Cascades Inc. reports its unaudited financial results for the three-month period ended June 30, 2020.
Q2 2020 Highlights:
- Sales of $1,285 million (compared with $1,313 million in Q1 2020 (-2%) and $1,275 million in Q2 2019 (+1%))
As reported (including specific items):
- Operating income of $94 million (compared with of $90 million in Q1 2020 (+4%) and an operating income of $82 million in Q2 2019 (+15%))
- Operating income before depreciation and amortization (OIBD)1 of $169 million (compared with $161 million in Q1 2020 (+5%) and $154 million in Q2 2019 (+10%))
-Net earnings per share of $0.57 (compared with $0.24 in Q1 2020 and $0.33 in Q2 2019)
-Adjusted (excluding specific items)1
-Operating income of $111 million (compared with $90 million in Q1 2020 (+23%) and $84 million in Q2 2019 (+32%))
-OIBD of $186 million (compared with $161 million in Q1 2020 (+16%) and $156 million in Q2 2019 (+19%))
-Net earnings per share of $0.61 (compared with $0.42 in Q1 2020 and $0.28 in Q2 2019)
-Net debt1 of $2,077 million as at June 30, 2020 (compared with $2,212 million as at March 31, 2020) reflecting favourable foreign exchange variance and solid cash flow from operations and including acquisition of CDPQ's interest in Greenpac Mill ($121 million) realized in the first quarter; Net debt to adjusted OIBD ratio1 of 3.1x as at June 30, 2020, down from 3.5x at March 31, 2020.
Mario Plourde, President and CEO, commented: "Our operations executed and adapted well during the second quarter, delivering improved consolidated results on both a sequential and year-over-year basis. This strong performance resulted in a record quarterly adjusted OIBD for the Corporation, highlighting the resiliency of our business model focused on providing customers with essential, sustainable quality packaging and tissue solutions. The ability of our business segments to successfully navigate through the challenging second quarter business environment is a testament to the commitment and hard work of our dedicated employees, and a measurable indication of the operational improvements and cost reduction initiatives being generated by our strategic investments of the past few years.
"Sales in the second quarter decreased by 2% sequentially as the elevated Covid-19 related demand levels present in the first quarter eased. As expected, this resulted in lower volumes in all segments with the exception of Specialty Products. Sales increased modestly when compared to the comparable period last year, supported by a 12.5% growth in Tissue.
"Second quarter adjusted OIBD of $186 million, representing a 14.5% margin, was a quarterly record for the Corporation, and was 16% above the prior quarter and 19% over the prior year period. The sequential performance was driven by improved results in all segments except Containerboard. Results of both the Tissue and Containerboard segments were negatively impacted by slightly lower volumes and higher raw material costs compared to the prior quarter. As mentioned at the end of the first quarter, the Corporation viewed the sharp increases in prices of recycled fibers as temporary. Pricing has since decreased and is expected to remain within these more normalized levels. The year-over-year adjusted OIBD increase of $30 million was largely driven by the Tissue segment and, to a lesser extent, Boxboard Europe. Specialty Products results were stable year-over-year, while those of Containerboard decreased mainly due to higher raw material costs and less favourable selling price and mix."
Discussing near-term outlook, Mr. Plourde commented, "Looking ahead, we are cautiously optimistic regarding our operational performance given the weighting of our production that falls within essential tissue and packaging segments, and the adaptability demonstrated by our business segments within the challenging business environment. In the near-term, this is counterbalanced by the ongoing potential economic impact related to Covid-19, and evolving consumption trends in end markets that have resulted from the pandemic. With this in mind, we are expecting consolidated results to decrease sequentially, as benefits from favourable raw materials pricing are anticipated to be offset by lower expected volumes, notably in the Away-from-Home Tissue business and the usual lower seasonal third quarter volumes in Europe.”