DOMTAR CORPORATION...Q2 2020 EARNINGS CALL | August 7 th, 2020 KINGSPORT, TN ASHDOWN, AR 600,000 tons annually of high-quality recycled linerboard and medium Conversion will be completed

Q2 2020 EARNINGS CALL | August 7th, 2020

(All financial information is in U.S. dollars, and all earnings per share results are diluted, unless otherwise noted.)

DOMTAR CORPORATIONSECOND QUARTER 2020 EARNINGS CALLAugust 7th, 2020


SAFE HARBOR

All statements in this presentation about our plans, expectations and future performance, including the statementsunder “Outlook” and under “Strategic Initiatives,” are “forward-looking statements.” Actual results may differmaterially from those suggested by these statements for a number of reasons, including the COVID-19 pandemicand the resulting decrease in paper sales and the challenges we face in maintaining manufacturing operations,changes in customer demand and pricing, changes in manufacturing costs, future acquisitions and divestitures,including facility closings, the failure to achieve our cost containment goals, costs of conversion in excess of ourexpectations, demand for linerboard, and the other reasons identified under “Risk Factors” in our Form 10-K for2019 as filed with the SEC and as updated by subsequently filed Form 10-Qs. Except to the extent required by law,we expressly disclaim any obligation to update or revise these forward-looking statements to reflect new events orcircumstances or otherwise. .

For a summary of the risk factors, please refer to Domtar’s Annual Report on Form 10-K for the year endedDecember 31, 2019 filed with the Securities and Exchange Commission and as updated by subsequently filed Form10-Q’s.

This presentation refers to non-GAAP financial information. For a reconciliation to GAAP financial measures, pleaserefer to the investors section of the company’s website at http://www.domtar.com (Refer to Earnings in the InvestorRelations section of the website).

Forward-Looking Statements

Risk Factors

Non-GAAP Financial Measures


Implemented various actions to maintain financial flexibility and reduce costs

Announced several key strategic initiatives that will help best position Domtar for the future

Paper business impacted by significantly lower demand and market-related downtime costs

Strong demand in certain pulp end-use markets including tissue, towel and hygiene

Solid EBITDA margin quarter in Personal Care

OVERVIEW

Second Quarter 2020 Highlights

3


2020 OUTLOOK

Expect the overall environment to continue to be challenging

Paper demand expected to remain weak, with some recovery expected in the third quarter and towards year-end

Near-term pulp markets will be impacted by seasonal softness, elevated global inventories, and weak demand trends from paper end-markets

Personal Care will continue to benefit from the impact of new customer wins and productivity gains

Overall raw material costs are expected to remain stable

4


Net earnings of $0.34 per share, earnings before items* of $0.36

EBITDA before items* of $91 million

Cash flow from operating activities of $67 million

Capital expenditures of $40 million

Free cash flow* of $27 million

Net debt-to-total capitalization ratio* at 30% as of June 30, 2020

Total liquidity of $906 million at quarter-end

FINANCIAL HIGHLIGHTS

Second Quarter 2020

* Non-GAAP financial measure. Refer to reconciliation available at www.domtar.com (refer to Earnings in the Investor Relations section of the website) 5


1Q’20 2Q’20

Sales 1,278 1,012

Cost of sales 1,083 837

Depreciation and amortization 72 71

SG&A 102 93

Closure and restructuring costs - 1

Other operating (income) loss, net 2 (4)

Operating income 19 14

Interest expense, net 14 15

Non-service components of net periodic benefit cost (4) (5)

Income tax expense (benefit) 3 (15)

Equity loss, net of taxes 1 -

Net earnings 5 19

EARNINGS STATEMENT

2Q’20 vs. 1Q’20 (in millions of dollars)

6

Lower Paper and Personal Care sales

Mix of earnings, additional tax credits and CARES Act


CASH FLOW STATEMENT


2Q’19 2Q’20

Net earnings 18 19

Depreciation and amortization 74 71

Deferred income taxes and tax uncertainties 2 (13)

Impairment of long-lived assets 15 -

Changes in assets and liabilities

Changes in working capital 7 (9)

Other 3 (1)

Cash flows from operating activities 119 67

Additions to PP&E (55) (40)

Proceeds from disposal of PP&E 1 -

Acquisition of business, net of cash acquired - (30)

Cash flows used for investing activities (54) (70)

Dividend payments and stock repurchases (36) (25)

Changes in borrowings (31) -

Other - (1)

Cash flows used for financing activities (67) (26)7


EBITDA BEFORE ITEMS*


95

41

32

165 5 2

(61)

(43) (1)

91

1Q'20 Maintenance Other Fixed costs Raw materials SG&A FX Volume/ mix Productivity Selling prices 2Q'20

8* Non-GAAP financial measure. Refer to reconciliation available at www.domtar.com (refer to Earnings in the Investor Relations section of the website)

Energy: 5Personal Care: 1 Fiber: (1)

Paper: (49)Personal Care: (8)Pulp: (4)

Wage subsidy: 25Non-production agreement: 7


2Q’20 vs. 1Q’20 vs. 2Q’19

Sales $802

EBITDA before items * $66

COVID-related restrictions, closures and the resulting impact on consumer mobility had a significant effect on paper demand

Made several adjustments to our mill operations to mitigate the impact of lower paper demand including 297,000 of market downtime

Reduced paper inventory by 22,000 tons in Q2 and 52,000 tons year-to-date.

Strong pulp demand from end-use markets such as tissue, towel & personal care

(in millions of dollars)

PULP AND PAPER SEGMENT


$58

27%22%


2Q’20 vs. 1Q’20 vs. 2Q’19

Sales $512



2Q’20 vs. 1Q’20 vs. 2Q’19

Shipments (manufactured, in thousands of short tons)

459

Transaction prices(US$ / ton – net, all regions)

PAPER (in millions of dollars)


33%

36%

$16

$56

$55

32%

$41

34%


2Q’20 vs. 1Q’20 vs. 2Q’19

Sales(incl. intersegment sales)

$290



2Q’20 vs. 1Q’20 vs. 2Q’19

Shipments (in thousands of ADMT)

427

Transaction prices(US$ / ADMT – net, all regions)

PULP (in millions of dollars)


4%

$2

$126

15%

As a result of changes in our organization structure, we have changed our segment reporting. Starting January 1, 2020, our materials business EAM, a manufacturer of high quality airlaid and ultrathin laminated cores, previously reported under our Personal Care segment is now presented under our Pulp and Paper segment. Prior period segment results have been restated to the new segment presentation with no significant impact on segment results.

10%

$17

12%

$41



INVENTORIES

PAPER

(Sequential variations in thousands of tons)

PULP

(Sequential variations in thousands of metric tons)

12

17

34

22

15

(19)

(36)

(30)

(22)

3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20

17

(7)

24

(2)

(9)(15)

24

(2)

3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20


2Q’20 vs. 1Q’20 vs. 2Q’19

Sales $229

EBITDA before items* $33

Same Currency Sales (@1Q’20 FX rate) $229 -

Same Currency Sales (@2Q’19 FX rate) $232 -

Lower sequential sales due mostly to pantry loading in Q1’20

Reduced SG&A spend, good cost control and improved operational efficiencies supported a solid EBITDA performance

EBITDA margin of 14.4%, which was nearly a 160 basis point improvement when compared to Q1’20 and the highest divisional margin since Q4’15

Good performance in several channels including scale-up of new customer wins

PERSONAL CARE SEGMENT(in millions of dollars)


$13

2%

$1

14%

14%


106

150

124128

135

94

124

94

1Q 2Q 3Q 4Q

2019 Actual 2020 Actual/ Estimate

(in millions of dollars)

MAINTENANCE COSTS

Total maintenance costs includes planned maintenance, maintenance over $100k outside of planned shutdown period, and day-to-day maintenance expenses in Pulp and Paper14


Cost reduction program

Value Drivers

Targeting $200 million in annual run-rate savings to be realized by the end of 2021

Executing on our asset conversion roadmap

Personal Care strategic review

Conversion of Kingsport, TN mill to high-quality recycled linerboard and medium and Ashdown, AR to 100% fluff and softwood pulp

Evaluate a range of value-creating alternatives for Personal Care, including a potential sale of the business

STRATEGIC INITIATIVES

15


COST REDUCTION HIGHLIGHTS

Improving our performance, creating synergies across our network, and rethinking our support function structures

Targeting $200 million in cost savings by Q4 2021

Expected to improve operating margins , free cash flow and return on

invested capital

Right-sizing support functions aligned to meet the

needs of the business and our customers

Creating a more agile, streamlined, & efficient

business that is well-positioned for long-term success

Mill-level cost savings

Capacity reduction and asset closures

16


KINGSPORT, TNUncoated freesheet capacity: 426,000 tons

~ 600,000 tons of recycled linerboard and medium

HAWESVILLE, KYUncoated freesheet capacity: 596,000 tons

~ 580,000 tons of kraft linerboard

~ 320,000 tons of recycled medium

MARLBORO, SCUncoated freesheet capacity: 274,000 tons

~ 600,000 tons of kraft linerboard

~ 315,000 ADMT of fluff pulp

11Option

22Option

BUILDING A NEW BUSINESS THROUGH VALUE-CREATING INVESTMENTS

ASHDOWN, ARUncoated freesheet capacity: 200,000 tons

~ 775,000 tons of fluff and softwood pulp

The repurposing roadmap will continue to be implemented in response to the evolution of paper demand in North America

17


KINGSPORT, TN

ASHDOWN, AR

600,000 tons annually of high-quality recycled linerboard and medium

Conversion will be completed by Q1 2023 at a cost of $300-350 million

Strategic entry point into a growing market with a very competitive, low-cost asset

Less than a day’s drive from over 60 customers representing nearly 4 million tons of annual containerboard demand

184,000 tons of additional market softwood pulp

Fiberline conversion to 100% softwood will require $15-20 million of capital investments and 12-14 months to implement

Following conversion, the mill will have annual production capacity of 775,000 tons of fluff and softwood pulp

Fiberline conversion necessary for an eventual expansion into containerboard

Domtar continues to deliver on its commitment to make value-creating investments in its world-class facilities

Asset roadmap creates significant optionality

Potential of 2.5 million tons of containerboard and/or 570,000 ADMT of additional market softwood and fluff pulp

Q2 2020 EARNINGS CALL I August 7th, 2020

ASSET REPURPOSING

18


KINGSPORT WILL BE A TOP-DECILE RECYCLED FACILITY

Manufacturing Costs

K1

K1

Cumulative capacityThousand metric tonne per year

Kingsport as a recycled linerboard mill:

Capacity: 600,000 tons, 330” width, 19 to 42 lbs

Scale: The 3rd largest recycled mill and the 7th

largest recycled supplier in NA

Conversion CAPEX: $300M to $350M

North American linerboard 35lbs cost curve$/ton, based on 2019/Q3 costs

Source: Afry

Q3 2019 Prices

Sensitivity Prices

$/ton OCCMixed Paper

Q3 2019 Prices 54 29

Sensitivity Prices 129 84

19

Q2 2020 EARNINGS CALL | August 7th, 2020Q2 2020 EARNINGS CALL I August 7th, 2020

UNIQUE AND COMPELLING VALUE PROPOSITION FOR CUSTOMERS

We will be a premier producer of high strength linerboard, corrugated medium, and packaging grades in North America

Offering lightweight containerboard (18#-31#) as well as have the capability to provide industry standard grades (31#-42#)

Leveraging a high-quality paper machine; originally built in 2002 with a speed of 4,500 fpm and 346” width

Targeting a diversified portfolio of independent packaging companies with a focus on end-use customers serving food, beverage and e-commerce as target markets

20


STRATEGIC REVIEW TO DRIVE SHAREHOLDER VALUE

• Company has commenced a strategic review process to explore a range of value-creating alternatives for its Personal Care division, which may include a sale of the business

• Review is meant to build on positive momentum and our ongoing commitment to profitable growth and maximizing the value of our assets

21

Appendix


SUPPLEMENTAL SEGMENTED INFORMATION

PULP & PAPER SEGMENT

(In millions of dollars) 1Q’19 2Q’19 3Q’19 4Q’19 1Q’20 2Q’20

Paper 854 805 794 755 773 512

Pulp 303 301 285 272 258 290

SALES 1,157 1,106 1,079 1,027 1,031 802

Paper 156 115 139 95 100 59

Pulp 49 9 (12) (30) (34) 7

EBITDA before items* 205 124 127 65 66 66

Paper Shipments – Manufactured 736 681 672 656 679 459

Paper Shipments – Sourced from 3rd parties 23 21 25 24 22 12

Paper Shipments 759 702 697 680 701 471

Pulp Shipments 349 370 416 404 389 427

PERSONAL CARE SEGMENT

(In millions of dollars) 1Q’19 2Q’19 3Q’19 4Q’19 1Q’20 2Q’20

SALES 239 228 219 234 266 229

EBITDA before items* 21 20 24 27 34 33

CORPORATE(In millions of dollars) 1Q’19 2Q’19 3Q’19 4Q’19 1Q’20 2Q’20

EBITDA before items* (21) (11) (4) (14) (5) (8)


EBITDA between the Pulp and Paper businesses has been restated to reflect the intrasegment pulp transfer at cost within the segment. As a result of changes in our organization structure, we have changed our segment reporting. Starting January1, 2020, our materials business EAM, a manufacturer of high quality airlaid and ultrathin laminated cores, previously reported under our Personal Care segment is now presented under our Pulp and Paper segment. Prior period segment results havebeen restated to the new segment presentation with no significant impact on segment results.

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DOMTAR CORPORATION...Q2 2020 EARNINGS CALL | August 7 th, 2020 KINGSPORT, TN ASHDOWN, AR 600,000 tons annually of high-quality recycled linerboard and medium Conversion will be completed