Cascades Inc. · TSX:CAS
Cascades — Q4 2015 Earnings Presentation
32 slides from Cascades's earnings presentation, Mar 11, 2016
Slide 1: Review of Q4 and Full Year 2015 Financial Results
CASCADES INC. Review of Q4 and Full Year 2015 Financial Results March 11, 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 ( 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 93 103 104 100 90 82 12% $0.40 75 85 $0.25 75 10% $0.30 $0.23 $0.18 50 8% $0.20 $0.08 $0.08 25 6% $0.10 $0.01 $0.04 0 4% $0.00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2014 2014
Slide 5: Historical Segmented EBITDA
HISTORICAL SEGMENTED EBITDA1 Containerboard Boxboard Europe (M CAN$) (% of sales) (M CAN$) (% of sales) 75 30% 28 16% 68 24 55 56 20 19 60 24% 21 12% 52 17 46 44 14 14 14 13 45 43 18% 14 8% 31 30 12% 7 4% 15 6% 0 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2014 2014 2014 2015 2015 2015 2
Slide 6: Segmented EBITDA Waterfalls
SEGMENTED EBITDA WATERFALLS1 Containerboard Boxboard Europe Selling Acqu. Acqu. Selling EBITDA Raw Other EBITDA EBITDA Other Raw EBITDA (M CAN$) Prices & & CAN$ Energy Volume (M CAN$) CAN$ & Energy Volume Prices & Q3-2015 Materials Costs Q4-2015 Q3-2015 Costs Materials Q4-2015 Mix Divest. Divest. Mi
Slide 7: Key Performance Indicators (KPIs)
KEY PERFORMANCE INDICATORS (KPIs) Containerboard: 90% Boxboard Europe: 89% Tissue Papers: 89% ('000 s.t.) 2 Total Shipments Capacity Utilization Rate (Manufacturing only) 770 800 100% 750 742 764 96% 738 721 715 716 93% 93% 93% 93% 93% 700 95% 90% 89% 600 90% 500 85% 400 80% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 8: Raw Material Costs
RAW MATERIAL COSTS Recycled Fibre North American Current Virgin Pulp prices Current (US$/ton) (US$/ton) 200 List Prices (March) 1,100 (February) 1,000 150 153 940 900 875 100 85 800 50 700 Nov 12 Nov 14 Nov 13 Nov 15 Dec 12 Mar 13 Sept 13 Sept 14 Feb 14 Feb 15 Feb 16 June 13 Dec 13 Mar 14 June 14 De
Slide 9: Financial Review
FINANCIAL REVIEW ( 10 8Mee
Slide 10: Q4 2014 – Q4 2015 Sales Reconciliation
Q4 2014 – Q4 2015 SALES RECONCILIATION (M CAN$) +11% 1,000 25 1 975 975 - 73 (1) (2) 950 925 900 879 0 Selling Recovery Sales Acqu. & Corp. Sales CAN$ Prices & Volume Q4-2014 Disposals Elim. Q4-2015 & Mix Recycling (M CAN$) Containerboard 295 21 20 (9) (1) 326 Boxboard Europe 196 6 1 (1) 202 Special
Slide 11: Q4 2014 – Q4 2015 EBITDA Variance Analysis
Q4 2014 – Q4 2015 EBITDA VARIANCE ANALYSIS (M CAN$) +27% 140 5 130 9 - (1) 120 11 110 25 104 100 (27) 90 82 0 Selling EBITDA Raw Acqu. & Other EBITDA Prices & CAN$ 1 Energy Volume Q4-2014 Materials Disposals Costs Q4-2015 Mix (M CAN$) Containerboard 44 20 3 1 (3) (9) 56 Boxboard Europe 14 (2) 1 13 S
Slide 12: Q3 2015 – Q4 2015 EBITDA Variance Analysis
Q3 2015 – Q4 2015 EBITDA VARIANCE ANALYSIS (M CAN$) -22% 160 8 15 - 150 (1) (2) 140 134 130 (23) 120 110 104 (27) 0 Selling EBITDA Raw Acqu. & Other EBITDA Prices & 1 CAN$ Energy Volume Q3-2015 Materials Disposals Costs Q4-2015 Mix (M CAN$) Containerboard 68 4 5 (1) (8) (12) 56 Boxboard Europe 14 (3
Slide 13: Quarterly EPS Variance
QUARTERLY EPS VARIANCE Q3-2015 Q4-2015 Excluding Excluding specifics Specifics As reported specifics Specifics As reported EBITDA 134 (12) 122 104 (60) 44 Depreciation (45) (45) (57) (57) EBIT 89 (12) 77 47 (60) (13) Financing expenses (21) (1) (22) (22) 0 (22) Interest expense on employee future be
Slide 14: Q4 2015 EBITDA to Operating Income Reconciliation
Q4 2015 EBITDA TO OPERATING INCOME RECONCILIATION (M CAN$) 120 104 100 80 60 47 1 40 (57) (4) 20 0 (20) (57) (13) (40) EBITDA Depr. & Op. income Restructuring Unrealized loss on Impairment Operating excluding amort. excluding gain financial charges income spec. items spec. items instruments Containe
Slide 15: Cash Flow Overview
CASH FLOW OVERVIEW 1, 2 Cash flows from continuing operations, adjusted 1 Free cash flows, adjusted (M CAN$) (M CAN$) 120 80 75 110 106 100 60 86 49 80 73 40 32 60 35 20 13 40 20 0 (7) 0 (20) Q4-2014 Q1-2015 Q2-2015 Q3-2015 Q4-2015 Q4-2014 Q1-2015 Q2-2015 Q3-2015 Q4-2015 2014 2015 (in millions of CA
Slide 16: Net Debt Reconciliation – Q4-2015
NET DEBT RECONCILIATION – Q4-2015 (M CAN$) -1% 1,750 1,741 49 1,721 1,700 42 1,650 33 (107) 3 1,600 - (30) (10) 1,550 1,500 Net Debt Cash flow Var. in non- Investments Dividends Discontinued Minority F/X Rate Capital Net Debt 09/30/2015 from cash work. and others paid & shares operations interest in
Slide 17: Net Debt Reconciliation – 2015
NET DEBT RECONCILIATION – 2015 (M CAN$) +7% 1,800 210 1,721 1,700 1,613 1,600 159 1,500 1,400 38 35 1,300 10 23 (337) 1,200 (30) 1,100 Net Debt Cash flow Discontinued Dividends Refinancing Minority Var. in non- Capital F/X Rate Net Debt 12/31/2014 from operations paid & shares and interest cash work
Slide 18: Consolidated Financial Ratios & Debt Maturities
CONSOLIDATED FINANCIAL RATIOS & DEBT MATURITIES Net Debt / LTM EBITDA Interest Coverage Ratio 4.7x 7.0x 5.0x 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 4.0x 2.0x 3.0x 1.0x 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Net Debt / Net Debt + Total Equity Long-Term Debt Maturi
Slide 19: Proportionate Consolidation
PROPORTIONATE CONSOLIDATION Proportionate As reported (IFRS) 1 (in millions of Canadian dollars) consolidation Selected financial data 2015 Q4-2015 2015 Q4-2015 Q3-2015 Sales 3,861 975 3,747 952 999 Adjusted EBITDA excluding specific items 426 104 463 114 144 Adjusted EBITDA excluding specific items
Slide 20: Segmented Review
SEGMENTED REVIEW ( 10 8Mee
Slide 21: Packaging Products / Containerboard
PACKAGING PRODUCTS / CONTAINERBOARD Results Change vs. Comments on sequential performance Q4 2015 Q3 2015 Q4 2014 Shipments ('000 s.t.) External shipments decreased for both the mills (13%) and the corrugated box 268 -9% -3% activities (7%). Average selling price (CAN$/unit) 1,217 2% 14% Higher
Slide 22: Packaging Products / Boxboard Europe
PACKAGING PRODUCTS / BOXBOARD EUROPE Results Change vs. Comments on sequential performance Q4 2015 Q3 2015 Q4 2014 Shipments ('000 s.t.) Lower shipments for recycled grades due to a weak European demand in Q4. 263 -1% 0% Higher shipments for virgin grades. Average selling price Slight price de
Slide 23: Packaging Products / Specialty Products
PACKAGING PRODUCTS / SPECIALTY PRODUCTS Results Change vs. Comments on sequential performance Q4 2015 Q3 2015 Q4 2014 Shipments decreases sequentially for the majority of the sub-segments due to Shipments ('000 s.t.) seasonality and production downtime mainly in the Industrial Packaging segment. 4
Slide 24: Tissue Papers
TISSUE PAPERS Results Change vs. Comments on sequential performance Q4 2015 Q3 2015 Q4 2014 Lower shipments in all converted product markets, resulting in a 5% decrease in Shipments ('000 s.t.) shipments due to the usual seasonality. 145 -11% 1% Parent roll shipments decreased by 20% due to seas
Slide 25: Q&A and Concluding Remarks
Q&A AND CONCLUDING REMARKS ete Ne] By
Slide 26: Near Term Outlook
NEAR TERM OUTLOOK • Favourable FX environment • Higher prices for recovered white papers + • Continued implementation of FX-related price • Potential decrease in prices in Europe for I increases for corrugated boxes recycled boxboard (WLC) • Higher volume in Q1 • Decrease in index price for linerboa
Slide 27: Appendix
APPENDIX
Slide 28: Foreign Exchange
FOREIGN EXCHANGE US$/CAN$ Exchange rates Euro€/CAN$ Hedging Program – USD Cash flows 1.10 1.00 2016 1.00 0.90 • 30% to 60% of exposure (net of interest) hedged at an average rate of 1.14 CAN$/US$ to 1.17 CAN$/US$ 0.90 0.80 2017 0.80 0.70 • 20% to 40% of exposure (net of interest) hedged at an averag
Slide 29: Energy Prices
ENERGY PRICES Natural gas Energy prices Crude oil Hedging Program – Natural gas (US$) (US$) 8.00 110 • Canada: 7.00 100 • 2016: 70% at 3.89 CAN$/GJ 6.00 90 5.00 80 • 2017: 57% at 3.94 CAN$/GJ 4.00 70 3.00 60 • U.S.: 2.00 50 • 2016: 41% at 4.47 US$/mmBtu 1.00 40 0.00 30 • 2017: 40% at 3.92 US$/mmBtu
Slide 30: Selected Reference Prices
SELECTED REFERENCE PRICES Containerboard - Selected Products Boxboard Europe - Selected Products Current (US$/s.t.) Current (Euro€/m.t.) (Dec.) 800 1,200 (Feb.) 1,100 750 1,061 725 1,000 700 900 650 645 800 700 600 674 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 Q4 2015 Q4 2015 Year 2015 over our actual selling prices or purchasing costs 2014 2015 over Q4 2014 over Q3 2015 Year 2014 Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year (units) (%) (unit
Slide 32: For more information
For more information: www.cascades.com/investors Investor Relations 514-282-2697 or [email protected] 32