Cascades (CAS) Q2 2024 earnings summary

Executive summary

• Q2 2024 sales reached $1,180 million, up 6% sequentially and 1% year-over-year, with improvement across all business segments; EBITDA(A) was $112 million, up 9% from Q1 but down from $141 million in Q2 2023.

• Net earnings per share were $0.01, compared to a loss of ($0.20) in Q1 2024 and $0.22 in Q2 2023; adjusted EPS was $0.08, down from $0.27 in Q2 2023.

• Sequential improvement was driven by higher selling prices, volumes, and lower freight and energy costs, partially offset by higher raw material costs.

• A $5 million one-time CEO transition compensation expense and $10 million in restructuring costs were recorded.

• Net debt increased to $2,093 million, with a net debt/EBITDA(A) ratio of 4.2x, up from 3.8x in Q1 2024.

Financial highlights

• EBITDA(A) margin was 9.5%, up from 9.3% in Q1 2024 but down from 12.1% in Q2 2023.

• Adjusted cash flow from operations was $95 million, down from $122 million year-over-year but up $49 million sequentially.

• Operating income included $10 million in restructuring costs and a $5 million one-time compensation expense.

• Dividend of $0.12 per share declared, payable September 5, 2024.

• Net debt increased by $73 million in Q2, with leverage rising to 4.2x from 3.8x in Q1.

Outlook and guidance

• Q3 2024 results expected to be stronger sequentially, led by improved Containerboard performance as price increases are implemented and production normalizes post-maintenance.

• Specialty Products segment results expected to be stable, with higher selling prices and efficiency gains offsetting higher production costs.

• Tissue Papers expected to face margin pressure from higher pulp prices and softer pricing, but a price increase of up to 8.5% for Canadian and some U.S. retail tissue products is planned for end of Q3.

• Bear Island facility ramp-up and Containerboard price increases remain key priorities.

• Additional U.S. retail tissue business volume secured for Q4.