Slide 1: Q4 2019 Financial Results
Q4 2019 FINANCIAL RESULTS February 27, 2020
Slide 2: Disclaimer
DISCLAIMER FORWARD-LOOKING STATEMENT Certain statements in this presentation, 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 numb
Slide 3: Summary of Quarterly Financial Results
SUMMARY OF QUARTERLY FINANCIAL RESULTS2 156 161 152 113 135 40 82 105 24 31 26 28 29 72 — 13 (26) (1) (67) (35) Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 1 Operating Income (loss) Adjusted OIBD Net Earnings (loss) Adjusted Net Earnings 1 Figures above in million
Slide 4: Historical Segmented Quarterly Operating Income (Loss) & Adjusted OIBD
HISTORICAL SEGMENTED QUARTERLY OPERATING INCOME (LOSS) & ADJUSTED OIBD1,2 Containerboard (millions of CAN$) Boxboard Europe2 (millions of CAN$) 113 118 29 30 111 25 24 104 106 20 18 19 11 14 91 84 84 84 69 (6) Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Operating
Slide 5: Historical Segmented Quarterly Shipments
HISTORICAL SEGMENTED QUARTERLY SHIPMENTS Containerboard ('000 s.t. and % capacity utilization1) Boxboard Europe ('000 s.t. and % capacity utilization1) 333 331 377 321 368 363 365 96% 342 95% 305 93% 93% 94% 90% 91% 92% 88% 292 88% Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q4 2018 Q1 2019 Q2 2019 Q3 2
Slide 6: Raw Material Costs - Index List Prices
RAW MATERIAL COSTS - INDEX LIST PRICES ($ US/t.c.) Recycled Fibre Prices Current ($ US/t.m.) Virgin Pulp Prices Current (Feb-20) (Feb-20) 250 1,500 225 1,400 200 1,300 175 150 1,200 125 1,100 1,130 101 100 1,000 75 900 890 50 25 33 800 0 700 Nov 15 Feb 16 May 16 Aug 16 Nov 16 Feb 17 May 17 Aug 17 No
Slide 7: Segmented Review
SEGMENTED REVIEW = 9 O18Me- 8
Slide 8: Packaging Products / Containerboard
PACKAGING PRODUCTS / CONTAINERBOARD Results Change vs. Comments on sequential performance Q4 2019 Q3 2019 Q4 2018 è Fourth quarter shipments decreased sequentially. This reflects a 4% decrease in shipments Shipments ('000 s.t.) of containerboard, which is attributable to the usual seasonal variation
Slide 9: Tissue Papers
TISSUE PAPERS Results Change vs. Comments on sequential performance Q4 2019 Q3 2019 Q4 2018 è Sequential increase in shipments reflects the Orchids acquisition. Excluding Shipments ('000 s.t.) Orchids,shipments decreased 5% from Q3. This is a reflection of lower shipments of 167 4% 12% converted pro
Slide 10: Packaging Products / Boxboard Europe
PACKAGING PRODUCTS / BOXBOARD EUROPE Results Change vs. Comments on sequential performance Q4 2019 Q3 2019 Q4 2018 è Shipments of virgin boxboard increased by 1,000 s.t, or 2%, sequentially, a level reflecting Shipments ('000 s.t.) the usual seasonality associated with the August and December vacati
Slide 11: Packaging Products / Specialty Products
PACKAGING PRODUCTS / SPECIALTY PRODUCTS Results Change vs. Comments on sequential performance Q4 2019 Q3 2019 Q4 2018 è The sequential sales decrease is largely attributable to the divestiture of the Rollpack Sales (M$) operations in France at the end of the third quarter. Sales of plastic products
Slide 12: Segmented YoY Operating Income (Loss) Waterfalls
SEGMENTED YoY OPERATING INCOME (LOSS) WATERFALLS Containerboard (millions of CAN$) Boxboard Europe (millions of CAN$) 160 26 1 50 27 (29) 12 3 111 106 24 (16) 120 11 20 84 (16) 25 (16) 69 11 80 (11) (8) (2) 40 0 (14) (6) 0 Q4 2018 Depr. & Q4 2018 Raw Other Price Other prod.Q4 2019 Depr. & Q4 2019 -2
Slide 13: Segmented Sequential Operating Income (Loss) Waterfalls
SEGMENTED SEQUENTIAL OPERATING INCOME (LOSS) WATERFALLS Containerboard (millions of CAN$) Boxboard Europe (millions of CAN$) 160 45 29 118 5 (29) 11 25 3 24 120 106 30 91 14 (3) (7) 69 15 (1) (3) 80 (2) (7) (8) 0 40 -15 (30) (6) 0 -30 Q3 2019 Depr. & Q3 2019 Raw Other Volume Price Q4 2019 Depr. & Q4
Slide 14: Financial Review
FINANCIAL REVIEW eo ke SE fe te Oe 7 ba
Slide 15: Key Performance Indicators (KPIs)
KEY PERFORMANCE INDICATORS (KPIs) Total Shipments1 ('000 s.t.) Capacity Utilization Rate1-2 (manufacturing only) 859 93% 93% 849 837 91% 821 809 90% 90% Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 LTM Return on Assets LTM Working Capital (% of LTM Sales) 12.0% 10.
Slide 16: Year Over Year Sales Reconciliation
YEAR OVER YEAR SALES RECONCILIATION (M CAN$) +3% 1,300 13 6 57 1,250 (7) (16) 1,227 1,196 (22) 1,200 1,150 Sales Business Other Recovery & Sales (M CAN$) Q4-2018 acquisitions Variances Volume F/X CAN$ Price & Mix Recycling Q4-2019 Containerboard 472 — — (5) — (16) — 451 Boxboard Europe 245 18 — (2)
Slide 17: Sequential Sales Reconciliation
SEQUENTIAL SALES RECONCILIATION (M CAN$) -3% 1,300 6 1,275 7 1,264 (2) 1,250 (19) 1,227 1,225 (29) 1,200 Sales Business Other Sales (M CAN$) Q3-2019 acquisitions variances F/X CAN$ Price & Mix Volume Q4-2019 Containerboard 473 — — — (7) (15) 451 Boxboard Europe 256 — — (2) (1) (10) 243 Specialty Pro
Slide 18: Year-Over-Year Operating Loss Reconciliation
YEAR-OVER-YEAR OPERATING LOSS RECONCILIATION + Lower recycled fibres and virgin pulp prices + Favourable mix of products sold + Lower costs of brown fibre grades + Higher average selling price - Lower manufacturing selling prices - Production costs (mix of converted products sold) - Recovery and Rec
Slide 19: Sequential Operating Income (Loss) Reconciliation
SEQUENTIAL OPERATING INCOME (LOSS) RECONCILIATION - Lower average selling price + Lower recycled fibres and virgin pulp prices - Lower seasonal volume + Orchids acquisition Q3-2019 - Higher freight and R&M costs - Lower volume + Lower costs of brown fibre grades (M CAN$) Impairment charges - on US T
Slide 20: Quarterly Year-Over-Year Adjusted EPS Variance
QUARTERLY YEAR-OVER-YEAR ADJUSTED EPS VARIANCE1,2 0.60 0.40 0.30 0.06 0.03 0.30 0.20 (0.01) (0.02) (0.06) 0.71 — 0.00 $ cents -0.20 (0.57) (0.27) -0.40 -0.60 -0.80 (0.71) -1.00 EPS reported Specific Adjusted EPS OIBD Depreciation Financing Share of Non- Income Adjusted EPS Specific EPS reported Q4-2
Slide 21: Quarterly Sequential Adjusted EPS Variance
QUARTERLY SEQUENTIAL ADJUSTED EPS VARIANCE1,2 0.50 0.42 0.40 0.15 0.30 0.30 0.30 (0.01) (0.02) (0.12) (0.02) 0.20 (0.07) (0.03) 0.10 $ cents 0.00 -0.10 -0.20 -0.30 (0.57) (0.27) -0.40 EPS reported Specific Adjusted EPS OIBD Depreciation Financing Share of Non- Income Adjusted EPS Specific EPS report
Slide 22: Q4-19 Adjusted OIBD to Operating Income (Loss) Reconciliation
Q4-19 ADJUSTED OIBD TO OPERATING INCOME (LOSS) RECONCILIATION (M CAN$) 200 152 150 100 75 50 (77) (5) (2) 0 -50 (64) (3) (2) (1) -100 Adjusted Depr. & Adjusted Loss on acq. Inventory adj. Impairment Restructuring Unrealized loss Operating 1 OIBD Amort. Operating and others resulting from charges cos
Slide 23: Net Earnings - IFRS vs Adjusted
NET EARNINGS - IFRS VS ADJUSTED NET EARNINGS NET EARNINGS (LOSS) (LOSS) PER SHARE1 (in millions of Canadian dollars, except amount per share) Q4-2019 Q4-2019 As per IFRS (26) $ (0.27) Specific items: Loss on acquisitions, disposals and others 5 $ 0.04 Inventory adjustment resulting from business acq
Slide 24: Cash Flow Overview
CASH FLOW OVERVIEW 124 125 52 38 104 108 107 15 1 16 89 89 85 91 82 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 CF from oper. Adj. CF from oper. 3 Adjusted Free Cash Flow 3 Figures above in millions of CAN$ Figures above in millions of CAN$ 2017 2018 2019 (In mill
Slide 25: Net Debt Reconciliation - Q4 2019
NET DEBT1 RECONCILIATION - Q4 2019 (M CAN$) 2,100 2,070 2,050 2,000 67 1,963 1,950 (91) 11 1,900 3 8 1,850 (72) (33) 1,800 1,750 1,700 1,650 1,600 1,550 1,500 Net debt as at Cash flow Changes in F/X CAN$ Investments Capital leases Dividends paid & Payments for Net debt as at September 30, 2019 from
Slide 26: Consolidated Financial Ratios & Debt Maturities
CONSOLIDATED FINANCIAL RATIOS & DEBT MATURITIES Net Debt / LTM Adjusted OIBD1,3 Interest Coverage Ratio2,3 5.0x 4.6x 4.7x 6.0x 5.8x 4.0x 3.8x 3.6x 4.7x 4.6x 3.5x 4.3x 3.25x 3.4x 3.4x 3.0x 2012 2013 2014 2015 2016 2017 2018 2019 2012 2013 2014 2015 2016 2017 2018 2019 Net Debt / Net Debt + Total Equi
Slide 27: Capital Investments
CAPITAL INVESTMENTS (in millions of Canadian dollars, including capitalization of IT projects, excluding value of leases) Excludes potential Bear Island investments 360 40 2020 CAPEX BUDGET1 81 274 ± $250 M1 47 Containerboard ±$40M 218 20 45 46 35 Boxboard Europe ±$35M 104 100 Specialty Products ±$3
Slide 28: Concluding Remarks
CONCLUDING REMARKS 28
Slide 29: Orchids Paper - Acquisition Update
ORCHIDS PAPER - ACQUISITION UPDATE • Expect annual OIBD1 contribution of US$25 - $30 million in 2020, increasing to annual OIBD1 run rate of ~US$45 million in 20212 • Cascades' outsourced tonnage being transferred to fill open capacity at Barnwell and Pryor • 75% of this tonnage had been transferred
Slide 30: Near Term Factors
NEAR TERM FACTORS • Raw materials: prices for OCC, virgin pulp and • Raw material: slight increases in OCC, SOP and SOP white recycled fiber grades remain low virgin pulp prices • Tissue: contribution from Orchids, price increases, • Tissue: lower Q1 seasonal volumes à • stable raw material costs Bo
Slide 31: Appendix
APPENDIX —s Ne | a
Slide 32: Impact of New IFRS 16 - Accounting for Leases
IMPACT OF NEW IFRS 16 - ACCOUNTING FOR LEASES Impact on the Statements of Earnings* (in millions of Canadian dollars) Q4-2019 2019 OIBD Containerboard 3 11 Europe 1 4 Specialty Products 1 3 Tissue Papers 1 4 Corporate 1 7 Increase in OIBD (total) 7 29 Increase in depreciation 7 27 Increase in financ
Slide 33: Selected Reference Prices and Fibre Costs
SELECTED REFERENCE PRICES Current (US$/s.t.) Containerboard - Selected Products Current (Euro€/s.t.) Boxboard Europe - Selected Products (Dec-19) 800 (Jan-20) 1,200 1,100 1,115 700 715 1,000 615 900 600 800 500 700 669 600 400 500 Nov 16 Feb 17 May 17 Aug 17 Nov 17 Feb 18 May 18 Aug 18 Nov 18 Feb 19
Slide 34: Selected Reference Prices and Fibre Costs
SELECTED REFERENCE PRICES AND FIBRE COSTS Q4 2019 vs Q4 2019 vs 2017 2018 2019 Q4 2018 Q3 2019 These indexes should only be used as an indicator of trends and they may be different than our actual selling prices or purchasing costs. Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year (units) (%) (units) (%) Sell
Slide 35: For more information: www.cascades.com/investors
For more information: www.cascades.com/investors Jennifer Aitken, MBA Director, Investor Relations 514-282-2697 / investor@cascades.com 35