Cascades Inc. · TSX:CAS
Cascades — Q1 2016 Earnings Presentation
32 slides from Cascades's earnings presentation, May 5, 2016
Slide 1: Review of Q1 2016 Financial Results
CASCADES INC. Review of Q1 2016 Financial Results May 5, 2016
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$) EBITDA 1 (CAN$) EPS 1 (% of sales) 150 16% $0.60 134 $0.52 125 14% $0.50 103 104 106 90 93 100 12% $0.40 82 85 $0.35 75 10% $0.30 $0.25 $0.23 50 8% $0.20 $0.18 $0.08 $0.08 25 6% $0.10 $0.04 0 4% $0.00 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2014 201
Slide 5: Historical Segmented EBITDA
HISTORICAL SEGMENTED EBITDA1 Containerboard Boxboard Europe (M CAN$) (% of sales) (M CAN$) (% of sales) 75 30% 28 16% 68 55 56 55 20 19 60 24% 21 12% 52 17 16 43 46 44 14 14 14 13 45 18% 14 8% 30 12% 7 4% 15 6% 0 0% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2014 2014 2015 2015 2015 2015 2
Slide 6: Segmented EBITDA Waterfalls
SEGMENTED EBITDA WATERFALLS1 Containerboard Boxboard Europe Acqu. Selling Acqu. Selling EBITDA Other Reco. & Raw EBITDA EBITDA Other Raw Reco. & EBITDA (M CAN$) Volume CAN$ & Energy Prices & (M CAN$) Volume & CAN$ Energy Prices & Q4-2015 Costs Recyc. Materials Q1-2016 Q4-2015 Costs Materials Recyc.
Slide 7: Key Performance Indicators (KPIs)
KEY PERFORMANCE INDICATORS (KPIs) Containerboard: 94% Boxboard Europe: 97% Tissue Papers: 87% ('000 s.t.) 2 Total Shipments Capacity Utilization Rate (Manufacturing only) 800 770 100% 750 738 742 764 746 721 716 96% 93% 93% 93% 93% 93% 700 95% 90% 89% 600 90% 500 85% 400 80% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 8: Raw Material Costs
RAW MATERIAL COSTS Recycled Fibre North American Current Virgin Pulp prices Current (US$/ton) (US$/ton) 200 List Prices (April) 1,100 (April) 1,000 150 153 960 900 100 850 85 800 50 700 Apr 14 Jan 13 Apr 13 Jan 14 Jan 15 Apr 15 Jan 16 Apr 16 July 13 July 14 July 15 July 13 July 14 July 15 Oct 15 Jan
Slide 9: Financial Review
FINANCIAL REVIEW ( 10 8Mee
Slide 10: Q1 2015 – Q1 2016 Sales Reconciliation
Q1 2015 – Q1 2016 SALES RECONCILIATION (M CAN$) +10% 1,025 11 4 1,003 1,000 22 - (5) 975 61 950 925 910 0 Selling Recovery Sales Acqu. & Corp. Sales CAN$ Volume Prices & Q1-2015 Disposals Elim. Q1-2016 & Mix Recycling (M CAN$) Containerboard 300 12 11 13 336 Boxboard Europe 216 18 (12) (2) (1) 219 S
Slide 11: Q1 2015 – Q1 2016 EBITDA Variance Analysis
Q1 2015 – Q1 2016 EBITDA VARIANCE ANALYSIS +25% (M CAN$) 4 1 120 8 - - 110 11 106 (14) 100 11 90 85 0 Selling Recovery EBITDA Raw Acqu. & Other EBITDA Prices & Energy Volume CAN$ & 1 Q1-2015 Materials Disposals Costs Q1-2016 Mix Recycling (M CAN$) Containerboard 52 13 4 5 (10) (9) 55 Boxboard Europe
Slide 12: Q4 2015 – Q1 2016 EBITDA Variance Analysis
Q4 2015 – Q1 2016 EBITDA VARIANCE ANALYSIS (M CAN$) 130 +2% 5 1 - 120 6 (2) (3) 9 110 106 104 (14) 0 Recovery Selling EBITDA Other Raw Acqu. & EBITDA Volume CAN$ Energy & Prices & Q4-2015 Costs Materials 1 Disposals Q1-2016 Recycling Mix (M CAN$) Containerboard 56 1 5 (2) 2 (7) 55 Boxboard Europe 13
Slide 13: Quarterly EPS Variance – Q1 vs Q1
QUARTERLY EPS VARIANCE – Q1 VS Q1 Q1-2015 Q1-2016 Excluding Excluding specifics Specifics As reported specifics Specifics As reported EBITDA 85 (13) 72 106 14 120 Depreciation (44) (44) (47) (47) EBIT 41 (13) 28 59 14 73 Financing expenses (24) (24) (24) (24) Interest expense on employee future bene
Slide 14: Quarterly EPS Variance – Q4 vs Q1
QUARTERLY EPS VARIANCE – Q4 VS Q1 Q4-2015 Q1-2016 Excluding Excluding specifics Specifics As reported specifics Specifics As reported EBITDA 104 (60) 44 106 14 120 Depreciation (57) (57) (47) (47) EBIT 47 (60) (13) 59 14 73 Financing expenses (22) 0 (22) (24) (24) Interest expense on employee future
Slide 15: Q1 2016 EBITDA to Operating Income Reconciliation
Q1 2016 EBITDA TO OPERATING INCOME RECONCILIATION (M CAN$) 120 106 100 14 73 80 59 60 (47) 40 20 0 EBITDA Depr. & Op. income Unrealized gain on financial Operating excluding amort. excluding instruments income spec. items spec. items Container- Boxboard Specialty Tissue Corporate Total (M CAN$) boar
Slide 16: Cash Flow Overview
CASH FLOW OVERVIEW Cash flows from continuing operations, adjusted 1 Free cash flows, adjusted 1, 2 (M CAN$) (M CAN$) 120 80 75 110 106 100 60 86 49 80 32 40 60 56 35 20 40 20 0 (7) (5) 0 (20) Q1-2015 Q2-2015 Q3-2015 Q4-2015 Q1-2016 Q1-2015 Q2-2015 Q3-2015 Q4-2015 Q1-2016 2014 2015 2016 (in millions
Slide 17: Net Debt Reconciliation – Q1-2016
NET DEBT RECONCILIATION – Q1-2016 (M CAN$) 1,750 -2% 1,721 1,700 54 1,684 1,650 33 (83) 9 1,600 6 (56) 1,550 1,500 Net Debt F/X Rate Cash flow from Investments Dividends paid Var. in non- Capital Net Debt 12/31/2015 operations and others & shares cash work. cap. investments, net 03/31/2016 buyback,
Slide 18: Consolidated Financial Ratios & Debt Maturities
CONSOLIDATED FINANCIAL RATIOS & DEBT MATURITIES Net Debt / LTM EBITDA Interest Coverage Ratio 5.0x 7.0x 5.0x 4.7x 5.8x 6.0x 4.0x 3.4x 3.4x 5.0x 4.7x 3.0x 5.0x 3.0x 4.6x 2.5x 4.0x 3.8x 4.0x 2.0x 3.0x 1.0x 2011 2012 2013 2014 2015 Q1 2011 2012 2013 2014 2015 Q1 2016 2016 Net Debt / Net Debt + Total Eq
Slide 19: Proportionate Consolidation
PROPORTIONATE CONSOLIDATION As reported Proportionate 1 (in millions of Canadian dollars) (IFRS) consolidation Selected financial data Q1-2016 Q1-2016 Q4-2015 Q1-2015 Sales 1,003 994 952 878 Adjusted EBITDA excluding specific items 106 116 114 95 Adjusted EBITDA excluding specific items - margin 10.
Slide 20: Segmented Review
SEGMENTED REVIEW ( 10 8Mee
Slide 21: Packaging Products / Containerboard
PACKAGING PRODUCTS / CONTAINERBOARD Results Change vs. Comments on sequential performance Q1 2016 Q4 2015 Q1 2015 Shipments ('000 s.t.) Higher global external shipments (+10% for the mills and stable for the corrugated 279 4% 4% box activities). Average selling price (CAN$/unit) Average selling
Slide 22: Packaging Products / Boxboard Europe
PACKAGING PRODUCTS / BOXBOARD EUROPE Results Change vs. Comments on sequential performance Q1 2016 Q4 2015 Q1 2015 Higher shipments for recycled grades due to seasonality after weak European Shipments ('000 s.t.) demand in Q4. 278 6% -6% Higher shipments for virgin grades due to seasonality. Ave
Slide 23: Packaging Products / Specialty Products
PACKAGING PRODUCTS / SPECIALTY PRODUCTS Results Change vs. Comments on sequential performance Q1 2016 Q4 2015 Q1 2015 Production downtime in Q4 essentially explains the sequential increase in Shipments ('000 s.t.) shipments in the Industrial Packaging segment. The other packaging segments 46 15% 1
Slide 24: Tissue Papers
TISSUE PAPERS Results Change vs. Comments on sequential performance Q1 2016 Q4 2015 Q1 2015 Shipments in all converted product markets decreased by 2% due to the usual Shipments ('000 s.t.) seasonality. 143 -2% 4% Parent roll shipments also decreased by 2% due to seasonality and lower demand fro
Slide 25: Q&A and Concluding Remarks
Q&A AND CONCLUDING REMARKS ete Ne] By
Slide 26: Near Term Outlook
NEAR TERM OUTLOOK • Pricing and raw material cost headwinds in • Higher volume in Q2 Europe + • Price increases for specific Tissue products • Higher prices for recovered white papers in I • Lower energy cost North America • OCC prices still low and stable • Decrease in index price for linerboard an
Slide 27: Appendix
APPENDIX
Slide 28: Foreign Exchange
FOREIGN EXCHANGE US$/CAN$ Exchange rates Euro€/CAN$ Hedging Program – USD Cash flows 1.10 1.10 2016 1.00 1.00 • 23% to 58% of exposure (net of interest) hedged at an average rate of 1.18 CAN$/US$ to 1.21 CAN$/US$ 0.90 0.90 2017 0.80 0.80 • 28% to 51% of exposure (net of interest) hedged at an 0.70 0
Slide 29: Energy Prices
ENERGY PRICES Natural gas Energy prices Crude oil Hedging Program – Natural gas (US$) (US$) 12.00 120 • Canada: 10.00 100 • 2016: 70% at 3.89 CAN$/GJ 8.00 80 • 2017: 57% at 3.94 CAN$/GJ 6.00 60 4.00 40 • U.S.: 2.00 20 • 2016: 39% at 4.53 US$/mmBtu 0.00 0 • 2017: 40% at 3.92 US$/mmBtu Q4-13 Q4-14 Q1-
Slide 30: Selected Reference Prices
SELECTED REFERENCE PRICES Containerboard - Selected Products Boxboard Europe - Selected Products Current (US$/s.t.) Current (Euro€/m.t.) (Mar.) 700 1,200 (Apr.) 1,100 650 1,047 1,000 615 600 900 550 800 515 700 663 500 Linerboard 42-lb. unbleached kraft, Eastern U.S. 600 Coated duplex - virgin board
Slide 31: 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 Q1 2016 Q1 2016 our actual selling prices or purchasing costs 2014 2015 2016 over Q1 2015 over Q4 2015 Year Q1 Q2 Q3 Q4 Year Q1 (units) (%) (units) (%) Selling prices (averag
Slide 32: For more information
For more information: www.cascades.com/investors Jennifer Aitken Director, Investor Relations 514-282-2697 or [email protected] 32