Cascades Inc. (CAS) Earnings Call Transcript & Summary

[Presentation] Ladies and gentlemen, good afternoon and welcome to our Annual General Meeting of Shareholders. My name is Alain Lemaire. I'm the Executive Chairman of the Board of Directors of Cascades. For the second time in our history, we are holding our AGM virtually this year because of, of course, the COVID-19 pandemic and its unprecedented impacts. We know that it is important to meet our shareholders in person, but the decision to go virtual again this year was necessary. Your health as well as that of our employees, customers and all of our partners must come first, and ours too, of course. Although we can't meet in person, our goal today is to ensure that you can participate fully in our annual meeting. I invite you to ask questions and vote on each object as if you were participating in person. And thank you for joining us. This meeting will be held in French, but simultaneous translation into English is available as you have noticed when you logged on to the platform. I hereby call this meeting to order, and I will act as Chair of this virtual meeting. With me today are Mario Plourde, the President and Chief Executive Officer; Allan Hogg, Vice President and Chief Financial Officer; and Robert Hall, Chief of Strategy, Legal Affairs and Corporate Secretary, who will act as secretary of this meeting. So I would now ask the secretary to explain some of the procedures relating to the meeting. Mr. Hall?

Thank you, Alain. As the meeting is being held virtually via a live audio webcast, we feel it is necessary to establish a few rules to ensure the smooth running of the meeting. [Operator Instructions] You can ask your question when we invite you to do so. Only registered shareholders or their duly appointed proxies may participate, ask questions, and vote at the meeting. As described in our management proxy circular, duly appointed proxies were required to register with our transfer agent and obtain a control number prior to the meeting in order to attend, vote and ask questions. All other proxies may attend the meeting as guests. [Operator Instructions] Questions will only be answered during the question period at the end of the meeting. Questions or comments that contain inappropriate language or disrupt the orderly contact of the meeting will not be answered. We will not repeat questions that have already been answered or which are redundant. At today's meeting, all items will be voted on by a single electronic vote. Registered shareholders and duly appointed proxies will be invited to vote on each item of business after all items have been presented. In other words, you only vote once. In due course, you will receive a message on the virtual interface asking you to vote. You will have enough time to vote on each item, but please note that there is a time limit on voting. It is important to mention that shareholders who have already voted in advance, do not have to vote again and can simply ignore the online ballot. Alain?

Thank you, Bob. I would now ask the secretary to file the notice of meeting, the management proxy circular, the voting proxy form and the certificate of transmittal of said documents and then please keep them on file for this meeting. Mr. Hall?

The documents have been filed.

Thank you. Representatives of Computershare Investor Services Inc., the company's transfer agent and registrar, are acting as scrutineers for this meeting. They are counting the proxies and online votes today. I am advised that the report is ready, and I would ask Martine Gauthier to read it to us.

Mr. Chair, the scrutineers' report indicated that more than 80% of issued and circulating shares are represented here at the meeting.

So I hereby declare the meeting duly convened and validly constituted to deal with the matters on the agenda. As mentioned earlier by the secretary, voting rights will be exercised on all matters to be voted on by means of a single electronic ballot. At the appropriate time, you will receive a message on the virtual interface asking you to vote. You will have a limited time to do so. Once the votes have been cast on all of the items on the meeting agenda, the scrutineers will tabulate the votes for each item. The next item on the agenda is the receipt of the company's consolidated financial statements for the year ending on December 31, 2020, and the independent auditor's report. I would ask the secretary to file the consolidated financial statements of the company for the year ending on December 31, 2020, along with the related independent auditor report, and the affidavit of transmittal certifying that a copy of these documents was sent on April 9, 2021 to those shareholders who requested them.

The documents are so filed.

Thank you, Robert. The next item on the agenda is the election of the 12 nominees proposed by management for election as directors of the corporation. The Board has set the number of candidates proposed for election as directors of the corporation at 12. You may have noticed from the proxy circular that Mr. Louis Garneau is leaving the Board of Directors after 25 years of loyal service as a director of Cascades. Today, we are turning a page in our history. When Louis joined our Board, he brought with him the innovative spirit of a dynamic young entrepreneur and all of the energy of a former world-class Olympian. Throughout his years as director, Louis had continually challenged us to seek to improve the marketing of our products through creative thinking, contributing in his own way to making Cascades a better company. Dear, Louis, on behalf of the shareholders, the Board of Directors, management and the employees of Cascades, I would like to express our appreciation for the work you have done throughout these many years of service. Thank you very much, Louis. Can a registered holder of common shares, or a proxy holder of shares, now make a motion to nominate each of the 12 persons?

My name is Robert Hall, and I'm a shareholder. Mr. Chair, I nominate the following persons for election as director of the corporation: Alain Lemaire, Sylvie Lemaire, Elise Pelletier, Sylvie Vachon, Mario Plourde, Michelle Cormier, Martin Couture, Patrick Lemaire, Hubert Lacroix, Melanie Dunn, Elif Levesque, and Nelson Gentiletti.

Thank you, Robert. Are there any other candidates? There are no other nominees, as we can see. Would a registered holder of common shares, or a proxy holder of shares, please make a motion to elect each of these 12 persons?

My name is Allan Hogg. I am a shareholder. Mr. Chair, I move that each of the 12 nominees be elected as a member of the Board of Directors of the corporation until the next Annual General Meeting or until their successors are elected.

Thank you, Allan. Is this motion seconded?

My name is Robert Hall. I'm a shareholder, and I second this motion.

Thank you, Robert. The motion has been moved and seconded. Again as mentioned at the beginning of the meeting, for all motions, voting rights will be exercised today by means of a single electronic ballot. The next item on the agenda is the appointment of the independent auditor for fiscal year 2021. The Board of Directors on the advice of the Audit and Finance Committee recommends that PricewaterhouseCoopers Chartered Professional Accountants be appointed as the corporation's independent auditor and that the directors be authorized to set its remuneration. I can see that Robert Hall wishes to make a motion to that effect?

Mr. Chair, my name is Robert Hall. I'm a shareholder, and I move that PricewaterhouseCoopers Chartered Professional Accountants be appointed as the corporation's independent auditor for the next financial year and the Board of Direc -- [Technical Difficulty] compensation.

Thank you, Robert. Would someone like to second the motion?

My name is Allan Hogg. I'm a shareholder. Mr. Chair, I second the motion.

Thank you, Allan. The motion has been moved and seconded. The next item on the agenda is the approval of the advisory resolution accepting the company's approach to executive compensation, as described in the proxy circular. I see that Robert again wishes to make a motion to that effect?

Yes, Mr. Chair. My name is Robert Hall. I'm a shareholder. I move the adoption of the advisory resolution accepting the company's approach to executive compensation.

Thank you, Robert. Would Allan Hogg like to second the motion?

My name is Allan Hogg. I'm a shareholder. Mr. Chair, I second the motion.

Thank you. The motion has been duly moved and seconded. The next item on the agenda is the approval and adoption of a special resolution to amend the articles of incorporation of the corporation in the manner described in the proxy circular. However, I will call on Robert Hall to speak to this resolution.

Thank you, Mr. Chair. Under the securities rules that apply to our company, we are required to publish and transmit certain notices and documents when a special resolution is to be adopted at a shareholders' meeting. Unfortunately, this was not done in time for this meeting. Although the votes received would have allowed the special resolution to be passed, for technical reasons, we must postpone the vote on this item to a future meeting. In the meantime, our current statutes continue to apply.

Thank you, Robert. As recommended by our corporate secretary, we will therefore postpone the vote on the special resolution to a future meeting, and move on immediately to the next item on the agenda. The next item on the agenda is the motion submitted by MEDAC and described in appendance -- appendix A-1 of the proxy circular.

[Technical Difficulty] particularly target Cascades. We have sent to all companies who are part of our portfolio. It's proposed that the Board and management specify the raison d'etre of Cascades as an organization and make sure that the policies and commitments and initiatives are implemented to fulfill the orientation of the company in terms of environment, human resources. And of course, we explain all of our values, the reason why we accepted to not require a vote in other shareholders' meetings. However, since Cascades has already adopted a mission, we would have preferred Cascades to add responsibility and follow up for these questions into the terms of reference of its Board. Now it would be up to you to agree within Cascades in those terms. But we did hope that this could be done in relatively short order. We didn't get a commitment on the part of the corporation in that regard. But there has been some openness on Cascades to other attempts to have these factors taken into consideration. We feel that it would be desirable that in addition to the mandate of the Board, that this be part of the Governance Committee mandate, which is why we make this proposal today and ask the meeting to vote in favor. I'm not sure if you're going to vote now, or I should move ahead with the other 2 proposals?

No, all votes are going to be brought together for a single electronic vote.

That's fine. So let me continue on with the other 2 proposals?

Yes.

To be brief, the other motions have been submitted to Cascades, but they're not submitted for vote because we have agreed with the company on a way to proceed. We had a proposal into holding virtual meetings. And we agreed to not require a vote on this proposal, given the opportunity to speak verbally in the meeting and for other shareholders. The mechanism has been, and it's to Cascades' honor, something has been provided in that respect. And we agreed in terms of on the principle as to the organization of future virtual meetings, so that it would look as much as possible like an in-person meeting, and so that everything that can be done in in-person assemblies can be done virtually. And also in terms of compensation experts, the external experts, there's some question of ratios in the mandate, comparing amount of money invested into the compensation of these external advisers and for other terms of reference, other mandates. We would like to see that these principles be discussed and that the company call upon another firm. But on the basis of our discussions, we are satisfied by the answer that's in the circular. And that's the reason why we didn't require that a vote be taken on that question. But we will continue to follow this closely in the future. Thank you for your efforts to communicate with us. And we're pleased to be well received by Cascades every year and find that things are progressing. Thank you for the time that you have given us.

Thank you, Mr. Gagnon, and we're pleased to note your understanding. And it's a good thing to remain vigilant. As we evolve, we will continue to take your positions into consideration. Thank you again, and we do hope that we will be up to your expectations. Now we are going to vote on all of the points on the [Foreign Language], the election of the Board members, the nomination of the external auditor, the approval of the advisory resolution accepting Cascades' approach to executive compensation, and the adoption of a special resolution to amend the company's articles of incorporation. I remind you that shareholders who have already exercised their voting rights in advance do not have to vote again and can simply ignore the online ballot. In a few moments, you'll be asked to vote on each of the 5 -- or the 4 items on the agenda rather. When you're asked to do so, go to the voting page. In terms of how to proceed, first of all, press the In Favor or Abstain button next to the name of each candidate for a position of director. Secondly, press the In Favor or Abstain button next to the resolution on the appointment of PricewaterhouseCoopers as independent auditor of the company. Thirdly, press the In Favor or Opposed button next to the advisory resolution accepting Cascades' approach to executive compensation. And to conclude, fourthly, press the In Favor or Opposed button next to the resolution on the proposal submitted by MEDAC. Once the electronic voting is complete, the voting page will disappear, and your votes will automatically be recorded. We will give registered shareholders and proxies about 2 minutes to complete the electronic ballots. Once voting is over, I would ask the scrutineers to compile in a report the results of the voting on all items on the agenda. We will return shortly to announce the results. [Voting]

Hello again. Thank you for your patience. I'd now call on Martine Gauthier from Computershare to read the scrutineers' report on the preliminary results of the vote.

Thank you, Mr. Chairman. Regarding the election of the directors, I confirm that the 12 candidates have been duly elected as directors of the corporation. I can also report that the resolution appointing PricewaterhouseCoopers as the company's independent auditor and the advisory resolution accepting Cascades' approach to executive compensation were adopted. And finally, I'd like to inform you that the MEDAC proposal was defeated. Thank you.

Thank you, madam. I confirm that the final results of the vote will be available on SEDAR tomorrow. I'd now like to invite Mario Plourde, President and Chief Executive Officer, to take the floor. Over to you, Mario.

Thank you, Alain. Hello, everyone. Welcome to your general meeting. Thank you for joining us today digitally. We hope to see you in person soon, but until then, the health of each and every one of us remains our priority. Despite the virtual format imposed by the pandemic, I'm pleased to have this opportunity to speak to you. I will begin by presenting the highlights of this exceptional year. Allan will then discuss our 2020 financial performance as well as our first quarter 2021 results, which were released earlier this morning. Then we will conclude today's meeting with an update on our strategic plan. Let me start with our performance in terms of business volumes. Sales in 2020 totaled nearly $5.2 billion for Cascades, representing a 3% increase over 2019. On an adjusted basis, operating income before depreciation and amortization, more commonly referred to as EBITDA, reached $675 million for the year. This represents not only a 12% improvement over the previous year, but also the third consecutive year of record results for the company. This performance was the result of a combination of a 3.8% increase in shipments, reflecting strong demand for containerboard packaging products and retail tissue and more favorable raw material prices in the containerboard sector. For tissue in particular, the 2020 results reflect the benefits of more favorable raw material prices as well as stronger demand for consumer retail products, offset by the significant contraction in demand in the out-of-home segment due to businesses, restaurants and other public venues being closed in whole or in part due to the pandemic. At the heart of our strong consolidated 2020 performance are our people. Throughout 2020, we've prioritized their health and safety as we continue to navigate this pandemic. We've also provided them with the tools and support to help them continue their work. While the COVID-19 pandemic has certainly added some challenges, it has not prevented us from making strategic investments in all of our operations. Specifically in 2020, we invested $244 million in our plants and equipment. Of this amount, approximately 70% was spent on our 2 largest business segments, containerboard and tissue. These are significant value-creating investments that will help to improve our competitive positioning, productivity and efficiency. We also acquired the Caisse de depot et placement du Quebec's 20.2% interest in our Greenpac facility for $121 million, increasing our ownership in this strategic asset to 86%. These investments were spread out geographically, demonstrating our efforts to modernize our platforms throughout North America. Let me now briefly review some of the highlights of the year. Firstly, we achieved a record adjustment (sic) [ adjusted ] OIBA for the third consecutive year despite the pandemic. Part of this performance was due to the launch of our margin expansion initiative. These efforts contributed $75 million to our annual results in 2020. In addition, we completed a $125 million equity offering, refinanced $300 million of our long-term debt, and achieved our year-end leverage ratio of a target of 2.5 by the end of the year. As regards containerboard, in addition to increasing our stake in the Greenpac mill, we optimized our conversion platform in Ontario, and launched the Bear Island strategic project to convert this asset into a first quartile recycled containerboard mill. In Europe, Reno de Medici made 2 important announcements. The first is the purchase of Paprinsa's operations in Spain, which should be finalized this summer. And the second is the agreement to sell La Rochette's virgin boxboard operations in France, concluded April 30, last. As for our Specialty Products business, we've seen impressive growth in the strategic areas of fresh food packaging and distribution while maintaining the innovative momentum for which it is known and its leadership position in sustainable packaging. In tissue, our key initiatives increased the optimization of our U.S. transformation asset base, a key part of which was completing the integration of the Orchids assets acquired in September 2019. Part of these significant multiyear modernization efforts, however, involved the closure of certain U.S. operations in 2020 and the planned closure of our Laval, Quebec plant in 2021. We'd like to thank our employees at these facilities for their dedication and hard work over the years. Before I hand the podium over to Allan, who will provide further details on our financial performance in 2020, let me briefly mention our strategic project to convert the Bear Island plant. The total investment for the project will be USD 380 million, which includes the cost of acquiring the site and the investments we've already made in 2019 and 2020. Strategically, this facility will be a very good complement to our Greenpac plant. In addition to incorporating up to 60% of mixed paper feedstock, Bear Island will produce highly competitive linerboard and medium products that are not only environmentally-friendly but also lightweight and increasingly in demand. Both factors are important to our customers who are increasingly concerned about the sustainability and quantity of the packaging products they use. After the facility opens in December 2022, 88% of our corrugated capacity will be recycled. This strengthens our platform's positioning to meet key market trends and improves our ability to meet the growing demand for high-quality environmentally-friendly packaging solutions. I'm now going to hand things over to Allan. Allan?

Thank you, Mario. Hello, everybody. Thank you for joining us today. I'll first give you an overview of our 2020 financial performance and then discuss our first quarter 2021 results that were released earlier this morning. As Mario mentioned earlier, our sales totaled $5.2 billion in 2020, which is up 3% over 2019. And our consolidated adjusted OIBA, often referred to as EBITDA, of $675 million represented a 12% increase over 2019 and a 13.1% margin. The results reflect strong sales in our European containerboard and folding board businesses due to good demand for packaging and favorable raw material prices. In the case of Europe, on the other hand, the average annual sales prices were lower, and raw material price is slightly higher for our containerboard business. In the tissue segment, the addition of the Orchids assets and the strong demand for products aimed at retail markets were partially offset by lower demand for out-of-home categories due to the impact of the COVID-19 pandemic on businesses. Specialty Products sales were down year-over-year, primarily due to the disposal of our European operations and the closure of a facility in Canada as well as a slightly less favorable sales mix. Sales in our containerboard business grew by 5% in 2020, but the OIBA decreased by 9% compared to 2019. Overall growth was driven by strong industry fundamentals that supported shipment levels. These benefits were partially offset by lower average selling prices and a slightly less favorable mix of products sold. The annual decline in OIBA reflects both of these factors in addition to the increase in the average cost of these segments' raw materials. Our European sheet carton business, through our interest in Italy's Reno de Medici, reported a slight increase in sales and a 19% increase in adjusted OIBA in 2020. This sales growth was driven by increased shipments and a more favorable exchange rate, which more than offset a lower average selling price. The strong year-on-year growth in adjusted OIBA was primarily due to lower raw material and energy costs as well as a more favorable exchange rate. And now for Specialty Products, here sales declined by 4% in 2020. This was largely due, as we said before, to the disposal of our European operations and the closure of a plant in Quebec as well as lower average selling prices and a less favorable product mix. Higher volume in all our subsectors and a more favorable exchange rate mitigated these impacts. Adjusted OIBA increased by 9% in 2020 as the benefits of higher volumes and lower raw material costs offset the factors I've just mentioned. Finally, our tissue paper operations reported a 3% increase in sales in 2020, despite the impact of the COVID-19 pandemic on out-of-home demand. Overall performance was driven by increased shipments, better inventory management and sales efforts that contributed to a slightly higher average selling price, the addition of the Orchids assets and a more favorable exchange rate. Profitability in this segment was significantly higher than in the previous year, reflecting the above factors that we've just mentioned. Overall, the result of this is -- and average -- lower average raw material prices. Overall, the results of this segment benefited from the ongoing network optimization efforts and modernization initiatives carried out in recent years. Now let's look at our evolution of the net debt, turn -- which decreased by $284 million or 14% year-on-year. This reflects the strong cash flow generated by our operations throughout the year, the addition of funds received from our share issue, and a more favorable exchange rate on our U.S. dollar-denominated debt. All these factors combined to exceed our capital commitments during the year. We're very pleased to have achieved our target debt to ratio -- debt-to-equity ratio, that is, of 2.5 at the end of 2020. Going forward, we'll continue to be diligent in managing our balance sheet and capital allocation plans. We expect our cash flow to fully fund our capital requirements over the next year. And we're committed to maintaining a debt-to-equity ratio below 3 through our Bear Island project, which should start contributing to our positive results. Following the recent refinancing of portions of our long-term debt, we have no significant maturities until 2025. We currently have close to $1 billion in our credit facility and expect our operations to generate good cash flow this year. Now let's move on to our first quarter 2021 results, which were released earlier today. Sales for the first quarter of 2021 totaled $1.18 billion. This represents a 5% sequential decline from fourth quarter 2020 levels and a 7% decline from the prior year period. Note that the results have been adjusted for discontinued operations, following the announced sale of the La Rochette virgin fiber boxboard business in France in our European folding board segment. You'll find all of that information in our official documents. The main factor behind the decline in sales was the contraction in volumes in our tissue business. After high levels of demand throughout 2020, customers began to rebalance inventory levels that have been built up in response to high demand from the COVID-19 pandemic, particularly on the retail market side. On a consolidated basis, less favorable exchange rates had a negative impact both sequentially and year-over-year, while prices and mix were beneficial in both cases. As you can see, raw material prices increased both sequentially and year-on-year in the first quarter. It's worth noting that brown cartonboard prices were up 97% year-on-year, and virgin pulp prices were up about 15% compared to the fourth and first quarters of last year. The following is an overview of the contribution of each of our business segments to our consolidated operating income and adjusted operating income results during the first quarter. As I mentioned, our tissue paper segment had a difficult first quarter due to a significant contraction of demand. And the raw material price inflation had a negative impact on the year-over-year results of all our packaging segments compared to 2020 and was the main factor behind the decline in our European folding board results. However, on a consolidated basis, raw material inflation was more than offset by price and mix improvements in all our North American business segments. Let's turn now to the evolution of our net debt in the first quarter. Strong cash flow from operations, a positive foreign exchange, and the reclassification of discontinued operations all benefited our net debt levels in the period, more than offsetting our capital investments dividend payments and working capital changes. Debt decreased by $25 million or 1% from December 31 levels, and our leverage ratio remained unchanged at 2.5. As my comments on the first quarter results were brief, I invite you to refer to our quarterly investor presentation, press release -- press release, that is, and MD&A for full details. In addition, a recording of our quarterly conference call held earlier this morning is available on our website. As Mario mentioned earlier, we have launched a major margin improvement program across the company in 2020. From a strategic perspective, the operational and financial benefits of these initiatives will strengthen our resilience in times of economic uncertainty and growth mitigation and drive performance when economic growth is strong. With the strengthened foundation, Cascades will continue to proactively manage its debt profile, make strategic capital investments, and deliver value to its shareholders while having greater flexibility to pursue external growth opportunities. More broadly, we've identified 5 key areas that will drive targeted margin growth. The first area, the net revenue management is to improve pricing and sales mix through a combination of SKU management and actively working with our customers to provide the best solutions to meet each of their needs. The second component is production efficiency, which as the name suggests, focuses on the overall productivity and efficiency of our equipment and assets. The third component is sales and operations planning, which focuses on optimizing the link between sales and production flows to ensure optimal planning and efficiency in our production, maximizing supplier chain efficiency. The fourth component involves targeted improvements in procurement, logistics and distribution across our business and encompasses everything from the raw materials we use to the way we get our products to our customers. And last but not least is Cascade's internal organizational effectiveness. In this area, we're looking for ways to improve the way we work on a day-to-day basis, with a focus on improving efficiency and coordination while leveraging expertise and knowledge across our operations. We're proud of the work that's been done by our teams. These initiatives began in 2020 and allow us to realize $70 million (sic) [ $75 million ] in benefits when we compare to 2010. And I'll thank you for your attention. I'll give the floor back to Mario.

Thank you, Allan. Before I present our updated strategic plan, I'd like to briefly discuss our outlook for 2021. While the current COVID-19 pandemic adds a degree of uncertainty, there may also be other headwinds such as the rising gas prices, less favorable exchange rates, and some inflationary pressure from both raw materials and transport costs. On the other hand, the trend in demand for containerboard and packaging products is solid and reassuring. Price increases have been announced in all our sectors of activity, and we're looking forward to a very promising second half of 2021. The timing and pace of the reopening of the economy is key to our tissue business. And as vaccination levels rise and businesses reopen, we expect a gradual return to more normalized levels of demand for out-of-home products. At the same time, we expect to continue to benefit from the modernization and capital investments made in recent years. And we expect our margin expansion initiatives to generate a further 1% increase in EBITDA this year. And we'll continue to implement our overall strategic plan. In this regard, we've made significant progress in delivering our multiyear strategic plan over the past year. And we remain focused on our 3 strategic priorities: the continuous modernization of our platforms, creating sustainable value, and innovation and customer-oriented approach in everything we do. We're pleased with the significant progress we've made on our 2020 platform modernization initiatives. As I mentioned earlier, we've invested $365 million in new equipment acquisitions and in advancing our strategic plan to convert the Bear Island facility in 2020. These initiatives will strengthen our long-term competitiveness and enhance our product offering. In our tissue business, significant work has been done over the past few years to upgrade our equipment to improve the geographic positioning of our assets and integrate the Orchids facility into our platform. We can say that we've completed approximately 90% of our action plan, as the installation of the last converting lines and the running in of the new equipment are underway. Through these initiatives, we've completely transformed and enhanced our tissue converting platform, repositioning it competitively and setting the stage for the long-term growth of this business. Our modernization efforts also focus on our geographic positioning to align capacity and production requirements, on improving our downstream integration to convert more of our manufactured products into finished goods, and on the sustainability of our operations and the products we produce. For 2021, we have budgeted a capital expenditure of between $450 million and $475 million, including $250 million for the Bear Island conversion project. We're pleased with the progress of this project, which is on budget and on schedule, to culminate in the production of the first roll of paper in December 2022. Given the current changing environment and with questions remaining about the timing and scale of the economic recovery and the rollout of vaccinations, we will be flexible in terms of the scope and speed of some of the planned investments, where warranted. Our second objective is to create long-term value. This objective is multifaceted, involving complementary and often interrelated measures and initiatives in 3 areas. The first of these is margin improvement. Organically, we're targeting internal improvement, as Allan outlined in his description of the margin improvement program currently underway across the business. In parallel, a strategic approach to capital allocation is targeting external sources of margin expansion that will improve our competitive positioning and product offering. The second area is balance sheet management. We're very pleased to have achieved our 2.5 debt-to-equity ratio target at the end of 2020. Going forward, we are committed to having the financial flexibility to be proactive about promising opportunities, while making capital investments that equip our plants to withstand market fluctuations and enable them to add value in times of economic growth. There's no doubt that our Bear Island project will require significant investments in 2021 and 2022. However, we expect strong operating cash flows during this period to meet all capital requirements. At last but certainly not least in our value creation framework is the return of value to our shareholders through a combination of share buybacks and dividends. Our latest strategic priority is to integrate innovation and customer focus into our daily execution. Cascades' entrepreneurial spirit and decades-long commitment to proposing and delivering sustainable solutions has always been at the heart of our company. We want to share this knowledge with our customers, partnering with them to develop innovative products that meet their specific needs. To do this, it's essential to make Cascades the leading provider of sustainable packaging and tissue solutions in the minds of our customers. We therefore apply a multidisciplinary approach across our business, linking broad knowledge base of our innovation team to sales, product development and production. Since the beginning of the pandemic, we've done everything possible to ensure the health and safety of our employees, and our efforts have paid off. We've been able to limit the impact of the pandemic within our walls. In this respect, I'd like to thank once again our employees who day after day came to work in a difficult context. They showed courage, resilience, discipline and vigilance at all times, proud to be providing essential goods and services in these difficult times. They've redoubled their efforts and dedication to meet our commitments to our customers and the consumers who depend on them. Being recognized as an essential business is a great privilege, but with that privilege comes a great responsibility, and our Cascaders have once again risen to the occasion. They've shown an unwavering commitment. Our employees have all shown ingenuity in meeting the challenges of the pandemic, from producing visors to designing de-confinement solutions. None of this stopped them from continuing to give back to the communities where Cascades operates. Just think of the 150,000 boxes we donated to food aid organizations last year. Our Cascaders feel with their hearts and reach out with their hearts and their hands. In these difficult times, they've helped to make a difference in their respective communities, and I really thank them for that. Over and above our results and all these achievements, what makes me even prouder is that we've done all of this while respecting our values and the vision of a sustainable company that our founders bequeathed to us. Once again, this year our company and our products have distinguished themselves by receiving numerous awards for the sustainability of our actions. Among these, I'd like to point out that Cascades was recognized this year as the 17th most sustainable company in the world in the prestigious Global 100 ranking, which evaluates more than 8,000 companies around the world with sales of over $1 billion. The Observatoire de la consommation responsable also named us the most responsible company and brand in the eyes of Quebecers for the 10th consecutive year. We're very proud of these. These awards, far from being a finishing line, motivate us to go even further. As you know, our 2016 to 2020 sustainable development plan has come to an end. This is the end of one cycle, but more importantly, the beginning of another. I'm very pleased and excited to announce that our new sustainable development plan is ready. It will be officially unveiled in the next few days, under the theme Driving Positive Change, this plan is the result of rigorous work carried out by our teams for over a year. It was developed following extensive consultation with customers, investors, suppliers, employees, and environmental NGOs. This will be our fourth sustainability plan and is without a doubt our most ambitious. Aligned with our stakeholders' priorities, it will enable us to make the expectations and demands of all our stakeholders who encourage and support us to create sustainable, innovative and value-creating packaging, hygiene and recovery solutions. It reflects our desire to push the boundaries of sustainability within our company and our industry and to consolidate our leadership position in this area. Cascades has always been an agent of change and a source of progress in sustainable development. That will continue to be the case. I'd like to invite you to watch a short video that will give you a taste of this strategy. [Presentation]

Stay tuned for the launch in the coming days of this new sustainable development plan. Before concluding today's meeting, let me reiterate how confident we are in the future of Cascades. We have made great strides in modernizing our platforms and increasing our financial flexibility. And these steps have positioned Cascades to create value for the company, for our customers, and for all of our stakeholders throughout the inevitable ups and downs of an ever-changing business environment and a world in the grips of a pandemic. We thank you for your attention today and for your trust. We look forward to your continued support. Please be assured that we will keep you informed of our progress throughout the year, and we hope to meet you in person this time next year. Thank you.

Thank you, Allan and Mario. I think that you can see that we're going to have a fourth consecutive record year. That's my prediction. And now we're in the question period. We will answer questions that any registered shareholder or any duly appointed proxy wishes to bring to the attention of this meeting. For each question received in the chat box, we will summarize the question and read out the name of the person who asked the question, and if applicable, the name of the entity they represent. [Operator Instructions] Let's be a little patient to see if there really are no questions. Well, I think, Mr. Hall, that we can continue. So thank you, everyone. Since there are no further questions, we will conclude the question period of the meeting. Having exhausted all of the items on the agenda, I declare the meeting closed. Journalists who would like to conduct individual interviews following the meeting are invited to contact Hugo D'Amours, VP of Communications and Public Affairs, whose contact information appears on your screens. Thank you for your attention, dear shareholders. And thank you for supporting Cascade's future success. Have an excellent end of the day, and take care. [Statements in English on this transcript were spoken by an interpreter present on the live call.]