CASCADES INC. Bank of America Merrill Lynch 2013 Leveraged Finance - PowerPoint PPT Presentation

CASCADES INC. Bank of America Merrill Lynch 2013 Leveraged Finance Conference December 3, 2013

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 and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, decreases in demand for the Corporation’s products, the prices and availability of raw materials, changes in the relative values of certain currencies, fluctuations in selling prices and adverse changes in general market and industry conditions. This presentation may also include price indices as well as variance and sensitivity analyses that are intended to provide the reader with a better understanding of the trends related to our business activities. These items are based on the best estimates available to the Corporation. The financial information included in this presentation also contains certain data that are not measures of performance under IFRS (“non-IFRS measures”). For example, the Corporation uses earnings before interest, taxes, depreciation and amortization (EBITDA) because it is the measure used by management to assess the operating and financial performance of the Corporation’s operating segments. Such information is reconciled to the most directly comparable financial measures, as set forth in the “Supplemental Information on Non-IFRS Measures” section of our most recent quarterly report or annual report. Specific items are defined as items such as charges for impairment of assets, for facility or machine closures, accelerated depreciation of assets due to restructuring measures, debt restructuring charges, gains or losses on sales of business units, unrealized gains or losses on derivative financial instruments that do not qualify for hedge accounting, foreign exchange gains or losses on long-term debt and other significant items of an unusual or non- recurring nature. All amounts in this presentation are in Canadian dollars unless otherwise indicated. 2

INTRODUCTION Where we come from  • Unique culture – green visionaries, turnarounds, entrepreneurial philosophy • Business model challenged with dollar near parity + volatile recycled fibre costs Our recent performance and financial situation • Cost inflation in 2011/2012 but less volatile cost environment at the moment  • Low economic growth in Canada and Europe but potential for a weaker CAD$ • Productivity and profitability improving  more to come • 2011 left us with an over-levered balance sheet but no immediate maturity Our action plan  • Started at the end of 2011: a lot has been done but not completed yet • Investments reflected on balance sheet but not yet in results • New state-of-the-art Greenpac mill ramping-up according to plan Doing all the right things to improve a success story 3

OVERVIEW OF OUR OPERATIONS Green packaging and tissue product offering Packaging Products Tissue Papers Containerboard Boxboard Europe Specialty Products 1 st containerboard 1 st tissue paper 2 nd 1 st producer of in Canada producer in Canada producer paper collector in 6 th in North America 4 th in North America in Europe Canada Leading NA packaging and tissue manufacturer with substantial recycling capabilities 4

OVERVIEW OF OUR OPERATIONS Closed-loop business model 100+ business units 77% recycled fibre (2.9M tons) NA integration rate (2012): CLIENTS 23 units 34% (520K tons) 33 units 2 Trims and rejects sent to recycling centers NA integration rate (YTD 2013): • Containerboard Group 1 : 53% 57 units 2 • Tissue Papers Group: 69% Upstream and downstream integration in North America 1 Combined integration rate for our containerboard and boxboard activities in North America. 5 2 Including Reno De Medici’s units. Also including seven manufacturing/converting tissue papers units which are counted in both Converting and Manufacturing.

OVERVIEW OF OUR OPERATIONS Balanced play in less cyclical sectors Cascades LTM Sales: $3,795M LTM EBITDA: $317M EBITDA Margin: 8% Packaging Products Tissue Papers 74% of Sales 26% of Sales 62% of EBITDA 38% of EBITDA EBITDA Margin: 13% Containerboard Boxboard Europe Specialty Products 33% of Sales 21% of Sales 20% of Sales 36% of EBITDA 12% of EBITDA 14% of EBITDA EBITDA Margin: 10% EBITDA Margin: 5% EBITDA Margin: 7% LTM figures as at 09/30/2013. EBITDA excluding specific items. Breakdown of sales and EBITDA before eliminations & corporate activities. Exposure to two healthiest sectors in the Pulp and Paper industry 6

OUR FINANCIAL PERFORMANCE Historical performance EBITDA Sales (M CAN$) (M CAN$) 500 4,500 465 3,929 4,017 3,877 400 4,000 3,795 350 2 310 3,625 3,645 315 317 306 304 1 3,500 300 3,278 3,182 229 3,000 200 2,500 100 2006 2007 2008 2009 2010 2011 2012 09/30/13 2006 2007 2008 2009 2010 2011 2012 09/30/13 LTM LTM IFRS IFRS CANADIAN GAAP CANADIAN GAAP EBITDA excluding specific items. Note 1 – Elimination of joint venture consolidation Note 2 – Impact of Dopaco divestiture and elimination of joint venture consolidation Results progressing as productivity, FX and pricing environment improve 7

OUR FINANCIAL PERFORMANCE Historical segmented EBITDA Containerboard Boxboard Europe Containerboard Boxboard Europe (M CAN$) (M CAN$) (% of sales) (% of sales) 48 16% 20 12% 42 36 12% 15 9% 33 13 11 11 27 26 9 25 25 10 10 11 23 10 21 24 19 8% 10 6% 7 12 4% 5 3% 0 0% 0 0% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2011 2011 2012 2012 2012 2012 2013 2013 2013 2011 2011 2012 2012 2012 2012 2013 2013 2013 Specialty Products Tissue Papers Specialty Products Tissue Papers (M CAN$) (% of sales) (M CAN$) (% of sales) 20 12% 44 20% 39 39 35 16 15 15 15 33 33 31 29 15 9% 33 15% 13 28 11 11 10 6% 22 18 10% 8 5 3% 11 5% 2 0 0% 0 0% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2011 2011 2012 2012 2012 2012 2013 2013 2013 2011 2011 2012 2012 2012 2012 2013 2013 2013 8 EBITDA excluding specific items.

OUR BUSINESS DRIVERS – PRICES Containerboard - Selected Products Tissue Papers - Parent rolls (US$/s.t.) (US$/s.t.) 1 100 1 600 20-pt clay coated news (CRB) Linerboard 42-lb 1 500 1 000 Corrugating medium 26-lb 1 400 900 1 300 800 1 200 700 1 100 600 Virgin parent rolls 1 000 Recycled parent rolls 500 900 400 800 juil.-10 sept.-10 nov.-10 janv.-11 mars-11 mai-11 juil.-11 sept.-11 nov.-11 janv.-12 mars-12 mai-12 juil.-12 sept.-12 nov.-12 janv.-13 mars-13 mai-13 juil.-13 sept.-13 juil.-10 sept.-10 nov.-10 janv.-11 mars-11 mai-11 juil.-11 sept.-11 nov.-11 janv.-12 mars-12 mai-12 juil.-12 sept.-12 nov.-12 janv.-13 mars-13 mai-13 juil.-13 sept.-13 • Two price increases in 2013 after 28 months • Additional capacity coming to market and of flat pricing ample supply of recovered papers having an impact on the price of recycled parent rolls Price increases in containerboard have been beneficial 9

OUR BUSINESS DRIVERS – ENERGY AND FX Energy costs higher than last year A weaker CAN$ would be a game changer 1 Energy prices Natural gas Crude oil Exchange rates US$/CAN$ €/CAN$ (US$) (US$) 7.00 110 1.10 0.95 6.00 100 1.05 0.90 5.00 90 1.00 0.85 4.00 80 0.95 0.80 3.00 70 0.90 0.75 2.00 60 0.85 0.70 1.00 0.00 50 0.80 0.65 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q1-11 Q2-11 Q3-11 Q4-11 Q4-10 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 US$/CAN$ €/CAN$ Natural gas (US$/mmBtu) Crude oil (US$/barrel) 2011 2012 2013 Change • US$/CAN$ forecasts by top Canadian banks Q3 2013 Q3 2013 Year Year Q3 Q3 2012 Q2 2013 Averages • Range 2014  0.90 to 0.99 (average 0.95) Energy prices • Range 2015  0.93 to 0.98 (average 0.96) Natural gas Henry Hub (US$/mmBtu) 4.04 2.79 3.58 28% -13% Crude oil WTI (US$/barrel) 94.01 94.92 102.42 14% 11% Stronger CAN$ and significant variable cost inflation negatively impact results Source: Bloomberg 10 1 EBITDA sensitivity of $7M to every change of C$0.01 vs $US; balance sheet impact on US debt conversion

OUR BUSINESS DRIVERS – RAW MATERIAL COSTS Recycled Fiber North American List US OCC Costs Highly Correlated with Prices Asian Board Market (US$/ Recycled Fiber North American ton) List Prices Greenpac 300 4,500 300 GreenFence start-up 270 program 250 4,000 July 15 240 Current 210 200 3,500 (October) 180 155 150 3,000 150 120 120 100 2,500 90 50 2,000 60 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Dec 2008 Mar 2009 Dec 2009 Mar 2010 Dec 2010 Mar 2011 Dec 2011 Mar 2012 Dec 2012 Mar 2013 Jun 2009 Sep 2009 Jun 2010 Sep 2010 Jun 2011 Sep 2011 Jun 2012 Sep 2012 Jun 2013 Sep 2013 Kraft-Top liner 175g - Domestic Price - China (RMB/tonne) White grades (SOP) Brown grades (OCC) OCC (11) - US - LA/SF export to China - CFR (US$/ton) • Experts estimate Chinese collection rate at approx. 46% • Will increase as domestic consumption increases No significant short term increase expected in recovered paper prices 11 Sources: RISI, PPI International