Cascades posts a sixth consecutive quarter of improved results
KINGSEY FALLS, QC,
(All amounts in this press release are in Canadian dollars unless otherwise indicated.)
- Net earnings of $0.35 per share ($34 million) compared to a net loss of
$0.07 per share ($7 million) in the third quarter of 2008. Excluding
specific items, net earnings of $0.36 per share ($35 million) compared
to net earnings of $0.06 per share ($6 million) in the same period of
last year;
- For the first nine months of 2009, net earnings of $1.03 per share
($101 million), $0.86 per share ($84 million) when excluding specific
items;
- Highest operating income before depreciation and amortization (EBITDA)
excluding specific items in the Company's history, $127 million, up 5%
compared to the previous quarter and 44% compared to the same period of
last year;
- Cash flow from operations excluding specific items more than doubled
compared to Q3 2008 to $95 million ($0.97 per share);
- Net debt down by approximately $90 million in comparison to the
previous quarter, notwithstanding acquisitions in the tissue paper and
recovery sectors. Compared to the same period of last year, Cascades'
net debt decreased by $216 million;
- Two strategic acquisitions in the paper recovery sector increasing
Cascades' collection capacity by 20%, thus reaffirming the Company's
position as the largest paper collector in Canada and amongst the
leaders in North America.
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Financial Highlights
--------------------
Selected consolidated information
(in millions of Canadian dollars, except -----------------------------
amounts per share) Q3/2009 Q3/2008 Q2/2009
------------------------------------------ -----------------------------
Note 2 Note 2
Sales 974 1,039 981
Excluding specific items(1)
Operating income before depreciation and
amortization (OIBD or EBITDA) 127 88 121
Operating income from continuing
operations 74 34 66
Net earnings 35 6 28
per common share $0.36 $0.06 $0.28
Cash flow from operations (adjusted)
from continuing operations 95 47 85
per common share $0.97 $0.47 $0.87
As reported
Operating income before depreciation and
amortization (OIBD or EBITDA)(1) 129 71 130
Operating income from continuing
operations 76 17 75
Net earnings (loss) 34 (7) 30
per common share $0.35 $(0.07) $0.30
Cash flow from operations (adjusted) from
continuing operations(1) 94 43 81
per common share(1) $0.96 $0.43 $0.83
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Note 1 - see the supplemental information on non-GAAP measures note.
Note 2 - the 2008 results were restated following the retrospective
application of CICA handbook Section 3064
Operating income before depreciation (OIBD or EBITDA) and net earnings excluding specific items increased significantly to respectively
Excluding specific items, EBITDA also improved by
Including specific items, the operating income before depreciation and net earnings also grew substantially to reach respectively
Commenting on the quarterly results,
Results analysis for the three-month period ended September 30, 2009
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In comparison with the same period last year, sales decreased by 6% to
Operating results however improved despite lower sales volumes and selling prices. In fact, the operating income from continuing operations more than quadrupled to
The specific items that impacted the operating income in the third quarter of 2009 include
Net debt decreased by
Finally, through the Pulp & Paper Green Transformation Program of the Canadian Government, Cascades expects to receive
Near term outlook
-----------------
Dividend on Common Shares and normal course issuer bid
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The Board of Directors of Cascades declared a quarterly dividend of
Supplemental information on non-GAAP measures
Operating income before depreciation and amortization, earnings before interests, taxes, depreciation and amortization, operating income, cash flow from operations and cash flow from operations per share are not measures of performance under Canadian GAAP. The Company includes operating income before depreciation and amortization, earnings before interests, taxes, depreciation and amortization, operating income, cash flow from operations and cash flow from operations per share because they are measures used by management to assess the operating and financial performance of the Company's operating segments. Additionally, the Company believes that these items provide additional measures often used by investors to assess a company's operating performance and its ability to meet debt service requirements. However, operating income before depreciation and amortization, earnings before interests, taxes, depreciation and amortization, operating income, cash flow from operations and cash flow from operations per share does not represent, and should not be used as a substitute for net earnings or cash flows from operating activities as determined in accordance with Canadian GAAP, and they are not necessarily an indication of whether cash flow will be sufficient to fund our cash requirements. In addition, our definition of operating income before depreciation and amortization, earnings before interests, taxes, depreciation and amortization, operating income, cash flow from operations and cash flow from operations per share may differ from those of other companies. Cash flow from operations is defined as cash flow from operating activities as determined in accordance with Canadian GAAP excluding the change in working capital components and cash flow from operations per share is determined by dividing cash flow from operations by the weighted average number of common shares of the period.
Operating income before depreciation and amortization excluding specific items, earnings before interests, taxes, depreciation and amortization excluding specific items, operating income excluding specific items, net earnings excluding specific items, net earnings per common share excluding specific items, cash flow from operations excluding specific items and cash flow from operations per share excluding specific items are non-GAAP measures. The Company believes that it is useful for investors to be aware of specific items that have adversely or positively affected its GAAP measures, and that the above mentioned non-GAAP measures provide investors with a measure of performance with which to compare its results between periods without regard to these specific items. The Company's measures excluding specific items have no standardized meaning prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies and therefore should not be considered in isolation.
Specific items are defined to include charges for impairment of assets, charges for facility or machine closures, debt restructuring charges, gains or losses on sale of business unit, unrealized gains or losses on derivative financial instruments that do not qualify for hedge accounting, foreign exchange gains or losses on long-term debt and other significant items of an unusual or non-recurring nature.
Net earnings (loss), which is a performance measure defined by Canadian GAAP is reconciled below to operating income (loss), operating income excluding specific items and operating income before depreciation excluding specific items or earnings before interests, taxes, depreciation and amortization excluding specific items:
-----------------------------
(in millions of Canadian dollars) Q3/2009 Q3/2008 Q2/2009
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Note 2 Note 2
Net earnings (loss) 34 (7) 30
Non-controlling interest - 1 -
Share of results of significantly
influenced companies (3) (2) (2)
Provision for (recovery of) income taxes 17 (2) 17
Loss on derivative financial instruments on
long-term debt - - 2
Foreign exchange loss on long-term debt 3 - 3
Interest expense 25 27 25
-----------------------------
Operating income 76 17 75
Specific items :
Loss on disposal and others - - 1
Impairment loss 1 - -
Closure and restructuring costs 5 4 3
Unrealized loss (gain) on financial
instruments (8) 13 (13)
-----------------------------
(2) 17 (9)
-----------------------------
Operating income - excluding specific items 74 34 66
Depreciation and amortization 53 54 55
-----------------------------
Operating income before depreciation and
amortization (OIBD) - excluding specific
items(1) 127 88 121
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Note 1 - also refers to earnings before interests, taxes, depreciation
and amortization (EBITDA).
Note 2 - the 2008 results were restated following the retrospective
application of CICA handbook Section 3064
The following table reconciles net earnings and net earnings per share to
net earnings excluding specific items and net earnings per share excluding
specific items:
--------------------------- ---------------------------
(in millions of
Canadian dollars,
except amounts Net earnings (loss)
per share) Net earnings (loss) per share(1)
--------------------------------------------- ---------------------------
Q3/2009 Q3/2008 Q2/2009 Q3/2009 Q3/2008 Q2/2009
--------------------------- ---------------------------
Note 2 Note 2 Note 2 Note 2
As per GAAP 34 (7) 30 $0.35 $(0.07) $0.30
Specific items :
Loss on disposal
and others - - 1 $ - $ - $ -
Impairment loss 1 - - $0.01 $ - $ -
Closure and
restructuring
costs 5 4 3 $0.03 $0.03 $0.02
Unrealized loss
(gain) financial
instruments (8) 13 (13) $(0.06) $0.10 $(0.09)
Loss on derivative
financial
instruments on
long-term debt - - 2 $ - $ - $0.02
Foreign exchange
loss on long-term
debt 3 - 3 $0.03 $ - $0.03
Tax effect on
specific items - (4) 2
--------------------------- ---------------------------
1 13 (2) $0.01 $0.13 $(0.02)
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Excluding specific
items 35 6 28 $0.36 $0.06 $0.28
--------------------------------------------- ---------------------------
--------------------------------------------- ---------------------------
Note 1 - specific amounts per share are calculated on an after-tax basis.
Note 2 - the 2008 results were restated following the retrospective
application of CICA handbook Section 3064
The following table reconciles cash flow from operations and cash flow
from operations per share to cash flow from operations excluding specific
items and cash flow from operations per share excluding specific items:
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Cash flow from operations
Cash flow from operations per share
--------------------------- ---------------------------
(in millions of
Canadian dollars,
except amounts
per share) Q3/2009 Q3/2008 Q2/2009 Q3/2009 Q3/2008 Q2/2009
--------------------------------------------- ---------------------------
Cash flow provided
by operating
activities 117 22 82
Changes in
non-cash working
capital
components (23) 21 (1)
--------------------------- ---------------------------
Cash flow
(adjusted) from
operations 94 43 81 $0.96 $0.43 $0.83
Specific items :
Gains or losses
on disposals and
others - - 1 - - -
Closure and
restructuring
costs, net of
current income
tax 1 4 3 $0.01 $0.04 $0.04
--------------------------- ---------------------------
Excluding specific
items 95 47 85 $0.97 $0.47 $0.87
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Founded in 1964, Cascades produces, converts and markets packaging and tissue products composed mainly of recycled fibres. Cascades employs close to 13,000 employees who work in more than 100 modern and flexible production units located in
Certain statements in this release, including statements regarding future results and performance, are forward-looking statements (as such term is defined under the Private Securities Litigation Reform Act of 1995) 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 Company's products, increases in raw material costs, fluctuations in selling prices and adverse changes in general market and industry conditions and other factors listed in the Company's Securities and Exchange Commission filings.
Consolidated Balance Sheets
(in millions of Canadian dollars)
As at As at
September 30, December 31,
2009 2008
----------------------------
Assets (unaudited) (restated)
Current assets
Cash and cash equivalents 20 11
Accounts receivable 622 657
Inventories 525 580
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1,167 1,248
Property, plant and equipment 1,955 2,030
Intangible assets 159 149
Other assets 272 283
Goodwill 324 321
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3,877 4,031
----------------------------
----------------------------
Liabilities and Shareholders' Equity
Current liabilities
Bank loans and advances 79 104
Accounts payable and accrued liabilities 534 586
Current portion of long-term debt 10 36
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623 726
Long-term debt 1,501 1,672
Other liabilities 418 377
----------------------------
2,542 2,775
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Commitments and Contingencies
Shareholders' Equity
Capital stock 500 506
Retained earnings 745 656
Contributed surplus 13 9
Accumulated other comprehensive income 77 85
----------------------------
1,335 1,256
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3,877 4,031
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Consolidated Statements of Earnings (Loss)
(in millions of Canadian dollars, except per share amounts)
(unaudited)
For the 3-month For the 9-month
periods ended periods ended
September 30, September 30,
2009 2008 2009 2008
------------------------------------------------
(restated) (restated)
Sales 974 1,039 2,925 2,997
Cost of sales and
expenses
Cost of sales (excluding
depreciation and
amortization) 752 854 2,254 2,502
Depreciation and
amortization 53 54 162 158
Selling and
administrative expenses 93 96 309 287
Losses on disposal and
others - - 1 5
Impairment and other
restructuring costs 6 4 14 20
Loss (gain) on
financial instruments (6) 14 (15) 6
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898 1,022 2,725 2,978
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Operating income from
continuing operations 76 17 200 19
Interest expense 25 27 77 77
Gain on purchases of
senior notes - - (14) -
Foreign exchange loss on
long-term debt 3 - 8 20
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48 (10) 129 (78)
Provision for (recovery
of) income taxes 17 (2) 39 (20)
Share of results of
significantly influenced
companies (3) (2) (10) (6)
Non-controlling interest - 1 (1) 2
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Net earnings (loss) from
continuing operations 34 (7) 101 (54)
Net earnings from
discontinued operations - - - 18
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Net earnings (loss) for
the period 34 (7) 101 (36)
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Net earnings (loss) from
continuing operations
per common share
Basic $0.35 ($0.07) $1.03 ($0.54)
------------------------------------------------
------------------------------------------------
Diluted $0.34 ($0.07) $1.02 ($0.54)
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------------------------------------------------
Net earnings (loss) per
common share
Basic $0.35 ($0.07) $1.03 ($0.36)
------------------------------------------------
------------------------------------------------
Diluted $0.34 ($0.07) $1.02 ($0.36)
------------------------------------------------
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Weighted average basic
number of common
shares outstanding 97,430,683 98,727,291 97,781,928 98,873,025
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Consolidated Statements of Shareholders' Equity
(in millions of Canadian dollars)
(unaudited)
For the 9-month period ended September 30,
2009
-------------------------------------------------
Accumu-
lated
other
Contri- compre- Share-
Capital Retained buted hensive holders'
stock earnings surplus income Equity
-------------------------------------------------
Balance - Beginning of
period 506 656 9 85 1,256
Comprehensive income:
Net earnings for the
period - 101 - - 101
Change in other
comprehensive income
(loss) - - - (8) (8)
---------
Comprehensive income for
the period 93
---------
Dividends - (12) - - (12)
Adjustment related to
stock options - - 1 - 1
Redemption of common
shares (6) - 3 - (3)
-------------------------------------------------
Balance - End of period 500 745 13 77 1,335
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For the 9-month period ended September 30,
2008
-------------------------------------------------
(restated)
Accumu-
lated
other
compre-
Contri- hensive Share-
Capital Retained buted income holders'
stock earnings surplus (loss) Equity
-------------------------------------------------
Balance - Beginning of
period 509 724 8 (43) 1,198
Cumulative impact of
accounting changes - 3 - - 3
-------------------------------------------------
Restated balance -
Beginning of period 509 727 8 (43) 1,201
Comprehensive income:
Net loss for the
period - (36) - - (36)
Change in other
comprehensive income - - - 50 50
---------
Comprehensive income for
the period 14
---------
Dividends - (12) - - (12)
Redemption of common
shares (2) (1) - - (3)
-------------------------------------------------
Balance - End of period 507 678 8 7 1,200
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Consolidated Statements of Comprehensive Income (Loss)
(in millions of Canadian dollars)
(unaudited)
For the 3-month For the 9-month
periods ended periods ended
September 30, September 30,
2009 2008 2009 2008
------------------------------------------------
Net earnings (loss) for
the period 34 (7) 101 (36)
------------------------------------------------
Other comprehensive
income (loss)
TRANSLATION ADJUSTMENTS
Change in foreign
currency translation
of self-sustaining
foreign subsidiaries (61) 9 (105) 52
Change in foreign
currency translation
related to hedging
activities 48 - 73 -
Income taxes (7) - (10) -
CASH FLOW HEDGES
Change in fair value of
foreign exchange
forward contracts
designated as cash
flow hedges 23 (7) 52 (10)
Change in fair value of
commodity derivative
financial instruments
designated as cash
flow hedges (1) - (2) 11
Income taxes (7) - (16) (3)
------------------------------------------------
(5) 2 (8) 50
------------------------------------------------
Comprehensive income
(loss) for the period 29 (5) 93 14
------------------------------------------------
------------------------------------------------
Consolidated Statements of Cash Flows
(in millions of Canadian dollars)
(unaudited)
For the 3-month For the 9-month
periods ended periods ended
September 30, September 30,
2009 2008 2009 2008
------------------------------------------------
(restated) (restated)
OPERATING ACTIVITIES FROM
CONTINUING OPERATIONS
Net earnings (loss) for
the period 34 (7) 101 (36)
Net earnings from
discontinued operations - - - (18)
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Net earnings (loss) from
continuing operations 34 (7) 101 (54)
Adjustments for
Depreciation and
amortization 53 54 162 158
Losses on disposal and
others - - 1 5
Impairment and other
restructuring costs 5 - 8 3
Unrealized loss (gain)
on financial
instruments (8) 13 (22) 6
Foreign exchange loss
on long-term debt 3 - 8 20
Gain on purchases of
senior notes - - (14) -
Future income taxes 12 (9) 11 (42)
Share of results of
significantly
influenced companies (3) (2) (10) (6)
Non-controlling
interest - 1 (1) 2
Others (2) (5) (1) (9)
Early settlement of
natural gaz contracts - (2) - 13
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94 43 243 96
Change in non-cash
working capital
components 23 (21) 23 (57)
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117 22 266 39
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INVESTING ACTIVITIES FROM
CONTINUING OPERATIONS
Purchases of property,
plant and equipment (52) (45) (124) (128)
Proceeds from disposal of
property, plant and
equipment - - 2 5
Decrease (increase) in
other assets (1) - (9) 2
Cash of a joint venture
and business
acquisitions (61) (1) (64) 5
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(114) (46) (195) (116)
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FINANCING ACTIVITIES FROM
CONTINUING OPERATIONS
Bank loans and advances (3) 18 (22) 13
Change in revolving
credit facilities 14 - (31) 22
Purchases of senior notes - - (18) -
Increase in other
long-term debt 2 1 27 1
Payments of other
long-term debt (3) (1) (8) (7)
Early settlement of
foreign exchange
contracts - - 8 -
Redemption of common
shares (1) (1) (3) (3)
Dividends (4) (4) (12) (12)
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5 13 (59) 14
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Change in cash and cash
equivalents during the
period from continuing
operations 8 (11) 12 (63)
Change in cash and cash
equivalents from
discontinued operations,
including proceeds on
disposal - 6 (3) 49
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Net change in cash and
cash equivalents during
the period 8 (5) 9 (14)
Translation adjustments
on cash and cash
equivalents - (7) - (2)
Cash and cash
equivalents - Beginning
of period 12 21 11 25
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Cash and cash
equivalents - End of
period 20 9 20 9
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------------------------------------------------
Selected Segmented Information
(in millions of Canadian dollars)
(unaudited)
For the 3-month For the 9-month
periods ended periods ended
September 30, September 30,
2009 2008 2009 2008
------------------------------------------------
Sales
Packaging products
Boxboard
Manufacturing 170 189 528 568
Converting 170 167 532 498
Intersegment sales (19) (24) (67) (74)
------------------------------------------------
321 332 993 992
Containerboard
Manufacturing 132 157 393 461
Converting 230 257 677 730
Intersegment sales (90) (96) (260) (281)
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272 318 810 910
Specialty products
Manufacturing 83 80 254 232
Converting 60 67 182 197
Recovery and deinked
pulp 70 102 193 295
Intersegment sales (18) (25) (60) (73)
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195 224 569 651
Intersegment sales (17) (28) (45) (81)
------------------------------------------------
771 846 2,327 2,472
Tissue papers
Manufacturing and
converting 210 205 628 559
Intersegment sales (7) (12) (30) (34)
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Total 974 1,039 2,925 2,997
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Selected Segmented Information
(in millions of Canadian dollars)
(unaudited)
For the 3-month For the 9-month
periods ended periods ended
September 30, September 30,
2009 2008 2009 2008
------------------------------------------------
Operating income (loss)
before depreciation and
amortization from
continuing operations
Packaging products
Boxboard
Manufacturing 8 (8) 34 (24)
Converting 14 15 42 39
Others - (1) (3) (11)
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22 6 73 4
Containerboard
Manufacturing 20 13 81 40
Converting 22 15 40 46
Others - (5) (5) (2)
------------------------------------------------
42 23 116 84
Specialty products
Manufacturing 8 5 28 4
Converting 7 8 18 21
Recovery and deinked
pulp 6 7 12 18
Others - 1 (2) 1
------------------------------------------------
21 21 56 44
------------------------------------------------
85 50 245 132
Tissue papers
Manufacturing and
converting 38 22 119 48
Corporate 6 (1) (2) (3)
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Operating income before
depreciation and
amortization from
continuing operations 129 71 362 177
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Depreciation and
amortization (restated) (restated)
Boxboard (19) (18) (57) (52)
Containerboard (16) (16) (48) (47)
Specialty products (8) (9) (25) (25)
Tissue papers (9) (9) (27) (26)
Corporate and
eliminations (1) (2) (5) (8)
------------------------------------------------
(53) (54) (162) (158)
------------------------------------------------
Operating income from
continuing operations 76 17 200 19
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Selected Segmented Information
(in millions of Canadian dollars)
(unaudited)
For the 3-month For the 9-month
periods ended periods ended
September 30, September 30,
2009 2008 2009 2008
------------------------------------------------
Purchases of property,
plant and equipment
Packaging products
Boxboard
Manufacturing 7 7 20 14
Converting 9 7 21 23
------------------------------------------------
16 14 41 37
Containerboard
Manufacturing 3 6 10 10
Converting 3 4 7 15
------------------------------------------------
6 10 17 25
Specialty products
Manufacturing 2 2 5 5
Converting 2 - 4 3
Recovery and deinked
pulp 2 9 14 19
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6 11 23 27
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28 35 81 89
Tissue papers
Manufacturing and
converting 11 7 26 25
Corporate 12 1 14 5
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Total 51 43 121 119
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Purchases of property,
plant and equipment
included in accounts
payable
Beginning of period 12 10 14 17
End of period (11) (8) (11) (8)
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Total investing
activities 52 45 124 128
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For further information: Media: Hubert Bolduc, Vice-President, Communications and Public Affairs, (514) 912-3790; Investors: Didier Filion, Director, Investor relations, (514) 282-2697; Source: Christian Dubé, Vice-President and Chief Financial Officer
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