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Cascades announces Q1 2015 results

May 7, 2015 - Cascades Inc., a leader in the recovery and manufacturing of green packaging and tissue paper products, announces its unaudited financial results for the three-month period ended March 31, 2015.

Q1 2015 Highlights

•Sales of $910 million
•(compared to $879 million in Q4 2014 (+4%) and $863 million in Q1 2014 (+5%))
•Excluding specific items
◦OIBD of $85 million (compared to $82 million in Q4 2014 (+4%) and $75 million in Q1 2014 (+13%))
◦Net earnings per share of $0.18 (compared to $0.08 in Q4 2014 and $0.01 in Q1 2014)
◦Greenpac contribution to net earnings: $0.03
•Including specific items
•OIBD of $72 million (compared to $57 million in Q4 2014 (+26%) and $79 million in Q1 2014 (-9%))
•Net loss per share of $0.37 (compared to $0.51 in Q4 2014 and $0.01 in Q1 2014)
•Net debt of $1,691 million (compared to $1,613 million as at December 31, 2014), including $79 million of non-recourse net debt.

Mario Plourde, president and CEO, had the following comments on the first quarter results:

"Despite the seasonality inherent to the first quarter of the year, we are satisfied with the financial results released today which represent an improvement, both on a sequential and year-over-year basis. Similar to what we experienced in 2014, energy costs had a negative impact during the first quarter which was offset by the weakening of the Canadian dollar and a sequential decrease in raw material costs. 

“The four per cent OIBD increase compared to the previous quarter is essentially linked to the strong performance of our Containerboard Group. Results in Europe were slightly higher while results of our Specialty Products Group were stable. In addition to temporary impacts related to the ramp-up of two new sites in the U.S., our Tissue Papers Group was negatively impacted by downtimes for equipment maintenance, upgrades and to balance our inventories during the first quarter. 

“Market conditions in the tissue market continue to be soft while new capacity is being absorbed by the industry. Finally, the Greenpac mill has continued to improve productivity, with daily production averaging 1,260 short tons during the quarter, and significant growth in the production of our premium lightweight grade.

“The increase in our debt was caused by the weakening of the Canadian dollar and seasonal investments in working capital. If the exchange rate between the Canadian dollar and its U.S. counterpart remains constant, our leverage ratio should resume its downward trend over the next few quarters due to the expected increase of free cash flows."

Results analysis for the three-month period ended March 31, 2015 (compared to the same period last year)
In comparison with the same period last year, sales increased by five per cent to $910 million as the positive impact of the decline of the Canadian dollar against it U.S. counterpart and higher shipments in all of our groups more than offset lower average selling prices.

Operating income, excluding specific items, increased from $32 million in the first quarter of 2014 to $41 million in the first quarter of 2015. The above-mentioned factors explain most of the increase in operating income, while raw material costs were slightly higher and the Canadian dollar greatly strengthened against the Euro.

When including specific items, operating income amounted to $28 million in comparison to $36 million for the same period of last year. In the first quarter of 2015, the following specific items, before income taxes, impacted our operating income and/or net earnings:

•a $13 million unrealized loss on derivative financial instruments (operating income and net earnings);

•a $5 million loss related to a change in the equity of Boralex, an associate investment (net earnings);

•a $1 million net gain related to the disposal of our North American boxboard activities included in discontinued operations (net earnings);

•a $45 million foreign exchange loss on long-term debt and financial instruments (net earnings).

Net earnings excluding specific items amounted to $17 million ($0.18 per share) in the first quarter of 2015 compared to $1 million ($0.01 per share) for the same period in 2014. Including specific items, the net loss amounted to $35 million ($0.37 per share) in the first quarter of 2015 compared to a net loss of $1 million ($0.01 per share) in the same period in 2014.

Results analysis for the three-month period ended March 31, 2015 (compared to the previous quarter)

In comparison to the previous quarter, sales increased by four per cent to reach $910 million due to a favourable foreign exchange rate and higher shipments in Europe. These factors were partially offset by lower average selling prices, except for the Containerboard Group.

Operating income, excluding specific items, increased from $38 million in the fourth quarter of 2014 to $41 million in the first quarter of 2015. As mentioned above, a favourable exchange rate and lower raw material costs improved the operating income but were partially offset by higher operational costs in the Tissue Papers Group due to downtimes, start-up costs, higher energy costs due to colder temperatures and lower average selling prices.

Near-term outlook
In commenting on the outlook, Mr. Plourde added, "With the improved results for the first quarter compared to last year and the current state of our markets, we remain confident that we will be able to continue to grow our financial results in 2015. In North America, our Packaging Products groups should continue to improve their performance as they enter a period of seasonally improved market conditions for the next two quarters. In Europe, a price increase was announced by Reno de Medici for recycled grades which should be applied gradually and have a more meaningful impact on our results during the second semester. Our Tissue Papers Group will benefit from the gradual contribution from two new sites in the U.S., which should also positively contribute to the results during the year. An increasing OIBD and a positive contribution from the Greenpac mill should positively impact our earnings per share in 2015. We are pleased with the progression of this investment, which, we are confident, will be as strategic and important to the long-term value of the Corporation as we expected. "

May 7, 2015  By CNW Telbec/Cascades Inc.