Cascades Inc. · TSX:CAS
Cascades — Q2 2015 Earnings Presentation
31 slides from Cascades's earnings presentation, Aug 7, 2015
Slide 1: Review of Q2 2015 financial results
CASCADES INC. Review of Q2 2015 financial results August 7, 2015
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 Financial Results
SUMMARY OF FINANCIAL RESULTS (M CAN$) EBITDA 1 (M CAN$) EPS 1 (% of sales) 125 14% $0.30 99 103 $0.25 94 93 100 90 12% $0.24 82 82 85 $0.19 75 $0.18 75 10% $0.18 50 8% $0.12 $0.09 $0.08 $0.08 $0.07 25 6% $0.06 $0.04 $0.01 0 4% $0.00 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2013 201
Slide 5: Historical Segmented EBITDA
HISTORICAL SEGMENTED EBITDA1 Containerboard Boxboard Europe (M CAN$) (% of sales) (M CAN$) (% of sales) 60 24% 28 16% 52 55 23 24 45 41 46 43 46 44 18% 21 20 19 12% 36 31 17 12 11 14 14 30 12% 14 8% 15 6% 7 4% 0 0% 0 0% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2013 2013 2014 2014 2
Slide 6: Segmented EBITDA Waterfalls
SEGMENTED EBITDA WATERFALLS1 Containerboard Boxboard Europe Selling Acqu. Selling Acqu. EBITDA Other Raw EBITDA EBITDA Other Raw EBITDA (M CAN$) Prices & Volume Energy & CAN$ (M CAN$) Energy Prices & & CAN$ Volume Q1-2015 Costs Materials Q2-2015 Q1-2015 Costs Materials Q2-2015 Mix Divest. Mix Divest
Slide 7: Key Performance Indicators (KPIs)
KEY PERFORMANCE INDICATORS (KPIs) ('000 s.t.) 1 1, 2 Total Shipments Capacity Utilization Rate (Manufacturing only) 800 100% Containerboard: 91% 747 750 742 764 728 738 721 Boxboard Europe: 97% 712 715 97% Tissue Papers: 90% 700 96% 97% 93% 93% 93% 93% 600 94% 91% 91% 90% 500 91% 400 88% Q2 Q3 Q4 Q1
Slide 8: Raw Material Costs
RAW MATERIAL COSTS Recycled Fibre North American Current (US$/ton) Virgin Pulp Prices Current (US$/ton) List Prices (August) 1,100 (July) 200 1,000 980 166 150 900 880 800 100 90 700 600 50 Apr 12 Oct 12 Jan 13 Apr 13 Oct 13 Jan 14 Apr 14 Oct 14 Jan 15 Apr 15 July 12 July 13 July 14 July 15 Feb 13 F
Slide 9: Financial Review
FINANCIAL REVIEW ( 10 8Mee
Slide 10: Q2 2014 – Q2 2015 Sales Reconciliation
Q2 2014 – Q2 2015 SALES RECONCILIATION (M CAN$) +4% 975 28 (1) (8) 950 950 29 (8) 925 910 0 Selling Sales Acqu. & Corp. Sales Volume CAN$ Prices Q2-2014 Disposals Elim. Q2-2015 & Mix (M CAN$) Containerboard 305 (3) 13 (1) 7 1 322 Boxboard Europe 220 3 (20) (2) 1 202 Specialty Products 146 6 8 (5) (9
Slide 11: Q2 2014 – Q2 2015 EBITDA Variance Analysis
Q2 2014 – Q2 2015 EBITDA VARIANCE ANALYSIS (M CAN$) 120 +14% 2 5 - 110 6 (2) 103 10 100 (8) 90 90 0 Selling EBITDA Other Acqu. & Raw EBITDA Volume CAN$ Energy Prices & Q2-2014 Costs Disposals Materials1 Q2-2015 Mix (M CAN$) Containerboard 43 (1) 2 (2) 6 7 55 Boxboard Europe 20 1 (2) 3 1 (2) (2) 19 S
Slide 12: Q1 2015 – Q2 2015 EBITDA Variance Analysis
Q1 2015 – Q2 2015 EBITDA VARIANCE ANALYSIS +21% (M CAN$) 3 1 120 - 13 (3) 110 17 103 100 (13) 90 85 0 Selling EBITDA Other Acqu. & Raw EBITDA Volume Energy Prices & CAN$ 1 Q1-2015 Costs Disposals Materials Q2-2015 Mix (M CAN$) Containerboard 52 6 4 8 (5) (2) (8) 55 Boxboard Europe 17 (2) 4 1 (1) 19
Slide 13: Quarterly EPS Variance
QUARTERLY EPS VARIANCE Q1-2015 Q2-2015 Excluding Excluding specifics Specifics As reported specifics Specifics As reported EBITDA 85 (13) 72 103 2 105 Depreciation (44) (44) (44) (44) EBIT 41 (13) 28 59 2 61 Financing expenses (24) (24) (23) (19) (42) Interest expense on employee future benefits (2)
Slide 14: Q2 2015 EBITDA to Operating Income Reconciliation
Q2 2015 EBITDA TO OPERATING INCOME RECONCILIATION (M CAN$) 120 103 100 80 59 6 60 (44) (1) (3) 61 40 20 EBITDA Depr. & Op. income Unrealized gain Impairment Restructuring Operating excluding amort. excluding on financial charges costs income spec. items spec. items instruments Container- Boxboard Sp
Slide 15: Cash Flow Overview
CASH FLOW OVERVIEW Cash flows from continuing operations, adjusted 1 Free cash flows, adjusted 1, 2 (M CAN$) (M CAN$) 100 93 50 45 86 80 73 40 34 54 30 60 20 17 35 15 40 10 20 0 0 (10) (5) Q2-2014 Q3-2014 Q4-2014 Q1-2015 Q2-2015 Q2-2014 Q3-2014 Q4-2014 Q1-2015 Q2-2015 2013 2014 2015 (in millions of
Slide 16: Net Debt Reconciliation
NET DEBT RECONCILIATION 0% 1,700 1,691 46 1,693 21 1,650 5 6 3 (70) 1,600 (9) 1,550 1,500 Net Debt Cash flow F/X Rate Dividends paid Discontinued Investments Var. in non- Capital Net Debt 03/31/2015 from op. (incl. & shares operations and others cash work. cap. investments, net 06/30/2015 refinancin
Slide 17: Consolidated Financial Ratios & Debt Maturities
CONSOLIDATED FINANCIAL RATIOS & DEBT MATURITIES Net Debt / LTM EBITDA Interest Coverage Ratio 7.0x 5.0x 5.8x 4.0x 6.0x 4.0x 3.4x 3.4x 5.0x 4.7x 4.7x 3.0x 5.0x 3.0x 4.6x 2.5x 4.0x 2.0x 3.0x 1.0x 2011 2012 2013 2014 LTM 2011 2012 2013 2014 LTM 06/30/2015 06/30/2015 Net Debt / Net Debt + Total Equity L
Slide 18: Proportionate Consolidation
PROPORTIONATE CONSOLIDATION As reported Proportionate (in millions of Canadian dollars) (IFRS) consolidation 1 Selected financial data Q2-2015 Q2-2015 Q1-2015 Sales 950 918 878 Adjusted EBITDA excluding specific items 103 110 95 Adjusted EBITDA excluding specific items - margin 10.8% 12.0% 10.8% Tot
Slide 19: Segmented Review
SEGMENTED REVIEW ( 10 8Mee
Slide 20: Packaging Products / Containerboard
PACKAGING PRODUCTS / CONTAINERBOARD Results Change vs. Q2 2015 Q1 2015 Q2 2014 Comments on sequential performance Shipments ('000 s.t.) 282 5% -1% External volume increase for both mills (4%) and corrugated boxes (6%) Average selling price (CAN$/unit) Higher average selling prices in Canada due
Slide 21: Packaging Products / Boxboard Europe
PACKAGING PRODUCTS / BOXBOARD EUROPE Results Change vs. Q2 2015 Q1 2015 Q2 2014 Comments on sequential performance Lower shipments due to lower production at the La Rochette mill during the May Shipments ('000 s.t.) Holidays in France; shipments slightly lower at Reno de Medici 286 -3% 1% Backlo
Slide 22: Packaging Products / Specialty Products
PACKAGING PRODUCTS / SPECIALTY PRODUCTS Results Change vs. Q2 2015 Q1 2015 Q2 2014 Comments on sequential performance Shipments ('000 s.t.) 44 7% 7% Sequential shipments increase in all segments mainly driven by seasonality Industrial Packaging shipments only Higher shipments explain higher sale
Slide 23: Tissue Papers
TISSUE PAPERS Results Change vs. Q2 2015 Q1 2015 Q2 2014 Comments on sequential performance 7% increase in converted products shipments essentially related to increased Shipments ('000 s.t.) volumes in the retail market in Canada and seasonality in the away-from-home 152 11% 9% market 20% increa
Slide 24: Q&A and Concluding Remarks
Q&A AND CONCLUDING REMARKS ete Ne] By
Slide 25: Near Term Outlook
NEAR TERM OUTLOOK • Favourable FX environment • Strong season for packaging products in North • Recent increases in OCC list prices America • New containerboard capacity coming to + • New volume obtained in the Tissue Papers market I market • Ramp-up of two new tissue sites • Announced price increas
Slide 26: Appendix
APPENDIX
Slide 27: Foreign Exchange
FOREIGN EXCHANGE US$/CAN$ Exchange rates Euro€/CAN$ Hedging Program – USD Cash flows 1.05 0.90 2015 1.00 0.85 • 25% to 48% of exposure (net of interest) hedged at an average rate 0.95 0.80 of 1.11 CAN$/US$ to 1.16 CAN$/US$ 0.90 0.75 2016 0.85 0.70 • 31% to 62% of exposure (net of interest) hedged at
Slide 28: Energy Prices
ENERGY PRICES Natural gas Energy prices Crude oil Hedging Program – Natural gas (US$) (US$) 7.00 110 • Canada: 6.00 100 • 2015 : 71% at 4.61 CAN$/GJ 5.00 90 • 2016 : 61% at 4.08 CAN$/GJ 4.00 80 3.00 70 • U.S.: 2.00 60 • 2015 : 47% at 4.73 US$/mmBtu 1.00 50 • 2016 : 38% at 4.67 US$/mmBtu 0.00 40 Q1-1
Slide 29: Selected Reference Prices
SELECTED REFERENCE PRICES Containerboard - Selected Products Boxboard Europe - Selected Products Current (US$/s.t.) Current (Euro€/m.t.) (June) 800 1,200 (July) 1,100 750 740 1,061 1,000 700 690 900 650 800 700 600 658 Linerboard 42-lb. unbleached kraft, Eastern U.S. 600 Coated duplex - virgin board
Slide 30: Selected Reference Prices and Fibre Costs
SELECTED REFERENCE PRICES AND FIBRE COSTS These indexes should only be used as indicator of trends and they be different than Q2 2015 Q2 2015 our actual selling prices or purchasing costs 2013 2014 2015 over Q2 2014 over Q1 2015 Year Q1 Q2 Q3 Q4 Year Q1 Q2 (units) (%) (units) (%) Selling prices (ave
Slide 31: For more information
For more information: www.cascades.com/investors Riko Gaudreault Director, Investor Relations and Business Strategies 514-282-2697 or investisseur@cascades.com 31