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Press release from CNW Group

Domtar Corporation reports preliminary second quarter 2014 financial results

Thursday, July 24, 2014

Domtar Corporation reports preliminary second quarter 2014 financial results

07:30 EDT Thursday, July 24, 2014

Second quarter results impacted by scheduled maintenance and lack-of-order downtime
(All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted.)

  • Second quarter 2014 net earnings of $0.61 per share
  • Lack-of-order downtime totaling 51 thousand tons of paper
  • Cash flows provided from operating activities totaling $104 million

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

MONTREAL, July 24, 2014 /CNW Telbec/ - Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $40 million ($0.61 per share) for the second quarter of 2014 compared to net earnings of $39 million ($0.60 per share) for the first quarter of 2014 and net loss of $46 million ($0.69 per share) for the second quarter of 2013. Sales for the second quarter of 2014 were $1,385 million.

Excluding items listed below, the Company had earnings before items1 of $40 million ($0.61 per share) for the second quarter of 2014 compared to earnings before items1 of $42 million ($0.65 per share) for the first quarter of 2014 and earnings before items1 of $16 million ($0.24 per share) for the second quarter of 2013.

Second quarter 2014 items :

  • None

First quarter 2014 items :

  • Closure and restructuring costs of $1 million ($1 million after tax); and
  • Negative impact of purchase accounting of $3 million ($2 million after tax).

Second quarter 2013 items :

  • Litigation settlement of $49 million ($46 million after tax);
  • Closure and restructuring charges of $18 million ($13 million after tax); and
  • Charge of $5 million ($3 million after tax) related to the impairment and write-down of property, plant and equipment.

Commenting on the second quarter results, John D. Williams, President and Chief Executive Officer, said, "While paper productivity improved from the first quarter, we took fifty-one thousand tons of lack of order downtime, which resulted in higher unit costs. Our pulp business benefited from good price momentum and we shipped over ten thousand tonnes from inventory. However, these benefits were more than offset by seasonally higher maintenance activity in our pulp mills."

Mr. Williams added, "In our Personal Care segment, results during the quarter were negatively impacted by higher raw material costs. Nevertheless, the integration of Indas is progressing well and it is performing in line with our expectations. In addition, our capacity expansion plan continues to ramp up and we are currently in the process of launching new products for strategic customers."

QUARTERLY REVIEW

Operating income before items1 was $79 million in the second quarter of 2014 compared to an operating income before items1 of $83 million in the first quarter of 2014. Depreciation and amortization totaled $96 million in the second quarter of 2014.

(In millions of dollars)   2Q 2014   1Q 2014
Sales   $1,385   $1,394
Operating income (loss)        
  Pulp and Paper segment   69   69
  Personal Care segment   14   15
  Corporate   (4)   (5)
  Total   79   79
Operating income before items1   79   83
Depreciation and amortization   96   99


The decrease in operating income before items1 in the second quarter of 2014 was the result of higher costs for planned maintenance, lack-of-order downtime in papers, lower paper shipments and overall unfavorable exchange rates. These factors were partially offset by lower energy costs, lower selling, general and administrative expenses, and higher average selling prices for paper and pulp. 

When compared to the first quarter of 2014, manufactured paper shipments decreased 3.1% and pulp shipments increased 5.7%. The shipments-to-production ratio for paper was 99% in the second quarter of 2014, compared to 100% in the first quarter of 2014. Paper inventories increased by 9,000 tons while pulp inventories decreased by 10,000 metric tons at the end of June when compared to March levels.

LIQUIDITY AND CAPITAL

Cash flow provided from operating activities amounted to $104 million and capital expenditures were $56 million, resulting in free cash flow1 of $48 million for the second quarter of 2014. Domtar's net debt-to-total capitalization ratio1 stood at 32% at June 30, 2014 compared to 33% at March 31, 2014.

OUTLOOK

Our paper volumes are expected to decline with market demand while global softwood pulp markets are expected to remain balanced. Domtar will continue to closely monitor its inventory levels and balance its production with its customers' demand. The ramp-up of the new production lines are expected to positively impact the Personal Care business results towards the end of the year. Input costs are expected to stay relatively stable for the second half of 2014.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 10:00 a.m. (ET) to discuss its second quarter 2014 financial results. Financial analysts are invited to participate in the call by dialing 1 (866) 321-8231 (toll free - North America) or 1 (416) 642-5213 (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 2014 earnings on October 23, 2014 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 its business is a network of world class wood fiber converting assets that produce papergrade, fluff and specialty pulps. The majority of its pulp production is consumed internally to manufacture paper and consumer products. Domtar is the largest integrated marketer of uncoated freesheet paper in North America with recognized brands such as Cougar®, Lynx® Opaque Ultra, Husky® Opaque Offset, First Choice® and Domtar EarthChoice®. Domtar is also a leading marketer and producer of a broad line of incontinence care products marketed primarily under the Attends®, IncoPack and Indasec® brand names as well as baby diapers. In 2013, Domtar had sales of US$5.4 billion from some 50 countries. The Company employs approximately 10,000 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 2013 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
Three months
ended June 30
Six months
ended June 30
Six months
ended June 30
        2014 2013 2014 2013
      (Unaudited)
        $ $ $ $
             
Selected Segment Information          
Sales           
  Pulp and Paper   1,160 1,208 2,328 2,446
  Personal Care   234 108 467 219
Total for reportable segments    1,394 1,316 2,795 2,665
  Intersegment sales - Pulp and Paper   (9) (4) (16) (8)
Consolidated sales 1,385 1,312 2,779 2,657
         
Depreciation and amortization and impairment and write-down of property, plant and equipment        
  Pulp and Paper 79 87 162 176
  Personal Care 17 6 33 12
Total for reportable segments 96 93 195 188
  Impairment and write-down of property, plant and equipment - Pulp and Paper - 5 - 15
Consolidated depreciation and amortization and impairment and write-down of property, plant and equipment 96 98 195 203
       
Operating income (loss)         
  Pulp and Paper 69 16 138 54
  Personal Care 14 10 29 23
  Corporate   (4) (56) (9) (58)
Consolidated operating income (loss) 79 (30) 158 19
Interest expense, net 26 21 51 46
Earnings (loss) before income taxes and equity loss 53 (51) 107 (27)
Income tax expense (benefit) 13 (5) 28 (27)
Equity loss, net of taxes - - - 1
Net earnings (loss)  40 (46) 79 (1)
         
Per common share (in dollars)        
Net earnings (loss)        
  Basic   0.62 (0.69) 1.22 (0.01)
  Diluted   0.61 (0.69) 1.22 (0.01)
Weighted average number of common and exchangeable shares outstanding (millions)        
  Basic   65.0 66.9 64.9 68.2
  Diluted   65.1 66.9 65.0 68.2
             
Cash flows provided from operating activities  104 120 245 183
Additions to property, plant and equipment 56 62 101 118


Domtar Corporation        
Consolidated Statements of Earnings (Loss)          
(In millions of dollars, unless otherwise noted)        
             
  Three months
ended June 30
Three months
ended June 30
Six months
ended June 30
Six months
ended June 30
      2014 2013 2014 2013
    (Unaudited)
      $ $ $ $
             
Sales   1,385 1,312 2,779 2,657
Operating expenses    
  Cost of sales, excluding depreciation and amortization 1,108 1,082 2,211 2,164
  Depreciation and amortization 96 93 195 188
  Selling, general and administrative 100 95 214 186
  Impairment and write-down of property, plant and equipment - 5 - 15
  Closure and restructuring costs - 18 1 18
  Other operating loss, net 2 49 - 67
      1,306 1,342 2,621 2,638
Operating income (loss) 79 (30) 158 19
Interest expense, net 26 21 51 46
Earnings (loss) before income taxes and equity loss 53 (51) 107 (27)
Income tax expense (benefit) 13 (5) 28 (27)
Equity loss, net of taxes - - - 1
Net earnings (loss) 40 (46) 79 (1)
             
Per common share (in dollars)        
             
Net earnings (loss)        
  Basic   0.62 (0.69) 1.22 (0.01)
  Diluted   0.61 (0.69) 1.22 (0.01)
Weighted average number of common and exchangeable shares outstanding (millions)        
  Basic 65.0 66.9 64.9 68.2
  Diluted 65.1 66.9 65.0 68.2


Domtar Corporation      
Consolidated Balance Sheets at      
(In millions of dollars)                  
             
      June 30 December 31
      2014 2013
        (Unaudited)
       $  $
 
Assets
Current assets
  Cash and cash equivalents   85 655
  Receivables, less allowances of $7 and $4   675 601
  Inventories   728 685
  Prepaid expenses   37 23
  Income and other taxes receivable   54 61
  Deferred income taxes   46 52
    Total current assets   1,625 2,077
       
Property, plant and equipment, at cost   9,032 8,883
Accumulated depreciation   (5,766) (5,594)
    Net property, plant and equipment   3,266 3,289
Goodwill   655 369
Intangible assets, net of amortization   648 407
Other assets   145 136
      Total assets   6,339 6,278
 
Liabilities and shareholders' equity      
Current liabilities      
  Bank indebtedness   15 15
  Trade and other payables   702 673
  Income and other taxes payable     32 17
  Long-term debt due within one year   7 4
    Total current liabilities   756 709
 
Long-term debt   1,410 1,510
Deferred income taxes and other   998 923
Other liabilities and deferred credits   349 354
 
Shareholders' equity      
  Exchangeable shares   - 44
  Additional paid-in capital   2,049 1,999
  Retained earnings    841 804
  Accumulated other comprehensive loss   (64) (65)
    Total shareholders' equity     2,826 2,782
      Total liabilities and shareholders' equity   6,339 6,278


Domtar Corporation    
Consolidated Statements of Cash Flows    
(In millions of dollars)    
         
      Six months
ended June 30
Six months
ended June 30
      2014 2013
      (Unaudited)
      $ $
         
Operating activities    
Net earnings (loss) 79 (1)
Adjustments to reconcile net earnings (loss) to cash flows from operating activities    
  Depreciation and amortization 195 188
  Deferred income taxes and tax uncertainties (6) -
  Impairment and write-down of property, plant and equipment - 15
  Net gains on disposals of property, plant and equipment  - (10)
  Stock-based compensation expense 3 3
  Equity loss, net - 1
  Other   6 (2)
Changes in assets and liabilities, excluding the effects of acquisition of businesses    
  Receivables 24 (30)
  Inventories (18) (10)
  Prepaid expenses (9) (7)
  Trade and other payables (43) 19
  Income and other taxes 23 (9)
  Difference between employer pension and other post-retirement contributions and pension and other post-retirement expense
(6) 26
  Other assets and other liabilities (3) -
  Cash flows provided from operating activities  245 183
     
Investing activities    
Additions to property, plant and equipment (101) (118)
Proceeds from disposals of property, plant and equipment 1 10
Acquisition of businesses, net of cash acquired (546) (11)
Investment in joint venture - (1)
  Cash flows used for investing activities (646) (120)
     
Financing activities    
Dividend payments (36) (31)
Net change in bank indebtedness - (17)
Change in revolving bank credit facility (140) -
Proceeds from receivables securitization facilities 90 -
Payments on receivables securitization facilities (84) -
Repayment of long-term debt (3) (97)
Stock repurchase - (147)
Other   4 1
  Cash flows used for financing activities (169) (291)
     
Net decrease in cash and cash equivalents (570) (228)
Impact of foreign exchange on cash - (1)
Cash and cash equivalents at beginning of period 655 661
Cash and cash equivalents at end of period 85 432
         
Supplemental cash flow information    
  Net cash payments for:    
      Interest (including $2 million of tender offer premiums in 2013) 44 27
      Income taxes paid (refund), net 19 (9)


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. 

           
        2014 2013
        Q1 Q2 YTD Q1 Q2 Q3 Q4 YTD
Reconciliation of "Earnings before items" to Net earnings (loss)                  
    Net earnings (loss) ($) 39 40 79 45 (46) 27 65 91
  (+) Impairment and write-down of property, plant and equipment  ($) - - - 7 3 - 7 17
  (+) Closure and restructuring costs ($) 1 - 1 - 13 - - 13
  (-) Net (gains) losses on disposals of property, plant and equipment and business ($) - - - (6) - 12 (4) 2
  (+) Impact of purchase accounting ($) 2 - 2 - - 2 - 2
  (+) Reversal of alternative fuel tax credits ($) - - - 18 - - - 18
  (-) Cellulosic biofuel producer credits ($) - - - (33) - - - (33)
  (+) Loss on repurchase of long-term debt ($) - - - 2 - - - 2
  (+) Weston litigation settlement ($) - - - - 46 - - 46
  (=) Earnings before items ($) 42 40 82 33 16 41 68 158
  ( / ) Weighted avg. number of common and exchangeable shares outstanding (diluted) (millions) 65.0 65.1 65.0 69.7 66.9 65.4 65.0 66.7
  (=) Earnings before items per diluted share ($) 0.65 0.61 1.26 0.47 0.24 0.63 1.05 2.37
                       
Reconciliation of "EBITDA" and "EBITDA before items" to Net earnings (loss)                  
    Net earnings (loss) ($) 39 40 79 45 (46) 27 65 91
  (+) Equity loss, net of taxes ($) - - - 1 - - - 1
  (+) Income tax expense (benefit) ($) 15 13 28 (22) (5) 1 6 (20)
  (+) Interest expense, net ($) 25 26 51 25 21 21 22 89
  (=) Operating income (loss) ($) 79 79 158 49 (30) 49 93 161
  (+) Depreciation and amortization ($) 99 96 195 95 93 93 95 376
  (+) Impairment and write-down of property, plant and equipment  ($) - - - 10 5 - 7 22
  (-) Net (gains) losses on disposals of property, plant and equipment and business ($) - - - (10) - 19 (5) 4
  (=) EBITDA ($) 178 175 353 144 68 161 190 563
  (/) Sales ($) 1,394 1,385 2,779 1,345 1,312 1,375 1,359 5,391
  (=) EBITDA margin (%) 13% 13% 13% 11% 5% 12% 14% 10%
    EBITDA ($) 178 175 353 144 68 161 190 563
  (+) Reversal of alternative fuel tax credits ($) - - - 26 - - - 26
  (+) Closure and restructuring costs ($) 1 - 1 - 18 - - 18
  (+) Impact of purchase accounting  ($) 3 - 3 - - 2 - 2
  (+) Weston litigation settlement ($) - - - - 49 - - 49
  (=) EBITDA before items ($) 182 175 357 170 135 163 190 658
  (/) Sales ($) 1,394 1,385 2,779 1,345 1,312 1,375 1,359 5,391
  (=) EBITDA margin before items (%) 13% 13% 13% 13% 10% 12% 14% 12%
                       
Reconciliation of "Free cash flow" to Cash flow provided from operating activities                  
    Cash flow provided from operating activities ($) 141 104 245 63 120 104 124 411
  (-) Additions to property, plant and equipment ($) (45) (56) (101) (56) (62) (62) (62) (242)
  (=) Free cash flow ($) 96 48 144 7 58 42 62 169
                       
"Net debt-to-total capitalization" computation                  
    Bank indebtedness ($) 8 15   13 2 6 15  
  (+) Long-term debt due within one year ($) 15 7   8 7 6 4  
  (+) Long-term debt ($) 1,490 1,410   1,104 1,102 1,102 1,510  
  (=) Debt ($) 1,513 1,432   1,125 1,111 1,114 1,529  
  (-) Cash and cash equivalents ($) (130) (85)   (513) (432) (191) (655)  
  (=) Net debt ($) 1,383 1,347   612 679 923 874  
  (+) Shareholders' equity ($) 2,771 2,826   2,842 2,652 2,681 2,782  
  (=) Total capitalization ($) 4,154 4,173   3,454 3,331 3,604 3,656  
    Net debt ($) 1,383 1,347   612 679 923 874  
  ( / ) Total capitalization ($) 4,154 4,173   3,454 3,331 3,604 3,656  
  (=) Net debt-to-total capitalization (%) 33% 32%   18% 20% 26% 24%  


"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 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) ($) 69 69 - - 138 15 14 - - 29 (5) (4) - - (9) 79 79 - - 158
  (+) Closure and restructuring costs ($) - - - - - 1 - - - 1 - - - - - 1 - - - 1
  (+) Impact of purchase accounting ($) - - - - - 3 - - - 3 - - - - - 3 - - - 3
  (=) Operating income (loss) before items ($) 69 69 - - 138 19 14 - - 33 (5) (4) - - (9) 83 79 - - 162
                                               
Reconciliation of "Operating income (loss) before items" to "EBITDA before items"                                          
    Operating income (loss) before items ($) 69 69 - - 138 19 14 - - 33 (5) (4) - - (9) 83 79 - - 162
  (+) Depreciation and amortization ($) 83 79 - - 162 16 17 - - 33 - - - - - 99 96 - - 195
                                               
  (=) EBITDA before items ($) 152 148 - - 300 35 31 - - 66 (5) (4) - - (9) 182 175 - - 357
  (/) Sales ($) 1,168 1,160 - - 2,328 233 234 - - 467 - - - - - 1,401 1,394 - - 2,795
  (=) EBITDA margin before items (%) 13% 13% - - 13% 15% 13% - - 14% - - - - - 13% 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) On January 2, 2014, the Company acquired 100% of the shares of Laboratorios Indas, S.A.U. in Spain.

Domtar Corporation
Quarterly Reconciliation of Non-GAAP Financial Measures - By Segment 2013
(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 (1) Personal Care (2) Corporate Total
        Q1'13 Q2'13 Q3'13 Q4'13 YTD Q1'13 Q2'13 Q3'13 Q4'13 YTD Q1'13 Q2'13 Q3'13 Q4'13 YTD Q1'13 Q2'13 Q3'13 Q4'13 YTD
Reconciliation of Operating income (loss) to "Operating income (loss) before items"                                          
    Operating income (loss) ($) 38 16 42 75 171 13 10 11 9 43 (2) (56) (4) 9 (53) 49 (30) 49 93 161
  (+) Impairment and write-down of property, plant and equipment  ($) 10 5 - 5 20 - - - 2 2 - - - - - 10 5 - 7 22
  (-) Net (gain) loss on disposal of property, plant and equipment and business ($) (10) - 19 1 10 - - - - - - - - (6) (6) (10) - 19 (5) 4
  (+) Reversal of alternative fuel tax credits ($) 26 - - - 26 - - - - - - - - - - 26 - - - 26
  (+) Weston litigation settlement ($) - - - - - - - - - - - 49 - - 49 - 49 - - 49
  (+) Closure and restructuring costs ($) - 10 - - 10 - 2 - - 2 - 6 - - 6 - 18 - - 18
  (+) Impact of purchase accounting  ($) - - - - - - - 2 - 2 - - - - - - - 2 - 2
  (=) Operating income (loss) before items ($) 64 31 61 81 237 13 12 13 11 49 (2) (1) (4) 3 (4) 75 42 70 95 282
                                               
Reconciliation of "Operating income (loss) before items" to "EBITDA before items"                                          
    Operating income (loss) before items ($) 64 31 61 81 237 13 12 13 11 49 (2) (1) (4) 3 (4) 75 42 70 95 282
  (+) Depreciation and amortization ($) 89 87 84 85 345 6 6 9 10 31 - - - - - 95 93 93 95 376
                                               
  (=) EBITDA before items ($) 153 118 145 166 582 19 18 22 21 80 (2) (1) (4) 3 (4) 170 135 163 190 658
  (/) Sales ($) 1,238 1,208 1,204 1,193 4,843 111 108 175 172 566 - - - - - 1,349 1,316 1,379 1,365 5,409
  (=) EBITDA margin before items (%) 12% 10% 12% 14% 12% 17% 17% 13% 12% 14% - - - - - 13% 10% 12% 14% 12%
                                               

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

(1) On May 31, 2013, the Company acquired Xerox's paper print and media product's assets in the United States and Canada.
(2) On July 1, 2013, the Company acquired 100% of the shares of Associated Hygiene Products LLC.

Domtar Corporation                  
Supplemental Segmented Information                  
(In millions of dollars, unless otherwise noted)                  
                       
        2014 2013
        Q1 Q2 YTD Q1 Q2 Q3 Q4 YTD
Pulp and Paper Segment                  
  Sales ($) 1,168 1,160 2,328 1,238 1,208 1,204 1,193 4,843
  Operating income  ($) 69 69 138 38 16 42 75 171
  Depreciation and amortization ($) 83 79 162 89 87 84 85 345
  Impairment and write-down of property, plant and equipment ($) - - - 10 5 - 5 20
                       
  Papers                  
  Papers Production ('000 ST) 801 786 1,587 793 829 814 810 3,246
  Papers Shipments - Manufactured ('000 ST) 804 779 1,583 828 801 814 817 3,260
    Communication Papers ('000 ST) 678 647 1,325 706 676 694 701 2,777
    Specialty and Packaging ('000 ST) 126 132 258 122 125 120 116 483
  Paper Shipments - Sourced from 3rd parties ('000 ST) 50 42 92 83 85 73 41 282
  Paper Shipments - Total ('000 ST) 854 821 1,675 911 886 887 858 3,542
  Pulp                  
  Pulp Shipments(a) ('000 ADMT) 318 336 654 372 344 352 377 1,445
    Hardwood Kraft Pulp (%) 12% 11% 11% 17% 14% 14% 14% 15%
    Softwood Kraft Pulp (%) 58% 63% 61% 56% 57% 59% 57% 57%
    Fluff Pulp (%) 30% 26% 28% 27% 29% 27% 29% 28%
                       
                       
Personal Care Segment                  
  Sales ($) 233 234 467 111 108 175 172 566
  Operating income ($) 15 14 29 13 10 11 9 43
  Depreciation and amortization ($) 16 17 33 6 6 9 10 31
  Impairment and write-down of property, plant and equipment ($) - - - - - - 2 2
                       
                       
Average Exchange Rates $US / $CAN 1.103 1.091 1.097 1.009 1.023 1.039 1.050 1.030
      $CAN / $US 0.906 0.917 0.912 0.991 0.977 0.963 0.953 0.971
      €EUR / $US 1.370 1.371 1.371 1.320 1.306 1.325 1.362 1.328

 

(a) 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
Manager
Investor Relations
Tel.: 514-848-5555 x 85979

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

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