U.S. Markets closed
  • S&P 500

    3,635.41
    +57.82 (+1.62%)
     
  • Dow 30

    30,046.24
    +454.97 (+1.54%)
     
  • Nasdaq

    12,036.79
    +156.15 (+1.31%)
     
  • Russell 2000

    1,853.53
    +35.23 (+1.94%)
     
  • Crude Oil

    44.81
    -0.10 (-0.22%)
     
  • Gold

    1,804.70
    +0.10 (+0.01%)
     
  • Silver

    23.25
    -0.05 (-0.21%)
     
  • EUR/USD

    1.1901
    +0.0004 (+0.0357%)
     
  • 10-Yr Bond

    0.8820
    +0.0250 (+2.92%)
     
  • Vix

    21.64
    -1.02 (-4.50%)
     
  • GBP/USD

    1.3358
    -0.0000 (-0.0027%)
     
  • USD/JPY

    104.5120
    +0.0320 (+0.0306%)
     
  • BTC-USD

    19,152.49
    +32.19 (+0.17%)
     
  • CMC Crypto 200

    381.03
    +11.28 (+3.05%)
     
  • FTSE 100

    6,432.17
    +98.33 (+1.55%)
     
  • Nikkei 225

    26,681.32
    +515.73 (+1.97%)
     

Cascades Reports Results for the Third Quarter of 2020

·31 min read

Positive outlook supported by favourable containerboard industry dynamics

KINGSEY FALLS, QC, Nov. 12, 2020 /CNW Telbec/ - Cascades Inc. (TSX: CAS) reports its unaudited financial results for the three-month period ended September 30, 2020.

Q3 2020 Highlights

  • Sales of $1,275 million (compared with $1,285 million in Q2 2020 (-1%) and $1,264 million in Q3 2019 (+1%))

  • As reported (including specific items)

  • Adjusted (excluding specific items)1

  • Added US$300 million of Senior Notes due in 2028; Redeemed US$200 million of remaining 2023 Senior Notes.

  • Net debt1 of $1,982 million as at September 30, 2020 (compared with $2,077 million as at June 30, 2020) reflecting solid cash flow from operations. Net debt to adjusted OIBD ratio1 at 3.0x down from 3.1x as at June 30, 2020.

  • European Boxboard business announced the acquisition of Papelera del Principado S.A. ("Paprinsa").

  • Announced plans for the Bear Island containerboard conversion project in Virginia, USA in October and concurrently completed a bought deal equity issue of 7,441,000 shares priced at $16.80, generating gross proceed of $125 million to finance a portion of the project.

  • Announced the closure of two tissue production and converting operations in Pennsylvania.

1 For further details, please refer to the "Supplemental Information on non-IFRS Measures" section.

2 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation.

Mario Plourde, President and CEO, commented: "We are pleased with our consolidated third quarter results. Within an ever-evolving business environment, demand levels for containerboard remained robust. This strength drove higher sequential quarterly sales volume in this business, offsetting higher energy costs and an approximate $3 million impact from unplanned operational shutdowns at our Niagara Falls, NY complex. Similarly, our Specialty Products segment generated solid results, benefiting from strong demand for our sustainable food packaging product offerings. Results in our Tissue business were mixed. As expected, demand remained strong for consumer tissue, while the reverse was true for Away-from-Home products given the impact that Covid-19 is having on businesses, restaurants, hotels and schools. This segment, which accounts for approximately 40% of our annual tissue sales, experienced sharp decreases in demand for some products. We have taken steps to adjust production capacity by temporarily closing several facilities that serve this market, and continue to evaluate opportunities to adapt some capacity for different products. Lastly, results in the European Boxboard segment reflected the usual softer seasonal third quarter volumes, the effects of which were partially offset by favourable raw material pricing and lower energy costs.

On the strategic side, we are very pleased to have announced the launch of our Bear Island project in mid-October. This is an important strategic investment for our containerboard business, one which we are confident will benefit operational performance, enhance our product offering in lightweight recycled containerboard and position our containerboard platform for long-term profitable growth within this competitive industry. We are equally pleased to have completed the $125 million equity issuance (offering) that was announced concurrently with the Bear Island project. The proceeds of this offering will be primarily dedicated to financing Bear Island, but may also be used for other ongoing capital projects. The European Boxboard segment also announced the strategic acquisition of one of the main European coated chipboard players, Papelera del Principado S.A. ("Paprinsa"), and three smaller adjoining companies, that will strengthen and consolidate Reno de Medici's position as the number two manufacturer of recycled boxboard in Europe, while strengthening its competitive position in Spain and the surrounding markets."

Discussing near-term outlook, Mr. Plourde commented, "In light of ongoing ambiguity related to the pandemic, we are cautiously optimistic regarding our performance in the near-term. Demand dynamics in containerboard remain strong, with results expected to also benefit from the announced US$50/st price increase beginning in the fourth quarter. In Tissue, usual seasonal softness in the fourth quarter and Covid-19 driven demand contraction in the Away-from-Home product categories are expected to translate into weaker sequential performance. Ongoing modernization initiatives in this business, which include the integration of the Orchids assets and final investments in state-of-the-art converting equipment, are delivering targeted returns and will generate increasing benefits as implementation costs trend down. Near-term performance in Specialty Products is forecasted to remain solid, supported by continued strong demand trends for consumer food packaging, while sequential results in European Boxboard are expected to decrease slightly as a result of lack of certainty regarding volume and less favourable mix of products. On a consolidated basis, raw material costs are expected to continue to be favourable for our businesses. Looking ahead, results are projected to benefit from a margin improvement initiative started earlier this year that is expected to generate a 1% annual increase in our consolidated OIBD margin for the next two years. Given persistent uncertainty around Covid-19, we remain focused on the health and safety of our employees and working with our customers to ensure that their needs and expectations for our essential packaging and tissue products are not only met but surpassed. Cash flow management supported by operational flexibility, resilience and execution remain the top priorities for Cascades' management team, and will continue to be essential to successfully navigate the current unusual and less predictable environment."

Financial Summary

Selected consolidated information





(in millions of Canadian dollars, except amounts per share) (unaudited)

Q3 2020

Q2 2020

Q3 2019





Sales

1,275

1,285

1,264

As Reported





Operating income before depreciation and amortization (OIBD)1 2

154

169

181

Operating income2

73

94

108

Net earnings2

49

54

43

per share2

$

0.51

$

0.57

$

0.45

Adjusted1




Operating income before depreciation and amortization (OIBD)

162

186

161

Operating income

81

111

88

Net earnings

48

58

28

per share

$

0.50

$

0.61

0.30

Margin (OIBD)

12.7%

14.5%

12.7%

Segmented OIBD as reported





(in millions of Canadian dollars) (unaudited)

Q3 2020

Q2 2020

Q3 2019





Packaging Products




Containerboard

101

83

120

Boxboard Europe

31

42

25

Specialty Products

16

16

14





Tissue Papers2

25

48

49





Corporate Activities

(19)

(20)

(27)

OIBD as reported

154

169

181

1 Please refer to the "Supplemental Information on Non-IFRS Measures" section for reconciliation of these figures.

2 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation.

Segmented adjusted OIBD1





(in millions of Canadian dollars) (unaudited)

Q3 2020

Q2 2020

Q3 2019





Packaging Products




Containerboard

100

94

118

Boxboard Europe

29

43

25

Specialty Products

16

17

16





Tissue Papers

36

54

24





Corporate Activities

(19)

(22)

(22)

Adjusted OIBD

162

186

161

1 - Refer to the "Supplemental Information on Non-IFRS Measures" section.

Analysis of results for the three-month period ended September 30, 2020 (compared to the same period last year)

Sales of $1,275 million grew by $11 million, or 1%, compared with the same period last year. This was largely a reflection of the volume-driven 7% increase in the Containerboard segment and favourable foreign exchange rate for all business segments. These benefits were offset by lower sales in the Tissue business driven by demand contraction in the Away-from-Home segment and lower average selling prices and/or less favourable sales mix in all packaging segments. While volumes grew in the Specialty Products segment, these benefits were largely offset by the mill closure and business divestiture completed in 2019.

The Corporation generated an operating income before depreciation and amortization (OIBD) of $154 million in the third quarter of 2020, down from $181 million in the third quarter of 20192. On an adjusted basis, third quarter OIBD totaled $162 million, an increase of $1 million, or 1% from the $161 million generated in the same period last year. The annual adjusted OIBD reflects increases of $12 million from Tissue and $4 million from Boxboard Europe and stable results in the Specialty Products segment. These benefits were offset by a decrease of $18 million from the Containerboard segment, as the benefits of increased volume were offset by higher year-over-year raw material costs and a less favourable selling price and sales mix. Research and development tax credits of $9 million were recorded in the current quarter.

On an adjusted basis1, third quarter 2020 OIBD stood at $162 million, versus $161 million in the previous year. The main specific items, before income taxes, that impacted our third quarter 2020 OIBD and/or net earnings were:

  • $7 million of gains recorded in Containerboard and Tissue related to the sale of previously closed assets (OIBD and net earnings);

  • $3 million of restructuring charges recorded in Containerboard following the announced closure of a converting facility in Ontario by no later than August 31, 2021 (OIBD and net earnings);

  • $13 million of impairment charges recorded in Tissue related to changes in the valuation of certain assets due to the current economic and market demand conditions (OIBD and net earnings);

  • $1 million unrealized gain on financial instruments (OIBD and net earnings);

  • $11 million foreign exchange gain on long-term debt and financial instruments (net earnings);

For the 3-month periods ended September 30, 2020, the Corporation posted net earnings of $49 million, or $0.51 per share, compared to net earnings of $43 million, or $0.45 per share, in the same period of 20192. On an adjusted basis1, the Corporation generated net earnings of $48 million in the third quarter of 2020, or $0.50 per share, compared to net earnings of $28 million, or $0.30 per share, in the same period of 2019.

1 For further details, please refer to the "Supplemental Information on non-IFRS Measures" section.

2 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation

Dividend on common shares and normal course issuer bid

The Board of Directors of Cascades declared a quarterly dividend of $0.08 per share to be paid on December 3, 2020 to shareholders of record at the close of business on November 20, 2020. This dividend is an "eligible dividend" as per the Income Tax Act (R.C.S. (1985), Canada). Cascades did not purchase any shares for cancellation during the third quarter of 2020.

2020 Third Quarter Results Conference Call Details

Management will discuss the 2020 third quarter financial results during a conference call today at 9:00 a.m. EDT. The call can be accessed by dialing 1-888-231-8191 (international dial-in 1-647-427-7450). 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 12, 2020 by dialing 1-855-859-2056 (international dial-in 1-416-849-0833), access code 4158758.

Founded in 1964, Cascades offers sustainable, innovative and value-added packaging, hygiene and recovery solutions. The company employs 12,000 women and men across a network of 88 facilities in North America and Europe. 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 (as such term is defined under the Private Securities Litigation Reform Act of 1995) 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 listed in the Corporation's Securities and Exchange Commission filings.

CONSOLIDATED BALANCE SHEETS

(in millions of Canadian dollars) (unaudited)

September 30,
2020

December 31,
2019

Assets



Current assets



Cash and cash equivalents

227

155

Accounts receivable

661

606

Current income tax assets

23

32

Inventories

606

598

Current portion of financial assets

9

10


1,526

1,401

Long-term assets



Investments in associates and joint ventures

86

80

Property, plant and equipment

2,785

2,770

Intangible assets with finite useful life

166

182

Financial assets

19

16

Other assets

48

55

Deferred income tax assets

179

153

Goodwill and other intangible assets with indefinite useful life

534

527


5,343

5,184

Liabilities and Equity



Current liabilities



Bank loans and advances

9

11

Trade and other payables

800

788

Current income tax liabilities

19

17

Current portion of other debt without recourse to the Corporation to be refinanced

162

Current portion of long-term debt

91

85

Current portion of provisions for contingencies and charges

7

5

Current portion of financial liabilities and other liabilities

30

137


1,118

1,043

Long-term liabilities



Long-term debt

1,947

2,022

Provisions for contingencies and charges

55

49

Financial liabilities

4

5

Other liabilities

212

198

Deferred income tax liabilities

210

198


3,546

3,515

Equity



Capital stock

498

491

Contributed surplus

13

15

Retained earnings

1,089

1,003

Accumulated other comprehensive loss

(10)

(17)

Equity attributable to Shareholders

1,590

1,492

Non-controlling interests

207

177

Total equity

1,797

1,669


5,343

5,184

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)

2020

2019

2020

2019

Sales

1,275

1,264

3,873

3,769

Cost of sales and expenses





Cost of sales (including depreciation and amortization of $81 million
for 3-month period (2019 — $73 million) and $227 million
for 9-month period (2019 — $212 million))

1,086

1,071

3,243

3,210

Selling and administrative expenses

107

105

348

320

Gain on acquisitions, disposals and others

(7)

(22)

(5)

(29)

Impairment charges and restructuring costs

16

1

31

11

Foreign exchange loss (gain)

1

(1)

Loss (gain) on derivative financial instruments

(1)

1

(1)

(4)


1,202

1,156

3,616

3,507

Operating income

73

108

257

262

Financing expense

25

24

79

74

Interest expense on employee future benefits and other liabilities

1

24

3

48

Loss on repurchase of long-term debt

6

6

Foreign exchange gain on long-term debt and financial instruments

(11)

(3)

(7)

Share of results of associates and joint ventures

(3)

(2)

(9)

(6)

Earnings before income taxes

55

62

181

153

Provision for (recovery of) income taxes

(3)

12

24

30

Net earnings including non-controlling interests for the period

58

50

157

123

Net earnings attributable to non-controlling interests

9

7

32

25

Net earnings attributable to Shareholders for the period

49

43

125

98

Net earnings per common share





Basic

$

0.51

$

0.45

$

1.32

$

1.04

Diluted

$

0.50

$

0.44

$

1.30

$

1.02

Weighted average basic number of common shares outstanding

95,019,694

93,860,367

94,577,538

93,886,909

Weighted average number of diluted common shares

96,077,440

95,519,226

95,735,264

95,437,252

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)

2020

2019

2020

2019

Net earnings including non-controlling interests for the period

58

50

157

123

Other comprehensive income (loss)





Items that may be reclassified subsequently to earnings





Translation adjustments





Change in foreign currency translation of foreign subsidiaries

(14)

1

43

(57)

Change in foreign currency translation related to net investment hedging activities

7

(3)

(27)

32

Cash flow hedges





Change in fair value of foreign exchange forward contracts

1

Change in fair value of interest rate swaps

(1)

Change in fair value of commodity derivative financial instruments

2

1

2

(1)


(5)

(1)

18

(26)

Items that are not released to earnings





Actuarial gain (loss) on employee future benefits

(4)

2

(19)

(13)

Recovery of income taxes

1

5

3


(3)

2

(14)

(10)

Other comprehensive income (loss)

(8)

1

4

(36)

Comprehensive income including non-controlling interests for the period

50

51

161

87

Comprehensive income attributable to non-controlling interests for the period

12

4

43

13

Comprehensive income attributable to Shareholders for the period

38

47

118

74

CONSOLIDATED STATEMENTS OF EQUITY


For the 9-month period ended September 30, 2020

(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 - End of previous
period, as reported

491

15

1,000

(17)

1,489

177

1,666

Business combinations

3

3

3

Adjusted balance - Beginning
of period

491

15

1,003

(17)

1,492

177

1,669

Comprehensive income (loss)








Net earnings

125

125

32

157

Other comprehensive income (loss)

(14)

7

(7)

11

4


111

7

118

43

161

Dividends

(22)

(22)

(13)

(35)

Issuance of common shares upon exercise of stock options

9

(2)

7

7

Redemption of common shares

(2)

(3)

(5)

(5)

Balance - End of period

498

13

1,089

(10)

1,590

207

1,797












For the 9-month period ended September 30, 2019

(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

Adjusted balance - Beginning of period

490

16

989

2

1,497

180

1,677

Comprehensive income (loss)








Net earnings

98

98

25

123

Other comprehensive loss

(10)

(14)

(24)

(12)

(36)


88

(14)

74

13

87

Dividends

(15)

(15)

(14)

(29)

Issuance of common shares upon exercise of stock options

5

(1)

4

4

Redemption of common shares

(5)

(3)

(8)

(8)

Disposal of a subsidiary

(1)

(1)

Capital contribution from a non-controlling interest

(3)

(3)

(3)

Balance - End of period

490

15

1,056

(12)

1,549

178

1,727

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)

2020

2019

2020

2019

Operating activities





Net earnings attributable to Shareholders for the period

49

43

125

98

Adjustments for:





Financing expense and interest expense on employee future benefits and other liabilities

26

48

82

122

Loss on repurchase of long-term debt

6

6

Depreciation and amortization

81

73

227

212

Gain on acquisitions, disposals and others

(7)

(26)

(5)

(32)

Impairment charges and restructuring costs

16

1

31

6

Unrealized loss (gain) on derivative financial instruments

(1)

1

(1)

(4)

Foreign exchange gain on long-term debt and financial instruments

(11)

(3)

(7)

Provision for (recovery of) income taxes

(3)

12

24

30

Share of results of associates and joint ventures

(3)

(2)

(9)

(6)

Net earnings attributable to non-controlling interests

9

7

32

25

Net financing expense paid

(49)

(42)

(73)

(101)

Premium paid on repurchase of long-term debt

(4)

(4)

Net income taxes received (paid)

(1)

(12)

1

(14)

Dividends received

2

1

7

3

Employee future benefits and others

(4)

(19)

(22)


106

104

421

310

Changes in non-cash working capital components

30

53

(38)

(13)


136

157

383

297

Investing activities





Disposals of associates and joint ventures

4

3

1

Payments for property, plant and equipment

(52)

(66)

(165)

(185)

Proceeds from disposals of property, plant and equipment

7

19

9

21

Change in intangible and other assets

(3)

(1)

(8)

(3)

Cash paid for business combinations

(300)

(314)

Proceeds on disposals of a subsidiary, net of cash disposed

9

9


(44)

(339)

(161)

(471)

Financing activities





Bank loans and advances

(2)

(2)

(2)

Change in credit facilities

(138)

252

(81)

317

Issuance of unsecured senior notes, net of related expenses

409

409

Repurchase of unsecured senior notes

(264)

(264)

Increase in other long-term debt

7

Payments of other long-term debt

(22)

(15)

(64)

(94)

Settlement of derivative financial instruments

1

Issuance of common shares upon exercise of stock options

4

7

4

Redemption of common shares

(3)

(5)

(8)

Partial disposal of a subsidiary to non-controlling interests

Payment of other liabilities

(121)

Dividends paid to non-controlling interests

(4)

(4)

(13)

(14)

Dividends paid to the Corporation's Shareholders

(7)

(8)

(22)

(15)


(26)

224

(155)

195

Change in cash and cash equivalents during the period

66

42

67

21

Currency translation on cash and cash equivalents

(1)

(2)

5

(6)

Cash and cash equivalents - Beginning of period

162

98

155

123

Cash and cash equivalents - End of period

227

138

227

138

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, 2019.

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 four segments: Containerboard, Boxboard Europe and Specialty Products (which constitutes the Corporation's Packaging Products), and Tissue Papers.


SALES


For the 3-month periods ended September 30,


Canada

United States

Italy

Other countries

Total

(in millions of Canadian dollars)
(unaudited)

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

Packaging Products











Containerboard

307

289

199

184

506

473

Boxboard Europe

79

88

182

168

261

256

Specialty Products

42

35

75

74

14

117

123

Intersegment sales

(2)

(4)

(2)

(4)

(4)


347

320

272

258

79

88

182

182

880

848

Tissue Papers

72

64

292

320

3

364

387

Intersegment sales and Corporate Activities

32

28

(1)

1

31

29


451

412

563

579

79

88

182

185

1,275

1,264






SALES


For the 9-month periods ended September 30,


Canada

United States

Italy

Other countries

Total

(in millions of Canadian dollars)
(unaudited)

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

Packaging Products











Containerboard

835

824

582

550

1

2

1,418

1,376

Boxboard Europe

240

247

558

558

798

805

Specialty Products

119

104

229

233

1

2

49

350

387

Intersegment sales

(9)

(10)

(3)

(1)

(12)

(11)


945

918

808

782

240

248

561

609

2,554

2,557

Tissue Papers

207

192

1,026

910

1

10

1,234

1,112

Intersegment sales and Corporate Activities

86

93

(1)

7

85

100


1,238

1,203

1,833

1,699

240

248

562

619

3,873

3,769


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)

2020

2019

2020

2019

Packaging Products





Containerboard

101

120

286

345

Boxboard Europe

31

25

104

84

Specialty Products

16

14

43

43


148

159

433

472

Tissue Papers

25

49

118

70

Corporate Activities

(19)

(27)

(67)

(68)

Operating income before depreciation and amortization

154

181

484

474

Depreciation and amortization

(81)

(73)

(227)

(212)

Financing expense and interest expense on employee future benefits and other liabilities

(26)

(48)

(82)

(122)

Loss on repurchase of long-term debt

(6)

(6)

Foreign exchange gain on long-term debt and financial instruments

11

3

7

Share of results of associates and joint ventures

3

2

9

6

Earnings before income taxes

55

62

181

153


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)

2020

2019

2020

2019

Packaging Products





Containerboard

36

19

67

55

Boxboard Europe

14

13

23

41

Specialty Products

6

4

15

11


56

36

105

107

Tissue Papers

23

27

62

74

Corporate Activities

5

19

16

40

Total acquisitions

84

82

183

221

Proceeds from disposals of property, plant and equipment

(7)

(19)

(9)

(21)

Right-of-use assets acquisitions and acquisitions included in other debts

(23)

(9)

(36)

(42)


54

54

138

158

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





Beginning of period

19

24

46

37

End of period

(28)

(31)

(28)

(31)

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

45

47

156

164

SUPPLEMENTAL INFORMATION ON NON-IFRS 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 those of other corporations and some of them 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, foreign exchange gains or losses on long-term debt and financial instruments, specific items of discontinued operations and other significant items of an unusual, non-cash or non-recurring nature.

RECONCILIATION OF NON-IFRS 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 measures and 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 are used in our financial disclosures:

  • Operating income before depreciation and amortization (OIBD): Used to assess operating performance and the contribution of each segment when excluding depreciation and amortization. OIBD is widely used by investors as a measure of a corporation's ability to incur and service debt and as an evaluation metric.

  • 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.

  • Net debt to adjusted OIBD ratio: Used to measure the Corporation's credit performance 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.

Non-IFRS 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 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) and to adjusted OIBD by business segment is as follows:


Q3 2020

(in millions of Canadian dollars) (unaudited)

Containerboard

Boxboard
Europe

Specialty
Products

Tissue Papers

Corporate
Activities

Consolidated

Operating income (loss)

71

19

11

3

(31)

73

Depreciation and amortization

30

12

5

22

12

81

Operating income (loss) before depreciation and amortization

101

31

16

25

(19)

154

Specific items:







Gain on acquisitions, disposals and others

(5)

(2)

(7)

Impairment charges

13

13

Restructuring costs

3

3

Unrealized loss (gain) on financial instruments

1

(2)

(1)


(1)

(2)

11

8

Adjusted operating income (loss) before depreciation and
amortization

100

29

16

36

(19)

162

Adjusted operating income (loss)

70

17

11

14

(31)

81


Q2 2020

(in millions of Canadian dollars) (unaudited)

Containerboard

Boxboard
Europe

Specialty
Products

Tissue Papers

Corporate
Activities

Consolidated

Operating income (loss)

54

30

11

31

(32)

94

Depreciation and amortization

29

12

5

17

12

75

Operating income (loss) before depreciation and amortization

83

42

16

48

(20)

169

Specific items :







Loss on acquisitions, disposals and others

1

1

Impairment charges

8

5

13

Restructuring costs

1

1

2

Unrealized loss (gain) on derivative financial instruments

2

1

(2)

1


11

1

1

6

(2)

17

Adjusted operating income (loss) before depreciation and
amortization

94

43

17

54

(22)

186

Adjusted operating income (loss)

65

31

12

37

(34)

111


Q3 2019

(in millions of Canadian dollars) (unaudited)

Containerboard

Boxboard
Europe

Specialty
Products

Tissue Papers1

Corporate
Activities

Consolidated

Operating income (loss)

91

14

10

34

(41)

108

Depreciation and amortization

29

11

4

15

14

73

Operating income (loss) before depreciation and amortization

120

25

14

49

(27)

181

Specific items:







Loss (gain) on acquisitions, disposals and others

(2)

1

(25)

4

(22)

Impairment charges

1

1

Unrealized loss on financial instruments

1

1


(2)

2

(25)

5

(20)

Adjusted operating income (loss) before depreciation and
amortization

118

25

16

24

(22)

161

Adjusted operating income (loss)

89

14

12

9

(36)

88

1 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation.

Net earnings, as per IFRS, is reconciled below with operating income, adjusted operating income and adjusted operating income before depreciation and amortization:





(in millions of Canadian dollars) (unaudited)

Q3 2020

Q2 2020

Q3 20191





Net earnings attributable to Shareholders for the period

49

54

43

Net earnings attributable to non-controlling interests

9

12

7

Provision for (recovery of) income taxes

(3)

12

12

Share of results of associates and joint ventures

(3)

(3)

(2)

Foreign exchange gain on long-term debt and financial instruments

(11)

(9)

Financing expense and interest expense on employee future benefits and other liabilities and other liabilities and loss on
repurchase of long-term debt

32

28

48

Operating income

73

94

108

Specific items:




Loss (gain) on acquisitions, disposals and others

(7)

1

(22)

Impairment charges

13

13

1

Restructuring costs

3

2

Unrealized loss (gain) on derivative financial instruments

(1)

1

1


8

17

(20)

Adjusted operating income

81

111

88

Depreciation and amortization

81

75

73

Adjusted operating income before depreciation and amortization

162

186

161

1 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation.

The following table reconciles net earnings and net earnings per share, as per IFRS, with adjusted net earnings and adjusted net earnings per share:





(in millions of Canadian dollars, except amounts per share) (unaudited)

NET EARNINGS


NET EARNINGS PER SHARE 1


Q3 2020

Q2 2020

Q3 20192


Q3 2020

Q2 2020

Q3 20192









As per IFRS

49

54

43


$

0.51

$

0.57

$

0.45

Specific items:








Loss (gain) on acquisitions, disposals and others

(7)

1

(22)


$

(0.05)

$

(0.24)

Impairment charges

13

13

1


$

0.10

$

0.10

0.01

Restructuring costs

3

2


$

0.03

$

0.02

Unrealized loss (gain) on derivative financial instruments

(1)

1

1


$

0.01

$

0.01

Loss on repurchase of long-term debt

6


$

0.05

Unrealized loss on interest rate swaps and option fair value

7


$

0.07

Foreign exchange gain on long-term debt and financial instruments

(11)

(9)


$

(0.12)

$

(0.09)

Tax effect on specific items, other tax adjustments and attributable
to non-controlling interest1

(4)

(4)

(2)


$

(0.02)


(1)

4

(15)


$

(0.01)

$

0.04

$

(0.15)

Adjusted

48

58

28


$

0.50

$

0.61

$

0.30

1 Specific amounts per 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.

2 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation.

The following table reconciles cash flow from operating activities with operating income and operating income before depreciation and amortization:





(in millions of Canadian dollars) (unaudited)

Q3 2020

Q2 2020

Q3 20191

Cash flow from operating activities

136

128

157

Changes in non-cash working capital components

(30)

34

(53)

Depreciation and amortization

(81)

(75)

(73)

Net income taxes paid

1

7

12

Net financing expense paid

49

7

42

Premium paid on long-term debt repurchase

4

Gain (loss) on acquisitions, disposals and others

7

(1)

26

Impairment charges and restructuring costs

(16)

(15)

(1)

Unrealized gain (loss) on derivative financial instruments

1

(1)

(1)

Dividend received, employee future benefits and others

2

10

(1)

Operating income

73

94

108

Depreciation and amortization

81

75

73

Operating income before depreciation and amortization

154

169

181

1 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation.

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 activities. It also reconciles adjusted cash flow from operating activities to adjusted free cash flow, which is also calculated on a per share basis:





(in millions of Canadian dollars, except amount per share or otherwise mentioned) (unaudited)

Q3 2020

Q2 2020

Q3 2019

Cash flow from operating activities

136

128

157

Changes in non-cash working capital components

(30)

34

(53)

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

106

162

104

Specific items paid

9

4

Adjusted cash flow from operating activities

115

162

108

Capital expenditures & other assets1 and right-of-use assets payments, net of disposals

(60)

(51)

(58)

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

(11)

(14)

(12)

Adjusted free cash flow

44

97

38

Adjusted free cash flow per share

$

0.46

$

1.02

$

0.40

Weighted average basic number of shares outstanding

95,019,694

94,459,257

93,860,367

1 Excluding increase in investments

The following table reconciles total debt and net debt with the ratio of net debt to adjusted operating income before depreciation and amortization (adjusted OIBD):





(in millions of Canadian dollars)

September 30,
2020

June 30,

2020

September 30,
2019

Long-term debt

1,947

1,975

2,107

Current portion of long-term debt

253

255

87

Bank loans and advances

9

9

14

Total debt

2,209

2,239

2,208

Less: Cash and cash equivalents

227

162

138

Net debt

1,982

2,077

2,070

Adjusted OIBD (last twelve months)

661

660

565

Net debt / Adjusted OIBD ratio

3.0x

3.1x

3.7x

Follow us on social media:
Website: www.cascades.com
Twitter: twitter.com/CascadesInvest
Facebook: facebook.com/Cascades
YouTube: youtube.com/Cascades

Cision
Cision

View original content:http://www.prnewswire.com/news-releases/cascades-reports-results-for-the-third-quarter-of-2020-301171350.html

SOURCE Cascades Inc.

Cision
Cision

View original content: http://www.newswire.ca/en/releases/archive/November2020/12/c2928.html