Domtar CORP - FORM 8-K - EX-99.1

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8-K - FORM 8-K - Domtar CORP	d854617d8k.htm

Exhibit 99.1


		395 de Maisonneuve Blvd. West Montreal, QC H3A 1L6

TICKER SYMBOL

INVESTOR RELATIONS

MEDIA RELATIONS

(NYSE: UFS) (TSX: UFS)

Nicholas Estrela

Director

Investor Relations

Tel.: 514-848-5555 x 85979

David Struhs

Vice-President

Corporate Communications and Sustainability

Tel.: 803-802-8031

DOMTAR CORPORATION REPORTS PRELIMINARY FOURTH QUARTER AND FISCAL YEAR 2014 FINANCIAL RESULTS

Strong fourth quarter results despite competitive paper market environment

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

•

Fourth quarter 2014 net earnings of $1.10 per share; earnings before items¹ of $1.41 per share

•

Announced capital project to convert a paper machine to a fluff pulp line at Ashdown mill

•

Record sales in European Personal Care business

Montreal, February 6, 2015 – Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $71 million ($1.10 per share) for the fourth quarter of 2014 compared to net earnings of $281 million ($4.33 per share) for the third quarter of 2014 and net earnings of $65 million ($1.00 per share) for the fourth quarter of 2013. Sales for the fourth quarter of 2014 were $1.4 billion.

Excluding items listed below, the Company had earnings before items¹ of $91 million ($1.41 per share) for the fourth quarter of 2014 compared to earnings before items¹ of $61 million ($0.94 per share) for the third quarter of 2014 and earnings before items¹ of $68 million ($1.05 per share) for the fourth quarter of 2013.

Fourth quarter 2014 items:

•

Closure and restructuring costs for $25 million ($18 million after tax); and

•

Impairment of property, plant & equipment of $4 million ($2 million after tax).

Third quarter 2014 items:

•

Deferred tax benefit of $204 million for the settlement of IRS audit, primarily related to Alternative Fuel Tax Credits;

•

Recognition of $18 million of Alternative Fuel Tax Credits ($18 million after tax); and

•

Closure and restructuring costs of $2 million ($2 million after tax).

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

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Fourth quarter 2013 items:

•

Net gain on sale of property, plant and equipment and business for $5 million ($4 million after tax); and

•

Charge of $7 million ($7 million after tax) for impairment of property, plant and equipment.

FISCAL YEAR 2014 HIGHLIGHTS

For fiscal year 2014, net earnings amounted to $431 million ($6.64 per share) compared to net earnings of $91 million ($1.36 per share) for fiscal year 2013. The Company had earnings before items¹ of $234 million ($3.61 per share) for fiscal 2014 compared to earnings before items¹ of $158 million ($2.37 per share) for fiscal 2013. Sales amounted to $5.6 billion for fiscal year 2014.

Commenting on the full-year results, John D. Williams, President and Chief Executive Officer said, “Looking back at 2014, we delivered a year of strong results with solid free cash flow generation. Overall, we had good operating performance despite lack-of-order downtime in paper and we continued to adjust to rapidly changing market conditions. We also turned an important corner on our journey to build a growing, fiber-based business through acquisitions, strategic investments in manufacturing capacity and the additional repurposing of existing assets. We ended the year with strengthened earnings potential for the long-term.”

QUARTERLY REVIEW

Operating income before items¹ was $115 million in the fourth quarter of 2014 compared to an operating income before items¹ of $104 million in the third quarter of 2014. Depreciation and amortization totaled $93 million in the fourth quarter of 2014.

Commenting on the fourth quarter results, Mr. Williams said, “In the fourth quarter, our results were strong despite a competitive paper market environment while pulp benefitted from good operating performance. During the quarter, we announced a fluff pulp conversion project that will further expand our presence in a growing business and help balance our paper supply with our customers’ demand.”

Mr. Williams added, “In Personal Care, our European business continued to perform well, posting a record sales performance but we did face some challenges in the U.S. market in addition to an extended ramp-up period. Momentum in the business is growing and we now have a state-of-the-art, low-cost, global manufacturing platform designed to provide our customers with differentiated product solutions to help them win in their markets.”


(In millions of dollars)	4Q 2014			3Q 2014

Sales	$	1,379		$	1,405

Operating income (loss)

Pulp and Paper segment		76			109

Personal Care segment		12			13

Corporate		(2	)		(2	)


Total		86			120

Operating income before items¹		115			104

Depreciation and amortization		93			96

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

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The increase in operating income before items¹ in the fourth quarter of 2014 was the result of lower costs for planned maintenance, higher other operating income, better productivity in pulp and paper, a favorable exchange rate and higher shipments in personal care. These factors were partially offset by lower average selling prices for paper and pulp, higher selling, general and administrative costs and higher raw material costs.

When compared to the third quarter of 2014, manufactured paper shipments were up 1.2% and pulp shipments increased 0.8%. The shipments-to-production ratio for paper was 101% in the fourth quarter of 2014, compared to 102% in the third quarter of 2014. Paper inventories decreased by 1,000 tons while pulp inventories increased by 21,000 metric tons at the end of December when compared to September levels.

LIQUIDITY AND CAPITAL

Cash flow provided from operating activities amounted to $186 million and capital expenditures were $79 million, resulting in free cash flow¹ of $107 million for the fourth quarter of 2014. Domtar’s net debt-to-total capitalization ratio¹ stood at 29% at December 31, 2014 compared to 30% at September 30, 2014.

In 2014, cash flow provided from operating activities amounted to $634 million and capital expenditures were $236 million, resulting in free cash flow¹ of $398 million.

OUTLOOK

We expect North American demand for uncoated freesheet to decline in 2015 with long-term secular trends. We anticipate some short-term volatility in pulp markets due to the recent strengthening of the U.S. dollar. Our new manufacturing platform is expected to generate revenue and earnings growth in our Personal Care business. A weak Canadian dollar is expected to benefit our pulp and paper mills in Canada while a weak Euro will negatively impact the translation of our Personal Care Euro results. We anticipate that oil-based input costs will be down year-over-year.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 10:00 a.m. (ET) to discuss its fourth quarter and fiscal 2014 financial results. Financial analysts are invited to participate in the call by dialing

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

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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 first quarter 2015 earnings results on April 30, 2015 before markets open, followed by a conference call at 10:00 a.m. (ET) to discuss results. The date is tentative and will be confirmed approximately three weeks prior to the official earnings release date.

About Domtar

Domtar Corporation (NYSE: UFS) (TSX: UFS) designs, manufactures, markets and distributes a wide variety of fiber-based products including communication papers, specialty and packaging papers and absorbent hygiene products. The foundation of 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 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 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.

- (30) -

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Domtar Corporation

Highlights

(In millions of dollars, unless otherwise noted)


	Three months ended December 31			Three months ended December 31			Twelve months ended December 31			Twelve months ended December 31
	2014			2013			2014			2013
	(Unaudited)
	$			$			$			$
Selected Segment Information

Sales
Pulp and Paper		1,160			1,193			4,674			4,843
Personal Care		230			172			928			566

Total for reportable segments		1,390			1,365			5,602			5,409
Intersegment sales - Pulp and Paper		(11	)		(6	)		(39	)		(18	)

Consolidated sales		1,379			1,359			5,563			5,391


Depreciation and amortization and impairment and write-down of property, plant and equipment
Pulp and Paper		78			85			319			345
Personal Care		15			10			65			31

Total for reportable segments		93			95			384			376
Impairment and write-down of property, plant and equipment - Pulp and Paper		4			5			4			20
Impairment and write-down of property, plant and equipment - Personal Care		—			2			—			2

Consolidated depreciation and amortization and impairment and write-down of property, plant and equipment		97			102			388			398


Operating income (loss)
Pulp and Paper		76			75			323			171
Personal Care		12			9			54			43
Corporate		(2	)		9			(13	)		(53	)

Consolidated operating income		86			93			364			161
Interest expense, net		27			22			103			89

Earnings before income taxes and equity loss		59			71			261			72
Income tax (benefit) expense		(12	)		6			(170	)		(20	)
Equity loss, net of taxes		—			—			—			1

Net earnings		71			65			431			91


Per common share (in dollars)
Net earnings
Basic		1.10			1.00			6.65			1.37
Diluted		1.10			1.00			6.64			1.36
Weighted average number of common and exchangeable shares outstanding (millions)
Basic		64.3			64.9			64.8			66.6
Diluted		64.4			65.0			64.9			66.7

Cash flows provided from operating activities		186			124			634			411
Additions to property, plant and equipment		79			62			236			242

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Domtar Corporation

Consolidated Statements of Earnings

(In millions of dollars, unless otherwise noted)


	Three months ended December 31			Three months ended December 31			Twelve months ended December 31			Twelve months ended December 31
	2014			2013			2014			2013
	(Unaudited)
	$			$			$			$
Sales		1,379			1,359			5,563			5,391
Operating expenses
Cost of sales, excluding depreciation and amortization		1,080			1,081			4,396			4,361
Depreciation and amortization		93			95			384			376
Selling, general and administrative		103			100			416			381
Impairment and write-down of property, plant and equipment		4			7			4			22
Closure and restructuring costs		25			—			28			18
Other operating (income) loss, net		(12	)		(17	)		(29	)		72

		1,293			1,266			5,199			5,230


Operating income		86			93			364			161

Interest expense, net		27			22			103			89


Earnings before income taxes and equity loss		59			71			261			72

Income tax (benefit) expense		(12	)		6			(170	)		(20	)

Equity loss, net of taxes		—			—			—			1


Net earnings		71			65			431			91


Per common share (in dollars)
Net earnings
Basic		1.10			1.00			6.65			1.37
Diluted		1.10			1.00			6.64			1.36
Weighted average number of common and exchangeable shares outstanding (millions)
Basic		64.3			64.9			64.8			66.6
Diluted		64.4			65.0			64.9			66.7

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Domtar Corporation

Consolidated Balance Sheets at

(In millions of dollars)


	December 31			December 31
	2014			2013
	(Unaudited)
	$			$
Assets
Current assets
Cash and cash equivalents		174			655
Receivables, less allowances of $6 and $4		628			601
Inventories		714			685
Prepaid expenses		25			23
Income and other taxes receivable		54			61
Deferred income taxes		75			52

Total current assets		1,670			2,077
Property, plant and equipment, at cost		8,909			8,883
Accumulated depreciation		(5,778	)		(5,594	)

Net property, plant and equipment		3,131			3,289
Goodwill		567			369
Intangible assets, net of amortization		661			407
Other assets		156			136

Total assets		6,185			6,278


Liabilities and shareholders’ equity
Current liabilities
Bank indebtedness		10			15
Trade and other payables		721			673
Income and other taxes payable		26			17
Long-term debt due within one year		169			4

Total current liabilities		926			709
Long-term debt		1,181			1,510
Deferred income taxes and other		810			923
Other liabilities and deferred credits		378			354

Shareholders’ equity
Common stock		1			—
Exchangeable shares		—			44
Additional paid-in capital		2,012			1,999
Retained earnings		1,145			804
Accumulated other comprehensive loss		(268	)		(65	)

Total shareholders’ equity		2,890			2,782

Total liabilities and shareholders’ equity		6,185			6,278

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Domtar Corporation

Consolidated Statements of Cash Flows

(In millions of dollars)


	Twelve months ended December 31			Twelve months ended December 31
	2014			2013
	(Unaudited)
	$			$
Operating activities
Net earnings		431			91
Adjustments to reconcile net earnings to cash flows from operating activities
Depreciation and amortization		384			376
Deferred income taxes and tax uncertainties		(201	)		(8	)
Impairment and write-down of property, plant and equipment		4			22
Net losses on disposals of property, plant and equipment and sale of business		—			4
Stock-based compensation expense		4			5
Equity loss, net		—			1
Other		3			(2	)
Changes in assets and liabilities, excluding the effects of acquisition and sale of businesses
Receivables		39			(70	)
Inventories		(29	)		(8	)
Prepaid expenses		1			1
Trade and other payables		(33	)		(11	)
Income and other taxes		12			(26	)
Difference between employer pension and other post-retirement contributions and pension and other post-retirement expense		16			31
Other assets and other liabilities		3			5

Cash flows provided from operating activities		634			411


Investing activities
Additions to property, plant and equipment		(236	)		(242	)
Proceeds from disposals of property, plant and equipment and sale of business		1			61
Acquisition of businesses, net of cash acquired		(546	)		(287	)
Other		(5	)		(1	)

Cash flows used for investing activities		(786	)		(469	)

Financing activities
Dividend payments		(84	)		(67	)
Net change in bank indebtedness		(6	)		(3	)
Change in revolving bank credit facility		(160	)		160
Proceeds from receivables securitization facilities		90			—
Payments on receivables securitization facilities		(129	)		—
Issuance of long-term debt		—			249
Repayment of long-term debt		(4	)		(102	)
Stock repurchase		(38	)		(183	)
Other		5			—

Cash flows (used for) provided from financing activities		(326	)		54


Net decrease in cash and cash equivalents		(478	)		(4	)
Impact of foreign exchange on cash		(3	)		(2	)
Cash and cash equivalents at beginning of year		655			661

Cash and cash equivalents at end of year		174			655


Supplemental cash flow information
Net cash payments for:
Interest (including $2 million of redemption premiums in 2013)		92			81
Income taxes paid, net		18			5

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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			Q3			Q4			YTD			Q1			Q2			Q3			Q4			YTD
Reconciliation of “Earnings before items” to Net earnings (loss)
	Net earnings (loss)	($)		39			40			281			71			431			45			(46	)		27			65			91
(+)	Impairment and write-down of property, plant and equipment	($)		—			—			—			2			2			7			3			—			7			17
(+)	Closure and restructuring costs	($)		1			—			2			18			21			—			13			—			—			13
(-)	Net (gains) losses on disposals of property, plant and equipment and business	($)		—			—			—			—			—			(6	)		—			12			(4	)		2
(+)	Impact of purchase accounting	($)		2			—			—			—			2			—			—			2			—			2
(+)	Alternative fuel tax credits	($)		—			—			(18	)		—			(18	)		18			—			—			—			18
(-)	Cellulosic biofuel producer credits	($)		—			—			—			—			—			(33	)		—			—			—			(33	)
(+)	Loss on repurchase of long-term debt	($)		—			—			—			—			—			2			—			—			—			2
(+)	Weston litigation settlement	($)		—			—			—			—			—			—			46			—			—			46
(-)	Internal Revenue Service audit settlement items	($)		—			—			(204	)		—			(204	)		—			—			—			—			—
(=)	Earnings before items	($)		42			40			61			91			234			33			16			41			68			158
(/)	Weighted avg. number of common and exchangeable shares outstanding (diluted)	(millions)		65.0			65.1			64.9			64.4			64.9			69.7			66.9			65.4			65.0			66.7
(=)	Earnings before items per diluted share	($)		0.65			0.61			0.94			1.41			3.61			0.47			0.24			0.63			1.05			2.37

Reconciliation of “EBITDA” and “EBITDA before items” to Net earnings (loss)
	Net earnings (loss)	($)		39			40			281			71			431			45			(46	)		27			65			91
(+)	Equity loss, net of taxes	($)		—			—			—			—			—			1			—			—			—			1
(+)	Income tax expense (benefit)	($)		15			13			(186	)		(12	)		(170	)		(22	)		(5	)		1			6			(20	)
(+)	Interest expense, net	($)		25			26			25			27			103			25			21			21			22			89
(=)	Operating income (loss)	($)		79			79			120			86			364			49			(30	)		49			93			161
(+)	Depreciation and amortization	($)		99			96			96			93			384			95			93			93			95			376
(+)	Impairment and write-down of property, plant and equipment	($)		—			—			—			4			4			10			5			—			7			22
(-)	Net (gains) losses on disposals of property, plant and equipment and business	($)		—			—			—			—			—			(10	)		—			19			(5	)		4
(=)	EBITDA	($)		178			175			216			183			752			144			68			161			190			563
(/)	Sales	($)		1,394			1,385			1,405			1,379			5,563			1,345			1,312			1,375			1,359			5,391
(=)	EBITDA margin	(%)		13	%		13	%		15	%		13	%		14	%		11	%		5	%		12	%		14	%		10	%
	EBITDA	($)		178			175			216			183			752			144			68			161			190			563
(+)	Alternative fuel tax credits	($)		—			—			(18	)		—			(18	)		26			—			—			—			26
(+)	Closure and restructuring costs	($)		1			—			2			25			28			—			18			—			—			18
(+)	Impact of purchase accounting	($)		3			—			—			—			3			—			—			2			—			2
(+)	Weston litigation settlement	($)		—			—			—			—			—			—			49			—			—			49
(=)	EBITDA before items	($)		182			175			200			208			765			170			135			163			190			658
(/)	Sales	($)		1,394			1,385			1,405			1,379			5,563			1,345			1,312			1,375			1,359			5,391
(=)	EBITDA margin before items	(%)		13	%		13	%		14	%		15	%		14	%		13	%		10	%		12	%		14	%		12	%

Reconciliation of “Free cash flow” to Cash flow provided from operating activities
	Cash flow provided from operating activities	($)		141			104			203			186			634			63			120			104			124			411
(-)	Additions to property, plant and equipment	($)		(45	)		(56	)		(56	)		(79	)		(236	)		(56	)		(62	)		(62	)		(62	)		(242	)
(=)	Free cash flow	($)		96			48			147			107			398			7			58			42			62			169

“Net debt-to-total capitalization” computation
	Bank indebtedness	($)		8			15			3			10						13			2			6			15
(+)	Long-term debt due within one year	($)		15			7			170			169						8			7			6			4
(+)	Long-term debt	($)		1,490			1,410			1,202			1,181						1,104			1,102			1,102			1,510
(=)	Debt	($)		1,513			1,432			1,375			1,360						1,125			1,111			1,114			1,529
(-)	Cash and cash equivalents	($)		(130	)		(85	)		(134	)		(174	)					(513	)		(432	)		(191	)		(655	)
(=)	Net debt	($)		1,383			1,347			1,241			1,186						612			679			923			874
(+)	Shareholders' equity	($)		2,771			2,826			2,938			2,890						2,842			2,652			2,681			2,782
(=)	Total capitalization	($)		4,154			4,173			4,179			4,076						3,454			3,331			3,604			3,656
	Net debt	($)		1,383			1,347			1,241			1,186						612			679			923			874
(/)	Total capitalization	($)		4,154			4,173			4,179			4,076						3,454			3,331			3,604			3,656
(=)	Net debt-to-total capitalization	(%)		33	%		32	%		30	%		29	%					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.

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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)	($)		69			69			109			76			323			15			14			13			12			54			(5	)		(4	)		(2	)		(2	)		(13	)		79			79			120			86			364
(+)	Alternative fuel tax credits	($)		—			—			(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	($)		—			—			—			4			4			—			—			—			—			—			—			—			—			—			—			—			—			—			4			4
(=)	Operating income (loss) before items	($)		69			69			93			105			336			19			14			13			12			58			(5	)		(4	)		(2	)		(2	)		(13	)		83			79			104			115			381
Reconciliation of “Operating income (loss) before items” to “EBITDA before items”
	Operating income (loss) before items	($)		69			69			93			105			336			19			14			13			12			58			(5	)		(4	)		(2	)		(2	)		(13	)		83			79			104			115			381
(+)	Depreciation and amortization	($)		83			79			79			78			319			16			17			17			15			65			—			—			—			—			—			99			96			96			93			384
(=)	EBITDA before items	($)		152			148			172			183			655			35			31			30			27			123			(5	)		(4	)		(2	)		(2	)		(13	)		182			175			200			208			765
(/)	Sales	($)		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	(%)		13	%		13	%		15	%		16	%		14	%		15	%		13	%		13	%		12	%		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.

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Domtar Corporation

Quarterly Reconciliation of Non-GAAP Financial Measures – By Segment 2013

(In millions of dollars, unless otherwise noted)


			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	%

⁽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.

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Domtar Corporation

Supplemental Segmented Information

(In millions of dollars, unless otherwise noted)


		2014															2013
		Q1			Q2			Q3			Q4			YTD			Q1			Q2			Q3			Q4			YTD
Pulp and Paper Segment
Sales	($)		1,168			1,160			1,186			1,160			4,674			1,238			1,208			1,204			1,193			4,843
Operating income	($)		69			69			109			76			323			38			16			42			75			171
Depreciation and amortization	($)		83			79			79			78			319			89			87			84			85			345
Impairment and write-down of property, plant and equipment	($)		—			—			—			4			4			10			5			—			5			20

Paper
Paper Production	(‘000 ST)		801			786			758			777			3,122			793			829			813			810			3,245
Paper Shipments - Manufactured	(‘000 ST)		804			779			776			786			3,145			828			801			814			817			3,260
Communication Papers	(‘000 ST)		678			647			649			661			2,635			706			676			694			701			2,777
Specialty and Packaging	(‘000 ST)		126			132			127			125			510			122			125			120			116			483
Paper Shipments - Sourced from 3rd parties	(‘000 ST)		50			42			47			34			173			83			85			73			41			282
Paper Shipments - Total	(‘000 ST)		854			821			823			820			3,318			911			886			887			858			3,542

Pulp
Pulp Shipments^(a)	(‘000 ADMT)		318			336			367			370			1,391			372			344			352			377			1,445
Hardwood Kraft Pulp	(%)		12	%		11	%		12	%		11	%		12	%		17	%		14	%		14	%		14	%		15	%
Softwood Kraft Pulp	(%)		58	%		63	%		63	%		60	%		61	%		56	%		57	%		59	%		57	%		57	%
Fluff Pulp	(%)		30	%		26	%		25	%		29	%		27	%		27	%		29	%		27	%		29	%		28	%

Personal Care Segment
Sales	($)		233			234			231			230			928			111			108			175			172			566
Operating income	($)		15			14			13			12			54			13			10			11			9			43
Depreciation and amortization	($)		16			17			17			15			65			6			6			9			10			31
Impairment and write-down of property, plant and equipment	($)		—			—			—			—			—			—			—			—			2			2

Average Exchange Rates	$US/$CAN		1.103			1.091			1.089			1.136			1.105			1.009			1.023			1.039			1.050			1.030
	$CAN/$US		0.906			0.917			0.918			0.881			0.906			0.991			0.977			0.963			0.953			0.971
	€EUR/$US		1.370			1.371			1.324			1.249			1.329			1.320			1.306			1.325			1.362			1.329

(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.

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Domtar CORP - FORM 8-K - EX-99.1 - February 6, 2015

Attached files

Domtar CORP Reports