Cascades Inc. · TSX:CAS
Cascades — Q1 2021 Earnings Presentation
34 slides from Cascades's earnings presentation, May 6, 2021
Slide 1: Q1 2021 Financial Results
Q1 2021 FINANCIAL RESULTS May 6, 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 1 1 Figures above in millions of CAN$ Figures above in millions of CAN$ (In millions of CAN$, except amount per 20192 20202 2021 share) Q1 Figures above in millions of CAN$ Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Financial results Sales 1,186 1,233 1,227 1,191 4,837
Slide 4: Historical Segmented Quarterly Operating Income & Adjusted OIBD
HISTORICAL SEGMENTED QUARTERLY OPERATING INCOME & ADJUSTED OIBD1 Containerboard (millions of CAN$) Boxboard Europe2 (millions of CAN$) 1 1 Specialty Products (millions of CAN$) Tissue Papers (millions of CAN$) 1 1 (1) Please click here for supplemental information on non-IFRS measures. (2) 2020 cons
Slide 5: Historical Segmented Quarterly Shipments
HISTORICAL SEGMENTED QUARTERLY SHIPMENTS Containerboard ('000 s.t. and % capacity utilization1) Boxboard Europe2 ('000 s.t. and % capacity utilization1) Tissue Papers ('000 s.t. and % capacity utilization1) (1) Utilization rate defined as total manufacturing shipments divided by practical capacity.
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 (Apr-21) (Apr-21) 1,565 118 1,260 78 White grades (Basket of products) Brown grades (OCC) NBSK NBHK Recovered Paper Prices Q1-2021 Q4-2020 Q1-2020 Q1/Q1 Q1/Q4 White grades - Basket
Slide 7: Segmented Review
SEGMENTED REVIEW SP ot@Becs&
Slide 8: Packaging Products / Containerboard
PACKAGING PRODUCTS / CONTAINERBOARD Results Change vs. Comments on sequential performance Q1 2021 Q4 2020 Q1 2020 Shipments decreased by 2% sequentially. This was driven by a 2% increase in the Shipments ('000 s.t.) integration rate. Shipments of parent rolls decreased by 3% and shipments of conve
Slide 9: Tissue Papers
TISSUE PAPERS Results Change vs. Comments on sequential performance Q1 2021 Q4 2020 Q1 2020 Shipments decreased by 19% on a sequential basis in the first quarter. This was Shipments ('000 s.t.) driven by a 21% decrease in shipments of converted products in all market segments. 123 (19)% (32)% Dema
Slide 10: Packaging Products / Boxboard Europe
PACKAGING PRODUCTS / BOXBOARD EUROPE2 Results Change vs. Comments on sequential performance Q1 2021 Q4 20202 Q1 20202 Shipments of recycled boxboard increased by 42,000 s.t., or 16%, in the first quarter of Shipments ('000 s.t.) 2021 compared to the prior quarter, while shipments of converted boxb
Slide 11: Packaging Products / Specialty Products
PACKAGING PRODUCTS / SPECIALTY PRODUCTS Results Change vs. Comments on sequential performance Q1 2021 Q4 2020 Q1 2020 Sales decreased slightly by 1% sequentially. This reflects a 5% reduction in volume, primarily driven by usual seasonality in the egg packaging distribution and the flexible and Sa
Slide 12: Financial Review
FINANCIAL REVIEW 12
Slide 13: 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 14: Key Performance Indicators (KPIs)
KEY PERFORMANCE INDICATORS (KPIs) Total Shipments1,2 ('000 s.t.) Capacity Utilization Rate1,2,3 (manufacturing only) LTM Return on Assets LTM Working Capital (% of LTM Sales) (1) Not including the Specialty Products segment. (2) 2020 consolidated results have been adjusted to reflect retrospective a
Slide 15: Year Over Year Sales Reconciliation
YEAR OVER YEAR SALES RECONCILIATION (M CAN$) -7% Sales Recovery & Sales (M CAN$) Q1-20201 Price & Mix Recycling F/X CAN$ Other Volume Q1-2021 Containerboard 458 40 — (17) 1 21 503 Boxboard Europe 224 — — 10 — 6 240 Specialty Products 113 6 — (5) — 8 122 Tissue Papers 446 3 — (15) — (142) 292 Corpora
Slide 16: Sequential Sales Reconciliation
SEQUENTIAL SALES RECONCILIATION (M CAN$) -5% Sales Sales (M CAN$) Q4-20201 Price & Mix Other F/X CAN$ Volume Q1-2021 Containerboard 500 30 (6) (8) (13) 503 Boxboard Europe 212 2 — (2) 28 240 Specialty Products 123 7 — (2) (6) 122 Tissue Papers 381 (10) — (7) (72) 292 Corporate & Elim. 26 (1) (1) 1 —
Slide 17: Year-Over-Year Operating Income Reconciliation
YEAR-OVER-YEAR OPERATING INCOME RECONCILIATION + Higher selling prices and favourable mix Higher spreads realized in the + Lower production and raw material costs (lower external jumbo rolls purchased) + Industrial Packaging and Consumer + Higher volumes products sub-segments - Higher raw material c
Slide 18: Sequential Operating Income Reconciliation
SEQUENTIAL OPERATING INCOME RECONCILIATION + Lower production costs + Higher selling prices and favourable mix - Lower volumes related to customer inventory management - Higher raw material costs - Higher operational costs - Less favourable mix of customers and of products sold (M CAN$) + Higher sel
Slide 19: Q1 2021 Adjusted OIBD to Operating Income Reconciliation
Q1 2021 ADJUSTED OIBD TO OPERATING INCOME RECONCILIATION (M CAN$) 1 1 Container- Boxboard Specialty Tissue Corporate Discontinued (M CAN$) board Europe Products Papers Activities operations Total Operating income (loss) 65 12 15 — (36) (4) 52 Specific items: Restructuring costs 3 — — 2 — — 5 Unreali
Slide 20: 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) Q1-2021 Q1-2021 As per IFRS 22 $0.22 Specific items: Restructuring costs 5 $0.03 Unrealized loss on financial instruments 8 $0.06 Foreign exchange gain on long-term debt &
Slide 21: Quarterly Year-Over-Year Adjusted EPS Variance
QUARTERLY YEAR-OVER-YEAR ADJUSTED EPS VARIANCE1,2,3 Accelerated depreciation on Lower results for multiple fixed assets in Q1-2021 Greenpac and RdM 2 2 (1) After-tax variance normalized at 26% tax rate, except for Income tax variance column. (2) Please click here for supplemental information on non-
Slide 22: Quarterly Sequential Adjusted EPS Variance
QUARTERLY SEQUENTIAL ADJUSTED EPS VARIANCE1,2,3 Accelerated depreciation on Q4-2020 Valuation allowance multiple fixed assets in Q1 on losses carried forward in Europe 2 2 (1) After-tax variance normalized at 26% tax rate, except for Income tax variance column. (2) Please click here for supplemental
Slide 23: Cash Flow Overview
CASH FLOW OVERVIEW 3 3 Figures above in millions of CAN$ Figures above in millions of CAN$ 2019 5 2020 5 2021 (In millions of CAN$, except amount per share) Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year Q1 Cash flow from operations 80 122 102 88 392 149 157 103 142 551 98 Specific items1 3 1 4 16 24 — — 9 6 15
Slide 24: Net Debt Reconciliation - Q1 2021
NET DEBT1 RECONCILIATION - Q1 2021 (M CAN$) Q4-2020 Q1-2021 $675 million LTM adjusted OIBD1, 2 $659 million 2.5x Net debt/LTM adjusted OIBD1,2 2.5x Solid Cash Flow from Operations and favourable FX more than offset higher working capital requirements, dividend payments and Capital expenditures (1) P
Slide 25: Consolidated Financial Ratios & Debt Maturities
CONSOLIDATED FINANCIAL RATIOS & DEBT MATURITIES Net Debt / Adjusted OIBD1,3,4 Interest Coverage Ratio2,3,4 Net Debt4 / Net Debt4 + Total Equity Long-Term Debt Maturities (as at March 31, 2021) Senior notes Revolver Term loan Leases - Subsidiaries Debts without recourse Subsidiaries debts Without rec
Slide 26: Capital Investments
CAPITAL INVESTMENTS2 (in millions of Canadian dollars, excluding value of leases) 2021F CAPEX: $450 - $475 M1 includes ~$250 M for Bear Island conversion (1) Amount is subject to change depending on business and/or economic conditions. (2) Not adjusted for discontinued operations. 26
Slide 27: Concluding Remarks
CONCLUDING REMARKS SP ot@Becs&
Slide 28: Near Term Factors
NEAR TERM FACTORS vs Q1 2021 vs Q2 2020 • North American operations: positive impact from margin improvement initiatives YoY and QoQ Q2 2021 OIBD2 Trend • Raw materials: expect higher raw material prices both YoY and sequentially in Q2 for all businesses • Transportation: anticipate continued upward
Slide 29: Appendix
APPENDIX ae if | i
Slide 30: Segmented YoY Operating Income Waterfalls
SEGMENTED YoY OPERATING INCOME WATERFALLS Containerboard (millions of CAN$) Boxboard Europe2 (millions of CAN$) (31) 28 10 (3) (12) (1) 1 1 1 1 2 2 Higher selling prices and Higher shipments of Higher raw material costs favourable mix converted products Higher brown recycled fibre prices Specialty P
Slide 31: Segmented Sequential Operating Income Waterfalls
SEGMENTED SEQUENTIAL OPERATING INCOME WATERFALLS Containerboard (millions of CAN$) Boxboard Europe2 (millions of CAN$) 28 (12) 11 (40) (31) 3 1 1 2 1 1 2 Positive impact index market price Higher raw material costs Higher operational costs Higher volume for recycled Higher brown recycled increase an
Slide 32: Selected Reference Prices
SELECTED REFERENCE PRICES Current Current (US$/s.t.) Containerboard - Selected Products (€/s.t.) Boxboard Europe - Selected Products (Apr-21) (Mar-21) 825 1,095 765 669 Current Current (US$/s.t.) Specialty Products - Selected Products (Apr-21) (US$/s.t.) Tissue Papers - Selected Products (Mar-21) 78
Slide 33: Selected Reference Prices and Fibre Costs
SELECTED REFERENCE PRICES AND 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) (%) Sellin
Slide 34: For more information
For more information: www.cascades.com/investors Jennifer Aitken, MBA Director, Investor Relations 514-282-2697 / [email protected] 34