Cascades Reports Solid Results for the Third Quarter of 2023

Cascades has reported its unaudited financial results for the three-month period ended September 30, 2023.

Q3 2023 Highlights

Sales of $1,198 million (compared with $1,168 million in Q2 2023 and $1,174 million in Q3 2022);
Operating income of $80 million (compared with $64 million in Q2 2023 and $25 million in Q3 2022);
Net earnings per common share of $0.34 (compared with net earnings per common share of $0.22 in Q2 2023 and a net loss per common share of ($0.02) in Q3 2022);
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA (A)1) of $161 million (compared with $141 million in Q2 2023 and $111 million in Q3 2022);
Adjusted net earnings per common share1 of $0.44 (compared with $0.27 in Q2 2023 and $0.20 in Q3 2022);
Net debt of $2,088 million as of September 30, 2023 (compared with $2,076 million as of June 30, 2023). Net debt to EBITDA (A) ratio1 of 3.8x, down from 4.1x as of June 30, 2023;
Total capital expenditures, net of disposals, of $56 million in Q3 2023, compared to $104 million in Q2 2023. The Corporation's 2023 forecasted net capital expenditures of approximately $325 million is unchanged.
Sales of $1,198 million (compared with $1,168 million in Q2 2023 and $1,174 million in Q3 2022);
Operating income of $80 million (compared with $64 million in Q2 2023 and $25 million in Q3 2022);
Net earnings per common share of $0.34 (compared with net earnings per common share of $0.22 in Q2 2023 and a net loss per common share of ($0.02) in Q3 2022);
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA (A)1) of $161 million (compared with $141 million in Q2 2023 and $111 million in Q3 2022);
Adjusted net earnings per common share1 of $0.44 (compared with $0.27 in Q2 2023 and $0.20 in Q3 2022);
Net debt of $2,088 million as of September 30, 2023 (compared with $2,076 million as of June 30, 2023). Net debt to EBITDA (A) ratio1 of 3.8x, down from 4.1x as of June 30, 2023;
Total capital expenditures, net of disposals, of $56 million in Q3 2023, compared to $104 million in Q2 2023. The Corporation's 2023 forecasted net capital expenditures of approximately $325 million is unchanged.

Mario Plourde, President and CEO, commented: "We are pleased with our solid third quarter results. Sequential sales growth of 2.6 percent reflects stronger Containerboard volume and more favourable sales mix in Tissue Papers. Quarterly EBITDA (A)1 improved 14 percent, exceeding expectations, fuelled by a robust 39 percent increase in Tissue Papers as benefits from lower raw material costs, price increases, and repositioning of this segment's operational platform and other profitability, efficiency and productivity initiatives undertaken over the past year continued to yield results. Sequentially, raw material costs were a headwind for our packaging businesses, but remained below prior year levels, while production costs were a tailwind. Notwithstanding a less favourable exchange rate, we maintained our net debt levels stable due to strong cash flows from operations and lower capital expenditures during the quarter. Consequently, our leverage ratio1 improved to 3.8x from 4.1x at the end of Q2."

Discussing near-term outlook, Plourde commented, "On a consolidated basis, we are forecasting fourth quarter results to decrease sequentially. This is driven by lower expected results in our Containerboard segment due to higher raw material costs, slightly lower average selling prices and usual softer seasonal volumes in the fourth quarter. Results in the Specialty Packaging and Tissue Papers segments are expected to remain stable on a sequential basis. More broadly, we continue to remain prudent on the demand-side, most notably in our packaging businesses, due to general economic uncertainty. Notwithstanding this, we are very pleased with the continued ramp-up of production at the Bear Island facility, and the benefits being realized in our Tissue Papers segment following the wide-ranging measures executed in recent quarters. In both cases, the benefits from these strategic actions will continue to generate long-term commercial and competitive advantages for Cascades and sustainable value for our shareholders."

Analysis of results for the three-month period ended September 30, 2023 (compared to the same period last year):

The third quarter sales of $1,198 million increased by $24 million compared with the same period last year. This increase reflects a net benefit of $46 million that was driven by stronger volume in Containerboard and a favourable FX impact for all business segments. These increases were partially offset by lower indexed selling prices in Containerboard, the effects of which outweighed the increase generated by higher average selling prices in Tissue Papers.

The third quarter EBITDA (A)1 totaled $161 million, an increase of $50 million, or 45 percent, from the $111 million generated in the same period last year. This increase was driven by a significant improvement in the Tissue Papers segment, which generated an EBITDA (A)1 of $61 million in the quarter, or 14.5 percent on a margin basis, reflecting profitability initiatives implemented over recent quarters, and lower raw material, logistics and energy costs. On a consolidated basis, results benefited from more favourable volume and sales mix and lower raw material and logistics costs. These impacts were partially offset by lower average selling prices in packaging, most notably in Containerboard following decreases in index prices, and higher production costs in all businesses due to inflationary pressures in the last twelve months.

The main specific items, before income taxes, that impacted our third quarter 2023 operating income and/or net earnings were:

$12 million of impairment charges on US assets, restructuring costs and an other loss related to the closure plants in the USA (operating income and net earnings);
$2 million foreign exchange loss on long-term debt and financial instruments (net earnings).

For the three-month period ended September 30, 2023, the Corporation posted net earnings of $34 million, or $0.34 per common share, compared to a net loss of $(2) million, or ($0.02) per common share, in the same period of 2022. On an adjusted basis1, the Corporation posted net earnings of $45 million in the third quarter of 2023, or $0.44 per common share, compared to net earnings of $20 million, or $0.20 per common share, in the same period of 2022.

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

Back to Tissue360 Newsletter