Mr. Mario Plourde reports

CASCADES REPORTS RESULTS FOR THE FOURTH QUARTER AND FULL YEAR 2023

Cascades Inc. has released its unaudited financial results for the three-month period and fiscal year ended Dec. 31, 2023.

Q4 2023 highlights:

• Sales of $1,138-million (compared with $1,198-million in Q3 2023 and $1,135-million in Q4 2022);
• Operating loss of $(24-million) (compared with operating income of $80-million in Q3 2023 and operating loss of $(20-million) in Q4 2022);
• Net loss per common share of (57 cents) (compared with net earnings per common share of 34 cents in Q3 2023 and a net loss per common share of (27 cents) in Q4 2022);
• Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA (A)) of $122-million (compared with $161-million in Q3 2023 and $116-million in Q4 2022);
• Adjusted net earnings per common share1 of five cents (compared with 44 cents in Q3 2023 and 22 cents in Q4 2022).

2023 annual highlights:

• Sales of $4,638-million (compared with $4,466-million in 2022);
• Operating income of $40-million (compared with $33-million in 2022);
• Net loss per common share of (76 cents) (compared with (34 cents) in 2022);
• Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA (A)) of $558-million (compared with $376-million in 2022);
• Adjusted net earnings per common share of $1.08 (compared with 37 cents in 2022);
• Net debt of $1,882-million as of Dec. 31, 2023 (compared with $1,966-million as of Dec. 31, 2022). Net debt to EBITDA (A) ratio of 3.4 times, down from 5.2 times as of Dec. 31, 2022;
• Total capital expenditures, net of disposals, of $46-million in Q4 2023 and $343-million in 2023. The corporation's 2024 forecasted net capital expenditures of approximately $175-million is unchanged.

Discussing results for the fiscal year 2023, Mario Plourde, president and chief executive officer, commented: "We are pleased with our strong annual performance in 2023, with our operations generating a 4-per-cent increase in sales and a 48-per-cent increase in EBITDA (A) levels compared to the prior year. Our tissue papers segment drove these stronger results, generating $182-million of EBITDA (A) in 2023, a significant improvement from last year that reflects the hard work done over the past two years."

Mr. Plourde continued: "In the fourth quarter of 2023, our tissue papers and specialty packaging businesses generated good results, meeting expectations. We are pleased with the continued strong performance of our tissue segment, which generated an EBITDA (A) margin of 15.6 per cent in the quarter, a testament to the benefits derived by the significant repositioning and profitability initiatives that have been implemented across this business. The containerboard segment continued to deliver solid volume of corrugated converted products. However, fourth quarter results in this segment were below expectations. Sequential performance of this business was impacted by lower average selling prices, higher costs and lower parent roll shipments, the latter of which underscores this segment's lower integration rate and also reflects the planned 49,000 short tons of maintenance and economic downtime taken during the period. Notwithstanding lower consolidated profitability, we reduced our net debt levels due to strong cash flows from operations and lower capital expenditures during the quarter. Consequently, our leverage ratio improved to 3.4 times from 3.8 times at the end of Q3."

Discussing near-term outlook, Mr. Plourde commented: "On a consolidated basis, we are forecasting that our results in the first quarter of 2024 will decrease sequentially. This is driven by lower expected results in our containerboard segment due to higher raw material costs, slightly lower average selling prices and lower production levels to manage inventory following softer demand in the fourth quarter. Along with the strategic investments made in recent years, these factors contributed to our decision to permanently remove higher-cost capacity from our manufacturing platform. We continue to implement commercial strategies and cost optimization initiatives to drive profitability in this business, while increasing the agility and market responsiveness of our platform. To this end, we are pleased with the ramp-up of our Bear Island facility, and the addition of this top-tier mill to our containerboard mill network augments its competitiveness from an operational, geographic positioning and cost perspective. Results in the tissue papers segment are also expected to slightly decrease sequentially reflecting increases in raw material pricing and normal seasonal softness at the beginning of the year, while results in specialty packaging are expected to improve thanks to efficiency improvements, notably in the plastics subsegment. More broadly, while our outlook for volume remains prudent for our packaging businesses in the first quarter given economic uncertainty, benefits from ongoing profitability initiatives will continue to create value across our businesses for Cascades, our customers and our shareholders."

Analysis of results for the three-month period ended Dec. 31, 2023 (compared with the same period last year)

The fourth quarter sales of $1,138-million increased by $3-million compared with the same period last year. This reflects consolidated net benefits of $57-million due to higher volume and $10-million from a more favourable sales mix. These increases were almost entirely offset by a $70-million impact from lower selling prices in all of the company's business segments, the most notable being in its containerboard business where lower index selling prices impacting sales by $60-million compared with the prior-year period.

The fourth quarter EBITDA (A) totalled $122-million, an increase of $6-million, or 5 per cent, from the $116-million generated in the same period last year. This increase was driven by continued improvement in the tissue papers segment, which generated an EBITDA (A) of $61-million in the quarter, or 15.6 per cent on a margin basis, reflecting benefits from implemented profitability initiatives, and lower raw material, logistics and energy costs.

The main specific items, before income taxes, that impacted the company's fourth quarter 2023 operating loss and/or net loss were:

• $73-million of impairment charges on assets, restructuring costs and other costs related to the closure of plants in Canada and in the United States (operating loss and net loss);
• $1-million unrealized loss on interest rate swaps (net loss);
• $1-million foreign exchange loss on long-term debt and financial instruments (net loss);
• $1-million gain from the sale of an investment in a non-significant joint venture in the corporate activities (net loss).

For the three-month period ended Dec. 31, 2023, the corporation posted a net loss of $(57-million), or (57 cents) per common share, compared with a net loss of $(27-million), or (27 cents) per common share, in the same period of 2022. On an adjusted basis, the corporation posted net earnings of $5-million in the fourth quarter of 2023, or five cents per common share, compared with net earnings of $22-million, or 22 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 March 21, 2024, to shareholders of record at the close of business on March 7, 2024. This dividend is an eligible dividend as per the Income Tax Act (R.C.S. (1985), Canada). During the fourth quarter of 2023, Cascades purchased no common shares for cancellation.

2023 fourth quarter results conference call details

Management will discuss the 2023 fourth quarter financial results during a conference call today at 9 a.m. ET. 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 March 22, 2024, by dialling 1-888-390-0541 (international 1-416-764-8677), access code 373082.

About Cascades Inc.

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 more than 70 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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