Cascades Reports Solid Results for the Second Quarter of 2023

Tissue Papers segment delivers strongest performance since 2020

KINGSEY FALLS, QC, Aug. 3, 2023 /PRNewswire/ - Cascades Inc. (TSX: CAS) reports its unaudited financial results for the three-month period ended June 30, 2023.

Q2 2023 Highlights

• Sales of $1,168 million (compared with $1,134 million in Q1 2023 and $1,119 million in Q2 2022);
• Operating income of $64 million (compared with an operating loss of $(80) million in Q1 2023 and operating income of $32 million in Q2 2022);
• Net earnings per common share of $0.22 (compared with a net loss per common share of ($0.75) in Q1 2023 and net earnings per common share of $0.10 in Q2 2022);
• Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA (A)¹) of $141 million (compared with $134 million in Q1 2023 and $91 million in Q2 2022);
• Adjusted net earnings per common share¹ of $0.27 (compared with adjusted net earnings per common share¹ of $0.32 in Q1 2023 and adjusted net earnings per common share¹ of $0.10 in Q2 2022);
• Net debt¹ of $2,076 million as of June 30, 2023 (compared with $2,070 million as of March 31, 2023). Net debt to EBITDA (A) ratio¹ of 4.1x, down from 4.6x as of March 31, 2023;
• Total capital expenditures, net of disposals, of $104 million in Q2 2023, compared to $137 million in Q1 2023 and to $116 million in Q2 2022. The Corporation's 2023 forecasted net capital expenditures of approximately $325 million is unchanged.

Mario Plourde, President and CEO, commented: "We had a solid second quarter, with consolidated sales and EBITDA (A)¹ levels increasing 4% and 55%, respectively, year-over-year. Results were driven by the Tissue Papers segment, which had its strongest performance since Q2 2020, reflecting benefits from commercial and operational initiatives. The repositioning of our Tissue Papers platform announced at the end of April 2023 progressed as planned in the second quarter, with the closures completed as scheduled in June and July. We anticipate that these decisions, combined with the ongoing productivity optimization initiatives, which are also progressing as expected, will continue to strengthen the performance of our Tissue Papers business going forward. Slightly softer results in the Containerboard segment largely reflect lower index-linked selling prices, the effects of which more than offset the beneficial effect of lower raw material costs. As expected, Containerboard results include costs related to Bear Island as the facility continues to be ramped up. Lastly, results in the Specialty Packaging business decreased slightly year-over-year, as softer volumes and higher production costs more than offset higher selling prices."

Discussing near-term outlook, Mr. Plourde commented, "On a consolidated basis, we are expecting a stable operational performance sequentially in the third quarter, with the Containerboard and Specialty Packaging businesses generating stable results and the Tissue Papers segment delivering a slightly stronger performance. Additionally, we anticipate continued progress in the ramp up of the Bear Island Mill. More broadly, while we are remaining prudent on the demand-side, raw material pricing for our Tissue business and lower transportation costs for all of our businesses are expected to be tailwinds in the third quarter. Production cost levels are expected to be stable sequentially while continuing to be more elevated than last year. Lastly, we anticipate that our leverage ratio will continue to improve in the coming quarters.

We will be hosting a Bear Island Mill tour and institutional investor day in Virginia on September 14, 2023, and look forward to showcasing this modernized recycled containerboard facility and elaborating on our businesses and strategies to the financial community."

Financial Summary

Selected consolidated information

Segmented sales

Segmented operating income (loss)

Segmented EBITDA (A)¹

Analysis of results for the three-month period ended June 30, 2023 (compared to the same period last year)
The second quarter sales of $1,168 million increased by $49 million compared with the same period last year. This increase reflects a net benefit of $18 million that was driven by a beneficial impact from higher selling prices in Tissue Papers and Specialty Packaging, a favourable FX impact for all business segments, and higher volumes in Containerboard. These were partially offset by lower indexed selling prices in Containerboard and a lower contribution from Recovery and Recycling activities driven by recycled fibre material pricing changes.

The second quarter EBITDA (A)¹ totaled $141 million, an increase of $50 million, or 55%, from the $91 million generated in the same period last year. This increase reflects stronger results in our Tissue Papers segment, the benefits of which were partially offset by slightly lower results in our Containerboard and Specialty Packaging businesses.

The main specific items, before income taxes, that impacted our second quarter 2023 operating income and/or net earnings were:

• $2 million of impairment charges on US assets in the Tissue Papers segment (operating income and net earnings);
• $6 million of restructuring costs related to the closure of Tissue Papers plants in the US (operating income and net earnings);
• $1 million unrealized loss on financial instruments (operating income and net earnings);
• $3 million foreign exchange gain on long-term debt and financial instruments (net earnings).

For the three-month period ended June 30, 2023, the Corporation posted net earnings of $22 million, or $0.22 per common share, compared to net earnings of $10 million, or $0.10 per common share, in the same period of 2022. On an adjusted basis¹, the Corporation posted net earnings of $26 million in the second quarter of 2023, or $0.27 per common share, compared to net earnings of $10 million, or $0.10 per common share, in the same period of 2022.

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 September 1, 2023 to shareholders of record at the close of business on August 18, 2023. This dividend is an "eligible dividend" as per the Income Tax Act (R.C.S. (1985), Canada). During the second quarter of 2023, Cascades purchased no common shares for cancellation.

2023 Second Quarter Results Conference Call Details
Management will discuss the 2023 second quarter financial results during a conference call today at 9:00 a.m. EDT. The call can be accessed by dialing 1-888-390-0620 (international 1-416-764-8651). The conference call, including the investor presentation, will be broadcast live on the Cascades website (www.cascades.com) under the "Investors" section. A replay of the call will be available on the Cascades website and may also be accessed by phone until September 3, 2023 by dialing 1-888-390-0541 (international 1-416-764-8677), access code 259981.

Founded in 1964, Cascades offers sustainable, innovative and value-added packaging, hygiene and recovery solutions. The company employs approximately 10,000 women and men across a network of close to 80 facilities in North America. Driven by its participative management, half a century of experience in recycling, and continuous research and development efforts, Cascades continues to provide innovative products that customers have come to rely on, while contributing to the well-being of people, communities and the entire planet. 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 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 Corporation's products, increases in raw material costs, fluctuations in selling prices and adverse changes in general market and industry conditions and other factors.

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF EQUITY