Cascades Inc. · TSX:CAS
Cascades — Q2 2021 Earnings Presentation
29 slides from Cascades's earnings presentation, Aug 5, 2021
Slide 1: Q2 2021 Financial Results
Q2 2021 FINANCIAL RESULTS August 5, 2021
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: Summary of Quarterly Financial Results
SUMMARY OF QUARTERLY FINANCIAL RESULTS 54 58 49 48 73 143 42 64 133 104 139 122 98 22 29 3 8 54 44 23 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 1 Operating Income Adjusted OIBD Net Earnings Adjusted Net Earnings 1 Figures above in millions of CAN$ Figures above
Slide 4: Historical Segmented Quarterly Operating Income & Adjusted OIBD
HISTORICAL SEGMENTED QUARTERLY OPERATING INCOME (LOSS) & ADJUSTED OIBD1 Containerboard (millions of CAN$) 122 110 108 94 100 100 71 65 64 54 Tissue Papers (millions of CAN$) Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 54 36 40 1 31 Operating Income Adjusted OIBD 20 3 10 — 1 Specialty Products (millions
Slide 5: Historical Segmented Quarterly Shipments
HISTORICAL SEGMENTED QUARTERLY SHIPMENTS Containerboard ('000 s.t. and % capacity utilization1) 411 399 391 385 360 98% 97% 97% 96% 92% Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Tissue Papers ('000 s.t. and % capacity utilization1) 167 152 145 138 123 87% 86% 80% 78% 73% Q2 2020 Q3 2020 Q4 2020 Q1 202
Slide 6: Raw Material Costs - Index List Prices
RAW MATERIAL COSTS - INDEX LIST PRICES ($ US/s.t.) Recycled Fibre Prices Current ($ US/s.t.) Virgin Pulp Prices Current (Jun-21) 1,800 (Jun-21) 250 225 200 1,600 1,615 175 1,400 150 1,350 125 134 1,200 100 95 75 1,000 50 800 25 0 600 Aug 17 Aug 17 Nov 17 Feb 19 Nov 18 May 20 May 17 May 20 Feb 19 Aug
Slide 7: Packaging Products / Containerboard
PACKAGING PRODUCTS / CONTAINERBOARD Results Change vs. Comments on sequential performance Q2 2021 Q1 2021 Q2 2020 è Shipments decreased by 2% sequentially. This was driven by a 1% decrease in the Shipments ('000 s.t.) operating rate. Shipments of parent rolls and converted products decreased by 1% o
Slide 8: Tissue Papers
TISSUE PAPERS Results Change vs. Comments on sequential performance Q2 2021 Q1 2021 Q2 2020 è Shipments increased by 12% on a sequential basis in the second quarter. This Shipments ('000 s.t.) reflects a 3% increase in shipments of converted products driven by Away-from-Home 138 12% (17)% products,
Slide 9: Packaging Products / Specialty Products
PACKAGING PRODUCTS / SPECIALTY PRODUCTS Results Change vs. Comments on sequential performance Q2 2021 Q1 2021 Q2 2020 è Sales increased by 7% sequentially. Volume increased in all product segments, driven Sales (M$) primarily by the by the plastic food and egg packaging distribution segments. In add
Slide 10: Discontinued Operations
DISCONTINUED OPERATIONS On July 5, 2021, the Corporation announced the monetization of its 57.6% controlling equity interest in Reno de Medici S.p.A. (RDM) for an amount per share of €1.45, or $461 million. The transaction is expected to close in the third quarter of 2021. 20192 20202 20212 (In mill
Slide 11: Key Performance Indicators (KPIs)
KEY PERFORMANCE INDICATORS (KPIs) Total Shipments1,2 ('000 s.t.) Capacity Utilization Rate1,2,3 (manufacturing only) 90% 90% 93% 92% 90% 527 556 551 514 523 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 LTM Return on Assets LTM Working Capital (% of LTM Sales) 12.0%
Slide 12: Year Over Year Sales Reconciliation
YEAR OVER YEAR SALES RECONCILIATION (M CAN$) -6% 1,100 20 25 1,020 (6) (23) 1,000 956 (80) 900 Sales Recovery & Sales (M CAN$) Q2-20201 Price & Mix Recycling Other Volume F/X CAN$ Q2-2021 Containerboard 454 41 — 3 33 (34) 497 Specialty Products 120 3 — — 20 (12) 131 Tissue Papers 424 (18) — — (76) (
Slide 13: Sequential Sales Reconciliation
SEQUENTIAL SALES RECONCILIATION (M CAN$) +1% 1,000 10 39 (3) (13) 956 950 942 (19) 900 Sales Recovery & Sales (M CAN$) Q1-20211 Volume Recycling Other Price & Mix F/X CAN$ Q2-2021 Containerboard 503 (6) — — 7 (7) 497 Specialty Products 122 12 — — — (3) 131 Tissue Papers 292 33 — — (20) (8) 297 Corpo
Slide 14: Year-Over-Year Operating Income Reconciliation
YEAR-OVER-YEAR OPERATING INCOME RECONCILIATION + Higher selling prices and favourable mix Higher spreads realized in the - Less favourable mix of products sold + Higher volumes + Industrial Packaging and Consumer Lower converted product shipments - Higher raw material and operational costs products
Slide 15: Sequential Operating Income Reconciliation
SEQUENTIAL OPERATING INCOME RECONCILIATION + Higher selling prices + Lower production costs - Less favourable sales mix Lower converted product shipments related to - Higher raw material and operational - continued customer inventory management due to costs COVID-19 (M CAN$) - Less favourable FX rat
Slide 16: Q2 2021 Adjusted OIBD to Operating Income Reconciliation
Q2 2021 ADJUSTED OIBD TO OPERATING INCOME RECONCILIATION (M CAN$) 98 100 50 34 23 (64) (1) (5) (5) 0 Adjusted Depr. & Adjusted Impairment Restructuring Unrealized loss Operating 1 OIBD Amort. Operating charges costs on financial Income Income 1 instruments Container- Boxboard Specialty Tissue Corpor
Slide 17: Net Earnings - IFRS vs Adjusted
NET EARNINGS - IFRS VS ADJUSTED NET EARNINGS NET EARNINGS PER SHARE1 (in millions of Canadian dollars, except amount per share) Q2 2021 Q2 2021 As per IFRS 3 $0.02 Specific items: Impairment charges 1 0.01 Restructuring costs 5 $0.04 Unrealized loss on financial instruments 5 $0.03 Foreign exchange
Slide 18: Quarterly Year-Over-Year Adjusted EPS Variance
QUARTERLY YEAR-OVER-YEAR ADJUSTED EPS VARIANCE1,2,3 Lower results for RDM in Q2-2021 Lower Tissue results 0.80 0.04 0.01 0.04 0.61 0.60 0.57 (0.01) (0.03) (0.04) $ cents 0.40 (0.19) 0.20 0.07 0.02 (0.32) 0.00 (0.05) EPS Specific Adjusted Financing Share of Depreciation Income Dilution Non- OIBD Adju
Slide 19: Quarterly Sequential Adjusted EPS Variance
QUARTERLY SEQUENTIAL ADJUSTED EPS VARIANCE1,2,3 Lower results for RDM in Q2-2021 Lower Tissue results 0.40 0.01 0.01 0.02 0.07 0.29 (0.01) 0.22 (0.07) $ cents 0.20 0.07 (0.18) 0.02 0.00 (0.05) EPS Specific Adjusted Share of Depreciation Financing Income Non- OIBD Adjusted Specific EPS reported items
Slide 20: Cash Flow Overview
CASH FLOW OVERVIEW 125 125 131 137 66 84 78 87 82 86 87 89 23 (12) (4) Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 3 CF from oper. Adj. CF from oper. Adjusted Free Cash Flow generated (used)3 Figures above in millions of CAN$ Figures above in millions of CAN$ 2019
Slide 21: Net Debt Reconciliation - Q2 2021
NET DEBT1 RECONCILIATION - Q2 2021 (M CAN$) 65 1,707 1,700 1,654 47 17 1,600 12 12 6 (87) (19) 1,500 Net debt as at Cash flow F/X CAN$ Investments Dividends paid Right-of-use Discontinued Changes in Payments for Net debt as at March 31, 2021 from oper. and others & assets operations non-cash propert
Slide 22: Consolidated Financial Ratios & Debt Maturities
CONSOLIDATED FINANCIAL RATIOS & DEBT MATURITIES Net Debt / Adjusted OIBD1,3,4 Interest Coverage Ratio2,3,4 5.0x 6.7x 6.4x 4.6x 4.7x 5.8x 6.0x 4.0x 3.8x 3.6x 4.7x 4.6x 4.3x 3.5x 3.25x 2.5x 2.9x 3.0x 3.4x 3.4x 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q2 2012 2013 2014 2015 2016 2017 2018 2019 2020
Slide 23: Capital Investments
CAPITAL INVESTMENTS (in millions of Canadian dollars, excluding value of leases) 2021F CAPEX: $400 - $425 M1 includes ~$250 M for Bear Island conversion 450 312 27 81 227 213 20 39 22 169 24 85 133 104 7 61 21 184 22 13 22 18 66 84 92 62 — 2017 2018 2019 2020 Q2 2021 YTD 2021F Containerboard Special
Slide 24: Near Term Factors
NEAR TERM FACTORS • North American operations: positive impact from margin vs Q2 2021 vs Q3 2020 improvement initiatives YoY and QoQ Q3 2021 OIBD1 Trend • Raw materials: expect higher raw material prices both YoY and sequentially in Q3 for all business segments • Production costs: anticipate continu
Slide 25: Segmented YoY Operating Income Waterfalls
SEGMENTED YoY OPERATING INCOME WATERFALLS Containerboard (millions of CAN$) 200 13 41 94 100 (31) 29 (3) (8) 64 54 (15) (23) 11 (5) 0 Q2 2020 Depr. & Q2 2020 Price & Mix Volume Energy F/X CAN$ Raw Materials Other prod Q2 2021 Depr. & Q2 2021 Tissue Papers (millions of CAN$) Operating Amort. Adjusted
Slide 26: Segmented Sequential Operating Income (Loss) Waterfalls
SEGMENTED SEQUENTIAL OPERATING INCOME (LOSS) WATERFALLS Containerboard (millions of CAN$) Higher operational costs 150 125 31 108 7 100 (31) 100 (2) (3) (4) (6) 75 65 64 50 12 (5) Tissue Papers (millions of CAN$) Q1 Depr. & Q1 Price & F/X Volume Raw Other Q2 Depr. & Q2 2021 Amort. / 2021 Mix CAN$ ma
Slide 27: Selected Reference Prices
SELECTED REFERENCE PRICES Current Current (US$/s.t.) Containerboard - Selected Products (US$/s.t.) Specialty Products - Selected Products (Jun-21) (Jun-21) 900 850 820 825 800 800 750 735 700 700 600 650 Nov-19 Nov 18 Aug-19 Aug 18 May-21 Feb-21 May-20 May 19 Feb-20 Feb 19 Nov-20 May 18 Aug-20 Nov-1
Slide 28: Selected Reference Prices and Fibre Costs
SELECTED REFERENCE PRICES AND FIBRE COSTS Q2 2021 vs Q2 2021 vs 2019 2020 2021 Q2 2020 Q1 2021 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) (%) Sel
Slide 29: For more information
For more information: www.cascades.com/investors Jennifer Aitken, MBA Director, Investor Relations 514-282-2697 / investor@cascades.com