Cascades Inc. · TSX:CAS
Cascades — Q3 2021 Earnings Presentation
29 slides from Cascades's earnings presentation, Nov 11, 2021
Slide 1: Q3 2021 Financial Results
Q3 2021 FINANCIAL RESULTS November 11, 2021
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 RESULTS 49 48 73 42 133 104 139 122 98 22 29 32 54 44 23 73 107 3 8 (1) Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 1 1 Operating Income Adjusted OIBD Net Earnings Adjusted Net Earnings (loss) Figures above in millions of CAN$ Figure
Slide 4: Historical Segmented Quarterly Operating Income & Adjusted OIBD
HISTORICAL SEGMENTED QUARTERLY OPERATING INCOME (LOSS) & ADJUSTED OIBD1 Containerboard (millions of CAN$) 122 110 108 100 100 94 71 65 64 58 Tissue Papers (millions of CAN$) Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 36 40 29 20 10 12 Operating Income Adjusted OIBD 1 3 — 1 Specialty Products (millions
Slide 5: Historical Segmented Quarterly Shipments
HISTORICAL SEGMENTED QUARTERLY SHIPMENTS Containerboard ('000 s.t. and % capacity utilization1) 411 399 391 385 377 98% 97% 97% 96% 94% Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Tissue Papers ('000 s.t. and % capacity utilization1) 145 152 138 148 123 86% 84% 80% 78% 73% Q3 2020 Q4 2020 Q1 2021 Q2 202
Slide 6: Raw Material Costs - Index List Prices
RAW MATERIAL COSTS - INDEX LIST PRICES ($ US/s.t.) Recycled Fibre Prices Current ($ US/s.t.) Virgin Pulp Prices Current (Nov-21) (Oct-21) 250 225 1,800 200 1,600 1,495 175 170 150 184 1,400 1,280 125 1,200 100 75 1,000 50 800 25 0 600 Nov 19 Aug 20 May 19 Feb 21 Nov 18 Aug 19 May 18 Feb 20 Nov 17 Au
Slide 7: Packaging Products / Containerboard
PACKAGING PRODUCTS / CONTAINERBOARD Results Change vs. Comments on sequential performance Q3 2021 Q2 2021 Q3 2020 è Shipments decreased by 2% sequentially. This was driven by a 2% decrease in the Shipments ('000 s.t.) operating rate. Shipments of parent rolls decreased by 2% while those of converted
Slide 8: Tissue Papers
TISSUE PAPERS Results Change vs. Comments on sequential performance Q3 2021 Q2 2021 Q3 2020 è Shipments increased by 7% on a sequential basis in the third quarter. This reflects an Shipments ('000 s.t.) 11% increase in shipments of converted products in both the Away-from-Home and 148 7% 2% retail m
Slide 9: Packaging Products / Specialty Products
PACKAGING PRODUCTS / SPECIALTY PRODUCTS Results Change vs. Comments on sequential performance Q3 2021 Q2 2021 Q3 2020 è Sales increased by 10% sequentially. Volume increased in the cardboard products Sales (M$) segment, decreased in the plastics segment, and remained relatively stable in the moulded
Slide 10: Discontinued Operations
DISCONTINUED OPERATIONS On July 5, 2021, the Corporation announced the monetization of its 57.6% controlling equity interest in Reno de Medici S.p.A. (RDM) for an amount per share of €1.45, or $461 million including foreign exchange contracts and before related transaction fees of $11 million. The t
Slide 11: Year Over Year Sales Reconciliation
YEAR OVER YEAR SALES RECONCILIATION (M CAN$) +2% 1,200 51 1,100 62 (20) 1,030 1,014 (38) 1,000 (39) 900 Sales Recovery & Sales (M CAN$) Q3 20201 Price & Mix Recycling Volume F/X CAN$ Other Q3 2021 Containerboard 506 56 — (41) (17) 3 507 Specialty Products 117 20 — 12 (5) — 144 Tissue Papers 364 (15)
Slide 12: Sequential Sales Reconciliation
SEQUENTIAL SALES RECONCILIATION +8% (M CAN$) 15 1,050 15 1,030 25 39 (20) 1,000 956 950 900 Sales Recovery & Sales (M CAN$) Q2 2021 Price & Mix Recycling F/X CAN$ Volume Other Q3 2021 Containerboard 497 16 — 6 (12) — 507 Specialty Products 131 7 — 3 3 — 144 Tissue Papers 297 15 — 8 24 — 344 Corporat
Slide 13: Year-Over-Year Operating Income Reconciliation
YEAR-OVER-YEAR OPERATING INCOME RECONCILIATION Higher spreads and volume realized + Higher selling prices and favourable mix - Less favourable mix of products sold + in the Industrial Packaging and - Lower containerboard product volumes - Higher energy and raw material costs Consumer products sub-se
Slide 14: Sequential Operating Income Reconciliation
SEQUENTIAL OPERATING INCOME RECONCILIATION + Higher selling prices and favourable mix of products sold + Higher selling prices + Higher volume - Less favourable sales mix and lower volume - Higher raw material and production costs - Higher raw material costs (M CAN$) - Water effluent issues - Niagar
Slide 15: Q3 2021 Adjusted OIBD to Operating Income Reconciliation
Q3 2021 ADJUSTED OIBD TO OPERATING INCOME RECONCILIATION (M CAN$) 107 100 39 73 44 (5) (5) 50 (63) 0 Adjusted Depr. & Adjusted Gain on acq., Restructuring Unrealized loss Operating 1 OIBD Amort. Operating disp. and others costs on financial Income 1 Income instruments Container- Boxboard Specialty T
Slide 16: Net Earnings (Loss) - IFRS vs Adjusted
NET EARNINGS (LOSS) - IFRS VS ADJUSTED2 NET EARNINGS (LOSS) NET EARNINGS (LOSS) PER COMMON SHARE1 (In millions of Canadian dollars, except per common share amounts) Q3 2021 Q3 2021 As per IFRS 32 $0.32 Specific items: Gain on acquisitions, disposals and others (39) ($0.31) Restructuring costs 5 $0.0
Slide 17: Quarterly Year-Over-Year Adjusted EPS Variance
QUARTERLY YEAR-OVER-YEAR ADJUSTED EPS VARIANCE1,2,3 Decrease in depreciation and amortization due to a review of useful life of buildings Lower RDM results Decrease in results for Tissue Papers segment 0.60 0.01 0.01 0.04 Q3 2021 Reversal of tax assets in Canada $18 million; 0.51 0.50 Q3 2020 Positi
Slide 18: Quarterly Sequential Adjusted EPS Variance
QUARTERLY SEQUENTIAL ADJUSTED EPS VARIANCE1,2 0.40 Q3 2021 9% increase in OIBD driven by better results in Tissue Higher RDM results Q3 2021 Reversal of tax 0.33 0.32 assets in Canada 0.30 0.05 0.01 0.20 $ cents 0.07 (0.01) (0.01) 0.10 0.05 0.07 0.02 0.00 (0.19) (0.01) EPS Specific Adjusted OIBD Non
Slide 19: Cash Flow Overview
CASH FLOW OVERVIEW 131 137 84 78 87 82 86 87 89 58 70 23 35 (12) (4) Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 3 3 CF from oper. Adj. CF from oper. Adjusted Free Cash Flow generated (used) Figures above in millions of CAN$ Figures above in millions of CAN$ 2019
Slide 20: Net Debt Reconciliation - Q3 2021
NET DEBT1 RECONCILIATION - Q3 2021 (M CAN$) 1,800 54 1,760 1,707 41 1,700 31 13 18 (58) 4 1,600 (50) 1,500 Net debt as at Cash flow Proceeds from Investments Changes in Right-of-use F/X CAN$ Dividends paid Payments for Net debt as at June 30, 2021 from oper. disposals of and others non-cash assets &
Slide 21: Consolidated Financial Ratios & Debt Maturities
CONSOLIDATED FINANCIAL RATIOS & DEBT MATURITIES Net Debt / Adjusted OIBD1,3,4 Interest Coverage Ratio2,3,4 5.0x 4.6x 4.7x 6.7x 4.0x 3.8x 3.6x 3.8x 5.8x 6.0x 3.5x 3.25x 5.2x 4.7x 4.6x 4.3x 2.5x 3.0x 3.4x 3.4x 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q3 5 2021 2012 2013 2014 2015 2016 2017 2018 20
Slide 22: Capital Investments
CAPITAL INVESTMENTS (in millions of Canadian dollars, excluding value of leases) 2021F CAPEX: $275 - $300 M1 Bear Island (US$ M) includes ~$155 M for Bear Island conversion 2018-2020 ~ $ 60 2021 ~ $ 125 312 2022 ~ $ 190 27 2023 ~ $ 25 300 Total ~ $ 400 81 227 213 39 22 20 184 169 13 24 85 30 104 18
Slide 23: Near Term Factors
NEAR TERM FACTORS • North American operations: continued benefits from margin improvement initiatives YoY and QoQ partially offsetting costs vs Q3 2021 vs Q4 2020 inflation Q4 2021 OIBD1 Trend • Raw material, logistics and production costs: expect higher costs YoY and QoQ in Q4 for all business segm
Slide 24: Segmented YoY Operating Income Waterfalls
SEGMENTED YoY OPERATING INCOME WATERFALLS Containerboard (millions of CAN$) 200 56 30 100 (1) (1) (8) 94 100 (17) (30) 71 58 (1) (35) (6) Q3 2020 Depr. & Q3 2020 Price & Mix F/X CAN$ Energy Other prod Volume Raw Materials Q3 2021 Depr. & Q3 2021 Tissue Papers (millions of CAN$) Operating Amort. Adju
Slide 25: Segmented Sequential Operating Income (Loss) Waterfalls
SEGMENTED SEQUENTIAL OPERATING INCOME (LOSS) WATERFALLS Containerboard (millions of CAN$) 150 9 1 125 16 31 100 94 (30) 100 (1) (5) 75 64 5 (26) 58 (6) 50 Q2 2021 Depr. & Q2 2021 Price & Mix Other prod. F/X CAN$ Energy Volume Raw materials Q3 2021 Depr. & Q3 2021 Tissue Papers (millions of CAN$) Ope
Slide 26: Key Performance Indicators (KPIs)
KEY PERFORMANCE INDICATORS (KPIs) Total Shipments1,2 ('000 s.t.) Capacity Utilization Rate1,2,3 (manufacturing only) 90% 93% 92% 90% 91% 556 551 514 523 525 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 LTM Return on Assets LTM Working Capital (% of LTM Sales) 12.0%
Slide 27: Selected Reference Prices
SELECTED REFERENCE PRICES Current Current (US$/s.t.) Containerboard - Selected Products (US$/s.t.) Specialty Products - Selected Products (Oct-21) (Oct-21) 900 1,000 875 950 940 900 800 795 850 800 700 750 700 600 650 May 19 Feb 19 May-20 May-21 Aug 18 Nov 18 Feb-20 Feb-21 Aug-19 Aug-20 Aug-21 Nov-1
Slide 28: Selected Reference Prices and Fibre Costs
SELECTED REFERENCE PRICES AND FIBRE COSTS Q3 2021 vs Q3 2021 vs 2019 2020 2021 Q3 2020 Q2 2021 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 Q3 (units) (%) (units) (%)
Slide 29: For more information
For more information: www.cascades.com/investors Jennifer Aitken, MBA Director, Investor Relations 514-282-2697 / investor@cascades.com