Cascades Inc. · TSX:CAS
Cascades — Investor Day (September 2023)
95 slides from Cascades's investor day presentation, Sep 14, 2023
Slide 1: Discover our True Nature
Discover our True Nature Bear Island Mill Tour & Investor Day September 14, 2023 1
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: Disclaimer: 2022–2024 Financial Information
DISCLAIMER: 2022 – 2024 Financial Information 2024 STRATEGIC PLAN UPDATE When taking into consideration all of the contributing factors discussed below, management expects sales, operating income and EBITDA (A) to increase from the year 2022 levels.: • Annualization of selling price changes in 2022
Slide 4: Agenda
AGENDA 8:00 a.m. 9:25 a.m. WELCOME & SAFE HARBOUR CONTAINERBOARD Jennifer Aitken Charles Malo Director, Investor Relations President & COO, Containerboard Packaging 8:10 a.m. BREAK OVERVIEW & STRATEGY Mario Plourde 10:30 a.m. President & CEO SPECIALTY PRODUCTS Jérôme Porlier 8:30 a.m. President & CO
Slide 5: We care. We innovate. We create value.
We care. We innovate. We create value. Mission Vision To improve the well-being of To be a key contributor to people, communities and the our customers’ success by planet by providing sustainable leading the way for sustainable and innovative solutions that packaging, hygiene and create value. recov
Slide 6: Macro Factors Driving our Businesses
Macro Factors Driving our Businesses Economic Resources Climate Demography Technology Environment These trends drive our innovation processes, guide investments & influence how Cascades responds to evolving customer needs. 6
Slide 7: Our True Nature
Our True Manufacturing Nature Conversion Recovery and Recycling A circular economy Cascades’ business Customer Transportation model for nearly 60 years. 7
Slide 8: Our True Nature
Our True Nature Sustainable, innovative and value-added packaging and hygiene solutions, supported by a research & innovation centre and national recovery operations Containerboard RECOVERY+ TRANSPORT RESEARCH + INNOVATION CENTRE Specialty ENGINEERING Products Tissue Papers 8
Slide 9: Cascades North America
Cascades North America 10,000 employees 500 products 75 facilities 9
Slide 10: Ontario, Québec, Northeastern U.S.
Ontario Québec Northeastern U.S. 10
Slide 11: Capital Investments
Capital Investments (M$, excluding new leases, disposal of assets and accounts payable variation) Strategic investments have transformed our operational platform. 532 36 41 29 330 ~325 312 26 27 50 81 227 213 37 169 20 39 22 426 ~175 24 85 104 61 217 184 22 22 18 62 66 84 2017 2018 2019 2020 2021 20
Slide 12: Recovery of fibre and plastic
The contents of your bin have invaluable potential. Recovery is our main source of raw material: every year, Cascades recycles tonnes of fibre and plastic, transforming them into innovative packaging and hygiene solutions. Be mindful of this treasure right under your nose. 12
Slide 13: Sustainability: Part of our DNA & our History
Sustainability: Part of our DNA & our History Antonio Lemaire 13
Slide 14: Our Approach to Sustainability
Our Approach to Sustainability 14
Slide 15: Our Guide: Science
Our Guide: Science When it comes to eco-responsibility, we believe that it is critical to base our choices on science. Life-Cycle Assessment (LCA) is a scientific approach for assessing the actual environmental footprint of our products. Our LCAs are rigorously conducted by independent organizations
Slide 16: Our Sustainability Action Plans
Our Sustainability Action Plans • 4 formal Action Plans since 2010 • Disclosure of ESG results since 1996 • Our last Action Plan was launched in June 2021 (2021-2025) 16
Slide 17: Our Environmental Performance 2022
Our Environmental Performance 2022 80% of the fibres bought to manufacture our products are recycled 2.4X less energy consumed than industry average* 4.3X less water consumed than the industry average* 42% fewer GHG emissions (scope 1 & 2) than the industry average* 59% of the electricity we use is
Slide 18: Awards & Distinctions
Awards & Distinctions 20th most sustainable CDP Supplier Engagement company in the world Rating Leaderboard Recognized as Giga-Guru by Canada’s top 100 employers Walmart for GHG reduction 18th best corporate 12th year as the most sustainable citizen in Canada company according to Quebecers 18
Slide 19: A Strong Record and an Ambitious Strategy
A Strong Record and an Ambitious Strategy The road traveled Where we're going Long established practices in Selected ESG data verified and measuring environmental and audited by independent third party social performance Alignment with international Transparency as a core value with standards and re
Slide 20: Sustainability Action Plan 2021-2025
Sustainability Action Plan 2021-2025 Ambitious targets and a robust action plan 20
Slide 21: Sustainability Action Plan 2021-2025
Sustainability Action Plan 2021-2025 Aligned with 10 of the 17 United Nations Goals 21
Slide 22: Cascades 2030 GHG Targets
Cascades 2030 GHG Targets 38.7% scopes 1+2, mills (KG DE CO2 eq/MT) 27.5% scopes 1+2, other (KG OF CO2 eq) 22% scope 3 (KG OF CO2 eq/MT) 22
Slide 23: Innovative Eco-Friendly Products that Meet Demand
Innovative Eco-Friendly Products that Meet Demand Our low-environmental-footprint packaging products are increasingly in demand, given the need for greener products. Recycled and recyclable insulated boxes 100% recycled and recyclable 100% recycled and recyclable* cardboard tray PET tray Recycled an
Slide 24: Well-positioned to benefit from growing demand for sustainable products
increase in customer 100X demands on ESG issues from 2016 to 2023 Well-positioned to benefit from the of our top 10 growing demand for 60% customers ask about ESG issues sustainable products & expertise of our top 100 40% customers ask about ESG issues 24
Slide 25: Recovery and Recycling
RECOVERY AND RECYCLING 25
Slide 26: Recovery & Recycling
Recovery & Recycling STRATEGIC MANDATE, CRITICAL ROLE ENSURE 100% OF CASCADES’ SECONDARY FIBRES AND PULP SUPPLY THROUGH A WORLD CLASS, SUSTAINABLE AND FULLY INTEGRATED SUPPLY CHAIN 26
Slide 27: About Recovery & Recycling
About Recovery & Recycling 2.6 M pulp supply chain provided MT/YR of secondary fibre & virgin 25% of Cascades’ fibre requirements via our collection & processing facilities We create value by North American operations facilities coast to coast 1 Servicing thousands of customers 2 Providing security
Slide 28: Recovery & Recycling: Protecting our Forests
Recovery & Recycling: Protecting our “Forests” Materials that are • Domestic competition is rising… OCC consumed from NA containerboard and recycled pulp mills integral to our products to grow by 3.7 M MT from 2020-2025 Mixed & • OCC represents 74% (60% in 2010) of recycled Newsprint; 7% fibre consu
Slide 29: Recovery & Recycling: Our mandate
Recovery & Recycling Our mandate RESIDENTIAL IC&I* FIBRE SOURCING EAST COAST FIBRE EXPERTISE FIBRE ACCESS & PROCESSING EXPANSION • Reinforce Cascades’ • Protect important • Support Cascades’ • Ensure long-term circular economy source of quality growth in US with fibre solutions and differentiation f
Slide 30: Recovery & Recycling: Commercial strategy
Recovery & Recycling Commercial strategy ACCESS TO LEAD IN IC&I EAST COAST FIBRE EXPERTISE RESIDENTIAL FIBRE EXPANSION • Diversify our supply • Optimize our assets, • Export our proven • Leverage sources and secure target commercial business model to technology and fibre locally agreements with secu
Slide 31: Fibre Expertise: Lines of Defense
Fibre Expertise: 3 Lines of Defense 1st DEFENSE 2nd DEFENSE 3rd DEFENSE ONE GRADE PROBING FIBRECHECK Visual evaluation Deeper assessment “Are we buying the of bales: integrity, beyond surface/visual right fibre for its grades, other intended end use?” qualities Moisture & plastic content as
Slide 32: Probing: Fibre Cost at Machine Headbox
Probing: Fibre Cost at Machine Headbox 32
Slide 33: You see waste. We see a new life.
You see waste. We see a new life.
Slide 34: Containerboard Packaging
Containerboard Packaging Modernized operational platform providing customers with a wide range of high-performance packaging solutions 34
Slide 35: Containerboard Packaging
Containerboard Packaging ~4,000 2022 sales: ~5,000 customers 7 mills employees $2.2 B across N.A. 19 converting sites 14% 8% 19% 42% 22% 2022 2022 2022 sales sales 58% sales 86% 51% Recycled Linerboard Manufacturing - Canada Manufacturing - US Virgin Medium Converting - Canada Converting - US 2022 a
Slide 36: Containerboard Packaging: Market Share and Facilities
Containerboard Packaging Cascades Market Share: 28.9%1 C Calgary, AB C Richmond, BC C Springfield, Winnipeg MB C Winnipeg, MB Niagara Falls, NY M M C Schenectady, NY Cabano M Cascades Market Share C Lancaster, NY C Newtown, CT C Piscataway, NJ Northeast U.S. = 6.6%2 M Bear Island, VA Victoriaville B
Slide 37: A Modernized and Evolving Network focussed on three main pillars
A Modernized and Evolving Network focussed on three main pillars Repositioning of Ontario Shut-down Packaging Operations, Corrugator closure of Etobicoke, ON Belleville, ON 5 year celebration, Piscataway Converting Closure of Plant Brown, ON 2020 2021 2022 2023 Bear Island Start-up of mill project B
Slide 38: Multi-Asset Portfolio to Support Future Growth
Multi-Asset Portfolio to Support Future Growth Bear Island, Virginia, U.S. Piscataway, New Jersey, U.S. Victoriaville, Québec, Canada Recycled lightweight Digital Printing Flexo – Gluer – Folder containerboard Newtown, Connecticut, U.S. Piscataway, New Jersey, U.S. Greenpac, New York, U.S. 38
Slide 39: Containerboard - Market Landscape
Containerboard - Market Landscape N.A. Containerboard Expected Production1 N.A. Containerboard Market Share3 CAGR 2023 – 2027 +0.5% TOP 4 PLAYERS = 67% 4,9 5,1 5,4 5,5 5,7 5,3 4,6 37,4 37,6 38,1 Other 34,7 34,7 36,3 37,0 24% IP 30% 2021 2022 2023E 2024E 2025E 2026E 2027E Containerboard consumption (
Slide 40: Corrugated Boxes - Market Landscape
Corrugated Boxes - Market Landscape Agriculture, food & beverage and e-commerce sectors to Forecasted Box Shipment Growth1 account for 79% of market growth from now to 20272. 100% 3,3% 2,1% 1,4% 16,9 25% 54% 1,2% 9% 12% 9,2 -3,6% -4,1% 4,2 2,0 1,6 Total Agriculture, food Manufacturing E-Commerce Ret
Slide 41: Containerboard: our Brands
Containerboard: our Brands Packaging solutions Containerboard 41
Slide 42: Innovations that Combine Creativity & Functionality
Innovations that Combine Creativity & Functionality Our innovative designs Large format Bag-in-a-box duo Fresh Display (compatible with our trays) Closed basket for fresh fruits and vegetables 42
Slide 43: Distribution
Cascades e-comC) Distribution packaging solutions™
Slide 44: Distribution Market
Distribution Market Market Our Products • Highest growth potential: last year +7.4%1 • Forecasted E-Commerce box shipment CAGR 2023-2027: +6.5%2 Key Trends Custom E-commerce Custom mailer boxes boxes printing • Right sizing & light weighting • Pouches & mailers • Supply chain optimization • Customiz
Slide 45: Food Processing
Cascades protect Food Processing imsn© solutions Cj}! 45
Slide 46: Food Processing
Food Processing Our Products Market • North American corrugated box demand for Die-cut boxes food & beverage 2022-2027 CAGR = 2.3%1 Retail • Still the largest sector for packaging packaging • Growing demand for private label brands Insulated Key Trends boxes POS and displays • Fibre-based materials
Slide 47: Produce
Produce Cascades fresh 47
Slide 48: Produce Market
Produce Market Market Our Products • Demand for Fresh Produce Packaging (U.S.) CAGR 2022-2027: + 2.1%1 • Rapid expansion: gardens and farms of the future with greenhouse production Key Trends Produce Produce Produce Bulk bins baskets trays boxes • Eat Local • Branding & marketing • Ecological awaren
Slide 49: Industrial
Industrial 49
Slide 50: Industrial Market
Industrial Market Market Our Products • Highest impact due to economy • Increased demand for domestic production • Reshoring: companies moving back to U.S. & Canada • Lower spending on durable goods due to inflation Handling & Protective Key Trends Regular Large shipping material boxes format • Auto
Slide 51: Consumer Packaged Goods (CPG)
Consumer Packaged Goods (CPG) 51
Slide 52: CPG Market
CPG Market Market Our Products • Evolving in a post-pandemic dynamic • The largest spending increase: private label brands “Private-label packaging spending is likely to see the largest increase of any brand owner category — a 7.1% rise by 2024”1 Trends Retail Custom POS & packaging mailer boxes • D
Slide 53: Containerboard: Commercial strategy
Containerboard Commercial strategy Creating value for our customers and Cascades CUSTOMERS FIRST: LEVERAGING OUR CONTINUOUS NET INVESTMENT IN SUPPORTING THEIR MODERNIZED, REVENUE INNOVATION SUSTAINABILITY MULTI-ASSET MANAGEMENT & TO GENERATE GROWTH PORTFOLIO SUPPLY CHAIN GROWTH INITIATIVES 53
Slide 54: You see a box.
You see a box. We see the key to growing your ee, business sustainably. 5 Cascades
Slide 55: Specialty Products Group
Develop our products according to recognized eco-design principles and lead the way in sustainable packaging solutions. Specialty Products Group 55
Slide 56: Specialty Products
Specialty Products ~1,150 2022 sales2: 400 customers 19 operating employees1 $654 M across N.A. facilities1 34% 36% 2022 2022 sales sales 64% 66% Consumer packaging USA Canada Industrial & flexible packaging (1) Including 4 plants in our JV Cascades Sonoco (2) Excluding sales from JV Cascades Sonoco
Slide 57: Our Sustainable Packaging in Retail Stores
Our Sustainable Packaging in Retail Stores FRUITS & PROTEIN EGGS MEAL KITS VEGETABLES 57
Slide 58: Specialty Products
58 Specialty Products Plastic (4) Moulded pulp (4) Cardboard (7) Cascades Sonoco1 (4) (1) Joint venture (50%) producing specialty paper packaging products such as headers, rolls and wrappers + Coating solutions for fibre-based products 58
Slide 59: Our Manufacturing Platform
Our Manufacturing Platform Rigid Plastic Cardboard Moulded Pulp Cascades Sonoco Drummondville / York, PA, U.S. Brook, Birmingham, Kingsey Falls, QC (Isothermal) Indiana, U.S. Alabama, U.S. Drummondville, QC Canada 59
Slide 60: Fresh Proteins
60 Fresh Proteins 15% of 2022 sales 60
Slide 61: Fresh Proteins
Fresh Proteins Market Our Products • Fresh meat packaging 2024 forecasted • Only player to offer solutions made with N.A. sales: US$2.6 B1 100% recycled content and are recyclable. • 2022-2026 CAGR volume growth: +2.5%1 • 83% of meat packages are case-ready: an increase of 69% since 20022 Key Trends
Slide 62: Fruits & Vegetables
6% of Fruits & Vegetables 2022 sales 62
Slide 63: Fruits & Vegetables
Fruits & Vegetables Our Products Market • 100% recycled and recyclable • Fresh produce packaging 2024 • Unique compostable water-based coating forecasted US sales: US$4.4 B1 • 2019-2024 CAGR volume growth: + 3.5%1 The brown tray but greenTM Made of 100% recycled fibres Key Trends • More shelf life t
Slide 64: From Farm to Table
Current product offer FROM FARM TO TABLE Primary packaging Secondary packaging Promotional display 64
Slide 65: Isothermal Distribution
Isothermal Distribution 6% of 2022 sales 65
Slide 66: Isothermal Distribution
Isothermal Distribution Market Our Products • US meal kit 2023-27 CAGR volume growth: + 6%1 • A circular solution made from recycled fibres and also recyclable Key Trends + • Players are consolidating and diversifying their businesses with new segments: frozen meat, grocery and pet food • A better t
Slide 67: Eggs
Eggs 35% of 2022 sales 67
Slide 68: Egg Packaging
Egg Packaging Our Products Market • Recyclable & compostable • 2025 forecasted US annual egg packaging • Filler flat market share leader sales: US$894 M1 • New innovation in retail • CAGR $ 2020-2025:+ 2.4%1 Key Trends • Cage free regulations driving specialty & differentiated retail packaging deman
Slide 69: Food Services
Food Services 4% of 2022 sales 69
Slide 70: Food Services
Food Services Market Our Products • 2027 forecasted US sales: US$33.2 B1 • 100% recycled material, recyclable & compostable • CAGR 2022-2027 volume growth: +3.8%1 • FlexSHIELD(TM) Coating: Certification compostable BPI Key Trends • Legislation on single use plastic has increased demand for fibre sol
Slide 71: Industrial & Flexible
Industrial & Flexible 34% of 2022 Sales 71 71
Slide 72: Industrial & Flexible
Industrial & Flexible Market Our Products • Cascades is vertically integrated to develop various industrial and flexible solutions • US demand for plastic film is expected to increase 1.3% annually to 18.7 billion pounds, Partitions Core URB or $32.5 billion, in 20261 Key Trends • Retail customers h
Slide 73: Specialty Products: Commercial strategy
Specialty Products Commercial strategy Customer-centric group firmly rooted in its key markets, placing innovation and eco-responsibility at the heart of business strategy. THE RIGHT BENCHMARK IN TECHNICAL INVESTMENTS TO PACKAGING FOR THE ECO-DESIGN EXPERTISE MANUFACTURE OUR RIGHT PRODUCT INNOVATION
Slide 74: You put it in the recycling. We put it back on the shelves.
. A, You put it | in the recycling. cf We put it back on the shelves.
Slide 75: Tissue Papers
Tissue Papers ~2,000 2022 sales2: ~200 customers employees $1.4 B 10 plants across N.A. Converting 40% Manufacturing Converting 48% capacity 51% capacity 49% capacity 52% by country1 by market1 by country1 60% USA Canada USA Canada Away-from-Home Retail Annual capacity1: ~445k s.t.; ~65-70 M cases I
Slide 76: Tissue Papers
TISSUE PAPERS Optimized operational platform providing a complete range of retail & away-from- home tissue solutions 76
Slide 77: Simplified Tissue Papers Business Model
Simplified Tissue Papers Business Model • Significant investments in converting assets • Closure of underperforming plants • Well-located and larger plants Acquisition of Orchids assets More resilient. • 2017-2021 • Production efficiency initiatives More agile. • • Customer portfolio review Product
Slide 78: Operating Platform Aligned with Major Population Areas
Operating Platform Aligned with Major Population Areas Population Density (People / km2) 0-1 1-5 5 - 25 25 - 250 250 - 1,000 1,000 - 30,000 78 Source: 2019 Commission for Environmental Cooperation
Slide 79: Tissue Papers Industry
Tissue Papers Industry US Tissue Parent Roll Production & Capacity Utilization1 US Parent Roll Prices1 1 593 1 530 97% 1 514 92% 93% 1 428 9 891 1 266 1 251 9 485 1 120 1 156 9 402 2020 2021 2022 Recycled parent roll, average (US$/s.t.) Virgin parent roll, average (US$/s.t.) Total parent roll produc
Slide 80: North American Tissue Retailer Share by Country
North American Tissue Retailer Share by Country Top 5 CAN retailers make up 94% Top 10 U.S. retailers make up 84% of market tissue EQ1 sales of market tissue EQ1 sales Top Retailers (Bath & Towels) EQ Share Top Retailers (Bath & Towels) EQ Share Share Change (YoY) Share Change (YoY) 43,8 +1.4% 23,3
Slide 81: Global and Paper Trends
Global and Paper Trends Increased Focus on Alternative Fibre Sustainability Challenges Greater focus on addressing Growing Importance Non-wood pulp alternatives hit by fibre environmental and social issues in the of E-Com availability challenges; high cost of pursuit of global economic growth invest
Slide 82: Tissue Papers: Commercial strategy
Tissue Papers Commercial strategy Be the conventional Towel and Tissue papers Private Label PARTNER OF CHOICE for distributors and retailers LEADERSHIP IN CO-DEVELOPMENT HAND IN HAND PRODUCT ENRICHED SUSTAINABILITY APPROACH SUPPLY CHAIN EXCELLENCE SERVICES 82
Slide 83: Retail Tissue
Retail Tissue 83
Slide 84: Retail Tissue
Retail Tissue Market1 Our Customers • N.A. sales growth of ~4.5% pre-Covid • Club, mass merchandisers, drug and grocery retailers - development and growth of • “Premiumization” a strong driver their premium private label positions • Heavily weighted to TAD Our Products Key Trends1 • Offer a range of
Slide 85: Away-from-Home Tissue
Away-from-Home Tissue 85
Slide 86: Away-from-Home Tissue
Away-from-Home Tissue Market1,2 Our Customers • Latest 12 months down 2.8% (US driven) • Wholesalers, distributors and select national • Private Label represents 30% of the market (+0.8pt) accounts across North America to build their Private Label portfolio • Bath Tissue is the only growing segment
Slide 87: Tissue Papers 2023-2024 focus
Tissue Papers 2023-2024 focus EBITDA (A)1 target of Customer Asset Portfolio Value $120M - $140M in 2024 Experience Optimization • Production ramp-up • Ongoing partnership evolution • Relocate some converting • Cost reduction with key customers assets • Disciplined pricing • Continue customer and •
Slide 88: Cascades saves over 28.8 million trees a year
By using 80% recycled fibres to manufacture its products, Cascades saves over 28.8 million trees a year, which reduces pressure on our natural resources. — 88 88
Slide 89: Our Operational Platforms Are Equipped to Provide Solutions for tomorrow's needs
Our Operational Platforms Are Equipped to Provide Solutions for tomorrow’s needs AGILITY ECORESPONSIBILITY OPTIMIZATION CONTINUOUS INNOVATION 89
Slide 90: Annual Sales
Annual Sales (M$) 2024 OBJECTIVE1: Sales of ~ $5 billion, an increase of ~25% from 2019 levels ~5 000 4 611 4,466 4,105 3,948 3,956 2019 2020 2021 2022 LTM Q2 2023 2024 Target (1) Please refer to the “Disclaimer: 2022 – 2024 Financial Information” included at the beginning of the presentation. Addit
Slide 91: Annual EBITDA (A)
Annual EBITDA (A)1 2024 OBJECTIVE2: EBITDA (A)1 margin of 12% - 14% 13,3% 12,6% ~12% - 14% 10,9% 9,8% 8,4% 546 502 496 ~650 389 376 2019 2020 2021 2022 LTM Q2 2023 2024 Target 1 1 EBITDA (A) (M$) EBITDA (A) Margin (% of sales) (1) Some information represents Non-IFRS financial measures, other financ
Slide 92: Leverage & Debt Maturities
Leverage & Debt Maturities 2024 OBJECTIVE4: Net debt/EBITDA (A)2 ratio of 2.5x – 3.0x Net Debt / EBITDA (A)2,3 Long-Term Debt Maturities1 5,2x 4,7x 4,0x 3,8x 3,6x 4,1x 2.5x- 3,5x 3,25x 3,5x 2,5x 3,0x Unsecured Revolving Leases - Term loan senior notes credit facility Subsidiaries Debts without Su
Slide 93: Cascades: Commercial strategy
Cascades Commercial strategy Be the go-to provider of sustainable packaging and tissue papers solutions for our customers across North America SUSTAINABLE PIONEER IN HAND IN HAND PRODUCT VALUE LEADERSHIP INNOVATION SUPPLY CHAIN EXCELLENCE CREATION 93
Slide 94: Cascades – Strong Foundation for Growth
Cascades – Strong Foundation for Growth 2022-2024 Modernized + Agile & Aligned Well-Positioned Go-To Market Strategic Plan1 Asset Base Approach (1) Please refer to the “Disclaimer: 2022 – 2024 Financial Information” included at the beginning of the presentation. Additionally, the Company’s 2022-2024
Slide 95: www.cascades.com/investors
www.cascades.com/investors Jennifer Aitken, MBA Director, Investor Relations 514-282-2697 investor@cascades.com 95