KINGSEY FALLS, QC, CANADA, Feb. 21, 2013 - Cascades Inc. (TSX: CAS), a leader in the recovery and manufacturing of green packaging and tissue paper products, announces its unaudited financial results for the three-month period and the fiscal year ended December 31, 2012.
Sales of $3,645 million (compared to $3,625 million in 2011 (+1%))
Excluding specific items
EBITDA of $304 million (compared to $229 million in 2011 (+33%))
Net earnings per share of $0.17 (compared to a net loss of $0.14 in 2011)
Including specific items
EBITDA of $274 million (compared to $188 million in 2011 (+46%))
Net loss per share of $0.11 (compared to net earnings of $1.03 in 2011)
Consolidation of our corrugated products sector in Ontario with the acquisition of Bird Packaging Limited and concurrent investments totaling $30 million
Consolidation of our folding carton and microlithography operations with investments totaling $20 million
Equipment upgrades at Cascades' mill in La Rochette and Reno de Medici's mill in Villa Santa Lucia in Europe
Construction of the Greenpac project mill with start-up still expected in July 2013
Price increase announcement during the fourth quarter in our containerboard sector
Sales of $904 million
(compared to $906 million in Q3-2012 (-%) and $913 million in Q4-2011 (-1%))
Excluding specific items
EBITDA of $70 million
(compared to $78 million in Q3-2012 (-10%) and $51 million in Q4-2011 (+37%))
Net loss per share of $0.02
(compared to net earnings of $0.07 in Q3-2012 and a net loss of $0.04 in Q4-2011)
Including specific items
EBITDA of $39 million
(compared to $83 million in Q3-2012 (-53%) and $37 million in Q4-2011 (+5%))
Net loss per share of $0.30
(compared to net earnings of $0.05 in Q3-2012 and net earnings of $0.05 in Q4-2011)
Net debt of $1,535 million (compared to $1,542 million as at September 30, 2012), including $133 million of non-recourse debt
Mr. Alain Lemaire, President and Chief Executive Officer, had the following comments on the fourth quarter results:
"We ended 2012 on a better note than last year. Despite a sequential performance which reflects inherent seasonality associated with the fourth quarter in North America, the results released today are encouraging in a number of ways. Our Tissue Papers Group continues to perform well. The sequential decline in recycled paper costs and the gradual implementation of price hikes contributed positively to the results of our Containerboard Group manufacturing activities. The maintenance downtime period did not allow this segment to achieve the desired utilization rate but the performance of our flagship operations is gradually improving. The implementation of price increases in the corrugated products sector is in line with our expectations but the product mix negatively impacted the performance of our converting operations during the fourth quarter. In our Specialty Products Group, shipments of specialty papers and converted products were lower than expected, which had a negative impact on financial results. In Europe, we have been able to capitalize on capacity closures to make the best of a difficult market environment."
Results analysis for the three-month period ended December 31, 2012 (compared to the same period last year)
In comparison with the same period last year, sales decreased by 1% to $904 million as of result of lower average selling prices and an unfavorable CAD/Euro exchange rate which more than offset the net impact of business acquisitions over divestitures and closures as well as lower shipments.
Despite the above-mentioned factors, operating income, excluding specific items, increased from nil during Q4-2011 to $22 million for the last quarter of 2012 mainly as a result of lower raw material and production costs as well as higher volumes. These factors were offset by lower average selling prices in all our sectors, including the impact of unfavorable product mixes. On a segmented basis, our four sectors surpassed their 2011 fourth quarter's results. When including specific items, the operating loss amounted to $19 million in comparison to $14 million for the same period of last year. In the fourth quarter of 2012, the following specific items impacted our operating income and/or net earnings (before tax):
a $27 million loss resulting from impairment charges on assets (impact on operating income and net earnings);
a $10 million expense related to accelerated depreciation of assets due to restructuring measures (operating income and net earnings);
$3 million of closure and restructuring costs (operating income and net earnings);
a $1 million unrealized loss on financial instruments (operating income and net earnings);
a $6 million foreign exchange gain on long-term debt and financial instruments (net earnings).
The net loss excluding specific items amounted to $2 million ($0.02 per share) in the fourth quarter of 2012 compared to a net loss of $4 million ($0.04 per share) for the same period in 2011. Including specific items, the net loss amounted to $29 million ($0.30 per share) compared to net earnings of $5 million ($0.05 per share) for the same quarter in 2011.
For further details, see the following tables on IFRS and non-IFRS measures reconciliation included herewith.
Results analysis for the three-month period ended December 31, 2012 (compared to the previous quarter)
In comparison to the previous quarter, sales remained stable. A favorable foreign exchange rate and higher external shipments partially counterbalanced the lower average selling prices. Excluding specific items, operating income decreased by $11 million to reach $22 million primarily due to an increased depreciation expense and lower selling prices that more than offset a decrease in raw material costs. Net earnings for the quarter decreased by $9 million resulting in a net loss of $2 million.
Net debt decreased by $7 million to $1,535 million due to free cash flows generated, primarily in the management of our working capital.
Results analysis for the fiscal year ended December 31, 2012
In comparison to last year, sales increased by 1% to $3.6 billion reflecting the net contribution of business acquisitions over divestitures and the full consolidation of the results of Reno de Medici since Q2 2011. These factors were offset by the negative impact of a stronger Canadian dollar as well as lower shipments and average selling prices.
In addition to the above-mentioned factors, the lower cost for raw materials contributed to increase the operating income excluding specific items to $118 million compared to $49 million last year. Operating income including specific items increased by $67 million to reach $75 million.
In 2012, net earnings excluding specific items amounted to $16 million ($0.17 per share) compared to a net loss of $14 million ($0.14 per share) last year. Including specific items, the net loss reached $11 million ($0.11 per share) compared to net earnings of $99 million ($1.03 per share) in 2011. Impairment charges and restructuring measures impacted net earnings during the last two years. In 2011, specific items included the gain from the sale of Dopaco.
In commenting on the near term outlook, Mr. Lemaire added: "2013 will be an important year for Cascades. In addition to the start-up of Cascades' largest project to date, Greenpac, we will benefit from other strategic initiatives we undertook over the last two years. In North America, industry fundamentals remain positive for our two core sectors. Demand in the tissue papers sector continues to be robust despite ongoing capacity additions. In the containerboard sector, the corrugated box price increase is gradually being implemented and is expected to be fully effective during the second quarter. In North America, we do not expect a significant move in the price of recovered papers in the beginning of the year. The situation is different in Europe and presents significant uncertainty in relation to costs and market conditions."
Dividend on common shares and normal course issuer bid
The Board of Directors of Cascades declared a quarterly dividend of $0.04 per share to be paid March 14, 2013 to shareholders of record at the close of business on March 4, 2013. This dividend paid by Cascades is an "eligible dividend" as per the Income Tax Act (Bill C-28, Canada).
In the fourth quarter of 2012, Cascades purchased for cancellation 123,786 shares at an average price of $4.40 representing an aggregate amount of approximately $0.5 million.
Conference call information
Management will comment the 2012 fourth quarter and annual financial results during a conference call to be held today at 10:00am.
Financial analysts, investors, media and other interested individuals are invited to listen to the conference call by dialing 1-888-231-8191. The conference call, including the investor presentation, will also be broadcast live on the Cascades corporate website (www.cascades.com, tab Investors of the Home page). The broadcast replay will be available on the Cascades corporate website and by phone until March 1, 2013 by dialing 1-855-859-2056 and by using access code 868625993#.
Founded in 1964, Cascades produces, converts and markets packaging and tissue products that are composed mainly of recycled fibres. The Corporation employs more than 12,000 employees, who work in more than 100 units located in North America and Europe. With its management philosophy, half a century of experience in recycling, and continuous efforts in research and development as driving forces, Cascades continues to serve its clients with innovative products. Cascades' shares trade on the Toronto Stock Exchange, under the ticker symbol CAS.
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