Domtar Corporation Reports Preliminary Fourth Quarter And Fiscal Year 2019 Financial Results

FORT MILL, S.C.–(BUSINESS WIRE)–
Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported a net loss of $34 million ($0.59 per share) for the fourth quarter of 2019 compared to net earnings of $20 million ($0.32 per share) for the third quarter of 2019 and net earnings of $87 million ($1.38 per share) for the fourth quarter of 2018. Sales for the fourth quarter of 2019 were $1.2 billion.

Excluding items listed below, the Company had earnings before items1 of $2 million ($0.03 per share) for the fourth quarter of 2019 compared to earnings before items1 of $55 million ($0.89 per share) for the third quarter of 2019 and earnings before items1 of $103 million ($1.63 per share) for the fourth quarter of 2018.

ITEMS

Description

Segment

Line item

Amount

After tax

effect

EPS impact

(per share)

(in millions)


Fourth quarter 2019

  • Pension settlement loss

Pulp and Paper

Non-service components of net periodic benefit cost

$30

$22

$0.38

  • Paper machine closures

Pulp and Paper

Closure and

restructuring costs

$17

$13

$0.22

  • Margin improvement plan

Personal Care

Closure and

restructuring costs

$2

$1

$0.02


Third quarter 2019

  • Paper machine closures

Pulp and Paper

Impairment of long-lived assets

$32

$25

$0.40

  • Paper machine closures

Pulp and Paper

Closure and

restructuring costs

$5

$4

$0.07

  • Margin improvement plan

Personal Care

Impairment of long-lived assets

$1

$1

$0.02

  • Margin improvement plan

Personal Care

Closure and

restructuring costs

$6

$5

$0.08


Fourth quarter 2018

  • Margin improvement plan

Personal Care

Impairment of long-lived assets

$7

$5

$0.08

  • Margin improvement plan

Personal Care

Closure and

restructuring costs

$8

$6

$0.09

  • U.S. Tax Reform

Corporate

Income tax expense

$5

$5

$0.08

FISCAL YEAR 2019 HIGHLIGHTS

For fiscal year 2019, net earnings amounted to $84 million ($1.37 per share) compared to net earnings of $283 million ($4.48 per share) for fiscal year 2018. The Company had earnings before items1 of $184 million ($3.00 per share) for fiscal year 2019 compared to earnings before items1 of $291 million ($4.61 per share) for fiscal year 2018. Sales amounted to $5.2 billion for fiscal year 2019.

Commenting on the full-year results, John D. Williams, President and Chief Executive Officer said, “Our teams were agile in adjusting to market changes and executed well on things under our control in a challenging market environment. We had strong cash flow generation and our solid financial position allowed us to continue to reward shareholders with a high free cash flow payout ratio, while strategically investing in our assets.”

QUARTERLY REVIEW

“Our results in the paper business fell short of our expectations. Shipments remained weak in the quarter due to seasonally slower demand and some customer destocking. As a result, we increased market-related downtime to better balance our supply with our customer demand and reduce our inventory to more optimal levels,” said John D. Williams, President and Chief Executive Officer.

Commenting on Personal Care, Mr. Williams added, “We had a strong finish to a good year. EBITDA1 significantly improved when compared to last year and we reached 12% EBITDA1 margins, which is the highest level since 2017. We expect to build on the momentum from this past year by continuing to focus on the execution of our margin improvement plan and restore and grow the profitability of the business.”

Operating loss was $15 million in the fourth quarter of 2019 compared to operating income of $29 million in the third quarter of 2019. Depreciation and amortization totaled $74 million in the fourth quarter of 2019.

Operating income before items1
was $4 million in the fourth quarter of 2019 compared to an operating income before items1 of $73 million in the third quarter of 2019.

(In millions of dollars)

4Q 2019

3Q 2019

Sales

$

1,244

$

1,283

Operating (loss) income

Pulp and Paper segment

(12

)

31

Personal Care segment

9

2

Corporate

(12

)

(4

)

Total operating (loss) income

(15

)

29

Operating income before items1

4

73

Depreciation and amortization

74

72

The operating loss in the fourth quarter of 2019 was the result of lower average selling prices and unfavorable productivity in pulp and paper, higher selling, general and administrative expenses, and higher maintenance, freight and raw material costs.

When compared to the third quarter of 2019, manufactured paper shipments were down 2% and pulp shipments decreased 3%. The shipment-to-production ratio for paper was 106% in the fourth quarter of 2019, compared to 103% in the third quarter of 2019. Paper inventories decreased by 36,000 tons, and pulp inventories decreased by 15,000 metric tons when compared to the third quarter of 2019.

LIQUIDITY AND CAPITAL

Cash flow from operating activities amounted to $160 million and capital expenditures were $98 million, resulting in free cash flow1 of $62 million for the fourth quarter of 2019. Domtar’s net debt-to-total capitalization ratio1 stood at 27% at December 31, 2019 compared to 26% at September 30, 2019.

For fiscal year 2019, cash flow from operating activities amounted to $442 million and capital expenditures were $255 million, resulting in free cash flow1 of $187 million. Domtar returned a total of $329 million to its shareholders through a combination of dividend and stock buybacks in 2019. Under its stock repurchase program, Domtar repurchased 6,220,658 shares of common stock at an average price of $35.29 throughout 2019. At the end of the year, Domtar had $403 million remaining under the program.

OUTLOOK

In 2020, our paper volumes are expected to trend with market demand while pulp volumes will increase due to higher pulp productivity at our Espanola and Ashdown mills. The Pulp and Paper business will benefit from lower planned maintenance costs. Personal Care is expected to benefit from their margin improvement plan and higher sales following new customer wins. Overall, we anticipate costs, including freight, labor and raw materials, to marginally increase.

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 2019 financial results. Financial analysts are invited to participate in the call by dialing 1 (800) 367-2403 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 2020 earnings results on April 30, 2020 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 $5.2 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 2018 as filed with the SEC and as updated by subsequently filed Form 10-Qs. 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)

For the three months ended

For the twelve months ended

December 31,

December 31,

December 31,

December 31,

2019

2018

2019

2018

(Unaudited)

$

$

$

$

Selected Segment Information

Sales

Pulp and Paper

1,018

1,154

4,332

4,523

Personal Care

242

254

953

1,000

Total for reportable segments

1,260

1,408

5,285

5,523

Intersegment sales

(16

)

(18

)

(65

)

(68

)

Consolidated sales

1,244

1,390

5,220

5,455

Depreciation and amortization

Pulp and Paper

57

58

228

238

Personal Care

17

17

65

70

Total for reportable segments

74

75

293

308

Impairment of long-lived assets – Pulp and Paper

32

Impairment of long-lived assets – Personal Care

7

26

7

Consolidated depreciation and amortization and impairment of long-lived assets

74

82

351

315

Operating (loss) income

Pulp and Paper

(12

)

148

225

438

Personal Care

9

(12

)

(15

)

(5

)

Corporate

(12

)

(3

)

(47

)

(47

)

Consolidated operating (loss) income

(15

)

133

163

386

Interest expense, net

14

15

52

62

Non-service components of net periodic benefit cost

30

(5

)

23

(18

)

(Loss) earnings before income taxes and equity loss

(59

)

123

88

342

Income tax (benefit) expense

(26

)

35

2

57

Equity loss, net of taxes

1

1

2

2

Net (loss) earnings

(34

)

87

84

283

Per common share (in dollars)

Net (loss) earnings

Basic

(0.59

)

1.38

1.37

4.50

Diluted

(0.59

)

1.38

1.37

4.48

Weighted average number of common shares outstanding (millions)

Basic

57.3

62.9

61.2

62.9

Diluted

57.5

63.0

61.4

63.1

Cash flows from operating activities

160

217

442

554

Additions to property, plant and equipment

98

84

255

195

Domtar Corporation


Consolidated Statements of Earnings (Loss)

(In millions of dollars, unless otherwise noted)

For the three months ended

For the twelve months ended

December 31,

December 31,

December 31,

December 31,

2019

2018

2019

2018

(Unaudited)

$

$

$

$

Sales

1,244

1,390

5,220

5,455

Operating expenses

Cost of sales, excluding depreciation and amortization

1,053

1,064

4,225

4,303

Depreciation and amortization

74

75

293

308

Selling, general and administrative

112

100

434

443

Impairment of long-lived assets

7

58

7

Closure and restructuring costs

19

8

42

8

Other operating loss, net

1

3

5

1,259

1,257

5,057

5,069

Operating (loss) income

(15

)

133

163

386

Interest expense, net

14

15

52

62

Non-service components of net periodic benefit cost

30

(5

)

23

(18

)

(Loss) earnings before income taxes and equity loss

(59

)

123

88

342

Income tax (benefit) expense

(26

)

35

2

57

Equity loss, net of taxes

1

1

2

2

Net (loss) earnings

(34

)

87

84

283

Per common share (in dollars)

Net (loss) earnings

Basic

(0.59

)

1.38

1.37

4.50

Diluted

(0.59

)

1.38

1.37

4.48

Weighted average number of common shares outstanding (millions)

Basic

57.3

62.9

61.2

62.9

Diluted

57.5

63.0

61.4

63.1

Domtar Corporation


Consolidated Balance Sheets at

(In millions of dollars)

December 31,

December 31,

2019

2018

(Unaudited)

$

$

Assets

Current assets

Cash and cash equivalents

61

111

Receivables, less allowances of $6 and $6

577

670

Inventories

786

762

Prepaid expenses

33

24

Income and other taxes receivable

61

22

Total current assets

1,518

1,589

Property, plant and equipment, net

2,567

2,605

Operating lease right-of-use assets

81

Intangible assets, net

573

597

Other assets

164

134

Total assets

4,903

4,925

Liabilities and shareholders’ equity

Current liabilities

Bank indebtedness

9

Trade and other payables

705

757

Income and other taxes payable

23

25

Operating lease liabilities due within one year

28

Long-term debt due within one year

1

1

Total current liabilities

766

783

Long-term debt

938

853

Operating lease liabilities

69

Deferred income taxes and other

479

476

Other liabilities and deferred credits

275

275

Shareholders’ equity

Common stock

1

1

Additional paid-in capital

1,770

1,981

Retained earnings

998

1,023

Accumulated other comprehensive loss

(393

)

(467

)

Total shareholders’ equity

2,376

2,538

Total liabilities and shareholders’ equity

4,903

4,925

Domtar Corporation


Consolidated Statements of Cash Flows

(In millions of dollars)

For the three months ended

For the twelve months ended

December 31, 2019

December 31, 2018

December 31, 2019

December 31, 2018

(Unaudited)

(Unaudited)

$

$

$

$

Operating activities

Net (loss) earnings

(34

)

87

84

283

Adjustments to reconcile net (loss) earnings to cash flows

from operating activities

Depreciation and amortization

74

75

293

308

Deferred income taxes and tax uncertainties

(17

)

10

(16

)

13

Impairment of long-lived assets

7

58

7

Net gains on disposals of property, plant and equipment

(4

)

Stock-based compensation expense

2

1

9

8

Equity loss, net

1

1

2

2

Other

(1

)

(1

)

Changes in assets and liabilities

Receivables

46

25

96

18

Inventories

18

(1

)

(16

)

(24

)

Prepaid expenses

6

6

2

2

Trade and other payables

44

30

(67

)

24

Income and other taxes

(16

)

(16

)

(43

)

(32

)

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

32

29

(46

)

Other assets and other liabilities

4

(7

)

11

(4

)

Cash flows from operating activities

160

217

442

554

Investing activities

Additions to property, plant and equipment

(98

)

(84

)

(255

)

(195

)

Proceeds from disposals of property, plant and equipment

1

1

5

Other

(6

)

Cash flows used for investing activities

(98

)

(83

)

(254

)

(196

)

Financing activities

Dividend payments

(27

)

(27

)

(110

)

(108

)

Stock repurchase

(80

)

(219

)

Net change in bank indebtedness

7

9

Change in revolving credit facility

35

80

Proceeds from receivables securitization facility

55

85

205

85

Repayments of receivables securitization facility

(90

)

(35

)

(200

)

(60

)

Repayments of long-term debt

(301

)

(1

)

(301

)

Other

1

(1

)

2

Cash flows used for financing activities

(100

)

(277

)

(237

)

(382

)

Net decrease in cash and cash equivalents

(38

)

(143

)

(49

)

(24

)

Impact of foreign exchange on cash

1

(2

)

(1

)

(4

)

Cash and cash equivalents at beginning of year

98

256

111

139

Cash and cash equivalents at end of year

61

111

61

111

Supplemental cash flow information

Net cash payments for:

Interest

7

9

46

57

Income taxes

4

31

59

71

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.

2019

2018

Q1

Q2

Q3

Q4

Year

Q1

Q2

Q3

Q4

Year

Reconciliation of “Earnings before items” to Net earnings (loss)

Net earnings (loss)

($)

80

18

20

(34

)

84

54

43

99

87

283

(+)

Pension settlement loss

($)

22

22

(+)

Impairment of long-lived assets

($)

8

12

26

46

5

5

(+)

Closure and restructuring costs

($)

3

6

9

14

32

6

6

(+)

Litigation settlement

($)

2

2

(-)

Net gains on disposals of property, plant and equipment

($)

(1

)

(2

)

(3

)

(-)

U.S. Tax Reform

($)

(7

)

5

(2

)

(=)

Earnings before items

($)

91

36

55

2

184

55

41

92

103

291

(/)

Weighted avg. number of common shares outstanding (diluted)

(millions)

63.2

63.3

61.7

57.5

61.4

62.9

63.2

63.2

63.0

63.1

(=)

Earnings before items per diluted share

($)

1.44

0.57

0.89

0.03

3.00

0.87

0.65

1.46

1.63

4.61

Reconciliation of “EBITDA” and “EBITDA before items” to
Net earnings (loss)

Net earnings (loss)

($)

80

18

20

(34

)

84

54

43

99

87

283

(+)

Equity loss, net of taxes

($)

1

1

2

1

1

2

(+)

Income tax expense (benefit)

($)

24

5

(1

)

(26

)

2

11

8

3

35

57

(+)

Interest expense, net

($)

13

13

12

14

52

16

16

15

15

62

(+)

Depreciation and amortization

($)

73

74

72

74

293

79

79

75

75

308

(+)

Impairment of long-lived assets

($)

10

15

33

58

7

7

(-)

Net gains on disposals of property, plant and equipment

($)

(1

)

(3

)

(4

)

(=)

EBITDA

($)

201

125

136

29

491

159

143

193

220

715

(/)

Sales

($)

1,376

1,317

1,283

1,244

5,220

1,345

1,353

1,367

1,390

5,455

(=)

EBITDA margin

(%)

15

%

9

%

11

%

2

%

9

%

12

%

11

%

14

%

16

%

13

%

EBITDA

($)

201

125

136

29

491

159

143

193

220

715

(+)

Pension settlement loss

($)

30

30

(+)

Closure and restructuring costs

($)

4

8

11

19

42

8

8

(+)

Litigation settlement

($)

2

2

(=)

EBITDA before items

($)

205

133

147

78

563

161

143

193

228

725

(/)

Sales

($)

1,376

1,317

1,283

1,244

5,220

1,345

1,353

1,367

1,390

5,455

(=)

EBITDA margin before items

(%)

15

%

10

%

11

%

6

%

11

%

12

%

11

%

14

%

16

%

13

%

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

Cash flows from operating activities

($)

55

119

108

160

442

90

177

70

217

554

(-)

Additions to property, plant and equipment

($)

(46

)

(55

)

(56

)

(98

)

(255

)

(25

)

(37

)

(49

)

(84

)

(195

)

(=)

Free cash flow

($)

9

64

52

62

187

65

140

21

133

359

“Net debt-to-total capitalization” computation

Bank indebtedness

($)

3

3

1

9

1

(+)

Long-term debt due within one year

($)

1

1

1

1

1

1

1

1

(+)

Long-term debt

($)

853

824

938

938

1,103

1,103

1,103

853

(=)

Debt

($)

857

828

940

948

1,104

1,105

1,104

854

(-)

Cash and cash equivalents

($)

(94

)

(93

)

(98

)

(61

)

(152

)

(264

)

(256

)

(111

)

(=)

Net debt

($)

763

735

842

887

952

841

848

743

(+)

Shareholders’ equity

($)

2,608

2,619

2,439

2,376

2,493

2,458

2,553

2,538

(=)

Total capitalization

($)

3,371

3,354

3,281

3,263

3,445

3,299

3,401

3,281

Net debt

($)

763

735

842

887

952

841

848

743

(/)

Total capitalization

($)

3,371

3,354

3,281

3,263

3,445

3,299

3,401

3,281

(=)

Net debt-to-total capitalization

(%)

23

%

22

%

26

%

27

%

28

%

25

%

25

%

23

%

“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 (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


Quarterly Reconciliation of Non-GAAP Financial Measures – By Segment 2019

(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

Q1’19

Q2’19

Q3’19

Q4’19

Year

Q1’19

Q2’19

Q3’19

Q4’19

Year

Q1’19

Q2’19

Q3’19

Q4’19

Year

Q1’19

Q2’19

Q3’19

Q4’19

Year

Reconciliation of Operating income (loss)
to “Operating income (loss) before items”

Operating income (loss)

($)

144

62

31

(12)

225

(8)

(18)

2

9

(15)

(21)

(10)

(4)

(12)

(47)

115

34

29

(15)

163

(+)

Impairment of long-lived assets

($)

32

32

10

15

1

26

10

15

33

58

(+)

Closure and restructuring costs

($)

5

17

22

4

8

6

2

20

4

8

11

19

42

(=)

Operating income (loss) before items

($)

144

62

68

5

279

6

5

9

11

31

(21)

(10)

(4)

(12)

(47)

129

57

73

4

263

Reconciliation of “Operating income (loss)
before items” to “EBITDA before items”

Operating income (loss) before items

($)

144

62

68

5

279

6

5

9

11

31

(21)

(10)

(4)

(12)

(47)

129

57

73

4

263

(+)

Pension settlement loss

($)

30

30

30

30

(+)

Non-service components of net periodic benefit cost

($)

3

3

2

(28)

(20)

(1)

(2)

(3)

3

2

2

(30)

(23)

(+)

Depreciation and amortization

($)

57

58

56

57

228

16

16

16

17

65

73

74

72

74

293

(=)

EBITDA before items

($)

204

123

126

64

517

22

21

25

28

96

(21)

(11)

(4)

(14)

(50)

205

133

147

78

563

(/)

Sales

($)

1,147

1,096

1,071

1,018

4,332

247

237

227

242

953

1,394

1,333

1,298

1,260

5,285

(=)

EBITDA margin before items

(%)

18%

11%

12%

6%

12%

9%

9%

11%

12%

10%

15%

10%

11%

6%

11%

“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


Quarterly Reconciliation of Non-GAAP Financial Measures – By Segment 2018

(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

Q1’18

Q2’18

Q3’18

Q4’18

Year

Q1’18

Q2’18

Q3’18

Q4’18

Year

Q1’18

Q2’18

Q3’18

Q4’18

Year

Q1’18

Q2’18

Q3’18

Q4’18

Year

Reconciliation of Operating income (loss)

to “Operating income (loss) before items”

Operating income (loss)

($)

76

79

135

148

438

8

2

(3)

(12)

(5)

(7)

(19)

(18)

(3)

(47)

77

62

114

133

386

(+)

Impairment of long-lived assets

($)

7

7

7

7

(-)

Net gains on disposals of property, plant and equipment

($)

(1)

(3)

(4)

(1)

(3)

(4)

(+)

Closure and restructuring costs

($)

8

8

8

8

(+)

Litigation settlement

($)

2

2

2

2

(=)

Operating income (loss) before items

($)

75

76

135

148

434

8

2

(3)

3

10

(5)

(19)

(18)

(3)

(45)

78

59

114

148

399

Reconciliation of “Operating income (loss)
before items” to “EBITDA before items”

Operating income (loss) before items

($)

75

76

135

148

434

8

2

(3)

3

10

(5)

(19)

(18)

(3)

(45)

78

59

114

148

399

(+)

Non-service components of net periodic benefit cost

($)

4

6

4

5

19

(1)

(1)

4

5

4

5

18

(+)

Depreciation and amortization

($)

61

61

58

58

238

18

18

17

17

70

79

79

75

75

308

(=)

EBITDA before items

($)

140

143

197

211

691

26

20

14

20

80

(5)

(20)

(18)

(3)

(46)

161

143

193

228

725

(/)

Sales

($)

1,100

1,123

1,146

1,154

4,523

262

247

237

254

1,000

1,362

1,370

1,383

1,408

5,523

(=)

EBITDA margin before items

(%)

13%

13%

17%

18%

15%

10%

8%

6%

8%

8%

12%

10%

14%

16%

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)

2019

2018

Q1

Q2

Q3

Q4

Year

Q1

Q2

Q3

Q4

Year

Pulp and Paper Segment

Sales

($)

1,147

1,096

1,071

1,018

4,332

1,100

1,123

1,146

1,154

4,523

Operating income (loss)

($)

144

62

31

(12

)

225

76

79

135

148

438

Depreciation and amortization

($)

57

58

56

57

228

61

61

58

58

238

Impairment of long-lived assets

($)

32

32

Paper

Paper Production

(‘000 ST)

757

697

653

619

2,726

739

739

743

757

2,978

Paper Shipments – Manufactured

(‘000 ST)

736

681

672

656

2,745

769

754

727

721

2,971

Communication Papers

(‘000 ST)

615

567

563

554

2,299

640

615

596

595

2,446

Specialty and Packaging

Papers

(‘000 ST)

121

114

109

102

446

129

139

131

126

525

Paper Shipments – Sourced from

3rd parties

(‘000 ST)

23

21

25

24

93

28

26

30

25

109

Paper Shipments – Total

(‘000 ST)

759

702

697

680

2,838

797

780

757

746

3,080

Pulp

Pulp Shipments(a)

(‘000 ADMT)

349

370

416

404

1,539

374

377

390

395

1,536

Pulp Shipments mix(b):

Hardwood Kraft Pulp

(%)

2

%

2

%

5

%

5

%

4

%

4

%

3

%

3

%

3

%

4

%

Softwood Kraft Pulp

(%)

53

%

56

%

55

%

54

%

54

%

58

%

56

%

56

%

55

%

56

%

Fluff Pulp

(%)

45

%

42

%

40

%

41

%

42

%

38

%

41

%

41

%

42

%

40

%

Personal Care Segment

Sales

($)

247

237

227

242

953

262

247

237

254

1,000

Operating (loss) income

($)

(8

)

(18

)

2

9

(15

)

8

2

(3

)

(12

)

(5

)

Depreciation and amortization

($)

16

16

16

17

65

18

18

17

17

70

Impairment of long-lived assets

($)

10

15

1

26

7

7

Average Exchange Rates

$US / $CAN

1.329

1.337

1.321

1.321

1.327

1.264

1.290

1.307

1.321

1.296

$CAN / $US

0.752

0.748

0.757

0.757

0.754

0.791

0.775

0.765

0.757

0.772

€ / $US

1.136

1.124

1.111

1.107

1.120

1.229

1.192

1.163

1.141

1.181


(a) Figures represent Pulp Shipments to third parties.



(b) Percentages include Pulp Shipments to our Personal Care segment.


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.

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