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Cascades shares Q4 and annual results for 2021

Results show the impact of the pandemic and the ongoing logistical and supply chain issues


February 25, 2022
By P&PC Staff/Cascades

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Cascades recently reported its unaudited fourth quarter and annual financial results, for the period-ended December 31, 2021.

Highlights from the fourth quarter of 2021 are as follows:

  • Sales of $1,028 million, compared with $1,030 million in Q3 2021 and $1,030 million in Q4 2020
  • As reported
    • Operating income (loss) of $90 million, compared with $73 million in Q3 2021 and $104 million in Q4 2020
    • Operating income (loss) before depreciation and amortization (OIBD) of $30 million, compared with $136 million in Q3 2021 and $163 million in Q4 2020
    • Net earnings per common share of $1.04, compared with $0.32 in Q3 2021 and $0.72 in Q4 2020
  • Adjusted
    • Operating income of $2 million, compared with $44 million in Q3 2021 and $80 million in Q4 2020
    • OIBD of $62 million, compared with $107 million in Q3 2021 and $139 million in Q4 2020
    • Net loss per common share of $0.09, compared with net loss per common share of $0.01 in Q3 2021 and net earnings per common share of $0.42 in Q4 2020

Annual highlights for 2021 are as follows:

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  • Sales of $3,956 million, compared with $4,105 million in 2020
  • As reported
    • Operating income of $50 million, compared with $292 million in 2020
    • Operating income before depreciation and amortization (OIBD) of $302 million, compared with $543 million in 2020
    • Net earnings per common share of $1.60, compared with $2.04 in 2020
  • Adjusted
    • Operating income of $137 million, compared with $295 million in 2020
    • OIBD of $389 million, compared with $546 million in 2020
    • Net earnings per common share of $0.26, compared with $1.95 in 2020
  • Financial information for the Boxboard Europe segment is presented as discontinued operations following the monetization of the corporation’s 57.6 percent controlling equity interest in Reno de Medici which generated net proceeds of $450 million. The transaction was announced in July 2021 and closed on October 26, 2021. The net gain after income tax amounts to $204 million.
  • Net debt of $1,351 million as at December 31, 2021, compared with $1,760 million as at September 30, 2021. Net debt to adjusted OIBD ratio of 3.5x down from 3.8x as at September 30, 2021.
  • Total capital expenditures, net of disposals, of $233 million in 2021, compared to $164 million in 2020Forecasted 2022 net capital expenditures of $415 million, encompassing $275 million for the Bear Island containerboard conversion project in Virginia, USA.

“It was a difficult end to the year, and our disappointing fourth-quarter results are a consequence of the escalation in costs and operational disruptions that continued to develop as the quarter progressed. Ongoing challenges from supply chain constraints, reduced labour availability and higher logistics costs related to the pandemic were further exacerbated by rail disruptions caused by flooding in Western Canada in November that significantly impeded logistics across Canada, and the subsequent emergence and rapid escalation of the Omicron variant in December. These factors intensified pressures on costs, impacted production levels in several of our operations, and delayed delivery times of products to customers. Notwithstanding this challenging environment, the specialty products segment continued to perform well, driven by product innovation and strategic commercial decisions,” explained Mario Plourde, president and CEO of Cascades.

He added that in the context of this challenging business environment, Cascades continued to take concrete steps to unlock value.

The sale of its 57.6 percent controlling equity position in Reno de Medici generated net proceeds of $450 million, which were used in part to redeem Senior unsecured notes.

In addition to this, Cascades continued to return capital to shareholders through the 50 percent dividend increase in the second quarter, and ongoing share buy-back program that resulted in 1.65 million shares being repurchased in the third quarter.

Discussing near-term outlook, Plourde added, “The ongoing pandemic and related ramifications on input costs, logistics, labour and demand remain unpredictable. Many of these factors continued in January, but we have begun to see improvement in labour availability in February. Demand remains solid for our packaging businesses, and results will reflect lower raw material costs in the near-term and roll-out of the announced price increases over the coming months. Without question the tissue segment remains challenging, and our priority is to return to our pre-pandemic performance trajectory. The fourth quarter was exceptionally difficult with major and unprecedented headwinds. However, despite these difficult conditions the year was also successful in terms of a well-executed exit from Europe and increased financial capacity. Moreover, I would like to take this opportunity to express my heartfelt appreciation for our employees who have played such a key role in our ability to continue servicing our customers through these challenging times.”