resolute fp - gs paper and forest products conference - 03-15-2012

8/2/2019 Resolute FP - GS Paper and Forest Products Conference - 03-15-2012

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Resolute Forest Products

March 2012

(AbitibiBowater Inc. now does business as Resolute Forest Products)


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Cautionary Statements Regarding Forward-Looking Information

Statements in this presentation that are not reported financial results or other historical information of Resolute ForestProducts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.They include, for example, statements relating to our: efforts to continue to reduce costs and increase revenues andprofitability, including our cost-reduction initiatives regarding selling, general and administrative expenses; business

and operating outlook; assessment of market conditions; prospects, growth strategies and the industry in which weoperate; and strategies for achieving our goals generally. Forward-looking statements may be identified by the use offorward-looking terminology such as the words should, would, could, will, may, expect, believe,

anticipate, attempt, project and other terms with similar meaning indicating possible future events or potentialimpact on our business or Resolute Forest Products shareholders.

The reader is cautioned not to place undue reliance on these forward-looking statements, which are not guarantees offuture performance. These statements are based on managements current assumptions, beliefs and expectations, allof which involve a number of business risks and uncertainties that could cause actual results to differ materially. Thepotential risks and uncertainties that could cause our actual future financial condition, results of operations andperformance to differ materially from those expressed or implied during the presentation include those set forth underthe heading Risk Factors in Part I, Item 1A in our annual report on Form 10-K for the year ended December 31,2011, filed with the U.S. Securities and Exchange Commission and the Canadian securities regulatory authorities onFebruary 29, 2012.

All forward-looking statements in this presentation are expressly qualified by the cautionary statements contained orreferred to in this section and in our other filings with the SEC and the Canadian securities regulatory authorities. Wedisclaim any obligation to publicly update or revise any forward-looking information, whether as a result of newinformation, future events or otherwise, except as required by law.

All figures in USD unless otherwise noted.


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United States,

60%

Canada, 13%

Brazil, 3%

Mexico, 3%

Italy, 2%

Korea, 2%

Other, 17%

Newsprint

38%

Coated

11%

Specialty

27%

Pulp14%

Wood Products

10%

United States

43%

Canada

53%

S. Korea

4%

Lower cost North American forest products company

Strengthened strategic position:

Eliminated approximately $900 million of annual fixed costs

Closed marginal assets

Newsprint reduced from 48% of sales at the merger to 38%

Total annual operating capacity of 6.2 million metric tons of pulp and paperand 2.7 billion board feet of lumber (current fiber supply limits productioncapacity to 2.2 billion board feet)

Proximity to deep sea ports facilitates access to international newsprintmarkets

Sales by Country Production by CountrySales by Product

Resolute Forest Products: the New AbiBow

FY 2011 Revenues = $4.8 bn


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Results of the AbiBow Restructuring

Corporate Number of employees

Capacity

Operations

Number of machines

Newsprint (mm tons)

CPP (mm tons)

Pulp (mm tons)

Wood products (bn bf)

Pulp & paper sites

Wood product sites

At timeof

Merger

18,000

62

5.6

3.7

1.1

3.1

31

35

Resolutenow

10,400

31

3.1

2.1

1.1

2.8

18

23

Change

(7,600)

(31)

(2.5)

(1.6)

0.0

(0.3)

(13)

(12)

Change(%)

(42%)

(50%)

(45%)

(43%)

0%

(10%)

(42%)

(34%)

Source: Company

Closed marginal assets, dramatically reducedoverhead and materially improved competitive position


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Mokpo

South

Korea

PonderayFort Frances

Thunder Bay

Iroquois Falls

Thorold

Amos

Baie Comeau

AlmaKnogami

Clermont

MerseyLaurentide

Montreal

Calhoun Greenville

Catawba

AugustaCoosa PinesGrenada

Flexible Mill Portfolio

Note: Map excludes sawmills, recycling operations and hydro facilities

Newsprint (mm tons)

Coated (mm tons)

Pulp (mm tons)

Wood products (bnbf)

NewABH

3.1

0.6

1.1

2.8

Capacity

Flexible portfolio allows us to mitigate secular declines in the N.A. newsprint market

through increased exports to growing markets

Uncoated (mm tons) 1.4

Pulp

Newsprint

Uncoated Paper

Coated Paper

Headquarters OfficeU.S. Corporate Office

Port Access


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2011: A Year of Transformation

New executive team

Repaid $264 million of senior secured notes; net debt of

approximately $250 million at year end

Launched the Resolute Forest Products brand

Joined WWFs Climate Savers Program

Issued first full-scale sustainability report

Improved adjusted EBITDA by 57%

Normalized SG&A approaching $20/ton

Continued focus on mill optimization


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2011 Financial Highlights

(In millions of US dollars) Q1 2011 Q2 2011 Q3 2011 Q4 2011 2011

Sales $1,185 $1,200 $1,224 $1,147 $4,756

Adjusted EBITDA 99 110 150 122 481

Operating income (loss) 27 52 72 47 198

Net income (loss) 30 61 (44) (6) 41

Interest expense 30 28 19 18 95

Net debt 668 416 417 252 252

Debt to equity 26% 19% 19% 18% 18%

Long-term debt to LTMadjusted EBITDA

2.5x 1.6x 1.3x 1.3x 1.3x

Note: The implementation of the plans of reorganization and the application of fresh start accounting materially changed the carrying amountsand classifications reported in the Companys consolidated financial statements. Accordingly, the Companys operating results, including

depreciation, for periods before December 31, 2010, are not comparable to the operating results after December 31, 2010.Please refer to the appendix for additional information, including the companys calculation of adjusted EBITDA.


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2012 EBITDA Sensitivities

Note: Presented on a U.S. GAAP consolidated basis1Assuming general consumption of 812 thousand tonnes

Variable Metric Change EBITDA ($ millions)

Newsprint Pricing $/mt - / + $25

CPP Pricing $/mt - / + $25

Lumber Pricing $/mbf - / + $25

Pulp Pricing $/mt - / + $25

Net Foreign Exchange C$/US$ + / - $0.01

ONP Prices1 $/mt + / - $10

Natural Gas $/gj + / - $0.50

-/+ $52

-/+ $67

-/+ $6

-/+ $8

-/+ $26

-/+ $16

-/+ $41


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Raw Material Sourcing - 2011

Newsprint Recycle Content

VirginFiber80%

ONP/OMG

20%

Energy Consumption Purchased Energy

Virgin Fiber

Sawmills and other internalfiber sources

46%

Open Market Purchases54%

PurchasedEnergy

57%

Internal Biomass

40%

Electricity

55% Fossil Fuels25%

Biomass20%

Internal Hydroelectric3%


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Financial Priorities

Control fixed charges to generate cash flow throughout cycle

Debt reduction

Capital spending focused on our low cost operations

No speculative hedging

Maintain ample liquidity

Capital structure without financial maintenance covenants


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Executive Incentive Compensation

Annual STIP

Payout based on weighted performance measures

Target: 100% / max: 150% of base salary (no minimum)

Payout limited to 7% of free cash flow

Annual LTIP:

50/50 mix of RSUs and options

Award based on base salary: 225% for CEO and 125%

for his direct reports

Resales subject to stock ownership guidelines


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Our Strategy

Operations

Leverage low-cost position

Continue to drive out costs and optimize asset portfolio

Capitalize on mill locations export markets for newsprint

Focus on selling only profitable tons

Manage inventory levels prudently

Corporate

Continue to de-leverage Spend capital in a disciplined, strategic and focused manner

Continue to reduce overhead costs

Strategic

Take opportunistic approach to consolidation Focus on cost position, product diversification and future growth

markets

Balance opportunities to return cash to shareholders against potentialvalue creating investments in our business


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Modest leverage with approximately $585 million of debt1

Undrawn credit facility of $600 million (except for ordinary course letters of credit), recentlyextended to 2016

No maintenance financial covenants Long-term corporate rating upgraded by S&P to BB- from B+ on September 30, 2011

Key Highlights

Forest ProductsLeader

Highly

CompetitiveCost Structure

Flexible MillPortfolio

DiversifiedRevenue Base

ConservativeCapital

Structure

Global leader in the forest products industry Established leading NA presence in our key segments: newsprint, coated and uncoated

mechanical papers, pulp, lumber and engineered wood products

One of the lowest cost producers in the industry as a result of aggressive cost reductionsand mill rationalizations

Highly efficient operations, strong economies of scale and access to competitive sourcesof energy and fiber

U.S. and Canadian mills strategically located near customer base or deep sea ports Balanced mix of U.S. and Canadian mills provides natural currency hedge Multiple fiber furnishes available at several sites provide ability to produce multiple grades

Diversified product mix and end markets Balanced portfolio of products Products marketed in close to 90 countries; non-U.S. sales represent 40% of total

Low cost platform and low leverage capital structureprovides opportunity for further improvement

Reduction ofFixed Costs

SG&A reduced by over 50% since 2007 Significant reduction in annual defined benefit pension contributions Dramatically reduced interest cost

Excludes deferred financing fees


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PRODUCTS


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Newsprint

Largest producerglobally by capacity

3.1 mm metric tons or9% of total worldwidecapacity

2.9 mm metric tons or36% of North Americancapacity

11 newsprint facilities in

North America and 1 inSouth Korea

(In millions of US dollars)Q1

11Q2

11Q3

11Q4

11

Sales $429 $462 $468 $457

Adjusted EBITDA $39 $43 $36 $44

Operating income

(loss)

$19 $26 $18 $26

Shipments (000tonnes)

656 697 706 694

Transaction price

($/t)

$654 $663 $663 $658

Source: CompanyPlease refer to the appendix for additional information, including the companys calculation of adjusted EBITDA.


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Newsprint - Capacity

3,103

0 1,000 2,000 3,000 4,000

Resolute

Norske Skog

UPM-Kymmene

Stora Enso

White Birch

'000 mt

2,902

0 500 1,000 1,500 2,000 2,500 3,000 3,500

Resolute

White Birch

Kruger

Catalyst

Norpac

'000 mt

The worlds largest newsprint producer by capacity

Source: RISI 2011; Resolute shows current operating capacity

World

NorthAmerica


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(5.2%)

(7.4%)

(3.0%)

(6.4%)

(2.0%)(1.3%)

World North America Western

Europe

Asia Eastern Europe Latin America

Global demand down 5.2% in 2011 anddown 4.0% in January

Industry Overview

NewsprintCommentary

Newsprint pricing has been stable forover 18 months

Demand down 7.4% for North America

in 2011 and down 7.7% in Jan 2012 Industry capacity in NA continues to

decline with 2012 capacity projected tobe 500K tonnes lower vs. 2011

Source: PPPC

World Newsprint Demand by Market

% change 2011 vs. 2010

Total U.S. Newsprint Consumption

0

2

4

6

8

10

2007 2008 2009 2010 2011

millionsofmt


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Diversified Newsprint Shipments

North America

55%

North America

55%

Latin America

21%

Latin America

21%

Europe8%

Europe8%

Asia

14%

Asia

14%Africa/

Middle East2%

Africa/

Middle East2%

Source: Company 2011 newsprint shipments


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Uncoated Mechanical Papers

Largest North Americanproducer by capacity

1.4 mm metric tons or31% of North Americancapacity

End uses include books,retail advertising, directmail, coupons and otherapplications


11Q2

11Q311

Q411

Sales $330 $320 $316 $309


Operating income

(loss) $ - $11 $27 $24

Shipments (000

tons) 473 442 422 416

Transaction price

($/t)$698 $724 $747 $745

Source: CompanyPlease refer to the appendix for additional information, including the companys calculation of adjusted EBITDA


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1,425

0 500 1,000 1,500 2,000 2,500 3,000 3,500

UPM

Stora Enso

Resolute

Norske Skog

Holmen

'000 mt

Uncoated Mechanical Papers - Capacity

1,425

0 500 1,000 1,500 2,000 2,500

Resolute

Catalyst

NewPage

Irving

Norpac

'000 mt


World

NorthAmerica


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0

2

4

6

8

2007 2008 2009 2010 2011

million

sofmt

(400)

(350)

(300)

(250)

(200)

(150)

(100)

(50)

-

50

Total SC - A /A+ SC-B STD LW

(00

0mt)

-7.8% -7.8% +2.8% -7.5% -20.8%

-1300

-1200

-1100

-1000

-900

-800

-700

-600

-500-400

-300

-200

-100

0

100

TOTAL UM UW CW CM

(000)tonnes

-5.2% -7.8% -3.4% -2.8% -8.6%

Total North American printing & writing paper

demand down 5.2% in 2011 and down 6.6% in

January 2012

Demand for all SC papers down 4.2% in 2011 and

down 25% in January

Standard and directory papers were down 8% and

21%, respectively, in 2011 and down 10% and 9%,

respectively, in January 2012.

Source: RISI, PPPC

Industry Overview

Printing & Writing Papers

Commentary NA Printing & Writing Demand by Grade

% change 2011 vs. 2010

Uncoated Mechanical Demand by Grade

% change 2011 vs. 2010

North American Uncoated MechanicalDemand


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Coated Mechanical Papers

Third largest NorthAmerican producer by

capacity

Approximately 637kmetric tons or 16% ofNorth American capacity

Sold to majorcommercial printers,publishers, catalogersand retailers formagazines, catalogs andinserts

Lowest cost producer inNorth America


11Q2

11Q3

11Q4

11

Sales $134 $132 $140 $132


Operating income $3 $23 $18 $13

Shipments (000tons)

169 161 167 160

Transaction price($/t)

$794 $822 $837 $821



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Coated Mechanical Papers - Capacity

637

0 500 1,000 1,500

NewPage

Verso

Resolute

UPM-Kymmene

Kruger

'000 mt

637

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

UPM/Myllykoski

Stora Enso

Sappi

Burgo Group

NewPage

Norske Skog

Verso

Nippon Paper

Resolute

Leipa

'000 mt


World

North

America


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Industry Overview

Coated Mechanical Papers

Commentary NA Coated Mechanical Paper Demand

North American demanddecreased 8.6% in 2011 and

4.2% in January

North American shipments in thedomestic market declined 8.0% in2011 vs 2010, 5.3% in January

NA imports were down 13.4% in2011

Shipment to capacity ratioaveraged 90% in 2011 and 89%in January

Source: PPPC, Magazine Publishers of North America

U.S. Magazine Advertising

12 months trailing sum

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2006 2007 2008 2009 2010 2011

('000mt)

N.A. CM Imports N.A. CM Domestic Shipments

-35%

-25%

-15%

-5%

5%

15%

25%

'06 '07 '08 '09 '10 '11

YOY%c

hang

Pages Revenue


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Commercial Printing Papers

North America91%

North America91%

Latin America

3%

Latin America

3%

Europe1%Europe1%Asia

4%

Asia

4%Africa/

Middle East

1%

Africa/

Middle East

1%

Source: Company 2011 commercial printing paper shipments


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Market Pulp

Operating capacity of 1mm metric tons or 6% ofNorth American capacity,

including 272K tonnes offluff pulp

About 75% softwood

End use is a range ofconsumer productsincluding tissue,commercial printingpaper products, diapers,

absorbent products andother products


11Q2

11Q3

11Q4

11

Sales $176 $171 $175 $137


Operating income $23 $14 $36 $12

Shipments (000tonnes) 239 223 236 204

Transaction price($/t)

$735 $767 $741 $674



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1,050

0 500 1,000 1,500 2,000 2,500

Koch

Domtar

Weyerhaueser

Canfor

West Fraser

Tembec

Resolute

International Paper

Mitsubishi

'000 mt

North America

A major producer of market pulp

Source: RISI; annual reports; Resolute shows current operating capacity

Market Pulp - Capacity


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70

75

80

85

90

95

100

105

110

2006 2007 2008 2009 2010 2011Shipment/Cap

acityRatio

Industry OverviewMarket Pulp

Global demand ofapproximately 53 million

tonnes

Global shipments up 4.8% in2011 and up 2.4% in Jan 2012

China up 31% in 2011 and

16% in Jan 2012

NBSK shipment to capacityratio of 91% in 2011 and 97%in Jan 2012

Source: PPPC Market Pulp Global 100

Commentary Market Pulp Demand (% Growth Dec 2011 YTD)

Northern Softwood Shipments / Capacity

(2006-2011)

Dec 2011 96%2011YTD 91%

4.8%

(3.6%) (3.1%) (3.1%) (2.9%)

3.1%

30.5%

3.0%1.2%

(20%)

(10%)

0%

10%

20%

30%

40%

50%

World North

America

Western

Europe

Eastern

Europe

Latin

America

Japan China Other

Asia

Oceania


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Pulp Shipments

Americas

59%

Americas

59%

Europe26%

Europe26%

Asia

13%

Asia

13%Africa/

Middle East2%

Africa/

Middle East2%

Source: Company 2011 market pulp shipments


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Wood Products

Operate 18 sawmills inCanada that producedimension (stud and

random) SPF lumbersold in North America

Operate 5 engineeredand remanufactured

wood products facilitiesin Canada that produceproducts for specializedapplications such aswood i-joists, trusses and

bed frames


11Q2

11Q3

11Q4

11

Sales $116 $115 $125 $112

Adjusted EBITDA $4 $(4) $5 $3

Operating income(loss) $(3) $(14) $(3) $(5)

Shipments (mbf)375 397 417 397

Transaction price($/mbf)

$310 $290 $298 $280



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2,710

0 1,000 2,000 3,000 4,000 5,000 6,000

West Fraser Timber

Weyerhaeuser

Canfor

Resolute

Tolko

Koch

million board feet

A major producer of wood products

North America

Source: Forest Economic Advisors; Resolute produced 1,683 million board feet in 2011

Lumber - Capacity

* Current fiber supply limits production capacity to 2.2 billion board feet

*


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Industry Overview

Wood Products

Source: U.S. Census Bureau

Annual U.S. Housing Starts

US housing starts are expected toimprove over time with the generaleconomy

U.S. housing starts were 610,000 in2011 and 699 in Jan 2012 (SAAR)

U.S. demographics support a naturallevel around 1.3 million housing startsover the long term

Commentary

0.0

0.5

1.0

1.5

2.0

2.5

2005 2006 2007 2008 2009 2010 2011

U.S.

HousingSta

rts(mm)


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Appendix


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Resolute Forest ProductsMarch 2012

resolute fp - gs paper and forest products conference - 03-15-2012

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