KINGSEY FALLS, QC, May 9, 2024 /CNW/ - Cascades Inc. (TSX:CAS) reports its unaudited financial results for the three-month period ended March 31, 2024. Q1 2024 Highlights Sales of $1,109 million (compared with $1,138 million in Q4 2023 and $1,134 million in Q1 2023); Operating income of $9 million (compared with operating loss of $(24) million in Q4 2023 and operating loss of $(80) million in Q1 2023); Net loss per common share of ($0.20) (compared with ($0.57) in Q4 2023 and ($0.75) in Q1 2023); Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA (A)1) of $103 million (compared with $122 million in Q4 2023 and $134 million in Q1 2023); Adjusted net earnings (loss) per common share1 of $0.00 (compared with adjusted net earnings per common share1 of $0.05 in Q4 2023 and adjusted net earnings per common share1 of $0.32 in Q1 2023); Net debt1 of $2,020 million as of March 31, 2024 (compared with $1,882 million as of December 31, 2023). Net debt to EBITDA (A) ratio1 of 3.8x, up from 3.4x as of December 31, 2023; On April 12, 2024, the Corporation entered into a $175 million delayed draw unsecured term loan credit facility to manage upcoming maturities; Total capital expenditures, net of disposals, of $41 million in Q1 2024, compared to $46 million in Q4 2023 and $137 million in Q1 2023. The Corporation's 2024 forecasted net capital expenditures of approximately $175 million is unchanged. Mario Plourde, President and CEO, commented: "First quarter 2024 results met expectations, considering the context of elevated raw material prices, and ongoing inflationary pressure on operational costs. Sequentially, Tissue Papers executed well, with increased average selling prices partially offsetting the impacts from higher maintenance costs and softer seasonal volumes. Results in Containerboard decreased from the previous quarter, as spreads remained under pressure due to cost headwinds, most noticeably in raw materials and energy, and lower selling prices prior to the implementation of published index price increases effective in the second quarter. The softer results similarly reflect costs associated with the Trenton mill, which ceased operations at the end of January prior to its permanent closure at the end of February. Conversely, Specialty Products had a solid quarter, driven by favourable sequential raw material and selling prices, and operational cost benefits reflecting efficiency and productivity initiatives. Lower consolidated profitability levels, higher seasonal working capital requirements and a less favourable exchange rate during the quarter resulted in our leverage ratio1 increasing to 3.8x from 3.4x at the end of 2023." Discussing near-term outlook, Mr. Plourde commented, "Consolidated second quarter results are expected to be stronger sequentially, driven by improved performance in our Containerboard segment as index price increases are implemented, and stable results in the Tissue Papers and Specialty Packaging businesses. We are continuing to advance the Bear Island facility ramp-up. It is progressing well, and we are pleased that the mill has achieved production levels above its rated daily capacity on several occasions. Broadly, we are cautiously optimistic for near-term volumes in our packaging businesses given continued economic uncertainty, and remain focused on profitability, efficiency and productivity initiatives and the ramp-up of Bear Island to create value throughout our operations." 1 Some information represents non-IFRS Accounting Standards Financial measures, other financial measures or non-IFRS Accounting Standards ratios which are not standardized under IFRS Accounting Standards and therefore might not be comparable to similar financial measures disclosed by other corporations. Please refer to the "Supplemental Information on Non-IFRS Accounting Standards Measures and Other Financial Measures" section for a complete reconciliation. Financial Summary Selected consolidated information (in millions of Canadian dollars, except amounts per common share) (unaudited) Q1 2024 Q4 2023 Q1 2023 Sales 1,109 1,138 1,134 As Reported Operating income (loss) 9 (24) (80) Net loss (20) (57) (75) per common share (basic) ($0.20) ($0.57) ($0.75) Adjusted1 Earnings before interest, taxes, depreciation and amortization (EBITDA (A)) 103 122 134 Net earnings (loss) — 5 33 per common share (basic) $— $0.05 $0.32 Margin (EBITDA (A) / Sales) 9.3 % 10.7 % 11.8 % Segmented sales (in millions of Canadian dollars) (unaudited) Q1 2024 Q4 2023 Q1 2023 Packaging Products Containerboard 556 561 561 Specialty Products 160 160 161 Inter-segment sales (7) (8) (7) 709 713 715 Tissue Papers 367 390 387 Inter-segment sales, Corporate, Recovery and Recycling activities 33 35 32 Sales 1,109 1,138 1,134 Segmented operating income (loss) (in millions of Canadian dollars) (unaudited) Q1 2024 Q4 2023 Q1 2023 Packaging Products Containerboard (7) (33) 38 Specialty Products 19 13 21 Tissue Papers 31 34 (92) Corporate, Recovery and Recycling activities (34) (38) (47) Operating income (loss) 9 (24) (80) Segmented EBITDA (A)1 (in millions of Canadian dollars) (unaudited) Q1 2024 Q4 2023 Q1 2023 Packaging Products Containerboard 50 67 126 Specialty Products 25 19 27 Tissue Papers 50 61 16 Corporate, Recovery and Recycling activities (22) (25) (35) EBITDA (A)1 103 122 134 1 Please refer to the "Supplemental Information on Non-IFRS Accounting Standards Measures and Other Financial Measures" section for a complete reconciliation. Analysis of results for the three-month period ended March 31, 2024 (compared to the same period last year) The first quarter sales of $1,109 million decreased by $25 million compared with the same period last year. This decrease was driven by a $64 million impact from lower selling prices in all of our business segments. This was partially offset by a $23 million benefit from a more favourable sales mix in the Tissue segment, and a $16 million benefit from higher volume, the latter of which was a net result of a $46 million volume benefit in our packaging businesses and a $30 million negative volume impact in our Tissue business that reflects operational platform changes including closures completed in the past year. The first quarter EBITDA (A)1 totaled $103 million, a decrease of $31 million, or 23%, from the $134 million generated in the same period last year. This decrease was largely driven by lower selling prices, primarily in the Containerboard segment, and higher raw material costs in our packaging businesses, the effects of which were partially offset by stronger volumes in these businesses. Production and freight costs were a headwind in Containerboard but were a tailwind for the Tissue Papers business, largely attributable to the optimization of this segment's operational base. The main specific items, before income taxes, that impacted our first quarter 2024 operating income and/or net loss were: $28 million of impairment charges on assets, restructuring costs and other costs related to the closure of plants in Canada and the USA (operating income and net loss); $1 million unrealized gain on financial instruments (operating income and net loss); $2 million unrealized gain on interest rate swaps (net loss); $1 million foreign exchange loss on long-term debt and financial instruments (net loss); For the three-month period ended March 31, 2024, the Corporation posted a net loss of $(20) million, or ($0.20) per common share, compared to a net loss of $(75) million, or ($0.75) per common share, in the same period of 2023. On an adjusted basis1, the Corporation posted a net loss of less than a million dollars in the first quarter of 2024, or $0.00 per common share, compared to net earnings of $33 million, or $0.32 per common share, in the same period of 2023. 1 Please refer to the "Supplemental Information on Non-IFRS Accounting Standards Measures and Other Financial Measures" section for a complete reconciliation. Dividend on common shares and normal course issuer bid The Board of Directors of Cascades declared a quarterly dividend of $0.12 per common share to be paid on June 6, 2024 to shareholders of record at the close of business on May 23, 2024. This dividend is an "eligible dividend" as per the Income Tax Act (R.C.S. (1985), Canada). During the first quarter of 2024, Cascades purchased no common shares for cancellation. 2024 First Quarter Results Conference Call Details Management will discuss the 2024 first quarter financial results during a conference call today at 9:00 a.m. ET. The call can be accessed by dialing 1-888-390-0620 (international 1-416-764-8651). 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 9, 2024 by dialing 1-888-390-0541 (international 1-416-764-8677), access code 655937. Founded in 1964, Cascades offers sustainable, innovative and value-added packaging, hygiene and recovery solutions. The company employs approximately 9,800 women and men across a network of close to 70 facilities in North America. 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 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. CONSOLIDATED BALANCE SHEETS (in millions of Canadian dollars) (unaudited) March 31,2024 December 31,2023 Assets Current assets Cash and cash equivalents 31 54 Accounts receivable 469 453 Current income tax assets 11 12 Inventories 645 568 Current portion of financial assets — 1 1,156 1,088 Long-term assets Investments in associates and joint ventures 98 94 Property, plant and equipment 2,770 2,808 Intangible assets with finite useful life 51 55 Financial assets 1 — Other assets 83 78 Deferred income tax assets 169 167 Goodwill and other intangible assets with indefinite useful life 488 482 4,816 4,772 Liabilities and Equity Current liabilities Bank loans and advances 2 — Trade and other payables 654 703 Current income tax liabilities 3 6 Current portion of Unsecured senior notes of $175 million to be refinanced 175 — Current portion of long-term debt 58 67 Current portion of provisions for contingencies and charges 22 14 Current portion of financial liabilities and other liabilities 27 29 941 819 Long-term liabilities Long-term debt 1,816 1,869 Provisions for contingencies and charges 63 61 Financial liabilities 2 5 Other liabilities 91 94 Deferred income tax liabilities 134 143 3,047 2,991 Equity Capital stock 613 613 Contributed surplus 16 15 Retained earnings 1,067 1,096 Accumulated other comprehensive income 31 15 Equity attributable to Shareholders 1,727 1,739 Non-controlling interests 42 42 Total equity 1,769 1,781 4,816 4,772 CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) For the 3-month periodsended March 31, (in millions of Canadian dollars, except per common share amounts and number of common shares) (unaudited) 2024 2023 Sales 1,109 1,134 Supply chain and logistic 668 663 Wages and employee benefits expenses 267 273 Depreciation and amortization 67 62 Maintenance and repair 62 58 Other operational costs 9 6 Impairment charges 2 152 Other loss (gain) 3 (2) Restructuring costs 23 1 Unrealized loss (gain) on derivative financial instruments (1) 1 Operating income (loss) 9 (80) Financing expense 35 23 Share of results of associates and joint ventures (3) (12)