) |
|
45 |
|
||
Changes in working capital and other assets and liabilities |
(38 |
) |
|
(83 |
) |
||
Cash provided by (used for) operating activities-continuing operations |
5 |
|
|
141 |
|
||
Cash provided by (used for) operating activities-discontinued operations |
19 |
|
|
19 |
|
||
Cash Provided by (Used for) Operating Activities |
24 |
|
|
160 |
|
||
|
|
|
|
||||
Investing Activities: |
|
|
|
||||
Capital expenditures |
(81 |
) |
|
(90 |
) |
||
Other |
— |
|
|
16 |
|
||
Cash used for investing activities-continuing operations |
(81 |
) |
|
(74 |
) |
||
Cash used for investing activities-discontinued operations |
(2 |
) |
|
(2 |
) |
||
Cash Used for Investing Activities |
(83 |
) |
|
(76 |
) |
||
|
|
|
|
||||
Financing Activities: |
|
|
|
||||
Changes in debt |
43 |
|
|
(34 |
) |
||
Dividends paid |
(19 |
) |
|
(21 |
) |
||
Common stock repurchased |
(6 |
) |
|
(18 |
) |
||
Cash provided by (used for) financing activities-continuing operations |
18 |
|
|
(73 |
) |
||
Cash provided by (used for) financing activities-discontinued operations |
— |
|
|
— |
|
||
Cash Provided by (Used for) Financing Activities |
18 |
|
|
(73 |
) |
||
|
|
|
|
||||
Cash and Cash Equivalents: |
|
|
|
||||
Change in cash and cash equivalents |
(41 |
) |
|
11 |
|
||
Net effect of foreign exchange on cash and cash equivalents |
(5 |
) |
|
(1 |
) |
||
Balance, beginning of year |
109 |
|
|
96 |
|
||
Balance, end of period |
$ |
63 |
|
|
$ |
106 |
|
C |
Sales Volumes and Average Prices
|
|||||||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Average Sales Prices: |
|
|
|
|
|
|
|
|
|
||||||||||
High Purity Cellulose ($ per metric ton): |
|
|
|
|
|
|
|
|
|
||||||||||
Cellulose Specialties |
$ |
1,317 |
|
|
$ |
1,310 |
|
|
$ |
1,333 |
|
|
$ |
1,303 |
|
|
$ |
1,344 |
|
Commodity Products |
$ |
768 |
|
|
$ |
792 |
|
|
$ |
807 |
|
|
$ |
803 |
|
|
$ |
813 |
|
Forest Products ($ per thousand board feet): |
|
|
|
|
|
|
|
|
|
||||||||||
Lumber |
$ |
366 |
|
|
$ |
356 |
|
|
$ |
487 |
|
|
$ |
370 |
|
|
$ |
500 |
|
Pulp ($ per metric ton): |
|
|
|
|
|
|
|
|
|
||||||||||
High-Yield pulp |
$ |
455 |
|
|
$ |
539 |
|
|
$ |
673 |
|
|
$ |
524 |
|
|
$ |
671 |
|
Paper ($ per metric ton): |
|
|
|
|
|
|
|
|
|
||||||||||
Paperboard |
$ |
1,097 |
|
|
$ |
1,117 |
|
|
$ |
1,120 |
|
|
$ |
1,105 |
|
|
$ |
1,136 |
|
Newsprint |
$ |
532 |
|
|
$ |
508 |
|
|
$ |
633 |
|
|
$ |
542 |
|
|
$ |
590 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales Volumes: |
|
|
|
|
|
|
|
|
|
||||||||||
High Purity Cellulose (thousands of metric tons): |
|
|
|
|
|
|
|
|
|
||||||||||
Cellulose Specialties |
137 |
|
|
146 |
|
|
163 |
|
|
432 |
|
|
466 |
|
|||||
Commodity Products |
88 |
|
|
71 |
|
|
70 |
|
|
246 |
|
|
188 |
|
|||||
Forest Products (millions of board feet): |
|
|
|
|
|
|
|
|
|
||||||||||
Lumber |
134 |
|
|
180 |
|
|
141 |
|
|
462 |
|
|
457 |
|
|||||
Pulp (thousands of metric tons): |
|
|
|
|
|
|
|
|
|
||||||||||
High-Yield pulp |
45 |
|
|
64 |
|
|
59 |
|
|
145 |
|
|
168 |
|
|||||
Paper (thousands of metric tons): |
|
|
|
|
|
|
|
|
|
||||||||||
Paperboard |
49 |
|
|
45 |
|
|
45 |
|
|
137 |
|
|
131 |
|
|||||
Newsprint |
38 |
|
|
47 |
|
|
44 |
|
|
123 |
|
|
151 |
|
|||||
D |
Reconciliation of Non-GAAP Measures
|
|||||||||||||||||||||||
EBITDA by Segment (a): |
Three Months Ended |
||||||||||||||||||||||
Forest
|
|
Pulp |
|
Paper |
|
High Purity
|
|
Corporate
|
|
Total |
|||||||||||||
Income (loss) from continuing operations |
$ |
(5 |
) |
|
$ |
(2 |
) |
|
$ |
3 |
|
|
$ |
8 |
|
|
$ |
(18 |
) |
|
$ |
(14 |
) |
Depreciation and amortization |
2 |
|
|
1 |
|
|
4 |
|
|
33 |
|
|
— |
|
|
40 |
|
||||||
Interest expense, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
15 |
|
|
15 |
|
||||||
Income tax expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(5 |
) |
|
(5 |
) |
||||||
EBITDA |
(3 |
) |
|
(1 |
) |
|
7 |
|
|
41 |
|
|
(8 |
) |
|
36 |
|
||||||
Loan amendment costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3 |
|
|
3 |
|
||||||
Insurance recovery |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(4 |
) |
|
(4 |
) |
||||||
Adjusted EBITDA |
$ |
(3 |
) |
|
$ |
(1 |
) |
|
$ |
7 |
|
|
$ |
41 |
|
|
$ |
(9 |
) |
|
$ |
35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Three Months Ended |
||||||||||||||||||||||
|
Forest
|
|
Pulp |
|
Paper |
|
High Purity
|
|
Corporate
|
|
Total |
||||||||||||
Income (loss) from continuing operations |
$ |
8 |
|
|
$ |
13 |
|
|
$ |
16 |
|
|
$ |
40 |
|
|
$ |
(47 |
) |
|
$ |
30 |
|
Depreciation and amortization |
2 |
|
|
1 |
|
|
4 |
|
|
30 |
|
|
— |
|
|
37 |
|
||||||
Interest expense, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
14 |
|
|
14 |
|
||||||
Income tax expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
7 |
|
|
7 |
|
||||||
EBITDA |
10 |
|
|
14 |
|
|
20 |
|
|
70 |
|
|
(26 |
) |
|
88 |
|
||||||
Gain on bargain purchase |
— |
|
|
— |
|
|
— |
|
|
(7 |
) |
|
1 |
|
|
(6 |
) |
||||||
Severance expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4 |
|
|
4 |
|
||||||
Adjusted EBITDA |
$ |
10 |
|
|
$ |
14 |
|
|
$ |
20 |
|
|
$ |
63 |
|
|
$ |
(21 |
) |
|
$ |
86 |
|
(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. |
E |
Reconciliation of Non-GAAP Measures
|
|||||||||||||||||||||||
EBITDA by Segment (a): |
Nine Months Ended |
||||||||||||||||||||||
Forest Products |
|
Pulp |
|
Paper |
|
High Purity
|
|
Corporate
|
|
Total |
|||||||||||||
Income (loss) from continuing operations |
$ |
(27 |
) |
|
$ |
3 |
|
|
$ |
8 |
|
|
$ |
10 |
|
|
$ |
(56 |
) |
|
$ |
(62 |
) |
Depreciation and amortization |
7 |
|
|
2 |
|
|
13 |
|
|
90 |
|
|
— |
|
|
112 |
|
||||||
Interest expense, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
43 |
|
|
43 |
|
||||||
Income tax expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(26 |
) |
|
(26 |
) |
||||||
EBITDA |
(20 |
) |
|
5 |
|
|
21 |
|
|
100 |
|
|
(39 |
) |
|
67 |
|
||||||
Non-recurring expense (b) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
1 |
|
||||||
Loan amendment costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3 |
|
|
3 |
|
||||||
Insurance recovery |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(4 |
) |
|
(4 |
) |
||||||
Adjusted EBITDA |
$ |
(20 |
) |
|
$ |
5 |
|
|
$ |
21 |
|
|
$ |
100 |
|
|
$ |
(39 |
) |
|
$ |
67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Nine Months Ended |
||||||||||||||||||||||
|
Forest
|
|
Pulp |
|
Paper |
|
High Purity
|
|
Corporate
|
|
Total |
||||||||||||
Income (loss) from continuing operations |
$ |
35 |
|
|
$ |
37 |
|
|
$ |
31 |
|
|
$ |
97 |
|
|
$ |
(107 |
) |
|
$ |
93 |
|
Depreciation and amortization |
5 |
|
|
2 |
|
|
13 |
|
|
86 |
|
|
— |
|
|
106 |
|
||||||
Interest expense, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
41 |
|
|
41 |
|
||||||
Income tax expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
28 |
|
|
28 |
|
||||||
EBITDA |
40 |
|
|
39 |
|
|
44 |
|
|
183 |
|
|
(38 |
) |
|
268 |
|
||||||
Gain on bargain purchase |
— |
|
|
— |
|
|
— |
|
|
(10 |
) |
|
(11 |
) |
|
(21 |
) |
||||||
Severance expense
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4 |
|
|
4 |
|
||||||
Adjusted EBITDA |
$ |
40 |
|
|
$ |
39 |
|
|
$ |
44 |
|
|
$ |
173 |
|
|
$ |
(45 |
) |
|
$ |
251 |
|
(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. |
F |
Reconciliation of Non-GAAP Measures (Continued)
(millions of dollars, except per share information) |
|||||||
|
Nine Months Ended |
||||||
Adjusted Free Cash Flows (a): |
|
|
|
||||
Cash provided by operating activities of continuing operations |
$ |
5 |
|
|
$ |
141 |
|
Capital expenditures |
(63 |
) |
|
(58 |
) |
||
Adjusted Free Cash Flows |
$ |
(58 |
) |
|
$ |
83 |
|
(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 |
$ |
21 |
|
|
$ |
15 |
|
Long-term debt & finance lease obligation |
1,212 |
|
|
1,173 |
|
||
Total debt |
1,233 |
|
|
1,188 |
|
||
Original issue discount, premiums and debt issuance costs |
4 |
|
|
5 |
|
||
Cash and cash equivalents |
(63 |
) |
|
(109 |
) |
||
Adjusted Net Debt |
$ |
1,174 |
|
|
$ |
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. |
G |
Reconciliation of Non-GAAP Measures (Continued)
(millions of dollars, except per share information) |
|||||||||||||||||||||||||||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Adjusted Operating Income (Loss) and Income (Loss) from Continuing Operations (a): |
$ |
|
Per Diluted
|
|
$ |
|
Per Diluted
|
|
$ |
|
Per Diluted Share |
|
$ |
|
Per Diluted Share |
|
$ |
|
Per Diluted Share |
||||||||||||||||||||
Operating Income (Loss) |
$ |
(8 |
) |
|
|
|
$ |
(15 |
) |
|
|
|
$ |
43 |
|
|
|
|
$ |
(51 |
) |
|
|
|
$ |
131 |
|
|
|
||||||||||
Severance expense |
— |
|
|
|
|
— |
|
|
|
|
4 |
|
|
|
|
— |
|
|
|
|
4 |
|
|
|
|||||||||||||||
Non-recurring expense (b) |
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
1 |
|
|
|
|
— |
|
|
|
|||||||||||||||
Loan amendment costs |
3 |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
3 |
|
|
|
|
— |
|
|
|
|||||||||||||||
Insurance recovery |
(4 |
) |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
(4 |
) |
|
|
|
— |
|
|
|
|||||||||||||||
Adjusted Operating Income (Loss) |
$ |
(9 |
) |
|
|
|
$ |
(15 |
) |
|
|
|
$ |
47 |
|
|
|
|
$ |
(51 |
) |
|
|
|
$ |
135 |
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Income (Loss) from Continuing Operations |
$ |
(14 |
) |
|
$ |
(0.29 |
) |
|
$ |
(19 |
) |
|
$ |
(0.46 |
) |
|
$ |
30 |
|
|
$ |
0.47 |
|
|
$ |
(62 |
) |
|
$ |
(1.36 |
) |
|
$ |
93 |
|
|
$ |
1.45 |
|
Severance expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4 |
|
|
0.06 |
|
|
— |
|
|
— |
|
|
4 |
|
|
0.06 |
|
||||||||||
Gain on bargain purchase |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(6 |
) |
|
(0.10 |
) |
|
— |
|
|
— |
|
|
(21 |
) |
|
(0.33 |
) |
||||||||||
Non-recurring expense (b) |
— |
|
|
0.01 |
|
|
1 |
|
|
0.01 |
|
|
— |
|
|
— |
|
|
1 |
|
|
0.02 |
|
|
— |
|
|
— |
|
||||||||||
Loan amendment costs |
3 |
|
|
0.06 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3 |
|
|
0.06 |
|
|
— |
|
|
— |
|
||||||||||
Insurance recovery |
(4 |
) |
|
(0.07 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(4 |
) |
|
(0.08 |
) |
|
— |
|
|
— |
|
||||||||||
Tax effects of adjustments |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1 |
) |
|
(0.02 |
) |
|
— |
|
|
— |
|
|
(1 |
) |
|
(0.01 |
) |
||||||||||
Adjusted Income (Loss) from Continuing Operations |
$ |
(15 |
) |
|
$ |
(0.29 |
) |
|
$ |
(18 |
) |
|
$ |
(0.45 |
) |
|
$ |
27 |
|
|
$ |
0.41 |
|
|
$ |
(61 |
) |
|
$ |
(1.36 |
) |
|
$ |
75 |
|
|
$ |
1.17 |
|
(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. |
H |
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