Cascades Inc. · TSX:CAS
Cascades — Shareholder Meeting (2021)
65 slides from Cascades's shareholder meeting presentation, 2021
Slide 1: Cascades
|e Cascades
Slide 2: 2021 Annual General Meeting of Shareholders
2021 Annual General Meeting of Shareholders 2
Slide 3: Disclaimer: Forward-Looking Statement
DISCLAIMER FORWARD-LOOKING STATEMENT Certain statements that may be made today, including statements regarding future results and performance, are forward-looking statements within the meaning of securities legislation based on current expectations. The accuracy of such statements is subject to a nu
Slide 4: Alain Lemaire, Executive Chairman of the Board
Alain Lemaire Executive Chairman of the Board of Directors 4
Slide 5: Word of Welcome
1 Word of Welcome 5
Slide 6: Opening of the 2021 Annual General Meeting
2 Opening of the 2021 Annual General Meeting 6
Slide 7: Management Representatives
Management Representatives Alain Mario Allan Robert Lemaire Plourde Hogg Hall Cofounder and President and Chief Vice-President and Chief of Strategy, Legal Executive Chairman of Executive Officer Chief Financial Officer Affairs and Corporate the Board of Directors Secretary 7
Slide 8: Meeting Procedures
3 Meeting Procedures 8
Slide 9: Confirmation of the Mailing of the Notice of Meeting, Management Proxy Circular and Proxy Form
Confirmation of the Mailing 4 of the Notice of Meeting, Management Proxy Circular and Proxy Form 9
Slide 10: Report of the Scrutineers
5 Report of the Scrutineers 10
Slide 11: Filing of the Consolidated Financial Statements for 2020
Filing of the Consolidated Financial 6 Statements for the year ended December 31, 2020 and the Independent Auditor’s Report 11
Slide 12: Election of Directors
7 Election of Directors 12
Slide 13: Thank you! Louis Garneau
Thank you! Louis Garneau 13
Slide 14: Election of Directors
7 Election of Directors Alain Sylvie Élise Pelletier Sylvie Lemaire Lemaire Vachon Mario Michelle Martin Patrick Plourde Cormier Couture Lemaire Hubert T. Mélanie Nelson Elif Lacroix Dunn Gentiletti Lévesque 14
Slide 15: Appointment of the Independent Auditor
Appointment of the Independent Auditor 8 PricewaterhouseCoopers LLP Partnership of chartered professional accountants 15
Slide 16: Advisory Vote on Executive Compensation
Advisory Vote on Executive 9 Compensation Accepting the Corporation’s Approach to Executive Compensation 16
Slide 17: Special Resolution Amending the Articles of the Corporation
Special Resolution for the Purpose of Amending the 10 Articles of the Corporation, all as Described in Appendix I of the Circular 17
Slide 18: Shareholder Proposal
11 Shareholder Proposal 18
Slide 19: Vote and Voting Results
12 Vote and Voting Results 19
Slide 20: 2020 Highlights
2020 Highlights Mario Plourde President and Chief Executive Officer 20
Slide 21: Sales ($M)
($M) Sales* 5,500 +3% +7% 5,157 4,996 5,000 +8% 4,649 4,500 4,321 4,000 2017 2018 2019 2020 * As reported in previous public filings. Figures have not been adjusted to reflect discontinued operations in this presentation. Please refer to “Financial Overview” section and Note 4 of the 2021 First Quar
Slide 22: Adjusted OIBD ($M)
($M) 800 +12% Adjusted +24% 675 OIBD1* 600 +24% 604 489 393 400 13.1% margin 12.1% margin 200 10.5% margin 9.1% margin 0 2017 2018 2019 2020 (1) Please click here for supplemental information on non-IFRS measures. * As reported in previous public filings. Figures have not been adjusted to reflect di
Slide 23: CAPEX $244M Strategic Investments
CAPEX $244M MAJOR 2020 PROJECTS INCLUDED Strategic CORPO & IT TISSUE 22 Investments • Converting lines $66M 2020* TISSUE CCP 84 CONTAINERBOARD 85 • Bear Island $28M • Box plant (Ontario) $15M $365M SPG 22 EUROPE 31 • • Laminator Boiler $5M $9M SPECIALTY PRODUCTS • New rigid plastic line $7M CDPQ’s 2
Slide 24: Strengthened & Expanded our Core Platforms
Strengthened & Expanded our Core Platforms NEW BOILER & WATER COOKING (CCP) ▪ Cabano, QC NEW CONVERTING CAPACITY (SPG) ▪ Inopak, QC AUTOMATION, ROBOTIZATION NEW CONVERTING CAPACITY (CCP) ▪ Indiana, IN ▪ St. Marys, ON (CCP) ▪ Vaughan, ON (CCP) NEW CONVERTING CAPACITY (CGT) ▪ Wagram, NC ▪ Pryor, OK ▪
Slide 25: Highlights: Corporate
Highlights CORPORATE Successfully Generated record Achieved launched the Completed a Refinanced adjusted OIBD for targeted leverage margin CAN$125 million US$300 million of the third ratio of 2.5x improvement equity offering long-term debt consecutive year at year-end program 25
Slide 26: Highlights: Containerboard Packaging
Highlights CONTAINERBOARD PACKAGING Increased ownership of Greenpac Mill to 86% via the Optimized Ontario operational Launched Bear Island, Virginia, purchase of Caisse de dépôt et platform conversion project placement du Québec (CDPQ)’s 20.1% interest 26
Slide 27: Highlights: Boxboard Europe
Highlights BOXBOARD EUROPE Agreement to sell Announced purchase of La Rochette operations Paprinsa operations in Spain in France (closed on April 30, 2021) 27
Slide 28: Highlights: Specialty Products
Highlights SPECIALTY PRODUCTS Adjusted OIBD margin: 12.7% Leader in sustainable Widely recognized product from 11.2% in 2019 food packaging innovations 28
Slide 29: Highlights: Tissue Papers
Highlights TISSUE PAPERS Reorganization of operations in Enhanced equipment platform Advanced modernization and Arizona, Waterford and at the optimization initiatives and Pennsylvania in 2020; planned Scappoose and Wagram integration of Orchids assets divestiture of Laval plant in operations 2021 29
Slide 30: Bear Island US$380M Investment
Bear Island Eco-friendly, highly competitive products will complement Greenpac Mill production GREENPAC BEAR ISLAND MILL Annual Capacity 465,000 s.t. 540,000 s.t. Machine Width 310" 330" US$380M Investment (US$193M in 2021 and US$118M in 2022) Product Basis Weight 16 – 42 lbs 20 – 42 lbs FIRST PAPER
Slide 31: Bear Island: A Strategic Investment
Bear Island: A Strategic Investment MARKET TRENDS MORE SUSTAINABLE Résultats de recherche d'images pour « bear island paper logo » Recyclability CAPACITY WITH CURRENT CAPACITY Sustainability BEAR ISLAND 1,568 K s.t. /YR 2,033 K s.t./YR +30% Lightweight 16% 12% E-commerce 84% ◼ Recycled 88% Microflut
Slide 32: Financial Review
Financial Review Allan Hogg Vice-President and Chief Financial Officer 32
Slide 33: 2020 Results
2020 RESULTS* Robust demand for essential packaging & retail tissue products 23% Tissue: strong demand for retail tissue products 32% 52% 38% ADJ. Containerboard and Specialty Products: strong volumes SALES1 8% driven by increased demand for essential products and e- OIBD 1,3 commerce 9% 17% E
Slide 34: Containerboard Packaging
CONTAINERBOARD PACKAGING ($M) +5% +11% -1% 2017 – 2020 2,000 1,918 30.0% 1,840 1,827 1,652 Adjusted OIBD1 22.3% 24.1% 25.0% CAGR (since 2017) : 1,500 21.0% 20.0% 15.0% +17.7% 1,000 +8% -9% 15.0% +66% 10.0% 500 410 441 403 247 5.0% 0 0.0% 2017 2018 2019 2020 1 1 Sales Adj. OIBD Adj. OIBD Margin 1 Ple
Slide 35: Boxboard Europe
BOXBOARD EUROPE1* ($M) +0.5% +12% 1,200 +11% 14% 1,048 1,052 2017 – 2020 933 10.3% 12.3% 12% 10.4% 838 10% Adjusted OIBD1 800 8.1% CAGR (since 2017) : 8% 6% +23.8% 400 +43% +11% +19% 4% 108 129 2% 97 68 0 0% 2017 2018 2019 2020 1 1 Sales Adj. OIBD Adj. OIBD Margin 1 Via our equity ownership in Reno
Slide 36: Specialty Products
SPECIALTY PRODUCTS ($M) +37% -4% 492 2020 Adj. OIBD1 500 473 14.0% +6% Margin : 12.7% 12.0% 400 358 11.2% 339 10.0% 10.0% +150 bps 300 9.2% 8.0% year-over-year 6.0% 200 +9% 4.0% +67% 100 2.0% 0 0.0% 2017 2018 2019 2020 1 1 Sales Adj. OIBD Adj. OIBD Margin 1 Please click here for supplemental informa
Slide 37: Tissue Papers
TISSUE PAPERS ($M) +7% 2020 Adj. OIBD1 1,800 +12% 12% 1,615 Margin : +7% 1,509 10.8% 1,500 10% 1,352 1,268 +510 bps 1,200 7.4% 8% year-over-year 900 5.7% 6% 600 4% +103% +406% -82% 300 2% 175 94 1.3% 86 17 0 0% 2017 2018 2019 2020 1 1 Sales Adj. OIBD Adj. OIBD Margin 1 Please click here for suppleme
Slide 38: Net Debt Evolution 2020
Net Debt Evolution 2020 (in $M) - 14% - $284M 48 18 63 121 20 22 195 120 1,963 1,679 567 Net debt as Payments for Purchase of Right-of-use Dividends paid Investments Changes in F/X CAN$ Issuance of Casf flow from Net debt as at December property, plant CDPQ investment assets and & change in and othe
Slide 39: Consolidated Financial Ratios & Debt Maturities
Consolidated Financial Ratios & Debt Maturities NET DEBT/ADJUSTED OIBD 1,2,3 LONG-TERM DEBT MATURITIES (as at Dec. 31, 2020, in $M) 5.0x 780 4.6x 4.7x 4.0x 3.8x 3.6x 3.5x 3.25x 445 2.5x 356 385 16 59 175 127 102 23 131 210 31 36 12 23 2012 2013 2014 2015 2016 2017 2018 2019 2020 1 year >1 year 2025
Slide 40: Q1 2021 Results
Q1 2021 Results 40
Slide 41: Q1 2021 Results
Q1 2021 Results* Q1 2021 Q4 2020 Q1 2020 Sales 1,182 1,242 1,265 Operating income 52 113 87 Adjusted OIBD1 141 162 157 Net earnings 22 73 22 Adjusted net earnings1 29 42 39 Net earnings per share $0.22 $0.72 $0.24 Adjusted net earnings per share1 $0.29 $0.42 $0.42 (1) Please click here for supplemen
Slide 42: Raw Material Costs – Index List Prices
Raw Material Costs – Index List Prices Recycled Fibre Prices Virgin Pulp Prices ($ US/s.t.) Current ($ US/s.t.) Current (Apr-21) (Apr-21) 1 565 1 260 118 78 White grades (Basket of products) Brown grades (OCC) NBSK NBHK Recovered Paper Prices Q1-2021 Q4-2020 Q1-2020 Q1/Q1 Q1/Q4 White grades - Basket
Slide 43: Operating Income Variance Q1 2021
Operating Income Variance Q1 2021* (in $M) - 40% - $35M - 10% - $16M 9 6 1 70 0 157 7 141 25 13 87 52 76 Q1 2020 Depr. & Specific Q1 2020 Container- Specialty Corporate Boxboard Tissue Q1 2021 1 Specific Depr. & Operating Operating Amort. items Adj. OIBD 1 board Products Activities Europe Papers Adj
Slide 44: Net Debt Evolution Q1 2021
Net Debt1 Evolution Q1 2021 (in $M) - 1% - $25M 1,679 78 1,654 14 98 12 3 21 13 Net debt as Cash flow from F/X CAN$ Discontinued Investments Dividends paid Change in non- Payments for Net debt as at at December oper. Activities operations and others & change in cash working property, plant March 31,
Slide 45: Margin Improvement Program
Margin Improvement Program 45
Slide 46: WHY: Several reasons to launch a margin improvement program
WHY: Several reasons to launch a margin improvement program ACHIEVING ACHIEVING EBITDA EBITDA MARGIN MARGIN TARGET IMPROVEMENT Protection against Return capital to Ability to pay Tackle new economic downturn shareholders down debt frontiers E.g. dividend, share price E.g. pursue M&A opportunities 46
Slide 47: WHAT: Streams set up to deliver margin improvement
WHAT: 5 streams set up to deliver margin improvement for Cascades Net Revenue Production Sales & Supply Chain Organizational Management Efficiency Operations Efficiency Effectiveness Planning Improving Increasing asset Optimizing sales Optimizing Spans & layers 1% margin price/mix and productivity,
Slide 48: Outlook and Update on Strategic Plan
Outlook and Update on Strategic Plan Mario Plourde President and Chief Executive Officer 48
Slide 49: 2021 Outlook
2021 Outlook Solid demand for containerboard Natural gas prices Announced price increases Foreign exchange rates in all of our business sectors Return to normalized demand levels in Potential for demand-driven Away-from-Home as businesses reopen pressure on raw material costs Benefits being realized
Slide 50: Our Strategic Focus
Our Long-Term Strategic Modernization Value Creation Focus Innovation & Customer Centricity Continue to support our employees through the COVID-19 pandemic, and provide them with excellent Health & Safety parameters 50
Slide 51: Our Strategic Focus: Modernize
Our Strategic Focus: MODERNIZE FOCUS STRATEGY ✓ Install state-of-the-art, 1st quartile equipment Modernize our platforms ✓ Variety of investments: upgrades, installation of new lines, conversion projects ✓ Increase downstream converting integration Integration & Sustainability ✓ Prioritize sustainab
Slide 52: Our Strategic Focus: Create Value
Our Strategic Focus: CREATE VALUE FOCUS STRATEGY ✓ Ongoing initiatives expected to generate 1% annual Margin expansion margin improvement in 2021 & 2022 ✓ Strategic capital allocation framework to strengthen competitive positioning ✓ Disciplined balance sheet management Leverage ratio < 3.0x ✓ Stron
Slide 53: Our Strategic Focus: Innovation
Our Strategic Focus: INNOVATION FOCUS STRATEGY ✓ Prioritize development of sustainable, innovative & industry-leading products Product development ✓ Integrate internal R&D and innovation expertise in product development ✓ Establish market positioning as the “go-to” provider of Sustainable solution p
Slide 54: Our Priority: the Health & Safety of our Employees
Our Priority: the Health & Safety of our Employees 54
Slide 55: Our Essential Products
Our Essential Products 55
Slide 56: Our Innovations
Our Innovations 56
Slide 57: Our Involvement
You see a simple box. Our Involvement ~ a ae We see 150,000 opportunities ~ wm “a - to support our communities.
Slide 58: In keeping with our values
Global 100 Most Sustainable Corporations in the World according to Corporate Knights Most Sustainable Corporations in the World rs GLOBAL 00 most responsible company and brand according to Quebecers, as measured by the Barometer of Responsible Consumption Observatoire de la Consommation Responsable
Slide 59: Driving positive change
driving posi-ive chance mw}
Slide 60: Conclusion
Conclusion Mario Plourde President and Chief Executive Officer 60
Slide 61: Question Period
16 Question Period 61
Slide 62: Adjournment of the Meeting
17 Adjournment of the Meeting 62
Slide 63: Investors and Media Contacts
INVESTORS MEDIA Jennifer Aitken Hugo D'Amours Director, Investor Relations Vice-President, Communications, Public Affairs and Sustainable 514-282-2697 Development investors@cascades.com 418-573-2348 hugo_damours@cascades.com 63
Slide 64: Thank you!
2021 Annual General Meeting of Shareholders Thank you! 64
Slide 65: Cascades
|e Cascades