Cascades Inc. · TSX:CAS
Cascades — FY2014 Earnings Presentation
33 slides from Cascades's earnings presentation, Mar 13, 2015
Slide 1: Review of Q4 and Full Year 2014 Financial Results
CASCADES INC. Review of Q4 and Full Year 2014 Financial Results March 13, 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 ww! Cascades ‘GREEN BY NATURE™
Slide 4: Summary of Financial Results
SUMMARY OF FINANCIAL RESULTS (M CAN$) EBITDA1 (M CAN$) EPS 1 (% of sales) 125 14.0% $0.24 99 $0.19 94 93 100 90 12.0% $0.16 82 82 $0.09 $0.07 66 67 75 $0.08 $0.08 75 10.0% $0.08 $0.04 $0.01 50 8.0% $0.00 $(0.04) 25 6.0% $(0.08) $(0.06) 0 4.0% $(0.16) Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q
Slide 5: Historical Segmented EBITDA
HISTORICAL SEGMENTED EBITDA1 Containerboard Boxboard Europe (M CAN$) (% of sales) (M CAN$) (% of sales) 56 20% 28 16% 46 23 24 36 41 43 46 44 20 42 15% 21 12% 27 31 26 12 11 12 11 14 14 28 10% 14 8% 14 5% 7 4% 0 0% 0 0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2013 2013 2013 2013 2
Slide 6: Segmented EBITDA Waterfalls
SEGMENTED EBITDA WATERFALLS1 Containerboard Boxboard Europe Acqu. Selling Acqu. Selling EBITDA Raw Other EBITDA EBITDA Other Raw EBITDA (M CAN$) CAN$ & Energy Volume Prices & (M CAN$) & Energy CAN$ Prices & Volume Q3-2014 Materials Costs Q4-2014 Q3-2014 Costs Materials Q4-2014 Divest. Mix Divest. Mi
Slide 7: Raw Material Costs
RAW MATERIAL COSTS Recycled Fiber North American Current (US$/ton) Virgin Pulp Prices Current (US$/ton) List Prices (March) 1,100 (February) 200 1,000 995 160 150 900 845 800 100 80 700 50 600 Feb 14 Feb 12 Feb 13 Feb 15 Aug 12 Aug 13 Nov 11 May 12 Nov 12 May 13 Nov 13 May 14 Aug 14 Nov 14 Dec 13 De
Slide 8: Key Performance Indicators (KPIs)
KEY PERFORMANCE INDICATORS (KPIs) Containerboard: 90% Boxboard Europe: 92% Tissue Papers: 89% ('000 s.t.) Total Shipments 1 Capacity Utilization Rate (Manufacturing only) 2, 3 800 100% 747 750 738 712 728 712 715 721 97% 700 693 97% 96% 95% 93% 93% 600 94% 92% 91% 91% 90% 500 91% 400 88% Q4 Q1 Q2 Q3
Slide 9: Financial Review
FINANCIAL REVIEW ww! Cascades ‘GREEN BY NATURE™
Slide 10: Discontinued Operations Reconciliation
DISCONTINUED OPERATIONS RECONCILIATION Including Discontinued Operations Exclusion of Discontinued Operations As Reported Container- Boxboard Specialty Intersegment (in millions of Canadian dollars) Total board Europe Products sales Total 2014 - Results Shipments ('000 s.t.) 3,286 (204) (27) (131) 2
Slide 11: 2014 Specific Items
2014 SPECIFIC ITEMS M$ Per share 1 Net earnings as at December 31, 2014 (excluding specific items) $20 $0.21 l Impairment charges (21) (0.13) l Restructuring costs (2) (0.02) l Unrealized loss on financial instruments (6) (0.05) l Loss on refinancing of long-term debt (44) (0.35) l FX loss on L
Slide 12: Q4 2013 – Q4 2014 Sales Reconciliation
Q4 2013 – Q4 2014 SALES RECONCILIATION (M CAN$) 1,000 -12% 958 950 +4% 24 900 879 30 (4) (7) (8) 850 844 (114) 0 Sales Sales Sales Selling Q4-2013 Q4-2013 Acqu. & Corp. Q4-2014 Disc. Op. CAN$ Volume Prices including excluding Disposals Elim. excluding & Mix (M CAN$) disc. op. disc. op. disc. op. Con
Slide 13: Q4 2013 – Q4 2014 EBITDA Variance Analysis
Q4 2013 – Q4 2014 EBITDA VARIANCE ANALYSIS (M CAN$) -17% 115 5 -6% - 110 8 105 105 (5) 100 99 (6) 95 (6) 90 (8) 85 82 (11) 0 EBITDA EBITDA EBITDA Selling Q4-2013 Q4-2013 Acqu. & Raw Other Q4-2014 Disc. Op. Volume CAN$ Energy Prices & including excluding Disposals Materials 1 Costs excluding Mix (M C
Slide 14: Q3 2014 – Q4 2014 EBITDA Variance Analysis
Q3 2014 – Q4 2014 EBITDA VARIANCE ANALYSIS (M CAN$) -12% 3 110 -8% 7 - 101 7 (3) 100 93 (12) 90 (8) 82 80 (13) 0 EBITDA EBITDA EBITDA Selling Q3-2014 Q3-2014 Other Raw Acqu. & Q4-2014 Disc. Op. CAN$ Energy Volume Prices & including excluding Costs Materials 1 Disposals excluding Mix (M CAN$) disc. o
Slide 15: Quarterly EPS Variance
QUARTERLY EPS VARIANCE Q3-2014 Q4-2014 Excluding Excluding specifics Specifics As reported specifics Specifics As reported EBITDA 93 2 95 82 (25) 57 Depreciation (44) (44) (44) (44) Operating Income 49 2 51 38 (25) 13 Financing expenses (23) (23) (23) (23) Interest expense on employee future benefit
Slide 16: Q4 2014 EBITDA to Operating Income Reconciliation
Q4 2014 EBITDA TO OPERATING INCOME RECONCILIATION (M CAN$) 90 82 80 70 60 50 38 40 (44) 30 (2) (5) 20 (5) 13 10 (13) 0 EBITDA Depr. & Op. income Restructuring Loss on acqui., Unrealized loss Impairment Operating excluding amort. excluding costs disposals on financial charges income spec. items spec.
Slide 17: Cash Flow Overview
CASH FLOW OVERVIEW Cash flow from continuing operations, adjusted 1 Free cash flow, adjusted 1, 2 (M CAN$) (M CAN$) 105 60 93 45 90 50 73 75 40 60 57 60 54 30 17 45 20 15 15 30 10 9 15 0 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 Q4-2013 Q1-2014 Q2-2014 Q3-2014 Q4-2014 2013 2014 (in millions of CAN$) Q
Slide 18: Net Debt Reconciliation
NET DEBT RECONCILIATION (M CAN$) -2% 1,650 1,640 -3% 54 1,613 1,600 1,572 31 (41) (71) 1,550 8 4 (44) (9) 1,500 1,450 Net Debt Cash flow Var. in non- Discontinued Dividends Capital lease F/X rate Capital Net Debt Sale of NA Net debt 09/30/2014 from op. cash work. operations paid & & others investmen
Slide 19: Consolidated Financial Ratios & Debt Maturities
CONSOLIDATED FINANCIAL RATIOS & DEBT MATURITIES Net Debt / LTM EBITDA 1 Interest Coverage Ratio 7.0x 5.0x 5.8x 6.0x 4.0x 3.4x 3.4x 5.0x 4.7x 3.0x 5.0x 4.6x 3.0x 4.6x 2.5x 4.0x 2.0x 3.0x 1.0x 2011 2012 2013 2014 2014 2011 2012 2013 2014 Pro forma 2 Net Debt / Net Debt + Total Equity Long-Term Debt Ma
Slide 20: Introducing New Indices in Q4
INTRODUCING NEW INDICES IN Q4 6.5x 6.0x 5.5x 5.0x 4.5x 4.0x 3.5x 3.0x 2.5x Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 Converting index Weighted index Manufacturing index The manufacturing index is a multiple calculated by dividing the average m
Slide 21: Segmented Review
SEGMENTED REVIEW ww! Cascades ‘GREEN BY NATURE™
Slide 22: Packaging Products / Containerboard
PACKAGING PRODUCTS / CONTAINERBOARD Results Change vs. Comments on sequential performance Q4 2014 Q3 2014 Q4 2013 Despite lower total shipments from the mills, external sales increased by 5% due to Shipments ('000 s.t.) lower internal demand following more purchases from the Greenpac mill 277 -3%
Slide 23: Packaging Products / Boxboard Europe
PACKAGING PRODUCTS / BOXBOARD EUROPE Results Change vs. Comments on sequential performance Q4 2014 Q3 2014 Q4 2013 Seasonal increase in shipments in our two markets Shipments ('000 s.t.) Gradual production increase of the new machine at Santa Giustina 263 2% 0% Satisfactory backlog at the e
Slide 24: Packaging Products / Specialty Products
PACKAGING PRODUCTS / SPECIALTY PRODUCTS Results Change vs. Comments on sequential performance Q4 2014 Q3 2014 Q4 2013 Sequential decrease in Industrial Packaging shipments due to seasonality and Shipments ('000 s.t.) production downtime in December 37 -10% -8% Shipments also decreased in other
Slide 25: Tissue Papers
TISSUE PAPERS Results Change vs. Comments on sequential performance Q4 2014 Q3 2014 Q4 2013 Lower shipments of converted products and parent rolls due to seasonality Shipments ('000 s.t.) Shipments of converted products were particularly strong in the Canadian retail 144 -6% 4% market in Q3 Av
Slide 26: Q&A and Concluding Remarks
Q&A AND CONCLUDING REMARKS ww! Cascades ‘GREEN BY NATURE™
Slide 27: Near Term Outlook
NEAR TERM OUTLOOK • Q1 seasonality in North America • Competitive tissue market • Potential decrease of average OCC costs • Start-up costs related to the new tissue + • Favourable FX environment paper machine in Oregon I • Positive impact from recent strategic initiatives • Reorganization of product
Slide 28: Appendix
APPENDIX ww! Cascades ‘GREEN BY NATURE™
Slide 29: Foreign Exchange
FOREIGN EXCHANGE US$/CAN$ Exchange rates Euro€/CAN$ Hedging Program – USD Cash flows 1.05 0.90 • 2015 1.00 0.85 32% to 61% of exposure hedged at an average 0.95 0.80 rate of 1.112 CAN$/US$ to 1.148 CAN$/US$ 0.90 0.75 • 2016 0.85 0.70 0.80 0.65 32% to 64% of exposure hedged at an average 0.75 0.60 ra
Slide 30: Energy Prices
ENERGY PRICES Natural gas Crude oil Hedging Program – Natural gas Energy prices (US$) (US$) • Canada: 8.00 110 7.00 100 • 2015 : 73% at 4.70 CAN$/GJ 6.00 90 • 2016 : 61% at 4.078 CAN$/GJ 5.00 80 4.00 70 3.00 60 • U.S.: 2.00 50 • 2015 : 49% at 4.736 US$/mmBtu 1.00 40 • 2016 : 38% at 4.673 US$/mmBtu Q
Slide 31: Selected Reference Prices
SELECTED REFERENCE PRICES Containerboard - Selected Products Boxboard Europe - Selected Products (US$/s.t.) Current (Euro€/m.t.) 800 Kapstone 40$/ton price increase (February) 1,200 announcement in March 2015 1,100 750 740 1,000 $9 decrease Sept. 2014 700 690 900 650 800 2nd $10 decrease Feb. 2015 7
Slide 32: 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 Q4 2014 Q4 2014 Year 2014 over our actual selling prices or purchasing costs 2012 2013 2014 over Q4 2013 over Q3 2014 Year 2013 Year Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year (units)
Slide 33: For more information
For more information: www.cascades.com/investors Riko Gaudreault Director, Investor Relations and Business Strategy 514-282-2697 or [email protected]