Cascades Announces Second Quarter 2017 Results; Continues to Execute on Strategic Fronts

Q2 2017 Highlights
• Sales of  $1,130 million   (compared to  $1,006 million  in Q1 2017 (+12%) and  $998 million  in Q2 2016 (+13%))
• As reported (including specific items) • Operating income of  $48 million   (compared to  $31 million  in Q1 2017 (+55%) and  $65 million  in Q2 2016 (-26%))
• OIBD  1  of  $104 million  (compared to  $78 million  in Q1 2017 (+33%) and  $112 million  in Q2 2016 (-7%))
• Net earnings per common share of  $3.41   (compared to net earnings of  $1.70  in Q1 2017 and net earnings of  $0.38  in Q2 2016)
• Adjusted (excluding specific items)  2  • Operating income of  $51 million   (compared to  $28 million  in Q1 2017 (+82%) and  $65 million  in Q2 2016 (-22%))
• OIBD  1  of  $107 million   (compared to  $75 million  in Q1 2017 (+43%) and  $112 million  in Q2 2016 (-4%))
• Net earnings per common share of  $0.25   (compared to net earnings of  $0.13  in Q1 2017 and net earnings of  $0.38  in Q2 2016)
• Greenpac results fully consolidated with those of the Corporation effective  April 4, 2017  .
• Cascades added to the S&P/TSX Composite Index and to the S&P/TSX Composite Dividend Index effective  June 19, 2017  .
• Net debt  2  of  $1,780 million  as at  June 30, 2017  (compared to  $1,617 million  as at  March 31, 2017  ) and net debt to adjusted OIBD ratio  2  at 4.2x on a pro-forma basis  3  .
• On  July 27, 2017  , the Corporation announced the sale of it’s 17.3% equity ownership in Boralex for an amount of  $287.5 million  .

Mr.  Mario Plourde  , President and Chief Executive Officer, commented: “We have made significant progress on our strategic objectives in recent months with the Greenpac transaction, the inauguration of the new state of the art tissue converting plant in  Scappoose, Oregon  , the sale of our equity interest in Boralex and, more recently, the announcement of the construction of a new ultra modern containerboard converting plant in  Piscataway, New Jersey  . To this end, our second quarter results provide a more comprehensive picture of our North American Containerboard business following the consolidation of the results of the Greenpac Mill at the beginning of the quarter. This acquisition resulted in a gain of  $281 million  on net earnings, and added  $219 million  to our total net debt levels. However, on a pro-forma basis including Greenpac’s results for the last twelve months, our leverage ratio stood at 4.2x as of the end of the second quarter, essentially unchanged from the previous quarter.

That said, our second quarter results fell short of expectations, most notably in our Containerboard segment. On a consolidated basis, the benefits realized year-over-year as a result of Greenpac and implementation of price increases in Containerboard, were limited by higher raw material costs, slightly lower volumes in Tissue, and higher operational costs primarily in Containerboard and Corporate activities.

Looking more specifically at our Containerboard business, the addition of Greenpac increased quarterly sales and operating income both sequentially and year-over-year. On a year-over-year basis, results were impacted by higher raw material costs, most notably OCC, which exceeded the benefits being realized from recent price increases which have yet to be fully implemented. Sequentially, the increases in price that have already been realized and a favourable product mix offset the incremental higher raw material cost during the second quarter. Higher operational, logistics and some unusual costs also tempered Containerboard operating income performance during the current period.

Second quarter results in our Tissue business decreased year-over-year as the benefits of higher realized average selling prices and favourable sales mix were more than offset by lower sales of jumbo rolls in the current period, as well as costs related to brand repositioning and the start-up of the new  Oregon  converting plant. On a sequential basis, Tissue results increased as a result of better seasonal volumes and improvements in average selling price, the benefits of which were partially offset by higher raw material costs.

As was the case in the first quarter, higher recycled fibre prices benefited results in our Specialty Products business in the second quarter. In addition, higher selling prices in the Industrial and Consumer Products packaging sectors similarly contributed to the improved results. Our Boxboard Europe segment improved results both sequentially and on a year-over-year basis. This reflects improved pricing, and strong order intake levels, which are attributable to a continued strengthening of market fundamentals. These improvements, along with lower energy prices, mitigated the impact of higher raw material prices on both a sequential and year-over-year basis.
more details at:  https://www.cascades.com/en/media-centre/press-releases-and-news/press-release/2017/6040/cascades-announces-second-quarter-2017-results-continues-to-execute-on-strategic-fronts

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