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Cascades Inc TSX: CAS-T

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Cascades Reports Results for the First Quarter of 2021

CNW Group - Thu May 6, 5:00AM CDT

Cascades Reports Results for the First Quarter of 2021

Canada NewsWire

Volume headwinds in Tissue limit consolidated performance

KINGSEY FALLS, QC , May 6, 2021 /CNW Telbec/ - Cascades Inc. (TSX:CAS.TO) reports its unaudited financial results for the three-month period ended March 31, 2021 .

Q1 2021 Highlights (comparative figures have been restated to reflect discontinued operations 2 )

  • Sales of $1,182 million (compared with $1,242 million in Q4 2020 (-5%) and $1,265 million in Q1 2020 (-7%))
  • As reported (including specific items)
    • Operating income of $52 million (compared with $113 million in Q4 2020 (-54%) and $87 million in Q1 2020 (-40%))
    • Operating income before depreciation and amortization (OIBD) 1 of $128 million (compared with $183 million in Q4 2020 (-30%) and $157 million in Q1 2020 (-18%))
    • Net earnings per share of $0.22 (compared with $0.72 in Q4 2020 and $0.24 in Q1 2020)
  • Adjusted (excluding specific items) 1
    • Operating income of $65 million (compared with $92 million in Q4 2020 (-29%) and $87 million in Q1 2020 (-25%))
    • OIBD of $141 million (compared with $162 million in Q4 2020 (-13%) and $157 million in Q1 2020 (-10%))
    • Net earnings per share of $0.29 (compared with $0.42 in Q4 2020 and $0.42 in Q1 2020)
  • Net debt 1 of $1,654 million as at March 31, 2021 (compared with $1,679 million as at December 31, 2020 ). Net debt to adjusted OIBD ratio 1, 3 of 2.5x is unchanged from December 31, 2020 .
  • Adjusted free cash flow 1 of ($4) million , or ($0.04) per share, in Q1 2021, compared to $83 million , or $0.83 per share, in Q4 2020 and $55 million , or $0.58 per share, in Q1 2020.
  • Total capital expenditures, net of disposals, of $78 million in Q1 2021, compared to $37 million in Q4 2020 and to $73 million in Q1 2020; Forecasted 2021 capital expenditures of between $450 million and $475 million , encompassing $250 million for the Bear Island containerboard conversion project in Virginia, USA , is unchanged.
  • Following the February 2021 announcement by Reno De Medici S.p.A. (Boxboard Europe) regarding the sale of its French virgin fibre boxboard subsidiary, financial information of this facility are now presented as discontinued operations. The transaction closed April 30, 2021 .

 

1 Please refer to the "Supplemental Information on Non-IFRS Measures" section for a complete reconciliation.

2 2020 consolidated results have been adjusted to reflect retrospective adjustments of discontinued operations.

3 Not adjusted for discontinued operations.


Mario Plourde , President and CEO, commented: "Our first quarter consolidated results highlight the dynamic and challenging business environment in view of the ongoing COVID-19 pandemic. The sequential decrease in our results was largely driven by an important contraction in retail tissue demand as customers worked through high inventory levels built up throughout 2020, and continued lower volumes in Away-from-Home. Tissue volumes were also impacted by inclement weather in the quarter, which resulted in lost production in one of the Corporation's Southern U.S. tissue plants. Conversely, the European Boxboard segment generated strong sequential sales growth in the period, the beneficial impact of which was offset by a notable increase in raw material prices and higher energy costs in the period. Solid demand levels and higher selling prices in the Containerboard segment were largely offset by transportation and raw material cost increases, and lower volume related to seasonality and scheduled maintenance downtime in the first three months of the year. Specialty Products generated strong sequential margin improvement.

Within the context of today's unpredictable business environment, we are pleased with the progress we made in our strategic initiatives and investments during the first quarter. The optimization and modernization of our Tissue platform is nearing completion, and the strategic decisions and investments made in recent years have better equipped this business to navigate the current challenging market dynamics. In Containerboard, our Bear Island conversion project is advancing on schedule and on budget, and the European Boxboard segment is expected to close its acquisition of Papelera del Principado S.A. ("Paprinsa") at the end of June 2021 . We continued to focus on our margin improvement program, with these initiatives expected to contribute 1% annually to our consolidated adjusted OIBD level based on our 2019 reference year."

Discussing near-term outlook, Mr. Plourde commented, "In light of continued uncertainty regarding the COVID-19 pandemic, we are maintaining a cautiously optimistic view for our near-term performance. Sequential results from our Tissue business are expected to remain stable, with performance over the longer-term expected to improve as consumer tissue demand normalizes once inventories are re-balanced,  Away-from-Home demand increases as the economy and businesses reopen, and benefits are realized from the high single digit price increase announced for consumer and Away-from-Home tissue products beginning in the third quarter. We expect near-term Containerboard performance to reflect good demand and cumulative benefits from announced price increases, counterbalanced by raw material price inflation and planned maintenance downtime at our two Niagara Falls facilities in the second quarter. Near-term results for the Specialty Products are forecasted to remain stable sequentially, with higher volume and average selling prices offsetting slightly higher raw material costs. Lastly, sequential performance from the European Boxboard segment is expected to remain stable as good volumes and higher average selling price as a result of announced price increases should mitigate higher raw material costs.

More broadly speaking, we are focused on advancing our Bear Island containerboard project, and finalizing modernization investments in our tissue converting operations. These investments will be fully funded by projected operational cash flows for the year. We continue to remain vigilant on ensuring the health and safety of our employees, and on actively working with our customers to meet their evolving needs and expectations."

Financial Summary

Selected consolidated information





(in millions of Canadian dollars, except amounts per share) (unaudited)

Q1 2021

Q4 2020 2

Q1 2020 2





Sales

1,182


1,242


1,265


As Reported




Operating income before depreciation and amortization (OIBD) 1

128


183


157


Operating income

52


113


87


Net earnings

22


73


22


per share

$

0.22


$

0.72


$

0.24


Adjusted 1




Operating income before depreciation and amortization (OIBD)

141


162


157


Operating income

65


92


87


Net earnings

29


42


39


per share

$

0.29


$

0.42


0.42


Margin (OIBD)

11.9

%

13.0

%

12.4

%

1 Please refer to the "Supplemental Information on Non-IFRS Measures" section for reconciliation of these figures.

2 2020 consolidated results have been adjusted to reflect retrospective adjustments of discontinued operations.

Segmented OIBD as reported





(in millions of Canadian dollars) (unaudited)

Q1 2021

Q4 2020 2

Q1 2020 2





Packaging Products




Containerboard

96

150

102

Boxboard Europe

23

18

31

Specialty Products

18

15

11





Tissue Papers

18

27

45





Corporate Activities

(23)

(29)

(28)

Total before discontinued operations

132

181

161

Discontinued operations - Boxboard Europe

(4)

2

(4)

OIBD as reported

128

183

157

1 Please refer to the "Supplemental Information on Non-IFRS Measures" section for reconciliation of these figures.

2 2020 consolidated results have been adjusted to reflect retrospective adjustments of discontinued operations.

Segmented adjusted OIBD 1





(in millions of Canadian dollars) (unaudited)

Q1 2021

Q4 2020 2

Q1 2020 2





Packaging Products




Containerboard

108

110

99

Boxboard Europe

23

27

30

Specialty Products

18

15

12





Tissue Papers

20

40

45





Corporate Activities

(24)

(26)

(25)

Total before discontinued operations

145

166

161

Discontinued operations - Boxboard Europe

(4)

(4)

(4)

Adjusted OIBD

141

162

157


1 Please refer to the "Supplemental Information on Non-IFRS Measures" section for a complete reconciliation.

2 2020 consolidated results have been adjusted to reflect retrospective adjustments of discontinued operations.

Analysis of results for the three-month period ended March 31, 2021 (compared to the same period last year 2 )

Sales of $1,182 million decreased by $83 million , or 7%, compared with the same period last year. This was driven by lower volumes in the Tissue segment attributable to continued COVID-19 related market softness in the Away-from-Home segment, and an important contraction in consumer retail product volumes as customers rebalanced inventory levels that had been built up in response to elevated Covid-19 demand. This was partially offset by stronger volumes in all packaging segments, most notably in the Containerboard segment which benefited from strong demand on both the manufacturing and converting side. Year-over-year consolidated sales levels also benefited from more favourable average selling prices and sales mix, with price increases realized in Tissue and Containerboard. Foreign exchange rates were beneficial for the European Boxboard business, but these benefits were more than offset by the impact of less favourable foreign exchange rates in North America .

The Corporation generated an operating income before depreciation and amortization (OIBD) of $128 million in the first quarter of 2021, down from $157 million in the first quarter of 2020. On an adjusted basis 1 , first quarter OIBD totaled $141 million , a decrease of $16 million , or 10% from the $157 million generated in the same period last year. This decrease is largely attributable to lower Tissue results, which reflected difficult year-over-year comparisons following elevated Covid-19 related demand in the year-ago period and customer inventory management in the current period that impacted retail consumer demand levels. European Boxboard adjusted OIBD levels also decreased from the year ago period, as material cost inflation more than offset the benefits from improved volumes. Good results from the North American packaging segments partially counterbalanced these headwinds. Results from the Containerboard segment increased 9% year-over-year, with higher volumes and beneficial selling price and sales mix mitigating the impact of higher raw material prices, while those of Specialty Products increased 50% compared to the prior year period, driven by higher volumes and better realized spreads. Results also benefited from lower SG&A costs as a $10 million expected credit loss provision on accounts receivable amounts was recorded in 2020 in relation to the COVID-19 pandemic.

The main specific items, before income taxes, that impacted our first quarter 2021 OIBD and/or net earnings were: 

  • $5 million of restructuring charges recorded in Containerboard and Tissue as part of profitability improvement and restructuring initiatives (OIBD and net earnings);
  • $8 million unrealized loss on financial instruments (OIBD and net earnings);
  • $3 million foreign exchange gain on long-term debt and financial instruments (net earnings);

For the 3-month period ended March 31, 2021 , the Corporation posted net earnings of $22 million , or $0.22 per share, compared to net earnings of $22 million , or $0.24 per share, in the same period of 2020. On an adjusted basis 1 , the Corporation generated net earnings of $29 million in the first quarter of 2021, or $0.29 per share, compared to net earnings of $39 million , or $0.42 per share, in the same period of 2020. 

1 Please refer to the "Supplemental Information on Non-IFRS Measures" section for a complete reconciliation.

2 2020 consolidated results have been adjusted to reflect retrospective adjustments of discontinued operations.

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 June 3, 2021 to shareholders of record at the close of business on May 19, 2021 . This dividend is an "eligible dividend" as per the Income Tax Act (R.C.S. (1985), Canada ). Cascades purchased no share for cancellation during the first quarter of 2021.

2021 First Quarter Results Conference Call Details

Management will discuss the 2021 first 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 June 6, 2021 by dialing 1-855-859-2056 (international dial-in 1-416-849-0833), access code  1148359.

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 85 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)

March 31,
2021

December 31,
2020

Assets



Current assets



Cash and cash equivalents

328

384

Accounts receivable

621

659

Current income tax assets

22

23

Inventories

577

569

Current portion of financial assets

11

5

Assets classified as held for sale

64


1,623

1,640

Long-term assets



Investments in associates and joint ventures

85

82

Property, plant and equipment

2,730

2,772

Intangible assets with finite useful life

155

160

Financial assets

9

16

Other assets

46

50

Deferred income tax assets

151

170

Goodwill and other intangible assets with indefinite useful life

518

522


5,317

5,412

Liabilities and Equity



Current liabilities



Bank loans and advances

6

12

Trade and other payables

822

861

Current income tax liabilities

21

17

Current portion of long-term debt

87

102

Current portion of provisions for contingencies and charges

13

14

Current portion of financial liabilities and other liabilities

19

25

Liabilities classified as held for sale

48


1,016

1,031

Long-term liabilities



Long-term debt

1,889

1,949

Provisions for contingencies and charges

58

57

Financial liabilities

7

6

Other liabilities

177

202

Deferred income tax liabilities

200

210


3,347

3,455

Equity



Capital stock

622

622

Contributed surplus

13

13

Retained earnings

1,172

1,146

Accumulated other comprehensive loss

(34)

(28)

Equity attributable to Shareholders

1,773

1,753

Non-controlling interests

197

204

Total equity

1,970

1,957


5,317

5,412

CONSOLIDATED STATEMENTS OF EARNINGS


For the 3-month periods ended
March 31,

(in millions of Canadian dollars, except per common share amounts and number of common shares) (unaudited)

2021

2020

Sales

1,182

1,265

Cost of sales and expenses



Cost of sales (including depreciation and amortization of $76 million (2020 — $70 million))

1,008

1,051

Selling and administrative expenses

108

127

Loss on acquisitions, disposals and others

1

Restructuring costs

5

Foreign exchange loss

1

Loss (gain) on derivative financial instruments

8

(1)


1,130

1,178

Operating income

52

87

Financing expense

23

27

Interest expense on employee future benefits

1

1

Foreign exchange loss (gain) on long-term debt and financial instruments

(3)

17

Share of results of associates and joint ventures

(2)

(3)

Earnings before income taxes

33

45

Provision for income taxes

8

15

Net earnings from continuing operations including non-controlling interests for the period

25

30

Results from discontinued operations

3

3

Net earnings including non-controlling interests for the period

28

33

Net earnings attributable to non-controlling interests

6

11

Net earnings attributable to Shareholders for the period

22

22

Net earnings from continuing operations per share



Basic

$

0.20

$

0.22

Diluted

$

0.20

$

0.21

Net earnings per common share



Basic

$

0.22

$

0.24

Diluted

$

0.22

$

0.23

Weighted average basic number of common shares outstanding

102,279,404

94,248,804

Weighted average number of diluted common shares

103,437,340

95,523,990




Net earnings attributable to Shareholders:



Continuing operations

20

20

Discontinued operations

2

2

Net earnings

22

22

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


For the 3-month periods ended
March 31,

(in millions of Canadian dollars) (unaudited)

2021

2020

Net earnings including non-controlling interests for the period

28

33

Other comprehensive income (loss)



Items that may be reclassified subsequently to earnings



Translation adjustments



Change in foreign currency translation of foreign subsidiaries

(33)

101

Change in foreign currency translation of foreign subsidiaries from discontinued operations

(1)

1

Change in foreign currency translation related to net investment hedging activities

21

(59)

Cash flow hedges



Change in fair value of interest rate swaps

(1)

Change in fair value of commodity derivative financial instruments

1

Recovery of income taxes

(3)


(15)

42

Items that are not released to earnings



Actuarial loss on employee future benefits

17

10

Recovery of income taxes

(5)

(3)


12

7

Other comprehensive income (loss)

(3)

49

Comprehensive income including non-controlling interests for the period

25

82

Comprehensive income (loss) attributable to non-controlling interests for the period

(3)

23

Comprehensive income attributable to Shareholders for the period

28

59




Comprehensive income attributable to Shareholders:



Continuing operations

27

56

Discontinued operations

1

3

Comprehensive income

28

59

CONSOLIDATED STATEMENTS OF EQUITY


For the 3-month period ended March 31, 2021

(in millions of Canadian dollars)
(unaudited)

CAPITAL STOCK

CONTRIBUTED
SURPLUS

RETAINED
EARNINGS

ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)

TOTAL EQUITY
ATTRIBUTABLE TO
SHAREHOLDERS

NON-
CONTROLLING
INTERESTS

TOTAL EQUITY

Balance - Beginning of period

622

13

1,146

(28)

1,753

204

1,957

Comprehensive income (loss)








Net earnings

22

22

6

28

Other comprehensive income (loss)

12

(6)

6

(9)

(3)


34

(6)

28

(3)

25

Dividends

(8)

(8)

(4)

(12)

Balance - End of period

622

13

1,172

(34)

1,773

197

1,970










For the 3-month period ended March 31, 2020

(in millions of Canadian dollars)
(unaudited)

CAPITAL STOCK

CONTRIBUTED
SURPLUS

RETAINED
EARNINGS

ACCUMULATED
OTHER COMPREHENSIVE
INCOME (LOSS)

TOTAL EQUITY
ATTRIBUTABLE TO
SHAREHOLDERS

NON-
CONTROLLING
INTERESTS

TOTAL EQUITY

Balance - Beginning of period

491

15

1,003

(17)

1,492

177

1,669

Comprehensive income








Net earnings

22

22

11

33

Other comprehensive income

7

30

37

12

49


29

30

59

23

82

Dividends

(7)

(7)

(3)

(10)

Issuance of common shares upon exercise of stock options

4

(1)

3

3

Redemption of common shares

(3)

(2)

(5)

(5)

Balance - End of period

492

14

1,023

13

1,542

197

1,739

CONSOLIDATED STATEMENTS OF CASH FLOWS


For the 3-month periods ended
March 31,

(in millions of Canadian dollars) (unaudited)

2021

2020

Operating activities from continuing operations



Net earnings attributable to Shareholders for the period

22

22

Results from discontinued operations

(3)

(3)

Results from discontinued operations attributable to non-controlling interests

1

1

Net earnings from continuing operations

20

20

Adjustments for:



Financing expense and interest expense on employee future benefits

24

28

Depreciation and amortization

76

70

Loss on acquisitions, disposals and others

1

Restructuring costs

5

Unrealized loss (gain) on derivative financial instruments

8

(1)

Foreign exchange loss (gain) on long-term debt and financial instruments

(3)

17

Provision for income taxes

8

15

Share of results of associates and joint ventures

(2)

(3)

Net earnings attributable to non-controlling interests

5

10

Net financing expense paid

(41)

(17)

Net income taxes received

1

9

Provisions for contingencies and charges and other liabilities

(3)


98

149

Changes in non-cash working capital components

(14)

(32)


84

117

Investing activities from continuing operations



Payments for property, plant and equipment

(82)

(74)

Proceeds from disposals of property, plant and equipment

4

1

Change in intangible and other assets

(4)

(2)

Cash received from business combinations

2


(82)

(73)

Financing activities from continuing operations



Bank loans and advances

(6)

(2)

Change in credit facilities

97

Payments of other long-term debt, including lease obligations

(33)

(20)

Issuance of common shares upon exercise of stock options

3

Redemption of common shares

(5)

Payment of other liabilities

(121)

Dividends paid to non-controlling interests

(4)

(3)

Dividends paid to the Corporation's Shareholders

(8)

(7)


(51)

(58)

Change in cash and cash equivalents during the period from continuing operations

(49)

(14)

Change in cash during the period from discontinued operations

(1)

Net change in cash and cash equivalents during the period

(50)

(14)

Currency translation on cash and cash equivalents

(6)

12

Cash and cash equivalents - Beginning of the period

384

155

Cash and cash equivalents - End of the period

328

153

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, 2020 .

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 TO


For the 3-month periods ended March 31,


Canada

United States

Italy

Other countries

Total

(in millions of Canadian dollars)
(unaudited)

2021

2020

2021

2020

2021

2020

2021

2020

2021

2020

Packaging Products











Containerboard

299

260

204

197

1

503

458

Boxboard Europe

91

81

195

191

286

272

Specialty Products

47

35

75

76

2

122

113

Inter-segment sales

(4)

(3)

(3)

(7)

(3)


342

292

276

273

91

81

195

194

904

840

Tissue Papers

57

70

235

375

1

292

446

Inter-segment sales and Corporate Activities

31

26

1

1

32

27


430

388

512

649

91

81

195

195

1,228

1,313

Discontinued operations — Boxboard Europe

(10)

(9)

(36)

(39)

(46)

(48)


430

388

512

649

81

72

159

156

1,182

1,265

 


OPERATING INCOME BEFORE DEPRECIATION
AND AMORTIZATION


For the 3-month periods ended March 31,

(in millions of Canadian dollars) (unaudited)

2021

2020

Packaging Products



Containerboard

96

102

Boxboard Europe

23

31

Specialty Products

18

11


137

144

Tissue Papers

18

45

Corporate Activities

(23)

(28)

Operating income before depreciation and amortization before discontinued operations

132

161

Discontinued operations — Boxboard Europe

(4)

(4)

Operating income before depreciation and amortization

128

157

Depreciation and amortization

(76)

(70)

Financing expense and interest expense on employee future benefits

(24)

(28)

Foreign exchange gain (loss) on long-term debt and financial instruments

3

(17)

Share of results of associates and joint ventures

2

3

Earnings before income taxes

33

45

 


PAYMENTS FOR PROPERTY, PLANT AND
EQUIPMENT


For the 3-month periods ended March 31,

(in millions of Canadian dollars) (unaudited)

2021

2020

Packaging Products



Containerboard

54

16

Boxboard Europe

7

5

Specialty Products

8

5


69

26

Tissue Papers

8

24

Corporate Activities

4

6

Total acquisitions

81

56

Proceeds from disposals of property, plant and equipment

(4)

(1)

Right-of-use assets acquisitions and acquisitions included in other debts

(9)


77

46

Acquisitions for property, plant and equipment included in "Trade and other payables"



Beginning of period

40

46

End of period

(39)

(19)

Payments for property, plant and equipment net of proceeds from disposals

78

73

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 and option fair value revaluation, foreign exchange gains or losses on long-term debt and financial instruments, fair value revaluation gain or losses on investments, 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: 


Q1 2021


Including Discontinued Operations

Exclusion of
Discontinued
Operations

As reported

(in millions of Canadian dollars) (unaudited)

Containerboard

Boxboard
Europe

Specialty
Products

Tissue Papers

Corporate
Activities

Boxboard
Europe

Consolidated

Operating income (loss)

65

12

15

(36)

(4)

52

Depreciation and amortization

31

11

3

18

13

76

Operating income (loss) before depreciation and amortization

96

23

18

18

(23)

(4)

128

Specific items:








Restructuring costs

3

2

5

Unrealized loss (gain) on derivative financial instruments

9

(1)

8


12

2

(1)

13

Adjusted operating income (loss) before depreciation and amortization

108

23

18

20

(24)

(4)

141

Adjusted operating income (loss)

77

12

15

2

(37)

(4)

65

 


Q4 2020


As reported in 2020

Exclusion of
Discontinued
Operations 1

As reported

(in millions of Canadian dollars) (unaudited)

Containerboard

Boxboard
Europe

Specialty
Products

Tissue Papers

Corporate
Activities

Boxboard
Europe

Consolidated

Operating income (loss)

122

5

12

10

(40)

4

113

Depreciation and amortization

28

13

3

17

11

(2)

70

Operating income (loss) before depreciation and amortization

150

18

15

27

(29)

2

183

Specific items :








Loss (gain) on acquisitions, disposals and others

(40)

2

(38)

Impairment charges (reversals)

(2)

9

5

1

(6)

7

Restructuring costs

6

2

8

Unrealized loss on derivative financial instruments

2

2


(40)

9

13

3

(6)

(21)

Adjusted operating income (loss) before depreciation and amortization

110

27

15

40

(26)

(4)

162

Adjusted operating income (loss)

82

14

12

23

(37)

(2)

92

1 2020 consolidated results have been adjusted to reflect retrospective adjustments of discontinued operations.

 


Q1 2020


As reported in 2020

Exclusion of
Discontinued
Operations 1

As reported

(in millions of Canadian dollars) (unaudited)

Containerboard

Boxboard
Europe

Specialty
Products

Tissue Papers

Corporate
Activities

Boxboard
Europe

Consolidated

Operating income (loss)

74

20

8

28

(40)

(3)

87

Depreciation and amortization

28

11

3

17

12

(1)

70

Operating income (loss) before depreciation and amortization

102

31

11

45

(28)

(4)

157

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 amortization

99

30

12

45

(25)

(4)

157

Adjusted operating income (loss)

71

19

9

28

(37)

(3)

87

1 2020 consolidated results have been adjusted to reflect retrospective adjustments of discontinued operations.

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)

Q1 2021

Q4 2020 1

Q1 2020 1





Net earnings attributable to Shareholders for the period

22

73

22

Net earnings attributable to non-controlling interests

6

4

11

Results from discontinued operations

(3)

3

(3)

Provision for income taxes

8

22

15

Fair value revaluation loss on investments

3

Share of results of associates and joint ventures

(2)

(5)

(3)

Foreign exchange loss (gain) on long-term debt and financial instruments

(3)

(3)

17

Financing expense and interest expense on employee future benefits

24

16

28

Operating income

52

113

87

Specific items:




Loss (gain) on acquisitions, disposals and others

(38)

1

Impairment charges

7

Restructuring costs

5

8

Unrealized loss (gain) on derivative financial instruments

8

2

(1)


13

(21)

Adjusted operating income

65

92

87

Depreciation and amortization

76

70

70

Adjusted operating income before depreciation and amortization

141

162

157

1 2020 consolidated results have been adjusted to reflect retrospective adjustments of discontinued operations .

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


Q1 2021

Q4 2020 2

Q1 2020


Q1 2021

Q4 2020 2

Q1 2020









As per IFRS

22

73

22


$0.22

$0.72

$0.24

Specific items:








Loss (gain) on acquisitions, disposals and others

(38)

1


($0.34)

$0.01

Impairment charges

7


$0.06

Restructuring costs

5

8


$0.03

$0.05

Unrealized loss (gain) on derivative financial instruments

8

2

(1)


$0.06

$0.02

($0.01)

Unrealized gain on interest rate swaps and option fair value

(11)


($0.12)

Foreign exchange loss (gain) on long-term debt and financial instruments

(3)

(3)

17


($0.02)

($0.02)

$0.18

Fair value revaluation loss on investments

3


$0.02

Included in discontinued operations, net of tax

6


$0.03

Tax effect on specific items, other tax adjustments and attributable to non-controlling interest 1

(3)

(5)



7

(31)

17


$0.07

($0.30)

$0.18

Adjusted

29

42

39


$0.29

$0.42

$0.42

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.

2

2020 consolidated results have been adjusted to reflect retrospective adjustments of discontinued operations.

The following table reconciles cash flow from operating activities from continuing operations with operating income and operating income before depreciation and amortization: 





(in millions of Canadian dollars) (unaudited)

Q1 2021

Q4 2020 1

Q1 2020 1

Cash flow from operating activities from continuing operations

84

202

117

Changes in non-cash working capital components

14

(60)

32

Depreciation and amortization

(76)

(70)

(70)

Net income taxes paid (received)

(1)

10

(9)

Net financing expense paid

41

6

17

Gain (loss) on acquisitions, disposals and others

38

(1)

Impairment charges and restructuring costs

(5)

(15)

Unrealized gain (loss) on derivative financial instruments

(8)

(2)

1

Provisions for contingencies and charges and other liabilities

3

4

Operating income

52

113

87

Depreciation and amortization

76

70

70

Operating income before depreciation and amortization

128

183

157

1 2020 consolidated results have been adjusted to reflect retrospective adjustments of discontinued operations.

The following table reconciles cash flow from operating activities from continuing operations with cash flow from operating activities from continuing operations (excluding changes in non-cash working capital components) and adjusted cash flow from operating activities from continuing operations. It also reconciles adjusted cash flow from operating activities from continuing operations 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)

Q1 2021

Q4 2020 2

Q1 2020 2

Cash flow from operating activities from continuing operations

84

202

117

Changes in non-cash working capital components

14

(60)

32

Cash flow from operating activities from continuing operations (excluding changes in non-cash working capital components)

98

142

149

Specific items paid

4

6

Adjusted cash flow from operating activities from continuing operations

102

148

149

Capital expenditures & other assets 1 and right-of-use assets payments, net of disposals

(94)

(53)

(84)

Dividends paid to the Corporation's Shareholders and to non-controlling interests

(12)

(12)

(10)

Adjusted free cash flow

(4)

83

55

Adjusted free cash flow per share

($0.04)

$0.83

$0.58

Weighted average basic number of shares outstanding

102,279,404

99,937,437

94,248,804

1 Excluding increase in investments

2 2020 consolidated cash flows have been adjusted to reflect retrospective adjustments of discontinued operations.

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)

March  31,

2021

December 31,
2020

March 31,

2020

Long-term debt

1,889

1,949

2,264

Current portion of long-term debt

87

102

92

Bank loans and advances

6

12

9

Total debt

1,982

2,063

2,365

Less: Cash and cash equivalents

328

384

153

Net debt

1,654

1,679

2,212

Net debt of discontinued operations classified as Held for sale 1

11

Net debt - before reclassification as Held for sale 1

1,665

1,679

2,212

Adjusted OIBD including $16 million (March, 31, 2021), $16 million (December 31, 2020) and $11 million (March 31, 2020) from discontinued operations (last twelve months) 1

659

675

630

Net debt / Adjusted OIBD 1

2.5 x

2.5 x

3.5 x

1 Net debt / Adjusted OIBD before discontinued operations in the Boxboard Europe segment.

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Cision View original content: http://www.prnewswire.com/news-releases/cascades-reports-results-for-the-first-quarter-of-2021-301285008.html

SOURCE Cascades Inc.

Cision View original content: http://www.newswire.ca/en/releases/archive/May2021/06/c7223.html

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