May 10th, 2018

KINGSEY FALLS, QC , May 10, 2018 /CNW Telbec/ - Cascades Inc. (TSX: CAS) reports its unaudited financial results for the three-month period ended March 31, 2018 .

Q1 2018 Highlights

  • Sales of $1,098 million
    (compared to $1,082 million in Q4 2017 (+1%) and $1,006 million in Q1 2017 (+9%))
  • As reported (including specific items)
    • Operating income of $112 million
      (compared to $45 million in Q4 2017 (+149%) and $31 million in Q1 2017 (+261%))
    • Operating income before depreciation and amortization (OIBD) 1 of $167 million
      (compared to $104 million in Q4 2017 (+61%) and $78 million in Q1 2017 (+114%))
    • Net earnings per common share of $0.65
      (compared to net earnings of $0.60 in Q4 2017 and net earnings of $1.70 in Q1 2017)
  • Adjusted (excluding specific items) 2
    • Operating income of $50 million
      (compared to $46 million in Q4 2017 (+9%) and $28 million in Q1 2017 (+79%))
    • OIBD 1 of $105 million
      (compared to $105 million in Q4 2017 (stable) and $75 million in Q1 2017 (+40%))
    • Net earnings per common share of $0.13
      (compared to net earnings of $0.14 in Q4 2017 and net earnings of $0.13 in Q1 2017)
  • Net debt 2 of $1,534 million as at March 31, 2018 (compared to $1,522 million as at December 31, 2017 ) and net debt to adjusted OIBD ratio 2,3 at 3.6x.

 

1

OIBD = Operating income before depreciation and amortization.

2

For further details, please refer to the "Supplemental Information on non-IFRS Measures" section.

3

Pro-forma basis to include 2017 and 2018 business combinations on a LTM basis.

   

 

Mr. Mario Plourde , President and Chief Executive Officer, commented: "Our consolidated first quarter performance improved both year-over-year and sequentially in terms of sales levels, shipments and operating income. Changes in raw material prices were positive on a consolidated basis both sequentially and year-over-year, while higher transportation costs negatively impacted profitability in our North American operations. 

Year-over-year, first quarter results were supported by a strong performance from our European boxboard subsidiary Reno de Medici, driven by strong market conditions, selling price improvement and lower raw material costs. The containerboard packaging division similarly generated stronger results, reflecting the April 2017 consolidation of the Greenpac Mill, strong industry fundamentals and higher average realized selling prices. As disclosed in early March, first quarter production levels in this segment were impacted by unplanned downtime at several mills at the beginning of the year, which resulted in a production shortfall of 15,000 short tons during the period. These production and mechanical issues were resolved before the end of the quarter. Results in the specialty products segment were below last year due to the lower recycled material prices, most notably OCC, which reduced sales in the recovery sub-segment. Finally, the tissue papers division increased shipments by 7% year-over-year within the ongoing context of challenging market conditions and market related downtime taken at the beginning of the year. Results in this segment, however, were impacted by lower average selling prices driven by increased competitiveness in several markets, higher raw material prices, and negative operating margin related to the Oregon converting facility that was started in the second quarter of 2017. 

On a sequential basis, consolidated first quarter results reflected improvements in capacity utilization, sales, and operating income. This was largely driven by a strong performance from the European boxboard division and was supported by a slight progress in tissue. Although production levels in containerboard reflected seasonally softer volumes and the downtime as described above, this division generated improvements in operating income and adjusted OIBD, reflecting higher realized average selling prices and lower raw material costs. Conversely, results from the specialty products segment decreased, due primarily to the impact of lower recycled paper pricing on the performance of its recovery activities.

On the strategic front, the construction of our new containerboard converting facility in NJ progressed on time and on budget, with start-up scheduled for the end of May. The containerboard division finalized the sale of the NY converting facility for US$72 million in January, and the acquisition of the 66.67% interest in the Italian boxboard processing company PAC Service S.p.A, was concluded by the European boxboard division at the beginning of the year. At the end of the first quarter, the leverage ratio stood at 3.6x 1 , unchanged from the end of 2017."

 

1

Pro-forma basis to include 2017 and 2018 business combinations on a LTM basis.

 

Financial Summary

 

Selected consolidated information

             

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

Q1 2018

 

Q4 2017

 

Q1 2017

 
       

Sales

1,098

 

1,082

 

1,006

 

As Reported

     
 

Operating income before depreciation and amortization (OIBD) 1

167

 

104

 

78

 
 

Operating income

112

 

45

 

31

 
 

Net earnings

61

 

57

 

161

 
   

per common share

$

0.65

 

$

0.60

 

$

1.70

 

Adjusted 1

     
 

Operating income before depreciation and amortization (OIBD)

105

 

105

 

75

 
 

Operating income

50

 

46

 

28

 
 

Net earnings

12

 

13

 

12

 
   

per common share

$

0.13

 

$

0.14

 

$

0.13

 
 

Margin (OIBD)

9.6

%

9.7

%

7.5

%

1 - Refer to the "Supplemental Information on Non-IFRS Measures" section.

 
 

Segmented Operating Income (loss) as reported

             

(in millions of Canadian dollars) (unaudited)

Q1 2018

 

Q4 2017

 

Q1 2017

 
             

Packaging Products

           
 

Containerboard

121

 

51

 

33

 
 

Boxboard Europe

19

 

11

 

5

 
 

Specialty Products

2

 

9

 

13

 
             

Tissue Papers

(2)

 

(6)

 

8

 
             

Corporate Activities

(28)

 

(20)

 

(28)

 

Operating income as reported

112

 

45

 

31

 
 
 

Segmented adjusted OIBD 1

             

(in millions of Canadian dollars) (unaudited)

Q1 2018

 

Q4 2017

 

Q1 2017

 
             

Packaging Products

           
 

Containerboard

77

 

74

 

45

 
 

Boxboard Europe

28

 

19

 

14

 
 

Specialty Products

7

 

14

 

18

 
             

Tissue Papers

13

 

12

 

23

 
             

Corporate Activities

(20)

 

(14)

 

(25)

 

Adjusted OIBD

105

 

105

 

75

 

1 - Refer to the "Supplemental Information on Non-IFRS Measures" section.

 

 

 

Analysis of results for the three-month period ended March 31, 2018 (compared to the same period last year)

Sales of $1,098 million increased by $92 million or 9% compared to the same period last year. This was driven by a 22% increase in the containerboard division, reflecting the Greenpac consolidation and higher average realized sales prices during the period, and a 17% sales increase in the European boxboard segment following implemented price increases and the January 2018 acquisition of PAC Service. These benefits were partially offset by lower sales in recovery activities attributable to the significant year-over-year decrease in raw material prices. Sales generated by the tissue segment were essentially unchanged compared to prior year levels, as the beneficial impact of higher volumes was offset by a less favourable product mix and weaker Canadian dollar - US dollar exchange rate.

First quarter operating income stood at $112 million , a notable improvement from the $31 million generated last year. This increase was largely driven by improvements in the containerboard segment, where results benefited from the consolidation of Greenpac, a higher average selling price and lower raw material costs. First quarter performance similarly reflected a higher contribution from the European boxboard segment, driven by strong industry fundamentals and lower raw material costs. Partially offsetting these benefits was a lower contribution from the specialty products division attributable to the impact of lower raw material prices on the performance of the recovery sub-segment, and a weaker tissue performance reflecting the more challenging marketplace and rising virgin pulp price. Higher amortization and depreciation expense as a result of business combinations and the Scappoose facility start-up also negatively impacted operating income compared to the prior year period. On an adjusted basis 1 , first quarter operating income stood at $50 million , versus $28 million in the prior year.

The specific items, before income taxes, that impacted our first quarter 2018 operating income and/or net earnings were:

  • a $4 million unrealized loss on financial instruments (operating income and net earnings).   
  • a $66 million gain related to the sale of the Maspeth, NY containerboard converting facility (operating income and net earnings).  
  • a $5 million gain on fair-value revaluation of investment related to the European boxboard acquisition of PAC Service (net earnings).
  • a $1 million foreign exchange gain on long-term debt and financial instruments (net earnings).   

The Corporation generated net earnings of $61 million , or $0.65 per common share in the first quarter of 2018, versus net earnings of $161 million, or $1.70 per common share in the comparable period of 2017. On an adjusted basis 1 , net earnings were $12 million , or $0.13 per common share, during the first three months of 2018, compared to net earnings of $12 million or $0.13 per common share in the same period of 2017.

 

1

For further details, please refer to the "Supplemental Information on non-IFRS Measures" section.

 

Near-Term and Strategic Outlook

Discussing the outlook for Cascades, Mr. Plourde commented: "Our near term outlook is positive. The second quarter is seasonally favourable for all of our business segments, and we would expect sales levels to reflect as much. In the case of our containerboard segment, strong industry demand, lower raw material costs, and the gradual implementation of the announced price increases should provide significant support for performance in the coming months. Conversely, we expect profitability levels in our tissue paper division to remain under pressure as a result of the heightened competitive marketplace and rising raw material costs. While external factors remain challenging in this segment, we remain focused on managing inventory, growing sales levels in our targeted markets, incorporating lower cost materials in our production processes when possible, and increasing sales levels in our Oregon tissue converting facility where we continue to make positive and measurable progress. In Europe , underlying industry fundamentals suggest continued strength, raw material prices continue to be favourable, and both order backlog and order intake levels remain healthy. Operationally, we will concentrate on managing raw material costs and countering the trend of increasing transportation costs through optimization of our transport strategies.

Looking to the remainder of 2018, we are focused internally on the optimization of our new business platform, and monetizing the efficiency, productivity and cost-saving initiatives that have been implemented through the centralization of our administrative processes. At the corporate level, attention will be centered on the smooth and successful execution of the company's planned 2018 investment program focused on improving our tissue platform, reinforcing our operational efficiency and productivity with a view to enhancing profitability and maximizing cash flow generation, and maintaining our strategic capital allocation commitment to reduce leverage."

Dividend on common shares and normal course issuer bid

The Board of Directors of Cascades declared a quarterly dividend of $0.04 per common share to be paid on June 6, 2018 , to shareholders of record at the close of business on May 23, 2018 . This dividend is an "eligible dividend" as per the Income Tax Act (R.C.S. (1985), Canada ). During the first quarter of 2018, Cascades purchased 435,580 common shares for cancellation at a weighted average price of $14.20 .

2018 First Quarter Results Conference Call Details

Management will discuss the 2018 first quarter financial results during a conference call today at 8:30 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 10, 2018 by dialing 1-855-859-2056, access code 6789174.

Founded in 1964, Cascades produces, converts and markets packaging and tissue products that are composed mainly of recycled fibres. The Corporation employs 11,000 employees, who work in more than 90 units located in North America and Europe . With its management philosophy, half a century of experience in recycling, and continuous efforts in research and development as driving forces, Cascades continues to serve its clients with innovative products. Cascades' shares trade on the Toronto Stock Exchange, under the ticker symbol CAS. Certain statements in this release, including statements regarding future results and performance, are forward-looking statements (as such term is defined under the Private Securities Litigation Reform Act of 1995) based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, decreases in demand for the Corporation's products, increases in raw material costs, fluctuations in selling prices and adverse changes in general market and industry conditions and other factors listed in the Corporation's Securities and Exchange Commission filings.

 

CONSOLIDATED BALANCE SHEETS

       

(in millions of Canadian dollars) (unaudited)

March 31,
2018

 

December 31,
2017

Assets

   

Current assets

   

Cash and cash equivalents (including $25 million of restricted cash in 2018)

137

 

89

Accounts receivable

633

 

608

Current income tax assets

16

 

18

Inventories

555

 

523

Current portion of financial assets

10

 

9

Assets held for sale

 

13

 

1,351

 

1,260

Long-term assets

   

Investments in associates and joint ventures

77

 

78

Property, plant and equipment

2,183

 

2,104

Intangible assets with finite useful life

209

 

212

Financial assets

24

 

23

Other assets

59

 

73

Deferred income tax assets

153

 

149

Goodwill and other intangible assets with indefinite useful life

542

 

528

 

4,598

 

4,427

Liabilities and Equity

   

Current liabilities

   

Bank loans and advances

23

 

35

Trade and other payables

671

 

683

Current income tax liabilities

11

 

6

Current portion of long-term debt

66

 

59

Current portion of provisions for contingencies and charges

9

 

7

Current portion of financial liabilities and other liabilities

94

 

101

 

874

 

891

Long-term liabilities

   

Long-term debt

1,582

 

1,517

Provisions for contingencies and charges

34

 

36

Financial liabilities

36

 

18

Other liabilities

180

 

178

Deferred income tax liabilities

207

 

186

 

2,913

 

2,826

Equity attributable to Shareholders

   

Capital stock

491

 

492

Contributed surplus

16

 

16

Retained earnings

1,035

 

982

Accumulated other comprehensive loss

(20)

 

(35)

 

1,522

 

1,455

Non-controlling interests

163

 

146

Total equity

1,685

 

1,601

 

4,598

 

4,427

 

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)

2018

 

2017

Sales

1,098

 

1,006

Cost of sales and expenses

   

Cost of sales (including depreciation and amortization of $55 million (2017 — $47 million))

946

 

880

Selling and administrative expenses

103

 

96

Gain on acquisitions, disposals and others

(66)

 

Impairment charges and restructuring costs

 

1

Foreign exchange loss (gain)

(1)

 

1

Loss (gain) on derivative financial instruments

4

 

(3)

 

986

 

975

Operating income

112

 

31

Financing expense

22

 

21

Interest expense on employee future benefits

1

 

1

Foreign exchange gain on long-term debt and financial instruments

(1)

 

(8)

Fair value revaluation gain on investments

(5)

 

(145)

Share of results of associates and joint ventures

(1)

 

(28)

Earnings before income taxes

96

 

190

Provision for income taxes

24

 

27

Net earnings including non-controlling interests for the period

72

 

163

Net earnings attributable to non-controlling interests

11

 

2

Net earnings attributable to Shareholders for the period

61

 

161

Net earnings per common share

   

Basic

$

0.65

 

$

1.70

Diluted

$

0.63

 

$

1.66

Weighted average basic number of common shares outstanding

 

95,013,041

   

94,554,104

Weighted average number of diluted common shares

 

97,801,090

   

97,237,972

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 
 

For the 3-month periods ended March 31,

(in millions of Canadian dollars) (unaudited)

2018

 

2017

Net earnings including non-controlling interests for the period

72

 

163

Other comprehensive income

   
 

Items that may be reclassified subsequently to earnings

   
   

Translation adjustments

   
     

Change in foreign currency translation of foreign subsidiaries

40

 

(6)

     

Change in foreign currency translation related to net investment hedging activities

(23)

 

6

   

Cash flow hedges

   
     

Change in fair value of foreign exchange forward contracts

(1)

 

     

Change in fair value of commodity derivative financial instruments

1

 

(1)

   

Equity investment

 

12

   

Share of other comprehensive income of associates

 

17

   

Provision for (recovery of) income taxes

3

 

(9)

 

20

 

19

 

Items that are reclassified to retained earnings

   
   

Actuarial gain on employee future benefits

1

 

2

   

Recovery of income taxes

 

(1)

 

1

 

1

Other comprehensive income

21

 

20

Comprehensive income including non-controlling interests for the period

93

 

183

Comprehensive income attributable to non-controlling interests for the period

18

 

2

Comprehensive income attributable to Shareholders for the period

75

 

181

 

CONSOLIDATED STATEMENTS OF EQUITY

   
 

For the 3-month period ended March 31, 2018

(in millions of Canadian dollars) (unaudited)

CAPITAL
STOCK

CONTRIBUTED
SURPLUS

RETAINED
EARNINGS

ACCUMULATED
OTHER

COMPREHENSIVE
LOSS

TOTAL EQUITY
ATTRIBUTABLE TO
SHAREHOLDERS

NON-
CONTROLLING
INTERESTS

TOTAL
EQUITY

Balance - Beginning of period

492

16

982

(35)

1,455

146

1,601

New IFRS adoption

(2)

2

Restated Balance - Beginning of period

492

16

980

(33)

1,455

146

1,601

Comprehensive income

             
 

Net earnings

61

61

11

72

 

Other comprehensive income

1

13

14

7

21

 

62

13

75

18

93

Dividends

(4)

(4)

(4)

Issuance of common share upon exercise of stock options

2

2

2

Redemption of common shares

(3)

(3)

(6)

(6)

Capital contribution from a non-controlling interest

1

1

Dividends paid to non-controlling interests

(2)

(2)

Balance - End of period

491

16

1,035

(20)

1,522

163

1,685

         
 

For the 3-month period ended March 31, 2017

(in millions of Canadian dollars) (unaudited)

CAPITAL
STOCK

CONTRIBUTED
SURPLUS

RETAINED
EARNINGS

ACCUMULATED
OTHER
COMPREHENSIVE

 LOSS

TOTAL EQUITY
ATTRIBUTABLE TO
SHAREHOLDERS

NON-
CONTROLLING INTERESTS

TOTAL
EQUITY

Balance - Beginning of period

487

16

512

(31)

984

90

1,074

Comprehensive income

             
 

Net earnings

161

161

2

163

 

Other comprehensive income

1

19

20

20

 

162

19

181

2

183

Dividends

(4)

(4)

(4)

Issuance of common share upon exercise of stock options

1

1

1

Balance - End of period

488

16

670

(12)

1,162

92

1,254

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

   
 

For the 3-month periods ended March 31,

(in millions of Canadian dollars) (unaudited)

2018

 

2017

Operating activities

   

Net earnings attributable to Shareholders for the period

61

 

161

Adjustments for:

   
 

Financing expense and interest expense on employee future benefits

23

 

22

 

Depreciation and amortization

55

 

47

 

Gain on acquisitions, disposals and others

(66)

 

 

Unrealized loss (gain) on derivative financial instruments

4

 

(4)

 

Foreign exchange gain on long-term debt and financial instruments

(1)

 

(8)

 

Provision for income taxes

24

 

27

 

Fair value revaluation gain on investments

(5)

 

(145)

 

Share of results of associates and joint ventures

(1)

 

(28)

 

Net earnings attributable to non-controlling interests

11

 

2

 

Net financing expense paid

(37)

 

(38)

 

Net income taxes received (paid)

3

 

(5)

 

Dividends received

 

2

 

Employee future benefits and others

(2)

 

 

69

 

33

Changes in non-cash working capital components

(31)

 

(39)

 

38

 

(6)

Investing activities

   

Investments in associates and joint ventures

(2)

 

(16)

Payments for property, plant and equipment

(83)

 

(61)

Proceeds from disposals of property, plant and equipment

81

 

3

Change in intangible and other assets

(4)

 

(5)

Net cash acquired in business combinations

3

 

 

(5)

 

(79)

Financing activities

   

Bank loans and advances

(13)

 

(3)

Change in revolving credit facilities

36

 

103

Increase in other long-term debt

8

 

6

Payments of other long-term debt

(9)

 

(5)

Settlement of derivative financial instruments

(1)

 

(7)

Issuance of common shares

2

 

1

Redemption of common shares

(6)

 

Dividends paid to non-controlling interests

(2)

 

Capital contribution from non-controlling interests

1

 

Dividends paid to the Corporation's Shareholders

(4)

 

(4)

 

12

 

91

Change in cash and cash equivalents during the period

45

 

6

Currency translation on cash and cash equivalents

3

 

Cash and cash equivalents - Beginning of period

89

 

62

Cash and cash equivalents - End of period

137

 

68

 

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, 2017 .

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, Specialty Products (which constitutes the Corporation's Packaging Products) and Tissue Papers.

 

 

SALES

   
 

For the 3-month periods ended March 31,

(in millions of Canadian dollars) (unaudited)

2018

2017

Packaging Products

   
 

Containerboard

421

346

 

Boxboard Europe

246

211

 

Specialty Products

159

173

 

Intersegment sales

(24)

(22)

 

802

708

Tissue Papers

305

306

Intersegment sales and Corporate Activities

(9)

(8)

 

1,098

1,006

   
 

OPERATING INCOME (LOSS) BEFORE DEPRECIATION
AND AMORTIZATION

   
 

For the 3-month periods ended March 31,

(in millions of Canadian dollars) (unaudited)

2018

2017

Packaging Products

   
 

Containerboard

141

45

 

Boxboard Europe

28

13

 

Specialty Products

7

18

 

176

76

Tissue Papers

13

23

Corporate

(22)

(21)

Operating income before depreciation and amortization

167

78

Depreciation and amortization

(55)

(47)

Financing expense and interest expense on employee future benefits

(23)

(22)

Foreign exchange gain on long-term debt and financial instruments

1

8

Fair value revaluation gain on investments

5

145

Share of results of associates and joint ventures

1

28

Earnings before income taxes

96

190

   
 

PAYMENTS FOR PROPERTY, PLANT AND EQUIPMENT

   
 

For the 3-month periods ended March 31,

(in millions of Canadian dollars) (unaudited)

2018

2017

Packaging Products

   
 

Containerboard

59

6

 

Boxboard Europe

3

8

 

Specialty Products

6

3

 

68

17

Tissue Papers

9

27

Corporate

3

3

Total acquisitions

80

47

Proceeds from disposals of property, plant and equipment

(81)

(3)

Capital lease acquisitions

(3)

(3)

 

(4)

41

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

   
 

Beginning of period

28

25

 

End of period

(22)

(8)

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

2

58

 

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, 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. It 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 contribution of each segment when excluding depreciation & 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 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 obligation 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 the 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 2018

(in millions of Canadian dollars)

Containerboard

Boxboard Europe

Specialty Products

Tissue Papers

Corporate Activities

Consolidated

Operating income (loss)

121

19

2

(2)

(28)

112

Depreciation and amortization

20

9

5

15

6

55

Operating income (loss) before depreciation and amortization

141

28

7

13

(22)

167

Specific items:

           
 

Gain on acquisitions, disposals and others

(66)

(66)

 

Unrealized loss on financial instruments

2

2

4

 

(64)

2

(62)

Adjusted operating income (loss) before depreciation and amortization

77

28

7

13

(20)

105

Adjusted operating income (loss)

57

19

2

(2)

(26)

50

   
 

Q4 2017

(in millions of Canadian dollars)

Containerboard

Boxboard Europe

Specialty Products

Tissue Papers

Corporate Activities

Consolidated

Operating income (loss)

51

11

9

(6)

(20)

45

Depreciation and amortization

22

8

5

18

6

59

Operating income (loss) before depreciation and amortization

73

19

14

12

(14)

104

Specific items :

           
 

Impairment reversal

(2)

(2)

 

Restructuring costs

1

1

 

Unrealized loss on derivative financial instruments

1

1

2

 

1

1

Adjusted operating income (loss) before depreciation and amortization

74

19

14

12

(14)

105

Adjusted operating income (loss)

52

11

9

(6)

(20)

46

   
 

Q1 2017

(in millions of Canadian dollars)

Containerboard

Boxboard Europe

Specialty Products

Tissue Papers

Corporate Activities

Consolidated

Operating income (loss)

33

5

13

8

(28)

31

Depreciation and amortization

12

8

5

15

7

47

Operating income (loss) before depreciation and amortization

45

13

18

23

(21)

78

Specific items:

           
 

Restructuring costs

1

1

 

Unrealized gain on financial instruments

(4)

(4)

 

1

(4)

(3)

Adjusted operating income (loss) before depreciation and amortization

45

14

18

23

(25)

75

Adjusted operating income (loss)

33

6

13

8

(32)

28

 

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 2018

 

Q4 2017

 

Q1 2017

           

Net earnings attributable to Shareholders for the year

61

 

57

 

161

Net earnings attributable to non-controlling interests

11

 

6

 

2

Provision for (recovery of) income taxes

24

 

(57)

 

27

Fair value revaluation gain on investments

(5)

 

 

(145)

Share of results of associates and joint ventures

(1)

 

(3)

 

(28)

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

(1)

 

4

 

(8)

Financing expense, interest expense on employee future benefits and loss on repurchase of long-term debt

23

 

38

 

22

Operating income

112

 

45

 

31

Specific items:

       
 

Gain on acquisitions, disposals and others

(66)

 

 

 

Impairment reversals

 

(2)

 

 

Restructuring costs

 

1

 

1

 

Unrealized loss (gain) on derivative financial instruments

4

 

2

 

(4)

 

(62)

 

1

 

(3)

Adjusted operating income

50

 

46

 

28

Depreciation and amortization

55

 

59

 

47

Adjusted operating income before depreciation and amortization

105

 

105

 

75

 

The following table reconciles net earnings and net earnings per common share, as per IFRS, with adjusted net earnings and adjusted net earnings per common share:

 

       

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

NET EARNINGS

 

NET EARNINGS PER SHARE 1

 

Q1 2018

 

Q4 2017

 

Q1 2017

 

Q1 2018

 

Q4 2017

 

Q1 2017

               

As per IFRS

61

 

57

 

161

 

$

0.65

 

$

0.60

 

$

1.70

Specific items:

             

Gain on acquisitions, disposals and others

(66)

 

 

 

$

(0.51)

 

 

Impairment reversals

 

(2)

 

 

 

$

(0.01)

 

Restructuring costs

 

1

 

1

 

 

$

0.01

 

$

0.01

Unrealized loss (gain) on derivative financial instruments

4

 

2

 

(4)

 

$

0.03

 

$

0.01

 

$

(0.03)

Loss on repurchase of long-term debt

 

14

 

 

 

$

0.10

 

Unrealized gain on interest rate swaps

 

(2)

 

 

 

$

(0.01)

 

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

(1)

 

4

 

(8)

 

$

(0.01)

 

$

0.04

 

$

(0.08)

Fair value revaluation gain on investments

(5)

 

 

(145)

 

$

(0.03)

 

 

$

(1.33)

Share of results of associates and joint ventures

 

 

(16)

 

 

 

$

(0.14)

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

19

 

(61)

 

23

 

 

$

(0.60)

 

 

(49)

 

(44)

 

(149)

 

$

(0.52)

 

$

(0.46)

 

$

(1.57)

Adjusted

12

 

13

 

12

 

$

0.13

 

$

0.14

 

$

0.13

   

1

Specific amounts per common share are calculated on an after-tax basis and are net of the portion attributable to non-controlling interests. Per common 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 (used for) operating activities with operating income and operating income before depreciation and amortization:

 

           

(in millions of Canadian dollars)

Q1 2018

 

Q4 2017

 

Q1 2017

Cash flow from (used for) operating activities

38

 

95

 

(6)

Changes in non-cash working capital components

31

 

(18)

 

39

Depreciation and amortization

(55)

 

(59)

 

(47)

Net income taxes paid (received)

(3)

 

4

 

5

Net financing expense paid

37

 

11

 

38

Premium paid on long-term debt repurchase

 

11

 

Gain on acquisitions, disposals and others

66

 

 

Impairment reversals and restructuring costs

 

2

 

Unrealized gain (loss) on derivative financial instruments

(4)

 

(2)

 

4

Dividend received, employee future benefits and others

2

 

1

 

(2)

Operating income

112

 

45

 

31

Depreciation and amortization

55

 

59

 

47

Operating income before depreciation and amortization

167

 

104

 

78

 

The following table reconciles cash flow from (used for) 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 common share basis:

 

           

(in millions of Canadian dollars, except amount per common share or otherwise mentioned)

Q1 2018

 

Q4 2017

 

Q1 2017

Cash flow from (used for) operating activities

38

 

95

 

(6)

Changes in non-cash working capital components

31

 

(18)

 

39

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

69

 

77

 

33

Specific items, net of current income taxes if applicable:

         
 

Restructuring costs

 

1

 

1

 

Premium paid on long-term debt repurchase

 

11

 

Adjusted cash flow from operating activities

69

 

89

 

34

Capital expenditures & other assets 1 and capital lease payments, net of disposals of $81 million in Q1 2018

(9)

 

(63)

 

(64)

Dividends paid to the Corporation's Shareholders

(4)

 

(4)

 

(4)

Adjusted free cash flow

56

 

22

 

(34)

Adjusted free cash flow per common share

$

0.59

 

$

0.24

 

$

(0.36)

Weighted average basic number of common shares outstanding

 

95,013,041

   

94,744,841

   

94,554,104

 

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)

March 31, 2018

 

December 31, 2017

 

March 31, 2017

Long-term debt

1,582

 

1,517

 

1,625

Current portion of long-term debt

66

 

59

 

36

Bank loans and advances

23

 

35

 

24

Total debt

1,671

 

1,611

 

1,685

Less: Cash and cash equivalents (including $25 million of restricted cash in 2018)

137

 

89

 

68

Net debt

1,534

 

1,522

 

1,617

Adjusted OIBD (last twelve months)

423

 

393

 

372

Net debt / Adjusted OIBD ratio

3.6

 

3.9

 

4.3

Net debt / Adjusted OIBD ratio on a pro forma basis 1

3.6

 

 

N/A

 

1 Pro-forma to include adjusted OIBD of 2017 and 2018 business acquisitions on a last twelve months basis.

 

SOURCE Cascades Inc.

Media :
Hugo D'Amours
Vice-President, Communications and Public Affairs
819-363-5184

Investors :
Jennifer Aitken, MBA
Director, Investor Relations
514-282-2697

Source :
Allan Hogg, Vice-President and Chief Financial Officer

 

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