Record quarterly adjusted OIBD highlights resiliency of our business model
KINGSEY FALLS, QC, Aug. 6, 2020 /PRNewswire/ - Cascades Inc. (TSX: CAS) reports its unaudited financial results for the three-month period ended June 30, 2020.
Q2 2020 Highlights
- Sales of $1,285 million
(compared with $1,313 million in Q1 2020 (-2%) and $1,275 million in Q2 2019 (+1%)) - As reported (including specific items)
- Operating income of $94 million
(compared with of $90 million in Q1 2020 (+4%) and an operating income of $82 million in Q2 2019 (+15%)) - Operating income before depreciation and amortization (OIBD)1 of $169 million
(compared with $161 million in Q1 2020 (+5%) and $154 million in Q2 2019 (+10%)) - Net earnings per share of $0.57
(compared with $0.24 in Q1 2020 and $0.33 in Q2 2019) - Adjusted (excluding specific items)1
- Operating income of $111 million
(compared with $90 million in Q1 2020 (+23%) and $84 million in Q2 2019 (+32%)) - OIBD of $186 million
(compared with $161 million in Q1 2020 (+16%) and $156 million in Q2 2019 (+19%)) - Net earnings per share of $0.61
(compared with $0.42 in Q1 2020 and $0.28 in Q2 2019) - Net debt1 of $2,077 million as at June 30, 2020 (compared with $2,212 million as at March 31, 2020) reflecting favourable foreign exchange variance and solid cash flow from operations and including acquisition of CDPQ's interest in Greenpac Mill ($121 million) realized in the first quarter; Net debt to adjusted OIBD ratio1 of 3.1x as at June 30, 2020, down from 3.5x at March 31, 2020.
1 For further details, please refer to the "Supplemental Information on non-IFRS Measures" section. |
Mario Plourde, President and CEO, commented: "Our operations executed and adapted well during the second quarter, delivering improved consolidated results on both a sequential and year-over-year basis. This strong performance resulted in a record quarterly adjusted OIBD for the Corporation, highlighting the resiliency of our business model focused on providing customers with essential, sustainable quality packaging and tissue solutions. The ability of our business segments to successfully navigate through the challenging second quarter business environment is a testament to the commitment and hard work of our dedicated employees, and a measurable indication of the operational improvements and cost reduction initiatives being generated by our strategic investments of the past few years.
Sales in the second quarter decreased by 2% sequentially as the elevated Covid-19 related demand levels present in the first quarter eased. As expected, this resulted in lower volumes in all segments with the exception of Specialty Products. Sales increased modestly when compared to the comparable period last year, supported by a 12.5% growth in Tissue.
Second quarter adjusted OIBD of $186 million, representing a 14.5% margin, was a quarterly record for the Corporation, and was 16% above the prior quarter and 19% over the prior year period. The sequential performance was driven by improved results in all segments except Containerboard. Results of both the Tissue and Containerboard segments were negatively impacted by slightly lower volumes and higher raw material costs compared to the prior quarter. As mentioned at the end of the first quarter, the Corporation viewed the sharp increases in prices of recycled fibers as temporary. Pricing has since decreased and is expected to remain within these more normalized levels. The year-over-year adjusted OIBD increase of $30 million was largely driven by the Tissue segment and, to a lesser extent, Boxboard Europe. Specialty Products results were stable year-over-year, while those of Containerboard decreased mainly due to higher raw material costs and less favourable selling price and mix."
Discussing near-term outlook, Mr. Plourde commented, "Looking ahead, we are cautiously optimistic regarding our operational performance given the weighting of our production that falls within essential tissue and packaging segments, and the adaptability demonstrated by our business segments within the challenging business environment. In the near-term, this is counterbalanced by the ongoing potential economic impact related to Covid-19, and evolving consumption trends in end markets that have resulted from the pandemic. With this in mind, we are expecting consolidated results to decrease sequentially, as benefits from favourable raw materials pricing are anticipated to be offset by lower expected volumes, notably in the Away-from-Home Tissue business and the usual lower seasonal third quarter volumes in Europe. Given continued uncertainty around Covid-19, we are focused on the health and safety of our employees and maintaining flexibility in our operations to meet the evolving product needs of our customers. We are committed in our support of community initiatives helping people navigate the current environment, and continue to work closely with our suppliers and customers being impacted. As always, management of our cash flow remains a priority along with reducing operational and SG&A costs. We continue to expect our projected available liquidity levels to meet future requirements including management of our debt level, and will readjust our investment plans should the need become apparent. At this time, we do not have any update on our Bear Island conversion project, for which analysis has continued at a slower pace given current circumstances."
Financial Summary
Selected consolidated information
(in millions of Canadian dollars, except amounts per share) (unaudited) |
Q2 2020 |
Q1 2020 |
Q2 2019 |
|||
Sales |
1,285 |
1,313 |
1,275 |
|||
As Reported |
||||||
Operating income before depreciation and amortization (OIBD)1 |
169 |
161 |
154 |
|||
Operating income |
94 |
90 |
82 |
|||
Net earnings |
54 |
22 |
31 |
|||
per share |
$ |
0.57 |
$ |
0.24 |
$ |
0.33 |
Adjusted1 |
||||||
Operating income before depreciation and amortization (OIBD) |
186 |
161 |
156 |
|||
Operating income |
111 |
90 |
84 |
|||
Net earnings |
58 |
39 |
26 |
|||
per share |
$ |
0.61 |
$ |
0.42 |
0.28 |
|
Margin (OIBD) |
14.5% |
12.3% |
12.2% |
|||
1 - Refer to the "Supplemental Information on Non-IFRS Measures" section. |
Segmented OIBD as reported
(in millions of Canadian dollars) (unaudited) |
Q2 2020 |
Q1 2020 |
Q2 2019 |
Packaging Products |
|||
Containerboard |
83 |
102 |
114 |
Boxboard Europe |
42 |
31 |
30 |
Specialty Products |
16 |
11 |
16 |
Tissue Papers |
48 |
45 |
17 |
Corporate Activities |
(20) |
(28) |
(23) |
OIBD as reported |
169 |
161 |
154 |
Segmented adjusted OIBD1
(in millions of Canadian dollars) (unaudited) |
Q2 2020 |
Q1 2020 |
Q2 2019 |
Packaging Products |
|||
Containerboard |
94 |
99 |
113 |
Boxboard Europe |
43 |
30 |
30 |
Specialty Products |
17 |
12 |
16 |
Tissue Papers |
54 |
45 |
18 |
Corporate Activities |
(22) |
(25) |
(21) |
Adjusted OIBD |
186 |
161 |
156 |
1 - Refer to the "Supplemental Information on Non-IFRS Measures" section. |
Analysis of results for the three-month period ended June 30, 2020 (compared to the same period last year)
Sales of $1,285 million grew by $10 million, or 1%, compared with the same period last year. This was largely a reflection of the volume-driven 12.5% increase in the Tissue segment, favourable foreign exchange impacts for all business segments and a positive contribution from recovery operations as a result of higher raw material prices. These benefits were partially offset by lower average selling prices and/or less favourable sales mix in all business segments except Specialty Products, in which year-over-year sales performance levels were nonetheless negatively impacted as a result of the mill closure and business divestiture completed in 2019.
The Corporation generated an operating income before depreciation and amortization (OIBD) of $169 million in the second quarter of 2020, down from $154 million in the second quarter of 2019. On an adjusted basis, second quarter OIBD totaled $186 million in the current period, a new quarterly record for the Corporation. This compares with the $156 million generated in the same period last year, an increase of $30 million, or 19%. The annual improvement in adjusted OIBD reflects increases of $36 million from Tissue and $13 million from Boxboard Europe and stable results in the Specialty Products segment. These benefits were partially offset by a decrease of $19 million from the Containerboard segment, largely due to higher raw material costs and a less favourable selling price and sales mix year-over-year. On a consolidated basis, higher raw material costs, a less favourable average selling price and sales mix negatively impacted adjusted OIBD performance compared to the prior year period. These effects were more than offset by lower production costs, lower energy costs, beneficial foreign exchange impact and a favourable contribution from recovery operations as a result of higher raw material pricing. Research and development tax credits of $9 million were recorded in the current quarter.
On an adjusted basis1, second quarter 2020 OIBD stood at $186 million, versus $156 million in the previous year. The main specific items, before income taxes, that impacted our second quarter 2020 OIBD and/or net earnings were:
- $13 million of impairment charges and $2 million of restructuring charges were recorded by the Containerboard and Tissue segments as part of network optimization and profitability improvement initiatives (OIBD and net earnings)
- $4 million environmental provision was recorded in the Specialty Products segment related to plants in Canada that were closed in the past (OIBD and net earnings)
- $3 million gain in the Specialty Products segment related to the sale of a non-core equity investment (OIBD and net earnings)
- $1 million unrealized loss on financial instruments (OIBD and net earnings)
- $9 million foreign exchange gain on long-term debt and financial instruments (net earnings)
For the 3-month periods ended June 30, 2020, the Corporation posted net earnings of $54 million, or $0.57 per share, compared to net earnings of $31 million, or $0.33 per share, in the same period of 2019. On an adjusted basis1, the Corporation generated net earnings of $58 million in the second quarter of 2020, or $0.61 per share, compared to net earnings of $26 million, or $0.28 per share, in the same period of 2019.
1 For further details, please refer to the "Supplemental Information on non-IFRS Measures" section. |
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 September 3, 2020 to shareholders of record at the close of business on August 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 second quarter of 2020.
2020 Second Quarter Results Conference Call Details
Management will discuss the 2020 second 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 September 6, 2020 by dialing 1-855-859-2056 (international dial-in 1-416-849-0833), access code 5819259.
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 90 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) |
June 30, |
December 31, |
||
Assets |
||||
Current assets |
||||
Cash and cash equivalents |
162 |
155 |
||
Accounts receivable |
677 |
606 |
||
Current income tax assets |
22 |
32 |
||
Inventories |
657 |
598 |
||
Current portion of financial assets |
7 |
10 |
||
1,525 |
1,401 |
|||
Long-term assets |
||||
Investments in associates and joint ventures |
88 |
80 |
||
Property, plant and equipment |
2,806 |
2,770 |
||
Intangible assets with finite useful life |
171 |
182 |
||
Financial assets |
24 |
16 |
||
Other assets |
51 |
55 |
||
Deferred income tax assets |
163 |
153 |
||
Goodwill and other intangible assets with indefinite useful life |
539 |
527 |
||
5,367 |
5,184 |
|||
Liabilities and Equity |
||||
Current liabilities |
||||
Bank loans and advances |
9 |
11 |
||
Trade and other payables |
837 |
788 |
||
Current income tax liabilities |
19 |
17 |
||
Current portion of other debt without recourse to the Corporation to be refinanced |
165 |
— |
||
Current portion of long-term debt |
90 |
85 |
||
Current portion of provisions for contingencies and charges |
5 |
5 |
||
Current portion of financial liabilities and other liabilities |
26 |
137 |
||
1,151 |
1,043 |
|||
Long-term liabilities |
||||
Long-term debt |
1,975 |
2,022 |
||
Provisions for contingencies and charges |
54 |
49 |
||
Financial liabilities |
8 |
5 |
||
Other liabilities |
209 |
198 |
||
Deferred income tax liabilities |
212 |
198 |
||
3,609 |
3,515 |
|||
Equity |
||||
Capital stock |
498 |
491 |
||
Contributed surplus |
13 |
15 |
||
Retained earnings |
1,050 |
1,003 |
||
Accumulated other comprehensive loss |
(2) |
(17) |
||
Equity attributable to Shareholders |
1,559 |
1,492 |
||
Non-controlling interests |
199 |
177 |
||
Total equity |
1,758 |
1,669 |
||
5,367 |
5,184 |
CONSOLIDATED STATEMENTS OF EARNINGS
For the 3-month periods ended |
For the 6-month periods ended |
|||||||
(in millions of Canadian dollars, except per common share amounts and number of |
2020 |
2019 |
2020 |
2019 |
||||
Sales |
1,285 |
1,275 |
2,598 |
2,505 |
||||
Cost of sales and expenses |
||||||||
Cost of sales (including depreciation and amortization of $75 million |
1,065 |
1,081 |
2,157 |
2,139 |
||||
Selling and administrative expenses |
110 |
111 |
241 |
215 |
||||
Loss (gain) on acquisitions, disposals and others |
1 |
3 |
2 |
(7) |
||||
Impairment charges and restructuring costs |
15 |
1 |
15 |
10 |
||||
Foreign exchange gain |
(1) |
(1) |
(1) |
(1) |
||||
Loss (gain) on derivative financial instruments |
1 |
(2) |
— |
(5) |
||||
1,191 |
1,193 |
2,414 |
2,351 |
|||||
Operating income |
94 |
82 |
184 |
154 |
||||
Financing expense |
27 |
25 |
54 |
50 |
||||
Interest expense on employee future benefits and other liabilities |
1 |
10 |
2 |
24 |
||||
Foreign exchange loss (gain) on long-term debt and financial instruments |
(9) |
(1) |
8 |
(7) |
||||
Share of results of associates and joint ventures |
(3) |
(2) |
(6) |
(4) |
||||
Earnings before income taxes |
78 |
50 |
126 |
91 |
||||
Provision for income taxes |
12 |
10 |
27 |
18 |
||||
Net earnings from continuing operations including non-controlling interests for |
66 |
40 |
99 |
73 |
||||
Net earnings attributable to non-controlling interests |
12 |
9 |
23 |
18 |
||||
Net earnings attributable to Shareholders for the period |
54 |
31 |
76 |
55 |
||||
Net earnings per common share |
||||||||
Basic |
$ |
0.57 |
$ |
0.33 |
$ |
0.81 |
$ |
0.59 |
Diluted |
$ |
0.57 |
$ |
0.32 |
$ |
0.80 |
$ |
0.58 |
Weighted average basic number of common shares outstanding |
94,459,257 |
93,636,771 |
94,354,030 |
93,900,400 |
||||
Weighted average number of diluted common shares |
95,600,602 |
95,058,479 |
95,562,296 |
95,395,585 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the 3-month periods ended |
For the 6-month periods ended |
||||
(in millions of Canadian dollars) (unaudited) |
2020 |
2019 |
2020 |
2019 |
|
Net earnings including non-controlling interests for the period |
66 |
40 |
99 |
73 |
|
Other comprehensive income (loss) |
|||||
Items that may be reclassified subsequently to earnings |
|||||
Translation adjustments |
|||||
Change in foreign currency translation of foreign subsidiaries |
(45) |
(21) |
57 |
(58) |
|
Change in foreign currency translation related to net investment hedging activities |
25 |
14 |
(34) |
35 |
|
Cash flow hedges |
|||||
Change in fair value of foreign exchange forward contracts |
— |
— |
— |
1 |
|
Change in fair value of interest rate swaps |
1 |
(1) |
— |
(1) |
|
Change in fair value of commodity derivative financial instruments |
— |
(1) |
— |
(2) |
|
(19) |
(9) |
23 |
(25) |
||
Items that are not released to earnings |
|||||
Actuarial loss on employee future benefits |
(25) |
(10) |
(15) |
(15) |
|
Recovery of income taxes |
7 |
1 |
4 |
3 |
|
(18) |
(9) |
(11) |
(12) |
||
Other comprehensive income (loss) |
(37) |
(18) |
12 |
(37) |
|
Comprehensive income including non-controlling interests for the period |
29 |
22 |
111 |
36 |
|
Comprehensive income attributable to non-controlling interests for the period |
8 |
7 |
31 |
9 |
|
Comprehensive income attributable to Shareholders for the period |
21 |
15 |
80 |
27 |
CONSOLIDATED STATEMENTS OF EQUITY
For the 6-month period ended June 30, 2020 |
||||||||||||||
(in millions of Canadian dollars) |
CAPITAL |
CONTRIBUTED |
RETAINED |
ACCUMULATED |
TOTAL EQUITY |
NON- |
TOTAL |
|||||||
Balance - End of previous |
491 |
15 |
1,000 |
(17) |
1,489 |
177 |
1,666 |
|||||||
Business combinations |
— |
— |
3 |
— |
3 |
— |
3 |
|||||||
Adjusted balance - Beginning |
491 |
15 |
1,003 |
(17) |
1,492 |
177 |
1,669 |
|||||||
Comprehensive income |
||||||||||||||
Net earnings |
— |
— |
76 |
— |
76 |
23 |
99 |
|||||||
Other comprehensive |
— |
— |
(11) |
15 |
4 |
8 |
12 |
|||||||
— |
— |
65 |
15 |
80 |
31 |
111 |
||||||||
Dividends |
— |
— |
(15) |
— |
(15) |
(9) |
(24) |
|||||||
Issuance of common shares |
9 |
(2) |
— |
— |
7 |
— |
7 |
|||||||
Redemption of common shares |
(2) |
— |
(3) |
— |
(5) |
— |
(5) |
|||||||
Balance - End of period |
498 |
13 |
1,050 |
(2) |
1,559 |
199 |
1,758 |
|||||||
For the 6-month period ended June 30, 2019 |
||||||||||||||
(in millions of Canadian dollars) |
CAPITAL |
CONTRIBUTED |
RETAINED |
ACCUMULATED |
TOTAL EQUITY |
NON- |
TOTAL |
|||||||
Adjusted balance - Beginning |
490 |
16 |
989 |
2 |
1,497 |
180 |
1,677 |
|||||||
Comprehensive income (loss) |
||||||||||||||
Net earnings |
— |
— |
55 |
— |
55 |
18 |
73 |
|||||||
Other comprehensive loss |
— |
— |
(12) |
(16) |
(28) |
(9) |
(37) |
|||||||
— |
— |
43 |
(16) |
27 |
9 |
36 |
||||||||
Dividends |
— |
— |
(7) |
— |
(7) |
(10) |
(17) |
|||||||
Redemption of shares |
(3) |
— |
(2) |
— |
(5) |
— |
(5) |
|||||||
Balance - End of period |
487 |
16 |
1,023 |
(14) |
1,512 |
179 |
1,691 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the 3-month periods ended |
For the 6-month periods ended |
|||
(in millions of Canadian dollars) (unaudited) |
2020 |
2019 |
2020 |
2019 |
Operating activities |
||||
Net earnings attributable to Shareholders for the period |
54 |
31 |
76 |
55 |
Adjustments for: |
||||
Financing expense and interest expense on employee future benefits and other liabilities |
28 |
35 |
56 |
74 |
Depreciation and amortization |
75 |
72 |
146 |
139 |
Loss (gain) on acquisitions, disposals and others |
1 |
3 |
2 |
(6) |
Impairment charges and restructuring costs |
15 |
— |
15 |
5 |
Unrealized loss (gain) on derivative financial instruments |
1 |
(2) |
— |
(5) |
Foreign exchange loss (gain) on long-term debt and financial instruments |
(9) |
(1) |
8 |
(7) |
Provision for income taxes |
12 |
10 |
27 |
18 |
Share of results of associates and joint ventures |
(3) |
(2) |
(6) |
(4) |
Net earnings attributable to non-controlling interests |
12 |
9 |
23 |
18 |
Net financing expense paid |
(7) |
(16) |
(24) |
(59) |
Net income taxes received (paid) |
(7) |
(2) |
2 |
(2) |
Dividends received |
5 |
2 |
5 |
2 |
Employee future benefits and others |
(15) |
(15) |
(15) |
(22) |
162 |
124 |
315 |
206 |
|
Changes in non-cash working capital components |
(34) |
(36) |
(68) |
(66) |
128 |
88 |
247 |
140 |
|
Investing activities |
||||
Investments in associates and joint ventures |
(1) |
1 |
(1) |
1 |
Payments for property, plant and equipment |
(39) |
(53) |
(113) |
(119) |
Proceeds from disposals of property, plant and equipment |
1 |
1 |
2 |
2 |
Change in intangible and other assets |
(3) |
(1) |
(5) |
(2) |
Cash paid for business combinations |
— |
(14) |
— |
(14) |
(42) |
(66) |
(117) |
(132) |
|
Financing activities |
||||
Bank loans and advances |
— |
(2) |
(2) |
— |
Change in credit facilities |
(40) |
1 |
57 |
65 |
Increase in other long-term debt |
— |
7 |
— |
7 |
Payments of other long-term debt |
(22) |
(38) |
(42) |
(79) |
Settlement of derivative financial instruments |
1 |
— |
1 |
— |
Issuance of common shares upon exercise of stock options |
4 |
— |
7 |
— |
Redemption of common shares |
— |
— |
(5) |
(5) |
Payment of other liabilities |
— |
— |
(121) |
— |
Dividends paid to non-controlling interests |
(6) |
(6) |
(9) |
(10) |
Dividends paid to the Corporation's Shareholders |
(8) |
(3) |
(15) |
(7) |
(71) |
(41) |
(129) |
(29) |
|
Change in cash and cash equivalents during the period |
15 |
(19) |
1 |
(21) |
Currency translation on cash and cash equivalents |
(6) |
— |
6 |
(4) |
Cash and cash equivalents - Beginning of period |
153 |
117 |
155 |
123 |
Cash and cash equivalents - End of period |
162 |
98 |
162 |
98 |
SEGMENTED INFORMATION
The Corporation analyzes the performance of its operating segments based on their operating income before depreciation and amortization, which is not a measure of performance under International Financial Reporting Standards (IFRS). However, the chief operating decision-maker (CODM) uses this performance measure to assess the operating performance of each reportable segment. Earnings for each segment are prepared on the same basis as those of the Corporation. Intersegment operations are recorded on the same basis as sales to third parties, which are at fair market value. The accounting policies of the reportable segments are the same as the Corporation's accounting policies described in its most recent audited consolidated financial statements for the year ended December 31, 2019.
The Corporation's operating segments are reported in a manner consistent with the internal reporting provided to the CODM. The Chief Executive Officer has authority for resource allocation and management of the Corporation's performance and is therefore the CODM.
The Corporation's operations are managed in four segments: Containerboard, Boxboard Europe and Specialty Products (which constitutes the Corporation's Packaging Products), and Tissue Papers.
SALES |
||||
For the 3-month periods ended |
For the 6-month periods ended |
|||
(in millions of Canadian dollars) (unaudited) |
2020 |
2019 |
2020 |
2019 |
Packaging Products |
||||
Containerboard |
454 |
462 |
912 |
903 |
Boxboard Europe |
265 |
270 |
537 |
549 |
Specialty Products |
120 |
135 |
233 |
264 |
Intersegment sales |
(5) |
(3) |
(8) |
(7) |
834 |
864 |
1,674 |
1,709 |
|
Tissue Papers |
424 |
377 |
870 |
725 |
Intersegment sales and Corporate Activities |
27 |
34 |
54 |
71 |
1,285 |
1,275 |
2,598 |
2,505 |
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION |
||||
For the 3-month periods ended |
For the 6-month periods ended |
|||
(in millions of Canadian dollars) (unaudited) |
2020 |
2019 |
2020 |
2019 |
Packaging Products |
||||
Containerboard |
83 |
114 |
185 |
225 |
Boxboard Europe |
42 |
30 |
73 |
59 |
Specialty Products |
16 |
16 |
27 |
29 |
141 |
160 |
285 |
313 |
|
Tissue Papers |
48 |
17 |
93 |
21 |
Corporate Activities |
(20) |
(23) |
(48) |
(41) |
Operating income before depreciation and amortization |
169 |
154 |
330 |
293 |
Depreciation and amortization |
(75) |
(72) |
(146) |
(139) |
Financing expense and interest expense on employee future benefits and other |
(28) |
(35) |
(56) |
(74) |
Foreign exchange gain (loss) on long-term debt and financial instruments |
9 |
1 |
(8) |
7 |
Share of results of associates and joint ventures |
3 |
2 |
6 |
4 |
Earnings before income taxes |
78 |
50 |
126 |
91 |
PAYMENTS FOR PROPERTY, PLANT AND EQUIPMENT |
||||
For the 3-month periods ended |
For the 6-month periods ended |
|||
(in millions of Canadian dollars) (unaudited) |
2020 |
2019 |
2020 |
2019 |
Packaging Products |
||||
Containerboard |
15 |
14 |
31 |
36 |
Boxboard Europe |
4 |
17 |
9 |
28 |
Specialty Products |
4 |
4 |
9 |
7 |
23 |
35 |
49 |
71 |
|
Tissue Papers |
15 |
18 |
39 |
47 |
Corporate Activities |
5 |
10 |
11 |
21 |
Total acquisitions |
43 |
63 |
99 |
139 |
Proceeds from disposals of property, plant and equipment |
(1) |
(1) |
(2) |
(2) |
Right-of-use assets acquisitions and acquisitions included in other debts |
(4) |
(18) |
(13) |
(33) |
38 |
44 |
84 |
104 |
|
Acquisitions for property, plant and equipment included in "Trade and other payables" |
||||
Beginning of period |
19 |
32 |
46 |
37 |
End of period |
(19) |
(24) |
(19) |
(24) |
Payments for property, plant and equipment net of proceeds from disposals |
38 |
52 |
111 |
117 |
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 long-term debt refinancing, 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:
Q2 2020 |
||||||
(in millions of Canadian dollars) (unaudited) |
Containerboard |
Boxboard |
Specialty |
Tissue Papers |
Corporate |
Consolidated |
Operating income (loss) |
54 |
30 |
11 |
31 |
(32) |
94 |
Depreciation and amortization |
29 |
12 |
5 |
17 |
12 |
75 |
Operating income (loss) before depreciation and |
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 financial instruments |
2 |
1 |
— |
— |
(2) |
1 |
11 |
1 |
1 |
6 |
(2) |
17 |
|
Adjusted operating income (loss) before depreciation and |
94 |
43 |
17 |
54 |
(22) |
186 |
Adjusted operating income (loss) |
65 |
31 |
12 |
37 |
(34) |
111 |
Q1 2020 |
||||||
(in millions of Canadian dollars) (unaudited) |
Containerboard |
Boxboard |
Specialty |
Tissue |
Corporate |
Consolidated |
Operating income (loss) |
74 |
20 |
8 |
28 |
(40) |
90 |
Depreciation and amortization |
28 |
11 |
3 |
17 |
12 |
71 |
Operating income (loss) before depreciation and |
102 |
31 |
11 |
45 |
(28) |
161 |
Specific items : |
||||||
Loss on acquisitions, disposals and others |
— |
— |
1 |
— |
— |
1 |
Unrealized loss (gain) on derivative financial instruments |
(3) |
(1) |
— |
— |
3 |
(1) |
(3) |
(1) |
1 |
— |
3 |
— |
|
Adjusted operating income (loss) before depreciation and |
99 |
30 |
12 |
45 |
(25) |
161 |
Adjusted operating income (loss) |
71 |
19 |
9 |
28 |
(37) |
90 |
Q2 2019 |
||||||
(in millions of Canadian dollars) (unaudited) |
Containerboard |
Boxboard |
Specialty |
Tissue |
Corporate |
Consolidated |
Operating income (loss) |
84 |
19 |
12 |
1 |
(34) |
82 |
Depreciation and amortization |
30 |
11 |
4 |
16 |
11 |
72 |
Operating income (loss) before depreciation and |
114 |
30 |
16 |
17 |
(23) |
154 |
Specific items: |
||||||
Loss on acquisitions, disposals and others |
— |
— |
— |
— |
3 |
3 |
Restructuring costs |
— |
— |
— |
1 |
— |
1 |
Unrealized gain on financial instruments |
(1) |
— |
— |
— |
(1) |
(2) |
(1) |
— |
— |
1 |
2 |
2 |
|
Adjusted operating income (loss) before depreciation and |
113 |
30 |
16 |
18 |
(21) |
156 |
Adjusted operating income (loss) |
83 |
19 |
12 |
2 |
(32) |
84 |
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 |
Q1 2020 |
Q2 2019 |
Net earnings attributable to Shareholders for the period |
54 |
22 |
31 |
Net earnings attributable to non-controlling interests |
12 |
11 |
9 |
Provision for income taxes |
12 |
15 |
10 |
Share of results of associates and joint ventures |
(3) |
(3) |
(2) |
Foreign exchange loss (gain) on long-term debt and financial instruments |
(9) |
17 |
(1) |
Financing expense and interest expense on employee future benefits and other liabilities |
28 |
28 |
35 |
Operating income |
94 |
90 |
82 |
Specific items: |
|||
Loss on acquisitions, disposals and others |
1 |
1 |
3 |
Impairment charges |
13 |
— |
— |
Restructuring costs |
2 |
— |
1 |
Unrealized loss (gain) on derivative financial instruments |
1 |
(1) |
(2) |
17 |
— |
2 |
|
Adjusted operating income |
111 |
90 |
84 |
Depreciation and amortization |
75 |
71 |
72 |
Adjusted operating income before depreciation and amortization |
186 |
161 |
156 |
The following table reconciles net earnings and net earnings per share, as per IFRS, with adjusted net earnings and adjusted net earnings per share:
(in millions of Canadian dollars, except amounts per share) (unaudited) |
NET EARNINGS |
NET EARNINGS PER SHARE 1 |
||||||||
Q2 2020 |
Q1 2020 |
Q2 2019 |
Q2 2020 |
Q1 2020 |
Q2 2019 |
|||||
As per IFRS |
54 |
22 |
31 |
$ |
0.57 |
$ |
0.24 |
$ |
0.33 |
|
Specific items: |
||||||||||
Loss (gain) on acquisitions, disposals and others |
1 |
1 |
3 |
— |
$ |
0.01 |
$ |
0.03 |
||
Impairment charges |
13 |
— |
— |
$ |
0.10 |
— |
— |
|||
Restructuring costs |
2 |
— |
1 |
$ |
0.02 |
— |
$ |
0.01 |
||
Unrealized loss (gain) on derivative financial instruments |
1 |
(1) |
(2) |
$ |
0.01 |
$ |
(0.01) |
$ |
(0.02) |
|
Unrealized gain on interest rate swaps and option fair value |
— |
— |
(6) |
— |
— |
$ |
(0.06) |
|||
Foreign exchange loss (gain) on long-term debt and financial |
(9) |
17 |
(1) |
$ |
(0.09) |
$ |
0.18 |
$ |
(0.01) |
|
Tax effect on specific items, other tax adjustments and attributable |
(4) |
— |
— |
— |
— |
— |
||||
4 |
17 |
(5) |
$ |
0.04 |
$ |
0.18 |
$ |
(0.05) |
||
Adjusted |
58 |
39 |
26 |
$ |
0.61 |
$ |
0.42 |
$ |
0.28 |
1 Specific amounts per share are calculated on an after-tax basis and are net of the portion attributable to non-controlling interests. Per share amounts in line item ''Tax effect on specific items, other tax adjustments and attributable to non-controlling interests'' only include the effect of tax adjustments. |
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 |
Q1 2020 |
Q2 2019 |
Cash flow from operating activities |
128 |
119 |
88 |
Changes in non-cash working capital components |
34 |
34 |
36 |
Depreciation and amortization |
(75) |
(71) |
(72) |
Net income taxes paid (received) |
7 |
(9) |
2 |
Net financing expense paid |
7 |
17 |
16 |
Loss on acquisitions, disposals and others |
(1) |
(1) |
(3) |
Impairment charges and restructuring costs |
(15) |
— |
— |
Unrealized gain (loss) on derivative financial instruments |
(1) |
1 |
2 |
Dividend received, employee future benefits and others |
10 |
— |
13 |
Operating income |
94 |
90 |
82 |
Depreciation and amortization |
75 |
71 |
72 |
Operating income before depreciation and amortization |
169 |
161 |
154 |
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 |
Q1 2020 |
Q2 2019 |
|||
Cash flow from operating activities |
128 |
119 |
88 |
|||
Changes in non-cash working capital components |
34 |
34 |
36 |
|||
Cash flow from operating activities (excluding changes in non-cash working capital components) |
162 |
153 |
124 |
|||
Specific items, net of current income taxes if applicable |
— |
— |
1 |
|||
Adjusted cash flow from operating activities |
162 |
153 |
125 |
|||
Capital expenditures & other assets1 and right-of-use assets payments, net of disposals |
(51) |
(84) |
(64) |
|||
Dividends paid to the Corporation's Shareholders and to non-controlling interests |
(14) |
(10) |
(9) |
|||
Adjusted free cash flow |
97 |
59 |
52 |
|||
Adjusted free cash flow per share |
$ |
1.02 |
$ |
0.63 |
$ |
0.56 |
Weighted average basic number of shares outstanding |
94,459,257 |
94,248,804 |
93,636,771 |
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 |
March 31, 2020 |
June 30, 2020 |
Long-term debt |
1,975 |
2,264 |
1,866 |
Current portion of long-term debt |
255 |
92 |
77 |
Bank loans and advances |
9 |
9 |
16 |
Total debt |
2,239 |
2,365 |
1,959 |
Less: Cash and cash equivalents |
162 |
153 |
98 |
Net debt |
2,077 |
2,212 |
1,861 |
Adjusted OIBD (last twelve months) |
660 |
630 |
541 |
Net debt / Adjusted OIBD ratio |
3.1x |
3.5x |
3.4x |
SOURCE Cascades Inc.
![](https://rt.prnewswire.com/rt.gif?NewsItemId=MO82800&Transmission_Id=202008060600PR_NEWS_USPR_____MO82800&DateId=20200806)
Share this article