Cascades Reports Results for the First Quarter of 2022

Q1 2022 Highlights (comparative figures have been restated to reflect discontinued operations1)
*Sales of $1,038 million (compared with $1,028 million in Q4 2021 and $942 million in Q1 2021)
As reported (including specific items)
*Operating income (loss) of $(4) million (compared with $(90) million in Q4 2021 and $44 million in Q1 2021)
*Operating income (loss) before depreciation and amortization (OIBD) of $56 million (compared with $(30) million in Q4 2021 and $109 million in Q1 2021)
*Net loss per common share of $(0.15) (compared with net earnings per common share of $1.04 in Q4 2021 and net earnings per common share of $0.22 in Q1 2021)

Mario Plourde, President and CEO, commented: “Our first quarter performance was disappointing and lower than our expectations. While demand levels were stable for our packaging segments and continued to show positive underlying momentum in tissue, two main factors caused results to come in below our outlook. The first was the important escalation in production and operational costs, the effects of which were further compounded for our Tissue segment by persistently higher raw material prices. The second was logistics from both a cost and availability standpoint. Inflation driven fuel surcharges increased already elevated cost levels. The ongoing transportation constraints slowed order inflow levels from some customers experiencing shipping challenges while also delaying delivery of our products to some customers. Production was therefore temporarily adjusted in several of our operations, which impacted sales levels.

In the context of this high cost environment our Specialty Products segment performed well, as strong demand drove higher volumes and sales price increases were implemented. In our Tissue business, significant cost headwinds for fibre and logistics combined with planned revenue management actions being implemented to transition to an optimized customer and product portfolio resulted in a difficult quarter for this segment prior to benefits from profitability initiatives underway being realized. Finally, below expected results in our Containerboard segment reflect the immediate impact of higher input costs and a challenging transportation environment prior to the realization of benefits from the roll-out of recently announced price increases.”

Discussing near-term outlook, Mr. Plourde commented, “Looking ahead, we are implementing price increases in our packaging segments that will help to offset input cost headwinds. These, combined with good demand for our packaging products as we enter the summer season, will progressively improve profitability levels in the coming months. Our Bear Island project is advancing as planned with project costs and the December 2022 start-up date in line with our stated objectives. The elevated capital investments for this project combined with our lower consolidated financial results in the first quarter led to a notable increase in leverage. This course is expected to reverse with improved business performance in the coming months and future positive contribution from the Bear Island project following the facility’s start-up. In Tissue, we are encouraged with the progress of the profitability plan underway notwithstanding this segment’s first quarter results. As expected, benefits from these initiatives did not contribute materially to first quarter performance. Despite significant cost headwinds, we remain confident that we will be in the range of the 2022 target disclosed in our February strategic update, as benefits from previously announced price increases will begin to support this segment’s results in the second quarter, and will be further supplemented by additional price increases for Away-from-Home products announced for July 1 as well as continued revenue and cost optimization initiatives.”
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