Business Wire | May 6, 2021 06:56AM EDT

Domtar Corporation Reports Preliminary First Quarter 2021 Financial Results

May 06, 2021

FORT MILL, S.C.--(BUSINESS WIRE)--May 06, 2021--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

EPS After-tax impactDescription Segment Line item Amount effect (per share)

(in millions)

First quarter 2021

* Cost reduction Pulp and Impairment of $6 $4 $0.07 program Paper long-lived assets

* Cost reduction Pulp and Closure and $2 $1 $0.02 program Paper restructuring costs

* Cost reduction Pulp and Asset conversion costs $8 $6 $0.11 program Paper

* Cost reduction Corporate Closure and $1 $1 $0.02 program restructuring costs

Fourth quarter 2020

* Cost reduction Pulp and Impairment of $25 $15 $0.27 program Paper long-lived assets

* Cost reduction Pulp and Closure and $28 $19 $0.34 program Paper restructuring costs

* Cost reduction Corporate Closure and $2 $1 $0.02 program restructuring costs

First quarter 2020

* None

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 items1was $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 items^1 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 March 31, 31,

2021 2020

(Unaudited)

$ $



Sales 944 1,031

Operating expenses

Cost of sales, excluding depreciation and 809 906 amortization

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 (22 ) 20 taxes

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 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

Consolidated Statements of Cash Flows

(In millions of dollars)

For the three months ended

March March 31, 31,

2021 2020

(Unaudited)

$ $

Operating activities

Net (loss) earnings (29 ) 5

Adjustments to reconcile net (loss) earnings to cashflows

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 (3 ) (1 )

pension and other post-retirement expense

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.

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) fromcontinuing operations

before items" to Net(loss) earnings

Net (loss) ($) (29 ) 5 19 (92 ) (59 ) (127 ) earnings

Loss (earnings) from (-) discontinued ($) 22 (20 ) (22 ) (19 ) 43 (18 ) operations, net of taxes

Impairment of (+) long-lived ($) 4 - - 68 15 83 assets

Closure and (+) restructuring ($) 2 - 1 42 20 63 costs

(+) Asset conversion ($) 6 - - - - - costs

Earnings (loss) (=) from continuing ($) 5 (15 ) (2 ) (1 ) 19 1 operations before items

Weighted avg. number of common (/) shares (millions) 53.5 56.2 55.3 55.2 55.2 55.4 outstanding (diluted)

Earnings (loss) from continuing operations (=) before items ($) 0.09 (0.27 ) (0.04 ) (0.02 ) 0.34 0.02

per diluted share



Reconciliation of"EBITDA" and "EBITDAbefore items" to

Net (loss) earnings

Net (loss) ($) (29 ) 5 19 (92 ) (59 ) (127 ) earnings

Loss (earnings) from (-) discontinued ($) 22 (20 ) (22 ) (19 ) 43 (18 ) operations, net of taxes

Equity method (+) investment loss, ($) - 1 - 1 1 3 net of taxes

Income tax (+) expense ($) - 3 (11 ) (52 ) (16 ) (76 ) (benefit)

(+) Interest ($) 15 14 15 14 15 58 expense, net

(+) Depreciation and ($) 54 58 56 56 53 223 amortization

Impairment of (+) long-lived ($) 6 - - 111 25 136 assets

Net gains on (-) disposals of ($) - - - - (1 ) (1 ) property, plant and equipment

(=) 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 ($) 3 - 1 68 30 99 costs

(+) Asset conversion ($) 8 - - - - - costs

(=) EBITDA before ($) 79 61 58 87 91 297 items

(/) Sales ($) 944 1,031 802 899 920 3,652

(=) EBITDA margin (%) 8 % 6 % 7 % 10 % 10 % 8 % before items



Reconciliation of"Free cash flow" to Cash flows fromoperating activities

Cash flows from operating ($) 33 88 67 121 135 411 activities

Additions to (-) property, plant ($) (51 ) (62 ) (40 ) (28 ) (45 ) (175 ) and equipment

(=) Free cash flow ($) (18 ) 26 27 93 90 236



"Net debt-to-totalcapitalization" computation

Bank ($) 4 - - - - indebtedness

Long-term debt (+) due within one ($) 301 1 13 13 13 year

(+) 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 ($) (671 ) (152 ) (124 ) (218 ) (309 ) equivalents

(=) Net debt ($) 137 950 977 880 788

(+) Shareholders' ($) 2,091 2,181 2,277 2,211 2,260 equity

(=) Total ($) 2,228 3,131 3,254 3,091 3,048 capitalization

Net debt ($) 137 950 977 880 788

(/) Total ($) 2,228 3,131 3,254 3,091 3,048 capitalization

Net (=) debt-to-total (%) 6 % 30 % 30 % 28 % 26 % capitalization

"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 ofOperating income(loss) to "Operatingincome (loss)before items"

Operating ($) 12 - - - 12 (10) - - - (10) 2 - - - 2 income (loss)

Impairment of (+) long-lived ($) 6 - - - 6 - - - - - 6 - - - 6 assets

Closure and (+) restructuring ($) 2 - - - 2 1 - - - 1 3 - - - 3 costs

Asset (+) conversion ($) 8 - - - 8 - - - - - 8 - - - 8 costs

Operating (=) income (loss) ($) 28 - - - 28 (9) - - - (9) 19 - - - 19 before items



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

Operating income (loss) ($) 28 - - - 28 (9) - - - (9) 19 - - - 19 before items

Non-service (+) components of ($) 6 - - - 6 - - - - - 6 - - - 6 net periodic benefit cost

Depreciation (+) and ($) 54 - - - 54 - - - - - 54 - - - 54 amortization

(=) EBITDA before ($) 88 - - - 88 (9) - - - (9) 79 - - - 79 items

(/) Sales ($) 944 - - - 944 - - - - - 944 - - - 944

(=) EBITDA margin (%) 9% - - - 9% - - - - - 8% - - - 8% before items

"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 ofOperating income(loss) to "Operatingincome (loss)before items"

Operating ($) 4 3 (140) (10) (143) (5) (7) (12) (10) (34) (1) (4) (152) (20) (177) income (loss)

Impairment of (+) long-lived ($) - - 111 25 136 - - - - - - - 111 25 136 assets

Closure and (+) restructuring ($) - 1 67 28 96 - - 1 2 3 - 1 68 30 99 costs

Operating (=) income (loss) ($) 4 4 38 43 89 (5) (7) (11) (8) (31) (1) (3) 27 35 58 before items



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

Operating income (loss) ($) 4 4 38 43 89 (5) (7) (11) (8) (31) (1) (3) 27 35 58 before items

Non-service (+) components of ($) 4 6 4 5 19 - (1) - (1) (2) 4 5 4 4 17 net periodic benefit cost

Net gains on disposals of (-) property, ($) - - - (1) (1) - - - - - - - - (1) (1) plant and

equipment

Depreciation (+) and ($) 58 56 56 53 223 - - - - - 58 56 56 53 223 amortization

(=) EBITDA before ($) 66 66 98 100 330 (5) (8) (11) (9) (33) 61 58 87 91 297 items

(/) Sales ($) 1,031 802 899 920 3,652 - - - - - 1,031 802 899 920 3,652

(=) EBITDA margin (%) 6% 8% 11% 11% 9% - - - - - 6% 7% 10% 10% 8% before items

"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.

DomtarCorporationSupplementalSegmentedInformation(In millions ofdollars, unlessotherwisenoted)

2021 2020

Q1 Q1 Q2 Q3 Q4 Year

Pulp and Paper Segment

Sales ($) 944 1,031 802 899 920 3,652

Operating ($) 12 4 3 (140 ) (10 ) (143 )income (loss)

Depreciationand ($) 54 58 56 56 53 223 amortization

Impairment oflong-lived ($) 6 - - 111 25 136 assets

Paper

Paper ('000 534 648 436 524 551 2,159 Production ST)

Paper Shipments ('000 546 679 459 550 542 2,230 - Manufactured ST)

Communication ('000 453 569 366 449 441 1,825 Papers ST)

Specialty and ('000Packaging ST) 93 110 93 101 101 405 Papers

Paper Shipments- Sourced from ('000 18 22 12 16 19 69 ST)3rd parties

Paper Shipments ('000 564 701 471 566 561 2,299 - Total ST)

Pulp

Pulp Shipments ('000 481 422 459 424 482 1,787 ADMT)

Pulp Shipments mix:

Hardwood Kraft (%) 4 % 3 % 2 % 4 % 6 % 4 %Pulp

Softwood Kraft (%) 60 % 52 % 57 % 62 % 62 % 58 %Pulp

Fluff Pulp (%) 36 % 45 % 41 % 34 % 32 % 38 %



Average $US / 1.266 1.344 1.385 1.332 1.304 1.341 Exchange Rates $CAN

$CAN 0.790 0.744 0.722 0.751 0.767 0.746 / $US



Note: the term "ST" refers to a short ton and the term "ADMT" refers to an airdry metric ton.

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20210506005589/en/

CONTACT: 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