RICHMOND, BC, March 3, 2015 /PRNewswire/ - Catalyst Paper
(TSX:CYT) today announced earnings before interest, taxes,
depreciation and amortization (EBITDA) of $6.8 million in Q4 compared to $8.0 million in Q3.
Catalyst reported a net loss, excluding specific items, of
$10.4 million in Q4 compared to
$10.8 million in Q3. Operating
results were impacted by increased manufacturing expenses,
including higher rates for electricity, as well as costs related to
the indefinite curtailment of Paper Machine No. 9 at the Powell
River mill, and the acquisition of the Biron paper mill in
Wisconsin and the Rumford pulp and
paper mill in Maine.
"Our results reflect critical decisions to position the
company effectively for the future," said Joe Nemeth, Catalyst President & CEO. "In
Q4, we incurred one-time costs and made strategic investments that
will enable us to optimize our product mix and performance, while
continuing to focus on cost, productivity, efficiency and customer
service."
North American paper demand was down in the fourth quarter for
all segments with the exception of lightweight coated and uncoated
paper. Benchmark prices remained flat for specialty grades and
declined for newsprint and pulp. Despite sluggish markets, sales
revenues increased modestly in Q4 compared to Q3 due to the
positive impact of a weaker Canadian dollar, higher average
transaction prices for pulp, and increased sales volumes for
newsprint, uncoated mechanical and lightweight coated paper.
Results for the Year
Adjusted EBITDA was $47.6 million
in 2014 compared to $46.1 million in
2013. Excluding specific items, our net loss was $28.3 million in 2014 compared to $31.5 million in 2013. Free cash flow was
negative $17.2 million compared to
negative $21.4 million in 2013.
These results understate the year-over-year improvement we
achieved, as we incurred one-time costs of $3.1 million to complete the acquisition of the
US assets and did not have the $4.3
million in EBITDA contribution from our interest in Powell
River Energy Inc. that existed in 2013. After normalizing for these
non-recurring items, adjusted EBITDA increased by $8.9 million compared to the prior year.
"Where we applied a sharp focus on operational excellence, we
made substantive progress," said Joe
Nemeth, Catalyst President & CEO. "As we look
ahead to 2015, we expect continued improvement as we work
diligently to realize the benefits of our US acquisition,
revitalize our Powell River
operations and consistently apply the operational excellence
principles that have enabled our financial recovery."
Cost factors beyond the company's control continued to challenge
the competitiveness of the business. In 2014, manufacturing costs
were higher mainly due to price increases in fibre, chemicals,
steam fuel and electrical power, which represents a major cost for
our energy-intensive business.
A critical priority in 2014 was implementing initiatives to
mitigate the increasing cost of hydroelectricity. The company took
advantage of a new Power Smart Program extended to pulp producers
that provides 75% of capital funding for equipment upgrades that
more efficiently harness energy. Through its efforts to mitigate
power usage, the company expects to realize funding potential of
approximately $45 million through the
Program.
Liquidity
Our total liquidity as of December 31,
2014 was $102.7 representing a
$19.9 million decrease from the prior
year. This decrease reflects negative free cash flow of
$17.2 million generated for the
year.
Selected Highlights
(In millions of
dollars, except where otherwise stated)
|
2014
|
|
2013
|
|
2012
|
Sales
2
|
$
|
1,109.3
|
|
$
|
1,051.4
|
|
$
|
1,058.2
|
Operating earnings
(loss) 2
|
|
(13.5)
|
|
|
(87.8)
|
|
|
19.1
|
Depreciation and
amortization 2
|
|
44.6
|
|
|
47.0
|
|
|
36.3
|
Adjusted EBITDA
1,2
|
|
47.6
|
|
|
46.1
|
|
|
55.4
|
– before
restructuring costs 1,2
|
|
48.1
|
|
|
47.3
|
|
|
60.7
|
Net earnings (loss)
attributable to the company
|
|
(72.3)
|
|
|
(127.6)
|
|
|
583.2
|
– before
specific items 1
|
|
(28.3)
|
|
|
(31.5)
|
|
|
(37.8)
|
Total
assets
|
|
668.7
|
|
|
700.1
|
|
|
978.8
|
Total long-term
liabilities
|
|
624.0
|
|
|
565.5
|
|
|
720.6
|
Adjusted EBITDA
margin 1,2
|
|
4.3%
|
|
|
4.4%
|
|
|
5.2%
|
– before
restructuring costs 1,2
|
|
4.3%
|
|
|
4.5%
|
|
|
5.2%
|
Net earnings (loss)
per share attributable to the company's
common shareholders
(in dollars)
|
|
|
|
|
|
|
|
|
– basic and
diluted from continuing operations 3
|
$
|
(4.99)
|
|
$
|
(9.01)
|
|
$
|
41.65
|
– basic and diluted
from discontinued operations 3
|
|
-
|
|
|
0.21
|
|
|
(1.15)
|
– before specific
items 3
|
|
(1.95)
|
|
|
(2.17)
|
|
|
(2.62)
|
(In thousands of
tonnes)
|
|
|
|
|
|
|
|
|
Sales
2
|
|
1,389.3
|
|
|
1,373.3
|
|
|
1,401.4
|
Production
2
|
|
1,403.5
|
|
|
1,382.6
|
|
|
1,388.6
|
Common shares
(millions)
|
|
|
|
|
|
|
|
|
At period-end
3
|
|
14.5
|
|
|
14.5
|
|
|
14.5
|
Weighted average
3
|
|
14.5
|
|
|
14.5
|
|
|
14.4
|
1
|
Refer to section
11, Non-GAAP measures, of our Q4 2014 management's
discussion and analysis.
|
2
|
Numbers exclude the
Snowflake mill's results from operations which have been
reclassified as discontinued operations; earnings from discontinued
operations, net of tax, are shown separately from continuing
operations in the consolidated statements of earnings (loss) in our
annual consolidated financial statements for the year ended
December 31, 2014.
|
3
|
Earnings per share
data for periods ended on and subsequent to September 30, 2012 were
based on the weighted average common shares issued pursuant to our
reorganization under CCAA. Earnings per share data for periods
prior to September 30, 2012 were based on the weighted average
common shares outstanding prior to emergence from creditor
protection proceedings. These shares were cancelled on
September 13, 2012.
|
Outlook
A key focus for 2015 is the full integration of the Biron and
Rumford mills. Our approach is to identify opportunities to
optimize production, product mix and performance. We have recruited
additional talent to enhance our sales capacity and capabilities,
and to ensure we can continue to distinguish Catalyst as the
industry's leading provider of quality products and superior
services to customers worldwide.
Mitigation of increasing hydroelectricity rates remains a
priority in 2015. We have launched a pilot program in concert with
BC Hydro at all of our Canadian mills that financially rewards the
company for shifting energy use within specific timeframes. We will
explore all feasible opportunities to mitigate the impact of
escalating rates, including another 6% increase planned by BC Hydro
on April 1.
We anticipate that specialty printing paper markets in
North America will remain
challenging with the continued evolution of digital media and the
displacement of printed mediums. Our strategy within this market is
to focus on lightweight niches in all printing and writing grades,
and to increase sales of higher-value products, including coated
free sheet and coated one side grades.
Further Quarterly Results Materials
This release, along with the full annual Management Discussion
&Analysis, Financial Statements and accompanying notes are
available on our web site at www.catalystpaper.com/Investors. This
material is also filed with SEDAR in Canada and EDGAR in the United States.
Catalyst manufactures diverse specialty mechanical printing
papers, newsprint and pulp. Its customers include retailers,
publishers and commercial printers in North America, Latin
America, the Pacific Rim
and Europe. With five mills across
North America, Catalyst has annual
production capacity of 2.3 million tonnes. Catalyst is
headquartered in Richmond, British
Columbia, Canada and is ranked by Corporate Knights magazine
as one of the 50 Best Corporate Citizens in Canada.
Forward-Looking Statement
Certain matters in this news release, including statements
with respect to general economic and market conditions, demand for
products, pricing expectations, anticipated cost savings and
capital expenditures, are forward looking. These forward-looking
statements reflect management's current views and are based on
certain assumptions including assumptions as to future economic
conditions, demand for products, levels of advertising, product
pricing, ability to achieve operating and labour cost reductions,
currency fluctuations, production flexibility and related courses
of action, as well as other factors management believes are
appropriate. Such forward looking statements are subject to risks
and uncertainties that may cause actual results to differ
materially from those contained in these statements, including
those risks and uncertainties identified under the heading "Risks
and Uncertainties" in Catalyst's management's discussion and
analysis contained in Catalyst's annual report for the year ended
December 31, 2014 available on the
company's website at www.catalystpaper.com/investors
and at www.sedar.com.
SOURCE Catalyst Paper Corporation