Cascades Inc. · TSX:CAS
Cascades — Investor Presentation (September 2024)
30 slides from Cascades's investor presentation, September 2024
Slide 1: Investor Presentation September 2024
1 Investor Presentation September 2024
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: 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 4: Investment Thesis
INVESTMENT THESIS • Modernized and well-positioned asset base equipped to drive value for customers & shareholders • Strong sustainability track record • Bear Island 100% recycled lightweight containerboard mill (Virginia, US) • Agile & aligned go-to market approach 5
Slide 5: Sustainability Action Plan 2021-2025
Sustainability Action Plan 2021-2025 Ambitious targets, a robust action plan, GHG reduction targets have been approved by the Science Based Targets initiative (SBTi). Climate Change 38.7% IN 2030 VS 2019 27.5% IN 2030 VS 2019 22% IN 2030 VS 2019 Respectful scopes 1 + 2, mills (kg of CO2 scopes 1 + 2
Slide 6: Financial Results
Financial Results 6
Slide 7: Summary of Financial Results
Summary of Financial Results (in millions of CAN$, except per share amounts) Q2 Q1 Q2 LTM2 2024 2024 2023 Sales 1,180 1,109 1,168 4,625 Operating Income (loss) 34 9 64 99 EBITDA (A)1 112 103 141 498 Margin (EBITDA (A)1/Sales) 9.5% 9.3% 12.1% 10.8% Net earnings (loss) 1 (20) 22 (42) Adjusted net earn
Slide 8: Overview of Consolidated Profitability Drivers
Overview of Consolidated Profitability Drivers (in millions of CAN$) Consolidated EBITDA (A)1 Variation Quarter-over-Quarter Year-over-Year (M CAN$) Q2 2024 vs Q1 2024 Q2 2024 vs Q2 2023 Pricing $12 million ($25) million Freight & Production Costs ($6) million $4 million Volume & Mix, FX & Others $1
Slide 9: Recycled Fibre Costs – Index Prices
Recycled Fibre Costs – Index Prices (US$/s.t.) OCC: Current • Strong domestic demand driven by new recycled (Sep-24) containerboard mills being ramped-up; fibre generation increased with usual favourable seasonal generation and consistent export volumes • Expect relatively stable market dynamics in
Slide 10: Virgin Fibre Costs – Index List Prices
Virgin Fibre Costs – Index List Prices (US$/metric ton) Current VIRGIN PULP : (Aug-24) • Market began to normalize following factors that impacted pricing in Q1: port strike, unplanned mill 1,760 downtime in Finland and hindered logistics NBSK • Lower demand in China led to first price reduction in
Slide 11: Capital Investments
Capital Investments (in property, plant & equipment, in millions of CAN dollars, excluding new leases, disposal of assets and accounts payable variation) Strategic investments have transformed our operational platform. 532 36 41 29 330 312 289 26 27 50 32 81 227 213 35 37 169 20 39 22 426 25 < 175 2
Slide 12: 5-Year Financial Performance
5-Year Financial Performance Sales (M CAN$) Free Cash Flow2 8.5% 8.9% 4,638 4,625 4,466 7.4% 7.5% 4,105 5.1% 3,948 3,956 4.7% 413 348 349 290 204 210 2019 2020 2021 2022 2023 LTM Q2 2024 2019 2020 2021 2022 2023 LTM Q2 2024 Free Cash Flow (M CAN$) Free Cash Flow/Sales (%) EBITDA (A)1 & Margin Net De
Slide 13: Financial Ratios & Debt Maturities
Financial Ratios & Debt Maturities Net Debt / Adjusted EBITDA (A)1,3 Interest Coverage Ratio2,3 5.2x 6.7x 5.8x 6.0x 4.2x 3.6x 3.5x 3.5x 4.6x 4.9x 4.5x 3.25x 3.4x 4.3x 2.5x 3.6x 2017 2018 2019 2020 2021 2022 2023 Q2 2017 2018 2019 2020 2021 2022 2023 Q2 2024 2024 Net Debt / Net Debt + Total Equity1 L
Slide 14: Containerboard Packaging
Containerboard Packaging Innovative, sustainable, high-performance packaging solutions 2023 Integration 6 Mills1 Annual capacity3 rate1: 52% 16 Converting sites1 1.805 M s.t. (68% including partners) Linerboard Medium 53% 47% 2023 SALES2 $2.3 B Virgin 13% Recycled 87% Manufacturing - Canada Manufact
Slide 15: Containerboard – Quarterly Performance
Containerboard – Quarterly Performance Quarterly EBITDA (A)1 (M CAN$) • Sequential Q2 shipments of converted products: Canada +5.9% (vs. market +6.2%); US -2.1% (vs. market +3.3%) 22% 17% 17% • Year-over-year Q2 shipments of converted products: 126 12% Canada +7.8% (vs. market +5.8%); US +0.6% (vs.
Slide 16: Specialty Products
Specialty Products Innovation & eco-responsibility at the heart of customer-centric strategy 17 facilities1 • 9 in the industrial packaging sector • 8 in the consumer product packaging sector Canada US 36% 64% 2023 SALES2 $642 M Industrial/ Consumer Flexible Packaging 71% Packaging 29% 20% 38% 5% 4%
Slide 17: Specialty Products – Quarterly Performance
Specialty Products – Quarterly Performance Quarterly EBITDA (A)1 (M CAN$) • Cardboard: Results decreased sequentially largely as a result of lower volumes in the Honeycomb sub-segment and higher raw material prices. 17% 16% 16% 15% 13% 12% • Moulded pulp: Slightly lower results sequentially driven 2
Slide 18: Tissue Papers – More resilient. More agile. Less volatile.
Tissue Papers – More resilient. More agile. Less volatile. 10 Facilities 2023 SALES 2023 Integration rate1: 87% $1.6 B Annual Capacity1: 445,000 s.t., ~65-70 M cases MANUFACTURING Canada US capacity by country1 48% 52% CONVERTING Canada US capacity by country1 51% 49% CONVERTING Retail Away-from-Hom
Slide 19: Operating Platform Aligned with Major Population Areas
Operating Platform Aligned with Major Population Areas 19 Equipped to be the conventional towel and tissue papers Private Label PARTNER OF CHOICE Population Density (People / km2) for distributors and 0-1 1-5 5 - 25 retailers 25 - 250 250 - 1,000 1,000 - 30,000 Source: 2019 Commission for Environmen
Slide 20: Tissue Papers – Quarterly Performance
Tissue Papers – Quarterly Performance Quarterly EBITDA (A)1 (M CAN$) Q2 2024 Shipments of Converted Products: 14% 16% 14% 14% 11% 4% Retail tissue Away-from-Home tissue 61 61 54 50 44 10.7 M cases 5.4 M cases 16 Q2 vs. Q1: +1.5% Q2 vs. Q1: +16.0% Q2 vs. Q2: +4.8% Q2 vs. Q2: -0.5% Q1 2023 Q2 2023 Q3
Slide 21: Near-Term Factors
NEAR-TERM FACTORS Q3 2024 EBITDA (A)1 TREND vs. Q2 2024 (*Assumes current index prices) • Stronger anticipated Containerboard performance expected to CONSOLIDATED offset softer Tissue Papers results Containerboard • Higher selling prices, good volume & lower operational costs following important shu
Slide 22: Appendices
APPENDICES 22
Slide 23: Recovery & Recycling
Recovery & Recycling A natural extension of our operations, delivering financial and strategic value. MT/YR of secondary fibre & virgin of Cascades’ fibre requirements via 2.6 M pulp supply chain provided 25% our collection & processing facilities We create value by North American operations facilit
Slide 24: 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 25: Quarterly Financial Results & KPIs
Quarterly Financial Results & KPIs 2022 2023 2024 (In millions of CAN$, except per common share amounts, where noted) Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 LTM3 Financial Results Sales 1,038 1,119 1,174 1,135 4,466 1,134 1,168 1,198 1,138 4,638 1,109 1,180 4,625 Operating income (loss) (4) 32 25 (
Slide 26: Cash Flow Overview
Cash Flow Overview 2022 2023 2024 (In millions of CAN$, except per common share amounts) Q1 Q2 Q3 Q4 YEAR Q1 Q2 Q3 Q4 Year Q1 Q2 LTM4 Cash flow from operations 19 81 60 100 260 89 117 100 91 397 32 78 301 Specific items1 7 — 2 3 12 1 5 6 12 24 14 17 49 Adjusted cash flow from operations2 26 81 62 10
Slide 27: Historical COGS and SG&A Overview
Historical COGS and SG&A Overview COST OF SALES 2022 2023 2024 (In millions of CAN$) Q1 Q2 Q3 Q4 YEAR Q1 Q2 Q3 Q4 YEAR Q1 Q2 Raw materials 359 393 440 395 1,587 365 396 419 395 1,570 377 431 Wages & benefits 171 176 171 180 698 193 194 192 180 773 194 198 Energy 59 59 65 60 243 63 58 57 60 231 54 51
Slide 28: Historical Reference Prices and Fibre Costs
Historical Reference Prices and Fibre Costs 2022 2023 2024 Q2 2024 vs Q2 2024 vs. Q2 2023 Q1 2024 These indexes should only be used as an indicator of trends and they may be different than our actual selling prices or purchasing costs. Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Q2 (units) (%) (units) (%)
Slide 29: Sensitivities
SHIPMENTS / EBITDA (A)1 SENSITIVITIES2 CONSUMPTION (‘000 s.t, ‘000 mm Btu for Natural Gas) INCREASE IMPACT (Annually, CAN$ M) SELLING PRICE2 (Manufacturing & Converting) PACKAGING Linerboard, 42-lbs unbleached kraft, Eastern US 425 US$25/s.t. 14 Corrugated Medium, 26-lbs semichemical, Eastern US 375
Slide 30: www.cascades.com/investors
www.cascades.com/investors Jennifer Aitken, MBA Director, Investor Relations 514.282.2697 / investor@cascades.com