RESOLUTE GROWS INTO TISSUE WITH ACQUISITION OF ATLAS PAPER

Transcription

1 RESOLUTE GROWS INTO TISSUE WITH ACQUISITION OF ATLAS PAPER RICHARD GARNEAU President & CEO JO-ANN LONGWORTH SVP & CFO NOVEMBER 17, 2015

2 CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION Statements in this presentation that are not reported financial results or other historical information of Resolute Forest Products Inc. are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of They include, for example, statements relating to Resolute s: expected benefits of the acquisition; cost savings and growth potential; business and operating outlook; assessment of market conditions; prospects, growth strategies and the industry in which it operates; and strategies for achieving its goals generally. Forward-looking statements may be identified by the use of forwardlooking terminology such as the words should, would, could, will, may, expect, believe, and other terms with similar meaning indicating possible future events or potential impact on the company s business or Resolute s shareholders. The reader is cautioned not to place undue reliance on these forward-looking statements, which are not guarantees of future performance. These statements are based on management s current assumptions, beliefs and expectations, all of which involve a number of business risks and uncertainties that could cause actual results to differ materially. The potential risks and uncertainties that could cause Resolute s actual future financial condition, results of operations and performance to differ materially from those expressed or implied in this presentation include, but are not limited to, the possible failure to successfully integrate the businesses of Resolute and Atlas Paper or that such integration may be more difficult, time-consuming or costly than expected; expected benefits from the acquisition may not be fully realized or realized within the expected time frame; revenues following the acquisition may be lower than expected; operating costs, customer loss and business disruption, including difficulties in maintaining relationships with employees, customers, clients or suppliers, may be greater than expected following the acquisition; developments in alternative media, which are expected to adversely affect the demand for some of Resolute s key products; any additional closure costs and long-lived asset impairment or accelerated depreciation charges; currency fluctuations; global economic conditions; intense competition in the forest products industry; negative publicity, even if unjustified; the highly cyclical nature of the forest products industry; contributions to its Canadian pension plans at levels higher than expected; the terms of outstanding indebtedness, which could restrict current and future operations; Resolute s ability to maintain adequate capital resources to provide for all of its substantial capital requirements; any inability to successfully implement its strategies to increase earnings power; changes in laws or regulations, including environmental regulations; future regulation of Canadian softwood lumber exports to the United States; countervailing duties or cash deposit requirements; any difficulties in obtaining wood fiber at favorable prices, or at all; changes in the cost of purchased energy and other raw materials; changes in political or economic conditions in Canada, the United States or other countries in which Resolute products are manufactured or sold; physical and financial risks associated with climate change; labor disputes; extreme weather conditions or natural or manmade disasters; cyber security risks; acquisitions, divestitures or other strategic transactions Resolute may pursue; and the potential risks and uncertainties set forth under the heading Risk Factors in Part 1, Item 1A of Resolute s annual report on Form 10-K for the year ended December 31, 2014 and in Part II, Item 1A of Resolute s quarterly report on Form 10-Q for the quarterly period ended September 30, All forward-looking statements in this presentation are expressly qualified by the cautionary statements contained or referred to above and in Resolute s filings with the U.S. Securities and Exchange Commission and the Canadian securities regulatory authorities. Resolute disclaims any obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law. 2

3 RESOLUTE BUYS ATLAS PAPER Synergistic & integrative tissue acquisition Atlas Paper Mills is a leading manufacturer of at-home and away-from home tissue products Offers range of products Branded & private label / recycled & virgin paper grades Covers premium, value & economy quality tiers Operations Three tissue machines 65,000 st of capacity 14 converting lines Paper recycling facility Strategic fit for Resolute and for Atlas Paper 3

4 STRATEGIC BENEFITS A significant shift for Resolute Resolute is uniquely positioned to generate synergies Optimize Atlas Paper s pulp supply using our U.S.-based pulp network Move to realize opportunities around excess converting capacity Success factor for Calhoun tissue expansion Leverage know-how and expertise of experienced tissue manufacturing, sales and management teams Provides immediate exposure to the tissue market Combined entity will have a broader and more versatile tissue product offering Accesses Atlas Paper s customer and sales agency relationships Provides financial strength and commitment to tissue 4

5 NA TISSUE CAPACITY Resolute will be key tissue player by ,000 2,500 2,000 1,500 1,000 Capacity (st) Atlas Paper Mills 65,000 RFP Calhoun (2017) 66,000 RFP Tissue segment 131, Source: RISI, Company filings 1. Pro forma for the acquisition of Wausau Paper announced on October 13, Pro forma for 66k short tons of capacity from Calhoun and 65k short tons of capacity from Atlas Paper transaction 5

6 TISSUE INDUSTRY DYNAMICS NA tissue demand continues to show stable & consistent growth North American Tissue Demand & Capacity Utilization Commentary North American Demand Capacity Utilization (million tons) % 94% 94% 94% 93% 92% 92% 93% 93% 2011A 2012A 2013A 2014A 2015E 2016E 2017E 2018E 2019E 1. Source: RISI (June 2015) Tissue demand expected to grow at an annual CAGR of 1.3% from (1) Capacity driven by quality upgrades (e.g., TAD and NTT technologies), new product launches and marketing 6

7 ATLAS PAPER OVERVIEW Resolute s new tissue platform; continues business as usual Operations Footprint Tampa Orlando Miami MIAMI ORLANDO TAMPA Manufacturing Capabilities Paper Making Converting Paper Making Converting Recycling Grades: Capacity: Lines: Capacity: Products: Grades: Capacity: Lines: Capacity: Products: Products: Capacity: Recycled (Bath Tissue) 2 Paper Machines, 36k tons Recycled & Virgin (Bath Tissue, Napkin, Towel) 1 Paper Machine, 27k tons million cases Bath Tissue, Kitchen Roll Towel, Jumbo Roll Tissue, Hard Roll Towel million cases Dispenser, Dinner Napkin, Bath Tissue (1) SOP, CBS, OCC, on site shredding 46k tons 1. SOP: Sorted Office Paper, CBS: Corrugated Book Stock, OCC: Old Corrugated Containers 7

8 TRANSACTION SUMMARY Acquisition closed on November 16, 2015 Purchase price of $156 million, including working cap Indebtedness discharged from proceeds at closing Transaction structured as a merger; Atlas Paper and its subsidiaries become wholly-owned subs of RFP Key Atlas Paper entities to guarantee senior notes and join ABL Transaction not subject to any regulatory approval Run-rate EBITDA target of $23 million by Q Includes synergies Represents EV/2016E EBITDA multiple of 6.8x Acquisition funded from cash on hand Explore financing opportunities in coming months 8

9 TISSUE STRATEGY Resolute Standalone Resolute (with Atlas) 1 LTM (Sept-15) Gross Sales Wood products Pulp Newsprint Specialty Papers Market Pulp Wood Products 24% 15% 31% Newsprint Wood products Pulp 23% 14% Tissue Newsprint Specialty Papers Market Pulp Wood Products Tissue 4% 30% Newsprint 30% Specialty 29% Specialty Newsprint Specialty Papers Market Pulp Wood Products Wood products 17% 19% Newsprint Newsprint Specialty Papers Market Pulp Wood Products Tissue Wood products 16% Tissue 6% 18% Newsprint LTM (Sept-15) Adjusted EBITDA Pulp 34% 30% Specialty Pulp 32% 28% Specialty 1. Reflects RFP LTM results combined with targeted run rate for Atlas Paper 9

10 A GLOBAL LEADER IN THE FOREST PRODUCTS INDUSTRY 10