Cascades Announces Results for the Fourth Quarter and Full Year 2018

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Record Adjusted OIBD for the Year

KINGSEY FALLS, QC , Feb. 28, 2019 - Cascades Inc. (TSX: CAS) reports its unaudited financial results for the three-month period and the fiscal year ended December 31, 2018 .

Q4 2018 Highlights

  • Sales of $1,196 million (compared to $1,175 million in Q3 2018 (+2%) and $1,082 million in Q4 2017 (+11%))
  • As reported (including specific items)
        . Operating loss of $33 million (compared to operating income of $78 million in Q3 2018 (-142%) and $45 million in Q4 2017 (-173%))
        . OIBD 1 of $37 million (compared to $139 million in Q3 2018 (-73%) and $104 million in Q4 2017 (-64%))
        . Net loss per share of $0.69 (compared to net earnings of $0.38 in Q3 2018 and net earnings of $0.60 in Q4 2017)
  • Adjusted 2 (excluding specific items)
        . Operating income of $43 million (compared to $76 million in Q3 2018 (-43%) and $46 million in Q4 2017 (-7%))
        . OIBD of $113 million (compared to $137 million in Q3 2018 (-18%) and $105 million in Q4 2017 (+8%))
        . Net earnings per share of $0.00 (compared to net earnings of $0.40 in Q3 2018 and net earnings of $0.14 in Q4 2017)
  • Impairment charge of $75 million ( $0.60 per share net of income taxes) recorded on certain fixed assets in the Tissue Papers segment
  • Business acquisitions completed in European Boxboard and Specialty Products segments

2018 Annual Highlights

  • Sales of $4,649 million (compared to $4,321 million in 2017 (+8%))
  • As reported (including specific items)
        . Operating income of $230 million (compared to $175 million in 2017 (+31%))
        . OIBD of $474 million (compared to $390 million in 2017 (+22%))
        . Net earnings per share of $0.62 (compared to net earnings of $5.35 in 2017)
  • Adjusted 2 (excluding specific items)
        . Operating income of $245 million (compared to $178 million in 2017 (+38%))
        . OIBD of $489 million (compared to $393 million in 2017 (+24%))
        . Net earnings per share of $0.83 (compared to net earnings of $0.72 in 2017)
  • Authorized credit facility increased to incorporate a US$175 million seven-year term loan with no additional assets required as security
  • Net debt of $1,769 million as at December 31, 2018 (compared to $1,522 million as at December 31, 2017 ) and net debt to adjusted OIBD ratio 3 of 3.5x, down from 3.6x at year-end 2017.

1 OIBD = Operating income (loss) before depreciation and amortization.
2 For further details, please refer to the "Supplemental Information on non-IFRS Measures" section.
3 Pro-forma basis to include 2018 and 2017 business combinations on a LTM basis.

Mr. Mario Plourde , President and Chief Executive Officer, commented: "Before commenting on the results, I would like to highlight the fact that Cascades is delivering record annual performance in terms of adjusted OIBD and Health & Safety. I also would like to take this opportunity to thank all of our employees, customers, business partners and stakeholders for their ongoing contribution and support.

Containerboard Packaging results point to continued solid fundamentals in the fourth quarter, with sequential performance reflecting customary seasonal changes in sales mix and volumes in the last three months of the year, in addition to scheduled downtime for maintenance and to complete capital projects. European Boxboard, via our equity position in Reno de Medici S.p.A., generated good results during the period driven by a higher average selling price, lower raw material prices, and the acquisition of Barcelona Cartonboard SAU at the end of October. The Specialty Products segment generated lower results in the last three months of the year, reflecting a lower contribution from the recovery sub-segment.

As previously disclosed, fourth quarter performance of the Tissue operations were well below expectations. The results of this segment were negatively impacted by the continued challenging industry and operational conditions, in addition to several non-recurring events that led to higher logistics costs within the platform and higher gas costs for operations on the West Coast. Operational difficulties at the St. Helens tissue mill in Oregon also negatively affected performance during the last three months of the year, with these issues leading to inefficiencies at the Scappoose converting facility that it supplies. The Corporation reviewed the recoverable value of its assets and recorded an impairment charge of $75 million on certain U.S. assets. Management has developed an action plan that it is implementing to successfully redress profitability in this group.

On the strategic front, we completed several important investments during the fourth quarter. In late October, the European Boxboard segment finalized the acquisition of Barcelona Cartonboard SAU. Subsequently, in late November, we communicated details about an important investment in the Wagram, N.C. tissue converting facility as part of our capital expenditure plan. The project involves the installation of new state-of-the-art converting lines and the modernization of several existing lines, with commissioning expected to begin in the second quarter of 2019 and finalized in the first half of 2020. In early December, we announced the acquisition of U.S. moulded pulp assets, which will double production capacity of ecological packaging manufactured in moulded pulp in the Specialty Products segment and support the ongoing development of the Consumer Products sub-segment. Strategically, this acquisition improves our positioning in the fresh protein and food service packaging markets, and given that these products are recycled, recyclable, compostable and biodegradable, it is fully aligned with our circular economy market approach. Finally, the Company increased its authorized credit facility to incorporate a seven-year term loan at the end of December. The facility increases financial flexibility, reduces interest costs, and provides access to available funding over a longer timeframe."

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Source: Cascades

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