falsetruefalsefalsefalseQ1false0001381531--12-31http://fasb.org/us-gaap/2024#RelatedPartyMemberhttp://fasb.org/us-gaap/2024#RelatedPartyMemberhttp://fasb.org/us-gaap/2024#NetPeriodicDefinedBenefitsExpenseReversalOfExpenseExcludingServiceCostComponenthttp://fasb.org/us-gaap/2024#NetPeriodicDefinedBenefitsExpenseReversalOfExpenseExcludingServiceCostComponenthttp://fasb.org/us-gaap/2024#NetPeriodicDefinedBenefitsExpenseReversalOfExpenseExcludingServiceCostComponenthttp://fasb.org/us-gaap/2024#NetPeriodicDefinedBenefitsExpenseReversalOfExpenseExcludingServiceCostComponenthttp://fasb.org/us-gaap/2024#SecuredOvernightFinancingRateSofrMember0001381531us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310001381531us-gaap:OperatingSegmentsMemberck0001381531:TissueMember2024-01-012024-03-310001381531ck0001381531:AssetBasedLendingFacilityFirstInLastOutLoanMemberck0001381531:AssetBasedLendingFacilityMemberck0001381531:ApplicableMarginRateMember2025-03-312025-03-310001381531us-gaap:AdditionalPaidInCapitalMember2025-03-310001381531ck0001381531:PaperAndPackagingMemberus-gaap:OperatingSegmentsMember2025-01-012025-03-310001381531ck0001381531:NaturalGasSwapContractsMember2025-01-012025-03-310001381531ck0001381531:BritishColumbiaMillMemberck0001381531:CroftonRestructuringAndImpairmentCostsBritishColumbiaMillMember2024-01-012024-03-310001381531ck0001381531:CountervailingDutiesMember2024-01-012024-03-310001381531ck0001381531:CurrencyOptionsMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-01-012024-12-310001381531ck0001381531:AntiDumpingDutiesMember2024-12-310001381531ck0001381531:NaturalGasSwapContractsMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2025-01-012025-03-310001381531us-gaap:RetainedEarningsMember2025-01-012025-03-310001381531ck0001381531:LinerboardMemberus-gaap:OperatingSegmentsMember2024-01-012024-03-310001381531ck0001381531:AssetBasedLendingFacilityFirstInLastOutLoanMemberck0001381531:AssetBasedLendingFacilityMember2025-02-260001381531us-gaap:AccumulatedOtherComprehensiveIncomeMember2025-03-310001381531us-gaap:AccumulatedTranslationAdjustmentMember2025-03-310001381531ck0001381531:CountervailingDutiesMember2017-04-282017-11-070001381531us-gaap:OperatingSegmentsMemberck0001381531:SpecialtyAndPackagingPaperMember2025-01-012025-03-310001381531ck0001381531:CountervailingDutiesMember2024-01-012024-12-310001381531us-gaap:PensionPlansDefinedBenefitMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2024-12-310001381531us-gaap:RetainedEarningsMember2024-03-310001381531us-gaap:AccumulatedOtherComprehensiveIncomeMember2025-01-012025-03-310001381531us-gaap:PensionPlansDefinedBenefitMember2025-03-310001381531us-gaap:OperatingSegmentsMember2024-01-012024-03-310001381531ck0001381531:AntiDumpingDutiesMember2017-06-302017-11-070001381531us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberck0001381531:CurrencyOptionsAndForwardsMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-01-012024-03-310001381531ck0001381531:BankTermLoanMember2025-01-282025-01-280001381531ck0001381531:CountervailingDutiesMember2021-12-022022-08-0800013815312024-01-012024-03-310001381531us-gaap:AccumulatedTranslationAdjustmentMember2025-01-012025-03-310001381531us-gaap:ForeignExchangeForwardMember2025-01-012025-03-310001381531ck0001381531:AntiDumpingDutiesMember2022-08-092023-07-310001381531us-gaap:OperatingSegmentsMemberck0001381531:PulpAndTissueMember2025-01-012025-03-310001381531ck0001381531:AntiDumpingDutiesMember2020-12-012021-12-010001381531us-gaap:CorporateNonSegmentMember2025-01-012025-03-310001381531us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2024-01-012024-03-310001381531ck0001381531:NewReceiptcoOpcoLLCMember2024-11-010001381531ck0001381531:CountervailingDutiesMember2025-03-310001381531us-gaap:PensionPlansDefinedBenefitMember2024-01-012024-03-310001381531ck0001381531:AntiDumpingDutiesMember2024-01-012024-03-310001381531ck0001381531:CountervailingDutiesMember2022-08-092023-07-310001381531us-gaap:FairValueInputsLevel2Memberck0001381531:LongTermDebtDueWithinOneYearMember2024-12-310001381531ck0001381531:ClimateChangeAndAirQualityRegulationsMembersrt:MinimumMemberck0001381531:AffordableCleanEnergyMember2023-05-232023-05-2300013815312024-01-012024-12-310001381531us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-12-310001381531us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2025-01-012025-03-310001381531ck0001381531:NewAccountingPronouncementsMember2025-01-012025-03-310001381531ck0001381531:PrepaidExpensesMemberck0001381531:NaturalGasSwapContractsMember2025-03-310001381531us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberck0001381531:CurrencyOptionsAndForwardsMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2025-01-012025-03-310001381531ck0001381531:OtherCostsMember2024-01-012024-03-310001381531us-gaap:InsuranceClaimsMember2025-01-012025-03-310001381531us-gaap:AccumulatedTranslationAdjustmentMember2024-01-012024-12-310001381531us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMemberus-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2023-12-310001381531us-gaap:ForeignExchangeForwardMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-01-012024-12-310001381531us-gaap:OperatingSegmentsMemberck0001381531:MarketPulpProductMember2024-01-012024-03-310001381531ck0001381531:LongTermDebtDueWithinOneYearMember2024-12-310001381531ck0001381531:PaperAndPackagingMemberus-gaap:OperatingSegmentsMember2024-01-012024-03-310001381531us-gaap:RevolvingCreditFacilityMemberck0001381531:AssetBasedLendingFacilityMember2025-03-310001381531us-gaap:OperatingSegmentsMemberck0001381531:PulpAndTissueMember2024-01-012024-03-310001381531us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMemberus-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2024-01-012024-12-310001381531us-gaap:FairValueInputsLevel2Memberus-gaap:ForeignExchangeOptionMemberck0001381531:TradeAndOtherPayablesMember2025-03-310001381531us-gaap:ForeignExchangeOptionMemberus-gaap:AccumulatedTranslationAdjustmentMember2025-01-012025-03-310001381531ck0001381531:NewsprintMemberus-gaap:OperatingSegmentsMember2024-01-012024-03-310001381531us-gaap:AdditionalPaidInCapitalMember2024-03-310001381531ck0001381531:NewReceiptcoOpcoLLCMember2024-11-012024-11-010001381531us-gaap:PensionPlansDefinedBenefitMemberus-gaap:OtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2024-01-012024-12-310001381531us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001381531us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001381531ck0001381531:AssetBasedLendingFacilityFirstInLastOutLoanMemberus-gaap:BaseRateMemberck0001381531:AssetBasedLendingFacilityMember2025-03-312025-03-310001381531ck0001381531:NaturalGasSwapContractsMember2024-01-012024-12-310001381531us-gaap:ForeignExchangeForwardMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2025-01-012025-03-310001381531ck0001381531:OtherLiabilitiesAndDeferredCreditsMember2025-03-310001381531us-gaap:RetainedEarningsMember2023-12-310001381531us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-12-310001381531ck0001381531:NaturalGasSwapContractsMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-01-012024-12-310001381531us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberck0001381531:NaturalGasSwapContractsMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-01-012024-03-310001381531ck0001381531:BritishColumbiaMillMemberck0001381531:CroftonRestructuringAndImpairmentCostsBritishColumbiaMillMember2025-01-012025-03-310001381531us-gaap:OperatingSegmentsMemberck0001381531:CommunicationPaperMember2024-01-012024-03-310001381531currency:CADck0001381531:CanadianSubsidiaryMembersrt:MaximumMember2025-03-310001381531us-gaap:FairValueInputsLevel3Memberck0001381531:OtherLiabilitiesAndDeferredCreditsMember2025-03-310001381531ck0001381531:AntiDumpingDutiesMember2025-03-310001381531us-gaap:OtherAssetsMember2025-03-310001381531us-gaap:RevolvingCreditFacilityMemberck0001381531:AssetBasedLendingFacilityMember2021-11-300001381531us-gaap:ForeignExchangeForwardMember2024-01-012024-12-310001381531us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMemberus-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2025-03-310001381531us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-01-012024-03-310001381531us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMemberus-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2025-01-012025-03-310001381531us-gaap:OperatingSegmentsMemberck0001381531:SpecialtyAndPackagingPaperMember2024-01-012024-03-310001381531ck0001381531:OtherLiabilitiesAndDeferredCreditsMember2024-12-310001381531ck0001381531:SuperfundSiteMemberck0001381531:EnvironmentalProtectionAgencyMember2025-01-012025-03-310001381531us-gaap:CorporateNonSegmentMember2024-01-012024-03-310001381531ck0001381531:CountervailingDutiesMember2024-12-310001381531us-gaap:OperatingSegmentsMemberck0001381531:WoodMember2024-01-012024-03-310001381531us-gaap:AccumulatedTranslationAdjustmentMember2024-12-3100013815312024-03-310001381531ck0001381531:BankTermLoanMember2025-01-012025-03-310001381531ck0001381531:AntiDumpingDutiesMember2023-08-012023-09-060001381531us-gaap:ForeignExchangeOptionMember2025-01-012025-03-310001381531us-gaap:PensionPlansDefinedBenefitMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2025-01-012025-03-310001381531us-gaap:InsuranceClaimsMemberck0001381531:OwnerMember2025-01-012025-03-310001381531us-gaap:CustomerRelationshipsMember2024-12-310001381531ck0001381531:BankTermLoanMember2025-01-280001381531us-gaap:FairValueInputsLevel2Memberck0001381531:PrepaidExpensesMemberck0001381531:NaturalGasSwapContractsMember2025-03-3100013815312025-03-310001381531us-gaap:OtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMemberus-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2024-01-012024-12-310001381531ck0001381531:SuperfundSiteMemberck0001381531:EnvironmentalProtectionAgencyMember2023-05-170001381531ck0001381531:AntiDumpingDutiesMember2025-01-012025-03-310001381531us-gaap:TradeNamesMember2025-03-310001381531ck0001381531:TradeAndOtherPayablesMemberus-gaap:ForeignExchangeOptionMember2025-03-310001381531ck0001381531:PaperAndPackagingMember2025-03-310001381531us-gaap:AccumulatedTranslationAdjustmentMember2023-12-310001381531us-gaap:IntersegmentEliminationMember2024-01-012024-03-310001381531ck0001381531:ForecastedNaturalGasAndOilPurchasesMembersrt:MaximumMember2025-03-310001381531ck0001381531:AntiDumpingDutiesMember2024-01-012024-12-310001381531ck0001381531:CountervailingDutiesMember2023-08-012024-08-180001381531us-gaap:OperatingSegmentsMember2025-01-012025-03-310001381531ck0001381531:EspanolaOntarioMillMemberck0001381531:IdlingAndSaleOfEspanolaOntarioMillMember2025-01-012025-03-310001381531ck0001381531:AntiDumpingDutiesMember2024-08-192024-09-300001381531ck0001381531:CountervailingDutiesMember2023-12-310001381531ck0001381531:PrepaidExpensesMemberus-gaap:ForeignExchangeOptionMember2025-03-310001381531us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMemberus-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2024-12-310001381531us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-01-012024-12-310001381531us-gaap:PensionPlansDefinedBenefitMember2025-01-012025-03-310001381531us-gaap:TradeNamesMember2024-12-310001381531us-gaap:StandbyLettersOfCreditMember2025-03-310001381531ck0001381531:CountervailingDutiesMember2020-12-012021-12-010001381531us-gaap:InsuranceClaimsMember2024-01-012024-03-310001381531us-gaap:RevolvingCreditFacilityMemberck0001381531:AssetBasedLendingFacilityMember2025-02-260001381531dei:OtherAddressMember2025-01-012025-03-310001381531ck0001381531:AntiDumpingDutiesMember2017-11-082020-11-290001381531ck0001381531:CurrencyOptionsMember2024-01-012024-12-310001381531us-gaap:FairValueInputsLevel2Member2024-12-3100013815312024-12-310001381531us-gaap:IndemnificationGuaranteeMember2025-01-012025-03-310001381531us-gaap:RevolvingCreditFacilityMemberck0001381531:AssetBasedLendingFacilityMember2025-01-012025-03-310001381531us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-12-310001381531us-gaap:AdditionalPaidInCapitalMember2024-12-310001381531us-gaap:PensionPlansDefinedBenefitMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2024-01-012024-12-310001381531us-gaap:FairValueInputsLevel2Memberck0001381531:PrepaidExpensesMemberck0001381531:NaturalGasSwapContractsMember2024-12-310001381531ck0001381531:CountervailingDutiesMember2024-08-192024-09-300001381531us-gaap:OperatingSegmentsMemberck0001381531:TissueMember2025-01-012025-03-3100013815312025-01-012025-03-310001381531us-gaap:ForeignExchangeOptionMemberus-gaap:AccumulatedTranslationAdjustmentMember2024-01-012024-12-310001381531us-gaap:CustomerRelationshipsMember2025-03-310001381531us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2025-01-012025-03-310001381531us-gaap:AdditionalPaidInCapitalMember2023-12-310001381531us-gaap:OperatingSegmentsMemberck0001381531:WoodProductsMember2024-01-012024-03-310001381531ck0001381531:CoTenantMemberus-gaap:InsuranceClaimsMember2025-01-012025-03-310001381531us-gaap:FairValueInputsLevel2Member2025-03-310001381531us-gaap:OtherComprehensiveIncomeMember2024-01-012024-12-310001381531ck0001381531:CurtailmentArkansasMillMemberck0001381531:AshdownCurtailmentArkansasMillMember2024-01-012024-03-310001381531ck0001381531:PrepaidExpensesMemberck0001381531:NaturalGasSwapContractsMember2024-12-310001381531us-gaap:UseRightsMember2025-03-310001381531us-gaap:ForeignExchangeOptionMember2024-01-012024-12-310001381531ck0001381531:LongTermDebtDueWithinOneYearMember2025-03-310001381531us-gaap:FairValueInputsLevel2Memberus-gaap:ForeignExchangeOptionMemberck0001381531:TradeAndOtherPayablesMember2024-12-310001381531ck0001381531:AntiDumpingDutiesMember2023-12-310001381531us-gaap:FairValueInputsLevel3Memberck0001381531:OtherLiabilitiesAndDeferredCreditsMember2024-12-310001381531ck0001381531:AntiDumpingDutiesMember2021-12-022022-08-080001381531ck0001381531:EspanolaOntarioMillMemberck0001381531:IdlingAndSaleOfEspanolaOntarioMillMember2024-01-012024-03-310001381531us-gaap:FairValueInputsLevel2Memberck0001381531:PrepaidExpensesMemberus-gaap:ForeignExchangeOptionMember2025-03-3100013815312023-12-310001381531ck0001381531:CountervailingDutiesMember2017-11-082020-11-300001381531ck0001381531:CommunicationPaperMemberus-gaap:OperatingSegmentsMember2025-01-012025-03-310001381531ck0001381531:AntiDumpingDutiesMember2023-09-072024-08-180001381531us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2025-01-012025-03-310001381531us-gaap:OperatingSegmentsMemberck0001381531:MarketPulpProductMember2025-01-012025-03-310001381531ck0001381531:AssetBasedLendingFacilityFirstInLastOutLoanMemberck0001381531:AssetBasedLendingFacilityMemberck0001381531:SecuredOvernightFinancingRateAdjustedMember2025-03-312025-03-310001381531us-gaap:OperatingSegmentsMemberck0001381531:WoodMember2025-01-012025-03-310001381531us-gaap:IntersegmentEliminationMember2025-01-012025-03-310001381531us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2025-03-310001381531us-gaap:RetainedEarningsMember2025-03-310001381531us-gaap:FairValueInputsLevel2Memberck0001381531:LongTermDebtDueWithinOneYearMember2025-03-310001381531ck0001381531:CountervailingDutiesMember2025-01-012025-03-310001381531us-gaap:OperatingSegmentsMemberck0001381531:WoodProductsMember2025-01-012025-03-310001381531us-gaap:ForeignExchangeOptionMemberck0001381531:TradeAndOtherPayablesMember2024-12-310001381531us-gaap:RetainedEarningsMember2024-12-310001381531ck0001381531:LinerboardMemberus-gaap:OperatingSegmentsMember2025-01-012025-03-310001381531us-gaap:OtherPostretirementBenefitPlansDefinedBenefitMember2025-03-310001381531ck0001381531:PaperAndPackagingMember2024-12-310001381531us-gaap:PensionPlansDefinedBenefitMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2025-03-310001381531us-gaap:PensionPlansDefinedBenefitMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-12-310001381531ck0001381531:NewsprintMemberus-gaap:OperatingSegmentsMember2025-01-012025-03-310001381531us-gaap:UseRightsMember2024-12-310001381531ck0001381531:NewReceiptcoOpcoLLCMember2025-01-012025-03-310001381531us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberck0001381531:NaturalGasSwapContractsMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2025-01-012025-03-31xbrli:purexbrli:sharesiso4217:CADck0001381531:Customeriso4217:USDxbrli:sharesck0001381531:Segmentiso4217:USD

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to_______

COMMISSION FILE NUMBER 001-33164

DOMTAR CORPORATION

(Exact name of registrant as specified in its charter)

     Delaware
(State or other jurisdiction of incorporation or organization)

     20-5901152
(I.R.S. Employer Identification No.)

      
395 de Maisonneuve Blvd. West
Montreal, Quebec, Canada H3A 1L6
(514) 848-5555

     234 Kingsley Park Drive
Fort Mill, SC  29715
 (803) 802-7500

(Address of principal executive offices, zip code, telephone number)

Securities registered pursuant to Section 12(b) of the Act: None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation ST (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ NO ☐ *

*The Registrant is a voluntary filer and not subject to the filing requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934. Although not subject to these filing requirements, the Registrant has filed all reports that would have been required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months had the Registrant been subject to such requirements.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

There are no longer publicly traded common shares of Domtar Corporation.

DOMTAR CORPORATION

FORM 10-Q

For the Quarterly Period Ended March 31, 2025

INDEX


PART I	FINANCIAL INFORMATION	3

ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)	3

	CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS)	3

	CONSOLIDATED BALANCE SHEETS	4

	CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY	5

	CONSOLIDATED STATEMENTS OF CASH FLOWS	6

	INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	7

	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	8

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	36

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	49

ITEM 4.	CONTROLS AND PROCEDURES	49

PART II	OTHER INFORMATION	50

ITEM 1.	LEGAL PROCEEDINGS	50

ITEM 1A.	RISK FACTORS	50

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	51

ITEM 3.	DEFAULT UPON SENIOR SECURITIES	51

ITEM 4.	MINE SAFETY DISCLOSURES	51

ITEM 5.	OTHER INFORMATION	51

ITEM 6.	EXHIBITS	52

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS (UNAUDITED)

DOMTAR CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED, IN MILLIONS OF DOLLARS)



	For the three months ended
	March 31,			March 31,
	2025			2024

	$			$
Sales		1,860			1,786
Operating expenses
Cost of sales, excluding depreciation and amortization		1,608			1,557
Depreciation and amortization		88			84
Selling, general and administrative		97			91
Impairment of long-lived assets (NOTE 10)		12			—
Closure and restructuring costs (NOTE 10)		—			11
Other operating income, net		(11	)		(16	)
		1,794			1,727
Operating income		66			59
Interest expense, net		61			59
Non-service components of net periodic benefit cost (NOTE 5)		(4	)		(5	)
Earnings before income taxes		9			5
Income tax expense (NOTE 6)		3			5
Net earnings		6			—
Other comprehensive income (loss) (NOTE 12):
Net derivative gains (losses) on cash flow hedges:
Net gains (losses) arising during the period, net of tax of $(2) (2024 – $4)		5			(14	)
Less: Reclassification adjustment for losses included in net earnings, net of tax of $(2) (2024 – $(1))		8			3
Foreign currency translation adjustments		1			(26	)
Change in unrecognized losses and prior service cost related to pension and other post-retirement benefit plans, net of tax of nil (2024 – nil)		(1	)		—
Other comprehensive income (loss)		13			(37	)
Comprehensive income (loss)		19			(37	)

The accompanying notes are an integral part of the consolidated financial statements.

DOMTAR CORPORATION

CONSOLIDATED BALANCE SHEETS

(UNAUDITED, IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)



	At
	March 31,			December 31,
	2025			2024

	$			$
Assets
Current assets
Cash and cash equivalents, including restricted cash of $13 and $14		74			97
Receivables, less allowances of $5 and $5		836			767
Receivables from related party (NOTE 16)		34			35
Inventories (NOTE 7)		1,399			1,394
Prepaid expenses		58			53
Income and other taxes receivable		39			45
Other current assets		12			16
Assets held for sale (NOTE 3)		8			—
Total current assets		2,460			2,407
Property, plant and equipment, net		3,475			3,535
Operating lease right-of-use assets		108			113
Goodwill and other intangible assets, net (NOTE 8)		157			161
Deferred income tax assets		475			482
Other assets (NOTE 9)		632			618
Total assets		7,307			7,316
Liabilities and shareholders' equity
Current liabilities
Bank indebtedness		9			8
Trade and other payables		918			937
Income and other taxes payable		25			11
Operating lease liabilities due within one year		28			28
Due to related party (NOTE 16)		14			7
Long-term debt due within one year (NOTE 11)		74			66
Total current liabilities		1,068			1,057
Long-term debt (NOTE 11)		2,537			2,557
Operating lease liabilities		80			86
Deferred income taxes and other		29			29
Pension and other post-retirement benefit obligations (NOTE 5)		667			684
Other liabilities and deferred credits (NOTE 13)		319			315
Commitments and contingencies (NOTE 14)
Shareholders' equity
Common stock $0.01 par value; 100 shares issued and outstanding		—			—
Additional paid-in capital		2,827			2,827
Deficit		(119	)		(125	)
Accumulated other comprehensive loss		(101	)		(114	)
Total shareholders' equity		2,607			2,588
Total liabilities and shareholders' equity		7,307			7,316

The accompanying notes are an integral part of the consolidated financial statements.

DOMTAR CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED, IN MILLIONS OF DOLLARS)


	For the three months ended
	March 31, 2025
	Additional paid-in capital		Deficit			Accumulated other comprehensive loss			Total shareholders' equity

	$		$			$			$
Balance at December 31, 2024		2,827		(125	)		(114	)		2,588
Net earnings		—		6			—			6
Net derivative gains on cash flow hedges:
Net gains arising during the period, net of tax of $(2)		—		—			5			5
Less: Reclassification adjustment for losses included in net earnings, net of tax of $(2)		—		—			8			8
Foreign currency translation adjustments		—		—			1			1
Change in unrecognized losses and prior service cost related to pension and other post-retirement benefit plans, net of tax of nil		—		—			(1	)		(1	)
Balance at March 31, 2025		2,827		(119	)		(101	)		2,607


	For the three months ended
	March 31, 2024
	Additional paid-in capital		Deficit			Accumulated other comprehensive loss			Total shareholders' equity

	$		$			$			$
Balance at December 31, 2023		2,727		(108	)		(44	)		2,575
Net earnings		—		—			—			—
Net derivative losses on cash flow hedges:
Net losses arising during the period, net of tax of $4		—		—			(14	)		(14	)
Less: Reclassification adjustment for losses included in net earnings, net of tax of $(1)		—		—			3			3
Foreign currency translation adjustments		—		—			(26	)		(26	)
Balance at March 31, 2024		2,727		(108	)		(81	)		2,538

The accompanying notes are an integral part of the consolidated financial statements.

DOMTAR CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED, IN MILLIONS OF DOLLARS)


	For the three months ended
	March 31,			March 31,
	2025			2024
	$			$
Operating activities
Net earnings		6			—
Adjustments to reconcile net earnings to cash flows provided from (used for) operating activities
Depreciation and amortization		88			84
Deferred income taxes and tax uncertainties (NOTE 6)		2			3
Impairment of long-lived assets (NOTE 10)		12			—
Net (gains) losses on disposals of assets		(2	)		1
Other		(1	)		(3	)
Changes in assets and liabilities
Receivables, including related party		(100	)		(44	)
Inventories		(6	)		(26	)
Prepaid expenses		3			7
Trade and other payables, including related party		29			(37	)
Income and other taxes		19			11
Difference between employer pension and other post-retirement contributions and pension and other post-retirement expense		(21	)		(29	)
Other assets and other liabilities		3			(1	)
Cash flows provided from (used for) operating activities		32			(34	)
Investing activities
Additions to property, plant and equipment		(44	)		(53	)
Proceeds from disposals of property, plant and equipment		4			—
Cash flows used for investing activities		(40	)		(53	)
Financing activities
Net change in bank indebtedness		1			(12	)
Change in revolving credit facility		(145	)		20
Issuance of long-term debt, net of debt issue costs		148			—
Repayments of long-term debt		(17	)		(16	)
Other		(3	)		—
Cash flows used for financing activities		(16	)		(8	)
Net decrease in cash and cash equivalents		(24	)		(95	)
Impact of foreign exchange on cash		—			(5	)
Cash, cash equivalents and restricted cash at beginning of period		156			203
Cash, cash equivalents and restricted cash at end of period		132			103
Supplemental cash flow information
Net cash payments (refunds) for:
Interest		45			42
Income taxes		(1	)		(8	)

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows.

Cash and cash equivalents		61			88
Restricted cash included in Cash and cash equivalents		13			15
Restricted cash included in Other assets		58			—
Total cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows		132			103

The accompanying notes are an integral part of the consolidated financial statements.

INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1	BASIS OF PRESENTATION	8

NOTE 2	RECENT ACCOUNTING PRONOUNCEMENTS	9

NOTE 3	ACQUISITION AND SALE OF BUSINESSES	10

NOTE 4	DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT	12

NOTE 5	PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS	16

NOTE 6	INCOME TAXES	17

NOTE 7	INVENTORIES	18

NOTE 8	GOODWILL AND OTHER INTANGIBLE ASSETS	19

NOTE 9	OTHER ASSETS	20

NOTE 10	CLOSURE AND RESTRUCTURING AND IMPAIRMENT OF LONG-LIVED ASSETS	21

NOTE 11	LONG-TERM DEBT	22

NOTE 12	CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS BY COMPONENT	23

NOTE 13	OTHER LIABILITIES AND DEFERRED CREDITS	25

NOTE 14	COMMITMENTS AND CONTINGENCIES	26

NOTE 15	SEGMENT DISCLOSURES	33

NOTE 16	RELATED PARTY TRANSACTIONS	35

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 1.

_________________

BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, in the opinion of Management, include all adjustments that are necessary for the fair statement of Domtar Corporation’s (“the Company”) financial position, results of operations, and cash flows for the interim periods presented. It is suggested that these consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Domtar Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the Securities and Exchange Commission. The Consolidated Balance Sheet at December 31, 2024, presented for comparative purposes in this interim report, was derived from audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

The preparation of the Consolidated Financial Statements requires management to make estimates and assumptions with respect to the reported amounts of assets, liabilities, revenue, and expenses and the disclosure of contingent assets and liabilities. Results for the first three months of the year may not necessarily be indicative of full-year results.

Certain reclassifications have been made to the prior year’s presentation to conform to the current year presentation.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 2.

_________________

RECENT ACCOUNTING PRONOUNCEMENTS

FUTURE ACCOUNTING CHANGES

INCOME TAXES DISCLOSURE

On December 14, 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures” which requires significant additional annual disclosures about income taxes, primarily focused on the disclosure of income taxes paid and the rate reconciliation table. The new guidance will be applied prospectively (with retrospective application permitted) and is effective for calendar year-end public business entities in the 2025 annual period, with early adoption permitted.

The Company is currently assessing the impact of the new disclosures on its annual financial statements.

EXPENSE DISAGGREGATION DISCLOSURE

On November 4, 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses” which requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The new guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The new guidance may be applied either prospectively or retrospectively. Early adoption is permitted.

The Company is currently evaluating the impact the new guidance will have on its disclosures.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 3.

_________________

ACQUISITION AND SALE OF BUSINESSES

Sale of Espanola, Ontario mill

Sale of Forest Products Mauricie, Quebec sawmill

On April 2, 2025, Domtar reached an agreement for the sale of the Forest Products Mauricie ("FPM") sawmill, subject to the fulfillment of closing conditions. The related assets are classified as held for sale.

Acquisition of New Receiptco Opco LLC (“Iconex Paper”)

On November 1, 2024, Domtar completed the acquisition of all the outstanding common shares of Iconex Paper from a portfolio company owned by an investment fund managed by Atlas Holdings for a purchase price of $208 million in cash. Of the purchase price, $100 million was funded through a contribution to equity by Domtar’s parent company.

Iconex Paper converts thermal paper parent rolls into point-of-sale ("POS") receipt rolls, serving customers in industries such as food service, retail, pharmacy, and financial services from its five North American locations in Arizona, Kansas, Tennessee, Virginia, and Mexico.

Domtar was determined to be the accounting acquirer in the Acquisition which was accounted for using the acquisition method of accounting. Under the acquisition method of accounting, the purchase consideration allocated to Iconex Paper’s assets and liabilities is based upon their estimated preliminary fair values at the acquisition date.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. The Company is in the process of finalizing the purchase price allocation for tax purposes; thus, the provisional measurements of deferred income tax and goodwill are subject to change. Purchase adjustments were made related to events or circumstances existing at the acquisition date. The final purchase price allocation may be materially different from the preliminary purchase price allocation. The goodwill is expected to be deductible for income tax purposes.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 3 – ACQUISITION OF BUSINESSES (CONTINUED)


Fair value of net assets acquired at the date of acquisition - Preliminary value
Receivables	$	42
Inventories		34
Prepaid expenses and other current assets		7
Property, plant and equipment		16
Operating lease right-of-use assets		16
Intangible assets - customer relationships		110
Goodwill		33
Total assets		258

Less: Assumed Liabilities
Trade and other payables		23
Other current liabilities		13
Operating lease liabilities (including short-term portion)		13
Deferred income tax liabilities		1
Total liabilities		50

Fair value of net assets acquired at the date of acquisition		208

The preliminary estimated fair value of the customer relationship intangible assets was estimated using the multi-period excess earnings method. Management applied significant judgment related to this fair value method, which included the determination of an expected EBITDA margin assumption for the forecast period, contributory asset charges, customer attrition rate, sales volume and market-participant discount rate assumptions. These significant assumptions are based on company specific information and projections, which are not observable in the market (except for the discount rate assumption) and, therefore, are considered Level 2 and Level 3 measurements. These significant assumptions are forward-looking and could be affected by future changes in economic and market conditions.

The following represents the unaudited pro forma sales and net earnings of the Company if Iconex Paper had been included in the Company's consolidated results for the three months ended March 31, 2024:


	For the three months ended
	March 31,
	2024
	(Unaudited)
	$

Sales		1,835
Net earnings		8

These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Iconex Paper to reflect the reduction in interest expense and the additional depreciation and operating costs that would have been charged assuming the fair value adjustments to inventory, property, plant and equipment, customer relationships and favorable facility leasing contracts had been applied on January 1, 2023, together with the related tax effects. In addition, these amounts include the additional interest expense incurred by the Company in relation to the financing of the acquisition. The Company did not have any material, nonrecurring pro forma adjustments directly attributable to the acquisition included in the unaudited pro forma sales and net earnings.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 4.

________________

DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT

HEDGING PROGRAMS

The Company is exposed to market risk, such as changes in currency exchange rates, commodity prices and interest rates. To the extent the Company decides to manage the volatility related to these exposures, the Company may enter into various financial derivatives that are accounted for under the derivatives and hedging guidance. These transactions are governed by the Company's hedging policies which provide direction on acceptable hedging activities, including instrument type and acceptable counterparty exposure.

Upon inception, the Company formally documents the relationship between hedging instruments and hedged items. At inception and quarterly thereafter, the Company formally assesses whether the financial instruments used in hedging transactions are effective at offsetting changes in either the cash flow or the fair value of the underlying exposures. The Company does not hold derivative financial instruments for trading purposes.

CREDIT RISK

The Company is exposed to credit risk on accounts receivable from its customers. In order to reduce this risk, the Company reviews new customers’ credit history before granting credit and conducts regular reviews of existing customers’ credit performance. As of March 31, 2025 and December 31, 2024, no single customer represented more than 10% of the Company's receivables.

The Company is exposed to credit risk in the event of non-performance by counterparties to its financial instruments. The Company attempts to minimize this exposure by entering into contracts with counterparties that are believed to be of high credit quality. Collateral or other security to support financial instruments subject to credit risk is usually not obtained. The credit standing of counterparties is regularly monitored.

INTEREST RATE RISK

The Company is exposed to interest rate risk arising from fluctuations in interest rates on its cash and cash equivalents, bank indebtedness, revolving credit facility, term loan and long-term debt. The Company’s objective in managing exposure to interest rate changes is to minimize the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs. The Company may manage this interest rate exposure through the use of derivative instruments such as interest rate swap contracts, whereby it agrees to exchange the difference between fixed and variable interest amounts calculated by reference to an agreed upon notional principal amount.

COST RISK

Cash flow hedges:

The Company is exposed to price volatility for raw materials and energy used in its manufacturing process. The Company manages its exposure to cost risk primarily through the use of supplier contracts. The Company purchases natural gas at the prevailing market price at the time of delivery. To reduce the impact on cash flow and earnings due to pricing volatility, the Company may utilize derivatives to fix the price of forecasted natural gas purchases. The changes in the fair value on qualifying instruments are included in Accumulated other comprehensive loss to the extent effective, and reclassified into Cost of sales in the period during which the hedged transaction affects earnings. Current contracts are used to hedge a portion of forecasted purchases of natural gas over the next 10 months.

The natural gas derivative contracts were effective as of March 31, 2025.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 4 – DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT (CONTINUED)

FOREIGN CURRENCY RISK

Cash flow hedges:

The Company has manufacturing operations in the United States and Canada. As a result, it is exposed to movements in foreign currency exchange rates in Canada. Moreover, certain assets and liabilities are denominated in Canadian dollars and are exposed to foreign currency movements. Accordingly, the Company’s earnings are affected by increases or decreases in the value of the Canadian dollar. The Company may use derivative financial instruments (currency options and foreign exchange forward contracts) to mitigate its exposure to fluctuations in foreign currency exchange rates.

Current contracts are used to hedge forecasted purchases in Canadian dollars by the Company’s Canadian subsidiaries over the next 12 months. Such derivatives are designated as cash flow hedges. The changes in the fair value on qualifying instruments are included in Accumulated other comprehensive loss to the extent effective, and reclassified into Sales or Cost of sales in the period during which the hedged transaction affects earnings.

The foreign exchange derivative contracts were effective as of March 31, 2025.

FAIR VALUE MEASUREMENT

The accounting standards for fair value measurements and disclosures establish a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is available and significant to the fair value measurement.

Level 1 Quoted prices in active markets for identical assets or liabilities.

Level 2 Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 4 – DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT (CONTINUED)

The following tables present information about the Company’s financial assets and financial liabilities measured at fair value on a recurring basis (except Long-term debt, see (b) and (c) below) at March 31, 2025 and December 31, 2024, in accordance with the accounting standards for fair value measurements and disclosures and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.


Fair Value of financial instruments at:	March 31, 2025		Quoted prices in active markets for identical assets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)			Balance sheet classification
	$		$		$		$
Derivatives designated as hedging instruments:
Asset derivatives
Currency derivatives		2		—		2		—	(a)	Prepaid expenses
Natural gas swap contracts		7		—		7		—	(a)	Prepaid expenses
Total Assets		9		—		9		—

Liabilities derivatives
Currency derivatives		28		—		28		—	(a)	Trade and other payables
Total Liabilities		28		—		28		—

Other Instruments:
Long-term debt due within one year		74		—		74		—	(b)	Long-term debt due within one year
Long-term debt		2,347		—		2,347		—	(c)	Long-term debt
Contingent consideration for contingent value right		160		—		—		160	(d)	Other liabilities and deferred credits

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 4 – DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT (CONTINUED)


Fair Value of financial instruments at:	December 31, 2024		Quoted prices in active markets for identical assets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)			Balance sheet classification
	$		$		$		$
Derivatives designated as hedging instruments:
Asset derivatives
Natural gas swap contracts		3		—		3		—	(a)	Prepaid expenses
Total Assets		3		—		3		—

Liabilities derivatives
Currency derivatives		39		—		39		—	(a)	Trade and other payables
Total Liabilities		39		—		39		—

Other Instruments:
Long-term debt due within one year		66		—		66		—	(b)	Long-term debt due within one year
Long-term debt		2,422		—		2,422		—	(c)	Long-term debt
Contingent consideration for contingent value right		154		—		—		154	(d)	Other liabilities and deferred credits

(a)

Fair values of the Company’s derivatives are classified under Level 2 (inputs that are observable; directly or indirectly) as it is measured as follows:

- For currency derivatives: Foreign currency forward and option contracts are valued using standard valuation models. Interest rates, forward market rates and volatility are used as inputs for such valuation techniques.

- For natural gas contracts: Fair value is measured using the discounted difference between contractual rates and quoted market future rates.

(b)

Fair value of the Company’s long-term debt is measured by comparison to market prices of its debt. The Company’s long-term debt is not carried at fair value on the Consolidated Balance Sheets at March 31, 2025 and December 31, 2024. The carrying value of the Company’s long-term debt due within one year is $74 million and $66 million at March 31, 2025 and December 31, 2024, respectively.

(c)

The carrying value of the Company’s long-term debt is $2,537 million and $2,557 million at March 31, 2025 and December 31, 2024, respectively.

(d)

The Company estimates the fair value of the contingent consideration by using a model based on the assumptions that a settlement would be reached and that a certain percentage of the deposits would be recovered after a certain period, which requires management’s estimates.

Due to their short-term maturity, the carrying amounts of cash and cash equivalents, including restricted cash, receivables, receivables from related party, bank indebtedness, trade and other payables and payables to related party approximate their fair values.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 5.

_________________

PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS

DEFINED CONTRIBUTION PLANS

The Company has several defined contribution plans and multi-employer plans. The pension expense under these plans is equal to the Company’s contribution. For the three months ended March 31, 2025, the pension expense was $18 million (2024 – $16 million).

The Company expects to contribute approximately $47 million under these plans during the remainder of the year.

DEFINED BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS

The Company's employees participate in various employee benefit plans.

Components of net periodic benefit cost for pension plans and other post-retirement benefit plans:



	For the three months ended
	March 31, 2025
	Pension plans			Other post-retirement benefit plans
	$			$
Service cost		6			—
Interest expense		42			1
Expected return on plan assets		(49	)		—
Amortization of net actuarial loss		—			1
Settlement loss		1			—
Net periodic benefit cost		—			2



	For the three months ended
	March 31, 2024
	Pension plans			Other post-retirement benefit plans
	$			$
Service cost		5			—
Interest expense		51			1
Expected return on plan assets		(57	)		—
Net periodic benefit cost		(1	)		1

The components of net periodic benefit cost for pension plans and other post-retirement benefits plans, other than service cost, are presented in Non-service components of net periodic benefit cost on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

For the three months ended March 31, 2025, the Company contributed $20 million (2024 – $25 million) to the pension plans and $2 million (2024 – $3 million) to the other post-retirement benefit plans.

The Company expects to make cash contributions of approximately $65 million to the pension plans and $10 million to the other post-retirement benefit plans during the remainder of the year.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 6.

_________________

INCOME TAXES

For the first quarter of 2025, the Company had income tax expense of $3 million, consisting of $1 million of current income tax expense and a deferred income tax expense of $2 million. This compares to an income tax expense of $5 million in the first quarter of 2024, consisting of $2 million of current income tax expense and a deferred income tax expense of $3 million. The Company received refunds, net of tax payments, of $1 million during the first quarter of 2025. The effective tax rate for the first quarter of 2025 was 33% compared to 100% for the first quarter of 2024. The effective tax rate for 2025 is unfavorably impacted by a valuation allowance on tax assets arising from deferred interest expenses and additional U.S. tax expense on foreign operations. This is partially offset by research and experimentation tax credits. The effective tax rate for 2024 was unfavorably impacted by a valuation allowance on tax assets arising from deferred interest expenses, foreign exchange items and additional U.S. tax expense on foreign operations.

In October 2021, the Organization for Economic Co-operation and Development ("OECD") announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting which agreed to a two-pillar framework to address tax challenges arising from digitalization of the economy and profit shifting. In December 2021, the OECD published the Pillar Two - Global Anti-Base Erosion Model Rules ("GloBE Rules") designed to ensure that multinational enterprises are subject to tax at an effective minimum tax rate of 15% in each jurisdiction where they operate. Although the U.S. has not enacted legislation to adopt GloBE Rules, the foreign countries where the Company has significant operations have already adopted or are in the process of adopting such legislation. For the first three months of 2025, the GloBE Rules did not impact the Company’s financial results. The Company continues to evaluate their impact on future periods.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 7.

_________________

INVENTORIES

The following table presents the components of inventories:


	March 31,		December 31,
	2025		2024
	$		$
Work in process and finished goods		680		682
Raw materials		338		344
Operating and maintenance supplies		381		368
		1,399		1,394

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 8.

_________________

GOODWILL AND OTHER INTANGIBLE ASSETS

The carrying value of the Company's goodwill is $33 million at March 31, 2025 and December 31, 2024, respectively, and is entirely related to the Paper and packaging reporting segment.

The following table presents the components of intangible assets:


			March 31, 2025							December 31, 2024
	Estimated useful lives (in years)		Gross carrying amount		Accumulated amortization			Net		Gross carrying amount		Accumulated amortization			Net
			$		$			$		$		$			$
Definite-lived intangible assets subject to amortization
Water rights		30		9		(1	)		8		9		(1	)		8
Trade names	15			15		(3	)		12		15		(3	)		12
Customer relationships	8			110		(6	)		104		110		(2	)		108
Total				134		(10	)		124		134		(6	)		128

Amortization expense related to intangible assets for the three months ended March 31, 2025 was $4 million (2024 – nil).

Amortization expense for the next five years related to intangible assets is expected to be as follows:


	2026		2027		2028		2029		2030
	$		$		$		$		$
Amortization expense related to intangible assets		15		15		15		15		15

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 9.

_________________

OTHER ASSETS

The following table presents the components of other assets:


	March 31,		December 31,
	2025		2024
	$		$
Pension asset - defined benefit pension plans		255		250
Countervailing duty and anti-dumping duty cash deposits on softwood lumber		205		195
Off-market contracts		71		71
Restricted cash		58		59
Other		43		43
		632		618

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 10.

_________________

CLOSURE AND RESTRUCTURING AND IMPAIRMENT OF LONG-LIVED ASSETS

Idling and sale of Espanola, Ontario mill

On September 6, 2023, the Company announced the indefinite idling of the Espanola Mill’s pulp and paper operations for an expected period greater than one year. The mill has been idled after years of ongoing operating losses and high costs associated with maintaining and operating the facility. The pulp mill was shut down in early October 2023 and the paper machines were shut down in early 2024.

On April 9, 2025, the Company signed a purchase agreement for the sale of its Espanola facility, with the transaction expected to close in the coming months pending regulatory approvals. As a result, during the first quarter of 2025, the Company recorded $12 million of write-off of property, plant and equipment, under Impairment of long-lived assets on the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

For the three months ended March 31, 2024, the Company recorded $1 million of other costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

Crofton restructuring and impairment costs, British Columbia mill

On January 25, 2024, the Company announced the indefinite curtailment of the Crofton mill paper operations. During the first quarter of 2025, the Company recorded $2 million of accelerated depreciation, under Depreciation and amortization on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss) (2024 – $4 million).

Additionally, for the three months ended March 31, 2024, the Company recorded $3 million of severance and termination costs and $2 million of write-off of inventory, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

Ashdown curtailment, Arkansas mill

On February 21, 2024, the Company announced that it will indefinitely curtail paper operations at its Ashdown, Arkansas, facility. The Ashdown Mill’s paper machine and associated sheeter were indefinitely idled in July 2024. The curtailment did not result in a workforce reduction.

During the first quarter of 2024, the Company recorded $6 million of accelerated depreciation, under Depreciation and amortization on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

Other Costs

For the three months ended March 31, 2024, other costs related to previous and ongoing closures and restructuring included $1 million of severance and termination costs and $4 million of other costs.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 11.

LONG-TERM DEBT

ABL REVOLVING CREDIT FACILITY

On February 26, 2025, the Company entered into an amendment (the “Third ABL Amendment”) to its ABL Revolving Credit Facility that matures on March 1, 2028. Pursuant to the Third ABL Amendment, the maximum availability under the ABL Revolving Credit Facility was increased from $1.0 billion to $1.14 billion, which includes a First In, Last Out (“FILO”) tranche of $120 million (the “ABL FILO Loan”). Availability is subject to the borrowing base as calculated monthly. On March 31, 2025, the Company had borrowings of $335 million and $157 million of letters of credit outstanding under this facility, leaving unused commitments of $648 million available. Borrowing under the ABL FILO Loan bears interest at a floating rate per annum of, at the Company's option, SOFR (adjusted by 0.10%) plus an applicable margin of 2.75% or a base rate plus 1.75%.

BANK TERM LOAN

On January 28, 2025 the Company entered into a Term Loan Credit Agreement (the “Bank Term Loan”) for $150 million which was used to repay borrowings under the ABL Revolving Credit Facility. The Bank Term Loan will mature on November 30, 2028. The Bank Term Loan bears interest at a floating rate per annum, of SOFR plus 5.00%. Borrowings under the Company's Bank Term Loan will be amortized in equal quarterly installments in an amount equivalent to 5.00% per annum of the principal amount. The Bank Term Loan ranks pari passu with the Farm Credit Term Loan, the First Lien Term Loan Credit Agreement, the Senior Secured Notes and the Industrial Revenue Bond. The Bank Term Loan contains customary negative covenants, including, but not limited to, restrictions on the Company's ability and that of its restricted subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets, make investments, pay dividends or make other restricted payments, sell or otherwise transfer assets or enter into transactions with affiliates.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 12.

_________________

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS BY COMPONENT

The following table presents the changes in Accumulated other comprehensive loss by component(1) for the three months ended March 31, 2025 and the year ended December 31, 2024:


	Net derivative (losses) gains on cash flow hedges			Pension items(2)			Post-retirement benefit items(2)			Foreign currency items			Total
	$			$			$			$			$
Balance at December 31, 2023		5			(72	)		30			(7	)		(44	)
Natural gas swap contracts		(2	)	N/A			N/A			N/A				(2	)
Currency options		(7	)	N/A			N/A			N/A				(7	)
Foreign exchange forward contracts		(39	)	N/A			N/A			N/A				(39	)
Net gain	N/A				54			9		N/A				63
Foreign currency items	N/A			N/A			N/A				(99	)		(99	)
Other comprehensive (loss) income before reclassifications		(48	)		54			9			(99	)		(84	)
Amounts reclassified from Accumulated other comprehensive loss		15			1			(2	)		—			14
Net current period other comprehensive (loss) income		(33	)		55			7			(99	)		(70	)
Balance at December 31, 2024		(28	)		(17	)		37			(106	)		(114	)
Natural gas swap contracts		4		N/A			N/A			N/A				4
Foreign exchange forward contracts		1		N/A			N/A			N/A				1
Foreign currency items	N/A			N/A			N/A				1			1
Other comprehensive income before reclassifications		5			—			—			1			6
Amounts reclassified from Accumulated other comprehensive loss		8			—			(1	)		—			7
Net current period other comprehensive income (loss)		13			—			(1	)		1			13
Balance at March 31, 2025		(15	)		(17	)		36			(105	)		(101	)

(1)

All amounts are after tax. Amounts in parentheses indicate losses.

(2)

The projected benefit obligation is actuarially determined on an annual basis as of December 31.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 12 – CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS BY COMPONENT (CONTINUED)

The following tables present reclassifications out of Accumulated other comprehensive loss:


	Amounts reclassified from Accumulated other comprehensive loss
	For the three months ended
	March 31,			March 31,
	2025			2024
	$			$
Net derivative gains (losses) on cash flow hedge
Natural gas swap contracts (1)		2			(3	)
Currency options and forwards (1)		(12	)		(1	)
Total before tax		(10	)		(4	)
Tax benefit		2			1
Net of tax		(8	)		(3	)

Amortization of defined benefit pension items
Amortization of net actuarial loss (2)		(1	)		—
Total before tax		(1	)		—
Tax benefit		1			—
Net of tax		—			—

Amortization of other post-retirement benefit items
Amortization of net actuarial gain (2)		1			—
Total before tax		1			—
Tax expense		—			—
Net of tax		1			—

(1)

These amounts are included in Cost of sales in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

(2)

These amounts are included in the computation of net periodic benefit cost (see Note 5 “Pension plans and other post-retirement benefit plans” for more details).

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 13.

_________________

OTHER LIABILITIES AND DEFERRED CREDITS

The following table presents the components of other liabilities and deferred credits:


	March 31,		December 31,
	2025		2024
	$		$
Provision for environmental and asset retirement obligations		106		107
Contingent consideration for contingent value right		160		154
Other		53		54
		319		315

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 14.

_________________

COMMITMENTS AND CONTINGENCIES

ENVIRONMENTAL MATTERS

The Company is subject to environmental laws and regulations enacted by federal, provincial, state and local authorities. The Company may also incur substantial costs in relation to enforcement actions (including orders requiring corrective measures, installation of pollution control equipment or other remedial actions) as a result of violations of, or liabilities under, environmental laws and regulations applicable to its past and present properties. The Company’s ongoing efforts to identify potential environmental concerns that may be associated with such properties may result in additional environmental costs and liabilities which cannot be reasonably estimated at this time.

The Company has environmental liabilities of $56 million and $57 million recorded as of March 31, 2025 and December 31, 2024, respectively, primarily related to environmental remediation related to closed sites. The amount of these liabilities represents management’s estimate of the ultimate settlement based on an assessment of relevant factors and assumptions and could be affected by changes in facts or assumptions not currently known to management for which the outcome cannot be reasonably estimated at this time.

The Company also has asset retirement obligations of $57 million and $56 million recorded as of March 31, 2025 and December 31, 2024, respectively, primarily consisting of liabilities associated with landfills, sludge basins and the dismantling of retired assets.

These liabilities are included in Trade and other payables and Other liabilities and deferred credits in the Consolidated Balance Sheets.

Additionally, the Company has asset retirement obligations with indeterminate settlement dates. The fair value of these liabilities cannot be estimated due to the lack of sufficient information to estimate the settlement dates of the obligation. The Company will recognize liability in the period in which sufficient information becomes available. These asset retirement obligations relate mainly to disposal of potentially hazardous materials that may be required if the Company undergoes major maintenance, renovation or demolition, and to closure of retention ponds that may be required if it ceases its operations.

The U.S. Environmental Protection Agency (the “EPA”) and/or various state agencies have notified the Company that it may be a potentially responsible party under the Comprehensive Environmental Response Compensation and Liability Act, commonly known as “Superfund”, and similar state laws with respect to other hazardous waste sites as to which no proceedings have been instituted against the Company. The Company continues to take remedial action under its Care and Control Program at its former wood preserving sites, and at a number of operating sites, due to possible soil, sediment or groundwater contamination.

CONTINGENCIES

In the normal course of operations, the Company becomes involved in various legal actions mostly related to contract disputes, patent infringements, environmental and product warranty claims, and labor issues. While the final outcome with respect to actions outstanding or pending at March 31, 2025, cannot be predicted with certainty, it is management’s opinion that their resolution will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

INDEMNIFICATIONS

In the normal course of business, the Company offers indemnifications relating to the sale of its businesses and real estate. In general, these indemnifications may relate to claims from past business operations, compliance with laws, the failure to abide by covenants and the breach of representations and warranties included in the sales agreements. Typically, such representations and warranties relate to taxation, environmental, product and employee matters. The terms of these indemnification agreements are generally for an unlimited period of time. At March 31, 2025, the Company is unable to estimate the potential maximum liabilities for these types of indemnification guarantees as the amounts are contingent upon the outcome of future events, the nature and likelihood of which cannot be reasonably estimated at this time. Accordingly, no provision has been recorded. These indemnifications have not yielded a significant expense in the past.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 14 – COMMITMENTS AND CONTINGENCIES (CONTINUED)

Pension Plans

The Company has indemnified and held harmless the trustees of its pension funds, and the respective officers, directors, employees and agents of such trustees, from any and all costs and expenses arising out of the performance of their obligations under the relevant trust agreements, including in respect of their reliance on authorized instructions from the Company or for failing to act in the absence of authorized instructions. These indemnifications survive the termination of such agreements. At March 31, 2025, the Company has not recorded a liability associated with these indemnifications, as it does not expect to make any payments pertaining to these indemnifications.

CLIMATE CHANGE AND AIR QUALITY REGULATIONS

Various national and local laws and regulations relating to climate change have been established or are emerging in jurisdictions where the Company currently has, or may have in the future, manufacturing facilities or investments.

In 2019, the EPA repealed the Clean Power Plan and replaced it with the “Affordable Clean Energy” (“ACE”) rule. The ACE rule was legally challenged in the U.S. Court of Appeals for the D.C. Circuit. The Court vacated the ACE rule and, the repeal of the Clean Power Plan, but the court stayed its mandate as to the Clean Power Plan repeal to avoid reinstating that rule. However, on June 30, 2022, the Supreme Court reversed the D.C. Circuit’s decision, holding that the Clean Power Plan was an “extraordinary” case of an agency claiming transformative power over a “major question” of policy without a clear statement from Congress. The decision does not completely bar the EPA from regulating greenhouse gas emissions from the power sector but prohibits the EPA from imposing standards based on “generation shifting” away from coal-fired power plants to natural gas plants and renewable resources.

On May 23, 2023, the EPA proposed a new climate change rule for existing power plants and repealed the ACE rule. The new rule requires, by 2030, all existing coal-fired power plants operating beyond 2039 to choose between carbon capture and sequestration by 2032, natural gas-co-firing by 2030, or retirement before 2032. The new rule also applies to all new gas combustion turbines which are categorized by operating level. Units that operate greater than 40% of their operating capacity in a year require carbon capture and sequestration. Units that operate less have an emission limit or the requirement to use lower emitting fuels. These new climate rules have been challenged in the D.C. Circuit and oral argument was held on December 6, 2024. However, the new Trump administration has indicated an intent to reconsider the rule and filed a motion with the court to hold the litigation in abeyance during the reconsideration, which the court granted on February 19, 2025. The Company does not expect to be disproportionately affected compared with other pulp and paper producers located in the states where the Company operates.

The EPA finalized amendments revising certain aspects of its Industrial Boiler Maximum Achievable Control Technology Standard (“MACT”), or Boiler MACT in 2022. The revised rule responded to two court decisions that remanded certain issues for further review by the EPA, and it includes revisions to 34 different emission limitations that could apply to some of the Company’s facilities. Although the EPA has indicated that a small number of facilities may need to reduce emissions further compared to the current limits, the EPA does not expect additional costs to be significant. On September 3, 2024, EPA’s rule amendments were partially set aside by the D.C. Circuit because they failed to properly distinguish between “new” and “existing” sources. As a result, EPA is expected to revise its Boiler MACT rules again in the near future. The Company does not expect its facilities to be disproportionately affected compared to other U.S. pulp and paper producers.

The province of Quebec has a greenhouse gas (“GHG”) cap-and-trade system with reduction targets. Ontario has its GHG Emission Performance Standards regulation and the province of British Columbia has the B.C. Output-Based Pricing System. The Company does not expect its facilities to be disproportionately affected by these measures compared to the other pulp and paper producers located in these provinces.

The Government of Canada has established a federal carbon pricing system that took effect in 2019. The Federal program is a backstop and takes effect if a province does not have a carbon pricing program or if a provincial program is not rigorous enough to meet federal requirements.

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 14 – COMMITMENTS AND CONTINGENCIES (CONTINUED)

LEGAL MATTERS

The Company becomes involved in various legal proceedings, claims and governmental inquiries, investigations, and other disputes in the normal course of business, including matters related to contracts, torts, commercial and trade disputes, taxes, environmental issues, activist damages, employment and workers’ compensation claims, grievances, human rights complaints, pension and benefit plans and obligations, health and safety, product safety and liability, asbestos exposure, financial reporting and disclosure obligations, corporate governance, Indigenous peoples’ claims, antitrust, governmental regulations, and other matters. Although the final outcome is subject to many variables and cannot be predicted with any degree of certainty, the Company regularly assesses the status of the matters and establishes provisions (including legal costs expected to be incurred) when it believes an adverse outcome is probable, and the amount can be reasonably estimated. Any recovery from litigation or settlement of claims that is a gain contingency is recognized if, and when, realized or realizable. Except as described below and for claims that cannot be assessed due to their preliminary nature, the Company believes that the ultimate disposition of these matters outstanding or pending as of March 31, 2025, will not have a material adverse effect on the Company's Consolidated Financial Statements.

ASBESTOS-RELATED LAWSUITS

The Company is involved in a number of asbestos-related lawsuits filed primarily in U.S. state courts, including certain cases involving multiple defendants. These lawsuits principally allege direct or indirect personal injury or death resulting from exposure to asbestos-containing premises. While the Company disputes the plaintiffs’ allegations and intends to vigorously defend these claims, the ultimate resolution of these matters cannot be determined at this time. These lawsuits frequently involve claims for unspecified compensatory and punitive damages, and the Company is unable to reasonably estimate a range of possible losses, which may not be covered in whole or in part by its insurance coverage. However, unfavorable rulings, judgments or settlement terms could materially impact the Consolidated Financial Statements. Hearings for certain of these matters are scheduled to occur in the next twelve months.

COUNTERVAILING DUTY AND ANTI-DUMPING INVESTIGATIONS ON SOFTWOOD LUMBER

On November 25, 2016, countervailing duty and anti-dumping petitions were filed with the U.S. Department of Commerce (“Commerce”) and the U.S. International Trade Commission (“ITC”) by certain U.S. softwood lumber products producers and forest landowners, requesting that the U.S. government impose countervailing and anti-dumping duties on Canadian-origin softwood lumber products exported to the U.S. One of the Company’s subsidiaries was identified in the petitions as being a Canadian exporting producer of softwood lumber products to the U.S. and was selected as a mandatory respondent to be investigated by Commerce in the countervailing and anti-dumping duty investigations, in the first administrative review of the countervailing and anti-dumping duty orders, and in the second and third administrative reviews of the countervailing duty order. With respect to other administrative reviews of the countervailing and anti-dumping duty orders for which the Company was not selected as a respondent by Commerce, the Company’s subject imports were assigned the rate applicable to non-selected importers.

The cash deposit rates on account of countervailing and anti-dumping duties paid for the Company’s subject imports of Canadian-origin softwood lumber products into the United States are as follows:


Effective dates for deposits on account of countervailing duties	Cash deposit rates
Initial Investigation
April 28 2017 – November 7, 2017 (Preliminary Determination)		12.82	%
November 8, 2017 – November 30, 2020 (Final Determination)		14.70	%
First Administrative Review
December 1, 2020 – December 1, 2021		19.10	%
Second Administrative Review
December 2, 2021 – August 8, 2022		18.07	%
Third Administrative Review
August 9, 2022 – July 31, 2023		10.10	%
Fourth Administrative Review
August 1, 2023 – August 18, 2024		1.79	%
Fifth Administrative Review
August 19, 2024 – Present		6.74	%

DOMTAR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

(IN MILLIONS OF DOLLARS, UNLESS OTHERWISE NOTED)

(UNAUDITED)

NOTE 14 – COMMITMENTS AND CONTINGENCIES (CONTINUED)

Commerce is expected to issue its final determination in the sixth administrative review of the countervailing investigation in the third quarter of 2025, at which time a new rate will take effect for the Company; this new rate was estimated at 14.38% for the Company in a non-binding, preliminary determination issued on April 3, 2025, which is subject to modification in the upcoming final determination.


Effective dates for deposits on account of anti-dumping duties	Cash deposit rates
Initial Investigation
June 30, 2017 – November 7, 2017 (Preliminary Determination)		4.59	%
November 8, 2017 – November 29, 2020 (Final Determination)		3.20	%
First Administrative Review
November 30, 2020 – December 1, 2021		1.15	%
Second Administrative Review
December 2, 2021 – August 8, 2022		11.59	%
Third Administrative Review
August 9, 2022 – July 31, 2023		4.76	%

Large accelerated filer

Accelerated filer

Non-accelerated filer

Small reporting company

Emerging growth company

Domtar CORP 10-Q