Domtar Corporation Reports Preliminary Third Quarter 2018 Financial Results

Significant earnings improvement driven by strong price realizations and operational performance

(All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted).

  • Third quarter 2018 net earnings of $1.57 per share; earnings before items1 of $1.46 per share
  • Personal Care margin improvement plan expected to result in $25-30 million of annualized benefit
  • Hurricane related impacts of $6 million

FORT MILL, S.C.–(BUSINESS WIRE)–Nov. 1, 2018– Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $99 million ($1.57 per share) for the third quarter of 2018 compared to net earnings of $43 million ($0.68 per share) for the second quarter of 2018 and net earnings of $70 million ($1.11 per share) for the third quarter of 2017. Sales for the third quarter of 2018 were $1.4 billion.

Excluding items listed below, the Company had earnings before items1 of $92 million ($1.46 per share) for the third quarter of 2018 compared to earnings before items1 of $41 million ($0.65 per share) for the second quarter of 2018 and earnings before items1 of $65 million ($1.03 per share) for the third quarter of 2017.

ITEMS

Description   Segment   Line item   Amount   After tax

effect

  EPS impact

(per share)

 
            (in millions)      

Third quarter 2018

                     
● Repatriation tax benefit   Corporate   Income tax benefit   $7   $7   $0.11  
                       

Second quarter 2018

                     
● Gain on disposal of

property, plant & equipment

  Pulp & Paper   Other operating income   $3   $2   $0.03  
                       

Third quarter 2017

                     
● Gain on disposal of

property, plant & equipment

  Pulp & Paper   Other operating income   $4   $3   $0.05  
● Partial reversal of contingent

consideration related to an

acquisition

  Corporate   Other operating income   $2   $2   $0.03  
                       

QUARTERLY REVIEW

“Our strong performance was driven by accelerating price realizations and margin expansion, particularly, within our Pulp and Paper businesses. Our operations also ran exceptionally well, despite some weather-related outages, with productivity gains across the mill system,” said John D. Williams, President and Chief Executive Officer. “We have strong momentum to close the year on a high note, and the confidence that our Pulp and Paper businesses will enter 2019 in the best position in recent years.”

Commenting on Personal Care, Mr. Williams added, “Escalating raw material costs continue to compress our margins in adult incontinence and baby diapers. As a result, we are accelerating the pace of actions that will improve margins and EBITDA, with a plan that is expected to generate annual benefits of approximately $25 to 30 million, with full effect by the end of 2020. This will include headcount reductions, the permanent closure of our Waco, Texas facility, and commercial and operational initiatives. The sum of these actions will reduce our cost base and strengthen our long-term competitive position.”

Operating income was $114 million in the third quarter of 2018 compared to operating income of $62 million in the second quarter of 2018. Depreciation and amortization totaled $75 million in the third quarter of 2018.

Operating income before items1 was $114 million in the third quarter of 2018 compared to an operating income before items1 of $59 million in the second quarter of 2018.

                 
(In millions of dollars)   3Q 2018     2Q 2018  
                 
Sales   $ 1,367     $ 1,353  
Operating income (loss)                
Pulp and Paper segment     135       79  
Personal Care segment     (3 )     2  
Corporate     (18 )     (19 )
Total operating income     114       62  
Operating income before items1     114       59  
Depreciation and amortization     75       79  

The increase in operating income in the third quarter of 2018 was the result of higher average selling prices for pulp and paper, lower maintenance costs, favorable productivity, lower raw material costs and selling, general and administrative expenses. These factors were partially offset by lower volume, higher freight and other costs.

When compared to the second quarter of 2018, manufactured paper shipments were down 4% and pulp shipments increased 3%. The shipments-to-production ratio for paper was 98% in the third quarter of 2018, compared to 102% in the second quarter of 2018. Paper inventories increased by 17,000 tons, and pulp inventories increased by 17,000 metric tons when compared to the second quarter of 2018.

LIQUIDITY AND CAPITAL

Cash flow from operating activities amounted to $70 million and capital expenditures were $49 million, resulting in free cash flow1 of $21 million for the third quarter of 2018. Domtar’s net debt-to-total capitalization ratio1 stood at 25% at September 30, 2018 and at June 30, 2018.

OUTLOOK

In the fourth quarter, we expect lower maintenance costs in Pulp and Paper. Paper and Pulp should continue to realize higher prices following recently announced price increases. Personal Care should benefit from higher volume and our margin improvement efforts while commodity cost inflation is expected to remain at elevated levels.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 10:00 a.m. (ET) to discuss its third 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 fourth quarter 2018 earnings results on February 5, 2019 before markets open, followed by a conference call at 11:00 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.

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

Domtar Corporation
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,  
   

 

2018

   

 

2017

   

 

2018

   

 

2017

 
   

 

       

(Unaudited)

           
    $       $       $       $    
                                 
Selected Segment Information                                
Sales (1)                                

Pulp and Paper

    1,146       1,054       3,369       3,126  
Personal Care     237       251       746       736  
Total for reportable segments     1,383       1,305       4,115       3,862  
Intersegment sales     (16 )     (15 )     (50 )     (49 )
Consolidated sales     1,367       1,290       4,065       3,813  
Depreciation and amortization                                
Pulp and Paper     58       63       180       190  
Personal Care     17       17       53       49  
Consolidated depreciation and amortization     75       80       233       239  
Operating income (loss)(2)                                
Pulp and Paper     135       89       290       181  
Personal Care     (3 )     8       7       37  
Corporate     (18 )     (12 )     (44 )     (33 )
Consolidated operating income     114       85       253       185  
Interest expense, net     15       16       47       50  
Non-service components of net periodic benefit cost     (4 )     (4 )     (13 )     (10 )
Earnings before income taxes and equity loss     103       73       219       145  
Income tax expense     3       3       22       17  
Equity loss, net of taxes     1             1        
Net earnings     99       70       196       128  
Per common share (in dollars)                                
Net earnings                                
Basic     1.57       1.12       3.12       2.04  
Diluted     1.57       1.11       3.11       2.04  
Weighted average number of common                                
shares outstanding (millions)                            
Basic     62.9       62.7       62.8       62.6  
Diluted     63.2       62.9       63.1       62.8  
Cash flows from operating activities     70       112       337       324  
Additions to property, plant and equipment     49       40       111       111  
                                 

(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 nine months ended September 30, 2017 were as follows: Pulp and Paper: $1,054 million and $3,126 million, respectively; Personal Care: $253 million and $743 million, respectively; Intersegment sales: $(15) million and $(49) 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 nine months ended September 30, 2017 were as follows: Pulp and Paper: $93 million and $192 million, respectively; Personal Care: $8 million and $37 million, respectively; Corporate: $(12) million and $(34) million, respectively.)

Domtar Corporation
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,  
   

 

2018

   

 

2017

   

 

2018

   

 

2017

 
    (Unaudited)  
    $       $       $       $    
                                 
Sales     1,367       1,290       4,065       3,813  
Operating expenses                                
Cost of sales, excluding depreciation and amortization     1,059       1,016       3,239       3,066  
Depreciation and amortization     75       80       233       239  
Selling, general and administrative     115       116       343       329  
Other operating loss (income), net     4       (7 )     (3 )     (6 )
      1,253       1,205       3,812       3,628  
Operating income     114       85       253       185  
Interest expense, net     15       16       47       50  
Non-service components of net periodic benefit cost     (4 )     (4 )     (13 )     (10 )
Earnings before income taxes and equity loss     103       73       219       145  
Income tax expense     3       3       22       17  
Equity loss, net of taxes     1             1        
Net earnings     99       70       196       128  
Per common share (in dollars)                                
Net earnings                                
Basic     1.57       1.12       3.12       2.04  
Diluted     1.57       1.11       3.11       2.04  
Weighted average number of common                                
shares outstanding (millions)                            
Basic     62.9       62.7       62.8       62.6  
Diluted     63.2       62.9       63.1       62.8  
                                 

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

                 
    September 30,     December 31,    
    2018       2017    
   

(Unaudited)

 
    $       $    
Assets                
Current assets                

Cash and cash equivalents

    256       139  
Receivables, less allowances of $6 and $7     702       704  
Inventories     772       757  
Prepaid expenses     33       33  
Income and other taxes receivable     17       24  
Total current assets     1,780       1,657  
Property, plant and equipment, net     2,621       2,765  
Intangible assets, net     607       633  
Other assets     174       157  
Total assets     5,182       5,212  
Liabilities and shareholders’ equity                
Current liabilities                
Trade and other payables     717       716  
Income and other taxes payable     32       24  
Long-term debt due within one year     1       1  
Total current liabilities     750       741  
Long-term debt     1,103       1,129  
Deferred income taxes and other     488       491  
Other liabilities and deferred credits     288       368  
Shareholders’ equity                
Common stock     1       1  
Additional paid-in capital     1,979       1,969  
Retained earnings     963       849  
Accumulated other comprehensive loss     (390 )     (336 )
Total shareholders’ equity     2,553       2,483  
Total liabilities and shareholders’ equity     5,182       5,212  
                 

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

    For the nine months ended  
    September 30, 2018     September 30, 2017  
    (Unaudited)  
    $     $  
Operating activities                
Net earnings     196       128  
Adjustments to reconcile net earnings to cash flows from operating activities                
Depreciation and amortization     233       239  
Deferred income taxes and tax uncertainties     3       (19 )
Net gains on disposals of property, plant and equipment     (4 )     (4 )
Stock-based compensation expense     7       6  
Equity loss, net     1        
Other           1  
Changes in assets and liabilities                
Receivables     (7 )     (28 )
Inventories     (23 )     (10 )
Prepaid expenses     (4 )     (2 )
Trade and other payables     (6 )     11  
Income and other taxes     (16 )     30  

Difference between employer pension and other post-retirement

contributions and pension and other post-retirement expense

    (46 )     (33 )
Other assets and other liabilities     3       5  
Cash flows from operating activities     337       324  
Investing activities                
Additions to property, plant and equipment     (111 )     (111 )
Proceeds from disposals of property, plant and equipment     4       8  
Other     (6 )      
Cash flows used for investing activities     (113 )     (103 )
Financing activities                
Dividend payments     (81 )     (78 )
Net change in bank indebtedness           (12 )
Change in revolving credit facility           (50 )
Proceeds from receivables securitization facility           25  
Repayments of receivables securitization facility     (25 )     (35 )
Repayments of long-term debt           (63 )
Other     1       1  
Cash flows used for financing activities     (105 )     (212 )
Net increase in cash and cash equivalents     119       9  
Impact of foreign exchange on cash     (2 )     9  
Cash and cash equivalents at beginning of period     139       125  
Cash and cash equivalents at end of period     256       143  
Supplemental cash flow information                
Net cash payments for:                
Interest     48       49  
Income taxes     40       18  
                 

Domtar Corporation
Quarterly Reconciliation of Non-GAAP Financial Measures
(In millions of dollars, unless otherwise noted)

The following table sets forth certain non-U.S. generally accepted accounting principles (“GAAP”) financial metrics identified in bold as “Earnings before items”, “Earnings before items per diluted share”, “EBITDA”, “EBITDA margin”, “EBITDA before items”, “EBITDA margin before items”, “Free cash flow”, “Net debt” and “Net debt-to-total capitalization”. Management believes that the financial metrics 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     Q3     YTD     Q1     Q2     Q3     Q4     Year  
Reconciliation of “Earnings before items” to Net earnings (loss)                                                                            
    Net earnings (loss)   ($)     54       43       99       196       20       38       70       (386 )     (258 )
  (+) Impairment of goodwill   ($)                                               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   ($)                                         (2 )           (2 )
  (-) U.S. Tax Reform   ($)                 (7 )     (7 )                       (140 )     (140 )
  (=) Earnings before items   ($)     55       41       92       188       20       38       65       40       163  
  (/) Weighted avg. number of common shares outstanding (diluted)   (millions)     62.9       63.2       63.2       63.1       62.8       62.7       62.9       62.7       62.7  
  (=) Earnings before items per diluted share   ($)     0.87       0.65       1.46       2.98       0.32       0.61       1.03       0.64      

2.60

 
Reconciliation of “EBITDA” and “EBITDA before items” to                                                                            
Net earnings (loss)                                                                              
    Net earnings (loss)   ($)     54       43       99       196       20       38       70       (386 )     (258 )
  (+) Equity loss, net of taxes   ($)                 1       1                                
  (+) Income tax expense (benefit)   ($)     11       8       3       22       5       9       3       (142 )     (125 )
  (+) Interest expense, net   ($)     16       16       15       47       17       17       16       16       66  
  (+) Depreciation and amortization   ($)     79       79       75       233       80       79       80       82       321  
  (+) Impairment of goodwill   ($)                                               578       578  
  (-) Net gains on disposals of property, plant and equipment   ($)     (1 )     (3 )           (4 )                 (4 )     (9 )     (13 )
  (=) EBITDA   ($)     159       143       193       495       122       143       165       139       569  
  (/) Sales   ($)     1,345       1,353       1,367       4,065       1,302       1,221       1,290       1,335       5,148  
  (=) EBITDA margin   (%)     12 %     11 %     14 %     12 %     9 %     12 %     13 %     10 %     11 %
    EBITDA   ($)     159       143       193       495       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       193       497       122       143       163       141       569  
  (/) Sales   ($)     1,345       1,353       1,367       4,065       1,302       1,221       1,290       1,335       5,148  
  (=) EBITDA margin before items   (%)     12 %     11 %     14 %     12 %     9 %     12 %     13 %     11 %     11 %
Reconciliation of “Free cash flow” to Cash flows from operating activities                                                                            
    Cash flows from operating activities   ($)     90       177       70       337       91       121       112       125       449  
  (-) Additions to property, plant and equipment   ($)     (25 )     (37 )     (49 )     (111 )     (34 )     (37 )     (40 )     (71 )     (182 )
  (=) Free cash flow   ($)     65       140       21       226       57       84       72       54       267  
“Net debt-to-total capitalization” computation                                                                            
    Bank indebtedness   ($)           1                     2                            
  (+) Long-term debt due within one year   ($)     1       1       1               64       1       1       1          
  (+) Long-term debt   ($)     1,103       1,103       1,103               1,188       1,203       1,164       1,129          
  (=) Debt   ($)     1,104       1,105       1,104               1,254       1,204       1,165       1,130          
  (-) Cash and cash equivalents   ($)     (152 )     (264 )     (256 )             (111 )     (124 )     (143 )     (139 )        
  (=) Net debt   ($)     952       841       848               1,143       1,080       1,022       991          
  (+) Shareholders’ equity   ($)     2,493       2,458       2,553               2,685       2,770       2,886       2,483          
  (=) Total capitalization   ($)     3,445       3,299       3,401               3,828       3,850       3,908       3,474          
    Net debt   ($)     952       841       848               1,143       1,080       1,022       991          
  (/) Total capitalization   ($)     3,445       3,299       3,401               3,828       3,850       3,908       3,474          
  (=) Net debt-to-total capitalization   (%)     28 %     25 %     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   135     290   8   2   (3)     7   (7)   (19)   (18)     (44)   77   62   114     253
  (-) 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   135     286   8   2   (3)     7   (5)   (19)   (18)     (42)   78   59   114     251
                                                                                         
Reconciliation of “Operating income (loss)

before items” to “EBITDA before items”

                                                                                   
    Operating income (loss) before items   ($)   75   76   135     286   8   2   (3)     7   (5)   (19)   (18)     (42)   78   59   114     251
  (+) Non-service components of net periodic benefit cost   ($)   4   6   4     14               (1)       (1)   4   5   4     13
  (+) Depreciation and amortization   ($)   61   61   58     180   18   18   17     53             79   79   75     233
  (=) EBITDA before items   ($)   140   143   197     480   26   20   14     60   (5)   (20)   (18)     (43)   161   143   193     497
  (/) Sales   ($)   1,100   1,123   1,146     3,369   262   247   237     746             1,362   1,370   1,383     4,115
  (=) EBITDA margin before items   (%)   13%   13%   17%     14%   10%   8%   6%     8%             12%   10%   14%     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.

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     Q3     YTD     Q1     Q2     Q3     Q4     Year  
Pulp and Paper Segment                                                                            
Sales   ($)     1,100       1,123       1,146       3,369       1,073       999       1,054       1,090       4,216  
Operating income   ($)     76       79       135       290       30       62       89       56       237  
Depreciation and

amortization

  ($)     61       61       58       180       64       63       63       64       254  
Paper                                                                            
Paper Production   (‘000 ST)     739       739       743       2,221       709       715       745       724       2,893  
Paper Shipments –

Manufactured

  (‘000 ST)     769       754       727       2,250       745       698       722       726       2,891  
Communication Papers   (‘000 ST)     640       615       596       1,851       622       582       597       600       2,401  
Specialty and Packaging

Papers

  (‘000 ST)     129       139       131       399       123       116       125       126       490  
Paper Shipments – Sourced

from 3rd parties

  (‘000 ST)     28       26       30       84       29       26       29       25       109  
Paper Shipments – Total   (‘000 ST)     797       780       757       2,334       774       724       751       751       3,000  
Pulp                                                                            
Pulp Shipments(a)   (‘000 ADMT)     374       377       390       1,141       453       383       424       462       1,722  
Pulp Shipments mix(b):                                                                            
Hardwood Kraft Pulp   (%)     4 %     3 %     3 %     3 %     4 %     3 %     7 %     5 %     5 %
Softwood Kraft Pulp   (%)     58 %     56 %     56 %     57 %     67 %     62 %     61 %     54 %     61 %
Fluff Pulp   (%)     38 %     41 %     41 %     40 %     29 %     35 %     32 %     41 %     34 %
                                                                             
Personal Care Segment                                                                            
Sales   ($)     262       247       237       746       247       238       251       260       996  
Operating income (loss)   ($)     8       2       (3 )     7       16       13       8       (564 )     (527 )
Depreciation and

amortization

  ($)     18       18       17       53       16       16       17       18       67  
Impairment of goodwill   ($)                                               578       578  
                                                                             
Average Exchange Rates   $US / $CAN     1.264       1.290       1.307       1.287       1.323       1.344       1.253       1.272       1.297  
    $CAN / $US     0.791       0.775       0.765       0.777       0.756       0.744       0.798       0.786       0.771  
    € / $US     1.229       1.192       1.163       1.195       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.

 

Source: Domtar Corporation

Domtar Corporation
INVESTOR RELATIONS
Nicholas Estrela, 514-848-5049
Director
Investor Relations
or
MEDIA RELATIONS
David Struhs, 803-802-8031
Vice-President
Corporate Services and Sustainability

 

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