Cascades reports net loss in Q1; CEO says results met expectations

Cascades Inc. released its first quarter 2024 financial results this week, and though the Kingsey Falls, Quebec-based paper and packaging company posted a net loss for the period, the results largely were in line with its expectations.

The company reports a net loss of CA$20 million ($14.6 million) for the first quarter of 2024, with sales down from CA$1.13 billion ($829 million) in the first quarter of 2023 to CA$1.1 billion ($811 million) in the most recently completed period.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) also are down in the first quarter of 2024, coming in at CA$103 million ($75 million) compared with CA$134 million ($98 million) in the first quarter of 2023.

However, Cascades’ operating income saw a large increase, reaching CA$9 million ($6.6 million) in the first quarter of 2024 compared with an CA$80 million ($59 million) loss in the first quarter of 2023.

“First quarter 2024 results met expectations, considering the context of elevated raw material prices and ongoing inflationary pressure on operational costs,” Cascades President and CEO Mario Plourde says in a news release accompanying the results.

In Cascades’ packaging segment, sales are down year over year, however, total shipments increased slightly and the company expects continued improvement in this sector.

Packaging sales are down from CA$561 million ($410 million) in the first quarter of 2023 to CA$556 million ($407 million) in the most recent quarter, but total shipments increased 2 percent sequentially.

The company also had 19,800 tons worth of downtime in the first quarter in its packaging products and containerboard segment, with 6,200 tons being economic/inventory management downtime.

Sales in Cascades’ tissue papers segment are down from CA$387 million ($283 million) in the first quarter of 2023 to CA$367 million ($268 million) in the first quarter of 2024.

In terms of recycled fiber costs, Cascades reports strong domestic demand for old corrugated containers (OCC), including growing levels for new recycled containerboard mills being ramped up, but generation reflected lower seasonal generation and a “softer economic environment.”

“Good inventory management and leveraging our recovery facilities fulfilled demands of our mills without issue,” the company says.

“The softer results similarly reflect costs associated with the Trenton [Ontario] mill, which ceased operations at the end of January prior to its permanent closure at the end of February,” Plourde adds of Cascades’ containerboard results. “Conversely, specialty products had a solid quarter driven by favorable sequential raw material and selling prices and operational cost benefits reflecting efficiency and productivity initiatives.”

Plourde also provided an update on the company’s Bear Island containerboard mill in Ashland, Virginia, that started operations in May 2023.

“It is progressing well and we are pleased that the mill has achieved production levels above its rated daily capacity on several occasions,” he says. “Broadly, we are cautiously optimistic for near-term volumes in our packaging business give continued economic uncertainty and remain focused on profitability, efficiency and productivity initiatives and the ramp-up of Bear Island to create value through our operations.”

Cascades’ full first quarter 2024 earnings can be found here.