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KINGSEY FALLS, QC, May 10, 2017 - Cascades Inc. (TSX: CAS) reports its unaudited financial results for the three-month period ended March 31, 2017.Sales of $1,006 million compared to $979 million in Q4 2016 (+3%) and $1,003 million in Q1 2016 (stable))
As reported
Operating income of $31 million
(compared to $33 million in Q4 2016 (-6%) and $73 million in Q1 2016 (-58%))
OIBD12 of $78 million
(compared to $83 million in Q4 2016 (-6%) and $120 million in Q1 2016 (-35%))
Net earnings per common share of $1.70
(compared to $0.04 in Q4 2016 and $0.79 in Q1 2016)
Adjusted (excluding specific items)1
Operating income of $28 million
(compared to $32 million in Q4 2016 (-13%) and $59 million in Q1 2016 (-53%))
OIBD of $75 million
(compared to $82 million in Q4 2016 (-9%) and $106 million in Q1 2016 (-29%)
Net earnings per common share of $0.13
(compared to $0.16 in Q4 2016 and $0.35 in Q1 2016)
Important increase recorded in shareholder equity following revaluation of Boralex investment to reflect market value
Net debt1 of $1,617 million as at March 31, 2017 (compared to $1,532 million as at December 31, 2016) and net debt to adjusted OIBD ratio1 at 4.3x.
Ownership in Greenpac Mill LLC increased from 59.7% to 62.5%, with results to be fully consolidated with those of Cascades beginning in Q2 2017.



For further details, please refer to the "Supplemental Information on non-IFRS Measures" section.


OIBD Operating income before depreciation and amortization

Mr. Mario Plourde, President and Chief Executive Officer, commented: "Our first quarter results were hampered by several short-term elements, namely higher raw material prices, our product repositioning and new facility construction initiatives in our Tissue Papers segment, and the ongoing implementation of our ERP platform. That said, our packaging operations executed well in the first quarter, with all three divisions delivering improvements in total shipments and capacity utilization rates on both a sequential and year-over-year basis. In the case of Containerboard, the significant increase in average OCC prices in the first three months of 2017 more than offset benefits accruing from the gradual implementation of the Fall 2016 price increase during the quarter, and put additional pressure on margins due to the timing mismatch ahead of the roll-out of the subsequent US$50 per short ton price increase that was announced in February. While detrimental to Containerboard performance, higher recycled fibre costs benefited results in our Specialty Products division, as higher margin levels obtained from recovery and recycling activities provided a partial hedge against the impact that higher input costs had on manufacturing margins. In Europe, Reno de Medici improved results sequentially, as improving market fundamentals helped mitigate the impact of higher average fibre and chemical costs.

Regarding our Tissue activities, first quarter results were lower on both a sequential and year-over-year basis. This performance reflects higher raw material costs, lower jumbo roll sales in the slower first quarter, ongoing costs associated with our new West Coast U.S. conversion facility and marketing costs linked to recent product re-branding and repositioning. Finally, at the corporate level, costs related to our ERP implementation and internal business process optimizations increased significantly on a year-over-year basis and marginally when compared to the previous quarter. These initiatives are progressing well, and we remain focused on finalizing them by the end of the year.

Looking at our financial profile, total net debt levels increased by 6% or $85 million sequentially, reflecting lower operating cash flow due to interest payments that are incurred in the first and third quarters, seasonally higher working capital requirements, and incremental capital expenditures and investments during the period. Consequently, our leverage ratio increased to 4.3x at the end of March, from 3.8x at the end of 2016. Our higher leverage ratio in Q1 is common during this period due to seasonal trends in our businesses, and the increased working capital requirements and interest costs that are characteristic of the period. We expect this to revert to more normalized levels in the near-term and continue to be focused on lowering our leverage ratio to within a range of 3.0x - 3.5x.

Lastly, I wanted to highlight an important change that was announced in early April. We are very pleased that results from our Greenpac Mill will be consolidated within our results beginning in the second quarter, as this represents the successful achievement of one of our objectives, and will provide our shareholders with greater clarity with regards to our North American containerboard platform and operational performance.


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