Cascades Reports Results for the Second Quarter of 2022

Mario Plourde, President and CEO, commented: "Our packaging businesses delivered good sequential performances in the second quarter, with improved pricing and sales mix, higher volumes, and lower raw material costs in the case of Containerboard outweighing the impact of continued cost inflation. Sequentially, results in our Tissue Papers business highlight the momentum being generated by the profitability initiatives underway. While pricing and mix improvements realized to date helped to mitigate the unprecedented headwinds on the cost side, these initiatives are trailing the pace of the current high inflation environment. These initiatives remain on track to generate important contributions in the back half of 2022, and are being closely monitored and regularly adapted to address the changing cost environment.

We continued to advance the Bear Island project in the quarter. The capital investments for this project, which totaled $81 million in the second quarter and $145 million year-to-date, combined with lower consolidated financial results, has resulted in an increase in our leverage in the second quarter. As we have previously stated, this trend is expected to reverse with improved business performance through the remainder of 2022 and throughout 2023 as well as the positive contribution from this facility following its start-up."

Discussing near-term outlook, Mr. Plourde commented, "We are focused on driving benefits from profitability initiatives underway in our Tissue Papers segment. While the level of expected long-term financial contributions remains intact, persistent cost headwinds and adjustments to the implementation timing of announced industry price increases have reduced our forecasted OIBD range for this segment to $25 - $40 million for 2022, from the previously stated $60 - $80 million2. This revision does not change the 2024 OIBD targets provided in our strategic plan in February. The current inflationary environment has also had implications for our Bear Island project in 2022. Higher cost levels combined with labour and material availability constraints, which have led to temporary delays in certain construction milestones, increased the total projected cost for this project to a range of $595 - $615 million (US$470 - US$485 million). Our team is working closely with contractors to mitigate any potential delay caused by these elements in order to meet the targeted mid-December 2022 start date. However, it is important to note that the timing of some critical construction milestones may be at risk due to these issues and, as a result the start-up of paper production may be delayed to the first quarter of 2023.

At the operations level, we are forecasting sequentially stable results in our packaging businesses in the third quarter, during which favourable pricing momentum is expected to mitigate continued cost inflation. As we have previously stated, the Tissue Papers business is expected to return to a trajectory of positive contribution in the upcoming quarters as meaningful benefits from implementation of the profitability initiatives begin to be realized."