Cascades Inc. · TSX:CAS
Cascades — 2016 Industrial & Construction Conference
22 slides from Cascades's conference presentation, May 11, 2016
Slide 1: Cascades Inc. 2016 Industrial & Construction Conference
CASCADES INC. 2016 Industrial & Construction Conference May 11, 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: Company Overview
COMPANY OVERVIEW LTM 3/31/16 Net Sales $3,954 million Segment Sales Breakdown1 • Founded in 1964 by the Lemaire family and headquartered in Kingsey Falls, QC 15% Containerboard • Produces, converts and markets packaging and 33% Tissue Papers tissue products principally composed of recycled 20% fibre
Slide 4: Leading Packaging and Tissue Paper Manufacturer
COMPANY OVERVIEW Leading Packaging and Tissue Paper Manufacturer Packaging Products Tissue Papers Containerboard Boxboard Europe Specialty Products • One of the Canadian • # 1 in Canada Position • # 2 in coated recycled • Largest paper collector in Market leaders boxboard in Europe Canada • # 5 in N
Slide 5: Sales and Operations Across North America and Europe
COMPANY OVERVIEW Sales and Operations Across North America and Europe Sales from (in %) Sales to (in %) Europe Europe 23% 23% 37% Canada 50% Canada 27% 40% US US Operating Units (in %) PP&E by Geographic Segment (in %) Europe 9% Europe 19% US 31% 52% Canada 60% Canada 29% US Note: Figures as of Dece
Slide 6: Geographically Diversified
GEOGRAPHICALLY DIVERSIFIED 6
Slide 7: Closed-loop Business Model
COMPANY OVERVIEW Closed-loop Business Model Recovery Manufacturing2 • 19 units 80% recycled fibre (2.6M tons) • Containerboard 6 units • Boxboard Europe: 6 units NA integration rate (2015): 28% (0.44M tons) • Specialty Products: 3 units • Tissue Papers: 11 units 26 units CLIENTS NA integration rate
Slide 8: Raw Materials: Reliable Sourcing Strategy
RAW MATERIALS Reliable Sourcing Strategy Cascades’ North American Recycled Fibre Supply Top Recovered Paper Suppliers in the World (M Tonnes) 20151 Recovery & 6 Internal 5 Most of the fibre 25% 4 supply coming 3 Regular and Spot from internal 25% 2 Steady Volume sources, contracts (Noncontractual) 1
Slide 9: Strong Financial Momentum
OPERATING PERFORMANCE AND FINANCIAL SITUATION Strong Financial Momentum Sales EBITDA (excl. specific items) (M CAN$) (M CAN$) 4,250 500 18.0% 3,954 447 4,000 450 16.0% 3,861 426 3,750 400 14.0% 3,561 342 340 3,500 350 12.0% 3,370 285 3,250 300 10.0% 3,141 3,000 250 8.0% 2,750 200 6.0% 2012 2013 2014
Slide 10: Historical Segmented EBITDA
OPERATING PERFORMANCE AND FINANCIAL SITUATION Historical Segmented EBITDA Containerboard Boxboard Europe (M CAN$) (M CAN$) 300 100% 100 100% 231 234 250 80% 80 80% 72 57 63 62 200 60% 60 60% 150 164 43 150 40% 40 40% 100 90 20% 20 20% 50 0% 0 0% 2012 2013 2014 2015 LTM 3/31/16 2012 2013 2014 2015 LT
Slide 11: Cash Flow and Free Cash Flow per Share
OPERATING PERFORMANCE AND FINANCIAL SITUATION Cash Flow and Free Cash Flow per Share Cash Flow From Operating Activities1 Free Cash Flow per Share1,2 (M CAN$) (CAN$) 400 2.00 337 358 1.60 1.58 277 1.50 300 233 0.86 1.00 0.78 200 155 0.50 100 0.00 (0.28) 0 (0.50) 2012 2013 2014 2015 LTM 3/31/16 2012
Slide 12: Capital Expenditures
OPERATING PERFORMANCE AND FINANCIAL SITUATION Capital Expenditures • 2016 level to be slightly higher at ~$185M, Capital Expenditures including IT (M CAN$) 200 • Mainly growth Capex 184 184 185 173 • Mostly towards US 161 150 Capex Distribution for FY2015 – $173M Corporate 100 Specialty 2012 2013 20
Slide 13: Debt Maturities and Repayment
OPERATING PERFORMANCE AND FINANCIAL SITUATION Debt Maturities Debt Repayment as at March 31, 2016 • Over last 24 months, $1 billion+ of 1,000 senior notes refinanced • Extended maturities to 2021, 750 714 2022 and 2023 • $750 million revolving facility 500 extended to 2019 325 282 250 250 • Average
Slide 14: Business Segment Highlights
BUSINESS SEGMENT HIGHLIGHTS Attractive Containerboard Market Conditions with Greenpac Investment Delivering Results Specialty Products Group Provides a Stable Source of Strong Position Across the Revenue, Unique Platform North American Tissue for Innovation and Hedge Market for Recovered Paper Price
Slide 15: Containerboard: Environment Still Sound
CONTAINERBOARD Environment Still Sound North American Containerboard Producers Fundamentals Sound Despite Added Capacity 2015 Industry Participants Operating Rates and Expected Capacity % of total capacity (Operating rate) 100% IP 33% 90% WestRock 19% 80% 70% GP 10% 60% PCA 10% Q1 2009 Q1 20
Slide 16: Our Strategic Move: Greenpac
CONTAINERBOARD Our Strategic Move: Greenpac • Largest recycled linerboard mill in NA: 1,500 s.t./day of lightweight recycled linerboard (26 pounds) • State-of-the-art equipment • Product differentiation: Greenpac XP grades represent 75% of total production in Q1-2016 • Take-or-pay agreement for 81%
Slide 17: Boxboard Europe: Stronger and Leaner Production Platform
BOXBOARD EUROPE Stronger and Leaner Production Platform • ~58% ownership of RdM, a public Italian company, and 100% of a virgin board mill in France • Rationalization of production capacity, consolidation of sales forces, structure simplification and modernization investments have resulted in improv
Slide 18: Specialty Products Group
SPECIALTY PRODUCTS GROUP Stable Source of Revenue and Unique Platform for Innovation • Diversified product offerings and stable revenue stream with leading market positions • Recent initiatives have included • Cascades Recovery minority (27%) acquisition completed in December 2015 • Restructuring an
Slide 19: Tissue Papers: Strong Position Across the North American Market
TISSUE PAPERS Stong Position Across the North American Tissue Market Sales by Geography (2015) Tissue Market Demand 160 Canada (25%) US (75%) Indexed U.S. Tissue 140 Away-from- Away-from- Demand Home Home 42% 49% 120 100 At-Home At-Home 58% 51% 80 1996 2000 2004 2008 2012 2016E Sales by End Markets
Slide 20: Tissue Papers: Extended Geographical Reach
TISSUE PAPERS Extended Geographical Reach 2015 NORTH AMERICAN TISSUE MANUFACTURERS Capacity Market Capacity Capacity ('000 s.t.) Share Retail AfH 1 Georgia-Pacific 2,849 29% 67% 33% 2 Procter & Gamble 1,494 15% 100% 0% 3 Kimberly-Clark 1,466 15% 67% 33% 4 SCA Tissue NA 772 8% 0% 100% 5 Cascades Tiss
Slide 21: Potential Benefits Stemming from Our Initiatives
POTENTIAL BENEFITS STEMMING FROM OUR INITIATIVES Modernizing our operating platform to increase profitability • $185M capex program in 2016 • Divestitures and closures of under-performing units • Containerboard: sound fundamentals and improved platform • Modernized converting platform and manufact
Slide 22: For more information
For more information: www.cascades.com/investors Jennifer Aitken, MBA Director, Investor Relations 514-282-2697 or investor@cascades.com 22