Domtar Corporation reports preliminary fourth quarter and fiscal year 2015 financial results

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(NYSE: UFS) (TSX: UFS)

Strong shipments and a solid operational performance drive fourth quarter earnings improvement         
(All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted).

  • Fourth quarter 2015 net earnings of $0.91 per share; earnings before items1 of $1.11 per share
  • Paper shipments increased 2.3% when compared to the third quarter 2015
  • Personal Care EBITDA1 23% higher when compared to the fourth quarter 2014

FORT MILL, SC, Feb. 5, 2016 /CNW Telbec/ – Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $57 million ($0.91 per share) for the fourth quarter of 2015 compared to net earnings of $11 million ($0.17 per share) for the third quarter of 2015 and net earnings of $71 million ($1.10 per share) for the fourth quarter of 2014. Sales for the fourth quarter of 2015 were $1.3 billion.

Excluding items listed below, the Company had earnings before items1 of $70 million ($1.11 per share) for the fourth quarter of 2015 compared to earnings before items1 of $54 million ($0.86 per share) for the third quarter of 2015 and earnings before items1 of $91 million ($1.41 per share) for the fourth quarter of 2014.

Fourth quarter 2015 items:

  • Closure and restructuring costs of $1 million ($1 million after tax); and
  • Impairment of property, plant & equipment of $20 million ($12 million after tax).

Third quarter 2015 items:

  • Closure and restructuring costs of $1 million ($1 million after tax);
  • Impairment of property, plant & equipment of $20 million ($12 million after tax); and
  • Debt refinancing costs of $42 million ($30 million after tax).

Fourth quarter 2014 items:

  • Closure and restructuring costs of $25 million ($18 million after tax); and
  • Impairment of property, plant & equipment of $4 million ($2 million after tax).

FISCAL YEAR 2015 HIGHLIGHTS

For fiscal year 2015, net earnings amounted to $142 million ($2.24 per share) compared to net earnings of $431 million ($6.64 per share) for fiscal year 2014. The Company had earnings before items1 of $211 million ($3.33 per share) for fiscal 2015 compared to earnings before items1 of $234 million ($3.61 per share) for fiscal 2014. Sales amounted to $5.3 billion for fiscal year 2015.

Commenting on the full-year results, John D. Williams, President and Chief Executive Officer, said, “I am pleased with our full-year performance. Our businesses generated strong free cash flow, and we further advanced on our Personal Care growth plan with a number of important customer wins. Our solid performance enabled us to return cash to shareholders, manage our balance sheet to preserve financial flexibility and better position Domtar for sustainable, long-term growth.  Our business transformation is still underway, but our financial results are starting to show the benefits of investments we are making in our facilities, in our people, and in our future.”

QUARTERLY REVIEW

“We had our best EBITDA performance of 2015 despite the impact of lower prices. Our pulp and paper shipments were strong, and our operations ran exceptionally well with productivity gains across the mill system,” said John D. Williams, President and Chief Executive Officer. “Our average production costs continue to trend lower as we focus on taking measures to run our assets more efficiently and improve our manufacturing processes.”

Mr. Williams added, “In Personal Care, momentum continues to build. We had our best sales quarter to date on a same-currency basis, and we delivered strong year-over-year EBITDA growth. We have made solid progress on capturing the benefits of cost savings from our new manufacturing platform while executing on our growth commitments with top-line benefits expected in 2016.”

Operating income before items1 was $115 million in the fourth quarter of 2015 compared to an operating income before items1 of $82 million in the third quarter of 2015. Depreciation and amortization totaled $89 million in the fourth quarter of 2015.

             

(In millions of dollars)

 

4Q 2015

 

3Q 2015

             

Sales

 

$

1,314

 

$

1,292

Operating income (loss)

           
 

Pulp and Paper segment

   

86

   

54

 

Personal Care segment

   

16

   

18

 

Corporate

   

(8)

   

(11)

 

Total

   

94

   

61

Operating income before items1

   

115

   

82

Depreciation and amortization

   

89

   

89

 

The increase in operating income before items1 in the fourth quarter of 2015 was the result of lower costs for planned maintenance, higher volume, higher productivity, lower raw material costs, a favorable exchange rate and lower freight and other costs. These factors were partially offset by lower average selling prices and higher selling, general and administrative expense.

When compared to the third quarter of 2015, manufactured paper shipments were up 2.3% and pulp shipments increased 15.9%. The shipments-to-production ratio for paper was 95% in the fourth quarter of 2015, compared to 98% in the third quarter of 2015. Paper inventories increased by 41,000 tons and pulp inventories decreased by 21,000 metric tons in December when compared to September levels.

LIQUIDITY AND CAPITAL

Cash flow provided from operating activities amounted to $137 million and capital expenditures were $87 million, resulting in free cash flow1 of $50 million for the fourth quarter of 2015. Domtar’s net debt-to-total capitalization ratio1 stood at 30% at December 31, 2015 and at September 30, 2015.

OUTLOOK

In 2016, we expect our paper shipments to be in-line with market demand while pulp shipments should be higher due to the conversion of a paper machine to a fluff pulp line. We anticipate some volatility in softwood and fluff pulp markets due to the strengthening of the U.S. dollar and announced new capacity additions. Our 2016 results are expected to be negatively impacted by approximately $23 million, related to the fluff pulp conversion outage at our Ashdown mill. In Personal Care, new customer wins are expected to generate above-market revenue growth. Costs for raw materials are expected to marginally increase.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 11:00 a.m. (ET) to discuss its fourth quarter and fiscal 2015 financial results. Financial analysts are invited to participate in the call by dialing 1 (800) 499-4035 (toll free – North America) or 1 (416) 204-9269 (International) at least 10 minutes before start time, while media and other interested individuals are invited to listen to the live webcast on the Domtar Corporation website at www.domtar.com.

The Company will release its first quarter 2016 earnings results on April 28, 2016, before markets open, followed by a conference call at 10:00 a.m. (ET) to discuss results. The date is tentative and will be confirmed approximately three weeks prior to the official earnings release date.

 

1 Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures in the appendix.

__________________________

About Domtar 
Domtar is a leading provider of a wide variety of fiber-based products including communication, specialty and packaging papers, market pulp and absorbent hygiene products. With approximately 9,850 employees serving more than 50 countries around the world, Domtar is driven by a commitment to turn sustainable wood fiber into useful products that people rely on every day. Domtar’s annual sales are approximately $5.3 billion and its common stock is traded on the New York and Toronto Stock Exchanges. Domtar’s principal executive office is in Fort Mill, South Carolina. To learn more, visit www.domtar.com.

Forward-Looking Statements
Statements in this release about our plans, expectations and future performance, including the statements by Mr. Williams and those contained under “Outlook,” are “forward-looking statements.” Actual results may differ materially from those suggested by these statements for a number of reasons, including changes in customer demand and pricing, changes in manufacturing costs, future acquisitions and divestitures, including facility closings, and the other reasons identified under “Risk Factors” in our Form 10-K for 2014 as filed with the SEC and as updated by subsequently filed Form 10-Q’s. Except to the extent required by law, we expressly disclaim any obligation to update or revise these forward-looking statements to reflect new events or circumstances or otherwise.

Domtar Corporation

     

Highlights

     

(In millions of dollars, unless otherwise noted)

     
             
   

Three months

ended

 

Three months

ended

 

Twelve months

ended

 

Twelve months

ended

   

December 31,

 

December 31,

 

December 31,

 

December 31,

   

2015

 

2014

 

2015

 

2014

 

(Unaudited)

   

$

 

$

 

$

 

$

               

Selected Segment Information

             

Sales

             
   

Pulp and Paper

1,110

 

1,160

 

4,458

 

4,674

   

Personal Care

221

 

230

 

869

 

928

Total for reportable segments

1,331

 

1,390

 

5,327

 

5,602

   

Intersegment sales

(17)

 

(11)

 

(63)

 

(39)

Consolidated sales

1,314

 

1,379

 

5,264

 

5,563

Depreciation and amortization and impairment and write-down of property, plant and equipment

             
   

Pulp and Paper

73

 

78

 

297

 

319

   

Personal Care

16

 

15

 

62

 

65

Total for reportable segments

89

 

93

 

359

 

384

   

Impairment and write-down of property, plant and equipment – Pulp and Paper

20

 

4

 

77

 

4

Consolidated depreciation and amortization and impairment and write-down of property, plant and equipment

109

 

97

 

436

 

388

               

Operating income (loss)1

             
   

Pulp and Paper

86

 

88

 

270

 

352

   

Personal Care

16

 

11

 

61

 

49

   

Corporate

(8)

 

(13)

 

(43)

 

(37)

Consolidated operating income

94

 

86

 

288

 

364

Interest expense, net

17

 

27

 

132

 

103

Earnings before income taxes

77

 

59

 

156

 

261

Income tax expense (benefit)

20

 

(12)

 

14

 

(170)

Net earnings

57

 

71

 

142

 

431

Per common share (in dollars)

             
 

Net earnings

             
   

Basic

0.91

 

1.10

 

2.24

 

6.65

   

Diluted

0.91

 

1.10

 

2.24

 

6.64

Weighted average number of common shares outstanding (millions)

             
   

Basic

62.8

 

64.3

 

63.3

 

64.8

   

Diluted

62.9

 

64.4

 

63.4

 

64.9

Cash flows provided from operating activities

137

 

186

 

453

 

634

Additions to property, plant and equipment

87

 

79

 

289

 

236

 

 

1 As a result of changes in the Company’s organization structure, we have changed the way we allocate certain Corporate general and administrative costs to the segments. Further, certain Corporate costs not related to segment activities, as well as the mark-to-market impact on stock-based compensation awards, will be presented on the Corporate line. As a result, we have revised our 2014 segment disclosures to conform to our 2015 presentation. (Previously reported numbers for Operating income (loss) for the three and twelve months ended December 31, 2014 are as follows; Pulp and Paper: $76M and $323M, respectively, Personal Care: $12M and $54M, respectively, Corporate: $(2)M and $(13)M, respectively).

 

 

 

Domtar Corporation

       

Consolidated Statements of Earnings
(In millions of dollars, unless otherwise noted)

       
               
               
     

Three months

ended

 

Three months

ended

 

Twelve months

ended

 

Twelve months

ended

     

December 31,

 

December 31,

 

December 31,

 

December 31,

     

2015

 

2014

 

2015

 

2014

 

(Unaudited)

     

$

 

$

 

$

$

                 

Sales

 

1,314

 

1,379

 

5,264

 

5,563

Operating expenses

               
   

Cost of sales, excluding depreciation and amortization

 

1,007

 

1,080

 

4,147

 

4,396

   

Depreciation and amortization

 

89

 

93

 

359

 

384

   

Selling, general and administrative

 

100

 

103

 

394

 

416

   

Impairment and write-down of property, plant and equipment

 

20

 

4

 

77

 

4

   

Closure and restructuring costs

 

1

 

25

 

4

 

28

   

Other operating loss (income), net

 

3

 

(12)

 

(5)

 

(29)

   

1,220

 

1,293

 

4,976

 

5,199

Operating income

 

94

 

86

 

288

 

364

Interest expense, net

 

17

 

27

 

132

 

103

Earnings before income taxes

 

77

 

59

 

156

 

261

Income tax expense (benefit)

 

20

 

(12)

 

14

 

(170)

Net earnings

 

57

 

71

 

142

 

431

Per common share (in dollars)

               
 

Net earnings

               
   

Basic

 

0.91

 

1.10

 

2.24

 

6.65

   

Diluted

 

0.91

 

1.10

 

2.24

 

6.64

Weighted average number of common shares outstanding (millions)

               
   

Basic

 

62.8

 

64.3

 

63.3

 

64.8

   

Diluted

 

62.9

 

64.4

 

63.4

 

64.9

 

 

 

Domtar Corporation

     

Consolidated Balance Sheets at

     

(In millions of dollars)

     
       
       
   

December 31,

 

December 31,

   

2015

 

2014

   

(Unaudited)

Assets

 

$

 

$

Current assets

       
 

Cash and cash equivalents

 

126

 

174

 

Receivables, less allowances of $6 and $6

 

627

 

628

 

Inventories

 

766

 

714

 

Prepaid expenses

 

21

 

25

 

Income and other taxes receivable

 

14

 

54

 

Deferred income taxes

 

 

75

   

Total current assets

 

1,554

 

1,670

Net property, plant and equipment

 

2,835

 

3,131

Goodwill

 

539

 

567

Intangible assets, net of amortization

 

601

 

661

Other assets

 

134

 

156

   

Total assets

 

5,663

 

6,185

Liabilities and shareholders’ equity

       

Current liabilities

       
 

Bank indebtedness

 

 

10

 

Trade and other payables

 

720

 

721

 

Income and other taxes payable

 

27

 

26

 

Long-term debt due within one year

 

41

 

169

   

Total current liabilities

 

788

 

926

Long-term debt

 

1,219

 

1,181

Deferred income taxes and other

 

654

 

810

Other liabilities and deferred credits

 

350

 

378

Shareholders’ equity

       
 

Common stock

 

1

 

1

 

Additional paid-in capital

 

1,966

 

2,012

 

Retained earnings

 

1,186

 

1,145

 

Accumulated other comprehensive loss

 

(501)

 

(268)

   

Total shareholders’ equity

 

2,652

 

2,890

     

Total liabilities and shareholders’ equity

 

5,663

 

6,185

 

 

Domtar Corporation

   

Consolidated Statements of Cash Flows

   

(In millions of dollars)

   
         
         
   

For the twelve months ended

   

December 31, 2015

 

December 31, 2014

   

(Unaudited)

   

$

 

$

Operating activities

       

Net earnings

 

142

 

431

Adjustments to reconcile net earnings to cash flows from operating activities

       
   

Depreciation and amortization

 

359

 

384

   

Deferred income taxes and tax uncertainties

 

(56)

 

(201)

   

Impairment and write-down of property, plant and equipment

 

77

 

4

   

Net gains on disposal of property, plant and equipment

 

(15)

 

   

Stock-based compensation expense

 

5

 

4

   

Other

 

4

 

3

Changes in assets and liabilities, excluding the effects of acquisition of business

       
   

Receivables

 

(22)

 

39

   

Inventories

 

(84)

 

(29)

   

Prepaid expenses

 

5

 

1

   

Trade and other payables

 

 

(33)

   

Income and other taxes

 

38

 

12

   

Difference between employer pension and other post-retirement contributions and pension and other post-retirement expense

 

(1)

 

16

   

Other assets and other liabilities

 

1

 

3

 

Cash flows provided from operating activities

 

453

 

634

Investing activities

       

Additions to property, plant and equipment

 

(289)

 

(236)

Proceeds from disposals of property, plant and equipment

 

36

 

1

Acquisition of business, net of cash acquired

 

 

(546)

Other

 

9

 

(5)

 

Cash flows used for investing activities

 

(244)

 

(786)

Financing activities

       

Dividend payments

 

(100)

 

(84)

Stock repurchase

 

(50)

 

(38)

Net change in bank indebtedness

 

(11)

 

(6)

Change in revolving bank credit facility

 

50

 

(160)

Proceeds from receivables securitization facilities

 

 

90

Payments on receivables securitization facilities

 

 

(129)

Issuance of long-term debt

 

300

 

Repayment of long-term debt

 

(439)

 

(4)

Other

 

1

 

5

 

Cash flows used for financing activities

 

(249)

 

(326)

Net decrease in cash and cash equivalents

 

(40)

 

(478)

Impact of foreign exchange on cash

 

(8)

 

(3)

Cash and cash equivalents at beginning of year

 

174

 

655

Cash and cash equivalents at end of year

 

126

 

174

Supplemental cash flow information

       
 

Net cash payments for:

       
   

Interest (including $40 million of redemption premiums in 2015)

 

133

 

92

   

Income taxes paid, net

 

34

 

18

 

 

Domtar Corporation

Quarterly Reconciliation of Non-GAAP Financial Measures

(In millions of dollars, unless otherwise noted)

The following table sets forth certain non-U.S. generally accepted accounting principles (“GAAP”) financial metrics identified in bold as “Earnings before items”, “Earnings before items per diluted share”, “EBITDA”, “EBITDA margin”, “EBITDA before items”, “EBITDA margin before items”, “Free cash flow”, “Net debt” and “Net debt-to-total capitalization.” Management believes that the financial metrics presented are frequently used by investors and are useful to evaluate our ability to service debt and our overall credit profile. Management believes these metrics are also useful to measure the operating performance and benchmark with peers within the industry. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

The Company calculates “Earnings before items” and “EBITDA before items” by excluding the after-tax (pre-tax) effect of items considered by management as not reflecting our current operations. Management uses these measures, as well as EBITDA and Free cash flow, to focus on ongoing operations and believes that it is useful to investors because it enables them to perform meaningful comparisons between periods. Domtar believes that using this information along with Net earnings provides for a more complete analysis of the results of operations. Net earnings and Cash flow provided from operating activities are the most directly comparable GAAP measures.  

 

           

2015

 

2014

           

Q1

 

Q2

 

Q3

 

Q4

 

YTD

 

Q1

 

Q2

 

Q3

 

Q4

 

YTD

Reconciliation of “Earnings before items” to Net earnings

                                           
 
   

Net earnings

 

($)

 

36

 

38

 

11

 

57

 

142

 

39

 

40

 

281

 

71

 

431

 

(+)

Impairment and write-down of property, plant and equipment

 

($)

 

12

 

11

 

12

 

12

 

47

 

 

 

 

2

 

2

 

(+)

Closure and restructuring costs

 

($)

 

1

 

1

 

1

 

1

 

4

 

1

 

 

2

 

18

 

21

 

(-)

Net gains on disposal of property, plant and equipment

 

($)

 

(1)

 

(11)

 

 

 

(12)

 

 

 

 

 

 

(+)

Impact of purchase accounting

 

($)

 

 

 

 

 

 

2

 

 

 

 

2

 

(-)

Alternative fuel tax credits

 

($)

 

 

 

 

 

 

 

 

(18)

 

 

(18)

 

(+)

Debt refinancing costs

 

($)

 

 

 

30

 

 

30

 

 

 

 

 

 

(-)

Internal Revenue Service audit settlement items

 

($)

 

 

 

 

 

 

 

 

(204)

 

 

(204)

 

(=)

Earnings before items

 

($)

 

48

 

39

 

54

 

70

 

211

 

42

 

40

 

61

 

91

 

234

 

(/)

Weighted avg. number of common and exchangeable shares outstanding (diluted)

 

(millions)

 

63.9

 

63.7

 

63.0

 

62.9

 

63.4

 

65.0

 

65.1

 

64.9

 

64.4

 

64.9

 

(=)

Earnings before items per diluted share

 

($)

 

0.75

 

0.61

 

0.86

 

1.11

 

3.33

 

0.65

 

0.61

 

0.94

 

1.41

 

3.61

                                                 

Reconciliation of “EBITDA” and “EBITDA before items” to Net earnings

                                           
   

Net earnings

 

($)

 

36

 

38

 

11

 

57

 

142

 

39

 

40

 

281

 

71

 

431

 

(+)

Income tax expense (benefit)

 

($)

 

9

 

(1)

 

(14)

 

20

 

14

 

15

 

13

 

(186)

 

(12)

 

(170)

 

(+)

Interest expense, net

 

($)

 

26

 

25

 

64

 

17

 

132

 

25

 

26

 

25

 

27

 

103

 

(=)

Operating income

 

($)

 

71

 

62

 

61

 

94

 

288

 

79

 

79

 

120

 

86

 

364

 

(+)

Depreciation and amortization

 

($)

 

90

 

91

 

89

 

89

 

359

 

99

 

96

 

96

 

93

 

384

 

(+)

Impairment and write-down of property, plant and equipment

 

($)

 

19

 

18

 

20

 

20

 

77

 

 

 

 

4

 

4

 

(-)

Net gains on disposal of property, plant and equipment

 

($)

 

(1)

 

(14)

 

 

 

(15)

 

 

 

 

 

 

(=)

EBITDA

 

($)

 

179

 

157

 

170

 

203

 

709

 

178

 

175

 

216

 

183

 

752

 

(/)

Sales

 

($)

 

1,348

 

1,310

 

1,292

 

1,314

 

5,264

 

1,394

 

1,385

 

1,405

 

1,379

 

5,563

 

(=)

EBITDA margin

 

(%)

 

13%

 

12%

 

13%

 

15%

 

13%

 

13%

 

13%

 

15%

 

13%

 

14%

   

EBITDA

 

($)

 

179

 

157

 

170

 

203

 

709

 

178

 

175

 

216

 

183

 

752

 

(-)

Alternative fuel tax credits

 

($)

 

 

 

 

 

 

 

 

(18)

 

 

(18)

 

(+)

Closure and restructuring costs

 

($)

 

1

 

1

 

1

 

1

 

4

 

1

 

 

2

 

25

 

28

 

(+)

Impact of purchase accounting

 

($)

 

 

 

 

 

 

3

 

 

 

 

3

 

(=)

EBITDA before items

 

($)

 

180

 

158

 

171

 

204

 

713

 

182

 

175

 

200

 

208

 

765

 

(/)

Sales

 

($)

 

1,348

 

1,310

 

1,292

 

1,314

 

5,264

 

1,394

 

1,385

 

1,405

 

1,379

 

5,563

 

(=)

EBITDA margin before items

 

(%)

 

13%

 

12%

 

13%

 

16%

 

14%

 

13%

 

13%

 

14%

 

15%

 

14%

                                                 

Reconciliation of “Free cash flow” to Cash flow provided from operating activities

                                           
   

Cash flow provided from operating activities

 

($)

 

127

 

122

 

67

 

137

 

453

 

141

 

104

 

203

 

186

 

634

 

(-)

Additions to property, plant and equipment

 

($)

 

(70)

 

(66)

 

(66)

 

(87)

 

(289)

 

(45)

 

(56)

 

(56)

 

(79)

 

(236)

 

(=)

Free cash flow

 

($)

 

57

 

56

 

1

 

50

 

164

 

96

 

48

 

147

 

107

 

398

                                                 

“Net debt-to-total capitalization” computation

                                           
   

Bank indebtedness

 

($)

 

6

 

1

 

1

 

     

8

 

15

 

3

 

10

   
 

(+)

Long-term debt due within one year

 

($)

 

169

 

169

 

42

 

41

     

15

 

7

 

170

 

169

   
 

(+)

Long-term debt

 

($)

 

1,179

 

1,178

 

1,245

 

1,219

     

1,490

 

1,410

 

1,202

 

1,181

   
 

(=)

Debt

 

($)

 

1,354

 

1,348

 

1,288

 

1,260

     

1,513

 

1,432

 

1,375

 

1,360

   
 

(-)

Cash and cash equivalents

 

($)

 

(183)

 

(207)

 

(128)

 

(126)

     

(130)

 

(85)

 

(134)

 

(174)

   
 

(=)

Net debt

 

($)

 

1,171

 

1,141

 

1,160

 

1,134

     

1,383

 

1,347

 

1,241

 

1,186

   
 

(+)

Shareholders’ equity

 

($)

 

2,710

 

2,761

 

2,659

 

2,652

     

2,771

 

2,826

 

2,938

 

2,890

   
 

(=)

Total capitalization

 

($)

 

3,881

 

3,902

 

3,819

 

3,786

     

4,154

 

4,173

 

4,179

 

4,076

   
   

Net debt

 

($)

 

1,171

 

1,141

 

1,160

 

1,134

     

1,383

 

1,347

 

1,241

 

1,186

   
 

(/)

Total capitalization

 

($)

 

3,881

 

3,902

 

3,819

 

3,786

     

4,154

 

4,173

 

4,179

 

4,076

   
 

(=)

Net debt-to-total capitalization

 

(%)

 

30%

 

29%

 

30%

 

30%

     

33%

 

32%

 

30%

 

29%

   

 

 

 

“Earnings before items”, “Earnings before items per diluted share”, “EBITDA”, “EBITDA margin”, “EBITDA before items”, “EBITDA margin before items”, “Free cash flow”, “Net debt” and “Net debt-to-total capitalization” have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation or as a substitute for Net earnings, Operating income or any other earnings statement, cash flow statement or balance sheet financial information prepared in accordance with GAAP. It is important for readers to understand that certain items may be presented in different lines by different companies on their financial statements thereby leading to different measures for different companies.

 

 

 

Domtar Corporation

Quarterly Reconciliation of Non-GAAP Financial Measures – By Segment 2015

(In millions of dollars, unless otherwise noted)

 

 

The following table sets forth certain non-U.S. generally accepted accounting principles (“GAAP”), financial metrics identified in bold as “Operating income (loss) before items”, “EBITDA before items” and “EBITDA margin before items” by reportable segment. Management believes that the financial metrics presented are frequently used by investors and are useful to measure the operating performance and benchmark with peers within the industry. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

The Company calculates the segmented “Operating income (loss) before items” by excluding the pre-tax effect of items considered by management as not reflecting our ongoing operations. Management uses these measures to focus on ongoing operations and believes that it is useful to investors because it enables them to perform meaningful comparisons between periods. Domtar believes that using this information along with Operating income (loss) provides for a more complete analysis of the results of operations. Operating income (loss) by segment is the most directly comparable GAAP measure.

 

           

Pulp and Paper

 

Personal Care

 

Corporate

 

Total

           

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

YTD

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

YTD

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

YTD

 

Q1’15

 

Q2’15

 

Q3’15

 

Q4’15

 

YTD

Reconciliation of Operating income (loss)

                                                                                   

to “Operating income (loss) before items”

   

Operating income (loss)(1)

 

($)

 

75

 

55

 

54

 

86

 

270

 

10

 

17

 

18

 

16

 

61

 

(14)

 

(10)

 

(11)

 

(8)

 

(43)

 

71

 

62

 

61

 

94

 

288

 

(+)

Impairment and write-down of property, plant and equipment

 

($)

 

19

 

18

 

20

 

20

 

77

 

 

 

 

 

 

 

 

 

 

 

19

 

18

 

20

 

20

 

77

 

(-)

Net gains on disposal of property, plant and equipment

 

($)

 

 

(14)

 

 

 

(14)

 

 

 

 

 

 

(1)

 

 

 

 

(1)

 

(1)

 

(14)

 

 

 

(15)

 
 

(+)

Closure and restructuring costs

 

($)

 

 

1

 

1

 

1

 

3

 

1

 

 

 

 

1

 

 

 

 

 

 

1

 

1

 

1

 

1

 

4

 

(=)

Operating income (loss) before items

 

($)

 

94

 

60

 

75

 

107

 

336

 

11

 

17

 

18

 

16

 

62

 

(15)

 

(10)

 

(11)

 

(8)

 

(44)

 

90

 

67

 

82

 

115

 

354

                                                                                         

Reconciliation of “Operating income (loss)

                                                                                   

before items” to “EBITDA before items”

   

Operating income (loss) before items

 

($)

 

94

 

60

 

75

 

107

 

336

 

11

 

17

 

18

 

16

 

62

 

(15)

 

(10)

 

(11)

 

(8)

 

(44)

 

90

 

67

 

82

 

115

 

354

 

(+)

Depreciation and amortization

 

($)

 

74

 

75

 

75

 

73

 

297

 

16

 

16

 

14

 

16

 

62

 

 

 

 

 

 

90

 

91

 

89

 

89

 

359

                                                                                         
 

(=)

EBITDA before items

 

($)

 

168

 

135

 

150

 

180

 

633

 

27

 

33

 

32

 

32

 

124

 

(15)

 

(10)

 

(11)

 

(8)

 

(44)

 

180

 

158

 

171

 

204

 

713

 

(/)

Sales

 

($)

 

1,146

 

1,110

 

1,092

 

1,110

 

4,458

 

218

 

216

 

214

 

221

 

869

 

 

 

 

 

 

1,364

 

1,326

 

1,306

 

1,331

 

5,327

 

(=)

EBITDA margin before items

 

(%)

 

15%

 

12%

 

14%

 

16%

 

14%

 

12%

 

15%

 

15%

 

14%

 

14%

 

 

 

 

 

 

13%

 

12%

 

13%

 

15%

 

13%

 

 

 

“Operating income (loss) before items”, “EBITDA before items” and “EBITDA margin before items” have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation or as a substitute for Operating income (loss) or any other earnings statement, cash flow statement or balance sheet financial information prepared in accordance with GAAP. It is important for readers to understand that certain items may be presented in different lines by different companies on their financial statements thereby leading to different measures for different companies.

 

(1) As a result of changes in the Company’s organization structure, we have changed the way we allocate certain Corporate general and administrative costs to the segments. Further, certain Corporate costs not related to segment activities, as well as the mark-to-market impact on stock-based compensation awards, will be presented on the Corporate line. As a result, we have revised our 2014 segment disclosures to conform to our 2015 presentation.  

 

Domtar Corporation

Quarterly Reconciliation of Non-GAAP Financial Measures – By Segment 2014

(In millions of dollars, unless otherwise noted)

 

 

The following table sets forth certain non-U.S. generally accepted accounting principles (“GAAP”), financial metrics identified in bold as “Operating income (loss) before items”, “EBITDA before items” and “EBITDA margin before items” by reportable segment. Management believes that the financial metrics presented are frequently used by investors and are useful to measure the operating performance and benchmark with peers within the industry. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

The Company calculates the segmented “Operating income (loss) before items” by excluding the pre-tax effect of items considered by management as not reflecting our ongoing operations. Management uses these measures to focus on ongoing operations and believes that it is useful to investors because it enables them to perform meaningful comparisons between periods. Domtar believes that using this information along with Operating income (loss) provides for a more complete analysis of the results of operations. Operating income (loss) by segment is the most directly comparable GAAP measure.

 

           

Pulp and Paper

 

Personal Care(1)

 

Corporate

 

Total

           

Q1’14

 

Q2’14

 

Q3’14

 

Q4’14

 

YTD

 

Q1’14

 

Q2’14

 

Q3’14

 

Q4’14

 

YTD

 

Q1’14

 

Q2’14

 

Q3’14

 

Q4’14

 

YTD

 

Q1’14

 

Q2’14

 

Q3’14

 

Q4’14

 

YTD

Reconciliation of Operating income (loss)

                                                                                   

to “Operating income (loss) before items”

   

Operating income (loss)(2)

 

($)

 

89

 

74

 

101

 

88

 

352

 

14

 

12

 

12

 

11

 

49

 

(24)

 

(7)

 

7

 

(13)

 

(37)

 

79

 

79

 

120

 

86

 

364

 

(-)

Alternative fuel tax credits

 

($)

 

 

 

 

 

 

 

 

 

 

 

 

 

(18)

 

 

(18)

 

 

 

(18)

 

 

(18)

 

(+)

Closure and restructuring costs

 

($)

 

 

 

2

 

25

 

27

 

1

 

 

 

 

1

 

 

 

 

 

 

1

 

 

2

 

25

 

28

 

(+)

Impact of purchase accounting

 

($)

 

 

 

 

 

 

3

 

 

 

 

3

 

 

 

 

 

 

3

 

 

 

 

3

 

(+)

Impairment and write-down of property,

 

($)

 

 

 

 

4

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

4

plant and equipment

 

(=)

Operating income (loss) before items

 

($)

 

89

 

74

 

103

 

117

 

383

 

18

 

12

 

12

 

11

 

53

 

(24)

 

(7)

 

(11)

 

(13)

 

(55)

 

83

 

79

 

104

 

115

 

381

                                                                                         

Reconciliation of “Operating income (loss)

                                                                                   

before items” to “EBITDA before items”

   

Operating income (loss) before items

 

($)

 

89

 

74

 

103

 

117

 

383

 

18

 

12

 

12

 

11

 

53

 

(24)

 

(7)

 

(11)

 

(13)

 

(55)

 

83

 

79

 

104

 

115

 

381

 

(+)

Depreciation and amortization

 

($)

 

83

 

79

 

79

 

78

 

319

 

16

 

17

 

17

 

15

 

65

 

 

 

 

 

 

99

 

96

 

96

 

93

 

384

                                                                                         
 

(=)

EBITDA before items

 

($)

 

172

 

153

 

182

 

195

 

702

 

34

 

29

 

29

 

26

 

118

 

(24)

 

(7)

 

(11)

 

(13)

 

(55)

 

182

 

175

 

200

 

208

 

765

 

(/)

Sales

 

($)

 

1,168

 

1,160

 

1,186

 

1,160

 

4,674

 

233

 

234

 

231

 

230

 

928

 

 

 

 

 

 

1,401

 

1,394

 

1,417

 

1,390

 

5,602

 

(=)

EBITDA margin before items

 

(%)

 

15%

 

13%

 

15%

 

17%

 

15%

 

15%

 

12%

 

13%

 

11%

 

13%

 

 

 

 

 

 

13%

 

13%

 

14%

 

15%

 

14%

 

 

 

“Operating income (loss) before items”, “EBITDA before items” and “EBITDA margin before items” have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation or as a substitute for Operating income (loss) or any other earnings statement, cash flow statement or balance sheet financial information prepared in accordance with GAAP. It is important for readers to understand that certain items may be presented in different lines by different companies on their financial statements thereby leading to different measures for different companies.

 

(1) On January 2, 2014, the Company acquired 100% of the shares of Laboratorios Indas, S.A.U. in Spain.
(2) As a result of changes in the Company’s organization structure, we have changed the way we allocate certain Corporate general and administrative costs to the segments. Further, certain Corporate costs not related to segment activities, as well as the mark-to-market impact on stock-based compensation awards, will be presented on the Corporate line. As a result, we have revised our 2014 segment disclosures to conform to our 2015 presentation.

 

 

Domtar Corporation

Supplemental Segmented Information

(In millions of dollars, unless otherwise noted)

       
       

2015

2014

 
       

Q1

Q2

Q3

Q4

YTD

Q1

Q2

Q3

Q4

YTD

Pulp and Paper Segment

                     
 

Sales

($)

1,146

1,110

1,092

1,110

4,458

1,168

1,160

1,186

1,160

4,674

 

Operating income (a)

($)

75

55

54

86

270

89

74

101

88

352

 

Depreciation and amortization

($)

74

75

75

73

297

83

79

79

78

319

 

Impairment and write-down of property, plant and equipment

($)

19

18

20

20

77

4

4

                       
 

Paper

                     
 

Paper Production

(‘000 ST)

808

806

794

837

3,245

801

786

758

777

3,122

 

Paper Shipments -Manufactured

(‘000 ST)

804

783

779

797

3,163

807

779

777

785

3,148

   

Communication Papers

(‘000 ST)

669

653

648

669

2,639

681

647

649

660

2,637

   

Specialty and Packaging

(‘000 ST)

135

130

131

128

524

126

132

128

125

511

 

Paper Shipments -Sourced from 3rd parties

(‘000 ST)

35

29

35

28

127

47

42

46

35

170

 

Paper Shipments – Total

(‘000 ST)

839

812

814

825

3,290

854

821

823

820

3,318

 

Pulp

                     
 

Pulp Shipments(b)

(‘000 ADMT)

350

345

333

386

1,414

318

336

367

370

1,391

   

Hardwood Kraft Pulp

(%)

9%

8%

8%

8%

8%

12%

11%

12%

11%

12%

   

Softwood Kraft Pulp

(%)

65%

65%

65%

69%

66%

58%

63%

63%

60%

61%

   

Fluff Pulp

(%)

26%

27%

27%

23%

26%

30%

26%

25%

29%

27%

                       
 

Personal Care Segment

                     
 

Sales

($)

218

216

214

221

869

233

234

231

230

928

 

Operating income(a)

($)

10

17

18

16

61

14

12

12

11

49

 

Depreciation and amortization

($)

16

16

14

16

62

16

17

17

15

65

                       

Average Exchange Rates

$US / $CAN

1.241

1.229

1.309

1.335

1.279

1.103

1.091

1.089

1.136

1.105

 

$CAN / $US

0.806

0.813

0.765

0.749

0.782

0.906

0.917

0.918

0.881

0.905

 

€ / $US

1.126

1.106

1.112

1.095

1.110

1.370

1.371

1.324

1.249

1.329

 

 

 

(a)  As a result of changes in the Company’s organization structure, we have changed the way we allocate certain Corporate general and administrative costs to the segments. Further, certain Corporate costs not related to segment activities, as well as the mark-to-market impact on stock-based compensation awards, will be presented on the Corporate line. As a result, we have revised our 2014 segment disclosures to conform to our 2015 presentation.

(b)  Figures are gross of market pulp purchased from other producers on the open market for some of our paper making operations. Pulp Shipments represent the amount of pulp produced in excess of our internal requirement.

Note: the term “ST” refers to a short ton and the term “ADMT” refers to an air dry metric ton.

 

SOURCE Domtar Corporation

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