Resolute Forest Products (RFP) Misses Q1 EPS by 1c, Revenues Miss

Resolute Forest Products (NYSE: RFP) reported Q1 EPS of $0.32, $0.01 worse than the analyst estimate of $0.33. Revenue for the quarter came in at $795 million versus the consensus estimate of $888 million.

• Q1 GAAP net income of $42 million / $0.45 per share
• Adjusted EBITDA of $104 million in the quarter
• Repurchased $225 million of senior notes
• Liquidity strong at $595 million
• Net debt to adjusted EBITDA at 0.6x

"Our diversified asset base continued to produce strong EBITDA in the quarter despite building market pressure in some of our businesses," said Yves Laflamme, president and chief executive officer. "Our quarterly results benefitted from improved productivity, which allowed us to absorb the significant rise in wood fiber costs and offset the reduction in EBITDA associated with the divestiture of the Catawba mill. Accordingly, we continued to generate consistent value from our paper portfolio, and the results of our wood products business improved as prices rebounded modestly from multi-year lows. We're also pleased with the recent ratification of a four-year collective agreement covering our nearly 800 unionized employees at three of our U.S. pulp, paper and tissue mills."

Outlook

"We maintain our view on market pulp fundamentals even as prices have recently started to trend down. While we expect lower price realizations in the second quarter, limited capacity additions and growing demand will continue to support favorable market dynamics over the medium term. Our tissue segment remains a key focus as we continue to build on the late-year progress in terms of productivity and quality. We expect our wood products cost performance to improve for the balance of the year. But we're more conservative with our expectations around lumber markets even as some market participants are more enthusiastic following abnormally wet and wintry conditions and in light of production curtailments among Canadian producers, including downtime of our own. While our near-term outlook is more uncertain, our medium to long-term outlook remains positive. With ongoing global demand declines and currently low operating rates, we expect lower pricing for our paper grades in the second quarter. But despite the softening market conditions, our paper business generated strong first quarter EBITDA margins, and we are confident we can continue to produce attractive cash flows as we take steps to reduce inventory and maintain our competitive cost position," added Mr. Laflamme.

For earnings history and earnings-related data on Resolute Forest Products (RFP) click here.

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