Domtar Corporation reports preliminary third quarter 2015 financial results

TICKER SYMBOL
(NYSE: UFS) (TSX: UFS)

Good productivity and lower costs drive solid results
(All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted).

  • Third quarter 2015 net earnings of $0.17 per share; earnings before items1 of $0.86 per share
  • Year-to-date same currency EBITDA in Personal Care 16% higher when compared to 2014
  • Completed debt refinancing including a 10-year term loan

FORT MILL, SC, Oct. 30, 2015 /CNW Telbec/ - Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $11 million ($0.17 per share) for the third quarter of 2015 compared to net earnings of $38 million ($0.60 per share) for the second quarter of 2015 and net earnings of $281 million ($4.33 per share) for the third quarter of 2014. Sales for the third quarter of 2015 were $1.3 billion.

Excluding items listed below, the Company had earnings before items1 of $54 million ($0.86 per share) for the third quarter of 2015 compared to earnings before items1 of $39 million ($0.61 per share) for the second quarter of 2015 and earnings before items1 of $61 million ($0.94 per share) for the third quarter of 2014.

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).

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).

Third quarter 2014 items:

  • Deferred tax benefit of $204 million for the settlement of IRS audits, primarily related to Alternative Fuel Tax Credits;
  • Recognitions of $18 million of deferred Alternative Fuel Tax Credits ($18 million after tax); and
  • Closure and restructuring costs of $2 million ($2 million after tax).

"We delivered a solid quarter in a steady market environment. We had a good operating performance in Pulp and Paper, particularly during our annual maintenance outages, resulting in strong productivity and lower costs. Our paper shipments are also trending better than forecast due to better demand and lower imports and we continue to position the company to capitalize on opportunities in our key markets," said John D. Williams, President and Chief Executive Officer. "We remain focused on solid execution in areas such as operational excellence, continuous improvement, and innovation to ensure that we extract maximum value from our assets."

Mr. Williams added, "In Personal Care, the business continues its earnings progression. Our near-term priority remains on achieving our growth plans, continuing to capture the benefits of our cost savings program, and building out our core capabilities to support and sustain our unique business model. We have plenty yet to do and our focus on execution will continue to be vital."

QUARTERLY REVIEW

Operating income before items1 was $82 million in the third quarter of 2015 compared to an operating income before items1 of $67 million in the second quarter of 2015. Depreciation and amortization totaled $89  million in the third quarter of 2015.








(In millions of dollars)


3Q 2015


2Q 2015








Sales


$

1,292


$

1,310

Operating income (loss)








Pulp and Paper segment



54



55


Personal Care segment



18



17


Corporate



(11)



(10)


Total



61



62

Operating income before items1



82



67

Depreciation and amortization



89



91

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

When compared to the second quarter of 2015, manufactured paper shipments were down 0.5% and pulp shipments decreased 3.5%. The shipments-to-production ratio for paper was 98% in the third quarter of 2015, compared to 97% in the second quarter of 2015. Paper inventories increased by 14,000 tons and pulp inventories increased by 36,000 metric tons in September when compared to June levels.

INCOME TAXES

The third quarter 2015 income tax benefit includes a benefit of $4 million related to enacted tax rate changes as well as the impact of the recognition of $5 million of additional tax benefits related to the finalization of certain estimates in connection with the filing of our 2014 tax returns. 

LIQUIDITY AND CAPITAL

Cash flow provided from operating activities amounted to $67 million and capital expenditures were $66 million, resulting in free cash flow1 of $1 million for the third quarter of 2015. Domtar's net debt-to-total capitalization ratio1 stood at 30% at September 30, 2015 compared to 29% at June 30, 2015.

During the quarter, Domtar repurchased $20 million of common stock under its stock repurchase program.

OUTLOOK

Paper should be impacted by seasonality and mix in the fourth quarter while prices for pulp are still expected to remain under pressure. We remain cautious on the short-term pulp outlook due to the strong U.S. dollar. The fourth quarter should benefit from lower maintenance activities in our network while we expect higher input costs due to increased raw material and energy usage due to colder weather. Personal Care results are expected to continue to benefit from market growth and cost savings from its new manufacturing platform.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 10:00 a.m. (ET) to discuss its third 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 fourth quarter 2015 earnings results on February 5, 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 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.

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,




2015


2014


2015


2014




(Unaudited)




$


$


$


$















Selected Segment Information












Sales














Pulp and Paper


1,092



1,186



3,348



3,514



Personal Care


214



231



648



698

Total for reportable segments


1,306



1,417



3,996



4,212



Intersegment sales


(14)



(12)



(46)



(28)

Consolidated sales


1,292



1,405



3,950



4,184

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














Pulp and Paper


75



79



224



241



Personal Care


14



17



46



50

Total for reportable segments


89



96



270



291



Impairment and write-down of property, plant

   and equipment - Pulp and Paper


20





57



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


109



96



327



291















Operating income (loss)1














Pulp and Paper


54



101



184



264



Personal Care


18



12



45



38



Corporate


(11)



7



(35)



(24)

Consolidated operating income


61



120



194



278

Interest expense, net


64



25



115



76

(Loss) earnings before income taxes


(3)



95



79



202

Income tax benefit


(14)



(186)



(6)



(158)

Net earnings


11



281



85



360


Per common share (in dollars)














Net earnings














Basic


0.17



4.34



1.34



5.55



Diluted


0.17



4.33



1.34



5.54

Weighted average number of common shares outstanding (millions)














Basic


62.9



64.8



63.4



64.9



Diluted


63.0



64.9



63.5



65.0

Cash flows provided from operating activities


67



203



316



448

Additions to property, plant and equipment


66



56



202



157

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 nine months ended September 30, 2014 are as follows; Pulp and Paper: $109M and $247M, respectively, Personal Care: $13M and $42M, respectively, Corporate: $(2)M and $(11)M, 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,




2015


2014


2015


2014




(Unaudited)




$


$


$


$













Sales


1,292



1,405



3,950



4,184

Operating expenses














Cost of sales, excluding depreciation and amortization


1,026



1,105



3,140



3,316



Depreciation and amortization


89



96



270



291



Selling, general and administrative


95



99



294



313



Impairment and write-down of property, plant and

   equipment


20





57





Closure and restructuring costs


1



2



3



3



Other operating income, net




(17)



(8)



(17)





1,231



1,285



3,756



3,906

Operating income


61



120



194



278

Interest expense, net


64



25



115



76

(Loss) earnings before income taxes


(3)



95



79



202

Income tax benefit


(14)



(186)



(6)



(158)

Net earnings


11



281



85



360

Per common share (in dollars)













Net earnings














Basic


0.17



4.34



1.34



5.55



Diluted


0.17



4.33



1.34



5.54

Weighted average number of common shares outstanding (millions)














Basic


62.9



64.8



63.4



64.9



Diluted


63.0



64.9



63.5



65.0















Domtar Corporation

Consolidated Balance Sheets at

(In millions of dollars)










September 30,


December 31,





2015


2014





(Unaudited)





$


$

Assets






Current assets







Cash and cash equivalents


128



174


Receivables, less allowances of $10 and $6


617



628


Inventories


751



714


Prepaid expenses


25



25


Income and other taxes receivable


17



54


Deferred income taxes


82



75



Total current assets


1,620



1,670


Property, plant and equipment, at cost


8,714



8,909


Accumulated depreciation


(5,842)



(5,778)



Net property, plant and equipment


2,872



3,131

Goodwill


546



567

Intangible assets, net of amortization


616



661

Other assets


135



156



Total assets


5,789



6,185

Liabilities and shareholders' equity






Current liabilities







Bank indebtedness


1



10


Trade and other payables


721



721


Income and other taxes payable


23



26


Long-term debt due within one year


42



169



Total current liabilities


787



926

Long-term debt


1,245



1,181

Deferred income taxes and other


744



810

Other liabilities and deferred credits


354



378

Shareholders' equity







Common stock


1



1


Additional paid-in capital


1,966



2,012


Retained earnings


1,154



1,145


Accumulated other comprehensive loss


(462)



(268)



Total shareholders' equity


2,659



2,890




Total liabilities and shareholders' equity


5,789



6,185


Domtar Corporation

Consolidated Statements of Cash Flows

(In millions of dollars)





For the nine months ended




September 30, 2015


September 30, 2014




(Unaudited)




$


$

Operating activities






Net earnings


85



360

Adjustments to reconcile net earnings to cash flows from operating activities








Depreciation and amortization


270



291



Deferred income taxes and tax uncertainties


(50)



(202)



Impairment and write-down of property, plant and equipment


57





Net gains on disposal of property, plant and equipment


(15)





Stock-based compensation expense


5



3



Other


4



1

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








Receivables


(11)



21



Inventories


(70)



(22)



Prepaid expenses


(3)



(4)



Trade and other payables


8



(22)



Income and other taxes


30



22



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


2





Other assets and other liabilities


4




Cash flows provided from operating activities


316



448

Investing activities






Additions to property, plant and equipment


(202)



(157)

Proceeds from disposals of property, plant and equipment and sale of business


35



1

Acquisition of business, net of cash acquired




(546)

Other


9



5


Cash flows used for investing activities


(158)



(697)

Financing activities






Dividend payments


(75)



(60)

Stock repurchase


(50)



(19)

Net change in bank indebtedness


(9)



(13)

Change in revolving bank credit facility


75



(160)

Proceeds from receivables securitization facilities




90

Payments on receivables securitization facilities




(108)

Issuance of long-term debt


300



Repayment of long-term debt


(439)



(4)

Other


1



4


Cash flows used for financing activities


(197)



(270)

Net decrease in cash and cash equivalents


(39)



(519)

Impact of foreign exchange on cash


(7)



(2)

Cash and cash equivalents at beginning of period


174



655

Cash and cash equivalents at end of period


128



134

Supplemental cash flow information







Net cash payments for:








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


121



70



Income taxes paid, net


16



32

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


YTD


Q1


Q2


Q3


Q4


YTD























Reconciliation of "Earnings before items" to Net
earnings



















Net earnings


($)

36


38


11


85


39


40


281


71


431

(+)

Impairment and write-down of property, plant and equipment


($)

12


11


12


35





2


2

(+)

Closure and restructuring costs


($)

1


1


1


3


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


141


42


40


61


91


234

(/)

Weighted avg. number of common and

exchangeable shares outstanding (diluted)


(millions)

63.9


63.7


63.0


63.5


65.0


65.1


64.9


64.4


64.9

(=)

Earnings before items per diluted share


($)

0.75


0.61


0.86


2.22


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


85


39


40


281


71


431

(+)

Income tax expense (benefit)


($)

9


(1)


(14)


(6)


15


13


(186)


(12)


(170)

(+)

Interest expense, net


($)

26


25


64


115


25


26


25


27


103

(=)

Operating income


($)

71


62


61


194


79


79


120


86


364

(+)

Depreciation and amortization


($)

90


91


89


270


99


96


96


93


384

(+)

Impairment and write-down of property, plant and equipment


($)

19


18


20


57





4


4

(-)

Net gains on disposal of property, plant

and equipment


($)

(1)


(14)



(15)






(=)

EBITDA


($)

179


157


170


506


178


175


216


183


752

(/)

Sales


($)

1,348


1,310


1,292


3,950


1,394


1,385


1,405


1,379


5,563

(=)

EBITDA margin


(%)

13%


12%


13%


13%


13%


13%


15%


13%


14%


EBITDA


($)

179


157


170


506


178


175


216


183


752

(-)

Alternative fuel tax credits


($)







(18)



(18)

(+)

Closure and restructuring costs


($)

1


1


1


3


1



2


25


28

(+)

Impact of purchase accounting


($)





3





3

(=)

EBITDA before items


($)

180


158


171


509


182


175


200


208


765

(/)

Sales


($)

1,348


1,310


1,292


3,950


1,394


1,385


1,405


1,379


5,563

(=)

EBITDA margin before items


(%)

13%


12%


13%


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


67


316


141


104


203


186


634

(-)

Additions to property, plant and equipment


($)

(70)


(66)


(66)


(202)


(45)


(56)


(56)


(79)


(236)

(=)

Free cash flow


($)

57


56


1


114


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




15


7


170


169



(+)

Long-term debt


($)

1,179


1,178


1,245




1,490


1,410


1,202


1,181



(=)

Debt


($)

1,354


1,348


1,288




1,513


1,432


1,375


1,360



(-)

Cash and cash equivalents


($)

(183)


(207)


(128)




(130)


(85)


(134)


(174)



(=)

Net debt


($)

1,171


1,141


1,160




1,383


1,347


1,241


1,186



(+)

Shareholders' equity


($)

2,710


2,761


2,659




2,771


2,826


2,938


2,890



(=)

Total capitalization


($)

3,881


3,902


3,819




4,154


4,173


4,179


4,076




Net debt


($)

1,171


1,141


1,160




1,383


1,347


1,241


1,186



(/)

Total capitalization


($)

3,881


3,902


3,819




4,154


4,173


4,179


4,076



(=)

Net debt-to-total capitalization


(%)

30%


29%


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



184


10


17


18



45


(14)


(10)


(11)



(35)


71


62


61



194

(+)

Impairment and write-down of property,

   plant and equipment


($)

19


18


20



57












19


18


20



57

(-)

Net gains on disposal of property, plant

   and equipment


($)


(14)




(14)







(1)





(1)


(1)


(14)




(15)

(+)

Closure and restructuring costs


($)


1


1



2


1





1







1


1


1



3

(=)

Operating income (loss) before items


($)

94


60


75



229


11


17


18



46


(15)


(10)


(11)



(36)


90


67


82



239












































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











































Operating income (loss) before items


($)

94


60


75



229


11


17


18



46


(15)


(10)


(11)



(36)


90


67


82



239

(+)

Depreciation and amortization


($)

74


75


75



224


16


16


14



46







90


91


89



270












































(=)

EBITDA before items


($)

168


135


150



453


27


33


32



92


(15)


(10)


(11)



(36)


180


158


171



509

(/)

Sales


($)

1,146


1,110


1,092



3,348


218


216


214



648







1,364


1,326


1,306



3,996

(=)

EBITDA margin before items


(%)

15%


12%


14%



14%


12%


15%


15%



14%







13%


12%


13%



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,

   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


Q3


YTD


Q1


Q2


Q3


Q4


YTD
















Pulp and Paper Segment




















Sales

($)

1,146


1,110


1,092


3,348


1,168


1,160


1,186


1,160


4,674


Operating income (a)

($)

75


55


54


184


89


74


101


88


352


Depreciation and amortization

($)

74


75


75


224


83


79


79


78


319


Impairment and write-down of property, plant and equipment

($)

19


18


20


57





4


4





















Paper




















Paper Production

('000 ST)

808


806


794


2,408


801


786


758


777


3,122


Paper Shipments -

Manufactured

('000 ST)

804


783


779


2,366


807


779


777


785


3,148



Communication Papers

('000 ST)

669


653


648


1,970


681


647


649


660


2,637



Specialty and Packaging

('000 ST)

135


130


131


396


126


132


128


125


511


Paper Shipments - Sourced from 3rd parties

('000 ST)

35


29


35


99


47


42


46


35


170


Paper Shipments - Total

('000 ST)

839


812


814


2,465


854


821


823


820


3,318


Pulp




















Pulp Shipments(b)

('000 ADMT)

350


345


333


1,028


318


336


367


370


1,391



Hardwood Kraft Pulp

(%)

9 %


8 %


8 %


8 %


12 %


11 %


12 %


11 %


12 %



Softwood Kraft Pulp

(%)

65 %


65 %


65 %


65 %


58 %


63 %


63 %


60 %


61 %



Fluff Pulp

(%)

26 %


27 %


27 %


27 %


30 %


26 %


25 %


29 %


27 %




















Personal Care Segment




















Sales

($)

218


216


214


648


233


234


231


230


928


Operating income(a)

($)

10


17


18


45


14


12


12


11


49


Depreciation and

amortization

($)

16


16


14


46


16


17


17


15


65




















Average Exchange Rates

$US / $CAN

1.241


1.229


1.309


1.260


1.103


1.091


1.089


1.136


1.105




$CAN / $US

0.806


0.813


0.764


0.794


0.906


0.917


0.918


0.881


0.906




€ / $US

1.126


1.106


1.112


1.115


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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