00:52:10 EDT Fri 29 Mar 2024
Enter Symbol
or Name
USA
CA



Catalyst Paper Corp (2)
Symbol CYT
Shares Issued 14,527,571
Close 2016-07-27 C$ 3.50
Market Cap C$ 50,846,499
Recent Sedar Documents

Catalyst Paper loses $26.6-million in Q2

2016-07-27 21:00 ET - News Release

Mr. Joe Nemeth reports

CATALYST ANNOUNCES SECOND QUARTER RESULTS

Catalyst Paper Corp. has released results for the second quarter ended June 30, 2016.

The company recorded a net loss of $26.6-million and a net loss before specific items of $27.3-million in the second quarter. This compared with net earnings of $16.9-million and a net loss before specific items of $5.1-million in the previous quarter.

Adjusted earnings before interest, tax, depreciation and amortization were negative $5.3-million, and adjusted EBITDA before specific items was negative $1.1-million in the second quarter. This compares with adjusted EBITDA of $17.1-million and adjusted EBITDA before specific items of $17.7-million in the previous quarter. Liquidity declined from $84.0-million as of March 31 to $74.5-million as of June 30, 2016.

Year-to-date adjusted EBITDA of $11.8-million was $17.0-million higher than the negative $5.2-million adjusted EBITDA reported in the same period last year.

Second quarter operating results were negatively impacted by the stronger Canadian dollar, lower production and sales volumes, the continued impact of the countervailing duty (CVD) on exports to the United States of supercalendered paper, and higher maintenance and power costs for the Canadian operations. Planned and unplanned maintenance outages at Crofton increased maintenance costs and reduced production volumes. This was partially offset by the revitalization program cost savings and revenue enhancement from product mix optimization.

"Although second quarter results were disappointing, operating results in the first half of 2016 were significantly better compared to the same period last year," said Joe Nemeth, president and chief executive officer. "Our progress demonstrates that we are effectively driving down costs and growing the topline -- key strategies that are foundational to our company's transformation."

Quarter highlights

The company made excellent progress in safety reducing both its medical incident (MIR) and long-term-incident (LTI) rates. In the second quarter, its MIR was 1.51, and its LTI was 0.60. Progress was due to a concerted effort to increase employee involvement in grassroots programs to strengthen personal accountability for safety.

Catalyst continued to see positive results with the revitalization program led by the U.S. mills, which are tracking ahead of schedule in realizing identified savings. Employees are taking ownership by driving cost reductions with a strong sense of urgency.

Planned and unplanned maintenance outages at Crofton drove increased maintenance costs and reduced production volumes. A total mill outage, recovery boiler and digester outage, and capital work on paper machine No. 3 resulted in lost production of 27,300 tonnes and total maintenance costs and lost contribution of approximately $13.8-million, which exceeded the planned financial impact by approximately $3.3-million.

Crofton was also impacted by a breach in the mill's main water supply line in April, 2016. The breach caused a millwide water outage that resulted in incremental costs and lost contribution of approximately $3.1-million, although the company has recorded insurance proceeds, estimated at $1.1-million, receivable as of June 30, 2016.

Catalyst received multiple awards in the second quarter recognizing its environmental performance and sustainability achievements. For the 10th consecutive year, Catalyst was named as one of the best 50 corporate citizens in Canada by Corporate Knights Magazine. Other acknowledgments included the company receiving the prestigious Canadian industry for energy conservation leadership award in recognition of G13 in Powell River, as well as the energy management insight award recognizing the implementation of the ISO 50001 energy management system at Crofton.

               SELECTED FINANCIAL INFORMATION
    (in millions of dollars, except where otherwise stated)
                                                             
                              YTD 2016      Q2 2016       Q1 2016

Sales                           $971.2       $460.8        $510.4
Operating earnings (loss)        (15.9)       (18.6)          2.7
Depreciation and
amortization                      27.7         13.3          14.4
Adjusted EBITDA                   11.8         (5.3)         17.1
Before specific items             16.6         (1.1)         17.7
Net earnings (loss)               (9.7)       (26.6)         16.9
Before specific items            (32.4)       (27.3)         (5.1)
Adjusted EBITDA margin             1.2%        (1.2%)         3.3%
Before specific items              1.7%        (0.2%)         3.5%
Net earnings (loss) per
share (in dollars)
Basic and diluted                (0.67)       (1.84)         1.17
Before specific items            (2.23)       (1.88)        (0.35)
                              --------      --------     --------
(in thousands of tonnes)
Sales                          1,055.2        512.4         542.8
Production                     1,056.7        523.0         533.7
                              --------      --------     --------
                             
                                    Total        Q4 2015        Q3 2015        Q2 2015        Q1 2015

Sales                            $1,991.1         $510.8         $542.6         $458.4         $479.3
Operating earnings (loss)           (12.7)          (2.2)          23.8          (34.0)          (0.3)
Depreciation and
amortization                         61.4           17.3           15.0           14.8           14.3
Adjusted EBITDA                      48.7           15.1           38.8          (19.2)          14.0
Before specific items                86.7           19.8           41.2            9.7           16.0
Net earnings (loss)                 (49.4)         (26.3)         (12.9)         (32.4)          22.2
Before specific items               (28.0)         (10.0)           8.4          (13.8)         (12.6)
Adjusted EBITDA margin                2.4%           3.0%           7.2%         (4.2%)           2.9%
Before specific items                 4.4%           3.9%           7.6%           2.1%           3.3%
Net earnings (loss) per
share (in dollars)
Basic and diluted                   (3.41)         (1.82)         (0.89)         (2.23)          1.53
Before specific items               (1.93)         (0.69)          0.58          (0.95)         (0.87)
                                 --------       --------       --------       --------       --------
(in thousands of tonnes)
Sales                             2,134.3          541.9          570.8          511.1          510.5
Production                        2,136.8          545.6          558.2          494.8          538.2
                                 --------       --------       --------       --------       --------

Market conditions

Markets continued to be difficult in the second quarter. Demand declined across all grades, although prices remained relatively stable.

Catalyst offset the challenge of declining printing and writing paper markets by improving product mix and accelerating product innovation. A number of new grades and products are in development. Exemplifying the company's progress is a recent announcement highlighting the availability of a new seven-point Orion matte paper that will meet a niche market need and provide customers with a reliable, one-stop supplier for No. 3 coated free sheet.

During the quarter, the U.S. Department of Commerce confirmed that it will extend the timeline of its expedited review of the CVD. The company is disappointed by the Department of Commerce's decisions as its preliminary determination is now expected no later than Nov. 7, 2016, with its final determination now delayed until at least the first quarter of 2017. Since the CVD was imposed on Catalyst in the second quarter of 2015, the company has incurred duties and associated legal costs of approximately $13.2-million, of which $2.2-million was incurred in the second quarter of 2016.

Outlook

In the second half of 2016, the company anticipates that additional savings generated by revitalization programs, combined with reduced maintenance spending at all operations, will contribute positively to earnings. It also expects to benefit from strong seasonal sales demand for its traditional printing paper business and growth in new specialty product sales.

Further quarterly results materials

This release, along with the full 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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