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Resolute Reports Preliminary Third Quarter 2020 Results

General News

Resolute Forest Products Inc. (“Resolute” or the “Company”) reported net income for the quarter ended September 30, 2020, of $57 million, or $0.66 per diluted share, compared to a net loss of $43 million, or $0.47 per share, in the same period in 2019. Sales were $730 million in the quarter, an increase of $25 million from the year-ago period. Excluding special items, the company reported net income of $62 million, or $0.72 per diluted share, compared to a net loss of $34 million, or $0.37 per share, in the third quarter of 2019.

“We took advantage of the rally in lumber prices to further deleverage the balance sheet and drive shareholder value by opportunistically repurchasing 5% of outstanding shares,” said Yves Laflamme, president and chief executive officer. “While the pulp and paper segments continue to suffer from pandemic economics, we used part of the cash we generated with our lumber business to fully repay all revolving borrowings under our credit facilities, except for the low-interest term loan used to finance the acquisition of the U.S. sawmills, which have generated $38 million of EBITDA under our ownership this year. The tissue business is also picking up steam: with $6 million of EBITDA in the quarter, it has generated $19 million of EBITDA in the last twelve months.”

Non-GAAP financial measures, such as adjustments for special items and adjusted EBITDA, are explained and reconciled below.

Resolute also today announced the selection and appointment of Remi G. Lalonde as the company’s next president and chief executive officer, and a member of the board of directors, succeeding Yves Laflamme, as of March 1, 2021.

Operating Income Variance Against Prior Period


The company reported operating income of $97 million in the quarter, compared to $6 million in the second quarter. The $91 million improvement over the previous quarter reflects the favorable impact of higher lumber pricing ($117 million), offset by higher stumpage fees with the increase in lumber pricing ($5 million) and lower market pulp prices ($7 million).

Segment Operating Income Variance

As of the second quarter 2020, the company’s results from the newsprint and specialty papers segments have been combined into one paper segment. Comparative information, including the information in this earnings release, has been modified to conform with the revised segment presentation.

Market Pulp

The market pulp segment recorded an operating loss of $4 million in the quarter, compared to operating income of $10 million in the previous quarter. The change reflects a $26 per metric ton, or 4%, slip in the average transaction price on softer market conditions and an increase of $27 per metric ton, or 5%, in the operating cost per unit (the “delivered cost”) due mostly to higher planned maintenance costs. Shipments improved by 15,000 metric tons and finished goods inventory fell to 71,000 metric tons at quarter-end. EBITDA in the segment was $2 million.


The company reported operating income of $2 million in the tissue segment in the quarter, $4 million better than the previous quarter. The average transaction price rose by 4%, or $71 per short ton in the quarter, primarily as a result of the company’s ongoing progress around customer and product mix. But shipments slipped by 3,000 short tons in the quarter as a result of increasingly challenging conditions in away-from-home end-markets due to the effects of the pandemic. Delivered cost per unit fell by $55 per short ton, or 3%, as a result of lower maintenance costs compared to annual outages in the previous quarter. Finished goods inventory at quarter-end was 6,000 short tons. Quarter-over-quarter segment EBITDA improved by $3 million, to $6 million.

Wood Products

The wood products segment reported operating income of $128 million in the quarter, an improvement of $113 million compared to the previous quarter. The significant improvement is due to the $217 per thousand board feet, or 57%, increase in average transaction price, reflecting strong market conditions, particularly from the repair and remodeling market and U.S. housing starts. The delivered cost rose by $6 per thousand board feet, or 2%, to $361 per thousand board feet, mostly due to higher stumpage fees, which track lumber market prices. Shipments rose by 16 million board feet and inventory was unchanged, at 121 million board feet. EBITDA in the segment improved by $114 million, to $139 million, with the recently-acquired U.S. sawmills contributing $31 million to our EBITDA in the quarter.


The company generated an operating loss of $12 million in the paper segment in the quarter, unchanged from the previous quarter. Despite the challenging market conditions for marketing-dependent products like newspapers, inserts, flyers and commercial papers, the average transaction price improved slightly in the quarter, to $594 per metric ton, or 1%, and inventory fell by 5%. Shipments were unchanged, at 351,000 metric tons, reflecting the company’s leaner production footprint implemented to cope with the dramatic reduction in economic activity during the pandemic. The delivered cost was stable. EBITDA in the segment improved by $2 million, to $6 million.

Consolidated Quarterly Operating Income Variance Against Year-Ago Period

The company reported operating income of $97 million in the third quarter, compared to an operating loss of $18 million in the third quarter of 2019. The $115 million increase reflects the favorable impact of higher selling prices for wood products ($104 million), contribution from the recently-acquired U.S. sawmills ($26 million), lower maintenance costs ($22 million), and the weaker Canadian dollar ($8 million). These items were partly offset by the effects of lower selling prices and fewer shipments in the market pulp and paper segments ($52 million) due to softer market conditions. Adjusted EBITDA of $140 million was $117 million higher than the third quarter of 2019.

Corporate and Finance

The company generated $100 million of cash from operating activities in the quarter and invested $16 million, net, in fixed assets. It also repurchased 4.5 million shares of common stock, or 5% of the amount outstanding, for $18 million, and further reduced borrowings under its credit facilities by $69 million.

The company’s liquidity improved by $81 million in the quarter, to $477 million, and net debt fell by $62 million, to $541 million. By quarter-end, the company had recorded cumulative softwood lumber duty deposits of $214 million on the balance sheet, including $20 million paid in the quarter.

Yesterday, the company’s subsidiary, Resolute FP Canada Inc., entered into a 10-year secured delayed term loan facility with Investissement Qu├ębec for up to $167 million (CA $220 million), with an initial availability of approximately $114 million (CA $149 million), subject to certain conditions. Borrowings under the Canadian dollar-denominated facility will bear interest at a floating rate of interest equal to 1.45% above Canadian Banker’s acceptance rate. The facility is meant to be used to finance activities and support obligations in Quebec.


Looking ahead, Mr. Laflamme added: “Together with our strong Canadian lumber business, the well-timed acquisition of U.S. sawmills positioned us well for the recent spike in lumber prices. Although market prices have come off their highs in recent weeks, the demand from the repair & remodeling sector as well as robust U.S. housing starts speak to strong market fundamentals. Accordingly, we are preparing our El Dorado, Arkansas sawmill to be restarted in the next few months. Following a very difficult stretch of over six months, there are signs that paper markets activity is slowly and gradually starting to recover, but we expect that the pandemic will have caused some measure of step-change in the secular demand decline trend. In the last quarter, pulp markets were also affected by the pandemic, but we are already seeing global inventories stabilize around balanced levels, and we are cautiously optimistic that markets will recover with overall economic conditions. In regards to tissue, we will continue to focus on customer portfolio optimization and productivity improvements. While retail end-market conditions remain strong, the away-from-home space, which represents about a third of our business, is under pressure due to the drop in commercial activity.”

For the full third quarter results, click here.

About Resolute Forest Products

Resolute Forest Products is a global leader in the forest products industry with a diverse range of products, including market pulp, tissue, wood products, newsprint and specialty papers, which are marketed in close to 70 countries. The company owns or operates some 40 facilities, as well as power generation assets, in the United States and Canada. Resolute has third-party certified 100% of its managed woodlands to internationally recognized sustainable forest management standards. The shares of Resolute Forest Products trade under the stock symbol RFP on both the New York Stock Exchange and the Toronto Stock Exchange. Resolute has received regional, North American and global recognition for its leadership in corporate social responsibility and sustainable development, as well as for its business practices. Visit for more information.


Marianne Limoges – Treasurer & Vice President Investor Relations – – (514) 394-2217

Source: Resolute Forest Products Inc.