Results in line with expectations,
supported by positive trends in Tissue
KINGSEY
FALLS, QC, Nov. 10, 2022 /PRNewswire/ - Cascades
Inc. (TSX: CAS) reports its unaudited financial results for the
three-month period ended September 30,
2022.
Q3 2022 Highlights
- Sales of $1,174 million (compared
with $1,119 million in Q2 2022 and
$1,030 million in Q3 2021)
- As reported (including specific items)
-
- Operating income of $25 million
(compared with $32 million in Q2 2022
and $73 million in Q3 2021)
- Operating income before depreciation and amortization (OIBD) of
$92 million (compared with
$95 million in Q2 2022 and
$136 million in Q3 2021)
- Net loss per common share of $(0.02) (compared with net earnings per common
share of $0.10 in Q2 2022 and net
earnings per common share of $0.32 in
Q3 2021)
- Adjusted (excluding specific items1)
-
- Operating income of $44 million
(compared with $28 million in Q2 2022
and $44 million in Q3 2021)
- Operating income before depreciation and amortization (OIBD) of
$111 million (compared with
$91 million in Q2 2022 and
$107 million in Q3 2021)
- Net earnings per common share of $0.20 (compared with net earnings per common
share of $0.10 in Q2 2022 and a net
loss per common share of ($0.01) in
Q3 2021)
- Net debt1 of $2,011
million as of September 30,
2022 (compared with $1,712
million as of June 30, 2022).
Net debt to adjusted OIBD ratio1 of 6.2x, up from 5.4x
as of June 30, 2022.
- Total capital expenditures, net of disposals, of $121 million in Q3 2022 and $333 million in the first nine months of 2022.
Forecasted 2022 net capital expenditures of $450 - $470
million, including $310 -
$330 million for the Bear Island containerboard conversion project
in Virginia, USA.
- On October 19, 2022, the
Corporation announced that it had successfully amended its existing
credit facility to reinforce its financial flexibility. The updated
agreement increased the authorized term loan to US$260 million from US$160
million while extending the maturity by two years to
December 2027. Concurrently, the term
of the Corporation's revolving facility was extended by one year to
July 2026.
1 Some information represents Non-IFRS financial
measures, other financial measures or Non-IFRS ratios which are not
standardized under IFRS and therefore might not be comparable to
similar financial measures disclosed by other corporations. Please
refer to the "Supplemental Information on Non-IFRS Measures and
Other Financial Measures" section for a
complete reconciliation.
|
Mario Plourde, President and CEO,
commented: "Our third quarter performance was in line with
expectations notwithstanding the fact that our Tissue segment
continued to face unprecedented cost inflation and reduced
productivity due to labour scarcity and inefficiencies.
Company-wide, improvements in volume, pricing and sales mix
mitigated continued cost headwinds on a sequential and
year-over-year basis. Importantly, the profitability initiatives
that have been deployed throughout our Tissue business absorbed
this segment's higher costs during the quarter. While these
measures trailed the cadence of cost headwinds in the first nine
months of the year, we are encouraged with how they are now
tracking, and continue to expect additional benefits
going forward.
The Bear Island project
advanced well during the quarter and we are preparing the
commissioning of certain key equipment. As we pointed to in our
second quarter release, supply chain constraints in 2022 slowed
delivery of some materials which delayed certain construction
milestones. These conditions continued in the third quarter and as
a result start-up of the facility will occur in the first quarter
of 2023. The capital investments for this project totaled
$83 million in the third quarter and
$228 million year-to-date. These
elevated investment levels underline the environment of high cost
inflation, and have resulted in an important increase in our
leverage, a trend we expect to reverse in 2023 with improved
business performance and the contribution from this facility
following its start-up. A prominent FX impact and higher working
capital requirements, driven by inflation, were similarly important
factors in the increase in our debt levels in the third
quarter."
Discussing near-term outlook, Mr. Plourde commented, "In view of
the persistent inflationary pressures on costs and current
macroeconomic environment, we are taking a conservative approach to
our near-term outlook. Accordingly, we expect sequentially stable
results in our packaging businesses, with lower raw material cost
tailwinds projected to counterbalance lower volumes. For our Tissue
segment, we anticipate improved sequential results driven by
accruing benefits from profitability initiatives and stable demand
levels. Our initiatives have delivered according to expectations
thus far, despite certain timing delays in their implementations.
The exception to this is meeting our production targets, where we
continue to put in place additional measures to narrow the
shortfall. The temporary shutdown of one of the machines at our St.
Helen's facility in Oregon has not
impacted our annualized longer-term Tissue profitability
objectives. Production is expected to resume by mid-December, and
costs associated with the shutdown will total approximately
$6 million.
As we have highlighted previously, our tissue business
performance has been impacted by persistent cost inflation this
year. The effect on results is immediate, whereas the roll-out of
corrective pricing and other commercial initiatives takes time to
be implemented and generate benefits. Given the significant impact
that this interval has had in the current year, our Tissue segment
is expected to generate $8 to
$12 million of adjusted OIBD1 in the fourth quarter
of 2022 and, as such, will not achieve the $25 - $40 million
adjusted OIBD1 target in the calendar year 2022. More
importantly, notwithstanding these challenging conditions, our
Tissue segment remains on track to deliver on its long-term
objectives."
Financial Summary
Selected consolidated
information
(in millions of
Canadian dollars, except amounts per common share)
(unaudited)
|
Q3
2022
|
Q2 2022
|
Q3 2021
|
|
|
|
|
Sales
|
1,174
|
1,119
|
1,030
|
As
Reported
|
|
|
|
Operating income
before depreciation and amortization (OIBD)
|
92
|
95
|
136
|
Operating
income
|
25
|
32
|
73
|
Net earnings
(loss)
|
(2)
|
10
|
32
|
per common
share
|
($0.02)
|
$0.10
|
$0.32
|
Margin
(OIBD)
|
7.8 %
|
8.5 %
|
13.2 %
|
Adjusted1
|
|
|
|
Operating income
before depreciation and amortization (OIBD)
|
111
|
91
|
107
|
Operating
income
|
44
|
28
|
44
|
Net earnings
(loss)
|
20
|
10
|
(1)
|
per common
share
|
$0.20
|
$0.10
|
($0.01)
|
Margin
(OIBD)
|
9.5 %
|
8.1 %
|
10.4 %
|
Segmented sales
(in millions of
Canadian dollars) (unaudited)
|
Q3
2022
|
Q2 2022
|
Q3 2021
|
|
|
|
|
Packaging
Products
|
|
|
|
Containerboard
|
595
|
569
|
507
|
Specialty
Products
|
168
|
168
|
144
|
Inter-segment
sales
|
(11)
|
(10)
|
(10)
|
|
752
|
727
|
641
|
Tissue
Papers
|
382
|
342
|
344
|
Inter-segment sales and
Corporate Activities
|
40
|
50
|
45
|
Sales
|
1,174
|
1,119
|
1,030
|
Segmented OIBD as reported
(in millions of
Canadian dollars) (unaudited)
|
Q3
2022
|
Q2 2022
|
Q3 2021
|
|
|
|
|
Packaging
Products
|
|
|
|
Containerboard
|
99
|
98
|
88
|
Specialty
Products
|
25
|
25
|
17
|
|
|
|
|
Tissue
Papers
|
(10)
|
(4)
|
47
|
|
|
|
|
Corporate
Activities
|
(22)
|
(24)
|
(16)
|
OIBD as
reported
|
92
|
95
|
136
|
1 Please refer to the
"Supplemental Information on Non-IFRS Measures and Other Financial
Measures" section for a complete reconciliation.
|
Segmented adjusted OIBD1
(in millions of
Canadian dollars) (unaudited)
|
Q3
2022
|
Q2 2022
|
Q3 2021
|
|
|
|
|
Packaging
Products
|
|
|
|
Containerboard
|
103
|
99
|
94
|
Specialty
Products
|
25
|
25
|
17
|
|
|
|
|
Tissue
Papers
|
4
|
(8)
|
12
|
|
|
|
|
Corporate
Activities
|
(21)
|
(25)
|
(16)
|
Adjusted
OIBD1
|
111
|
91
|
107
|
Analysis of results for the three-month period ended
September 30, 2022 (compared to the same period last
year)
Sales of $1,174 million increased
by $144 million compared with the
same period last year. This reflects $147
million of combined benefits from improvements in selling
prices and sales mix in all business segments. The Canadian dollar
- US dollar exchange rate was also favourable for all businesses,
contributing $26 million to sales
levels on a consolidated basis. These factors were partially offset
by a $26 million impact related to
lower volumes mainly in the Tissue Papers business segment.
The Corporation generated an operating income before
depreciation and amortization (OIBD) of $92
million in the third quarter of 2022, down from $136 million in the third quarter of 2021. On an
adjusted basis1, third quarter OIBD totaled $111 million, an increase of $4 million, or
4%, from the $107 million generated
in the same period last year. This increase is attributable to
$138 million of improvements related to selling price and mix
in all businesses, the benefits of which outweighed higher raw
material, production, energy and logistics costs in all
segments.
The main specific items, before income taxes, that impacted our
third quarter 2022 OIBD and/or a net loss were:
- $2 million of impairment charges
in the Containerboard Packaging segment on some equipment as part
of the continuing optimization initiatives of the platform in
Ontario, Canada (OIBD and a net
loss);
- $14 million of impairment charges
in the Tissue Papers segment on spare parts and on some property,
plant and equipment related to a permanently closed plant in the
USA (OIBD and a net loss);
- $3 million unrealized loss on
financial instruments (OIBD and a net loss);
- $10 million foreign exchange loss
on long-term debt and financial instruments (a net loss).
For the 3-month period ended September 30, 2022, the
Corporation posted a net loss of $(2)
million, or $(0.02) per common
share, compared to net earnings of $32
million, or $0.32 per common
share, in the same period of 2021. On an adjusted
basis1, the Corporation generated net earnings of
$20 million in the third quarter of 2022, or $0.20 per common share, compared to a net loss of
$(1) million, or ($0.01) per common share, in the same period
of 2021.
1 Please refer to the
"Supplemental Information on Non-IFRS 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 8, 2022 to shareholders
of record at the close of business on November 23, 2022. This dividend is an "eligible
dividend" as per the Income Tax Act (R.C.S. (1985), Canada). During the third quarter of 2022,
Cascades purchased 460,400 common shares for cancellation at a
weighted average price of $9.38.
2022 Third Quarter Results Conference Call Details
Management will discuss the 2022 third quarter financial results
during a conference call today at 9:00 a.m.
EDT. 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 December 10,
2022 by dialing 1-888-390-0541 (international
1-416-764-8677), access code 369906.
Founded in 1964, Cascades offers sustainable, innovative and
value-added packaging, hygiene and recovery solutions. The company
employs approximately 10,000 women and men across a network of
close to 80 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,
2022
|
December 31,
2021
|
Assets
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
43
|
174
|
Accounts
receivable
|
639
|
510
|
Current income tax
assets
|
12
|
19
|
Inventories
|
616
|
494
|
Current portion of
financial assets
|
12
|
1
|
|
1,322
|
1,198
|
Long-term
assets
|
|
|
Investments in
associates and joint ventures
|
98
|
87
|
Property, plant and
equipment
|
2,892
|
2,522
|
Intangible assets with
finite useful life
|
78
|
88
|
Financial
assets
|
7
|
6
|
Other assets
|
55
|
54
|
Deferred income tax
assets
|
109
|
138
|
Goodwill and other
intangible assets with indefinite useful life
|
496
|
473
|
|
5,057
|
4,566
|
Liabilities and
Equity
|
|
|
Current
liabilities
|
|
|
Bank loans and
advances
|
2
|
1
|
Trade and other
payables
|
694
|
707
|
Current income tax
liabilities
|
4
|
12
|
Current portion of
long-term debt
|
77
|
74
|
Current portion of
provisions for contingencies and charges
|
9
|
12
|
Current portion of
financial liabilities and other liabilities
|
23
|
16
|
|
809
|
822
|
Long-term
liabilities
|
|
|
Long-term
debt
|
1,975
|
1,450
|
Provisions for
contingencies and charges
|
45
|
47
|
Financial
liabilities
|
9
|
6
|
Other
liabilities
|
89
|
122
|
Deferred income tax
liabilities
|
146
|
192
|
|
3,073
|
2,639
|
Equity
|
|
|
Capital
stock
|
611
|
614
|
Contributed
surplus
|
14
|
14
|
Retained
earnings
|
1,247
|
1,274
|
Accumulated other
comprehensive income (loss)
|
57
|
(23)
|
Equity attributable
to Shareholders
|
1,929
|
1,879
|
Non-controlling
interests
|
55
|
48
|
Total
equity
|
1,984
|
1,927
|
|
5,057
|
4,566
|
CONSOLIDATED STATEMENTS OF EARNINGS
|
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)
|
2022
|
2021
|
2022
|
2021
|
Sales
|
1,174
|
1,030
|
3,331
|
2,928
|
Cost of sales and
expenses
|
|
|
|
|
Cost of sales
(including depreciation and amortization of $67 million for
3-month period
(2021 — $63 million) and $190 million for 9-month
period (2021 — $192 million))
|
1,042
|
901
|
2,994
|
2,532
|
Selling and
administrative expenses
|
88
|
86
|
269
|
260
|
Gain on acquisitions,
disposals and others
|
—
|
(39)
|
(10)
|
(39)
|
Impairment charges and
restructuring costs
|
16
|
5
|
17
|
16
|
Foreign exchange loss
(gain)
|
—
|
(1)
|
(2)
|
1
|
Loss on derivative
financial instruments
|
3
|
5
|
10
|
18
|
|
1,149
|
957
|
3,278
|
2,788
|
Operating
income
|
25
|
73
|
53
|
140
|
Financing
expense
|
21
|
22
|
53
|
64
|
Interest expense on
employee future benefits and other liabilities
|
1
|
1
|
3
|
3
|
Foreign exchange loss
(gain) on long-term debt and financial instruments
|
10
|
3
|
12
|
(3)
|
Share of results of
associates and joint ventures
|
(5)
|
(4)
|
(15)
|
(11)
|
Earnings (loss)
before income taxes
|
(2)
|
51
|
—
|
87
|
Provision for
(recovery of) income taxes
|
(5)
|
30
|
(6)
|
38
|
Net earnings from
continuing operations including non-controlling interests for
the period
|
3
|
21
|
6
|
49
|
Results from
discontinued operations
|
—
|
25
|
—
|
30
|
Net earnings
including non-controlling interests for the period
|
3
|
46
|
6
|
79
|
Net earnings
attributable to non-controlling interests
|
5
|
14
|
13
|
22
|
Net earnings (loss)
attributable to Shareholders for the period
|
(2)
|
32
|
(7)
|
57
|
Net earnings (loss)
from continuing operations per common share
|
|
|
|
|
Basic
|
($0.02)
|
$0.18
|
($0.07)
|
$0.39
|
Diluted
|
($0.02)
|
$0.18
|
($0.07)
|
$0.39
|
Net earnings (loss)
per common share
|
|
|
|
|
Basic
|
($0.02)
|
$0.32
|
($0.07)
|
$0.56
|
Diluted
|
($0.02)
|
$0.32
|
($0.07)
|
$0.56
|
Weighted average
basic number of common shares outstanding
|
100,822,027
|
102,129,769
|
100,744,469
|
102,229,534
|
Weighted average
number of diluted common shares
|
101,108,030
|
103,156,393
|
101,265,038
|
103,292,002
|
|
|
|
|
|
Net earnings (loss)
attributable to Shareholders:
|
|
|
|
|
Continuing
operations
|
(2)
|
18
|
(7)
|
40
|
Discontinued
operations
|
—
|
14
|
—
|
17
|
Net earnings
(loss)
|
(2)
|
32
|
(7)
|
57
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
For the 3-month
periods ended September 30,
|
For the 9-month
periods ended September 30,
|
(in millions of
Canadian dollars) (unaudited)
|
2022
|
2021
|
2022
|
2021
|
Net earnings
including non-controlling interests for the period
|
3
|
46
|
6
|
79
|
Other comprehensive
income
|
|
|
|
|
Items that may be
reclassified subsequently to earnings
|
|
|
|
|
Translation
adjustments
|
|
|
|
|
Change in foreign
currency translation of foreign subsidiaries
|
82
|
26
|
103
|
(3)
|
Change in foreign
currency translation of foreign subsidiaries from discontinued
operations
|
—
|
(1)
|
—
|
(21)
|
Change in foreign
currency translation related to net investment hedging
activities
|
(24)
|
(15)
|
(30)
|
3
|
Change in foreign
currency translation related to net investment hedging activities
from discontinued operations
|
—
|
—
|
—
|
12
|
Cash flow
hedges
|
|
|
|
|
Change in fair value
of commodity derivative financial instruments
|
3
|
2
|
10
|
5
|
Recovery of
(provision for) income taxes
|
2
|
1
|
1
|
(2)
|
Provision for
income taxes from discontinued operations
|
—
|
—
|
—
|
(2)
|
|
63
|
13
|
84
|
(8)
|
Items that are not
released to earnings
|
|
|
|
|
Actuarial gain (loss)
on employee future benefits
|
(2)
|
8
|
29
|
29
|
Provision for income
taxes
|
—
|
(1)
|
(8)
|
(7)
|
|
(2)
|
7
|
21
|
22
|
Other comprehensive
income
|
61
|
20
|
105
|
14
|
Comprehensive income
including non-controlling interests for the period
|
64
|
66
|
111
|
93
|
Comprehensive income
attributable to non-controlling interests for
the period
|
8
|
14
|
17
|
13
|
Comprehensive income
attributable to Shareholders for the period
|
56
|
52
|
94
|
80
|
Comprehensive income
attributable to Shareholders:
|
|
|
|
|
Continuing
operations
|
56
|
38
|
94
|
65
|
Discontinued
operations
|
—
|
14
|
—
|
15
|
Comprehensive
income
|
56
|
52
|
94
|
80
|
CONSOLIDATED STATEMENTS OF EQUITY
|
For the 9-month
period ended September 30, 2022
|
(in millions of
Canadian dollars) (unaudited)
|
CAPITAL
STOCK
|
CONTRIBUTED
SURPLUS
|
RETAINED
EARNINGS
|
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)
|
TOTAL EQUITY
ATTRIBUTABLE TO
SHAREHOLDERS
|
NON-
CONTROLLING
INTERESTS
|
TOTAL EQUITY
|
Balance - Beginning
of period
|
614
|
14
|
1,274
|
(23)
|
1,879
|
48
|
1,927
|
Comprehensive
income
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
—
|
—
|
(7)
|
—
|
(7)
|
13
|
6
|
Other comprehensive
income
|
—
|
—
|
21
|
80
|
101
|
4
|
105
|
|
—
|
—
|
14
|
80
|
94
|
17
|
111
|
Dividends
|
—
|
—
|
(36)
|
—
|
(36)
|
(9)
|
(45)
|
Stock options
expense
|
—
|
1
|
—
|
—
|
1
|
—
|
1
|
Issuance of common
shares upon exercise of stock options
|
2
|
(1)
|
—
|
—
|
1
|
—
|
1
|
Redemption of common
shares
|
(5)
|
—
|
(4)
|
—
|
(9)
|
—
|
(9)
|
Acquisition of
non-controlling interests
|
—
|
—
|
(1)
|
—
|
(1)
|
(1)
|
(2)
|
Balance - End of
period
|
611
|
14
|
1,247
|
57
|
1,929
|
55
|
1,984
|
|
|
|
|
|
|
|
|
|
For the 9-month period
ended September 30, 2021
|
(in millions of
Canadian dollars) (unaudited)
|
CAPITAL
STOCK
|
CONTRIBUTED
SURPLUS
|
RETAINED
EARNINGS
|
ACCUMULATED
OTHER
COMPREHENSIVE
LOSS
|
TOTAL EQUITY
ATTRIBUTABLE TO
SHAREHOLDERS
|
NON-
CONTROLLING
INTERESTS
|
TOTAL EQUITY
|
Balance - Beginning
of period
|
622
|
13
|
1,146
|
(28)
|
1,753
|
204
|
1,957
|
Comprehensive income
(loss)
|
|
|
|
|
|
|
|
Net
earnings
|
—
|
—
|
57
|
—
|
57
|
22
|
79
|
Other comprehensive
income (loss)
|
—
|
—
|
22
|
1
|
23
|
(9)
|
14
|
|
—
|
—
|
79
|
1
|
80
|
13
|
93
|
Dividends
|
—
|
—
|
(29)
|
—
|
(29)
|
(10)
|
(39)
|
Dividends paid to
non-controlling interests from discontinued operations
|
—
|
—
|
—
|
—
|
—
|
(3)
|
(3)
|
Issuance of common
shares upon exercise of stock options
|
2
|
—
|
—
|
—
|
2
|
—
|
2
|
Redemption of common
shares
|
(10)
|
—
|
(16)
|
—
|
(26)
|
—
|
(26)
|
Acquisition of
non-controlling interests
|
—
|
—
|
1
|
—
|
1
|
(1)
|
—
|
Balance - End of
period
|
614
|
13
|
1,181
|
(27)
|
1,781
|
203
|
1,984
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
For the 3-month
periods ended September 30,
|
For the 9-month
periods ended September 30,
|
(in millions of
Canadian dollars) (unaudited)
|
2022
|
2021
|
2022
|
2021
|
Operating activities
from continuing operations
|
|
|
|
|
Net earnings (loss)
attributable to Shareholders for the period
|
(2)
|
32
|
(7)
|
57
|
Results from
discontinued operations
|
—
|
(25)
|
—
|
(30)
|
Results from
discontinued operations attributable to non-controlling
interests
|
—
|
11
|
—
|
13
|
Net earnings (loss)
from continuing operations
|
(2)
|
18
|
(7)
|
40
|
Adjustments
for:
|
|
|
|
|
Financing expense and
interest expense on employee future benefits and other
liabilities
|
22
|
23
|
56
|
67
|
Depreciation and
amortization
|
67
|
63
|
190
|
192
|
Gain on acquisitions,
disposals and others
|
—
|
(39)
|
(10)
|
(39)
|
Impairment charges and
restructuring costs
|
16
|
5
|
17
|
16
|
Unrealized loss on
derivative financial instruments
|
3
|
5
|
10
|
18
|
Foreign exchange loss
(gain) on long-term debt and financial instruments
|
10
|
3
|
12
|
(3)
|
Provision for (recovery
of) income taxes
|
(5)
|
30
|
(6)
|
38
|
Share of results of
associates and joint ventures
|
(5)
|
(4)
|
(15)
|
(11)
|
Net earnings
attributable to non-controlling interests
|
5
|
3
|
13
|
9
|
Net financing expense
paid
|
(38)
|
(41)
|
(72)
|
(85)
|
Net income taxes
received (paid)
|
(1)
|
1
|
(5)
|
2
|
Dividends
received
|
1
|
—
|
6
|
5
|
Provisions for
contingencies and charges and other liabilities
|
(13)
|
(9)
|
(29)
|
(22)
|
|
60
|
58
|
160
|
227
|
Changes in non-cash
working capital components
|
(61)
|
(13)
|
(212)
|
(85)
|
|
(1)
|
45
|
(52)
|
142
|
Investing activities
from continuing operations
|
|
|
|
|
Disposals in associates
and joint ventures
|
—
|
—
|
—
|
1
|
Payments for property,
plant and equipment
|
(122)
|
(54)
|
(341)
|
(191)
|
Proceeds from disposals
of property, plant and equipment
|
1
|
50
|
8
|
51
|
Change in intangible
and other assets
|
—
|
(3)
|
(3)
|
(14)
|
|
(121)
|
(7)
|
(336)
|
(153)
|
Financing activities
from continuing operations
|
|
|
|
|
Bank loans and
advances
|
—
|
(1)
|
—
|
(5)
|
Change in credit
facilities
|
140
|
1
|
388
|
—
|
Increase in other
long-term debt
|
—
|
—
|
—
|
5
|
Payments of other
long-term debt, including lease obligations
|
(26)
|
(19)
|
(75)
|
(63)
|
Issuance of common
shares upon exercise of stock options
|
—
|
2
|
1
|
2
|
Redemption of common
shares
|
(4)
|
(26)
|
(9)
|
(26)
|
Dividends paid to
non-controlling interests
|
(3)
|
(3)
|
(9)
|
(10)
|
Acquisition of
non-controlling interests
|
(1)
|
—
|
(3)
|
(2)
|
Dividends paid to the
Corporation's Shareholders
|
(12)
|
(13)
|
(36)
|
(29)
|
|
94
|
(59)
|
257
|
(128)
|
Change in cash and
cash equivalents during the period from continuing
operations
|
(28)
|
(21)
|
(131)
|
(139)
|
Change in cash and
cash equivalents from discontinued operations and reclassification
of cash and cash equivalent as held for sale
|
—
|
—
|
—
|
(94)
|
Net change in cash
and cash equivalents during the period
|
(28)
|
(21)
|
(131)
|
(233)
|
Currency translation
on cash and cash equivalents
|
1
|
1
|
—
|
—
|
Cash and cash
equivalents - Beginning of the period
|
70
|
171
|
174
|
384
|
Cash and cash
equivalents - End of the period
|
43
|
151
|
43
|
151
|
SEGMENTED INFORMATION
The Corporation analyzes the performance of its operating
segments based on their operating income before depreciation and
amortization, which is not a measure of performance under
International Financial Reporting Standards (IFRS). However, the
chief operating decision-maker (CODM) uses this performance measure
to assess the operating performance of each reportable segment.
Earnings for each segment are prepared on the same basis as those
of the Corporation. Intersegment operations are recorded on the
same basis as sales to third parties, which are at fair market
value. The accounting policies of the reportable segments are the
same as the Corporation's accounting policies described in its most
recent audited consolidated financial statements for the year ended
December 31, 2021.
The Corporation's operating segments are reported in a manner
consistent with the internal reporting provided to the CODM. The
Chief Executive Officer has authority for resource allocation and
management of the Corporation's performance and is therefore the
CODM.
The Corporation's operations are managed in three segments:
Containerboard and Specialty Products (which constitutes the
Corporation's Packaging Products) and Tissue Papers.
|
|
|
|
|
|
|
SALES TO
|
|
|
|
For the 3-month
periods ended September 30,
|
|
Canada
|
United
States
|
Other
countries
|
Total
|
(in millions of
Canadian dollars) (unaudited)
|
2022
|
2021
|
2022
|
2021
|
2022
|
2021
|
2022
|
2021
|
Packaging
Products
|
|
|
|
|
|
|
|
|
Containerboard
|
336
|
314
|
258
|
193
|
1
|
—
|
595
|
507
|
Specialty
Products
|
59
|
51
|
109
|
93
|
—
|
—
|
168
|
144
|
Inter-segment
sales
|
(5)
|
(3)
|
(6)
|
(7)
|
—
|
—
|
(11)
|
(10)
|
|
390
|
362
|
361
|
279
|
1
|
—
|
752
|
641
|
Tissue
Papers
|
93
|
68
|
289
|
276
|
—
|
—
|
382
|
344
|
Inter-segment sales
and Corporate Activities
|
33
|
40
|
7
|
5
|
—
|
—
|
40
|
45
|
|
516
|
470
|
657
|
560
|
1
|
—
|
1,174
|
1,030
|
|
|
|
|
|
|
|
SALES TO
|
|
|
|
For the 9-month
periods ended September 30,
|
|
Canada
|
United
States
|
Other
countries
|
Total
|
(in millions of
Canadian dollars) (unaudited)
|
2022
|
2021
|
2022
|
2021
|
2022
|
2021
|
2022
|
2021
|
Packaging
Products
|
|
|
|
|
|
|
|
|
Containerboard
|
1,001
|
928
|
696
|
579
|
1
|
—
|
1,698
|
1,507
|
Specialty
Products
|
181
|
147
|
312
|
250
|
—
|
—
|
493
|
397
|
Inter-segment
sales
|
(14)
|
(10)
|
(15)
|
(14)
|
—
|
—
|
(29)
|
(24)
|
|
1,168
|
1,065
|
993
|
815
|
1
|
—
|
2,162
|
1,880
|
Tissue
Papers
|
232
|
183
|
806
|
750
|
—
|
—
|
1,038
|
933
|
Inter-segment sales
and Corporate Activities
|
114
|
105
|
17
|
10
|
—
|
—
|
131
|
115
|
|
1,514
|
1,353
|
1,816
|
1,575
|
1
|
—
|
3,331
|
2,928
|
|
OPERATING INCOME BEFORE
DEPRECIATION AND AMORTIZATION
|
|
For the 3-month
periods
ended September 30,
|
For the 9-month
periods
ended September 30,
|
(in millions of
Canadian dollars) (unaudited)
|
2022
|
2021
|
2022
|
2021
|
Packaging
Products
|
|
|
|
|
Containerboard
|
99
|
88
|
269
|
279
|
Specialty
Products
|
25
|
17
|
78
|
53
|
|
124
|
105
|
347
|
332
|
Tissue
Papers
|
(10)
|
47
|
(32)
|
60
|
Corporate
Activities
|
(22)
|
(16)
|
(72)
|
(60)
|
Operating income
before depreciation and amortization
|
92
|
136
|
243
|
332
|
Depreciation and
amortization
|
(67)
|
(63)
|
(190)
|
(192)
|
Financing expense and
interest expense on employee future benefits and other
liabilities
|
(22)
|
(23)
|
(56)
|
(67)
|
Foreign exchange gain
(loss) on long-term debt and financial instruments
|
(10)
|
(3)
|
(12)
|
3
|
Share of results of
associates and joint ventures
|
5
|
4
|
15
|
11
|
Earnings (loss)
before income taxes
|
(2)
|
51
|
—
|
87
|
|
PAYMENTS FOR PROPERTY,
PLANT AND EQUIPMENT
|
|
For the 3-month
periods ended September 30,
|
For the 9-month
periods ended September 30,
|
(in millions of
Canadian dollars) (unaudited)
|
2022
|
2021
|
2022
|
2021
|
Packaging
Products
|
|
|
|
|
Containerboard
|
142
|
33
|
301
|
139
|
Specialty
Products
|
8
|
7
|
25
|
23
|
|
150
|
40
|
326
|
162
|
Tissue
Papers
|
17
|
14
|
39
|
26
|
Corporate
Activities
|
10
|
15
|
25
|
26
|
Total
acquisitions
|
177
|
69
|
390
|
214
|
Right-of-use assets
acquisitions and of property, plant and equipment included in other
debts
|
(36)
|
(18)
|
(69)
|
(30)
|
|
141
|
51
|
321
|
184
|
Acquisitions for
property, plant and equipment included in "Trade and other
payables"
|
|
|
|
|
Beginning of the
period
|
36
|
27
|
75
|
31
|
End of the
period
|
(55)
|
(24)
|
(55)
|
(24)
|
Payments for
property, plant and equipment
|
122
|
54
|
341
|
191
|
Proceeds from
disposals of property, plant and equipment
|
(1)
|
(50)
|
(8)
|
(51)
|
Payments for
property, plant and equipment net of proceeds from
disposals
|
121
|
4
|
333
|
140
|
SUPPLEMENTAL INFORMATION ON NON-IFRS 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 swaps 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 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
("non-IFRS 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 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
measures and other financial measures are used in our
financial disclosures:
Non-IFRS measures
- Adjusted OIBD: Used to assess operating performance and the
contribution of each segment on a comparable basis.
- Adjusted operating income: Used to assess operating performance
of each segment on a comparable basis.
- Adjusted net earnings: Used to assess the Corporation's
consolidated financial performance on a comparable basis.
- Adjusted free cash flow: Used to assess the Corporation's
capacity to generate cash flows to meet financial obligations
and/or discretionary items such as share repurchase, dividend
increase and strategic investments.
- Working capital: Used to assess the short-term liquidity of the
Corporation.
Other financial measures
- Total debt: 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: Used to calculate the Corporation's total debt less
cash and cash equivalents. Often put in relation to adjusted OIBD
to calculate net debt to adjusted OIBD ratio.
Non-IFRS ratios
- Net debt to adjusted OIBD ratio: Used to assess the
Corporation's ability to pay its debt and evaluate financial
leverage.
- Net debt to adjusted OIBD ratio on a pro-forma basis: Used to
measure the Corporation's credit performance and evaluate the
financial leverage on a comparable basis, including significant
business acquisitions and excluding significant business disposals,
if any.
- Adjusted OIBD margin: Used to assess operating performance and
the contribution of each segment on a comparable basis.
- Adjusted net earnings per common share: Used to assess the
Corporation's consolidated financial performance on a comparable
basis.
- Net debt / Net debt + Shareholders' equity: Used to evaluate
the Corporation's financial leverage and thus the risk to
Shareholders.
- Working capital as a percentage of sales: Used to assess the
Corporation's operating liquidity performance.
- Adjusted free cash flow per common share: Used to assess the
Corporation's financial flexibility.
Non-IFRS and other financial measures are mainly derived from
the consolidated financial statements, but do not have meanings
prescribed by IFRS. 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.
In addition, our definitions of non-IFRS and other financial
measures may differ from those of other corporations. Any such
modification or reformulation may be significant.
The reconciliation of operating income (loss) to OIBD, to
adjusted operating income (loss)1 and to adjusted
OIBD1 by business segment is as follows:
|
Q3
2022
|
(in millions of
Canadian dollars) (unaudited)
|
Containerboard
|
Specialty
Products
|
Tissue
Papers
|
Corporate
Activities
|
Consolidated
|
Operating income
(loss)
|
68
|
20
|
(31)
|
(32)
|
25
|
Depreciation and
amortization
|
31
|
5
|
21
|
10
|
67
|
Operating income
(loss) before depreciation and amortization
|
99
|
25
|
(10)
|
(22)
|
92
|
Specific
items:
|
|
|
|
|
|
Impairment
charges
|
2
|
—
|
14
|
—
|
16
|
Unrealized loss on
derivative financial instruments
|
2
|
—
|
—
|
1
|
3
|
|
4
|
—
|
14
|
1
|
19
|
Adjusted operating
income (loss) before depreciation and
amortization1
|
103
|
25
|
4
|
(21)
|
111
|
Adjusted operating
income (loss)1
|
72
|
20
|
(17)
|
(31)
|
44
|
|
Q2 2022
|
(in millions of
Canadian dollars) (unaudited)
|
Containerboard
|
Specialty
Products
|
Tissue
Papers
|
Corporate
Activities
|
Consolidated
|
Operating income
(loss)
|
69
|
20
|
(23)
|
(34)
|
32
|
Depreciation and
amortization
|
29
|
5
|
19
|
10
|
63
|
Operating income
(loss) before depreciation and amortization
|
98
|
25
|
(4)
|
(24)
|
95
|
Specific
items:
|
|
|
|
|
|
Gain on acquisitions,
disposals and others
|
—
|
—
|
(4)
|
—
|
(4)
|
Unrealized loss (gain)
on financial instruments
|
1
|
—
|
—
|
(1)
|
—
|
|
1
|
—
|
(4)
|
(1)
|
(4)
|
Adjusted operating
income (loss) before depreciation and
amortization1
|
99
|
25
|
(8)
|
(25)
|
91
|
Adjusted operating
income (loss)1
|
70
|
20
|
(27)
|
(35)
|
28
|
|
Q3 2021
|
(in millions of
Canadian dollars) (unaudited)
|
Containerboard
|
Specialty
Products
|
Tissue
Papers
|
Corporate
Activities
|
Consolidated
|
Operating income
(loss)
|
58
|
13
|
29
|
(27)
|
73
|
Depreciation and
amortization
|
30
|
4
|
18
|
11
|
63
|
Operating income
(loss) before depreciation and amortization
|
88
|
17
|
47
|
(16)
|
136
|
Specific
items:
|
|
|
|
|
|
Gain on acquisitions,
disposals and others
|
—
|
—
|
(39)
|
—
|
(39)
|
Restructuring
costs
|
1
|
—
|
4
|
—
|
5
|
Unrealized loss on
derivative financial instruments
|
5
|
—
|
—
|
—
|
5
|
|
6
|
—
|
(35)
|
—
|
(29)
|
Adjusted operating
income (loss) before depreciation and
amortization1
|
94
|
17
|
12
|
(16)
|
107
|
Adjusted operating
income (loss)1
|
64
|
13
|
(6)
|
(27)
|
44
|
1 Please refer to the
"Supplemental Information on Non-IFRS Measures and Other Financial
Measures" section for a complete reconciliation.
|
Net earnings (loss), as per IFRS, are reconciled below with
operating income, adjusted operating income1 and
adjusted operating income before depreciation and
amortization1:
(in millions of
Canadian dollars) (unaudited)
|
Q3
2022
|
Q2 2022
|
Q3 2021
|
|
|
|
|
Net earnings (loss)
attributable to Shareholders for the period
|
(2)
|
10
|
32
|
Net earnings
attributable to non-controlling interests
|
5
|
4
|
14
|
Results from
discontinued operations
|
—
|
—
|
(25)
|
Provision for (recovery
of) income taxes
|
(5)
|
3
|
30
|
Share of results of
associates and joint ventures
|
(5)
|
(6)
|
(4)
|
Foreign exchange loss
on long-term debt and financial instruments
|
10
|
3
|
3
|
Financing expense and
interest expense on employee future benefits and other
liabilities
|
22
|
18
|
23
|
Operating
income
|
25
|
32
|
73
|
Specific
items:
|
|
|
|
Gain on acquisitions,
disposals and others
|
—
|
(4)
|
(39)
|
Impairment
charges
|
16
|
—
|
—
|
Restructuring
costs
|
—
|
—
|
5
|
Unrealized loss on
derivative financial instruments
|
3
|
—
|
5
|
|
19
|
(4)
|
(29)
|
Adjusted operating
income1
|
44
|
28
|
44
|
Depreciation and
amortization
|
67
|
63
|
63
|
Adjusted operating
income before depreciation and
amortization1
|
111
|
91
|
107
|
1 Please refer to the
"Supplemental Information on Non-IFRS 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 per IFRS, with adjusted net earnings
(loss)1 and adjusted net earnings (loss)1 per
common share:
(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
|
|
Q3
2022
|
Q2 2022
|
Q3 2021
|
|
Q3
2022
|
Q2 2022
|
Q3 2021
|
As per
IFRS
|
(2)
|
10
|
32
|
|
($0.02)
|
$0.10
|
$0.32
|
Specific
items:
|
|
|
|
|
|
|
|
Gain on acquisitions,
disposals and others
|
—
|
(4)
|
(39)
|
|
—
|
($0.03)
|
($0.31)
|
Impairment
charges
|
16
|
—
|
—
|
|
$0.12
|
—
|
—
|
Restructuring
costs
|
—
|
—
|
5
|
|
—
|
—
|
$0.04
|
Unrealized loss on
derivative financial instruments
|
3
|
—
|
5
|
|
$0.02
|
—
|
$0.03
|
Foreign exchange loss
on long-term debt and financial instruments
|
10
|
3
|
3
|
|
$0.08
|
$0.03
|
$0.03
|
Included in
discontinued operations, net of tax
|
—
|
—
|
(20)
|
|
—
|
—
|
($0.12)
|
Tax effect on specific
items, other tax adjustments and attributable to non-controlling
interest2
|
(7)
|
1
|
13
|
|
—
|
—
|
—
|
|
22
|
—
|
(33)
|
|
$0.22
|
—
|
($0.33)
|
Adjusted1
|
20
|
10
|
(1)
|
|
$0.20
|
$0.10
|
($0.01)
|
Weighted average
basic number of common shares outstanding
|
|
|
|
|
100,822,027
|
100,588,470
|
102,129,769
|
1 Please refer to
the "Supplemental Information on Non-IFRS 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 cash flow from (used by) operating
activities from continuing operations with operating income and
operating income before depreciation and amortization:
(in millions of
Canadian dollars) (unaudited)
|
Q3
2022
|
Q2 2022
|
Q3 2021
|
Cash flow from (used
by) operating activities from continuing operations
|
(1)
|
22
|
45
|
Changes in non-cash
working capital components
|
61
|
59
|
13
|
Depreciation and
amortization
|
(67)
|
(63)
|
(63)
|
Net income taxes paid
(received)
|
1
|
3
|
(1)
|
Net financing expense
paid
|
38
|
4
|
41
|
Gain on acquisitions,
disposals and others
|
—
|
4
|
39
|
Impairment charges and
restructuring costs
|
(16)
|
—
|
(5)
|
Unrealized loss on
derivative financial instruments
|
(3)
|
—
|
(5)
|
Provisions for
contingencies and charges and other liabilities, net of dividends
received
|
12
|
3
|
9
|
Operating
income
|
25
|
32
|
73
|
Depreciation and
amortization
|
67
|
63
|
63
|
Operating income
before depreciation and amortization
|
92
|
95
|
136
|
The following table reconciles cash flow from (used by) operating
activities from continuing operations with cash flow from operating
activities from continuing operations (excluding changes in
non-cash working capital components) and adjusted cash flow from
operating activities from continuing operations1. It
also reconciles adjusted cash flow from operating activities from
continuing operations1 to adjusted free 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)
|
Q3
2022
|
Q2 2022
|
Q3 2021
|
Cash flow from (used
by) operating activities from continuing operations
|
(1)
|
22
|
45
|
Changes in non-cash
working capital components
|
61
|
59
|
13
|
Cash flow from
operating activities from continuing operations (excluding changes
in non-cash working capital components)
|
60
|
81
|
58
|
Restructuring costs
paid
|
2
|
—
|
12
|
Adjusted cash flow
from operating activities from continuing
operations1
|
62
|
81
|
70
|
Payments for property,
plant and equipment
|
(122)
|
(117)
|
(54)
|
Change in intangible
and other assets
|
—
|
(2)
|
(3)
|
Lease obligation
payments
|
(14)
|
(13)
|
(12)
|
Proceeds from
disposals of property, plant and equipment
|
1
|
1
|
50
|
|
(73)
|
(50)
|
51
|
Dividends paid to
non-controlling interests
|
(3)
|
(2)
|
(3)
|
Dividends paid to the
Corporation's Shareholders and to non-controlling
interests
|
(12)
|
(12)
|
(13)
|
Adjusted free cash
flow generated (used)1
|
(88)
|
(64)
|
35
|
Adjusted free cash
flow generated (used)1 per common
share
(in Canadian
dollars)
|
($0.87)
|
($0.64)
|
$0.34
|
Weighted average
basic number of common shares outstanding
|
100,822,027
|
100,588,470
|
102,129,769
|
1 Please refer to the
"Supplemental Information on Non-IFRS Measures and Other Financial
Measures" section for a complete reconciliation.
|
The following table reconciles total debt1 and net
debt1 with the ratio of net debt1 to adjusted
operating income before depreciation and amortization (adjusted
OIBD1):
(in millions of
Canadian dollars) (unaudited)
|
September
30,
2022
|
June 30,
2022
|
September
30,
2021
|
Long-term
debt
|
1,975
|
1,710
|
1,830
|
Current portion of
long-term debt
|
77
|
71
|
74
|
Bank loans and
advances
|
2
|
1
|
7
|
Total
debt1
|
2,054
|
1,782
|
1,911
|
Less: Cash and cash
equivalents
|
(43)
|
(70)
|
(151)
|
Net debt1
as reported
|
2,011
|
1,712
|
1,760
|
Adjusted
OIBD1 as reported on a last twelve months
basis
|
322
|
318
|
466
|
Net debt / Adjusted
OIBD ratio1
|
6.2x
|
5.4x
|
3.8x
|
1 Please refer to the
"Supplemental Information on Non-IFRS Measures and Other Financial
Measures" section for a complete reconciliation.
|
View original
content:https://www.prnewswire.com/news-releases/cascades-reports-results-for-the-third-quarter-of-2022-301673717.html
SOURCE Cascades Inc.