Domtar Corporation Reports Preliminary First Quarter 2021 Financial Results

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.

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
Cost reduction program	Pulp and Paper	Impairment of long-lived assets	$6	$4	$0.07
Cost reduction program	Pulp and Paper	Closure and restructuring costs	$2	$1	$0.02
Cost reduction program	Pulp and Paper	Asset conversion costs	$8	$6	$0.11
Cost reduction program	Corporate	Closure and restructuring costs	$1	$1	$0.02
Fourth quarter 2020
Cost reduction program	Pulp and Paper	Impairment of long-lived assets	$25	$15	$0.27
Cost reduction program	Pulp and Paper	Closure and restructuring costs	$28	$19	$0.34
Cost reduction program	Corporate	Closure and restructuring costs	$2	$1	$0.02
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 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 quart