Domtar Corporation reports preliminary second quarter 2015 financial results

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(NYSE: UFS) (TSX: UFS)

Strong operational results in Pulp and Paper and Personal Care (All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted).

  • Second quarter 2015 net earnings of $0.60 per share; earnings before items1 of $0.61 per share
  • Cash flow from operating activities of $122 million
  • Sales and margin momentum building in Personal Care

FORT MILL, SC, July 30, 2015 /CNW Telbec/ - Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $38 million ($0.60 per share) for the second quarter of 2015 compared to net earnings of $36 million ($0.56 per share) for the first quarter of 2015 and net earnings of $40 million ($0.61 per share) for the second quarter of 2014. Sales for the second quarter of 2015 were $1.3 billion.

Excluding items listed below, the Company had earnings before items1 of $39 million ($0.61 per share) for the second quarter of 2015 compared to earnings before items1 of $48 million ($0.75 per share) for the first quarter of 2015 and earnings before items1 of $40 million ($0.61 per share) for the second quarter of 2014.

Second quarter 2015 items:

  • Closure and restructuring costs of $1 million ($1 million after tax);
  • Gain on disposal of property, plant and equipment of $14 million ($11 million after tax); and
  • Impairment of property, plant & equipment of $18 million ($11 million after tax).

First quarter 2015 items:

  • Closure and restructuring costs of $1 million ($1 million after tax);
  • Gain on disposal of property, plant and equipment of $1 million ($1 million after tax); and
  • Impairment of property, plant & equipment of $19 million ($12 million after tax).

Second quarter 2014 items:

  • None

"Our pulp and paper business performed largely in-line with expectations. Our operations ran well despite the seasonally high level of scheduled maintenance at our mills. The flooding in the U.S. South negatively impacted some of our wood costs and supply, but production curtailments were limited," said John D. Williams, President and CEO. "Our paper shipments year-to-date are outperforming the broader North American uncoated freesheet market by 2.3%. As the trade case progresses, we will continue to monitor further opportunities resulting from lower cut-size imports while continuing to balance our capacity versus our customer demand."

Mr. Williams added, "Personal Care turned in a solid performance. Same currency sales increased 3% year over year while our cost savings program continued to deliver according to plan, driving a 300 basis-point margin improvement. Momentum in the business is growing, and we are operating and executing with more consistency. We remain focused on sharpening our strategies and capabilities that will deliver sustainable growth and value creation in this segment."  

QUARTERLY REVIEW

Operating income before items1 was $67 million in the second quarter of 2015 compared to an operating income before items1 of $90 million in the first quarter of 2015. Depreciation and amortization totaled $91 million in the second quarter of 2015.

(In millions of dollars)

2Q 2015

1Q 2015

Sales

$

1,310

$

1,348

Operating income (loss)

Pulp and Paper segment

55

75

Personal Care segment

17

10

Corporate

(10)

(14)

Total

62

71

Operating income before items1

67

90

Depreciation and amortization

91

90

The decrease in operating income before items1 in the second quarter of 2015 was the result of higher costs for planned maintenance, lower paper and pulp prices, lower paper and pulp shipments, higher freight costs and overall unfavorable exchange rates. These factors were partially offset by lower raw material and other costs and lower selling, general and administrative expenses. In addition, the first quarter was impacted by a bad debt expense.

When compared to the first quarter of 2015, manufactured paper shipments were down 2.6% and pulp shipments decreased 1.4%. The shipments-to-production ratio for paper was 97% in the second quarter of 2015, compared to 100% in the first quarter of 2015. Paper inventories increased by 23,000 tons while pulp inventories decreased by 15,000 metric tons in June when compared to March levels.

LIQUIDITY AND CAPITAL

Cash flow provided from operating activities amounted to $122 million and capital expenditures were $66 million, resulting in free cash flow1 of $56 million for the second quarter of 2015. Domtar's net debt-to-total capitalization ratio1 stood at 29% at June 30, 2015 compared to 30% at March 31, 2015.

During the quarter, Domtar repurchased $17 million of common stock under its stock repurchase program.

OUTLOOK

Looking into the second half of 2015, Domtar paper shipments are expected to trend with market demand and should benefit from lower import volumes in North America. We expect some short-term pricing volatility in pulp, as normal seasonal factors in certain markets take hold. Inflation on input costs is expected to be relatively flat; fiber costs will remain high in certain markets, but are not expected to increase further, while energy costs should remain favorable. Personal Care is expected to benefit from further cost savings and market growth, but the segment will be impacted by some seasonality in the third quarter.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 10:00 a.m. (ET) to discuss its second quarter 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 third quarter 2015 earnings results on October 29, 2015 before markets open, followed by a conference call at 10:00 a.m. (ET) to discuss results. The date is tentative and will be confirmed approximately three weeks prior to the official earnings release date.

About Domtar 

Domtar Corporation (NYSE: UFS) (TSX: UFS) designs, manufactures, markets and distributes a wide variety of fiber-based products, including communication papers, specialty and packaging papers, and absorbent hygiene products. The foundation of our business is a network of world-class wood fiber-converting assets that produce papergrade, fluff and specialty pulp. The majority of our pulp production is consumed internally to manufacture paper and consumer products. Domtar is the largest integrated marketer and manufacturer of uncoated freesheet paper in North America with recognized brands such as Cougar®, Lynx® Opaque Ultra, Husky® Opaque Offset, First Choice®, EarthChoice® and Xerox® Paper and Specialty Media. Domtar is also a marketer and producer of a broad line of absorbent hygiene products marketed primarily under the Attends®, IncoPack® and Indasec® brand names. In 2014, Domtar had sales of $5.6 billion from some 50 countries. The Company employs approximately 9,800 people. 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.

____________________________ 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  

June 30,

2015

Three months ended  

June 30,

2014

Six months ended

June 30,

2015

Six months ended

June 30,

2014

(Unaudited)

$

$

$

$

Selected Segment Information

Sales 

Pulp and Paper

1,110

1,160

2,256

2,328

Personal Care

216

234

434

467

Total for reportable segments

1,326

1,394

2,690

2,795

Intersegment sales

(16)

(9)

(32)

(16)

Consolidated sales

1,310

1,385

2,658

2,779

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

Pulp and Paper

75

79

149

162

Personal Care

16

17

32

33

Total for reportable segments

91

96

181

195

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

18

37

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

109

96

218

195

Operating income (loss)1

Pulp and Paper

55

74

130

163

Personal Care

17

12

27

26

Corporate

(10)

(7)

(24)

(31)

Consolidated operating income 

62

79

133

158

Interest expense, net 

25

26

51

51

Earnings before income taxes 

37

53

82

107

Income tax (benefit) expense 

(1)

13

8

28

Net earnings 

38

40

74

79

Per common share (in dollars)

Net earnings

Basic

0.60

0.62

1.16

1.22

Diluted

0.60

0.61

1.16

1.22

Weighted average number of common shares outstanding (millions)

Basic

63.6

65.0

63.7

64.9

Diluted

63.7

65.1

63.8

65.0

Cash flows provided from operating activities 

122

104

249

245

Additions to property, plant and equipment

66

56

136

101

1As 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 six months ended June 30, 2014 are as follows; Pulp and Paper: $69M and $138M, respectively, Personal Care: $14M and $29M, respectively, Corportate: $(4)M and $(9)M, respectively).

Domtar Corporation

Consolidated Statements of Earnings 

(In millions of dollars, unless otherwise noted)

Three months ended  

June 30,

2015

Three months ended  

June 30,

2014

Six months ended  

June 30,

2015

Six months ended  

June 30,

2014

(Unaudited)

$

$

$

$

Sales

1,310

1,385

2,658

2,779

Operating expenses

Cost of sales, excluding depreciation and amortization

1,052

1,108

2,114

2,211

Depreciation and amortization

91

96

181

195

Selling, general and administrative

99

100

199

214

Impairment and write-down of property, plant and equipment

18

37

Closure and restructuring costs

1

2

1

Other operating (income) loss, net

(13)

2

(8)

1,248

1,306

2,525

2,621

Operating income

62

79

133

158

Interest expense, net 

25

26

51

51

Earnings before income taxes 

37

53

82

107

Income tax (benefit) expense 

(1)

13

8

28

Net earnings 

38

40

74

79

Per common share (in dollars)

Net earnings

Basic

0.60

0.62

1.16

1.22

Diluted

0.60

0.61

1.16

1.22

Weighted average number of common shares outstanding (millions)

Basic

63.6

65.0

63.7

64.9

Diluted

63.7

65.1

63.8

65.0

Domtar Corporation

Consolidated Balance Sheets at

(In millions of dollars)

June 30,

December 31,

2015

2014

(Unaudited)

$

$

Assets

Current assets

Cash and cash equivalents

207

174

Receivables, less allowances of $10 and $6

640

628

Inventories

721

714

Prepaid expenses

36

25

Income and other taxes receivable

13

54

Deferred income taxes

78

75

Total current assets

1,695

1,670

Property, plant and equipment, at cost

8,817

8,909

Accumulated depreciation

(5,858)

(5,778)

Net property, plant and equipment

2,959

3,131

Goodwill 

546

567

Intangible assets, net of amortization 

621

661

Other assets

142

156

Total assets

5,963

6,185

Liabilities and shareholders' equity

Current liabilities

Bank indebtedness

1

10

Trade and other payables

687

721

Income and other taxes payable

36

26

Long-term debt due within one year

169

169

Total current liabilities

893

926

Long-term debt 

1,178

1,181

Deferred income taxes and other

765

810

Other liabilities and deferred credits

366

378

Shareholders' equity

Common stock

1

1

Additional paid-in capital

1,985

2,012

Retained earnings

1,168

1,145

Accumulated other comprehensive loss

(393)

(268)

Total shareholders' equity

2,761

2,890

Total liabilities and shareholders' equity

5,963

6,185

Domtar Corporation

Consolidated Statements of Cash Flows

(In millions of dollars)

For the six months ended

June 30, 2015

June 30, 2014

(Unaudited)

$

$

Operating activities

Net earnings 

74

79

Adjustments to reconcile net earnings to cash flows from operating activities

Depreciation and amortization

181

195

Deferred income taxes and tax uncertainties

(32)

(6)

Impairment and write-down of property, plant and equipment

37

Net gains on disposal of property, plant and equipment

(15)

Stock-based compensation expense

3

3

Other

6

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

Receivables

24

Inventories

(23)

(18)

Prepaid expenses

(10)

(9)

Trade and other payables

(18)

(43)

Income and other taxes

46

23

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

3

(6)

Other assets and other liabilities

3

(3)

Cash flows provided from operating activities

249

245

Investing activities

Additions to property, plant and equipment

(136)

(101)

Proceeds from disposals of property, plant and equipment

7

1

Acquisition of business, net of cash acquired

(546)

Other

9

-

Cash flows used for investing activities

(120)

(646)

Financing activities

Dividend payments

(50)

(36)

Stock repurchase

(30)

Net change in bank indebtedness

(9)

Change in revolving bank credit facility

(140)

Proceeds from receivables securitization facilities

90

Payments on receivables securitization facilities

(84)

Repayment of long-term debt

(2)

(3)

Other

1

4

Cash flows used for financing activities

(90)

(169)

Net increase (decrease) in cash and cash equivalents  

39

(570)

Impact of foreign exchange on cash

(6)

Cash and cash equivalents at beginning of period

174

655

Cash and cash equivalents at end of period

207

85

Supplemental cash flow information

Net cash payments for:

Interest

48

44

Income taxes paid, net

2

19

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

YTD

Q1

Q2

Q3

Q4

YTD

Reconciliation of "Earnings before items" to Net earnings 

Net earnings 

($)

36

38

74

39

40

281

71

431

(+)

Impairment and write-down of property, plant and equipment 

($)

12

11

23

2

2

(+)

Closure and restructuring costs

($)

1

1

2

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)

(-)

Internal Revenue Service audit settlement items

($)

(204)

(204)

(=)

Earnings before items

($)

48

39

87

42

40

61

91

234

(/)

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

(millions)

63.9

63.7

63.8

65.0

65.1

64.9

64.4

64.9

(=)

Earnings before items per diluted share

($)

0.75

0.61

1.36

0.65

0.61

0.94

1.41

3.61

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

Net earnings 

($)

36

38

74

39

40

281

71

431

(+)

Income tax expense (benefit)

($)

9

(1)

8

15

13

(186)

(12)

(170)

(+)

Interest expense, net

($)

26

25

51

25

26

25

27

103

(=)

Operating income 

($)

71

62

133

79

79

120

86

364

(+)

Depreciation and amortization

($)

90

91

181

99

96

96

93

384

(+)

Impairment and write-down of property, plant and equipment 

($)

19

18

37

4

4

(-)

Net gains on disposal of property, plant and equipment 

($)

(1)

(14)

(15)

(=)

EBITDA

($)

179

157

336

178

175

216

183

752

(/)

Sales

($)

1,348

1,310

2,658

1,394

1,385

1,405

1,379

5,563

(=)

EBITDA margin

(%)

13%

12%

13%

13%

13%

15%

13%

14%

EBITDA

($)

179

157

336

178

175

216

183

752

(-)

Alternative fuel tax credits

($)

(18)

(18)

(+)

Closure and restructuring costs

($)

1

1

2

1

2

25

28

(+)

Impact of purchase accounting 

($)

3

3

(=)

EBITDA before items

($)

180

158

338

182

175

200

208

765

(/)

Sales

($)

1,348

1,310

2,658

1,394

1,385

1,405

1,379

5,563

(=)

EBITDA margin before items

(%)

13%

12%

13%

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

249

141

104

203

186

634

(-)

Additions to property, plant and equipment

($)

(70)

(66)

(136)

(45)

(56)

(56)

(79)

(236)

(=)

Free cash flow

($)

57

56

113

96

48

147

107

398

"Net debt-to-total capitalization" computation

Bank indebtedness

($)

6

1

8

15

3

10

(+)

Long-term debt due within one year

($)

169

169

15

7

170

169

(+)

Long-term debt

($)

1,179

1,178

1,490

1,410

1,202

1,181

(=)

Debt

($)

1,354

1,348

1,513

1,432

1,375

1,360

(-)

Cash and cash equivalents

($)

(183)

(207)

(130)

(85)

(134)

(174)

(=)

Net debt

($)

1,171

1,141

1,383

1,347

1,241

1,186

(+)

Shareholders' equity

($)

2,710

2,761

2,771

2,826

2,938

2,890

(=)

Total capitalization

($)

3,881

3,902

4,154

4,173

4,179

4,076

Net debt

($)

1,171

1,141

1,383

1,347

1,241

1,186

(/)

Total capitalization

($)

3,881

3,902

4,154

4,173

4,179

4,076

(=)

Net debt-to-total capitalization

(%)

30%

29%

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

130

10

17

27

(14)

(10)

(24)

71

62

133

(+)

Impairment and write-down of property, plant and equipment 

($)

19

18

37

19

18

37

(-)

Net gains on disposal of property, plant and equipment

($)

(14)

(14)

(1)

(1)

(1)

(14)

(15)

(+)

Closure and restructuring costs

($)

1

1

1

1

1

1

2

(=)

Operating income (loss) before items

($)

94

60

154

11

17

28

(15)

(10)

(25)

90

67

157

Reconciliation of "Operating income (loss) before items" to "EBITDA before items"

Operating income (loss) before items

($)

94

60

154

11

17

28

(15)

(10)

(25)

90

67

157

(+)

Depreciation and amortization

($)

74

75

149

16

16

32

90

91

181

(=)

EBITDA before items

($)

168

135

303

27

33

60

(15)

(10)

(25)

180

158

338

(/)

Sales

($)

1,146

1,110

2,256

218

216

434

1,364

1,326

2,690

(=)

EBITDA margin before items

(%)

15%

12%

13%

12%

15%

14%

13%

12%

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 allocated 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, plant and equipment  

($)

4

4

4

4

(=)

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

YTD

Q1

Q2

Q3

Q4

YTD

Pulp and Paper Segment

Sales

($)

1,146

1,110

2,256

1,168

1,160

1,186

1,160

4,674

Operating income(a)

($)

75

55

130

89

74

101

88

352

Depreciation and amortization

($)

74

75

149

83

79

79

78

319

Impairment and write-down of property, plant and equipment

($)

19

18

37

4

4

Paper

Paper Production

('000 ST)

808

806

1,614

801

786

758

777

3,122

Paper Shipments - Manufactured

('000 ST)

804

783

1,587

804

779

776

786

3,145

Communication Papers

('000 ST)

669

653

1,322

678

647

649

661

2,635

Specialty and Packaging

('000 ST)

135

130

265

126

132

127

125

510

Paper Shipments - Sourced from 3rd parties

('000 ST)

35

29

64

50

42

47

34

173

Paper Shipments - Total

('000 ST)

839

812

1,651

854

821

823

820

3,318

Pulp

Pulp Shipments(b)

('000 ADMT)

350

345

695

318

336

367

370

1,391

Hardwood Kraft Pulp

(%)

9%

8%

9%

12%

11%

12%

11%

12%

Softwood Kraft Pulp

(%)

65%

65%

65%

58%

63%

63%

60%

61%

Fluff Pulp

(%)

26%

27%

26%

30%

26%

25%

29%

27%

Personal Care Segment

Sales

($)

218

216

434

233

234

231

230

928

Operating income(a)

($)

10

17

27

14

12

12

11

49

Depreciation and amortization

($)

16

16

32

16

17

17

15

65

Average Exchange Rates

$US / $CAN

1.241

1.229

1.235

1.103

1.091

1.089

1.136

1.105

$CAN / $US

0.806

0.813

0.810

0.906

0.917

0.918

0.881

0.906

€ / $US

1.126

1.106

1.116

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 Communications and Sustainability, Tel.: 803-802-8031

RELATED LINKS
http://www.domtar.com

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Domtar Corporation

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