Cascades Increases Annual Net Earnings and Announces Fourth Quarter 2016 Results

KINGSEY FALLS, QC, March 2, 2017 /CNW Telbec/ - Cascades Inc. (TSX: CAS) reports its unaudited financial results for the three-month period and the fiscal year ended December 31, 2016.

Q4 2016 Highlights

  • Sales of $979 million (compared to $1,021 million in Q3 2016 (-4%) and $975 million in Q4 2015 (stable))
  • Adjusted (excluding specific items)
    • OIBD of $82 million (compared to $103 million in Q3 2016 (-20%) and $104 million in Q4 2015 (-21%))
    • Net earnings per common share of $0.16 (compared to $0.32 in Q3 2016 and $0.23 in Q4 2015)

As reported (including specific items)

  • OIBD of $83 million (compared to $98 million in Q3 2016 (-15%) and $44 million in Q4 2015 (+89%))
  • Net earnings per common share of $0.04 (compared to $0.21 in Q3 2016 and a net loss of $0.81 in Q4 2015)

2016 Annual Highlights

  • Sales of $4,001 million (compared to $3,861 million in 2015 (+4%))
  • Adjusted (excluding specific items)
    • OIBD of $403 million (compared to $426 million in 2015 (-5%))
    • Net earnings per common share of $1.21 (compared to $1.18 in 2015)

As reported (including specific items)

  • OIBD of $413 million (compared to $343 million in 2015 (+20%))
  • Net earnings per common share of $1.42 (compared to a net loss of $0.69 in 2015)

Net debt of $1,532 million as at December 31, 2016 (compared to $1,721 million as at December 31, 2015 (-11%)) and net debt to adjusted OIBD ratio at 3.8x, down from 4.0x at year-end 2015.

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

Mr. Mario Plourde, President and Chief Executive Officer, commented: "We finished our financial year with positive results, in spite of a fourth quarter that was below our expectations. Among the factors that impacted Q4 results on a sequential basis, the most notable was longer market related and maintenance downtime in our tissue and containerboard segments, which hindered both volume and operating cost levels of these divisions. On a year-over-year basis, sales remained stable, driven by increased sales from recovery and recycling activities and better volumes in our Containerboard Packaging and Specialty Products groups, which counterbalanced the continued weakness in Europe and softer containerboard pricing following the onset of pricing weakness at the beginning of 2016.

On an annual basis, our North American operations executed well in 2016, delivering a 6% year-over-year sales increase that more than counterbalanced the 4% sales decline in Europe. While adjusted operating income decreased compared to 2015, this largely reflects continued weakness in Europe, and the higher level of investments we are making to implement our ERP platform across our facilities and adapt many of our business processes.

Lastly, we are pleased to note that we continued to deliver on our commitment to lower our debt levels. Despite fluctuations in foreign exchange rates, which increased net debt by $24 million during the period, we successfully reduced our total net debt by an additional 6%, or $93 million during the fourth quarter. This brought full year debt reduction to $189 million, which represents a notable 11% decrease from year-end 2015 levels, and resulted in our leverage ratio decreasing to 3.8x from 4.0x at the end of last year. We remain committed to continuing our efforts to deleverage our balance sheet going forward in order to bolster our operational flexibility, and improve our overall financial profile."

Financial Summary

 

Segmented adjusted OIBD 1

         
           

(in millions of Canadian dollars) (unaudited)

2016

2015

Q4 2016

Q3 2016

Q4 2015

                     

Packaging Products

                   
 

Containerboard

 

216

 

231

 

43

 

58

 

56

 

Boxboard Europe

 

53

 

63

 

11

 

9

 

13

 

Specialty Products

 

65

 

58

 

17

 

18

 

16

                     

Tissue Papers

 

150

 

119

 

30

 

47

 

38

                     

Corporate Activities

 

(81)

 

(45)

 

(19)

 

(29)

 

(19)

Adjusted OIBD

 

403

 

426

 

82

 

103

 

104

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

                   
                     

Selected consolidated information

                   
                     

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

2016

 

2015

 

Q4 2016

 

Q3 2016

 

Q4 2015

Sales

 

4,001

 

3,861

 

979

 

1,021

 

975

Adjusted1

                   
 

Operating income before depreciation and amortization (OIBD)

 

403

 

426

 

82

 

103

 

104

 

Operating income

 

211

 

236

 

32

 

55

 

47

 

Net earnings

 

114

 

112

 

15

 

30

 

22

   

per common share

$

1.21

$

1.18

$

0.16

$

0.32

$

0.23

 

Margin (OIBD)

 

10.1%

 

11%

 

8.4%

 

10.1%

 

10.7%

As reported

                   
 

Operating income before depreciation and amortization (OIBD)

 

413

 

343

 

83

 

98

 

44

 

Operating income (loss)

 

221

 

153

 

33

 

50

 

(13)

 

Net earnings (loss)

 

135

 

(65)

 

4

 

20

 

(76)

   

per common share

$

1.42

$

(0.69)

$

0.04

$

0.21

$

(0.81)

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

 

Analysis of results for the three-month period ended December 31, 2016 (compared to the same period last year)

Sales of $979 million increased by $4 million compared to the same period last year. This reflects higher year-over-year sales volumes in Containerboard and Specialty Products, and a $13 million sales increase generated by recovery and recycling activities. Offsetting these were a $2 million currency-related negative impact, and a $15 million decrease attributable to lower average sales prices, most notably in the European Boxboard and Containerboard Packaging segments, related to mix and market pricing conditions. On the strategic front, benefits accruing to the containerboard business from the acquisition of a plant in the second quarter more than offset the negative impact from the Specialty Products segment's closure of its de-inked pulp mill in Maine.

On an adjusted basis, fourth quarter 2016 operating income stood at $32 million compared to $47 million in 2015. The decrease reflects the impacts on sales as described above, combined with higher raw material and maintenance and logistics costs, which negatively impacted the contribution from our containerboard and tissue activities. Additionally, we incurred higher marketing costs in our Tissue Group related to the repositioning and rebranding of the group's Away-from-Home and retail product lines.

The main specific items, before income taxes, that impacted our fourth quarter 2016 operating income and/or net earnings were:

  • a $2 million impairment reversal related to a building sold after the closure of our de-inked pulp mill located in Auburn, Maine
  • a $1 million unrealized loss on derivative financial instruments
  • a $13 million foreign exchange loss on long-term debt and financial instruments

Adjusted net earnings amounted to $15 million ($0.16 per share) in the fourth quarter of 2016 compared to $22 million ($0.23 per share) for the comparable period in 2015. Prior-year adjusted net earnings exclude $98 million of specific items, the most notable being $73 million of impairment charges and tax reversals incurred in the European Boxboard segment. As reported, net earnings amounted to $4 million ($0.04 per share) in the fourth quarter of 2016 compared to a net loss of $76 million ($0.81 per share) in the same period in 2015.

Analysis of results for the three-month period ended December 31, 2016 (compared to the previous quarter)

On a sequential basis, sales declined by 4% to $979 million. This decrease is largely attributable to the lower seasonal volumes common during the period, primarily in the Tissue and Containerboard Packaging groups, and additional downtime taken during December. Partially offsetting these impacts were a favourable foreign exchange rate for our North American operations.

Adjusted operating income decreased from $55 million in the third quarter of 2016 to $32 million to in the fourth quarter of 2016. This is attributable to the sales variances explained above, higher production costs due to extended downtime periods and additional marketing costs in the Tissue Group. At the corporate level, a $2 million insurance refund related to the fire at the Mississauga, Ontario, plant was received during the current period. These funds partially reimburse a total of $4 million of costs related to this fire that were recorded during the third quarter.

Near-Term Outlook

Commenting on the outlook for Cascades, Mr. Plourde added: "Looking ahead, we expect near-term financial performance to reflect recent increases in raw material costs and the usual seasonal trends in our business segments. In Europe, favourable order inflow trends at the beginning of 2017, and the recently announced €60 April price increase suggest early signs of improvement in market dynamics compared to the softness seen in 2016. On a segmented basis, we expect the fall 2016 price increase announcement to benefit our Containerboard Packaging division in the first quarter, and to be fully implemented as of the end of the second quarter. However, recent raw material price increases will counterbalance the benefit. We recently announced a second price increase in Containerboard, which should start to take effect in the second quarter, and be fully realized during the second half of the year. In our Tissue Group, the combination of lower marketing costs, recent product repositioning efforts and the beneficial impact of price increases announced in 2016 are expected to support performance going forward. On a positive note, our new Tissue converting facility in Scappoose, Oregon, began operating its first line last month, as planned. The facility will continue ramping up, and will add two new converting lines through the second quarter. Finally, we anticipate our Specialty Products Group to maintain its positive momentum built over the past two years. On the cost side, tight market dynamics, including strong demand, are expected to continue putting pressure on the price of our input materials in the near-term. 

Corporate investments are expected to remain elevated through the end of this year. However, we look forward to completing the implementation of our ERP platform and other initiatives undertaken to modernize our internal processes in 2017. In addition, we will continue our efforts to deleverage our balance sheet, and to analyze our strategic options with the view of creating additional value for our shareholders. As always, our strategic efforts will be guided by our commitment to increase operational efficiency, execution and flexibility through targeted investments and growth initiatives."

Dividend on common shares and normal course issuer bid

The Board of Directors of Cascades declared a quarterly dividend of $0.04 per share to be paid on April 3, 2017, to shareholders of record at the close of business on March 24, 2017. This dividend is an "eligible dividend" as per the Income Tax Act (R.C.S. (1985), Canada). For the year 2016, 1,047,243 common shares were repurchased for cancellation at an average price of $8.61, representing an aggregate amount of approximately $9.0 million.

2016 Fourth Quarter and Annual Financial Results Conference Call Details

Management will discuss the 2016 fourth quarter and annual financial results during a conference call today at 10:00 a.m. EST. The call can be accessed by dialing 1-888-231-8191. 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 April 2, 2017 by dialing 1-855-859-2056, access code 50805795.

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 close to 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)

December 31,
2016

December 31,
2015

Assets

   

Current assets

   

Cash and cash equivalents

62

60

Accounts receivable

524

540

Current income tax assets

12

30

Inventories

477

494

Financial assets

3

1

 

1,078

1,125

Long-term assets

   

Investments in associates and joint ventures

335

322

Property, plant and equipment

1,618

1,608

Intangible assets with finite useful life

171

174

Financial assets

10

12

Other assets

72

80

Deferred income tax assets

179

181

Goodwill and other intangible assets with indefinite useful life

350

346

 

3,813

3,848

Liabilities and Equity

   

Current liabilities

   

Bank loans and advances

28

37

Trade and other payables

661

613

Current income tax liabilities

1

1

Current portion of long-term debt

36

34

Current portion of provisions for contingencies and charges

9

5

Current portion of financial liabilities and other liabilities

27

37

 

762

727

Long-term liabilities

   

Long-term debt

1,530

1,710

Provisions for contingencies and charges

34

34

Financial liabilities

16

47

Other liabilities

178

178

Deferred income tax liabilities

219

189

 

2,739

2,885

Equity attributable to Shareholders

   

Capital stock

487

490

Contributed surplus

16

17

Retained earnings

512

387

Accumulated other comprehensive loss

(31)

(27)

 

984

867

Non-controlling interests

90

96

Total equity

1,074

963

 

3,813

3,848

 

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

   
     
 

For the 3-month periods ended December 31,

 

For years ended December 31,

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

2016

2015

2016

2015

Sales

979

975

4,001

3,861

Cost of sales and expenses

       

Cost of sales (including depreciation and amortization of $192 million ($50 million in the fourth quarter); 2015 — $190 million ($57 million in the fourth quarter))

841

826

3,380

3,261

Selling and administrative expenses

106

98

402

360

Gain on acquisitions, disposals and others

(4)

(1)

Impairment charges (reversal) and restructuring costs

(2)

56

12

66

Foreign exchange gain

(4)

(1)

(4)

(6)

Loss (gain) on derivative financial instruments

5

9

(6)

28

 

946

988

3,780

3,708

Operating income (loss)

33

(13)

221

153

Financing expense

21

22

88

91

Interest expense on employee future benefits

1

1

5

6

Loss on refinancing of long-term debt

19

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

13

23

(22)

91

Share of results of associates and joint ventures

(7)

(6)

(32)

(37)

Earnings (loss) before income taxes

5

(53)

182

(17)

Provision for income taxes

2

23

45

40

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

3

(76)

137

(57)

Net earnings from discontinued operations

1

1

Net earnings (loss) including non-controlling interests for the period

3

(75)

137

(56)

Net earnings (loss) attributable to non-controlling interests

(1)

1

2

9

Net earnings (loss) attributable to Shareholders for the period

4

(76)

135

(65)

Net earnings (loss) from continuing operations per common share

       
 

Basic

$

0.04

$

(0.82)

$

1.42

$

(0.70)

 

Diluted

$

0.04

$

(0.82)

$

1.39

$

(0.70)

Net earnings (loss) per common share

       
 

Basic

$

0.04

$

(0.81)

$

1.42

$

(0.69)

 

Diluted

$

0.04

$

(0.81)

$

1.39

$

(0.69)

Weighted average basic number of common shares outstanding

94,487,211

94,690,092

94,709,048

94,384,308

Weighted average number of diluted common shares

96,992,787

97,117,947

96,877,848

96,261,484

         

Net earnings (loss) attributable to Shareholders:

       
 

Continuing operations

4

(77)

135

(66)

 

Discontinued operations

1

1

Net earnings (loss)

4

(76)

135

(65)

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

   
     
 

For the 3-month periods ended
December 31,

For the years ended
December 31,

(in millions of Canadian dollars) (unaudited)

2016

2015

2016

2015

Net earnings (loss) including non-controlling interests for the period

3

(75)

137

(56)

Other comprehensive income (loss)

       
 

Items that may be reclassified subsequently to earnings

       
   

Translation adjustments

       
     

Change in foreign currency translation of foreign subsidiaries

4

29

(33)

115

     

Change in foreign currency translation related to net investment hedging activities

(13)

(23)

21

(101)

   

Cash flow hedges

       
     

Change in fair value of foreign exchange forward contracts

2

     

Change in fair value of commodity derivative financial instruments

4

1

10

2

   

Available-for-sale financial assets

1

(2)

2

   

Share of other comprehensive income of associates

9

3

14

   

Income taxes

(3)

2

(6)

8

 

2

12

(10)

42

 

Items that are reclassified to retained earnings

       
   

Actuarial gain on post-employment benefit obligations

42

16

11

25

   

Income taxes

(11)

(4)

(3)

(7)

 

31

12

8

18

Other comprehensive income (loss)

33

24

(2)

60

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

36

(51)

135

4

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

(4)

2

(4)

16

Comprehensive income (loss) attributable to Shareholders for the period

40

(53)

139

(12)

Comprehensive income (loss) attributable to Shareholders:

       
 

Continuing operations

40

(54)

139

(13)

 

Discontinued operations

1

1

Comprehensive income (loss)

40

(53)

139

(12)

 

CONSOLIDATED STATEMENTS OF EQUITY

     
   

For the year ended December 31, 2016

(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 year

490

 

17

 

387

 

(27)

 

867

 

96

 

963

Comprehensive income (loss)

                         
 

Net earnings

 

 

135

 

 

135

 

2

 

137

 

Other comprehensive income (loss)

 

 

8

 

(4)

 

4

 

(6)

 

(2)

   

 

 

143

 

(4)

 

139

 

(4)

 

135

Dividends

 

 

(15)

 

 

(15)

 

 

(15)

Stock options

1

 

 

 

 

1

 

 

1

Issuance of common shares

1

 

 

 

 

1

 

 

1

Redemption of common shares

(5)

 

(1)

 

(3)

 

 

(9)

 

 

(9)

Dividends paid to non-controlling interests and acquisition of non-controlling interests

 

 

 

 

 

(2)

 

(2)

Balance - End of year

487

 

16

 

512

 

(31)

 

984

 

90

 

1,074

                 
   

For the year ended December 31, 2015

(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 year

483

 

18

 

454

 

(62)

 

893

 

110

 

1,003

Comprehensive income (loss)

             
 

Net earnings (loss)

 

 

(65)

 

 

(65)

 

9

 

(56)

 

Other comprehensive income

 

 

18

 

35

 

53

 

7

 

60

   

 

 

(47)

 

35

 

(12)

 

16

 

4

Dividends

 

 

(15)

 

 

(15)

 

 

(15)

Stock options

2

 

(1)

 

 

 

1

 

 

1

Issuance of common shares

5

 

 

 

 

5

 

 

5

Acquisition of non-controlling interests

 

 

(5)

 

 

(5)

 

(30)

 

(35)

Balance - End of year

490

 

17

 

387

 

(27)

 

867

 

96

 

963


 

CONSOLIDATED STATEMENTS OF CASH FLOWS

     
         
   

For the 3-month periods ended
December 31,

 

For the years ended
December 31,

(in millions of Canadian dollars) (unaudited)

2016

 

2015

 

2016

 

2015

Operating activities from continuing operations

             

Net earnings (loss) attributable to Shareholders for the period

4

 

(76)

 

135

 

(65)

Net earnings from discontinued operations

 

(1)

 

 

(1)

Net earnings (loss) from continuing operations

4

 

(77)

 

135

 

(66)

Adjustments for:

       
 

Financing expense and interest expense on employee future benefits

22

 

23

 

93

 

97

 

Loss on refinancing of long-term debt

 

 

 

19

 

Depreciation and amortization

50

 

57

 

192

 

190

 

Loss (gain) on acquisitions, disposals and others

1

 

 

(4)

 

(1)

 

Impairment (reversal) charges and restructuring costs

(2)

 

57

 

4

 

64

 

Unrealized loss (gain) on derivative financial instruments

1

 

4

 

(18)

 

18

 

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

13

 

23

 

(22)

 

91

 

Provision for income taxes

2

 

23

 

45

 

40

 

Share of results of associates and joint ventures

(7)

 

(6)

 

(32)

 

(37)

 

Net earnings (loss) attributable to non-controlling interests

(1)

 

1

 

2

 

9

 

Net financing expense paid

(4)

 

(4)

 

(89)

 

(89)

 

Premium paid on long-term debt refinancing

 

 

 

(13)

 

Net income taxes received (paid)

 

(4)

 

10

 

(14)

 

Dividend received

6

 

6

 

18

 

17

 

Employee future benefits and others

 

4

 

(18)

 

(3)

   

85

 

107

 

316

 

322

Changes in non-cash working capital components

93

 

30

 

56

 

(38)

   

178

 

137

 

372

 

284

Investing activities from continuing operations

       

Investments in associates and joint ventures

(4)

 

(2)

 

(6)

 

(2)

Payments for property, plant and equipment

(57)

 

(50)

 

(182)

 

(163)

Proceeds on disposals of property, plant and equipment

2

 

1

 

5

 

4

Change in intangible and other assets

(2)

 

13

 

14

 

8

Business acquisition

(1)

 

 

(16)

 

   

(62)

 

(38)

 

(185)

 

(153)

Financing activities from continuing operations

       

Bank loans and advances

(4)

 

4

 

(8)

 

(14)

Change in revolving credit facilities

(99)

 

(91)

 

(146)

 

(120)

Issuance of senior notes, net of related expenses

 

 

 

300

Repayment of senior notes

 

 

 

(305)

Increase in other long-term debt

29

 

30

 

40

 

73

Payments of other long-term debt

(16)

 

(10)

 

(47)

 

(48)

Settlement of derivative financial instruments

3

 

 

3

 

Issuance of common shares

1

 

4

 

1

 

5

Redemption of common shares

(1)

 

 

(9)

 

Dividends paid to non-controlling interests and acquisition of non-controlling interests

 

(3)

 

(1)

 

(5)

Dividends paid to the Corporation's Shareholders

(3)

 

(4)

 

(15)

 

(15)

   

(90)

 

(70)

 

(182)

 

(129)

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

26

 

29

 

5

 

2

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

 

(3)

 

 

30

Net change in cash and cash equivalents during the period

26

 

26

 

5

 

32

Currency translation on cash and cash equivalents

(1)

 

 

(3)

 

(1)

Cash and cash equivalents - Beginning of period

37

 

34

 

60

 

29

Cash and cash equivalents - End of period

62

 

60

 

62

 

60

 

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, 2015.

The Corporation's operating segments are reported in a manner consistent with the internal reporting provided to the CODM. The Chief Executive Officer has authority for resource allocation and assessment of the Corporation's performance, and is therefore the CODM.

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

 

 

       

SALES

 
   

For the 3-month periods ended
December 31,

 

For the years ended
December 31,

(in millions of Canadian dollars) (unaudited)

2016

 

2015

 

2016

 

2015

Packaging Products

             
 

Containerboard

336

 

326

 

1,370

 

1,301

 

Boxboard Europe

191

 

202

 

796

 

825

 

Specialty Products

156

 

147

 

620

 

579

 

Intersegment sales

(16)

 

(15)

 

(61)

 

(55)

   

667

 

660

 

2,725

 

2,650

Tissue Papers

319

 

322

 

1,305

 

1,236

Intersegment sales and Corporate activities

(7)

 

(7)

 

(29)

 

(25)

   

979

 

975

 

4,001

 

3,861

     
     
   

OPERATING INCOME (LOSS)
BEFORE DEPRECIATION AND AMORTIZATION (OIBD)

   

For the 3-month periods ended
December 31,

 

For the years ended
December 31,

(in millions of Canadian dollars) (unaudited)

2016

 

2015

 

2016

 

2015

Packaging Products

             
 

Containerboard

42

 

55

 

214

 

233

 

Boxboard Europe

11

 

(42)

 

51

 

6

 

Specialty Products

19

 

16

 

71

 

52

   

72

 

29

 

336

 

291

Tissue Papers

30

 

38

 

139

 

119

Corporate

(19)

 

(23)

 

(62)

 

(67)

Operating income before depreciation and amortization

83

 

44

 

413

 

343

Depreciation and amortization

(50)

 

(57)

 

(192)

 

(190)

Financing expense and interest expense on employee future benefits

(22)

 

(23)

 

(93)

 

(97)

Loss on refinancing of long-term debt

 

 

 

(19)

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

(13)

 

(23)

 

22

 

(91)

Share of results of associates and joint ventures

7

 

6

 

32

 

37

Earnings (loss) before income taxes

5

 

(53)

 

182

 

(17)

     
     
   

PAYMENTS FOR PROPERTY, PLANT AND EQUIPMENT

   

For the 3-month periods ended
December 31,

 

For the years ended
December 31,

(in millions of Canadian dollars) (unaudited)

2016

 

2015

 

2016

 

2015

Packaging Products

             
 

Containerboard

25

 

34

 

51

 

64

 

Boxboard Europe

6

 

11

 

26

 

23

 

Specialty Products

7

 

5

 

26

 

14

   

38

 

50

 

103

 

101

Tissue Papers

30

 

10

 

77

 

57

Corporate

5

 

3

 

26

 

7

Total acquisitions

73

 

63

 

206

 

165

Proceeds on disposals of property, plant and equipment

(2)

 

(1)

 

(5)

 

(4)

Capital-lease acquisitions and included in other debts

(1)

 

(2)

 

(18)

 

(3)

   

70

 

60

 

183

 

158

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

             
 

Beginning of period

10

 

8

 

19

 

20

 

End of period

(25)

 

(19)

 

(25)

 

(19)

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

55

 

49

 

177

 

159

 

SUPPLEMENTAL INFORMATION ON NON-IFRS MEASURES

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

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

The specific items excluded from OIBD, operating income, financing expense, net earnings and cash flow from operations mainly include  charges for (reversals of) impairment of assets, restructuring gains or costs, loss on refinancing of long-term debt, deferred tax assets 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 or non-recurring nature. Although we consider these items to be non-recurring and less relevant to evaluating our performance, some of them may take place in the future and will reduce the cash available to us.

The following table reconciles net earnings (loss) and net earnings (loss) per common share 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

 

2016

 

2015

 

Q4 2016

 

Q3 2016

 

Q4 2015

   

2016

   

2015

   

Q4 2016

   

Q3 2016

   

Q4 2015

As per IFRS

135

 

(65)

 

4

 

20

 

(76)

 

$

1.42

 

$

(0.69)

 

$

0.04

 

$

0.21

 

$

(0.81)

Specific items:

                     

Gain on acquisitions, disposals and others

(4)

 

(1)

 

 

 

 

$

(0.03)

 

$

(0.01)

 

 

 

Impairment charges (reversal)

3

 

69

 

(2)

 

2

 

57

 

$

0.03

 

$

0.67

 

$

(0.01)

 

$

0.02

 

$

0.59

Restructuring costs (gain)

9

 

(3)

 

 

3

 

(1)

 

$

0.06

 

$

(0.03)

 

 

$

0.02

 

$

(0.01)

Unrealized loss (gain) on derivative financial instruments

(18)

 

18

 

1

 

 

4

 

$

(0.14)

 

$

0.14

 

$

0.01

 

 

$

0.03

Loss on refinancing of long-term debt

 

19

 

 

 

 

 

$

0.15

 

 

 

Unrealized loss (gain) on interest rates swaps

(1)

 

1

 

(1)

 

 

 

$

(0.01)

 

$

0.01

 

$

(0.01)

 

 

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

(22)

 

91

 

13

 

7

 

23

 

$

(0.19)

 

$

0.83

 

$

0.12

 

$

0.07

 

$

0.20

Share of results of associates and joint ventures

7

 

(9)

 

1

 

 

3

 

$

0.05

 

$

(0.07)

 

$

0.01

 

 

$

0.03

Included in discontinued operations, net of tax

 

(2)

 

 

 

 

 

$

(0.02)

 

 

 

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

5

 

(6)

 

(1)

 

(2)

 

12

 

$

0.02

 

$

0.20

 

 

 

$

0.20

 

(21)

 

177

 

11

 

10

 

98

 

$

(0.21)

 

$

1.87

 

$

0.12

 

0.11

 

$

1.04

Adjusted

114

 

112

 

15

 

30

 

22

 

$

1.21

 

$

1.18

 

$

0.16

 

$

0.32

 

$

0.23

Note 1 : Specific amounts per common share are calculated on an after-tax basis and are net of the portion attributable to non-controlling interest. Per share amounts in line item ''Tax effect on specific items, other tax adjustments and attributable to non-controlling interest'' only include the effect of tax adjustments. The $0.02 impact in 2016 is related to an income tax provision adjustment on past years sale of assets. The $0.20 impact in 2015 is related to the $18 million deferred tax assets reversal following the revaluation of our virgin boxboard mill in France.

 
 

 

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

 

                   

(in millions of Canadian dollars) (unaudited)

2016

 

2015

 

Q4 2016

 

Q3 2016

 

Q4 2015

Net earnings (loss) attributable to Shareholders for the period

135

 

(65)

 

4

 

20

 

(76)

Net earnings (loss) attributable to non-controlling interest

2

 

9

 

(1)

 

 

1

Net loss from discontinued operations

 

(1)

 

 

 

(1)

Provision for income taxes

45

 

40

 

2

 

9

 

23

Share of results of associates and joint ventures

(32)

 

(37)

 

(7)

 

(10)

 

(6)

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

(22)

 

91

 

13

 

7

 

23

Financing expense and interest on future employee benefits

93

 

116

 

22

 

24

 

23

Operating income

221

 

153

 

33

 

50

 

(13)

Specific items:

         
 

Gain on acquisitions, disposals and others

(4)

 

(1)

 

 

 

 

Impairment charges (reversal)

3

 

69

 

(2)

 

2

 

57

 

Restructuring costs (gain)

9

 

(3)

 

 

3

 

(1)

 

Unrealized loss (gain) on derivative financial instruments

(18)

 

18

 

1

 

 

4

   

(10)

 

83

 

(1)

 

5

 

60

Adjusted operating income

211

 

236

 

32

 

55

 

47

Depreciation and amortization

192

 

190

 

50

 

48

 

57

Adjusted operating income before depreciation and amortization

403

 

426

 

82

 

103

 

104

 

The following table reconciles the total debt and the net debt with the net debt on adjusted operating income before depreciation and amortization (adjusted OIBD) ratio:

 

     

(in millions of Canadian dollars) (unaudited)

December 31, 2016

 

December 31, 2015

Long-term debt

1,530

 

1,710

Current portion of long-term debt

36

 

34

Bank loans and advances

28

 

37

Total debt

1,594

 

1,781

Less: Cash and cash equivalents

62

 

60

Net debt

1,532

 

1,721

Adjusted OIBD on a last twelve months basis

403

 

426

Net debt / Adjusted OIBD ratio

3.8

 

4.0

           

 

SOURCE Cascades Inc.
 

For further information:
Media: Hugo D'Amours
Vice-President
Communications and Public Affair
819-363-5184

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

Source:
Allan Hogg
Vice-President and Chief Financial Officer