Strong results during peak maintenance outage quarter
(All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted).
- Second quarter 2018 net earnings of $0.68 per share; earnings before items1 of $0.65 per share
- Pulp and paper price improvement continues
- $177 million of cash flow from operating activities
FORT MILL, S.C.–(BUSINESS WIRE)–Aug. 1, 2018– Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $43 million ($0.68 per share) for the second quarter of 2018 compared to net earnings of $54 million ($0.86 per share) for the first quarter of 2018 and net earnings of $38 million ($0.61 per share) for the second quarter of 2017. Sales for the second quarter of 2018 were $1.4 billion.
Excluding items listed below, the Company had earnings before items1 of $41 million ($0.65 per share) for the second quarter of 2018 compared to earnings before items1 of $55 million ($0.87 per share) for the first quarter of 2018 and earnings before items1 of $38 million ($0.61 per share) for the second quarter of 2017.
Second quarter 2018 items:
- Gain on disposal of property, plant & equipment of $3 million ($2 million after tax).
First quarter 2018 items:
- Litigation settlement of $2 million ($2 million after tax); and
- Gain on disposal of property, plant & equipment of $1 million ($1 million after tax).
Second quarter 2017 items:
- None.
QUARTERLY REVIEW
“We had a solid performance in pulp and paper given the extensive scheduled maintenance outages at several facilities. Both businesses are providing us with good sales and cash flow and we are building on several important initiatives” said John D. Williams, President and Chief Executive Officer. “We continued to implement our announced price increases throughout the quarter with higher price realizations in both pulp and paper, which helped offset higher maintenance and inflation on some raw material and freight costs.”
Commenting on Personal Care, Mr. Williams added, “As expected, Personal Care results were impacted by anticipated volume reduction and continued commodity inflation. This was partially offset by strong cost savings and reduced overhead spending. We expect to improve margins towards the end of the year as the benefits of the new customer wins flow through.”
Operating income was $62 million in the second quarter of 2018 compared to operating income of $77 million in the first quarter of 2018. Depreciation and amortization totaled $79 million in the second quarter of 2018.
Operating income before items1 was $59 million in the second quarter of 2018 compared to an operating income before items1 of $78 million in the first quarter of 2018.
(In millions of dollars) | 2Q 2018 | 1Q 2018 | ||||||
Sales | $ | 1,353 | $ | 1,345 | ||||
Operating income (loss) | ||||||||
Pulp and Paper segment | 79 | 76 | ||||||
Personal Care segment | 2 | 8 | ||||||
Corporate | (19 | ) | (7 | ) | ||||
Total operating income | 62 | 77 | ||||||
Operating income before items1 | 59 | 78 | ||||||
Depreciation and amortization | 79 | 79 |
The decrease in operating income in the second quarter of 2018 was the result of higher maintenance costs, higher selling, general and administrative expenses, lower volume and unfavorable productivity. These factors were partially offset by higher average selling prices for pulp and paper and lower energy costs.
When compared to the first quarter of 2018, manufactured paper shipments were down 2% and pulp shipments increased 1%. The shipments-to-production ratio for paper was 102% in the second quarter of 2018, compared to 104% in the first quarter of 2018. Paper inventories decreased by 15,000 tons, and pulp inventories decreased by 26,000 metric tons when compared to the first quarter of 2018.
LIQUIDITY AND CAPITAL
Cash flow from operating activities amounted to $177 million and capital expenditures were $37 million, resulting in free cash flow1 of $140 million for the second quarter of 2018. Domtar’s net debt-to-total capitalization ratio1 stood at 25% at June 30, 2018 compared to 28% at March 31, 2018.
OUTLOOK
For the remainder of the year, we expect our paper shipments to trend better than market given the announced industry capacity closures. The announced price increases in paper are expected to continue to positively impact results in the second half of 2018. Pulp will benefit from lower planned maintenance costs and we expect prices will continue to trend positively. Personal Care results should improve towards the end of the year as the benefits of the new customer wins flow through. We expect moderate inflation in our costs for the second half of the year.
EARNINGS CONFERENCE CALL
The Company will hold a conference call today at 10:00 a.m. (ET) to discuss its second quarter 2018 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 third quarter 2018 earnings results on November 1, 2018 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 2017 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)
Three months ended | Three months ended | Six months ended | Six months ended | |||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(Unaudited) | ||||||||||||||||
$ | $ | $ | $ | |||||||||||||
Selected Segment Information | ||||||||||||||||
Sales (1) | ||||||||||||||||
Pulp and Paper | 1,123 | 999 | 2,223 | 2,072 | ||||||||||||
Personal Care | 247 | 238 | 509 | 485 | ||||||||||||
Total for reportable segments | 1,370 | 1,237 | 2,732 | 2,557 | ||||||||||||
Intersegment sales | (17 | ) | (16 | ) | (34 | ) | (34 | ) | ||||||||
Consolidated sales | 1,353 | 1,221 | 2,698 | 2,523 | ||||||||||||
Depreciation and amortization | ||||||||||||||||
Pulp and Paper | 61 | 63 | 122 | 127 | ||||||||||||
Personal Care | 18 | 16 | 36 | 32 | ||||||||||||
Consolidated depreciation and amortization | 79 | 79 | 158 | 159 | ||||||||||||
Operating income (loss)(2) | ||||||||||||||||
Pulp and Paper | 79 | 62 | 155 | 92 | ||||||||||||
Personal Care | 2 | 13 | 10 | 29 | ||||||||||||
Corporate | (19 | ) | (13 | ) | (26 | ) | (21 | ) | ||||||||
Consolidated operating income | 62 | 62 | 139 | 100 | ||||||||||||
Interest expense, net | 16 | 17 | 32 | 34 | ||||||||||||
Non-service components of net periodic benefit cost | (5 | ) | (2 | ) | (9 | ) | (6 | ) | ||||||||
Earnings before income taxes | 51 | 47 | 116 | 72 | ||||||||||||
Income tax expense | 8 | 9 | 19 | 14 | ||||||||||||
Net earnings | 43 | 38 | 97 | 58 | ||||||||||||
Per common share (in dollars) | ||||||||||||||||
Net earnings | ||||||||||||||||
Basic | 0.68 | 0.61 | 1.54 | 0.93 | ||||||||||||
Diluted | 0.68 | 0.61 | 1.54 | 0.93 | ||||||||||||
Weighted average number of common
shares outstanding (millions) |
||||||||||||||||
Basic | 62.9 | 62.6 | 62.8 | 62.6 | ||||||||||||
Diluted | 63.2 | 62.7 | 63.1 | 62.7 | ||||||||||||
Cash flows from operating activities | 177 | 121 | 267 | 212 | ||||||||||||
Additions to property, plant and equipment | 37 | 37 | 62 | 71 |
(1) As a result of adopting ASU 2014-09 “Revenue from Contracts with Customers,” the Company has revised its 2017 segment disclosures to conform to the new guideline. (Previously reported numbers for Sales for the three and six months ended June 30, 2017 were as follows: Pulp and Paper: $999 million and $2,072 million, respectively; Personal Care: $241 million and $490 million, respectively; Intersegment sales: $(16) million and $(34) million, respectively.)
(2) As a result of adopting ASU 2017-07 “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” the Company has revised its 2017 segment disclosures to conform to the new guideline. (Previously reported numbers for Operating income (loss) for the three and six months ended June 30, 2017 were as follows: Pulp and Paper: $65 million and $99 million, respectively; Personal Care: $13 million and $29 million, respectively; Corporate: $(14) million and $(22) million, respectively.)
Domtar Corporation
Consolidated Statements of Earnings
(In millions of dollars, unless otherwise noted)
Three months ended | Three months ended | Six months ended | Six months ended | |||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(Unaudited) | ||||||||||||||||
$ | $ | $ | $ | |||||||||||||
Sales | 1,353 | 1,221 | 2,698 | 2,523 | ||||||||||||
Operating expenses | ||||||||||||||||
Cost of sales, excluding depreciation and amortization | 1,096 | 971 | 2,180 | 2,050 | ||||||||||||
Depreciation and amortization | 79 | 79 | 158 | 159 | ||||||||||||
Selling, general and administrative | 118 | 107 | 228 | 213 | ||||||||||||
Other operating (income) loss, net | (2 | ) | 2 | (7 | ) | 1 | ||||||||||
1,291 | 1,159 | 2,559 | 2,423 | |||||||||||||
Operating income | 62 | 62 | 139 | 100 | ||||||||||||
Interest expense, net | 16 | 17 | 32 | 34 | ||||||||||||
Non-service components of net periodic benefit cost | (5 | ) | (2 | ) | (9 | ) | (6 | ) | ||||||||
Earnings before income taxes | 51 | 47 | 116 | 72 | ||||||||||||
Income tax expense | 8 | 9 | 19 | 14 | ||||||||||||
Net earnings | 43 | 38 | 97 | 58 | ||||||||||||
Per common share (in dollars) | ||||||||||||||||
Net earnings | ||||||||||||||||
Basic | 0.68 | 0.61 | 1.54 | 0.93 | ||||||||||||
Diluted | 0.68 | 0.61 | 1.54 | 0.93 | ||||||||||||
Weighted average number of common
shares outstanding (millions) |
||||||||||||||||
Basic | 62.9 | 62.6 | 62.8 | 62.6 | ||||||||||||
Diluted | 63.2 | 62.7 | 63.1 | 62.7 |
Domtar Corporation
Consolidated Balance Sheets at
(In millions of dollars)
June 30, | December 31, | |||||||
2018 | 2017 | |||||||
(Unaudited) | ||||||||
$ | $ | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | 264 | 139 | ||||||
Receivables, less allowances of $6 and $7 | 667 | 704 | ||||||
Inventories | 756 | 757 | ||||||
Prepaid expenses | 35 | 33 | ||||||
Income and other taxes receivable | 21 | 24 | ||||||
Total current assets | 1,743 | 1,657 | ||||||
Property, plant and equipment, net | 2,629 | 2,765 | ||||||
Intangible assets, net | 614 | 633 | ||||||
Other assets | 159 | 157 | ||||||
Total assets | 5,145 | 5,212 | ||||||
Liabilities and shareholders’ equity | ||||||||
Current liabilities | ||||||||
Bank indebtedness | 1 | — | ||||||
Trade and other payables | 722 | 716 | ||||||
Income and other taxes payable | 29 | 24 | ||||||
Long-term debt due within one year | 1 | 1 | ||||||
Total current liabilities | 753 | 741 | ||||||
Long-term debt | 1,103 | 1,129 | ||||||
Deferred income taxes and other | 475 | 491 | ||||||
Other liabilities and deferred credits | 356 | 368 | ||||||
Shareholders’ equity | ||||||||
Common stock | 1 | 1 | ||||||
Additional paid-in capital | 1,977 | 1,969 | ||||||
Retained earnings | 891 | 849 | ||||||
Accumulated other comprehensive loss | (411 | ) | (336 | ) | ||||
Total shareholders’ equity | 2,458 | 2,483 | ||||||
Total liabilities and shareholders’ equity | 5,145 | 5,212 |
Domtar Corporation
Consolidated Statements of Cash Flows
(In millions of dollars)
For the six months ended | ||||||||
June 30, 2018 | June 30, 2017 | |||||||
(Unaudited) | ||||||||
$ | $ | |||||||
Operating activities | ||||||||
Net earnings | 97 | 58 | ||||||
Adjustments to reconcile net earnings to cash flows from operating activities | ||||||||
Depreciation and amortization | 158 | 159 | ||||||
Deferred income taxes and tax uncertainties | (5 | ) | (12 | ) | ||||
Net gains on disposals of property, plant and equipment | (4 | ) | — | |||||
Stock-based compensation expense | 5 | 3 | ||||||
Other | (1 | ) | — | |||||
Changes in assets and liabilities | ||||||||
Receivables | 27 | 11 | ||||||
Inventories | (10 | ) | 10 | |||||
Prepaid expenses | (11 | ) | (4 | ) | ||||
Trade and other payables | 1 | (35 | ) | |||||
Income and other taxes | 9 | 21 | ||||||
Difference between employer pension and other post-retirement
contributions and pension and other post-retirement expense |
(1 | ) | — | |||||
Other assets and other liabilities | 2 | 1 | ||||||
Cash flows from operating activities | 267 | 212 | ||||||
Investing activities | ||||||||
Additions to property, plant and equipment | (62 | ) | (71 | ) | ||||
Proceeds from disposals of property, plant and equipment | 4 | — | ||||||
Other | (6 | ) | — | |||||
Cash flows used for investing activities | (64 | ) | (71 | ) | ||||
Financing activities | ||||||||
Dividend payments | (53 | ) | (52 | ) | ||||
Net change in bank indebtedness | — | (12 | ) | |||||
Change in revolving credit facility | — | (30 | ) | |||||
Proceeds from receivables securitization facility | — | 25 | ||||||
Repayments of receivables securitization facility | (25 | ) | (15 | ) | ||||
Repayments of long-term debt | — | (63 | ) | |||||
Other | 2 | (1 | ) | |||||
Cash flows used for financing activities | (76 | ) | (148 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 127 | (7 | ) | |||||
Impact of foreign exchange on cash | (2 | ) | 6 | |||||
Cash and cash equivalents at beginning of period | 139 | 125 | ||||||
Cash and cash equivalents at end of period | 264 | 124 | ||||||
Supplemental cash flow information | ||||||||
Net cash payments for: | ||||||||
Interest | 28 | 31 | ||||||
Income taxes | 25 | 15 |
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.
2018 | 2017 | |||||||||||||||||||||||||||||||||||
Q1 | Q2 | YTD | Q1 | Q2 | Q3 | Q4 | Year | |||||||||||||||||||||||||||||
Reconciliation of “Earnings before items” to Net earnings (loss) | ||||||||||||||||||||||||||||||||||||
Net earnings (loss) | ($) | 54 | 43 | 97 | 20 | 38 | 70 | (386 | ) | (258 | ) | |||||||||||||||||||||||||
(+) | Impairment of goodwill | ($) | — | — | — | — | — | — | 573 | 573 | ||||||||||||||||||||||||||
(+) | Closure and restructuring costs | ($) | — | — | — | — | — | — | 1 | 1 | ||||||||||||||||||||||||||
(+) | Litigation settlement | ($) | 2 | — | 2 | — | — | — | — | — | ||||||||||||||||||||||||||
(-) | Net gains on disposals of property, plant and equipment | ($) | (1 | ) | (2 | ) | (3 | ) | — | — | (3 | ) | (8 | ) | (11 | ) | ||||||||||||||||||||
(-) | Reversal of contingent consideration | ($) | — | — | — | — | — | (2 | ) | — | (2 | ) | ||||||||||||||||||||||||
(-) | U.S. Tax Reform | ($) | — | — | — | — | — | — | (140 | ) | (140 | ) | ||||||||||||||||||||||||
(=) | Earnings before items | ($) | 55 | 41 | 96 | 20 | 38 | 65 | 40 | 163 | ||||||||||||||||||||||||||
(/) | Weighted avg. number of common shares outstanding (diluted) | (millions) | 62.9 | 63.2 | 63.1 | 62.8 | 62.7 | 62.9 | 62.7 | 62.7 | ||||||||||||||||||||||||||
(=) | Earnings before items per diluted share | ($) | 0.87 | 0.65 | 1.52 | 0.32 | 0.61 | 1.03 | 0.64 | 2.60 | ||||||||||||||||||||||||||
Reconciliation of “EBITDA” and “EBITDA before items” to
Net earnings (loss) |
||||||||||||||||||||||||||||||||||||
Net earnings (loss) | ($) | 54 | 43 | 97 | 20 | 38 | 70 | (386 | ) | (258 | ) | |||||||||||||||||||||||||
(+) | Income tax expense (benefit) | ($) | 11 | 8 | 19 | 5 | 9 | 3 | (142 | ) | (125 | ) | ||||||||||||||||||||||||
(+) | Interest expense, net | ($) | 16 | 16 | 32 | 17 | 17 | 16 | 16 | 66 | ||||||||||||||||||||||||||
(+) | Depreciation and amortization | ($) | 79 | 79 | 158 | 80 | 79 | 80 | 82 | 321 | ||||||||||||||||||||||||||
(+) | Impairment of goodwill | ($) | — | — | — | — | — | — | 578 | 578 | ||||||||||||||||||||||||||
(-) | Net gains on disposals of property, plant and equipment | ($) | (1 | ) | (3 | ) | (4 | ) | — | — | (4 | ) | (9 | ) | (13 | ) | ||||||||||||||||||||
(=) | EBITDA | ($) | 159 | 143 | 302 | 122 | 143 | 165 | 139 | 569 | ||||||||||||||||||||||||||
(/) | Sales | ($) | 1,345 | 1,353 | 2,698 | 1,302 | 1,221 | 1,290 | 1,335 | 5,148 | ||||||||||||||||||||||||||
(=) | EBITDA margin | (%) | 12 | % | 11 | % | 11 | % | 9 | % | 12 | % | 13 | % | 10 | % | 11 | % | ||||||||||||||||||
EBITDA | ($) | 159 | 143 | 302 | 122 | 143 | 165 | 139 | 569 | |||||||||||||||||||||||||||
(+) | Closure and restructuring costs | ($) | — | — | — | — | — | — | 2 | 2 | ||||||||||||||||||||||||||
(+) | Litigation settlement | ($) | 2 | — | 2 | — | — | — | — | — | ||||||||||||||||||||||||||
(-) | Reversal of contingent consideration | ($) | — | — | — | — | — | (2 | ) | — | (2 | ) | ||||||||||||||||||||||||
(=) | EBITDA before items | ($) | 161 | 143 | 304 | 122 | 143 | 163 | 141 | 569 | ||||||||||||||||||||||||||
(/) | Sales | ($) | 1,345 | 1,353 | 2,698 | 1,302 | 1,221 | 1,290 | 1,335 | 5,148 | ||||||||||||||||||||||||||
(=) | EBITDA margin before items | (%) | 12 | % | 11 | % | 11 | % | 9 | % | 12 | % | 13 | % | 11 | % | 11 | % | ||||||||||||||||||
Reconciliation of “Free cash flow” to Cash flows from operating activities | ||||||||||||||||||||||||||||||||||||
Cash flows from operating activities | ($) | 90 | 177 | 267 | 91 | 121 | 112 | 125 | 449 | |||||||||||||||||||||||||||
(-) | Additions to property, plant and equipment | ($) | (25 | ) | (37 | ) | (62 | ) | (34 | ) | (37 | ) | (40 | ) | (71 | ) | (182 | ) | ||||||||||||||||||
(=) | Free cash flow | ($) | 65 | 140 | 205 | 57 | 84 | 72 | 54 | 267 | ||||||||||||||||||||||||||
“Net debt-to-total capitalization” computation | ||||||||||||||||||||||||||||||||||||
Bank indebtedness | ($) | — | 1 | 2 | — | — | — | |||||||||||||||||||||||||||||
(+) | Long-term debt due within one year | ($) | 1 | 1 | 64 | 1 | 1 | 1 | ||||||||||||||||||||||||||||
(+) | Long-term debt | ($) | 1,103 | 1,103 | 1,188 | 1,203 | 1,164 | 1,129 | ||||||||||||||||||||||||||||
(=) | Debt | ($) | 1,104 | 1,105 | 1,254 | 1,204 | 1,165 | 1,130 | ||||||||||||||||||||||||||||
(-) | Cash and cash equivalents | ($) | (152 | ) | (264 | ) | (111 | ) | (124 | ) | (143 | ) | (139 | ) | ||||||||||||||||||||||
(=) | Net debt | ($) | 952 | 841 | 1,143 | 1,080 | 1,022 | 991 | ||||||||||||||||||||||||||||
(+) | Shareholders’ equity | ($) | 2,493 | 2,458 | 2,685 | 2,770 | 2,886 | 2,483 | ||||||||||||||||||||||||||||
(=) | Total capitalization | ($) | 3,445 | 3,299 | 3,828 | 3,850 | 3,908 | 3,474 | ||||||||||||||||||||||||||||
Net debt | ($) | 952 | 841 | 1,143 | 1,080 | 1,022 | 991 | |||||||||||||||||||||||||||||
(/) | Total capitalization | ($) | 3,445 | 3,299 | 3,828 | 3,850 | 3,908 | 3,474 | ||||||||||||||||||||||||||||
(=) | Net debt-to-total capitalization | (%) | 28 | % | 25 | % | 30 | % | 28 | % | 26 | % | 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 (loss), 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 | YTD | Q1’18 | Q2’18 | Q3’18 | Q4’18 | YTD | Q1’18 | Q2’18 | Q3’18 | Q4’18 | YTD | Q1’18 | Q2’18 | Q3’18 | Q4’18 | YTD | |||||||||||||||||||||||||
Reconciliation of Operating income (loss)
to “Operating income (loss) before items” |
||||||||||||||||||||||||||||||||||||||||||||
|
Operating income (loss) | ($) | 76 | 79 | — | — | 155 | 8 | 2 | — | — | 10 | (7) | (19) | — | — | (26) | 77 | 62 | — | — | 139 | ||||||||||||||||||||||
(-) |
Net gains on disposals of property, plant and
equipment |
($) | (1) | (3) | — | — | (4) | — | — | — | — | — | — | — | — | — | — | (1) | (3) | — | — | (4) | ||||||||||||||||||||||
(+) | Litigation settlement | ($) | — | — | — | — | — | — | — | — | — | — | 2 | — | — | — | 2 | 2 | — | — | — | 2 | ||||||||||||||||||||||
(=) | Operating income (loss) before items | ($) | 75 | 76 | — | — | 151 | 8 | 2 | — | — | 10 | (5) | (19) | — | — | (24) | 78 | 59 | — | — | 137 | ||||||||||||||||||||||
Reconciliation of “Operating income (loss)
before items” to “EBITDA before items” |
||||||||||||||||||||||||||||||||||||||||||||
Operating income (loss) before items | ($) | 75 | 76 | — | — | 151 | 8 | 2 | — | — | 10 | (5) | (19) | — | — | (24) | 78 | 59 | — | — | 137 | |||||||||||||||||||||||
(+) | Non-service components of net periodic benefit cost | ($) | 4 | 6 | — | — | 10 | — | — | — | — | — | — | (1) | — | — | (1) | 4 | 5 | — | — | 9 | ||||||||||||||||||||||
(+) | Depreciation and amortization | ($) | 61 | 61 | — | — | 122 | 18 | 18 | — | — | 36 | — | — | — | — | — | 79 | 79 | — | — | 158 | ||||||||||||||||||||||
(=) | EBITDA before items | ($) | 140 | 143 | — | — | 283 | 26 | 20 | — | — | 46 | (5) | (20) | — | — | (25) | 161 | 143 | — | — | 304 | ||||||||||||||||||||||
(/) | Sales | ($) | 1,100 | 1,123 | — | — | 2,223 | 262 | 247 | — | — | 509 | — | — | — | — | — | 1,362 | 1,370 | — | — | 2,732 | ||||||||||||||||||||||
(=) | EBITDA margin before items | (%) | 13% | 13% | — | — | 13% | 10% | 8% | — | — | 9% | — | — | — | — | — | 12% | 10% | — | — | 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 2017
(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 | |||||||||||||||||||||||||||||||||||||||||
Q1’17 | Q2’17 | Q3’17 | Q4’17 | Year | Q1’17 | Q2’17 | Q3’17 | Q4’17 | Year | Q1’17 | Q2’17 | Q3’17 | Q4’17 | Year | Q1’17 | Q2’17 | Q3’17 | Q4’17 | Year | |||||||||||||||||||||||||
Reconciliation of Operating income (loss) to “Operating income (loss) before items” |
||||||||||||||||||||||||||||||||||||||||||||
Operating income (loss) | ($) | 30 | 62 | 89 | 56 | 237 | 16 | 13 | 8 | (564) | (527) | (8) | (13) | (12) | (5) | (38) | 38 | 62 | 85 | (513) | (328) | |||||||||||||||||||||||
(+) | Impairment of goodwill | ($) | — | — | — | — | — | — | — | — | 578 | 578 | — | — | — | — | — | — | — | — | 578 | 578 | ||||||||||||||||||||||
(-) |
Net gains on disposals of property, plant and equipment
|
($) | — | — | (4) | — | (4) | — | — | — | — | — | — | — | — | (9) | (9) | — | — | (4) | (9) | (13) | ||||||||||||||||||||||
(-) | Reversal of contingent consideration | ($) | — | — | — | — | — | — | — | — | — | — | — | — | (2) | — | (2) | — | — | (2) | — | (2) | ||||||||||||||||||||||
(+) | Closure and restructuring costs | ($) | — | — | — | — | — | — | — | — | 2 | 2 | — | — | — | — | — | — | — | — | 2 | 2 | ||||||||||||||||||||||
(=) | Operating income (loss) before items | ($) | 30 | 62 | 85 | 56 | 233 | 16 | 13 | 8 | 16 | 53 | (8) | (13) | (14) | (14) | (49) | 38 | 62 | 79 | 58 | 237 | ||||||||||||||||||||||
Reconciliation of “Operating income (loss)
before items” to “EBITDA before items” |
||||||||||||||||||||||||||||||||||||||||||||
Operating income (loss) before items | ($) | 30 | 62 | 85 | 56 | 233 | 16 | 13 | 8 | 16 | 53 | (8) | (13) | (14) | (14) | (49) | 38 | 62 | 79 | 58 | 237 | |||||||||||||||||||||||
(+) | Non-service components of net periodic benefit cost | ($) | 4 | 3 | 4 | 2 | 13 | — | — | — | — | — | — | (1) | — | (1) | (2) | 4 | 2 | 4 | 1 | 11 | ||||||||||||||||||||||
(+) | Depreciation and amortization | ($) | 64 | 63 | 63 | 64 | 254 | 16 | 16 | 17 | 18 | 67 | — | — | — | — | — | 80 | 79 | 80 | 82 | 321 | ||||||||||||||||||||||
(=) | EBITDA before items | ($) | 98 | 128 | 152 | 122 | 500 | 32 | 29 | 25 | 34 | 120 | (8) | (14) | (14) | (15) | (51) | 122 | 143 | 163 | 141 | 569 | ||||||||||||||||||||||
(/) | Sales | ($) | 1,073 | 999 | 1,054 | 1,090 | 4,216 | 247 | 238 | 251 | 260 | 996 | — | — | — | — | — | 1,320 | 1,237 | 1,305 | 1,350 | 5,212 | ||||||||||||||||||||||
(=) | EBITDA margin before items | (%) | 9% | 13% | 14% | 11% | 12% | 13% | 12% | 10% | 13% | 12% | — | — | — | — | — | 9% | 12% | 12% | 10% | 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
Supplemental Segmented Information
(In millions of dollars, unless otherwise noted)
2018 | 2017 | |||||||||||||||||||||||||||||||||
Q1 | Q2 | YTD | Q1 | Q2 | Q3 | Q4 | Year | |||||||||||||||||||||||||||
Pulp and Paper Segment | ||||||||||||||||||||||||||||||||||
Sales | ($) | 1,100 | 1,123 | 2,223 | 1,073 | 999 | 1,054 | 1,090 | 4,216 | |||||||||||||||||||||||||
Operating income | ($) | 76 | 79 | 155 | 30 | 62 | 89 | 56 | 237 | |||||||||||||||||||||||||
Depreciation and
amortization |
($) | 61 | 61 | 122 | 64 | 63 | 63 | 64 | 254 | |||||||||||||||||||||||||
Paper | ||||||||||||||||||||||||||||||||||
Paper Production | (‘000 ST) | 739 | 739 | 1,478 | 709 | 715 | 745 | 724 | 2,893 | |||||||||||||||||||||||||
Paper Shipments –
Manufactured |
(‘000 ST) | 769 | 754 | 1,523 | 745 | 698 | 722 | 726 | 2,891 | |||||||||||||||||||||||||
Communication Papers | (‘000 ST) | 640 | 615 | 1,255 | 622 | 582 | 597 | 600 | 2,401 | |||||||||||||||||||||||||
Specialty and Packaging
Papers |
(‘000 ST) | 129 | 139 | 268 | 123 | 116 | 125 | 126 | 490 | |||||||||||||||||||||||||
Paper Shipments – Sourced
from 3rd parties |
(‘000 ST) | 28 | 26 | 54 | 29 | 26 | 29 | 25 | 109 | |||||||||||||||||||||||||
Paper Shipments – Total | (‘000 ST) | 797 | 780 | 1,577 | 774 | 724 | 751 | 751 | 3,000 | |||||||||||||||||||||||||
Pulp | ||||||||||||||||||||||||||||||||||
Pulp Shipments(a) | (‘000 ADMT) | 374 | 377 | 751 | 453 | 383 | 424 | 462 | 1,722 | |||||||||||||||||||||||||
Pulp Shipments mix(b): | ||||||||||||||||||||||||||||||||||
Hardwood Kraft Pulp | (%) | 4 | % | 3 | % | 4 | % | 4 | % | 3 | % | 7 | % | 5 | % | 5 | % | |||||||||||||||||
Softwood Kraft Pulp | (%) | 58 | % | 56 | % | 57 | % | 67 | % | 62 | % | 61 | % | 54 | % | 61 | % | |||||||||||||||||
Fluff Pulp | (%) | 38 | % | 41 | % | 39 | % | 29 | % | 35 | % | 32 | % | 41 | % | 34 | % | |||||||||||||||||
Personal Care Segment | ||||||||||||||||||||||||||||||||||
Sales | ($) | 262 | 247 | 509 | 247 | 238 | 251 | 260 | 996 | |||||||||||||||||||||||||
Operating income (loss) | ($) | 8 | 2 | 10 | 16 | 13 | 8 | (564 | ) | (527 | ) | |||||||||||||||||||||||
Depreciation and
amortization |
($) | 18 | 18 | 36 | 16 | 16 | 17 | 18 | 67 | |||||||||||||||||||||||||
Impairment of goodwill | ($) | — | — | — | — | — | — | 578 | 578 | |||||||||||||||||||||||||
Average Exchange Rates | $US / $CAN | 1.264 | 1.290 | 1.277 | 1.323 | 1.344 | 1.253 | 1.272 | 1.297 | |||||||||||||||||||||||||
$CAN / $US | 0.791 | 0.775 | 0.783 | 0.756 | 0.744 | 0.798 | 0.786 | 0.771 | ||||||||||||||||||||||||||
€ / $US | 1.229 | 1.192 | 1.211 | 1.066 | 1.100 | 1.175 | 1.178 | 1.130 |
(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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180801005408/en/
Source: Domtar Corporation
Domtar Corporation
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