Cascades Inc.

Good morning. My name is Sylvie, and I will be your conference operator today. At this time, I would like to welcome everyone to Cascade First Quarter 2024 Financial Results Conference Call. At this time, all lines are currently in the listen-only mode. After the speaker's remarks, there will be a question-and-answer session. I will now pass the call to Jennifer Aitken, Director of Investor Relations for Cascade. Madame Aitken, you may begin.

Thank you, Sylvie. Good morning, everyone, and thank you for joining our first quarter 2024 conference call. We will begin with an overview of our operational and financial results, followed by some concluding remarks, after which we will begin the question period. Today's speakers will be Mario Plould, President and CEO, and Alan Hogg, CFO. Also joining us for the question period at the end of the call are Charles Marleau, President and COO of Container Board Packaging, Jérôme Parlier, President and COO of Specialty Products, Jean-David Tardif, President and COO of Tissue Papers, and Luc Langevin, Senior VP of Corporate Services. Before I turn the call over to my colleagues, I would like to highlight that certain statements made during this call will discuss historical and forward-looking matters. The accuracy of these statements is subject to risk factors that can have a material impact on actual results. These risks are listed in our public filings. These statements, the investor presentation, and the press release also include data that are not measures of performance under IFRS. Please refer to our Q1 2024 investor presentation for details. This presentation, along with our first quarter press release, can be found in the investor section of our website. If you have any questions, please feel free to contact us after the session. I will now turn the call over to our CEO. Mario?

Thank you, Jennifer, and good morning, everyone. Let me begin with a quick overview of our consolidated results. First quarter sales levels decreased by roughly 2.5% sequentially and year over year. This performance was in line with our expectations. Software selling prices in all of our businesses were the main headwinds year over year, the effect of which were partially offset by a better sales mix in tissue, a stronger volume in our packaging businesses. Sequentially, sales mix, volume, and less favorable exchange rate were the main factor behind the lower sales. Consolidated EBITDA of $103 million decreased 23% from the prior year and 16% from Q4. This performance was in line with expectation given recent index pricing movement, the impact of which was most prominent for our container board business. To this end, lower pricing and the higher raw material costs were the main drivers of our lower performance year over year and fully upset beneficial volume and mix in packaging lower raw material costs in tissue, and lower operational costs on a consolidated basis. Sequentially, the combined impact of higher operational costs and less favorable volume in cells mixed far outweighted slightly stronger pricing. On the raw material side, highlighted on slide five and six, the Q1 average index price for OCC increased 206% year-over-year and 22% from Q4. The OCC markets saw consistent strong demand, including growing amount needed for new recycled container board mill being ramped up and lower seasonal generation levels, which put upward pressure on pricing. We have no problem supplying the needs of our operation with good inventory management. Average Q1 index prices for white recycled paper grade increased 2% sequentially, but were 36% below prior year levels. The market was relatively balanced, with index prices not being significantly impacted by virgin pulp pricing movement. Pulp pricing was higher sequentially, up 10% in the case of softwood and 13% for hardwood. Year over year, however, prices for both softwood and hardwood pulp remain lower, down 14% and 20%, respectively. Market conditions were impacted by multiple factors, including downtime and permanent closure in North America, a port strike and unplanned mail downtime in Finland, and reduced traffic and key shipping routes. Notwithstanding these, the market conditions The material has been readily available for our mails. Moving now to the results of each of our business segments, as highlighted on page 7 through 12 of the presentation. Beginning with container boards, sequential sales decreased by a marginal 1% in Q1. This reflected lower selling prices following index change in November 2023 and a less favorable sales mix and exchange rate. These were partially offset by higher volumes with the 9% sequential increase in parent role shipments and 3% decrease in converted product shipments, both related to seasonality. As previously announced, we took 19,800 short term of maintenance and inventory management related downtime in the quarter. Sequentially, converting shipment decreased 3% in Canada below the 1.7% decrease in the Canadian market. U.S. converting shipment decreased 3.7% below the 2.3% in the U.S. market decrease. Q1 adjusted EBITDA of 50 million or 9% on the margin basis was 25% below Q4 levels and was in line with expectations. The decrease reflects the impact from higher operating energy and raw material costs. The Trenton paper mill closure announced in February also had a negative impact on our first quarter result. Year-over-year sales also decreased by 1%, with the impact of lower selling prices largely offset by higher volumes. A bit of level decreased by 60%, a reflection of the combined impact from lower pricing and higher raw material, and operational costs, including costs associated with Bear Island. These were partially offset by improved volume and a more favorable sales mix. The over-year shipment increased by 8% in Q1, largely related by the new Bear Island volume. Converting shipment increased by 7.4% in Canada, outperforming the 2.3% increase in the Canadian market. U.S. converting shipment increased 16.8%, once again significantly outperforming the 1.1 U.S. market decrease. Continuing with our packaging business, Q1 sales levels in our specialty product segment were stable sequentially at slightly lower volume and the impact from a less favorable exchange rate were offset by a better sales mix in the model pulp business. EBITDA increased by 6 million sequentially, driven by higher spread in the plastic business and lower operational costs. These were partially offset by higher raw material costs in the cardboard segment. On a margin basis, the business Q1 margin was 15.6%. When compared to the prior year, Q1 sales were stable as the impact from lower selling prices in the cardboard sub-segment was offset by benefit from higher volumes in the plastic business. EBITDA levels decreased by 2 million year-over-year to 25 million in Q1 as the impact from lower selling prices in cardboard and higher recycled fiber were partially offset by benefits from lower resin and better volume in our plastic packaging activity. Moving now to our tissue business, first quarter sales in the segment decreased 6% sequentially, reflecting a 14% decrease in volume in the away-from-home market that is attributable to usual seasonality and the impact from a less favourable exchange rate. First quarter EBITDA of 50 million decreased from Q4 levels, reflecting lower average selling prices due to contractual mechanism, higher raw material and maintenance costs and lower volume in the away from home. Q1 margin of 13.6% remained solid but were below the 15.6% in the previous period. Sales decreased by 5% year-over-year. This reflects a 7% reduction in shipment levels, which was driven by a 65% decrease in shipments of parent rolls following meal closures and higher internal consumption, as highlighted by this business integration rate increasing to 94% from 84% a year ago period. On the converting side, shipment decreased by 3%, the result of a 5% decrease in the away-from-home following plant closure, offset by an 8% increase in retail. The average selling price increased by 3%, driven by the lower proportion of parent role in the sales mix. partially offset by a slightly lower average selling price due to contracted pricing model agreement and the less favorable exchange rate. Year over year, EBITDA was well above prior year levels. This is the outcome of lower raw material, energy, transportation, and production costs, the last of which reflect benefits related to lower fixed cost level following plant closure. These tailwinds were partially offset by lower selling prices and a net negative volume and sales mix effect. Alan will now discuss the main highlight of our financial performance. Alan?