Mr. Mario Plourde reports

CASCADES REPORTS SOLID RESULTS FOR THE SECOND QUARTER OF 2023

Cascades Inc. has its unaudited financial results for the three-month period ended June 30, 2023.

Q2 2023 highlights

• Sales of $1,168-million (compared with $1,134-million in Q1 2023 and $1,119-million in Q2 2022).
• Operating income of $64-million (compared with an operating loss of $80-million in Q1 2023 and operating income of $32-million in Q2 2022);
• Net earnings per common share of 22 cents (compared with a net loss per common share of 75 cents in Q1 2023 and net earnings per common share of 10 cents in Q2 2022).
• Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $141-million (compared with $134-million in Q1 2023 and $91-million in Q2 2022).
• Adjusted net earnings per common share1 of 27 cents (compared with adjusted net earnings per common share1 of 32 cents in Q1 2023 and adjusted net earnings per common share of 10 cents in Q2 2022).
• Net debt of $2,076-million as of June 30, 2023 (compared with $2,070-million as of March 31, 2023). Net debt to EBITDA ratio of 4.1 times, down from 4.6 times as of March 31, 2023.
• Total capital expenditures, net of disposals, of $104-million in Q2 2023, compared with $137-million in Q1 2023 and to $116-million in Q2 2022. The corporation's 2023 forecasted net capital expenditures of approximately $325-million is unchanged.

Mario Plourde, president and chief executive officer, commented: "We had a solid second quarter, with consolidated sales and EBITDA levels increasing 4 per cent and 55 per cent, respectively, year over year. Results were driven by the tissue papers segment, which had its strongest performance since Q2 2020, reflecting benefits from commercial and operational initiatives. The repositioning of our tissue papers platform announced at the end of April, 2023, progressed as planned in the second quarter, with the closures completed as scheduled in June and July. We anticipate that these decisions, combined with the ongoing productivity optimization initiatives, which are also progressing as expected, will continue to strengthen the performance of our tissue papers business going forward. Slightly softer results in the containerboard segment largely reflect lower index-linked selling prices, the effects of which more than offset the beneficial effect of lower raw material costs. As expected, containerboard results include costs related to Bear Island as the facility continues to be ramped up. Lastly, results in the specialty packaging business decreased slightly year over year, as softer volumes and higher production costs more than offset higher selling prices."

Discussing near-term outlook, Mr. Plourde commented: "On a consolidated basis, we are expecting a stable operational performance sequentially in the third quarter, with the containerboard and specialty packaging businesses generating stable results and the Tissue Papers segment delivering a slightly stronger performance. Additionally, we anticipate continued progress in the ramp up of the Bear Island mill. More broadly, while we are remaining prudent on the demand-side, raw material pricing for our tissue business and lower transportation costs for all of our businesses are expected to be tailwinds in the third quarter. Production cost levels are expected to be stable sequentially while continuing to be more elevated than last year. Lastly, we anticipate that our leverage ratio will continue to improve in the coming quarters.

"We will be hosting a Bear Island mill tour and institutional investor day in Virginia on Sept. 14, 2023, and look forward to showcasing this modernized recycled containerboard facility and elaborating on our businesses and strategies to the financial community."

Financial summary

Analysis of results for the three-month period ended June 30, 2023 (compared with the same period last year)

The second quarter sales of $1,168-million increased by $49-million compared with the same period last year. This increase reflects a net benefit of $18-million that was driven by a beneficial impact from higher selling prices in tissue papers and specialty packaging, a favourable FX impact for all business segments, and higher volumes in containerboard. These were partially offset by lower indexed selling prices in containerboard and a lower contribution from recovery and recycling activities driven by recycled fibre material pricing changes.

The second quarter EBITDA totalled $141-million, an increase of $50-million, or 55 per cent, from the $91-million generated in the same period last year. This increase reflects stronger results in the company's tissue papers segment, the benefits of which were partially offset by slightly lower results in its containerboard and specialty packaging businesses.

The main specific items, before income taxes, that impacted its second quarter 2023 operating income and/or net earnings were:

• $2-million of impairment charges on U.S. assets in the tissue papers segment (operating income and net earnings);
• $6-million of restructuring costs related to the closure of tissue papers plants in the United States (operating income and net earnings);
• $1-million unrealized loss on financial instruments (operating income and net earnings);
• $3-million foreign exchange gain on long-term debt and financial instruments (net earnings).

For the three-month period ended June 30, 2023, the corporation posted net earnings of $22-million, or 22 cents per common share, compared with net earnings of $10-million, or 10 cents per common share, in the same period of 2022. On an adjusted basis, the corporation posted net earnings of $26-million in the second quarter of 2023, or 27 cents per common share, compared with net earnings of $10-million, or 10 cents per common share, in the same period of 2022.

Dividend on common shares and normal course issuer bid

The board of directors of Cascades declared a quarterly dividend of 12 cents per common share to be paid on Sept. 1, 2023, to shareholders of record at the close of business on Aug. 18, 2023. This dividend is an eligible dividend as per the Income Tax Act (R.C.S. (1985), Canada). During the second quarter of 2023, Cascades purchased no common shares for cancellation.

2023 second quarter results conference call details

Management will discuss the 2023 second quarter financial results during a conference call today at 9 a.m. EDT. The call can be accessed by dialling 1-888-390-0620 (international 1-416-764-8651). The conference call, including the investor presentation, will be broadcast live on the Cascades website under the investors section. A replay of the call will be available on the Cascades website and may also be accessed by phone until Sept. 3, 2023, by dialling 1-888-390-0541 (international 1-416-764-8677), access code 259981.

Founded in 1964, Cascades offers sustainable, innovative and value-added packaging, hygiene and recovery solutions. The company employs approximately 10,000 women and men across a network of close to 80 facilities in North America. Driven by its participative management, half a century of experience in recycling, and continuous research and development efforts, Cascades continues to provide innovative products that customers have come to rely on, while contributing to the well-being of people, communities and the entire planet. Cascades' shares trade on the Toronto Stock Exchange under the ticker symbol CAS.

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