Cascades Inc.

from Q1 and were essentially stable year-over-year. This performance was in line with our expectations. Volume, pricing, and exchange rate drove the sequential improvement. Year-over-year sales mix and exchange rate were both tailwinds, while volume and pricing were headwinds. Consolidated EBITDA of $112 million increased 9% from Q1, reflecting stronger pricing and favorable volume and mix freight and energy costs. These were offset by higher raw material and production costs. Year-over-year consolidated EBITDA decreased 20%, mostly due to higher raw material costs and decrease in average selling prices. Our second quarter results also include a $5 million one-time compensation expense related to CO transition. On the raw material side, highlighted on slide 5 and 6, the second quarter average index price for OCC increased 9% from Q1. and 134% year-over-year. The market for these materials are consistent demand domestically, including growing amounts needed for new recycled container-borne mills. We have no problem supplying our operations with good inventory management in our internal supply network. We expect relatively stable market in the coming months. Average Q2 index prices for white recycled paper grades decreased 6% versus Q1, and 27% from last year. The market was balanced, with readily available volumes and fibers translating into a small decrease in pricing in the quarter. Bulk prices were higher sequentially, up 18% in the case of softwood and 17% for hardwood. Year-over-year prices were also higher, up 12% and 13% respectively. Our mails were adequately supplied throughout the period. Moving now to the results of each of our business segments, as highlighted on page 7 through 12 of the presentation. Beginning with container board, Q2 sales increased by 5% sequentially, reflecting higher selling prices and volume, and better sales mix and exchange rate. Shipments increased 1% from Q1, driven by converted products. Sequentially, converting shipments increased 5.9% in Canada, slightly below the 6.2% increase in the Canadian market. U.S. converting shipments decreased 2.1%, below the 3.3% U.S. market increase, reflecting the sale of our Newtown facility during the quarter. Excluding that sale, U.S. converting shipments increased 0.3% from Q1. EBITDA in Q2 was $60 million, or 10% on a margin basis. This represents a 20% increase from Q1. Results benefited from recent market price increases, offset by continued iron material costs. We also recorded the $4 million R&D credit during the quarter. This was in line with the range we provided with our Q1 results, but nonetheless impacted by a prolongation of planned maintenance downtime at our Greenback and Bear Island mills. The additional downtime reduced our production capacity by a further 8,000 short tons in the quarter. Year-over-year sales increased by 4%, with benefits from higher volumes and more favorable sales mix and exchange rates, upsetting the impact from lower sending prices. EBITDA levels decreased by 38%, a reflection of the combined impact from lower pricing and higher raw materials. Year-over-year shipments increased by 4% in Q2, mostly driven by the new Bear Island volume. Converting shipments increased by 8% in Canada, outperforming the 6% increase in the Canadian market. U.S. converting shipments increased 0.6%, slightly below the 1.1% U.S. market increase. Excluding Newtown, U.S. converting shipments increased 3.2% from the year-ago period. Continuing with our packaging business, our specialty product division continued to deliver strong results. Q2 sales were up 4% from Q1 on improved selling price, sales mix, exchange rate, and higher volume in plastic food packaging. EBITDA was up 4% or 2 million from Q1, and the margin of 15.6% remained solid and unchanged from Q1. Year-over-year sales increased 2% in Q2, with exchange rate and higher selling prices in certain products driving this growth. EBITDA improved by 2 million to 26 million as lower operating costs offset lower realized spreads due to higher raw material. Moving now to our tissue business. Second quarter sales increased 8% sequentially, largely due to volume increases of 16% in the away-from-home market and 3% in the retail market, both of which reflects seasonality new business gains, and promotional activities. EBITDA of $54 million increased 8% from Q1, driven by higher volume and lower transportation costs. These benefits were partially offset by higher raw material costs. Q2 margin of 13.6% remained stable with Q1 levels. Sales decreased 5% year-over-year, reflecting lower shipment levels. This was driven by a decrease in parent roll shipments following meal closures and higher internal consumption. As a result, the integration rate increasing to 94% from 83% in the year-ago period. On the converting side, shipments increased by 3%, the result of a 4% decrease in away-from-home following plant closures, offset by a 9% increase in retail. The average selling price increased by 4%, driven by lower proportion of parent roles in the sales mix and the beneficial exchange rate. Year over year, EBITDA increased by $10 million, or 23%. This is the outcome of favorable product mix and lower production costs, the latter of which reflects the beneficial impact from recent plant closures. I will now pass the call to Alain, who will briefly discuss some of the financial highlights. Alain?

Yes, thank you, Eric, and good morning, everyone. Slides 13 and 14 illustrate the specific items recorded during the quarter. The main item that impacted EBITDA were $10 million of restructuring costs related to the closure of plants, mainly incontainable and tissue, that occurred over the last 12 months. Slide 15 and 16 illustrate the year-over-year and sequential variance of our Q2 adjusted earnings per share and the reconciliation with the specific items that affected our quarterly results. As reported, Q2 net earnings per share was $0.01. This compared to net earnings per share of $0.22 last year and a net loss per share of $0.20 in Q1. On an adjusted basis, net earnings per share were $0.08 in the current quarter. This compared to net earnings per share of $0.27 in last year's results and zero in the first quarter. This variance mainly reflects lower EBITDA and higher financing and depreciation expenses, while sequential variance reflects higher EBITDA levels. As highlighted on slide 17, second quarter adjusted cash flow farm operations was 95 million, down from 122 million in the year-ago period, but up 49 million sequentially. Adjusted cash flow used in the second quarter improved Year-over-year, largely reflecting the higher levels of capital investments associated with Bay Island in the year-ago period. Sequentially, adjusted cash flow from operations also improved due to lower net financing expenses paid. Slide 18 provides detail about our capital investments. New investments in the second quarter total $62 million. For 2024, our planned capital investments will be below our initial forecast, $175 million. Moving now to our net debt reconciliation, as detailed on slide 19, sequentially our net debt increased by $73 million in the second quarter. Despite higher cash flow pharma operations in Q2, net debt increased due to the exchange rate, our paid capital investments, leases renewal, and a negative working capital volume. We also dispose of some assets for $17 million, largely related to the Newtown Connecticut Converting Facility in the second quarter. Higher levels of net debt and lower EBITDA levels on an LTM basis increased leverage to 4.2 times at the end of Q2 from 3.8 times at the end of Q1. Financial ratios and information about maturities are detailed on slide 20, And other information and analysis can be found on slides 23 through 30 of the deck. I will now pass the call back to Hugues, who will conclude with some brief comments on our near-term outlook before we begin the question period. Hugues?

Thank you, Alain. We've outlined our near-term outlook on slide 21 of the presentation. As a reminder, actual results may differ from this outlook in the event of movements in index pricing, both in terms of raw material costs and selling prices. Beginning with our packaging businesses, we expect Q3 results to be stronger sequentially in container board. Two main factors are driving this outlook. The first is the benefit being realized as price increases continue to be implemented. The second is improved operational efficiency following the important shutdowns in Q2 and good volumes given stronger seasonality. We expect raw material costs to continue to be a headwind for the business. We're planning approximately 11,000 short tons of maintenance scheduled on time in the quarter. Results in the specialty product segments are expected to be stable sequentially. This reflects higher selling prices in certain product categories and gains from efficiency improvements. These tailwinds are expected to offset any impact from higher production costs. Finally, we expect third quarter results to be softer sequentially for our tissue business. While we anticipate stable volumes, this will be outweighed by higher raw material costs and less favorable sales mix. Looking further ahead, our outlook is positive as we have announced a price increase of up to 8.5% for Canadian retail tissue products and some U.S. customers at the end of Q3. We also secured additional U.S. retail business volume that will be starting in Q4. we're focused on four main work streams. The first is the ongoing ramp-up of the Bear Island facility. Second is solidifying efficiency improvements across all of our production facilities. Third is on further improving customer satisfaction levels with our partners and remaining the supplier of choice. And last but certainly not least is the diligent implementation of already announced price increases. We remain cautious, giving the economy and persistent inflation, and are committed to continuous improvement throughout our business while remaining rigorous when it comes to capital allocation. Let me finish by saying that in my eight weeks with Cascade, I've been very impressed with the fashion and the commitment of every employee. People are dedicated and proud and doing everything they can to meet customers' expectations. To me, clearly, the saying, a company is its people, rings very true for Cascade, and I'm looking forward for the next step as we continue to grow our company. And before I pass it to the operator, I want to thank the people around the table with me here. They made my life easy on this first call. Back to the operator. Thank you.