CASCADES INC. 2016 Industrial & Construction Conference May 11, 2016
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 Cascades Inc. ’s (“Cascades,” “CAS,” the “Company,” the “Corporation,” “us” or “we”) 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 Company. 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 Company uses operating income before depreciation and amortization (“OIBD” which, for purposes of this presentation, we call “EBITDA”) and operating income before depreciation and amortization (excluding specific items) (“OIBD (excluding specific items)” which, for purposes of this presentation, we call “EBITDA (excluding specific items)”) because such measures are used by management to assess the operating and financial performance of the Company’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 or reversal of impairment of assets, for facility or machine closures, accelerated depreciation of assets due to restructuring measures, premiums paid on long-term debt refinancing, loss on refinancing of long-term debt, gains or losses on sales of business units, unrealized gains or losses on derivative financial instruments that do not qualify for hedge accounting, unrealized gains or losses on interest rate swaps, foreign exchange gains or losses on long-term debt, other significant items of an unusual or non-recurring nature, and all such items included in discontinued operations or in the share of results of our associates and joint ventures. All amounts in this presentation are in Canadian dollars unless otherwise indicated. 2
COMPANY OVERVIEW LTM 3/31/16 Net Sales $3,954 million Segment Sales Breakdown 1 • Founded in 1964 by the Lemaire family and headquartered in Kingsey Falls, QC 15% Containerboard • Produces, converts and markets packaging and 33% Tissue Papers tissue products principally composed of recycled 20% fibre Boxboard Europe Specialty Products • Balanced play in less cyclical sectors 32% • Heavy exposure to two of the strongest paper LTM 3/31/16 EBITDA $447 million segments: Tissue and Containerboard Segment EBITDA Breakdown 1, 2 • Market leader across many of its primary product offerings 13% • Unique culture – green visionaries, turnarounds, Containerboard 13% entrepreneurial philosophy Tissue Papers 47% Boxboard Europe • ~11,000 employees worldwide Specialty Products 27% 1 Before inter-segment sales and corporate activities 2 EBITDA excluding specific items 3
COMPANY OVERVIEW Leading Packaging and Tissue Paper Manufacturer Packaging Products Tissue Papers Containerboard Boxboard Europe Specialty Products • One of the Canadian • # 1 in Canada Position • # 2 in coated recycled • Largest paper collector in Market leaders boxboard in Europe Canada • # 5 in North America • # 6 in North America 3 • 33% of Sales 1 • 20% of Sales 1 • 15% of Sales 1 • 32% of Sales 1 LTM 3/31/16 Financials • 47% of EBITDA 1,2 • 13% of EBITDA 1,2 • 13% of EBITDA 1,2 • 27% of EBITDA 1,2 • EBITDA Margin 2 : 18% • EBITDA Margin 2 : 7% • EBITDA Margin 2 : 10% • EBITDA Margin 2 : 11% 1 Before inter-segment sales and corporate activities 2 Excluding specific items 4 3 Including 100% of Greenpac’s capacity
COMPANY OVERVIEW Sales and Operations Across North America and Europe Sales from (in %) Sales to (in %) Europe Europe 23% 23% Canada 37% 50% Canada 27% 40% US US Operating Units (in %) PP&E by Geographic Segment (in %) Europe Europe 9% 19% US 31% 52% 60% Canada Canada 29% US 5 Note: Figures as of December 31, 2015
GEOGRAPHICALLY DIVERSIFIED 6
COMPANY OVERVIEW Closed-loop Business Model Recovery Manufacturing 2 • Containerboard 6 units • 19 units 80% recycled fibre (2.6M tons) • Boxboard Europe: 6 units NA integration rate (2015): • Specialty Products: 3 units 28% (0.44M tons) • Tissue Papers: 11 units 26 units CLIENTS NA integration rate (2015) • Containerboard 1 64% • Tissue Papers 67% Finished Products Converting 2 • Trims and rejects sent to • Containerboard: 18 units recycling centers • Specialty Products: 17 units • Tissue Papers: 13 units 48 units Upstream and downstream integration in North America 1 Integration rate for our containerboard activities in North America (considering 100% of Greenpac’s production as internal capacity) 7 2 Including Reno De Medici’s units and Greenpac. Also including four manufacturing/converting tissue papers units which are cou nted in both Converting and Manufacturing.
RAW MATERIALS Reliable Sourcing Strategy Cascades’ North American Recycled Fibre Supply Top Recovered Paper Suppliers in the World (M Tonnes) 2015 1 6 Recovery & 5 Internal 25% 4 Most of the fibre supply coming 3 Spot Regular and from internal 2 25% Steady Volume sources, contracts 1 (Noncontractual) and regular 27% 0 streams Contractual Agreements 23% Source: RISI Our Strategy • Constant review of our inventory strategy • Continue to increase integration rate with CAS’ other segments • Ensure control over fibre supply with potential to increase tons under control • Potential to increase virgin content in certain circumstances • Develop substitute grades • Continue to close the loop with customers & retailers 8 1 Including volume treated for Greenpac
OPERATING PERFORMANCE AND FINANCIAL SITUATION Strong Financial Momentum Sales EBITDA (excl. specific items) (M CAN$) (M CAN$) 4,250 500 18.0% 3,954 447 4,000 450 16.0% 3,861 426 3,750 400 14.0% 3,561 340 342 3,500 350 12.0% 3,370 285 3,250 300 10.0% 3,141 250 8.0% 3,000 2,750 200 6.0% 2012 2013 2014 2015 LTM 3/31/16 2012 2013 2014 2015 LTM 3/31/16 Improved results reflect improved productivity, FX and stable raw material & energy costs 9
OPERATING PERFORMANCE AND FINANCIAL SITUATION Historical Segmented EBITDA Containerboard Boxboard Europe (M CAN$) (M CAN$) 300 100% 100 100% 234 231 250 80% 80 80% 72 63 62 57 200 60% 60 60% 164 43 150 150 40% 40 40% 100 90 20% 20 20% 50 0% 0 0% 2012 2013 2014 2015 LTM 3/31/16 2012 2013 2014 2015 LTM 3/31/16 Specialty Products Tissue Papers (M CAN$) (M CAN$) 100 100% 150 100% 138 138 133 119 80 80% 125 80% 62 58 96 60 60% 100 60% 41 37 40 40 40% 75 40% 20 20% 50 20% 0 0% 25 0% 2012 2013 2014 2015 LTM 3/31/16 2012 2013 2014 2015 LTM 3/31/16 10 Green line represents segment EBITDA as percent of total Company EBITDA; EBITDA excluding specific items
OPERATING PERFORMANCE AND FINANCIAL SITUATION Cash Flow and Free Cash Flow per Share Cash Flow From Operating Activities 1 Free Cash Flow per Share 1,2 (CAN$) (M CAN$) 2.00 400 358 337 1.60 1.58 277 1.50 300 0.86 233 1.00 0.78 200 155 0.50 100 0.00 (0.28) 0 (0.50) 2012 2013 2014 2015 LTM 3/31/16 2012 2013 2014 2015 LTM 3/31/16 • Cash flows have grown at a 29% CAGR since 2012 Improving cash flows driven by Strategic • Action Plan Objective of ~$100M of free cash flow annually directed toward debt reduction 1 Excluding specific items 2 Excluding increase in investments 11
OPERATING PERFORMANCE AND FINANCIAL SITUATION Capital Expenditures • 2016 level to be slightly higher at ~$185M, Capital Expenditures including IT (M CAN$) • Mainly growth Capex 200 184 185 184 • Mostly towards US 173 161 150 Capex Distribution for FY2015 – $173M Corporate 100 2012 2013 2014 2015 2016B Specialty 9% Products 8% • Divestitures and free cash flow have funded capital expenditures Containerboard Boxboard 13% 37% Europe Tissue Papers 33% 12
OPERATING PERFORMANCE AND FINANCIAL SITUATION Debt Maturities Debt Repayment as at March 31, 2016 1,000 • Over last 24 months, $1 billion+ of senior notes refinanced 714 • Extended maturities to 2021, 750 2022 and 2023 • $750 million revolving facility 500 extended to 2019 325 282 250 250 • Average interest rate down 112 bps 132 33 to 4.93% in 2015 from 6.05% in 2013 0 • Resulted in interest savings of 1 year > 1 year 2019 2021 2022 2023 ~$23 million annually Debts without recourse Subsidiaries debts Revolver Senior notes Refinancings in 2014 and 2015 resulting in +US$20 million interest savings 13
Recommend
More recommend
