Cascades Inc. · TSX:CAS
Cascades — Shareholder Meeting (2017)
60 slides from Cascades's shareholder meeting presentation, Jun 19, 2017
Slide 1: Cascades
(|e Cascades
Slide 2: Happy Birthday!
HAPPY BIRTHDAY! oN Cascades
Slide 3: 2017 Annual General Meeting of the Shareholders of Cascades Inc.
2017 ANNUAL GENERAL MEETING OF THE SHAREHOLDERS OF CASCADES INC.
Slide 4: Disclaimer: Forward-Looking Statement
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 number of risks
Slide 5: Reconciliation of Non-IFRS Measures
RECONCILIATION OF NON-IFRS MEASURES To provide more information for evaluating the Corporation's performance, the financial information included in this analysis contains certain data that are not performance measures under IFRS (“non- IFRS measures”) which are also calculated on an adjusted basis t
Slide 6: Alain Lemaire, Executive Chairman of the Board
Executive Chairman of the Board of Directors ALAIN LEMAIRE
Slide 7: Circular Economy Partners
“=~ David —_—= S: \S Suzuki Foundation ; ST SOLUTIONS ARE IN OUR NATURE PRAIRIES CIRCULAR ECONOMY PARTNERS w} Cascades
Slide 8: Board of Directors
Alain Louis Sylvie David Georges Élise Lemaire Garneau Lemaire McAusland Kobrynsky Pelletier Sylvie Laurence G. Mario Michelle Patrick Martin Vachon Sellyn Plourde Cormier Lemaire Couture BOARD OF DIRECTORS
Slide 9: Opening of the 2017 Annual General Meeting
2 Opening of the 2017 Annual General Meeting
Slide 10: Confirmation of the Mailing of the Notice of Meeting
3 Confirmation of the Mailing of the Notice of Meeting, the Management Proxy Circular and the Proxy Form
Slide 11: Scrutineers' Report
~ Scrutineers’ Report Cascades
Slide 12: Filing of the Consolidated Financial Statements and Auditor's Report
5 Filing of the Consolidated Financial Statements for the year ended December 31, 2016, and the Independent Auditor’s Report
Slide 13: Election of Directors
6 Election of Directors
Slide 14: Election of Directors
6 Election of Directors Alain Louis Sylvie David Georges Élise Lemaire Garneau Lemaire McAusland Kobrynsky Pelletier Sylvie Laurence G. Mario Michelle Patrick Martin Vachon Sellyn Plourde Cormier Lemaire Couture
Slide 15: Appointment of the Independent Auditor
7 PricewaterhouseCoopers LLP Partnership of chartered Appointment of the professional accountants Independent Auditor
Slide 16: Advisory Vote on Executive Compensation
8 Advisory Vote on Executive Compensation Accepting the Corporation’s Approach to Executive Compensation
Slide 17: Shareholder Proposal
Shareholder Proposal F\. y Cascades ©
Slide 18: 2016 Highlights and Update
MARIO PLOURDE President and Chief Executive Officer 2016 HIGHLIGHTS AND UPDATE
Slide 19: 2016 in Review
2016 IN REVIEW Sales: $4,001 M Operating Income : $221 M (↑ 44.4% vs 2015) (↑ 3.6% vs 2015) 52% Containerboard 6% 17% Boxboard 32% 34% Europe 25% Specialty Adjusted OIBD1: $403 M Products (↓ 5.4% vs 2015) 45% Tissue Papers 11% 15% 19% 13% 31% (1) Please click here for supplemental information on non
Slide 20: Divisions Performance: Containerboard and Boxboard Europe
DIVISIONS PERFORMANCE Charles Malo Michele Bianchi President and COO President and CEO 26 years with Cascades Joined Reno de Medici in 2016 Containerboard Packaging Boxboard Europe Sales (M$) Sales (M$) 1,400 1,370 1,000 825 796 1,301 800 1,300 Adjusted 600 Adjusted 1,200 231 216 OIBD1 ($M) 63 53 OI
Slide 21: Divisions Performance: Specialty Products and Tissue Papers
DIVISIONS PERFORMANCE Luc Langevin Jean Jobin President and COO President and COO 21 years with Cascades 24 years with Cascades Specialty Products Tissue Papers Sales (M$) Sales (M$) 750 1,400 1,305 620 1,236 600 579 1,200 450 Adjusted Adjusted 58 65 OIBD1 ($M) 1,000 119 150 OIBD1 ($M) 300 800 150 O
Slide 22: Total Shipments
TOTAL SHIPMENTS 2015 2016 (‘000 short tons) 3,050 Stable Containerboard +2% 3,000 2,993 2,999 Boxboard Europe -4% 2,950 2,900 Specialty Products +10% 2,850 2015 2016 Tissue Papers +2%
Slide 23: Average Selling Price
AVERAGE SELLING PRICE 2015 2016 Containerboard +3% Boxboard Europe Stable Tissue Papers +4%
Slide 24: Fibre Costs
FIBRE COSTS Recycled Papers Pulp (US$/s.t.) (US$/m.t.) 200 1,100 150 173 1,000 1,045 150 150 144 978 972 100 900 93 83 869 868 847 50 800 0 700 2015 2016 2017 YTD 2015 2016 2017 YTD Brown grades (OCC – northeast) Softwood pulp White grades (SOP – northeast) Hardwood pulp
Slide 25: Share Price Performance
SHARE PRICE PERFORMANCE 150% TSX Small Cap 131%1 125% Cascades Fall 2016 122%1 containerboard 100% price increase Greenpac Spring 2017 consolidation 75% containerboard announced price increase 50% 2016-04 2017-03 2016-01 2016-02 2016-03 2016-05 2016-06 2016-07 2016-08 2016-09 2016-10 2016-11 2016-12
Slide 26: What We Accomplished in 2016
WHAT WE ACCOMPLISHED IN 2016
Slide 27: Tissue Papers: Scappoose, OR Conversion Facility
TISSUE PAPERS $83 M1 Scappoose, OR • Construction of a new conversion facility, 40% integrated with our plant • Repositioning and rebranding located in St. Helens, OR of our Away-from-Home • Annual production: brands (Cascades PRO) and 5.2 M cases or 58,000 s.t. of our Canadian branded retail finish
Slide 28: Containerboard Packaging Investments
CONTAINERBOARD PACKAGING $16 M $8 M Acquisition of a corrugated New state-of-the-art corrugator box plant in Newtown, CT in Drummondville, QC
Slide 29: Specialty Products
SPECIALTY PRODUCTS Created via the merger of the recovery operations and the corporate recycled fibre buying group. Manages all of the Corporation’s recycled and virgin fibre needs across North America 62% of the 2.6 M s.t. of recycled fibres that are collected and acquired are used internally by Ca
Slide 30: Financial Review
ALLAN HOGG Vice-President and Chief Financial Officer FINANCIAL REVIEW
Slide 31: Sales
SALES 2015 2016 ($M) +4% 4,250 Containerboard +5% 4,000 4,001 Boxboard Europe -4% 3,861 3,750 Specialty Products +7% 3,500 3,250 Tissue Papers +6% 2015 2016
Slide 32: Exchange Rate and Sales Distribution
EXCHANGE ` RATE AND SALES DISTRIBUTION US$ / CAN$ Exchange Rate 2016 Sales Distribution $1.05 $1.00 $0.95 $0.90 22% $0.85 $0.80 39% $0.75 $0.70 $0.65 39% Q1-16 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q2-16 Q3-16 Q4-16 Canada United States Europe and other
Slide 33: Cost of Goods Sold
` COST OF GOODS SOLD 2016 12% Raw materials 1 Raw materials 6% Chemical products & 35% account for 47% manufacturing supplies Energy 8% of cost of goods Salaries & benefits sold Transport 20% Depreciation & amortization 12% 7% Other (1) Including chemical products & manufacturing supplies
Slide 34: Capital Expenditures
CAPITAL EXPENDITURES 1 2016: $206 M $26 M $51 M Containerboard Boxboard Europe Specialty Products $77 M $26 M Tissue Papers Corporate Activities1 $26 M (1) Excluding IT projects
Slide 35: Operating Income and Adjusted OIBD
OPERATING INCOME AND ADJUSTED OIBD1 Operating Income 2016 2016 6% margin $221 M +44% Containerboard 158 216 2015 4% margin $153 M Boxboard Europe 19 53 Adjusted OIBD1 Specialty Products 51 65 2016 10% margin $403 M -5% Tissue Papers 75 150 2015 11% margin $426 M Operating Adjusted Income OIBD1 (1) P
Slide 36: Operating Income Annual Variance
OPERATING INCOME ANNUAL VARIANCE +44% +$68 M 23 14 (18) 83 426 (42) 403 10 (192) 190 221 153 Operating Depr. & Specific Adjusted Energy Selling Raw Other Adjusted Specific Depr. & Operating Income Amort. OIBD1 Price and Material Costs OIBD1 Amort. Income 2015 2015 mix & 2016 2016 Volume (1) Please c
Slide 37: Earnings Per Share
EARNINGS PER SHARE $M Per Share1 2016 net earnings – as per IFRS 135 $1.42 Gain on acquisitions, disposals and others (4) (0.03) Impairment charges and restructuring costs 12 0.09 Unrealized gain on derivative financial instruments (18) (0.14) Unrealized gain in interest rate swaps (1) (0.01) Foreig
Slide 38: Net Debt Evolution in 2016
NET DEBT1 EVOLUTION IN 2016 -11% -$189 M 1,721 177 1,532 (316) 16 21 8 (56) (39) Net Debt1 Cash Flow Working FX Rate Investments & Business Dividends,Share Capital Net Debt1 12/31/2015 from Capital Other Assets Acquisition Buyback & Expenditures, 12/31/2016 Operations Other net of disposals (1) Plea
Slide 39: Net Debt / Adjusted OIBD
NET DEBT / ADJUSTED OIBD1 Our 3,0x – 3,5x leverage ratio objective is in line with market expectations 6.0x 5.0x 5.8x 5.0x 4.7x 4.0x 4.6x 3.0x 4.0x 3.8x 2 3.3x 2 2 2.0x 2.8x 2.7x 1.0x 0.0x 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E (2) Based on Analyst adjusted OIBD estimates of $482 M for 2017
Slide 40: Debt Maturities
DEBT MATURITIES (M$) 1,000 Weighted Average 750 Interest Rate of 738 5.32% in 2016 500 336 250 250 131 90 36 0 1 year > 1 year 2019 2021 2022 2023 Debts without recourse Subsidiary debt Revolver Senior notes At December 31, 2016
Slide 41: Q1-2017 Results
Q1-2017 RESULTS Q1- Q4- Q1- 2017 2016 2016 Sales 1,006 979 1,003 Operating Income 31 33 73 Adjusted OIBD1 75 82 106 Net Earnings 161 4 75 Adjusted Net Earnings1 12 15 34 Net Earnings per share $1.70 $0.04 $0.79 Adjusted Net Earnings per share1 $0.13 $0.16 $0.35 (1) Please click here for supplemental
Slide 42: Operating Income Variance – Q1 2017
OPERATING INCOME VARIANCE – Q1 2017 -58% -$42 M 47 (14) 5 4 (18) 106 5 (27) 73 75 3 (47) 31 Operating Depr. & Specific Adjusted Recovery Other Selling Raw Other Adjusted Specific Depr. & Operating Amort. OIBD 1 & Variances Price Material Costs OIBD1 Amort. Income Income Q1 Q1 Recycling and Mix Q1 Q1
Slide 43: Net Debt Levels – Q1 2017
NET DEBT1 LEVELS – Q1 2017 +6% +$85 M 58 1,617 39 1,532 23 10 (33) (12) Net Debt1 Cash Flow FX Rate Dividends Investments & Working Capital Net Debt1 12/31/2016 from & Other Other Assets Capital Expenditures, 03/31/2017 Operations Net of Disposal (1) Please click here for supplemental information on
Slide 44: Working Capital
WORKING CAPITAL 16% 14.4% 14% 13.5% 12.9% 12.7% 12.3% 12% 11.6% 11.3% 11.4% 11.0% 10.6% 10% 10.0% 8% Q4 2012 Q2 2013 Q4 2013 Q2 2014 Q4 2014 Q2 2015 Q4 2015 Q2 2016 Q4 2016 Q1 2017 OBJECTIVE
Slide 45: Our Strategic Plan
OUR STRATEGIC PLAN
Slide 46: The 2011-2016 Plan
THE 2011-2016 PLAN ✓ MODERNIZE More than $500 million invested in modern equipment ✓ OPTIMIZE $125 million in annual savings by improving working capital ✓ RESTRUCTURE Sales and unit closures totaling $1 billion in sales and 2% in EBITDA ✓ INNOVATE Launch many new products
Slide 47: Sustainable Development
SUSTAINABLE DEVELOPMENT RECYCLED FIBRES WATER ENERGY 83% recycled fibres 6.7 times less water 2.7 times less energy into Cascades than the Canadian than the Canadian products paper industry paper industry Avoided cutting + 46 million trees -10 % 2015 data including Greenpac Mill. Follow our efforts
Slide 48: Upgrade Our Platforms, Create Value, Focus on Customers and Innovation
1 Upgrade our platforms 2 Create value 3 Focus on customer and innovation
Slide 49: Upgrade Our Platforms
UPGRADE 1 OUR PLATFORMS Accelerate the modernization of our assets • Replace older equipment • Invest in organic growth
Slide 50: Upgrade Our Platforms: Integration Rate
UPGRADE 1 OUR PLATFORMS Increase the integration rate by investing in converting capacity 2016 Integration Rate Our Objective 1 1 Containerboard 67% 85% Tissue Papers 68% 85% (1) Including associates and joint ventures
Slide 51: Upgrade Our Platforms: Geographic Footprint
UPGRADE 1 OUR PLATFORMS Improve our geographic footprint to better serve our customers Expansion in the United States
Slide 52: Create Value
2 CREATE VALUE Increase our profitability margin 10% 15% • Consolidate • Monetize the benefits • Benefits from the • Growth associated Greenpac results of our optimization, transformation with potential modernization and program, reduction of strategic investments • New tissue restructuring efforts
Slide 53: Focus on Customers and Innovation
FOCUS ON CUSTOMERS 3 AND INNOVATION TM TM STRAWBERRY TM BASKET
Slide 54: Sustainable Development 2016-2020
SUSTAINABLE DEVELOPMENT 2016-2020 PLANET PROSPERITY PARTNERS -7% +40% -38% -7% +57% +16% +5% +43% 10,000 -10% hours Follow our efforts in sustainable development on our different platforms.
Slide 55: Alain Lemaire, Executive Chairman of the Board
Executive Chairman of the Board of Directors ALAIN LEMAIRE
Slide 56: Thank You!
THANK YOU! y é Cw} / Cascades
Slide 57: Question Period
® Question Period Cascades
Slide 58: Closing of the 2017 Annual General Meeting
11 Closing of the 2017 Annual General Meeting
Slide 59: Thank You!
2017 ANNUAL GENERAL MEETING OF SHAREHOLDERS OF CASCADES INC. Thank You!
Slide 60: Cascades
(|e Cascades