Cascades continues to improve its financial results during the first quarter of 2015, notably due to a strong performance in the containerboard sector

KINGSEY FALLS, QC, May 7, 2015 /PRNewswire/ - Cascades Inc. (TSX: CAS), a leader in the recovery and manufacturing of green packaging and tissue paper products, announces its unaudited financial results for the three-month period ended March 31, 2015.

Q1 2015 Highlights

• Sales of $910 million
  (compared to $879 million in Q4 2014 (+4%) and $863 million in Q1 2014 (+5%))
• Excluding specific items
  • OIBD of $85 million
    (compared to $82 million in Q4 2014 (+4%) and $75 million in Q1 2014 (+13%))
  • Net earnings per share of $0.18
    (compared to $0.08 in Q4 2014 and $0.01 in Q1 2014)
  • Greenpac contribution to net earnings: $0.03
• Including specific items
  • OIBD of $72 million
    (compared to $57 million in Q4 2014 (+26%) and $79 million in Q1 2014 (-9%))
  • Net loss per share of $0.37
    (compared to $0.51 in Q4 2014 and $0.01 in Q1 2014)
• Net debt of $1,691 million (compared to $1,613 million as at December 31, 2014), including $79 million of non-recourse net debt.

Mr. Mario Plourde, President and Chief Executive Officer, had the following comments on the first quarter results: "Despite the seasonality inherent to the first quarter of the year, we are satisfied with the financial results released today which represent an improvement, both on a sequential and year-over-year basis.

Similar to what we experienced in 2014, energy costs had a negative impact during the first quarter which was offset by the weakening of the Canadian dollar and a sequential decrease in raw material costs. The 4% OIBD increase compared to the previous quarter is essentially linked to the strong performance of our Containerboard Group. Results in Europe were slightly higher while results of our Specialty Products Group were stable. In addition to temporary impacts related to the ramp-up of two new sites in the U.S., our Tissue Papers Group was negatively impacted by downtimes for equipment maintenance, upgrades and to balance our inventories during the first quarter. Market conditions in the tissue market continue to be soft while new capacity is being absorbed by the industry. Finally, the Greenpac mill has continued to improve productivity, with daily production averaging 1,260 short tons during the quarter, and significant growth in the production of our premium lightweight grade.

The increase in our debt was caused by the weakening of the Canadian dollar and seasonal investments in working capital. If the exchange rate between the Canadian dollar and its U.S. counterpart remains constant, our leverage ratio should resume its downward trend over the next few quarters due to the expected increase of free cash flows."

Financial Summary

Results analysis for the three-month period ended March 31, 2015 (compared to the same period last year)

In comparison with the same period last year, sales increased by 5% to $910 million as the positive impact of the decline of the Canadian dollar against it U.S. counterpart and higher shipments in all of our groups more than offset lower average selling prices.

Operating income, excluding specific items, increased from $32 million in the first quarter of 2014 to $41 million in the first quarter of 2015. The above-mentioned factors explain most of the increase in operating income, while raw material costs were slightly higher and the Canadian dollar greatly strengthened against the Euro.

When including specific items, operating income amounted to $28 million in comparison to $36 million for the same period of last year. In the first quarter of 2015, the following specific items, before income taxes, impacted our operating income and/or net earnings:

• a $13 million unrealized loss on derivative financial instruments (operating income and net earnings);
• a $5 million loss related to a change in the equity of Boralex, an associate investment (net earnings);
• a $1 million net gain related to the disposal of our North American boxboard activities included in discontinued operations (net earnings);
• a $45 million foreign exchange loss on long-term debt and financial instruments (net earnings).

Net earnings excluding specific items amounted to $17 million ($0.18 per share) in the first quarter of 2015 compared to $1 million ($0.01 per share) for the same period in 2014. Including specific items, the net loss amounted to $35 million ($0.37 per share) in the first quarter of 2015 compared to a net loss of $1 million ($0.01 per share) in the same period in 2014.

Results analysis for the three-month period ended March 31, 2015 (compared to the previous quarter)

In comparison to the previous quarter, sales increased by 4% to reach $910 million due to a favourable foreign exchange rate and higher shipments in Europe. These factors were partially offset by lower average selling prices, except for the Containerboard Group.

Operating income, excluding specific items, increased from $38 million in the fourth quarter of 2014 to $41 million in the first quarter of 2015. As mentioned above, a favourable exchange rate and lower raw material costs improved the operating income but were partially offset by higher operational costs in the Tissue Papers Group due to downtimes, start-up costs, higher energy costs due to colder temperatures and lower average selling prices.

For further details, see the tables on IFRS and non-IFRS measures reconciliation, included herewith.

Near-Term Outlook

In commenting on the outlook, Mr. Plourde added: "With the improved results for the first quarter compared to last year and the current state of our markets, we remain confident that we will be able to continue to grow our financial results in 2015. In North America, our Packaging Products groups should continue to improve their performance as they enter a period of seasonally improved market conditions for the next two quarters. In Europe, a price increase was announced by Reno de Medici for recycled grades which should be applied gradually and have a more meaningful impact on our results during the second semester. Our Tissue Papers Group will benefit from the gradual contribution from two new sites in the U.S., which should also positively contribute to the results during the year. An increasing OIBD and a positive contribution from the Greenpac mill should positively impact our earnings per share in 2015. We are pleased with the progression of this investment, which, we are confident, will be as strategic and important to the long-term value of the Corporation as we expected. "

Dividend on common shares and normal course issuer bid

The Board of Directors of Cascades declared a quarterly dividend of $0.04 per share to be paid June 4, 2015 to shareholders of record at the close of business on May 26, 2015. This dividend paid by Cascades is an "eligible dividend" as per the Income Tax Act (Bill C-28, Canada).

In the first quarter of 2015, Cascades did not purchase any shares.

Conference call information

Management will comment on the 2015 first quarter financial results during a conference call to be held today at 9:00 a.m.

Financial analysts, investors, media and other interested individuals are invited to listen to the conference call by dialing 1-866-229-4144 and by using the access code 9501952#. The conference call, including the investor presentation, will also be broadcast live on the Cascades corporate website (www.cascades.com, Investors tab on the Home page). The broadcast replay will be available on the Cascades corporate website and by phone until May 15, 2015 by dialing 1-888-843-7419 and by using the access code 9501952#.

Founded in 1964, Cascades produces, converts and markets packaging and tissue products that are composed mainly of recycled fibres. The Corporation employs close to 11,000 employees, who work in more than 90 units located in North America and Europe. With its management philosophy, half a century of experience in recycling, and continuous efforts in research and development as driving forces, Cascades continues to serve its clients with innovative products. 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.

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, 2014.

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 assessment of the Corporation's performance, and is therefore the CODM.

The Corporation's operations are managed in four segments: Containerboard, Boxboard Europe, Specialty Products (which constitutes the Packaging Products of the Corporation) and Tissue Papers.

SUPPLEMENTAL INFORMATION ON NON-IFRS MEASURES

Operating income before depreciation and amortization, earnings before interest, income taxes, depreciation and amortization and operating income are not measures of performance under IFRS. The Corporation includes operating income before depreciation and amortization, earnings before interest, taxes, depreciation and amortization and operating income because they are measures used by management to assess the operating and financial performance of the Corporation's operating segments. Additionally, the Corporation believes that these items provide additional measures often used by investors to assess a company's operating performance and its ability to meet debt service requirements. However, operating income before depreciation and amortization, earnings before interest, taxes, depreciation and amortization and operating income do not represent, and should not be used as a substitute for, net earnings or cash flows from operating activities as determined in accordance with IFRS, and they are not necessarily an indication of whether cash flow will be sufficient to fund our cash requirements. In addition, our definition of operating income before depreciation and amortization, earnings before interest, taxes, depreciation and amortization and operating income may differ from those of other companies.

Operating income before depreciation and amortization excluding specific items, earnings before interest, income taxes, depreciation and amortization excluding specific items, operating income excluding specific items, net earnings excluding specific items and net earnings per common share excluding specific items are non-IFRS measures. The Corporation believes that it is useful for investors to be aware of specific items that have adversely or positively affected its IFRS measures, and that the above mentioned non-IFRS measures provide investors with a measure of performance with which to compare its results between periods without regard to these specific items. The Corporation's measures excluding specific items have no standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation.

The specific items excluded from OIBD, operating income, financing expense, net earnings and cash flow from operations mainly include charges for (reversals of) impairment of assets, charges for facility or machine closures, accelerated depreciation of assets due to restructuring measures, debt restructuring charges, gains or losses on the acquisition or sale of a business unit, discontinued operations, 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 other significant items of an unusual or non-recurring nature. Although we consider these items to be non-recurring and less relevant to evaluating our performance, some of them are ongoing and will reduce the cash available to us.

The following table reconciles net earnings (loss) and net earnings (loss) per share with net earnings (loss) excluding specific items and net earnings (loss) per share excluding specific items:

Net loss, which is a performance measure defined by IFRS, is reconciled below with operating income, operating income excluding specific items and operating income before depreciation excluding specific items or earnings before interest, income taxes, depreciation and amortization excluding specific items:

SOURCE Cascades Inc.

Related Links

http://www.cascades.com