Domtar Corporation (NYSE: UFS) (TSX: UFS) today reported a net loss of $29 million ($0.54 per share) for the first quarter of 2021 compared to a net loss of $59 million ($1.07 per share) for the fourth quarter of 2020 and net earnings of $5 million ($0.09 per share) for the first quarter of 2020. Sales for the first quarter of 2021 were $944 million.
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The first quarter 2021 results include an after-tax loss of $22 million ($0.41 per share) from discontinued operations related to the sale of the Personal Care Business, compared to an after-tax loss of $43 million ($0.78 per share) for the fourth quarter of 2020 and an after-tax earnings of $20 million ($0.36 per share) for the first quarter of 2020.
Excluding discontinued operations and the items listed below, the Company had earnings from continuing operations before items1 of $5 million ($0.09 per share) for the first quarter of 2021 compared to earnings from continuing operations before items1 of $19 million ($0.34 per share) for the fourth quarter of 2020 and a loss from continuing operations before items1 of $15 million ($0.27 per share) for the first quarter of 2020.
ITEMS
Description | Segment | Line item | Amount | After-tax effect | EPS impact (per share) |
(in millions) | |||||
First quarter 2021 | |||||
| Pulp and Paper | Impairment of long-lived assets | $6 | $4 | $0.07 |
| Pulp and Paper | Closure and restructuring costs | $2 | $1 | $0.02 |
| Pulp and Paper | Asset conversion costs | $8 | $6 | $0.11 |
| Corporate | Closure and restructuring costs | $1 | $1 | $0.02 |
Fourth quarter 2020 | |||||
| Pulp and Paper | Impairment of long-lived assets | $25 | $15 | $0.27 |
| Pulp and Paper | Closure and restructuring costs | $28 | $19 | $0.34 |
| Corporate | Closure and restructuring costs | $2 | $1 | $0.02 |
First quarter 2020 | |||||
| |||||
QUARTERLY REVIEW
“While COVID-19 continued to remain the dominant challenge in the first quarter, severe winter weather affected our production and our supply chains across North America, notably at our Ashdown, AR market pulp mill. Nevertheless, we got off to a reasonably good start to the year and we expect strong second half results driven by price momentum and strong volume in paper and pulp,” said John D. Williams, President and Chief Executive Officer. “The Kingsport conversion is progressing well. The project is on schedule, and the crews on site are currently completing demolition and preparing the site for the new buildings and warehouse. We are also making good progress with our commercial strategy and the customer response continues to be extremely positive.”
Mr. Williams added, “During the quarter, we successfully closed the sale of the Personal Care business. The sale is part of our ongoing effort to strategically optimize our portfolio and it allowed us to strengthen our balance sheet, enhance liquidity and repurchase shares.”
Operating income was $2 million in the first quarter of 2021 compared to an operating loss of $20 million in the fourth quarter of 2020. Depreciation and amortization totaled $54 million in the first quarter of 2021.
Operating income before items1 was $19 million in the first quarter of 2021 compared to operating income before items1 of $35 million in the fourth quarter of 2020.
(In millions of dollars) | 1Q 2021 | 4Q 2020 | |||||||
Sales | $ | 944 | $ | 920 | |||||
Operating income (loss) | |||||||||
Pulp and Paper segment | 12 | (10 | ) | ||||||
Corporate | (10 | ) | (10 | ) | |||||
Total operating income (loss) | 2 | (20 | ) | ||||||
Operating income before items1 | 19 | 35 | |||||||
Depreciation and amortization | 54 | 53 | |||||||
The increase in operating income in the first quarter of 2021, compared to the prior quarter, was the result of lower long-lived asset impairment and closure and restructuring charges related to the cost savings program, higher average selling prices in pulp, lower maintenance costs and favorable exchange rates. These factors were partially offset by higher raw material and freight costs, asset conversion costs, unfavorable productivity, higher selling, general and administrative expenses and higher fixed costs.
When compared to the fourth quarter of 2020, manufactured paper shipments were up 1% and pulp shipments were flat. The shipment-to-production ratio for paper was 102% in the first quarter of 2021, compared to 98% in the fourth quarter of 2020. Paper inventories decreased by 13,000 tons, and pulp inventories decreased by 38,000 metric tons when compared to the fourth quarter of 2020.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operating activities was $33 million and capital expenditures were $51 million, resulting in a negative free cash flow1 of $18 million for the first quarter of 2021. Domtar’s net debt-to-total capitalization ratio1 stood at 6% at March 31, 2021 compared to 26% at December 31, 2020.
OUTLOOK
Paper demand will remain dependent upon recovery from COVID-19, but demand is expected to continue to rebound through the year as people return to schools and offices. Near-term pulp markets should remain balanced due to steady demand growth and limited new supply. Recently announced price increases in both pulp and paper will positively impact our results. The second quarter will be affected by seasonally higher maintenance costs in our Pulp and Paper business as we move into the planned outages at some of our major facilities.
EARNINGS CONFERENCE CALL
The Company will hold a conference call today at 10:00 a.m. (ET) to discuss its first quarter 2021 financial results. Financial analysts are invited to participate in the call by dialing 1 (800) 700-1722 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 2021 earnings results on August 5, 2021 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 airlaid nonwovens. With approximately 6,400 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 $3.7 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, the failure to achieve our cost containment goals, costs of conversion in excess of our expectations, demand for linerboard, and the other reasons identified under “Risk Factors” in our Form 10-K for 2020 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.
Domtar Corporation Consolidated Statements of Earnings (Loss) (In millions of dollars, unless otherwise noted) | ||||||||
For the three months ended | ||||||||
March 31, | March 31, | |||||||
2021 | 2020 | |||||||
(Unaudited) | ||||||||
$ | $ | |||||||
Sales | 944 | 1,031 | ||||||
Operating expenses | ||||||||
Cost of sales, excluding depreciation and amortization | 809 | 906 | ||||||
Depreciation and amortization | 54 | 58 | ||||||
Selling, general and administrative | 64 | 66 | ||||||
Impairment of long-lived assets | 6 | — | ||||||
Closure and restructuring costs | 3 | — | ||||||
Asset conversion costs | 8 | — | ||||||
Other operating (income) loss, net | (2 | ) | 2 | |||||
942 | 1,032 | |||||||
Operating income (loss) | 2 | (1 | ) | |||||
Interest expense, net | 15 | 14 | ||||||
Non-service components of net periodic benefit cost | (6 | ) | (4 | ) | ||||
Loss before income taxes and equity loss | (7 | ) | (11 | ) | ||||
Income tax expense | — | 3 | ||||||
Equity method investment loss, net of taxes | — | 1 | ||||||
Loss from continuing operations | (7 | ) | (15 | ) | ||||
(Loss) earnings from discontinued operations, net of taxes | (22 | ) | 20 | |||||
Net (loss) earnings | (29 | ) | 5 | |||||
Per common share (in dollars) | ||||||||
Basic net (loss) earnings | ||||||||
Loss from continuing operations | (0.13 | ) | (0.27 | ) | ||||
(Loss) earnings from discontinued operations | (0.41 | ) | 0.36 | |||||
Basic net (loss) earnings | (0.54 | ) | 0.09 | |||||
Diluted net (loss) earnings | ||||||||
Loss from continuing operations | (0.13 | ) | (0.27 | ) | ||||
(Loss) earnings from discontinued operations | (0.41 | ) | 0.36 | |||||
Diluted net (loss) earnings | (0.54 | ) | 0.09 | |||||
Weighted average number of common shares outstanding (millions) | ||||||||
Basic | 53.5 | 56.1 | ||||||
Diluted | 53.5 | 56.2 | ||||||
Domtar Corporation Consolidated Balance Sheets at (In millions of dollars) | ||||||||
March 31, | December 31, | |||||||
2021 | 2020 | |||||||
(Unaudited) | ||||||||
$ | $ | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | 671 | 309 | ||||||
Receivables, less allowances of $5 and $6 | 450 | 380 | ||||||
Inventories | 600 | 630 | ||||||
Prepaid expenses | 53 | 50 | ||||||
Income and other taxes receivable | 49 | 54 | ||||||
Assets held for sale | — | 1,133 | ||||||
Total current assets | 1,823 | 2,556 | ||||||
Property, plant and equipment, net | 2,022 | 2,023 | ||||||
Operating lease right-of-use assets | 55 | 59 | ||||||
Intangible assets, net | 29 | 29 | ||||||
Other assets | 192 | 189 | ||||||
Total assets | 4,121 | 4,856 | ||||||
Liabilities and shareholders' equity | ||||||||
Current liabilities | ||||||||
Bank indebtedness | 4 | — | ||||||
Trade and other payables | 504 | 484 | ||||||
Income and other taxes payable | 16 | 15 | ||||||
Operating lease liabilities due within one year | 19 | 20 | ||||||
Long-term debt due within one year | 301 | 13 | ||||||
Liabilities held for sale | — | 295 | ||||||
Total current liabilities | 844 | 827 | ||||||
Long-term debt | 503 | 1,084 | ||||||
Operating lease liabilities | 47 | 50 | ||||||
Deferred income taxes and other | 324 | 321 | ||||||
Other liabilities and deferred credits | 312 | 314 | ||||||
Shareholders' equity | ||||||||
Common stock | 1 | 1 | ||||||
Additional paid-in capital | 1,493 | 1,717 | ||||||
Retained earnings | 817 | 846 | ||||||
Accumulated other comprehensive loss | (220 | ) | (304 | ) | ||||
Total shareholders' equity | 2,091 | 2,260 | ||||||
Total liabilities and shareholders' equity | 4,121 | 4,856 | ||||||
Domtar Corporation Consolidated Statements of Cash Flows (In millions of dollars) | |||||||
For the three months ended | |||||||
March 31, | March 31, | ||||||
2021 | 2020 | ||||||
(Unaudited) | |||||||
$ | $ | ||||||
Operating activities | |||||||
Net (loss) earnings | (29 | ) | 5 | ||||
Adjustments to reconcile net (loss) earnings to cash flows from operating activities | |||||||
Depreciation and amortization | 64 | 72 | |||||
Deferred income taxes and tax uncertainties | (4 | ) | 1 | ||||
Impairment of long-lived assets | 6 | — | |||||
Net loss on disposition of discontinued operations | 32 | — | |||||
Stock-based compensation expense | 2 | 1 | |||||
Equity method investment loss, net | — | 1 | |||||
Other | 2 | — | |||||
Changes in assets and liabilities, excluding the effect of sale of business | |||||||
Receivables | (68 | ) | (28 | ) | |||
Inventories | 32 | 28 | |||||
Prepaid expenses | 3 | (5 | ) | ||||
Trade and other payables | (6 | ) | (16 | ) | |||
Income and other taxes | 4 | 39 | |||||
Difference between employer pension and other post-retirement contributions and pension and other post-retirement expense | (3 | ) | (1 | ) | |||
Other assets and other liabilities | (2 | ) | (9 | ) | |||
Cash flows from operating activities | 33 | 88 | |||||
Investing activities | |||||||
Additions to property, plant and equipment | (51 | ) | (62 | ) | |||
Proceeds from sale of business, net of cash disposed | 897 | — | |||||
Cash flows provided from (used for) investing activities | 846 | (62 | ) | ||||
Financing activities | |||||||
Dividend payments | — | (26 | ) | ||||
Stock repurchase | (223 | ) | (59 | ) | |||
Net change in bank indebtedness | 4 | (10 | ) | ||||
Change in revolving credit facility | — | 140 | |||||
Proceeds from receivables securitization facility | — | 25 | |||||
Repayments of long-term debt | (294 | ) | — | ||||
Other | (3 | ) | (3 | ) | |||
Cash flows (used for) provided from financing activities | (516 | ) | 67 | ||||
Net increase in cash and cash equivalents | 363 | 93 | |||||
Impact of foreign exchange on cash | (1 | ) | (2 | ) | |||
Cash and cash equivalents at beginning of period | 309 | 61 | |||||
Cash and cash equivalents at end of period | 671 | 152 | |||||
Supplemental cash flow information | |||||||
Net cash payments (refund) for: | |||||||
Interest | 18 | 17 | |||||
Income taxes | (7 | ) | (25 | ) | |||
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 (loss) from continuing operations before items”, “Earnings (loss) from continuing operations 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 (loss) from continuing operations 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.
2021 | 2020 | |||||||||||||||||||||||||||
Q1 | Q1 | Q2 | Q3 | Q4 | Year | |||||||||||||||||||||||
Reconciliation of "Earnings (loss) from continuing operations before items" to Net (loss) earnings | ||||||||||||||||||||||||||||
Net (loss) earnings | ($) | (29 | ) | 5 | 19 | (92 | ) | (59 | ) | (127 | ) | |||||||||||||||||
(-) | Loss (earnings) from discontinued operations, net of taxes | ($) | 22 | (20 | ) | (22 | ) | (19 | ) | 43 | (18 | ) | ||||||||||||||||
(+) | Impairment of long-lived assets | ($) | 4 | — | — | 68 | 15 | 83 | ||||||||||||||||||||
(+) | Closure and restructuring costs | ($) | 2 | — | 1 | 42 | 20 | 63 | ||||||||||||||||||||
(+) | Asset conversion costs | ($) | 6 | — | — | — | — | — | ||||||||||||||||||||
(=) | Earnings (loss) from continuing operations before items | ($) | 5 | (15 | ) | (2 | ) | (1 | ) | 19 | 1 | |||||||||||||||||
(/) | Weighted avg. number of common shares outstanding (diluted) | (millions) | 53.5 | 56.2 | 55.3 | 55.2 | 55.2 | 55.4 | ||||||||||||||||||||
(=) | Earnings (loss) from continuing operations before items per diluted share | ($) | 0.09 | (0.27 | ) | (0.04 | ) | (0.02 | ) | 0.34 | 0.02 | |||||||||||||||||
Reconciliation of "EBITDA" and "EBITDA before items" to Net (loss) earnings | ||||||||||||||||||||||||||||
Net (loss) earnings | ($) | (29 | ) | 5 | 19 | (92 | ) | (59 | ) | (127 | ) | |||||||||||||||||
(-) | Loss (earnings) from discontinued operations, net of taxes | ($) | 22 | (20 | ) | (22 | ) | (19 | ) | 43 | (18 | ) | ||||||||||||||||
(+) | Equity method investment loss, net of taxes | ($) | — | 1 | — | 1 | 1 | 3 | ||||||||||||||||||||
(+) | Income tax expense (benefit) | ($) | — | 3 | (11 | ) | (52 | ) | (16 | ) | (76 | ) | ||||||||||||||||
(+) | Interest expense, net | ($) | 15 | 14 | 15 | 14 | 15 | 58 | ||||||||||||||||||||
(+) | Depreciation and amortization | ($) | 54 | 58 | 56 | 56 | 53 | 223 | ||||||||||||||||||||
(+) | Impairment of long-lived assets | ($) | 6 | — | — | 111 | 25 | 136 | ||||||||||||||||||||
(-) | Net gains on disposals of property, plant and equipment | ($) | — | — | — | — | (1 | ) | (1 | ) | ||||||||||||||||||
(=) | EBITDA | ($) | 68 | 61 | 57 | 19 | 61 | 198 | ||||||||||||||||||||
(/) | Sales | ($) | 944 | 1,031 | 802 | 899 | 920 | 3,652 | ||||||||||||||||||||
(=) | EBITDA margin | (%) | 7 | % | 6 | % | 7 | % | 2 | % | 7 | % | 5 | % | ||||||||||||||
EBITDA | ($) | 68 | 61 | 57 | 19 | 61 | 198 | |||||||||||||||||||||
(+) | Closure and restructuring costs | ($) | 3 | — | 1 | 68 | 30 | 99 | ||||||||||||||||||||
(+) | Asset conversion costs | ($) | 8 | — | — | — | — | — | ||||||||||||||||||||
(=) | EBITDA before items | ($) | 79 | 61 | 58 | 87 | 91 | 297 | ||||||||||||||||||||
(/) | Sales | ($) | 944 | 1,031 | 802 | 899 | 920 | 3,652 | ||||||||||||||||||||
(=) | EBITDA margin before items | (%) | 8 | % | 6 | % | 7 | % | 10 | % | 10 | % | 8 | % | ||||||||||||||
Reconciliation of "Free cash flow" to Cash flows from operating activities | ||||||||||||||||||||||||||||
Cash flows from operating activities | ($) | 33 | 88 | 67 | 121 | 135 | 411 | |||||||||||||||||||||
(-) | Additions to property, plant and equipment | ($) | (51 | ) | (62 | ) | (40 | ) | (28 | ) | (45 | ) | (175 | ) | ||||||||||||||
(=) | Free cash flow | ($) | (18 | ) | 26 | 27 | 93 | 90 | 236 | |||||||||||||||||||
"Net debt-to-total capitalization" computation | ||||||||||||||||||||||||||||
Bank indebtedness | ($) | 4 | — | — | — | — | ||||||||||||||||||||||
(+) | Long-term debt due within one year | ($) | 301 | 1 | 13 | 13 | 13 | |||||||||||||||||||||
(+) | Long-term debt | ($) | 503 | 1,101 | 1,088 | 1,085 | 1,084 | |||||||||||||||||||||
(=) | Debt | ($) | 808 | 1,102 | 1,101 | 1,098 | 1,097 | |||||||||||||||||||||
(-) | Cash and cash equivalents | ($) | (671 | ) | (152 | ) | (124 | ) | (218 | ) | (309 | ) | ||||||||||||||||
(=) | Net debt | ($) | 137 | 950 | 977 | 880 | 788 | |||||||||||||||||||||
(+) | Shareholders' equity | ($) | 2,091 | 2,181 | 2,277 | 2,211 | 2,260 | |||||||||||||||||||||
(=) | Total capitalization | ($) | 2,228 | 3,131 | 3,254 | 3,091 | 3,048 | |||||||||||||||||||||
Net debt | ($) | 137 | 950 | 977 | 880 | 788 | ||||||||||||||||||||||
(/) | Total capitalization | ($) | 2,228 | 3,131 | 3,254 | 3,091 | 3,048 | |||||||||||||||||||||
(=) | Net debt-to-total capitalization | (%) | 6 | % | 30 | % | 30 | % | 28 | % | 26 | % | ||||||||||||||||
“Earnings (loss) from continuing operations before items”, “Earnings (loss) from continuing operations 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 (loss) earnings 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 2021 |
(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 | Corporate | Total | ||||||||||||||||||||||||||||||||
Q1'21 | Q2'21 | Q3'21 | Q4'21 | YTD | Q1'21 | Q2'21 | Q3'21 | Q4'21 | YTD | Q1'21 | Q2'21 | Q3'21 | Q4'21 | YTD | ||||||||||||||||||||
Reconciliation of Operating income (loss) to "Operating income (loss) before items" | ||||||||||||||||||||||||||||||||||
Operating income (loss) | ($) | 12 | — | — | — | 12 | (10) | — | — | — | (10) | 2 | — | — | — | 2 | ||||||||||||||||||
(+) | Impairment of long-lived assets | ($) | 6 | — | — | — | 6 | — | — | — | — | — | 6 | — | — | — | 6 | |||||||||||||||||
(+) | Closure and restructuring costs | ($) | 2 | — | — | — | 2 | 1 | — | — | — | 1 | 3 | — | — | — | 3 | |||||||||||||||||
(+) | Asset conversion costs | ($) | 8 | — | — | — | 8 | — | — | — | — | — | 8 | — | — | — | 8 | |||||||||||||||||
(=) | Operating income (loss) before items | ($) | 28 | — | — | — | 28 | (9) | — | — | — | (9) | 19 | — | — | — | 19 | |||||||||||||||||
Reconciliation of "Operating income (loss) before items" to "EBITDA before items" | ||||||||||||||||||||||||||||||||||
Operating income (loss) before items | ($) | 28 | — | — | — | 28 | (9) | — | — | — | (9) | 19 | — | — | — | 19 | ||||||||||||||||||
(+) | Non-service components of net periodic benefit cost | ($) | 6 | — | — | — | 6 | — | — | — | — | — | 6 | — | — | — | 6 | |||||||||||||||||
(+) | Depreciation and amortization | ($) | 54 | — | — | — | 54 | — | — | — | — | — | 54 | — | — | — | 54 | |||||||||||||||||
(=) | EBITDA before items | ($) | 88 | — | — | — | 88 | (9) | — | — | — | (9) | 79 | — | — | — | 79 | |||||||||||||||||
(/) | Sales | ($) | 944 | — | — | — | 944 | — | — | — | — | — | 944 | — | — | — | 944 | |||||||||||||||||
(=) | EBITDA margin before items | (%) | 9% | — | — | — | 9% | — | — | — | — | — | 8% | — | — | — | 8% | |||||||||||||||||
“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 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 | Corporate | Total | ||||||||||||||||||||||||||||||||
Q1'20 | Q2'20 | Q3'20 | Q4'20 | Year | Q1'20 | Q2'20 | Q3'20 | Q4'20 | Year | Q1'20 | Q2'20 | Q3'20 | Q4'20 | Year | ||||||||||||||||||||
Reconciliation of Operating income (loss) to "Operating income (loss) before items" | ||||||||||||||||||||||||||||||||||
Operating income (loss) | ($) | 4 | 3 | (140) | (10) | (143) | (5) | (7) | (12) | (10) | (34) | (1) | (4) | (152) | (20) | (177) | ||||||||||||||||||
(+) | Impairment of long-lived assets | ($) | — | — | 111 | 25 | 136 | — | — | — | — | — | — | — | 111 | 25 | 136 | |||||||||||||||||
(+) | Closure and restructuring costs | ($) | — | 1 | 67 | 28 | 96 | — | — | 1 | 2 | 3 | — | 1 | 68 | 30 | 99 | |||||||||||||||||
(=) | Operating income (loss) before items | ($) | 4 | 4 | 38 | 43 | 89 | (5) | (7) | (11) | (8) | (31) | (1) | (3) | 27 | 35 | 58 | |||||||||||||||||
Reconciliation of "Operating income (loss) before items" to "EBITDA before items" | ||||||||||||||||||||||||||||||||||
Operating income (loss) before items | ($) | 4 | 4 | 38 | 43 | 89 | (5) | (7) | (11) | (8) | (31) | (1) | (3) | 27 | 35 | 58 | ||||||||||||||||||
(+) | Non-service components of net periodic benefit cost | ($) | 4 | 6 | 4 | 5 | 19 | — | (1) | — | (1) | (2) | 4 | 5 | 4 | 4 | 17 | |||||||||||||||||
(-) | Net gains on disposals of property, plant and equipment | ($) | — | — | — | (1) | (1) | — | — | — | — | — | — | — | — | (1) | (1) | |||||||||||||||||
(+) | Depreciation and amortization | ($) | 58 | 56 | 56 | 53 | 223 | — | — | — | — | — | 58 | 56 | 56 | 53 | 223 | |||||||||||||||||
(=) | EBITDA before items | ($) | 66 | 66 | 98 | 100 | 330 | (5) | (8) | (11) | (9) | (33) | 61 | 58 | 87 | 91 | 297 | |||||||||||||||||
(/) | Sales | ($) | 1,031 | 802 | 899 | 920 | 3,652 | — | — | — | — | — | 1,031 | 802 | 899 | 920 | 3,652 | |||||||||||||||||
(=) | EBITDA margin before items | (%) | 6% | 8% | 11% | 11% | 9% | — | — | — | — | — | 6% | 7% | 10% | 10% | 8% | |||||||||||||||||
“Operating income (loss) before items”, “EBITDA before items” and “EBITDA margin before items” have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation or as a substitute for Operating income (loss) or any other earnings statement, cash flow statement or balance sheet financial information prepared in accordance with GAAP. It is important for readers to understand that certain items may be presented in different lines by different companies on their financial statements, thereby leading to different measures for different companies.
Domtar Corporation
| ||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||
Q1 | Q1 | Q2 | Q3 | Q4 | Year | |||||||||||||||||||||
Pulp and Paper Segment | ||||||||||||||||||||||||||
Sales | ($) | 944 | 1,031 | 802 | 899 | 920 | 3,652 | |||||||||||||||||||
Operating income (loss) | ($) | 12 | 4 | 3 | (140 | ) | (10 | ) | (143 | ) | ||||||||||||||||
Depreciation and amortization | ($) | 54 | 58 | 56 | 56 | 53 | 223 | |||||||||||||||||||
Impairment of long-lived assets | ($) | 6 | — | — | 111 | 25 | 136 | |||||||||||||||||||
Paper | ||||||||||||||||||||||||||
Paper Production | ('000 ST) | 534 | 648 | 436 | 524 | 551 | 2,159 | |||||||||||||||||||
Paper Shipments - Manufactured | ('000 ST) | 546 | 679 | 459 | 550 | 542 | 2,230 | |||||||||||||||||||
Communication Papers | ('000 ST) | 453 | 569 | 366 | 449 | 441 | 1,825 | |||||||||||||||||||
Specialty and Packaging Papers | ('000 ST) | 93 | 110 | 93 | 101 | 101 | 405 | |||||||||||||||||||
Paper Shipments - Sourced from 3rd parties | ('000 ST) | 18 | 22 | 12 | 16 | 19 | 69 | |||||||||||||||||||
Paper Shipments - Total | ('000 ST) | 564 | 701 | 471 | 566 | 561 | 2,299 | |||||||||||||||||||
Pulp | ||||||||||||||||||||||||||
Pulp Shipments | ('000 ADMT) | 481 | 422 | 459 | 424 | 482 | 1,787 | |||||||||||||||||||
Pulp Shipments mix: | ||||||||||||||||||||||||||
Hardwood Kraft Pulp | (%) | 4 | % | 3 | % | 2 | % | 4 | % | 6 | % | 4 | % | |||||||||||||
Softwood Kraft Pulp | (%) | 60 | % | 52 | % | 57 | % | 62 | % | 62 | % | 58 | % | |||||||||||||
Fluff Pulp | (%) | 36 | % | 45 | % | 41 | % | 34 | % | 32 | % | 38 | % | |||||||||||||
Average Exchange Rates | $US / $CAN | 1.266 | 1.344 | 1.385 | 1.332 | 1.304 | 1.341 | |||||||||||||||||||
$CAN / $US | 0.790 | 0.744 | 0.722 | 0.751 | 0.767 | 0.746 | ||||||||||||||||||||
Note: the term “ST” refers to a short ton and the term “ADMT” refers to an air dry metric ton. | ||||||||||||||||||||||||||
1 Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures in the appendix.
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