Cascades Inc. · TSX:CAS
Cascades — Q1 2013 Earnings Presentation
31 slides from Cascades's earnings presentation, May 2013
Slide 1: Review of Q1 2013 financial results
CASCADES INC. Review of Q1 2013 financial results
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
Slide 4: Summary of Financial Results
SUMMARY OF FINANCIAL RESULTS EBITDA Cash flow from operations (adjusted) (M CAN$) (% of sales) (M CAN$) (% of sales) 100 10.0% 80 10.0% 79 84 78 61 72 70 68 75 8.5% 60 7.5% 62 48 46 51 40 44 40 50 7.0% 40 35 5.0% 17 25 5.5% 20 2.5% 0 4.0% 0 0.0% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2011 2
Slide 5: Segmented EBITDA Waterfalls
SEGMENTED EBITDA WATERFALLS Containerboard Boxboard Europe Acq. Variation Selling Acq. Variation Selling Q4-2012 Other Raw Q1-2013 Q4-2012 Raw Other Q1-2013 (M CAN$) Energy Volume and of the Prices & (M CAN$) Energy Volume and of the Prices & EBITDA Costs Materials EBITDA EBITDA Materials Costs EBIT
Slide 6: Market Dynamics
MARKET DYNAMICS
Slide 7: Raw Material Costs
RAW MATERIAL COSTS (US$/ton) Main Recycled Fiber North Amercian OBM (US$/tonne) Virgin Pulp Prices List Prices 300 1,100 Current 250 1,000 200 Current 900 930 150 150 800 835 100 100 700 50 600 Jan 11 Jan 12 Jan 13 Apr 11 Oct 11 Apr 12 Oct 12 Mar 13 July 11 July 12 Mar 13 Jan 11 Jan 12 Jan 13 Apr 11
Slide 8: Key Performance Indicators (KPIs)
KEY PERFORMANCE INDICATORS (KPIs) ('000 s.t.) Total Shipments Capacity Utilization Rate 1,000 95% Containerboard only 902 92% 88% (for the quarter) 900 92% 92% (for March 2013) 831 90% 822 774 807 825 805 806 89% 800 89% Containerboard only 87% 88% 87% (for the quarter) 700 86% 600 83% Q2 Q3 Q4 Q1 Q
Slide 9: Financial Review
FINANCIAL REVIEW
Slide 10: Q1-2012 – Q1-2013 Sales Reconciliation
Q1-2012 – Q1-2013 SALES RECONCILIATION (M CAN$) 950 +3% 940 6 7 930 17 920 914 910 18 (25) 900 891 0 Sales Volume Corporate Variation Acq. Selling Sales Q1-2012 Elimin. of the & Prices Q1-2013 CAN$ Divest. & Mix Volume and FX more than offset lower average selling prices 10
Slide 11: Q1-2012 – Q1-2013 EBITDA Variance Analysis
Q1-2012 – Q1-2013 EBITDA VARIANCE ANALYSIS (M CAN$) -6% 3 110 5 5 100 11 90 11 (14) 80 72 70 68 (25) 0 Business Variation Selling EBITDA Raw Other EBITDA 1 Volume Acq. & of the Energy Prices & Q1-2012 Materials Costs Q1-2013 Disposals CAN$ Mix (M CAN$) Containerboard 21 5 (1) 5 1 (7) 1 25 Boxboard E
Slide 12: Q4-2012 – Q1-2013 EBITDA Variance Analysis
Q4-2012 – Q1-2013 EBITDA VARIANCE ANALYSIS (M CAN$) -3% 90 3 5 85 5 80 8 (5) 75 (5) 70 70 68 (13) 0 Variation Business Selling EBITDA Raw 1 Other EBITDA Energy of the Volume Acq. & Prices & Q4-2012 Materials Costs Q1-2013 CAN$ Disposals Mix (M CAN$) Containerboard 25 2 1 2 1 (7) 3 (2) 25 Boxboard Eu
Slide 13: Q1-2013 EBITDA to Operating Income Reconciliation
Q1-2013 EBITDA TO OPERATING INCOME RECONCILIATION (M CAN$) 80 68 60 40 24 20 20 (44) (4) 0 -20 -40 EBITDA Depr. & Op. income Loss on acq., disp. & Operating excluding amort., excluding others income spec. items excl. spec. items spec. items Container- Boxboard Specialty Tissue Corporate Total (M CAN
Slide 14: Cash Flow Overview
CASH FLOW OVERVIEW Cash flow from operations, (M CAN$) Free cash flow (M CAN$) including specific items 60 46 20 13 45 42 37 5 34 30 (10) (3) (4) 15 (25) (27) 0 (40) Q2-2012 Q3-2012 Q4-2012 Q1-2013 Q2-2012 Q3-2012 Q4-2012 Q1-2013 2012 2013 (in millions of CAN$) Q1 Q2 Q3 Q4 Year Q1 Cash flow from ope
Slide 15: Net Debt Reconciliation
NET DEBT RECONCILIATION (M CAN$) 1,590 42 1,581 1,580 1,570 1,560 1,550 24 1,540 1,535 1,530 1,520 14 1,510 8 1,500 4 1,490 (46) 0 Net Debt Cash flow Dividends Other $CAN Var. of Capex, Net Debt 12/31/2012 from op. & items working net of disp. 03/31/2013 Buybacks capital & Others Net debt increased
Slide 16: Consolidated Financial Ratios & Debt Maturities
CONSOLIDATED FINANCIAL RATIOS & DEBT MATURITIES Net debt / LTM EBITDA Interest Coverage Ratio 7.0x 5.0x 4.6x 5.9x 5.8x 6.0x 4.0x 5.3x 5.0x 3.0x 2.9x 3.0x 2.9x 5.0x 4.5x 3.0x 2.5x 4.0x 2.0x 3.3x 3.0x 1.0x 2008 2009 2010 2011 2012 LTM 2008 2009 2010 2011 2012 LTM 03/31/2013 03/31/2013 Debt / Debt + Eq
Slide 17: Segmented Review
SEGMENTED REVIEW
Slide 18: Tissue Papers
TISSUE PAPERS Results Change vs. Q1 2013 Q4 2012 Q1 2012 Comments on sequential performance Higher shipments in our Consumer Product activities, mainly in the US Shipments Shipments of parent rolls also higher ('000 s.t.) Lower shipments in our away-from-home activities, mostly in Canada, due to low
Slide 19: Packaging / Containerboard
PACKAGING / CONTAINERBOARD Results Change vs. Q1 2013 Q4 2012 Q1 2012 Comments on sequential performance External shipments of our manufacturing activities increased by 9% (+11% Shipments containerboard and +3% boxboard) ('000 s.t.) Shipments of converted products decreased by 4% (+20% folding carto
Slide 20: Packaging / Boxboard Europe
PACKAGING / BOXBOARD EUROPE Results Change vs. Q1 2013 Q4 2012 Q1 2012 Comments on sequential performance Sequentially, higher shipments in all of our markets due to more favorable market Shipments conditions and downtimes taken during the previous quarter ('000 s.t.) Order book has not been this he
Slide 21: Packaging / Specialty Products
PACKAGING / SPECIALTY PRODUCTS Results Change vs. Q1 2013 Q4 2012 Q1 2012 Comments on sequential performance Sequentially, higher shipments in the Specialty Papers and Industrial Packaging Shipments 1 segments ('000 s.t.) Reduced volumes in the Consumer Products and Recovery segments 94 3% -4% Avera
Slide 22: Q&A and Concluding Remarks
Q&A AND CONCLUDING REMARKS
Slide 23: Near Term Outlook
NEAR TERM OUTLOOK • Price increase in corrugated box and • State of Canadian economy boxboard sectors • Stable to slightly increasing raw material • Benefits of restructuring and optimization costs measures + I • Seasonal preventive shutdowns in tissue • Potential to improve utilization rate sector
Slide 24: Appendix
APPENDIX
Slide 25: Historical Segmented EBITDA
HISTORICAL SEGMENTED EBITDA Containerboard Boxboard Europe Containerboard Boxboard Europe (M CAN$) (% of sales) (M CAN$) (% of sales) 30 12.0% 20 12.0% 27 26 17 25 25 25 23 9.0% 15 9.0% 21 13 20 19 11 11 11 10 10 20 6.0% 10 6.0% 7 15 3.0% 5 3.0% 10 0.0% 0 0.0% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Slide 26: Energy Prices
ENERGY PRICES Natural gas Energy prices Crude oil Hedging Program – Natural gas (US$) (US$) • Canada: 7.00 110 • 2013 (May – Dec): 70% at 5.47 CAN$/GJ 6.00 100 • 2014: 65% at 5.35 CAN$/GJ 5.00 90 4.00 80 3.00 70 • U.S.: 2.00 60 1.00 50 • 2013 (May – Dec) : 52% at 5.73 US$/mmBtu 0.00 40 • 2014: 45% a
Slide 27: Foreign Exchange
FOREIGN EXCHANGE Exchange rates Hedging Program – USD Cash flows US$/CAN$ EURO/CAN$ • 2013 1.10 1.00 1.05 0.95 31 to 55% of exposure hedged at an 0.90 1.00 0.85 average rate of 1.023CAN$/US$ to 0.95 0.80 1.079CAN$/US$ 0.90 0.75 0.70 • 2014 0.85 0.65 0.80 0.60 11 to 19% of exposure hedged at an Q2-10
Slide 28: North American Manufacturing Spread
NORTH AMERICAN MANUFACTURING SPREAD 1,300 850 1,250 1,271 1,262 1,238 1,233 1,180 750 1,200 650 550 1,100 494 450 471 409 350 1,000 386 367 353 250 900 150 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 North American manufacturing selling prices inde
Slide 29: Selected Industry Reference Prices
SELECTED INDUSTRY REFERENCE PRICES Boxboard Europe - Selected Products Containerboard - Selected Products (Euro/m.t.) ($US/s.t.) 1,200 1,100 20-pt clay coated news (CRB) QoQ: Linerboard 42-lb 1,100 1,000 -20€/tm Corrugating medium 26-lb (-2%) QoQ: 1,000 900 +0$tc 900 800 (+0%) 800 700 QoQ: QoQ: +0$/
Slide 30: Market Prices and Costs Summary
MARKET PRICES AND COSTS SUMMARY Q1 2013 Q1 2013 These indexes should only be used as indicator of trends and they be different 2011 2012 2013 over Q1 2012 over Q4 2012 than our actual selling prices or purchasing costs. Year Q1 Q2 Q3 Q4 Year Q1 (units) (%) (units) (%) Selling prices (average) 1 Casc
Slide 31: Notes
NOTES 1. The Cascades North American selling prices index represents an approximation of the Corporation'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 operati