Cascades Inc. · TSX:CAS
Cascades — Scotia ESG Conference 2021
36 slides from Cascades's conference presentation, May 27, 2021
Slide 1: Investor Presentation - Scotia ESG Conference
1 Investor Presentation Scotia ESG Conference May 27, 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: LTM Q1 2021 Results
LTM Q1 2021 RESULTS SALES1,4 Sales4 $4,898 M 30% 20% Adj. OIBD3 ,4 $643 M 56% 41% CF from operations4: $500 M 9% Net debt: $1.65 B 14% ADJ. Net debt/Adj. OIBD3: 2.5x OIBD1,3,4 10% WC (% of sales): 9.5% 19% Capacity utilization rate4: 88% 2 Containerboard Packaging Boxboard Europe Specialty Products
Slide 4: Quarterly Financial Results
QUARTERLY FINANCIAL RESULTS 2 1 1 Figures above in millions of CAN$ Figures above in millions of CAN$ (In millions of CAN$, except amount per 20192 20202 2021 share) Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Financial results Sales 1,186 1,233 1,227 1,191 4,837 1,265 1,238 1,236 1,242 4,981 1,182 Operati
Slide 5: Discontinued Operations
DISCONTINUED OPERATIONS On February 15, 2021, the Boxboard Europe segment, via its ownership in Reno de Medici S.p.A., announced the sale of all the shares of its French subsidiary which produces virgin fibre based boxboard. The operations are now presented as discontinued operations. The sale was c
Slide 6: Raw Material – Index Prices
RAW MATERIAL – INDEX PRICES Recycled Fibre Prices (US$ / s.t.) Current Q1 Q1 vs Q1 vs (Apr-21) RECOVERED PAPER PRICES 2021 Q1/20 Q4/20 █ WHITE GRADES - Basket of products 118 (Northeast avg)1 102 -% 16% 78 █ BROWN GRADES - OCC No. 11 (Northeast average) 71 97% 9% Virgin Pulp Prices (US$ / s.t.) Curr
Slide 7: Q1 2021 – What Moved the Dial
Q1 2021 – WHAT MOVED THE DIAL CONTAINERBOARD TISSUE PAPERS Solid performance – OIBD margin 21.5% Lower costs following plant closures in Higher average selling prices 2020, better cost control & sales mix Record 1st quarter shipment levels − Lower shipments due to customer inventory manageme
Slide 8: Consolidated Financial Ratios & Debt Maturities
CONSOLIDTED FINANCIAL RATIOS & DEBT MATURITIES Net Debt / LTM Adjusted OIBD1,3,4 Interest Coverage Ratio2,3,4 Net Debt / Net Debt + Total Equity Long-Term Debt Maturities (as at March 31, 2021) Senior notes Revolver Term loan Leases - Subsidiaries Without recourse - Debts without recourse Subsidiari
Slide 9: Near-Term Outlook
NEAR-TERM OUTLOOK vs Q1 2021 vs Q2 2020 • North American operations: positive impact from margin improvement initiatives YoY and QoQ Q2 2021 • Raw materials: expect higher raw material prices both YoY OIBD2 Trend and sequentially in Q2 for all businesses • Transportation: anticipate continued upward
Slide 10: Strategic Plan
STRATEGIC PLAN
Slide 11: Our Strategic Focus: Modernize
Our Strategic Focus: MODERNIZE FOCUS STRATEGY ✓ Optimization of recent investments in Tissue Modernize our platforms ✓ Construction and start-up of Bear Island ✓ Increase downstream converting integration in Integration & Sustainability Containerboard ✓ Prioritize sustainability in capital decisions
Slide 12: Bear Island: A Strategic Investment
BEAR ISLAND: A Strategic Investment BEAR GREENPAC ISLAND MILL Annual Capacity 465,000 s.t. 540,000 s.t. Machine Width 310" 330" Product Basis 16 – 42 lbs 20 – 42 lbs Weight Mixed Paper Raw 0% - 60% 0% - 5% Material Component • Investment: US $380M (2021: US$193M ; 2022: US$118M) • First paper roll:
Slide 13: Capital Investments
CAPITAL INVESTMENTS2 Priorities Capital Investments1 2021F CAPEX: $450 M - $475 M1 ✓ Replace older assets with Includes ~ $250 M for Bear Island conversion MODERN equipment ✓ Invest in ORGANIC growth $347 M ✓ OPTIMIZE geographic footprint $267 M $244 M 184 ✓ Equip facilities to produce our $196 M 90
Slide 14: Our Strategic Focus: Create Value
Our Strategic Focus: CREATE VALUE FOCUS STRATEGY ✓ Ongoing initiatives expected to generate 1% Margin expansion annual margin improvement in 2021 & 2022 ✓ Target EBITDA margin : 15% ✓ Disciplined balance sheet management Leverage ratio 2.5x – 3.0x ✓ Strong cash flow expected to meet all capital duri
Slide 15: Margin Improvement Program
Margin Improvement Program → 5 streams set up to deliver margin improvement 1% margin Net Revenue Sales & Supply Chain Organizational Production improvement Management Operations Efficiency Effectiveness Efficiency Planning in 2020, 2021 and Improving Increasing Optimizing Optimizing Spans & layers
Slide 16: Our Strategic Focus: Innovation
Our Strategic Focus: INNOVATION FOCUS STRATEGY Product development ✓ Prioritize development of sustainable, innovative & industry-leading products ✓ Establish market positioning as the “go-to” Sustainable solutions provider provider of sustainable packaging & tissue paper solutions ✓ Partner with cu
Slide 17: Sustainability in Focus
SUSTAINABILITY IN FOCUS 3rd party frameworks, standards & guidelines 100 Most provide Sustainable comprehensive & Corporations transparent Only 1 out of in the World Containers only 12 information for our (Corporate Knights) Ranked & Canadian customers, investors & 17th Packaging companies stakehold
Slide 18: Sustainability Is in Our DNA
SUSTAINABILITY IS IN OUR DNA 50% 7.3x 2.8x reduction in the intensity of our GHG less water used to manufacture our less energy used to manufacture our emissions since 1990 products than the average in the products than the average in the Canadian paper industry* Canadian paper industry* * Forest Pr
Slide 19: Sustainability: 2021-2026
SUSTAINABILITY: 2021- 2026 19
Slide 20: Appendix
APPENDIX
Slide 21: Containerboard – Our Business
CONTAINERBOARD – OUR BUSINESS 6th largest containerboard producer in N.A. ANNUAL CAPACITY 1,565 K S.T. (CAN $ M) 2,000 1,918 1,963 600 15% 1,827 47% 500 53% 24.1% 21.0% 1,500 21.0% 441 85% 403 412 400 Recycled Virgin Linerboard Medium 328 321 312 1,000 300 200 MANUFACTURING CONVERTING 500 10% of 202
Slide 22: Containerboard – Our Business
CONTAINERBOARD – OUR BUSINESS Lead the way in developing profitable, innovative, sustainable packaging solutions MARKET TRENDS STRATEGIC MARKETS ▪ E-commerce accelerated growth ▪ Sustainability is now a MUST E-Commerce CPG FOOD PROCESSING ▪ Differentiation by design ▪ Growth of lighter weight soluti
Slide 23: Containerboard – Market
CONTAINERBOARD – MARKET North American Containerboard North American Capacity 1 Demand Growth and Market Share and Operating Rate 1 Others International Paper Capacity (M s.t.) Operating Rate 21% 30% 50.0 48.9 47.6 Visy Pulp & 46.1 Paper 4% 44.7 Capacity Market Share 42.9 43.2 93.9% Cascades 4% 93.4
Slide 24: Containerboard – Market
CONTAINERBOARD – MARKET • Gross profit spread in Containerboard expected to remain favourable • Demand for containerboard supported by solid forecasted N.A. GDP growth through 2025 Linerboard, OCC Price, and Gross Profit Spread 1,2 Canada : Real GDP Growth (Annual % Change)1 6% 4% 5-year moving aver
Slide 25: Boxboard Europe – Our Business
BOXBOARD EUROPE1,4 – OUR BUSINESS • 2nd largest coated recycled boxboard producer3 in Europe (CAN $ M) 1,200 White Lined Chipboard (recycled) 876 12.9% 1,000 892 11.9% Reno de Medici capacity: 889 113 • 6 recycled mills 106 • 1,095K m.t./ year 99 11.1% 800 600 67 58 400 37 200 RDM mills 0 La Rochett
Slide 26: Tissue Papers – Our Business
TISSUE PAPERS – OUR BUSINESS • 4th largest tissue producer in N.A. (CAN $ M) 300 1,615 2020 ANNUAL SALES: 28% 72% 1,600 1,509 1,461 ~ 73% RECYCLED / 27% VIRGIN 250 1,200 200 RETAIL TISSUE AWAY-FROM-HOME PARENT ROLLS 175 150 150 45% 35% 20% 800 10.8% of 2020 sales of 2020 sales of 2020 sales 5.7% 10.
Slide 27: Tissue Papers – Market
TISSUE PAPERS – MARKET North American Tissue Capacity1 Market Share 2020 North American Tissue Capacity1 • Forecasted average annual capacity growth of ~ • Top 5 players accounted for ~ 69% of total 2020 1.1% over 2021-2023 capacity of 9.4 M s.t. ✓ Forecasted avg. annual US GDP growth1 of ~1.8% ✓ Fo
Slide 28: Specialty Products – Our Business
3 SPECIALTY PRODUCTS – OUR BUSINESS (CAN $ M) 600 Comprehensive Packaging Solutions Provider 492 482 500 473 Focused on Strategic Scalable Markets 400 66 13.7% CONSUMER PRODUCTS INDUSTRIAL 60 12.7% 55 PACKAGING2 PACKAGING 300 11.2% 49 42 59% 41% 200 36 of 2020 sales of 2020 sales 100 0 2019 2020 LTM
Slide 29: Specialty Products – Our Business
SPECIALTY PRODUCTS – OUR BUSINESS • We know how to deal with the particular characteristics of a wide range of materials and how to use their full potential to create high-performance and sustainable packaging solutions. THE MATERIALS WE USE THE MARKETS WE SERVE EGGS UNCOATED RECYCLED RECYCLED RECYC
Slide 30: Recovery Activities
RECOVERY ACTIVITIES A leading paper collector in Canada Fibre1 used in 2020: 2.4 M s.t. 5% 9% ✓ 18 facilities in Canada & the U.S. (0.1 M st) (0.2 M st) ✓ In 2020, we collected & purchased 3.0 MILLION S.T. of fibre 17% • 77% (2.3 million s.t.) (0.4 M st) used internally 69% (1.6 M st) • 23% (0.7 mil
Slide 31: 2020 Results
2020 RESULTS4 SALES1,4 Sales $4,981 M Adj. OIBD3 $659 M 33% 23% 39% Adj. OIBD3 Margin 13.2% 54% Adj. CF from operations: $566 M 8% Adj. Free CF $274 M 15% ADJ. Adj. Free CF per share $2.86 OIBD1,3,4 10% Net debt (at Dec. 31/20): $1.68 B 18% Net debt/Adj. OIBD3: 2.5x 2 WC (% of LTM sales)5: 9.6% Cont
Slide 32: Segmented Quarterly Operating Income & Adjusted OIBD
SEGMENTED QUARTERLY OPERATING INCOME (LOSS) & ADJUSTED OIBD1,2 Containerboard (millions of CAN$) Boxboard Europe2 (millions of CAN$) Specialty Products2 (millions of CAN$) Tissue Papers (millions of CAN$) (1) Please click here for supplemental information on non-IFRS measures. (2) 2020 consolidated
Slide 33: Selected Reference Prices
SELECTED REFERENCE PRICES Current Current (US$/s.t.) Containerboard – Selected Products (Euro€/s.t.) Boxboard Europe – Selected Products (Apr-21) (Mar-21) 825 1,095 765 669 Current Current (US$/s.t.) Specialty Products – Selected Products Tissue Papers – Selected Products (Apr-21) (US$/s.t.) (Mar-21
Slide 34: Reference Prices & Fibre Costs
REFERENCE PRICES & FIBRE COSTS Q1 2021 vs Q1 2021 vs 2019 2020 2021 Q1 2020 Q4 2020 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 (units) (%) (units) (%) Selling prices (a
Slide 35: Sensitivities
SENSITIVITIES1 SHIPMENTS /CONSUMPTION (‘000 s.t, ‘000 mmBtu for Natural Gas) INCREASE OIBD IMPACT (in CAN$ M) SELLING PRICE2 (Manufacturing & Converting) Linerboard, Eastern US 430 US$25/s.t. 14 North Corrugated medium, Eastern US 330 US$25/s.t. 11 America Converted products 780 US$25/s.t. 25 Tissue
Slide 36: investor@cascades.com
Ce Cascades nvestor@cascades.com