Cascades Inc. · TSX:CAS
Cascades — Q1 2012 Earnings Presentation
36 slides from Cascades's earnings presentation, May 10, 2012
Slide 1: Review of Q1 2012 financial results
CASCADES Review of Q1 2012 financial results May 10, 2012
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 3
Slide 4: Summary of Financial Results
SUMMARY OF FINANCIAL RESULTS (M CAN$) (% of sales) (M CAN$) (% of sales) EBITDA Cash flow from operations (adjusted) 100 10.0% 100 11.0% 79 80 72 80 61 9.0% 62 8.0% 60 51 60 48 7.0% 40 37 40 40 5.0% 6.0% 15 17 20 20 3.0% 0 4.0% 0 1.0% Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q1 2011 Q2 2011 Q3 2011 Q
Slide 5: Segmented EBITDA
SEGMENTED EBITDA (M CAN$) Boxboard Europe (% of sales) (M CAN$) (% of sales) Containerboard 20 12,0% 60 55 15,0% 17 46 15 13 45 36 12,0% 7,0% 10 10 33 10 30 27 9,0% 5 19 20 19 21 4 2,0% 5 15 6,0% 2 2 0 0 -3,0% 0 3,0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2010 2010 2010 2011 2011
Slide 6: Market Dynamics
MARKET DYNAMICS 6
Slide 7: Market Dynamics – Raw Material Costs
MARKET DYNAMICS – RAW MATERIAL COSTS (US$/ton) Main Recycled Fiber North Amercian OBM List Prices 300 290 250 Current 200 170 150 150 165 130 140 100 White grades (SOP) 50 Brown grades (OCC) 0 May 08 May 09 May 10 May 11 Mar 08 July 08 Nov 08 Mar 09 July 09 Nov 09 Mar 10 July 10 Nov 10 Mar 11 July 1
Slide 8: Market Dynamics – FX and Other Input Costs
MARKET DYNAMICS – FX AND OTHER INPUT COSTS Oil & chemicals Currency Since Since Dec. 2011 Jan. 2010 performance against Oil +9% +46% Latex Pigments +10% +1% +43% +37% € Plastics +12% +29% Q1-2012 vs Starch +3% +28% Q4-2011 +2% +5% CAN$ strength and input costs sky-rocketing since 2010
Slide 9: Q1-2012 Strategic Initiatives
Q1-2012 STRATEGIC INITIATIVES Focused investing for Optimizing capital allocation Restructuring of modernization of between under-performing units core operations (and IT) sectors and investments ● Announced consolidation of ● Acquisition of Ontario containerboard Bird Packaging ● $30 million invest
Slide 10: Financial Review
FINANCIAL REVIEW 10
Slide 11: Q1-2011 - Q1-2012 Sales Reconciliation
Q1-2011 - Q1-2012 SALES RECONCILIATION (M CAN$) 1,000 950 130 13 4 891 900 (15) (15) 850 800 774 750 Sales Business Selling FX Corporate Volume Sales Q1-2011 Acqu. & Prices Eliminations Q1-2012 Disposals & Mix Increase in sales resulting from consolidation of RdM, acquisitions and higher volume 11
Slide 12: Q1-2011 - Q1-2012 EBITDA Variance Analysis
Q1-2011 - Q1-2012 EBITDA VARIANCE ANALYSIS (M CAN$) 125 100 3 15 18 (8) 72 75 20 (13) 50 37 25 0 Selling Business Raw FX & Other Q1-2011 Prices Acqu. & Volume Q1-2012 Materials Energy Costs & Mix Disposals (M CAN$) Containerboard 19 10 6 0 1 (6) (9) 21 Boxboard Europe 5 (1) 2 10 1 (2) (2) 13 Special
Slide 13: Q4-2011 - Q1-2012 EBITDA Variance Analysis
Q4-2011 - Q1-2012 EBITDA VARIANCE ANALYSIS (M CAN$) 100 11 2 27 80 (2) (3) 72 (14) 60 51 40 20 0 Selling Raw Other Q4 2011 Volume Energy $CAN Prices & Q1 2012 Materials Costs (M CAN$) Mix Containerboard 19 7 (2) (4) (1) 2 21 Boxboard Europe 10 6 4 (1) (1) (5) 13 Specialty Products 2 5 5 1 1 (1) (2)
Slide 14: Q1-2012 EBITDA to Operating Income Reconciliation
Q1-2012 EBITDA TO OPERATING INCOME RECONCILIATION (M CAN$) 90 80 72 70 60 50 40 26 2 1 29 30 20 (46) 10 0 EBITDA excl. Depreciation & EBIT excl. spec. Unrealized gain Gain on disposal Operating income spec. items amortization items on financial instr. and others Container- Boxboard Specialty Tissue
Slide 15: Q1-2012 Net Earnings Reconciliation
Q1-2012 NET EARNINGS RECONCILIATION (M CAN$) 10 1 2 8 (1) 2 6 6 (2) 4 4 2 0 Net earnings Unrealized FX gain on Gain on Tax effect on Discontinued Net earnings excluding gain on long-term disposal and specific operations spec. items financial debt and others items instruments financial instruments 15
Slide 16: Cash Flow Overview
CASH FLOW OVERVIEW (M CAN$) Cash flow from operations (M CAN$) Free cash flow 100 50 80 21 25 60 60 48 0 40 35 (7) (5) 22 20 14 -25 (16) (20) 0 -50 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 2011 2012 (in millions of CAN$) Q1 Q2 Q3 Q4 Year Q1 Cash flow from opera
Slide 17: Key Performance Indicators (KPIs)
KEY PERFORMANCE INDICATORS (KPIs) Total Shipments Capacity Utilization Rate ('000 s.t.) 1000 96% 94% 902 900 91% 821 92% 796 90% 90% 775 89% 800 88% 87% 87% 692 695 86% 700 663 661 84% 600 500 80% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2010 2010 2011 2011 2011 2011 2012 2010 2010 2010
Slide 18: Net Debt Reconciliation
NET DEBT RECONCILIATION (M CAN$) 1,700 1,600 23 6 29 (14) 43 1,524 1,485 (48) 1,500 1,400 1,300 Net debt CAPEX, net Var. of Other Dividends, Var. of CF from Net debt Q4-2011 of disposals working assets & bbacks CAN$ operations Q1-2012 capital & investments Others Net debt up mostly due to CAPEX and
Slide 19: Debt Profile
DEBT PROFILE (M CAN$) Net Debt Long-term Debt Maturities Distribution 2,000 1,805 1,800 2017 1,658 34% 2020 1,570 1,533 17% 1,600 1,454 1,508 1,462 1,445 1,4851,524 1,397 1,370 1,400 1,298 Before 2015 1,200 10% 1,000 2016 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 14% 2015 2009 2009 2009 2009 2010 2010
Slide 20: Balance Sheet & Key Financial Ratios
BALANCE SHEET & KEY FINANCIAL RATIOS Debt / Debt + Equity Net debt / LTM EBITDA 65% 7.0 60% 59% 6.5 60% 58% 5.8 x 56% 6.0 5.6 x 54% 5.5 55% 4.9 x 5.0 50% 4.2 x 4.2 x 4.5 4.0 45% 3.5 40% 3.0 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Slight increase in debt during
Slide 21: Segmented Review
SEGMENTED REVIEW 21
Slide 22: Tissue Papers
TISSUE PAPERS Sales EBITDA EBITDA margins Shipments Avg. Selling price Avg. Selling price (in millions $) (in millions $) (% of sales) (in thousands s.t.) (CAN$/s.t.) (US$/s.t.) Q1 2012 Q4 2011 Q1 2012 Q4 2011 Q1 2012 Q4 2011 Q1 2012 Q4 2011 Q1 2012 Q4 2011 Q1 2012 Q4 2011 229 233 33 28 14% 12% 130
Slide 23: Packaging – Containerboard
PACKAGING – CONTAINERBOARD Sales EBITDA EBITDA margins Shipments Avg. Selling price Avg. Selling price (in millions $) (in millions $) (% of sales) (in thousands s.t.) (CAN$/s.t. or msf) (US$/s.t. or msf) Q1 2012 Q4 2011 Q1 2012 Q4 2011 Q1 2012 Q4 2011 Q1 2012 Q4 2011 Q1 2012 Q4 2011 Q1 2012 Q4 2011
Slide 24: Packaging – Boxboard Europe
PACKAGING – BOXBOARD EUROPE Sales EBITDA EBITDA margins Shipments Avg. Selling price Avg. Selling price (in millions $) (in millions $) (% of sales) (in thousands s.t.) (CAN$/s.t.) (euro/s.t.) Q1 2012 Q4 2011 Q1 2012 Q4 2011 Q1 2012 Q4 2011 Q1 2012 Q4 2011 Q1 2012 Q4 2011 Q1 2012 Q4 2011 204 206 13
Slide 25: Packaging – Specialty Products
PACKAGING – SPECIALTY PRODUCTS Sales EBITDA EBITDA margins Shipments Avg. Selling price Avg. Selling price (in millions $) (in millions $) (% of sales) (in thousands s.t.) (CAN$/s.t.) (US$/s.t.) Q1 2012 Q4 2011 Q1 2012 Q4 2011 Q1 2012 Q4 2011 Q1 2012 Q4 2011 Q1 2012 Q4 2011 Q1 2012 Q4 2011 202 206 1
Slide 26: Q&A
Q&A 26
Slide 27: Concluding Remarks
CONCLUDING REMARKS 27
Slide 28: Near Term Outlook: Cautious optimism
NEAR TERM OUTLOOK: Cautious optimism • Lower raw material costs • Consolidation of Papersource • Higher demand volatility + • Impacts of restructuring and • Europe uncertainty I optimization measures • Continuous strength of CAN$ • Produce according to historical • High energy and chemical costs sta
Slide 29: Appendices
APPENDICES 29
Slide 30: Energy Prices
ENERGY PRICES Natural gas Energy prices Crude oil Hedging Program - Natural gas (US$) (US$) 7.00 110 • Canada: 6.00 5.00 90 • 2012: 65% at 5.97 CAN$/GJ 4.00 • 2013: 70% at 5.48 CAN$/GJ 70 3.00 2.00 50 • U.S.: 1.00 0.00 30 • 2012: 58% at 6.30 US$/mmBtu • 2013: 52% at 5.84 US$/mmBtu Apr 09 July 09 Oct
Slide 31: Foreign Exchange
FOREIGN EXCHANGE US$/CAN$ Exchange rates EURO/CAN$ Hedging Program - Cash flow USD: 1.10 1.00 • 2012 US$/CAN$ Euro/CAN$ 1.05 0.95 0.90 31 to 52% (with options) of exposure 1.00 hedged at an average rate of 0.85 1.032CAN$/US$ to 1.067CAN$/US$ 0.95 0.80 0.90 0.75 • 2013 0.70 0.85 23 to 39% (with optio
Slide 32: Other Inputs Inflation
OTHER INPUTS INFLATION Chemical products price variation 60% 50% Average increase from 40% Jan .2010 to: 30% • Dec. 2010: +8% 20% • Dec. 2011: +21% • March 2012: +27% 10% 0% Jan 10 Mar 10 May 10 Sep 10 Jan 11 Mar 11 May 11 Sep 11 Jan 12 Mar 12 Jul 10 Nov 10 Jul 11 Nov 11 Wax Latex Pigments Plastics
Slide 33: North American Manufacturing Spread
NORTH AMERICAN MANUFACTURING SPREAD 1,300 1,267 1,271 850 1,234 750 1,200 1,106 1,166 650 550 1,100 1,070 512 450 452 428 410 387 350 1,000 206 324 250 900 150 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 Manufacturing spread in CAN$ in Q1/1
Slide 34: Market Prices and Costs Summary
MARKET PRICES AND COSTS SUMMARY 2010 2011 2012 Change Change These indexes should only be used as indicator of trends Average Average Average Average Average Average Average Q1 2012 Q1 2012 and they be different than our actual selling prices or purchasing Q1 Q2 Q3 Q4 Q1 Q1 2011 Q4 2011 costs. (unit
Slide 35: Notes
NOTES 1. The Cascades Noth American selling prices index represents an approximation of the Company's manufacturing selling prices in North America (excluding converting). It is weighted according to shipments and is based on the average selling price of our North American manufacturing operations o
Slide 36: For more information
For more information: www.cascades.com/investors Riko Gaudreault Director, Investor Relations [email protected] 514-282-2697 36 CREDIT: IMAGE ECOterre