Cascades’ sales up in Q1 of 2020

Cascades Inc., Kingsey Falls, Quebec, reports that sales were up during the first quarter of 2020, which ended March 31. According to a news release from Cascades on the company’s first-quarter earnings report, the company achieved sales of about $1.31 billion in the first quarter of 2020, which is up about 7 percent compared with sales in the fourth quarter of 2019 and the first quarter of 2019. The company achieved sales of about $1.23 billion in the fourth quarter of 2019 and about $1.23 million in the first quarter of 2019. 

According to Cascades, the company achieved operating income of about $90 million in the first quarter of 2020 compared with an operating loss of $1 million in the fourth quarter of 2019 and an operating income of about $72 million in the first quarter of 2019. In addition, the company reports it had net earnings per share of 24 cents in the first quarter of 2020 compared with a net loss per share of 27 cents in the fourth quarter of 2019 and net earnings per share of 26 cents in the first quarter of 2019. 

“Our first-quarter results are a testament to the dedication and hard work of every one of our employees during these challenging times,” says Mario Plourde, president and CEO of Cascades. “We are very proud of their commitment to support our customers and communities by ensuring that our facilities meet the heightened demand for the essential tissue and packaging products we produce.”

Plourde says first-quarter sales increased 7 percent compared with the prior quarter, reflecting improvements in all business segments. He says the company noticed the most improvement in its Tissue, European Boxboard and Specialty Packaging products business segments in the first quarter of 2020 as a result of consumer buying patterns related to COVID-19 and strategic actions taken in recent quarters by the company. 

Plourde reports that containerboard sales also increased year over year, as higher volumes and a beneficial exchange rate offset the impacts from a less favorable sales mix and lower average selling prices, while lower sales in the Specialty Products segment reflected a business divestiture and mill closure in 2019. 

Operating income before depreciation (OIBD) was at $161 million in the first quarter of 2020, which is a net of $10 million expected credit loss provision taken against accounts receivable amounts across the company’s business segments, increased 6 percent sequentially and 19 percent compared with the first quarter of 2019. Cascades reports that the sequential performance was driven by improved results in the Tissue business segment that reflected volume growth combined with a higher average selling price. Also, stronger sequential performances from the European Boxboard and Specialty Packaging business segments also benefited from volume growth. European Boxboard results also reflected lower raw material pricing and lower average selling prices, while the reverse was true for the Specialty Packaging business segment. 

“At this time, we expect second-quarter performance to be the result of a combination of tailwinds and headwinds in our different business segments,” Plourde says. 

In the second quarter of 2020, Plourde says he expects the Tissue business segment’s results will reflect elevated raw material prices due to higher white recycled-grade fiber costs and a greater use of virgin pulp due to lower levels of available recycled material. Also, containerboard margins are expected to be impacted by higher old corrugated containers (OCC) costs. Also, volumes in both the Tissue and Containerboard business segments are forecasted to slow sequentially following an easing of the COVID-19-related pantry stocking trends experienced in the first quarter of 2020 and lower demand levels following business closures. Plourde adds that near-term Specialty Products business segment performance is expected to reflect stronger consumer packaging trends, the effects of which should offset softness in industrial packaging. Additionally, the European Boxboard business segment results are expected to increase slightly, supported by steady demand and announced industry price increases.

Plourde states that the company is making the health and safety of its employees a priority, given concerns around COVID-19. The company is also focusing on prudent cash-flow management.

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“Given the uncertainty regarding the potential impact from the COVID-19 pandemic over the coming months, we are focused on prudent cash flow management, and have therefore reduced planned capital expenditures to a range of $175 to $200 million for the year, down from $250 million previously, but are maintaining our current dividend policy,” he says. “Analysis of our Bear Island conversion project has continued at a slower pace given current circumstances, and as such we will not be providing any updated specifics or schedule at this time.”