Cascades posts significantly improved results in the first quarter
KINGSEY FALLS, QC, May 14 /CNW Telbec/ -
(All amounts in this press release are in Canadian dollars unless
otherwise indicated.)
- Net earnings of $37 million ($0.38 per share) compared to a net loss
of $4 million in the first quarter of 2008;
- Operating income before depreciation and amortization (EBITDA)
excluding specific items of $107 million, highest for a first quarter
in Cascades' history, an increase of 81 % compared to last year and of
11 % compared to the previous quarter;
- Net earnings excluding specific items of $21 million ($0.22 per share)
compared to a net loss of $9 million in the same period of last year;
- 169% improvement in cash flow from operations excluding specific items
to $70 million;
- $14 million gain on purchase of long-term debt (included in specific
items);
- Current cash availability of approximately $300 million;
- Buy-back of approximately 1.1 million shares at an average cost of
$2.12 by the Company;
- Purchase of more than 630,000 shares by insiders during the quarter;
- Start-up of the new sorting facility in April to support the launch of
the new blue cart recycling program of the City of Calgary;
- Cascades named one of Canada's greenest employers by Mediacorp.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Financial Highlights
--------------------
Selected consolidated information
(in millions of Canadian dollars, --------------------------
except amounts per share) Q1/2009 Q1/2008 Q4/2008
--------------------------------------------- --------------------------
Sales 970 959 1,020
Excluding specific items (1)
Operating income before depreciation
and amortization (OIBD or EBITDA) 107 59 96
Operating income from continuing
operations 53 8 41
Net earnings (loss) 21 (9) 18
per common share $0.22 $(0.09) $0.18
Cash flow from operations (adjusted)
from continuing operations 70 26 68
per common share $0.71 $0.26 $0.69
As reported
Operating income before depreciation and
amortization (OIBD or EBITDA) (1) 103 45 52
Operating income (loss) from continuing
operations 49 (6) (3)
Net earnings (loss) 37 (4) (18)
per common share $0.38 $(0.04) $(0.19)
Cash flow from operations (adjusted) from
continuing operations (1) 68 17 59
per common share (1) $0.69 $0.17 $0.60
-------------------------------------------------------------------------
Note 1 - see the supplemental information on non-GAAP measures note.
Note 2 - the 2008 results were restated following the retrospective
application of CICA handbook Section 3064
Cascades Inc. (CAS on the Toronto stock exchange), leader in recovery and
in green packaging and tissue paper products, announces its financial results
for the three months ended March 31, 2009. Operating income before
depreciation (OIBD or EBITDA) and net earnings excluding specific items
increased significantly to respectively $107 million and $21 million ($0.22
per share) in the first quarter of 2009 compared to $59 million and a net loss
of $9 million in the same period in 2008.
Excluding specific items, EBITDA also improved by $11 million in
comparison to the previous quarter while net earnings increased by $3 million.
This sequential rise constitutes the fourth quarter of consecutive growth in
EBITDA.
Including specific items, the operating income before depreciation and net
earnings grew respectively to $103 million and $37 million ($0.38 per share)
in the first quarter of 2009 compared to $45 million and a net loss of $4
million for the same quarter in 2008.
Commenting on the quarterly results, Mr. Alain Lemaire, President and
Chief Executive Officer stated: "During the quarter, we benefited from
restructuring initiatives implemented in the past twelve months, from the
depreciation of the Canadian dollar and a more favourable variable cost
environment. These factors have more than offset the capacity utilization rate
of less than 80% in our packaging sector and our EBITDA margin on sales
increased from 6% in the first quarter of 2008 to 11% in 2009. Our Tissue
Group has continued to perform well and our boxboard operations' EBITDA almost
tripled to $24 million. Since a trough in Q2 2008, this group's EBITDA has in
fact been multiplied by 8."
Results analysis for the three-month period ended March 31, 2009
----------------------------------------------------------------
In comparison with the same period last year, sales increased 1% to $970
million reflecting the increase in selling prices and the depreciation of the
Canadian dollar which have more than offset the 12% drop in shipments.
The operating income from continuing operations amounted to $49 million
compared to an operating loss of $6 million last year. When excluding specific
items, operating income from continuing operations increased $45 million to
$53 million. Despite lower sales volumes, operating results improved mainly
due to higher selling prices, lower raw material and energy costs and the
depreciation of the Canadian dollar.
The specific items that impacted the operating income in the first quarter
of 2009 include a $3 million impairment loss following the announcement of the
closure of the Quebec City corrugated box plant and $2 million in other
closure and restructuring costs.
Net earnings of $37 million reflect a $14 million gain on purchase of
long-term debt at 56% of their nominal value and $6 million in positive income
tax adjustment following the change of the Quebec provincial tax rate for
investment income.
The net debt remained relatively stable despite a $33 million negative
impact of the depreciation of the Canadian dollar on long-term debt. The ratio
of net debt to EBITDA excluding specific items in the last twelve months
decreased from 5.9x in the fourth quarter of 2008 to 5.1x in the first quarter
of 2009.
Near term outlook
-----------------
Mr. Alain Lemaire, President and Chief Executive Officer added: "We expect
to benefit from the seasonal pickup in demand in the second quarter and we
anticipate that our two main variable costs, recycled fibre and energy, should
stay relatively stable. However, we remain cautious in regards to short term
business conditions considering the decrease in selling prices for certain of
our products in recent months and the potential appreciation of the Canadian
dollar."
Dividend on Common Shares and normal course issuer bid
------------------------------------------------------
The Board of Cascades declared a quarterly dividend of $0.04 per share to
be paid June 12, 2009 to shareholders of record at the close of business on
May 29, 2009. This dividend paid by Cascades is an "eligible dividend" as per
the Income Tax Act (Bill C-28, Canada). In addition, in the first quarter of
2009, in accordance with its normal course issuer bid, Cascades has purchased
for cancellation 1,081,200 common shares at an average price of $2.12 per
share representing an aggregate amount of approximately $2.3 million.
Supplemental information on non-GAAP measures
Operating income before depreciation and amortization, earnings before
interests, taxes, depreciation and amortization, operating income, cash flow
from operations and cash flow from operations per share are not measures of
performance under Canadian GAAP. The Company includes operating income before
depreciation and amortization, earnings before interests, taxes, depreciation
and amortization, operating income, cash flow from operations and cash flow
from operations per share because they are measures used by management to
assess the operating and financial performance of the Company's operating
segments. Additionally, the Company 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, earnings before
interests, taxes, depreciation and amortization, operating income, cash flow
from operations and cash flow from operations per share does not represent,
and should not be used as a substitute for net earnings or cash flows from
operating activities as determined in accordance with Canadian GAAP, 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 interests, taxes,
depreciation and amortization, operating income, cash flow from operations and
cash flow from operations per share may differ from those of other companies.
Cash flow from operations is defined as cash flow from operating activities as
determined in accordance with Canadian GAAP excluding the change in working
capital components and cash flow from operations per share is determined by
dividing cash flow from operations by the weighted average number of common
shares of the period.
Operating income before depreciation and amortization excluding specific
items, earnings before interests, taxes, depreciation and amortization
excluding specific items, operating income excluding specific items, net
earnings excluding specific items, net earnings per common share excluding
specific items, cash flow from operations excluding specific items and cash
flow from operations per share excluding specific items are non-GAAP measures.
The Company believes that it is useful for investors to be aware of specific
items that have adversely or positively affected its GAAP measures, and that
the above mentioned non-GAAP measures provide investors with a measure of
performance with which to compare its results between periods without regard
to these specific items. The Company's measures excluding specific items have
no standardized meaning prescribed by GAAP and are not necessarily comparable
to similar measures presented by other companies and therefore should not be
considered in isolation.
Specific items are defined to include charges for impairment of assets,
charges for facility or machine closures, debt restructuring charges, gains or
losses on sale of business unit, unrealized gains or losses on derivative
financial instruments that do not qualify for hedge accounting, foreign
exchange gains or losses on long-term debt and other significant items of an
unusual or non-recurring nature.
Net earnings (loss), which is a performance measure defined by Canadian
GAAP is reconciled below to operating income (loss), operating income
excluding specific items and operating income before depreciation excluding
specific items or earnings before interests, taxes, depreciation and
amortization excluding specific items:
--------------------------
(in millions of Canadian dollars) Q1/2009 Q1/2008 Q4/2008
-------------------------------------------------------------------------
Note 2 Note 2
Net earnings (loss) 37 (4) (18)
Net earnings from discontinued operations - (19) -
Non-controlling interest (1) 1 -
Share of results of significantly influenced
companies (5) (4) (2)
Provision for (recovery of) income taxes 5 (9) (12)
Foreign exchange loss on long-term debt - 5 4
Gain on purchases of senior notes (14) - -
Interest expense 27 24 25
--------------------------
Operating income (loss) 49 (6) (3)
Specific items :
Inventory adjustment resulting from business
acquisition - 1 -
Loss on disposal - 5 -
Impairment loss 3 - 13
Closure and restructuring costs 2 8 10
Unrealized loss (gain) on financial
instruments (1) - 21
--------------------------
4 14 44
--------------------------
Operating income - excluding specific
items 53 8 41
Depreciation and amortization 54 51 55
--------------------------
Operating income before depreciation and
amortization (OIBD) - excluding specific
items(1) 107 59 96
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Note 1 - also refers to earnings before interests, taxes, depreciation
and amortization (EBITDA).
Note 2 - the 2008 results were restated following the retrospective
application of CICA handbook Section 3064
The following table reconciles net earnings and net earnings per share to
net earnings excluding specific items and net earnings per share excluding
specific items:
(in millions of Canadian --------------------- -------------------------
dollars, except amounts Net earnings (loss)
per share) Net earnings (loss) per share (1)
---------------------------------------------- -------------------------
Q1/ Q1/ Q4/ Q1/ Q1/ Q4
2009 2008 2008 2009 2008 2008
--------------------- -------------------------
Note 2 Note 2 Note 2 Note 2
As per GAAP 37 (4) (18) $0.38 $(0.04) $(0.19)
Specific items :
Inventory adjustment
resulting from
business acquisition - 1 - $ - $ 0.01 $ -
Loss on disposal - 5 - $ - $ 0.05 $ -
Impairment loss 3 - 13 $ 0.02 $ - $0.11
Closure and
restructuring costs 2 8 10 $ 0.02 $ 0.05 $0.07
Unrealized loss (gain)
on financial instruments (1) - 21 $(0.01) $ - $0.15
Gain on purchase
of senior notes (14) - - $(0.13) $ - $ -
Foreign exchange loss
on long-term debt - 5 4 $ - $ 0.04 $0.04
Gain included in
discontinued operations - (24) - $ - $(0.20) $ -
Adjustment of statutory
tax rate (6) - - $(0.06) $ - $ -
Tax effect on specific
items - - (12)
--------------------- -------------------------
(16) (5) 36 $(0.16) $(0.05) $0.37
--------------------- ------------------------
Excluding specific items 21 (9) 18 $0.22 $(0.09) $0.18
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Note 1 - specific amounts per share are calculated on an after-tax basis.
Note 2 - the 2008 results were restated following the retrospective
application of CICA handbook Section 3064
The following table reconciles cash flow from operations and cash flow
from operations per share to cash flow from operations excluding specific
items and cash flow from operations per share excluding specific items:
---------------------------------------------- -------------------------
Cash flow Cash flow from
from operations operations per share
(in millions of Canadian --------------------- -------------------------
dollars, except amounts Q1/ Q1/ Q4/ Q1/ Q1/ Q4/
per share) 2009 2008 2008 2009 2008 2008
---------------------------------------------- -------------------------
Cash flow provided by
operating activities 67 (31) 85
Changes in non-cash
working capital
components 1 48 (26)
--------------------- -------------------------
Cash flow (adjusted)
from operations 68 17 59 $0.69 $0.17 $0.60
Specific items :
Inventory adjustment
resulting from
business acquisition - 1 - - $0.01 -
Closure and restructuring
costs, net of current
income tax 2 8 9 $0.02 $0.08 $0.09
--------------------- -------------------------
Excluding specific items 70 26 68 $0.71 $0.26 $0.69
---------------------------------------------- -------------------------
---------------------------------------------- -------------------------
Founded in 1964, Cascades produces, converts and markets packaging and
tissue products composed mainly of recycled fibres. Cascades employs close to
13,000 employees who work in more than 100 modern and flexible production
units located in North America and Europe. Cascades' management philosophy,
its 45 years of experience in recycling, its continued efforts in research and
development are strengths which enable the company to create new products for
its customers. The 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 Company'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 Company's Securities and Exchange Commission filings.
Consolidated Balance Sheets
(in millions of Canadian dollars)
As at As at
March December
31, 31,
2009 2008
---------------------------------
Assets (unaudited) (restated)
Current assets
Cash and cash equivalents 13 11
Accounts receivable 639 657
Inventories 577 580
-------------------------------------------------------------------------
1,229 1,248
Property, plant and equipment 2,028 2,030
Intangible assets 139 142
Other assets 318 289
Goodwill 327 321
-------------------------------------------------------------------------
4,041 4,030
---------------------------------
---------------------------------
Liabilities and Shareholders' Equity
Current liabilities
Bank loans and advances 72 104
Accounts payable and accrued liabilities 569 586
Current portion of long-term debt 39 36
-------------------------------------------------------------------------
680 726
Long-term debt 1,707 1,672
Other liabilities 365 377
---------------------------------
2,752 2,775
-------------------------------------------------------------------------
Commitment and Contingencies
Shareholders' Equity
Capital stock 510 515
Retained earnings 691 655
Accumulated other comprehensive income 88 85
---------------------------------
1,289 1,255
-------------------------------------------------------------------------
4,041 4,030
---------------------------------
---------------------------------
Consolidated Statements of Earnings (Loss)
(in millions of Canadian dollars, except per share amounts)
(unaudited)
For the 3-month periods
ended March 31,
2009 2008
---------------------------------
(restated)
Sales 970 959
Cost of sales and expenses
Cost of sales (excluding depreciation
and amortization) 752 805
Depreciation and amortization 54 51
Selling and administrative expenses 108 97
Losses on disposal - 5
Impairment and other restructuring
costs 5 8
Loss (gain) on financial instruments 2 (1)
-------------------------------------------------------------------------
921 965
-------------------------------------------------------------------------
Operating income (loss) from continuing
operations 49 (6)
Interest expense 27 24
Gain on purchases of senior notes (14) -
Foreign exchange loss on long-term debt - 5
-------------------------------------------------------------------------
36 (35)
Provision for (recovery of) income taxes 5 (9)
Share of results of significantly influenced
companies (5) (4)
Non-controlling interest (1) 1
-------------------------------------------------------------------------
Net earnings (loss) from continuing operations 37 (23)
Net earnings from discontinued operations - 19
-------------------------------------------------------------------------
Net earnings (loss) for the period 37 (4)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted net earnings (loss) from
continuing operations per common share $0.38 ($0.23)
---------------------------------
---------------------------------
Basic and diluted net earnings (loss)
per common share $0.38 ($0.04)
---------------------------------
Weighted average number of common shares
outstanding 98,458,747 99,041,800
---------------------------------
---------------------------------
Consolidated Statements of Shareholders' Equity
(in millions of Canadian dollars)
(unaudited) For the 3-month period ended March 31,
2009
--------------------------------------------
Accumulated
other
compre- Share-
Capital Retained hensive holders'
stock earnings income Equity
--------------------------------------------
Balance - Beginning of period 515 656 85 1,256
Cumulative impact of
accounting changes - (1) - (1)
----------------------------------------
Restated balance - Beginning
of period 515 655 85 1,255
Comprehensive income:
Net earnings for the
period - 37 - 37
Change in foreign
currency translation
of self-sustaining
foreign subsidiaries,
net of related hedging
activities - - 5 5
Change in fair value
of foreign exchange
forward contracts
designated as cash
flow hedges - - 1 1
Change in fair value
of commodity derivative
financial instruments
designated as cash flow
hedges - - (3) (3)
------------
Comprehensive income for
the period 40
------------
Dividends - (4) - (4)
Redemption of common
shares (5) 3 - (2)
----------------------------------------
Balance - End of period 510 691 88 1,289
----------------------------------------
----------------------------------------
For the 3-month period ended March 31,
2008
----------------------------------------
(restated)
--------------------------------------------
Accumulated
other
compre-
hensive Share-
Capital Retained income holders'
stock earnings (loss) Equity
--------------------------------------------
Balance - Beginning of period 517 728 (43) 1,202
Cumulative impact of
accounting changes - (1) - (1)
--------------------------------------------
Restated balance - Beginning
of period 517 727 (43) 1,201
Comprehensive income:
Net loss for the period - (4) - (4)
Change in foreign
currency translation
of self-sustaining
foreign subsidiaries,
net of related hedging
activities - - 53 53
Change in fair value of
foreign exchange forward
contracts designated as
cash flow hedges - - (2) (2)
Change in fair value of
interest rate swap
agreements designated
as cash flow hedges - - (1) (1)
Change in fair value of
commodity derivative
financial instruments
designated as cash flow
hedges - - 4 4
------------
Comprehensive income for
the period 50
------------
Dividends - (4) - (4)
Redemption of common shares (1) (1) - (2)
--------------------------------------------
Balance - End of period 516 718 11 1,245
--------------------------------------------
--------------------------------------------
Consolidated Statements of Cash Flows
(in millions of Canadian dollars)
(unaudited) For the 3-month periods
ended March 31,
2009 2008
------------------------
(restated)
OPERATING ACTIVITIES FROM CONTINUING OPERATIONS
Net earnings (loss) for the period 37 (4)
Net earnings from discontinued operations - (19)
-------------------------------------------------------------------------
Net earnings (loss) from continuing operations 37 (23)
Adjustments for
Depreciation and amortization 54 51
Losses on disposal - 5
Impairment and other restructuring costs 3 -
Unrealized gain on financial instruments (1) -
Foreign exchange loss on long-term debt - 5
Gain on purchases of senior notes (14) -
Future income taxes (3) (20)
Share of results of significantly influenced
companies (5) (4)
Non-controlling interest (1) 1
Others (2) 2
-------------------------------------------------------------------------
68 17
Change in non-cash working capital components (1) (48)
-------------------------------------------------------------------------
67 (31)
-------------------------------------------------------------------------
INVESTING ACTIVITIES FROM CONTINUING OPERATIONS
Purchases of property, plant and equipment (40) (41)
Increase in other assets (3) (1)
Cash of a joint venture and business acquisitions - 6
-------------------------------------------------------------------------
(43) (36)
-------------------------------------------------------------------------
FINANCING ACTIVITIES FROM CONTINUING OPERATIONS
Bank loans and advances (32) 15
Change in revolving credit facilities 12 11
Purchases of senior notes (14) -
Increase in other long-term debt 22 -
Payments of other long-term debt (1) (1)
Redemption of common shares (2) (2)
Dividends (4) (4)
-------------------------------------------------------------------------
(19) 19
-------------------------------------------------------------------------
Change in cash and cash equivalents during the
period from continuing operations 5 (48)
Change in cash and cash equivalents from
discontinued operations, including proceeds on
disposal (3) 35
-------------------------------------------------------------------------
Net change in cash and cash equivalents during
the period 2 (13)
Translation adjustments on cash and cash
equivalents - 6
Cash and cash equivalents - Beginning of period 11 25
-------------------------------------------------------------------------
Cash and cash equivalents - End of period 13 18
------------------------
------------------------
Selected Segmented Information
(in millions of Canadian dollars)
(unaudited)
For the 3-month periods
ended March 31,
2009 2008
------------------------
Sales
Packaging products
Boxboard
Manufacturing 180 195
Converting 181 161
Intersegment sales (25) (27)
------------------------
336 329
------------------------
Containerboard
Manufacturing 131 154
Converting 217 227
Intersegment sales (85) (90)
------------------------
263 291
------------------------
Specialty products
Manufacturing 86 76
Converting 61 63
Recovery and deinked pulp 59 93
Intersegment sales (20) (23)
------------------------
186 209
Intersegment sales (13) (28)
------------------------
772 801
Tissue papers
Manufacturing and converting 211 170
Intersegment sales (13) (12)
-------------------------------------------------------------------------
Total 970 959
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Selected Segmented Information
(in millions of Canadian dollars)
(unaudited)
For the 3-month periods
ended March 31,
2009 2008
------------------------
Operating income (loss) before depreciation
and amortization from continuing operations
Packaging products
Boxboard
Manufacturing 12 (6)
Converting 12 12
Others (2) (7)
------------------------
22 (1)
Containerboard
Manufacturing 35 17
Converting 7 14
Others (7) 3
------------------------
35 34
Specialty products
Manufacturing 9 (1)
Converting 5 5
Recovery and deinked pulp - 5
Others (1) -
------------------------
13 9
------------------------
70 42
Tissue papers
Manufacturing and converting 39 12
Corporate (6) (9)
-------------------------------------------------------------------------
Operating income before depreciation and
amortization from continuing operations 103 45
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------
Depreciation and amortization (restated)
Boxboard (19) (16)
Containerboard (16) (16)
Specialty products (8) (8)
Tissue papers (9) (8)
Corporate and eliminations (2) (3)
-----------------------
(54) (51)
------------------------
Operating income (loss) from continuing
operations 49 (6)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Selected Segmented Information
(in millions of Canadian dollars)
(unaudited)
For the 3-month periods
ended March 31,
2009 2008
------------------------
Purchases of property, plant and equipment
Packaging products
Boxboard
Manufacturing 4 4
Converting 8 9
------------------------
12 13
Containerboard
Manufacturing 3 2
Converting 2 4
------------------------
5 6
Specialty products
Manufacturing 1 1
Converting 1 1
Recovery and deinked pulp 8 1
------------------------
10 3
------------------------
27 22
Tissue papers
Manufacturing and converting 7 10
Corporate 1 2
-------------------------------------------------------------------------
Total 35 34
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Purchases of property, plant and equipment
included in accounts payable
Beginning of period 14 17
End of period (9) (10)
-------------------------------------------------------------------------
Total investing activities 40 41
-------------------------------------------------------------------------
-------------------------------------------------------------------------
For further information: Media: Hubert Bolduc, Vice-President,
Communications and Public Affairs, (514) 912-3790; Investors: Didier Filion,
Director, Investor relations, (514) 282-2697; Source: Christian Dubé,
Vice-President and Chief Financial Officer
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