INVESTOR PRESENTATION: CIBC EASTERN INSTITUTIONAL …€¦ · 1 Including joint ventures.2 Via our...
Transcript of INVESTOR PRESENTATION: CIBC EASTERN INSTITUTIONAL …€¦ · 1 Including joint ventures.2 Via our...
INVESTOR PRESENTATION:
CIBC EASTERN INSTITUTIONAL INVESTOR CONFERENCE,MONTREAL
September 27, 2017
DISCLAIMER
2
FORWARD-LOOKING STATEMENTCertain statements in this presentation, including statements regarding future results and performance, are forward-looking statements within the meaning of securities legislationbased 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 fromthose 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 adversechanges 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 thereader with a better understanding of the trends related to our business activities. These items are based on the best estimates available to the Corporation.
SUPPLEMENTAL INFORMATION ON NON-IFRS MEASURES – SPECIFIC ITEMSThe Corporation incurs some specific items that adversely or positively affected its operating results. We believe it is useful for readers to be aware of these items, as they provideadditional information to measure the performance, compare the Corporation's results between periods and to assess operating results and liquidity, notwithstanding these specificitems. Management believes these specific items are not necessarily reflective of the Corporation underlying business operations in measuring and comparing its performance andanalyzing future trends. Our definition of specific items may differ from those of other corporations and some of them may arise in the future and may reduce the cash available to us.
They include, but are not limited to, charges for (reversals of) impairment of assets, restructuring gains or costs, loss on refinancing of long-term debt, some deferred tax assetsprovisions or reversals, premiums paid on long-term debt refinancing, gains or losses on the acquisition or sale of a business unit, gains or losses on the share of results of associatesand joint ventures, unrealized gains or losses on derivative financial instruments that do not qualify for hedge accounting, unrealized gains or losses on interest rate swaps, foreignexchange gains or losses on long-term debt, specific items of discontinued operations and other significant items of an unusual, non-cash or non-recurring nature.
RECONCILIATION OF NON-IFRS MEASURESTo provide more information for evaluating the Corporation's performance, the financial information included in this analysis contains certain data that are not performance measuresunder IFRS (“non-IFRS measures”) which are also calculated on an adjusted basis to exclude specific items. We believe that providing certain key performance measures and non-IFRS measures is useful to both management and investors as they provide additional information to measure the performance and financial position of the Corporation. It alsoincreases the transparency and clarity of the financial information. The following non-IFRS measures are used in our financial disclosures:
- Operating income before depreciation and amortization (OIBD): Used to assess operating performance and contribution of each segment when excluding depreciation &amortization. OIBD is widely used by investors as a measure of a corporation ability to incur and service debt and as an evaluation metric.
- Adjusted OIBD: Used to assess operating performance and contribution of each segment on a comparable basis.- Adjusted operating income: Used to assess operating performance of each segment on a comparable basis.- Adjusted net earnings: Used to assess the Corporation‘s consolidated financial performance on a comparable basis.- Adjusted free cash flow: Used to assess the Corporation’s capacity to generate cash flows to meet financial obligation and/or discretionary items such as share repurchase,
dividend increase and strategic investments.- Net debt to adjusted OIBD ratio: Used to measure the Corporation's credit performance and evaluate the financial leverage.
Non-IFRS measures are mainly derived from the consolidated financial statements but do not have meanings prescribed by IFRS. These measures have limitations as an analyticaltool, and should not be considered on their own or as a substitute for an analysis of our results as reported under IFRS. In addition, our definitions of non-IFRS measures may differfrom those of other corporations. Any such modification or reformulation may be significant.
All amounts in this presentation are in Canadian dollars unless otherwise indicated.
Please click here for the 2016 supplemental information on non-IFRS measures.Please click here for the Q2 2017 supplemental information on non-IFRS measures.
31 Including joint ventures. 2 Via our 57.7% equity ownership in Reno de Medici S.p.A. (RdM) 3 As of September 22, 2017
INVESTMENT THESIS
50+ Years of
Production &
Focus on
Sustainable
Development
& Innovation
• Founded in 1964 by the Lemaire brothers in Kingsey Falls, Quebec,
Canada
• 89 facilities1, 11,000 employees, operations in Canada, US & Europe2
• 80% of Cascades’ products are made with recycled fibres
• “Closed-Loop” business model: Recovery & Recycling →
Manufacturing → Converting → Customers
Publicly
Traded for
over 30 Years
• 94.7 M common shares (~ 30% held by founders & directors)
• Market cap3: CAN$1.54 B; TSX avg. volume3: 228,800 shares
• S&P/TSX Composite Index (added June 19/17), S&P/TSX Clean
Technology Index, S&P/TSX Small Cap Index, BMO Small Cap Index
• Corporate credit ratings: Moody’s: Ba2 (Stable), S&P: BB- (Stable)
Diversified
Player, Strong
Competitive
Positioning
Cascades’ has leading market positions in our targeted focus areas:
# 6 containerboard producer in North America
# 5 tissue producer in North America
# 2 coated recycled boxboard producer in Europe1
# 1 paper collector in Canada, top 10 worldwide
4
INVESTMENT THESIS
WHERE WE’VE BEEN….
We repositioned, invested & restructured over 2011 – 2016
• Invested more than $500M in modern equipment
• $125M in annual working capital savings
• Refocused our NA platform on growing packaging & tissue segments
WHERE WE ARE GOING….
We are focused on strategic growth & capital allocation over 2017 – 2022:
• Organic growth, increasing integration, optimizing our footprint, investing in state of the art equipment
• Monetize important benefits from significant IT & internal processes optimizations
• Continue to differentiate via innovation, customer focus, our sustainable product offerings
5
✓ Revenues: $4,136 M
✓ Adj. EBITDA: $367 M
✓ Adjusted EBITDA margin: 8.9%
✓ Adj. CF Ops.: $277 M
✓ Shipments: 3,124 (‘000 s.t.)
✓ ROCE: 3.8%
✓ Working capital (% of sales): 10.5%
✓ Net debt/Adjusted EBITDA3: 4.2x
1 Via 57.7% equity ownership in Reno de Medici S.p.A. (RdM)2 Greenpac Mill results are included for Q2 but not prior periods, unless otherwise noted.3 Pro-forma for the consolidation of Greenpac on a LTM basis. Supplemental information on non-IFRS measures for 2016 and Q2-2017.
INVESTMENT THESIS
Sales by Segment
% before inter-segment sales
34%
19%16%
31%Containerboard
Boxboard Europe1
Specialty Products
Tissue Papers
LTM Q2-2017
sales $4,136M
Financial Metrics
2016 Sales by Geography
LTM Q2 20172
2016 SALES TO (DESTINATION)
2016 SALES FROM(SOURCE)
39%
39%
22%
51%
28%
21% Europe1
U.S.
Canada
Export: ~ 25% of our Canadian sales
6
1 Via our 57.7% equity
ownership in Reno de
Medici S.p.A. (RdM)
1
INVESTMENT THESISInternational Footprint Provides Geographic Diversification
72016 capacity. 1 Including joint ventures. 2 Via our 57.7% equity ownership in Reno de Medici S.p.A. (RdM) 3 Containerboard capacity includes Greenpac Mill capacity of 540,000 s.t.
INVESTMENT THESISPaper & Packaging Provides Operational Diversification
6 Manufacturing 4 Canada / 2 US 1.53 M s.t.
18 Converting 14 Canada / 4 US 12.6 million ft
7 Manufacturing 2 Canada / 5 US 380,000 s.t.
10 Converting 2 Canada / 8 US –
4 Manufacturing/Converting 3 Canada / 1 US 270,000 s.t.
5 Recycled boxboard 3 Italy / 1 Germany / 1 France 885,000 m.t.
1 Virgin boxboard France 165,000 m.t.
2 Manufacturing Canada 165,000 s.t.
6 Consumer product packaging 4 Canada / 2 US 58.9 M Kg
11 Industrial packaging 5 Canada / 4 US / 2 Europe 353,000 s.t.
19 Recovery & Recycling facilities 16 Canada / 3 US 1.37 M s.t.
Containerboard1,3
→ 24 facilities
Tissue1
→ 21 facilities
Europe2
→ 6 facilities
SpecialtyProducts1
→ 38 facilities
TYPE OF
FACILITY
ANNUAL
CAPACITY
FACILITY
LOCATION
BUSINESS
SEGMENT
8
Packaging End Markets Tissue End Markets
4%
42%
22%
15%
17%
Retail -branded
Retail -private label
Afh -branded
AfH -private label
Parent rolls
44%
21%
19%
10%
6%Food &Beverage
Papers &Wood
Other
Chemicals &Plastics
Agriculture &Meat
INVESTMENT THESISDiversified End Markets & Customer Base
% of 2016 N.A. Sales of Corrugated Boxes by Industry % of 2016 N.A. Sales by Market
9
✓ Full implementation of linerboard and medium price increases in containerboard
✓ Benefits from business process modernization and implementation of ERP platform
✓ Ramp-up of new state of the art tissue converting facility in Oregon
✓ New containerboard facility in NJ with expected start-up in Q2/18
✓ Announced price increases in European Boxboard division
✓ Away-from-Home price increases announced in Tissue
✓ Fluctuations in raw material pricing – OCC, SOP, pulp
✓ Increased competitiveness and capacity additions in tissue segment
✓ Rumored and announced plant conversions in containerboard
✓ Canadian dollar exchange rate – USD and euro
Tailwinds
Headwinds
INVESTMENT THESISNear-Term Business Drivers
FINANCIAL OVERVIEW
10
72
176
137153
221
162
2.3%
5.2%
3.8% 4.0%
5.5%
3.9%
0.0%
2.0%
4.0%
6.0%
8.0%
0
50
100
150
200
250
2012 2013 2014 2015 2016 LTMQ2-17
285342 340
426 403367
9.1%10.1% 9.5%
11.0%10.1%
8.9%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
020406080100120140160180200220240260280300320340360380400420440460
2012 2013 2014 2015 2016 LTMQ2-17
11
OPERATING PERFORMANCE AND FINANCIAL SITUATIONStrong Financial Profile
3,1413,370
3,5613,861
4,001 4,136
2500
3000
3500
4000
4500
2012 2013 2014 2015 2016 LTMQ2-17
CAGR: + 6.3%
Sales (CAN$ M) Operating Income & Margin (CAN$ M and %)
CAGR: + 19.7%
1 Supplemental information on non-IFRS measures for 2016 and Q2-2017.
Adjusted OIBD1 & Margin (CAN$ M and %)
CAGR: + 6.5%
Adjusted Free Cash Flow per Share1(CAN$)
($0.28)
$0.78 $0.86
$1.58
$1.20
$0.85
2012 2013 2014 2015 2016 LTMQ2-17
713
324
561
52
169
1 year >1 year 2021 2022 2023
Senior notes Revolver
Debts without recourse Subsidiaries debts
Bank debt financial covenant ratios: Net funded debt to capitalization < 65% (currently at 47.60%), interest coverage ratio > 2.25x (currently at 3.98x).1 Supplemental information on non-IFRS measures for 2016 and Q2-2017.2 OIBD to interest expense.3 Pro-forma for the consolidation of Greenpac on a LTM basis. Leverage ratio stands at 3.5x on a pro-forma basis following sale of Boralex investment in July 2017.
12
Revolving credit facility pushed from 2019 to 2021
5.0x 4.6x 4.7x4.0x 3.8x 4.2x
2012 2013 2014 2015 2016 Q22017
3.0x 3.4x 3.4x
4.7x 4.6x 4.7x
2012 2013 2014 2015 2016 Q22017
Net Debt / LTM Adjusted OIBD1 Interest Coverage Ratio2
Long-Term Debt Maturities (as at June 30, 2017)Net Debt1 / Net Debt + Total Equity
58% 57%
62%64%
59%
54%
2012 2013 2014 2015 2016 Q22017
Weighted Average
Interest Rate of
5.32% in 2016
OPERATING PERFORMANCE AND FINANCIAL SITUATIONConsolidated Financial Ratios & Debt Maturities
33
5.8x
5.0x
4.6x 4.7x
4.0x 3.8x
3.2x
2.3x 2.2x
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x20
11
2012
2013
2014
2015
2016
2017
E
2018
E
2019
E
The $288 M of proceeds from the sale of our equity stake in Boralex on
July 27, 2017, will enable us to achieve our leverage target ratio in 2017
13
1 Based on Street’s adjusted OIBD estimates $425 million for 2017 and $536 million for 2018. Assuming stable adjusted OIBD for 2019 ($536 million), FX US$/CAN$ at 1.25 and $100
million of free cash flows dedicated to debt reduction annually. Greenpac Mill included on a twelve month pro-forma basis. 2017e also takes into consideration the sale of our equity
stake in Boralex.
1
1 1
OPERATING PERFORMANCE AND FINANCIAL SITUATIONNear-Term Leverage Target of 3.0x – 3.5x
700
800
900
1,000
1,100
1,200
Ju
ne
14
Se
pt
14
Dec 1
4
Ma
r 1
5
Ju
ne
15
Se
pt
15
Dec 1
5
Ma
r 1
6
Ju
ne
16
Se
pt
16
Dec 1
6
Ma
r 1
7
Ju
ne
17
Se
pt
17
(US$/ton)Virgin Pulp Prices
NBSK NBHK
50
75
100
125
150
175
200
Ju
ne
14
Se
pt
14
Dec 1
4
Ma
r 1
5
Ju
ne
15
Se
pt
15
Dec 1
5
Ma
r 1
6
Ju
ne
16
Se
pt
16
Dec 1
6
Ma
r 1
7
Ju
ne
17
Se
pt
17
(US$/ton)Recycled Fibre Prices
White grades (Basket of products) Brown grades (OCC)
Recovered Paper Prices Q2-2016 Q1-2017 Q2-2017 Q2/Q2 Q2/Q1
White grades - Basket of products (Northeast average)1 154 182 181 +17% -1%
Brown grades - OCC No. 11 (Northeast average) 88 142 148 +68% +4%
Virgin Pulp Prices
NBSK (Canadian sources delivered to Eastern US) 980 1,033 1,093 +12% +6%
NBHK (Canada/US sources delivered to Eastern US) 847 853 942 +11% +10%
RAW MATERIAL COSTS – INDEX LIST PRICES
14Source: RISI. 1 Basket of white recycled paper, including grades such as SOP, Hard White Envelope and Coated Book Stock; Northeast average.
Weighted average based on Cascades’ consumption of each grade.
Current
(Sept.)
155
1791,130
1,005
Current
(Sept.)
Q2 recovered paper prices remained elevated as strong domestic & foreign demand persisted
BUSINESS OVERVIEW
15
16
▪ Largest corrugated box producer in Canada with
~32% market share
▪ 64%1 integration rate, targeting 85%1 in the mid-term
▪ Strong platform in Canada and growing presence in
U.S. Northeast
▪ Annual capacity of 1,531K s.t.(including Greenpac):
✓ 84% recycled vs. 16% virgin
✓ 53% linerboard vs. 47% medium
▪ 2013-LTM Q2-17 sales CAGR: +8.7%
1,0951,181
1,301 1,370 1,466
104 108
170 158135150 164
231 216 202
0
100
200
300
400
0
400
800
1,200
1,600
2013 2014 2015 2016 LTMQ2-17
Sales Operating Income Adj. OIBD
CONTAINERBOARD PACKAGING GROUPA Leading Canadian and Major North American Player
8%
15%
61%
16%Manufacturing - CAN
Manufacturing - US
Converting - CAN
Converting - US
2016
Sales
$1,370M
LTM Q2-17 adjusted OIBD2 margin of 14%
1 Including associates and JVs and Greenpac. 2 Supplemental information on non-IFRS
measures for 2016 and Q2-2017. 3 EBITDA margin including Greenpac on a pro-forma basis:
15.6% in 2014, 21.3% in 2015, 18.5% in 2016 and 15.7% in LTM Q2-17.
Strong Asset Base Improving Results
13.7%13.9%
17.8% 15.8% 13.8%
& Margin32
Not including Greenpac Mill.
CAN $ M
71% Canada ; 28% US; 1% other
• Product differentiation: Greenpac XP grades
represent majority of total production
• Take-or-pay agreement for 81% of the mill’s output
• Partners: 1 pension fund, 2 independent converters
• As of Q2/17: ownership increased to 62.5% from
59.7%, and Greenpac results are consolidated
17
CONTAINERBOARD PACKAGING GROUPModernizing and Upgrading - Organic Growth
1 Mill capacity at 515,000 tons based on 90% production of lightweight products compared to initial stated capacity of 540,000 tons.3 Q2/17, including associates and JVs and Greenpac.
• New state of the art conversion facility housing
1st quartile equipment
• US$80 M project largely funded by sale of land of
NYC plant (scheduled to close by end of 2018);
property is currently listed for US$72 M
• Corrugator capacity: 2.4 billion ft2
• Q2/18 start-up planned, with focus in 1st year of
operation to ramp up 1.5 billion ft2 to accommodate
business transferred from Cascades’ other US
northeast plants and new customers
• When fully ramped-up, operation will increase
integration rate by 5%, from current 64%3
New Conversion Plant in
Piscataway, NJ
Largest recycled
linerboard mill in
North America
→ 1,4251 st/day
→ 26 pounds
18
CONTAINERBOARD PACKAGING GROUPConsolidated North American Competitive Landscape
Smurfit Stone 20%
❖ Weyerhaeuser 16%
IP 11%
GP 11%
Temple Inland 9%
PCA 6%
Cascades1 3%
Others 24%
Top-5 67%
IP 35%
❖ Rock Tenn 20%
Koch/GP 11%
PCA 7%
Cascades1 4%
Pratt 3%
Kapstone 2%
Others 18%
Top-5 77%
IP 33%
❖ WestRock 19%
Koch/GP 10%
PCA 9%
Kapstone 4%
Cascades1 4%
Pratt 4%
Others 17%
Top-5 75%
2007 2013 2016
% of total capacity
Source: RISI, Deutsche Bank, Company reports and estimates, Fibre Box Association, Paper Packaging Canada1 Including Greenpac Mill in 2016 and 2013. Greenpac was not in operation in 2007
60%
70%
80%
90%
100%
Q22010
Q22011
Q22012
Q22013
Q22014
Q22015
Q22016
Q22017
44.0
42.0
40.0
38.0
36.02019e2018e New
capacity
1.5
2017e New
capacity
41.90.9
43.4
41.0
New
capacity
0.4
2016e
40.6
New
capacity
0.6
2015e
40.0
19
Fundamentals Sound Despite Added Capacity
Industry Operating Rates1
1 Source: RISI, Deutsche Bank, RBC, Company reports and estimates. New
capacity, net of capacity shutdowns.
Pratt Yr 2
Greif Yr 2
IP Valliant Yr 2
SP Fiber Yr 2
Corr. Supplies
WestRock shuts
Productivity 0.8%
Kruger Yr 2
Corr. Sup. Yr 1
PCA Yr 1
McKinley Yr 1
Productivity 0.8%
(+1.5%) (+1.0%) (+2.2%) (+2.4%)
Cascades adjusted EBITDA increases ~$2.5M
with every 1% increase in our utilization rate
CONTAINERBOARD PACKAGING GROUPSound Environment
Kruger Yr 1
Productivity 0.8%
Corr. Sup. Yr 2
PCA Yr 2
IP Yr 1
McKinley Yr 2
Productivity 0.8%
• Capacity growth of ±1.8% annually
over 2015 - 2019 period
• Sound industry fundamentals (Aug/17):
✓ YTD capacity utilization: 97.3% (96.9% in August)
✓ Inventories: 2% above 10 year avg.
✓ 3.8 weeks of supply below 10 year avg. of 4.0
• US$50/st containerboard price increase
being implemented on rolls and boxes
• US$30/st corrugating medium price
increase reflected in July (US$20/st) &
August (US$10/st) RISI publications
Industry Expected Capacity1 (M s.t.)
300
350
400
450
500
550
600
650
700
750
Se
p 0
7
Mar
08
Se
p 0
8
Mar
09
Se
p 0
9
Mar
10
Se
p 1
0
Mar
11
Se
p 1
1
Mar
12
Se
p 1
2
Mar
13
Se
p 1
3
Mar
14
Se
p 1
4
Mar
15
Se
p 1
5
Mar
16
Se
p 1
6
Mar
17
Se
p 1
7Linerboard 42-lb. unbleached kraft, Eastern U.S.
Corrugating medium 26-lb. semichemical, Eastern U.S.
(US$/s.t.)
0
20
40
60
80
100
120
140
160
180
200
Se
p 0
7
Mar
08
Se
p 0
8
Mar
09
Se
p 0
9
Mar
10
Se
p 1
0
Mar
11
Se
p 1
1
Mar
12
Se
p 1
2
Mar
13
Se
p 1
3
Mar
14
Se
p 1
4
Mar
15
Se
p 1
5
Mar
16
Se
p 1
6
Mar
17
Se
p 1
7
Old corrugated containers no. 11 (Northeast)
Old corrugated containers no. 11 (Midwest)
(US$/s.t.)
20Source: RISI
CONTAINERBOARD PACKAGING GROUPBusiness Drivers
Containerboard Benchmark Market Prices Brown Grades Recycled Fibre Prices
US$50/st containerboard price increase
reflected in RISI of April 2017;
US$30/st medium price increase
reflected in RISI of July and August 2017
OCC up US $70/st in Q1/17, and $6/st in Q2/17 due
to strong domestic and foreign demand; Price rose
$15/st in July, was flat in August, and decreased by
$10/st in September RISI publications.
21
CONTAINERBOARD INDUSTRY STATISTICS
U.S. Corrugated Boxes Shipments (BSF)
345357 359 360 360 364 369
376384
392 399408 414
2009 2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F
RISI Forecast
U.S Containerboard Production & Utilization Capacity Rate (tons & %)
31,517 33,766 34,024 34,371 34,823 35,354 35,822 36,316 37,430 38,472 39,359 40,520 41,352
80%
85%
90%
95%
100%
105%
0
10,000
20,000
30,000
40,000
50,000
2009 2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F
2017 – 2021 CAGR: + 1.9%
2017 – 2021 CAGR: + 2.5%RISI Forecast
Source: FBA, RISI
78%
22%Coatedrecycledboxboard
Coatedvirginboxboard
22
▪ 57.7% equity ownership of Reno de Medici, a public
Italian company; 5 recycled (885K m.t.) & 1 virgin
boxboard (165K m.t.) mills
▪ Operations in Italy, France and Germany
▪ Simplified structure and investments made in
modernization
▪ Completed legal transfer of Cascades’ virgin mill in
France to RdM in Q2-2016
2016
Sales
$796M
LTM Q2-17 adjusted OIBD1 margin of 7%
BOXBOARD EUROPE GROUPSecond Largest Coated Recycled Boxboard Producer in Europe
1 Supplemental information on non-IFRS measures for 2016 and Q2-2017.2 Including $9 million of energy credits.
Steady Contributor to Results
786841 825 796 804
1129
(28)
19 22
5772
6353 55
-40
-20
0
20
40
60
80
100
120
0
200
400
600
800
1,000
2013 2014 2015 2016 LTMQ2-17
Sales Operating Income Adj. OIBD
7.3%8.6%
7.6%6.7% 6.8%
& Margin1
CAN $ M
2
32% Italy; 21% France; 12% Eastern Europe; 11% Germany,
Austria & Switzerland; 12% Western Europe; 12% Overseas
0 500 1000 1500
Mayr-Melnhof
Reno De Medici
Weig Karton
Smurfit Kappa
Buchmann
Fiskeby Board
Barcelona Cartonboard
KappaStar
Pulp Mill Holding
Paprinsa
23
BOXBOARD EUROPE GROUPLeading European Producer of Coated Board
1 Source: PÖYRY, 2016, Reno de Medici. Capacity in 1,000 t/a. SBS = Solid Bleached Sulphate (virgin); FBB = Folding Boxboard (virgin); CUK = Coated Unbleached Kraft (virgin);
WLC = White Lined Chipboard (recycled); LPB = Liquid Packaging Board (virgin).
Cartonboard Producers by Grade1 (2016) WLC Producers1 (2016)
24
▪ Largest paper collector in Canada with 19 facilities
and 1.4 million s.t. of material processed in 2016
▪ A leading position in industrial packaging with
Cascades Sonoco JV
▪ Strong growth potential in consumer packaging
▪ 2016 sales (IFRS) of $620M, vs. $819M (Non-IFRS)
with JVs at 100%
▪ 2013-LTM Q2-17 sales CAGR: +6.1%
SPECIALTY PRODUCTS GROUPA Diversified Packaging Player
46%
30%
24%
Recovery
Industrialpackaging
Consumerproductspackaging
2016
Sales
$620M
LTM Q2-17 adjusted OIBD1 margin of 11%
1 Supplemental information on non-IFRS measures for 2016 and Q2-2017.
Focusing on Growth Sectors
548 568 579620
675
166
31
51 53
41 40
5865
73
0
20
40
60
80
100
0
100
200
300
400
500
600
700
800
2013 2014 2015 2016 LTMQ2-17
Sales Operating Income Adj. OIBD
7.5% 7.0%
10.0%10.5%
10.8%
& Margin1
CAN $ M
53% Canada; 38% US; 9% Europe & other
25
Spot
25%
SPECIALTY PRODUCTS GROUPCascades Recovery+ Sub-Segment
• Business unit created via the merger of
recovery operations & recycled fibre
buying group
• Manages procurement of all raw material
fibre for Cascades’ North American
operations
31%
11%
4%
16%
38%
Brown recycled purchased
White recycled purchased
Recycled groundwoodpurchased
Recycled fibre collected &USED by CAS
Recycled fibre collected &SOLD by CAS
• We use 29% of the 1.4M st of recycled fibre that
we collect via our Recovery operations
• Out of the 2.6M st of recycled fibre that we collect
& purchase externally, we use 62% internally, and
sell the remaining 38% to external customers
NA Recycled Fibre1
(2.6M st)
(1.0M st) (0.8M st)
(0.3M st)
(0.1M st)
(0.4M st)
1 North America only.
CIRCULAR ECONOMY APPROACH
26
▪ 5th largest tissue producer in NA based on capacity
(650K s.t.)
▪ Growing footprint in Western U.S.
▪ 68% integration rate, targeting 85% in the mid-term
▪ Repositioned and rebranded AfH product lines under
Cascades PRO brand to simplify product offering
▪ Launched new Cascades consumer tissue paper lines in
Canada: Fluff™ and Tuff™ brands
▪ 2013-LTM Q2-17 sales CAGR: +6.9%
TISSUE PAPERS GROUPA Canadian Leader and Important North American Player
46%
37%
17% Retail
Away-from-Home
Parent rolls
2016
Sales
$1,305M
LTM Q2-17 adjusted OIBD1 margin of 10%
1 Supplemental information on non-IFRS measures for 2016 and Q2-2017.
Targeting 13% OIBD Margin Near Term
1,033 1,054
1,2361,305 1,305
106
4864 75
63
133
96119
150135
0
50
100
150
200
250
0
400
800
1,200
2013 2014 2015 2016 LTMQ2-17
Sales Operating Income Adj. OIBD
12.9%
9.1%9.6%
11.5%10.3%
& Margin1
CAN $ M
9,571 9,838 9,883 10,227 10,522267 45 344 295
0
2,500
5,000
7,500
10,000
12,500
2013 2016 2017e 2018e 2019e
80
100
120
140
160
1996 2000 2004 2008 2012 2016
Inde
xed
U.S
. T
issu
e
Dem
and
271 Source: RISI
CAS Sales by Country (2016)
CAS North American Sales by End Markets (2016)
Tissue Market Demand1
North American Tissue Capacity Additions1
(M s.t.)
(+0.9%/year) (+0.0%) (+3.5%) (+2.9%)
TISSUE PAPERS GROUPStrong Position Across the North American Tissue Market
4%
42%
22%
15%
17%Retail - branded
Retail - private label
Afh - branded
AfH - private label
Parent rolls
Private
Label57%
At-Home
58%
Private
Label73%
At-Home
53%
Branded
43%
Away-from-
Home42%
Branded
27%Away-from-
Home47%
Canada (25%) US (75%)
NA Tissue sales:
~ 75% recycled and ~ 25% virgin
28
TISSUE PAPERS GROUPNewest investment: Converting Facility in Oregon
• Expands tissue footprint on US West Coast
• US$64M investment
• 40% integration with St. Helens, OR tissue paper
plant, located ~12 km away, resulting in a ~9%
increase in overall integration rate to 78%
• State-of-the-art facility, with annual production
capacity of 5.2 M cases or ~ 58,000 s.t. of
finished product• Manufactures virgin & recycled bathroom
tissue products and paper hand towels for
the US AfH market
• 3 production lines are installed and in
production
• Fully commissioned at the end of Q2/17,
on schedule
29
2016 NORTH AMERICAN TISSUE MANUFACTURERS
Capacity
('000 s.t.)
Market
Share
Capacity
Retail
Capacity
AfH
1 Georgia-Pacific 2,849 29% 67% 33%
2 Procter & Gamble 1,494 15% 100% 0%
3 Kimberly-Clark 1,466 15% 67% 33%
4 SCA Tissue NA 784 8% 0% 100%
5 Cascades Tissue 650 7% 62% 38%
6 Clearwater Paper 435 4% 90% 10%
7 KP Tissue 400 4% 77% 23%
8 First Quality Tissue 319 3% 100% 0%
9 Irving Tissue 282 3% 100% 0%
10 ST Paper & Tissue 160 2% 0% 100%
Others 1,044 10%
TOTAL 9,883 100%
Source: RISI
TISSUE PAPERS GROUPDiversified Capacity and Positioning
0
50
100
150
200
250
300
350
Se
p 0
7
Mar
08
Se
p 0
8
Mar
09
Se
p 0
9
Mar
10
Se
p 1
0
Mar
11
Se
p 1
1
Mar
12
Se
p 1
2
Mar
13
Se
p 1
3
Mar
14
Se
p 1
4
Mar
15
Se
p 1
5
Mar
16
Se
p 1
6
Mar
17
Se
p 1
7
Sorted office papers no. 37 (Northeast)
Sorted office papers no. 37 (Midwest)
(US$/s.t.)
800
900
1,000
1,100
1,200
1,300
1,400
1,500
Jul 07
Jan
08
Jul 08
Jan
09
Jul 09
Jan
10
Jul 10
Jan
11
Jul 11
Jan
12
Jul 12
Jan
13
Jul 13
Jan
14
Jul 14
Jan
15
Jul 15
Jan
16
Jul 16
Jan
17
Jul 17Virgin parent rolls
Recycled parent rolls
(US$/s.t.)
30Source: RISI
TISSUE PAPERS GROUPBusiness Drivers
Tissue Papers Benchmark Market Prices White Grades Recycled Fibre Prices
After years of volatility, parent roll prices have
remained relatively stable since 2015
The recent increase is partially due to lower
levels of material generation
31
52%
33%
7%
7%
1%
N.A. Retail Tissue Product Consumption (2016)
Bathroomtissue
Toweling
Facial
Napkins
Sanitary
44%
34%
18%
2% 2%
N.A. Away-from-Home Tissue Product Consumption (2016)
Toweling
Bathroomtissue
Napkins
Facial
Sanitary
Source: RISI
TISSUE PAPERS GROUPNorth American Tissue Market
Towel and bathroom tissue products account for majority of tissue consumption
2017-2022 STRATEGIC PLAN
32
33
POSITIONING FOR GROWTHBuilding on the Past, Positioning for the Future
Consolidation of
Reno De Medici
2011 2012 2013 2014 2015 2016
Sale of
DopacoSale of
Fine Papers
Sale NA
Boxboard
activities
Start-up of the
Greenpac Mill Start-up of
the Wagram
tissue plant
New tissue paper
machine in Oregon
Acquisition of
a corrugated
box plant in
Connecticut
Consolidation
of Recovery
ownership
Acquisition of
Papersource
WE MODERNIZED
• Invested more than $500M in
modern equipment
WE OPTIMIZED
• $125M in annual savings by
improving working capital
WE RESTRUCTURED
• Closed 16 non-performing
assets, completed 6 asset sales,
exited industries and
consolidated operational
platforms in NA representing
$1B in sales, 2% EBITDA margin
WE INNOVATED
• Launched many new products
2011 - 2016
34
0
50
100
150
200
250
2012 2013 2014 2015 2016 2017B
(M$)
Containerboard Boxboard Europe Specialty Products
Tissue Papers Corporate & IT
Capital Expenditures
• 2017B Capex ~ $200M
✓ Mainly growth Capex
✓ Mostly in the US
• Strong free cash flow has
funded Capex
• Impacted by strong US$
• Important investments made in
Tissue Papers (2013-15) and
in Containerboard (2012-13)
• Significant IT & administrative
process modernization
$161M
$184M$173M
$206M $200M
POSITIONING FOR GROWTHBuilding on the Past, Positioning for the Future
$184M
35
POSITIONING FOR GROWTHBuilding on the Past, Positioning for the Future
UPGRADE OUR PLATFORMS
- Invest in organic growth
- Increase integration rate to 85%
- Grow US platform
- Optimize geographic footprint
VALUE CREATION
- Increase profitability margin from 10% to 15%
- Disciplined capital allocation
- Sustainable free cash flow generation
- Continued focus on debt reduction
INNOVATION & CUSTOMER FOCUS
- 2020: 20% of sales from innovative products
- Leverage our diversified portfolio to cross-sell
- Reinforce positioning as THE provider of sustainable packaging and tissue products
-
-
-
2017 – 2022
FOCUS AREAS
2017 – 2022
STRATEGY
1 2
3
36
UPGRADE OUR PLATFORMS1
Accelerate Modernization
• Replace older equipment
• Invest in organic growth
Drummondville, QC
Scappoose, OR
64%1
68%1
85%2
85%2
1Q2 2017 integration rate including associates, joint ventures and Greenpac. 2 Including associates, joint ventures. Containerboard integration including Greenpac.
• Increase our integration rate
by investing in conversion
capacity
Increase Integration
• Improve geographic footprint
to better serve our customers,
increase penetration of
national accounts
Grow our US platform &
geographic footprint
Optimize Footprint+ +
Tissue
Containerboard
37
CREATE VALUE2↑ Profitability Margin to 15%
• Consolidate Greenpac results
(Q2/17)
• New Oregon tissue conversion
facility
• Monetize the benefits of our
optimization, modernization and
restructuring efforts
• Transformation program benefits &
reduction of implementation costs
±$50 M ANNUALLY
• Growth associated with potential
strategic investments and
acquisitions
1
3
4
2
Cash Flow from Operations
INVEST IN OUR ASSET BASE
• Modernize equipment
• Opportunistic M&A
• Increase integration, optimize footprint
DIVIDENDS & SHARE REPURCHASES
• Maintain current strategy
DEBT REDUCTION
• Objective = allocate at least $100M of
FCF toward debt reduction annually
• Near-term leverage ratio target of
3.0 x - 3.5 x
Disciplined Capital Allocation+
38
FOCUS ON CUSTOMERS AND INNOVATION3
Polystyrene foam
packaging
containing 25%
recycled material
Low-density PETE
containing 80% post-
consumer material
OBJECTIVE: 20% of sales from innovative products in 2020
Water-based coating that
acts as a barrier against
grease and humidity for
takeout containers
Recyclable insulated
container, made with
FSC® certified
recycled materials
Produces innovative, lightweight
recycled linerboard – XP grades
Hand towel dispenser
with new, patented
dispenser technology
APPENDIX
39
2016 2017
Q1 Q2 Q3 Q4 Year Q1 Q2 LTM
Financial results
Sales 1,003 998 1,021 979 4,001 1,006 1,130 4,136
Operating income 73 65 50 33 221 31 48 162
Adjusted OIBD1
106 112 103 82 403 75 107 367
Net earnings 75 36 20 4 135 161 323 508
Adjusted net earnings1
34 35 30 15 114 12 24 81
Net earnings per share $0.79 $0.38 $0.21 $0.04 $1.42 $1.70 $3.41 $5.36
Adjusted net earnings per share1
$0.35 $0.38 $0.32 $0.16 $1.21 $0.13 $0.25 $0.86
(In millions of CAN$, except amount per share)
40
Net earnings of $323 million or $3.41 per share in Q2 2017 reflects
revaluation gain on Greenpac acquisition
6550
33 3148
112 10382 75
107
Q22016
Q32016
Q42016
Q12017
Q22017
Operating Income Adjusted OIBD
36 20 4
161
323
35 30 15 12 24
Q22016
Q32016
Q42016
Q12017
Q22017
Net Earnings Adjusted Net Earnings
1 Supplemental information on non-IFRS measures for 2016 and Q2-2017.
1 1
Figures above in millions of CAN$ Figures above in millions of CAN$
Q2 2017 PERFORMANCE – FINANCIAL RESULTS
19 166
31
51 53
3% 3%1%
5%
8% 8%
0%1%2%3%4%5%6%7%8%9%
0
10
20
30
40
50
60
2012 2013 2014 2015 2016 LTMQ2-17
1 Including $9 million of energy credits 2 Via our 57.7% equity ownership in Reno de Medici S.p.A. (RdM)
92106
4864
75639%
10%
5% 5% 6%5%
0%
2%
4%
6%
8%
10%
12%
0
20
40
60
80
100
120
2012 2013 2014 2015 2016 LTMQ2-17
(13)
104 108
170 158135
(1%)
9% 9%
13%12%
9%
-4%-2%0%2%4%6%8%10%12%14%
-100
-50
0
50
100
150
2012 2013 2014 2015 2016 LTMQ2-17
311
29
(28)
19 22
0% 1%
3%
(3%)
2% 3%
-5%
-3%
-1%
1%
3%
5%
-40-30-20-10
010203040
2012 2013 2014 2015 2016 LTMQ2-17
41
Containerboard (CAN$ M and %) Boxboard Europe2(CAN$ M and %)
Tissue Papers (CAN$ M and %)Specialty Products (CAN$ M and %)
BUSINESS SEGMENTSHistorical Segmented Operating Income and Margin
1
37 41 40
5865
73
7%7% 7%
10% 10% 11%
4%5%6%7%8%9%10%11%12%
01020304050607080
2012 2013 2014 2015 2016 LTMQ2-17
1 Including $9 million of energy credits 2 Via our 57.7% equity ownership in Reno de Medici S.p.A. (RdM)3 Supplemental information on non-IFRS measures for 2016 and Q2-2017.
138 133
96119
150135
14%13%
9% 10%
11%10%
4%
6%
8%
10%
12%
14%
16%
020406080
100120140160
2012 2013 2014 2015 2016 LTMQ2-17
90
150 164
231216 202
10%
14% 14%
18%16%
14%
5%7%9%11%13%15%17%19%
0
50
100
150
200
250
2012 2013 2014 2015 2016 LTMQ2-17
43
57
7263
53 55
6%
7%
9%
8%
7% 7%
3%
4%
5%
6%
7%
8%
9%
01020304050607080
2012 2013 2014 2015 2016 LTMQ2-17
42
Containerboard (CAN$ M and %) Boxboard Europe2(CAN$ M and %)
Tissue Papers (CAN$ M and %)Specialty Products (CAN$ M and %)
BUSINESS SEGMENTSHistorical Segmented Adjusted OIBD3 and Margin
1
(In million of Canadian dollars) Q2-17 Q1-17 2016 Q4-16 Q3-16 Q2-16 Q1-16 2015 2014
Sales
Containerboard 428 346 1,370 336 356 342 336 1,301 1,181
Boxboard Europe 213 211 796 191 189 197 219 825 841
Specialty Products 188 173 620 156 158 157 149 579 568
Tissue Papers 338 306 1,305 319 342 324 320 1,236 1,054
Inter-segment sales and corporate activities (37) (30) (90) (23) (24) (22) (21) (80) (83)
Total 1,130 1,006 4,001 979 1,021 998 1,003 3,861 3,561
Operating Income
Containerboard 30 33 158 28 44 46 40 170 108
Boxboard Europe 13 5 19 3 1 7 8 (28) 29
Specialty Products 14 13 51 14 12 16 9 31 6
Tissue Papers 17 8 75 12 26 18 19 64 48
Corporate activities (26) (28) (82) (24) (33) (22) (3) (84) (54)
Total 48 31 221 33 50 65 73 153 137
Adjusted OIBD1
Containerboard 56 45 216 43 58 60 55 231 164
Boxboard Europe 21 14 53 11 9 17 16 63 72
Specialty Products 20 18 65 17 18 16 14 58 40
Tissue Papers 35 23 150 30 47 39 34 119 96
Corporate activities (25) (25) (81) (19) (29) (20) (13) (45) (32)
Total 107 75 403 82 103 112 106 426 340
Adjusted OIBD1 Margin 9.5% 7.5% 10.1% 8.4% 10.1% 11.2% 10.6% 11.0% 9.5%
43
HISTORICAL RESULTS
1 Supplemental information on non-IFRS measures for 2016 and Q2-2017.
44
NEAR TERM OUTLOOK
+
I
• Higher OCC costs in North America and
Europe
• Other recovered paper prices in North
America and Europe remain high
• NBSK and NBHK pulp prices remain high
• Appreciation of the CAN$ vs US$
• Gradual price increase in corrugated boxes
following the US$50/st containerboard price
increase reflected in RISI in April 2017
• US$20/st corrugating medium price increase
reflected in RISI in July 2017
• €40/mt recycled boxboard (WLC) price
increase in Europe, effective September 1,
2017
• Slightly lower energy costs
Q3-2017 vs
Q2-2017
Boxboard
Europe
Operating
Income
Impact
Containerboard
Operating
Income
Impact
Specialty
Products
Operating
Income
Impact
Tissue Papers
Operating
Income
Impact
Volume Slight decrease Slight increase Slight increase Slight increase
Average selling
pricesSlight increase Increase Stable Slight increase
Average raw material
costsSlight increase Slight increase Slight increase Slight increase
CAN$ exchange rate Stable Appreciation Appreciation Appreciation
Energy costs Stable Slight decrease Slight decrease Slight decrease
45
CONTAINERBOARD PACKAGING GROUPGreenpac Mill Acquisition – Accounting Factsheet
Fact Sheet
• Interest of one partner classified in other liabilities due to put option
• Cascades share of profit before tax
• Minority interest
• Client list and amortizable fixed assets increase
• Goodwill addition
• Net debt increase
• Provision for income tax calculated on 62.5% of profit before tax
• Including one equity partner classified as liability, interest expense up $5 million
on a quarterly basis (including $2 million non-cash)
78.3%
21.7%
$53 million
$256 million
$219 million
50%
150%
250%
350%
450%
550%
2012
-09
2012
-12
2013
-03
2013
-06
2013
-09
2013
-12
2014
-03
2014
-06
2014
-09
2014
-12
2015
-03
2015
-06
2015
-09
2015
-12
2016
-03
2016
-06
2016
-09
2016
-12
2017
-03
2017
-06
2017
-09
Cascades TSX Composite Index TSX Small Cap Index Containerboard Index Tissue Index
5-YEAR SHAREHOLDER RETURNCAS vs. Indices
46
CASTSX
Composite
TSX
Small Cap
Container-
board Index
Tissue
Index
1 Year 126% 106% 101% 124% 81%
3 Year 266% 103% 98% 117% 85%
5 Year 350% 125% 106% 199% 105%
Note: Shareholder return excludes dividend yield. As of market close September 22, 2017. Source: Bloomberg1 Containerboard Index includes the following companies: International Paper, WestRock (starting June 24, 2015), Packaging Corp of America and KapStone.2 Tissue Index includes the following companies: Kimberly-Clark, Clearwater Paper, KP Tissue (starting December 13, 2012) and Orchids Paper.
1 2
CAS added to the TSX Composite Index June 19, 2017
47
SHAREHOLDERS & ANALYST COVERAGE
Major Shareholders %
Lemaire Brothers, BoD & employees 33.7%
Letko Brosseau 14.2%
Caisse de Dépôt et Placement du QC 5.0%
Dimensional Fund Advisors 3.4%
Norges Bank (Government of Norway) 1.8%
Royal Bank of Canada 1.5%
Vanguard Group 1.4%
IA Financial Group 1.2%
SEI Investments 0.8%
Boston Partners 0.5%
Putnam Investments 0.4%
BlackRock 0.3%
33.7%
41.8%
24.5%
Lemaire brothers, BoD &CAS employees
Institutional
Retail
Ownership Breakdown1
Analyst City Bank
Leon Aghazarian Montréal National Bank
Keith Howlett Toronto Desjardins
Benoît Laprade Montréal Scotiabank
Hamir Patel Vancouver CIBC
Paul Quinn Vancouver Royal Bank of Canada
Sean Stuart Toronto TD Bank
50.0%50.0%
Sector Outperform
Sector Perform
Analyst Recommendations1
1 As of September 22, 2017 . Source: Bloomberg, InfoSuite
48
For more information:www.cascades.com/investors
Jennifer Aitken, MBA
Director, Investor Relations
514-282-2697 or [email protected]