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, Financial) 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.
Q: What are some potential areas you expect to focus on given your operating background?
A: The focus will be on the Bear Island ramp-up to reach capacity and on improving operational efficiencies to capture potential gains. We are also prioritizing debt reduction in the coming quarters.
Q: How should we think about CapEx for 2025, and what strategic projects are planned?
A: We will spend less than $175 million in CapEx this year. We are currently evaluating capital allocation to ensure long-term value. The priority will remain on debt reduction.
Q: Can you provide more color on the additional US retail tissue volumes secured for Q4?
A: We have secured a significant new business, slightly above 4 million cases, for a major US retailer. This is a positive outcome from our negotiations and discussions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
