Domtar Corporation Reports Preliminary Fourth Quarter and Fiscal Year 2016 Financial Results

Lower selling prices and higher costs impact fourth quarter results
(All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted).

  • Fourth quarter 2016 net earnings of $0.75 per share; earnings before items1 of $0.75 per share
  • Best operating cash flow quarter of 2016
  • Qualification of Ashdown fluff pulp underway with initial trials providing good results

FORT MILL, S.C.–(BUSINESS WIRE)–Feb. 9, 2017– Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $47 million ($0.75 per share) for the fourth quarter of 2016 compared to net earnings of $59 million ($0.94 per share) for the third quarter of 2016 and net earnings of $57 million ($0.91 per share) for the fourth quarter of 2015. Sales for the fourth quarter of 2016 were $1.3 billion.

Excluding items listed below, the Company had earnings before items1 of $47 million ($0.75 per share) for the fourth quarter of 2016 compared to earnings before items1 of $71 million ($1.13 per share) for the third quarter of 2016 and earnings before items1 of $70 million ($1.11 per share) for the fourth quarter of 2015.

Fourth quarter 2016 items:

  • Closure and restructuring impact of $(1) million ($(1) million after tax); and
  • Negative impact of purchase accounting of $1 million ($1 million after tax).

Third quarter 2016 items:

  • Closure and restructuring costs of $10 million ($8 million after tax); and
  • Impairment of property, plant & equipment of $5 million ($4 million after tax).

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).

FISCAL YEAR 2016 HIGHLIGHTS

For fiscal year 2016, net earnings amounted to $128 million ($2.04 per share) compared to net earnings of $142 million ($2.24 per share) for fiscal year 2015. The Company had earnings before items1 of $178 million ($2.84 per share) for fiscal year 2016 compared to earnings before items1 of $211 million ($3.33 per share) for fiscal year 2015. Sales amounted to $5.1 billion for fiscal year 2016.

Commenting on the full-year results, John D. Williams, President and Chief Executive Officer, said, “Our businesses generated strong EBITDA and cash flow in a challenging macro-economic and competitive environment. This allowed us to further execute on our growth strategy, while returning cash to our shareholders.”

QUARTERLY REVIEW

“Our pulp business shipped record volumes of softwood in the fourth quarter. Nevertheless, the segment was impacted by lower prices and higher costs,” said John D. Williams, President and Chief Executive Officer. “Personal Care began manufacturing baby diapers using Ashdown fluff pulp with initial trials providing good results. This production is the first step towards qualifying Ashdown fluff pulp for the hygiene market.”

Mr. Williams added, “The fourth quarter marked our highest Personal Care sales and EBITDA of the year, which included the results of our recent HDIS acquisition. We are scaling up our capabilities in the rapidly growing direct-to-consumer channel, while expanding our partner-brand strategy to capture sales growth and higher margins by continuing to differentiate the way we sell our products.”

Operating income was $74 million in the fourth quarter of 2016 compared to an operating income of $92 million in the third quarter of 2016. Depreciation and amortization totaled $85 million in the fourth quarter of 2016.

Operating income before items1 was $74 million in the fourth quarter of 2016 compared to an operating income before items1 of $107 million in the third quarter of 2016.

                 
(In millions of dollars)   4Q 2016     3Q 2016  
                 
Sales   $ 1,274     $ 1,270  
Operating income (loss)                
Pulp and Paper segment     74       89  
Personal Care segment     13       15  
Corporate     (13 )     (12 )
Total operating income     74       92  
Operating income before items1     74       107  
Depreciation and amortization     85       87  

The decrease in operating income in the fourth quarter of 2016 was the result of lower average selling prices, higher raw material costs, lower productivity and higher maintenance costs. These factors were partially offset by an increase in pulp sales volume and favorable exchange rates.

When compared to the third quarter of 2016, manufactured paper shipments were down 1% and pulp shipments increased 12%. The shipments-to-production ratio for paper was 104% in the fourth quarter of 2016, compared to 102% in the third quarter of 2016. Paper inventories decreased by 22,000 tons and pulp inventories increased by 19,000 metric tons when compared to the third quarter of 2016.

LIQUIDITY AND CAPITAL

Cash flow provided from operating activities amounted to $155 million, and capital expenditures were $45 million, resulting in free cash flow1 of $110 million for the fourth quarter of 2016. Domtar’s net debt-to-total capitalization ratio1 stood at 30% at December 31, 2016 and at September 30, 2016.

OUTLOOK

In 2017, 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 strong U.S. dollar and new capacity additions. Costs, including freight, labor and raw materials, are expected to marginally increase. In Personal Care, investments in advertising and promotion in addition to new customer wins should drive higher sales.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 10:00 a.m. (ET) to discuss its fourth quarter and fiscal year 2016 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 2017 earnings results on April 27, 2017, 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.

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 10,000 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 $5.1 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 2015 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,  
    2016     2015     2016     2015  
    (Unaudited)  
    $     $     $     $  
                                 
Selected Segment Information                                
Sales                                
Pulp and Paper     1,046       1,110       4,239       4,458  
Personal Care     242       221       917       869  
Total for reportable segments     1,288       1,331       5,156       5,327  
Intersegment sales     (14 )     (17 )     (58 )     (63 )
Consolidated sales     1,274       1,314       5,098       5,264  
Depreciation and amortization and impairment

of property, plant and equipment

                               
Pulp and Paper     68       73       284       297  
Personal Care     17       16       64       62  
Total for reportable segments     85       89       348       359  
Impairment of property, plant

and equipment – Pulp and Paper

          20       29       77  
Consolidated depreciation and amortization and

impairment of property, plant and equipment

    85       109       377       436  
                                 
Operating income (loss)                                
Pulp and Paper     74       86       217       270  
Personal Care     13       16       57       61  
Corporate     (13 )     (8 )     (51 )     (43 )
Consolidated operating income     74       94       223       288  
Interest expense, net     17       17       66       132  
Earnings before income taxes     57       77       157       156  
Income tax expense     10       20       29       14  
Net earnings     47       57       128       142  
Per common share (in dollars)                                
Net earnings                                
Basic     0.75       0.91       2.04       2.24  
Diluted     0.75       0.91       2.04       2.24  
Weighted average number of common

shares outstanding (millions)

                               
Basic     62.6       62.8       62.6       63.3  
Diluted     62.7       62.9       62.7       63.4  
Cash flows provided from operating activities     155       137       465       453  
Additions to property, plant and equipment     45       87       347       289  

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,  
    2016     2015     2016     2015  
    (Unaudited)  
    $     $     $     $  
                                 
Sales     1,274       1,314       5,098       5,264  
Operating expenses                                
Cost of sales, excluding depreciation and amortization     1,003       1,007       4,035       4,147  
Depreciation and amortization     85       89       348       359  
Selling, general and administrative     113       100       427       394  
Impairment of property, plant and equipment           20       29       77  
Closure and restructuring costs     (1 )     1       32       4  
Other operating loss (income), net           3       4       (5 )
      1,200       1,220       4,875       4,976  
Operating income     74       94       223       288  
Interest expense, net     17       17       66       132  
Earnings before income taxes     57       77       157       156  
Income tax expense     10       20       29       14  
Net earnings     47       57       128       142  
Per common share (in dollars)                                
Net earnings                                
Basic     0.75       0.91       2.04       2.24  
Diluted     0.75       0.91       2.04       2.24  
Weighted average number of common

shares outstanding (millions)

                               
Basic     62.6       62.8       62.6       63.3  
Diluted     62.7       62.9       62.7       63.4  

Domtar Corporation
Consolidated Balance Sheets at
(In millions of dollars)

       
    December 31,     December 31,  
    2016     2015  
    (Unaudited)  
    $     $  
Assets                
Current assets                
Cash and cash equivalents     125       126  
Receivables, less allowances of $7 and $6     613       627  
Inventories     759       766  
Prepaid expenses     40       21  
Income and other taxes receivable     31       14  
Total current assets     1,568       1,554  
Property, plant and equipment, net     2,825       2,835  
Goodwill     550       539  
Intangible assets, net     608       601  
Other assets     129       125  
Total assets     5,680       5,654  
Liabilities and shareholders’ equity                
Current liabilities                
Bank indebtedness     12        
Trade and other payables     656       720  
Income and other taxes payable     22       27  
Long-term debt due within one year     63       41  
Total current liabilities     753       788  
Long-term debt     1,218       1,210  
Deferred income taxes and other     675       654  
Other liabilities and deferred credits     358       350  
Shareholders’ equity                
Common stock     1       1  
Additional paid-in capital     1,963       1,966  
Retained earnings     1,211       1,186  
Accumulated other comprehensive loss     (499 )     (501 )
Total shareholders’ equity     2,676       2,652  
Total liabilities and shareholders’ equity     5,680       5,654  

Domtar Corporation
Consolidated Statements of Cash Flows
(In millions of dollars)

    For the twelve months ended  
    December 31, 2016     December 31, 2015  
    (Unaudited)  
    $     $  
Operating activities                
Net earnings     128       142  
Adjustments to reconcile net earnings to cash flows from operating activities                
Depreciation and amortization     348       359  
Deferred income taxes and tax uncertainties     9       (56 )
Impairment of property, plant and equipment     29       77  
Net gains on disposals of property, plant and equipment           (15 )
Stock-based compensation expense     7       5  
Other     (2 )     4  
Changes in assets and liabilities, excluding effect of sale and acquisition of

businesses

               
Receivables     18       (22 )
Inventories     14       (84 )
Prepaid expenses     5       5  
Trade and other payables     (51 )      
Income and other taxes     (18 )     38  
Difference between employer pension and other post-retirement

contributions and pension and other post-retirement expense

    (21 )     (1 )
Other assets and other liabilities     (1 )     1  
Cash flows provided from operating activities     465       453  
Investing activities                
Additions to property, plant and equipment     (347 )     (289 )
Proceeds from disposals of property, plant and equipment and sale of business     1       36  
Acquisition of businesses, net of cash acquired     (46 )      
Other     1       9  
Cash flows used for investing activities     (391 )     (244 )
Financing activities                
Dividend payments     (102 )     (100 )
Stock repurchase     (10 )     (50 )
Net change in bank indebtedness     12       (11 )
Change in revolving bank credit facility           50  
Proceeds from receivables securitization facility     140        
Repayments of receivables securitization facility     (70 )      
Issuance of long-term debt           300  
Repayments of long-term debt     (40 )     (439 )
Other     (3 )     1  
Cash flows used for financing activities     (73 )     (249 )
Net increase (decrease) in cash and cash equivalents     1       (40 )
Impact of foreign exchange on cash     (2 )     (8 )
Cash and cash equivalents at beginning of year     126       174  
Cash and cash equivalents at end of year     125       126  
Supplemental cash flow information                
Net cash payments for:                
Interest (including $40 million of redemption premiums in 2015)     64       133  
Income taxes paid, net     40       34  

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 are useful to understand our operating performance and benchmark with peers within the industry. The Company calculates “Earnings before items” and “EBITDA before items” by excluding the after-tax (pre-tax) effect of specified items. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

            2016     2015  
            Q1     Q2     Q3     Q4     Year     Q1     Q2     Q3     Q4     Year  
Reconciliation of “Earnings before items” to Net

earnings

                                                                                   
    Net earnings   ($)     4       18       59       47       128       36       38       11       57       142  
  (+) Impairment of property, plant and equipment   ($)     16       2       4             22       12       11       12       12       47  
  (+) Closure and restructuring costs   ($)     2       16       8       (1 )     25       1       1       1       1       4  
  (+) Litigation settlement   ($)           2                   2                                
  (-) Net gains on disposals of property, plant and equipment   ($)                                   (1 )     (11 )                 (12 )
  (+) Impact of purchase accounting   ($)                       1       1                                
  (+) Debt refinancing costs   ($)                                               30             30  
  (=) Earnings before items   ($)     22       38       71       47       178       48       39       54       70       211  
  (/) Weighted avg. number of common shares outstanding (diluted)   (millions)     62.8       62.7       62.7       62.7       62.7       63.9       63.7       63.0       62.9       63.4  
  (=) Earnings before items per diluted share   ($)     0.35       0.61       1.13       0.75       2.84       0.75       0.61       0.86       1.11       3.33  
                                                                                         
Reconciliation of “EBITDA” and “EBITDA before

items” to Net earnings

                                                                                   
    Net earnings   ($)     4       18       59       47       128       36       38       11       57       142  
  (+) Income tax (benefit) expense   ($)     (3 )     6       16       10       29       9       (1 )     (14 )     20       14  
  (+) Interest expense, net   ($)     17       15       17       17       66       26       25       64       17       132  
  (=) Operating income   ($)     18       39       92       74       223       71       62       61       94       288  
  (+) Depreciation and amortization   ($)     89       87       87       85       348       90       91       89       89       359  
  (+) Impairment of property, plant and equipment   ($)     21       3       5             29       19       18       20       20       77  
  (-) Net gains on disposals of property, plant and equipment   ($)                                   (1 )     (14 )                 (15 )
  (=) EBITDA   ($)     128       129       184       159       600       179       157       170       203       709  
  (/) Sales   ($)     1,287       1,267       1,270       1,274       5,098       1,348       1,310       1,292       1,314       5,264  
  (=) EBITDA margin   (%)     10 %     10 %     14 %     12 %     12 %     13 %     12 %     13 %     15 %     13 %
    EBITDA   ($)     128       129       184       159       600       179       157       170       203       709  
  (+) Closure and restructuring costs   ($)     2       21       10       (1 )     32       1       1       1       1       4  
  (+) Litigation settlement   ($)           2                   2                                
  (+) Impact of purchase accounting   ($)                       1       1                              

 
  (=) EBITDA before items   ($)     130       152       194       159       635       180       158       171       204       713  
  (/) Sales   ($)     1,287       1,267       1,270       1,274       5,098       1,348       1,310       1,292       1,314       5,264  
  (=) EBITDA margin before items   (%)     10 %     12 %     15 %     12 %     12 %     13 %     12 %     13 %     16 %     14 %
                                                                                         
Reconciliation of “Free cash flow” to Cash flows

provided from operating activities

                                                                                   
    Cash flows provided from operating activities   ($)     97       118       95       155       465       127       122       67       137       453  
  (-) Additions to property, plant and equipment   ($)     (100 )     (119 )     (83 )     (45 )     (347 )     (70 )     (66 )     (66 )     (87 )     (289 )
  (=) Free cash flow   ($)     (3 )     (1 )     12       110       118       57       56       1       50       164  
                                                                                         
“Net debt-to-total capitalization” computation                                                                                    
    Bank indebtedness   ($)     6       1             12               6       1       1                
  (+) Long-term debt due within one year   ($)     41       64       63       63               169       169       42       41          
  (+) Long-term debt   ($)     1,211       1,237       1,309       1,218               1,170       1,169       1,236       1,210          
  (=) Debt   ($)     1,258       1,302       1,372       1,293               1,345       1,339       1,279       1,251          
  (-) Cash and cash equivalents   ($)     (97 )     (111 )     (168 )     (125 )             (183 )     (207 )     (128 )     (126 )        
  (=) Net debt   ($)     1,161       1,191       1,204       1,168               1,162       1,132       1,151       1,125          
  (+) Shareholders’ equity   ($)     2,736       2,716       2,754       2,676               2,710       2,761       2,659       2,652          
  (=) Total capitalization   ($)     3,897       3,907       3,958       3,844               3,872       3,893       3,810       3,777          
    Net debt   ($)     1,161       1,191       1,204       1,168               1,162       1,132       1,151       1,125          
  (/) Total capitalization   ($)     3,897       3,907       3,958       3,844               3,872       3,893       3,810       3,777          
  (=) Net debt-to-total capitalization   (%)     30 %     30 %     30 %     30 %             30 %     29 %     30 %     30 %        

“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 2016
(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 are useful to understand our operating performance and benchmark with peers within the industry. The Company calculates the segmented “Operating income (loss) before items” by excluding the pre-tax effect of specified items. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

            Pulp and Paper   Personal Care (1)   Corporate   Total
            Q1’16   Q2’16   Q3’16   Q4’16   Year   Q1’16   Q2’16   Q3’16   Q4’16   Year   Q1’16   Q2’16   Q3’16   Q4’16   Year   Q1’16   Q2’16   Q3’16   Q4’16   Year
Reconciliation of Operating income (loss)

to “Operating income (loss) before items”

                                                                                   
    Operating income (loss)   ($)   19   35   89   74   217   14   15   15   13   57   (15)   (11)   (12)   (13)   (51)   18   39   92   74   223
  (+) Impairment of property, plant and equipment   ($)   21   3   5     29                       21   3   5     29
  (+) Impact of purchase accounting   ($)                   1   1          

        1   1
  (+) Closure and restructuring costs   ($)   2   21   10   (2)   31         1   1        

 

  2   21   10   (1)   32
  (+) Litigation settlement   ($)                         2       2     2       2
  (=) Operating income (loss) before items   ($)   42   59   104   72   277   14   15   15   15   59   (15)   (9)   (12)   (13)   (49)   41   65   107   74   287
                                                                                         
Reconciliation of “Operating income (loss)

before items” to “EBITDA before items”

                                                                                   
    Operating income (loss) before items   ($)   42   59   104   72   277   14   15   15   15   59   (15)   (9)   (12)   (13)   (49)   41   65   107   74   287
  (+) Depreciation and amortization   ($)   73   72   71   68   284   16   15   16   17   64             89   87   87   85   348
                                                                                         
  (=) EBITDA before items   ($)   115   131   175   140   561   30   30   31   32   123   (15)   (9)   (12)   (13)   (49)   130   152   194   159   635
  (/) Sales   ($)   1,085   1,054   1,054   1,046   4,239   216   228   231   242   917             1,301   1,282   1,285   1,288   5,156
  (=) EBITDA margin before items   (%)   11%   12%   17%   13%   13%   14%   13%   13%   13%   13%             10%   12%   15%   12%   12%

“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 October 1, 2016, the Company acquired 100% of the shares of Home Delivery Incontinent Supplies Co. in the United States.

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 are useful to understand our operating performance and benchmark with peers within the industry. The Company calculates the segmented “Operating income (loss) before items” by excluding the pre-tax effect of specified items. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

            Pulp and Paper   Personal Care   Corporate   Total
            Q1’15   Q2’15   Q3’15   Q4’15   Year   Q1’15   Q2’15   Q3’15   Q4’15   Year   Q1’15   Q2’15   Q3’15   Q4’15   Year   Q1’15   Q2’15   Q3’15   Q4’15   Year
Reconciliation of Operating income (loss)

to “Operating income (loss) before items”

                                                                                   
    Operating income (loss)   ($)   75   55   54   86   270   10   17   18   16   61   (14)   (10)   (11)   (8)   (43)   71   62   61   94   288
  (+) Impairment of property, plant and equipment   ($)   19   18   20   20   77                       19   18   20   20   77
  (-) Net gains on disposals 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.

Domtar Corporation
Supplemental Segmented Information
(In millions of dollars, unless otherwise noted)

        2016     2015  
        Q1     Q2     Q3     Q4     Year     Q1     Q2     Q3     Q4     Year  
Pulp and Paper

Segment

                                                                                   
Sales   ($)     1,085       1,054       1,054       1,046       4,239       1,146       1,110       1,092       1,110       4,458  
Operating income   ($)     19       35       89       74       217       75       55       54       86       270  
Depreciation and

amortization

  ($)     73       72       71       68       284       74       75       75       73       297  
Impairment of property,

plant and equipment

  ($)     21       3       5             29       19       18       20       20       77  
                                                                                     
Paper                                                                                    
Paper Production   (‘000 ST)     785       715       726       714       2,940       808       806       794       837       3,245  
Paper Shipments –

Manufactured

  (‘000 ST)     786       752       744       739       3,021       804       783       779       797       3,163  
Communication

Papers

  (‘000 ST)     657       627       620       618       2,522       669       653       648       669       2,639  
Specialty and

Packaging

  (‘000 ST)     129       125       124       121       499       135       130       131       128       524  
Paper Shipments –

Sourced from

3rd parties

  (‘000 ST)     32       29       35       27       123       35       29       35       28       127  
Paper Shipments –

Total

  (‘000 ST)     818       781       779       766       3,144       839       812       814       825       3,290  
Pulp                                                                                    
Pulp Shipments(a)   (‘000 ADMT)     369       360       369       415       1,513       350       345       333       386       1,414  
Hardwood Kraft

Pulp

  (%)     6 %     4 %     5 %     8 %     6 %     9 %     8 %     8 %     8 %     8 %
Softwood Kraft

Pulp

  (%)     69 %     66 %     67 %     67 %     67 %     65 %     65 %     65 %     69 %     66 %
Fluff Pulp   (%)     25 %     30 %     28 %     25 %     27 %     26 %     27 %     27 %     23 %     26 %
                                                                                     
Personal Care

Segment

                                                                                   
Sales   ($)     216       228       231       242       917       218       216       214       221       869  
Operating income   ($)     14       15       15       13       57       10       17       18       16       61  
Depreciation and

amortization

  ($)     16       15       16       17       64       16       16       14       16       62  
                                                                                     
Average Exchange

Rates

  $US / $CAN     1.375       1.289       1.305       1.333       1.325       1.241       1.229       1.309       1.335       1.279  
    $CAN / $US     0.727       0.776       0.766       0.750       0.755       0.806       0.813       0.765       0.749       0.782  
    € / $US     1.103       1.130       1.116       1.078       1.107       1.126       1.106       1.112       1.095       1.110  

(a) 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.

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

 

Source: Domtar Corporation

Domtar Corporation
INVESTOR RELATIONS
Nicholas Estrela, 514-848-5555 x 85979
Director
Investor Relations
or
MEDIA RELATIONS
David Struhs, 803-802-8031
Vice-President
Corporate Services and Sustainability

 

Sign up for our newsletter to get the latest Domtar news delivered to your inbox.