# EDGAR Filing Document

**Accession Number:** 0001381531
**File Stem:** 0001193125-26-208635
**Filing Date:** 2026-5
**Character Count:** 173016
**Document Hash:** 9baf3d5035f43a35cffabbda3afc3c1e
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-26-208635.hdr.sgml**: 20260506

**ACCESSION NUMBER**: 0001193125-26-208635

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 72

**CONFORMED PERIOD OF REPORT**: 20260331

**FILED AS OF DATE**: 20260506

**DATE AS OF CHANGE**: 20260506

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Domtar CORP
- **CENTRAL INDEX KEY:** 0001381531
- **STANDARD INDUSTRIAL CLASSIFICATION:** PAPER MILLS [2621]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 205901152
- **STATE OF INCORPORATION:** SC
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-33164
- **FILM NUMBER:** 26947807

**BUSINESS ADDRESS:**
- **STREET 1:** 234 KINGSLEY PARK DRIVE
- **CITY:** FORT MILL
- **STATE:** SC
- **ZIP:** 29715
- **BUSINESS PHONE:** (803) 802-7500

**MAIL ADDRESS:**
- **STREET 1:** 234 KINGSLEY PARK DRIVE
- **CITY:** FORT MILL
- **STATE:** SC
- **ZIP:** 29715

?xml version='1.0' encoding='ASCII'? 10-Q

**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, 2026

**OR**

☐ **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<br>**(State or other jurisdiction of incorporation or organization)** | 20-5901152<br>**(I.R.S. Employer Identification No.)** |
| <br>395 de Maisonneuve Blvd. West<br>Montreal**,** Quebec**,** Canada H3A 1L6<br>**(**514**)** 848-5555 | 234 Kingsley Park Drive<br>Fort Mill**,** SC 29715<br> **(**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.

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒  | Small reporting company | ☐ |
| Emerging growth company | ☐ |  |  |

---

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, 2026**

**INDEX**

---

| | | |
|:---|:---|:---|
| PART I  | [<u>FINANCIAL INFORMATION</u>](#item_1_financial_statements) | 3 |
| ITEM 1.  | [<u>FINANCIAL STATEMENTS (UNAUDITED)</u>](#item_1_financial_statements) | 3 |
|  | [<u>CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS)</u>](#consolidated_statements_earnings_compreh) | 3 |
|  | [<u>CONSOLIDATED BALANCE SHEETS</u>](#consolidated_balance_sheets) | 4 |
|  | [<u>CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY</u>](#consolidated_statement_shareholders_equi) | 5 |
|  | [<u>CONSOLIDATED STATEMENTS OF CASH FLOWS</u>](#consolidated_statements_cash_flows) | 6 |
|  | [<u>INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</u>](#item_1_index_for_notes) | 7 |
|  | [<u>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</u>](#note_1) | 8 |
| ITEM 2.  | [<u>MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</u>](#item_2_managements_discussion_analysis_f) | 37 |
| ITEM 3. | [<u>QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK</u>](#item_3_quantitative_qualitative_disclosu) | 52 |
| ITEM 4. | [<u>CONTROLS AND PROCEDURES</u>](#item_4_controls_procedures) | 52 |
| PART II | [<u>OTHER INFORMATION</u>](#part_ii_or_information) | 53 |
| ITEM 1. | [<u>LEGAL PROCEEDINGS</u>](#item_1_legal_proceedings) | 53 |
| ITEM 1A.  | [<u>RISK FACTORS</u>](#item_1a_risk_factors) | 53 |
| ITEM 2. | [<u>UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS</u>](#item_2_unregistered_sales_equity_securit) | 53 |
| ITEM 3.  | [<u>DEFAULT UPON SENIOR SECURITIES</u>](#item_3_default_upon_senior_securities) | 53 |
| ITEM 4.  | [<u>MINE SAFETY DISCLOSURES</u>](#item_4_mine_safety_disclosures) | 53 |
| ITEM 5.  | [<u>OTHER INFORMATION</u>](#item_5_or_information) | 53 |
| ITEM 6. | [<u>EXHIBITS</u>](#item_6_exhibits) | 54 |

---

------

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* | *For the three months ended* |
|  | **March 31,** | March 31, |
|  | **2026** | 2025 |
|  | **$** | $ |
| **Sales** |  |  |
| **Operating expenses** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of sales, excluding depreciation and amortization |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of long-lived assets (NOTE 9) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Closure and restructuring costs (NOTE 9) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other operating income, net |  |  |
| **Operating (loss) income** |  |  |
| Interest expense, net |  |  |
| Non-service components of net periodic benefit cost (NOTE 4) |  |  |
| **(Loss) earnings before income taxes** |  |  |
| Income tax expense (NOTE 5) |  |  |
| **Net (loss) earnings** |  |  |
| **Other comprehensive (loss) income (NOTE 11):** |  |  |
| Net derivative (losses) gains on cash flow hedges: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net (losses) gains arising during the period, net of tax of <br> $3 (2025 – $(2)) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Less: Reclassification adjustment for (gains) losses included in <br> net (loss) earnings, net of tax of $2 (2025 – $(2)) |  |  |
| Foreign currency translation adjustments |  |  |
| Change in unrecognized losses and prior service cost related to pension <br> and other post-retirement benefit plans, net of tax of nil (2025 – nil) |  |  |
| **Other comprehensive (loss) income** |  |  |
| **Comprehensive (loss) income** |  |  |

---

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 | At |
|  | **March 31,** | December 31, |
|  | **2026** | 2025 |
|  | **$** | $ |
| **Assets** |  |  |
| **Current assets** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents, including restricted cash of nil and $4 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Receivables, less allowances of $5 and $5 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Receivables from related party (NOTE 15) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventories (NOTE 6) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Income and other taxes receivable |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other current assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total current assets** |  |  |
| **Property, plant and equipment, net** |  |  |
| **Operating lease right-of-use assets** |  |  |
| **Notes receivable from related party (NOTE 15)** |  |  |
| **Goodwill and other intangible assets, net (NOTE 7)** |  |  |
| **Deferred income tax assets** |  |  |
| **Other assets (NOTE 8)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total assets** |  |  |
| **Liabilities and shareholders' equity** |  |  |
| **Current liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Bank indebtedness |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Trade and other payables |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Income and other taxes payable |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities due within one year |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Due to related party (NOTE 15) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term debt due within one year (NOTE 10) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total current liabilities** |  |  |
| **Long-term debt (NOTE 10)** |  |  |
| **Operating lease liabilities** |  |  |
| **Deferred income taxes and other** |  |  |
| **Pension and other post-retirement benefit obligations (NOTE 4)** |  |  |
| **Other liabilities and deferred credits (NOTE 12)** |  |  |
| Commitments and contingencies (NOTE 13) |  |  |
| **Shareholders' equity** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock $0.01 par value; 100 shares issued and outstanding |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Deficit**)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive (loss) income**)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total shareholders' equity** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities and shareholders' equity** |  |  |

---

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* | *For the three months ended* | *For the three months ended* | *For the three months ended* |
|  | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
|  | **Additional <br>paid-in capital** | **Deficit** | **Accumulated other comprehensive income (loss)** | **Total shareholders' equity** |
|  | $ | $ | $ | $ |
| Balance at December 31, 2025 | **2827** |  |  |  |
| Net loss | **—** |  |  |  |
| Net derivative losses on cash flow hedges: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net losses arising during the period, net of tax of $3 | **—** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: Reclassification adjustment for gains<br> included in net loss, net of tax of $2 | **—** |  |  |  |
| Foreign currency translation adjustments | **—** |  |  |  |
| **Balance at March 31, 2026** | **2827** |  |  |  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | *For the three months ended* | *For the three months ended* | *For the three months ended* | *For the three months ended* |
|  | March 31, 2025 | March 31, 2025 | March 31, 2025 | March 31, 2025 |
|  | Additional <br>paid-in capital | Deficit | Accumulated other comprehensive loss | Total shareholders' equity |
|  | $ | $ | $ | $ |
| Balance at December 31, 2024 | 2827 |  |  |  |
| Net earnings |  |  |  |  |
| Net derivative gains on cash flow hedges: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net gains arising during the period, net of tax of $(2) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: Reclassification adjustment for losses <br> included in net earnings, net of tax of $(2) |  |  |  |  |
| Foreign currency translation adjustments |  |  |  |  |
| Change in unrecognized losses and prior service cost related to<br> pension and other post-retirement benefit plans, net of tax of nil |  |  |  |  |
| Balance at March 31, 2025 | 2827 |  |  |  |

---

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* | *For the three months ended* |
|  | **March 31,** | March 31, |
|  | **2026** | 2025 |
|  | **$** | $ |
| **Operating activities** |  |  |
| Net (loss) earnings |  |  |
| Adjustments to reconcile net (loss) earnings to cash flows <br> (used for) provided from operating activities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes and tax uncertainties (NOTE 5) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of long-lived assets (NOTE 9) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of inventory (NOTE 9) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net gains on disposals of assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other |  |  |
| Changes in assets and liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Receivables, including related party |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade and other payables, including related party |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income and other taxes |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Difference between employer pension and other post-retirement <br> contributions and pension and other post-retirement expense |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets and other liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash flows (used for) provided from operating activities |  |  |
| **Investing activities** |  |  |
| Additions to property, plant and equipment |  |  |
| Proceeds from disposals of property, plant and equipment |  |  |
| Proceeds from government assistance for property, plant and equipment |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash flows used for investing activities |  |  |
| **Financing activities** |  |  |
| Net change in bank indebtedness |  |  |
| Change in revolving credit facility |  |  |
| Issuance of long-term debt, net of debt issue costs |  |  |
| Repayments of long-term debt |  |  |
| Other |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash flows provided from (used for) financing activities |  |  |
| **Net increase (decrease) in cash, cash equivalents and restricted cash** |  |  |
| Impact of foreign exchange on cash |  |  |
| Cash, cash equivalents and restricted cash at beginning of period |  |  |
| **Cash, cash equivalents and restricted cash at end of period** |  |  |
| **Supplemental cash flow information** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net cash payments (refunds) for: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes |  |  |
| 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. | 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. | 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 |  |  |
| Restricted cash included in Cash and cash equivalents |  |  |
| Restricted cash included in Other assets |  |  |
| **Total cash, cash equivalents, and restricted cash shown in the <br> Consolidated Statements of Cash Flows** |  |  |

---

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

------

**INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

---

| | | |
|:---|:---|:---|
| NOTE 1 | [<u>BASIS OF PRESENTATION</u>](#note_1) | 8 |
| NOTE 2 | [<u>RECENT ACCOUNTING PRONOUNCEMENTS</u>](#note_2ref) | 9 |
| NOTE 3 | [<u>DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT</u>](#note_5) | 10 |
| NOTE 4 | [<u>PENSION PLANS AND OTHER POST-RETIREMENT BENEFIT PLANS</u>](#note_6) | 14 |
| NOTE 5 | [<u>INCOME TAXES</u>](#note_7) | 15 |
| NOTE 6 | [<u>INVENTORIES</u>](#note_8) | 16 |
| NOTE 7 | [<u>GOODWILL AND OTHER INTANGIBLE ASSETS</u>](#goodwill_intangibles) | 17 |
| NOTE 8 | [<u>OTHER ASSETS</u>](#note_9) | 18 |
| NOTE 9 | [<u>CLOSURE AND RESTRUCTURING AND IMPAIRMENT OF LONG-LIVED ASSETS</u>](#note_10) | 19 |
| NOTE 10 | [<u>LONG-TERM DEBT</u>](#note_10_ltd) | 21 |
| NOTE 11 | [<u>CHANGES IN ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME BY COMPONENT</u>](#note_11) | 22 |
| NOTE 12 | [<u>OTHER LIABILITIES AND DEFERRED CREDITS</u>](#note_12) | 24 |
| NOTE 13 | [<u>COMMITMENTS AND CONTINGENCIES</u>](#commitment_note) | 25 |
| NOTE 14 | [<u>SEGMENT DISCLOSURES</u>](#note_14) | 33 |
| NOTE 15 | [<u>RELATED PARTY TRANSACTIONS</u>](#note_15) | 36 |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

**(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, 2025, as filed with the Securities and Exchange Commission. The Consolidated Balance Sheet at December 31, 2025, 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. See Note 14 "Segment Disclosures" for more details.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 2.**

**_________________**

**RECENT ACCOUNTING PRONOUNCEMENTS**

**FUTURE ACCOUNTING CHANGES**

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.

GOVERNMENT GRANTS

On December 4, 2025, the FASB issued ASU 2025-10, "*Accounting for Government Grants Received by Business Entities*", to establish guidance on the recognition, measurement, and presentation of government grants received by business entities. The new guidance leverages the principles in the accounting framework for government assistance in IFRS, specifically IAS 20, "Accounting for Government Grants and Disclosure of Government Assistance". The new guidance will be effective for calendar year-end public business entities in the 2029 annual period (including interim periods within), with early adoption permitted.

The new guidance is not expected to significantly change the Company's current accounting for incentives from federal, state, provincial, and local governments.

INTERIM REPORTING

On December 8, 2025, the FASB issued ASU No. 2025-11 "*Interim Reporting (Topic 270): Narrow-Scope Improvements*". The new guidance clarifies the applicability of Topic 270 and the form and content of interim financial statements. In addition, it requires entities to disclose material events occurring since the last annual reporting period. The new guidance will be effective for interim periods beginning January 1, 2028, and can be applied on a prospective or retrospective basis.

The Company is evaluating the disclosure impact; however, the new guidance will not have an impact on the Company's consolidated financial position, results of operations or cash flows.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 3.**

**________________**

**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, 2026, one customer located in the U.S. represented 11% or $76 million of the Company's receivables (December 31, 2025 – 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) income to the extent effective, and reclassified into Cost of sales in the period during which the hedged transaction affects earnings.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 3 – 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 operations over the next 8 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) income 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, 2026.

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, 2026**

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

**(UNAUDITED)**

**NOTE 3 – 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, 2026 and December 31, 2025, 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, 2026** | **Quoted prices in <br>active markets for <br>identical assets <br>(Level 1)** | **Significant <br>observable <br>inputs <br>(Level 2)** | **Significant <br>unobservable <br>inputs <br>(Level 3)** |  | **Balance sheet classification** |
|  | **$** | **$** | **$** | **$** | $— |  |
| Derivatives designated as <br> hedging instruments: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Asset derivatives** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Currency derivatives | **1** |  | 1 |  | (a) | Prepaid expenses |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total Assets** | **1** |  | 1 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Liabilities derivatives** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Currency derivatives | **9** |  | 9 |  | (a) | Trade and other payables |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities** | **9** |  | 9 |  |  |  |
| **Other Instruments:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term debt due <br> within one year | **76** |  | 76 |  | (b) | Long-term debt due within <br> one year |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term debt | **1985** |  | 1985 |  | (c) | Long-term debt |
| &nbsp;&nbsp;&nbsp;&nbsp;Contingent consideration <br> for contingent value right | **185** |  |  |  | (d) | Other liabilities and deferred <br> credits |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 3 – DERIVATIVES AND HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENT (CONTINUED)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Fair Value of financial instruments at:** | **December 31, 2025** | **Quoted prices in <br>active markets for <br>identical assets <br>(Level 1)** | **Significant <br>observable <br>inputs <br>(Level 2)** | **Significant <br>unobservable <br>inputs <br>(Level 3)** |  | **Balance sheet classification** |
|  | **$** | **$** | **$** | **$** | $— |  |
| Derivatives designated as <br> hedging instruments: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Asset derivatives** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Currency derivatives | **15** |  | 15 |  | (a) | Prepaid expenses |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total Assets** | **15** |  | 15 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;**Liabilities derivatives** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Currency derivatives | **2** |  | 2 |  | (a) | Trade and other payables |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities** | **2** |  | 2 |  |  |  |
| **Other Instruments:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term debt due within <br> one year | **75** |  | 75 |  | (b) | Long-term debt due within <br> one year |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term debt | **2348** |  | 2348 |  | (c) | Long-term debt |
| &nbsp;&nbsp;&nbsp;&nbsp;Contingent consideration <br> for contingent value right | **178** |  |  |  | (d) | Other liabilities and deferred <br> 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, 2026 and December 31, 2025. The carrying value of the Company's long-term debt due within one year is $76 million and $75 million at March 31, 2026 and December 31, 2025, respectively.

(c)The carrying value of the Company's long-term debt is $2,826 million and $2,749 million at March 31, 2026 and December 31, 2025, 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.

Notes receivable from related party are carried at amortized cost, and bear interest at rates that approximate current market rates for similar financial instruments. Their carrying amounts approximate their fair value because there have been no significant changes in market rates or credit risk.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 4.**

**_________________**

**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, 2026, the pension expense was $16 million (2025 – $18 million).

The Company expects to contribute approximately $45 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*** | ***For the three months ended*** |
|  | **March 31, 2026** | **March 31, 2026** |
|  | **Pension plans** | **Other post-retirement benefit plans** |
|  | **$** | **$** |
| Service cost |  | **—** |
| Interest expense |  | **1** |
| Expected return on plan assets |  | **—** |
| &nbsp;&nbsp;&nbsp;&nbsp;Net periodic benefit cost |  | **1** |

---

---

| | | |
|:---|:---|:---|
|  | *For the three months ended* | *For the three months ended* |
|  | March 31, 2025 | March 31, 2025 |
|  | Pension plans | Other post-retirement benefit plans |
|  | $ | $ |
| Service cost |  |  |
| Interest expense |  | 1 |
| Expected return on plan assets |  |  |
| Amortization of net actuarial loss |  | 1 |
| Settlement loss |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net periodic benefit cost |  | 2 |

---

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, 2026, the Company contributed $20 million (2025 – $20 million) to the pension plans and $3 million (2025 – $2 million) to the other post-retirement benefit plans.

The Company expects to make cash contributions of approximately $62 million to the pension plans and $11 million to the other post-retirement benefit plans during the remainder of the year.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 5.**

**_________________**

**INCOME TAXES**

For the first quarter of 2026, the Company recorded no income tax expense as current income tax expense of $1 million was fully offset by a deferred income tax benefit of $1 million. This compares to an income tax expense of $3 million in the first quarter of 2025, consisting of $1 million of current income tax expense and a deferred income tax expense of $2 million. The Company made no payments during the first quarter of 2026, as payments were offset by income tax refunds. The effective tax rate for the first quarter of 2026 was 0% compared to 33% for the first quarter of 2025. The effective tax rate for 2026 was impacted by current year losses with no related tax benefit. This was partially offset by the recognition of previously unrecognized tax benefits. The effective tax rate for 2025 was impacted by a valuation allowance on tax assets arising from deferred interest expenses and additional U.S. tax expense on foreign operations. This was partially offset by research and experimentation tax credits.

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. The Company has performed an assessment of potential exposure and concluded GloBE Rules did not impact financial results for the first quarter of 2026.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 6.**

**_________________**

**INVENTORIES**

The following table presents the components of inventories:

---

| | | |
|:---|:---|:---|
|  | **March 31,** | December 31, |
|  | **2026** | 2025 |
|  | **$** | $ |
| Work in process and finished goods | **675** | 763 |
| Raw materials | **344** | 371 |
| Operating and maintenance supplies | **359** | 365 |
|  | **1378** | 1499 |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 7.**

**_________________**

**GOODWILL AND OTHER INTANGIBLE ASSETS**

The carrying value of goodwill is as follows:

---

| | | |
|:---|:---|:---|
|  | **March 31, 2026** | December 31, 2025 |
|  | **$** | $ |
| Balance at beginning of year | **35** | 33 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase price accounting adjustment |  | 2 |
| Balance at end of period | **35** | 35 |

---

The goodwill at March 31, 2026 and December 31, 2025 is entirely related to the Paper and packaging reporting segment.

The following table presents the components of intangible assets:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **March 31, 2026** | **March 31, 2026** | December 31, 2025 | December 31, 2025 |
|  | Estimated <br>useful lives<br>(in years) | **Gross carrying <br>amount** | **Net** | Gross carrying <br>amount | Net |
|  |  | **$** | **$** | $ | $ |
| Definite-lived intangible assets<br> subject to amortization |  |  |  |  |  |
| Water rights | 30 | **9)** | **8** | 9) | 8 |
| Trade names | 15 | **15)** | **11** | 15) | 11 |
| Customer relationships | 8 | **110)** | **90** | 110) | 94 |
| Total |  | **134** | **109** | 134 | 113 |

---

Amortization expense related to intangible assets for the three months ended March 31, 2026 was $4 million (2025 – $4 million).

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

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **2027** | **2028** | **2029** | **2030** | **2031** |
|  | $ | $ | $ | $ | $ |
| Amortization expense related to intangible assets | 15 | 15 | 15 | 15 | 15 |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 8.**

**_________________**

**OTHER ASSETS**

The following table presents the components of other assets:

---

| | | |
|:---|:---|:---|
|  | **March 31,** | December 31, |
|  | **2026** | 2025 |
|  | **$** | $ |
| Pension asset - defined benefit pension plans | **285** | 285 |
| Countervailing duty and anti-dumping duty cash deposits on softwood lumber | **256** | 242 |
| Off-market contracts | **62** | 62 |
| Restricted cash | **59** | 41 |
| Other | **43** | 44 |
|  | **705** | 674 |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 9.**

**_________________**

**CLOSURE AND RESTRUCTURING AND IMPAIRMENT OF LONG-LIVED ASSETS**

*Idling of Coosa Pines, Alabama mill*

On March 24, 2026, the Company announced that it will indefinitely idle operations at its Coosa Pines, Alabama, facility in May 2026. This idling will reduce the Company's annual market pulp production capacity by approximately 270,000 air-dried metric tons and will result in a workforce reduction of approximately 285 employees.

During the first quarter of 2026, the Company recorded $9 million of write-off of property, plant and equipment and $3 million of write-off of operating lease right-of-use assets, under Impairment of long-lived assets on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss). Additionally, for the three months ended March 31, 2026, the Company recorded $10 million of write-off of inventory and $7 million of severance and termination costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

*Impairment of long-lived assets*

During the year 2025, the Company identified indicators of impairment related to certain non-core pulp and paper assets and Wood Products lumber operations. These indicators were primarily driven by strategic actions to dispose of non-core assets, the indefinite closure and curtailment of certain operations, as well as persistent adverse market conditions affecting the lumber industry, including weaker demand, increased duties and tariffs, and ongoing economic uncertainty.

These market conditions and strategic actions continued during the first quarter of 2026. As a result, the Company recorded impairment charges of $6 million in the Wood Products segment, $5 million in the Paper and Packaging segment, and $2 million as corporate charges during the first quarter of 2026. The impairment charges were recognized as a reduction to the carrying value of property, plant and equipment of $6 million, and operating lease right-of-use assets of $7 million. These charges were recorded under Impairment of long-lived assets on the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

*Catalyst restructuring and impairment costs, British Columbia mills*

On August 16, 2023, it was announced that operations at the Tiskwat mill at Powell River would be curtailed permanently. On January 25, 2024, the Company announced the indefinite curtailment of the Crofton mill paper operations. On December 2, 2025, the Company announced the permanent closure of operations at the Crofton mill. While pulp production is being discontinued, the Company continues to manage the site in compliance with all applicable environmental and other laws and is exploring a variety of possibilities for the future of the site.

During the first quarter of 2026, the Company recorded $2 million of write-off of inventory (2025 – nil) and $1 million of other costs (2025 – nil), under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

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).

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 9 – CLOSURE AND RESTRUCTURING AND IMPAIRMENT OF LONG-LIVED ASSETS (CONTINUED)**

*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. On October 17, 2025, the Company completed the sale. 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).

*Other Costs*

For the three months ended March 31, 2026, other costs related to previous and ongoing closures and restructuring included

$4 million of severance and termination costs (2025 – nil), and $10 million of other costs (2025 – nil).

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 10.**

------

**LONG-TERM DEBT**

INDEBTEDNESS AND LIQUIDITY

The Company expects that it will need to refinance all or a portion of its indebtedness on or before maturity. If it cannot timely refinance its indebtedness, the Company may have to take actions such as raising additional equity capital and reducing, delaying or foregoing capital expenditures, strategic acquisitions, investments and alliances. It is uncertain whether any such actions, if necessary, could be implemented on commercially reasonable terms or at all. In addition, if the Company's cash flows and capital resources are insufficient to fund its debt service obligations, it could face substantial liquidity challenges and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure its indebtedness. The Company may not be able to effect such alternative measures on commercially reasonable terms or at all, and, even if successful, those alternative actions may not allow the Company fully to meet its debt service obligations.

The Company is focused on generating additional liquidity, including from external sources. Accordingly, it has undertaken a number of actions that seek to enhance access to liquidity in the business. The Company is conducting a comprehensive review of the assets in its portfolio to identify assets that are not complementary to the business and therefore may merit divestiture to provide cash inflow and reduce operating costs; it is continuing a review of support function costs with the aim of reducing costs and right sizing the organization in anticipation of asset sales; the Company may also potentially idle certain underperforming mills and plans to reduce working capital. Additionally, in 2025 and to date in 2026, the Company took steps to adjust production capacity and reduce costs by taking market downtime in various locations to adjust to customer demand for paper, pulp and wood lumber products; idled indefinitely the Grenada, Mississippi newsprint mill in response to lower customer demand for newsprint; announced the closure of the Nogales, Mexico converting facility and the closure of the Addison, Illinois converting facility; announced the curtailment of operations at the Glenwood, Arkansas sawmill and the Maniwaki, Quebec sawmill in response to weaker lumber demand conditions; announced the permanent closure of the Crofton, British Columbia pulp mill; announced the indefinite idling of the Coosa Pines, Alabama mill; and reduced capital expenditure programs for 2025 and 2026 to better focus on core functions such as the maintenance of assets, the safety of employees and compliance with applicable laws and regulations.

The Company's consolidated financial statements have been prepared on the basis that the Company is expected to be able to realize its assets and discharge its liabilities in the normal course of business as they become due for at least twelve months from the issuance date of these consolidated financial statements. Significant judgement was applied in performing a liquidity assessment to evaluate whether the Company has sufficient liquidity for the next 12 months using a cash flow model. Based on current assumptions, including those related to expected operating margin and other non-discretionary cash inflows and outflows, the Company expects to have sufficient liquidity to meet its obligations over the next 12 months. In addition to these assumptions, the Company's liquidity position is supported by its available cash balances, access to existing credit facilities, and anticipated cash flows from operations.

The Company's ability to meet its debt service requirements and liquidity needs will depend on its ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors, many of which are beyond its control.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 11.**

**_________________**

**CHANGES IN ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME BY COMPONENT**

The following table presents the changes in Accumulated other comprehensive (loss) income by component<sup>(1)</sup> for the three months ended March 31, 2026 and the year ended December 31, 2025:

---

| | | |
|:---|:---|:---|
|  | **Pension items**<sup>(2)</sup> | **Post-retirement<br>benefit items**<sup>(2)</sup> |
|  | **$** | **$** |
| Balance at December 31, 2024)**)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Currency options | N/A | N/A |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange forward contracts | N/A | N/A |
| &nbsp;&nbsp;&nbsp;&nbsp;Net gain (loss) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign currency items | N/A | N/A |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive income (loss)<br> before reclassifications |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amounts reclassified from Accumulated <br> other comprehensive (loss) income |  |  |
| Net current period other comprehensive <br> income |  |  |
| Balance at December 31, 2025) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange forward contracts) | N/A | N/A |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign currency items | N/A | N/A)**)** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive loss<br> before reclassifications)**)** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amounts reclassified from Accumulated <br> other comprehensive (loss) income**)** |  |  |
| Net current period other comprehensive <br> loss)**)** |  |  |
| **Balance at March 31, 2026** |  |  |

---

<sup>(1)</sup> All amounts are after tax. Amounts in parentheses indicate losses.

<sup>(2)</sup> The projected benefit obligation is actuarially determined on an annual basis as of December 31.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 11 – CHANGES IN ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME BY COMPONENT (CONTINUED)**

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

---

| | | |
|:---|:---|:---|
| **Details about Accumulated other comprehensive (loss) income components** | **Amounts reclassified from <br>Accumulated other <br>comprehensive (loss) income** | **Amounts reclassified from <br>Accumulated other <br>comprehensive (loss) income** |
|  | *For the three months ended* | *For the three months ended* |
|  | **March 31,** | March 31, |
|  | **2026** | 2025 |
|  | **$** | $ |
| Net derivative gains (losses) on cash flow hedge |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Natural gas swap contracts <sup>(1)</sup> |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Currency options and forwards <sup>(1)</sup> |  |  |
| Total before tax |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax (expense) benefit |  |  |
| Net of tax |  |  |
| Amortization of defined benefit pension items |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of net actuarial loss <sup>(2)</sup> |  |  |
| Total before tax |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax benefit |  |  |
| Net of tax |  |  |
| Amortization of other post-retirement benefit items |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of net actuarial gain <sup>(2)</sup> |  |  |
| Total before tax |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax expense |  |  |
| Net of tax |  |  |

---

<sup>(1)</sup> These amounts are included in Cost of sales in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

<sup>(2)</sup> These amounts are included in the computation of net periodic benefit cost (see Note 4 "Pension plans and other post-retirement benefit plans" for more details).

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 12.**

**_________________**

**OTHER LIABILITIES AND DEFERRED CREDITS**

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

---

| | | |
|:---|:---|:---|
|  | **March 31,** | December 31, |
|  | **2026** | 2025 |
|  | **$** | $ |
| Provision for environmental and asset retirement obligations | **102** | 103 |
| Contingent consideration for contingent value right | **185** | 178 |
| Deferred government assistance | **42** |  |
| Other | **42** | 51 |
|  | **371** | 332 |

---

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 13.**

**_________________**

**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 $52 million and $55 million recorded as of March 31, 2026 and December 31, 2025, 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 $58 million and $58 million recorded as of March 31, 2026 and December 31, 2025, 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, 2026, 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, 2026, 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, 2026**

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

**(UNAUDITED)**

**NOTE 13 – 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, 2026, 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 current 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, 2026**

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

**(UNAUDITED)**

**NOTE 13 – 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, 2026, 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, in the second and third administrative reviews of the countervailing duty order, and in the seventh administrative review of the countervailing and anti-dumping duty orders. 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:

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 13 – COMMITMENTS AND CONTINGENCIES (CONTINUED)**

---

| | |
|:---|:---|
| **Effective dates for deposits on account of countervailing duties** | **Cash deposit rates** |
| **Initial Investigation** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;April 28, 2017 – November 7, 2017 (Preliminary Determination) | 12.82% |
| &nbsp;&nbsp;&nbsp;&nbsp;November 8, 2017 – November 30, 2020 (Final Determination) | 14.70% |
| **First Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;December 1, 2020 – December 1, 2021 | 19.10% |
| **Second Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;December 2, 2021 – August 8, 2022 | 18.07% |
| **Third Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;August 9, 2022 – July 31, 2023 | 10.10% |
| **Fourth Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;August 1, 2023 – August 18, 2024 | 1.79% |
| **Fifth Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;August 19, 2024 – August 11, 2025 | 6.74% |
| **Sixth Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;August 12, 2025 – Present | 14.63% |

---

Commerce issued its final determination in the sixth countervailing administrative review on August 12, 2025.

---

| | |
|:---|:---|
| **Effective dates for deposits on account of anti-dumping duties** | **Cash deposit rates** |
| **Initial Investigation** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;June 30, 2017 – November 7, 2017 (Preliminary Determination) | 4.59% |
| &nbsp;&nbsp;&nbsp;&nbsp;November 8, 2017 – November 29, 2020 (Final Determination) | 3.20% |
| **First Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;November 30, 2020 – December 1, 2021 | 1.15% |
| **Second Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;December 2, 2021 – August 8, 2022 | 11.59% |
| **Third Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;August 9, 2022 – July 31, 2023 | 4.76% |
| **Fourth Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;August 1, 2023 – September 6, 2023 | 6.20% |
| &nbsp;&nbsp;&nbsp;&nbsp;September 7, 2023 – August 18, 2024 | 6.26% |
| **Fifth Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;August 19, 2024 – July 28, 2025 | 7.66% |
| **Sixth Administrative Review** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;July 29, 2025 – September 10, 2025 | 20.56% |
| &nbsp;&nbsp;&nbsp;&nbsp;September 11, 2025 – Present | 20.53% |

---

Commerce issued its final determination in the sixth anti-dumping administrative review on July 29, 2025, and a correction on September 11, 2025.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 13 – COMMITMENTS AND CONTINGENCIES (CONTINUED)**

*Ongoing Administrative Reviews*

Following Commerce's completion of the Canadian softwood lumber investigation and the first, second, third, fourth, fifth and sixth administrative reviews, the seventh administrative review remains pending. On February 21, 2025, Commerce published a notice initiating the seventh administrative review of the countervailing duty and anti-dumping orders on softwood lumber from Canada. In decisions issued April 9 and 21, 2025, the Company was selected as a respondent in the seventh administrative review of the anti-dumping and countervailing investigations, respectively. On March 9, 2026, Commerce published a notice initiating the eighth administrative review of the countervailing duty and anti-dumping orders on softwood lumber from Canada. In a decision issued April 8, 2026, the Company was selected as a respondent in the eighth administrative review of the countervailing investigation. On April 14, 2026, Commerce published its preliminary determination in the anti-dumping and countervailing seventh administrative review and the Company's preliminary rates were set respectively at 11.70% for the countervailing duty and 13.25% for the anti-dumping rates which are not in effect before the issuance of the final determination scheduled on or before October 12, 2026.

*Ongoing Appellate Reviews*

On December 14, 2017 and January 4, 2018, the Company filed complaints supporting appellate reviews of the final results of Commerce's countervailing and anti-dumping investigations on softwood lumber from Canada, respectively, before a binational panel formed pursuant to the North American Free Trade Agreement or United States-Mexico-Canada Agreement, as the case may be ("Panel"). The Panel issued its decision in the anti-dumping appellate review on October 5, 2023, finding that Commerce's methodology was inconsistent with applicable legal principles and ordering a remand to Commerce. Commerce's decision was issued on April 30, 2024 and the Panel issued its decision remanding again to Commerce on February 19, 2026. The Panel directed Commerce to file a determination on remand by April 30, 2026. The hearing for the countervailing appellate review took place from September 27 to 29, 2023. On May 6, 2024, the Panel issued its decision on the countervailing appellate review and remanded to Commerce on certain issues. Commerce's decision was issued on December 17, 2024. On January 6, 2021 and January 19, 2021, the Company filed its complaints supporting appellate Panel reviews of the final results in the countervailing and anti-dumping first administrative reviews. On July 21, 2025, the Panel issued its decision in the first administrative review of the anti-dumping order and remanded Commerce on its methodology further to two recent decisions of the U.S. Court of Assents for the Federal Circuit. On September 17, 2025, the Panel granted the motion for voluntary dismissal jointly filed by all appellate parties, concluding the appellate Panel review in the anti-dumping first administrative review. The Company filed similar complaints with respect to the second administrative reviews on January 12, 2022, and with respect to the third administrative reviews on September 16, 2022. On September 10, 2025, the Panel granted the motion for voluntary dismissal jointly filed by all appellate parties, concluding the appellate Panel review in the anti-dumping second administrative review. On October 12, 2023, the Company joined the complaint filed by Canadian parties supporting an appellate Panel review of the final results in the countervailing fourth administration review, and also filed a summons before the U.S. Court of International Trade ("CIT") to initiate an appellate review of the final results in the anti-dumping fourth administrative review. On October 18, 2024, the Company joined the complaint filed by Canadian parties supporting appellate Panel reviews of the final results in the countervailing and anti-dumping fifth administrative reviews. On September 29, 2025, the Company joined the complaint filed by Canadian parties supporting appellate Panel reviews of the final results in the countervailing and anti-dumping sixth administrative reviews. All appellate reviews described above remain pending, except for the anti-dumping first and second administrative reviews.

*Sunset Reviews*

In parallel, on December 1, 2022, Commerce and the ITC published notices that automatically initiated five-year "sunset" reviews to determine whether revocation, for the future, of the anti-dumping and countervailing duty orders on softwood lumber products from Canada would likely lead to continuation or recurrence of dumping or subsidies (Commerce) and of material injury (ITC). Commerce released final results in the sunset reviews of the countervailing and anti-dumping orders on March 27 and April 3, 2023, respectively, finding that revocation of the orders would be likely to lead to continuation or recurrence of countervailable subsidies and of dumping. On May 8, 2023, the Company filed with the CIT a complaint supporting an appellate review of Commerce's final results in the sunset review of the anti-dumping order. On November 30, 2023, the ITC voted that revocation of the orders would be likely to lead to a continuation or recurrence of material injury to the U.S. industry within a reasonably foreseeable time.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 13 – COMMITMENTS AND CONTINGENCIES (CONTINUED)**

*World Trade Organization Appeal*

In addition, on August 24, 2020, the World Trade Organization's (the "WTO") dispute panel issued a report (the "Panel Report") in the case brought by the government of Canada in "United States — Countervailing Measures on Softwood Lumber from Canada" ("DS533"), concluding, among other things, that Commerce acted inconsistently with the Agreement on Subsidies and Countervailing Measures on most of the matters. On September 28, 2020, the U.S. notified the WTO's Dispute Settlement Body of its decision to appeal the Panel Report. The appeal remains pending.

*Financial assurance*

The Company is required by U.S. Customs to provide surety bonds to secure the payment of its cash deposits. As of March 31, 2026, the Company had $133 million of surety bonds outstanding in favor of U.S. Customs, of which $62 million were secured by letters of credit.

As of March 31, 2026, a total of $756 million of cash deposits ($527 million of countervailing and $229 million of anti-dumping duties) on estimated softwood lumber duties were paid. These deposits are measured 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 of time. Deposits are remeasured with that model every reporting date and the variation is recorded under Other operating income, net on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

The following tables reconcile the Company's cash deposits paid during the period to the amount recorded on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss):

---

| | | | |
|:---|:---|:---|:---|
|  | ***For the three months ended*** | ***For the three months ended*** | ***For the three months ended*** |
|  | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
|  | **Countervailing duty** | **Anti-dumping duty** | **Total** |
|  | **$** | **$** | **$** |
| Cash deposits paid <sup>(1)</sup> |  |  |  |
| Cash deposits paid recognized as receivable |  |  |  |

---

---

| | | | |
|:---|:---|:---|:---|
|  | *For the three months ended* | *For the three months ended* | *For the three months ended* |
|  | March 31, 2025 | March 31, 2025 | March 31, 2025 |
|  | Countervailing duty | Anti-dumping duty | Total |
|  | $ | $ | $ |
| Cash deposits paid <sup>(1)</sup> |  |  |  |
| Cash deposits paid recognized as receivable |  |  |  |

---

<sup>(1)</sup> Deposits paid are recorded as contingent assets with a portion recoverable, using a recovery model and undiscounted figures based on management estimates.

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**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 13 – COMMITMENTS AND CONTINGENCIES (CONTINUED)**

The following tables outline the change in duties receivable:

---

| | | | |
|:---|:---|:---|:---|
|  | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
|  | **Countervailing duty** | **Anti-dumping duty** | **Total** |
|  | **$** | **$** | **$** |
| Beginning of year | **176** | **66** | **242** |
| Cash deposits paid recognized as recoverable | **2** | **4** | **6** |
| Accretion | **6** | **2** | **8** |
| Balance at end of period <sup>(1)</sup> | **184** | **72** | **256** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | December 31, 2025 | December 31, 2025 | December 31, 2025 |
|  | Countervailing duty | Anti-dumping duty | Total |
|  | $ | $ | $ |
| Beginning of year | 146 | 49 | 195 |
| Cash deposits paid recognized as recoverable | 9 | 11 | 20 |
| Accretion | 21 | 6 | 27 |
| Balance at end of year | 176 | 66 | 242 |

---

<sup>(1)</sup> The balance of $256 million is shown in Other assets in the Consolidated Balance Sheets.

PARTIAL WIND-UPS OF PENSION PLANS

On June 12, 2012, the Company filed a motion for directives with the Quebec Superior Court, the court with jurisdiction in the creditor protection proceedings under the Companies' Creditors Arrangement Act (Canada) (the "CCAA Creditor Protection Proceedings"), seeking an order to prevent pension regulators in each of Quebec, New Brunswick, and Newfoundland and Labrador from declaring partial wind-ups of pension plans relating to employees of former operations in New Brunswick, and Newfoundland and Labrador, or a declaration that any claim for accelerated reimbursements of deficits arising from a partial wind-up is a barred claim under the CCAA Creditor Protection Proceedings. The Company's position is that any such declaration, if issued, would be inconsistent with the Quebec Superior Court's sanction order confirming the CCAA debtors' CCAA Plan of Reorganization and Compromise, as amended, and the terms of the Company's emergence from the CCAA Creditor Protection Proceedings. A partial wind-up would likely shorten the period in which any deficit within those plans, which could reach up to $108 million (C$150 million), would have to be funded if the Company does not obtain the relief sought. The hearing in this matter was held in March 2024. On August 27, 2024, the Quebec Superior Court rendered its judgment, declaring that (i) claims for additional contributions to the New Brunswick, and Newfoundland and Labrador pension plans resulting from partial wind-ups of these pension plans are extinguished and have been released and discharged by the sanction order confirming the CCAA debtors' CCAA Plan of Reorganization and Compromise, as amended; and (ii) claims for additional contributions to the New Brunswick, and Newfoundland and Labrador pension plans resulting from partial wind-ups of the pension plans on the basis of facts that took place prior to April 17, 2009 are inconsistent with the sanction order confirming the CCAA debtors' CCAA Plan of Reorganization and Compromise, as amended. On September 17, 2024, the Superintendent of Pensions for New Brunswick and the Superintendent of Pensions of Newfoundland and Labrador filed a motion seeking leave to appeal, which was denied. On January 7, 2025, the Superintendent of Pensions for New Brunswick and the Superintendent of Pensions of Newfoundland and Labrador filed an application for leave to appeal to the Supreme Court of Canada, which was rejected by the Supreme Court of Canada on September 23, 2025.

On August 5, 2025, the Superintendent of Pensions for New Brunswick and the Superintendent of Pensions of Newfoundland and Labrador each sent to the Company demand letters requesting evidence from the Company that the pension plans relating to employees of former operations in New Brunswick and Newfoundland and Labrador have been funded in accordance with New Brunswick and Newfoundland and Labrador laws during the period starting on December 9, 2010 and ending July 1, 2020 and July 1, 2023 respectively, and seeking grounds to confirm a partial termination of the pension plans for funding below the levels required under New Brunswick and Newfoundland and Labrador laws.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 13 – COMMITMENTS AND CONTINGENCIES (CONTINUED)**

SUPERFUND SITE

On May 17, 2023, the EPA issued a General Notice of Liability and Demand for Reimbursement of Response Costs Expended at the Barite Hill/Nevada Goldfields Superfund Site (the "Notice of Liability") to the Company. The Notice of Liability states that the EPA believes that the Company may be liable under Sections 106 and 107(a) of the Comprehensive, Environmental Response, Compensation, and Liability Act ("CERCLA") for costs the EPA has incurred at the Barite Hill/Nevada Goldfields Superfund Site (the "Site"). The approximate total response costs identified by the EPA in the Notice of Liability through January 19, 2023 was approximately $21 million. The Company believes that the EPA may also seek to hold it responsible for future remediation costs at the Site. The Company is currently assessing its defenses to liability at the Site.

The Company has recognized a provision of $15 million, with respect to the EPA's cause of action for past costs described in the Notice of Liability, as an environmental liability in Other liabilities.

MENOMINEE FIRE

On October 6, 2022, a fire in a third-party owned warehouse that the Company leases adjacent to its Menominee recycled pulp mill damaged and, in some cases, destroyed, the warehouse, as well as certain of the Company's property, plant and equipment and inventories, which resulted in the temporary idling of the mill. The mill was restarted during the first quarter of 2023, operating at a limited capacity. The fire incident resulted in third-party damages in addition to damages to the Company's Menominee mill. Six claims were filed in Michigan State Court against the Company, of which four have been settled including the complaint by the owner of the warehouse alleging damages in an amount in excess of $45 million. The separate complaint filed by a co-tenant in the warehouse and its insurer alleging damages in an amount in excess of $132 million is still pending. The Company currently does not believe it is probable that it will incur any material uninsured loss related to third party claims, nor could any possible loss contingency be reasonably estimable at the present time.

On December 6, 2024, Michigan EGLE sent a "Compliance Communication" to the Company regarding the alleged release of hazardous substances caused by the October 6, 2022 fire and fire suppression activities. EGLE alleges that the Company is liable under Part 201 for the facility and seeks reimbursement of EGLE's response activity costs. The Company disputes EGLE's allegations.

On March 5, 2025, the Company also received a letter from USEPA Region 5 seeking recovery of "Response Costs" for the period up to November 30, 2024. On October 2, 2025, the parties signed a statute-of-limitations tolling agreement which was extended February 6, 2026 providing a tolling period expiring June 30, 2026.

On March 6, 2025, the Company received a claim letter from the U.S. Coast Guard National Pollution Funds Center, indicating that they received a claim from the City of Marinette identifying the Company as the party responsible for the October 6, 2022 warehouse fire. On March 17, 2025, the U.S. Coast Guard National Pollution Funds Center denied the City of Marinette's initial claim related to the fire incident.

The Company maintains insurance coverage, subject to customary deductibles and limits. Anticipated insurance recoveries related to losses and incremental costs incurred, in excess of the deductible, are recognized when receipt is probable. The anticipated insurance recoveries related to the fire, in excess of the net book value of the damaged operating assets and related to business interruption, will not be recognized until all contingencies related to the claim have been resolved.

For the three months ended March 31, 2026, the Company did not record additional costs or related recoveries and no additional payment was received from the insurer.

For the three months ended March 31, 2025, the Company recognized direct costs of $4 million, which were determined probable to be recovered and recognized an equivalent amount of recovery in reduction of Cost of sales. The Company also recognized a gain on disposition of property, plant and equipment of $2 million for the three months ended March 31, 2025, under Other operating income, net on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss). For the three months ended March 31, 2025, $6 million were received from the insurer.

The Company expects to continue to record additional costs and recoveries until the assessment is completed and insurance claims are fully settled. The timing and the amounts of additional insurance recoveries, including for business interruption, are not known at this time.

------

**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 14.**

**_________________**

**SEGMENT DISCLOSURES**

The Company reports segment information consistent with the way its Chief Operating Decision Maker ("CODM") evaluates the operating results and performance of the Company. The Company analyzes the results of its business through the following three reportable segments, which also represent its three operating segments based on the Company's organizational structure:

• **Paper and Packaging –** consists of the design, manufacturing, marketing and distribution of a wide variety of fiber-based products including communication, specialty and packaging papers.

• **Pulp and Tissue –** consists of the design, manufacturing, marketing and distribution of a wide variety of fiber-based products including market pulp, tissue and paper.

• **Wood products –** consists of the production of lumber and other wood products for the residential construction and home renovation markets, as well as for specialized structural and industrial applications.

Effective January 1, 2026, the Ashdown, Plymouth and Skookumchuck pulp mills are now being reported under the Company's Pulp and Tissue operating segment. This change has been reflected in the Company's reporting segments for all periods presented. The change in segment reporting did not have an impact on the Company's consolidated financial position, results of operations, cash flows, or stockholders' equity.

The Company's CODM, the sole beneficial owner of Domtar, reviews segment operating income, as well as revenue, in the budgeting and forecasting process and considers actual versus budget variances in assessing the performance of the segment and the allocation of resources. The CODM also uses segment operating income as an input to the overall compensation measures for segment management under our incentive compensation plans. The Company believes it is appropriate to disclose this measure to help analyze segment performance and trends. Expense information is provided to and reviewed by the CODM on a consolidated basis to evaluate cost efficiency and company level performance. Segment operating income excludes certain corporate expenses that are not related to segment activities and are presented on the Corporate and other line. The Company excludes these items from segment operating income in order to provide better transparency of its segment operating results.

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**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 14 – SEGMENT DISCLOSURES (CONTINUED)**

An analysis and reconciliation of the Company's business segment information to the respective information in the financial statements is as follows:

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| | | |
|:---|:---|:---|
|  | *For the three months ended* | *For the three months ended* |
|  | **March 31,** | March 31, |
| SEGMENT DATA | **2026** | 2025 |
|  | **$** | $ |
| Sales by segment |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Paper and packaging |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Pulp and tissue |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Wood products |  |  |
| Total for reportable segments |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Intersegment sales |  |  |
| Consolidated sales |  |  |
| Sales by product group |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Communication papers |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Specialty and packaging papers |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Market pulp |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Linerboard |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Newsprint |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Tissue |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Wood |  |  |
| Consolidated sales |  |  |
| Other costs by segment |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Paper and packaging |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Pulp and tissue |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Wood products |  |  |
| Total for reportable segments |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate and other |  |  |
| Consolidated other costs |  |  |
| Operating income (loss) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Paper and packaging |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Pulp and tissue |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Wood products |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate and other |  |  |
| Consolidated operating (loss) income |  |  |
| Interest expense, net |  |  |
| Non-service components of net periodic benefit cost |  |  |
| (Loss) earnings before income taxes |  |  |
| Income tax expense |  |  |
| Net (loss) earnings |  |  |

---

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**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 14 – SEGMENT DISCLOSURES (CONTINUED)**

Other costs by segment consist primarily of: input costs (including fiber, energy and chemicals), manufacturing costs (including hourly and salaried wages and fringe and plant overhead, such as utilities and taxes), freight & duty costs, maintenance related costs, spending-related costs (including depreciation and amortization of manufacturing assets, asset retirements, intangible assets and operating leases), and administrative, information technology, and selling costs (including primarily wages and fringe for salaried personnel and purchased services).

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**DOMTAR CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**MARCH 31, 2026**

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

**(UNAUDITED)**

**NOTE 15.**

**_________________**

**RELATED PARTY TRANSACTIONS** 

For the three months ended March 31, 2026, the Company purchased $10 million (2025 – nil) of electricity from an affiliated company and provided services of $6 million (2025 – nil) to the same affiliated company. These costs are included, on a net basis, in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) under Cost of sales.

For the three months ended March 31, 2026, the Company recognized $3 million (2025 – $5 million) of administrative expenses paid to an affiliated company. These costs are included in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) under Selling, general and administrative expense.

The Company has other receivables with affiliated companies of $43 million and $33 million at March 31, 2026 and December 31, 2025, respectively.

The Company has other payables with affiliated companies of $11 million and $8 million at March 31, 2026 and December 31, 2025, respectively.

The Company has notes receivable issued by PECHC, an affiliated company, of $65 million and $64 million at March 31, 2026 and December 31, 2025, respectively. The subject interest-bearing notes were issued as consideration for the transfer of certain power generation assets to PECHC through the creation and sale of a special purpose entity. Concurrently, the Company entered into agreements to provide services to, and make purchases from, the subject entity, on arm's length terms.

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**ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with Domtar Corporation's unaudited interim financial statements and notes thereto included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission ("SEC") on March 30, 2026. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed below under "Outlook", "Forward-looking statements", as well as in Item 1A, Risk Factors, in Part II, of this report. Throughout this MD&A, unless the context requires otherwise, "Domtar Corporation," "the Company," "Domtar," "we," "us" and "our" refer to Domtar Corporation and its subsidiaries. Except where otherwise indicated, all financial information reflected herein is determined on the basis of accounting principles generally accepted in the United States.

The information contained on our websites is not incorporated by reference into this Form 10-Q and should in no way be construed as a part of this or any other report that we file with or furnish to the SEC.

In accordance with industry practice, in this report, the term "ton" or the symbol "ST" refers to a short ton, an imperial unit of measurement equal to 0.9072 metric tons. The term "metric ton" or the symbol "ADMT" refers to an air dry metric ton, and the term "MBF" refers to a million board feet. In this report, unless otherwise indicated, all dollar amounts are expressed in U.S. dollars, and the term "dollars" and the symbol "$" refer to U.S. dollars. In the following discussion, unless otherwise noted, references to increases or decreases in income and expense items, prices, contribution to net earnings (loss), and shipment volumes are based on the three-month periods ended March 31, 2026 and March 31, 2025. The three-month periods are also referred to as the first quarter of 2026 and 2025. Reference to notes refers to footnotes to the consolidated financial statements and notes thereto included in Item 1 of this Form 10-Q.

Effective in the first quarter of 2026, our Ashdown, Plymouth and Skookumchuck pulp mills are now being reported under our Pulp and Tissue Business Unit. This change has been reflected in our reporting segments for all periods presented. The change in segment reporting did not have an impact on the Company's consolidated financial position, results of operations, cash flows, or stockholders' equity.

**Recent Events and Items Affecting Comparability of Financial Results**

<u>Tariffs</u>

In 2025, the United States imposed tariffs on specific goods imported from numerous countries and suggested the potential for additional widespread tariffs in the near term. On April 2, 2025, the U.S. administration issued an executive order imposing tariffs beginning at 10% on all imports into the U.S. from all countries, but with much higher rates for many. While Canada was not exempt, goods compliant with the United States-Mexico-Canada Agreement ("USMCA") are not subject to these additional tariffs. Multiple nations have countered with retaliatory tariffs and other actions in response. Subsequently, the United States and other nations have adjusted their initial announcements and deferred or limited implementation in certain instances. The tariff environment continues to be dynamic, with changes occurring on an ongoing basis, and it is likely that additional developments will occur over the next several months, particularly as the U.S. negotiates with trade partners.

On February 20, 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act ("IEEPA") does not authorize the imposition of tariffs. The same day, the U.S. President issued a proclamation imposing a global 10% tariff on all articles imported into the United States under Section 122 of the Trade Act of 1974. The Section 122 tariffs maintain the existing exemption for USMCA compliant goods and do not apply to goods subject to Section 232 of the United States Trade Expansion Act of 1962 tariffs.

Refer to the discussion in our 2025 Annual Report on Form 10-K under part 1, item 1A Risks Factors "*Products the Company produces in one country and exports to another may become subject to additional duties, tariff or other international trade remedies or restrictions*" for discussion of some of the risks associated with tariffs.

<u>Closure and Restructuring, and Impairment of long-lived assets</u>

*Idling of Coosa Pines, Alabama mill*

On March 24, 2026, we announced that we will indefinitely idle operations at our Coosa Pines, Alabama, facility in May 2026. This idling will reduce our annual market pulp production capacity by approximately 270,000 ADMT and will result in a workforce reduction of approximately 285 employees.

During the first quarter of 2026, we recorded $9 million of write-off property, plant and equipment and $3 million of write-off of right-of-use assets, under Impairment of long-lived assets on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss). Additionally, we recorded $10 million of write-off of inventory and $7 million of severance and termination costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

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*Impairment of long-lived assets*

In 2025, we identified indicators of impairment related to certain non-core pulp and paper assets and Wood Products lumber operations. These indicators were primarily driven by strategic actions to dispose of non-core assets, the indefinite closure and curtailment of certain operations, as well as persistent adverse market conditions affecting the lumber industry, including weaker demand, increased duties and tariffs, and ongoing economic uncertainty.

These market conditions and strategic actions continued during the first quarter of 2026. As a result, we recorded impairment charges of $6 million in the Wood Products segment, $5 million in the Paper and Packaging segment, and $2 million as corporate charges during the first quarter of 2026. The impairment charges were recognized as a reduction to the carrying value of property, plant and equipment of $6 million, and operating lease right-of-use assets of $7 million. These charges were recorded under Impairment of long-lived assets on the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

*Cost reduction measures*

On August 20, 2025, as a result of a strategic review of our operations, we announced the indefinite idling of the Grenada, Mississippi, newsprint mill and the closure of our Addison, Illinois, and Nogales, Mexico, converting facilities. The Nogales facility ceased operations in August, while the Grenada mill and the Addison facility ceased operations in September.

*Catalyst* 

On January 25, 2024, we announced the indefinite curtailment of the Crofton mill paper operations. On December 2, 2025, we announced the permanent closure of operations at the Crofton pulp mill. While the pulp production is being discontinued, we continue to manage the site in compliance with all applicable environmental and other laws and we are exploring a variety of possibilities for the future of the site.

During the first quarter of 2026, we recorded $2 million of write-off of inventory (2025 – nil) and $1 million of other costs (2025 – nil), under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

During the first quarter of 2025, we recorded $2 million of accelerated depreciation, under Depreciation and amortization on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

*Espanola*

The paper machines were shut down in early 2024. On April 9, 2025, we signed a purchase agreement for the sale of our Espanola facility. On October 17, 2025, we completed the sale of our Espanola facility. As a result, for the first quarter of 2025, we 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).

*Other Costs*

For the three months ended March 31, 2026, other costs related to previous and ongoing closures and restructuring included

$4 million of severance and termination costs (2025 – nil) and $10 million of other costs (2025 – nil).

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**OVERVIEW**

We design, manufacture, market and distribute a wide variety of fiber-based products including paper, market pulp, wood products

and tissue, which are marketed in over 90 countries. We are the largest integrated manufacturer and marketer of uncoated freesheet

paper and uncoated mechanical papers in North America as well as a leading global producer of newsprint, fluff, recycled and softwood pulp. We own or operate manufacturing facilities, including pulp and paper mills, tissue facilities and sawmills, as well as power generation assets in the U.S. and Canada. Our paper and tissue manufacturing operations are supported by converting and forms

manufacturing operations.

*Organizational structure*

Our organizational structure is comprised of Business Units and a Corporate function. We manage and report our operating results through three reportable segments: Paper and Packaging, Pulp and Tissue and Wood Products. Effective in the first quarter of 2026, our Ashdown, Plymouth and Skookumchuck pulp mills are now being reported under our Pulp and Tissue Business Unit. This change has been reflected in our reporting segments for all periods presented. The change in segment reporting did not have an impact on the Company's consolidated financial position, results of operations, cash flows, or stockholders' equity.

**Paper and Packaging**: Design, manufacture, market and distribute a wide variety of fiber-based products including communication papers, specialty and packaging papers. Largest integrated manufacturer and marketer of uncoated freesheet paper in North America as well as an important supplier of specialty and packaging papers.

**Pulp and Tissue:** Design, manufacture, market and distribute a wide variety of fiber-based products including market pulp, tissue, and paper. Largest producer of uncoated mechanical papers in North America, a leading global producer of newsprint, and a fluff, recycled and softwood pulp producer in North America.

**Wood Products:** A large North American producer of lumber and other wood products for the residential construction and home renovation markets, as well as for specialized structural and industrial applications.

Our segment measure of profit (operating income (loss)) is used by management to evaluate performance and make operational decisions. Management believes that this measure allows for a better understanding of cost trends, operating efficiencies, prices and volume. Business segment operating income (loss) is defined as earnings (loss) before income taxes and equity losses, interest expense, and non-service components of net periodic benefit cost. Corporate expenses are allocated to our segment with the exception of certain discretionary charges and credits, which we present under "Corporate and Other" and do not allocate to the segments.

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**Paper, Pulp and Tissue**

The table below lists our operating paper, pulp and tissue manufacturing facilities, the number of machines we operate and their annual production capacity following the change in our reporting segment:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Fiberline Pulp Capacity** | **Fiberline Pulp Capacity** | **Saleable Paper** | **Saleable Paper** | **Tissue** | **Tissue** |
|  | **# lines** | **('000 ADMT)** <sup>(1)</sup> | **# machines** | **('000 ST)** <sup>(1, 2)</sup> | **# machines** | **('000 ST)** <sup>(1)</sup> |
| **PAPER AND PACKAGING** |  |  |  |  |  |  |
| **Paper** |  |  |  |  |  |  |
| Windsor, Quebec | 1 | 447 | 2 | 642 |  |  |
| Hawesville, Kentucky | 1 | 412 | 2 | 596 |  |  |
| Marlboro, South Carolina | 1 | 320 | 1 | 274 |  |  |
| Johnsonburg, Pennsylvania | 1 | 228 | 2 | 344 |  |  |
| Nekoosa, Wisconsin | 1 | 155 | 3 | 168 |  |  |
| Rothschild, Wisconsin | 1 | 65 | 1 | 131 |  |  |
| Port Alberni, British Columbia |  |  | 2 | 265 |  |  |
| Kingsport, Tennessee |  |  | 1 | 600 |  |  |
| *Total* | 6 | 1627 | 14 | 3020 |  |  |
| ***TOTAL Paper and Packaging*** | **6** | **1627** | **14** | **3020** | **—** | **—** |
| **PULP AND TISSUE** |  |  |  |  |  |  |
| **Paper** |  |  |  |  |  |  |
| Clermont, Quebec |  |  | 1 | 244 |  |  |
| Gatineau, Quebec |  |  | 1 | 214 |  |  |
| Alma, Quebec |  |  | 1 | 233 |  |  |
| Dolbeau, Quebec |  |  | 1 | 159 |  |  |
| Kénogami, Quebec |  |  | 1 | 148 |  |  |
| *Total* |  |  | 5 | 998 |  |  |
| **Pulp** |  |  |  |  |  |  |
| Ashdown, Arkansas | 3 | 725 |  |  |  |  |
| Plymouth, North Carolina | 2 | 390 |  |  |  |  |
| Skookumchuck, British Columbia | 1 | 290 |  |  |  |  |
| Saint-Félicien, Quebec | 1 | 357 |  |  |  |  |
| Menominee, Michigan | 1 | 171 |  |  |  |  |
| *Total* | 8 | 1933 |  |  |  |  |
| **Tissue** |  |  |  |  |  |  |
| Calhoun, Tennessee |  |  |  |  | 1 | 66 |
| Hialeah, Florida |  |  |  |  | 2 | 34 |
| Sanford, Florida |  |  |  |  | 1 | 28 |
| *Total* |  |  |  |  | 4 | 128 |
| ***TOTAL Pulp and Tissue*** | **8** | **1933** | **5** | **998** | **4** | **128** |
| **Trade Pulp** <sup>(3)</sup> |  | **1690** |  |  |  |  |

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(1) ADMT refers to an air-dry metric ton and ST refers to short ton. (2) Paper capacity is based on an operating schedule of 360 days and the production at the winder. (3) Estimated third-party shipments dependent upon market conditions.

**HIGHLIGHTS FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2026**

For the first quarter of 2026, we reported an operating loss of $118 million, compared to operating income of $66 million in the first quarter of 2025.

The decrease of $184 million in operating results is principally driven by higher closure and restructuring costs, higher impairment charge, higher energy costs as well as freight costs, higher cash deposits for duties and higher U.S. tariffs for our wood products, lower

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average selling prices for our pulp products and lower paper production, partially offset by higher average selling prices for our paper products.

These and other factors that affected the quarter-to-quarter comparison of financial results are discussed in the consolidated analysis and segment analysis.

**Economic conditions and uncertainties** 

The markets in which our businesses operate are highly competitive and include well-established domestic and foreign manufacturers. Most of our products are commodities that are widely available from other producers as well. Because commodity products have few distinguishing qualities from producer to producer, competition for these products is based primarily on price, which is determined by supply relative to demand. For our pulp and paper products, we also compete on the basis of product quality, breadth of offering and service solutions. Further, as a paper company, we compete against electronic transmission and document storage alternatives. As a result of such competition, we are experiencing ongoing decreasing demand for most of our existing paper products. The pulp market is highly fragmented as well, with many manufacturers competing worldwide. Competition in the pulp market is primarily based on product quality and price.

A portion of the products that we manufacture are exported to other countries, and a portion of the inputs that we use in manufacturing are imported from other countries. Starting in the first quarter of 2025, the U.S. government announced new tariffs on imports from numerous countries, and multiple nations countered with retaliatory tariffs and other actions in response. Subsequently, the U.S. and other nations have adjusted their initial announcements and deferred or limited implementation in certain instances. The tariff environment has been dynamic over the last several months, with changes occurring on an ongoing basis, and developments are likely over the next several months, particularly as the U.S. negotiates with trade partners. See section "Tariffs" above for more information and most recent update on the subject.

Implementation of new tariffs or increases in existing tariffs likely will have an adverse impact on our business. As noted above, we operate in a highly competitive environment, and tariffs that either increase our landed sales prices or our manufacturing costs make our products less competitive relative to those that are not subject to these impacts. Our main export markets from the United States are: China, Canada and Mexico and from Canada, our main export market is the United States. We continue to actively evaluate the potential impacts of the announced tariffs on our business as well as our ability to mitigate impacts as they arise. The tariff environment is volatile and unpredictable, however, and such impacts may be significant in the future.

**OUTLOOK** 

For the balance of 2026, we expect demand for paper to increase for most of our grades, with modest improvements anticipated in pulp demand, especially for fluff. We also expect strong price recovery in our fluff pulp as well as paper products. We will continue to actively manage our inventory levels and align our production with our customer demand. In our Wood Products business, soft demand in the U.S., combined with the implementation of additional 10% tariff on lumber exports to the U.S., has created challenging market conditions and contributed to a significant reduction in the North American lumber capacity. Despite near-term pressure, we remain confident on the medium and long-term housing fundamentals and the housing shortage in both the U.S. and Canada. Overall, we anticipate costs, including freight, labor and raw materials, to marginally increase year over year. We will continue to monitor the Middle-East conflict, which is driving increases in energy prices, supply and shipping disruptions, inflationary pressures, and broader supply chain uncertainty. Our near-term focus continues to be on controlling costs and generating cash flow.

This outlook reflects assumptions subject to change given the macro environment.

**CONSOLIDATED RESULTS OF OPERATIONS AND SEGMENT REVIEW** 

This section presents a discussion and analysis of our first quarter of 2026 and 2025 sales, operating (loss) income and other information relevant to the understanding of our results of operations. Effective in the first quarter of 2026, our Ashdown, Plymouth and Skookumchuck pulp mills are now being reported under our Pulp and Tissue operating segment. This change has been reflected in our reporting segments for all periods presented. The change in segment reporting did not have an impact on the Company's consolidated financial position, results of operations, cash flows, or stockholders' equity.

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---

| | | | |
|:---|:---|:---|:---|
|  | **Three months ended** | **Three months ended** | **Three months ended** |
| FINANCIAL HIGHLIGHTS | **March 31, 2026** | March 31, 2025 | variance $ |
| *(In millions of dollars)* |  |  |  |
| Sales | $**1678** | $1860 | $(182) |
| Operating (loss) income | **(118)** | 66 | (184) |
| Net (loss) earnings | $**(168)** | $6 | $(174) |
| **Sales by segment** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Paper and Packaging | $**907** | $1003 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Pulp and Tissue | **570** | 645 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Wood Products | **226** | 237 |  |
| **Total for reportable segments** | $**1703** | $**1885** |  |
| &nbsp;&nbsp;Intersegment sales | **(25)** | (25) |  |
| **Consolidated sales** | $**1678** | $**1860** |  |
| **Operating income (loss) by segment** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Paper and Packaging | $**46** | $87 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Pulp and Tissue | **(99)** | 10 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Wood Products | **(7)** | (2) |  |
| **Total for reportable segments** | $**(60)** | $**95** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate and Other | **(58)** | (29) |  |
| **Consolidated operating (loss) income** | $**(118)** | $**66** |  |
|  |  | **At March 31, 2026** | At December 31, 2025 |
| Total assets |  | $**6592** | $6658 |
| Total long-term debt, including current portion of long-term debt and due to related party |  | $**2913** | $2832 |

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**First quarter of 2026 compared to First quarter of 2025**

**Analysis of Sales** 

Sales in the first quarter of 2026 decreased by $182 million, or 10%, when compared to sales in the first quarter of 2025. This decrease in sales is mostly due to lower volume for the majority of our products as well as lower average selling prices for pulp. This decline was largely attributable to weakened consumer demand resulting from ongoing macroeconomic challenges. These decreases were partially offset by an increase in our net average selling prices for our paper.

**Analysis of change in Operating Income (Loss)**

Operating results in the first quarter of 2026 decreased by $184 million, or 279%, when compared to operating income in the first quarter of 2025. This decrease was principally driven by higher closure and restructuring costs related to our cost reduction measures, higher impairment charges, higher energy costs as well as freight costs, higher cash deposits for duties and higher U.S. tariffs for our wood products, lower average selling prices for our pulp products and lower paper production, partially offset by higher average selling prices for our paper products.

**OTHER FACTORS**

**Interest Expense, net** 

We incurred $57 million of net interest expense in the first quarter of 2026, a decrease of $4 million compared to net interest expense of $61 million in the first quarter of 2025. Interest expense decreased mainly due to lower floating rates for SOFR, partially offset by higher debt levels for the three month period in 2026 compared to 2025. In the first quarter of 2026, we had capitalized interest of $1 million, compared to nil in the first quarter of 2025. See section "Capital Resources" below for more information on our debt structure.

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**Non-Service Components of net periodic benefit cost**

For the first quarter of 2026, our non-service components of net periodic benefit cost were a benefit of $7 million, an increase of $3 million when compared to the first quarter of 2025. Refer to Item 1, Financial Statements and Supplementary Data, under Note 4 "Pension Plans and Other Post-Retirement Benefit Plans" for additional information.

**Income Taxes** 

For the first quarter of 2026, we recorded no income tax expense. Our current income tax expense of $1 million was fully offset by our deferred income tax benefit of $1 million. This compares to an income tax expense of $3 million in the first quarter of 2025, consisting of $1 million of current income tax expense and a deferred income tax expense of $2 million. We made no payments during the first quarter of 2026, as payments were offset by income tax refunds. The effective tax rate for the first quarter of 2026 was 0% compared to 33% for the first quarter of 2025. The effective tax rate for 2026 was impacted by current year losses with no related tax benefit. This was partially offset by the recognition of previously unrecognized tax benefits. The effective tax rate for 2025 was impacted by a valuation allowance on tax assets arising from deferred interest expenses and additional U.S. tax expense on foreign operations. This was partially offset by research and experimentation tax credits.

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 we have significant operations have already adopted or are in the process of adopting such legislation. We performed an assessment of potential exposure and concluded GloBE Rules did not impact our financial results for the first quarter of 2026.

**Commentary – Segment Review** 

Effective in the first quarter of 2026, our Ashdown, Plymouth and Skookumchuck pulp mills are now being reported under our Pulp and Tissue operating segment. This change has been reflected in our reporting segments for all periods presented. The change in segment reporting did not have an impact on the Company's consolidated financial position, results of operations, cash flows, or stockholders' equity.

**PAPER AND PACKAGING** 

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| | | | |
|:---|:---|:---|:---|
|  | **Three months ended** | **Three months ended** | **Three months ended** |
| *(In millions of dollars, unless <br> otherwise noted)* | **March 31, 2026** | March 31, 2025 | *variance $* |
| Sales |  |  |  |
| &nbsp;&nbsp;Paper | $**861** | $903 | $(42) |
| &nbsp;&nbsp;Pulp | **46** | 100 | (54) |
| Total sales | $**907** | $1003 | $(96) |
| Operating income | $**46** | $87 | $(41) |
| <u>Shipments</u> |  |  |  |
| Paper - manufactured <br> (in thousands of ST) | **651** | 656 | (5) |
| &nbsp;&nbsp;Communication papers | **354** | 410 | (56) |
| &nbsp;&nbsp;Specialty and Packaging papers | **297** | 246 | 51 |
| Pulp (in thousands of ADMT) | **53** | 118 | (65) |

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*Sales*

Paper and Packaging segment sales in the first quarter of 2026 decreased by $96 million, or 10%, when compared to sales in the first quarter of 2025. This decrease in sales is mostly due to a decrease in our pulp net average selling prices and pulp volume, as well as a decrease in our paper volume. These decreases were partially offset by higher average selling price for our paper products. Our paper volume was impacted by lower demand, resulting from ongoing macroeconomic challenges and our pulp volume was impacted by the closure of Crofton pulp facility in December 2025.

*Operating income* 

Operating income in our Paper and Packaging segment amounted to $46 million in the first quarter of 2026, a decrease of $41 million, when compared to operating income of $87 million in the first quarter of 2025. Our results were negatively impacted by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher operating expenses ($47 million) when compared to the first quarter of 2025 mostly due to lower production, higher maintenance and freight costs as well as other operating expenses

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher input costs ($8 million) mostly due to higher costs of energy

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower paper volume and mix ($5 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher impairment charge ($5 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower net average selling prices for pulp ($6 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher closure and restructuring costs ($2 million) when compared to the first quarter of 2025

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Negative impact of a higher Canadian dollar on our Canadian dollar denominated expenses, net of hedging ($1 million)

These decreases were partially offset by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher net average selling prices for paper ($15 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower depreciation charges ($6 million) when compared to the first quarter of 2025

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher other operating income ($12 million) when compared to the first quarter of 2025 mostly due to an insurance settlement received in the first quarter of 2026

**PULP AND TISSUE** 

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| | | | |
|:---|:---|:---|:---|
|  | **Three months ended** | **Three months ended** | **Three months ended** |
| *(In millions of dollars, unless <br> otherwise noted)* | **March 31, 2026** | March 31, 2025 | variance $ |
| Sales |  |  |  |
| &nbsp;&nbsp;Paper | $**147** | $183 | $(36) |
| &nbsp;&nbsp;Pulp | **361** | 401 | (40) |
| &nbsp;&nbsp;Tissue | **62** | 61 | 1 |
| Total sales | $**570** | $645 | $(75) |
| Operating income (loss) | $**(99)** | $10 | $(109) |
| <u>Shipments</u> |  |  |  |
| Paper (in thousands of ST) | **213** | 274 | (61) |
| Pulp (in thousands of ADMT) | **484** | 466 | 18 |
| Tissue (in thousands of ST) <sup>(1)</sup> | **29** | 25 | 4 |

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<sup>(1)</sup> *Tissue converted products, which are measured in cases, are converted to short tons.*

*Sales*

Pulp and Tissue segment sales in the first quarter of 2026 decreased by $75 million, or 12%, when compared to sales in the first quarter of 2025. This decrease in sales is mostly due to a decrease in our paper sales volume mostly due to lower demand resulting from ongoing macroeconomic challenges and by the closure of our Grenada paper facility in August 2025, as well as a decrease in our net average selling prices for pulp.

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*Operating income (loss)* 

Operating loss in our Pulp and Tissue segment amounted to $99 million in the first quarter of 2026, a decrease of $109 million, when compared to operating income of $10 million in the first quarter of 2025. Our results were negatively impacted by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower average selling prices ($56 million) for pulp

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher operating expenses ($44 million) when compared to the first quarter of 2025 mostly due to higher maintenance costs in part due to the timing of some major maintenance, lower production, higher freight costs as well as other operating expenses. Higher operating expenses were partially due to cold weather in the U.S. south that impacted some of our pulp mills.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Negative impact of a higher Canadian dollar on our Canadian dollar denominated expenses ($8 million), net of hedging

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower other operating income ($1 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher input costs ($1 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher impairment charges ($12 million)

These decreases were partially offset by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher volume and mix ($10 million) mostly due to our mix of pulp products

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher average selling price ($2 million) for tissue

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower depreciation charges ($1 million)

**WOOD PRODUCTS** 

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| | | | |
|:---|:---|:---|:---|
|  | **Three months ended** | **Three months ended** | **Three months ended** |
| *(In millions of dollars, unless otherwise noted)* | **March 31, 2026** | March 31, 2025 | *variance $* |
| Sales | $**226** | $237 | $(11) |
| Operating (loss) | $**(7)** | $(2) | $(5) |
| <u>Shipments</u> |  |  |  |
| Wood products (in millions board feet) <sup>(1)</sup> | **432** | 455 | (23) |

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<sup>(1)</sup> *Includes wood pellets measured by mass, converted to board feet using a density-based conversion ratio, as well as engineered wood products measured by linear feet, converted to board feet.*

*Sales*

Wood Products segment sales in the first quarter of 2026 decreased by $11 million, or 5%, when compared to sales in the first quarter of 2025. This decrease in sales is due to a decrease in volume mostly due to lower demand resulting from a slowdown in residential construction and renovation activity.

*Operating loss* 

Operating loss in our Wood Products segment amounted to $7 million in the first quarter of 2026, a decrease of $5 million, when compared to operating loss of $2 million in the first quarter of 2025. Our results were negatively impacted by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher cash deposits for duties and higher U.S. tariffs ($17 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Negative impact of a higher Canadian dollar on our Canadian dollar denominated expenses ($7 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Higher impairment charges partially offset by lower depreciation charge ($2 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower average selling prices for wood products ($1 million)

These decreases were partially offset by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Favorable hedging ($7 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower operating expenses ($8 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Lower input costs ($5 million)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Favorable volume impact ($2 million)

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**LIQUIDITY AND CAPITAL RESOURCES**

Our principal cash requirements are for ongoing operating costs, pension contributions, working capital and capital expenditures, as well as principal and interest payments on our debt and income tax payments. We expect to fund our liquidity needs primarily with internally generated funds from our operations and, to the extent necessary, through borrowings under various lending arrangements, including our ABL Revolving Credit facility, of which $295 million was undrawn and available as of March 31, 2026, and asset sales. Under adverse market conditions, there can be no assurance that these agreements would be available or sufficient. See "Capital Resources" below.

We expect that we will need to refinance all or a portion of our indebtedness on or before maturity. If we cannot timely refinance our indebtedness, we may have to take actions such as raising additional equity capital and reducing, delaying or foregoing capital expenditures, strategic acquisitions, investments and alliances. It is uncertain whether any such actions, if necessary, could be implemented on commercially reasonable terms or at all. In addition, if our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity challenges and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital, and/or restructure our indebtedness. We may not be able to effect such alternative measures on commercially reasonable terms or at all, and, even if successful, those alternative actions may not allow us fully to meet our debt service obligations.

For the first quarter of 2026, we used $43 million of cash flows in operations, had capital expenditures of $56 million, and had debt repayments of $19 million. This compares to $32 million cash provided from operations, capital expenditures of $44 million and debt repayments of $17 million for the first quarter of 2025.

We are focused on generating additional liquidity, including from external sources. Accordingly, we have undertaken a number of actions that seek to enhance our access to liquidity in the business. We continue to conduct a comprehensive review of the assets in our portfolio to identify those that are not complementary to the business and therefore may merit divestiture to provide cash inflow and reduce operating costs; we are continuing a complete review of support function costs with the aim of reducing costs and right sizing the organization in anticipation of asset sales; we may also potentially idle certain underperforming mills and plan to reduce working capital. In addition, in 2025 and to date in 2026, we have: taken steps to adjust production capacity and reduce costs by taking market downtime in various locations to adjust to customer demand for paper, pulp and wood lumber products; idled indefinitely the Grenada, Mississippi newsprint mill in response to lower customer demand for newsprint; closure of the Nogales, Mexico converting facility and the closure of the Addison, Illinois converting facility; curtailment of operations at the Glenwood, Arkansas, sawmill and at the Maniwaki, Quebec sawmill in response to weaker lumber demand conditions; permanent closure of the Crofton, British Columbia pulp mill; announced the indefinite idling of the Coosa Pines, Alabama mill; and reduced capital expenditure programs for 2025 and 2026 to better focus on core functions such as the maintenance of assets, safety of our employees and compliance with applicable laws and regulations.

Our consolidated financial statements have been prepared on the basis that we are expected to be able to realize our assets and discharge our liabilities in the normal course of business as they become due for at least twelve months from the issuance date of these consolidated financial statements. Significant judgment was applied in performing a liquidity assessment to evaluate whether we have sufficient liquidity for the next 12 months using a cash flow model. Based on current assumptions, including those related to expected operating margin and other non-discretionary cash inflows and outflows, we expect to have sufficient liquidity to meet our obligations over the next 12 months. In addition to these assumptions, our liquidity position is supported by our available cash balances, access to existing credit facilities, and anticipated cash flows from operations.

Our ability to make payments on the requirements mentioned above will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Our credit facility and debt indentures impose various restrictions and covenants on us that could limit our ability to respond to market conditions, to provide for unanticipated capital investments or to take advantage of business opportunities.

A portion of our cash is held outside the U.S. by foreign subsidiaries. The earnings of the foreign subsidiaries reflect full provision for local income taxes. We remain indefinitely reinvested in the outside basis differences of our foreign subsidiaries.

**Operating Activities** 

Our operating cash flow requirements are primarily for salaries and benefits, the purchase of raw materials, including fiber and energy, and other expenses such as income tax and property taxes.

Cash flows used for operating activities totaled $43 million in the first quarter of 2026, a $75 million difference compared to cash flows provided from operating activities of $32 million in the first quarter of 2025. This decrease in cash flows from operating activities is primarily due to an increase in net loss. For the first quarter of 2026, we contributed $20 million (first quarter of 2025 - $20 million) to the pension plans and $3 million (first quarter of 2025 - $2 million) to the other post-retirement benefit plans.

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**Investing Activities** 

Cash flows used for investing activities in the first quarter of 2026 amounted to $13 million, a $27 million difference compared to cash flows used for investing activities of $40 million in the first quarter of 2025.

The use of cash for investing activities in the first quarter of 2026 was attributable to additions to property, plant and equipment of $56 million, partially offset by proceeds from the sale of property, plant and equipment of $1 million and proceeds from government assistance related to past and future additions to property, plant and equipment of $42 million.

The use of cash for investing activities in the first quarter of 2025 was mostly attributable to additions to property, plant and equipment of $44 million, partially offset by proceeds from the sale of property, plant and equipment of $4 million.

Our annual capital expenditures for 2026 are expected to total between $260 million and $290 million.

**Financing Activities**

Cash flows provided from financing activities totaled $67 million in the first quarter of 2026 compared to cash flows used for financing activities of $16 million in the first quarter of 2025.

The source of cash flows from financing activities in the first quarter of 2026 was attributable to borrowings under our ABL Revolving Credit Facility ($95 million), partially offset by repayment of long-term debt as required for quarterly amortization of our term loans ($19 million) and lower bank indebtedness ($9 million).

The use of cash flows from financing activities in the first quarter of 2025 was attributable to borrowing under our ABL Revolving Credit Facility ($145 million), repayment of long-term debt as required for quarterly amortization of our Farm Credit Term Loan Facility and First Lien Term Loan ($17 million) partially offset by issuance of long-term debt ($148 million).

**Capital Resources** 

Net indebtedness, consisting of bank indebtedness, long-term debt and due to related party, net of cash and cash equivalents and restricted cash, was $2,861 million as of March 31, 2026, compared to $2,781 million as of December 31, 2025. A substantial majority of this amount, approximately $1.9 billion, matures in 2028.

*ABL Revolving Credit Facility* 

On February 26, 2025, we amended our 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 Tranche 1 Loan ("ABL Tranche I Loan") of $1.020 billion and First In, Last Out ("FILO") tranche of $120 million (the "ABL FILO Loan"). Our ABL Revolving Credit Facility provides for revolving loans and letters of credit in an aggregate amended amount of up to $1.14 billion, subject to borrowing base capacity. The facility was fully available as of March 31, 2026.

Borrowings under the ABL Tranche 1 Loan bears interest at a floating rate per annum of, at our option, SOFR (adjusted by 0.10%) plus an applicable margin of 1.50% to 2.00% or a base rate plus 0.50% to 1.00%, in each case, depending on excess availability. Borrowing under the ABL FILO Loan bears interest at a floating rate per annum of, at our option, SOFR (adjusted by 0.10%) plus an applicable margin of 2.75% or a base rate plus 1.75%. Utilization of the ABL Revolving Credit Facility is limited by borrowing base calculations based on the sum of specified percentages of eligible accounts receivable, plus specified percentages of eligible inventory, plus specified percentages of qualified cash, minus the amount of any applicable reserves. The ABL Revolving Credit Facility is subject to an unused line fee of 0.25% to 0.375%, depending upon utilization.

Our ABL Revolving Credit Facility, when specified excess availability is less than the greater of $99.75 million and 10% of the lesser of the borrowing base and maximum borrowing capacity, requires the maintenance of a fixed charge coverage ratio of 1.00 to 1.00 at the end of each fiscal quarter for the trailing 12-month period. This covenant did not apply as of March 31, 2026.

On March 31, 2026, we had borrowings of $690 million and $155 million of letters of credit outstanding under this facility, leaving unused commitments available to us of $295 million.

*Bank Term Loan*

On January 28, 2025, we 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 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 our ability and that of our

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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. At March 31, 2026, there were $142 million of borrowings outstanding under the Bank Term Loan.

*Industrial Revenue Bond ("IRB Bonds")*

On December 5, 2024, we issued IRB Bonds with a principal amount of $60 million through the Industrial Development Board of the City of Kingsport, Tennessee to finance an environmental project at our Kingsport linerboard mill. The proceeds of the financing are held in trust to pay for the costs of the project. The funds held in trust are included in Other assets on the Consolidated Balance Sheets. The rate on the bonds is 5.25% until November 15, 2029. The IRB Bond provisions include a mandatory remarketing event scheduled for November 15, 2029, where the bonds will be offered for remarketing at the prevailing market rate. We are obligated to repurchase any bonds not successfully remarketed. The interest on these bonds is exempt from federal income tax for holders. The bonds rank pari passu with the First Lien Term Loan Credit Agreement, the Senior Secured Notes, the Farm Credit Term Loan and the Bank Term Loan. While the bonds remain outstanding, we are obligated to follow the covenants contained in the Senior Note indenture or a replacement security.

*Farm Credit Term Loan*

On March 1, 2023, we entered into a Term Loan Credit Agreement (the "Farm Credit Term Loan") for $949 million, consisting of two tranches: (a) $666 million of Farm Credit Term Loan A (as defined in the Farm Credit Term Loan) used to refinance renewable energy investments and facilitate an acquisition and (b) $283 million of Farm Credit Term Loan B (as defined in the Farm Credit Term Loan) used to repay $283 million of borrowings under the Term Loan Facility.

Our Farm Credit Term Loan matures (i) with respect to the Farm Credit Term Loan A, on March 1, 2030, and (ii) with respect to the Farm Credit Term Loan B, on November 30, 2028. Our Farm Credit Term Loan bear interest at a floating rate per annum of, at Domtar's option, (i) with respect to the Farm Credit Term Loan A, SOFR (adjusted by 0.10%) plus 6% or a base rate plus 5%, and (ii) with respect to the Farm Credit Term Loan B, SOFR (adjusted by 0.10%) plus 5.75% or a base rate plus 4.75%. The SOFR rate is subject to an interest rate floor of 0.75% and the base rate is subject to an interest rate floor of 1.75%. Borrowings under our Farm Credit Term Loan amortize in equal quarterly installments in an amount equivalent to 5% per annum of the principal amount. The Farm Credit Term Loan ranks pari passu with the First Lien Term Loan Credit Agreement and the Senior Secured Notes.

During the first quarter of 2026, we repaid $8 million of Farm Credit Term Loan A, and $4 million of Farm Credit Term Loan B, as required for quarterly amortization. At March 31, 2026, there were $566 million of borrowings under the Farm Credit Term Loan A and $237 million of borrowings under the Farm Credit Term Loan B.

*First Lien Term Loan Facility*

Borrowings under our First Lien Term Loan Facility amortize in equal quarterly installments in an amount equal to 5% per annum. The interest rate margin applicable to borrowings under our First Lien Term Loan Facility is, at our option, either (1) SOFR adjusted by 0.114% plus 5.50%, subject to interest rate floor of 0.75%. or (2) the base rate plus 4.50%, subject to a base rate floor of 1.75%.

During the first quarter of 2026, we repaid $4 million as required for quarterly amortization. At March 31, 2026, there were $303 million of borrowings outstanding under the Term Loan Facility.

*Senior Secured Notes*

Pearl Merger Sub Inc., a wholly-owned subsidiary of Pearl Excellence Holdco L.P., a Delaware limited partnership, was the initial issuer of the $775 million aggregate principal amount of 6.75% Senior Secured Notes due 2028 (the "Notes"). This Note issue was part of financing related to the acquisition of Domtar by Pearl Excellence Holdco L.P. Upon the completion of the acquisition, the initial issuer was merged with and into Domtar with Domtar surviving the Merger and becoming the obligor of the Notes. As of March 31, 2026, we had $642 million of Notes outstanding.

The Notes mature on October 1, 2028, and interest on the Notes is payable in cash semi-annually in arrears on April 1 and October 1 of each year, commencing on April 1, 2022.

*Secured Debt Attributes*

We are required to offer to prepay the loans under the Farm Credit Term Loan, the First Lien Term Loan Facility, the Bank Term Loan, the Senior Secured Notes and IRB Bonds with 100% of the net cash proceeds of certain asset sales subject to reinvestment rights.

We are required to prepay the Farm Credit Term Loan, First Lien Term Loan Facility and Bank Term Loan with 100% of the net cash proceeds of certain debt issuances and 50% of excess cash flow, subject to certain exceptions.

Our ABL Revolving Credit Facility, Farm Credit Term Loan, the First Lien Term Loan Facility and the Senior Secured Notes contain customary negative covenants, including, but not limited to, restrictions on our ability and that of our restricted subsidiaries to merge

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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.

Our ABL Revolving Credit Facility, Farm Credit Term Loan, the First Lien Term Loan Facility and the Senior Secured Notes provide that, upon the occurrence of certain events of default, our obligations thereunder may be accelerated. Such events of default include payment defaults to the lenders thereunder, material inaccuracies of representations and warranties, covenant defaults, cross-defaults to other material indebtedness, voluntary and involuntary bankruptcy, insolvency, corporate arrangement, winding-up, liquidation or similar proceedings, material money judgments, change of control and other customary events of default.

Our obligations under our ABL Revolving Credit Facility are guaranteed by our immediate parent (a company that has no assets other than Domtar shares) and our wholly-owned material U.S. subsidiaries and wholly-owned material Canadian subsidiaries. Our ABL Revolving Credit Facility has a first-priority lien on the current assets of such U.S. subsidiaries and all the assets of Canadian subsidiaries, and a second-priority lien on the fixed assets of our wholly-owned material U.S. subsidiaries (in all cases, excluding principal properties and shares of subsidiaries), in each case, subject to permitted liens.

Our obligations under our Farm Credit Term Loan, the First Lien Term Loan Facility and the Senior Secured Notes are guaranteed by our immediate parent (a company with no assets other than Domtar shares) and all of the Issuer's direct and indirect wholly-owned material U.S. subsidiaries. Our Farm Credit Term Loan, the First Lien Term Loan Facility, the Senior Secured Notes, the Bank Term Loan and the IRB Bonds have a first priority lien on the fixed assets of our wholly-owned material U.S. subsidiaries, representing 59% of the Consolidated Fixed Assets, and a second-priority lien on the current asset collateral in the U.S. (second in priority to the liens securing our ABL Revolving Credit Facility discussed above), in each case, subject to other permitted liens.

*Unsecured Notes*

As of March 31, 2026, we had outstanding $116 million of the unsecured 6.25% Notes due 2042 and $150 million of the unsecured 6.75% Notes due 2044.

**GUARANTEES**

**Indemnifications**

In the normal course of business, we offer indemnifications relating to the sale of our 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 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, 2026, we were 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 significant expenses in the past.

**Pension Plans**

We have indemnified and held harmless the trustees of our 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 us or for failing to act in the absence of authorized instructions. These indemnifications survive the termination of such agreements. At March 31, 2026, we have not recorded a liability associated with these indemnifications, as we do not expect to make any payments pertaining to these indemnifications.

**RECENT ACCOUNTING PRONOUNCEMENTS**

Refer to Note 2 "Recent Accounting Pronouncements," of the financial statements in this Quarterly Report on Form 10-Q.

**CRITICAL ACCOUNTING ESTIMATES AND POLICIES** 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates, assumptions and choices amongst acceptable accounting methods that affect our reported results of operations and financial position. Critical accounting estimates pertain to matters that contain a significant level of management estimates about future events, encompass the most complex and subjective judgments and are subject to a fair degree of measurement uncertainty. On an ongoing basis, management reviews its estimates, including those related to liquidity assessment, environmental matters and asset retirement obligations, business combinations, impairment of property, plant and equipement, operating lease right-of-use assets and definite-lived intangible assets, useful lives, closure and restructuring costs, pension and other post-retirement benefit plans, income taxes, countervailing duty and anti-dumping duty cash deposits on softwood lumber and contingencies related to legal claims. These critical accounting estimates and policies have been reviewed with the Audit Committee. We believe these accounting

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policies, and others as set forth in Note 1 "Summary of Significant Accounting Policies", should be reviewed as they are essential to understanding our results of operations, cash flows and financial condition. Actual results could differ from those estimates.

For more details on critical accounting policies, refer to our Annual Report on Form 10-K for the year ended December 31, 2025.

There has not been any material change to our policies since December 31, 2025.

**FORWARD-LOOKING STATEMENTS**

The information included in this Quarterly Report on Form 10-Q contains forward-looking statements relating to trends in, or representing management's beliefs about, Domtar Corporation's future growth, results of operations, performance, liquidity and business prospects and opportunities. These forward-looking statements are generally denoted by the use of words such as "anticipate", "believe", "expect", "intend", "aim", "target", "plan", "continue", "estimate", "project", "may", "will", "should" and similar expressions.

These statements reflect management's current beliefs and are based on information currently available to management. Our future financial condition and results of operations, as well as any forward-looking statements, are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to known and unknown risks and uncertainties and other factors, many of which are beyond our control and are amplified by current and potential trade and tariff actions affecting the countries where we operate, that could cause actual results to differ materially from historical results. Accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will occur, or if any occur, what effect they will have on our results of operations or financial condition. These factors include, but are not limited to those discussed in our Annual Report on Form 10-K for the year ended December 31, 2025, under Item 1A "Risk Factors," and:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•continued decline in usage of paper products in our core market;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our ability to implement our business diversification initiatives, including repurposing of assets and strategic acquisitions or divestitures, facility closures and integration of acquired businesses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•future revenues and profitability;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•demand for linerboard;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•product selling prices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•cyclicality of sales and prices in the lumber market and market pulp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•raw material prices, including wood fiber, chemicals and energy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the tariffs announced by the United States government, the retaliatory tariffs and other actions in response announced by other countries, the implementation of new tariffs or future increases in existing tariffs, their impact on the landed sales prices of the products that we manufacture and export and on the cost of the inputs that we import from other countries, and their impact on our overall sales and profitability;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•other economic or geopolitical developments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•impact of inflation on our costs and uncertainty of our ability to pass through increased costs to our customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•conditions in the global capital and credit markets, and the general economy, particularly in the U.S. and Canada;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•significant indebtedness and resulting financial leverage;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•performance of our manufacturing operations, including unexpected maintenance requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the level of competition from domestic and foreign producers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•cyberattacks or other security breaches;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the effect of, or change in, forestry, land use, environmental and other governmental regulations and accounting regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the effect of weather and the risk of loss from fires, floods, windstorms, hurricanes and other natural disasters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•transportation costs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the loss of current customers or the inability to obtain new customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•legal proceedings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in asset valuations, including impairment of long-lived assets, inventory, accounts receivable or other assets, including deferred assets, or other reasons;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in currency exchange rates, particularly the relative value of the Canadian dollar to the U.S. dollar;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•performance of pension fund investments and related derivatives, if any;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a material disruption in our supply chain, manufacturing, distribution operations or customer demand such as public health crises that impact trade or the general economy, including viruses, diseases or illnesses; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the other factors described under "Risk Factors", in item 1A of our Annual Report on Form 10-K, for the year ended December 31, 2025.

You are cautioned not to unduly rely on such forward-looking statements, which speak only as of the date made, when evaluating the information presented in this Quarterly Report on Form 10-Q. Unless specifically required by law, Domtar Corporation disclaims any obligation to update or revise these forward-looking statements to reflect new events or circumstances.

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**ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK**

Information relating to quantitative and qualitative disclosure about market risk is contained in our Annual Report on Form 10-K for the year ended December 31, 2025. There has not been any material change in our exposure to market risk since December 31, 2025. A full discussion on Quantitative and Qualitative Disclosure about Market Risk, is found in Note 3 "Derivatives and Hedging Activities and Fair Value Measurement," of the financial statements in this Quarterly Report on Form 10-Q.

Our operating income (loss) can be impacted by the following sensitivities:

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|:---|:---|
| **SENSITIVITY ANALYSIS** |  |
| *(In millions of dollars, unless otherwise noted)* |  |
| **Each $10/unit change in the selling price of the following <br> products**<sup>1</sup>**:** |  |
| Papers | 34 |
| Pulp - net position | 21 |
| Wood | 20 |
| Tissue | 1 |
| **Foreign exchange** |  |
| (US $0.01 change in relative value to the Canadian dollar before hedging) | 35 |
| **Energy** <sup>2</sup> |  |
| Natural gas: $0.25/MMBtu change in price before hedging | 9 |

---

1. Based on estimated 2026 capacity (ST, ADMT or MBF).

2. Based on estimated 2026 consumption levels. The allocation between energy sources may vary during the year in order to take advantage of market conditions.

*Note that we may, from time to time, hedge part of our foreign exchange and energy positions, which may therefore impact the above sensitivities.*

**ITEM 4. CONTROLS AND PROCEDURES**

*Evaluation of Disclosure Controls and Procedures*

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports under the Securities and Exchange Act of 1934, as amended ("Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of March 31, 2026, an evaluation was performed by members of management, at the direction and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2026, our disclosure controls and procedures were effective.

*Change in Internal Control over Financial Reporting*

There were no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting during the period covered by this report.

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**PART II OTHER INFORMATION**

**ITEM 1. LEGAL PROCEEDINGS**

See Note 13 "Commitments and Contingencies" of the financial statements in this Quarterly Report on Form 10-Q for the discussion regarding legal proceedings.

**ITEM 1A. RISK FACTORS** 

Our Annual Report on Form 10-K for the year ended December 31, 2025, contains important risk factors that could cause our actual results to differ materially from those projected in any forward-looking statement. There were no material changes to the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2025.

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

As of March 31, 2026, there are no publicly traded common shares of Domtar Corporation.

**ITEM 3. DEFAULT UPON SENIOR SECURITIES**

Not applicable.

**ITEM 4. MINE SAFETY DISCLOSURES**

Not applicable.

**ITEM 5. OTHER INFORMATION**

Not applicable.

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**ITEM 6. EXHIBITS** 

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| | | | | |
|:---|:---|:---|:---|:---|
| **Exhibit**<br>**Number** | **Exhibit Description** | **Form** | **Exhibit** | **Filing Date** |
| 31.1 | [<u>Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</u>](ck0001381531-ex31_1.htm) |  |  |  |
| 31.2 | [<u>Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</u>](ck0001381531-ex31_2.htm) |  |  |  |
| 32.1 | [<u>Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</u>](ck0001381531-ex32_1.htm) |  |  |  |
| 32.2 | [<u>Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</u>](ck0001381531-ex32_2.htm)<br>|  |  |  |
| 101.INS | XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |  |  |  |
| 101.SCH | Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Document |  |  |  |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |  |  |  |

---

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**SIGNATURE**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized.

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| | |
|:---|:---|
| **DOMTAR CORPORATION** | **DOMTAR CORPORATION** |
| Date: May 6, 2026 | Date: May 6, 2026 |
| By: | /s/ Joseph Ragan |
|  | Joseph Ragan |
|  | Chief Financial Officer (Principal Accounting Officer and Duly Authorized Officer) |

---

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## Exhibit 31.1

**Exhibit 31.1**

CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER PURSUANT TO<br>SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steve Henry, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Domtar Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 6, 2026

---

| |
|:---|
| /s/ Steve Henry |
| Steve Henry <br>Paper & Packaging CEO and President USA of Domtar |

---

------

## Exhibit 31.2

**Exhibit 31.2**

CERTIFICATION BY THE CHIEF FINANCIAL OFFICER PURSUANT TO<br>SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph Ragan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Domtar Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 6, 2026

---

| |
|:---|
| /s/ Joseph Ragan |
| Joseph Ragan<br>Chief Financial Officer (Principal Accounting Officer and Duly Authorized Officer) |

---

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## Exhibit 32.1

**Exhibit 32.1**

CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies that to his knowledge, the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2026 (the "Form 10-Q") fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 6, 2026

---

| |
|:---|
| /s/ Steve Henry |
| Steve Henry<br>Paper & Packaging CEO and President USA of Domtar |

---

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## Exhibit 32.2

**Exhibit 32.2**

CERTIFICATION BY THE CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies that to his knowledge, the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2026 (the "Form 10-Q") fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 6, 2026

---

| |
|:---|
| /s/ Joseph Ragan |
| Joseph Ragan<br>Chief Financial Officer (Principal Accounting Officer and Duly Authorized Officer) |

---

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