Solid quarter led by a strong performance in Pulp and Paper
(All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted).
- Third quarter 2017 net earnings of
$1.11 per share - Price increases announced for several pulp and paper grades
$112 million of cash flow from operating activities
Excluding items listed below, the Company had earnings before items1 of $65 million (
Third quarter 2017 items:
- Gain on disposal of property, plant & equipment of
$4 million ($3 million after tax); and - Partial reversal of contingent consideration related to an acquisition of
$2 million ($2 million after tax).
Second quarter 2017 items:
- None.
Third quarter 2016 items:
- Impairment of property, plant & equipment of $5 million ($4 million after tax); and
- Closure and restructuring costs of $10 million ($8 million after tax).
QUARTERLY REVIEW
“We continue to generate strong EBITDA and cash flow in our Pulp and Paper business while taking further measures to optimize our assets and improve our manufacturing processes,” said
Commenting on Personal Care, Mr. Williams added, “Price pressure and raw material headwinds negatively impacted margins in the quarter but we achieved a 9% increase in infant diaper volumes, we are delivering cost savings and our sales pipeline remains strong. We continue to execute our strategies for long-term success, while focusing on near-term growth opportunities as we operate in a competitive environment.”
Operating income was $89 million in the third quarter of 2017 compared to operating income of $64 million in the second quarter of 2017. Depreciation and amortization totaled $80 million in the third quarter of 2017.
Operating income before items1 was $83 million in the third quarter of 2017 compared to an operating income before items1 of $64 million in the second quarter of 2017.
(In millions of dollars) | 3Q 2017 | 2Q 2017 | ||||||
Sales | $ | 1,292 | $ | 1,224 | ||||
Operating income (loss) | ||||||||
Pulp and Paper segment | 93 | 65 | ||||||
Personal Care segment | 8 | 13 | ||||||
Corporate | (12 | ) | (14 | ) | ||||
Total operating income | 89 | 64 | ||||||
Operating income before items1 | 83 | 64 | ||||||
Depreciation and amortization | 80 | 79 |
The increase in operating income in the third quarter of 2017 was the result of higher volume and average selling prices, favorable productivity, and lower maintenance and raw material costs. These factors were partially offset by unfavorable exchange rates and higher selling, general and administrative expenses.
When compared to the second quarter of 2017, manufactured paper shipments were up 3% and pulp shipments increased 11%. The shipments-to-production ratio for paper was 97% in the third quarter of 2017, compared to 98% in the second quarter of 2017. Paper inventories increased by 24,000 tons and pulp inventories increased by 32,000 metric tons when compared to the second quarter of 2017.
LIQUIDITY AND CAPITAL
Cash flow from operating activities amounted to $112 million and capital expenditures were $40 million, resulting in free cash flow1 of $72 million for the third quarter of 2017. Domtar’s net debt-to-total capitalization ratio1 stood at 26% at September 30, 2017 compared to 28% at
OUTLOOK
In the fourth quarter, we expect higher maintenance costs in Pulp and Paper. Paper is expected to be negatively impacted by seasonally unfavorable mix while Pulp should continue to realize higher prices following recently announced price increases. Personal Care should benefit from higher volume, favorable raw material costs and seasonally lower marketing expense.
EARNINGS CONFERENCE CALL
The Company will hold a conference call today at
The Company will release its fourth quarter 2017 earnings results on
About
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 2016 as filed with the
Highlights
(In millions of dollars, unless otherwise noted)
Three months ended | Three months ended | Nine months ended | Nine months ended | |||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(Unaudited) | ||||||||||||||||
$ | $ | $ | $ | |||||||||||||
Selected Segment Information | ||||||||||||||||
Sales | ||||||||||||||||
Pulp and Paper | 1,054 | 1,054 | 3,126 | 3,193 | ||||||||||||
Personal Care | 253 | 231 | 743 | 675 | ||||||||||||
Total for reportable segments | 1,307 | 1,285 | 3,869 | 3,868 | ||||||||||||
Intersegment sales | (15 | ) | (15 | ) | (49 | ) | (44 | ) | ||||||||
Consolidated sales | 1,292 | 1,270 | 3,820 | 3,824 | ||||||||||||
Depreciation and amortization
of property, plant and equipment |
||||||||||||||||
Pulp and Paper | 63 | 71 | 190 | 216 | ||||||||||||
Personal Care | 17 | 16 | 49 | 47 | ||||||||||||
Total for reportable segments | 80 | 87 | 239 | 263 | ||||||||||||
Impairment of property, plant
and equipment – Pulp and Paper |
— | 5 | — | 29 | ||||||||||||
Consolidated depreciation and amortization and
impairment of property, plant and equipment |
80 | 92 | 239 | 292 | ||||||||||||
Operating income (loss) | ||||||||||||||||
Pulp and Paper | 93 | 89 | 192 | 143 | ||||||||||||
Personal Care | 8 | 15 | 37 | 44 | ||||||||||||
Corporate | (12 | ) | (12 | ) | (34 | ) | (38 | ) | ||||||||
Consolidated operating income | 89 | 92 | 195 | 149 | ||||||||||||
Interest expense, net | 16 | 17 | 50 | 49 | ||||||||||||
Earnings before income taxes | 73 | 75 | 145 | 100 | ||||||||||||
Income tax expense | 3 | 16 | 17 | 19 | ||||||||||||
Net earnings | 70 | 59 | 128 | 81 | ||||||||||||
Per common share (in dollars) | ||||||||||||||||
Net earnings | ||||||||||||||||
Basic | 1.12 | 0.94 | 2.04 | 1.29 | ||||||||||||
Diluted | 1.11 | 0.94 | 2.04 | 1.29 | ||||||||||||
Weighted average number of common
shares outstanding (millions) |
||||||||||||||||
Basic | 62.7 | 62.6 | 62.6 | 62.6 | ||||||||||||
Diluted | 62.9 | 62.7 | 62.8 | 62.7 | ||||||||||||
Cash flows from operating activities | 112 | 95 | 324 | 310 | ||||||||||||
Additions to property, plant and equipment | 40 | 83 | 111 | 302 |
Consolidated Statements of Earnings
(In millions of dollars, unless otherwise noted)
Three months ended | Three months ended | Nine months ended | Nine months ended | ||||||||||||
September 30, | September 30, | September 30, | September 30, | ||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(Unaudited) | |||||||||||||||
$ | $ | $ | $ | ||||||||||||
Sales | 1,292 | 1,270 | 3,820 | 3,824 | |||||||||||
Operating expenses | |||||||||||||||
Cost of sales, excluding depreciation and amortization | 1,012 | 969 | 3,055 | 3,032 | |||||||||||
Depreciation and amortization | 80 | 87 | 239 | 263 | |||||||||||
Selling, general and administrative | 118 | 107 | 337 | 314 | |||||||||||
Impairment of property, plant and equipment | — | 5 | — | 29 | |||||||||||
Closure and restructuring costs | — | 10 | — | 33 | |||||||||||
Other operating (income) loss, net | (7 | ) | — | (6 | ) | 4 | |||||||||
1,203 | 1,178 | 3,625 | 3,675 | ||||||||||||
Operating income | 89 | 92 | 195 | 149 | |||||||||||
Interest expense, net | 16 | 17 | 50 | 49 | |||||||||||
Earnings before income taxes | 73 | 75 | 145 | 100 | |||||||||||
Income tax expense | 3 | 16 | 17 | 19 | |||||||||||
Net earnings | 70 | 59 | 128 | 81 | |||||||||||
Per common share (in dollars) | |||||||||||||||
Net earnings | |||||||||||||||
Basic | 1.12 | 0.94 | 2.04 | 1.29 | |||||||||||
Diluted | 1.11 | 0.94 | 2.04 | 1.29 | |||||||||||
Weighted average number of common
shares outstanding (millions) |
|||||||||||||||
Basic | 62.7 | 62.6 | 62.6 | 62.6 | |||||||||||
Diluted | 62.9 | 62.7 | 62.8 | 62.7 |
Consolidated Balance Sheets at
(In millions of dollars)
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
(Unaudited) | ||||||||
$ | $ | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | 143 | 125 | ||||||
Receivables, less allowances of $7 and $7 | 659 | 613 | ||||||
Inventories | 787 | 759 | ||||||
Prepaid expenses | 47 | 40 | ||||||
Income and other taxes receivable | 13 | 31 | ||||||
Total current assets | 1,649 | 1,568 | ||||||
Property, plant and equipment, net | 2,774 | 2,825 | ||||||
Goodwill | 578 | 550 | ||||||
Intangible assets, net | 632 | 608 | ||||||
Other assets | 151 | 129 | ||||||
Total assets | 5,784 | 5,680 | ||||||
Liabilities and shareholders’ equity | ||||||||
Current liabilities | ||||||||
Bank indebtedness | — | 12 | ||||||
Trade and other payables | 687 | 656 | ||||||
Income and other taxes payable | 32 | 22 | ||||||
Long-term debt due within one year | 1 | 63 | ||||||
Total current liabilities | 720 | 753 | ||||||
Long-term debt | 1,164 | 1,218 | ||||||
Deferred income taxes and other | 681 | 675 | ||||||
Other liabilities and deferred credits | 333 | 358 | ||||||
Shareholders’ equity | ||||||||
Common stock | 1 | 1 | ||||||
Additional paid-in capital | 1,969 | 1,963 | ||||||
Retained earnings | 1,261 | 1,211 | ||||||
Accumulated other comprehensive loss | (345 | ) | (499 | ) | ||||
Total shareholders’ equity | 2,886 | 2,676 | ||||||
Total liabilities and shareholders’ equity | 5,784 | 5,680 |
Consolidated Statements of Cash Flows
(In millions of dollars)
For the nine months ended | ||||||||
September 30, 2017 | September 30, 2016 | |||||||
(Unaudited) | ||||||||
$ | $ | |||||||
Operating activities | ||||||||
Net earnings | 128 | 81 | ||||||
Adjustments to reconcile net earnings to cash flows from operating activities | ||||||||
Depreciation and amortization | 239 | 263 | ||||||
Deferred income taxes and tax uncertainties | (19 | ) | 6 | |||||
Impairment of property, plant and equipment | — | 29 | ||||||
Net gains on disposals of property, plant and equipment | (4 | ) | — | |||||
Stock-based compensation expense | 6 | 5 | ||||||
Other | 1 | (3 | ) | |||||
Changes in assets and liabilities, excluding the effect of acquisition of business | ||||||||
Receivables | (28 | ) | 19 | |||||
Inventories | (10 | ) | 6 | |||||
Prepaid expenses | (2 | ) | (5 | ) | ||||
Trade and other payables | 11 | (53 | ) | |||||
Income and other taxes | 30 | (18 | ) | |||||
Difference between employer pension and other post-retirement
contributions and pension and other post-retirement expense |
(33 | ) | (16 | ) | ||||
Other assets and other liabilities | 5 | (4 | ) | |||||
Cash flows from operating activities | 324 | 310 | ||||||
Investing activities | ||||||||
Additions to property, plant and equipment | (111 | ) | (302 | ) | ||||
Proceeds from disposals of property, plant and equipment | 8 | — | ||||||
Acquisition of business, net of cash acquired | — | (1 | ) | |||||
Other | — | 1 | ||||||
Cash flows used for investing activities | (103 | ) | (302 | ) | ||||
Financing activities | ||||||||
Dividend payments | (78 | ) | (76 | ) | ||||
Stock repurchase | — | (10 | ) | |||||
Net change in bank indebtedness | (12 | ) | 1 | |||||
Change in revolving credit facility | (50 | ) | 60 | |||||
Proceeds from receivables securitization facility | 25 | 140 | ||||||
Repayments of receivables securitization facility | (35 | ) | (40 | ) | ||||
Repayments of long-term debt | (63 | ) | (40 | ) | ||||
Other | 1 | (3 | ) | |||||
Cash flows (used for) provided from financing activities | (212 | ) | 32 | |||||
Net increase in cash and cash equivalents | 9 | 40 | ||||||
Impact of foreign exchange on cash | 9 | 2 | ||||||
Cash and cash equivalents at beginning of period | 125 | 126 | ||||||
Cash and cash equivalents at end of period | 143 | 168 | ||||||
Supplemental cash flow information | ||||||||
Net cash payments for: | ||||||||
Interest | 49 | 50 | ||||||
Income taxes | 18 | 37 |
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.
2017 | 2016 | |||||||||||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | YTD | Q1 | Q2 | Q3 | Q4 | Year | ||||||||||||||||||||||||||||||||
Reconciliation of “Earnings before items” to Net earnings | ||||||||||||||||||||||||||||||||||||||||
Net earnings | ($) | 20 | 38 | 70 | 128 | 4 | 18 | 59 | 47 | 128 | ||||||||||||||||||||||||||||||
(+) | Impairment of property, plant and equipment | ($) | — | — | — | — | 16 | 2 | 4 | — | 22 | |||||||||||||||||||||||||||||
(+) | Closure and restructuring costs | ($) | — | — | — | — | 2 | 16 | 8 | (1 | ) | 25 | ||||||||||||||||||||||||||||
(+) | Litigation settlement | ($) | — | — | — | — | — | 2 | — | — | 2 | |||||||||||||||||||||||||||||
(-) | Net gains on disposals of property, plant and equipment | ($) | — | — | (3 | ) | (3 | ) | — | — | — | — | — | |||||||||||||||||||||||||||
(-) | Reversal of contingent consideration | ($) | — | — | (2 | ) | (2 | ) | — | — | — | — | — | |||||||||||||||||||||||||||
(+) | Impact of purchase accounting | ($) | — | — | — | — | — | — | — | 1 | 1 | |||||||||||||||||||||||||||||
(=) | Earnings before items | ($) | 20 | 38 | 65 | 123 | 22 | 38 | 71 | 47 | 178 | |||||||||||||||||||||||||||||
(/) | Weighted avg. number of common shares outstanding (diluted) | (millions) | 62.8 | 62.7 | 62.9 | 62.8 | 62.8 | 62.7 | 62.7 | 62.7 | 62.7 | |||||||||||||||||||||||||||||
(=) | Earnings before items per diluted share | ($) | 0.32 | 0.61 | 1.03 | 1.96 | 0.35 | 0.61 | 1.13 | 0.75 | 2.84 | |||||||||||||||||||||||||||||
Reconciliation of “EBITDA” and “EBITDA before items” to Net earnings | ||||||||||||||||||||||||||||||||||||||||
Net earnings | ($) | 20 | 38 | 70 | 128 | 4 | 18 | 59 | 47 | 128 | ||||||||||||||||||||||||||||||
(+) | Income tax expense (benefit) | ($) | 5 | 9 | 3 | 17 | (3 | ) | 6 | 16 | 10 | 29 | ||||||||||||||||||||||||||||
(+) | Interest expense, net | ($) | 17 | 17 | 16 | 50 | 17 | 15 | 17 | 17 | 66 | |||||||||||||||||||||||||||||
(=) | Operating income | ($) | 42 | 64 | 89 | 195 | 18 | 39 | 92 | 74 | 223 | |||||||||||||||||||||||||||||
(+) | Depreciation and amortization | ($) | 80 | 79 | 80 | 239 | 89 | 87 | 87 | 85 | 348 | |||||||||||||||||||||||||||||
(+) | Impairment of property, plant and equipment | ($) | — | — | — | — | 21 | 3 | 5 | — | 29 | |||||||||||||||||||||||||||||
(-) | Net gains on disposals of property, plant and equipment | ($) | — | — | (4 | ) | (4 | ) | — | — | — | — | — | |||||||||||||||||||||||||||
(=) | EBITDA | ($) | 122 | 143 | 165 | 430 | 128 | 129 | 184 | 159 | 600 | |||||||||||||||||||||||||||||
(/) | Sales | ($) | 1,304 | 1,224 | 1,292 | 3,820 | 1,287 | 1,267 | 1,270 | 1,274 | 5,098 | |||||||||||||||||||||||||||||
(=) | EBITDA margin | (%) | 9 | % | 12 | % | 13 | % | 11 | % | 10 | % | 10 | % | 14 | % | 12 | % | 12 | % | ||||||||||||||||||||
EBITDA | ($) | 122 | 143 | 165 | 430 | 128 | 129 | 184 | 159 | 600 | ||||||||||||||||||||||||||||||
(+) | Closure and restructuring costs | ($) | — | — | — | — | 2 | 21 | 10 | (1 | ) | 32 | ||||||||||||||||||||||||||||
(+) | Litigation settlement | ($) | — | — | — | — | — | 2 | — | — | 2 | |||||||||||||||||||||||||||||
(-) | Reversal of contingent consideration | ($) | — | — | (2 | ) | (2 | ) | — | — | — | — | — | |||||||||||||||||||||||||||
(+) | Impact of purchase accounting | ($) | — | — | — | — | — | — | — | 1 | 1 | |||||||||||||||||||||||||||||
(=) | EBITDA before items | ($) | 122 | 143 | 163 | 428 | 130 | 152 | 194 | 159 | 635 | |||||||||||||||||||||||||||||
(/) | Sales | ($) | 1,304 | 1,224 | 1,292 | 3,820 | 1,287 | 1,267 | 1,270 | 1,274 | 5,098 | |||||||||||||||||||||||||||||
(=) | EBITDA margin before items | (%) | 9 | % | 12 | % | 13 | % | 11 | % | 10 | % | 12 | % | 15 | % | 12 | % | 12 | % | ||||||||||||||||||||
Reconciliation of “Free cash flow” to Cash flows from operating activities | ||||||||||||||||||||||||||||||||||||||||
Cash flows from operating activities | ($) | 91 | 121 | 112 | 324 | 97 | 118 | 95 | 155 | 465 | ||||||||||||||||||||||||||||||
(-) | Additions to property, plant and equipment | ($) | (34 | ) | (37 | ) | (40 | ) | (111 | ) | (100 | ) | (119 | ) | (83 | ) | (45 | ) | (347 | ) | ||||||||||||||||||||
(=) | Free cash flow | ($) | 57 | 84 | 72 | 213 | (3 | ) | (1 | ) | 12 | 110 | 118 | |||||||||||||||||||||||||||
“Net debt-to-total capitalization” computation | ||||||||||||||||||||||||||||||||||||||||
Bank indebtedness | ($) | 2 | — | — | 6 | 1 | — | 12 | ||||||||||||||||||||||||||||||||
(+) | Long-term debt due within one year | ($) | 64 | 1 | 1 | 41 | 64 | 63 | 63 | |||||||||||||||||||||||||||||||
(+) | Long-term debt | ($) | 1,188 | 1,203 | 1,164 | 1,211 | 1,237 | 1,309 | 1,218 | |||||||||||||||||||||||||||||||
(=) | Debt | ($) | 1,254 | 1,204 | 1,165 | 1,258 | 1,302 | 1,372 | 1,293 | |||||||||||||||||||||||||||||||
(-) | Cash and cash equivalents | ($) | (111 | ) | (124 | ) | (143 | ) | (97 | ) | (111 | ) | (168 | ) | (125 | ) | ||||||||||||||||||||||||
(=) | Net debt | ($) | 1,143 | 1,080 | 1,022 | 1,161 | 1,191 | 1,204 | 1,168 | |||||||||||||||||||||||||||||||
(+) | Shareholders’ equity | ($) | 2,685 | 2,770 | 2,886 | 2,736 | 2,716 | 2,754 | 2,676 | |||||||||||||||||||||||||||||||
(=) | Total capitalization | ($) | 3,828 | 3,850 | 3,908 | 3,897 | 3,907 | 3,958 | 3,844 | |||||||||||||||||||||||||||||||
Net debt | ($) | 1,143 | 1,080 | 1,022 | 1,161 | 1,191 | 1,204 | 1,168 | ||||||||||||||||||||||||||||||||
(/) | Total capitalization | ($) | 3,828 | 3,850 | 3,908 | 3,897 | 3,907 | 3,958 | 3,844 | |||||||||||||||||||||||||||||||
(=) | Net debt-to-total capitalization | (%) | 30 | % | 28 | % | 26 | % | 30 | % | 30 | % | 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.
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 | YTD | Q1’17 | Q2’17 | Q3’17 | Q4’17 | YTD | Q1’17 | Q2’17 | Q3’17 | Q4’17 | YTD | Q1’17 | Q2’17 | Q3’17 | Q4’17 | YTD | |||||||||||||||||||||||||
Reconciliation of Operating income (loss)
to “Operating income (loss) before items” |
||||||||||||||||||||||||||||||||||||||||||||
Operating income (loss) | ($) | 34 | 65 | 93 | — | 192 | 16 | 13 | 8 | — | 37 | (8) | (14) | (12) | — | (34) | 42 | 64 | 89 | — | 195 | |||||||||||||||||||||||
(-) | Net gains on disposals of property, plant and
equipment |
($) | — | — | (4) | — | (4) | — | — | — | — | — | — | — | — | — | — | — | — | (4) | — | (4) | ||||||||||||||||||||||
(-) | Reversal of contingent consideration | ($) | — | — | — | — | — | — | — | — | — | — | — | — | (2) | — | (2) | — | — | (2) | — | (2) | ||||||||||||||||||||||
(=) | Operating income (loss) before items | ($) | 34 | 65 | 89 | — | 188 | 16 | 13 | 8 | — | 37 | (8) | (14) | (14) | — | (36) | 42 | 64 | 83 | — | 189 | ||||||||||||||||||||||
Reconciliation of “Operating income (loss)
before items” to “EBITDA before items” |
||||||||||||||||||||||||||||||||||||||||||||
Operating income (loss) before items | ($) | 34 | 65 | 89 | — | 188 | 16 | 13 | 8 | — | 37 | (8) | (14) | (14) | — | (36) | 42 | 64 | 83 | — | 189 | |||||||||||||||||||||||
(+) | Depreciation and amortization | ($) | 64 | 63 | 63 | — | 190 | 16 | 16 | 17 | — | 49 | — | — | — | — | — | 80 | 79 | 80 | — | 239 | ||||||||||||||||||||||
(=) | EBITDA before items | ($) | 98 | 128 | 152 | — | 378 | 32 | 29 | 25 | — | 86 | (8) | (14) | (14) | — | (36) | 122 | 143 | 163 | — | 428 | ||||||||||||||||||||||
(/) | Sales | ($) | 1,073 | 999 | 1,054 | — | 3,126 | 249 | 241 | 253 | — | 743 | — | — | — | — | — | 1,322 | 1,240 | 1,307 | — | 3,869 | ||||||||||||||||||||||
(=) | EBITDA margin before items | (%) | 9% | 13% | 14% | — | 12% | 13% | 12% | 10% | — | 12% | — | — | — | — | — | 9% | 12% | 12% | — | 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.
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
Supplemental Segmented Information
(In millions of dollars, unless otherwise noted)
2017 | 2016 | |||||||||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | YTD | Q1 | Q2 | Q3 | Q4 | Year | ||||||||||||||||||||||||||||||
Pulp and Paper Segment | ||||||||||||||||||||||||||||||||||||||
Sales | ($) | 1,073 | 999 | 1,054 | 3,126 | 1,085 | 1,054 | 1,054 | 1,046 | 4,239 | ||||||||||||||||||||||||||||
Operating income | ($) | 34 | 65 | 93 | 192 | 19 | 35 | 89 | 74 | 217 | ||||||||||||||||||||||||||||
Depreciation and
amortization |
($) | 64 | 63 | 63 | 190 | 73 | 72 | 71 | 68 | 284 | ||||||||||||||||||||||||||||
Impairment of property, plant
and equipment |
($) | — | — | — | — | 21 | 3 | 5 | — | 29 | ||||||||||||||||||||||||||||
Paper | ||||||||||||||||||||||||||||||||||||||
Paper Production | (‘000 ST) | 709 | 715 | 745 | 2,169 | 785 | 715 | 726 | 714 | 2,940 | ||||||||||||||||||||||||||||
Paper Shipments –
Manufactured |
(‘000 ST) | 745 | 698 | 722 | 2,165 | 786 | 752 | 744 | 739 | 3,021 | ||||||||||||||||||||||||||||
Communication Papers | (‘000 ST) | 622 | 582 | 597 | 1,801 | 657 | 627 | 620 | 618 | 2,522 | ||||||||||||||||||||||||||||
Specialty and Packaging
Papers |
(‘000 ST) | 123 | 116 | 125 | 364 | 129 | 125 | 124 | 121 | 499 | ||||||||||||||||||||||||||||
Paper Shipments – Sourced
from 3rd parties |
(‘000 ST) | 29 | 26 | 29 | 84 | 32 | 29 | 35 | 27 | 123 | ||||||||||||||||||||||||||||
Paper Shipments – Total | (‘000 ST) | 774 | 724 | 751 | 2,249 | 818 | 781 | 779 | 766 | 3,144 | ||||||||||||||||||||||||||||
Pulp | ||||||||||||||||||||||||||||||||||||||
Pulp Shipments(a) | (‘000 ADMT) | 453 | 383 | 424 | 1,260 | 369 | 360 | 369 | 415 | 1,513 | ||||||||||||||||||||||||||||
Pulp Shipments mix(b): | ||||||||||||||||||||||||||||||||||||||
Hardwood Kraft Pulp | (%) | 4 | % | 3 | % | 7 | % | 5 | % | 5 | % | 4 | % | 4 | % | 8 | % | 5 | % | |||||||||||||||||||
Softwood Kraft Pulp | (%) | 67 | % | 62 | % | 61 | % | 63 | % | 66 | % | 61 | % | 63 | % | 63 | % | 63 | % | |||||||||||||||||||
Fluff Pulp | (%) | 29 | % | 35 | % | 32 | % | 32 | % | 29 | % | 35 | % | 33 | % | 29 | % | 32 | % | |||||||||||||||||||
Personal Care Segment | ||||||||||||||||||||||||||||||||||||||
Sales | ($) | 249 | 241 | 253 | 743 | 216 | 228 | 231 | 242 | 917 | ||||||||||||||||||||||||||||
Operating income | ($) | 16 | 13 | 8 | 37 | 14 | 15 | 15 | 13 | 57 | ||||||||||||||||||||||||||||
Depreciation and
amortization |
($) | 16 | 16 | 17 | 49 | 16 | 15 | 16 | 17 | 64 | ||||||||||||||||||||||||||||
Average Exchange Rates | $US / $CAN | 1.323 | 1.344 | 1.253 | 1.305 | 1.375 | 1.289 | 1.305 | 1.333 | 1.325 | ||||||||||||||||||||||||||||
$CAN / $US | 0.756 | 0.744 | 0.798 | 0.766 | 0.727 | 0.776 | 0.766 | 0.750 | 0.755 | |||||||||||||||||||||||||||||
€ / $US | 1.066 | 1.100 | 1.175 | 1.114 | 1.103 | 1.130 | 1.116 | 1.078 | 1.107 |
(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: http://www.businesswire.com/news/home/20171027005293/en/
Source:
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