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 improved volumes sequentially, but offset by softer year-over-year volumes and higher raw material costs.

• 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 lower volumes and higher costs year-over-year.

• Adjusted net earnings per share were $0.27, up from $0.08 in Q2 2024 but down from $0.44 last year; reported EPS was $0.01, unchanged sequentially and down from $0.34 in Q3 2023.

• Restructuring and impairment charges impacted results, including $29 million in restructuring costs and $7 million in impairment charges.

Financial highlights

• Q3 adjusted cash from operations was $86 million, down from $106 million last year and $95 million in Q2; net debt stood at $2,039 million, down $54 million sequentially, with a leverage ratio of 4.3x.

• Capital investments 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.

• Full benefit of new U.S. retail tissue business expected in Q1 2025.

• No major CapEx projects planned for 2025; spending expected to be similar to 2024.

• 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.