Cascades Inc. · TSX:CAS
Cascades — Q1 2015 Earnings Presentation
31 slides from Cascades's earnings presentation, May 7, 2015
Slide 1: Review of Q1 2015 Financial Results
CASCADES INC. Review of Q1 2015 Financial Results May 7th, 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 wT} Cascades GREEN BY WATURE™
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 $0.18 94 93 100 90 12.0% $0.16 82 82 85 67 75 $0.09 $0.07 $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 4.0% $(0.16) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 5: Historical Segmented EBITDA
HISTORICAL SEGMENTED EBITDA1 Containerboard Boxboard Europe (M CAN$) (% of sales) (M CAN$) (% of sales) 60 24% 28 16% 52 23 24 41 46 43 46 44 20 45 18% 21 12% 36 17 27 31 11 12 11 14 14 30 12% 14 8% 15 6% 7 4% 0 0% 0 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2013 2013 2013 2013 2014 2
Slide 6: Segmented EBITDA Waterfalls
SEGMENTED EBITDA WATERFALLS1 Containerboard Boxboard Europe Selling Acqu. Acqu. Selling EBITDA Raw Other EBITDA EBITDA Other Raw EBITDA (M CAN$) CAN$ Prices & & Energy Volume (M CAN$) Volume & CAN$ Prices & Energy Q4-2014 Materials Costs Q1-2015 Q4-2014 Costs Materials Q1-2015 Mix Divest. 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 (May) 1,100 (April) 200 1,000 980 160 150 900 865 800 100 80 700 50 600 Apr 12 Apr 13 Apr 14 Apr 15 Jan 12 July 12 Oct 12 Jan 13 July 13 Oct 13 Jan 14 July 14 Oct 14 Jan 15 Feb 12 Aug
Slide 8: Key Performance Indicators (KPIs)
KEY PERFORMANCE INDICATORS (KPIs) Containerboard: 91% Boxboard Europe: 101% Tissue Papers: 98% ('000 s.t.) Total Shipments 1 Capacity Utilization Rate (Manufacturing only) 1, 2 800 100% 747 750 738 742 712 728 712 715 721 97% 97% 96% 700 97% 95% 600 94% 93% 93% 91% 91% 90% 500 91% 400 88% Q1 Q2 Q3 Q
Slide 9: Financial Review
FINANCIAL REVIEW wT} Cascades GREEN BY WATURE™
Slide 10: Q1 2014 – Q1 2015 Sales Reconciliation
Q1 2014 – Q1 2015 SALES RECONCILIATION (M CAN$) 950 29 925 (1) (2) 910 39 900 (18) 875 863 0 Selling Sales Acqu. & Corp. & Sales Volume CAN$ Prices Q1-2014 Disposals Elim. Q1-2015 & Mix (M CAN$) Containerboard 271 15 14 (1) 1 300 Boxboard Europe 232 6 (18) (4) 216 Specialty Products 140 6 8 (12) (7)
Slide 11: Q1 2014 – Q1 2015 EBITDA Variance Analysis
Q1 2014 – Q1 2015 EBITDA VARIANCE ANALYSIS (M CAN$) 110 6 - - 11 100 (2) 90 13 85 (18) 80 75 0 Selling EBITDA Other Acqu. & Raw EBITDA Volume CAN$ Energy Prices & Q1-2014 Costs Disposals Materials1 Q1-2015 Mix (M CAN$) Containerboard 31 5 8 4 2 1 1 52 Boxboard Europe 24 1 (1) 2 (4) (1) (4) 17 Specia
Slide 12: Q4 2014 – Q1 2015 EBITDA Variance Analysis
Q4 2014 – Q1 2015 EBITDA VARIANCE ANALYSIS (M CAN$) 110 10 - - 100 11 (4) 90 (7) 85 82 (7) 80 0 Selling EBITDA Raw Acqu. & Other EBITDA CAN$ Volume Energy Prices & Q4-2014 Materials1 Disposals Costs Q1-2015 Mix (M CAN$) Containerboard 44 4 6 (3) 1 (3) 3 52 Boxboard Europe 14 (1) 7 2 (3) (2) 17 Speci
Slide 13: Quarterly EPS Variance
QUARTERLY EPS VARIANCE Q4-2014 Q1-2015 Excluding Excluding specifics Specifics As reported specifics Specifics As reported EBITDA 82 (25) 57 85 (13) 72 Depreciation (44) (44) (44) (44) EBIT 38 (25) 13 41 (13) 28 Financing expenses (23) (23) (24) (24) Interest expense on employee future benefits (1)
Slide 14: Q4 2014 EBITDA to Operating Income Reconciliation
Q4 2014 EBITDA TO OPERATING INCOME RECONCILIATION (M CAN$) 100 85 80 60 41 - - - 40 (44) 28 (13) 20 0 EBITDA Depr. & Op. income Restructuring Loss on acqui., Impairment Unrealized loss Operating excluding amort. excluding costs disposals charges on financial income spec. items spec. items and others
Slide 15: Cash Flow Overview
CASH FLOW OVERVIEW Cash flow from continuing operations, adjusted 1 Free cash flow, adjusted 1, 2 (M CAN$) (M CAN$) 100 93 50 45 80 73 40 57 54 30 60 17 20 15 40 35 10 9 20 0 0 (10) (5) Q1-2014 Q2-2014 Q3-2014 Q4-2014 Q1-2015 Q1-2014 Q2-2014 Q3-2014 Q4-2014 Q1-2015 2013 2014 2015 (in millions of CAN
Slide 16: Net Debt Reconciliation
NET DEBT RECONCILIATION (M CAN$) +5% 1,700 82 1,691 1,650 1,613 35 1,600 26 (41) 7 1,550 4 (35) 1,500 1,450 Net Debt Discontinued Cash flow Dividends Investments Var. in non- Capital F/X Rate Net Debt 12/31/2014 operations from op. paid & shares and others cash work. cap. investments, net 03/31/2015
Slide 17: Consolidated Financial Ratios & Debt Maturities
CONSOLIDATED FINANCIAL RATIOS & DEBT MATURITIES Net Debt / LTM EBITDA Interest Coverage Ratio 7.0x 5.0x 5.8x 6.0x 4.0x 3.4x 3.6x 3.4x 5.0x 4.7x 4.8x 3.0x 5.0x 3.0x 4.6x 2.5x 4.0x 2.0x 3.0x 1.0x 2011 2012 2013 2014 LTM 2011 2012 2013 2014 LTM 03/31/2015 03/31/2015 Net Debt / Net Debt + Total Equity L
Slide 18: Introducing Proportionate Consolidation
INTRODUCING PROPORTIONATE CONSOLIDATION As reported Proportionate 1 (in millions of Canadian dollars) (IFRS) consolidation Q1-2015 Selected financial data Sales 910 878 EBITDA excluding specific items 85 95 EBITDA excluding specific items - margin (%) 9.3% 10.8% Total assets 3,719 3,741 Net debt2 1,
Slide 19: Segmented Review
SEGMENTED REVIEW wT} Cascades GREEN BY WATURE™
Slide 20: Packaging Products / Containerboard
PACKAGING PRODUCTS / CONTAINERBOARD Results Change vs. Comments on sequential performance Q1 2015 Q4 2014 Q1 2014 Decrease in total shipments of 3% (-4% external shipments by mills and -3% for Shipments ('000 s.t.) corrugated boxes) 268 -3% 6% Higher integration rate explains lower external sales Av
Slide 21: Packaging Products / Boxboard Europe
PACKAGING PRODUCTS / BOXBOARD EUROPE Results Change vs. Comments on sequential performance Q1 2015 Q4 2014 Q1 2014 Seasonality and improved production contributed to increase in shipments in both virgin Shipments ('000 s.t.) and recycled markets 296 13% 2% Improve productivity at Reno de Medici also
Slide 22: Packaging Products / Specialty Products
PACKAGING PRODUCTS / SPECIALTY PRODUCTS Results Change vs. Comments on sequential performance Q1 2015 Q4 2014 Q1 2014 Shipments ('000 s.t.) 41 11% 0% Sequential increase in Industrial Packaging shipments, but lower shipments in other segments Sales ($M) 135 -1% -4% Positive impact of a favourable ex
Slide 23: Tissue Papers
TISSUE PAPERS Results Change vs. Comments on sequential performance Q1 2015 Q4 2014 Q1 2014 9% decrease in converted products shipments essentially linked to seasonality in the Shipments ('000 s.t.) away-from-home market 137 -5% 5% Increase in parent rolls shipments of 7% due to efforts to manage in
Slide 24: Q&A and Concluding Remarks
Q&A AND CONCLUDING REMARKS wT} Cascades GREEN BY WATURE™
Slide 25: Near Term Outlook
NEAR TERM OUTLOOK • Strong season for packaging products in North America • Announced price increase in Europe • Competitive tissue market + • Favourable FX environment • Ramp-up of two new tissue sites I • Favourable OCC environment • Potential pressure for recovered paper prices in Europe • Lower
Slide 26: Appendix
APPENDIX wT} Cascades GREEN BY WATURE™
Slide 27: Foreign Exchange
FOREIGN EXCHANGE US$/CAN$ Exchange rates Euro€/CAN$ Hedging Program – USD Cash flows 1.05 0.90 2015 1.00 0.85 0.95 0.80 • 26% to 48% of exposure (net of interest) hedged at an average rate of 1.11 CAN$/US$ to 1.16 CAN$/US$ 0.90 0.75 0.85 0.70 2016 0.80 0.65 • 32% to 64% of exposure (net of interest)
Slide 28: Energy Prices
ENERGY PRICES Natural gas Energy prices Crude oil Hedging Program – Natural gas (US$) (US$) 8.00 110 7.00 100 • Canada: 6.00 90 • 2015 : 73% at 4.67 CAN$/GJ 5.00 80 • 2016 : 61% at 4.08 CAN$/GJ 4.00 70 3.00 60 2.00 50 • U.S.: 1.00 40 • 2015 : 49% at 4.71 US$/mmBtu Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13
Slide 29: Selected Reference Prices
SELECTED REFERENCE PRICES Containerboard - Selected Products Boxboard Europe - Selected Products (US$/s.t.) Current (Euro€/m.t.) 800 1,200 (April) 1,100 750 740 1,000 $22 decrease Q1-2015 700 690 900 650 800 700 Linerboard 42-lb 600 Corrugating medium 26-lb 600 Coated duplex - virgin board (GC2) $12
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 Q1 2015 Q1 2015 our actual selling prices or purchasing costs 2013 2014 2015 over Q1 2014 over Q4 2014 Year Q1 Q2 Q3 Q4 Year Q1 (units) (%) (units) (%) Selling prices (averag
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]