Cascades Inc. (TSX: CAS) reports its unaudited financial results for the three-month period ended September 30, 2024.

Q3 2024 Highlights

• Sales of $1,201 million (compared with $1,180 million in Q2 2024 and $1,198 million in Q3 2023);
• Operating income of $36 million (compared with $34 million in Q2 2024 and $80 million in Q3 2023);
• Net earnings per common share of $0.01 (compared with $0.01 in Q2 2024 and $0.34 in Q3 2023);
• Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA (A)¹) of $140 million (compared with $112 million in Q2 2024 and $161 million in Q3 2023);
• Adjusted net earnings per common share¹ of $0.27 (compared with $0.08 in Q2 2024 and $0.44 in Q3 2023);
• Net debt¹ of $2,039 million as of September 30, 2024 (compared with $2,093 million as of June 30, 2024). Net debt to EBITDA (A) ratio¹ of 4.3x, versus from 4.2x as of June 30, 2024;
• Total capital expenditures, net of disposals, totaled $34 million in Q3 2024, compared to $23 million in Q2 2024 and $56 million in Q3 2023. The Corporation's 2024 capital expenditures will be approximately $160 million.

Hugues Simon, President and CEO, commented: "We are pleased with our third quarter 2024 performance. Sequentially stronger results were driven by our Containerboard business, where higher average selling prices and lower production expenses offset the impact of higher raw material costs. Specialty Products results were stable, with stronger selling prices fully mitigating raw material cost and sales mix headwinds. As forecasted, third quarter Tissue Papers results were lower than the previous quarter due to higher average raw material costs and lower pricing related to the expected changes in the mix of products sold."

Discussing near-term outlook, Mr. Simon commented, "We expect fourth quarter results in each of our packaging business segments to be stable sequentially, as benefits from lower raw material costs and previously announced selling price increases will be offset by lower seasonal volumes. In Tissue Papers, slightly stronger sequential results are expected to benefit from lower average raw material costs, slightly stronger volumes, and selling price increase tailwinds offset by the impact from seasonal changes in sales mix.

As we look toward the medium and longer-term, we are focused on growing sustainable value for shareholders. Central to this is driving and capturing efficiency across our operational platforms, most notably by the ongoing scale-up of production at our Bear Island facility and ramp-up of our recently installed tissue converting lines. Prioritizing these areas, in conjunction with leveraging additional production capacity in all of our facilities through numerous efficiency optimization initiatives, will drive cash flow generation and debt reduction, both of which are key action areas across the Company. We will be all the more better positioned to deliver on both fronts as we implement the changes announced on October 30, and look forward to sharing details of our areas of strategic focus for the next 18 to 24 months in early 2025."

Financial Summary

Selected consolidated information

Segmented sales

Segmented operating income (loss)

Segmented EBITDA (A)¹

Analysis of results for the three-month period ended September 30, 2024 (compared to the same period last year)

The Corporation's third quarter sales of $1,201 million increased by $3 million compared with the same period last year. This was driven by $24 million of sales mix benefits in Tissue Papers and Containerboard, and $12 million related to more a favourable foreign exchange. Results also reflected a consolidated $7 million net benefit from higher selling prices. These were offset by a net negative impact of $40 million related to lower volumes in Containerboard and Tissue Papers, with the majority of this impact attributable to the changes made within the Tissue Papers operational platform in the past year to improve profitability.

The third quarter EBITDA (A)¹ totaled $140 million, a decrease of $21 million, or 13%, from the $161 million generated in the same period last year. This reflects consolidated net impacts of $35 million from higher raw material costs and $5 million related to volume and sales mix changes. These were partly offset by net benefits from higher selling prices and lower operating costs, and lower corporate costs, as expected.

The main specific items, before income taxes, that impacted our third quarter 2024 operating income and/or net earnings were:

• $7 million of impairment charge on assets related to a decision to discontinue product lines in Canada and in the United States (operating income and net earnings);
• $29 million of restructuring and other costs related to plant closures in Canada (operating income and net earnings);
• $2 million unrealized gain on financial instruments (operating income and net earnings);
• $2 million unrealized loss on interest rate hedge instruments (net earnings);
• $1 million foreign exchange gain on long-term debt and financial instruments net earnings.

For the three-month period ended September 30, 2024, the Corporation posted net earnings of $1 million, or $0.01 per common share, compared to net earnings of $34 million, or $0.34 per common share, in the same period of 2023. On an adjusted basis¹, the Corporation posted net earnings of $27 million in the third quarter of 2024, or $0.27 per common share, compared to net earnings of $45 million, or $0.44 per common share, in the same period of 2023.

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 December 5, 2024 to shareholders of record at the close of business on November 21, 2024. This dividend is an "eligible dividend" as per the Income Tax Act (R.C.S. (1985), Canada). During the third quarter of 2024, Cascades purchased no common shares for cancellation.