Catalyst Paper reported fourth quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $15.1 million and EBITDA before specific items of $19.8 million.
This compares to adjusted EBITDA of $38.8 million and adjusted EBITDA before specific items of $41.2 million in the third quarter of 2015.
Fourth quarter results were impacted by the completion of major planned maintenance outages of $17.4 million in addition to the impact of the imposition of countervailing duties on exports to the United States of supercalendered paper including associated legal fees and duties of $4.5 million.
In the fourth quarter, the company incurred a net loss of $26.3 million and a net loss of $10.0 million before specific items. This compares to a net loss of $12.9 million and earnings of $8.4 million before specific items in the third quarter. As a result of the significant maintenance expenditures in the fourth quarter and the deposit of the countervailing duties to the U.S., free cash flow in the fourth quarter was negative $11.4 million.
Results for the Year
Consistent with our plans, we moved from the integration and investment of our newly-acquired U.S. assets in the first half of 2015 to execution of our integrated business plan in the second half of the year. In the first half of 2015, we reported negative EBITDA of $5.2 million compared to positive EBITDA of $53.9 million in the second half of the year.
Stronger second half results led to full year adjusted EBITDA before specific items of $86.7 million compared to adjusted EBITDA before specific items of $51.2 million in 2014. Adjusted EBITDA was $48.7 million in 2015 compared to $47.6 million in the previous year.
Adjusted EBITDA was negatively impacted by specific items of approximately $38 million, including the Rumford recovery boiler upgrade, the Crofton oxygen plant outage, significant second quarter market curtailments at our Rumford, Port Alberni and Powell River mills, as well as costs related to the imposition of countervailing duties on U.S. exports of supercalendered paper.
The company recorded a net loss of $49.4 million and a net loss before specific items of $28.0 million in 2015. This compared to a net loss of $72.3 million and a net loss before specific items of $28.3 million in 2014. Free cash flow in 2015 was negative $37.6 million, compared to negative $17.2 million in 2014.
As we indicated, the first half of the year focused on the integration of our newly-acquired U.S. assets including the establishment of a regional sales, marketing and logistics team to better serve customers.
In spite of continued declines in North American paper demand and increased imports, our sales team successfully grew market share in all coated paper segments. Our success is based on building long-term, value-added business partnerships combined with a singular commitment to providing superior customer service.
In the first half of 2015, we also launched a formal mill Revitalization Program with the goal of fundamentally improving mill competitive cost position in 24 months or less. This Program, which was implemented at three of our mills in 2015 and will be launched at the remaining two mills in 2016, includes targeted strategic capital investments. In 2015, the top two projects included the recovery boiler upgrade at Rumford and the G13 condensing turbine at Powell River, which will support the reduction of energy costs at both mills.
To support the creation of an ownership culture across the company, our Opportunities for Improvement (OFI) Program was expanded to include our U.S. operations. This Program encourages and rewards employees to take ownership of the business by identifying and implementing opportunities for cost savings or revenue generation. OFI is measured as year over year improvement over the previous year's results. In 2015, Catalyst employees drove $49.6 million in value creation through our OFI Program, which serves to offset revenue declines in our product lines.
"The combination of strategic capital investments, market share growth, mill cost reduction programs, and product mix and optimization achievements, drove the step change in results in the second half of 2015," said Joe Nemeth, President & Chief Executive Officer. "The full implementation of these profit improvement programs is a key focus in 2016, and will provide the foundation for a sustainable improvement at Catalyst Paper."
