08:50:20 EDT Fri 29 Mar 2024
Enter Symbol
or Name
USA
CA



Catalyst Paper Corp (2)
Symbol CYT
Shares Issued 14,527,571
Close 2014-07-29 C$ 2.40
Market Cap C$ 34,866,170
Recent Sedar Documents

Catalyst Paper loses $6.3-million in Q2

2014-07-29 21:01 ET - News Release

Mr. Joe Nemeth reports

CATALYST PAPER Q2 RESULTS IMPACTED BY PLANNED MAINTENANCE

Catalyst Paper Corp. recorded adjusted earnings before interest, taxes, depreciation and amortization for the second quarter of $7.1-million compared with $25.7-million in the previous quarter. Strong operating performance was overshadowed by a planned maintenance outage at the Crofton pulp mill, higher power costs due to a hydroelectricity rate increase, a stronger Canadian dollar, and lower transaction prices for pulp and all paper grades. Sales of $283.5-million exceeded the prior quarter by $9.6-million and reflected higher paper sales due in part to the delivery of shipments delayed by the first quarter container truck driver strike at Port Metro Vancouver.

Catalyst recorded a net loss of $6.3-million (43 cents per common share) and a net loss before specific items of $13.6-million in second quarter. This compared with a net loss of $3.8-million (26 cents per common share) and net earnings before specific items of $6.5-million the previous quarter. Free cash flow for the quarter was negative $8.6-million. Liquidity decreased $37.5-million from the prior quarter due to a lower borrowing base, debt redemption and buybacks in the quarter, the impact of the Crofton maintenance shut, and a scheduled interest payment.

Paper production volumes for the quarter were 3.5 per cent higher than average production in 2013 and 2 per cent higher than the first quarter of 2014 due to improved paper productivity. Two major debottlenecking initiatives were completed on the pulp mill during the scheduled maintenance outage to increase future pulp production.

"Our operating results were hampered by the cost and production impact of the recovery boiler shut, the hydroelectricity rate increase and the strengthening Canadian dollar," said Catalyst president and chief executive officer Joe Nemeth. "On the upside, we achieved a new record in paper productivity in the quarter, we're already seeing improved pulp production as a result of the debottlenecking work completed on the pulp mill, and our program to identify and implement opportunities for improvement is on track to realize significant benefits in 2014 and beyond."

Quarter highlights

On July 24, 2014, the Ministry of Energy and Mines and B.C. Hydro introduced a new energy efficiency program that provides a three-year financing injection of $100-million, with $45-million allocated to Catalyst Paper. The B.C. Hydro Power Smart program is aimed at reducing the energy intensity and improving the energy efficiency of thermal-mechanical pulping facilities in British Columbia. The program will benefit Catalyst Paper's three mills located in Crofton, Port Alberni and Powell River by financing 75 per cent of the required capital investment on projects that will improve the energy efficiency of these mills. The first project at the Powell River mill is in the advanced stages of planning, has an expected cost of $25-million, of which 75 per cent will be covered by Power Smart financing, and will reduce the company's annual energy costs by approximately $5-million.

Catalyst redeemed the $19.4-million (U.S.) outstanding balance on the floating-rate senior secured notes due 2016. The company repurchased $5.0-million (U.S.) of its PIK toggle senior secured notes due 2017 on the open market.

Market conditions

North American demand decreased from the second quarter of 2013 for all paper grades except uncoated paper. Benchmark prices for coated and uncoated paper declined from the previous quarter while remaining flat for directory and newsprint. For NBSK pulp, the benchmark price decreased by 3.1 per cent compared with first quarter due to short-term destocking in the quarter.

                                                SELECTED HIGHLIGHTS
                           (in millions of Canadian dollars, except where otherwise stated)

                                                      2014                                2013
                                          YTD        Q2        Q1     Total        Q4        Q3        Q2        Q1

Sales                                $  557.4  $  283.5  $  273.9 $ 1,051.4   $ 272.1   $ 268.8   $ 263.4 $   247.1
Operating earnings (loss)                10.9      (3.9)     14.8     (87.8)    (79.5)      4.9     (12.0)     (1.2)
Depreciation and amortization            21.9      11.0      10.9      47.0      11.7      11.5      11.4      12.4
Adjusted EBITDA                          32.8       7.1      25.7      46.1      19.1      16.4      (0.6)     11.2
Before restructuring costs               32.8       7.1      25.7      47.3      20.2      16.4      (0.5)     11.2
Net earnings (loss) attributable
to the company                          (10.1)     (6.3)     (3.8)   (127.6)    (95.0)      5.2     (28.0)     (9.8)
Before specific items                    (7.1)    (13.6)      6.5     (31.5)      1.7      (3.5)    (18.1)    (11.6)
Adjusted EBITDA margin                    5.9%      2.5%      9.4%      4.4%      7.0%      6.1%     (0.2%)     4.5%
Before restructuring costs                5.9%      2.5%      9.4%      4.5%      7.4%      6.1%     (0.2%)     4.5%
Net earnings (loss) per share
attributable to
The company's common shareholders
(in dollars)
Basic and diluted from continuing
operations                            $ (0.70)  $ (0.43)  $ (0.26) $  (9.01)   $(6.55)  $  0.36    $(1.93) $  (0.89)
Basic and diluted from discontinued
operations                                 --        --        --      0.21        --        --        --      0.21
Before specific items                   (0.49)    (0.94)     0.45     (2.17)     0.12     (0.24)    (1.25)    (0.80)
(in thousands of tonnes)
Sales                                   692.2     356.5     335.7   1,373.3     346.5     350.6     346.6     329.6
Production                              702.5     349.7     352.8   1,382.6     350.2     357.6     338.5     336.3

Outlook

The decline in demand for coated and uncoated mechanical paper is expected to continue for the rest of the year. Demand for directory paper will continue to decrease due to electronic substitution. While newsprint demand is expected to continue to contract as circulation and page counts fall, the North American market is expected to remain stable due to pending newsprint machine conversions.

Global pulp inventories are very low, and this may put upward pressure on future pulp pricing. However, China's seasonally low demand and tight monetary policy are expected to negatively impact the softwood pulp market. Pulp is therefore expected to trade in a narrow range for the balance of the year.

The Power Smart program will result in improved energy efficiency and will partly mitigate the impact of energy cost rate increases. Discussions will continue with key stakeholders on a suite of potential initiatives to further mitigate the impact of energy rate escalation.

Third quarter earnings will reflect a scheduled total mill outage at Powell River and power boiler shuts at all three mills.

Further quarterly results materials

This release, along with the full annual management's discussion and analysis, financial statements, and accompanying notes, is available on the company's website. This material is also filed with SEDAR in Canada and EDGAR in the United States.

We seek Safe Harbor.

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