Cascades (CAS) Q3 2024 earnings summary

Executive summary

• Q3 2024 sales reached $1,201 million, up 2% sequentially and stable year-over-year, driven by higher prices and lower production costs in Containerboard, while Tissue Papers faced margin pressure from higher raw material costs and sales mix changes.

• Adjusted EBITDA (A) was $140 million, up 25% from Q2 2024 but down from $161 million in Q3 2023, reflecting margin improvement to 11.7% from 9.5% in Q2 2024, but impacted by higher raw material costs and lower volumes.

• Net earnings per share were $0.01 as reported and $0.27 on an adjusted basis, compared to $0.34 and $0.44, respectively, last year.

Financial highlights

• Net debt stood at $2,039 million as of September 30, 2024, down $54 million sequentially, with a net debt/EBITDA (A) ratio of 4.3x, up from 4.2x in Q2 2024 and 3.8x in Q3 2023.

• Q3 adjusted cash from operations was $86 million, down from $106 million a year ago and $95 million in Q2; adjusted cash flow per share was $0.21.

• Capital expenditures in Q3 totaled $34 million; full-year 2024 CapEx expected to be about $160 million.

• Operating income was $36 million, up from $34 million in Q2 2024 but down from $80 million in Q3 2023.

• Quarterly dividend of $0.12 per share declared, payable December 5, 2024.

Outlook and guidance

• Q4 2024 results in packaging segments expected to be stable sequentially, with lower raw material costs and price increases offset by seasonally lower volumes.

• Tissue Papers expected to see slightly stronger sequential results in Q4, benefiting from lower raw material costs, improved volumes, and price increases, partially offset by seasonal sales mix.

• Bear Island mill ramp-up is behind target but expected to close the 20% production gap by end of 2025.

• Medium- and long-term focus on operational efficiency, scaling up Bear Island facility, and ramping up new tissue converting lines to drive cash flow and debt reduction.