Inc. (TSX: CAS) reports its unaudited financial results for the three-month period ended March 31, 2018 .
Q1 2018 Highlights
• Sales of $1,098 million (compared to $1,082 million in Q4 2017 (+1%) and $1,006 million in Q1 2017 (+9%))
• As reported (including specific items) • Operating income of $112 million (compared to $45 million in Q4 2017 (+149%) and $31 million in Q1 2017 (+261%))
• Operating income before depreciation and amortization (OIBD) 1 of $167 million (compared to $104 million in Q4 2017 (+61%) and $78 million in Q1 2017 (+114%))
• Net earnings per common share of $0.65 (compared to net earnings of $0.60 in Q4 2017 and net earnings of $1.70 in Q1 2017)
• Adjusted (excluding specific items) 2 • Operating income of $50 million (compared to $46 million in Q4 2017 (+9%) and $28 million in Q1 2017 (+79%))
• OIBD 1 of $105 million (compared to $105 million in Q4 2017 (stable) and $75 million in Q1 2017 (+40%))
• Net earnings per common share of $0.13 (compared to net earnings of $0.14 in Q4 2017 and net earnings of $0.13 in Q1 2017)
• Net debt 2 of $1,534 million as at March 31, 2018 (compared to $1,522 million as at December 31, 2017 ) and net debt to adjusted OIBD ratio 2,3 at 3.6x.
Mr. Mario Plourde , President and Chief Executive Officer, commented: “Our consolidated first quarter performance improved both year-over-year and sequentially in terms of sales levels, shipments and operating income. Changes in raw material prices were positive on a consolidated basis both sequentially and year-over-year, while higher transportation costs negatively impacted profitability in our North American operations.
Year-over-year, first quarter results were supported by a strong performance from our European boxboard subsidiary Reno de Medici, driven by strong market conditions, selling price improvement and lower raw material costs. The containerboard packaging division similarly generated stronger results, reflecting the April 2017 consolidation of the Greenpac Mill, strong industry fundamentals and higher average realized selling prices. As disclosed in early March, first quarter production levels in this segment were impacted by unplanned downtime at several mills at the beginning of the year, which resulted in a production shortfall of 15,000 short tons during the period. These production and mechanical issues were resolved before the end of the quarter. Results in the specialty products segment were below last year due to the lower recycled material prices, most notably OCC, which reduced sales in the recovery sub-segment. Finally, the tissue papers division increased shipments by 7% year-over-year within the ongoing context of challenging market conditions and market related downtime taken at the beginning of the year. Results in this segment, however, were impacted by lower average selling prices driven by increased competitiveness in several markets, higher raw material prices, and negative operating margin related to the Oregon converting facility that was started in the second quarter of 2017.
On a sequential basis, consolidated first quarter results reflected improvements in capacity utilization, sales, and operating income. This was largely driven by a strong performance from the European boxboard division and was supported by a slight progress in tissue. Although production levels in containerboard reflected seasonally softer volumes and the downtime as described above, this division generated improvements in operating income and adjusted OIBD, reflecting higher realized average selling prices and lower raw material costs. Conversely, results from the specialty products segment decreased, due primarily to the impact of lower recycled paper pricing on the performance of its recovery activities.
On the strategic front, the construction of our new containerboard converting facility in NJ progressed on time and on budget, with start-up scheduled for the end of May. The containerboard division finalized the sale of the NY converting facility for US$72 million in January, and the acquisition of the 66.67% interest in the Italian boxboard processing company PAC Service S.p.A, was concluded by the European boxboard division at the beginning of the year. At the end of the first quarter, the leverage ratio stood at 3.6x 1 , unchanged from the end of 2017.”
Sales of $1,098 million increased by $92 million or 9% compared to the same period last year. This was driven by a 22% increase in the containerboard division, reflecting the Greenpac consolidation and higher average realized sales prices during the period, and a 17% sales increase in the European boxboard segment following implemented price increases and the January 2018 acquisition of PAC Service. These benefits were partially offset by lower sales in recovery activities attributable to the significant year-over-year decrease in raw material prices. Sales generated by the tissue segment were essentially unchanged compared to prior year levels, as the beneficial impact of higher volumes was offset by a less favourable product mix and weaker Canadian dollar – US dollar exchange rate.
First quarter operating income stood at $112 million , a notable improvement from the $31 million generated last year. This increase was largely driven by improvements in the containerboard segment, where results benefited from the consolidation of Greenpac, a higher average selling price and lower raw material costs. First quarter performance similarly reflected a higher contribution from the European boxboard segment, driven by strong industry fundamentals and lower raw material costs. Partially offsetting these benefits was a lower contribution from the specialty products division attributable to the impact of lower raw material prices on the performance of the recovery sub-segment, and a weaker tissue performance reflecting the more challenging marketplace and rising virgin pulp price. Higher amortization and depreciation expense as a result of business combinations and the Scappoose facility start-up also negatively impacted operating income compared to the prior year period. On an adjusted basis 1 , first quarter operating income stood at $50 million , versus $28 million in the prior year.
The Corporation generated net earnings of $61 million , or $0.65 per common share in the first quarter of 2018, versus net earnings of $161 million, or $1.70 per common share in the comparable period of 2017. On an adjusted basis 1 , net earnings were $12 million , or $0.13 per common share, during the first three months of 2018, compared to net earnings of $12 million or $0.13 per common share in the same period of 2017.
more detail at: https://www.cascades.com/en/media-centre/press-releases-and-news/press-release/2018/6065/cascades-announces-results-for-the-first-quarter-of-2018-strong-containerboard-fundamentals-driving-positive-outlook-for-remainder-of-year