UFS
$21.01
Domtar
$.46
2.24%
Earnings Details
1st Quarter March 2020
Friday, May 08, 2020 6:55:00 AM
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Summary

Domtar (UFS) Recent Earnings

Domtar (UFS) reported 1st Quarter March 2020 earnings of $0.09 per share on revenue of $1.3 billion. The consensus estimate was a loss of $0.26 per share on revenue of $1.2 billion. Revenue fell 7.1% compared to the same quarter a year ago.

Domtar Corp designs, manufactures, markets, and distributes various fiber-based products. It offers communication papers, specialty and packaging papers, and adult incontinence products.

Results
Reported Earnings
$0.09
Earnings Whisper
-
Consensus Estimate
($0.26)
Reported Revenue
$1.28 Bil
Revenue Estimate
$1.24 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Domtar Corporation Reports Preliminary First Quarter 2020 Financial Results

Improved first quarter results; accelerating COVID-19 response plan
(All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted).

  • First quarter 2020 net earnings of $0.09 per share
  • Record quarter sales and EBITDA in Personal Care
  • Several measures taken in response to COVID-19
  • Suspension of quarterly dividends and share repurchase program

FORT MILL, S.C.--(BUSINESS WIRE)--Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported net earnings of $5 million ($0.09 per share) for the first quarter of 2020 compared to a net loss of $34 million ($0.59 per share) for the fourth quarter of 2019 and net earnings of $80 million ($1.27 per share) for the first quarter of 2019. Sales for the first quarter of 2020 were $1.3 billion.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20200508005201/en/

Excluding items listed below, the Company had earnings before items1 of $5 million ($0.09 per share) for the first quarter of 2020 compared to earnings before items1 of $2 million ($0.03 per share) for the fourth quarter of 2019 and earnings before items1 of $91 million ($1.44 per share) for the first quarter of 2019.

ITEMS

Description

Segment

Line item

Amount

After tax

effect

EPS impact

(per share)

 

 

 

(in millions)

 

First quarter 2020

 

 

 

 

 

 

 

 

 

 

 

? None

 

 

 

 

 

 

 

 

 

 

 

Fourth quarter 2019

 

 

 

 

 

 

 

 

 

 

 

? Pension settlement loss

Pulp and Paper

Non-service components of
net periodic benefit cost

$30

$22

$0.38

 

 

 

 

 

 

? Paper machine closures

Pulp and Paper

Closure and
restructuring costs

$17

$13

$0.22

 

 

 

 

 

 

? Margin improvement plan

Personal Care

Closure and
restructuring costs

$2

$1

$0.02

 

 

 

 

 

 

First quarter 2019

 

 

 

 

 

 

 

 

 

 

 

? Margin improvement plan

Personal Care

Impairment of long-lived
assets

$10

$8

$0.12

 

 

 

 

 

 

? Margin improvement plan

Personal Care

Closure and
restructuring costs

$4

$3

$0.05

 

 

 

 

 

 

QUARTERLY REVIEW

“As the global community reacts to COVID-19 and the large-scale effort to contain it continues, we remain focused on navigating the crisis, keeping our employees and their families safe, serving our customers as an essential business, and protecting our financial stability. We are taking steps to reduce spending to further strengthen our balance sheet, liquidity and cash flow while seeking to ensure we are well positioned when the economy starts moving again”, said John D. Williams, President and Chief Executive Officer.

“Despite our paper volumes increasing in Q1, we experienced a significant reduction of orders in April due to the COVID crisis and the resulting lockdown of schools, offices, retailers and other business sectors. As a result, we are taking the appropriate steps to optimize our operations and to remain an agile, reliable partner to our customers. We continue to closely monitor customer orders and backlogs, and will adjust capacity accordingly, but we anticipate inventory to be at appropriate levels as a result of our recently-announced capacity reduction plan,” said Mr. Williams. “Our pulp shipments were stable in Q1 despite some logistical challenges and a major shutdown of operations in China due to COVID-19. We did see good demand from our North American tissue customers, and we expect overall demand for pulp in the second quarter to remain strong, particularly in China as they continue to reopen their economy.”

Commenting on Personal Care, Mr. Williams added, “We had a record sales and EBITDA quarter. Our sales line in Q1 benefited from consumer pantry loading in preparation for in-home quarantine and the scale-up of new customer wins. We continue to increase operating rates, and we have established rapid response teams to maximize productivity to support an uptick in demand, inventory replenishment and portfolio simplification.”

Operating income was $19 million in the first quarter of 2020 compared to an operating loss of $15 million in the fourth quarter of 2019. Depreciation and amortization totaled $72 million in the first quarter of 2020.

Operating income before items1 was $19 million in the first quarter of 2020 compared to operating income before items1 of $4 million in the fourth quarter of 2019.

 

 

 

 

 

 

 

 

 

(In millions of dollars)

 

1Q 2020

 

 

4Q 2019

 

 

 

 

 

 

 

 

 

 

Sales

 

$

1,278

 

 

$

1,244

 

Operating income (loss)

 

 

 

 

 

 

 

 

Pulp and Paper segment

 

 

4

 

 

 

(11

)

Personal Care segment

 

 

20

 

 

 

8

 

Corporate

 

 

(5

)

 

 

(12

)

Total operating income (loss)

 

 

19

 

 

 

(15

)

Operating income before items1

 

 

19

 

 

 

4

 

Depreciation and amortization

 

 

72

 

 

 

74

 

The increase in operating income in the first quarter of 2020 was the result of favorable productivity, higher volume, lower selling, general and administrative expenses, lower raw material and freight costs and favorable exchange rates. These factors were partially offset by lower average selling prices in pulp and paper and higher maintenance, fixed and other costs.

When compared to the fourth quarter of 2019, manufactured paper shipments were up 4% and pulp shipments decreased 4%. The shipment-to-production ratio for paper was 105% in the first quarter of 2020, compared to 106% in the fourth quarter of 2019. Paper inventories decreased by 30,000 tons, and pulp inventories increased by 24,000 metric tons when compared to the fourth quarter of 2019.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow from operating activities amounted to $88 million and capital expenditures were $62 million, resulting in free cash flow1 of $26 million for the first quarter of 2020. Domtar’s net debt-to-total capitalization ratio1 stood at 30% at March 31, 2020 compared to 27% at December 31, 2019. At March 31, 2020, we had total liquidity of approximately $643 million ($152 million of cash on hand, $491 million in available credit facilities) with no near-term debt maturities. Subsequently to March 31, 2020, the Company closed a new $300 million, five year term loan, the proceeds of which will be used to further improve its liquidity position.

COVID-19 UPDATE

Government authorities across the globe have recognized the importance of the forest products sector based on the products we manufacture and their end uses. Accordingly, Domtar anticipates continuing to operate in all of its business segments, but the Company has taken and may take further temporary steps to reduce its current paper capacity to be in line with current and expected demand levels for the duration of the crisis.

Domtar has implemented COVID-19 response and business continuity plans to protect its employees and their families, to safeguard the continuity of Domtar’s operations, and to ensure full support to its customers and partners.

COST CONTROL MEASURES

Domtar is taking further actions to strengthen cash flow and improve liquidity. Cost control actions, capital deferment, closely managing working capital and a reduction of operating costs and selling, general and administrative expenses will generate cash savings, providing us flexibility to take advantage of opportunities as the market rebounds.

SUSPENSION OF CAPITAL RETURN PROGRAM

Due to the unprecedented market conditions and uncertainty caused by COVID-19, the Company has suspended the payment of its regular quarterly dividend and stock repurchase program in order to preserve cash and provide additional flexibility in the current environment. The Board of Directors will continue to evaluate the Company’s capital return program based upon customary considerations, including market conditions.

OUTLOOK

The high degree of uncertainty and volatility day-to-day and the longer term potential impacts of the economic lockdown remain unclear. In Paper, we expect significantly lower demand in the second quarter. We expect demand for softwood and fluff pulp to remain strong in the near-term driven by accelerated growth in tissue and towel, while containment measures across Europe and North America are expected to weigh on certain end-use markets. Personal Care will continue to benefit from higher usage and the impact from new customer wins, but we expect a portion of the demand increase from consumer stock-up may reverse later in the year. Raw material costs are expected to remain stable.

EARNINGS CONFERENCE CALL

The Company will hold a conference call today at 10:00 a.m. (ET) to discuss its first quarter 2020 financial results. Financial analysts are invited to participate in the call by dialing 1 (888) 394-8218 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 second quarter 2020 earnings results on July 30, 2020 before markets open, followed by a conference call at 10:00 a.m. (ET) to discuss results. The date is tentative and will be confirmed approximately three weeks prior to the official earnings release date.

About Domtar

Domtar is a leading provider of a wide variety of fiber-based products including communication, specialty and packaging papers, market pulp and absorbent hygiene products. With approximately 9,700 employees serving more than 50 countries around the world, Domtar is driven by a commitment to turn sustainable wood fiber into useful products that people rely on every day. Domtar’s annual sales are approximately $5.2 billion, and its common stock is traded on the New York and Toronto Stock Exchanges. Domtar’s principal executive office is in Fort Mill, South Carolina. To learn more, visit www.domtar.com.

Forward-Looking Statements

Statements in this release about our plans, expectations and future performance, including the statements by Mr. Williams and those contained under “Outlook,” are “forward-looking statements.” Actual results may differ materially from those suggested by these statements for a number of reasons, including the COVID-19 pandemic and the resulting decrease in paper sales and the challenges we face in maintaining manufacturing operations, 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 2019 as filed with the SEC and as updated by subsequently filed Form 10-Qs. Except to the extent required by law, we expressly disclaim any obligation to update or revise these forward-looking statements to reflect new events or circumstances or otherwise.

_________

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

 

Domtar Corporation

Highlights

(In millions of dollars, unless otherwise noted)

 

 

 

For the three months ended

 

 

March 31,

 

 

March 31,

 

 

 

2020

 

 

2019

 

 

 

(Unaudited)

 

 

$

 

 

$

 

Selected Segment Information

 

 

 

 

 

 

 

 

Sales

 

 

 

 

 

 

 

 

Pulp and Paper

 

 

1,031

 

 

 

1,157

 

Personal Care

 

 

266

 

 

 

239

 

Total for reportable segments

 

 

1,297

 

 

 

1,396

 

Intersegment sales

 

 

(19

)

 

 

(20

)

Consolidated sales

 

 

1,278

 

 

 

1,376

 

Depreciation and amortization

 

 

 

 

 

 

 

 

Pulp and Paper

 

 

58

 

 

 

58

 

Personal Care

 

 

14

 

 

 

15

 

Total for reportable segments

 

 

72

 

 

 

73

 

Impairment of long-lived assets - Personal Care

 

 

 

 

 

10

 

Consolidated depreciation and amortization and impairment of long-lived assets

 

 

72

 

 

 

83

 

Operating income (loss)

 

 

 

 

 

 

 

 

Pulp and Paper

 

 

4

 

 

 

144

 

Personal Care

 

 

20

 

 

 

(8

)

Corporate

 

 

(5

)

 

 

(21

)

Consolidated operating income

 

 

19

 

 

 

115

 

Interest expense, net

 

 

14

 

 

 

13

 

Non-service components of net periodic benefit cost

 

 

(4

)

 

 

(3

)

Earnings before income taxes and equity loss

 

 

9

 

 

 

105

 

Income tax expense

 

 

3

 

 

 

24

 

Equity loss, net of taxes

 

 

1

 

 

 

1

 

Net earnings

 

 

5

 

 

 

80

 

Per common share (in dollars)

 

 

 

 

 

 

 

 

Net earnings

 

 

 

 

 

 

 

 

Basic

 

 

0.09

 

 

 

1.27

 

Diluted

 

 

0.09

 

 

 

1.27

 

Weighted average number of common

shares outstanding (millions)

 

 

 

 

 

 

 

 

Basic

 

 

56.1

 

 

 

63.0

 

Diluted

 

 

56.2

 

 

 

63.2

 

Cash flows from operating activities

 

 

88

 

 

 

55

 

Additions to property, plant and equipment

 

 

62

 

 

 

46

 

As a result of changes in our organization structure, we have changed our segment reporting. Starting January 1, 2020, our materials business EAM Corporation, (“EAM”), a manufacturer of high quality airlaid and ultrathin laminated cores, previously reported under our Personal Care segment is now presented under our Pulp and Paper segment. Prior period segment results have been restated to the new segment presentation with no significant impact on segment results. There were no changes to our consolidated sales or operating income.

 

Domtar Corporation

Consolidated Statements of Earnings

(In millions of dollars, unless otherwise noted)

 

 

 

For the three months ended

 

 

March 31,

 

 

March 31,

 

 

 

2020

 

 

2019

 

 

 

(Unaudited)

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

Sales

 

 

1,278

 

 

 

1,376

 

Operating expenses

 

 

 

 

 

 

 

 

Cost of sales, excluding depreciation and amortization

 

 

1,083

 

 

 

1,052

 

Depreciation and amortization

 

 

72

 

 

 

73

 

Selling, general and administrative

 

 

102

 

 

 

123

 

Impairment of long-lived assets

 

 

 

 

 

10

 

Closure and restructuring costs

 

 

 

 

 

4

 

Other operating loss (income), net

 

 

2

 

 

 

(1

)

 

 

 

1,259

 

 

 

1,261

 

Operating income

 

 

19

 

 

 

115

 

Interest expense, net

 

 

14

 

 

 

13

 

Non-service components of net periodic benefit cost

 

 

(4

)

 

 

(3

)

Earnings before income taxes and equity loss

 

 

9

 

 

 

105

 

Income tax expense

 

 

3

 

 

 

24

 

Equity loss, net of taxes

 

 

1

 

 

 

1

 

Net earnings

 

 

5

 

 

 

80

 

Per common share (in dollars)

 

 

 

 

 

 

 

 

Net earnings

 

 

 

 

 

 

 

 

Basic

 

 

0.09

 

 

 

1.27

 

Diluted

 

 

0.09

 

 

 

1.27

 

Weighted average number of common

shares outstanding (millions)

 

 

 

 

 

 

 

 

Basic

 

 

56.1

 

 

 

63.0

 

Diluted

 

 

56.2

 

 

 

63.2

 

 

Domtar Corporation

Consolidated Balance Sheets at

(In millions of dollars)

 

 

 

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

(Unaudited)

 

 

$

 

 

$

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

152

 

 

 

61

 

Receivables, less allowances of $10 and $6

 

 

600

 

 

 

577

 

Inventories

 

 

740

 

 

 

786

 

Prepaid expenses

 

 

32

 

 

 

33

 

Income and other taxes receivable

 

 

27

 

 

 

61

 

Total current assets

 

 

1,551

 

 

 

1,518

 

Property, plant and equipment, net

 

 

2,493

 

 

 

2,567

 

Operating lease right-of-use assets

 

 

77

 

 

 

81

 

Intangible assets, net

 

 

561

 

 

 

573

 

Other assets

 

 

151

 

 

 

164

 

Total assets

 

 

4,833

 

 

 

4,903

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Bank indebtedness

 

 

 

 

 

9

 

Trade and other payables

 

 

700

 

 

 

705

 

Income and other taxes payable

 

 

26

 

 

 

23

 

Operating lease liabilities due within one year

 

 

27

 

 

 

28

 

Long-term debt due within one year

 

 

1

 

 

 

1

 

Total current liabilities

 

 

754

 

 

 

766

 

Long-term debt

 

 

1,102

 

 

 

938

 

Operating lease liabilities

 

 

65

 

 

 

69

 

Deferred income taxes and other

 

 

457

 

 

 

479

 

Other liabilities and deferred credits

 

 

274

 

 

 

275

 

Shareholders' equity

 

 

 

 

 

 

 

 

Common stock

 

 

1

 

 

 

1

 

Additional paid-in capital

 

 

1,710

 

 

 

1,770

 

Retained earnings

 

 

978

 

 

 

998

 

Accumulated other comprehensive loss

 

 

(508

)

 

 

(393

)

Total shareholders' equity

 

 

2,181

 

 

 

2,376

 

Total liabilities and shareholders' equity

 

 

4,833

 

 

 

4,903

 

 

Domtar Corporation

Consolidated Statements of Cash Flows

(In millions of dollars)

 

For the three months ended

 

March 31, 2020

 

 

March 31, 2019

 

 

(Unaudited)

 

$

 

 

$

 

Operating activities

 

 

 

 

 

 

 

Net earnings

 

5

 

 

 

80

 

Adjustments to reconcile net earnings to cash flows from operating activities

 

 

 

 

 

 

 

Depreciation and amortization

 

72

 

 

 

73

 

Deferred income taxes and tax uncertainties

 

1

 

 

 

(3

)

Impairment of long-lived assets

 

 

 

 

10

 

Stock-based compensation expense

 

1

 

 

 

2

 

Equity loss, net

 

1

 

 

 

1

 

Changes in assets and liabilities

 

 

 

 

 

 

 

Receivables

 

(28

)

 

 

(30

)

Inventories

 

28

 

 

 

(49

)

Prepaid expenses

 

(5

)

 

 

 

Trade and other payables

 

(16

)

 

 

(69

)

Income and other taxes

 

39

 

 

 

26

 

Difference between employer pension and

other post-retirement contributions and

pension and other post-retirement expense

 

(1

)

 

 

1

 

Other assets and other liabilities

 

(9

)

 

 

13

 

Cash flows from operating activities

 

88

 

 

 

55

 

Investing activities

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

(62

)

 

 

(46

)

Cash flows used for investing activities

 

(62

)

 

 

(46

)

Financing activities

 

 

 

 

 

 

 

Dividend payments

 

(26

)

 

 

(27

)

Stock repurchase

 

(59

)

 

 

 

Net change in bank indebtedness

 

(10

)

 

 

3

 

Change in revolving credit facility

 

140

 

 

 

 

Proceeds from receivables securitization facility

 

25

 

 

 

20

 

 

Repayments of receivables securitization facility

 

 

 

 

(20

)

Other

 

(3

)

 

 

(1

)

Cash flows provided from (used for) financing activities

 

67

 

 

 

(25

)

Net increase (decrease) in cash and cash equivalents

 

93

 

 

 

(16

)

Impact of foreign exchange on cash

 

(2

)

 

 

(1

)

Cash and cash equivalents at beginning of period

 

61

 

 

 

111

 

Cash and cash equivalents at end of period

 

152

 

 

 

94

 

Supplemental cash flow information

 

 

 

 

 

 

 

Net cash payments (refund) for:

 

 

 

 

 

 

 

Interest

 

17

 

 

 

16

 

Income taxes

 

(25

)

 

 

6

 

Domtar Corporation

Quarterly Reconciliation of Non-GAAP Financial Measures

(In millions of dollars, unless otherwise noted)

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

 

 

 

 

 

 

2020

 

 

2019

 

 

 

 

 

 

 

Q1

 

 

Q1

 

 

Q2

 

 

Q3

 

 

Q4

 

 

Year

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss)

 

($)

 

 

5

 

 

 

80

 

 

 

18

 

 

 

20

 

 

 

(34

)

 

 

84

 

 

(+)

Pension settlement loss

 

($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22

 

 

 

22

 

 

(+)

Impairment of long-lived assets

 

($)

 

 

 

 

 

8

 

 

 

12

 

 

 

26

 

 

 

 

 

 

46

 

 

(+)

Closure and restructuring costs

 

($)

 

 

 

 

 

3

 

 

 

6

 

 

 

9

 

 

 

14

 

 

 

32

 

 

(=)

Earnings before items

 

($)

 

 

5

 

 

 

91

 

 

 

36

 

 

 

55

 

 

 

2

 

 

 

184

 

 

(/)

Weighted avg. number of common shares outstanding (diluted)

 

(millions)

 

 

56.2

 

 

 

63.2

 

 

 

63.3

 

 

 

61.7

 

 

 

57.3

 

 

 

61.4

 

 

(=)

Earnings before items per diluted share

 

($)

 

 

0.09

 

 

 

1.44

 

 

 

0.57

 

 

 

0.89

 

 

 

0.03

 

 

 

3.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss)

 

($)

 

 

5

 

 

 

80

 

 

 

18

 

 

 

20

 

 

 

(34

)

 

 

84

 

 

(+)

Equity loss, net of taxes

 

($)

 

 

1

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

2

 

 

(+)

Income tax expense (benefit)

 

($)

 

 

3

 

 

 

24

 

 

 

5

 

 

 

(1

)

 

 

(26

)

 

 

2

 

 

(+)

Interest expense, net

 

($)

 

 

14

 

 

 

13

 

 

 

13

 

 

 

12

 

 

 

14

 

 

 

52

 

 

(+)

Depreciation and amortization

 

($)

 

 

72

 

 

 

73

 

 

 

74

 

 

 

72

 

 

 

74

 

 

 

293

 

 

(+)

Impairment of long-lived assets

 

($)

 

 

 

 

 

10

 

 

 

15

 

 

 

33

 

 

 

 

 

 

58

 

 

(=)

EBITDA

 

($)

 

 

95

 

 

 

201

 

 

 

125

 

 

 

136

 

 

 

29

 

 

 

491

 

 

(/)

Sales

 

($)

 

 

1,278

 

 

 

1,376

 

 

 

1,317

 

 

 

1,283

 

 

 

1,244

 

 

 

5,220

 

 

(=)

EBITDA margin

 

(%)

 

 

7

%

 

 

15

%

 

 

9

%

 

 

11

%

 

 

2

%

 

 

9

%

 

 

EBITDA

 

($)

 

 

95

 

 

 

201

 

 

 

125

 

 

 

136

 

 

 

29

 

 

 

491

 

 

(+)

Pension settlement loss

 

($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30

 

 

 

30

 

 

(+)

Closure and restructuring costs

 

($)

 

 

 

 

 

4

 

 

 

8

 

 

 

11

 

 

 

19

 

 

 

42

 

 

(=)

EBITDA before items

 

($)

 

 

95

 

 

 

205

 

 

 

133

 

 

 

147

 

 

 

78

 

 

 

563

 

 

(/)

Sales

 

($)

 

 

1,278

 

 

 

1,376

 

 

 

1,317

 

 

 

1,283

 

 

 

1,244

 

 

 

5,220

 

 

(=)

EBITDA margin before items

 

(%)

 

 

7

%

 

 

15

%

 

 

10

%

 

 

11

%

 

 

6

%

 

 

11

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of "Free cash flow" to Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

($)

 

 

88

 

 

 

55

 

 

 

119

 

 

 

108

 

 

 

160

 

 

 

442

 

 

(-)

Additions to property, plant and equipment

 

($)

 

 

(62

)

 

 

(46

)

 

 

(55

)

 

 

(56

)

 

 

(98

)

 

 

(255

)

 

(=)

Free cash flow

 

($)

 

 

26

 

 

 

9

 

 

 

64

 

 

 

52

 

 

 

62

 

 

 

187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

"Net debt-to-total capitalization" computation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank indebtedness

 

($)

 

 

 

 

 

3

 

 

 

3

 

 

 

1

 

 

 

9

 

 

 

 

 

 

(+)

Long-term debt due within one year

 

($)

 

 

1

 

 

 

1

 

 

 

1

 

 

 

1

 

 

 

1

 

 

 

 

 

 

(+)

Long-term debt

 

($)

 

 

1,102

 

 

 

853

 

 

 

824

 

 

 

938

 

 

 

938

 

 

 

 

 

 

(=)

Debt

 

($)

 

 

1,103

 

 

 

857

 

 

 

828

 

 

 

940

 

 

 

948

 

 

 

 

 

 

(-)

Cash and cash equivalents

 

($)

 

 

(152

)

 

 

(94

)

 

 

(93

)

 

 

(98

)

 

 

(61

)

 

 

 

 

 

(=)

Net debt

 

($)

 

 

951

 

 

 

763

 

 

 

735

 

 

 

842

 

 

 

887

 

 

 

 

 

 

(+)

Shareholders' equity

 

($)

 

 

2,181

 

 

 

2,608

 

 

 

2,619

 

 

 

2,439

 

 

 

2,376

 

 

 

 

 

 

(=)

Total capitalization

 

($)

 

 

3,132

 

 

 

3,371

 

 

 

3,354

 

 

 

3,281

 

 

 

3,263

 

 

 

 

 

 

 

Net debt

 

($)

 

 

951

 

 

 

763

 

 

 

735

 

 

 

842

 

 

 

887

 

 

 

 

 

 

(/)

Total capitalization

 

($)

 

 

3,132

 

 

 

3,371

 

 

 

3,354

 

 

 

3,281

 

 

 

3,263

 

 

 

 

 

 

(=)

Net debt-to-total capitalization

 

(%)

 

 

30

%

 

 

23

%

 

 

22

%

 

 

26

%

 

 

27

%

 

 

 

 

“Earnings before items”, “Earnings before items per diluted share”, “EBITDA”, “EBITDA margin”, “EBITDA before items”, “EBITDA margin before items”, “Free cash flow”, “Net debt” and “Net debt-to-total capitalization” have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation or as a substitute for Net earnings (loss) 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 2020

(In millions of dollars, unless otherwise noted)

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

 

 

 

 

 

 

Pulp and Paper

 

Personal Care

 

Corporate

 

Total

 

 

 

 

 

 

Q1'20

 

Q2'20

 

Q3'20

 

Q4'20

 

YTD

 

Q1'20

 

Q2'20

 

Q3'20

 

Q4'20

 

YTD

 

Q1'20

 

Q2'20

 

Q3'20

 

Q4'20

 

YTD

 

Q1'20

 

Q2'20

 

Q3'20

 

Q4'20

 

YTD

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

($)

 

4

 

 

 

 

4

 

20

 

 

 

 

20

 

(5)

 

 

 

 

(5)

 

19

 

 

 

 

19

 

(=)

Operating income (loss) before items

 

($)

 

4

 

 

 

 

4

 

20

 

 

 

 

20

 

(5)

 

 

 

 

(5)

 

19

 

 

 

 

19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss) before items

 

($)

 

4

 

 

 

 

4

 

20

 

 

 

 

20

 

(5)

 

 

 

 

(5)

 

19

 

 

 

 

19

 

(+)

Non-service components of net periodic benefit cost

 

($)

 

4

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

4

 

(+)

Depreciation and amortization

 

($)

 

58

 

 

 

 

58

 

14

 

 

 

 

14

 

 

 

 

 

 

72

 

 

 

 

72

 

(=)

EBITDA before items

 

($)

 

66

 

 

 

 

66

 

34

 

 

 

 

34

 

(5)

 

 

 

 

(5)

 

95

 

 

 

 

95

 

(/)

Sales

 

($)

 

1,031

 

 

 

 

1,031

 

266

 

 

 

 

266

 

 

 

 

 

 

1,297

 

 

 

 

1,297

 

(=)

EBITDA margin before items

 

(%)

 

6%

 

 

 

 

6%

 

13%

 

 

 

 

13%

 

 

 

 

 

 

7%

 

 

 

 

7%

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

 

Domtar Corporation

Quarterly Reconciliation of Non-GAAP Financial Measures – By Segment 2019

(In millions of dollars, unless otherwise noted)

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

 

 

 

 

 

 

Pulp and Paper

 

Personal Care

 

Corporate

 

Total

 

 

 

 

 

 

Q1'19

 

Q2'19

 

Q3'19

 

Q4'19

 

Year

 

Q1'19

 

Q2'19

 

Q3'19

 

Q4'19

 

Year

 

Q1'19

 

Q2'19

 

Q3'19

 

Q4'19

 

Year

 

Q1'19

 

Q2'19

 

Q3'19

 

Q4'19

 

Year

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

($)

 

144

 

62

 

31

 

(11)

 

226

 

(8)

 

(18)

 

2

 

8

 

(16)

 

(21)

 

(10)

 

(4)

 

(12)

 

(47)

 

115

 

34

 

29

 

(15)

 

163

 

(+)

Impairment of long-lived assets

 

($)

 

 

 

32

 

 

32

 

10

 

15

 

1

 

 

26

 

 

 

 

 

 

10

 

15

 

33

 

 

58

 

(+)

Closure and restructuring costs

 

($)

 

 

 

5

 

17

 

22

 

4

 

8

 

6

 

2

 

20

 

 

 

 

 

 

4

 

8

 

11

 

19

 

42

 

(=)

Operating income (loss) before items

 

($)

 

144

 

62

 

68

 

6

 

280

 

6

 

5

 

9

 

10

 

30

 

(21)

 

(10)

 

(4)

 

(12)

 

(47)

 

129

 

57

 

73

 

4

 

263

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss) before items

 

($)

 

144

 

62

 

68

 

6

 

280

 

6

 

5

 

9

 

10

 

30

 

(21)

 

(10)

 

(4)

 

(12)

 

(47)

 

129

 

57

 

73

 

4

 

263

 

(+)

Pension settlement loss

 

($)

 

 

 

 

30

 

30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30

 

30

 

(+)

Non-service components of net periodic benefit cost

 

($)

 

3

 

3

 

2

 

(28)

 

(20)

 

 

 

 

 

 

 

(1)

 

 

(2)

 

(3)

 

3

 

2

 

2

 

(30)

 

(23)

 

(+)

Depreciation and amortization

 

($)

 

58

 

59

 

57

 

57

 

231

 

15

 

15

 

15

 

17

 

62

 

 

 

 

 

 

73

 

74

 

72

 

74

 

293

 

(=)

EBITDA before items

 

($)

 

205

 

124

 

127

 

65

 

521

 

21

 

20

 

24

 

27

 

92

 

(21)

 

(11)

 

(4)

 

(14)

 

(50)

 

205

 

133

 

147

 

78

 

563

 

(/)

Sales

 

($)

 

1,157

 

1,106

 

1,079

 

1,027

 

4,369

 

239

 

228

 

219

 

234

 

920

 

 

 

 

 

 

1,396

 

1,334

 

1,298

 

1,261

 

5,289

 

(=)

EBITDA margin before items

 

(%)

 

18%

 

11%

 

12%

 

6%

 

12%

 

9%

 

9%

 

11%

 

12%

 

10%

 

 

 

 

 

 

15%

 

10%

 

11%

 

6%

 

11%

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

As a result of changes in our organization structure, we have changed our segment reporting. Starting January 1, 2020, our materials business EAM, a manufacturer of high quality airlaid and ultrathin laminated cores, previously reported under our Personal Care segment is now presented under our Pulp and Paper segment. Prior period segment results have been restated to the new segment presentation with no significant impact on segment results. There were no changes to our consolidated sales or operating income.

 

Domtar Corporation

Supplemental Segmented Information

(In millions of dollars, unless otherwise noted)

 

 

 

 

 

2020

 

 

2019

 

 

 

 

 

Q1

 

 

Q1

 

 

Q2

 

 

Q3

 

 

Q4

 

 

Year

 

Pulp and Paper Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

($)

 

 

1,031

 

 

 

1,157

 

 

 

1,106

 

 

 

1,079

 

 

 

1,027

 

 

 

4,369

 

Operating income (loss)

 

($)

 

 

4

 

 

 

144

 

 

 

62

 

 

 

31

 

 

 

(11

)

 

 

226

 

Depreciation and amortization

 

($)

 

 

58

 

 

 

58

 

 

 

59

 

 

 

57

 

 

 

57

 

 

 

231

 

Impairment of long-lived assets

 

($)

 

 

 

 

 

 

 

 

 

 

 

32

 

 

 

 

 

 

32

 

Paper

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paper Production

 

('000 ST)

 

 

648

 

 

 

757

 

 

 

697

 

 

 

653

 

 

 

619

 

 

 

2,726

 

Paper Shipments - Manufactured

 

('000 ST)

 

 

679

 

 

 

736

 

 

 

681

 

 

 

672

 

 

 

656

 

 

 

2,745

 

Communication Papers

 

('000 ST)

 

 

569

 

 

 

615

 

 

 

567

 

 

 

563

 

 

 

554

 

 

 

2,299

 

Specialty and Packaging Papers

 

('000 ST)

 

 

110

 

 

 

121

 

 

 

114

 

 

 

109

 

 

 

102

 

 

 

446

 

Paper Shipments - Sourced from 3rd parties

 

('000 ST)

 

 

22

 

 

 

23

 

 

 

21

 

 

 

25

 

 

 

24

 

 

 

93

 

Paper Shipments - Total

 

('000 ST)

 

 

701

 

 

 

759

 

 

 

702

 

 

 

697

 

 

 

680

 

 

 

2,838

 

Pulp

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pulp Shipments(a)

 

('000 ADMT)

 

 

389

 

 

 

349

 

 

 

370

 

 

 

416

 

 

 

404

 

 

 

1,539

 

Pulp Shipments mix(b):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hardwood Kraft Pulp

 

(%)

 

 

3

%

 

 

2

%

 

 

2

%

 

 

5

%

 

 

5

%

 

 

4

%

Softwood Kraft Pulp

 

(%)

 

 

52

%

 

 

53

%

 

 

56

%

 

 

55

%

 

 

54

%

 

 

54

%

Fluff Pulp

 

(%)

 

 

45

%

 

 

45

%

 

 

42

%

 

 

40

%

 

 

41

%

 

 

42

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personal Care Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

($)

 

 

266

 

 

 

239

 

 

 

228

 

 

 

219

 

 

 

234

 

 

 

920

 

Operating income (loss)

 

($)

 

 

20

 

 

 

(8

)

 

 

(18

)

 

 

2

 

 

 

8

 

 

 

(16

)

Depreciation and amortization

 

($)

 

 

14

 

 

 

15

 

 

 

15

 

 

 

15

 

 

 

17

 

 

 

62

 

Impairment of long-lived assets

 

($)

 

 

 

 

 

10

 

 

 

15

 

 

 

1

 

 

 

 

 

 

26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Exchange Rates

 

$US / $CAN

 

 

1.344

 

 

 

1.329

 

 

 

1.337

 

 

 

1.321

 

 

 

1.321

 

 

 

1.327

 

 

 

$CAN / $US

 

 

0.744

 

 

 

0.752

 

 

 

0.748

 

 

 

0.757

 

 

 

0.757

 

 

 

0.754

 

 

 

€ / $US

 

 

1.102

 

 

 

1.136

 

 

 

1.124

 

 

 

1.111

 

 

 

1.107

 

 

 

1.120

 

As a result of changes in our organization structure, we have changed our segment reporting. Starting January 1, 2020, our materials business EAM, a manufacturer of high quality airlaid and ultrathin laminated cores, previously reported under our Personal Care segment is now presented under our Pulp and Paper segment. Prior period segment results have been restated to the new segment presentation with no significant impact on segment results. There were no changes to our consolidated sales or operating income.

(a) Figures represent Pulp Shipments to third parties.

 

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

 

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

 

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

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

Source: Domtar Corporation