Cascades Reports Results for the Second Quarter of 2024

KINGSEY FALLS, QC, Aug. 8, 2024 /PRNewswire/ – Cascades Inc. (TSX: CAS) 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.”

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)

Q2 2024

Q1 2024

Q2 2023





Sales

1,180

1,109

1,168

As Reported




Operating income

34

9

64

Net earnings (loss)

1

(20)

22

per common share (basic)

$0.01

($0.20)

$0.22

Adjusted1




Earnings before interest, taxes, depreciation and amortization (EBITDA (A))

112

103

141

Net earnings (loss)

8

26

per common share (basic)

$0.08

$—

$0.27

Margin (EBITDA (A) / Sales)

9.5 %

9.3 %

12.1 %



Segmented sales

(in millions of Canadian dollars) (unaudited)

Q2 2024

Q1 2024

Q2 2023





Packaging Products




Containerboard

585

556

562

Specialty Products

167

160

164

Inter-segment sales

(7)

(7)

(9)


745

709

717

Tissue Papers

397

367

416

Inter-segment sales, Corporate, Recovery and Recycling activities

38

33

35

Sales

1,180

1,109

1,168



Segmented operating income (loss)

(in millions of Canadian dollars) (unaudited)

Q2 2024

Q1 2024

Q2 2023





Packaging Products




Containerboard

15

(7)

62

Specialty Products

19

19

19





Tissue Papers

38

31

18





Corporate, Recovery and Recycling activities

(38)

(34)

(35)

Operating income

34

9

64



Segmented EBITDA (A)1

(in millions of Canadian dollars) (unaudited)

Q2 2024

Q1 2024

Q2 2023





Packaging Products




Containerboard

60

50

96

Specialty Products

26

25

24





Tissue Papers

54

50

44





Corporate, Recovery and Recycling activities

(28)

(22)

(23)

EBITDA (A)1

112

103

141


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 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.

2024 Second Quarter Results Conference Call Details

Management will discuss the 2024 second quarter financial results during a conference call today at 9:00 a.m. ET. The call can be accessed by dialing 1-888-390-0620 (international 1-416-764-8651). 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 September 9, 2024 by dialing 1-888-390-0541 (international 1-416-764-8677), access code 606556.

Founded in 1964, Cascades offers sustainable, innovative and value-added packaging, hygiene and recovery solutions. The company employs approximately 9,900 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)

June 30,

2024

December 31,

2023

Assets



Current assets



Cash and cash equivalents

23

54

Accounts receivable

493

453

Current income tax assets

7

12

Inventories

641

568

Current portion of financial assets

1


1,164

1,088

Long-term assets



Investments in associates and joint ventures

94

94

Property, plant and equipment

2,795

2,808

Intangible assets with finite useful life

48

55

Financial assets

1

Other assets

106

78

Deferred income tax assets

182

167

Goodwill and other intangible assets with indefinite useful life

491

482


4,881

4,772

Liabilities and Equity



Current liabilities



Bank loans and advances

3

Trade and other payables

660

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

60

67

Current portion of provisions for contingencies and charges

18

14

Current portion of financial liabilities and other liabilities

25

29


945

819

Long-term liabilities



Long-term debt

1,878

1,869

Provisions for contingencies and charges

62

61

Financial liabilities

1

5

Other liabilities

89

94

Deferred income tax liabilities

136

143


3,111

2,991

Equity



Capital stock

616

613

Contributed surplus

15

15

Retained earnings

1,059

1,096

Accumulated other comprehensive income

39

15

Equity attributable to Shareholders

1,729

1,739

Non-controlling interests

41

42

Total equity

1,770

1,781


4,881

4,772



CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)


For the 3-month periods

ended June 30,

For the 6-month periods

ended June 30,

(in millions of Canadian dollars, except per common share amounts and number of

common shares) (unaudited)

2024

2023

2024

2023

Sales

1,180

1,168

2,289

2,302






Supply chain and logistic

722

690

1,390

1,353

Wages and employee benefits expenses

275

270

542

543

Depreciation and amortization

69

68

136

130

Maintenance and repair

60

60

122

118

Other operational costs

11

7

20

13

Impairment charges

2

2

154

Other loss (gain)

3

(2)

Restructuring costs

10

6

33

7

Unrealized loss (gain) on derivative financial instruments

(1)

1

(2)

2

Operating income (loss)

34

64

43

(16)

Financing expense

37

31

72

54

Share of results of associates and joint ventures

(6)

(3)

(9)

(15)

Earnings (loss) before income taxes

3

36

(20)

(55)

Provision for (recovery of) income taxes

(1)

9

(7)

(15)

Net earnings (loss) including non-controlling interests for the period

4

27

(13)

(40)

Net earnings attributable to non-controlling interests

3

5

6

13

Net earnings (loss) attributable to Shareholders for the period

1

22

(19)

(53)

Net earnings (loss) per common share





Basic

$0.01

$0.22

($0.19)

($0.53)

Diluted

$0.01

$0.22

($0.19)

($0.53)

Weighted average basic number of common shares outstanding

100,781,388

100,447,357

100,742,283

100,404,729

Weighted average number of diluted common shares

100,870,224

100,860,684

101,043,122

100,781,402



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


For the 3-month periods

ended June 30,

For the 6-month periods

ended June 30,

(in millions of Canadian dollars) (unaudited)

2024

2023

2024

2023

Net earnings (loss) including non-controlling interests for the period

4

27

(13)

(40)

Other comprehensive income (loss)





Items that may be reclassified subsequently to earnings





Translation adjustments





Change in foreign currency translation of foreign subsidiaries

12

(22)

38

(24)

Change in foreign currency translation related to net investment hedging activities

(5)

8

(15)

9

Cash flow hedges





Change in fair value of commodity derivative financial instruments

1

(5)

Recovery of (provision for) income taxes

1

(1)

2


8

(14)

25

(20)

Items that are not released to earnings





Actuarial gain on employee future benefits

4

2

11

3

Provision for income taxes

(1)

(1)

(3)

(1)


3

1

8

2

Other comprehensive income (loss)

11

(13)

33

(18)

Comprehensive income (loss) including non-controlling interests for the period

15

14

20

(58)

Comprehensive income attributable to non-controlling interests for the period

3

5

7

13

Comprehensive income (loss) attributable to Shareholders for the period

12

9

13

(71)



CONSOLIDATED STATEMENTS OF EQUITY


For the 6-month period ended June 30, 2024

(in millions of Canadian dollars)

      (unaudited)

CAPITAL STOCK

CONTRIBUTED

SURPLUS

RETAINED

EARNINGS

ACCUMULATED

OTHER

COMPREHENSIVE

INCOME

TOTAL EQUITY

ATTRIBUTABLE TO

SHAREHOLDERS

NON-

CONTROLLING

INTERESTS

TOTAL EQUITY

Balance – Beginning of period

613

15

1,096

15

1,739

42

1,781

Comprehensive income (loss)








Net earnings (loss)

(19)

(19)

6

(13)

Other comprehensive income

8

24

32

1

33


(11)

24

13

7

20

Dividends

(24)

(24)

(8)

(32)

Stock options expense

1

1

1

Issuance of common shares

     upon exercise of stock

     options

3

(1)

2

2

Acquisition of non-controlling

     interests

(2)

(2)

(2)

Balance – End of period

616

15

1,059

39

1,729

41

1,770










For the 6-month period ended June 30, 2023

(in millions of Canadian dollars)

     (unaudited)

CAPITAL STOCK

CONTRIBUTED SURPLUS

RETAINED EARNINGS

ACCUMULATED

OTHER

COMPREHENSIVE INCOME

TOTAL EQUITY

ATTRIBUTABLE TO SHAREHOLDERS

NON-

CONTROLLING INTERESTS

TOTAL EQUITY

Balance – Beginning of period

611

14

1,212

34

1,871

57

1,928

Comprehensive income (loss)








Net earnings (loss)

(53)

(53)

13

(40)

Other comprehensive income

     (loss)

2

(20)

(18)

(18)


(51)

(20)

(71)

13

(58)

Dividends

(24)

(24)

(9)

(33)

Issuance of common shares

     upon exercise of stock

     options

2

2

2

Acquisition of non-controlling

     interests

1

1

(1)

Balance – End of period

613

14

1,138

14

1,779

60

1,839



CONSOLIDATED STATEMENTS OF CASH FLOWS


For the 3-month periods

ended June 30,

For the 6-month periods

ended June 30,

(in millions of Canadian dollars) (unaudited)

2024

2023

2024

2023

Operating activities





Net earnings (loss) attributable to Shareholders for the period

1

22

(19)

(53)

Adjustments for:





Financing expense

37

31

72

54

Depreciation and amortization

69

68

136

130

Impairment charges

2

2

154

Other loss (gain)

3

(2)

Restructuring costs

10

6

33

7

Unrealized loss (gain) on derivative financial instruments

(1)

1

(2)

2

Provision for (recovery of) income taxes

(1)

9

(7)

(15)

Share of results of associates and joint ventures

(6)

(3)

(9)

(15)

Net earnings attributable to non-controlling interests

3

5

6

13

Net financing expense paid

(18)

(18)

(65)

(62)

Net income taxes received (paid)

2

(5)

(3)

(7)

Dividends received

8

6

9

7

Provisions for contingencies and charges and other liabilities

(26)

(7)

(46)

(7)


78

117

110

206

Changes in non-cash working capital components

(24)

(30)

(94)

(76)


54

87

16

130

Investing activities





Disposals in associates and joint ventures

10

Payments for property, plant and equipment

(40)

(104)

(81)

(244)

Proceeds from disposals of property, plant and equipment

17

17

3

Change in intangible and other assets

(20)

1

(20)

(1)


(43)

(103)

(84)

(232)

Financing activities





Bank loans and advances

1

3

3

2

Change in credit facilities

8

44

85

166

Change in credit facilities without recourse to the Corporation

3

18

Payments of other long-term debt, including lease obligations (2024 – $35 million for the

6-month period ($15 million for the 3-month period); 2023 – $29 million for the 6-

month period ($15 million for the 3-month period))

(16)

(34)

(37)

(91)

Issuance of common shares upon exercise of stock options

2

2

2

2

Dividends paid to non-controlling interests

(5)

(6)

(8)

(9)

Acquisition of non-controlling interests

(3)

(3)

(3)

Dividends paid to the Corporation’s Shareholders

(12)

(12)

(24)

(24)


(19)

(6)

36

43

Net change in cash and cash equivalents during the period

(8)

(22)

(32)

(59)

Currency translation on cash and cash equivalents

(1)

1

(2)

Cash and cash equivalents – Beginning of the period

31

64

54

102

Cash and cash equivalents – End of the period

23

41

23

41



SEGMENTED INFORMATION

The Corporation’s operations are managed in three segments: Containerboard, Specialty Products (these two segments constitute the Corporation’s Packaging Products) and Tissue Papers. The accounting policies of the reportable segments are the same as the Corporation’s accounting policies described in Note 2.

The Corporation’s operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (CODM). The Chief Executive Officer has authority for resource allocation and management of the Corporation’s performance and is therefore the CODM. The CODM assesses the performance of each reportable segment based on sales and earnings before interest, taxes, depreciation and amortization, adjusted to exclude specific items (EBITDA (A)). The CODM considers EBITDA (A) to be the best performance measure of the Corporation’s activities.

Sales for each segment are prepared on the same basis as those of the Corporation. Inter-segment operations are recorded on the same basis as sales to third parties, which are at fair market value.

EBITDA (A) does not have a standardized meaning under IFRS Accounting Standards; accordingly, it may not be comparable to similarly named measures used by other companies. Investors should not view EBITDA (A) as an alternative measure to, for example, net earnings, or as a measure of operating results, which are IFRS Accounting Standards measures.

Sales by country by business segment are shown in the following table:








SALES TO




For the 3-month periods ended June 30,


Canada

United States

Other countries

Total

(in millions of Canadian dollars) (unaudited)

2024

2023

2024

2023

2024

2023

2024

2023

Packaging Products









Containerboard

346

329

238

233

1

585

562

Specialty Products

66

58

99

105

2

1

167

164

Inter-segment sales

(5)

(4)

(2)

(5)

(7)

(9)


407

383

335

333

3

1

745

717

Tissue Papers

133

136

264

280

397

416

Inter-segment sales, Corporate, Recovery and

     Recycling activities

30

23

8

7

5

38

35


570

542

607

620

3

6

1,180

1,168








SALES TO




For the 6-month periods ended June 30,


Canada

United States

Other countries

Total

(in millions of Canadian dollars) (unaudited)

2024

2023

2024

2023

2024

2023

2024

2023

Packaging Products









Containerboard

668

658

470

464

3

1

1,141

1,123

Specialty Products

126

114

199

209

2

2

327

325

Inter-segment sales

(8)

(8)

(6)

(8)

(14)

(16)


786

764

663

665

5

3

1,454

1,432

Tissue Papers

268

262

496

541

764

803

Inter-segment sales, Corporate, Recovery and

     Recycling activities

56

48

15

13

6

71

67


1,110

1,074

1,174

1,219

5

9

2,289

2,302



EBITDA (A) by business segment is reconciled to IFRS Accounting Standards measure, namely operating income (loss), and is shown in the following table:


For the 3-month period ended June 30, 2024

(in millions of Canadian dollars) (unaudited)

Containerboard

Specialty

Products

Tissue Papers

Corporate,

Recovery and

Recycling

activities

Consolidated

Operating income (loss)

15

19

38

(38)

34

Depreciation and amortization

38

6

13

12

69

Restructuring costs

6

1

3

10

Unrealized loss (gain) on derivative financial instruments

1

(2)

(1)

EBITDA (A)

60

26

54

(28)

112


For the 3-month period ended June 30, 2023

(in millions of Canadian dollars) (unaudited)

Containerboard

Specialty

Products

Tissue Papers

Corporate,

Recovery and

Recycling

activities

Consolidated

Operating income (loss)

62

19

18

(35)

64

Depreciation and amortization

34

5

18

11

68

Impairment charges

2

2

Restructuring costs

6

6

Unrealized loss on derivative financial instruments

1

1

EBITDA (A)

96

24

44

(23)

141


For the 6-month period ended June 30, 2024

(in millions of Canadian dollars) (unaudited)

Containerboard

Specialty

Products

Tissue Papers

Corporate,

Recovery and

Recycling

activities

Consolidated

Operating income (loss)

8

38

69

(72)

43

Depreciation and amortization

75

12

26

23

136

Impairment charges

2

2

Other loss (gain)

3

3

Restructuring costs

22

1

9

1

33

Unrealized gain on derivative financial instruments

(2)

(2)

EBITDA (A)

110

51

104

(50)

215


For the 6-month period ended June 30, 2023

(in millions of Canadian dollars) (unaudited)

Containerboard

Specialty

Products

Tissue Papers

Corporate,

Recovery and

Recycling activities

Consolidated

Operating income (loss)

100

40

(74)

(82)

(16)

Depreciation and amortization

64

10

35

21

130

Impairment charges

59

1

94

154

Other gain

(2)

(2)

Restructuring costs

7

7

Unrealized loss (gain) on derivative financial instruments

(1)

3

2

EBITDA (A)

222

51

60

(58)

275



Payments for property, plant and equipment by business segment are shown in the following table:


PAYMENTS FOR PROPERTY, PLANT AND EQUIPMENT


For the 3-month periods

ended June 30,

For the 6-month periods

ended June 30,

(in millions of Canadian dollars) (unaudited)

2024

2023

2024

2023

Packaging Products





Containerboard

58

66

69

155

Specialty Products

5

7

8

11


63

73

77

166

Tissue Papers

12

8

20

17

Corporate, Recovery and Recycling activities

13

10

19

13

Total acquisitions

88

91

116

196

Right-of-use assets acquisitions (non-cash)

(51)

(7)

(54)

(15)


37

84

62

181

Acquisitions for property, plant and equipment included in “Trade and other payables”





Beginning of the period

29

63

45

106

End of the period

(26)

(43)

(26)

(43)

Payments for property, plant and equipment

40

104

81

244

Proceeds from disposals of property, plant and equipment

(17)

(17)

(3)

Payments for property, plant and equipment net of proceeds from disposals

23

104

64

241



SUPPLEMENTAL INFORMATION ON NON-IFRS ACCOUNTING STANDARDS MEASURES AND OTHER FINANCIAL MEASURES

SPECIFIC ITEMS

The Corporation incurs some specific items that adversely or positively affect its operating results. We believe it is useful for readers to be aware of these items as they provide additional information to measure performance, compare the Corporation’s results between periods, and assess operating results and liquidity, notwithstanding these specific items. Management believes these specific items are not necessarily reflective of the Corporation’s underlying business operations in measuring and comparing its performance and analyzing future trends. Our definition of specific items may differ from that of other corporations and some of these items may arise in the future and may reduce the Corporation’s available cash.

They include, but are not limited to, charges for (reversals of) impairment of assets, restructuring gains or costs, loss on refinancing and repurchase of long-term debt, some deferred tax asset provisions or reversals, premiums paid on repurchase of long-term debt, gains or losses on the acquisition or sale of a business unit, gains or losses on the share of results of associates and joint ventures, unrealized gains or losses on derivative financial instruments that do not qualify for hedge accounting, unrealized gains or losses on interest rate hedge instruments and option fair value revaluation, foreign exchange gains or losses on long-term debt and financial instruments, fair value revaluation gains or losses on investments, specific items of discontinued operations and other significant items of an unusual, non-cash or non-recurring nature.

RECONCILIATION AND USES OF NON-IFRS ACCOUNTING STANDARDS MEASURES AND OTHER FINANCIAL MEASURES

To provide more information for evaluating the Corporation’s performance, the financial information included in this analysis contains certain data that are not performance measures under IFRS Accounting Standards (“non-IFRS Accounting Standards measures”), which are also calculated on an adjusted basis to exclude specific items. We believe that providing certain key performance and capital measures, as well as non-IFRS Accounting Standards measures, is useful to both Management and investors, as they provide additional information to measure the performance and financial position of the Corporation. This also increases the transparency and clarity of the financial information. The following non-IFRS Accounting Standards measures and other financial measures are used in our financial disclosures:

Non-IFRS Accounting Standards measures

  • Adjusted earnings before interest, taxes, depreciation and amortization or EBITDA (A): represents the operating income (as published in the Consolidated Statement of Earnings (Loss) of the Consolidated Financial Statements) before depreciation and amortization excluding specific items. Measure used to assess recurring operating performance and the contribution of each segment on a comparable basis.
  • Adjusted net earnings: Measure used to assess the Corporation’s consolidated financial performance on a comparable basis.
  • Adjusted cash flow: Measure used to assess the Corporation’s capacity to generate cash flows to meet financial obligations and/or discretionary items such as share repurchases, dividend increases and strategic investments.
  • Free cash flow: Measure used to calculate the excess cash the Corporation generates by subtracting capital expenditures (excluding strategic projects) from the EBITDA (A).
  • Working capital: Measure used to assess the short-term liquidity of the Corporation.

Other financial measures

  • Total debt: Measure used to calculate all the Corporation’s debt, including long-term debt and bank loans. Often put in relation to equity to calculate the debt-to-equity ratio.
  • Net debt: Measure used to calculate the Corporation’s total debt less cash and cash equivalents. Often put in relation to EBITDA (A) to calculate net debt to EBITDA (A) ratio.

Non-IFRS Accounting Standards ratios

  • Net debt to EBITDA (A) ratio: Ratio used to assess the Corporation’s ability to pay its debt and evaluate financial leverage.
  • EBITDA (A) margin: Ratio used to assess operating performance and the contribution of each segment on a comparable basis calculated as a percentage of sales.
  • Adjusted net earnings per common share: Ratio used to assess the Corporation’s consolidated financial performance on a comparable basis.
  • Net debt / Net debt + Shareholders’ equity: Ratio used to evaluate the Corporation’s financial leverage and the risk to Shareholders.
  • Working capital as a percentage of sales: Ratio used to assess the Corporation’s operating liquidity performance.
  • Adjusted cash flow per common share: Ratio used to assess the Corporation’s financial flexibility.
  • Free cash flow ratio: Ratio used to measure the liquidity and efficiency of how much more cash the Corporation generates than it uses to run the business by subtracting capital expenditures (excluding strategic projects) from the EBITDA (A) calculated as a percentage of sales.

Non-IFRS Accounting Standards measures and other financial measures are mainly derived from the consolidated financial statements, but do not have meanings prescribed by IFRS Accounting Standards. These measures have limitations as an analytical tool and should not be considered on their own or as a substitute for an analysis of our results as reported under IFRS Accounting Standards. In addition, our definitions of non-IFRS Accounting Standards measures and other financial measures may differ from those of other corporations. Any such modification or reformulation may be significant.

The CODM assesses the performance of each reportable segment based on sales and earnings before interest, taxes, depreciation and amortization, adjusted to exclude specific items (EBITDA (A)1). The CODM considers EBITDA (A)1 to be the best performance measure of the Corporation’s activities.

EBITDA (A)1 by business segment is reconciled to IFRS Accounting Standards measure, namely operating income (loss), and is shown in the following table:


Q2 2024

(in millions of Canadian dollars) (unaudited)

Containerboard

Specialty

Products

Tissue Papers

Corporate,

Recovery and

Recycling

activities

Consolidated

Operating income (loss)

15

19

38

(38)

34

Depreciation and amortization

38

6

13

12

69

Restructuring costs

6

1

3

10

Unrealized loss (gain) on derivative financial instruments

1

(2)

(1)

EBITDA (A)1

60

26

54

(28)

112


Q1 2024

(in millions of Canadian dollars) (unaudited)

Containerboard

Specialty

Products

Tissue Papers

Corporate,

Recovery and

Recycling

activities

Consolidated

Operating income (loss)

(7)

19

31

(34)

9

Depreciation and amortization

37

6

13

11

67

Impairment charges

2

2

Other loss

3

3

Restructuring costs

16

6

1

23

Unrealized gain on derivative financial instruments

(1)

(1)

EBITDA (A)1

50

25

50

(22)

103


Q2 2023

(in millions of Canadian dollars) (unaudited)

Containerboard

Specialty

Products

Tissue Papers

Corporate,

Recovery and

Recycling

activities

Consolidated

Operating income (loss)

62

19

18

(35)

64

Depreciation and amortization

34

5

18

11

68

Impairment charges

2

2

Restructuring costs

6

6

Unrealized loss on derivative financial instruments

1

1

EBITDA (A)1

96

24

44

(23)

141


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



The following table reconciles net earnings (loss) and net earnings (loss) per common share, as reported, with adjusted net earnings (loss)1 and adjusted net earnings (loss) per common share1:

(in millions of Canadian dollars, except per common share amounts and number of

common shares) (unaudited)

NET EARNINGS (LOSS)


NET EARNINGS (LOSS)

PER COMMON SHARE2


Q2 2024

Q1 2024

Q2 2023


Q2 2024

Q1 2024

Q2 2023

As reported

1

(20)

22


$0.01

($0.20)

$0.22

Specific items:








Impairment charges

2

2


$0.01

$0.02

Other loss (gain)

3


$0.02

Restructuring costs

10

23

6


$0.07

$0.18

$0.04

Unrealized loss (gain) on derivative financial instruments

(1)

(1)

1


($0.01)

($0.01)

$0.01

Unrealized loss (gain) on interest rate hedge instrument

1

(2)


$0.01

($0.01)

Foreign exchange loss (gain) on long-term debt and financial

     instruments

1

(3)


$0.01

($0.02)

Tax effect on specific items, other tax adjustments and

     attributable to non-controlling interest2

(3)

(6)

(2)



7

20

4


$0.07

$0.20

$0.05

Adjusted1

8

26


$0.08

$0.27

Weighted average basic number of common shares

     outstanding





100,781,388

100,703,177

100,447,357



The following table reconciles cash flow from operating activities with EBITDA (A)1:

(in millions of Canadian dollars) (unaudited)

Q2 2024

Q1 2024

Q2 2023

Cash flow from operating activities

54

(38)

87

Changes in non-cash working capital components

24

70

30

Net income taxes paid (received)

(2)

5

5

Net financing expense paid

18

47

18

Provisions for contingencies and charges and other liabilities, net of dividends received

18

19

1

EBITDA (A)1

112

103

141



The following table reconciles cash flow from operating activities with cash flow from operating activities (excluding changes in non-cash working capital components) and adjusted cash flow from operating activities1. It also reconciles adjusted cash flow from operating activities1 to adjusted cash flow generated (used)1, which is also calculated on a per common share basis:

(in millions of Canadian dollars, except per common share amounts or otherwise noted) (unaudited)

Q2 2024

Q1 2024

Q2 2023

Cash flow from operating activities

54

(38)

87

Changes in non-cash working capital components

24

70

30

Cash flow from operating activities (excluding changes in non-cash working capital components)

78

32

117

Restructuring costs paid

17

14

5

Adjusted cash flow from operating activities1

95

46

122

Payments for property, plant and equipment

(40)

(41)

(104)

Change in intangible and other assets

(20)

1

Lease obligation payments

(15)

(20)

(15)

Proceeds from disposals of property, plant and equipment

17


37

(15)

4

Dividends paid to non-controlling interests

(5)

(3)

(6)

Dividends paid to the Corporation’s Shareholders and to non-controlling interests

(12)

(12)

(12)

Adjusted cash flow generated (used)1

20

(30)

(14)

Adjusted cash flow generated (used) per common share1

 (in Canadian dollars)

$0.20

($0.30)

($0.14)

Weighted average basic number of common shares outstanding

100,781,388

100,703,177

100,447,357



1

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

2

Specific amounts per common share are calculated on an after-tax basis and are net of the portion attributable to non-controlling interests. Per share amounts in line item ”Tax effect on specific items, other tax adjustments and attributable to non-controlling interests” only include the effect of tax adjustments.



The following table reconciles total debt1 and net debt1 with the ratio of net debt to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA (A))1:

(in millions of Canadian dollars) (unaudited)

June 30,

2024

March 31,

 2024

June 30,

2023

Long-term debt

1,878

1,816

2,038

Current portion of Unsecured senior notes of $175 million to be refinanced

175

175

Current portion of long-term debt

60

58

75

Bank loans and advances

3

2

4

Total debt1

2,116

2,051

2,117

Less: Cash and cash equivalents

(23)

(31)

(41)

Net debt1 as reported

2,093

2,020

2,076

Last twelve months EBITDA (A)1

498

527

502

Net debt / EBITDA (A) ratio1

              4.2x

              3.8x

              4.1x


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

SOURCE Cascades Inc.


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