Cascades Inc. · TSX:CAS
Cascades — FY2016 Earnings Presentation
38 slides from Cascades's earnings presentation, Mar 2, 2017
Slide 1: Review of Q4 & Full Year 2016 Financial Results
CASCADES INC. Review of Q4 & Full Year 2016 Financial Results March 2, 2016
Slide 2: Disclaimer
DISCLAIMER 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 number of risks, uncertainties
Slide 3: Opening Remarks
OPENING REMARKS ( 10 8Mee
Slide 4: Summary of Quarterly Financial Results
SUMMARY OF QUARTERLY FINANCIAL RESULTS (M CAN$) Adjusted EBITDA (% of sales) (CAN$) Adjusted EPS 150 16% $0.60 134 $0.52 125 14% $0.50 104 106 112 103 103 100 12% $0.40 $0.38 85 82 $0.35 $0.32 75 10% $0.30 $0.25 $0.23 $0.18 $0.16 50 8% $0.20 25 6% $0.10 0 4% $0.00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 5: Historical Segmented Quarterly Shipments
HISTORICAL SEGMENTED QUARTERLY SHIPMENTS Containerboard Boxboard Europe (% capacity (% capacity ('000 s.t.) utilization) ('000 s.t.) utilization) 300 296 294 100% 300 296 105% 282 284 283 286 280 277 95% 280 278 100% 268 268 266 263 267 263 260 90% 260 258 95% 240 85% 240 90% 220 80% 220 85% Q1 Q2 Q
Slide 6: Key Performance Indicators (KPIs)
Sequentially: KEY PERFORMANCE INDICATORS (KPIs) Containerboard: 96% to 91% Boxboard Europe: 89% to 91% Tissue Papers: 93% to 83% ('000 s.t.) Total Shipments Capacity Utilization Rate (Manufacturing only) 2 800 100% 766 769 763 743 757 736 93% 93% 93% 93% 93% 741 750 95% 717 91% 89% 89% 700 90% 650 8
Slide 7: Raw Material Costs – Index List Prices
RAW MATERIAL COSTS – INDEX LIST PRICES Recycled Fibre Prices Current Virgin Pulp Prices Current (US$/ton) (US$/ton) (Feb.) (Feb.) 200 1,100 183 1,030 1,000 150 135 900 100 850 800 50 700 Feb 14 May 14 Feb 15 May 15 Feb 16 May 16 Feb 17 Nov 13 Nov 14 Nov 15 Nov 16 Aug 14 Aug 15 Aug 16 May 14 May 15 M
Slide 8: Historical Segmented Quarterly Adjusted EBITDA
HISTORICAL SEGMENTED QUARTERLY ADJUSTED EBITDA Containerboard Boxboard Europe (M CAN$) (% of sales) (M CAN$) (% of sales) 75 24% 25 20% 68 56 60 58 19 60 20% 20 16% 52 55 55 17 17 43 16 45 16% 15 14 12% 13 11 30 12% 10 9 8% 15 8% 5 4% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2015 2015 20
Slide 9: Segmented Sequential Adjusted EBITDA Waterfalls
SEGMENTED SEQUENTIAL ADJUSTED EBITDA WATERFALLS Containerboard Boxboard Europe Adjusted Acqu. Selling Adjusted Adjusted Acqu. Selling Adjusted Raw Reco. & Other Other Reco. & Raw (M CAN$) EBITDA CAN$ & Energy Volume Prices & EBITDA (M CAN$) EBITDA Energy CAN$ & Prices & Volume EBITDA Materials Recyc
Slide 10: Segmented YoY Adjusted EBITDA Waterfalls
SEGMENTED YoY ADJUSTED EBITDA WATERFALLS Containerboard Boxboard Europe Adjusted Acqu. Selling Adjusted Adjusted Acqu. Selling Adjusted Reco. & Raw Other Other Reco. & Raw (M CAN$) EBITDA Volume CAN$ & Energy Prices & EBITDA (M CAN$) EBITDA Energy CAN$ Volume & Prices & EBITDA Recyc. Materials Costs
Slide 11: Consolidated Financial Ratios & Debt Maturities
CONSOLIDATED FINANCIAL RATIOS & DEBT MATURITIES Net Debt / LTM Adjusted EBITDA Interest Coverage Ratio 4.7x 7.0x 5.0x 4.6x 5.8x 6.0x 4.0x 3.4x 3.4x 5.0x 4.7x 3.0x 5.0x 3.0x 4.6x 2.5x 4.0x 3.8x 4.0x 2.0x 3.0x 1.0x 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 Net Debt / Net Debt + Total
Slide 12: Financial Review
FINANCIAL REVIEW ( 10 8Mee
Slide 13: Q4 2015 – Q4 2016 YoY Sales Reconciliation
Q4 2015 – Q4 2016 YoY SALES RECONCILIATION (M CAN$) 0% 3 1,000 9 995 (2) (4) 990 13 985 980 979 975 (15) 975 0 Recovery Selling Sales Acqu. & Corp. Sales & Volume CAN$ Prices Q4-2015 Disposals Elim. Q4-2016 Recycling & Mix (M CAN$) Containerboard 326 8 10 (1) (7) 336 Boxboard Europe 202 (2) (9) 191
Slide 14: Q3 2016 – Q4 2016 QoQ Sales Reconciliation
Q3 2016 – Q4 2016 QoQ SALES RECONCILIATION (M CAN$) -4% 1,040 3 1 4 - 1,030 7 1,021 1,020 1,010 1,000 990 979 980 (57) 0 Recovery Selling Sales Acqu. & Corp. Sales CAN$ & Prices Volume Q3-2016 Disposals Elim. Q4-2016 Recycling & Mix (M CAN$) Containerboard 356 3 (9) 3 (17) 336 Boxboard Europe 189 (2
Slide 15: Q4 2015 – Q4 2016 YoY Adjusted EBITDA Reconciliation
Q4 2015 – Q4 2016 YoY ADJUSTED EBITDA RECONCILIATION - Lower selling prices due to containerboard price decrease in January 2016 - Higher OCC costs - Unfavourable maintenance costs (M CAN$) 110 104 1 - 100 (2) (8) 90 - Additional costs related to our new Scappoose converting plant 82 - Higher SOP &
Slide 16: Q3 2016 – Q4 2016 QoQ Adjusted EBITDA Reconciliation
Q3 2016 – Q4 2016 QoQ ADJUSTED EBITDA RECONCILIATION - Seasonal impact on volume - Seasonal impact on volume - Maintenance & economic downtime - Maintenance & economic downtime - Unfavourable product mix - Higher marketing costs (M CAN$) 2 115 10 (1) 110 105 103 100 (15) 95 90 - Insurance proceed fr
Slide 17: Quarterly YoY EPS Variance – Q4 vs Q4
QUARTERLY YOY EPS VARIANCE – Q4 VS Q4 Q4-2015 Q4-2016 Adjusted Specifics As reported Adjusted Specifics As reported EBITDA 104 (60) 44 82 1 83 Depreciation (57) (57) (50) (50) EBIT 47 (60) (13) 32 1 33 Financing expenses & interest expense on employee future benefits (23) (23) (23) 1 (22) FX gain (l
Slide 18: Quarterly QoQ EPS Variance – Q3 vs Q4
QUARTERLY QoQ EPS VARIANCE – Q3 VS Q4 Q3-2016 Q4-2016 Adjusted Specifics As reported Adjusted Specifics As reported EBITDA 103 (5) 98 82 1 83 Depreciation (48) (48) (50) (50) EBIT 55 (5) 50 32 1 33 Financing expenses & interest expense on employee future benefits (24) (24) (23) 1 (22) FX gain (loss)
Slide 19: Q4-16 Adjusted EBITDA to Operating Income Reconciliation
Q4-16 ADJUSTED EBITDA TO OPERATING INCOME RECONCILIATION (M CAN$) 100 82 80 60 32 2 33 40 (50) (1) 20 0 Adjusted Dep. & Adjusted Impairment Unrealized loss on Operating EBITDA amort. operating reversals financial instruments income income Container- Boxboard Specialty Tissue Corporate Total (M CAN$)
Slide 20: Net Earnings – IFRS vs Adjusted
NET EARNINGS – IFRS VS ADJUSTED NET EARNINGS NET EARNINGS 1 PER COMMON SHARE (in millions of Canadian dollars, except amount per common share) Q4-2016 Q4-2016 As per IFRS 4 $0.04 Specific items: Impairment reversals (2) ($0.01) Unrealized gain on financial instruments 1 $0.01 Unrealized loss on inte
Slide 21: Cash Flow Overview
CASH FLOW OVERVIEW (M CAN$) Adjusted Cash Flow from Operations (M CAN$) Adjusted Free Cash Flow 2 116 75 125 80 110 106 59 100 60 86 84 49 68 37 75 40 56 32 22 50 20 35 25 0 (7) (5) 0 (20) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2015 2015 2015 2016 2016 2016 2016 2015 2015 2015 2015 201
Slide 22: Net Debt Reconciliation – Q4-2016
NET DEBT RECONCILIATION – Q4-2016 (M CAN$) -$93M 1,650 -6% 1,625 1,600 1,550 57 1,532 (93) 1,500 24 1 3 1,450 (85) 1,400 Net Debt Var. in non- Cash flow from Investments Dividends paid FX Rate Capital Net Debt 09/30/2016 cash work. cap. operations and others & share investments, net 12/31/2016 compo
Slide 23: Net Debt Reconciliation – 2016
NET DEBT RECONCILIATION – 2016 (M CAN$) -$189M 1,800 -11% 1,721 1,700 1,600 189 1,532 1,500 1,400 (316) 24 9 1,300 (56) (39) 1,200 Net Debt Cash flow from Var. in non- F/X Rate Investments Dividends paid Capital Net Debt 12/31/2015 operations cash work. cap. and others & share investments, net 12/31
Slide 24: Proportionate Consolidation – Cascades
PROPORTIONATE CONSOLIDATION – CASCADES As reported Proportionate 1 (in millions of Canadian dollars) (IFRS) consolidation Selected financial data Q4-2016 Q4-2016 Q3-2016 Q4-2015 Sales 979 961 1,007 952 Adjusted EBITDA 82 93 114 114 Adjusted EBITDA - margin 8.4% 9.7% 11.3% 12.0% Total assets 3,813 3,
Slide 25: Financial Information on Greenpac
FINANCIAL INFORMATION ON GREENPAC Greenpac - Selected financial data1 (in millions of US dollars) 2014 2015 2016 Sales 210-230 235-250 250-265 Adjusted EBITDA 38-45 65-72 55-65 Adjusted EBITDA - margin 16%-20% 26%-30% 22%-25% Net debt2,3 270 185 172 Net debt/Adjusted EBITDA ratio 6.0x-7.1x 2.6x-2.8x
Slide 26: Segmented Review
SEGMENTED REVIEW ( 10 8Mee
Slide 27: Packaging Products / Containerboard
PACKAGING PRODUCTS / CONTAINERBOARD Results Change vs. Comments on sequential performance Q4 2016 Q3 2016 Q4 2015 Seasonal lower shipments in the fourth quarter in both sectors of the Group; -1% Shipments ('000 s.t.) for containerboard products and -5% for corrugated boxes. Globally, sequential 28
Slide 28: Packaging Products / Boxboard Europe
PACKAGING PRODUCTS / BOXBOARD EUROPE Results Change vs. Comments on sequential performance Q4 2016 Q3 2016 Q4 2015 Shipments ('000 s.t.) Increase in shipments of both recycled and virgin grades thanks to seasonality and 263 2% 0% an improved demand in Europe. Average selling price Pressure remai
Slide 29: Packaging Products / Specialty Products
PACKAGING PRODUCTS / SPECIALTY PRODUCTS Results Change vs. Comments on sequential performance Q4 2016 Q3 2016 Q4 2015 Shipments ('000 s.t.) Shipments for Industrial Packaging slightly decreased sequentially due to seasonal 46 production downtime. Shipments in Consumer Packaging were also slightly
Slide 30: Tissue Papers
TISSUE PAPERS Results Change vs. Comments on sequential performance Q4 2016 Q3 2016 Q4 2015 Converted product shipments in all segments decreased by 4% due to the usual Shipments ('000 s.t.) seasonality. 144 External parent roll shipments decreased by 27% due to the market seasonality, the -12%
Slide 31: Concluding Remarks and Q&A
CONCLUDING REMARKS AND Q&A — i? oh f. | @e passes
Slide 32: Near Term Outlook
NEAR TERM OUTLOOK • Full impact in Q1 and Q2 2017 of the October 2016 containerboard price increase + • $50/s.t. containerboard price increase announced for March 2017 in North America • Important increase in recovered paper I prices in North America and Europe • Higher average selling prices in all
Slide 33: Appendix
APPENDIX
Slide 34: Foreign Exchange
FOREIGN EXCHANGE US$/CAN$ Exchange rates Euro€/CAN$ Hedging Program – US$ Cash flows 2017 1.00 1.00 • 31% to 59% of exposure (net of interest) hedged at an 0.90 0.90 average rate of 1.28 CAN$/US$ to 1.30 CAN$/US$ 0.80 0.80 2018 • 10% to 25% of exposure (net of interest) hedged at an 0.70 0.70 averag
Slide 35: Energy Prices
ENERGY PRICES Natural gas Energy prices Crude oil (US$) Hedging Program – Natural gas (US$) 12.00 120 • Canada: 10.00 100 • 2017: 57% at 3.94 CAN$/GJ 8.00 80 • 2018: 41% at 3.99 CAN$/GJ 6.00 60 4.00 40 • U.S.: 2.00 20 • 2017: 43% at 3.85 US$/mmBtu 0.00 0 • 2018: 36% at 3.58 US$/mmBtu Q1-14 Q2-14 Q3-
Slide 36: Selected Reference Prices
SELECTED REFERENCE PRICES (US$/s.t.) Containerboard - Selected Products Current Boxboard Europe - Selected Products Current (Euro€/m.t.) 700 (Feb) 1,200 (Dec) 650 655 1,100 1,043 1,000 600 900 550 540 800 500 700 450 649 Linerboard 42-lb. unbleached kraft, Eastern U.S. 600 Coated duplex - virgin boa
Slide 37: Selected Reference Prices and Fibre Costs
SELECTED REFERENCE PRICES AND FIBRE COSTS These indexes should only be used as an indicator of trends and they may be Q4 2016 Q4 2016 2016 vs. different than our actual selling prices or purchasing costs. 2015 2016 vs. Q4 2015 vs. Q3 2016 2015 Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year (units) (%) (units) (%
Slide 38: For more information
For more information: www.cascades.com/investors Jennifer Aitken, MBA Director, Investor Relations 514-282-2697 or jennifer_aitken@cascades.com 38