KINGSEY FALLS, QC, Aug. 11 /PRNewswire-FirstCall/ - Cascades Inc. (CAS on the Toronto stock exchange), a leader in recovery and the manufacturing of green packaging and tissue paper products, announces its financial results for the three months ended June 30, 2010.
(All amounts in this press release are in Canadian dollars unless otherwise indicated.)
Second quarter highlights ------------------------- - Net earnings per share of $0.22 compared to net earnings per share of $0.00 in the previous quarter and $0.28 in the same period of last year (excluding specific items). - Operating income before depreciation and amortization (EBITDA) excluding specific items of $107 million, up 37% in comparison to Q1 2010. EBITDA excluding specific items amounted to $121 million in the second quarter of 2009. - Cash flow from operations (adjusted) of $71 million compared to $38 million in the first quarter of 2010 and $81 million in the same period last year. - Improved business conditions and increased demand and selling prices in both North America and Europe. - Total shipments up 3% compared to the first three months of the year and up 9% compared to the second quarter of 2009 (excluding the impact of acquisitions). - Buy-back of 325,463 shares at an average price of $6.66 for a total amount of approximately $2.2 million. - Launch of a new antibacterial tissue hand towel, a world first in terms of hand hygiene. ------------------------------------------------------------------------- ------------------------------------------------------------------------- Financial Summary ----------------- Selected consolidated information (in millions of Canadian dollars, --------------------------- except amounts per share) Q2/2010 Q2/2009 Q1/2010 ------------------------------------------------------------------------- Sales 998 981 942 Excluding specific items(1) Operating income before depreciation and amortization (OIBD or EBITDA) 107 121 78 Operating income 56 66 23 Net earnings attributable to shareholders for the period 21 28 - per common share $0.22 $0.28 $ - Cash flow from operations (adjusted) 71 85 41 As reported Operating income before depreciation and amortization (OIBD or EBITDA)(1) 101 130 82 Operating income 50 75 27 Net earnings attributable to shareholders for the period 21 30 - per common share $0.22 $0.30 $ - Cash flow from operations (adjusted)(1) 71 81 38 ------------------------------------------------------------------------- Note 1 - see the supplemental information on non-GAAP measures note.
Commenting on the second quarter results, Mr. Alain Lemaire, President and Chief Executive Officer stated: "As anticipated, we experienced a significant rebound in profitability compared to the previous quarter mostly as a result of the momentum in pricing and volumes in our different business units. All our segments delivered improved results as they benefited from selling price increases implemented during or prior to the second quarter. In addition, stronger demand combined with seasonal pick-up impacted positively our operational efficiency and financial results. In fact, during the quarter our overall operating rate reached 96%, the highest it's been in three years.
It is also important to note that these results were achieved despite the slow economic recovery as well as higher recycled fibre costs and Canadian dollar, up approximately 90% and 14% respectively compared to the same period last year."
Results analysis for the three-month period ended June 30, 2010 (compared ------------------------------------------------------------------------- to the previous year) ---------------------
In comparison with the same period last year, sales rose by 2% to $998 million resulting from higher selling prices and a 9% increase in shipments (excluding the impact of the acquisition of the tissue assets of Atlantic Packaging), offset by the appreciation of the Canadian dollar.
Net earnings excluding specific items amounted to $21 million ($0.22 per share) in the second quarter of 2010 compared to $28 million ($0.28 per share) for the same period of last year. Including specific items, net earnings amounted to $21 million ($0.22 per share) compared to $30 million ($0.30 per share) for the same quarter in 2009.
The operating income excluding specific items amounted to $56 million compared to $66 million in Q2 2009. Improved volumes and selling prices as well as the optimization of our cost structure and higher operating rates were more than offset by the rise of raw material costs. When including specific items, operating income amounted to $50 million in comparison to $75 million in the same period of last year.
In the second quarter of 2010, these specific items impacted our operating income and/or net earnings (before tax):
- $6 million unrealized loss on financial instruments (impact on operating income and net earnings); - $6 million foreign exchange gain on long-term debt and financial instruments (impact on net earnings).
For further details, see the two following tables on GAAP and non-GAAP measures reconciliation.
Third quarter outlook ---------------------
Mr. Alain Lemaire, President and Chief Executive Officer added: "Looking forward to the next quarter, we expect that the sequential improvement in profitability will carry on as a result of the continuous implementation of selling price increases in many of our operations. Also, the favourable seasonality associated with the third quarter leads us to anticipate a stronger demand for most of our products. In fact, despite some scheduled downtime for maintenance, we anticipate our operating rates to remain at high levels. In terms of input costs, we should start to benefit from the drop in pricing of old corrugated containers (OCC), the main grade of recycled fibres consumed by Cascades, which peaked in March. All in all, we remain confident for the coming months, particularly for our containerboard operations."
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 September 17, 2010 to shareholders of record at the close of business on September 3, 2010. This dividend paid by Cascades is an "eligible dividend" as per the Income Tax Act (Bill C-28, Canada). In addition, in the second quarter of 2010, in accordance with its normal course issuer bid program, Cascades purchased for cancellation 325,463 shares at an average price of $6.66 representing an aggregate amount of approximately $2.2 million. In the first half of the year, Cascades purchased for cancellation 563,181 shares at an average price of $7.29 representing an aggregate amount of approximately $4.1 million
Supplemental information on non-GAAP measures ---------------------------------------------
Operating income before depreciation and amortization, earnings before interests, taxes, depreciation and amortization, operating income and cash flow from operations are not measures of performance under Canadian GAAP. The Company includes operating income before depreciation and amortization, earnings before interests, taxes, depreciation and amortization, operating income and cash flow from operations because they are measures used by management to assess the operating and financial performance of the Company's operating segments. Additionally, the Company 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 interests, taxes, depreciation and amortization, operating income and cash flow from operations 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 Canadian GAAP, 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 interests, taxes, depreciation and amortization, operating income and cash flow from operations may differ from those of other companies. Cash flow from operations is defined as cash flow from operating activities as determined in accordance with Canadian GAAP excluding the change in working capital components.
Operating income before depreciation and amortization excluding specific items, earnings before interests, taxes, depreciation and amortization excluding specific items, operating income excluding specific items, net earnings excluding specific items, net earnings per common share excluding specific items and cash flow from operations excluding specific items are non-GAAP measures. The Company believes that it is useful for investors to be aware of specific items that have adversely or positively affected its GAAP measures, and that the above mentioned non-GAAP measures provide investors with a measure of performance with which to compare its results between periods without regard to these specific items. The Company's measures excluding specific items have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation.
Specific items are defined to include charges for impairment of assets, charges for facility or machine closures, debt restructuring charges, gains or losses on sale of business unit, unrealized gains or losses on derivative financial instruments that do not qualify for hedge accounting, foreign exchange gains or losses on long-term debt and other significant items of an unusual or non-recurring nature.
Net earnings attributable, which is a performance measure defined by Canadian GAAP is reconciled below to operating income, operating income excluding specific items and operating income before depreciation excluding specific items or earnings before interests, taxes, depreciation and amortization excluding specific items:
--------------------------- (in millions of Canadian dollars) Q2/2010 Q2/2009 Q1/2010 ------------------------------------------------------------------------- Net earnings attributable to shareholders for the period 21 30 - Non-controlling interest 1 - - Share of results of significantly influenced companies - (2) (2) Provision for (recovery of) income taxes 7 17 (3) Foreign exchange loss (gain) on long-term debt and financial instruments (6) 5 1 Loss on long-term debt refinancing - - 3 Financing expense 27 25 28 --------------------------- Operating income 50 75 27 Specific items : Loss on disposal and others - 1 - Closure and restructuring costs - 3 - Unrealized loss (gain) on financial instruments 6 (13) (4) --------------------------- 6 (9) (4) --------------------------- Operating income - excluding specific items 56 66 23 Depreciation and amortization 51 55 55 --------------------------- Operating income before depreciation and amortization (OIBD or EBITDA) - excluding specific items 107 121 78 ------------------------------------------------------------------------- -------------------------------------------------------------------------
The following table reconciles net earnings attributable to shareholders for the period and net earnings per share attributable to shareholders for the period to net earnings attributable to shareholders for the period excluding specific items and net earnings per share attributable to shareholders for the period excluding specific items:
--------------------------- -------------------------- (in millions of Net earnings (loss) Net earnings (loss) Canadian dollars, attributable to per share attributable except amounts shareholders to shareholders per share) for the period for the period(1) ---------------------------------------------- -------------------------- Q2/2010 Q2/2009 Q1/2010 Q2/2010 Q2/2009 Q1/2010 --------------------------- -------------------------- As per GAAP 21 30 - $0.22 $0.30 $ - Specific items : Loss on disposal and others - 1 - $ - $ - $ - Closure and restructuring costs - 3 - $ - $0.02 $ - Unrealized loss (gain) financial instruments 6 (13) (4) $0.05 $(0.09) $(0.03) Loss on long-term debt refinancing - - 3 $ - $ - $0.02 Foreign exchange loss (gain) on long-term debt and financial instruments (6) 5 1 $(0.05) $0.05 $0.01 Tax effect on specific items - 2 - --------------------------- -------------------------- - (2) - $ - $(0.02) $ - --------------------------- -------------------------- Excluding specific items 21 28 - $0.22 $0.28 $ - ---------------------------------------------- -------------------------- ---------------------------------------------- -------------------------- Note 1 - specific amounts per share are calculated on an after-tax basis.
The following table reconciles cash flow provided by operating activities to cash flow (adjusted) from operations excluding specific items:
--------------------------- Cash flow from operations (in millions of Canadian dollars, --------------------------- except amounts per share) Q2/2010 Q2/2009 Q1/2010 ------------------------------------------------------------------------- Cash flow provided by operating activities 17 82 33 Changes in non-cash working capital components 54 (1) 5 --------------------------- Cash flow (adjusted) from operations 71 81 38 Specific items : Loss on disposal and others - 1 - Loss on long-term debt refinancing - - 3 Closure and restructuring costs, net of current income tax - 3 - --------------------------- Excluding specific items 71 85 41 ------------------------------------------------------------------------- -------------------------------------------------------------------------
Founded in 1964, Cascades produces, converts and markets packaging and tissue products that are composed mainly of recycled fibres. The Company employs close to 12,500 employees, who work in more than 100 units located in North America and Europe. Its management philosophy, its more than 45 years of experience in recycling and its continued efforts in research and development are strengths that enable Cascades to create new products for its customers. 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 Company'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 Company's Securities and Exchange Commission filings.
Consolidated Balance Sheets (in millions of Canadian dollars) As at As at June 30, December 31, 2010 2009 ----------------------------- Assets (unaudited) Current assets Cash and cash equivalents 22 19 Accounts receivable 606 543 Inventories 527 520 ------------------------------------------------------------------------- 1,155 1,082 Property, plant and equipment 1,848 1,912 Intangible assets 158 165 Other assets 318 317 Goodwill 317 316 ------------------------------------------------------------------------- 3,796 3,792 ----------------------------- ----------------------------- Liabilities and Equity Current liabilities Bank loans and advances 79 83 Accounts payable and accrued liabilities 532 505 Current portion of long-term debt 10 10 ------------------------------------------------------------------------- 621 598 Long-term debt 1,486 1,459 Other liabilities 387 410 ------------------------------------------------------------------------- 2,494 2,467 ----------------------------- Equity attributable to the Shareholders Capital stock 496 499 Contributed surplus 13 14 Retained earnings 713 700 Accumulated other comprehensive income 58 91 ------------------------------------------------------------------------- 1,280 1,304 Non-controlling interest 22 21 ------------------------------------------------------------------------- Total equity 1,302 1,325 ------------------------------------------------------------------------- 3,796 3,792 ----------------------------- ----------------------------- Consolidated Statements of Earnings (in millions of Canadian dollars, except per share amounts) (unaudited) For the 3-month periods For the 6-month periods ended June 30, ended June 30, 2010 2009 2010 2009 ------------------------------------------------------ Sales 998 981 1,940 1,951 Cost of sales and expenses Cost of sales (excluding depreciation and amortization) 791 750 1,557 1,502 Depreciation and amortization 51 55 106 109 Selling and administrative expenses 101 108 199 216 Losses on disposal and others - 1 - 1 Impairment and other restructuring costs - 3 - 8 Loss (gain) on financial instruments 5 (11) 1 (9) ------------------------------------------------------------------------- 948 906 1,863 1,827 ------------------------------------------------------------------------- Operating income 50 75 77 124 Financing expense 27 25 55 52 Loss on refinancing of long-term debt - - 3 - Gain on purchases of senior notes - - - (14) Foreign exchange loss (gain) on long-term debt and financial instruments (6) 5 (5) 5 ------------------------------------------------------------------------- 29 45 24 81 Provision for income taxes 7 17 4 22 Share of results of significantly influenced companies - (2) (2) (7) ------------------------------------------------------------------------- Net earnings including non-controlling interest for the period 22 30 22 66 Non-controlling interest 1 - 1 (1) ------------------------------------------------------------------------- Net earnings attributable to Shareholders for the period 21 30 21 67 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted net earnings per common share $0.22 $0.30 $0.22 $0.68 ------------------------------------------------------ ------------------------------------------------------ Weighted average number of common shares outstanding 96,895,355 97,467,651 96,990,471 97,960,461 ------------------------------------------------------ ------------------------------------------------------ Consolidated Statements of Equity (in millions of Canadian dollars) (unaudited) For the 6-month period ended June 30, 2010 -------------------------------------------------------------- Total Accu- equity mulated attribu- Non- Re- other table control- Contri- tained- compre- to the ling Capital buted ear- hensive Share- inte- Total stock surplus nings income holders rest equity -------------------------------------------------------------- Balance - Beginning of period 499 14 700 91 1,304 21 1,325 Comprehen- sive income (loss): Net earnings for the period - - 21 - 21 1 22 Change in other compre- hensive income (loss) - - - (33) (33) - (33) -------------------------- Comprehen- sive income (loss) for the period (12) 1 (11) -------------------------- Dividends - - (8) - (8) - (8) Redemption of common shares (3) (1) - - (4) - (4) -------------------------------------------------------------- Balance - End of period 496 13 713 58 1,280 22 1,302 -------------------------------------------------------------- -------------------------------------------------------------- For the 6-month period ended June 30, 2009 -------------------------------------------------------------- Total Accu- equity mulated attribu- Non- Re- other table control- Contri- tained- compre- to the ling Capital buted ear- hensive Share- inte- Total stock surplus nings income holders rest equity -------------------------------------------------------------- Balance - Beginning of period 506 9 656 85 1,256 22 1,278 Comprehen- sive income: Net earnings (loss) for the period - - 67 - 67 (1) 66 Change in other comprehen- sive income (loss) - - - (3) (3) - (3) -------------------------- Comprehen- sive income (loss) for the period 64 (1) 63 -------------------------- Dividends - - (8) - (8) - (8) Redemption of common shares (5) 3 - - (2) - (2) -------------------------------------------------------------- Balance - End of period 501 12 715 82 1,310 21 1,331 -------------------------------------------------------------- -------------------------------------------------------------- Consolidated Statements of Comprehensive Income (Loss) (in millions of Canadian dollars) (unaudited) For the 3-month periods For the 6-month periods ended June 30, ended June 30, 2010 2009 2010 2009 ------------------------------------------------------ Net earnings including non- controlling interest for the period 22 30 22 66 ------------------------------------------------------ Other comprehensive income (loss) Translation adjustments Change in foreign currency translation of self-sustaining foreign subsidiaries 20 (61) (15) (44) Change in foreign currency translation related to hedging activities (24) 39 (8) 25 Income taxes 3 (5) 1 (3) Cash flow hedges Change in fair value of foreign exchange forward contracts (6) 28 (2) 29 Change in fair value of interest rate swap agreements (1) - (3) - Change in fair value of commodity derivative financial instruments 1 3 (11) - Income taxes 1 (10) 5 (10) ------------------------------------------------------ (6) (6) (33) (3) ------------------------------------------------------ Comprehensive income (loss) including non- controlling interest for the period 16 24 (11) 63 ------------------------------------------------------ Less: Comprehensive income (loss) attributable to non-controlling interest 1 - 1 (1) ------------------------------------------------------ Comprehensive income (loss) attributable to Shareholders 15 24 (12) 64 ------------------------------------------------------ ------------------------------------------------------ Consolidated Statements of Cash Flows (in millions of Canadian dollars) (unaudited) For the 3-month periods For the 6-month periods ended June 30, ended June 30, 2010 2009 2010 2009 ------------------------------------------------------ OPERATING ACTIVITIES FROM CONTINUING OPERATIONS Net earnings attributable to Shareholders for the period 21 30 21 67 Adjustments for Depreciation and amortization 51 55 106 109 Losses on disposal and others - 1 - 1 Impairment and other restructuring costs - - - 3 Unrealized loss (gain) on financial instruments 6 (13) 2 (14) Gain on purchases of senior notes - - - (14) Foreign exchange loss (gain) on long-term debt and financial instruments (6) 5 (5) 5 Future income taxes (2) 2 (12) (1) Share of results of significantly influenced companies - (2) (2) (7) Non-controlling interest 1 - 1 (1) Others - 3 (2) 1 ------------------------------------------------------------------------- 71 81 109 149 Change in non-cash working capital components (54) 1 (59) - ------------------------------------------------------------------------- 17 82 50 149 ------------------------------------------------------------------------- INVESTING ACTIVITIES FROM CONTINUING OPERATIONS Purchases of property, plant and equipment (22) (30) (56) (70) Increase in other assets (3) (8) (5) (11) Business acquisitions - - (3) - ------------------------------------------------------------------------- (25) (38) (64) (81) ------------------------------------------------------------------------- FINANCING ACTIVITIES FROM CONTINUING OPERATIONS Bank loans and advances 2 13 - (19) Change in revolving credit facilities 16 (57) 201 (45) Purchases of senior notes (4) (4) (165) (18) Variance of other long-term debt (1) 3 - 25 Payments of other long-term debt - (4) (5) (5) Early settlement of foreign exchange contracts - 8 - 8 Redemption of common shares (2) - (4) (2) Dividends (4) (4) (8) (8) ------------------------------------------------------------------------- 7 (45) 19 (64) ------------------------------------------------------------------------- Change in cash and cash equivalents during the period from continuing operations (1) (1) 5 4 Change in cash and cash equivalents from discontinued operations - - (2) (3) ------------------------------------------------------------------------- Net change in cash and cash equivalents during the period (1) (1) 3 1 Translation adjustments on cash and cash equivalents - - - - Cash and cash equivalents - Beginning of period 23 13 19 11 ------------------------------------------------------------------------- Cash and cash equivalents - End of period 22 12 22 12 ------------------------------------------------------ ------------------------------------------------------ Selected Segmented Information (in millions of Canadian dollars) (unaudited) For the 3-month periods For the 6-month periods ended June 30, ended June 30, ------------------------------------------------------------------------- 2010 2009 2010 2009 ------------------------------------------------------------------------- Sales Packaging products Boxboard Manufacturing 180 178 357 358 Converting 162 181 315 362 Intersegment sales (23) (23) (43) (48) ---------------------------------------------------- 319 336 629 672 Containerboard Manufacturing 148 130 282 261 Converting 217 221 411 430 Intersegment sales (94) (76) (167) (153) ---------------------------------------------------- 271 275 526 538 Specialty products Industrial packaging 49 45 95 92 Consumer packaging 20 21 38 41 Specialty papers 78 78 156 161 Recovery and recycling 76 46 151 84 Intersegment sales (3) (2) (5) (4) ---------------------------------------------------- 220 188 435 374 Intersegment sales (28) (15) (57) (28) ---------------------------------------------------- 782 784 1,533 1,556 Tissue papers Manufacturing and converting 220 207 418 418 Intersegment sales and other (4) (10) (11) (23) ------------------------------------------------------------------------- Total 998 981 1,940 1,951 ------------------------------------------------------------------------- ------------------------------------------------------------------------- For the 3-month periods For the 6-month periods ended June 30, ended June 30, ------------------------------------------------------------------------- 2010 2009 2010 2009 ------------------------------------------------------------------------- Operating income (loss) before depreciation and amortization Packaging products Boxboard Manufacturing 13 13 22 25 Converting 17 16 32 28 Others (1) - (2) (2) ---------------------------------------------------- 29 29 52 51 Containerboard Manufacturing 15 26 25 61 Converting 26 11 47 18 Others (3) 2 (3) (5) ---------------------------------------------------- 38 39 69 74 Specialty products Industrial packaging 6 5 13 10 Consumer packaging 2 3 3 6 Specialty papers 5 10 10 20 Recovery and recycling 7 3 12 - Others - 1 - (1) ---------------------------------------------------- 20 22 38 35 ---------------------------------------------------- 87 90 159 160 Tissue papers Manufacturing and converting 23 42 42 81 Corporate (9) (2) (18) (8) ------------------------------------------------------------------------- Operating income before depreciation and amortization 101 130 183 233 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Depreciation and amortization Boxboard (15) (19) (29) (38) Containerboard (17) (16) (36) (32) Specialty products (9) (9) (18) (17) Tissue papers (9) (9) (20) (18) Corporate and eliminations (1) (2) (3) (4) ---------------------------------------------------- (51) (55) (106) (109) ---------------------------------------------------- Operating income 50 75 77 124 ------------------------------------------------------------------------- ------------------------------------------------------------------------- For the 3-month periods For the 6-month periods ended June 30, ended June 30, 2010 2009 2010 2009 ---------------------------------------------------- Purchases of property, plant and equipment Packaging products Boxboard Manufacturing 3 7 7 13 Converting 3 6 6 13 ---------------------------------------------------- 6 13 13 26 Containerboard Manufacturing 5 4 9 7 Converting 3 2 8 4 ---------------------------------------------------- 8 6 17 11 Specialty products Industrial packaging 1 - 1 1 Consumer packaging 1 1 2 1 Specialty papers 2 1 3 3 Recovery and recycling 1 5 2 12 ---------------------------------------------------- 5 7 8 17 ---------------------------------------------------- 19 26 38 54 Tissue papers Manufacturing and converting 3 8 11 15 Corporate 2 1 5 2 ------------------------------------------------------------------------- Total purchases 24 35 54 71 Disposal of property, plant and equipment (1) (2) (3) (3) ------------------------------------------------------------------------- 23 33 51 68 Purchases of property, plant and equipment included in accounts payable Beginning of period 7 9 13 14 End of period (8) (12) (8) (12) ------------------------------------------------------------------------- Total investing activities 22 30 56 70 ------------------------------------------------------------------------- -------------------------------------------------------------------------
SOURCE CASCADES INC.
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