UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

For the fiscal year ended December 31, 2025

or

Commission File Number: 001-33164

Domtar Corporation

(Exact name of registrant as specified in its charter)

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

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

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

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☒ No ☐

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 ☐ *

*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 has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§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 ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

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

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on The New York Stock Exchange on June 30, 2025, was nil.

There are no publicly traded common shares of Domtar Corporation.

DOMTAR CORPORATION

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED DECEMBER 31, 2025

TABLE OF CONTENTS

PART I

ITEM 1. BUSINESS

Throughout this Annual Report on Form 10-K, unless otherwise specified, “Domtar Corporation,” “the Company,” “Domtar,” “we,” “us” and “our” refer to Domtar Corporation, its subsidiaries, as well as its investments.

GENERAL

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 in the U.S. and Canada. Our paper and tissue manufacturing operations are supported by converting and forms manufacturing operations.

AVAILABILITY OF INFORMATION

In this Annual Report on Form 10-K, we incorporate by reference certain information contained in other documents filed with or furnished to the U.S. Securities and Exchange Commission (“SEC”) and we refer you to such information. We file annual, quarterly and current reports and other information with the SEC available on the SEC’s website at www.sec.gov free of charge as soon as reasonably practicable after we have filed or furnished the above-referenced reports.

REPORTABLE SEGMENTS

We manage and report our operating results through three reportable segments, also referred to as Business Units: Paper and Packaging, Pulp and Tissue and Wood Products. For additional information, refer to Item 8, Financial Statements and Supplementary Data, under Note 21 “Segment Disclosures,” and Item 7, Management’s Discussion and Analysis of Financial Conditions and Results of Operations.

OUR BUSINESS OVERVIEW

Paper and Packaging: We have six integrated pulp and paper mills, with an annual paper production capacity of approximately 2.2 million tons of uncoated freesheet paper, serving a variety of customers, including merchants, retail outlets, stationers, printers, publishers, converters and end-users. We also have one mechanical paper mill with an annual paper production capacity of 265,000 tons of coated papers, directory and specialty papers. Our paper manufacturing operations are supported by converting and forms manufacturing operations. We produce a wide variety of paper, including office papers, printing and publishing papers, digital & production inkjet papers, technical and specialty papers and converting papers. We have one mill that manufactures packaging materials made from 100% recycled content with a production capacity of approximately 600,000 tons annually of high-quality recycled linerboard and corrugating medium, providing us with a strategic footprint in a growing market. In addition, we produce fluff pulp at our pulp mills at Ashdown and Plymouth and softwood pulp at our Skookumchuck pulp mill. We can sell approximately 1.4 million metric tons of market pulp per year depending on market conditions.

Pulp and Tissue: We produce softwood pulp at our pulp mill in Saint-Félicien, and recycled pulp at our Menominee pulp mill. We can sell approximately 0.4 million metric tons of market pulp per year depending on market conditions. We produce newsprint and specialty papers at five mills strategically located to serve major markets with a total capacity of 1.0 million tons. Our specialty papers comprise uncoated mechanical papers, including supercalendered paper and white paper. We produce tissue products at three facilities, with a total capacity of 128,000 tons. We have a total of 11 tissue converting lines. We manufacture a range of tissue products for the retail and away-from-home markets, including recycled and virgin paper products, covering premium, value and economy grades.

Wood Products: We own or operate 13 sawmills in Canada and two sawmills in the southern U.S., with a total mechanical capacity of approximately 2,616 million board feet. Our Canadian sawmills produce dimension spruce-pine-fir lumber and provide wood chips to our pulp and paper mills in Canada and third parties. Our U.S. sawmills produce dimension lumber and decking from southern yellow pine and provide wood chips and other wood residue to one of our pulp and paper mills in the U.S. as well as third-party pulp and paper mills and other end users for use as fuel to produce electricity and steam based on renewable sources. We also operate two remanufactured wood products facilities that manufacture bed frame components, finger joints and furring strips, two engineered wood products facilities that produce I-joists for the construction industry, and one wood pellet facility.

OUR OPERATIONS

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:

(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. (4) On March 24, 2026, we announced the indefinite idling of our Coosa Pines pulp mill for an expected period greater than one year. This closure is reflected in the table above.

Wood

The following table lists the total mechanical capacity, reflecting the impact of any downtime taken, of our sawmills by region. We do not have access to enough fiber to operate all of the sawmills at their total mechanical capacity. Total capacity is based on an operating schedule of approximately 355 days.

(1) Includes Sociéte en Commandite Scierie Opitciwan, located in Obedjiwan, an equity method investment in which we have a 45% interest. The amounts in the above table include the sawmill’s total capacity.

The table below lists the remanufactured wood, engineered wood, and wood pellet products facilities we owned or operated during the year ended December 31, 2025, and their respective 2025 capacity. Total capacity is based on an operating schedule of approximately 355 days.

Other products

We sell power produced from renewable sources and wood-related products and by-products to customers located in U.S. and Canada. Sales of these other products are considered a recovery of the cost of manufacturing our primary products.

OUR PRODUCT OFFERING

Paper

Our paper sales channels are aligned to bring a competitive and complete product offering to our varied customers. Our sales, customer service, marketing and production teams work closely together to provide high-quality products, exceptional service and expert support to merchants, converters, end-users, stationers, printers and retailers. We sell our products indirectly through distribution networks and directly to end-users and others who influence paper purchasing decisions in order to enhance brand recognition and increase demand for our products. In addition, our sales, marketing and product management teams work closely with technology teams and mill-based product development personnel and undertake product development and innovation initiatives with customers in order to better serve their business needs and to support future growth opportunities.

We sell business papers to office supply retailers, dealers, wholesalers, merchants, office equipment manufacturers and retail outlets. We distribute uncoated commercial printing, transactional printing and publishing papers to end-users and commercial printers, mainly through paper merchants, as well as selling directly to converters. We sell our specialty and packaging papers mainly to converters, who apply a further production process such as coating, laminating, folding or waxing to our papers before selling them to a variety of specialized end-users. Our publishing papers portfolio comprises uncoated and coated mechanical papers, as well as uncoated freesheet papers. Our publishing papers are used in books, retail inserts, direct mail, coupons, magazines, catalogs, bags and other commercial printing applications. We sell newsprint to newspaper publishers worldwide and to commercial printers in North America for uses such as inserts and flyers. Our packaging paper comprises high-quality recycled linerboard and corrugating medium that we sell to independent corrugated box converters for use in a wide range of packaging applications.

Market Pulp

Our pulp products comprise softwood, fluff and recycled bleached kraft. Our pulp grades are sold to customers and are used in a variety of end-products, such as diapers and personal hygiene products, bathroom and facial tissue, specialty and packaging papers, printing and writing grades, building products and electrical insulating papers. We sell market pulp to customers in North America mainly through a North American sales force, while sales to most overseas customers are made directly or through commission agents. We maintain pulp supplies at strategically located warehouses, which allow us to respond to customer orders on short notice.

Wood products

Our Canadian sawmills produce dimension spruce-pine-fir lumber and provide wood chips to our pulp and paper mills in Canada and third parties. Our sawmills also supply wood residue to our pulp and paper mills for use as fuel to produce electricity and steam. Our U.S. sawmills produce dimension lumber and decking from southern yellow pine and provide wood chips and other wood residue to one of our mills in the U.S. as well as third party pulp and paper mills and other end-users. We also operate two remanufactured wood products facilities that manufacture bed frame components, finger joints, and furring strips, two engineered wood products facilities that produce I-joists for the construction industry, and one wood pellet facility, all of which are located in Quebec and Ontario.

Tissue

We manufacture a range of tissue products for the retail and away-from-home markets, including recycled and virgin paper products, covering premium, value and economy grades that are ideally suited to serve U.S. customers. We also sell parent rolls not converted into tissue products.

Based on market interest, we offer a number of our products, including pulp and paper, wood and tissue, with specific designations from one or more globally recognized forest management and chain of custody standard-setting organizations, as well as product specifications to meet customers’ requirements.

OUR CUSTOMERS

Our ten largest customers represented approximately 28% of our sales in 2025. In 2025, no single customer represented 10% or more of our sales. The majority of our customers purchase products through individual purchase orders. In 2025, approximately 71% of our sales were in the United States, 10% were in Canada, were 11% in Asia and 8% were in other countries.

OUR RAW MATERIALS

The manufacture of our products requires fiber, chemicals and energy. We discuss these three major raw materials used in our manufacturing operations below.

Fiber

Our sources of wood include purchases from local producers, including sawmills that supply residual wood chips, wood harvested from government-owned land on which we hold timber supply guarantees or harvesting rights, and wood harvesting from property we own or lease. The fiber used by our operations in the U.S. is mainly wood fiber (softwood and hardwood) as well as old corrugated containers (“OCC”). The fiber used at our operations in Canada is both hardwood and softwood and includes a significant amount of residual sawmill chips from our owned sawmills. Access to fiber harvested on public lands in Ontario and Quebec is subject to licensing and review by the relevant governmental authorities.

We depend heavily on harvesting rights and timber supply guarantees over government-owned land in Ontario and Quebec, respectively. The volume of harvest permitted under these licenses is subject to limits, which are generally referred to as the annual allowable cut (“AAC”). Approximately 25% of the total allowable harvesting rights in Quebec are allocated through an open auction system. The prices generated by the auction system are used to set pricing for the remainder of the AAC. The timber requirements for our U.S. sawmills are met mostly by purchasing timber from timberland owners.

Chemicals

We use various chemical compounds in our manufacturing operations that we purchase, primarily on a centralized basis, through contracts varying between one and ten years in duration to ensure product availability. Most of the contracts have pricing that fluctuates based on prevailing market conditions. For pulp manufacturing, we use numerous chemicals including caustic soda, sodium chlorate, sulfuric acid, hydrogen peroxide and lime. For paper manufacturing, we also use several chemical products including starch, precipitated calcium carbonate, clay, optical brighteners, dyes and aluminum sulfate.

Energy

Our operations produce and consume substantial amounts of energy. Our primary energy sources include biomass, natural gas and electricity. A significant portion of the total energy required to manufacture our products comes from renewable fuels such as bark and spent pulping liquor, substantially all of which are generated as by-products from our manufacturing processes. The remainder of the energy comes mainly from natural gas, electricity and from smaller amounts of other fossil fuels as well as purchased steam procured under supply contracts. Under most of these contracts, suppliers are committed to provide quantities within predetermined ranges that meet our needs for a particular type of fuel at a specific facility. Most of these contracts have pricing that fluctuates based on prevailing market conditions. Biomass and fossil fuels are consumed primarily to produce power and steam that are used in the manufacturing process and, to a lesser extent, to provide direct heat used in the chemical recovery process.

We have energy cogeneration at a number of our integrated pulp and paper mills. These units generate energy from primarily renewable biomass. For some facilities, the right to generate hydroelectricity stems from our ownership of the riverbed on which these facilities are located. Smaller hydro assets are also present at two locations: Nekoosa and Rothschild.

All these generating assets produce electricity for consumption by our manufacturing operations, with the balance of our requirements supplied from local utilities. Electricity is primarily used to drive motors, pumps and other equipment, as well as to provide lighting.

OUR COMPETITION

The markets in which our products are sold are highly competitive. Our products compete against similar products from many large and small companies, including well-known global competitors. We also compete, in some instances, with companies in other industries and against substituted wood-fiber products. We are well positioned in the industry segments and markets in which we operate, often holding a leadership or significant market share position. For our paper products, we compete primarily on the basis of product quality, breadth of offering, service solutions and competitively priced paper products, which include an extensive offering of high-quality Forest Stewardship Council (“FSC”)-certified paper products. Price, quality, service, fiber sources and freight costs are considered the main competitive determinants for our pulp products. Because there are few distinctions between lumber from different producers, competition is primarily based on price for our wood products. As with other global commodities, the competitive position of our products is significantly affected by fluctuations in foreign currency exchange rates.

OUR HUMAN CAPITAL

We have approximately 12,100 employees; 46% are employed in the United States and 54% in Canada. 56% of our employees are covered by collective bargaining agreements.

Health and Safety

The physical health of our employees is of vital importance to the Company. That is why we work relentlessly to eliminate the potential for life-altering hazards and minimize risk of injury as part of a proactive, preventive safety culture, while also investing in well-being programs to help our employees establish and maintain healthy lifestyles.

Attraction and Retention

We are committed to fostering a workplace that attracts and retains talent. Through ongoing employee development, comprehensive compensation and benefits, and a focus on health, safety, and community engagement, we aim to directly influence positive work behavior and on-the-job performance. In hiring and promoting employees, we strive to select the individuals who are the most qualified for the relevant positions. We believe that a diverse workplace is in the best interest of Domtar, and, respecting applicable constraints, we seek to maintain an inclusive workplace. We have a strict non-discrimination and anti-harassment policy. However, we view inclusion as more than just a set of policies and practices. It is part of who we are, how we operate, and essential to our long-term sustainability. We strive to create and sustain an inclusive workplace where people can bring their authentic selves to work and feel valued and included.

Compensation and Pay Equity

Our compensation program is designed to attract and reward talented individuals who possess the skills necessary to support our business objectives, assist in the achievement of our strategic goals and create long-term value. We believe people should be paid fairly for what they do and how they do it, regardless of their gender, race, or other personal characteristics. To deliver on that commitment, we benchmark and set pay ranges based on market data and consider factors such as an employee’s role, experience and performance. We also regularly review our compensation practices, in respect of both of our overall workforce and individual employees, to ensure our employees’ pay is fair and equitable.

Learning and Development

Hiring, developing and retaining employees is important to our operations and we are focused on creating experiences and programs that foster growth, performance and retention. We continually invest in our employees’ career growth and provide a wide range of development opportunities, including face-to-face, virtual, social and on-site learning, mentoring, coaching, and external development.

Community Involvement

We make donations to charitable organizations in the communities where we live and work and believe that this commitment helps in our efforts to attract and retain employees. We also offer employees the opportunity to volunteer in their communities through our Domtar EarthChoice Ambassadors program. We focus our philanthropic efforts on three areas that align with our business: literacy, sustainability, and health and wellness.

OUR APPROACH TO SUSTAINABILITY

Domtar aims to deliver value to our customers, employees and communities by viewing our business decisions within the larger context of sustainability. We take a long-term view on managing natural resources for the future. We strive to carefully manage waste and encourage recycling. We aim to maintain the highest standards of ethical conduct, for caring about the health and safety of each other, and for maintaining the environmental quality in the communities where we live and work. We value the partnerships we have formed with non-governmental organizations and believe they make us a better Company. We focus on agility to respond to new opportunities, and we are committed to turning innovation into value creation. By embracing sustainability as our operating philosophy, we seek to internalize the fact that the choices we have and the impact of the decisions we make on our stakeholders are all interconnected. We believe that our business and the people and communities who depend on us are better served as we weave this focus on sustainability into the things we do.

Domtar strives to execute this commitment to sustainability at every level and every location across the Company. The overall responsibility for our performance in this area resides with our executive team, and we rely on our employees to support the delivery of our key objectives and implement related plans. The committees involved in this effort are cross-functional groups of senior managers and subject-matter experts from manufacturing, sales, environment, human resources, finance and legal, among other departments. Tasked with developing and driving our sustainability strategy and performance based on high priority issues, these committees are focused on improving the net impact of our operations, and maintaining a constructive dialogue with our customers, partners and key stakeholders to ensure alignment and support on our goals. Committee responsibilities also include setting annual targets and providing project oversight on the company’s long-term objectives. Our sustainability goals, challenges and progress are reported annually on the Company’s website and other published reports. References to published reports and website are for informational purposes only, and neither the published reports nor the other information on our website is incorporated by reference into this Annual Report on Form 10-K.

OUR ENVIRONMENTAL COMPLIANCE

Our business is subject to a wide range of general and industry-specific laws and regulations in the U.S. and Canada, relating to the protection of the environment, including those governing wood harvesting, air emissions, climate change, wastewater discharges, storage, management and disposal of hazardous substances and wastes, contaminated sites, landfill operation and closure obligations and health and safety matters. Compliance with these laws and regulations is a significant factor in the operation of our business. We may encounter situations in which our operations fail to maintain full compliance with applicable environmental requirements, possibly leading to civil or criminal fines, penalties or enforcement actions, including those that could result in governmental or judicial orders that stop or interrupt our operations or require us to take corrective measures at substantial costs, such as the installation of additional pollution control equipment or other remedial actions.

Compliance with environmental laws and regulations involves capital expenditures as well as additional operating costs. Additional information regarding environmental matters is included in Item 8, Financial Statements and Supplementary Data, under Note 19 “Commitments and Contingencies” and in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, under the heading Critical Accounting Estimates and Policies, under the caption “Environmental Matters and Asset Retirement Obligations.”

OUR INTELLECTUAL PROPERTY

Many of our brand name products are protected by registered trademarks. Our key trademarks include Cougar®, Lynx® Opaque Ultra, Husky® Opaque Offset, EarthChoice®, Ariva®, Resolute®, Resolute Forest Products® and Resolute Tissue®. These brand names and trademarks are important to our business. Our numerous trademarks have been registered in the U.S. and/or in other countries where our products are sold. The current registrations of these trademarks are effective for various periods of time. These trademarks may be renewed periodically, provided that we, as the registered owner, and/or licensee comply with all applicable renewal requirements, including the continued use of the trademarks in connection with the same or similar goods.

We own U.S. and foreign patents and have several pending patent applications. Our management regards these patents and patent applications as important, but does not consider any single patent or group of patents to be materially important to our business as a whole.

OUR EXECUTIVE OFFICERS

Effective March 1, 2026, we transitioned from a Management Board model to a more focused Executive Committee structure to improve strategic alignment and operational accountability. This governance change does not impact our business model, operating segments, or product offerings.

FORWARD-LOOKING STATEMENTS

The information included in this Annual Report on Form 10-K 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 in this report, 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 forward-looking statements will occur, or if any do occur, as to what effect they will have on our results of operations or financial condition. These factors include, but are not limited to those discussed in Item 1A “Risk Factors,” and:

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 Annual Report on Form 10-K. Unless specifically required by law, Domtar Corporation disclaims any obligation to update or revise these forward-looking statements to reflect new events or circumstances.

ITEM 1A. RISK FACTORS

You should read the following risk factors carefully in connection with evaluating the Company's business and the forward-looking information contained in this Annual Report on Form 10-K. Any of the following risks could materially and adversely affect our business, financial condition, operating results and the actual outcome of matters described in this Annual Report on Form 10-K. While the Company believes it has identified and discussed below the key risk factors affecting our business, there may be additional risks and uncertainties that the Company does not currently know of or believe to be significant, which may adversely affect our business, financial condition or operating results in the future.

Risks Related to our Business

Fluctuations and volatility in the prices of and the demand for the Company’s products due to factors such as economic cyclicality and changes in consumer preferences or trends could have a material adverse effect on its business, results of operations and financial position.

Historically, economic and market shifts, fluctuations in capacity, tariffs or other trade barriers and changes in foreign currency exchange rates have created cyclical changes in prices, demand and margins for the Company’s products. The length and magnitude of industry cycles have varied over time, both by market and by product, but generally reflect changes in macroeconomic conditions and levels of capacity. Any decline or stagnation in macroeconomic conditions could lead to lower sales volumes and reduced margins for the Company’s products. During periods of weak or weakening global economic conditions, the Company would expect any increase in unemployment or lower gross domestic product growth rates to adversely affect demand for its products as its customers delay or reduce their expenditures. For example, during an economic downturn, the Company’s paper products could face more intense pressure from electronic substitution, end consumers may reduce printed newspaper and magazine subscriptions as a direct result of their financial circumstances, contributing to lower demand for the Company's products by its customers. In addition, demand for the Company’s market pulp products is generally associated with the production rates of paper producers, as well as consumption trends for products such as tissue, toweling and absorbent products. An economic downturn in the U.S. or Canada could also negatively affect the U.S. or Canadian housing industry and the repair and remodeling segment, which are significant drivers of demand for the Company’s lumber and other wood-based products.

Most of the Company’s products are commodities that are widely available from other producers. 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.

In addition, consumer preferences and trends are constantly changing based on, among other factors, cost, convenience and health concerns and perceptions and an increased awareness of Environmental, Social and Governance (“ESG”) considerations. These consumer preferences and trends may affect the prices of the Company’s products. The Company results may be adversely affected if the Company fails to anticipate trends that would enable it to offer products that respond to changing customer preferences and technological and regulatory developments.

As a result, prices for all of the Company’s products are driven by many factors outside of its control and may be volatile. The price for any one or more of these products may fall below its cash production costs, requiring the Company to incur losses on product sales or curtail production at one or more of its manufacturing facilities, or both. If the prices or demand for its products decline, this could adversely affect the Company’s business, results of operations and financial position.

The Company’s paper products are vulnerable to long-term declines in demand due to competing technologies or materials.

The Company’s paper business competes with electronic transmission and document storage alternatives, as well as with paper grades it does not produce. As a result of such competition, the Company is experiencing ongoing decreasing demand for most of its existing paper products. As the use of these alternatives grows, demand for paper products is likely to decline further. Declines in demand for the Company’s paper products may adversely affect its business, results of operations and financial position.

Failure to successfully implement the Company’s business diversification and integration initiatives could have a material adverse effect on its business, results of operations and financial position.

The Company is pursuing strategic initiatives that management considers important to its long-term success. The intent of these initiatives is to help grow and diversify the business and counteract the secular decline in the North American paper business. These initiatives may involve organic growth, conversion of assets, other strategic transactions and projects to complement, expand or optimize its business. The success of these initiatives will depend on, among other things, the Company's ability to identify potential strategic initiatives, understand the key trends and principal drivers affecting those businesses and to execute the initiatives in a cost-effective manner. There are significant risks involved with the execution of such initiatives, including significant business, economic and competitive uncertainties, many of which are outside the Company’s control. In connection with any acquisition, conversion, strategic transaction or project, the Company may not successfully integrate an acquired business, assets, technologies, processes, controls, policies, and operations with ours or realize some or all of the anticipated benefits and synergies of the acquisition, conversion, strategic transaction or project. In connection with such transactions, the Company may face challenges associated with

entering a new market, production location, product category or meeting customers’ demands. The Company may also face issues with the separation of processes and loss of synergies following the divestiture of businesses or idling or closure of facilities.

Strategic acquisitions may expose the Company to additional risks. The Company may have to compete for acquisition targets and any acquisition it makes, may fail to accomplish its strategic objectives or may not perform as expected. In addition, the costs of integrating an acquired business may exceed its estimates and may require significant time and attention from senior management. Accordingly, the Company cannot predict whether it will succeed in implementing these strategic initiatives. If it fails to successfully diversify its business, or if the diversification strategy does not produce the expected outcomes, it may have a material adverse effect on the Company’s competitive position, financial condition and operating results.

Asset conversion, like its conversion of one of its mills to a containerboard production facility, can be capital intensive and can involve the shutdown of a facility for an extended period, followed by an extended ramp-up and customer certification process. In addition, the success of a conversion depends upon demand over time for the new product relative to the previously produced products, as well as costs and other factors, and there can be no assurance that a particular conversion will be as successful as expected.

The Company may have difficulty obtaining wood fiber at favorable prices, or at all.

Wood fiber is the principal raw material used by the Company’s businesses. The primary source for wood fiber is wood chips and logs for its pulp and paper mills and timber for its wood products business.

Wood fiber is a commodity, and prices historically have been impacted by a variety of factors. Environmental litigation and regulatory developments, activist campaigns and litigation advanced by Indigenous groups or other stakeholders, alternative use for energy production and reduction in harvesting related to the reduced demand, have caused, and may cause in the future, significant reductions in the amount of timber available for commercial harvest in the U.S. and Canada or that meet standards required for third-party certifications. In addition, future domestic or foreign legislation and litigation concerning the use of timberlands, the protection of habitats and endangered or other species, including the woodland caribou, the promotion of forest health and biodiversity and the response to and prevention of catastrophic wildfires could also affect timber supplies. Availability of harvested timber may be further limited by adverse weather, fire, insect infestation, disease, ice storms, windstorms, flooding, climate change effects and other natural and man-made causes, thereby reducing supply and increasing prices. Wood fiber pricing is subject to regional market influences, and the Company’s cost of wood fiber may increase in particular regions due to market shifts in those regions. Any sustained increase in wood fiber prices would increase the Company’s operating costs, and the Company may be unable to increase prices for its products in response to increased wood fiber costs due to additional factors affecting the demand or supply of these products.

The Company currently meets its wood fiber requirements by purchasing wood fiber from third parties and by harvesting timber pursuant to its forest licenses and forest management agreements. If the Company’s harvesting rights, under its forest licenses or forest management agreements are reduced, or any third-party supplier of wood fiber, timber or market pulp is unable to sell wood fiber to the Company at a reasonable market price (or at all) for any of the reasons described above, the Company's financial condition or results of operations could be materially and adversely affected.

Inflation or a sustained increase in the cost of the Company’s purchased energy and/or other raw materials and services would lead to higher manufacturing costs, thereby reducing its margins.

The Company’s operations consume substantial amounts of energy such as biomass, natural gas, electricity and wood residue. The main raw materials the Company uses in its manufacturing process are wood fiber and chemicals. The prices for raw materials and energy are volatile, affected by inflation, tariffs or other trade barriers and may change rapidly, which impacts the Company's manufacturing costs, directly affects its results of operations and may contribute to earnings volatility. While the Company purchases substantial portions of its energy under supply contracts, most of these contracts are based on market pricing. The Company also relies on service providers and contractors in its operations, the costs of which have also increased due to workforce shortages and inflation.

For the commodity products of the Company, the relationship between supply and demand, rather than changes in the cost of raw materials or purchased energy, will determine the Company’s ability to increase prices. Consequently, the Company may be unable to pass on increases in its operating costs to its customers. Any sustained increase in raw material or energy prices, including due to factors like changing import duties and tariffs, without a corresponding increase in product pricing would reduce the Company’s operating margins and may have a material adverse effect on its business and results of operations.

The Company could experience disruptions in operations and/or increased labor costs due to labor disputes or occupational health and safety issues.

A majority of the Company’s employees are represented by unions through collective bargaining agreements generally negotiated on a facility-by-facility basis. In the future, the Company may not be able to negotiate acceptable new collective bargaining agreements, which could result in strikes or work stoppages or other labor disputes by affected workers. Renewal of collective bargaining agreements could also result in higher wages or benefits paid to union members. In addition, labor organizing activities could occur at any of the Company’s facilities. Therefore, the Company could experience a disruption of its operations or higher ongoing labor costs, which could have a material adverse effect on its business and results of operations.

Occupational health and safety issues could also cause disruptions in operations or otherwise affect labor-related costs, including workforce availability and logistics constraints related to pandemic measures and the resulting economic conditions.

A material disruption in the Company’s supply chain, manufacturing or distribution operations could prevent us from meeting customer demand, reduce its sales and/or negatively impact its results of operations.

The Company’s ability to manufacture, distribute and sell products is critical to its operations. Any event that disrupts or limits transportation, delivery services or the operations of the Company’s suppliers, including workforce shortages and economic conditions resulting from pandemic conditions, could materially and adversely affect the Company's business, including increasing its inventory levels. The Company’s supply chain, manufacturing or distribution operations are subject to inherent risks such as:

Events such as those listed above can cause personal injury and loss of life, disrupt the Company’s supply chain and impair its ability to manufacture or sell its products and have resulted in operating losses in the past. Any interruption or facility damage could prevent the Company from meeting customer demand for its products as well as require additional resources and/or require unplanned expenditures. If one or more of these machines or facilities were to incur significant downtime, a material adverse effect on the Company’s business, results of operations and financial condition may result. In addition, some of the above hazards can result in, among other things: reputational damage; the imposition of civil or criminal penalties; workers’ compensation claims; and other claims against the Company with respect to workplace exposure, exposure of contractors and others located on or off the Company’s premises.

The Company is subject to physical, financial, regulatory, transition and litigation risks associated with global, regional, and local weather conditions and climate change.

The Company’s operations and the operations of its suppliers are subject to climate variations, which impact the productivity of forests, the frequency and severity of wildfires, the availability of water, the distribution and abundance of species, and the spread of disease or insect epidemics, which in turn may adversely or positively affect timber production and fiber availability. Over the past several years, changing weather patterns and climatic conditions due to natural and man-made causes have added to the unpredictability and frequency of natural disasters such as hurricanes, earthquakes, hailstorms, wildfires, drought, flooding, snow, ice storms, the spread of disease, and insect infestations. Any of these natural disasters or other conditions could also affect woodlands or cause variations in the cost of raw materials, such as virgin fiber. Changes in precipitation could make wildfires more frequent or more severe and could adversely affect timber harvesting. The effects of global, regional and local weather conditions, and climate change, including the costs of complying with evolving climate change regulations and any related litigation, could also adversely impact its business and results of operations.

Implementation of climate-change mitigation programs could increase the Company's costs in the short term, including as a result of potential GHG emissions reporting obligations in the U.S. and more detailed mandatory reporting in both Ontario and Quebec, all of which may require additional resources for monitoring, tracking, calibrating and reporting information, as well as training and verification. Carbon price mechanisms, such as the cap-and-trade system in Quebec, have an impact on the operational costs of covered facilities, as well as the cost of fuel from distributors operating under the programs. The price of carbon in Canada could continue to increase, and a price on carbon could be introduced in the U.S. International reporting protocols or could change their standards for reporting GHG emissions, including changing the distinction that is currently made between CO2 emissions from biomass combustion at stationary sources and CO2 generated from fossil fuels. Regulatory bodies could also change their position on the carbon-neutrality of biomass energy, which would significantly alter its carbon footprint. Adopting and incorporating new technologies to help with the transition toward a low-carbon economy are also transitional risks that could represent significant costs to the Company or may expose us to unforeseen risks.

There is increased focus on sustainability reporting and the importance of ESG scores from customers and other stakeholders, which may impact the Company's business.

Sustainability/ESG reporting frameworks are numerous and evolving rapidly. Sustainability governance, performance and disclosures are reviewed and monitored by customers, stakeholders and ESG scoring service providers using different methodologies, which may impact how stakeholders perceive, justifiably or not, the Company as a debtor, customer, supplier or business partner. In the event that the Company is unable to achieve its stated sustainability targets, goals and commitments or if its sustainability statements were challenged as erroneous, inaccurate or incomplete, whether justified or not, the Company could sustain damage to its reputation and be exposed to litigation and liability. Evolving standards and regulations related to climate change, sustainability and ESG reporting may also result in additional compliance costs, impose strain on its human capital resources, and expose the Company to a new type of credit risk.

The Company could be required to curtail production, shut down machines or facilities, restructure operations or dispose of facilities or business.

The Company is continuously seeking the most cost-effective means and structure to serve its customers and to respond to changes in its markets and declining demand for some of its products and to address productivity issues. Accordingly, from time to time, the Company may curtail production, indefinitely or permanently shut-down machines or facilities, sell non-core assets and otherwise restructure operations to improve competitiveness and profitability. Additionally, new or increased tariffs and/or trade barriers and our response to these tariffs and barriers could limit our ability to offer and deliver our products on a cost-effective basis. As a result, restructuring and divestiture costs have been, and are expected to be, a recurring component of the Company's operating expenses, and may vary significantly from year to year depending on the scope of such activities. Divestitures and restructuring may also result in significant financial charges for the impairment of assets, including intangible assets. Furthermore, such activities may divert the attention of management, disrupt its ordinary operations, and/or result in a reduction in the volume of products produced and sold. There is no guarantee that any such activities will achieve their goals, and if the Company cannot successfully manage the associated risks, its financial condition and results of operations could be adversely affected.

If the Company is unable to offer products certified to globally recognized forestry management and chain of custody standards or meet customers’ product specifications, the Company’s ability to compete may be adversely affected.

Based on market interest and customer requirements, the Company offers a number of its products, including pulp and paper, wood products and tissue, with specific designations in respect of one or more globally recognized forest management and chain of custody certification standards. The Company’s ability to conform to new or existing guidelines for certification depends on a number of factors, many of which are beyond its control, such as: changes to the standards or the interpretation or the application of the standards; the collaboration of Company suppliers in timely sharing product information; the adequacy of government-implemented conservation measures; and the existence of territorial disputes between Indigenous Peoples and governments. If the Company is unable to offer

such certified products, for which demand is growing, or to meet commitments to supply certified products or meet the product specifications of its customers, the marketability of the Company’s products and its ability to compete with other producers could be adversely affected.

Negative publicity, even if unjustified, could have a negative impact on the Company’s brands and the marketability of its products.

While the Company believes that it has established a reputation for transparent communications, sound social and corporate governance, responsible forestry practices, and overall sustainability leadership, negative publicity, whether or not justified, relating to its operations and its business or to its industry, could tarnish the Company’s reputation or reduce the value of its brands and market demand for its products. In addition, the actions of activists, including legislative initiatives or other campaigns affecting boreal-sourced forest products, whether justified or not, could impede or delay the Company’s ability to access raw materials or obtain third-party certifications with respect to forest management and chain of custody standards that the Company seeks in order to supply certified products to its customers. Activist campaigns could affect the Company’s revenues and require the Company to incur significant expenses and dedicate substantial resources to defend itself, rebuild its reputation, and restore the value of its brands.

The Company is transitioning from certain legacy system applications; during the transition, such legacy systems may be more vulnerable to attack or failure and implementation of the transition may cause disruptions to the Company’s business IT systems.

The Company is transitioning from certain legacy system applications with an integrated business management software platform. Prior to the completion of this upgrading process, the Company may not have supplier or third-party support for legacy systems in the event of failure or required updates, and such legacy systems may be more vulnerable to breakdown, malicious intrusion, and random attack. The Company may also experience difficulties maintaining or replacing the hardware infrastructure required to operate these legacy systems. Such legacy systems, if not properly functioning prior to their replacement, could adversely affect the Company's business.

During the process of replacing legacy systems, the Company could experience disruptions to its business IT systems and normal operating processes because of the projects’ complexity. The potential adverse consequences could include delays, loss of information, decreased management reporting capabilities, damage to the Company's ability to process transactions, harm to its control environment, diminished employee productivity, business interruptions, and unanticipated increases in costs. Further, the Company's ability to achieve anticipated operational benefits from new IT platforms is not assured.

Legal and Regulatory Risks

The Company could incur substantial costs as a result of compliance with, violations of or liabilities under applicable environmental laws and regulations. It could also incur costs as a result of asbestos-related personal injury litigation.

The Company is subject to a wide range of general and industry-specific laws and regulations in the U.S. and Canada, relating to pollution and the protection of the environment and natural resources as well as several requirements stipulated in its facilities’ permits, including those governing air emissions, greenhouse gases, water usage, wastewater discharges, harvesting, silvicultural activities, storage, management and disposal of hazardous substances and wastes, the investigation and cleanup of contaminated sites, landfill and wastewater treatment system operation and closure obligations, forest management and operations, endangered species and their habitat, health and safety matters, carbon pricing and climate change. In particular, the pulp and paper industry in the U.S. is subject to the United States Environmental Protection Agency’s (“EPA”) Cluster Rules.

The Company has incurred, and expects that it will continue to incur, significant capital, operating and other expenditures complying with applicable environmental laws and regulations as a result of remedial obligations. The Company could also incur substantial costs, such as civil, administrative or criminal fines, sanctions and enforcement actions (including orders limiting its operations or requiring corrective measures, installation of pollution control equipment or other remedial actions), cleanup and closure costs, and third-party claims for property damage and personal injury as a result of violations of, or liabilities under, environmental laws and regulations. The Company’s ongoing efforts to identify potential environmental concerns that may be associated with its past and present properties may lead to future environmental investigations. Those efforts may result in the determination of additional environmental costs and liabilities that cannot be reasonably estimated at this time.

As the owner and operator of real estate, the Company may be liable under environmental laws for cleanup, closure and other damages resulting from the presence and release of hazardous substances, including asbestos, on or from its properties or operations, including properties that it no longer owns. The amount and timing of environmental expenditures is difficult to predict, and, in some cases, the Company’s liability may be imposed without regard to contribution or to whether it knew of, or caused, the claimed release of hazardous substances and may exceed forecasted amounts or the value of the property itself. The discovery of additional contamination or the imposition of additional cleanup obligations at the Company’s or third-party sites may result in significant additional costs. Any material liability the Company incurs could adversely impact its business and financial condition.

In addition, the Company may also be liable under health and safety laws for exposures of employees, contractors and other persons to substances and waste on or from its current or former properties or injuries, including asbestos-related claims arising out of exposure to asbestos on or from such properties or operations and may incur substantial costs as a result of any defense, settlement, or adverse

judgment in ensuing litigation. The Company may not have access to adequate insurance proceeds to cover costs associated with asbestos-related personal injury litigation.

Enactment of new environmental laws or regulations or changes in existing laws or regulations, or interpretation thereof, might require significant expenditures. For additional information, refer to Item 8, Financial Statements and Supplementary Data, under Note 19 “Commitments and Contingencies”. The Company may be unable to generate funds or other sources of liquidity and capital to cover its overall environmental liabilities or expenditures.

The Company is subject to a wide variety of laws, regulations and other government requirements that may change in significant ways, and the cost of compliance or failure to comply, could have a material adverse effect on its business, results of operations and financial condition.

In addition to environmental laws, the Company’s business and operations are subject to a broad range of regulation under a wide variety of U.S. federal and state and Canadian laws, regulations and other government requirements, including, those relating to antitrust and competition laws, financial reporting and disclosure obligations, custom, tariffs and trade, timber and water rights, occupational health and safety laws, data privacy, pension, benefit plans, labor and employment laws, the manufacture and sale of consumer products, including product safety and liability, and the rights of Indigenous Peoples, among others. Many of these laws and regulations are complex and subject to evolving and differing interpretation. Compliance with these laws and regulations, including changes to them or their interpretations or enforcement, or introduction of new laws and regulations, including without limitation, higher tariffs or new barriers to entry, has required in the past, and could require in the future, substantial expenditures by the Company and adversely affect its results of operations. In addition, noncompliance with laws and regulations could significantly damage and require the Company to spend substantial amounts of money to rebuild its reputation which may have a material adverse effect on the Company’s results of operations and financial condition.

The Company's ability to comply with such laws and regulations often depends, at least in part, on compliance by independent third parties, such as contractors and agents it retains to provide services. For example, its compliance with customs requirements for international shipments depends in part on compliance by its customs brokers, sureties, transportation companies, and external advisors, in addition to its own employees and consultants, and the Company could be liable for noncompliance by any of them, even if inadvertent. Failure to comply with laws and regulations can also be the result of unintended consequences, such as unforeseen consequences of information technology modifications, upgrades, or replacements. Although the Company strives to comply with all applicable laws and regulations, no company can assure that it will successfully prevent, detect, and/or remediate all potential instances of non-compliance. Any failure on our part to do so could be material, require substantial expenditures, and adversely affect its results of operations and financial condition.

For additional information, refer to Item 8, Financial Statements and Supplementary Data, under Note 19 “Commitments and Contingencies.”

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.

The Company produces products in the U.S. and Canada and sells products worldwide. Under trade and investment treaties and domestic trade laws, custom duties (also called tariffs) can be imposed by national governments where imports are “dumped” or “subsidized” and such imports cause material injury, or an imminent threat of injury, to a domestic industry. International trade laws also generally provide that national governments can adopt countervailing measures, including countervailing duties, regarding imported products that are subsidized through foreign government programs under certain circumstances. A trade remedy investigation or proceeding may involve allegations of either dumping, subsidization, or both, which are generally initiated at the request of local producers. Where injurious dumping is found, the trade remedy is typically an anti-dumping duty order. Where injurious subsidization is found, the trade remedy is typically a countervailing duty order. In principle, a tariff equal to the amount of dumping or subsidization, as applicable, should be imposed on the importer of the product. Tariffs can be legally challenged before local or international review bodies, but national governments will generally continue levying deposits on estimated customs duties during the pendency of such review proceedings, which can span over many years. Legal rules applicable to tariffs could also be modulated should certain national governments amend their legislation or withdraw from international treaties on tariffs, or in the event such international treaties are renegotiated or terminated. Changes in the import and export policies, including trade restrictions, new or increased tariffs or quotas, embargoes, sanctions and countersanctions, safeguards or customs restrictions by the U.S. and/or other foreign governments, could require the Company to change the way it conducts business and adversely affect its results of operations, financial condition and reputation, as well as our relationships with customers, suppliers and employees in the short- or long-term. Likewise, changes in laws and policies governing manufacturing, development and investment in the territories or countries where we currently conduct business could adversely affect our business.

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. Multiples

nations have countered with retaliatory tariffs and other actions in response. Subsequently, the United States and other nations have adjusted their initial announcement and deferred or limited implementation in certain instances. It is unclear what additional changes in tariffs will be implemented.

These actions are expected to result in retaliatory measures on U.S. goods. If maintained, such tariffs and the potential escalation of trade disputes could pose a significant risk to our business and would affect our revenue and cost of goods sold. The extent and duration of the tariffs and the resulting impact on general economic conditions and on the Company’s business are uncertain and depend on various factors, such as negotiations between the U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply, and demand for our products in affected markets. Further, actions the Company take to adapt to new tariffs or trade restrictions may cause the Company to modify its operations or forgo business opportunities.

In addition, national governments could also impose non-tariff measures to restrict the import of some or all of the Company's imported products, such as quotas, tariff-rate quotas, import bans, licensing regimes, price bands or targeted domestic taxes. While such non-tariff measures could be legally challenged under existing trade treaties, non-tariff measures adopted by countries where the Company sells its products could materially affect its cash flow, and the competitive position of its operations relating to the affected products.

The Company is subject to countervailing and anti-dumping duty orders on the vast majority of its U.S. imports of softwood lumber products produced at its Canadian sawmills, which could materially affect its results of operations and cash flows.

Most of the Company's imports to the U.S. of softwood lumber products produced in Canada are subject to orders requiring the Company to pay cash deposits to U.S. Customs for estimated countervailing and anti-dumping duties. These cash deposit requirements are the result of petitions filed, shortly after the 2006 Softwood Lumber Agreement expired in October 2015, by U.S. softwood lumber products producers and forest landowners with U.S. Department of Commerce (“Commerce”) and the U.S. International Trade Commission.

All countervailing and anti-dumping duty orders issued by Commerce in the present softwood lumber dispute have been appealed before a binational review panel established under the North American Free Trade Agreement and its successor the USMCA, or before the U.S. Court of International Trade. Deposits paid to U.S. Customs in each period of review of the present dispute will not be converted into actual duties unless and until appeals have been exhausted for the corresponding period of review.

The Company has been required to pay cash deposits for estimated countervailing duties and anti-dumping duties on most of its U.S. imports of softwood lumber products produced at its Canadian sawmills since April 28, 2017, and June 30, 2017, respectively. Subsequently, Commerce maintained cash deposits at varying rates as a result of annual administrative reviews; following the initial investigation, six administrative reviews were initiated and further administrative reviews could be initiated for years to come. As of December 31, 2025, the rates for estimated countervailing and anti-dumping duties applicable to the Company's U.S. imports of softwood lumber products were 14.63% and 20.53%, respectively and cumulatively. These rates will apply until Commerce sets new duty rates in subsequent administrative reviews, or until new rates are set on appeal through a remand determination by the binational review or by a U.S. court. On February 21, 2025, Commerce published a notice initiating the seventh administrative reviews 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 such seventh administrative reviews.

On October 14, 2025, the United States government implemented an additional 10% ad valorem tariff on imports of softwood lumber products from Canada under Section 232 of the Trade Expansion Act of 1962. This tariff is in addition to the existing countervailing and anti-dumping duties, which currently total approximately 35.16%, resulting in a combined duty rate of approximately 45.16% on affected exports. These tariffs materially increase the cost of exporting softwood lumber to the U.S. The increased duties may adversely affect our pricing competitiveness and reduce demand for our wood products.

The Company cannot provide any assurance regarding the estimated or final duty rates that may be determined by Commerce in its future administrative reviews. During any period in which the Company’s U.S. imports of softwood lumber products from its Canadian sawmills are subject to countervailing or anti-dumping cash deposit requirements or duty requirements, its cash flows and the competitive position of those products and its related Canadian operations could be adversely affected to a material degree.

The Company is and may become a party to a number of legal proceedings, claims, governmental inquiries, investigations, and other disputes, and adverse judgments could have a material adverse effect on its financial condition.

The Company may become involved in various legal proceedings, claims, governmental inquiries, investigations, and other disputes in the normal course of business. These could include, for example, matters related to contracts, transactions, commercial and trade disputes, taxes, environmental and climate change issues, activist’s claims for 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, intellectual property, financial reporting and disclosure obligations, corporate governance, Indigenous peoples’ claims, antitrust, governmental regulations, and other matters. Although the outcome of these matters 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. Legal proceedings that the Company believes could have a material adverse effect if not resolved in its favor, or that the Company believes to be significant, are discussed in Item 8, Financial Statements and Supplementary Data, under Note 19 “Commitments and Contingencies.” However, the Company’s periodic reports do not disclose or discuss all matters of which it is aware. If the Company assessment of the probable outcome or immateriality of any matter proves incorrect, the Company may face an unaccrued loss, and its results of operations and financial condition could be adversely impacted.

Some matters that the Company may be involved in from time-to-time involve from claims brought by us against various parties, including customers, suppliers, governments or governmental agencies, activists and others. Even if such a matter may not involve a claim for damages or other penalty or remedial action against us, such a matter could nevertheless adversely affect its relationships with those its claim against and third parties.

Financial Risks

The Company has significant levels of debt and may incur substantially more debt. This could increase risks associated with its leverage.

Net indebtedness, consisting of bank indebtedness, long-term debt and debt due to related party, net of cash and cash equivalents and restricted cash, was $2,781 million as of December 31, 2025, compared to $2,541 million as of December 31, 2024. The Company’s net indebtedness level is mainly due to the Resolute Forest Products acquisition. The Company may incur substantial additional indebtedness in the future. Although the Company’s debt agreements contain restrictions on the incurrence of additional secured and unsecured indebtedness, these restrictions are subject to a number of qualifications and exceptions, and additional indebtedness incurred in compliance with these restrictions could be substantial. Refer to Item 8, Financial Statements and Supplementary Data, under Note 17 “Long-Term Debt”, for more details.

The Company’s operations require substantial capital, and it may not have adequate capital resources to provide for all of its capital requirements, or at all.

The Company’s businesses are capital intensive and require ongoing capital expenditures in order to maintain its equipment, increase its operating efficiency, comply with environmental laws and innovate to remain competitive.

If the Company’s available cash resources and cash generated from operations are not sufficient to fund its operating needs, make pension contributions, and finance its working capital, capital expenditures, and duty cash deposits, the Company would have to obtain additional funds from borrowings or other available sources or reduce or delay its capital expenditures. The Company may not be able to obtain additional funds at favorable terms, or at all.

In addition, the Company’s debt service obligations will reduce its available cash flows. If the Company cannot maintain or upgrade its equipment as it requires or allocate funds to ensure environmental compliance, it could be required to curtail or cease some of its manufacturing operations, or it may become unable to manufacture products that compete effectively in one or more of its product lines.

The Company’s ability to generate the significant amount of cash needed to pay interest and principal on the Company’s secured and unsecured long-term indebtedness and service its other debt and financial obligations and its ability to refinance all or a portion of its indebtedness or obtain additional financing depends on many factors beyond the Company’s control.

Net indebtedness, consisting of bank indebtedness, long-term debt and due to related party, net of cash and cash equivalents and restricted cash, was $2,781 million as of December 31, 2025. A substantial majority of this amount, approximately $1.9 billion, matures in 2028. The Company’s ability to make payments on and refinance its debt, including the Company’s secured and unsecured long-term notes, its First Lien Term Loan Facility, its Farm Credit Term Loan and its Bank Term Loan and amounts borrowed under its ABL Revolving Credit Facility, if any, and other financial obligations and to fund its operations will depend on its ability to generate substantial operating cash flows. The Company’s cash flow generation will depend on its future performance, which will be subject to prevailing economic conditions and to financial, business and other factors, many of which are beyond its control.

The Company’s business may not generate sufficient cash flow from operations and future borrowings may not be available to the Company under its ABL Revolving Credit Facility or otherwise in amounts sufficient to enable the Company to service its indebtedness, including the Company’s secured and unsecured long-term notes, its First Lien Term Loan Facility, its Farm Credit Term Loan and its Bank Term Loan and borrowings, if any, under its ABL Revolving Credit Facility or to fund its other liquidity needs. If the Company cannot service its debt, the Company will have to take actions such as reducing or delaying capital investments, selling assets, restructuring or refinancing its debt or seek additional equity capital. Any of these remedies may not be executed on commercially reasonable terms, or at all, and may impede the implementation of its business strategy. Furthermore, the secured and unsecured long-term notes, the First Lien Term Loan Facility, Farm Credit Term Loan, Bank Term Loan and the ABL Revolving Credit Facility may restrict the Company from adopting any of these alternatives. Because of these and other factors that may be beyond its control, the Company may be unable to service its indebtedness.

An increase in interest rates could have a material adverse effect on the Company's business.

Borrowings under the Company's ABL Revolving Credit Facility and under its First Lien Term Loan, Farm Credit Term Loan and Bank Term Loan bear interest at rates that are calculated based on SOFR or a base rate plus, in each case, an applicable margin. As a result, the Company is exposed to risks associated with an increase in interest rates, including if the U.S. Federal Reserve raises its benchmark interest rate. The Company may utilize derivative financial instruments, such as interest rate swaps, to manage its interest rate risk. There can be no assurance, however, that increases in interest rates will not adversely affect the Company’s business, results of operations and financial position, by causing an increase in interest expense. Significantly higher interest rates may also, among other things, reduce the availability and increase the cost of obtaining new debt and refinancing existing indebtedness.

The Company has liabilities with respect to its pension plans and the actual cost of its pension plan obligations could exceed current provisions.

Since pension fund obligations are primarily long-term in nature, losses in pension fund investments, if any, would result in increased contributions by the Company, over a period of time ranging from 5 to 15 years, depending upon the applicable legislation for funding pension deficits. Losses, if any, would also impact the Company’s results over a longer period of time and immediately increase liabilities and reduce equity.

The Company’s future funding obligations for its defined benefit pension plans depend upon changes to the level of benefits provided by the plans, the future performance of assets set aside in trusts for these plans, the level of interest rates used to determine minimum funding levels, actuarial data and experience, and any changes in applicable laws and regulations. The Company also has significant liabilities related to unfunded plans which are subject to their underlying actuarial assumptions.

It is also possible that regulators, including Canadian provincial pension regulators, could attempt to compel additional funding of certain of the Company's pension plans, including its Canadian registered pension plans, in respect of plan members associated with sites it formerly operated. On June 12, 2012, one of our subsidiaries 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) (or, 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 barred under the CCAA Creditor Protection Proceedings. A partial wind-up would likely shorten the period in which any deficit, which could reach up to $109 million ($C150 million), within those plans, would have to be funded if the Company does not obtain the relief sought. Refer to Item 8, Financial Statements and Supplementary Data, under Note 19 “Commitments and Contingencies”, for more details. At this time, the Company cannot estimate the additional contributions, if any, that may be required in future years, but they could be material.

The Company may be subject to losses that might not be covered in whole or in part by its insurance coverage.

The Company maintains property, business interruption, general liability, casualty, cybersecurity and other types of insurance, including environmental liability, that the Company believes are in accordance with customary industry practices, but the Company is not fully insured against all potential hazards inherent in its business, including losses resulting from human error, natural disasters, war risks, or terrorist acts. As is typical in the industry, the Company also does not maintain insurance for any loss to its access to standing timber from natural disasters, regulatory changes, or other causes. Changes in insurance market conditions, including the impact of climate change on the insurance industry, have caused, and may in the future cause, premiums and deductibles for certain insurance policies to increase substantially and in some instances, for certain insurance to become unavailable or available only for reduced amounts of coverage. If the Company was to incur a significant liability for which it was not fully insured, or at all, the Company might not be able to finance the amount of the uninsured liability on terms acceptable to the Company or at all, and might be obligated to divert a significant portion, or all, of its cash flow from normal business operations.

We could be required to record additional valuation allowances against our recognized deferred income tax assets and we could be limited in our use of certain tax attributes.

The Company recorded significant deferred income tax assets relating to our Canadian operations in our Consolidated Balance Sheet as of December 31, 2025. If, in the future, the Company determines that it is likely that we will be able to recognize these deferred income tax assets as a result of sustained cumulative losses in our Canadian operations, the Company could be required to record additional valuation allowances for the portion of the deferred income tax assets that is less likely to be realized. Such valuation allowances, if taken, would be recorded as a charge to income tax expense and would adversely impact its results of operations.

Market Risks

The Company faces intense competition in its markets, and the failure to compete effectively could have a material adverse effect on its business and results of operations.

The Company competes with domestic and global producers and, for many of its product lines with global producers that may have greater financial resources and lower production costs than the Company. The principal basis for competition is selling price. Because the markets for the Company’s products are highly competitive, actions by competitors can affect the Company's ability to compete and the volatility of prices at which its products are sold. For example, favorable market price conditions of wood, pulp or paper products could attract investment from competitors, including the reopening of plants in markets where the Company competes, which in turn could have an adverse impact on the Company’s sales, results of operations and financial condition.

The Company’s ability to maintain satisfactory margins depends largely on its ability to control its costs. The Company's industries also are particularly sensitive to other factors including innovation, design, quality and service, with varying emphasis on these factors depending on the product line. The Company cannot provide assurance that it will compete effectively and maintain current levels of sales and profitability, and any failure to do so could have a material adverse effect on its business, results of operations and financial condition.

Conditions in the global geopolitical and economic environment, including protectionist trade policies such as tariffs, and/or other events, may adversely affect the Company’s business, results of operations and financial condition.

A significant or prolonged downturn in the general economic environment may affect the Company’s sales and profitability. The Company has exposure to counterparties with which it routinely executes transactions. Such counterparties include commercial banks, insurance companies and other financial institutions, some of which may be exposed to bankruptcy or liquidity risks. A bankruptcy or illiquidity event by one of its significant counterparties may materially and adversely affect the Company’s access to capital, future business and results of operations. In addition, the Company’s customers and suppliers may be adversely affected by severe economic conditions. This could result in reduced demand for its products or its inability to obtain necessary supplies at reasonable costs, or at all.

The Company may be negatively impacted by geopolitical issues or crises in individual countries or regions, including sovereign risk related to a default by or deterioration in the credit worthiness of local governments, change in the terms of, or countries that are parties to, bilateral and multi-lateral trade agreements and arrangements, limitation on the ability of potential customers to import products or obtain foreign currency for payment of imported products and political and economic instability, including new or increased tariffs and/or trade barriers, pandemics, significant civil unrest, acts of war or terrorist activities, or unstable or unpredictable governments in countries in which the Company operates or trades.

The Company is affected by changes in currency exchange rates.

The Company has manufacturing operations in the U.S. and Canada and sells products globally. As a result, it is exposed to movements in foreign currency exchange rates. The Company sells its products mainly in transactions denominated in U.S. dollars, but it also sells in other currencies, including the Canadian dollar, the euro, and the pound sterling. Certain assets and liabilities, including a substantial portion of the Company’s net pension and other postretirement benefit obligations and its deferred income tax assets, are denominated mainly in Canadian dollars and are thus exposed to foreign currency movements. The Company’s earnings are affected by increases or decreases in the value of the Canadian dollar relative to the U.S. dollar. Additionally, there has been, and may continue to be, unpredictable volatility in currency exchange rates. The Company’s risk management policy allows the hedging of a significant portion of its cash flow exposure against fluctuations in the value of the Canadian dollar relative to other currencies, but there can be no assurance that the Company will be fully protected against substantial foreign currency fluctuations. Currency exchange rates could adversely affect the Company’s business, results of operations and financial condition.

The Company is subject to the potential loss of important customers or a significant change in customer relationships or in customer demand for its products, as well as accounts receivable credit risk exposure, which could materially adversely affect the Company’s business, results of operations and financial condition.

The Company’s ten largest customers represented approximately 28% of its sales in 2025. Losing important customers, decreases in demand for products from an important customer or increases in accounts receivable credit risk exposure due to financial difficulties of its customers, could materially adversely affect the Company’s business, financial condition or results of operations.

General Risks

Large-scale disruption of social and commercial activity and financial markets, such as has occurred in the past due to pandemic conditions, could have a material adverse effect on the Company’s business operations, results of operations, cash flows and financial condition.

Major external events, including pandemic conditions that result in large-sale disruption of social and commercial activity, such as business closures and social restrictions, could adversely impact our volumes, costs and operational execution. If such conditions were to be severe, resulting in a broad-based economic downturn, it may have a material adverse impact on our business operations, results of operations, cash flows and financial condition and hinder our ability to grow our business and otherwise execute our business strategy.

The Company’s financial results could be affected by changes in U.S. and foreign tax laws or in the mix of its U.S. and foreign earnings, as well as adjustments to its estimates of uncertain tax positions or results from audits by U.S. or foreign tax authorities.

The Company is subject to U.S. and foreign tax laws and regulations. Tax laws, regulations, and administrative practices in various jurisdictions may be subject to significant change, with or without notice, due to economic, political and other conditions, and significant judgment is required in evaluating and estimating its provision and accruals for these taxes. International tax norms governing each country’s jurisdiction to tax cross-border international trade have evolved partly due to the Base Erosion and Profit Shifting project led by the Organization for Economic Cooperation and Development and supported by the G20. Changes in these laws and regulations, or any change in the position of tax authorities regarding their application, administration or interpretation could adversely affect the Company’s financial results. In addition, countries continue to enact changes to tax laws affecting multinational corporations, including the U.S. Tax Cuts and Jobs Acts (“U.S. Tax Reform”) enacted in 2017, the “One Big Beautiful Bill Act,” enacted in July 2025, and Organization for Economic Co-operation and Development's inclusive Framework on Base Erosion and Profit Shifting - Pillar Two, including applicable safe harbor provisions that further changes global taxation and could materially impact our financial results.

The Company’s effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates or changes in the valuation of deferred tax assets and liabilities. The Company is also subject to the examination of its tax returns and other matters by tax authorities and governmental bodies. The Company regularly assesses the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of its provision for taxes. Taxing authorities may disagree with the positions the Company has taken regarding the tax treatment or characterization of its transactions. If any tax authorities were successful in challenging the tax treatment or characterization of any of the Company’s transactions, it could also adversely affect its financial results.

The Company’s intellectual property rights are valuable, and any inability to protect them could reduce the value of its products and its brands.

The Company relies on patent, trademark and other intellectual property laws of the U.S. and other countries to protect its intellectual property rights. However, the Company may be unable to prevent third parties from using its intellectual property without its authorization, which may reduce any competitive advantage it has developed. If the Company had to litigate to protect these rights, such proceedings could be costly, and it may not prevail. The Company cannot guarantee that any U.S. or foreign patents, issued or pending, will provide it with any competitive advantage or will not be challenged by third parties. Additionally, the Company has obtained and applied for U.S. and foreign trademark registrations and will continue to evaluate the registration of additional service marks and trademarks, as appropriate. The Company cannot guarantee that any of its pending patent or trademark applications will be approved by the applicable governmental authorities and, even if the applications are approved, third parties may seek to oppose or otherwise challenge these registrations. The failure to secure any pending patent or trademark protections may limit the Company’s ability to protect the intellectual property rights that the relevant applications are intended to cover.

Difficulties in the Company's employees’ relations or difficulties identifying, attracting, and retaining employees, could lead to operational disruptions or increased costs.

The success of the Company is substantially dependent, in part, on maintaining good relations with its employees and minimizing employee turnover and on the efforts and abilities of its key personnel, including its executive management team, to develop and implement its business strategies and manage its operations. Work stoppages, excessive employee turnover, or difficulty in attracting and retaining employees, particularly for work in remote locations and certain positions with specialized skill sets, could lead to operational disruptions or increased costs. The failure to retain key personnel or to develop successors with appropriate skills and experience for key positions in the Company could adversely affect the development and achievement of critical organizational strategies, goals and objectives. In addition, as experienced workers retire, the Company could encounter loss of institutional knowledge and specialized skills sets, which could lead to operational disruptions or increased costs. There can be no assurance that the Company will be able to retain or develop the key personnel it needs, and any failure to do so may adversely affect its business, results of operations and financial condition.

The Company's operations could be adversely affected by disruptions to its IT systems.

The Company’s IT systems, some of which are dependent on services provided by third parties, serve an important role in the efficient operation of its business. The protection of customers, employees and company data is critical to the Company’s business. This role includes ordering and managing materials from suppliers, managing its inventory, converting materials to finished products, facilitating order entry and fulfillment and processing of transactions, summarizing and reporting its financial results, facilitating internal and external communications, administering human resources functions, retaining certain personal information and providing other processes necessary to manage its business. The failure of the Company’s IT systems, including any failure of the Company’s current systems and/or as a result of transitioning to additional or replacement IT systems, as the case may be, to perform as the Company anticipates could disrupt the Company’s business and could result in, among other things, transactions errors, processing inefficiencies, disruption of production and/or deliveries, loss of data and the loss of sales and customers, which could have a material adverse effect on the Company’s business, results of operations and financial position, and the effectiveness of its internal control over financial reporting could be negatively impacted. Additionally, the regulatory environment surrounding information security data privacy and data protection is evolving and becoming increasingly restrictive.

The Company is exposed to the risk of cybersecurity incidents in the normal course of business. Cyber incidents may be deliberate attacks attempting for the theft of intellectual property or other sensitive information or may be the result of unintentional events. Like most companies, the Company's information technology systems may be vulnerable to interruption due to a variety of events beyond the Company’s control, including, but not limited to, natural disasters, terrorist attacks, power and/or telecommunications failures, computer viruses, hackers and other security issues. The Company has technology security initiatives and disaster recovery plans in place to mitigate the Company’s risk to these vulnerabilities, including protection of confidential or personal information, but these measures may not be adequate or implemented properly to ensure that the Company's operations are not disrupted. Cybersecurity and privacy related incidents and vulnerabilities may remain undetected for an extended period of time. The Company’s IT systems have been, and will likely continue to be, subject to computer viruses or other malicious codes, unauthorized access attempts, phishing and other cyber-incidents, none of which, to the Company’s knowledge, have had a material impact on its business information systems or operations. The Company cannot guarantee that its security efforts will prevent breaches or breakdowns to its IT systems or those of its third-party providers. Potential consequences of a material cyber incident, which could result in confidential or personal information being accessed, obtained, damaged or used by unauthorized or improper persons, include damage to the Company’s reputation, litigation, inefficiencies or production downtimes and increased cyber security protection and remediation costs. Such consequences could have a negative impact on the Company’s ability to meet customers’ orders, resulting in a delay or decrease to its revenue and a reduction to its operating margins. Recent developments in cybersecurity and privacy legislation in different jurisdictions are imposing additional obligations on the Company and could expand its potential liability in the event of a cybersecurity or privacy incident.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our corporate co-headquarters are located in Fort Mill, South Carolina and Montreal, Quebec. Our co-headquarters are owned or leased and house certain executive offices, business units, and our administrative, finance, legal, IT and human resources functions.

Production facilities

We own substantially all of our production facilities. As of December 31, 2025, we operated manufacturing and processing facilities in the U.S. and Canada. Our paper manufacturing operations are supported by converting and forms manufacturing operations (including a network of plants located offsite from our paper making operations) as well as sales offices, regional replenishment centers and warehouse facilities located in the U.S. and Canada. For more information on our production facilities, refer to Item 1, Business, under the “Our Operation” section.

We lease substantially all of our sales offices, regional replenishment centers and warehouse facilities. We believe our properties are in good operating condition and are suitable and adequate for the operations for which they are used. We own substantially all of the equipment used in our facilities.

Approximately 59% of our paper production capacity is in the U.S. and 41% is in Canada. Approximately 69% of our pulp production capacity is in the U.S. and 31% is in Canada. All our tissue production capacity is in the U.S. Approximatly 87% of our sawmills mechanical capacity is in Canada and 13% in the U.S.

Forestlands

We have access to fiber from 39 million acres of public forestlands in Canada that are licensed and regulated by the provincial and federal governments. Subject to our ability to maintain the subject licenses, we believe that these forestlands will provide a continuous supply of wood sufficient to meet the Company’s foreseeable future needs.

ITEM 3. LEGAL PROCEEDINGS

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. The Company periodically reviews the status of these legal proceedings, assesses the likelihood of any adverse judgments or outcomes, and analyzes the probability of losses. Although the final outcome of any legal proceeding is subject to a number of variables and cannot be predicted with any degree of certainty, management believes that the ultimate outcomes of current legal proceedings will not have a material adverse effect on the Company’s long-term results of operations, cash flow or financial condition. An unanticipated adverse outcome in one or more significant legal proceedings could have a material adverse effect on the Company’s results of operations and financial condition in a given quarter or year, however.

For a discussion of commitments, legal proceedings and related contingencies, refer to Item 8, Financial Statements and Supplementary Data under, Note 19 “Commitments and Contingencies”.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

As of December 31, 2025, there were no publicly traded common shares of Domtar Corporation.

ITEM 6. RESERVED

ITEM 7. 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 the Company’s audited consolidated financial statements and notes thereto included in Item 8, Financial Statements and Supplementary Data. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in any forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed below under “Outlook”, in Item 1, Business, under “Forward-looking statements”, as well as in Item 1A, Risk Factors, in this report. 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 website, www.domtar.com, is not incorporated by reference into this Form 10-K 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” refer to 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.

For a discussion of the year ended December 31, 2024, compared to the year ended December 31, 2023, please refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024 (filed with the SEC on February 27, 2025).

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

Recent Events and Items Affecting Comparability of Financial Results

Tariffs

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 which much higher rates for many. While Canada was not exempt, goods compliant with the USMCA are not subject to these additional tariffs. Multiples 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.

Refer to 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.

Acquisitions and Divestitures

Transfer of power generation assets

On September 8, 2025, we transferred certain power generation assets to Paper Excellence Canada Holdings Corporation, an affiliated company, for consideration of $62 million, through the issuance of interest-bearing notes, in the principal amounts of $47 million and $15 million (the “Agreement”).

Sale of Espanola, Ontario mill

On October 17, 2025, we completed the sale of our Espanola facility.

Sale of Forest Products Mauricie, Quebec sawmill

On July 1, 2025, we completed the sale of the Forest Products Mauricie (“FPM”) sawmill, for a purchase price of $15 million, resulting in a gain of $9 million.

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

On November 1, 2024, we acquired Iconex Paper for a purchase price of $208 million in cash. Iconex Paper converts thermal paper parent rolls into point-of-sale (POS) receipt rolls, serving customers in industries such as food service, retail, pharmacy, and financial services from its four North American locations in Arizona, Kansas, Tennessee, and Virginia. The Nogales, Mexico converting facility

was closed in 2025. For the year ended December 31, 2024, we recognized $3 million of transaction related costs associated with this acquisition. These costs are included in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss) in the line item entitled Transaction Costs.

Sale of El Dorado, Arkansas sawmill

On August 1, 2024, we sold our sawmill located in El Dorado, Arkansas, to Anthony Forest Products Company, LLC, an affiliate of Canfor Corporation, for a purchase price of $73 million in cash, subject to customary adjustments. For the year 2024, we recorded a gain on disposal of assets of $5 million.

Closure and Restructuring and Impairment of Long-Lived Assets

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 air-dried metric tons and will result in a workforce reduction of approximately 285 employees.

Costs in connection with the closure of the Coosa Pines fluff pulp mill are expected to be incurred largely in the first quarter of 2026. The closure is expected to result in an aggregate pre-tax earnings charge of approximately $45 million, of which an estimated $23 million are non-cash charges related to the write-off of the carrying amount of the equipment, related spare parts and inventory, an estimated $7 million are cash charges related to severance, employee benefits and termination costs and an estimated $15 million charge for other closure and cleanup costs.

Impairment of long-lived assets

In the fourth quarter, we initiated a process to pursue the sale of a portfolio of non‑core pulp and paper assets. Based on this review, we identified indicators of impairment at those operations for the year ended December 31, 2025.

In connection with the indefinite closure and temporary production curtailment announcements in response to weaker lumber demand conditions, increased countervailing and anti-dumping duties, the introduction of a 10% U.S. tariff in the fourth quarter on Canadian-origin softwood lumber products exported to the U.S., and ongoing economic uncertainty, we determined there were indicators of impairment at certain of our Wood Products lumber operations for the year ended December 31, 2025.

A discounted cash flow model was used to estimate the fair value of the Wood Products impaired asset groups. The fair values of Paper and Packaging as well as the Pulp and Tissue impaired asset groups were derived from indicative non-binding offers from potential buyers.

As a result of these assessments, we recorded impairment charges of $185 million in the Paper and Packaging segment, $136 million in the Wood Products segment, $30 million in the Pulp and Tissue segment, and $3 million as corporate charges for the year ended December 31, 2025. These charges were recorded under Impairment of long‑lived assets on the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

Power generation assets impairment costs

On September 8, 2025, we transferred certain power generation assets to Paper Excellence Canada Holdings Corporation, an affiliated company. As a result, in 2025, we recorded $7 million of write-off of off-market contracts and $1 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).

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.

In 2025, we recorded $1 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). Additionally, we recorded $18 million of write-off of inventory, $8 million of severance and termination costs and $3 million of other costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

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.

As a results, for the year 2025, we recorded $10 million of accelerated depreciation, under Depreciation and amortization on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss) (2024 – $8 million of accelerated depreciation under Impairment of long-lived assets on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss)).

For the year 2025, we also recorded $17 million of severance and termination costs, $19 million of write-off of inventory, and $3 million of other costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss) (2024 – $4 million of severance and termination costs and $2 million of write-off of inventory).

Espanola

In 2023, the mill was idled after years of ongoing operating losses and high costs associated with maintaining and operating the facility. The paper machines were shut down in early 2024.

On October 17, 2025, we completed the sale of our Espanola facility. As a result, for the year ended December 31, 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).

For the year 2025, we also recorded reversals of $1 million of environmental closure costs and $1 million of other costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

For the year 2024, we recorded $2 million of inventory obsolescence, $1 million of severance and termination costs, and $2 million of other costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

Ashdown

On February 21, 2024, we announced that we would indefinitely curtail paper operations at our Ashdown facility. The paper machine and associated sheeter were indefinitely idled in July 2024. The curtailment did not result in a workforce reduction.
For the year 2024, we recorded $30 million of accelerated depreciation, under Depreciation and amortization on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss). Additionally, we recorded $4 million of write-off of inventory and $1 million of severance and termination costs, under Closure and restructuring costs on the Consolidated Statement of Earnings (Loss) and Comprehensive Income (Loss).

Other Costs

During 2025, other costs related to previous and ongoing closures and restructuring included $3 million of severance and termination costs and $11 million of other costs (2024 - $2 million of severance and termination costs and $12 million of other costs).

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 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 comprises 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.

Paper and Packaging: Design, manufacture, market and distribute a wide variety of fiber-based products including communication papers, specialty and packaging papers as well as fluff and softwood pulp. We are the largest integrated manufacturer and marketer of uncoated freesheet paper in North America. We are also 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. We are the 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 reporting segments with the exception of certain discretionary charges and credits, which we present under “Corporate and Other” and do not allocate to the segments.

2025 HIGHLIGHTS

For the year ended December 31, 2025, we reported operating loss of $395 million, compared to operating income of $218 million for the year ended December 31, 2024. The decline in operating performance primarily reflects the challenging global market conditions that persisted throughout 2025 across all three of our Business units. Market demand was weaker than anticipated for most of the year due to continued economic uncertainty, including softer consumer sentiment, the impact of tariffs, and a slowdown in housing starts, all of which contributed to reduced volumes and margin pressure.

The decrease of $613 million from an operating income to an operating loss, is in part driven by an impairment of long-lived assets of $375 million recorded in 2025. In addition, in 2025, we recognized $80 million of closure and restructuring costs mostly related to the idling of our Crofton pulp mill as well as other cost reduction measures, compared to $30 million of closure and restructuring costs in 2024 mostly related to paper machine closures in 2024. When we compare 2025 to 2024, we had higher input costs, lower volume of pulp and paper, higher maintenance costs, higher freight costs, lower production as well as higher U.S. duties and tariffs for our wood products, partially offset by higher average selling prices for the majority of our products, favorable impact of a lower Canadian dollar on our Canadian dollar denominated expenses, the inclusion of our Iconex business acquired in the fourth quarter of 2024 as well as lower selling, general and administrative costs.

These and other factors that affected the comparison of financial results are discussed in the consolidated results of operations and segment review.

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.

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 2026, we expect demand for paper to remain stable relative to 2025 levels, with modest improvements anticipated in pulp demand. We also expect some recovery in our pulp and paper pricing. 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 recent Middle-East conflict (March 2026), 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 depending on broader macroeconomic developments.

CONSOLIDATED RESULTS OF OPERATIONS AND SEGMENT REVIEW

This section presents a discussion and analysis of our 12 months ended December 31, 2025, and 2024, sales, operating income (loss) and other information relevant to the understanding of our results.

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 12-month periods ended December 31, 2025 and 2024. The

12-month periods are also referred to as 2025, and 2024. References to notes refer to footnotes to the consolidated financial statements and notes thereto included in Item 8, Financial Statements and Supplementary Data.

2025 vs. 2024

Analysis of Sales

Sales in 2025 decreased by $211 million, or 3% when compared to sales in 2024. This decrease in sales is mostly due to a decrease in our sales volume for most of our products. 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 the majority of our products. In addition, our paper sales volume was impacted by our paper machine closure at our Ashdown facilities in 2024. In addition, our 2025 sales includes the sales of Iconex, acquired in the fourth quarter of 2024.

Analysis of change in Operating (Loss) Income

Operating loss in 2025 of $395 million was lower by $613 million when compared to operating income in 2024. This decrease is mainly driven by $375 of impairment of long-lived assets as well as higher closure and restructuring costs related to our cost-reduction measures and the closure of our Crofton pulp mill in December 2025. When we compare 2025 to 2024, we had higher input costs, lower volume for most of our products, higher maintenance costs, higher freight costs, lower production as well as higher U.S. duties and tariffs for our wood products, partially offset by higher average selling prices for the majority of our products, favorable impact of a lower Canadian dollar on our Canadian dollar denominated expenses, the inclusion of our Iconex business acquired in the fourth quarter of 2024 as well as lower selling, general and administrative costs. Our paper volume was impacted by our paper machine closure at our Ashdown facility in early July 2024.

Refer to Item 8, Financial Statements and Supplementary Data, under Note 14 “Closure and Restructuring, Impairment of Long-Lived Asset and Asset Conversion Costs” for additional information.

OTHER FACTORS

Corporate and Other

For the year 2025, our Corporate and Other incurred a loss of $119 million, an increase of $66 million compared to $53 million in 2024. This increase in loss was mostly due to higher foreign exchange loss on working capital items of $33 million, higher closure and restructuring costs of $22 million, $17 million of impairment on long-lived assets, lower gains on assets disposal of $32 million when compared to 2024, partially offset by litigation settlement loss of $21 million in 2024 and lower other costs of $8 million, lower selling, general and administrative costs of $6 million as well as lower transaction costs of $3 million.

Interest Expense, net

We incurred $237 million of net interest expense in 2025, flat compared to net interest expense of $237 million in 2024. Interest expense decreased mainly due to lower floating rates for SOFR, offset by higher debt levels in 2025 compared to 2024. In 2025, we had capitalized interest of $2 million, compared to $6 million in 2024. See section “Capital Resources” below for more information on our debt structure.

Non-Service Components of Net Periodic Benefit Cost

For the year 2025, our non-service components of net periodic benefit cost were a benefit of $16 million, a decrease of $4 million when compared to 2024. Refer to Item 8, Financial Statements and Supplementary Data, under Note 5 “Pension Plans and Other Post-Retirement Benefit Plans” for additional information.

Income Taxes

We recorded an income tax expense of $188 million in 2025 compared to an income tax expense of $18 million in 2024, which yielded an effective tax rate of -30.5% and 1,800% for 2025 and 2024, respectively. Our 2025 effective tax rate was unfavorably impacted by

our decision to record a full allowance against our net U.S. deferred income tax assets and the net deferred tax assets of certain Canadian subsidiaries, as discussed further below. The effective tax rate was also negatively affected by the recognition of a capital gain arising from the repatriation of foreign earnings from a wholly owned subsidiary, which did not result in any cash taxes payable, as well as by nondeductible items. These impacts were partially offset by research and experimentation tax credits, foreign exchange effects resulting from the strengthening of the Canadian dollar, and a reduction in the deferred tax liability on foreign earnings.

At each reporting period, we assess whether it is more likely than not that the deferred income tax assets will be realized, based on the review of all available positive and negative evidence, including future reversals of existing taxable temporary differences, estimates of future taxable income, past operating results, and prudent and feasible tax planning strategies. Our assessment assigns the most weight to historical income or losses. A cumulative three-year loss position is considered significant negative evidence in assessing the realizability of deferred income tax assets that is difficult to overcome. The carrying value of deferred income tax assets reflects the expected ability to generate sufficient future taxable income in certain tax jurisdictions to utilize these deferred income tax assets.

Following the assessment of our ability to realize the deferred income tax assets related to our U.S. operations, we concluded that existing negative evidence outweighed the positive evidence, especially since our U.S. operations had a cumulative loss for the three years ending December 31, 2025. Since the weight assigned to positive and negative evidence must align with how objectively verifiable that evidence is, the cumulative losses from our U.S. operations significantly constrains our ability to rely on more subjective positive indicators. As a result, we determined that it is not more likely than not that we will realize the remaining net deferred tax asset in the U.S. and recorded a corresponding increase in the related valuation allowance. As of December 31, 2025, the total valuation allowance related to net U.S. deferred income tax assets was $686 million, resulting in no recognized deferred tax assets for our U.S. operations.

Following an evaluation of our ability to realize deferred income tax assets related to our Canadian operations, we determined that positive evidence, including sustained historical earnings, outweighed any negative evidence for certain Canadian subsidiaries. Accordingly, no valuation allowance was required for the majority of our net Canadian deferred income tax assets. However, certain Canadian subsidiaries were in a cumulative three‑year loss position as of December 31, 2025, which limited our ability to rely on more subjective positive indicators or evidence. As a result, a valuation allowance was recorded for the net deferred tax assets of such subsidiaries. As of December 31, 2025, the total valuation allowance related to net Canadian deferred income tax assets was $72 million.

The non-cash charge to increase the valuation allowance has no impact on consolidated operating income or cash flows and does not restrict our ability to utilize tax loss carryforwards or other deferred tax assets in future periods. If, in a subsequent period, sufficient objective positive evidence becomes available to support the realizability of some or all of our deferred tax assets for which an allowance has been recorded, the amount will be reduced as appropriate, with the corresponding adjustment recognized as a reduction of the income tax provision.

Our 2024 effective tax rate was unfavorably impacted by foreign exchange items from the weakening of the Canadian dollar and by recording a valuation allowance on certain elements of deferred income tax assets, mainly deferred interest expense. This was partially offset by additional tax credits, mainly from research activities and state investment, as well as adjustments relating to filed tax returns.

Pillar Two - Global Anti-Base Erosion Model Rules (“GloBE Rules”)

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 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 wherein we have significant operations have already adopted or are in the process of adopting such legislation. We have performed an assessment of potential exposure and concluded GloBE Rules did not impact our financial results for the year ended December 31, 2025. We will continue to evaluate their impact on future periods.

Commentary – Segment Review

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 the related reporting segment with the exception of certain discretionary charges and credits, which we present under “Corporate and Other.”

PAPER AND PACKAGING

Sales

Paper and Packaging segment sales in 2025 decreased by $48 million, or 1% when compared to sales in 2024. This decrease in sales is mostly due to a decrease in our Communication paper sales volumes. Our paper volume was impacted by lower demand, resulting from ongoing macroeconomic challenges and our paper machine closure at our Ashdown facility in July 2024. This decrease was partially offset by an increase in our net average selling prices for our paper and pulp products as well as an increase in our pulp volume. In addition, our 2025 sales include the sales of Iconex, acquired in the fourth quarter of 2024.

Operating (loss) income

Operating loss in our Paper and Packaging segment amounted to $1 million in 2025, a decrease in income of $332 million, when compared to operating income of $331 million in 2024. Our results were negatively impacted by:

These decreases were partially offset by:

PULP AND TISSUE

(1) Tissue converted products, which are measured in cases, are converted to short tons.

Sales

Pulp and Tissue segment sales in 2025 decreased by $132 million, or 9% when compared to sales in 2024. This decrease in sales is mostly due to a decrease in our pulp and paper sales volume mostly due to lower demand resulting from ongoing macroeconomic challenges, as well as a decrease in our net average selling prices for paper, partially offset by an increase in our net average selling prices for pulp.

Operating (loss) income

Operating loss in our Pulp and Tissue segment amounted to $92 million in 2025, an increase in loss of $145 million when compared to operating income of $53 million in 2024. Our results were negatively impacted by:

These increases in loss were partially offset by:

WOOD PRODUCTS

(1) 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 2025 decreased by $46 million, or 5%, when compared to sales in 2024. This decrease in sales is mostly due to a decrease in our volume mostly due to lower demand resulting from a slowdown in residential construction and renovation activity, partially offset by higher net average selling prices.

Operating loss

Operating loss in our Wood Products segment amounted to $183 million in 2025, an increase in loss of $70 million when compared to operating loss of $113 million in 2024. Our results were negatively impacted by:

These increases in loss were offset by:

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 $390 million was undrawn and available as of December 31, 2025, 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 year 2025, we used $25 million of cash flows in operations, had capital expenditures of $248 million, and had debt repayments of $73 million. This compares to $79 million cash provided from operations, capital expenditures of $280 million and debt repayments of $67 million for the year 2024.

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 plans to reduce working capital. In addition, in 2025, 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; closure of the Crofton pulp mill, 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; 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 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, 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. Refer to the discussion in Part 1, item 1A Risks Factors of this Form 10-K.

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 $25 million in 2025, a $104 million difference compared to cash flows provided from operating activities of $79 million in 2024. This increase in cash flows used for operating activities is primarily due to an increase in net loss partially offset by a decrease in working capital requirements. In addition, we had income tax payments, net of refunds, of $7 million during 2025, compared to income tax refunds, net of payments, of $18 million in 2024. We paid $99 million of employer pension and other post-retirement contributions in excess of pension and other post-retirement expense in 2025 compared to $104 million of employer pension and other post-retirement contributions in excess of pension and other post-retirement expense in 2024.

Investing Activities

Cash flows used for investing activities in 2025 amounted to $223 million, a $129 million difference compared to cash flow used for investing activities of $352 million in 2024.

The use of cash for investing activities in 2025 was mostly attributable to additions to property, plant and equipment of $248 million and was partially offset by the proceeds from the sale of businesses, net of cash disposed, of $15 million and proceeds from the disposals of property, plant and equipment of $11 million.

The use of cash for investing activities in 2024 was attributable to additions to property, plant and equipment of $280 million, as well as an acquisition of business, net of cash acquired, for a total of $208 million, partially offset by proceeds from the sales of businesses of $97 million and proceeds from the disposals of property, plant and equipment of $40 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 $191 million in 2025 compared to cash flows provided from financing activities of $233 million in 2024.

The cash flows provided from financing activities in 2025 were attributable to borrowing under our ABL Revolving Credit Facility ($115 million), issuance of long-term debt ($150 million), and higher bank indebtedness ($2 million), partially offset by repayment of long-term debt as required for quarterly amortization of our term loans ($73 million).

The cash flows provided from financing activities in 2024 were attributable to borrowings under our ABL Revolving Credit Facility ($145 million), issuance of capital ($100 million), and issuance of long-term debt ($61 million) partially offset by repayment of long-term debt as required for quarterly amortization of our term loans ($67 million) and lower bank indebtedness ($6 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 $2,781 million as of December 31, 2025, compared to $2,541 million as of December 31, 2024. 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 December 31, 2025.

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 December 31, 2025.

On December 31, 2025, we had borrowings of $595 million and $155 million of letters of credit outstanding under this facility, leaving unused commitments available to us of $390 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 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 December 31, 2025, there were $144 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.

We are required to offer to prepay the loans under the Farm Credit Term Loan, the Term Loan Facility and the Senior Secured Notes 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 and Term Loan Facility with 100% of the net cash proceeds of certain debt issuances and 50% of excess cash flow, subject to certain exceptions.

During the year 2025, we repaid $33 million of Farm Credit Term Loan A, and $14 million of Farm Credit Term Loan B, as required for quarterly amortization. At December 31, 2025, there were $574 million of borrowings under the Farm Credit Term Loan A and $241 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%, or (2) the base rate plus 4.50%. The Term Loan Facility is subject to a SOFR floor of 0.75%.

During the year 2025, we repaid $19 million as required for quarterly amortization. At December 31, 2025, there were $307 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 December 31, 2025, 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.

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 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 58% 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 December 31, 2025, we had outstanding $116 million of the 6.25% Notes due 2042 and $150 million of the 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, in some instance the terms of these indemnification agreements are for an unlimited period of time. At December 31, 2025, 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 December 31, 2025, we have not recorded a liability associated with these indemnifications, as we do not expect to make any payments pertaining to these indemnifications.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

In the normal course of business, we enter into certain contractual obligations and commercial commitments. For more information on our contractual obligation and commercial commitments, refer to Item 8, Financial Statements and Supplementary Data under Note 11 “Leases”, Note 17 “Long-Term Debt” and Note 19 “Commitments and Contingencies”.

In addition, we expect to contribute a minimum total amount of $87 million to the pension plans in 2026 and a minimum total amount of $15 million in 2026 to the other post-retirement benefits plans.

For 2026 and the foreseeable future, we expect cash flows from operations and from our various sources of financing to be sufficient to meet our contractual obligations and commercial commitments. Refer to section “Liquidity and Capital Resources” above for more information on our liquidity.

RECENT ACCOUNTING PRONOUNCEMENTS

Refer to Item 8, Financial Statements and Supplementary Data under Note 2 “Recent Accounting Pronouncements”.

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

Our principal accounting policies are described in Item 8, Financial Statements and Supplementary Data, under Note 1 “Summary of Significant Accounting Policies”. Notes referenced in this section are included in Item 8, Financial Statements and Supplementary Data.

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 and useful lives of long-lived assets, usefull life, 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 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.

Liquidity Assessment

We have prepared the consolidated financial statements 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 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, 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.

Environmental Matters and Asset Retirement Obligations

We maintain provisions for estimated environmental costs when remedial efforts are probable and can be reasonably estimated. Environmental provisions relate mainly to effluent treatment, air emissions, silvicultural activities and site remediation (together

referred to as “environmental matters”). The environmental cost estimates reflect assumptions and judgments as to probable nature, magnitude and timing of required investigation, remediation and monitoring activities, as well as contribution by other responsible parties. Additional information regarding environmental matters is available in Note 19 “Commitments and Contingencies”.

While we believe that we have determined the costs for environmental matters likely to be incurred, based on known information, our ongoing efforts to identify potential environmental concerns that may be associated with the properties may lead to future environmental investigations. These efforts may result in the determination of additional environmental costs and liabilities, which cannot be reasonably estimated at this time. In addition, environmental laws and regulations and interpretation by regulatory authorities could change which could result in significant changes to our estimates. For further details on “Climate change and air quality regulation” and other environmental matters refer to Note 19 “Commitments and Contingencies”.

Asset retirement obligations are mainly associated with landfill operation and closure, dredging of settling ponds and bark pile management. We recognize asset retirement obligations, at fair value, in the period in which we incur a legal obligation associated with the retirement of an asset. The fair value is based on the expected cash flow approach, in which multiple cash flow scenarios that reflect a range of possible outcomes are considered. Probabilities are applied to each of the cash flow scenarios to arrive at an expected cash flow. The estimated cash flows are then discounted using a credit adjusted risk-free interest rate in combination with business-specific and other relevant risks to discount the cash flow. The rates used in 2025 was 6.75%.

Cash flow estimates incorporate assumptions that marketplace participants would use in their estimates of fair value, whenever that information is available without undue cost and effort. If unavailable, assumptions are based on internal experts, third-party engineers’ studies and historical experience in remediation work.

As of December 31, 2025, we had a total provision of $113 million for environmental matters and asset retirement obligations (2024 – $113 million). Certain of these amounts have been discounted due to more certainty of the timing of expenditures using the credit adjusted risk-free interest rate for the corresponding period until the settlement date. The rates used vary, based on the prevailing rate at the moment of recognition of the liability and on its settlement period. Additional costs, not known or identified, could be incurred for remediation efforts. Based on policies and procedures in place to monitor environmental exposure, management believes that such additional remediation costs would not have a material adverse effect on our result of operations, cash flows or financial condition.

Business Combinations

We account for business combinations using the acquisition method of accounting, which requires us to recognize the assets acquired and the liabilities assumed at their acquisition date fair value and the recognition of acquisition-related costs in the Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss).

The estimated fair value assigned to identifiable intangible assets acquired are determined primarily by using an income approach using a discounted cash flow methodology, which is based on assumptions and estimates made by management.

The fair value of property, plant and equipment was primarily determined based on management’s estimate of depreciated replacement cost as further adjusted based on estimated cash flow forecasts. The significant assumptions underlying the fair value are based on company specific information and projections, which are not observable in the market and, therefore, are considered Level 3 measurements. These significant assumptions are forward-looking and could be affected by future changes in economic and market conditions.

The estimated fair value of finished goods was calculated as the estimated selling price, adjusted for costs of the selling effort and a reasonable profit allowance relating to the selling effort. The estimated fair value of work in process inventory was primarily calculated as the estimated selling price, adjusted for estimated costs to complete the manufacturing, estimated costs of the selling effort, as well as a reasonable profit margin on the remaining manufacturing and selling effort. The estimated fair value of raw materials and operating and maintenance supplies was determined to approximate the historical carrying value. These significant assumptions are based on company specific information and projections, which are not observable in the market and, therefore, are considered Level 3 measurements. These significant assumptions are forward-looking and could be affected by future changes in economic and market conditions.

We generally use third-party qualified consultants to assist management in determining the fair value of assets acquired and liabilities assumed. This includes, when necessary, assistance with the determination of economic useful lives and valuation of property, plant and equipment and identifiable intangibles as well as assisting management in assessing off-market contracts.

The purchase price allocation process also entails us to refine these estimates over a measurement period not to exceed one year to reflect new information obtained surrounding facts and circumstances existing at acquisition date.

The excess of the purchase price over the fair value of the identified assets acquired and liabilities assumed is recorded as goodwill. The excess of the fair value of the identified assets acquired and liabilities assumed over the purchase price is recorded as a gain on acquisition recognized in the Statement of Earnings (Loss) and Comprehensive Income (Loss).

Impairment of Property Plant and Equipment, Operating lease right-of-use assets and Definite-Lived Intangible Assets

Property, plant and equipment, operating lease right-of-use assets and definite-lived intangible assets are reviewed for impairment upon the occurrence of events or changes in circumstances indicating that, at the lowest level of determinable cash flows, the carrying value of the assets may not be recoverable. Step I of the impairment test assesses if the carrying value of the assets exceeds their estimated undiscounted future cash flows in order to assess if the property, plant and equipment, operating lease right-of-use assets and definite-lived intangible assets are impaired. In the event the estimated undiscounted future cash flows are lower than the net book value of the assets, a Step II impairment test must be carried out to determine the impairment charge. In Step II, the assets are written down to their estimated fair values. Given that there is generally no readily available quoted value for our property, plant and equipment, operating lease right-of-use assets and definite-lived intangible assets, we determine fair value of our assets based on the present value of estimated future cash flows expected from their use and eventual disposition, and by using the liquidation or salvage value in the case of idled assets. The fair value estimate in Step II is based on the undiscounted cash flows used in Step I.

Estimates of undiscounted future cash flows used to test the recoverability of the property, plant and equipment, operating lease right-of use assets and definite-lived intangible assets includes key assumptions related to selling prices, volume, fiber cost, inflation-adjusted cost projections, forecasted exchange rates (when applicable) and estimated useful life. Changes in our assumptions and estimates may affect our forecasts and may lead to an outcome where impairment charges would be required. In addition, actual results may vary from our forecasts, and such variations may be material and unfavorable, thereby triggering the need for future impairment tests where our conclusions may differ in reflection of prevailing market conditions.

For further details on “Impairment of long-lived assets” refer to Note 14 “Closure and Restructuring, Impairment of Long-Lived Assets and Asset Conversion Costs”.

Useful Lives

On a regular basis, we review the estimated useful lives of our property, plant and equipment and our definite-lived intangible assets. Assessing the reasonableness of the estimated useful lives of property, plant and equipment and definite-lived intangible assets requires judgment and is based on currently available information. Changes in circumstances such as technological advances, changes to our business strategy, changes to our capital strategy or changes in regulation can result in useful lives differing from our estimates. Revisions to the estimated useful lives of property, plant and equipment and definite-lived intangible assets constitute a change in accounting estimate and are dealt with prospectively by amending depreciation and amortization rates.

A change in the remaining estimated useful life of a group of assets, or their estimated net salvage value, will affect the depreciation or amortization rate used to depreciate or amortize the group of assets and thus affect depreciation or amortization expense as reported in our results of operations.

Closure and Restructuring Costs

Closure and restructuring costs are recognized as liabilities in the period when they are incurred and are measured at their fair value. For such recognition to occur, management, with the appropriate level of authority, must have approved and committed to a firm plan and appropriate communication to those affected must have occurred. These provisions may require an estimation of costs such as severance and termination benefits, pension and related curtailments, environmental remediation and may also include expenses related to demolition and outplacement. Actions taken may also require an evaluation of any remaining assets to determine required impairments, if any, and a review of estimated remaining useful lives which may lead to accelerated depreciation expense.

Estimates of cash flows and fair value relating to closures and restructuring require judgment. Closure and restructuring liabilities are based on management’s best estimates of future events. Although we do not anticipate significant changes, actual costs may differ from these estimates due to subsequent business developments. As such, additional costs and further impairment charges may be required in future periods.

Additional information can be found under Note 14 “Closure and Restructuring, Impairment of Long-Lived Assets and Asset Conversion Costs”.

Pension Plans and Other Post-Retirement Benefit Plans

We have several defined contribution pension plans. The pension expense under these plans is equal to our contribution.

We sponsor both contributory and non-contributory U.S. and non-U.S. defined benefit pension plans. We also sponsor a number of other post-retirement benefit plans for eligible U.S. and non-U.S. employees; the plans are unfunded and include life insurance programs and medical and dental benefits. In addition, we provide supplemental unfunded defined benefit pension plans and supplemental unfunded defined contribution pension plans to certain employees.

We account for pensions and other post-retirement benefits in accordance with Compensation-Retirement Benefits Topic of the Financial Accounting Standards Board, which requires employers to recognize the overfunded or underfunded status of defined benefit pension plans as an asset or liability in its Consolidated Balance Sheets. Pension and other post-retirement benefit charges require assumptions in order to estimate the projected and accumulated benefit obligations. These assumptions require considerable management judgment and include:

Changes in these assumptions result in actuarial gains or losses, which are amortized over the expected average remaining service life of the active employee group covered by the plans, only to the extent that the unrecognized net actuarial gains and losses are in excess of 10% of the greater of the projected benefit obligation and the market value of assets, over the average remaining service period of approximately 11 years of the active employee group covered by the pension plans, and 16 years of the active employee group covered by the other post-retirement benefits plans.

An expected rate of return on plan assets of 5.5% was considered appropriate by management for the determination of pension expense for 2025. Effective January 1, 2026, we will use 5.5% as the expected return on plan assets, which reflects the current view of long-term investment returns. The overall expected long-term rate of return on plan assets is based on management’s best estimate of the long-term returns of the major asset classes (cash and cash equivalents, equities, bonds and various alternative investment asset classes) weighted by the target allocation of assets at the measurement date, net of expenses. This rate includes an equity risk premium over government bond returns for equity investments and a value-added premium for the contribution to returns from active management. The sources used to determine management's best estimate of long-term returns are numerous and include country specific bond yields, which may be derived from the market using local bond indices or by analysis of the local bond market, and country-specific inflation and investment market expectations derived from market data and analysts' or governments' expectations, as applicable.

We set our discount rate assumption annually to reflect the rates available on high-quality, fixed income debt instruments, with a duration that is expected to match the timing and amount of expected benefit payments. High-quality debt instruments are corporate bonds with a rating of AA or better. The discount rates as of December 31, 2025 for pension plans were estimated at 4.9% for the projected benefit obligation and 4.9% for the net periodic benefit cost for 2025 and for post-retirement benefit plans were estimated at 4.8% for the projected benefit obligation and 4.7% for the net periodic benefit cost for 2025.

We used a full yield curve approach to estimate the current service and interest cost components of net periodic benefit cost for Canadian pension plans and U.S. funded pension plans. The estimate of these components is made by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. We used this approach to provide a more precise measurement of current service and interest cost components by improving the correlation between projected benefit cash flows to the corresponding spot yield curve rates.

The rate of compensation increase is another significant assumption in the actuarial model for pension plan (set at 2.1% for the projected benefit obligation and 2.1% for the net periodic benefit cost) and for post-retirement benefit plans (set at 2.1% for the projected benefit obligation and 2.0% for the net periodic benefit cost) and is determined based upon our long-term plans for such increases.

For employee related factors, mortality rate tables tailored to our industry were used and the other factors reflect our historical experience and management’s best estimate regarding future expectations.

For measurement purposes in 2025, a 4.4%, reducing to 3.7% in 2040 weighted average annual rate of increase in the per capita cost of covered health care benefits was assumed for Canadian plans and a 7.4%, reducing to 4.0% in 2050 weighted average annual rate of increase in the per capita cost of covered health care benefits was assumed for U.S. plans.