Domtar's preliminary Q1 results show net income of US$39M is down from US$45M a year ago, but sales up 3.6% year-over-year, to US$1.39B; Q1 items include, after tax, US$1M in closure and restructuring costs, US$2M negative impact of purchase accounting

MONTREAL , April 24, 2014 (press release) –

First quarter financial performance impacted by adverse weather conditions
(All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted.)

  • First quarter 2014 net earnings of $1.20 per share, earnings before items1 of $1.29 per share
  • Implemented price increases for pulp and a wide range of paper products
  • Weather-related issues led to additional costs of $22 million

 

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

MONTREAL, AprilDomtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $39 million ($1.20 per share) for the first quarter of 2014 compared to net earnings of $65 million ($2.00 per share) for the fourth quarter of 2013 and net earnings of $45 million ($1.29 per share) for the first quarter of 2013. Sales for the first quarter of 2014 were $1,394 million.

Excluding items listed below, the Company had earnings before items1 of $42 million ($1.29 per share) for the first quarter of 2014 compared to earnings before items1 of $68 million ($2.09 per share) for the fourth quarter of 2013 and earnings before items1 of $33 million ($0.95 per share) for the first quarter of 2013.

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).

Fourth quarter 2013 items:

  • Net gain on sale of property, plant and equipment and business of $5 million ($4 million after tax); and
  • Charge of $7 million ($7 million after tax) for impairment of property, plant and equipment.

First quarter 2013 items:

  • Conversion of $26 million ($18 million after tax) of alternative fuel tax credits into cellulosic biofuel producer income tax credits of $55 million ($33 million after tax) resulting in a net gain after tax of $15 million;
  • Charge of $10 million ($7 million after tax) related to the impairment and write-down of property, plant and equipment;
  • Gain on the sale of property, plant and equipment of $10 million ($6 million after tax); and
  • Premium paid and costs related to the debt repurchase of $3 million ($2 million after tax).

 

Commenting on the first quarter results, John D. Williams, President and Chief Executive Officer, said, "Severe winter weather across much of the eastern part of North America negatively impacted some of our pulp and paper operations. In particular, our mills experienced greater than normal energy and fiber costs and reduced productivity. Nonetheless, we benefited from higher pulp and paper prices with the successful implementation of price increases."

Mr. Williams added, "The integration of Indas is progressing well and the business performed in line with our expectations in the first quarter. I am pleased with the progress made so far in our Personal Care division, despite some erosion of sales in our baby diaper business. We are well underway with our adult incontinence organic growth plan and our teams are moving fast in the deployment of new machinery to begin manufacturing product-for-sale by the end of the fourth quarter. We are bringing new production online to provide the capacity and the product mix required to better serve our targeted customers."

QUARTERLY REVIEW

Operating income before items1 was $83 million in the first quarter of 2014 compared to an operating income before items1 of $95 million in the fourth quarter of 2013. Depreciation and amortization totaled $99 million in the first quarter of 2014.

 

(In millions of dollars)

 

1Q 2014

 

4Q 2013

Sales

 

$1,394

 

$1,359

Operating income (loss)

 

 

 

 

 

Pulp and Paper segment

 

69

 

75

 

Personal Care segment

 

15

 

9

 

Corporate

 

(5)

 

9

 

Total

 

79

 

93

Operating income before items1

 

83

 

95

Depreciation and amortization

 

99

 

95

 

The decrease in operating income before items1 in the first quarter of 2014 was the result of higher fiber, energy and other costs, lower volumes for pulp and paper and higher selling, general and administrative expenses. These factors were partially offset by higher average selling prices for paper and pulp, the addition of Indas and a favorable exchange rate.

When compared to the fourth quarter of 2013, manufactured paper shipments decreased 1.6% and pulp shipments decreased 15.6%. The shipments-to-production ratio for paper was 100% in the first quarter of 2014, compared to 100% in the fourth quarter of 2013. Paper inventories decreased by 4,000 tons while pulp inventories increased by 13,000 metric tons at the end of March compared to December levels.

LIQUIDITY AND CAPITAL

Cash flow provided from operating activities amounted to $141 million and capital expenditures were $45 million, resulting in free cash flow1 of $96 million for the first quarter of 2014. Following the completion of our acquisition of Indas on January 2, 2014, Domtar's net debt-to-total capitalization ratio1 stood at 33% at March 31, 2014 compared to 24% at December 31, 2013.

OUTLOOK

Price realizations in paper are expected to further improve from the first quarter as a result of recently announced price increases while our volumes are expected to remain relatively stable and input costs are expected to return to more normal levels for the remainder of the year. The second quarter is expected to be affected by seasonally higher maintenance activity. Personal Care will continue to benefit from the recent acquisition of Indas and the addition of the new production lines towards the end of the year.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 10:00 a.m. (ET) to discuss its first 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.

A replay will be available by dialing 1 (888) 203-1112 (North America) or 1 (647) 436-0148 (International) using access code 5674179 until May 8, 2014.

The Company will hold its 2014 Annual Meeting of Stockholders on Wednesday, April 30, 2014 at 9:00 a.m. (ET) at the Montreal Museum of Fine Arts, Claire and Marc Bourgie Pavilion, 1339 Sherbrooke Street West, Montreal, Quebec. The Company will release its second quarter 2014 earnings on July 24, 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 March 31

 

Three months

ended March 31

 

 

2014

 

2013

 

 

(Unaudited)

 

 

$

 

$

Selected Segment Information

 

 

 

 

 

 

 

 

 

Sales

 

 

 

 

 

 

Pulp and Paper

 

1,168

 

1,238

 

 

Personal Care

 

233

 

111

Total for reportable segments

 

1,401

 

1,349

 

 

Intersegment sales - Pulp and Paper

 

(7)

 

(4)

Consolidated sales

 

1,394

 

1,345

 

 

 

 

 

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

 

 

 

 

 

 

Pulp and Paper

 

83

 

89

 

 

Personal Care

 

16

 

6

Total for reportable segments

 

99

 

95

 

 

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

 

-

 

10

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

 

99

 

105

 

 

 

 

 

Operating income (loss)

 

 

 

 

 

 

Pulp and Paper

 

69

 

38

 

 

Personal Care

 

15

 

13

 

 

Corporate

 

(5)

 

(2)

Consolidated operating income

 

79

 

49

Interest expense, net

 

25

 

25

Earnings before income taxes and equity loss

 

54

 

24

Income tax expense (benefit)

 

15

 

(22)

Equity loss, net of taxes

 

-

 

1

Net earnings

 

39

 

45

 

 

 

 

 

Per common share (in dollars)

 

 

 

 

 

Net earnings

 

 

 

 

 

 

Basic

 

1.20

 

1.29

 

 

Diluted

 

1.20

 

1.29

Weighted average number of common and exchangeable shares outstanding (millions)

 

 

 

 

 

 

Basic

 

32.5

 

34.8

 

 

Diluted

 

32.6

 

34.9

 

 

 

 

 

Cash flows provided from operating activities

 

141

 

63

Additions to property, plant and equipment

 

45

 

56

 

Domtar Corporation
Consolidated Statements of Earnings
(In millions of dollars, unless otherwise noted)

 

 

 

 

 

Three months

ended March 31

 

Three months

ended March 31

 

2014

 

2013

 

(Unaudited)

 

$

 

$

 

 

 

 

Sales

1,394

 

1,345

Operating expenses

 

 

 

 

 

Cost of sales, excluding depreciation and amortization

1,103

 

1,082

 

 

Depreciation and amortization

99

 

95

 

 

Selling, general and administrative

114

 

91

 

 

Impairment and write-down of property, plant and equipment

-

 

10

 

 

Closure and restructuring costs

1

 

-

 

 

Other operating (income) loss, net

(2)

 

18

 

1,315

 

1,296

Operating income

79

 

49

Interest expense, net

25

 

25

Earnings before income taxes and equity loss

54

 

24

Income tax expense (benefit)

15

 

(22)

Equity loss, net of taxes

-

 

1

Net earnings

39

 

45

 

 

 

 

Per common share (in dollars)

 

 

 

 

Net earnings

 

 

 

 

 

Basic

1.20

 

1.29

 

 

Diluted

1.20

 

1.29

Weighted average number of common and exchangeable shares outstanding (millions)

 

 

 

 

 

Basic

32.5

 

34.8

 

 

Diluted

32.6

 

34.9

 

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

 

 

 

 

 

March 31

 

December 31

 

2014

 

2013

 

(Unaudited)

 

$

 

$

Assets

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

130

 

655

 

 

Receivables, less allowances of $7 and $4

688

 

601

 

 

Inventories

720

 

685

 

 

Prepaid expenses

24

 

23

 

 

Income and other taxes receivable

52

 

61

 

 

Deferred income taxes

45

 

52

 

 

 

Total current assets

1,659

 

2,077

 

 

 

 

 

Property, plant and equipment, at cost

8,892

 

8,883

 

Accumulated depreciation

(5,616)

 

(5,594)

 

 

 

Net property, plant and equipment

3,276

 

3,289

Goodwill

655

 

369

Intangible assets, net of amortization

655

 

407

Other assets

131

 

136

 

 

 

Total assets

6,376

 

6,278

 

 

 

 

Liabilities and shareholders' equity

 

 

 

Current liabilities

 

 

 

 

 

Bank indebtedness

8

 

15

 

 

Trade and other payables

718

 

673

 

 

Income and other taxes payable

24

 

17

 

 

Long-term debt due within one year

15

 

4

 

 

 

Total current liabilities

765

 

709

 

 

 

 

Long-term debt

1,490

 

1,510

Deferred income taxes and other

991

 

923

Other liabilities and deferred credits

359

 

354

 

 

 

 

Shareholders' equity

 

 

 

 

 

Exchangeable shares

32

 

44

 

 

Additional paid-in capital

2,014

 

1,999

 

 

Retained earnings

825

 

804

 

 

Accumulated other comprehensive loss

(100)

 

(65)

 

 

 

Total shareholders' equity

2,771

 

2,782

 

 

 

 

Total liabilities and shareholders' equity

6,376

 

6,278

 

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

 

 

 

 

 

Three months

ended March 31

 

Three months

ended March 31

 

2014

 

2013

 

(Unaudited)

 

$

 

$

 

 

 

 

Operating activities

 

 

 

Net earnings

39

 

45

Adjustments to reconcile net earnings to cash flows provided from operating activities

 

 

 

 

Depreciation and amortization

99

 

95

 

Deferred income taxes and tax uncertainties

-

 

1

 

Impairment and write-down of property, plant and equipment

-

 

10

 

Net gains on disposals of property, plant and equipment

-

 

(10)

 

Stock-based compensation expense

1

 

1

 

Equity loss, net

-

 

1

 

Other

3

 

(1)

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

 

 

 

 

Receivables

9

 

(53)

 

Inventories

(14)

 

(1)

 

Prepaid expenses

3

 

(2)

 

Trade and other payables

(23)

 

(8)

 

Income and other taxes 

20

 

(18)

 

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

(2)

 

5

 

Other assets and other liabilities

6

 

(2)

 

Cash flows provided from operating activities

141

 

63

 

 

 

 

Investing activities

 

 

 

Additions to property, plant and equipment

(45)

 

(56)

Proceeds from disposals of property, plant and equipment

-

 

9

Acquisition of business, net of cash acquired

(546)

 

-

Investment in joint venture

-

 

(1)

 

Cash flows used for investing activities

(591)

 

(48)

 

 

 

 

Financing activities

 

 

 

Dividend payments

(18)

 

(16)

Net change in bank indebtedness

(8)

 

(5)

Change in revolving bank credit facility and other borrowings

(48)

 

-

Repayment of long-term debt

-

 

(95)

Stock repurchase

-

 

(47)

Other

1

 

1

 

Cash flows used for financing activities

(73)

 

(162)

 

 

 

 

Net decrease in cash and cash equivalents

(523)

 

(147)

Impact of foreign exchange on cash

(2)

 

(1)

Cash and cash equivalents at beginning of period

655

 

661

Cash and cash equivalents at end of period

130

 

513

 

 

 

 

Supplemental cash flow information

 

 

 

 

Net cash payments for:

 

 

 

 

 

Interest (including $2 million of tender offer premiums in 2013)

22

 

12

 

 

Income taxes (refund) paid

(1)

 

1

 

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

Q1

Q2

Q3

Q4

YTD

Reconciliation of "Earnings before items" to Net earnings (loss)

 

 

 

 

 

 

 

 

 

Net earnings (loss)

($)

39

45

(46)

27

65

91

 

(+)

Impairment and write-down of property, plant and equipment

($)

-

7

3

-

7

17

 

(+)

Closure and restructuring costs

($)

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

 

(+)

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

33

16

41

68

158

 

(/)

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

(millions)

32.6

34.9

33.4

32.8

32.5

33.4

 

(=)

Earnings before items per diluted share

($)

1.29

0.95

0.48

1.25

2.09

4.73

 

 

 

 

 

 

 

 

 

 

Reconciliation of "EBITDA" and "EBITDA before items" to Net earnings (loss)

 

 

 

 

 

 

 

 

 

Net earnings (loss)

($)

39

45

(46)

27

65

91

 

(+)

Equity loss, net of taxes

($)

-

1

-

-

-

1

 

(+)

Income tax expense (benefit)

($)

15

(22)

(5)

1

6

(20)

 

(+)

Interest expense, net

($)

25

25

21

21

22

89

 

(=)

Operating income (loss)

($)

79

49

(30)

49

93

161

 

(+)

Depreciation and amortization

($)

99

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

144

68

161

190

563

 

(/)

Sales

($)

1,394

1,345

1,312

1,375

1,359

5,391

 

(=)

EBITDA margin

(%)

13%

11%

5%

12%

14%

10%

 

 

EBITDA

($)

178

144

68

161

190

563

 

(+)

Reversal of alternative fuel tax credits

($)

-

26

-

-

-

26

 

(+)

Closure and restructuring costs

($)

1

-

18

-

-

18

 

(+)

Impact of purchase accounting

($)

3

-

2

-

2

 

(+)

Weston litigation settlement

($)

-

-

49

-

-

49

 

(=)

EBITDA before items

($)

182

170

135

163

190

658

 

(/)

Sales

($)

1,394

1,345

1,312

1,375

1,359

5,391

 

(=)

EBITDA margin before items

(%)

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

63

120

104

124

411

 

(-)

Additions to property, plant and equipment

($)

(45)

(56)

(62)

(62)

(62)

(242)

 

(=)

Free cash flow

($)

96

7

58

42

62

169

 

 

 

 

 

 

 

 

 

 

"Net debt-to-total capitalization" computation

 

 

 

 

 

 

 

 

 

Bank indebtedness

($)

8

13

2

6

15

 

 

(+)

Long-term debt due within one year

($)

15

8

7

6

4

 

 

(+)

Long-term debt

($)

1,490

1,104

1,102

1,102

1,510

 

 

(=)

Debt

($)

1,513

1,125

1,111

1,114

1,529

 

 

(-)

Cash and cash equivalents

($)

(130)

(513)

(432)

(191)

(655)

 

 

(=)

Net debt

($)

1,383

612

679

923

874

 

 

(+)

Shareholders' equity

($)

2,771

2,842

2,652

2,681

2,782

 

 

(=)

Total capitalization

($)

4,154

3,454

3,331

3,604

3,656

 

 

 

Net debt

($)

1,383

612

679

923

874

 

 

( / )

Total capitalization

($)

4,154

3,454

3,331

3,604

3,656

 

 

(=)

Net debt-to-total capitalization

(%)

33%

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

15

-

-

-

15

(5)

-

-

-

(5)

79

-

-

-

79

 

(+)

Closure and restructuring costs

($)

-

-

-

-

-

1

-

-

-

1

-

-

-

-

-

1

-

-

-

1

 

(+)

Impact of purchase accounting

($)

-

-

-

-

-

3

-

-

-

3

-

-

-

-

-

3

-

-

-

3

 

(=)

Operating income (loss) before items

($)

69

-

-

-

69

19

-

-

-

19

(5)

-

-

-

(5)

83

-

-

-

83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss) before items

($)

69

-

-

-

69

19

-

-

-

19

(5)

-

-

-

(5)

83

-

-

-

83

 

(+)

Depreciation and amortization

($)

83

-

-

-

83

16

-

-

-

16

-

-

-

-

-

99

-

-

-

99

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(=)

EBITDA before items

($)

152

-

-

-

152

35

-

-

-

35

(5)

-

-

-

(5)

182

-

-

-

182

 

(/)

Sales

($)

1,168

-

-

-

1,168

233

-

-

-

233

-

-

-

-

-

1,401

-

-

-

1,401

 

(=)

EBITDA margin before items

(%)

13%

-

-

-

13%

15%

-

-

-

15%

-

-

-

-

-

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

Q1

Q2

Q3

Q4

YTD

Pulp and Paper Segment

 

 

 

 

 

 

 

 

Sales

($)

1,168

1,238

1,208

1,204

1,193

4,843

 

Operating income

($)

69

38

16

42

75

171

 

Depreciation and amortization

($)

83

89

87

84

85

345

 

Impairment and write-down of property, plant and equipment

($)

-

10

5

-

5

20

 

 

 

 

 

 

 

 

 

Papers

 

 

 

 

 

 

 

 

Papers Production

('000 ST)

801

793

829

814

810

3,246

 

Papers Shipments - Manufactured

('000 ST)

804

828

801

814

817

3,260

 

 

Communication Papers

('000 ST)

678

706

676

694

701

2,777

 

 

Specialty and Packaging

('000 ST)

126

122

125

120

116

483

 

Paper Shipments - Sourced from 3rd parties

('000 ST)

50

83

85

73

41

282

 

Paper Shipments - Total

('000 ST)

854

911

886

887

858

3,542

 

Pulp

 

 

 

 

 

 

 

 

Pulp Shipments(a)

('000 ADMT)

318

372

344

352

377

1,445

 

 

Hardwood Kraft Pulp

(%)

12%

17%

14%

14%

14%

15%

 

 

Softwood Kraft Pulp

(%)

58%

56%

57%

59%

57%

57%

 

 

Fluff Pulp

(%)

30%

27%

29%

27%

29%

28%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personal Care Segment

 

 

 

 

 

 

 

 

Sales

($)

233

111

108

175

172

566

 

Operating income

($)

15

13

10

11

9

43

 

Depreciation and amortization

($)

16

6

6

9

10

31

 

Impairment and write-down of property, plant and equipment

($)

-

-

-

-

2

2

 

 

 

 

 

 

 

 

Average Exchange Rates

$US / $CAN

1.103

1.009

1.023

1.039

1.050

1.030

 

$CAN / $US

0.906

0.991

0.977

0.963

0.953

0.971

 

€EUR / $US

1.370

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

 

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