Resolute reports preliminary Q3 2013 results

Resolute Forest Products Inc. recently reported a net loss of $588 million for the quarter ended September 30, 2013, or $6.22 per share, on sales of $1.1 billion. The Company's quarterly results were significantly affected by a $619 million non-recurring, non-cash income tax charge to reduce the value of deferred income tax assets on its balance sheet.

Excluding total special items of $617 million, net income in the quarter was $29 million, or $0.31 per share. This compares to net income of $13 million, or $0.13 per diluted share, excluding $24 million of special items, in the third quarter ended September 30, 2012. Before adjusting for special items, net income in that quarter was $37 million, or $0.38 per diluted share, on sales of $1.2 billion. Adjusted EBITDA was $104 million in the quarter, compared to $96 million in the year-ago period.

"Again this quarter, our continued asset optimization efforts helped to maximize our earnings power despite challenging market conditions," said Richard Garneau, president and chief executive officer. "Improvements in volume, transaction price and costs led to the best quarter our pulp segment has seen in two years, which helped to offset the effects of weaker pricing for lumber and excess supply in paper grades."

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

Compared to the year-ago period, sales in the quarter declined 2%, or $23 million, to $1.1 billion, primarily as a result of lower pricing ($33 million), mainly in newsprint, and currency fluctuations, offset in part by an increase in volume ($17 million).

Resolute  recorded operating income of $36 million this quarter, a $5 million improvement over the third quarter of 2012. This reflects a $26 million improvement to pulp and paper manufacturing costs - the benefit of asset optimization initiatives and external power sales from new cogeneration facilities - and a weaker Canadian dollar, offset in part by the lower pricing, largely in newsprint, and higher wood products costs.

Downtime was 90,000 metric tons lower in the pulp and paper segments this quarter, mainly as a result of the extensive downtime taken in 2012 to improve the operational and environmental performance of the newly acquired Saint-Félicien, Québec, pulp mill.