Cascades Inc. · TSX:CAS
Cascades — Q2 2022 Earnings Presentation
31 slides from Cascades's earnings presentation, Aug 4, 2022
Slide 1: Q2 2022 Financial Results
Q2 2022 FINANCIAL RESULTS August 4, 2022
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: Overview of Consolidated Profitability Drivers
OVERVIEW OF CONSOLIDATED PROFITABILITY DRIVERS Consolidated Adj. OIBD1 Variation Quarter-over-Quarter Year-over-Year Year-to-Date (in millions of Canadian dollars) Q2 2022 vs Q1 2022 Q2 2022 vs Q2 2021 2022 vs 2021 Pricing & Mix $51 million $147 million $233 million Freight & Production Costs ($25)
Slide 4: Summary of Quarterly Financial Results & KPIs
SUMMARY OF QUARTERLY FINANCIAL RESULTS & KPIs 20202 2021 2022 (In millions of CAN$, except per common share amounts, where 5 noted) Year Q1 2 Q2 Q3 Q4 Year Q1 Q2 YTD LTM6 Financial Results Sales 4,105 942 956 1,030 1,028 3,956 1,038 1,119 2,157 4,215 Operating income (loss) 292 44 23 73 (90) 50 (4)
Slide 5: Recycled Fibre Costs - Index List Prices
RECYCLED FIBRE COSTS - INDEX LIST PRICES ($ US/s.t.) Current OCC: 275 (July-22) • Stable market, with increased generation of material 250 253 related to usual seasonality, lower export demand 225 • Solid inventories at our mills 200 175 • Higher pricing YoY, but slightly lower sequentially; 150 ant
Slide 6: Virgin Fibre Costs - Index List Prices
VIRGIN FIBRE COSTS - INDEX LIST PRICES Current ($ US/s.t.) (July-22) VIRGIN PULP: 1,805 • Recent improvements in pulp mill uptime has not 1,800 yet resulted in a significant improvement in market 1,600 1,630 dynamics • Transportation constraints persist, with rail car 1,400 availability and port con
Slide 7: Packaging Products / Containerboard
PACKAGING PRODUCTS / CONTAINERBOARD Results Change vs. Comments on sequential performance Q2 2022 Q1 2022 Q2 2021 è Total shipments increased by 2% sequentially. Both shipments of parent rolls and those Shipments ('000 s.t.) of converted products increased by 2% on a sequential basis. 379 2% (2)% è
Slide 8: Packaging Products / Containerboard
PACKAGING PRODUCTS / CONTAINERBOARD Quarterly Operating Income & Adjusted OIBD1 (M CAN$) è Stronger second quarter 2022 shipments reflect usual upward seasonal trends, partially offset by some softness in demand 20% 19% 14% 15% 17% levels as a result of inventory rebalancing at certain customers. 10
Slide 9: Packaging Products / Containerboard - Bear Island
PACKAGING PRODUCTS / CONTAINERBOARD - BEAR ISLAND (in millions of Canadian dollars unless otherwise specified) • Persistent inflationary pressure on costs has PROJECT COST US $470 - $485 M increased total project costs. INVESTMENT TO DATE (2018 - Q2 2022) US $252 M ($322 M) • Delivery delays of cert
Slide 10: Packaging Products / Specialty Products
PACKAGING PRODUCTS / SPECIALTY PRODUCTS Results Change vs. Comments on sequential performance Q2 2022 Q1 2022 Q2 2021 Sales (M$) è Sales increased by 7% sequentially. Price increases in response to cost inflation 168 7% 28% contributed positively to sales of all sub-segments. In addition, favourable
Slide 11: Packaging Products / Specialty Products
PACKAGING PRODUCTS / SPECIALTY PRODUCTS 1 Quarterly Operating Income & Adjusted OIBD1 (M CAN$) è Q2 2022 adjusted OIBD of $25 M was the third consecutive record quarterly level, and increased 14% sequentially and 39% 14% 12% 14% 14% 15% versus prior year. 24 25 21 22 20 18 17 17 è Industrial packagi
Slide 12: Tissue Papers
TISSUE PAPERS Results Change vs. Comments on sequential performance Q2 2022 Q1 2022 Q2 2021 è Shipments increased by 2% on a sequential basis in the second quarter. This reflects Shipments ('000 s.t.) an 8% increase in shipments of converted products and lower external shipments of 133 2% (4)% paren
Slide 13: Tissue Papers
TISSUE PAPERS Quarterly Operating Income (Loss) & Adjusted OIBD1 (M CAN$) è Continued to see positive demand level momentum for Away- from-Home tissue products (shipments +14% YoY, +14% QoQ), —% 3% (2)% and Retail tissue products (shipments + 9% YoY, +3% QoQ). (5)% (2)% 29 è Significant increase in
Slide 14: Tissue Papers - Strategic Plan Update
TISSUE PAPERS - STRATEGIC PLAN UPDATE (M CAN$) 60 - 80 (~65) ~10 è Our plan is tracking well, but benefits realized to date are being è Significant cost headwinds and slight delay in price increase 1 offset by persistent cost headwinds since its launch in implementation timeline results in revised 2
Slide 15: Q2 2022 Adjusted OIBD to Operating Income Reconciliation
Q2 2022 ADJUSTED OIBD TO OPERATING INCOME RECONCILIATION (M CAN$) 91 80 40 28 4 32 0 (63) Adjusted1 Depr. & Adjusted Gain on acq., Operating OIBD Amort. Operating disp. and others income income Container- Specialty Tissue Corporate (M CAN$) board Products Papers Activities Total Operating income (lo
Slide 16: Net Earnings - IFRS vs Adjusted
NET EARNINGS - IFRS VS ADJUSTED2 NET EARNINGS NET EARNINGS PER COMMON SHARE1 (In millions of Canadian dollars, except per common share amounts) Q2 2022 Q2 2022 As per IFRS 10 $0.10 Specific items: Gain on acquisitions, disposals and others (4) ($0.03) Foreign exchange loss on long-term debt & financ
Slide 17: Quarterly Year-over-Year Adjusted EPS Variance
QUARTERLY YEAR-OVER-YEAR ADJUSTED EPS VARIANCE1,2 0.18 0.01 0.15 0.01 0.02 0.13 0.02 0.10 — 0.10 0.10 0.02 $ cents (0.05) 0.08 0.05 0.07 0.05 0.03 0.02 0.00 EPS reported Specific Adjusted EPS Financing Income Non- Share of Depreciation OIBD Adjusted EPS Specific EPS reported 2 2 Q2 2021 items Q2 202
Slide 18: Quarterly Sequential Adjusted EPS Variance
QUARTERLY SEQUENTIAL ADJUSTED EPS VARIANCE1,2 0.20 0.02 0.03 0.10 0.10 0.10 0.24 (0.02) — (0.02) $ cents 0.00 -0.10 — (0.15) (0.15) -0.20 EPS reported Specific Adjusted EPS OIBD Income Share of Depreciation Financing Adjusted EPS Specific EPS reported 2 Q1 2022 items Q1 2022 tax results of & expense
Slide 19: Cash Flow Overview
CASH FLOW OVERVIEW 2020 4 2021 2022 (In millions of CAN$, except per common share amounts) Year Q1 4 Q2 Q3 Q4 Year Q1 Q2 YTD 5 LTM 6 Cash flow from operations 458 82 87 58 20 247 19 81 100 178 Specific items1 15 4 2 12 31 49 7 — 7 50 Adjusted cash flow from operations2 473 86 89 70 51 296 26 81 107
Slide 20: New Capital Investments
NEW CAPITAL INVESTMENTS (in millions of Canadian dollars, excluding new leases, disposal of assets and accounts payable variation) 2022F CAPEX: $450 M - $470 M1 includes ~ CAN$310 M - $330M for Bear Island conversion 330 312 26 27 50 81 227 213 37 20 39 22 180 169 24 85 104 61 217 184 22 22 18 145 6
Slide 21: Net Debt Reconciliation - Q2 2022
NET DEBT1 RECONCILIATION - Q2 2022 (M CAN$) 117 1,712 1,700 59 1,600 1,549 40 12 15 1,500 2 (81) (1) 1,400 Net debt as of Cash flow Proceeds from Investments Right-of-use Dividends paid & F/X CAN$ Changes in non- Payments for Net debt as of March 31, 2022 from oper. disposals of and others assets ch
Slide 22: Consolidated Financial Ratios & Debt Maturities
CONSOLIDATED FINANCIAL RATIOS & DEBT MATURITIES Net Debt / Adjusted OIBD1,3 Interest Coverage Ratio2,3 5.4x 6.7x 4.6x 4.7x 5.8x 6.0x 4.0x 3.8x 3.6x 4.7x 4.6x 4.3x 4.6x 4.3x 3.5x 3.25x 3.5x 2.5x 3.4x 3.4x 2013 2014 2015 2016 2017 2018 2019 2020 2021 Q2 2013 2014 2015 2016 2017 2018 2019 2020 2021 Q2
Slide 23: Near Term Factors
NEAR TERM FACTORS • Logistics and production costs: expect continued pressure on vs Q2 2022 vs Q3 2021 costs YoY and QoQ in Q3 for all business segments. Q3 2022 OIBD1 Trend • Containerboard: QoQ performance to reflect stable demand, lower average raw material prices and incremental benefits from pr
Slide 24: Appendix
APPENDIX 24
Slide 25: Year Over Year Sales Reconciliation
YEAR OVER YEAR SALES RECONCILIATION (M CAN$) +17% 1,200 23 14 147 1,119 (5) (16) 1,000 956 Sales Recovery & Sales (M CAN$) Q2 2021 Price & Mix F/X CAN$ Recycling Other Volume Q2 2022 Containerboard 497 71 10 — — (9) 569 Specialty Products 131 32 4 — — 1 168 Tissue Papers 297 44 9 — (8) 342 Corporate
Slide 26: Year-Over-Year Operating Income Reconciliation
YEAR-OVER-YEAR OPERATING INCOME RECONCILIATION + Higher realized spreads + Higher selling prices - Higher raw material, energy, logistics, chemicals - Higher logistics and operational costs and other operational costs - Lower volumes + Higher selling prices Lower volume for external parent rolls - s
Slide 27: Sequential Sales Reconciliation
SEQUENTIAL SALES RECONCILIATION +8% (M CAN$) 1,125 6 5 1 1,119 18 1,100 51 1,075 1,050 1,038 1,025 1,000 Sales Recovery & Sales (M CAN$) Q1 2022 Price & Mix Volume Recycling F/X CAN$ Other Q2 2022 Containerboard 534 24 9 — 2 — 569 Specialty Products 157 7 3 — 1 — 168 Tissue Papers 314 20 6 — 2 — 342
Slide 28: Sequential Operating Income Reconciliation
SEQUENTIAL OPERATING INCOME RECONCILIATION + Higher selling prices + Higher selling prices + Higher volume + Higher volume + Lower raw material costs - Higher raw material and logistics costs - Higher logistics, chemicals and other operational costs (M CAN$) 100 3 2 91 4 9 19 60 2 58 50 + Improved p
Slide 29: Selected Reference Prices
SELECTED REFERENCE PRICES Current Current Containerboard - Selected Products (US$/s.t.) Specialty Products - Selected Products (July-22) (US$/s.t.) (July-22) 1,200 1,000 1,100 935 1,100 900 1,000 865 800 900 800 700 700 600 600 Feb-20 Fev-22 Nov-19 Nov-21 Aug-19 Aug-21 May-21 May 19 Feb-21 Feb 19 No
Slide 30: Selected Reference Prices and Fibre Costs
SELECTED REFERENCE PRICES AND FIBRE COSTS Q2 2022 vs. Q2 2022 2020 2021 2022 Q2 2021 vs.Q1 2022 These indexes should only be used as an indicator of trends and they may be different than our actual selling prices or purchasing costs. Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 (units) (%) (units) (%) Se
Slide 31: For more information
For more information: www.cascades.com/investors Jennifer Aitken, MBA Director, Investor Relations 514-282-2697 / investisseur@cascades.com