Cascades Inc (CADNF) Q2 2024 Earnings Call Highlights: Navigating Growth Amidst Challenges

GuruFocus News
3 min read

In This Article:

  • Revenue: Second quarter sales increased by 6% from Q1 and were stable year over year.

  • Consolidated EBITDA: $112 million, up 9% from Q1 but down 20% year over year.

  • Net Earnings Per Share: $0.01 as reported; $0.08 on an adjusted basis.

  • Adjusted Cash Flow from Operations: $95 million, down from $122 million year over year, but up $49 million sequentially.

  • Capital Investments: $62 million in Q2; 2024 planned investments below initial forecast of $175 million.

  • Net Debt: Increased by $73 million in Q2, with leverage at 4.2 times.

  • Containerboard EBITDA: $60 million, a 20% increase from Q1.

  • Specialty Products EBITDA: $26 million, up $2 million year over year, with a margin of 15.6%.

  • Tissue Business EBITDA: $54 million, up 8% from Q1, with a margin of 13.6%.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Cascades Inc (CADNF) reported a 6% increase in sales from Q1, driven by volume, pricing, and exchange rate improvements.

  • Consolidated EBITDA increased by 9% from Q1, reflecting stronger pricing and favorable volume and mix.

  • The specialty products division delivered strong results with a 4% increase in sales and stable EBITDA margins.

  • The tissue business saw an 8% sequential increase in sales, largely due to volume increases in the away-from-home and retail markets.

  • Cascades Inc (CADNF) secured additional US retail tissue business volume starting in Q4, indicating future growth potential.

Negative Points

  • Year-over-year consolidated EBITDA decreased by 20% due to higher raw material costs and lower average selling prices.

  • The company faced a $5 million one-time compensation expense related to CEO transition.

  • Net debt increased by $73 million in Q2, despite higher cash flow from operations.

  • The tissue business experienced a 5% year-over-year decrease in sales due to lower shipment levels.

  • Cascades Inc (CADNF) anticipates higher raw material costs to continue being a headwind for the business.

Q & A Highlights

Q: Could you discuss how containerboard end-user demand trends have evolved since May? A: We see a general uptake due to seasonal demand, but overall, the demand is solid relative to Q2. Our containerboard shipments have outperformed the industry for the eighth quarter in a row, driven by strategic investments in our group, including Bear Island and other facilities.

Q: Can you give us a status update on the ramp-up of the Bear Island facility and the transition to using more mixed paper? A: The Bear Island ramp-up continues successfully. We are now able to supply all the grades as planned. We are gradually increasing the mix of paper used while ensuring product quality remains high.

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