Cascades Reports Results for the Second Quarter of 2024

Cascades Inc. reports its unaudited financial results for the three-month period ended June 30, 2024.

Q2 2024 Highlights

• Sales of $1,180 million (compared with $1,109 million in Q1 2024 and $1,168 million in Q2 2023);
  
• Operating income of $34 million (compared with $9 million in Q1 2024 and $64 million in Q2 2023);
  
• Net earnings per common share of $0.01 (compared with a net loss per common share of ($0.20) in Q1 2024 and net earnings per common share of $0.22 in Q2 2023);
  
• Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA (A)¹) of $112 million (compared with $103 million in Q1 2024 and $141 million in Q2 2023);
  
• Adjusted net earnings per common share¹ of $0.08 (compared with adjusted net loss per common share¹ of $0.00 in Q1 2024 and adjusted net earnings per common share¹ of $0.27 in Q2 2023);
  
• Net debt¹ of $2,093 million as of June 30, 2024 (compared with $2,020 million as of March 31, 2024). Net debt to EBITDA (A) ratio¹ of 4.2x, up from 3.8x as of March 31, 2024;
  
• Total capital expenditures, net of $17 million of disposals, totaled $23 million in Q2 2024, compared to $41 million in Q1 2024 and $104 million in Q2 2023. The Corporation’s 2024 forecasted net capital expenditures will be below our initial forecast of $175 million.

The Corporation’s second quarter 2024 results increased sequentially on stronger performances from all three business segments. In Tissue Papers, the sequential impact from higher raw material costs was mitigated by favourable volume and lower transportation costs. Higher volume combined with slightly stronger pricing in the Specialty Products business outweighed sequentially higher average raw material costs. The Containerboard segment saw stronger pricing, volume and mix, and lower transportation and energy costs, the combined impact of which offset higher raw material costs and extended downtime at the Greenpac and Bear Island mills following a prolongation of planned maintenance at these facilities, which reduced production capacity in the second quarter by approximately 8,000 tons.

Discussing near-term outlook, Mr. Hugues Simon, President and CEO, commented, “In my first eight weeks at Cascades, I have been inspired by the Company-wide drive to create meaningful value for our customers and shareholders. We expect consolidated third quarter results to be stronger sequentially, driven by improved Containerboard results as price increases are implemented and production efficiency levels are normalized following planned maintenance in the second quarter, and the unplanned extended downtime at Bear Island and Greenpac. Consolidated results are also expected to benefit from stable results in the Specialty Packaging business. At the same time, higher pulp prices and softer pricing due largely to a less favourable sales mix are expected to translate into lower results from the Tissue Papers segment. More broadly, the ongoing Bear Island facility ramp-up remains a priority, as is the roll-out of announced price increases in Containerboard and continued focus on profitability, efficiency and productivity initiatives throughout our operations.”

Analysis of Results for the Three-Month Period Ended June 30, 2024

(compared to the same period last year)

The Corporation’s second quarter sales of $1,180 million increased by $12 million compared with the same period last year. This was driven by a combined favourable sales mix impact of $30 million in Tissue Papers and Containerboard and a $14 million favourable impact from foreign exchange. These were largely offset by net negative impacts of $25 million due to lower selling prices in Tissue and Containerboard and $12 million related to lower volumes primarily in the Tissue Papers business following operational platform changes in this business completed in the past year.

The second quarter EBITDA (A)¹ totaled $112 million, a decrease of $29 million, or 21%, from the $141 million generated in the same period last year. This was largely driven by lower selling prices in the Containerboard and Tissue Papers segments, and higher raw material costs in our packaging businesses. The second quarter results also include a $5 million one-time compensation expense consisting of an 18-month consulting agreement with Mr. Mario Plourde, commencing January 1, 2025, and deferred share units granted to Mr. Hugues Simon following his appointment as President and CEO effective June 17, 2024.

The main specific items, before income taxes, that impacted our second quarter 2024 operating income and/or net earnings were:

• $10 million of restructuring and other costs related to plant closures in Canada and the United States (operating income and net earnings);
• $1 million unrealized gain on financial instruments (operating income and net earnings);
• $1 million unrealized loss on interest rate hedge instruments (net earnings).

For the three-month period ended June 30, 2024, the Corporation posted net earnings of $1 million, or $0.01 per common share, compared to net earnings of $22 million, or $0.22 per common share, in the same period of 2023. On an adjusted basis¹, the Corporation posted net earnings of $8 million in the second quarter of 2024, or $0.08 per common share, compared to net earnings of $26 million, or $0.27 per common share, in the same period of 2023.

1 Please refer to the “Supplemental Information on Non-IFRS Accounting Standards Measures and Other Financial Measures” section for a complete reconciliation.

Dividend on Common Shares and Normal Course Issuer Bid

The Board of Directors of Cascades declared a quarterly dividend of $0.12 per common share to be paid on September 5, 2024 to shareholders of record at the close of business on August 22, 2024. This dividend is an “eligible dividend” as per the Income Tax Act (R.C.S. (1985), Canada). During the second quarter of 2024, Cascades purchased no common shares for cancellation.

For full results click here.

About Cascades

Founded in 1964, Cascades offers sustainable, innovative and value-added packaging, hygiene and recovery solutions. The Company employs 10,000 talents across a network close to 75 facilities in North America. Driven by its participative management, half a century of experience in recycling, and continuous research and development efforts, Cascades continues to provide innovative products that customers have come to rely on, while contributing to the well-being of people, communities and the entire planet. Cascades’ shares trade on the Toronto Stock Exchange under the ticker symbol CAS.

Contact:

Hugo D’Amours – Vice-President, Communications, Public Affairs and Sustainability – hugo_damours@cascades.com – (819) 363-5164

Source: Cascades Canada ULC