Cascades Inc. · TSX:CAS
Cascades — Q3 2015 Earnings Presentation
31 slides from Cascades's earnings presentation, Nov 11, 2015
Slide 1: Review of Q3 2015 financial results
CASCADES INC. Review of Q3 2015 financial results November 11, 2015
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: Opening Remarks
OPENING REMARKS ( 10 8Mee
Slide 4: Summary of Financial Results
SUMMARY OF FINANCIAL RESULTS (M CAN$) EBITDA 1 (M CAN$) EPS 1 (% of sales) 150 16% $0.60 134 $0.52 125 14% $0.50 99 93 103 94 90 100 12% $0.40 75 82 85 75 10% $0.30 $0.25 $0.19 $0.18 50 8% $0.20 $0.07 $0.08 $0.08 25 6% $0.10 $0.01 $0.04 0 4% $0.00 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q
Slide 5: Historical Segmented EBITDA
HISTORICAL SEGMENTED EBITDA1 Containerboard Boxboard Europe (M CAN$) (% of sales) (M CAN$) (% of sales) 75 30% 28 16% 68 23 24 60 55 24% 21 20 19 12% 52 17 41 46 43 46 44 11 14 14 14 45 18% 14 8% 31 30 12% 7 4% 15 6% 0 0% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2013 2013 2014 2014 2014
Slide 6: Segmented EBITDA Waterfalls
SEGMENTED EBITDA WATERFALLS1 Containerboard Boxboard Europe Selling Acqu. Selling Acqu. EBITDA Other Raw EBITDA EBITDA Raw Other EBITDA (M CAN$) Prices & Volume CAN$ Energy & (M CAN$) Prices & Energy CAN$ & Volume Q2-2015 Costs Materials Q3-2015 Q2-2015 Materials Costs Q3-2015 Mix Divest. Mix Divest
Slide 7: Key Performance Indicators (KPIs)
KEY PERFORMANCE INDICATORS (KPIs) ('000 s.t.) 2 Total Shipments Capacity Utilization Rate (Manufacturing only) 800 770 100% Containerboard: 95% 750 738 742 764 Boxboard Europe: 91% 728 712 715 721 Tissue Papers: 95% 96% 700 97% 93% 93% 93% 93% 93% 600 94% 91% 91% 90% 500 91% 400 88% Q3 Q4 Q1 Q2 Q3 Q
Slide 8: Raw Material Costs
RAW MATERIAL COSTS Recycled Fibre North American Current Virgin Pulp prices Current (US$/ton) (US$/ton) 200 List Prices (November) 1,100 (October) 1,000 150 149 955 900 880 100 90 800 50 700 Feb 13 Feb 14 Feb 15 Aug 12 Nov 12 May 13 Aug 13 Nov 13 May 14 Aug 14 Aug 15 Nov 14 May 15 Nov 15 Jan 13 Apr
Slide 9: Financial Review
FINANCIAL REVIEW ( 10 8Mee
Slide 10: Q3 2014 – Q3 2015 Sales Reconciliation
Q3 2014 – Q3 2015 SALES RECONCILIATION (M CAN$) +13% 1,050 3 34 - 1,026 1,025 (4) 1,000 84 975 950 925 909 0 Selling Sales Acqu. & Corp. Sales CAN$ Volume Prices Q3-2014 Disposals Elim. Q3-2015 & Mix (M CAN$) Containerboard 310 22 10 11 353 Boxboard Europe 193 2 8 2 205 Specialty Products 145 12 (5)
Slide 11: Q3 2014 – Q3 2015 EBITDA Variance Analysis
Q3 2014 – Q3 2015 EBITDA VARIANCE ANALYSIS (M CAN$) +44% 140 3 134 3 - 130 4 5 12 120 110 14 100 93 0 Selling EBITDA Raw Other Acqu. & EBITDA CAN$ Volume Prices & Energy Q3-2014 Materials1 Costs Disposals Q3-2015 Mix (M CAN$) Containerboard 46 1 3 3 3 11 1 68 Boxboard Europe 14 (1) 2 (4) 2 1 14 Spec
Slide 12: Q2 2015 – Q3 2015 EBITDA Variance Analysis
Q2 2015 – Q3 2015 EBITDA VARIANCE ANALYSIS (M CAN$) +30% 150 3 7 - 140 134 8 (4) 130 22 (5) 120 110 103 0 Selling EBITDA Acqu. & Raw Other EBITDA Prices & CAN$ Volume Energy Q2-2015 Disposals Materials1 Costs Q3-2015 Mix (M CAN$) Containerboard 55 8 1 6 (6) 4 68 Boxboard Europe 19 4 (3) 2 (3) (5) 14
Slide 13: Foreign Exchange
FOREIGN EXCHANGE US$/CAN$ Exchange rates Euro€/CAN$ Hedging Program – USD Cash flows 1.10 1.00 2015 1.00 0.90 • Approximately 50% of exposure (net of interest) hedged at an average rate of 1.16 CAN$/US$ 0.90 0.80 2016 0.80 0.70 • 31% to 62% of exposure (net of interest) hedged at an average rate of
Slide 14: Quarterly EPS Variance
QUARTERLY EPS VARIANCE Q2-2015 Q3-2015 Excluding Excluding specifics Specifics As reported specifics Specifics As reported EBITDA 103 2 105 134 (12) 122 Depreciation (44) (44) (45) (45) EBIT 59 2 61 89 (12) 77 Financing expenses (23) (19) (42) (21) (1) (22) Interest expense on employee future benefi
Slide 15: Q3 2015 EBITDA to Operating Income Reconciliation
Q3 2015 EBITDA TO OPERATING INCOME RECONCILIATION (M CAN$) 140 134 120 5 1 100 89 (45) (7) 77 80 (11) 60 40 EBITDA Depr. & Op. income Restructuring Gain on acqui., Unrealized loss Impairment Operating excluding amort. excluding gain disposals on financial charges income spec. items spec. items and o
Slide 16: Cash Flow Overview
CASH FLOW OVERVIEW 1 1, 2 Cash flows from continuing operations, adjusted Free cash flows, adjusted (M CAN$) (M CAN$) 120 110 100 93 76 100 80 73 86 80 60 45 60 40 34 35 15 40 20 20 0 0 (20) (5) Q3-2014 Q4-2014 Q1-2015 Q2-2015 Q3-2015 Q3-2014 Q4-2014 Q1-2015 Q2-2015 Q3-2015 2013 2014 2015 (in millio
Slide 17: Net Debt Reconciliation
NET DEBT RECONCILIATION (M CAN$) +3% 1,750 95 1,741 1,700 1,693 29 1,650 21 1,600 3 7 3 (110) 1,550 1,500 Net Debt Cash flow from Discontinued Dividends paid Investments Variation in Capital F/X Rate Net Debt 06/30/2015 operations operations & shares & others non-cash investments, 09/30/2015 buyback
Slide 18: Consolidated Financial Ratios & Debt Maturities
CONSOLIDATED FINANCIAL RATIOS & DEBT MATURITIES Net Debt / LTM EBITDA Interest Coverage Ratio 7.0x 5.0x 4.5x 5.8x 6.0x 4.0x 3.4x 3.4x 5.0x 4.7x 3.0x 5.0x 3.0x 4.6x 2.5x 4.3x 4.0x 2.0x 3.0x 1.0x 2011 2012 2013 2014 LTM 2011 2012 2013 2014 LTM 09/30/2015 09/30/2015 Net Debt / Net Debt + Total Equity L
Slide 19: Proportionate Consolidation
PROPORTIONATE CONSOLIDATION As reported Proportionate 1 (in millions of Canadian dollars) (IFRS) consolidation Selected financial data Q3-2015 Q3-2015 Q2-2015 Sales 1,026 999 918 Adjusted EBITDA excluding specific items 134 144 110 Adjusted EBITDA excluding specific items - margin 13.1% 14.4% 12.0%
Slide 20: Segmented Review
SEGMENTED REVIEW ( 10 8Mee
Slide 21: Packaging Products / Containerboard
PACKAGING PRODUCTS / CONTAINERBOARD Results Change vs. Comments on sequential performance Q3 2015 Q2 2015 Q3 2014 Shipments ('000 s.t.) External shipments increased for both the mills (2%) and the corrugated box 296 5% 3% activities (7%) Average selling price Higher average selling prices in Can
Slide 22: Packaging Products / Boxboard Europe
PACKAGING PRODUCTS / BOXBOARD EUROPE Results Change vs. Comments on sequential performance Q3 2015 Q2 2015 Q3 2014 Shipments ('000 s.t.) Lower shipments essentially due to seasonal maintenance 266 -10% -6% Order backlog was lower at the end of the quarter Average selling price Slight price inc
Slide 23: Packaging Products / Specialty Products
PACKAGING PRODUCTS / SPECIALTY PRODUCTS Results Change vs. Comments on sequential performance Q3 2015 Q2 2015 Q3 2014 Shipments ('000 s.t.) Stable shipments in all segments, except for the Industrial Packaging segment with 45 2% 10% a 2% increase Industrial Packaging shipments only Despite lower
Slide 24: Tissue Papers
TISSUE PAPERS Results Change vs. Comments on sequential performance Q3 2015 Q2 2015 Q3 2014 Higher shipments in all converted product markets, resulting in an increase of 7% in Shipments ('000 s.t.) shipments 163 7% 7% Significant increase of 17% in retail product shipments in the U.S. due to ad
Slide 25: Q&A and Concluding Remarks
Q&A AND CONCLUDING REMARKS ete Ne] By
Slide 26: Near Term Outlook
NEAR TERM OUTLOOK • Favourable FX environment • Continued implementation of prices increases • Seasonality in Q4 + for corrugated boxes • Weak backlog orders in Europe for recycled I • New volume obtained in the Tissue Papers grades Group • Decrease in index price for corrugating • Ramp-up of new ti
Slide 27: Appendix
APPENDIX
Slide 28: Energy Prices
ENERGY PRICES Natural gas Energy prices Crude oil Hedging Program – Natural gas (US$) (US$) 8.00 110 • Canada: 7.00 100 • 2015 : 76% at 4.28 CAN$/GJ 6.00 90 5.00 80 • 2016 : 70% at 3.89 CAN$/GJ 4.00 70 3.00 60 • U.S.: 2.00 50 • 2015 : 43% at 4.72 US$/mmBtu 1.00 40 0.00 30 • 2016 : 39% at 4.62 US$/mm
Slide 29: Selected Reference Prices
SELECTED REFERENCE PRICES Containerboard - Selected Products Boxboard Europe - Selected Products Current (US$/s.t.) Current (Euro€/m.t.) (Sept.) 800 1,200 (Oct.) 1,100 750 1,061 740 1,000 700 900 675 650 800 700 600 679 Linerboard 42-lb. unbleached kraft, Eastern U.S. 600 Coated duplex - virgin boar
Slide 30: Selected Reference Prices and Fibre Costs
SELECTED REFERENCE PRICES AND FIBRE COSTS These indexes should only be used as indicator of trends and they be different than Q3 2015 Q3 2015 our actual selling prices or purchasing costs 2013 2014 2015 over Q3 2014 over Q2 2015 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 (units) (%) (units) (%) Selling prices (
Slide 31: For more information
For more information: www.cascades.com/investors Riko Gaudreault Director, Investor Relations and Business Strategies 514-282-2697 or [email protected] 31