Domtar Corporation reports preliminary fourth quarter and fiscal year 2015 financial results

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(NYSE: UFS) (TSX: UFS)

Strong shipments and a solid operational performance drive fourth quarter earnings improvement          (All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted).

  • Fourth quarter 2015 net earnings of $0.91 per share; earnings before items1 of $1.11 per share
  • Paper shipments increased 2.3% when compared to the third quarter 2015
  • Personal Care EBITDA1 23% higher when compared to the fourth quarter 2014

FORT MILL, SC, Feb. 5, 2016 /CNW Telbec/ - Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $57 million ($0.91 per share) for the fourth quarter of 2015 compared to net earnings of $11 million ($0.17 per share) for the third quarter of 2015 and net earnings of $71 million ($1.10 per share) for the fourth quarter of 2014. Sales for the fourth quarter of 2015 were $1.3 billion.

Excluding items listed below, the Company had earnings before items1 of $70 million ($1.11 per share) for the fourth quarter of 2015 compared to earnings before items1 of $54 million ($0.86 per share) for the third quarter of 2015 and earnings before items1 of $91 million ($1.41 per share) for the fourth quarter of 2014.

Fourth quarter 2015 items:

  • Closure and restructuring costs of $1 million ($1 million after tax); and
  • Impairment of property, plant & equipment of $20 million ($12 million after tax).

Third quarter 2015 items:

  • Closure and restructuring costs of $1 million ($1 million after tax);
  • Impairment of property, plant & equipment of $20 million ($12 million after tax); and
  • Debt refinancing costs of $42 million ($30 million after tax).

Fourth quarter 2014 items:

  • Closure and restructuring costs of $25 million ($18 million after tax); and
  • Impairment of property, plant & equipment of $4 million ($2 million after tax).

FISCAL YEAR 2015 HIGHLIGHTS

For fiscal year 2015, net earnings amounted to $142 million ($2.24 per share) compared to net earnings of $431 million ($6.64 per share) for fiscal year 2014. The Company had earnings before items1 of $211 million ($3.33 per share) for fiscal 2015 compared to earnings before items1 of $234 million ($3.61 per share) for fiscal 2014. Sales amounted to $5.3 billion for fiscal year 2015.

Commenting on the full-year results, John D. Williams, President and Chief Executive Officer, said, "I am pleased with our full-year performance. Our businesses generated strong free cash flow, and we further advanced on our Personal Care growth plan with a number of important customer wins. Our solid performance enabled us to return cash to shareholders, manage our balance sheet to preserve financial flexibility and better position Domtar for sustainable, long-term growth.  Our business transformation is still underway, but our financial results are starting to show the benefits of investments we are making in our facilities, in our people, and in our future."

QUARTERLY REVIEW

"We had our best EBITDA performance of 2015 despite the impact of lower prices. Our pulp and paper shipments were strong, and our operations ran exceptionally well with productivity gains across the mill system," said John D. Williams, President and Chief Executive Officer. "Our average production costs continue to trend lower as we focus on taking measures to run our assets more efficiently and improve our manufacturing processes."

Mr. Williams added, "In Personal Care, momentum continues to build. We had our best sales quarter to date on a same-currency basis, and we delivered strong year-over-year EBITDA growth. We have made solid progress on capturing the benefits of cost savings from our new manufacturing platform while executing on our growth commitments with top-line benefits expected in 2016."

Operating income before items1 was $115 million in the fourth quarter of 2015 compared to an operating income before items1 of $82 million in the third quarter of 2015. Depreciation and amortization totaled $89 million in the fourth quarter of 2015.

(In millions of dollars)

4Q 2015

3Q 2015

Sales

$

1,314

$

1,292

Operating income (loss)

Pulp and Paper segment

86

54

Personal Care segment

16

18

Corporate

(8)

(11)

Total

94

61

Operating income before items1

115

82

Depreciation and amortization

89

89

The increase in operating income before items1 in the fourth quarter of 2015 was the result of lower costs for planned maintenance, higher volume, higher productivity, lower raw material costs, a favorable exchange rate and lower freight and other costs. These factors were partially offset by lower average selling prices and higher selling, general and administrative expense.

When compared to the third quarter of 2015, manufactured paper shipments were up 2.3% and pulp shipments increased 15.9%. The shipments-to-production ratio for paper was 95% in the fourth quarter of 2015, compared to 98% in the third quarter of 2015. Paper inventories increased by 41,000 tons and pulp inventories decreased by 21,000 metric tons in December when compared to September levels.

LIQUIDITY AND CAPITAL

Cash flow provided from operating activities amounted to $137 million and capital expenditures were $87 million, resulting in free cash flow1 of $50 million for the fourth quarter of 2015. Domtar's net debt-to-total capitalization ratio1 stood at 30% at December 31, 2015 and at September 30, 2015.

OUTLOOK

In 2016, we expect our paper shipments to be in-line with market demand while pulp shipments should be higher due to the conversion of a paper machine to a fluff pulp line. We anticipate some volatility in softwood and fluff pulp markets due to the strengthening of the U.S. dollar and announced new capacity additions. Our 2016 results are expected to be negatively impacted by approximately $23 million, related to the fluff pulp conversion outage at our Ashdown mill. In Personal Care, new customer wins are expected to generate above-market revenue growth. Costs for raw materials are expected to marginally increase.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 11:00 a.m. (ET) to discuss its fourth quarter and fiscal 2015 financial results. Financial analysts are invited to participate in the call by dialing 1 (800) 499-4035 (toll free - North America) or 1 (416) 204-9269 (International) at least 10 minutes before start time, while media and other interested individuals are invited to listen to the live webcast on the Domtar Corporation website at www.domtar.com.

The Company will release its first quarter 2016 earnings results on April 28, 2016, 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.

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

__________________________

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 9,850 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 $5.3 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 2014 as filed with the SEC and as updated by subsequently filed Form 10-Q's. Except to the extent required by law, we expressly disclaim any obligation to update or revise these forward-looking statements to reflect new events or circumstances or otherwise.

Domtar Corporation

Highlights

(In millions of dollars, unless otherwise noted)

Three months

ended

Three months

ended

Twelve months

ended

Twelve months

ended

December 31,

December 31,

December 31,

December 31,

2015

2014

2015

2014

(Unaudited)

$

$

$

$

Selected Segment Information

Sales

Pulp and Paper

1,110

1,160

4,458

4,674

Personal Care

221

230

869

928

Total for reportable segments

1,331

1,390

5,327

5,602

Intersegment sales

(17)

(11)

(63)

(39)

Consolidated sales

1,314

1,379

5,264

5,563

Depreciation and amortization and impairment and write-down of property, plant and equipment

Pulp and Paper

73

78

297

319

Personal Care

16

15

62

65

Total for reportable segments

89

93

359

384

Impairment and write-down of property, plant and equipment - Pulp and Paper

20

4

77

4

Consolidated depreciation and amortization and impairment and write-down of property, plant and equipment

109

97

436

388

Operating income (loss)1

Pulp and Paper

86

88

270

352

Personal Care

16

11

61

49

Corporate

(8)

(13)

(43)

(37)

Consolidated operating income

94

86

288

364

Interest expense, net

17

27

132

103

Earnings before income taxes

77

59

156

261

Income tax expense (benefit)

20

(12)

14

(170)

Net earnings

57

71

142

431

Per common share (in dollars)

Net earnings

Basic

0.91

1.10

2.24

6.65

Diluted

0.91

1.10

2.24

6.64

Weighted average number of common shares outstanding (millions)

Basic

62.8

64.3

63.3

64.8

Diluted

62.9

64.4

63.4

64.9

Cash flows provided from operating activities

137

186

453

634

Additions to property, plant and equipment

87

79

289

236

1 As a result of changes in the Company's organization structure, we have changed the way we allocate certain Corporate general and administrative costs to the segments. Further, certain Corporate costs not related to segment activities, as well as the mark-to-market impact on stock-based compensation awards, will be presented on the Corporate line. As a result, we have revised our 2014 segment disclosures to conform to our 2015 presentation. (Previously reported numbers for Operating income (loss) for the three and twelve months ended December 31, 2014 are as follows; Pulp and Paper: $76M and $323M, respectively, Personal Care: $12M and $54M, respectively, Corporate: $(2)M and $(13)M, respectively).

Domtar Corporation

Consolidated Statements of Earnings (In millions of dollars, unless otherwise noted)

Three months

ended

Three months

ended

Twelve months

ended

Twelve months

ended

December 31,

December 31,

December 31,

December 31,

2015

2014

2015

2014

(Unaudited)

$

$

$

$

Sales

1,314

1,379

5,264

5,563

Operating expenses

Cost of sales, excluding depreciation and amortization

1,007

1,080

4,147

4,396

Depreciation and amortization

89

93

359

384

Selling, general and administrative

100

103

394

416

Impairment and write-down of property, plant and equipment

20

4

77

4

Closure and restructuring costs

1

25

4

28

Other operating loss (income), net

3

(12)

(5)

(29)

1,220

1,293

4,976

5,199

Operating income

94

86

288

364

Interest expense, net

17

27

132

103

Earnings before income taxes

77

59

156

261

Income tax expense (benefit)

20

(12)

14

(170)

Net earnings

57

71

142

431

Per common share (in dollars)

Net earnings

Basic

0.91

1.10

2.24

6.65

Diluted

0.91

1.10

2.24

6.64

Weighted average number of common shares outstanding (millions)

Basic

62.8

64.3

63.3

64.8

Diluted

62.9

64.4

63.4

64.9

Domtar Corporation

Consolidated Balance Sheets at

(In millions of dollars)

December 31,

December 31,

2015

2014

(Unaudited)

Assets

$

$

Current assets

Cash and cash equivalents

126

174

Receivables, less allowances of $6 and $6

627

628

Inventories

766

714

Prepaid expenses

21

25

Income and other taxes receivable

14

54

Deferred income taxes

75

Total current assets

1,554

1,670

Net property, plant and equipment

2,835

3,131

Goodwill

539

567

Intangible assets, net of amortization

601

661

Other assets

134

156

Total assets

5,663

6,185

Liabilities and shareholders' equity

Current liabilities

Bank indebtedness

10

Trade and other payables

720

721

Income and other taxes payable

27

26

Long-term debt due within one year

41

169

Total current liabilities

788

926

Long-term debt

1,219

1,181

Deferred income taxes and other

654

810

Other liabilities and deferred credits

350

378

Shareholders' equity

Common stock

1

1

Additional paid-in capital

1,966

2,012

Retained earnings

1,186

1,145

Accumulated other comprehensive loss

(501)

(268)

Total shareholders' equity

2,652

2,890

Total liabilities and shareholders' equity

5,663

6,185

Domtar Corporation

Consolidated Statements of Cash Flows

(In millions of dollars)

For the twelve months ended

December 31, 2015

December 31, 2014

(Unaudited)

$

$

Operating activities

Net earnings

142

431

Adjustments to reconcile net earnings to cash flows from operating activities

Depreciation and amortization

359

384

Deferred income taxes and tax uncertainties

(56)

(201)

Impairment and write-down of property, plant and equipment

77

4

Net gains on disposal of property, plant and equipment

(15)

Stock-based compensation expense

5

4

Other

4

3

Changes in assets and liabilities, excluding the effects of acquisition of business

Receivables

(22)

39

Inventories

(84)

(29)

Prepaid expenses

5

1

Trade and other payables

(33)

Income and other taxes

38

12

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

(1)

16

Other assets and other liabilities

1

3

Cash flows provided from operating activities

453

634

Investing activities

Additions to property, plant and equipment

(289)

(236)

Proceeds from disposals of property, plant and equipment

36

1

Acquisition of business, net of cash acquired

(546)

Other

9

(5)

Cash flows used for investing activities

(244)

(786)

Financing activities

Dividend payments

(100)

(84)

Stock repurchase

(50)

(38)

Net change in bank indebtedness

(11)

(6)

Change in revolving bank credit facility

50

(160)

Proceeds from receivables securitization facilities

90

Payments on receivables securitization facilities

(129)

Issuance of long-term debt

300

Repayment of long-term debt

(439)

(4)

Other

1

5

Cash flows used for financing activities

(249)

(326)

Net decrease in cash and cash equivalents

(40)

(478)

Impact of foreign exchange on cash

(8)

(3)

Cash and cash equivalents at beginning of year

174

655

Cash and cash equivalents at end of year

126

174

Supplemental cash flow information

Net cash payments for:

Interest (including $40 million of redemption premiums in 2015)

133

92

Income taxes paid, net

34

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 presented are frequently used by investors and are useful to evaluate our ability to service debt and our overall credit profile. Management believes these metrics are also useful to measure the operating performance and benchmark with peers within the industry. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

The Company calculates "Earnings before items" and "EBITDA before items" by excluding the after-tax (pre-tax) effect of items considered by management as not reflecting our current operations. Management uses these measures, as well as EBITDA and Free cash flow, to focus on ongoing operations and believes that it is useful to investors because it enables them to perform meaningful comparisons between periods. Domtar believes that using this information along with Net earnings provides for a more complete analysis of the results of operations. Net earnings and Cash flow provided from operating activities are the most directly comparable GAAP measures.  

2015

2014

Q1

Q2

Q3

Q4

YTD

Q1

Q2

Q3

Q4

YTD

Reconciliation of "Earnings before items" to Net earnings

Net earnings

($)

36

38

11

57

142

39

40

281

71

431

(+)

Impairment and write-down of property, plant and equipment

($)

12

11

12

12

47

2

2

(+)

Closure and restructuring costs

($)

1

1

1

1

4

1

2

18

21

(-)

Net gains on disposal of property, plant and equipment

($)

(1)

(11)

(12)

(+)

Impact of purchase accounting

($)

2

2

(-)

Alternative fuel tax credits

($)

(18)

(18)

(+)

Debt refinancing costs

($)

30

30

(-)

Internal Revenue Service audit settlement items

($)

(204)

(204)

(=)

Earnings before items

($)

48

39

54

70

211

42

40

61

91

234

(/)

Weighted avg. number of common and exchangeable shares outstanding (diluted)

(millions)

63.9

63.7

63.0

62.9

63.4

65.0

65.1

64.9

64.4

64.9

(=)

Earnings before items per diluted share

($)

0.75

0.61

0.86

1.11

3.33

0.65

0.61

0.94

1.41

3.61

Reconciliation of "EBITDA" and "EBITDA before items" to Net earnings

Net earnings

($)

36

38

11

57

142

39

40

281

71

431

(+)

Income tax expense (benefit)

($)

9

(1)

(14)

20

14

15

13

(186)

(12)

(170)

(+)

Interest expense, net

($)

26

25

64

17

132

25

26

25

27

103

(=)

Operating income

($)

71

62

61

94

288

79

79

120

86

364

(+)

Depreciation and amortization

($)

90

91

89

89

359

99

96

96

93

384

(+)

Impairment and write-down of property, plant and equipment

($)

19

18

20

20

77

4

4

(-)

Net gains on disposal of property, plant and equipment

($)

(1)

(14)

(15)

(=)

EBITDA

($)

179

157

170

203

709

178

175

216

183

752

(/)

Sales

($)

1,348

1,310

1,292

1,314

5,264

1,394

1,385

1,405

1,379

5,563

(=)

EBITDA margin

(%)

13%

12%

13%

15%

13%

13%

13%

15%

13%

14%

EBITDA

($)

179

157

170

203

709

178

175

216

183

752

(-)

Alternative fuel tax credits

($)

(18)

(18)

(+)

Closure and restructuring costs

($)

1

1

1

1

4

1

2

25

28

(+)

Impact of purchase accounting

($)

3

3

(=)

EBITDA before items

($)

180

158

171

204

713

182

175

200

208

765

(/)

Sales

($)

1,348

1,310

1,292

1,314

5,264

1,394

1,385

1,405

1,379

5,563

(=)

EBITDA margin before items

(%)

13%

12%

13%

16%

14%

13%

13%

14%

15%

14%

Reconciliation of "Free cash flow" to Cash flow provided from operating activities

Cash flow provided from operating activities

($)

127

122

67

137

453

141

104

203

186

634

(-)

Additions to property, plant and equipment

($)

(70)

(66)

(66)

(87)

(289)

(45)

(56)

(56)

(79)

(236)

(=)

Free cash flow

($)

57

56

1

50

164

96

48

147

107

398

"Net debt-to-total capitalization" computation

Bank indebtedness

($)

6

1

1

8

15

3

10

(+)

Long-term debt due within one year

($)

169

169

42

41

15

7

170

169

(+)

Long-term debt

($)

1,179

1,178

1,245

1,219

1,490

1,410

1,202

1,181

(=)

Debt

($)

1,354

1,348

1,288

1,260

1,513

1,432

1,375

1,360

(-)

Cash and cash equivalents

($)

(183)

(207)

(128)

(126)

(130)

(85)

(134)

(174)

(=)

Net debt

($)

1,171

1,141

1,160

1,134

1,383

1,347

1,241

1,186

(+)

Shareholders' equity

($)

2,710

2,761

2,659

2,652

2,771

2,826

2,938

2,890

(=)

Total capitalization

($)

3,881

3,902

3,819

3,786

4,154

4,173

4,179

4,076

Net debt

($)

1,171

1,141

1,160

1,134

1,383

1,347

1,241

1,186

(/)

Total capitalization

($)

3,881

3,902

3,819

3,786

4,154

4,173

4,179

4,076

(=)

Net debt-to-total capitalization

(%)

30%

29%

30%

30%

33%

32%

30%

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, Operating income or any other earnings statement, cash flow statement or balance sheet financial information prepared in accordance with GAAP. It is important for readers to understand that certain items may be presented in different lines by different companies on their financial statements thereby leading to different measures for different companies.

Domtar Corporation

Quarterly Reconciliation of Non-GAAP Financial Measures – By Segment 2015

(In millions of dollars, unless otherwise noted)

The following table sets forth certain non-U.S. generally accepted accounting principles ("GAAP"), financial metrics identified in bold as "Operating income (loss) before items", "EBITDA before items" and "EBITDA margin before items" by reportable segment. Management believes that the financial metrics presented are frequently used by investors and are useful to measure the operating performance and benchmark with peers within the industry. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

The Company calculates the segmented "Operating income (loss) before items" by excluding the pre-tax effect of items considered by management as not reflecting our ongoing operations. Management uses these measures to focus on ongoing operations and believes that it is useful to investors because it enables them to perform meaningful comparisons between periods. Domtar believes that using this information along with Operating income (loss) provides for a more complete analysis of the results of operations. Operating income (loss) by segment is the most directly comparable GAAP measure.

Pulp and Paper

Personal Care

Corporate

Total

Q1'15

Q2'15

Q3'15

Q4'15

YTD

Q1'15

Q2'15

Q3'15

Q4'15

YTD

Q1'15

Q2'15

Q3'15

Q4'15

YTD

Q1'15

Q2'15

Q3'15

Q4'15

YTD

Reconciliation of Operating income (loss)

to "Operating income (loss) before items"

Operating income (loss)(1)

($)

75

55

54

86

270

10

17

18

16

61

(14)

(10)

(11)

(8)

(43)

71

62

61

94

288

(+)

Impairment and write-down of property, plant and equipment

($)

19

18

20

20

77

19

18

20

20

77

(-)

Net gains on disposal of property, plant and equipment

($)

(14)

(14)

(1)

(1)

(1)

(14)

(15)

(+)

Closure and restructuring costs

($)

1

1

1

3

1

1

1

1

1

1

4

(=)

Operating income (loss) before items

($)

94

60

75

107

336

11

17

18

16

62

(15)

(10)

(11)

(8)

(44)

90

67

82

115

354

Reconciliation of "Operating income (loss)

before items" to "EBITDA before items"

Operating income (loss) before items

($)

94

60

75

107

336

11

17

18

16

62

(15)

(10)

(11)

(8)

(44)

90

67

82

115

354

(+)

Depreciation and amortization

($)

74

75

75

73

297

16

16

14

16

62

90

91

89

89

359

(=)

EBITDA before items

($)

168

135

150

180

633

27

33

32

32

124

(15)

(10)

(11)

(8)

(44)

180

158

171

204

713

(/)

Sales

($)

1,146

1,110

1,092

1,110

4,458

218

216

214

221

869

1,364

1,326

1,306

1,331

5,327

(=)

EBITDA margin before items

(%)

15%

12%

14%

16%

14%

12%

15%

15%

14%

14%

13%

12%

13%

15%

13%

"Operating income (loss) before items", "EBITDA before items" and "EBITDA margin before items" have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation or as a substitute for Operating income (loss) or any other earnings statement, cash flow statement or balance sheet financial information prepared in accordance with GAAP. It is important for readers to understand that certain items may be presented in different lines by different companies on their financial statements thereby leading to different measures for different companies.

(1) As a result of changes in the Company's organization structure, we have changed the way we allocate certain Corporate general and administrative costs to the segments. Further, certain Corporate costs not related to segment activities, as well as the mark-to-market impact on stock-based compensation awards, will be presented on the Corporate line. As a result, we have revised our 2014 segment disclosures to conform to our 2015 presentation.  

Domtar Corporation

Quarterly Reconciliation of Non-GAAP Financial Measures – By Segment 2014

(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 presented are frequently used by investors and are useful to measure the operating performance and benchmark with peers within the industry. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

The Company calculates the segmented "Operating income (loss) before items" by excluding the pre-tax effect of items considered by management as not reflecting our ongoing operations. Management uses these measures to focus on ongoing operations and believes that it is useful to investors because it enables them to perform meaningful comparisons between periods. Domtar believes that using this information along with Operating income (loss) provides for a more complete analysis of the results of operations. Operating income (loss) by segment is the most directly comparable GAAP measure.

Pulp and Paper

Personal Care(1)

Corporate

Total

Q1'14

Q2'14

Q3'14

Q4'14

YTD

Q1'14

Q2'14

Q3'14

Q4'14

YTD

Q1'14

Q2'14

Q3'14

Q4'14

YTD

Q1'14

Q2'14

Q3'14

Q4'14

YTD

Reconciliation of Operating income (loss)

to "Operating income (loss) before items"

Operating income (loss)(2)

($)

89

74

101

88

352

14

12

12

11

49

(24)

(7)

7

(13)

(37)

79

79

120

86

364

(-)

Alternative fuel tax credits

($)

(18)

(18)

(18)

(18)

(+)

Closure and restructuring costs

($)

2

25

27

1

1

1

2

25

28

(+)

Impact of purchase accounting

($)

3

3

3

3

(+)

Impairment and write-down of property,

($)

4

4

4

4

plant and equipment

(=)

Operating income (loss) before items

($)

89

74

103

117

383

18

12

12

11

53

(24)

(7)

(11)

(13)

(55)

83

79

104

115

381

Reconciliation of "Operating income (loss)

before items" to "EBITDA before items"

Operating income (loss) before items

($)

89

74

103

117

383

18

12

12

11

53

(24)

(7)

(11)

(13)

(55)

83

79

104

115

381

(+)

Depreciation and amortization

($)

83

79

79

78

319

16

17

17

15

65

99

96

96

93

384

(=)

EBITDA before items

($)

172

153

182

195

702

34

29

29

26

118

(24)

(7)

(11)

(13)

(55)

182

175

200

208

765

(/)

Sales

($)

1,168

1,160

1,186

1,160

4,674

233

234

231

230

928

1,401

1,394

1,417

1,390

5,602

(=)

EBITDA margin before items

(%)

15%

13%

15%

17%

15%

15%

12%

13%

11%

13%

13%

13%

14%

15%

14%

"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 January 2, 2014, the Company acquired 100% of the shares of Laboratorios Indas, S.A.U. in Spain. (2) As a result of changes in the Company's organization structure, we have changed the way we allocate certain Corporate general and administrative costs to the segments. Further, certain Corporate costs not related to segment activities, as well as the mark-to-market impact on stock-based compensation awards, will be presented on the Corporate line. As a result, we have revised our 2014 segment disclosures to conform to our 2015 presentation.

Domtar Corporation

Supplemental Segmented Information

(In millions of dollars, unless otherwise noted)

2015

2014

Q1

Q2

Q3

Q4

YTD

Q1

Q2

Q3

Q4

YTD

Pulp and Paper Segment

Sales

($)

1,146

1,110

1,092

1,110

4,458

1,168

1,160

1,186

1,160

4,674

Operating income (a)

($)

75

55

54

86

270

89

74

101

88

352

Depreciation and amortization

($)

74

75

75

73

297

83

79

79

78

319

Impairment and write-down of property, plant and equipment

($)

19

18

20

20

77

4

4

Paper

Paper Production

('000 ST)

808

806

794

837

3,245

801

786

758

777

3,122

Paper Shipments -Manufactured

('000 ST)

804

783

779

797

3,163

807

779

777

785

3,148

Communication Papers

('000 ST)

669

653

648

669

2,639

681

647

649

660

2,637

Specialty and Packaging

('000 ST)

135

130

131

128

524

126

132

128

125

511

Paper Shipments -Sourced from 3rd parties

('000 ST)

35

29

35

28

127

47

42

46

35

170

Paper Shipments - Total

('000 ST)

839

812

814

825

3,290

854

821

823

820

3,318

Pulp

Pulp Shipments(b)

('000 ADMT)

350

345

333

386

1,414

318

336

367

370

1,391

Hardwood Kraft Pulp

(%)

9%

8%

8%

8%

8%

12%

11%

12%

11%

12%

Softwood Kraft Pulp

(%)

65%

65%

65%

69%

66%

58%

63%

63%

60%

61%

Fluff Pulp

(%)

26%

27%

27%

23%

26%

30%

26%

25%

29%

27%

Personal Care Segment

Sales

($)

218

216

214

221

869

233

234

231

230

928

Operating income(a)

($)

10

17

18

16

61

14

12

12

11

49

Depreciation and amortization

($)

16

16

14

16

62

16

17

17

15

65

Average Exchange Rates

$US / $CAN

1.241

1.229

1.309

1.335

1.279

1.103

1.091

1.089

1.136

1.105

$CAN / $US

0.806

0.813

0.765

0.749

0.782

0.906

0.917

0.918

0.881

0.905

€ / $US

1.126

1.106

1.112

1.095

1.110

1.370

1.371

1.324

1.249

1.329

(a)  As a result of changes in the Company's organization structure, we have changed the way we allocate certain Corporate general and administrative costs to the segments. Further, certain Corporate costs not related to segment activities, as well as the mark-to-market impact on stock-based compensation awards, will be presented on the Corporate line. As a result, we have revised our 2014 segment disclosures to conform to our 2015 presentation.

(b)  Figures are gross of market pulp purchased from other producers on the open market for some of our paper making operations. Pulp Shipments represent the amount of pulp produced in excess of our internal requirement.

Note: the term "ST" refers to a short ton and the term "ADMT" refers to an air dry metric ton.

 

SOURCE Domtar Corporation

For further information: INVESTOR RELATIONS: Nicholas Estrela, Director, Investor Relations, Tel.: 514-848-5555 x 85979; MEDIA RELATIONS: David Struhs, Vice-President, Corporate Services and Sustainability, Tel.: 803-802-8031

RELATED LINKS
http://www.domtar.com

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Domtar Corporation

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