Commercial initiatives drive stronger
sequential performance
KINGSEY
FALLS, QC , Aug. 4, 2022
/PRNewswire/ - Cascades Inc. (TSX: CAS) reports its unaudited
financial results for the three-month period ended June 30, 2022.
Q2 2022 Highlights
- Sales of $1,119 million (compared
with $1,038 million in Q1 2022 and
$956 million in Q2 2021)
- As reported (including specific items)
-
- Operating income (loss) of $32
million (compared with $(4)
million in Q1 2022 and $23
million in Q2 2021)
- Operating income before depreciation and amortization (OIBD) of
$95 million (compared with
$56 million in Q1 2022 and
$87 million in Q2 2021)
- Net earnings per common share of $0.10 (compared with net loss per common share of
($0.15) in Q1 2022 and net earnings
per common share of $0.02 in Q2
2021)
- Adjusted (excluding specific items1)
-
- Operating income (loss) of $28
million (compared with $(2)
million in Q1 2022 and $34
million in Q2 2021)
- Operating income before depreciation and amortization (OIBD) of
$91 million (compared with
$58 million in Q1 2022 and
$98 million in Q2 2021)
- Net earnings per common share of $0.10 (compared with net loss per common share of
($0.15) in Q1 2022 and net earnings
per common share of $0.07 in Q2
2021)
- Net debt1 of $1,712
million as of June 30, 2022
(compared with $1,549 million as of
March 31, 2022). Net debt to adjusted
OIBD ratio1 of 5.4x, up from 4.8x as of March 31, 2022.
- Total capital expenditures, net of disposals, of $116 million in Q2 2022, and $212 million in the first half 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.
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 packaging businesses delivered good sequential
performances in the second quarter, with improved pricing and sales
mix, higher volumes, and lower raw material costs in the case of
Containerboard outweighing the impact of continued cost inflation.
Sequentially, results in our Tissue Papers business highlight the
momentum being generated by the profitability initiatives underway.
While pricing and mix improvements realized to date helped to
mitigate the unprecedented headwinds on the cost side, these
initiatives are trailing the pace of the current high inflation
environment. These initiatives remain on track to generate
important contributions in the back half of 2022, and are being
closely monitored and regularly adapted to address the changing
cost environment.
We continued to advance the Bear
Island project in the quarter. The capital investments for
this project, which totaled $81
million in the second quarter and $145 million year-to-date, combined with lower
consolidated financial results, has resulted in an increase in our
leverage in the second quarter. As we have previously stated, this
trend is expected to reverse with improved business performance
through the remainder of 2022 and throughout 2023 as well as the
positive contribution from this facility following its
start-up."
Discussing near-term outlook, Mr. Plourde commented, "We are
focused on driving benefits from profitability initiatives underway
in our Tissue Papers segment. While the level of expected long-term
financial contributions remains intact, persistent cost headwinds
and adjustments to the implementation timing of announced industry
price increases have reduced our forecasted OIBD range for this
segment to $25 - $40 million for 2022, from the previously stated
$60 - $80
million2. This revision does not change the 2024
OIBD targets provided in our strategic plan in February. The
current inflationary environment has also had implications for our
Bear Island project in 2022.
Higher cost levels combined with labour and material availability
constraints, which have led to temporary delays in certain
construction milestones, increased the total projected cost for
this project to a range of $595 -
$615 million (US$470 - US$485
million). Our team is working closely with contractors to
mitigate any potential delay caused by these elements in order to
meet the targeted mid-December 2022
start date. However, it is important to note that the timing of
some critical construction milestones may be at risk due to these
issues and, as a result the start-up of paper production may be
delayed to the first quarter of 2023.
At the operations level, we are forecasting sequentially stable
results in our packaging businesses in the third quarter, during
which favourable pricing momentum is expected to mitigate continued
cost inflation. As we have previously stated, the Tissue Papers
business is expected to return to a trajectory of positive
contribution in the upcoming quarters as meaningful benefits from
implementation of the profitability initiatives begin to be
realized."
Financial Summary
Selected consolidated information
(in millions of
Canadian dollars, except amounts per common share)
(unaudited)
|
Q2
2022
|
Q1 2022
|
Q2 2021
|
|
|
|
|
Sales
|
1,119
|
1,038
|
956
|
As
Reported
|
|
|
|
Operating income
before depreciation and amortization (OIBD)
|
95
|
56
|
87
|
Operating income
(loss)
|
32
|
(4)
|
23
|
Net earnings
(loss)
|
10
|
(15)
|
3
|
per common
share
|
$0.10
|
($0.15)
|
$0.02
|
Margin
(OIBD)
|
8.5 %
|
5.4 %
|
9.1 %
|
Adjusted1
|
|
|
|
Operating income
before depreciation and amortization (OIBD)
|
91
|
58
|
98
|
Operating income
(loss)
|
28
|
(2)
|
34
|
Net earnings
(loss)
|
10
|
(15)
|
8
|
per common
share
|
$0.10
|
($0.15)
|
$0.07
|
Margin
(OIBD)
|
8.1 %
|
5.6 %
|
10.3 %
|
Segmented OIBD as reported
(in millions of
Canadian dollars) (unaudited)
|
Q2
2022
|
Q1 2022
|
Q2 2021
|
|
|
|
|
Packaging
Products
|
|
|
|
Containerboard
|
98
|
72
|
95
|
Specialty
Products
|
25
|
28
|
18
|
|
|
|
|
Tissue
Papers
|
(4)
|
(18)
|
(5)
|
|
|
|
|
Corporate
Activities
|
(24)
|
(26)
|
(21)
|
OIBD as
reported
|
95
|
56
|
87
|
Segmented adjusted OIBD1
(in millions of
Canadian dollars) (unaudited)
|
Q2
2022
|
Q1 2022
|
Q2 2021
|
|
|
|
|
Packaging
Products
|
|
|
|
Containerboard
|
99
|
80
|
100
|
Specialty
Products
|
25
|
22
|
18
|
|
|
|
|
Tissue
Papers
|
(8)
|
(17)
|
1
|
|
|
|
|
Corporate
Activities
|
(25)
|
(27)
|
(21)
|
Adjusted
OIBD1
|
91
|
58
|
98
|
|
|
|
|
1
|
Please refer to the
"Supplemental Information on Non-IFRS Measures and Other Financial
Measures" section for a complete reconciliation.
|
2
|
Please refer to the
Q2 2022 Management's Discussion and Analysis for additional
information.
|
|
|
Analysis of results for the
three-month period ended June 30, 2022 (compared to the
same period last year)
Sales of $1,119 million increased
by $163 million compared with the
same period last year. This reflects $146
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 $24 million to sales
levels on a consolidated basis. These were partially offset by a
$16 million impact related to lower
volumes in the Containerboard and Tissue Papers business
segments.
The Corporation generated an operating income before
depreciation and amortization (OIBD) of $95
million in the second quarter of 2022, up from $87 million in the second quarter of 2021. On an
adjusted basis1, second quarter OIBD totaled
$91 million, a decrease of
$7 million, or 7% from the $98
million generated in the same period last year. This
decrease is attributable to higher raw material, production, energy
and logistics costs in all segments, the effects of which were not
fully mitigated by improvements in selling prices and mix in all
businesses and a beneficial FX impact for the packaging
segments.
The main specific items, before income taxes, that impacted our
second quarter 2022 OIBD and/or net earnings were:
- $4 million gain from the
settlement of a supply agreement in Tissue Papers segment (OIBD and
net earnings);
- $3 million foreign exchange loss
on long-term debt and financial instruments (net earnings).
For the 3-month period ended June 30, 2022, the
Corporation posted net earnings of $10
million, or $0.10 per common
share, compared to net earnings of $3
million, or $0.02 per common
share, in the same period of 2021. On an adjusted
basis1, the Corporation generated net earnings of
$10 million in the second quarter of 2022, or $0.10 per common share, compared to net earnings
of $8 million, or $0.07 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 September 1, 2022 to shareholders
of record at the close of business on August
17, 2022. This dividend is an "eligible dividend" as per the
Income Tax Act (R.C.S. (1985), Canada). During the second quarter of 2022,
Cascades purchased no common shares for cancellation.
2022 Second Quarter Results
Conference Call Details
Management will discuss the 2022 second quarter financial
results during a conference call today at 12:00 p.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
September 4, 2022 by dialing
1-888-390-0541 (international 1-416-764-8677), access code
567197.
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)
|
June 30,
2022
|
December 31,
2021
|
Assets
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
70
|
174
|
Accounts
receivable
|
605
|
510
|
Current income tax
assets
|
10
|
19
|
Inventories
|
584
|
494
|
Current portion of
financial assets
|
5
|
1
|
|
1,274
|
1,198
|
Long-term
assets
|
|
|
Investments in
associates and joint ventures
|
92
|
87
|
Property, plant and
equipment
|
2,657
|
2,522
|
Intangible assets with
finite useful life
|
80
|
88
|
Financial
assets
|
9
|
6
|
Other assets
|
56
|
54
|
Deferred income tax
assets
|
156
|
138
|
Goodwill and other
intangible assets with indefinite useful life
|
478
|
473
|
|
4,802
|
4,566
|
Liabilities and
Equity
|
|
|
Current
liabilities
|
|
|
Bank loans and
advances
|
1
|
1
|
Trade and other
payables
|
696
|
707
|
Current income tax
liabilities
|
6
|
12
|
Current portion of
long-term debt
|
71
|
74
|
Current portion of
provisions for contingencies and charges
|
8
|
12
|
Current portion of
financial liabilities and other liabilities
|
16
|
16
|
|
798
|
822
|
Long-term
liabilities
|
|
|
Long-term
debt
|
1,710
|
1,450
|
Provisions for
contingencies and charges
|
46
|
47
|
Financial
liabilities
|
12
|
6
|
Other
liabilities
|
88
|
122
|
Deferred income tax
liabilities
|
207
|
192
|
|
2,861
|
2,639
|
Equity
|
|
|
Capital
stock
|
614
|
614
|
Contributed
surplus
|
14
|
14
|
Retained
earnings
|
1,266
|
1,274
|
Accumulated other
comprehensive loss
|
(3)
|
(23)
|
Equity attributable
to Shareholders
|
1,891
|
1,879
|
Non-controlling
interests
|
50
|
48
|
Total
equity
|
1,941
|
1,927
|
|
4,802
|
4,566
|
CONSOLIDATED STATEMENTS OF EARNINGS
|
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)
|
2022
|
2021
|
2022
|
2021
|
Sales
|
1,119
|
956
|
2,157
|
1,898
|
Cost of sales and
expenses
|
|
|
|
|
Cost of sales
(including depreciation and amortization of $63 million for
3-month period
(2021 — $64 million) and $123 million for 6-month period
(2021 — $129 million))
|
1,001
|
834
|
1,952
|
1,631
|
Selling and
administrative expenses
|
93
|
87
|
181
|
174
|
Gain on acquisitions,
disposals and others
|
(4)
|
—
|
(10)
|
—
|
Impairment charges and
restructuring costs
|
—
|
6
|
1
|
11
|
Foreign exchange loss
(gain)
|
(3)
|
1
|
(2)
|
2
|
Loss on derivative
financial instruments
|
—
|
5
|
7
|
13
|
|
1,087
|
933
|
2,129
|
1,831
|
Operating
income
|
32
|
23
|
28
|
67
|
Financing
expense
|
17
|
20
|
32
|
42
|
Interest expense on
employee future benefits and other liabilities
|
1
|
1
|
2
|
2
|
Foreign exchange loss
(gain) on long-term debt and financial instruments
|
3
|
(3)
|
2
|
(6)
|
Share of results of
associates and joint ventures
|
(6)
|
(5)
|
(10)
|
(7)
|
Earnings before
income taxes
|
17
|
10
|
2
|
36
|
Provision for
(recovery of) income taxes
|
3
|
2
|
(1)
|
8
|
Net earnings from
continuing operations including non-controlling interests for
the period
|
14
|
8
|
3
|
28
|
Results from
discontinued operations
|
—
|
(3)
|
—
|
5
|
Net earnings
including non-controlling interests for the period
|
14
|
5
|
3
|
33
|
Net earnings
attributable to non-controlling interests
|
4
|
2
|
8
|
8
|
Net earnings (loss)
attributable to Shareholders for the period
|
10
|
3
|
(5)
|
25
|
Net earnings (loss)
from continuing operations per common share
|
|
|
|
|
Basic
|
$0.10
|
$0.04
|
($0.05)
|
$0.21
|
Diluted
|
$0.10
|
$0.04
|
($0.05)
|
$0.21
|
Net earnings (loss)
per common share
|
|
|
|
|
Basic
|
$0.10
|
$0.02
|
($0.05)
|
$0.24
|
Diluted
|
$0.10
|
$0.02
|
($0.05)
|
$0.24
|
Weighted average
basic number of common shares outstanding
|
100,588,470
|
102,281,072
|
100,705,048
|
102,280,243
|
Weighted average
number of diluted common shares
|
101,083,826
|
103,285,361
|
101,344,843
|
103,360,930
|
|
|
|
|
|
Net earnings (loss)
attributable to Shareholders:
|
|
|
|
|
Continuing
operations
|
10
|
5
|
(5)
|
22
|
Discontinued
operations
|
—
|
(2)
|
—
|
3
|
Net earnings
(loss)
|
10
|
3
|
(5)
|
25
|
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)
|
2022
|
2021
|
2022
|
2021
|
Net earnings
including non-controlling interests for the period
|
14
|
5
|
3
|
33
|
Other comprehensive
income (loss)
|
|
|
|
|
Items that may be
reclassified subsequently to earnings
|
|
|
|
|
Translation
adjustments
|
|
|
|
|
Change in foreign
currency translation of foreign subsidiaries
|
32
|
(14)
|
21
|
(29)
|
Change in foreign
currency translation of foreign subsidiaries from discontinued
operations
|
—
|
(1)
|
—
|
(20)
|
Change in foreign
currency translation related to net investment hedging
activities
|
(9)
|
9
|
(6)
|
18
|
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
|
1
|
2
|
7
|
3
|
Recovery of
(provision for) income taxes
|
1
|
(2)
|
(1)
|
(3)
|
Provision for
income taxes from discontinued operations
|
—
|
—
|
—
|
(2)
|
|
25
|
(6)
|
21
|
(21)
|
Items that are not
released to earnings
|
|
|
|
|
Actuarial gain on
employee future benefits
|
12
|
4
|
31
|
21
|
Provision for income
taxes
|
(3)
|
(1)
|
(8)
|
(6)
|
|
9
|
3
|
23
|
15
|
Other comprehensive
income (loss)
|
34
|
(3)
|
44
|
(6)
|
Comprehensive income
including non-controlling interests for the period
|
48
|
2
|
47
|
27
|
Comprehensive income
(loss) attributable to non-controlling interests for
the period
|
5
|
2
|
9
|
(1)
|
Comprehensive income
attributable to Shareholders for the period
|
43
|
—
|
38
|
28
|
Comprehensive income
attributable to Shareholders:
|
|
|
|
|
Continuing
operations
|
43
|
3
|
38
|
27
|
Discontinued
operations
|
—
|
(3)
|
—
|
1
|
Comprehensive
income
|
43
|
—
|
38
|
28
|
CONSOLIDATED STATEMENTS OF EQUITY
|
For the 6-month
period ended June 30, 2022
|
(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
|
614
|
14
|
1,274
|
(23)
|
1,879
|
48
|
1,927
|
Comprehensive
income
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
—
|
—
|
(5)
|
—
|
(5)
|
8
|
3
|
Other comprehensive
income
|
—
|
—
|
23
|
20
|
43
|
1
|
44
|
|
—
|
—
|
18
|
20
|
38
|
9
|
47
|
Dividends
|
—
|
—
|
(24)
|
—
|
(24)
|
(6)
|
(30)
|
Stock options
expense
|
—
|
1
|
—
|
—
|
1
|
—
|
1
|
Issuance of common
shares
upon exercise of stock options
|
2
|
(1)
|
—
|
—
|
1
|
—
|
1
|
Redemption of common
shares
|
(2)
|
—
|
(3)
|
—
|
(5)
|
—
|
(5)
|
Acquisition of
non-controlling interests
|
—
|
—
|
1
|
—
|
1
|
(1)
|
—
|
Balance - End of
period
|
614
|
14
|
1,266
|
(3)
|
1,891
|
50
|
1,941
|
|
|
|
|
|
|
|
|
|
For the 6-month period
ended June 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
|
—
|
—
|
25
|
—
|
25
|
8
|
33
|
Other comprehensive
income (loss)
|
—
|
—
|
15
|
(12)
|
3
|
(9)
|
(6)
|
|
—
|
—
|
40
|
(12)
|
28
|
(1)
|
27
|
Dividends
|
—
|
—
|
(16)
|
—
|
(16)
|
(7)
|
(23)
|
Dividends paid to
non-controlling
interests from discontinued operations
|
—
|
—
|
—
|
—
|
—
|
(3)
|
(3)
|
Acquisition of
non-controlling interests
|
—
|
—
|
1
|
—
|
1
|
(1)
|
—
|
Balance - End of
period
|
622
|
13
|
1,171
|
(40)
|
1,766
|
192
|
1,958
|
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)
|
2022
|
2021
|
2022
|
2021
|
Operating activities
from continuing operations
|
|
|
|
|
Net earnings (loss)
attributable to Shareholders for the period
|
10
|
3
|
(5)
|
25
|
Results from
discontinued operations
|
—
|
3
|
—
|
(5)
|
Results from
discontinued operations attributable to non-controlling
interests
|
—
|
(1)
|
—
|
2
|
Net earnings (loss)
from continuing operations
|
10
|
5
|
(5)
|
22
|
Adjustments
for:
|
|
|
|
|
Financing expense and
interest expense on employee future benefits and other
liabilities
|
18
|
21
|
34
|
44
|
Depreciation and
amortization
|
63
|
64
|
123
|
129
|
Gain on acquisitions,
disposals and others
|
(4)
|
—
|
(10)
|
—
|
Impairment charges and
restructuring costs
|
—
|
6
|
1
|
11
|
Unrealized loss on
derivative financial instruments
|
—
|
5
|
7
|
13
|
Foreign exchange loss
(gain) on long-term debt and financial instruments
|
3
|
(3)
|
2
|
(6)
|
Provision for (recovery
of) income taxes
|
3
|
2
|
(1)
|
8
|
Share of results of
associates and joint ventures
|
(6)
|
(5)
|
(10)
|
(7)
|
Net earnings
attributable to non-controlling interests
|
4
|
3
|
8
|
6
|
Net financing expense
paid
|
(4)
|
(4)
|
(34)
|
(44)
|
Net income taxes
received (paid)
|
(3)
|
(1)
|
(4)
|
1
|
Dividends
received
|
5
|
5
|
5
|
5
|
Provisions for
contingencies and charges and other liabilities
|
(8)
|
(11)
|
(16)
|
(13)
|
|
81
|
87
|
100
|
169
|
Changes in non-cash
working capital components
|
(59)
|
(47)
|
(151)
|
(72)
|
|
22
|
40
|
(51)
|
97
|
Investing activities
from continuing operations
|
|
|
|
|
Disposals in associates
and joint ventures
|
—
|
1
|
—
|
1
|
Payments for property,
plant and equipment
|
(117)
|
(66)
|
(219)
|
(137)
|
Proceeds from disposals
of property, plant and equipment
|
1
|
1
|
7
|
1
|
Change in intangible
and other assets
|
(2)
|
(7)
|
(3)
|
(11)
|
|
(118)
|
(71)
|
(215)
|
(146)
|
Financing activities
from continuing operations
|
|
|
|
|
Bank loans and
advances
|
(6)
|
2
|
—
|
(4)
|
Change in credit
facilities
|
191
|
(1)
|
248
|
(1)
|
Increase in other
long-term debt
|
—
|
5
|
—
|
5
|
Payments of other
long-term debt, including lease obligations
|
(40)
|
(20)
|
(49)
|
(44)
|
Issuance of common
shares upon exercise of stock options
|
1
|
—
|
1
|
—
|
Redemption of common
shares
|
—
|
—
|
(5)
|
—
|
Dividends paid to
non-controlling interests
|
(2)
|
(3)
|
(6)
|
(7)
|
Acquisition of
non-controlling interests
|
(2)
|
(2)
|
(2)
|
(2)
|
Dividends paid to the
Corporation's Shareholders
|
(12)
|
(8)
|
(24)
|
(16)
|
|
130
|
(27)
|
163
|
(69)
|
Change in cash and
cash equivalents during the period from continuing
operations
|
34
|
(58)
|
(103)
|
(118)
|
Change in cash and
cash equivalents from discontinued operations
|
—
|
(99)
|
—
|
(94)
|
Net change in cash
and cash equivalents during the period
|
34
|
(157)
|
(103)
|
(212)
|
Currency translation
on cash and cash equivalents
|
(1)
|
—
|
(1)
|
(1)
|
Cash and cash
equivalents - Beginning of the period
|
37
|
328
|
174
|
384
|
Cash and cash
equivalents - End of the period
|
70
|
171
|
70
|
171
|
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 June 30,
|
|
Canada
|
United
States
|
Total
|
(in millions of
Canadian dollars) (unaudited)
|
2022
|
2021
|
2022
|
2021
|
2022
|
2021
|
Packaging
Products
|
|
|
|
|
|
|
Containerboard
|
337
|
309
|
232
|
188
|
569
|
497
|
Specialty
Products
|
65
|
49
|
103
|
82
|
168
|
131
|
Inter-segment
sales
|
(5)
|
(3)
|
(5)
|
(4)
|
(10)
|
(7)
|
|
397
|
355
|
330
|
266
|
727
|
621
|
Tissue
Papers
|
74
|
58
|
268
|
239
|
342
|
297
|
Inter-segment sales
and Corporate Activities
|
44
|
34
|
6
|
4
|
50
|
38
|
|
515
|
447
|
604
|
509
|
1,119
|
956
|
|
|
|
|
|
SALES TO
|
|
|
|
For the 6-month
periods ended June 30,
|
|
Canada
|
United
States
|
Total
|
(in millions of
Canadian dollars) (unaudited)
|
2022
|
2021
|
2022
|
2021
|
2022
|
2021
|
Packaging
Products
|
|
|
|
|
|
|
Containerboard
|
665
|
614
|
438
|
386
|
1,103
|
1,000
|
Specialty
Products
|
122
|
96
|
203
|
157
|
325
|
253
|
Inter-segment
sales
|
(9)
|
(7)
|
(9)
|
(7)
|
(18)
|
(14)
|
|
778
|
703
|
632
|
536
|
1,410
|
1,239
|
Tissue
Papers
|
139
|
115
|
517
|
474
|
656
|
589
|
Inter-segment sales
and Corporate Activities
|
81
|
65
|
10
|
5
|
91
|
70
|
|
998
|
883
|
1,159
|
1,015
|
2,157
|
1,898
|
|
OPERATING INCOME BEFORE
DEPRECIATION AND AMORTIZATION
|
|
For the 3-month
periods
ended June 30,
|
For the 6-month
periods
ended June 30,
|
(in millions of
Canadian dollars) (unaudited)
|
2022
|
2021
|
2022
|
2021
|
Packaging
Products
|
|
|
|
|
Containerboard
|
98
|
95
|
170
|
191
|
Specialty
Products
|
25
|
18
|
53
|
36
|
|
123
|
113
|
223
|
227
|
Tissue
Papers
|
(4)
|
(5)
|
(22)
|
13
|
Corporate
Activities
|
(24)
|
(21)
|
(50)
|
(44)
|
Operating income
before depreciation and amortization
|
95
|
87
|
151
|
196
|
Depreciation and
amortization
|
(63)
|
(64)
|
(123)
|
(129)
|
Financing expense and
interest expense on employee future benefits and other
liabilities
|
(18)
|
(21)
|
(34)
|
(44)
|
Foreign exchange gain
(loss) on long-term debt and financial instruments
|
(3)
|
3
|
(2)
|
6
|
Share of results of
associates and joint ventures
|
6
|
5
|
10
|
7
|
Earnings before
income taxes
|
17
|
10
|
2
|
36
|
|
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)
|
2022
|
2021
|
2022
|
2021
|
Packaging
Products
|
|
|
|
|
Containerboard
|
84
|
52
|
159
|
106
|
Specialty
Products
|
6
|
8
|
17
|
16
|
|
90
|
60
|
176
|
122
|
Tissue
Papers
|
17
|
4
|
22
|
12
|
Corporate
Activities
|
7
|
7
|
15
|
11
|
Total
acquisitions
|
114
|
71
|
213
|
145
|
Right-of-use assets
acquisitions and of property, plant and equipment included in
other
debts
|
(12)
|
(12)
|
(33)
|
(12)
|
|
102
|
59
|
180
|
133
|
Acquisitions for
property, plant and equipment included in "Trade and other
payables"
|
|
|
|
|
Beginning of the
period
|
51
|
34
|
75
|
31
|
End of the
period
|
(36)
|
(27)
|
(36)
|
(27)
|
Payments for
property, plant and equipment
|
117
|
66
|
219
|
137
|
Proceeds from
disposals of property, plant and equipment
|
(1)
|
(1)
|
(7)
|
(1)
|
Payments for
property, plant and equipment net of proceeds from
disposals
|
116
|
65
|
212
|
136
|
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:
|
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 derivative 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
|
|
Q1 2022
|
(in millions of
Canadian dollars) (unaudited)
|
Containerboard
|
Specialty
Products
|
Tissue
Papers
|
Corporate
Activities
|
Consolidated
|
Operating income
(loss)
|
44
|
24
|
(35)
|
(37)
|
(4)
|
Depreciation and
amortization
|
28
|
4
|
17
|
11
|
60
|
Operating income
(loss) before depreciation and amortization
|
72
|
28
|
(18)
|
(26)
|
56
|
Specific
items:
|
|
|
|
|
|
Gain on acquisitions,
disposals and others
|
—
|
(6)
|
—
|
—
|
(6)
|
Restructuring
costs
|
—
|
—
|
1
|
—
|
1
|
Unrealized loss (gain)
on financial instruments
|
8
|
—
|
—
|
(1)
|
7
|
|
8
|
(6)
|
1
|
(1)
|
2
|
Adjusted operating
income (loss) before depreciation and
amortization1
|
80
|
22
|
(17)
|
(27)
|
58
|
Adjusted operating
income (loss)1
|
52
|
18
|
(34)
|
(38)
|
(2)
|
|
Q2 2021
|
(in millions of
Canadian dollars) (unaudited)
|
Containerboard
|
Specialty
Products
|
Tissue
Papers
|
Corporate
Activities
|
Consolidated
|
Operating income
(loss)
|
64
|
14
|
(22)
|
(33)
|
23
|
Depreciation and
amortization
|
31
|
4
|
17
|
12
|
64
|
Operating income
(loss) before depreciation and amortization
|
95
|
18
|
(5)
|
(21)
|
87
|
Specific
items:
|
|
|
|
|
|
Impairment
charges
|
—
|
—
|
1
|
—
|
1
|
Restructuring
costs
|
—
|
—
|
5
|
—
|
5
|
Unrealized loss on
derivative financial instruments
|
5
|
—
|
—
|
—
|
5
|
|
5
|
—
|
6
|
—
|
11
|
Adjusted operating
income (loss) before depreciation and
amortization1
|
100
|
18
|
1
|
(21)
|
98
|
Adjusted operating
income (loss)1
|
69
|
14
|
(16)
|
(33)
|
34
|
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 (loss), adjusted operating income
(loss)1 and adjusted operating income before
depreciation and amortization1:
(in millions of
Canadian dollars) (unaudited)
|
Q2
2022
|
Q1 2022
|
Q2 2021
|
|
|
|
|
Net earnings (loss)
attributable to Shareholders for the period
|
10
|
(15)
|
3
|
Net earnings
attributable to non-controlling interests
|
4
|
4
|
2
|
Results from
discontinued operations
|
—
|
—
|
3
|
Provision for (recovery
of) income taxes
|
3
|
(4)
|
2
|
Share of results of
associates and joint ventures
|
(6)
|
(4)
|
(5)
|
Foreign exchange loss
(gain) on long-term debt and financial instruments
|
3
|
(1)
|
(3)
|
Financing expense and
interest expense on employee future benefits and other
liabilities
|
18
|
16
|
21
|
Operating
income
|
32
|
(4)
|
23
|
Specific
items:
|
|
|
|
Gain on acquisitions,
disposals and others
|
(4)
|
(6)
|
—
|
Impairment
charges
|
—
|
—
|
1
|
Restructuring
costs
|
—
|
1
|
5
|
Unrealized loss on
derivative financial instruments
|
—
|
7
|
5
|
|
(4)
|
2
|
11
|
Adjusted operating
income (loss)1
|
28
|
(2)
|
34
|
Depreciation and
amortization
|
63
|
60
|
64
|
Adjusted operating
income before depreciation and
amortization1
|
91
|
58
|
98
|
|
|
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
|
|
Q2
2022
|
Q1 2022
|
Q2 2021
|
|
Q2
2022
|
Q1 2022
|
Q2 2021
|
|
|
|
|
|
|
|
|
As per
IFRS
|
10
|
(15)
|
3
|
|
$0.10
|
($0.15)
|
$0.02
|
Specific
items:
|
|
|
|
|
|
|
|
Gain on acquisitions,
disposals and others
|
(4)
|
(6)
|
—
|
|
($0.03)
|
($0.05)
|
—
|
Impairment
charges
|
—
|
—
|
1
|
|
—
|
—
|
$0.01
|
Restructuring
costs
|
—
|
1
|
5
|
|
—
|
$0.01
|
$0.04
|
Unrealized loss on
derivative financial instruments
|
—
|
7
|
5
|
|
—
|
$0.05
|
$0.03
|
Foreign exchange loss
(gain) on long-term debt and financial instruments
|
3
|
(1)
|
(3)
|
|
$0.03
|
($0.01)
|
($0.03)
|
Tax effect on specific
items, other tax adjustments and attributable to
non-controlling
interest2
|
1
|
(1)
|
(3)
|
|
—
|
—
|
—
|
|
—
|
—
|
5
|
|
—
|
—
|
$0.05
|
Adjusted1
|
10
|
(15)
|
8
|
|
$0.10
|
($0.15)
|
$0.07
|
Weighted average
basic number of common shares outstanding
|
|
|
|
|
100,588,470
|
100,822,921
|
102,281,072
|
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 (loss) and operating income (loss) before depreciation
and amortization:
(in millions of
Canadian dollars) (unaudited)
|
Q2
2022
|
Q1 2022
|
Q2 2021
|
Cash flow from (used
by) operating activities from continuing operations
|
22
|
(73)
|
40
|
Changes in non-cash
working capital components
|
59
|
92
|
47
|
Depreciation and
amortization
|
(63)
|
(60)
|
(64)
|
Net income taxes
paid
|
3
|
1
|
1
|
Net financing expense
paid
|
4
|
30
|
4
|
Gain on acquisitions,
disposals and others
|
4
|
6
|
—
|
Impairment charges and
restructuring costs
|
—
|
(1)
|
(6)
|
Unrealized loss on
derivative financial instruments
|
—
|
(7)
|
(5)
|
Provisions for
contingencies and charges and other liabilities, net of dividends
received
|
3
|
8
|
6
|
Operating income
(loss)
|
32
|
(4)
|
23
|
Depreciation and
amortization
|
63
|
60
|
64
|
Operating income
(loss) before depreciation and amortization
|
95
|
56
|
87
|
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 operations2 to adjusted free cash flow
used2, 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
2022
|
Q1 2022
|
Q2 2021
|
Cash flow from (used
by) operating activities from continuing operations
|
22
|
(73)
|
40
|
Changes in non-cash
working capital components
|
59
|
92
|
47
|
Cash flow from
operating activities from continuing operations (excluding changes
in non-cash working
capital components)
|
81
|
19
|
87
|
Restructuring costs
paid
|
—
|
7
|
2
|
Adjusted cash flow
from operating activities from continuing
operations1
|
81
|
26
|
89
|
Capex
expenditures
|
(117)
|
(102)
|
(66)
|
Change in intangible
and other assets
|
(2)
|
(1)
|
(7)
|
Lease obligation
payments
|
(13)
|
(13)
|
(11)
|
Proceeds from
disposals of property, plant and equipment
|
1
|
6
|
1
|
|
(50)
|
(84)
|
6
|
Dividends paid to
non-controlling interests
|
(2)
|
(4)
|
(3)
|
Dividends paid to the
Corporation's Shareholders and to non-controlling
interests
|
(12)
|
(12)
|
(8)
|
Adjusted free cash
flow used1
|
(64)
|
(100)
|
(5)
|
Adjusted free cash
flow generated1 per common
share
(in Canadian
dollars)
|
($0.64)
|
($0.99)
|
($0.05)
|
Weighted average
basic number of common shares outstanding
|
100,588,470
|
100,822,921
|
102,281,072
|
|
|
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)
|
June
30,
2022
|
March 31,
2022
|
June 30,
2021
|
Long-term
debt
|
1,710
|
1,510
|
1,799
|
Current portion of
long-term debt
|
71
|
69
|
72
|
Bank loans and
advances
|
1
|
7
|
7
|
Total
debt1
|
1,782
|
1,586
|
1,878
|
Less: Cash and cash
equivalents
|
70
|
37
|
171
|
Net debt1
as reported
|
1,712
|
1,549
|
1,707
|
Adjusted
OIBD1 as reported on a last twelve months
basis
|
318
|
325
|
492
|
Net debt / Adjusted
OIBD ratio1
|
5.4x
|
4.8x
|
3.5x
|
|
|
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-second-quarter-of-2022-301599438.html
SOURCE Cascades Inc.