PR Newswire | Feb 25, 2021 06:01AM EST

Consecutive Annual Record Levels of Sales and Adjusted OIBD

02/25 05:00 CST

Cascades Reports Strong Results for the Fourth Quarter of 2020 and 3rd Consecutive Annual Record Levels of Sales and Adjusted OIBD KINGSEY FALLS, QC, Feb. 23, 2021

Positive containerboard industry dynamics support optimistic outlook

KINGSEY FALLS, QC, Feb. 23, 2021 /PRNewswire/ - Cascades Inc. (TSX: CAS) reports its unaudited financial results for the three-month period and fiscal year ended December 31, 2020.

Q4 2020 Highlights

* Sales of $1,284 million (compared with $1,275 million in Q3 2020 (+1%) and $1,227 million in Q4 2019 (+5%)) * As reported (including specific items) * Operating income of $109 million (compared with $73 million in Q3 2020 (+49%) and operating loss of $(1) million in Q4 2019) * Operating income before depreciation and amortization (OIBD)1 of $181 million (compared with $154 million in Q3 2020 (+18%) and $76 million in Q4 2019 (+138%)) * Net earnings per share of $0.72 (compared with $0.51 in Q3 2020 and net loss per share of $(0.27) in Q4 2019)

* Adjusted (excluding specific items)1 * Operating income of $94 million (compared with $81 million in Q3 2020 (+16%) and $75 million in Q4 2019 (+25%)) * OIBD of $166 million (compared with $162 million in Q3 2020 (+2%) and $152 million in Q4 2019 (+9%)) * Net earnings per share of $0.42 (compared with $0.50 in Q3 2020 and $0.30 in Q4 2019)

2020 Annual Highlights

* Sales of $5,157 million (compared with $4,996 million in 2019 (+3%)) * As reported (including specific items) * Operating income of $366 million (compared with $261 million in 20192 (+40%)) * Operating income before depreciation and amortization (OIBD)1 of $665 million (compared with $550 million in 20192 (+21%)) * Net earnings per share of $2.04 (compared with $0.77 in 20192)

* Adjusted (excluding specific items)1 * Operating income of $376 million (compared with $315 million in 2019 (+19%)) * OIBD of $675 million (compared with $604 million in 2019 (+12%)) * Net earnings per share of $1.95 (compared with $1.02 in 2019)

* Net debt1 of $1,679 million as at December 31, 2020 (compared with $1,982 million as at September 30, 2020) reflecting solid cash flow from operations, the $125 million equity offering and appreciation of the Canadian dollar. Net debt to adjusted OIBD ratio1 at 2.5x down from 3.0x at September 30, 2020. * Adjusted free cash flow of $285 million, or $2.97 per share, in 2020, compared to $107 million, or $1.14 per share, in 2019. * Total capital expenditures paid, net of disposals, of $195 million in 2020, compared to $231 million in 2019; Forecasted 2021 capital expenditures of between $450 million and $475 million include $250 million envelope for the Bear Island containerboard conversion project in Virginia, USA. * Announced planned progressive and permanent closure of tissue operations at the Laval plant, located in Qubec, in June 2021, and that Tissue operations in Pennsylvania ceased in December 2020. * Reno De Medici S.p.A. (Boxboard Europe) announced the signature of a put option for the sale of its French subsidiary, which produces virgin fiber-based boxboard, in February 2021. The transaction is expected to close at the end of the second quarter of 2021.

1 For further details, please refer to the "Supplemental Information on non-IFRS Measures" section.

2 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation.

Mario Plourde, President and CEO, commented: "We are very pleased with our strong fourth quarter performance. Consolidated adjusted OIBD of $166 million surpassed our cautious outlook for the period, represented an increase of 2% sequentially and 9% year-over, and drove annual profitability to a record level for the third consecutive year. These results demonstrate good operational execution within the context of a challenging environment, benefits being realized from our ongoing margin improvement initiatives, and the resiliency and dedication of our employees throughout the challenges of COVID-19. Sequentially, fourth quarter performance was driven by a solid contribution from the Containerboard segment, itself fueled by stronger than expected demand on both the manufacturing and converting side. The Tissue segment also generated good results, with stable consumer retail tissue demand helping to offset lower demand levels for Away-from-Home products as a result of COVID-19. The Tissue segment generated a solid fourth quarter adjusted OIBD margin of 10.5% in spite of ongoing challenging market conditions. The Specialty Products and European Boxboard segments generated slightly lower results in the quarter.

We have made significant progress on the strategic side in 2020. A large portion of our announced modernization investments in the Tissue segment have been completed, with the remaining two state-of-the-art converting lines expected to be installed in the coming quarters. In Containerboard, we announced details of our strategic Bear Island conversion project in mid-October, and helped to de-risk the project with a concurrent $125 million equity issuance offering. The European Boxboard segment announced the acquisition of Papelera del Principado S.A. ("Paprinsa") and three affiliated companies, that will strengthen and consolidate Reno de Medici's competitive positioning within European recycled boxboard markets, and is expected to close at the end of the first quarter of 2021. At the corporate level, we continued to proactively manage our long-term debt profile, redeeming our 2023 senior notes and issuing 2028 senior notes under beneficial terms. On a broader basis, we advanced our margin improvement initiatives throughout the year, with these efforts contributing approximately $75 million to our consolidated adjusted OIBD level in 2020."

Discussing near-term outlook, Mr. Plourde commented, "Our near-term outlook is positive despite ongoing COVID-19 related uncertainty. Demand levels in Containerboard remain strong which, combined with recent industry price increases, are expected to help offset raw material pricing headwinds. In Tissue, stronger than expected volumes in December, usual seasonal softness in the first quarter, and unfavourable demand impact on Away-from-Home products related to COVID-19 are expected to translate into weaker sequential performance. We expect the ongoing modernization, cost management and margin improvement initiatives to partially counter softer demand factors. Near-term performance in Specialty Products is forecasted to remain stable sequentially, with higher average selling prices and good demand trends for consumer food packaging offsetting slightly higher raw material costs. Results in European Boxboard are expected to remain stable, with higher volumes and a favourable exchange rate mitigating higher forecasted raw material and energy costs. On a consolidated basis, raw material costs are expected to be a headwind for our businesses sequentially, with average OCC prices increasing in line with usual seasonal trends for the period. Prices for white recycled fibers remain stable, while those for virgin pulp are expected to increase given recent moves in index pricing. Raw materials remain readily available, and we do not foresee any changes in this regard.

Looking further ahead, 2021 will be a busy year. The highlight will be our Bear Island containerboard project, which will account for the lion's share of our capex program. We will also be finalizing modernization investments in our tissue converting operations, with all of these projects encompassed within our $450 to $475 million capital program for 2021. We expect these investments to be fully funded by solid projected cash flows for the year, in part driven by our ongoing margin improvement initiatives that are targeting net revenue management, production efficiency, organizational effectiveness and supply chain optimization. These initiatives are expected to contribute 1% annually to consolidated OIBD margins in both 2021 and 2022, regardless of external factors. As we continue to navigate the challenges and uncertainties inherent in the ongoing pandemic business environment, we remain focused on ensuring the health and safety of our employees, and on proactively engaging with our customers to ensure that their needs and expectations are met consistently, promptly and professionally."

Financial Summary

Selected consolidated information

(in millions of Canadian dollars, except amounts per share) 2020 2019 Q4 2020 Q3 2020 Q4 2019(unaudited)

Sales 5,157 4,996 1,284 1,275 1,227

As Reported

Operating income before depreciation and amortization 665 550 181 154 76(OIBD)^1 2

Operating income (loss)^2 366 261 109 73 (1)

Net earnings (loss)^2 198 72 73 49 (26)

per share^2 $ 2.04 $ 0.77 $ 0.72 $ 0.51 $ (0.27)

Adjusted^1

Operating income before depreciation and 675 604 166 162 152amortization (OIBD)

Operating income 376 315 94 81 75

Net earnings 187 96 42 48 29

per share $ 1.95 $ 1.02 $ 0.42 $ 0.50 0.30

Margin (OIBD) 13.1 % 12.1 % 12.9 % 12.7 % 12.4 %

Segmented OIBD as reported

(in millions of Canadian dollars) 2020 2019 Q4 2020 Q3 2020 Q4 2019(unaudited)

Packaging Products

Containerboard 436 443 150 101 98

Boxboard Europe 122 92 18 31 8

Specialty Products 58 52 15 16 9

Tissue Papers^2 145 67 27 25 (3)

Corporate Activities (96) (104) (29) (19) (36)

OIBD as reported 665 550 181 154 76

1 Please refer to the "Supplemental Information on Non-IFRS Measures" section for reconciliation of these figures.

2 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation.

Segmented adjusted OIBD1

(in millions of Canadian dollars) (unaudited) 2020 2019 Q4 2020 Q3 2020 Q4 2019

Packaging Products

Containerboard 403 441 110 100 106

Boxboard Europe 129 108 27 29 24

Specialty Products 60 55 15 16 9

Tissue Papers 175 86 40 36 35

Corporate Activities (92) (86) (26) (19) (22)

Adjusted OIBD 675 604 166 162 152

1 - Refer to the "Supplemental Information on Non-IFRS Measures" section.

Analysis of results for the three-month period ended December 31, 2020 (compared to the same period last year)

Sales of $1,284 million grew by $57 million, or 5%, compared with the same period last year. This was driven by stronger volumes in all packaging segments, most notably in the Containerboard segment which benefited from strong demand on both the manufacturing and converting side. This was partially offset by lower volumes in the Tissue segment attributable to continued COVID-19 related market contraction in the Away-from-Home segment. Year-over-year consolidated sales levels also benefited from favourable average selling prices and sales mix, with price increases realized in Tissue and stable pricing and sales mix in both Containerboard and Specialty Products more than mitigated the impacts of a less favourable pricing and mix environment for European Boxboard. Foreign exchange rates were beneficial for the European Boxboard business, which more than offset the impact of less favourable foreign exchange rates for Tissue and Containerboard.

The Corporation generated an operating income before depreciation and amortization (OIBD) of $181 million in the fourth quarter of 2020, up from $76 million in the fourth quarter of 2019. On an adjusted basis, fourth quarter OIBD totaled $166 million, an increase of $14 million, or 9% from the $152 million generated in the same period last year. Results from the Containerboard segment increased 4% year-over-year, as benefits from higher volumes and lower production costs more than offset the impact from higher raw material prices. Stronger year-over-year Tissue results reflected more favourable sales mix and price increases, the effects of which more than mitigated the effects of lower COVID-19 related volumes and higher raw material costs. Adjusted OIBD in the Specialty Products segment increased compared to the prior year period, as higher volumes, beneficial favourable pricing and sales mix, and lower energy and production costs offset higher raw material costs. Our North American business segments also benefited from the positive impacts being generated by our margin improvement program that was started in the first quarter of 2020. In Europe, lower energy and production costs, combined with beneficial foreign exchange rates and slightly higher volume, more than offset less favourable pricing and sales mix and slightly higher raw material costs.

On an adjusted basis1, fourth quarter 2020 OIBD stood at $166 million, versus $152 million in the previous year. The main specific items, before income taxes, that impacted our fourth quarter 2020 OIBD and/or net earnings were:

* $40 million gain from the sale of a building and the land of the Containerboard Packaging facility located in Etobicoke, Ontario, Canada (OIBD and net earnings); * $2 million environmental provision related to a Tissue plant in Pennsylvania, USA (OIBD and net earnings); * $8 million of restructuring charges recorded in Tissue and Corporate Activities as part of profitability improvement and restructuring initiatives (OIBD and net earnings); * $13 million of impairment charges, primarily in the Tissue Papers and Boxboard Europe segments, related to changes in the valuation of certain assets due to the current economic and market demand conditions (OIBD and net earnings); * $2 million unrealized loss on financial instruments (OIBD and net earnings); * $11 million unrealized gain on interest rate swaps and option fair value (net earnings); * $3 million foreign exchange gain on long-term debt and financial instruments (net earnings); * $3 million fair value revaluation loss on investments (net earnings).

For the 3-month periods ended December 31, 2020, the Corporation posted net earnings of $73 million, or $0.72 per share, compared to net loss of $26 million, or $(0.27) per share, in the same period of 2019. On an adjusted basis1, the Corporation generated net earnings of $42 million in the fourth quarter of 2020, or $0.42 per share, compared to net earnings of $29 million, or $0.30 per share, in the same period of 2019.

1 For further details, please refer to the "Supplemental Information on non-IFRS Measures" section.

Dividend on common shares and normal course issuer bid

The Board of Directors of Cascades declared a quarterly dividend of $0.08 per share to be paid on March 25, 2021 to shareholders of record at the close of business on March 10, 2021. This dividend is an "eligible dividend" as per the Income Tax Act (R.C.S. (1985), Canada). Cascades purchased 190,200 shares for cancellation during the fourth quarter of 2020 at an average price of $14.46.

2020 Fourth Quarter Results Conference Call Details

Management will discuss the 2020 fourth quarter financial results during a conference call today at 9:00 a.m. EDT. The call can be accessed by dialing 1-888-231-8191 (international dial-in 1-647-427-7450). The conference call, including the investor presentation, will be broadcast live on the Cascades website (www.cascades.com 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 25, 2021 by dialing 1-855-859-2056 (international dial-in 1-416-849-0833), access code 5877077.

Founded in 1964, Cascades offers sustainable, innovative and value-added packaging, hygiene and recovery solutions. The company employs 12,000 women and men across a network of 85 facilities in North America and Europe. 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. Certain statements in this release, including statements regarding future results and performance, are forward-looking statements (as such term is defined under the Private Securities Litigation Reform Act of 1995) based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, decreases in demand for the Corporation's products, increases in raw material costs, fluctuations in selling prices and adverse changes in general market and industry conditions and other factors listed in the Corporation's Securities and Exchange Commission filings.

CONSOLIDATED BALANCE SHEETS

December December (in millions of Canadian dollars) (unaudited) 31, 31, 2020 2019

Assets

Current assets

Cash and cash equivalents 384 155

Accounts receivable 659 610

Current income tax assets 23 32

Inventories 569 598

Current portion of financial assets 5 10

1,640 1,405

Long-term assets

Investments in associates and joint ventures 82 80

Property, plant and equipment 2,772 2,770

Intangible assets with finite useful life 160 182

Financial assets 16 16

Other assets 50 55

Deferred income tax assets 170 153

Goodwill and other intangible assets with indefinite 522 527 useful life

5,412 5,188

Liabilities and Equity

Current liabilities

Bank loans and advances 12 11

Trade and other payables 861 792

Current income tax liabilities 17 17

Current portion of long-term debt 102 85

Current portion of provisions for contingencies and 14 5 charges

Current portion of financial liabilities and other 25 137 liabilities

1,031 1,047

Long-term liabilities

Long-term debt 1,949 2,022

Provisions for contingencies and charges 57 49

Financial liabilities 6 5

Other liabilities 202 198

Deferred income tax liabilities 210 198

3,455 3,519

Equity

Capital stock 622 491

Contributed surplus 13 15

Retained earnings 1,146 1,003

Accumulated other comprehensive loss (28) (17)

Equity attributable to Shareholders 1,753 1,492

Non-controlling interests 204 177

Total equity 1,957 1,669

5,412 5,188

CONSOLIDATED STATEMENTS OF EARNINGS

For the 3-month periods endedFor the years ended December 31, December 31,

(in millions of Canadian dollars, except per common share amounts and number of2020 2019 2020 2019 common shares) (unaudited)

Sales 1,284 1,227 5,157 4,996

Cost of sales and expenses

Cost of sales (including depreciation and amortization of $72 million for 3-month period (2019 - $77 million) and $299 million 1,078 1,022 4,321 4,232 for the year (2019 - $289 million))

Selling and administrative expenses 112 133 460 453

Loss (gain) on acquisitions, disposals and others (38) 5 (43) (24)

Impairment charges and restructuring costs 21 67 52 78

Foreign exchange gain - (1) - (2)

Loss (gain) on derivative financial instruments 2 2 1 (2)

1,175 1,228 4,791 4,735

Operating income (loss) 109 (1) 366 261

Financing expense 26 27 105 101

Interest expense (revenue) on employee future benefits and other liabilities (10) (6) (7) 42

Loss on repurchase of long-term debt - 14 6 14

Foreign exchange loss (gain) on long-term debt and financial instruments (3) 1 (6) (6)

Fair value revaluation loss on investments 3 - 3 -

Share of results of associates and joint ventures (5) (3) (14) (9)

Earnings (loss) before income taxes 98 (34) 279 119

Provision for (recovery of) income taxes 21 (11) 45 19

Net earnings (loss) including non-controlling interests for the period 77 (23) 234 100

Net earnings attributable to non-controlling interests 4 3 36 28

Net earnings (loss) attributable to Shareholders for the period 73 (26) 198 72

Net earnings (loss) per common share

Basic $ 0.72 $(0.27) $ 2.04 $ 0.77

Diluted $ 0.72 $(0.27) $ 2.02 $ 0.75

Weighted average basic number of common shares outstanding 99,937,437 94,287,895 95,924,83593,987,980

Weighted average number of diluted common shares 101,009,931 95,748,973 97,061,13695,515,822

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the 3-month periods endedFor the years ended December 31, December 31,

(in millions of Canadian dollars) (unaudited) 2020 2019 2020 2019

Net earnings (loss) including non-controlling interests for the period 77 (23) 234 100

Other comprehensive income (loss)

Items that may be reclassified subsequently to earnings

Translation adjustments

Change in foreign currency translation of foreign subsidiaries (50) (18) (7) (75)

Change in foreign currency translation related to net investment hedging 30 13 3 45 activities

Cash flow hedges

Change in fair value of foreign exchange forward contracts - - - 1

Change in fair value of interest rate swaps - - - (1)

Change in fair value of commodity derivative financial instruments - (1) 2 (2)

Recovery of (provision for) income taxes (2) 1 (2) 1

(22) (5) (4) (31)

Items that are not released to earnings

Actuarial gain (loss) on employee future benefits (3) 10 (22) (3)

Recovery of (provision for) income taxes 1 (2) 6 1

(2) 8 (16) (2)

Other comprehensive income (loss) (24) 3 (20) (33)

Comprehensive income (loss) including non-controlling interests for the period 53 (20) 214 67

Comprehensive income attributable to non-controlling interests for the period - 1 43 14

Comprehensive income (loss) attributable to Shareholders for the period 53 (21) 171 53

CONSOLIDATED STATEMENTS OF EQUITY

For the year ended December 31, 2020

ACCUMULATED TOTAL EQUITY NON- (in millions of Canadian dollars) (unaudited) CAPITALCONTRIBUTEDRETAINEDOTHER ATTRIBUTABLE TOCONTROLLINGTOTAL STOCK SURPLUS EARNINGSCOMPREHENSIVESHAREHOLDERS INTERESTS EQUITY LOSS

Balance - End of previous year, as reported 491 15 1,000 (17) 1,489 177 1,666

Business combinations - - 3 - 3 - 3

Adjusted balance - Beginning of year 491 15 1,003 (17) 1,492 177 1,669

Comprehensive income (loss)

Net earnings - - 198 - 198 36 234

Other comprehensive income (loss) - - (16) (11) (27) 7 (20)

- - 182 (11) 171 43 214

Dividends - - (31) - (31) (16) (47)

Issuance of common shares on public offering 125 - (4) - 121 - 121

Stock options expense - 1 - - 1 - 1

Issuance of common shares upon 10 (3) - - 7 - 7 exercise of stock options

Redemption of common shares (4) - (4) - (8) - (8)

Balance - End of year 622 13 1,146 (28) 1,753 204 1,957



For the year ended December 31, 2019

ACCUMULATED TOTAL EQUITY NON- (in millions of Canadian dollars) (unaudited)CAPITALCONTRIBUTEDRETAINEDOTHER ATTRIBUTABLE TOCONTROLLINGTOTAL STOCK SURPLUS EARNINGSCOMPREHENSIVESHAREHOLDERS INTERESTS EQUITY INCOME (LOSS)

Balance - End of previous year, as reported 490 16 1,000 2 1,508 180 1,688

Business combinations - - (2) - (2) - (2)

Adjusted balance - End of previous year 490 16 998 2 1,506 180 1,686

New IFRS adoption - - (9) - (9) - (9)

Adjusted balance - Beginning of year 490 16 989 2 1,497 180 1,677

Comprehensive income (loss)

Net earnings - - 72 - 72 28 100

Other comprehensive loss - - - (19) (19) (14) (33)

- - 72 (19) 53 14 67

Dividends - - (23) - (23) (17) (40)

Issuance of common shares upon 6 (1) - - 5 - 5 exercise of stock options

Redemption of common shares (5) - (4) - (9) - (9)

Disposal of a subsidiary - - - - - (1) (1)

Acquisition of non-controlling interests - - (31) - (31) 1 (30)

Balance - End of year 491 15 1,003 (17) 1,492 177 1,669

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the 3-month periods endedFor the years ended December 31, December 31,

(in millions of Canadian dollars) (unaudited) 2020 2019 2020 2019

Operating activities

Net earnings (loss) 73 (26) 198 72

Adjustments for:

Financing expense and interest expense (revenue) on employee future benefits and 16 21 98 143 other liabilities

Loss on repurchase of long-term debt - 14 6 14

Depreciation and amortization 72 77 299 289

Loss (gain) on acquisitions, disposals and others (38) 5 (43) (27)

Impairment charges and restructuring costs 21 62 52 68

Unrealized loss (gain) on derivative financial instruments 2 2 1 (2)

Foreign exchange loss (gain) on long-term debt and financial instruments (3) 1 (6) (6)

Provision for (recovery of) income taxes 21 (11) 45 19

Fair value revaluation loss on investments 3 - 3 -

Share of results of associates and joint ventures (5) (3) (14) (9)

Net earnings attributable to non-controlling interests 4 3 36 28

Net financing expense paid (6) (32) (79) (133)

Premium paid on repurchase of long-term debt - (11) (4) (11)

Net income taxes paid (10) (13) (9) (27)

Dividends received 3 6 10 9

Provisions for contengencies and charges and others liabilities (7) (4) (26) (26)

146 91 567 401

Changes in non-cash working capital components 60 72 20 59

206 163 587 460

Investing activities

Disposals of associates and joint ventures - - 3 1

Payments for property, plant and equipment (85) (73) (250) (258)

Proceeds from disposals of property, plant and equipment 46 6 55 27

Change in intangible and other assets (5) (5) (13) (8)

Cash received (paid) for business combinations - 3 2 (311)

Proceeds on disposals of a subsidiary, net of cash disposed - - - 9

(44) (69) (203) (540)

Financing activities

Bank loans and advances 3 (3) 1 (5)

Change in credit facilities (50) (278) (131) 39

Issuance of unsecured senior notes, net of related expenses - 1,026 409 1,026

Repurchase of unsecured senior notes - (776) (264) (776)

Increase in other long-term debt 33 (1) 33 6

Payments of other long-term debt, including lease obligations (92) (31) (156) (125)

Settlement of derivative financial instruments - - 1 -

Issuance of common shares on public offering, net of transaction fees 120 - 120 -

Issuance of common shares upon exercise of stock options - 1 7 5

Redemption of common shares (3) (1) (8) (9)

Payment of other liabilities - - (121) -

Dividends paid to non-controlling interests (3) (3) (16) (17)

Dividends paid to the Corporation's Shareholders (9) (8) (31) (23)

(1) (74) (156) 121

Net change in cash and cash equivalents during the period 161 20 228 41

Currency translation on cash and cash equivalents (4) (3) 1 (9)

Cash and cash equivalents - Beginning of the period 227 138 155 123

Cash and cash equivalents - End of the period 384 155 384 155

SEGMENTED INFORMATION

The Corporation analyzes the performance of its operating segments based on their operating income before depreciation and amortization, which is not a measure of performance under International Financial Reporting Standards (IFRS). However, the chief operating decision-maker (CODM) uses this performance measure to assess the operating performance of each reportable segment. Earnings for each segment are prepared on the same basis as those of the Corporation. Intersegment operations are recorded on the same basis as sales to third parties, which are at fair market value. The accounting policies of the reportable segments are the same as the Corporation's accounting policies described in its most recent audited consolidated financial statements for the year ended December 31, 2019.

The Corporation's operating segments are reported in a manner consistent with the internal reporting provided to the CODM. The Chief Executive Officer has authority for resource allocation and management of the Corporation's performance and is therefore the CODM.

The Corporation's operations are managed in four segments: Containerboard, Boxboard Europe and Specialty Products (which constitutes the Corporation's Packaging Products), and Tissue Papers.

SALES TO

For the 3-month periods ended December 31,

Canada United Italy Other Total States countries

(in millions of Canadian 202020192020201920202019202020192020 2019 dollars) (unaudited)

Packaging Products

Containerboard 295 255 205 196 - - - - 500 451

Boxboard Europe - - - - 82 62 172 181 254 243

Specialty Products 46 32 76 71 - 1 1 1 123 105

Intersegment sales (4) (3) (2) - - - - - (6) (3)

337 284 279 267 82 63 173 182 871 796

Tissue Papers 71 65 310 332 - - - - 381 397

Intersegment sales and 29 31 3 3 - - - - 32 34 Corporate Activities

437 380 592 602 82 63 173 182 1,2841,227

SALES TO

For the years ended December 31,

Canada United Italy Other Total States countries

(in millions of Canadian dollars) 2020 2019 2020 2019 20202019202020192020 2019 (unaudited)

Packaging Products

Containerboard 1,1301,079787 746 - - 1 2 1,9181,827

Boxboard Europe - - - - 322 309 730 739 1,0521,048

Specialty Products 165 136 305 304 - 2 3 50 473 492

Intersegment sales (13) (13) (5) (1) - - - - (18) (14)

1,2821,2021,0871,049322 311 734 791 3,4253,353

Tissue Papers 278 257 1,3361,242- - 1 10 1,6151,509

Intersegment sales and Corporate 115 124 2 10 - - - - 117 134 Activities

1,6751,5832,4252,301322 311 735 801 5,1574,996

OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION

For the 3-month periods ended For the years ended December 31, December 31,

(in millions of Canadian dollars) (unaudited) 2020 2019 2020 2019

Packaging Products

Containerboard 150 98 436 443

Boxboard Europe 18 8 122 92

Specialty Products 15 9 58 52

183 115 616 587

Tissue Papers 27 (3) 145 67

Corporate Activities (29) (36) (96) (104)

Operating income before depreciation and amortization 181 76 665 550

Depreciation and amortization (72) (77) (299) (289)

Financing expense and interest expense (revenue) on employee future benefits and other (16) (21) (98) (143) liabilities

Loss on repurchase of long-term debt - (14) (6) (14)

Foreign exchange gain (loss) on long-term debt and financial instruments 3 (1) 6 6

Fair value revaluation loss on investments (3) - (3) -

Share of results of associates and joint ventures 5 3 14 9

Earnings (loss) before income taxes 98 (34) 279 119

PAYMENTS FOR PROPERTY, PLANT AND EQUIPMENT

For the 3-month periods endedFor the years ended December 31, December 31,

(in millions of Canadian dollars) (unaudited) 2020 2019 2020 2019

Packaging Products

Containerboard 44 28 111 83

Boxboard Europe 18 15 41 56

Specialty Products 10 9 25 20

72 52 177 159

Tissue Papers 42 36 104 110

Corporate Activities 10 8 26 48

Total acquisitions 124 96 307 317

Proceeds from disposals of property, plant and equipment (46) (6) (55) (27)

Right-of-use assets acquisitions and acquisitions included in other debts (27) (8) (63) (50)

51 82 189 240

Acquisitions for property, plant and equipment included in "Trade and other payables"

Beginning of year 28 31 46 37

End of year (40) (46) (40) (46)

Payments for property, plant and equipment net of proceeds from disposals 39 67 195 231

SUPPLEMENTAL INFORMATION ON NON-IFRS MEASURES

SPECIFIC ITEMS

The Corporation incurs some specific items that adversely or positively affect its operating results. We believe it is useful for readers to be aware of these items as they provide additional information to measure performance, compare the Corporation's results between periods, and assess operating results and liquidity, notwithstanding these specific items. Management believes these specific items are not necessarily reflective of the Corporation's underlying business operations in measuring and comparing its performance and analyzing future trends. Our definition of specific items may differ from those of other corporations and some of them may arise in the future and may reduce the Corporation's available cash.

They include, but are not limited to, charges for (reversals of) impairment of assets, restructuring gains or costs, loss on refinancing and repurchase of long-term debt, some deferred tax asset provisions or reversals, premiums paid on repurchase of long-term debt, gains or losses on the acquisition or sale of a business unit, gains or losses on the share of results of associates and joint ventures, unrealized gains or losses on derivative financial instruments that do not qualify for hedge accounting, unrealized gains or losses on interest rate swaps and option fair value revaluation, foreign exchange gains or losses on long-term debt and financial instruments, fair value revaluation gain or losses on investments, specific items of discontinued operations and other significant items of an unusual, non-cash or non-recurring nature.

RECONCILIATION OF NON-IFRS MEASURES

To provide more information for evaluating the Corporation's performance, the financial information included in this analysis contains certain data that are not performance measures under IFRS ("non-IFRS measures"), which are also calculated on an adjusted basis to exclude specific items. We believe that providing certain key performance measures and non-IFRS measures is useful to both Management and investors, as they provide additional information to measure the performance and financial position of the Corporation. This also increases the transparency and clarity of the financial information. The following non-IFRS measures are used in our financial disclosures:

* Operating income before depreciation and amortization (OIBD): Used to assess operating performance and the contribution of each segment when excluding depreciation and amortization. OIBD is widely used by investors as a measure of a corporation's ability to incur and service debt and as an evaluation metric. * Adjusted OIBD: Used to assess operating performance and the contribution of each segment on a comparable basis. * Adjusted operating income: Used to assess operating performance of each segment on a comparable basis. * Adjusted net earnings: Used to assess the Corporation's consolidated financial performance on a comparable basis. * Adjusted free cash flow: Used to assess the Corporation's capacity to generate cash flows to meet financial obligations and/or discretionary items such as share repurchase, dividend increase and strategic investments. * Net debt to adjusted OIBD ratio: Used to measure the Corporation's credit performance and evaluate financial leverage. * Net debt to adjusted OIBD ratio on a pro-forma basis: Used to measure the Corporation's credit performance and evaluate the financial leverage on a comparable basis, including significant business acquisitions and excluding significant business disposals, if any.

Non-IFRS measures are mainly derived from the consolidated financial statements, but do not have meanings prescribed by IFRS. These measures have limitations as an analytical tool and should not be considered on their own or as a substitute for an analysis of our results as reported under IFRS. In addition, our definitions of non-IFRS measures may differ from those of other corporations. Any such modification or reformulation may be significant.

The reconciliation of operating income (loss) to OIBD, to adjusted operating income (loss) and to adjusted OIBD by business segment is as follows:

Q4 2020

(in millions of Canadian ContainerboardBoxboardSpecialtyTissueCorporate Consolidateddollars) Europe Products PapersActivities (unaudited)

Operating 122 5 12 10 (40) 109 income (loss)

Depreciation and 28 13 3 17 11 72 amortization

Operating income (loss) before 150 18 15 27 (219) 181 depreciation and amortization

Specific items:

Loss (gain) on acquisitions,(40) - - 2 - (38) disposals and others

Impairment charges (2) 9 - 5 1 13 (reversals)

Restructuring- - - 6 2 8 costs

Unrealized loss on derivative 2 - - - - 2 financial instruments

(40) 9 - 13 3 (15)

Adjusted operating income (loss) before 110 27 15 40 (26) 166 depreciation and amortization

Adjusted operating 82 14 12 23 (37) 94 income (loss)

Q3 2020

(in millions of Canadian ContainerboardBoxboardSpecialtyTissue Corporate Consolidateddollars) Europe Products 111PapersActivities (unaudited)

Operating 71 19 11 3 (31) 73 income (loss)

Depreciation and 30 12 5 22 12 81 amortization

Operating income (loss) before 101 31 16 25 (19) 154 depreciation and amortization

Specific items :

Gain on acquisitions,(5) - - (2) - (7) disposals and others

Impairment - - - 13 - 13 charges

Restructuring3 - - - - 3 costs

Unrealized loss (gain) on derivative1 (2) - - - (1) financial instruments

(1) (2) - 11 - 8

Adjusted operating income (loss) before 100 29 16 36 (19) 162 depreciation and amortization

Adjusted operating 70 17 11 14 (31) 81 income (loss)

Q4 2019

(in millions Tissue of Canadian ContainerboardBoxboardSpecialtyPapers^Corporate Consolidateddollars) Europe Products 1 Activities (unaudited)

Operating 69 (6) 5 (21) (48) (1) income (loss)

Depreciation and 29 14 4 18 12 77 amortization

Operating income (loss) before 98 8 9 (3) (36) 76 depreciation and amortization

Specific items:

Loss on acquisitions,4 - - - 1 5 disposals and others

Inventory adjustment resulting - - - 2 - 2 from business acquisition

Impairment 2 14 - 34 14 64 charges

Restructuring1 - - 2 - 3 costs

Unrealized loss (gain) on derivative1 2 - - (1) 2 financial instruments

8 16 - 38 14 76

Adjusted operating income (loss) before 106 24 9 35 (22) 152 depreciation and amortization

Adjusted operating 77 10 5 17 (34) 75 income (loss)

Net earnings (loss), as per IFRS, is reconciled below with operating income, adjusted operating income and adjusted operating income before depreciation and amortization:

(in millions of Canadian dollars) (unaudited) 2020 2019^1 Q4 2020 Q3 2020 Q4 2019

Net earnings (loss) attributable to Shareholders for the period 198 72 73 49 (26)

Net earnings attributable to non-controlling interests 36 28 4 9 3

Provision for (recovery of) income taxes 45 19 21 (3) (11)

Fair value revaluation loss on investments 3 - 3 - -

Share of results of associates and joint ventures (14) (9) (5) (3) (3)

Foreign exchange loss (gain) on long-term debt and financial instruments (6) (6) (3) (11) 1

Financing expense and interest expense (revenue) on employee future benefitsand other liabilities and 104 157 16 32 42 other liabilities and loss on repurchase of long-term debt

Operating income 366 261 109 73 6

Specific items:

Loss (gain) on acquisitions, disposals and others (43) (24) (38) (7) 5

Inventory adjustment resulting from business acquisition - 2 - - 2

Impairment charges 39 69 13 13 64

Restructuring costs 13 9 8 3 3

Unrealized loss (gain) on derivative financial instruments 1 (2) 2 (1) 2

10 54 (15) 8 76

Adjusted operating income 376 315 94 81 82

Depreciation and amortization 299 289 72 81 77

Adjusted operating income before depreciation and amortization 675 604 166 162 159

1 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation.

The following table reconciles net earnings (loss) and net earnings (loss) per share, as per IFRS, with adjusted net earnings and adjusted net earnings per share:

(in millions of Canadian dollars, except amounts per share) (unaudited) NET EARNINGS (LOSS) NET EARNINGS (LOSS) PER SHARE ^1

2020 2019^2 Q4 2020 Q3 2020 Q4 2019 2020 2019^2 Q4 2020 Q3 2020 Q4 2019

As per IFRS 198 72 73 49 (26) $ 2.04 $ 0.77 $ 0.72 $ 0.51 $ (0.27)

Specific items:

Loss (gain) on acquisitions, disposals and others (43) (24) (38) (7) 5 $ (0.38) $ (0.28) $ (0.34) $ (0.05) $ 0.04

Inventory adjustment resulting from business acquisition - 2 - - 2 - $ 0.02 - - $ 0.02

Impairment charges 39 69 13 13 64 $ 0.29 $ 0.53 $ 0.09 $ 0.10 $ 0.49

Restructuring costs 13 9 8 3 3 $ 0.10 $ 0.07 $ 0.05 $ 0.03 $ 0.02

Unrealized loss (gain) on derivative financial instruments 1 (2) 2 (1) 2 $ 0.02 $ (0.02) $ 0.02 - $ 0.01

Loss on repurchase of long-term debt 6 14 - 6 14 $ 0.05 $ 0.11 - $ 0.05 $ 0.11

Unrealized gain on interest rate swaps and option fair value (11) - (11) - (1) $ (0.12) - $ (0.12) - $ (0.01)

Foreign exchange loss (gain) on long-term debt (6) (6) (3) (11) 1 $ (0.05) $ (0.06) $ (0.02) $ (0.12) $ 0.01 and financial instruments

Fair value revaluation loss on investments 3 - 3 - - $ 0.02 - $ 0.02 - -

Tax effect on specific items, other tax adjustments (13) (38) (5) (4) (35) $ (0.02) $ (0.12) - $ (0.02) $ (0.12) and attributable to non-controlling interest^1

(11) 24 (31) (1) 55 $ (0.09) $ 0.25 $ (0.30) $ (0.01) $ 0.57

Adjusted 187 96 42 48 29 $ 1.95 $ 1.02 $ 0.42 $ 0.50 $ 0.30

Specific amounts per share are calculated on an after-tax basis and are net of the portion attributable to non-controlling interests. Per share amounts1 in line item ''Tax effect on specific items, other tax adjustments and attributable to non-controlling interests'' only include the effect of tax adjustments.

2 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation.

The following table reconciles cash flow from operating activities with operating income and operating income before depreciation and amortization:

(in millions of Canadian dollars) (unaudited) 2020 2019^ Q4 Q3 Q4 1 2020 2020 2019

Cash flow from operating activities 587 460 206 136 163

Changes in non-cash working capital components (20) (59) (60) (30) (72)

Depreciation and amortization (299) (289) (72) (81) (77)

Net income taxes paid 9 27 10 1 13

Net financing expense paid 79 133 6 49 32

Premium paid on long-term debt repurchase 4 11 - 4 11

Gain (loss) on acquisitions, disposals and 43 27 38 7 (5)others

Impairment charges and restructuring costs (52) (68) (21) (16) (62)

Unrealized gain (loss) on derivative financial (1) 2 (2) 1 (2)instruments

Dividend received, employee future benefits and 16 17 4 2 (2)others

Operating income 366 261 109 73 (1)

Depreciation and amortization 299 289 72 81 77

Operating income before depreciation and 665 550 181 154 76amortization

1 2019 third quarter consolidated results have been adjusted to reflect retrospective adjustments of purchase price allocation

The following table reconciles cash flow from operating activities with cash flow from operating activities (excluding changes in non-cash working capital components) and adjusted cash flow from operating activities. It also reconciles adjusted cash flow from operating activities to adjusted free cash flow, which is also calculated on a per share basis:

(in millions of Canadiandollars, except amount 2020 2019 Q4 2020 Q3 2020 Q4 2019per share or otherwisementioned) (unaudited)

Cash flow from operating 587 460 206 136 163activities

Changes in non-cashworking capital (20) (59) (60) (30) (72)components

Cash flow from operatingactivities (excludingchanges in non-cash 567 401 146 106 91working capital components)

Specific items paid 15 24 6 9 16

Adjusted cash flow from 582 425 152 115 107operating activities

Capital expenditures &other assets^1 andright-of-use assets (250) (278) (55) (60) (80)payments, net ofdisposals

Dividends paid to theCorporation'sShareholders and to (47) (40) (12) (11) (11)non-controllinginterests

Adjusted free cash flow 285 107 85 44 16

Adjusted free cash flow $ 2.97 $ 1.14 $ 0.85 $ 0.46 $ 0.17per share

Weighted average basicnumber of shares 95,924,835 93,987,980 99,937,437 95,019,694 94,287,895outstanding

1 Excluding increase in investments

The following table reconciles total debt and net debt with the ratio of net debt to adjusted operating income before depreciation and amortization (adjusted OIBD):

(in millions of Canadian December 31, September 30, December 31,dollars) 2020 2020 2019

Long-term debt 1,949 1,947 2,022

Current portion of long-term 102 253 85debt

Bank loans and advances 12 9 11

Total debt 2,063 2,209 2,118

Less: Cash and cash 384 227 155equivalents

Net debt 1,679 1,982 1,963

Adjusted OIBD (last twelve 675 661 604months)

Net debt / Adjusted OIBD ratio 2.5 x 3.0 x 3.3 x

Source:Allan HoggVice-President and Chief Financial Officer Follow us on social media:Website: www.cascades.comTwitter: twitter.com/@CascadesInvest Facebook: facebook.com/Cascades YouTube: youtube.com/Cascades

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SOURCE Cascades Inc.