Resolute Forest Products Inc.

First-quarter adjusted EBITDA was $270 million versus $111 million in Q4. Adjusted net income was $177 million, or $2.26 per share, compared with $37 million, or $0.48 per share, in Q4 and $119 million, or $1.45 per share, in the same quarter last year. Total sales were $945 million, up $111 million sequentially. By segment, adjusted EBITDA was $230 million in wood products, $26 million in market pulp, $(4) million in tissue, and $34 million in paper. Management said wood product average transaction price was $1,022 per thousand board feet, up $410, and market pulp pricing rose $9 per metric ton; paper pricing rose $37 per metric ton and tissue pricing rose $47 per short ton. For Q2, management expects a significant increase in lumber shipments, a modest increase in pulp volumes, pulp margins to widen with some maintenance offset, tissue shipments to stay similar with higher pulp costs, and paper prices to remain strong but partially offset by higher planned maintenance.

Remi G. Lalonde emphasized that the quarter reflected favorable pricing momentum, especially in wood products and paper, but that transportation network issues slowed sales and lifted inventories. He said the company is using acquisitions and internal capital projects to improve competitiveness and grow its wood and pulp businesses, while also reviewing strategic options for tissue. His tone was constructive and confident, highlighting strong cash generation, more than $1 billion of liquidity, and the company’s ability to create long-term value.

Sylvain Girard said net income excluding special items was $177 million, or $2.26 per share, versus $37 million in Q4 and $119 million a year ago. He pointed to $945 million of sales, $147 million of cash from operating activities, $30 million of capital expenditures, and $42 million of softwood lumber duty deposits, bringing total deposits to $440 million. Net debt fell to $140 million at quarter-end, liquidity was over $1.1 billion, and Moody’s upgraded the credit rating to Ba3 from B1 with a stable outlook. He also reduced 2022 Calhoun closure cost expectations to $22 million from $32 million.

Analysts pressed on paper pricing sustainability, tissue strategic alternatives, cost inflation, inventory buildup, and capital allocation. Management said there are few long-term paper contracts limiting upside, expects paper pricing to stay strong, and noted the tissue divestiture process has just launched with no timeline yet. On costs, management said higher log, freight, and energy costs were partly offset by the Calhoun curtailment, and guided to about $20 million of higher pulp and paper maintenance cost quarter over quarter. On inventory and logistics, management said finished goods are effectively deferred EBITDA, lumber inventory at 223 million board feet is very high, and shipments should improve significantly in Q2.