Cascades Reports Results for the Third Quarter of 2024
KINGSEY FALLS, QC, Nov. 6, 2024 /PRNewswire/ - Cascades Inc. (TSX:CAS) reports its unaudited financial results for the three-month period ended September 30, 2024.
Q3 2024 Highlights
Sales of $1,201 million (compared with $1,180 million in Q2 2024 and $1,198 million in Q3 2023);
Operating income of $36 million (compared with $34 million in Q2 2024 and $80 million in Q3 2023);
Net earnings per common share of $0.01 (compared with $0.01 in Q2 2024 and $0.34 in Q3 2023);
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA (A)1) of $140 million (compared with $112 million in Q2 2024 and $161 million in Q3 2023);
Adjusted net earnings per common share1 of $0.27 (compared with $0.08 in Q2 2024 and $0.44 in Q3 2023);
Net debt1 of $2,039 million as of September 30, 2024 (compared with $2,093 million as of June 30, 2024). Net debt to EBITDA (A) ratio1 of 4.3x, versus from 4.2x as of June 30, 2024;
Total capital expenditures, net of disposals, totaled $34 million in Q3 2024, compared to $23 million in Q2 2024 and $56 million in Q3 2023. The Corporation's 2024 capital expenditures will be approximately $160 million.
Hugues Simon, President and CEO, commented: "We are pleased with our third quarter 2024 performance. Sequentially stronger results were driven by our Containerboard business, where higher average selling prices and lower production expenses offset the impact of higher raw material costs. Specialty Products results were stable, with stronger selling prices fully mitigating raw material cost and sales mix headwinds. As forecasted, third quarter Tissue Papers results were lower than the previous quarter due to higher average raw material costs and lower pricing related to the expected changes in the mix of products sold."
Discussing near-term outlook, Mr. Simon commented, "We expect fourth quarter results in each of our packaging business segments to be stable sequentially, as benefits from lower raw material costs and previously announced selling price increases will be offset by lower seasonal volumes. In Tissue Papers, slightly stronger sequential results are expected to benefit from lower average raw material costs, slightly stronger volumes, and selling price increase tailwinds offset by the impact from seasonal changes in sales mix.
As we look toward the medium and longer-term, we are focused on growing sustainable value for shareholders. Central to this is driving and capturing efficiency across our operational platforms, most notably by the ongoing scale-up of production at our Bear Island facility and ramp-up of our recently installed tissue converting lines. Prioritizing these areas, in conjunction with leveraging additional production capacity in all of our facilities through numerous efficiency optimization initiatives, will drive cash flow generation and debt reduction, both of which are key action areas across the Company. We will be all the more better positioned to deliver on both fronts as we implement the changes announced on October 30, and look forward to sharing details of our areas of strategic focus for the next 18 to 24 months in early 2025."
1
Some information represents non-IFRS Accounting Standards Financial measures, other financial measures or non-IFRS Accounting Standards ratios which are not standardized under IFRS Accounting Standards and therefore might not be comparable to similar financial measures disclosed by other corporations. Please refer to the "Supplemental Information on Non-IFRS Accounting Standards Measures and Other Financial Measures" section for a complete reconciliation.
Financial Summary
Selected consolidated information
(in millions of Canadian dollars, except amounts per common share) (unaudited)
Q3 2024
Q2 2024
Q3 2023
Sales
1,201
1,180
1,198
As Reported
Operating income
36
34
80
Net earnings
1
1
34
per common share (basic)
$0.01
$0.01
$0.34
Adjusted1
Earnings before interest, taxes, depreciation and amortization (EBITDA (A))
140
112
161
Net earnings
27
8
45
per common share (basic)
$0.27
$0.08
$0.44
Margin (EBITDA (A) / Sales)
11.7 %
9.5 %
13.4 %
Segmented sales
(in millions of Canadian dollars) (unaudited)
Q3 2024
Q2 2024
Q3 2023
Packaging Products
Containerboard
610
585
593
Specialty Products
169
167
157
Inter-segment sales
(6)
(7)
(7)
773
745
743
Tissue Papers
390
397
422
Inter-segment sales, Corporate, Recovery and Recycling activities
38
38
33
Sales
1,201
1,180
1,198
Segmented operating income (loss)
(in millions of Canadian dollars) (unaudited)
Q3 2024
Q2 2024
Q3 2023
Packaging Products
Containerboard
24
15
61
Specialty Products
17
19
13
Tissue Papers
24
38
38
Corporate, Recovery and Recycling activities
(29)
(38)
(32)
Operating income
36
34
80
Segmented EBITDA (A)1
(in millions of Canadian dollars) (unaudited)
Q3 2024
Q2 2024
Q3 2023
Packaging Products
Containerboard
90
60
101
Specialty Products
27
26
21
Tissue Papers
43
54
61
Corporate, Recovery and Recycling activities
(20)
(28)
(22)
EBITDA (A)1
140
112
161
1 Please refer to the "Supplemental Information on Non-IFRS Accounting Standards Measures and Other Financial Measures" section for a complete reconciliation.
Analysis of results for the three-month period ended September 30, 2024 (compared to the same period last year)
The Corporation's third quarter sales of $1,201 million increased by $3 million compared with the same period last year. This was driven by $24 million of sales mix benefits in Tissue Papers and Containerboard, and $12 million related to more a favourable foreign exchange. Results also reflected a consolidated $7 million net benefit from higher selling prices. These were offset by a net negative impact of $40 million related to lower volumes in Containerboard and Tissue Papers, with the majority of this impact attributable to the changes made within the Tissue Papers operational platform in the past year to improve profitability.
The third quarter EBITDA (A)1 totaled $140 million, a decrease of $21 million, or 13%, from the $161 million generated in the same period last year. This reflects consolidated net impacts of $35 million from higher raw material costs and $5 million related to volume and sales mix changes. These were partly offset by net benefits from higher selling prices and lower operating costs, and lower corporate costs, as expected.
The main specific items, before income taxes, that impacted our third quarter 2024 operating income and/or net earnings were:
$7 million of impairment charge on assets related to a decision to discontinue product lines in Canada and in the United States (operating income and net earnings);
$29 million of restructuring and other costs related to plant closures in Canada (operating income and net earnings);
$2 million unrealized gain on financial instruments (operating income and net earnings);
$2 million unrealized loss on interest rate hedge instruments (net earnings);
$1 million foreign exchange gain on long-term debt and financial instruments net earnings.
For the three-month period ended September 30, 2024, the Corporation posted net earnings of $1 million, or $0.01 per common share, compared to net earnings of $34 million, or $0.34 per common share, in the same period of 2023. On an adjusted basis1, the Corporation posted net earnings of $27 million in the third quarter of 2024, or $0.27 per common share, compared to net earnings of $45 million, or $0.44 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 December 5, 2024 to shareholders of record at the close of business on November 21, 2024. This dividend is an "eligible dividend" as per the Income Tax Act (R.C.S. (1985), Canada). During the third quarter of 2024, Cascades purchased no common shares for cancellation.
2024 Third Quarter Results Conference Call Details
Management will discuss the 2024 third quarter financial results during a conference call today at 9:00 a.m. ET. The call can be accessed by dialing 1-800-990-4777 (international 1-289-819-1299). The conference call, including the investor presentation, will be broadcast live on the Cascades website (www.cascades.com) under the "Investors" section. A replay of the call will be available on the Cascades website and may also be accessed by phone until December 7, 2024 by dialing 1-888-660-6345 (international 1-289-819-1450), access code 18522 #.
Founded in 1964, Cascades offers sustainable, innovative and value-added packaging, hygiene and recovery solutions. The company employs approximately 9,700 women and men across a network of close to 70 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. Certain statements in this release, including statements regarding future results and performance, are forward-looking statements based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, decreases in demand for the Corporation's products, increases in raw material costs, fluctuations in selling prices and adverse changes in general market and industry conditions and other factors.
CONSOLIDATED BALANCE SHEETS
(in millions of Canadian dollars) (unaudited)
September 30,2024
December 31,2023
Assets
Current assets
Cash and cash equivalents
34
54
Accounts receivable
495
453
Current income tax assets
8
12
Inventories
643
568
Current portion of financial assets
2
1
1,182
1,088
Long-term assets
Investments in associates and joint ventures
99
94
Property, plant and equipment
2,753
2,808
Intangible assets with finite useful life
44
55
Other assets
106
78
Deferred income tax assets
192
167
Goodwill and other intangible assets with indefinite useful life
488
482
4,864
4,772
Liabilities and Equity
Current liabilities
Bank loans and advances
7
—
Trade and other payables
678
703
Current income tax liabilities
4
6
Current portion of Unsecured senior notes of $175 million to be refinanced
175
—
Current portion of long-term debt
63
67
Current portion of provisions for contingencies and charges
16
14
Current portion of financial liabilities and other liabilities
28
29
971
819
Long-term liabilities
Long-term debt
1,828
1,869
Provisions for contingencies and charges
89
61
Financial liabilities
3
5
Other liabilities
94
94
Deferred income tax liabilities
129
143
3,114
2,991
Equity
Capital stock
616
613
Contributed surplus
16
15
Retained earnings
1,045
1,096
Accumulated other comprehensive income
31
15
Equity attributable to Shareholders
1,708
1,739
Non-controlling interests
42
42
Total equity
1,750
1,781
4,864
4,772
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
For the 3-month periods ended September 30,
For the 9-month periods ended September 30,
(in millions of Canadian dollars, except per common share amounts and number of common shares) (unaudited)
2024
2023
2024
2023
Sales
1,201
1,198
3,490
3,500
Supply chain and logistic
736
711
2,126
2,064
Wages and employee benefits expenses
267
266
809
809
Depreciation and amortization
70
69
206
199
Maintenance and repair
58
60
180
178
Other operational costs
—
—
20
13
Impairment charges
7
7
9
161
Other loss (gain)
24
1
27
(1)
Restructuring costs
5
4
38
11
Unrealized loss (gain) on derivative financial instruments
(2)
—
(4)
2
Operating income
36
80
79
64
Financing expense
36
38
108
92
Share of results of associates and joint ventures
(5)
(4)
(14)
(19)
Earnings (loss) before income taxes
5
46
(15)
(9)
Provision for (recovery of) income taxes
(1)
6
(8)
(9)
Net earnings (loss) including non-controlling interests for the period
6
40
(7)
—
Net earnings attributable to non-controlling interests
5
6
11
19
Net earnings (loss) attributable to Shareholders for the period
1
34
(18)
(19)
Net earnings (loss) per common share
Basic
$0.01
$0.34
($0.18)
($0.19)
Diluted
$0.01
$0.34
($0.18)
($0.19)
Weighted average basic number of common shares outstanding
100,988,040
100,669,311
100,824,800
100,493,892
Weighted average number of diluted common shares
101,042,159
101,163,731
101,042,799
100,910,246
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the 3-month periods ended September 30,
For the 9-month periods ended September 30,
(in millions of Canadian dollars) (unaudited)
2024
2023
2024
2023
Net earnings (loss) including non-controlling interests for the period
6
40
(7)
—
Other comprehensive income (loss)
Items that may be reclassified subsequently to earnings
