PR Newswire
Positive outlook supported by favourable containerboard industry dynamics
KINGSEY FALLS, QC, Nov. 12, 2020 /PRNewswire/ – 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)
- Operating income of $73 million (compared with $94 million in Q2 2020 (-22%) and $108 million in Q3 20192 (-32%))
- Operating income before depreciation and amortization (OIBD)1 of $154 million (compared with $169 million in Q2 2020 (-9%) and $181 million in Q3 20192 (-15%))
- Net earnings per share of $0.51 (compared with $0.57 in Q2 2020 and $0.45 in Q3 20192)
- Adjusted (excluding specific items)1
- Operating income of $81 million (compared with $111 million in Q2 2020 (-27%) and $88 million in Q3 2019 (-8%))
- OIBD of $162 million (compared with $186 million in Q2 2020 (-13%) and $161 million in Q3 2019 (+1%))
- Net earnings per share of $0.50 (compared with $0.61 in Q2 2020 and $0.30 in Q3 2019)
- 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.
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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) |
|
Q2 2020 |
Q3 2019 |
|||
|
Sales |
|
1,285 |
1,264 |
|||
|
|
||||||
|
Operating income before depreciation and amortization (OIBD)1 2 |
|
169 |
181 |
|||
|
Operating income2 |
|
94 |
108 |
|||
|
Net earnings2 |
|
54 |
43 |
|||
|
per share2 |
|
|
$ |
0.57 |
$ |
0.45 |
|
|
||||||
|
Operating income before depreciation and amortization (OIBD) |
|
186 |
161 |
|||
|
Operating income |
|
111 |
88 |
|||
|
Net earnings |
|
58 |
28 |
|||
|
per share |
|
|
$ |
0.61 |
0.30 |
|
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Margin (OIBD) |
|
14.5% |
12.7% |
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Segmented OIBD as reported
|
(in millions of Canadian dollars) (unaudited) |
|
Q2 2020 |
Q3 2019 |
|
|
|||
|
Containerboard |
|
83 |
120 |
|
Boxboard Europe |
|
42 |
25 |
|
Specialty Products |
|
16 |
14 |
|
|
|
48 |
49 |
|
Corporate Activities |
|
(20) |
(27) |
|
|
|
169 |
181 |
|
|
|
|
Segmented adjusted OIBD1
|
(in millions of Canadian dollars) (unaudited) |
|
Q2 2020 |
Q3 2019 |
||
|
|
|||||
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Containerboard |
|
94 |
118 |
||
|
Boxboard Europe |
|
43 |
25 |
||
|
Specialty Products |
|
17 |
16 |
||
|
|
|
54 |
24 |
||
|
Corporate Activities |
|
(22) |
(22) |
||
|
|
|
186 |
161 |
||
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1 – Refer to the “Supplemental Information on Non-IFRS Measures” section. |
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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.
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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) |
|
December 31, |
|
|
||
|
|
||
|
Cash and cash equivalents |
|
155 |
|
Accounts receivable |
|
606 |
|
Current income tax assets |
|
32 |
|
Inventories |
|
598 |
|
Current portion of financial assets |
|
10 |
|
|
1,401 |
|
|
|
||
|
Investments in associates and joint ventures |
|
80 |
|
Property, plant and equipment |
|
2,770 |
|
Intangible assets with finite useful life |
|
182 |
|
Financial assets |
|
16 |
|
Other assets |
|
55 |
|
Deferred income tax assets |
|
153 |
|
Goodwill and other intangible assets with indefinite useful life |
|
527 |
|
|
5,184 |
|
|
|
||
|
|
||
|
Bank loans and advances |
|
11 |
|
Trade and other payables |
|
788 |
|
Current income tax liabilities |
|
17 |
|
Current portion of other debt without recourse to the Corporation to be refinanced |
|
— |
|
Current portion of long-term debt |
|
85 |
|
Current portion of provisions for contingencies and charges |
|
5 |
|
Current portion of financial liabilities and other liabilities |
|
137 |
|
|
1,043 |
|
|
|
||
|
Long-term debt |
|
2,022 |
|
Provisions for contingencies and charges |
|
49 |
|
Financial liabilities |
|
5 |
|
Other liabilities |
|
198 |
|
Deferred income tax liabilities |
|
198 |
|
|
3,515 |
|
|
|
||
|
Capital stock |
|
491 |
|
Contributed surplus |
|
15 |
|
Retained earnings |
|
1,003 |
|
Accumulated other comprehensive loss |
|
(17) |
|
|
|
1,492 |
|
Non-controlling interests |
|
177 |
|
|
|
1,669 |
|
|
5,184 |
CONSOLIDATED STATEMENTS OF EARNINGS
|
|
|
|||||||
|
(in millions of Canadian dollars, except per common share amounts and number of common shares) (unaudited) |
|
2019 |
|
2019 |
||||
|
|
|
1,264 |
|
3,769 |
||||
|
|
||||||||
|
Cost of sales (including depreciation and amortization of $81 million |
|
1,071 |
|
3,210 |
||||
|
Selling and administrative expenses |
|
105 |
|
320 |
||||
|
Gain on acquisitions, disposals and others |
|
(22) |
|
(29) |
||||
|
Impairment charges and restructuring costs |
|
1 |
|
11 |
||||
|
Foreign exchange loss (gain) |
|
— |
|
(1) |
||||
|
Loss (gain) on derivative financial instruments |
|
1 |
|
(4) |
||||
|
|
1,156 |
|
3,507 |
|||||
|
|
|
108 |
|
262 |
||||
|
Financing expense |
|
24 |
|
74 |
||||
|
Interest expense on employee future benefits and other liabilities |
|
24 |
|
48 |
||||
|
Loss on repurchase of long-term debt |
|
— |
|
— |
||||
|
Foreign exchange gain on long-term debt and financial instruments |
|
— |
|
(7) |
||||
|
Share of results of associates and joint ventures |
|
(2) |
|
(6) |
||||
|
|
|
62 |
|
153 |
||||
|
|
|
12 |
|
30 |
||||
|
|
|
50 |
|
123 |
||||
|
|
|
7 |
|
25 |
||||
|
|
|
43 |
|
98 |
||||
|
|
||||||||
|
Basic |
|
|
$ |
0.45 |
|
|
$ |
1.04 |
|
Diluted |
|
|
$ |
0.44 |
|
|
$ |
1.02 |
|
|
|
93,860,367 |
|
93,886,909 |
||||
|
|
|
95,519,226 |
|
95,437,252 |
||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
|||
|
(in millions of Canadian dollars) (unaudited) |
|
2019 |
|
2019 |
|
|
|
50 |
|
123 |
|
|
||||
|
|
||||
|
|
||||
|
Change in foreign currency translation of foreign subsidiaries |
|
1 |
|
(57) |
|
Change in foreign currency translation related to net investment hedging activities |
|
(3) |
|
32 |
|
|
||||
|
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 |
|
1 |
|
(1) |
|
|
(1) |
|
(26) |
|
|
|
||||
|
Actuarial gain (loss) on employee future benefits |
|
2 |
|
(13) |
|
Recovery of income taxes |
|
— |
|
3 |
|
|
2 |
|
(10) |
|
|
|
|
1 |
|
(36) |
|
|
|
51 |
|
87 |
|
|
|
4 |
|
13 |
|
|
|
47 |
|
74 |
CONSOLIDATED STATEMENTS OF EQUITY
|
|
|||||||
|
(in millions of Canadian dollars) |
CAPITAL |
CONTRIBUTED |
RETAINED |
ACCUMULATED |
TOTAL EQUITY |
NON- |
TOTAL |
|
|
|
|
|
|
|
|
|
|
Business combinations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
|||||||
|
Net earnings |
|
|
|
|
|
|
|
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends |
|
|
|
|
|
|
|
|
Issuance of common shares upon exercise of stock options |
|
|
|
|
|
|
|
|
Redemption of common shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the 9-month period ended September 30, 2019 |
|||||||
|
(in millions of Canadian dollars) |
CAPITAL |
CONTRIBUTED |
RETAINED |
ACCUMULATED |
TOTAL EQUITY |
NON- |
TOTAL |
|
|
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) |
|
|
490 |
15 |
1,056 |
(12) |
1,549 |
178 |
1,727 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|||
|
(in millions of Canadian dollars) (unaudited) |
|
2019 |
|
2019 |
|
|
||||
|
Net earnings attributable to Shareholders for the period |
|
43 |
|
98 |
|
Adjustments for: |
||||
|
Financing expense and interest expense on employee future benefits and other liabilities |
|
48 |
|
122 |
|
Loss on repurchase of long-term debt |
|
— |
|
— |
|
Depreciation and amortization |
|
73 |
|
212 |
|
Gain on acquisitions, disposals and others |
|
(26) |
|
(32) |
|
Impairment charges and restructuring costs |
|
1 |
|
6 |
|
Unrealized loss (gain) on derivative financial instruments |
|
1 |
|
(4) |
|
Foreign exchange gain on long-term debt and financial instruments |
|
— |
|
(7) |
|
Provision for (recovery of) income taxes |
|
12 |
|
30 |
|
Share of results of associates and joint ventures |
|
(2) |
|
(6) |
|
Net earnings attributable to non-controlling interests |
|
7 |
|
25 |
|
Net financing expense paid |
|
(42) |
|
(101) |
|
Premium paid on repurchase of long-term debt |
|
— |
|
— |
|
Net income taxes received (paid) |
|
(12) |
|
(14) |
|
Dividends received |
|
1 |
|
3 |
|
Employee future benefits and others |
|
— |
|
(22) |
|
|
104 |
|
310 |
|
|
Changes in non-cash working capital components |
|
53 |
|
(13) |
|
|
157 |
|
297 |
|
|
|
||||
|
Disposals of associates and joint ventures |
|
— |
|
1 |
|
Payments for property, plant and equipment |
|
(66) |
|
(185) |
|
Proceeds from disposals of property, plant and equipment |
|
19 |
|
21 |
|
Change in intangible and other assets |
|
(1) |
|
(3) |
|
Cash paid for business combinations |
|
(300) |
|
(314) |
|
Proceeds on disposals of a subsidiary, net of cash disposed |
|
9 |
|
9 |
|
|
(339) |
|
(471) |
|
|
|
||||
|
Bank loans and advances |
|
(2) |
|
(2) |
|
Change in credit facilities |
|
252 |
|
317 |
|
Issuance of unsecured senior notes, net of related expenses |
|
— |
|
— |
|
Repurchase of unsecured senior notes |
|
— |
|
— |
|
Increase in other long-term debt |
|
— |
|
7 |
|
Payments of other long-term debt |
|
(15) |
|
(94) |
|
Settlement of derivative financial instruments |
|
— |
|
— |
|
Issuance of common shares upon exercise of stock options |
|
4 |
|
4 |
|
Redemption of common shares |
|
(3) |
|
(8) |
|
Partial disposal of a subsidiary to non-controlling interests |
|
— |
|
— |
|
Payment of other liabilities |
|
— |
|
— |
|
Dividends paid to non-controlling interests |
|
(4) |
|
(14) |
|
Dividends paid to the Corporation’s Shareholders |
|
(8) |
|
(15) |
|
|
224 |
|
195 |
|
|
|
|
42 |
|
21 |
|
|
|
(2) |
|
(6) |
|
|
|
98 |
|
123 |
|
|
|
138 |
|
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 |
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|
|
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|
Canada |
United States |
Italy |
Other countries |
Total |
||||||
|
(in millions of Canadian dollars) |
|
2019 |
|
2019 |
|
2019 |
|
2019 |
|
2019 |
|
|
||||||||||
|
Containerboard |
|
289 |
|
184 |
|
— |
|
— |
|
473 |
|
Boxboard Europe |
|
— |
|
— |
|
88 |
|
168 |
|
256 |
|
Specialty Products |
|
35 |
|
74 |
|
— |
|
14 |
|
123 |
|
Intersegment sales |
|
(4) |
|
— |
|
— |
|
— |
|
(4) |
|
|
320 |
|
258 |
|
88 |
|
182 |
|
848 |
|
|
|
|
64 |
|
320 |
|
— |
|
3 |
|
387 |
|
Intersegment sales and Corporate Activities |
|
28 |
|
1 |
|
— |
|
— |
|
29 |
|
|
412 |
|
579 |
|
88 |
|
185 |
|
1,264 |
|
|
SALES |
||||||||||
|
|
||||||||||
|
Canada |
United States |
Italy |
Other countries |
Total |
||||||
|
(in millions of Canadian dollars) |
|
2019 |
|
2019 |
|
2019 |
|
2019 |
|
2019 |
|
|
||||||||||
|
Containerboard |
|
824 |
|
550 |
|
— |
|
2 |
|
1,376 |
|
Boxboard Europe |
|
— |
|
— |
|
247 |
|
558 |
|
805 |
|
Specialty Products |
|
104 |
|
233 |
|
1 |
|
49 |
|
387 |
|
Intersegment sales |
|
(10) |
|
(1) |
|
— |
|
— |
|
(11) |
|
|
918 |
|
782 |
|
248 |
|
609 |
|
2,557 |
|
|
|
|
192 |
|
910 |
|
— |
|
10 |
|
1,112 |
|
Intersegment sales and Corporate Activities |
|
93 |
|
7 |
|
— |
|
— |
|
100 |
|
|
1,203 |
|
1,699 |
|
248 |
|
619 |
|
3,769 |
|
|
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION |
||||
|
|
|
|||
|
(in millions of Canadian dollars) (unaudited) |
|
2019 |
|
2019 |
|
|
||||
|
Containerboard |
|
120 |
|
345 |
|
Boxboard Europe |
|
25 |
|
84 |
|
Specialty Products |
|
14 |
|
43 |
|
|
159 |
|
472 |
|
|
|
|
49 |
|
70 |
|
|
|
(27) |
|
(68) |
|
|
|
181 |
|
474 |
|
Depreciation and amortization |
|
(73) |
|
(212) |
|
Financing expense and interest expense on employee future benefits and other liabilities |
|
(48) |
|
(122) |
|
Loss on repurchase of long-term debt |
|
— |
|
— |
|
Foreign exchange gain on long-term debt and financial instruments |
|
— |
|
7 |
|
Share of results of associates and joint ventures |
|
2 |
|
6 |
|
|
|
62 |
|
153 |
|
PAYMENTS FOR PROPERTY, PLANT AND EQUIPMENT |
||||
|
|
|
|||
|
(in millions of Canadian dollars) (unaudited) |
|
2019 |
|
2019 |
|
|
||||
|
Containerboard |
|
19 |
|
55 |
|
Boxboard Europe |
|
13 |
|
41 |
|
Specialty Products |
|
4 |
|
11 |
|
|
36 |
|
107 |
|
|
|
|
27 |
|
74 |
|
|
|
19 |
|
40 |
|
|
|
82 |
|
221 |
|
Proceeds from disposals of property, plant and equipment |
|
(19) |
|
(21) |
|
Right-of-use assets acquisitions and acquisitions included in other debts |
|
(9) |
|
(42) |
|
|
54 |
|
158 |
|
|
Acquisitions for property, plant and equipment included in “Trade and other payables” |
||||
|
Beginning of period |
|
24 |
|
37 |
|
End of period |
|
(31) |
|
(31) |
|
|
|
47 |
|
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:
|
|
||||||
|
(in millions of Canadian dollars) (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specific items: |
||||||
|
Gain on acquisitions, disposals and others |
|
|
|
|
|
|
|
Impairment charges |
|
|
|
|
|
|
|
Restructuring costs |
|
|
|
|
|
|
|
Unrealized loss (gain) on financial instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2020 |
||||||
|
(in millions of Canadian dollars) (unaudited) |
Containerboard |
Boxboard |
Specialty |
Tissue Papers |
Corporate |
Consolidated |
|
|
54 |
30 |
11 |
31 |
(32) |
94 |
|
Depreciation and amortization |
29 |
12 |
5 |
17 |
12 |
75 |
|
|
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 |
|
|
|
94 |
43 |
17 |
54 |
(22) |
186 |
|
|
65 |
31 |
12 |
37 |
(34) |
111 |
|
Q3 2019 |
||||||
|
(in millions of Canadian dollars) (unaudited) |
Containerboard |
Boxboard |
Specialty |
Tissue Papers1 |
Corporate |
Consolidated |
|
|
91 |
14 |
10 |
34 |
(41) |
108 |
|
Depreciation and amortization |
29 |
11 |
4 |
15 |
14 |
73 |
|
|
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) |
|
|
|
118 |
25 |
16 |
24 |
(22) |
161 |
|
|
89 |
14 |
12 |
9 |
(36) |
88 |
|
|
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) |
|
Q2 2020 |
Q3 20191 |
|
|
|
54 |
43 |
|
Net earnings attributable to non-controlling interests |
|
12 |
7 |
|
Provision for (recovery of) income taxes |
|
12 |
12 |
|
Share of results of associates and joint ventures |
|
(3) |
(2) |
|
Foreign exchange gain on long-term debt and financial instruments |
|
(9) |
— |
|
Financing expense and interest expense on employee future benefits and other liabilities and other liabilities and loss on |
|
28 |
48 |
|
|
|
94 |
108 |
|
Specific items: |
|||
|
Loss (gain) on acquisitions, disposals and others |
|
1 |
(22) |
|
Impairment charges |
|
13 |
1 |
|
Restructuring costs |
|
2 |
— |
|
Unrealized loss (gain) on derivative financial instruments |
|
1 |
1 |
|
|
17 |
(20) |
|
|
|
|
111 |
88 |
|
Depreciation and amortization |
|
75 |
73 |
|
|
|
186 |
161 |
|
|
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) |
|
|
||||||||
|
|
Q2 2020 |
Q3 20192 |
|
Q2 2020 |
Q3 20192 |
|||||
|
|
|
54 |
43 |
|
|
$ |
0.57 |
$ |
0.45 |
|
|
Specific items: |
||||||||||
|
Loss (gain) on acquisitions, disposals and others |
|
1 |
(22) |
|
|
— |
$ |
(0.24) |
||
|
Impairment charges |
|
13 |
1 |
|
|
$ |
0.10 |
0.01 |
||
|
Restructuring costs |
|
2 |
— |
|
|
$ |
0.02 |
— |
||
|
Unrealized loss (gain) on derivative financial instruments |
|
1 |
1 |
|
$ |
0.01 |
$ |
0.01 |
||
|
Loss on repurchase of long-term debt |
|
— |
— |
|
|
— |
— |
|||
|
Unrealized loss on interest rate swaps and option fair value |
|
— |
7 |
|
— |
$ |
0.07 |
|||
|
Foreign exchange gain on long-term debt and financial instruments |
|
(9) |
— |
|
|
$ |
(0.09) |
— |
||
|
Tax effect on specific items, other tax adjustments and attributable |
|
(4) |
(2) |
|
|
— |
— |
|||
|
|
4 |
(15) |
|
|
$ |
0.04 |
$ |
(0.15) |
||
|
|
|
58 |
28 |
|
|
$ |
0.61 |
$ |
0.30 |
|
|
|
|
|
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) |
|
Q2 2020 |
Q3 20191 |
|
|
|
128 |
157 |
|
Changes in non-cash working capital components |
|
34 |
(53) |
|
Depreciation and amortization |
|
(75) |
(73) |
|
Net income taxes paid |
|
7 |
12 |
|
Net financing expense paid |
|
7 |
42 |
|
Premium paid on long-term debt repurchase |
|
— |
— |
|
Gain (loss) on acquisitions, disposals and others |
|
(1) |
26 |
|
Impairment charges and restructuring costs |
|
(15) |
(1) |
|
Unrealized gain (loss) on derivative financial instruments |
|
(1) |
(1) |
|
Dividend received, employee future benefits and others |
|
10 |
(1) |
|
|
|
94 |
108 |
|
Depreciation and amortization |
|
75 |
73 |
|
|
|
169 |
181 |
|
|
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) |
|
Q2 2020 |
Q3 2019 |
|||
|
|
|
128 |
157 |
|||
|
Changes in non-cash working capital components |
|
34 |
(53) |
|||
|
|
|
162 |
104 |
|||
|
Specific items paid |
|
— |
4 |
|||
|
|
|
162 |
108 |
|||
|
Capital expenditures & other assets1 and right-of-use assets payments, net of disposals |
|
(51) |
(58) |
|||
|
Dividends paid to the Corporation’s Shareholders and to non-controlling interests |
|
(14) |
(12) |
|||
|
|
|
97 |
38 |
|||
|
|
|
|
$ |
1.02 |
$ |
0.40 |
|
|
|
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) |
|
June 30, 2020 |
September 30, |
|
Long-term debt |
|
1,975 |
2,107 |
|
Current portion of long-term debt |
|
255 |
87 |
|
Bank loans and advances |
|
9 |
14 |
|
|
|
2,239 |
2,208 |
|
Less: Cash and cash equivalents |
|
162 |
138 |
|
|
|
2,077 |
2,070 |
|
Adjusted OIBD (last twelve months) |
|
660 |
565 |
|
|
|
3.1x |
3.7x |
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View original content:http://www.prnewswire.com/news-releases/cascades-reports-results-for-the-third-quarter-of-2020-301171350.html
SOURCE Cascades Inc.
