Domtar : Name Quarterly Reconciliation of Non-GAAP Financial Measures

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.

													2019																		2018
Reconciliation of "Earnings before items" to Net earnings (loss)					Q1		Q2		Q3		Q4	Year				Q1		Q2		Q3		Q4	Year
		Net earnings (loss)		($)			80				18			20			(34	)			84				54				43				99				87				283
	(+)	Pension settlement loss		($)			-				-			-			22				22				-				-				-				-				-
	(+)	Impairment of long-lived assets		($)			8				12			26			-				46				-				-				-				5				5
	(+) Closure and restructuring costs	($)		3			6		9		14			32				-		-		-	6			6
	(+)	Litigation settlement		($)			-				-			-			-				-				2				-				-				-				2
	(-)	Net gains on disposals of property, plant and equipment		($)			-				-			-			-				-				(1	)			(2	)			-				-				(3)
	(-)	U.S. Tax Reform		($)			-				-			-			-				-				-				-				(7	)			5				(2)
	(=) Earnings before items	($)		91			36		55		2			184			55			41			92			103			291
	(/)	Weighted avg. number of common shares outstanding (diluted)		(millions)			63.2				63.3			61.7			57.5				61.4				62.9				63.2				63.2				63.0				63.1
	(=)	Earnings before items per diluted share		($)			1.44				0.57			0.89			0.03				3.00				0.87				0.65				1.46				1.63				4.61
Reconciliation of "EBITDA" and "EBITDA before items" to
Net earnings (loss)
		Net earnings (loss)		($)			80				18			20			(34	)			84				54				43				99				87				283
	(+)	Equity loss, net of taxes		($)			1				-			-			1				2				-				-				1				1				2
	(+)	Income tax expense (benefit)		($)			24				5			(1	)		(26	)			2				11				8				3				35				57
	(+)	Interest expense, net		($)			13				13			12			14				52				16				16				15				15				62
	(+)	Depreciation and amortization		($)			73				74			72			74				293				79				79				75				75				308
	(+) Impairment of long-lived assets	($)		10			15		33			-	58				-		-		-	7			7
	(-)	Net gains on disposals of property, plant and equipment		($)			-				-			-			-				-				(1	)			(3	)			-				-				(4)
	(=)	EBITDA		($)			201				125			136			29				491				159				143				193				220				715
	(/)	Sales		($)			1,376				1,317			1,283			1,244				5,220				1,345				1,353				1,367				1,390				5,455
	(=) EBITDA margin	(%)		15%		9%	11%	2%		9%		12%		11%		14%		16%		13%
		EBITDA		($)			201				125			136			29				491				159				143				193				220				715
	(+) Pension settlement loss	($)			-		-		-	30			30				-		-		-		-		-
	(+)	Closure and restructuring costs		($)			4				8			11			19				42				-				-				-				8				8
	(+)	Litigation settlement		($)			-				-			-			-				-				2				-				-				-				2
	(=)	EBITDA before items		($)			205				133			147			78				563				161				143				193				228				725
	(/)	Sales		($)			1,376				1,317			1,283			1,244				5,220				1,345				1,353				1,367				1,390				5,455
	(=)	EBITDA margin before items		(%)			15	%			10	%		11	%		6	%			11	%			12	%			11	%			14	%			16	%			13	%

Domtar Corporation

Quarterly Reconciliation of Non-GAAP Financial Measures (In millions of dollars, unless otherwise noted)

													2019																	2018
							Q1			Q2		Q3		Q4		Year				Q1			Q2			Q3			Q4		Year
Reconciliation of "Free cash flow" to Cash flows from operating activities
		Cash flows from operating activities		($)			55				119			108			160				442				90				177				70				217				554
	(-)	Additions to property, plant and equipment		($)			(46	)			(55	)		(56	)		(98	)			(255	)			(25	)			(37	)			(49	)			(84	)			(195)
	(=)	Free cash flow		($)			9				64			52			62				187				65				140				21				133				359
"Net debt-to-total capitalization" computation
		Bank indebtedness		($)			3				3			1			9								-				1				-				-
	(+) Long-term debt due within one year	($)		1		1		1		1							1		1		1		1
	(+)	Long-term debt		($)			853				824			938			938								1,103				1,103				1,103				853
	(=)	Debt		($)			857				828			940			948								1,104				1,105				1,104				854
	(-)	Cash and cash equivalents		($)			(94	)			(93	)		(98	)		(61	)							(152	)			(264	)			(256	)			(111	)
	(=)	Net debt		($)			763				735			842			887								952				841				848				743
	(+)	Shareholders' equity		($)			2,608				2,619			2,439			2,376								2,493				2,458				2,553				2,538
	(=) Total capitalization	($)		3,371		3,354		3,281		3,263							3,445		3,299		3,401		3,281
		Net debt		($)			763				735			842			887								952				841				848				743
	(/)	Total capitalization		($)			3,371				3,354			3,281			3,263								3,445				3,299				3,401				3,281
	(=)	Net debt-to-total capitalization		(%)			23	%			22	%		26	%		27	%							28	%			25	%			25	%			23	%

"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 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
Reconciliation of Operating income (loss)		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
to "Operating income (loss) before items"
	Operating income (loss)	($)	144	62	31	(12)	225		(8)	(18)	2	9	(15)		(21)	(10)	(4)	(12)	(47)		115	34	29	(15)	163
(+)	Impairment of long-lived assets	($)	-	-	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	5	279	6	5	9	11	31	(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	($)	144	62	68	5	279		6	5	9	11	31		(21)	(10)	(4)	(12)	(47)		129	57	73	4	263
(+)	Pension settlement loss	($)	-	-	-	30	30		-	-	-	-	-		-	-	-	-	-		-	-	-	30	30
(+)	Non-service components of net periodic benefit cost	($)	3	3	2	(28)	(20)		-	-	-	-	-		-	(1)	-	(2)	(3)		3	2	2	(30)	(23)
(+)Depreciation and amortization	($)	57	58	56	57	228	16	16	16	17	65		-	-	-	-	-	73	74	72	74	293
(=)	EBITDA before items	($)	204	123	126	64	517		22	21	25	28	96		(21)	(11)	(4)	(14)	(50)		205	133	147	78	563
(/)	Sales	($)	1,147	1,096	1,071	1,018	4,332		247	237	227	242	953		-	-	-	-	-		1,394	1,333	1,298	1,260	5,285
(=)	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.

Domtar Corporation

Quarterly Reconciliation of Non-GAAP Financial Measures - By Segment 2018

(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
Reconciliation of Operating income (loss)		Q1'18	Q2'18		Q3'18		Q4'18	Year		Q1'18 Q2'18 Q3'18 Q4'18 Year		Q1'18 Q2'18 Q3'18 Q4'18 Year		Q1'18 Q2'18		Q3'18		Q4'18	Year
to "Operating income (loss) before items"
	Operating income (loss)	($)	76	79		135		148	438		8		2		(3)		(12)		(5)		(7)		(19)		(18)		(3)		(47)		77	62		114		133	386
(+)	Impairment of long-lived assets	($)	-	-		-		-	-		-		-		-		7		7		-		-		-		-		-		-	-		-		7	7
(-)	Net gains on disposals of property, plant and					-		-			-		-		-		-		-		-		-		-		-		-					-		-
	equipment	($)	(1)	(3)			(4)												(1)	(3)			(4)
(+)Closure and restructuring costs	($)	-	-		-		-	-		-		-		-	8	8		-		-		-	-		-		-	-		-	8	8
(+)	Litigation settlement	($)	-	-		-		-	-		-		-		-		-		-		2		-		-		-		2		2	-		-		-	2
(=)	Operating income (loss) before items	($)	75	76		135		148	434		8		2		(3)		3		10		(5)		(19)		(18)		(3)		(45)		78	59		114		148	399
Reconciliation of "Operating income (loss)
before items" to "EBITDA before items"
	Operating income (loss) before items	($)	75	76		135		148	434		8		2		(3)		3		10		(5)		(19)		(18)		(3)		(45)		78	59		114		148	399
(+)	Non-service components of net periodic benefit cost	($)	4	6		4		5	19		-		-		-		-		-		-		(1)		-		-		(1)		4	5		4		5	18
(+)	Depreciation and amortization	($)	61	61		58		58	238		18		18		17		17		70		-		-		-		-		-		79	79		75		75	308
(=)EBITDA before items	($)	140	143	197	211	691	26	20	14	20	80	(5)	(20)	(18)		(3)	(46)	161	143	193	228	725
(/)	Sales	($)	1,100	1,123		1,146		1,154	4,523		262		247		237		254		1,000		-		-		-		-		-		1,362	1,370		1,383		1,408	5,523
(=)EBITDA margin before items	(%)	13%	13%	17%	18%	15%	10%	8%	6%	8%	8%		-		-		-	-		-	12%	10%	14%	16%	13%

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