Resolute Reports Preliminary Fourth Quarter and 2021 Results
For the year, the tissue segment reported an operating loss of $24 million, compared to a loss of $1 million in 2020
Resolute Forest Products Inc. announced a net loss for the quarter ended December 31 of $128 million, or $1.64 per share, compared to a net loss of $52 million, or $0.63 per share, in the same period in 2020. Sales were $834 million in the quarter, an increase of $65 million from the year-ago period. Excluding special items, the company reported net income of $37 million, or $0.48 per diluted share, compared to net income of $45 million, or $0.55 per diluted share, in the fourth quarter of 2020.
For the year, the company reported GAAP net income of $307 million, or $3.83 per diluted share, compared to net income of $10 million, or $0.12 per diluted share, in 2020. Sales were $3.7 billion, up by 31% from the previous year. Excluding special items, the company reported net income of $523 million, or $6.51 per diluted share, compared to net income of $56 million, or $0.65 per diluted share, in 2020.
“The $921 million of adjusted EBITDA generated in 2021 allowed us to reduce our debt, invest in our business and return cash to shareholders,” said Remi G. Lalonde, president and chief executive officer. “Our fourth quarter results reflect higher realized prices across most of our segments, especially wood products, but also cost pressures across the business. We faced higher manufacturing costs, mainly due to higher energy prices, lower internal power generation and higher fiber costs, as well as higher freight costs and a mark-to-market of share-based awards following a stock price appreciation of roughly 30% in Q4. Rising interest rates helped to reduce our net pension and OPEB deficit by over $400 million this year, further strengthening our balance sheet and credit profile.”
“We also recently amended and extended our ABL credit facility, which includes an ESG module, one of the first examples in the forest products industry. Looking back on the year, I am particularly proud of our employees for setting a new bar on safety, with an annual OSHA incident rate of 0.47. Our long-term ambition is to continue to improve until we reach 0 injury, but this is an impressive success along the way – despite the pandemic and other challenges – and I wholeheartedly applaud our employees for our achievement,” he added.
The company reported an operating loss of $6 million in the tissue segment in the quarter, compared to an operating loss of $9 million in the third quarter. The average transaction price improved by $160 per short ton, or 9%, due to better product mix, and shipments rose by 1,000 short tons on improving market conditions. The delivered cost increased by $37 per short ton, or 2%, partly due to higher freight costs. Finished goods inventory was unchanged at 6,000 short tons. Quarter-over-quarter segment EBITDA improved by $3 million, to negative $1 million.
For the year, the tissue segment reported an operating loss of $24 million, compared to a loss of $1 million in 2020. The average transaction price slipped by $10 per short ton because of unfavorable product mix. The delivered cost rose by $249 per short ton due to higher fiber costs and accumulated market downtime as a result of consumer inventory rebalancing and pandemic-related logistics and labor challenges. Shipments were lower by 6,000 short tons. The difficult market conditions in 2021 and the impact of market downtime ($6 million), a process improvement program ($5 million) and the ramp-up of the Hagerstown converting facility ($6 million), contributed to weaker performance in 2021, with EBITDA in the segment at negative $5 million for the year.
Despite the lost integration benefit of approximately $15 million in the tissue segment and approximately $5 million for on-going costs associated with closed site maintenance, the company anticipates an improvement in its overall operating income of approximately $35 million to $40 million as result of the indefinite idling of pulp and paper operations at Calhoun.
“In tissue, we expect the retail market to continue its recovery and the away-from-home market to remain sluggish for some time. Following the indefinite idling of pulp and paper operations at Calhoun and as markets continue to stabilize, we are reviewing strategic options for the tissue segment,” said Lalonde.
