Domtar Corporation Reports Preliminary Fourth Quarter and Fiscal Year 2018 Financial Results

Best quarterly performance since 2011
(All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted).

  • Fourth quarter 2018 net earnings of $1.38 per share; earnings before items1 of $1.63 per share
  • Higher pulp and paper price realization
  • $217 million of cash flow from operating activities

FORT MILL, S.C.--()--Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $87 million ($1.38 per share) for the fourth quarter of 2018 compared to net earnings of $99 million ($1.57 per share) for the third quarter of 2018 and a net loss of $386 million ($6.16 per share) for the fourth quarter of 2017. Sales for the fourth quarter of 2018 were $1.4 billion.

Excluding items listed below, the Company had earnings before items1 of $103 million ($1.63 per share) for the fourth quarter of 2018 compared to earnings before items1 of $92 million ($1.46 per share) for the third quarter of 2018 and earnings before items1 of $40 million ($0.64 per share) for the fourth quarter of 2017.

ITEMS

Description   Segment   Line item   Amount After tax

effect

EPS impact

(per share)

      (in millions)
Fourth quarter 2018
 

● Margin improvement

plan

Personal Care

Impairment of property, plant

and equipment

 

$7

 

$5

 

$0.08

 
● Margin improvement

plan

Personal Care Closure and

restructuring costs

 

$8

 

$6

 

$0.09

 
● U.S. Tax Reform Corporate Income tax expense

 

$5

 

$5

 

$0.08

 
Third quarter 2018
 
● U.S. Tax Reform Corporate Income tax benefit

 

$7

 

$7

 

$0.11

 
Fourth quarter 2017
 
● Non-cash goodwill

impairment charge

Personal Care

Impairment of goodwill

 

$578

 

$573

 

$9.14

 
● Closure and

restructuring costs

Personal Care Closure and

restructuring costs

 

$2

 

$1

 

$0.02

 
● U.S. Tax Reform Corporate Income tax benefit

 

$140

 

$140

 

$2.23

 
● Net gain on disposal

of property, plant &

equipment

Corporate Other operating income

 

$9

 

$8

 

$0.13

FISCAL YEAR 2018 HIGHLIGHTS

For fiscal year 2018, net earnings amounted to $283 million ($4.48 per share) compared to a net loss of $258 million ($4.11 per share) for fiscal year 2017. The Company had earnings before items1 of $291 million ($4.61 per share) for fiscal year 2018 compared to earnings before items1 of $163 million ($2.60 per share) for fiscal year 2017. Sales amounted to $5.5 billion for fiscal year 2018.

Commenting on the full-year results, John D. Williams, President and Chief Executive Officer said, “We had a strong finish to a great year where we significantly improved EBITDA and cash flow. 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”.

QUARTERLY REVIEW

“The fourth quarter was one of our best in several years,” said John D. Williams, President and Chief Executive Officer. “Our results reflect a strong performance in Pulp and Paper as we benefited from solid business fundamentals, accelerating price realizations and improved productivity. I’m especially pleased with our cost performance in the quarter despite fiber availability issues at several of our facilities.”

Commenting on Personal Care, Mr. Williams added, “Results improved from the third quarter led by seasonally stronger sales in Europe while new customer volume began to ramp up in North America. Higher volume and cost improvements also drove operational efficiencies and resulted in lower overall unit cost. Although markets remain challenged with raw material cost inflation, we do see some of the underlying fundamentals beginning to improve.”

Operating income was $133 million in the fourth quarter of 2018 compared to operating income of $114 million in the third quarter of 2018. Depreciation and amortization totaled $75 million in the fourth quarter of 2018.

Operating income before items1 was $148 million in the fourth quarter of 2018 compared to an operating income before items1 of $114 million in the third quarter of 2018.

   
(In millions of dollars) 4Q 2018 3Q 2018
 
Sales $ 1,390 $ 1,367
Operating income (loss)
Pulp and Paper segment 148 135
Personal Care segment (12 ) (3 )
Corporate   (3 )   (18 )
Total operating income 133 114
Operating income before items1 148 114
Depreciation and amortization 75 75

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

When compared to the third quarter of 2018, manufactured paper shipments were down 1% and pulp shipments increased 1%. The shipments-to-production ratio for paper was 95% in the fourth quarter of 2018, compared to 98% in the third quarter of 2018. Paper inventories increased by 34,000 tons, and pulp inventories decreased by 7,000 metric tons when compared to the third quarter of 2018.

LIQUIDITY AND CAPITAL

Cash flow from operating activities amounted to $217 million and capital expenditures were $84 million, resulting in free cash flow1 of $133 million for the fourth quarter of 2018. Domtar’s net debt-to-total capitalization ratio1 stood at 23% at December 31, 2018 compared to 25% at September 30, 2018.

In 2018, cash flow from operating activities amounted to $554 million and capital expenditures were $195 million, resulting in free cash flow1 of $359 million.

OUTLOOK

In 2019, our paper shipments will increase as we respond to increased demand from our customers following the announced capacity closures while paper prices will continue to improve in the wake of the recently announced price increases across the majority of our paper grades. Softwood and fluff pulp markets will remain balanced through the year due to continued steady demand growth and limited announced new capacity. We anticipate costs, including freight, labor and raw materials, to marginally increase. Personal Care is expected to benefit from our margin improvement plan and new customer wins, partially offset by further raw material cost inflation.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 11:00 a.m. (ET) to discuss its fourth quarter and fiscal year 2018 financial results. Financial analysts are invited to participate in the call by dialing 1 (800) 499-4035 (toll free - North America) or 1 (416) 204-9269 (International) at least 10 minutes before start time, while media and other interested individuals are invited to listen to the live webcast on the Domtar Corporation website at www.domtar.com.

The Company will release its first quarter 2019 earnings results on May 1, 2019 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 is a leading provider of a wide variety of fiber-based products including communication, specialty and packaging papers, market pulp and absorbent hygiene products. With approximately 10,000 employees serving more than 50 countries around the world, Domtar is driven by a commitment to turn sustainable wood fiber into useful products that people rely on every day. Domtar’s annual sales are approximately $5.5 billion, and its common stock is traded on the New York and Toronto Stock Exchanges. Domtar’s principal executive office is in Fort Mill, South Carolina. To learn more, visit www.domtar.com.

Forward-Looking Statements
Statements in this release about our plans, expectations and future performance, including the statements by Mr. Williams and those contained under “Outlook,” are “forward-looking statements.” Actual results may differ materially from those suggested by these statements for a number of reasons, including changes in customer demand and pricing, changes in manufacturing costs, future acquisitions and divestitures, including facility closings, and the other reasons identified under “Risk Factors” in our Form 10-K for 2017 as filed with the SEC and as updated by subsequently filed Form 10-Qs. Except to the extent required by law, we expressly disclaim any obligation to update or revise these forward-looking statements to reflect new events or circumstances or otherwise.

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

Domtar Corporation
Highlights
(In millions of dollars, unless otherwise noted)

  Three months ended   Three months ended   Twelve months ended   Twelve months ended
December 31, December 31, December 31, December 31,
2018 2017 2018 2017
(Unaudited)
$ $ $ $
Selected Segment Information        
Sales (1)
Pulp and Paper 1,154 1,090 4,523 4,216
Personal Care   254   260   1,000   996
Total for reportable segments 1,408 1,350 5,523 5,212
Intersegment sales   (18 )   (15 )   (68 )   (64 )
Consolidated sales   1,390   1,335   5,455   5,148
Depreciation and amortization
Pulp and Paper 58 64 238 254
Personal Care   17   18   70   67
Total for reportable segments 75 82 308 321
Impairment of property plant and equipment and

goodwill - Personal Care

  7   578   7   578
Consolidated depreciation and amortization and

impairment of property, plant and equipment

and goodwill

  82   660   315   899
Operating income (loss)(2)
Pulp and Paper 148 56 438 237
Personal Care (12 ) (564 ) (5 ) (527 )
Corporate   (3 )   (5 )   (47 )   (38 )
Consolidated operating income (loss) 133 (513 ) 386 (328 )
Interest expense, net 15 16 62 66
Non-service components of net periodic benefit cost   (5 )   (1 )   (18 )   (11 )
Earnings (loss) before income taxes and equity loss 123 (528 ) 342 (383 )
Income tax expense (benefit) 35 (142 ) 57 (125 )
Equity loss, net of taxes   1     2  
Net earnings (loss)   87   (386 )   283   (258 )
Per common share (in dollars)
Net earnings (loss)
Basic 1.38 (6.16 ) 4.50 (4.11 )
Diluted 1.38 (6.16 ) 4.48 (4.11 )
Weighted average number of common

shares outstanding (millions)

Basic 62.9 62.7 62.9 62.7
Diluted   63.0   62.7   63.1   62.7
Cash flows from operating activities 217 125 554 449
Additions to property, plant and equipment   84   71   195   182

(1) As a result of adopting ASU 2014-09 “Revenue from Contracts with Customers,” the Company has revised its 2017 segment disclosures to conform to the new guideline. (Previously reported numbers for Sales for the three and twelve months ended December 31, 2017 were as follows: Pulp and Paper: $1,090 million and $4,216 million, respectively; Personal Care: $262 million and $1,005 million, respectively; Intersegment sales: $(15) million and $(64) million, respectively.)

(2) As a result of adopting ASU 2017-07 “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” the Company has revised its 2017 segment disclosures to conform to the new guideline. (Previously reported numbers for Operating income (loss) for the three and twelve months ended December 31, 2017 were as follows: Pulp and Paper: $58 million and $250 million, respectively; Personal Care: $(564) million and $(527) million, respectively; Corporate: $(6) million and $(40) million, respectively.)

Domtar Corporation
Consolidated Statements of Earnings (Loss)
(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,
2018 2017 2018 2017
(Unaudited)
$ $ $ $
       
Sales 1,390 1,335 5,455 5,148
Operating expenses
Cost of sales, excluding depreciation and amortization 1,064 1,079 4,303 4,145
Depreciation and amortization 75 82 308 321
Selling, general and administrative 100 115 443 444
Impairment of property, plant and equipment and

goodwill

7 578 7 578
Closure and restructuring costs 8 2 8 2
Other operating loss (income), net   3   (8 )     (14 )
  1,257   1,848   5,069   5,476
Operating income (loss) 133 (513 ) 386 (328 )
Interest expense, net 15 16 62 66
Non-service components of net periodic benefit cost   (5 )   (1 )   (18 )   (11 )
Earnings (loss) before income taxes and equity loss 123 (528 ) 342 (383 )
Income tax expense (benefit) 35 (142 ) 57 (125 )
Equity loss, net of taxes   1         2    
Net earnings (loss)   87   (386 )   283   (258 )
Per common share (in dollars)
Net earnings (loss)
Basic 1.38 (6.16 ) 4.50 (4.11 )
Diluted 1.38 (6.16 ) 4.48 (4.11 )
Weighted average number of common

shares outstanding (millions)

Basic 62.9 62.7 62.9 62.7
Diluted 63.0 62.7 63.1 62.7

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

 
December 31,   December 31,
2018 2017
(Unaudited)
$ $
Assets    
Current assets
Cash and cash equivalents 111 139
Receivables, less allowances of $6 and $7 670 704
Inventories 762 757
Prepaid expenses 24 33
Income and other taxes receivable   22     24
Total current assets 1,589 1,657
Property, plant and equipment, net 2,605 2,765
Intangible assets, net 597 633
Other assets   134   157
Total assets   4,925   5,212
Liabilities and shareholders' equity
Current liabilities
Trade and other payables 757 716
Income and other taxes payable 25 24
Long-term debt due within one year   1   1
Total current liabilities 783 741
Long-term debt 853 1,129
Deferred income taxes and other 476 491
Other liabilities and deferred credits 275 368
Shareholders' equity
Common stock 1 1
Additional paid-in capital 1,981 1,969
Retained earnings 1,023 849
Accumulated other comprehensive loss   (467 )   (336 )
Total shareholders' equity   2,538   2,483
Total liabilities and shareholders' equity   4,925   5,212

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

  For the twelve months ended
December 31, 2018   December 31, 2017
(Unaudited)
$ $
Operating activities    
Net earnings (loss) 283 (258 )
Adjustments to reconcile net earnings (loss) to cash flows from operating activities
Depreciation and amortization 308 321
Deferred income taxes and tax uncertainties 13 (207 )
Impairment of property, plant and equipment and goodwill 7 578
Net gains on disposals of property, plant and equipment (4 ) (13 )
Stock-based compensation expense 8 6
Equity loss, net 2
Other (1 ) 2
Changes in assets and liabilities
Receivables 18 (72 )
Inventories (24 ) 21
Prepaid expenses 2 5
Trade and other payables 24 35
Income and other taxes (32 ) 12
Difference between employer pension and other post-retirement

contributions and pension and other post-retirement expense

(46 ) (32 )
Other assets and other liabilities   (4 )   51
Cash flows from operating activities   554   449
Investing activities
Additions to property, plant and equipment (195 ) (182 )
Proceeds from disposals of property, plant and equipment 5 19
Acquisition of business, net of cash acquired (8 )
Other   (6 )  
Cash flows used for investing activities   (196 )   (171 )
Financing activities
Dividend payments (108 ) (104 )
Net change in bank indebtedness (12 )
Change in revolving credit facility (50 )
Proceeds from receivables securitization facility 85 45
Repayments of receivables securitization facility (60 ) (90 )
Repayments of long-term debt (301 ) (64 )
Other   2   1
Cash flows used for financing activities   (382 )   (274 )
Net (decrease) increase in cash and cash equivalents (24 ) 4
Impact of foreign exchange on cash (4 ) 10
Cash and cash equivalents at beginning of year   139   125
Cash and cash equivalents at end of year   111   139
Supplemental cash flow information
Net cash payments for:
Interest 57 58
Income taxes   71   33

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

The following table sets forth certain non-U.S. generally accepted accounting principles (“GAAP”) financial metrics identified in bold as “Earnings before items”, “Earnings before items per diluted share”, “EBITDA”, “EBITDA margin”, “EBITDA before items”, “EBITDA margin before items”, “Free cash flow”, “Net debt” and “Net debt-to-total capitalization”. Management believes that the financial metrics are useful to understand our operating performance and benchmark with peers within the industry. The Company calculates “Earnings before items” and “EBITDA before items” by excluding the after-tax (pre-tax) effect of specified items. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

        2018   2017
Q1   Q2   Q3   Q4   Year Q1   Q2   Q3   Q4   Year
Reconciliation of "Earnings before items" to Net earnings (loss)                        
Net earnings (loss) ($) 54 43 99 87 283 20 38 70 (386 ) (258 )
(+) Impairment of property, plant and equipment and goodwill ($) 5 5 573 573
(+) Closure and restructuring costs ($) 6 6 1 1
(+) Litigation settlement ($) 2 2
(-) Net gains on disposals of property, plant and equipment ($) (1 ) (2 ) (3 ) (3 ) (8 ) (11 )
(-) Reversal of contingent consideration ($) (2 ) (2 )
(-) U.S. Tax Reform ($) (7 ) 5 (2 ) (140 ) (140 )
(=) Earnings before items ($) 55 41 92 103 291 20 38 65 40 163
(/) Weighted avg. number of common shares outstanding (diluted) (millions) 62.9 63.2 63.2 63.0 63.1 62.8 62.7 62.9 62.7 62.7
(=) Earnings before items per diluted share ($) 0.87 0.65 1.46 1.63 4.61 0.32 0.61 1.03 0.64 2.60
 
Reconciliation of "EBITDA" and "EBITDA before items" to

Net earnings (loss)

Net earnings (loss) ($) 54 43 99 87 283 20 38 70 (386 ) (258 )
(+) Equity loss, net of taxes ($) 1 1 2
(+) Income tax expense (benefit) ($) 11 8 3 35 57 5 9 3 (142 ) (125 )
(+) Interest expense, net ($) 16 16 15 15 62 17 17 16 16 66
(+) Depreciation and amortization ($) 79 79 75 75 308 80 79 80 82 321
(+) Impairment of property, plant and equipment and goodwill ($) 7 7 578 578
(-) Net gains on disposals of property, plant and equipment ($) (1 ) (3 ) (4 ) (4 ) (9 ) (13 )
(=) EBITDA ($) 159 143 193 220 715 122 143 165 139 569
(/) Sales ($) 1,345 1,353 1,367 1,390 5,455 1,302 1,221 1,290 1,335 5,148
(=) EBITDA margin (%) 12 % 11 % 14 % 16 % 13 % 9 % 12 % 13 % 10 % 11 %
EBITDA ($) 159 143 193 220 715 122 143 165 139 569
(+) Closure and restructuring costs ($) 8 8 2 2
(+) Litigation settlement ($) 2 2
(-) Reversal of contingent consideration ($) (2 ) (2 )
(=) EBITDA before items ($) 161 143 193 228 725 122 143 163 141 569
(/) Sales ($) 1,345 1,353 1,367 1,390 5,455 1,302 1,221 1,290 1,335 5,148
(=) EBITDA margin before items (%) 12 % 11 % 14 % 16 % 13 % 9 % 12 % 13 % 11 % 11 %
 
Reconciliation of "Free cash flow" to Cash flows from operating activities
Cash flows from operating activities ($) 90 177 70 217 554 91 121 112 125 449
(-) Additions to property, plant and equipment ($) (25 ) (37 ) (49 ) (84 ) (195 ) (34 ) (37 ) (40 ) (71 ) (182 )
(=) Free cash flow ($) 65 140 21 133 359 57 84 72 54 267
 
"Net debt-to-total capitalization" computation
Bank indebtedness ($) 1 2
(+) Long-term debt due within one year ($) 1 1 1 1 64 1 1 1
(+) Long-term debt ($) 1,103 1,103 1,103 853 1,188 1,203 1,164 1,129
(=) Debt ($) 1,104 1,105 1,104 854 1,254 1,204 1,165 1,130
(-) Cash and cash equivalents ($) (152 ) (264 ) (256 ) (111 ) (111 ) (124 ) (143 ) (139 )
(=) Net debt ($) 952 841 848 743 1,143 1,080 1,022 991
(+) Shareholders' equity ($) 2,493 2,458 2,553 2,538 2,685 2,770 2,886 2,483
(=) Total capitalization ($) 3,445 3,299 3,401 3,281 3,828 3,850 3,908 3,474
Net debt ($) 952 841 848 743 1,143 1,080 1,022 991
(/) Total capitalization ($) 3,445 3,299 3,401 3,281 3,828 3,850 3,908 3,474
(=) Net debt-to-total capitalization (%) 28 % 25 % 25 % 23 % 30 % 28 % 26 % 29 %

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

Domtar Corporation
Quarterly Reconciliation of Non-GAAP Financial Measures – By Segment 2018
(In millions of dollars, unless otherwise noted)

The following table sets forth certain non-U.S. generally accepted accounting principles (“GAAP”) financial metrics identified in bold as “Operating income (loss) before items”, “EBITDA before items” and “EBITDA margin before items” by reportable segment. Management believes that the financial metrics are useful to understand our operating performance and benchmark with peers within the industry. The Company calculates the segmented “Operating income (loss) before items” by excluding the pre-tax effect of specified items. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

        Pulp and Paper   Personal Care   Corporate   Total
Q1'18   Q2'18   Q3'18   Q4'18   Year Q1'18   Q2'18   Q3'18   Q4'18   Year Q1'18   Q2'18   Q3'18   Q4'18   Year Q1'18   Q2'18   Q3'18   Q4'18   Year

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

 

 

Operating income (loss) ($) 76 79 135 148 438 8 2 (3) (12) (5) (7) (19) (18) (3) (47) 77 62 114 133 386

(+)

Impairment of property, plant and equipment ($) 7 7 7 7
(-)

Net gains on disposals of property, plant and equipment

 

($) (1) (3) (4) (1) (3) (4)
(+) Closure and restructuring costs ($) 8 8 8 8
(+) Litigation settlement ($) 2 2 2 2
(=) Operating income (loss) before items ($) 75 76 135 148 434 8 2 (3) 3 10 (5) (19) (18) (3) (45) 78 59 114 148 399
 

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

 

Operating income (loss) before items ($) 75 76 135 148 434 8 2 (3) 3 10 (5) (19) (18) (3) (45) 78 59 114 148 399
(+) Non-service components of net periodic benefit cost ($) 4 6 4 5 19 (1) (1) 4 5 4 5 18
(+) Depreciation and amortization ($) 61 61 58 58 238 18 18 17 17 70 79 79 75 75 308
(=) EBITDA before items ($) 140 143 197 211 691 26 20 14 20 80 (5) (20) (18) (3) (46) 161 143 193 228 725
(/) Sales ($) 1,100 1,123 1,146 1,154 4,523 262 247 237 254 1,000 1,362 1,370 1,383 1,408 5,523
(=) EBITDA margin before items (%) 13% 13% 17% 18% 15% 10% 8% 6% 8% 8% 12% 10% 14% 16% 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.

Domtar Corporation
Quarterly Reconciliation of Non-GAAP Financial Measures – By Segment 2017
(In millions of dollars, unless otherwise noted)

The following table sets forth certain non-U.S. generally accepted accounting principles (“GAAP”) financial metrics identified in bold as “Operating income (loss) before items”, “EBITDA before items” and “EBITDA margin before items” by reportable segment. Management believes that the financial metrics are useful to understand our operating performance and benchmark with peers within the industry. The Company calculates the segmented “Operating income (loss) before items” by excluding the pre-tax effect of specified items. These metrics are presented as a complement to enhance the understanding of operating results but not in substitution for GAAP results.

        Pulp and Paper   Personal Care   Corporate   Total
Q1'17   Q2'17   Q3'17   Q4'17   Year Q1'17   Q2'17   Q3'17   Q4'17   Year Q1'17   Q2'17   Q3'17   Q4'17   Year Q1'17   Q2'17   Q3'17   Q4'17   Year

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

 

Operating income (loss) ($) 30 62 89 56 237 16 13 8 (564) (527) (8) (13) (12) (5) (38) 38 62 85 (513) (328)
(+) Impairment of goodwill ($) 578 578 578 578
(-)

Net gains on disposals of property, plant and equipment

 

($) (4) (4) (9) (9) (4) (9) (13)
(-) Reversal of contingent consideration ($) (2) (2) (2) (2)
(+) Closure and restructuring costs ($) 2 2 2 2
(=) Operating income (loss) before items ($) 30 62 85 56 233 16 13 8 16 53 (8) (13) (14) (14) (49) 38 62 79 58 237
 

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

 

Operating income (loss) before items ($) 30 62 85 56 233 16 13 8 16 53 (8) (13) (14) (14) (49) 38 62 79 58 237
(+) Non-service components of net periodic benefit cost ($) 4 3 4 2 13 (1) (1) (2) 4 2 4 1 11
(+) Depreciation and amortization ($) 64 63 63 64 254 16 16 17 18 67 80 79 80 82 321
(=) EBITDA before items ($) 98 128 152 122 500 32 29 25 34 120 (8) (14) (14) (15) (51) 122 143 163 141 569
(/) Sales ($) 1,073 999 1,054 1,090 4,216 247 238 251 260 996 1,320 1,237 1,305 1,350 5,212
(=) EBITDA margin before items (%) 9% 13% 14% 11% 12% 13% 12% 10% 13% 12% 9% 12% 12% 10% 11%

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

Domtar Corporation
Supplemental Segmented Information
(In millions of dollars, unless otherwise noted)

    2018   2017
Q1   Q2   Q3   Q4   Year Q1   Q2   Q3   Q4   Year
Pulp and Paper Segment                        
Sales ($) 1,100 1,123 1,146 1,154 4,523 1,073 999 1,054 1,090 4,216
Operating income ($) 76 79 135 148 438 30 62 89 56 237
Depreciation and

amortization

($) 61 61 58 58 238 64 63 63 64 254
Paper
Paper Production ('000 ST) 739 739 743 757 2,978 709 715 745 724 2,893
Paper Shipments -

Manufactured

('000 ST) 769 754 727 721 2,971 745 698 722 726 2,891
Communication Papers ('000 ST) 640 615 596 595 2,446 622 582 597 600 2,401
Specialty and Packaging

Papers

('000 ST) 129 139 131 126 525 123 116 125 126 490
Paper Shipments - Sourced

from 3rd parties

('000 ST) 28 26 30 25 109 29 26 29 25 109
Paper Shipments - Total ('000 ST) 797 780 757 746 3,080 774 724 751 751 3,000
Pulp
Pulp Shipments(a) ('000 ADMT) 374 377 390 395 1,536 453 383 424 462 1,722
Pulp Shipments mix(b):
Hardwood Kraft Pulp (%) 4 % 3 % 3 % 3 % 4 % 4 % 3 % 7 % 5 % 5 %
Softwood Kraft Pulp (%) 58 % 56 % 56 % 55 % 56 % 67 % 62 % 61 % 54 % 61 %
Fluff Pulp (%) 38 % 41 % 41 % 42 % 40 % 29 % 35 % 32 % 41 % 34 %
 
Personal Care Segment
Sales ($) 262 247 237 254 1,000 247 238 251 260 996
Operating income (loss) ($) 8 2 (3 ) (12 ) (5 ) 16 13 8 (564 ) (527 )
Depreciation and

amortization

($) 18 18 17 17 70 16 16 17 18 67
Impairment of property, plant and

equipment and goodwill

($) 7 7 578 578
 
Average Exchange Rates $US / $CAN 1.264 1.290 1.307 1.321 1.296 1.323 1.344 1.253 1.272 1.297
$CAN / $US 0.791 0.775 0.765 0.757 0.772 0.756 0.744 0.798 0.786 0.771
€ / $US 1.229 1.192 1.163 1.141 1.181 1.066 1.100 1.175 1.178 1.130

(a) Figures represent Pulp Shipments to third parties.

(b) Percentages include Pulp Shipments to our Personal Care segment.

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

Contacts

INVESTOR RELATIONS
Nicholas Estrela
Director
Investor Relations
Tel.: 514-848-5049

MEDIA RELATIONS
David Struhs
Vice-President
Corporate Services and Sustainability
Tel.: 803-802-8031

Contacts

INVESTOR RELATIONS
Nicholas Estrela
Director
Investor Relations
Tel.: 514-848-5049

MEDIA RELATIONS
David Struhs
Vice-President
Corporate Services and Sustainability
Tel.: 803-802-8031