REVIEW OF Q FINANCIAL RESULTS

Transcription

1 REVIEW OF FINANCIAL RESULTS May 10,

2 DISCLAIMER FORWARD-LOOKING STATEMENT 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 Corporation. SUPPLEMENTAL INFORMATION ON NON-IFRS MEASURES SPECIFIC ITEMS The 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 provide additional information to measure the performance, compare the Corporation's results between periods and to assess operating results and liquidity, notwithstanding these specific items. Management believes these specific items are not necessarily reflective of the Corporation underlying business operations in measuring and comparing its performance and analyzing 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 and repurchase of long-term debt, some deferred tax assets provisions 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 associates and 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, foreign exchange 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 MEASURES To provide more information for evaluating the Corporation's performance, the financial information included in this analysis contains certain data that are not performance measures under 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 also increases the transparency and clarity of the financial information. The following non-ifrs measures are used in our financial disclosures: - 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. - OIBD: Used to assess operating performance and contribution of each segment on a comparable basis. - operating income: Used to assess operating performance of each segment on a comparable basis. - net earnings: Used to assess the Corporation s consolidated financial performance on a comparable basis. - 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. - Net debt to adjusted OIBD ratio on a pro forma basis: Used to measure the Corporation's credit performance and evaluate the financial leverage on a comparable basis including significant business acquisitions and excluding significant business disposals, if any. 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 analytical tool, 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 differ from 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 supplemental information on non-ifrs measures. 2

3 SUMMARY OF QUARTERLY FINANCIAL RESULTS Q2 Income Figures above in millions of CAN$ Q3 Q4 OIBD Q2 Net Earnings Q3 Q4 Net Earnings 1 1 Figures above in millions of CAN$ (In millions of CAN$, except amount per share) Financial results 2016 Year Q2 Q3 Q4 Year LTM Sales 4,001 1,006 1,130 1,103 1,082 4,321 1,098 4,413 income Net earnings net earnings Net earnings per share $1.42 $1.70 $2.70 $0.35 $0.60 $5.35 $0.65 $4.30 net earnings per share 1 $1.21 $0.13 $0.25 $0.20 $0.14 $0.72 $0.13 $0.72 Sales, operating income and adjusted OIBD improved YoY in (1) Please click here for supplemental information on non-ifrs measures. 3

4 HISTORICAL SEGMENTED QUARTERLY OPERATING INCOME (LOSS) & ADJUSTED Containerboard (millions of CAN$) Boxboard Europe (millions of CAN$) Q2 Income Q3 Q4 OIBD Q2 Income Q3 Q4 OIBD 1 1 Specialty Products (millions of CAN$) Q2 Income Q3 Q4 2 7 OIBD 1 Tissue Papers (millions of CAN$) Q Q3 Income (Loss) (6) Q (2) OIBD 1 (1) Please click here for supplemental information on non-ifrs measures. 4

5 HISTORICAL SEGMENTED QUARTERLY SHIPMENTS Containerboard ( 000 s.t. and % capacity utilization 1 ) Boxboard Europe ( 000 s.t. and % capacity utilization 1 ) % % Q2 91% Q3 92% Q % % % Q % 93% Q3 Q % Tissue Papers ( 000 s.t. and % capacity utilization 1 ) % % 90% Q2 Q % Q4 88% (1) Utilization rate defined as total manufacturing shipments divided by practical capacity.. 5

6 KEY PERFORMANCE INDICATORS (KPIs) Total Shipments 1 ( 000 s.t.) Capacity Utilization Rate 1-2 (manufacturing only) % 95% 92% 91% 94% Q2 Q3 Q4 Q2 Q3 Q4 LTM Return on Assets LTM Working Capital (% of LTM Sales) 9.8% 9.1% 8.9% 9.2% 9.5% 10.2% 9.9% 9.9% 10.1% 10.5% Q2 Q3 Q4 Q2 Q3 Q4 Good sequential progression in ROA and utilization rate in (1) Not including the Specialty Products Group. (2) Utilization rate defined as total manufacturing shipments divided by practical capacity. Please refer to the Annual Report for the definition of the KPIs. 6

7 Feb 15 May 15 Aug 15 Nov 15 Feb 16 May 16 Aug 16 Nov 16 Feb 17 May 17 Aug 17 Nov 17 Feb 18 May 18 Jan 15 Apr 15 July 15 Oct 15 Jan 16 Apr 16 July 16 Oct 16 Jan 17 Apr 17 July 17 Oct 17 Jan 18 Apr 18 RAW MATERIAL COSTS INDEX LIST PRICES (US$/ton) Recycled Fibre Prices Current (May) (US$/ton) 1,400 1,300 1,200 1,100 1, Virgin Pulp Prices Current (Apr.) 1,280 1,100 White grades (Basket of products) Brown grades (OCC) NBSK NBHK Recovered Paper Prices - Q4- - / /Q4 White grades - Basket of products (Northeast average) % +4% Brown grades - OCC No. 11 (Northeast average) % -7% Virgin Pulp Prices NBSK (Canadian sources delivered to Eastern US) 1,033 1,183 1, % +4% NBHK (Canada/US sources delivered to Eastern US) 853 1,052 1, % +2% OCC prices continued downward trend in due to China s restriction on recovered paper import permits; Strong demand for pulp pushed NBSK & NBHK prices higher Source: RISI. (1) Basket of white recycled paper, including grades such as SOP, Hard White Envelope and Coated Book Stock; Northeast average. ()1 Weighted average based on Cascades consumption of each grade. 7

8 CONSOLIDATED FINANCIAL RATIOS & DEBT MATURITIES Net Debt / LTM Interest Coverage Ratio 2 5.0x 4.6x 4.7x 4.0x 3.8x 3 3.6x 3.6x 3 3.0x 3.4x 3.4x 4.7x 4.6x 4.3x 3 4.5x Net Debt / Net Debt + Total Equity Long-Term Debt Maturities (as at March 31, ) 58% 57% 62% 64% 59% 49% 48% Targeting leverage ratio of 2.5x 1 year >1 year Senior notes Revolver Debts without recourse Bank debt financial covenant ratios: Net funded debt to capitalization < 65% (currently at 44.22%), interest coverage ratio > 2.25x (currently at 3.96x). (1) Please click here for supplemental information on non-ifrs measures. (2) OIBD to financing expense. (3) Pro-forma for the and business acquisitions on a LTM basis. Subsidiaries debts 8

9 FINANCIAL REVIEW

10 YEAR OVER YEAR SALES RECONCILIATION (M CAN$) 1,150 1, , % 3 (16) (30) 1,098 1,050 1,006 0 Sales - Greenpac Sales - Proforma 1 Selling Prices & Mix Acqu. & Disposals F/X CAN$ Other Variances Recovery & Recycling Volume Sales - (M CAN$) Containerboard (11) (39) 421 Boxboard Europe (2) 246 Specialty Products (16) (5) 159 Tissue Papers (9) (11) Corporate & Elim. (30) (30) (3) (33) Total (16) (30) Q2 Greenpac consolidation & improved selling price/mix in packaging drove the 9% year-on-year increase, offsetting lower packaging volume & recovery activities contribution (1) For variance analysis purposes, adjusted to include Greenpac sales on a pro-forma basis in - (net of inter-segment sales). 10

11 SEQUENTIAL SALES RECONCILIATION (M CAN$) 1,110 1,105 1,100 1, % (2) (5) (5) 1,098 1,090 1,085 1,082 0 Sales Q4- Acqu. & Disposals F/X Corp. Elim. Selling Prices & Mix Recovery & Recycling Volume Sales - (M CAN$) Containerboard (1) (29) 421 Boxboard Europe Specialty Products (2) (5) Tissue Papers 301 (1) Corporate & Elim. (32) (1) (33) Total 1, (2) (5) (5) 1,098 Higher sales from acquisitions, Europe volume and a favourable FX were partially offset by lower contribution from Recovery & Recycling and lower Containerboard volume 11

12 (M CAN$) YEAR-OVER-YEAR CONSOLIDATED OPERATING INCOME RECONCILIATION 31 - Income As reported + Greenpac & Ontario acquisitions + More favourable average selling prices & product mix + Lower raw material costs - Lower volume due to mechanical issues - Higher transportation costs 54 Amort. 2 (3) Specific Items 11 Greenpac Income , Container-Boxboarboard Europe + Higher average selling prices + Lower raw material costs + Favourable FX Good performance in Containerboard and Europe more than counterbalanced lower results in Specialty Products and Tissue Papers 5 (10) + Higher volume - Higher raw material costs - Less favourable product mix and average selling prices Corporate Activities - Lower contribution from the Recovery business Tissue Papers (11) Specialty Products Greenpac consolidation - ERP fully implemented - Scappoose start-up (62) Specific Items (55) + Sale of NY plant Amort Income (1) Please click here for supplemental information on non-ifrs measures. (2) For variance analysis purposes, adjusted to include Greenpac in - on a pro-forma basis. 12

13 SEQUENTIAL CONSOLIDATED OPERATING INCOME RECONCILIATION (M CAN$) Q4- Income + Lower raw material costs - Lower volume due to mechanical issues - Higher transportation costs + Higher volume + Lower raw material costs 59 Amort. 1 Specific Items 105 Q4-9 Boxboard Europe 3 Containerboard - Lower contribution from the Recovery business 1 Tissue Papers (6) Corporate Activities (7) - FX gain in Q4- + Lower ERP and business process optimization costs Specialty Products Sale of NY plant (62) Specific Items (55) Amort Income Lower recycled fibre costs benefitted Boxboard Europe and Containerboard, but had a negative impact on Recovery and Recycling activities (1) Please click here for supplemental information on non-ifrs measures. 13

14 QUARTERLY YEAR-OVER-YEAR EPS VARIANCE Specifics 1 As reported 1 Specifics 1 As reported Depreciation (47) (47) (55) (55) income Financing expenses & interest expense on employee future benefits (22) (22) (23) (23) FX gain on LT debt and fin. Inst Fair value revaluation gain on investments Share of results of associates and JVs Profit before tax Recovery of (provision for) income taxes (4) (23) (27) (5) (19) (24) Non-controlling interests (2) (2) (11) (11) Net earnings per share $0,13 $1,57 $1,70 $0,13 $0,52 $0,65 Change in after-tax operating results 30% $0,16 Higher contribution from Containerboard & Europe partially offset by lower results from Tissue & Specialty Change in income taxes provision vs normalized tax $0,02 Lower U.S income tax rate in - 30% Change in share of results of Associates and JVs - ($0,18) Greenpac now consolidated, Boralex stake sold and net of taxes and non-controlling interests higher non-controlling interest from RdM $0,00 (1) Please click here for supplemental information on non-ifrs measures. 14

15 QUARTERLY SEQUENTIAL EPS VARIANCE Q Specifics 1 As reported 1 Specifics 1 As reported 105 (1) Depreciation (59) (59) (55) (55) income 46 (1) Financing expenses & interest expense on employee future benefits (26) 2 (24) (23) (23) FX gain (loss) on LT debt and fin. Inst. (4) (4) 1 1 Fair value revaluation gain on investments 5 5 Loss on repurchase of long-term debt (14) (14) Share of results of associates and JVs Profit before tax 23 (17) Recovery of (provision for) income taxes (5) (5) (19) (24) Non-controlling interests (5) (1) (6) (11) (11) Net earnings per share $0.14 $0.46 $0.60 $0.13 $0.52 $0.65 Change in after-tax operating results 30% $0.05 Better results in Containerboard & Europe partially offset by lower results from Specialty and higher corporate Change in income taxes provision vs normalized tax $0.02 Lower U.S income tax rate in - 30% Change in share of results of Associates and JVs - ($0.08) Higher minority interest from RdM net of taxes and non-controlling interests ($0.01) (1) Please click here for supplemental information on non-ifrs measures. 15

16 -18 ADJUSTED OIBD TO OPERATING INCOME RECONCILIATION (M CAN$) (55) Amort. 50 Income 1 66 Gain on Acquisitions, Disposals and Others (4) Unrealized Loss on Financial Instruments 112 Income Container- Boxboard Specialty Tissue Corporate (M CAN$) board Europe Products Papers Activities Total income (loss) (2) (28) 112 Specific items: Gain on acquisitions, disposals and others (66) (66) Unrealized loss on financial instruments Total specific items (64) 2 (62) operating income (loss) (2) (26) 50 Depreciation and amortization (20) 105 (1) Please click here for supplemental information on non-ifrs measures. 16

17 NET EARNINGS IFRS VS ADJUSTED NET EARNINGS NET EARNINGS PER COMMON SHARE 1 (in millions of Canadian dollars, except amount per common share) - - As per IFRS 61 $0.65 Specific items: Gain on acquisitions, disposals and others (66) ($0.51) Unrealized loss on financial instruments 4 $0.03 Foreign exchange gain on long-term debt & financial instruments (1) ($0.01) Fair value revaluation gain on investment (5) ($0.03) Tax effect on specific items, other tax adjustments and attributable to non-controlling interest 1 19 (49) ($0.52) 2 12 $0.13 (1) Specific amounts per common share are calculated on an after-tax basis and are net of the portion attributable to non-controlling interest. Per share amounts in line item ''Tax effect on specific items, other tax adjustments and attributable to non-controlling interest'', if any, only include the effect of tax adjustments. (2) Please click here for supplemental information on non-ifrs measures. 17

18 CASH FLOW OVERVIEW Q2 CF from operations Q3 Figures above in millions of CAN$ Q4 CF from operations (34) Q2 Q3 Q4 Free Cash Flow 3 3 Figures above in millions of CAN$ 2016 (in millions of CAN$, except amount per share) Year Q2 Q3 Q4 Year LTM Cash flow from operations Specific items cash flow from operations Including: Net financing expense paid (89) (38) (10) (40) (11) (99) (37) (98) Capital expenditures & other assets 2, capital lease payments, net of disposals (196) (64) (32) (46) (63) (205) (9) 5 (150) Dividends 4 (16) (4) (7) (5) (4) (20) (4) (20) free cash flow (34) free cash flow per share 3 $1.18 ($0.36) $0.54 $0.13 $0.24 $0.55 $0.59 $1.50 Higher YoY adjusted FCF in reflects a strong progression of CF from operations and NY facility sale (1) Specific items: premiums paid on the repurchase of long-term debt and restructuring costs. (2) Excluding increase in investments. (3) Please click here for supplemental information on non-ifrs measures. (4) Paid to our shareholders and to non-controlling interests. (5) Net of disposals of $81 million 18

19 (M CAN$) NET DEBT 1 RECONCILIATION - 1,700 1,600 +$12M +1% 89 1,500 1,400 1,522 1 Net Debt 12/31/ (69) Cash flow from operations 3 Others 10 Dividends paid & share buyback, net of share issuance (options) 29 FX Rate 31 Var. in noncash work. cap. components Capital investments (81) Sale of NY facility assets 1,534 Net Debt 03/31/ Q4- - $422 million 2 LTM adjusted $430 million 2 3.6x Net debt/ltm adjusted 3.6x 1 CF from operations and the NY facility sale were offset by CAPEX, WC requirements & less favourable FX (1) Please click here for supplemental information on non-ifrs measures. (2) Pro-forma for the and business acquisitions on a LTM basis. 19

20 SEGMENTED REVIEW

21 SEGMENTED YoY OPERATING INCOME (LOSS) WATERFALLS Containerboard (millions of CAN$) Boxboard Europe (millions of CAN$) (11) (14) (20) (9) Income As reported Amort. 2 Greenpac operating income 2 - Pro-forma 2 Selling Price & Mix Other Variances Volume - Specific Items / Amort. - Income 0 - Income Amort. / Specific Items - Selling Price & Mix Raw Material Other Variances - Amort. - Income Higher containerboard and corrugated box prices Higher freight costs Lower volume due to mechanical issues Higher recycled and virgin grade prices Lower recycled fibre costs Specialty Products (millions of CAN$) Tissue Papers (millions of CAN$) (8) (8) (9) (10) (15) (2) 0 - Income Amort. - Selling Price & Mix Other Variances Recovery & Recycling - (5) Amort. - Income (10) - Income Amort. - Volume Other Variances Raw Material Selling Price & Mix - Amort. - Loss Higher URB prices as well as favourable product mix Lower contribution from Recovery activities due to lower recycled paper index prices & Chinese import restrictions Lower marketing expenses related to brand launches Increase in virgin fibre costs Less favourable product mix (1) Please click here for supplemental information on non-ifrs measures. (2) For variance analysis purposes, adjusted to include Greenpac in - on a pro-forma basis. 21

22 SEGMENTED SEQUENTIAL OPERATING INCOME (LOSS) WATERFALLS Containerboard (millions of CAN$) Boxboard Europe (millions of CAN$) (3) (11) (20) (9) 19 0 Q4- Income Amort. / Specific Items Q4- Raw Material Other Variances Volume - Amort. / Specific - Income Items 0 Q4- Income Amort. Q4- Volume Raw Material Other Variances - Amort. - Income OCC down 7% Lower containerboard volume due to mechanical issues Favourable market conditions and seasonality Lower recycled fibre costs Specialty Products (millions of CAN$) Tissue Papers (millions of CAN$) (7) 0 2 (15) (2) 0 Q4- Income Amort. Q4- Recovery & Recycling - (5) Amort. - Income (10) (6) Q4- Loss Amort. / Specific Items Q4- Volume - Amort. - Loss Lower contribution from our Recovery activities due to lower recycled paper index prices & Chinese import restrictions (1) Please click here for supplemental information on non-ifrs measures. Higher parent roll sales 22

23 PACKAGING PRODUCTS / CONTAINERBOARD Results Change vs. 2 Q4 Comments on sequential performance Shipments ('000 s.t.) 352-5% 24% Average selling price (CAN$/unit) 1,195 1% -1% Shipments decreased by 5% sequentially. Containerboard shipments were 9% lower due to operational issues during the quarter. Corrugated box shipments were down 1% sequentially, including acquisitions, due to seasonal customer buying patterns. Average selling prices in CAN$ were up 1% compared to Q4, reflecting a more favourable product mix and higher selling prices. Sales ($M) 421-4% 22% Sequential sales decreased by 4% attributable to lower shipments and a less favourable sales mix in converted products. income ($M) % 267% ($M) 77 4% 71% % of sales 18% income increased to $121 million due to lower raw material costs and higher sales, which more than offset lower shipments and higher transportation costs. A $66 million gain is also included in operating income related to the sale of our NY facility. (1) Please click here for supplemental information on non-ifrs measures. (2) Greenpac s results included in consolidated numbers starting in Q2. 23

24 PACKAGING PRODUCTS / BOXBOARD EUROPE Results Change vs. Q4 Shipments ('000 s.t.) % 1% Average selling price (CAN$/unit) 827 5% 16% Comments on sequential performance Sequentially higher shipments due to favourable market conditions and seasonality. Compared to last quarter, recycled grades (WLC) +8% and virgin grades (FBB) +19%. Higher average selling prices for virgin grades. Announced price increase in FBB started to be visible at the end of the first quarter, and will be fully effective in the second quarter. Sales ($M) % 17% Higher shipments and selling prices as well as a favourable sales mix explain the sequential 16% sales increase. income ($M) 19 73% 280% ($M) 28 47% 100% % of sales 11% In addition to the above-mentioned factors, results benefitted from the production and management efficiency, the reduction of the overall costs of raw materials in the WLC segment, and the containment of the increase in energy costs. (1) Please click here for supplemental information on non-ifrs measures. 24

25 PACKAGING PRODUCTS / SPECIALTY PRODUCTS Results Change vs. Q4 Sales ($M) 159-1% -8% income ($M) 2-78% -85% ($M) 7-50% -61% % of sales 4% Comments on sequential performance The 1% decrease in sales is essentially linked to lower shipments in the Recovery & Recycling sub-segment due to the Chinese restrictions on recycled paper import permits. Average selling prices were stable in the packaging activities while average selling prices for Recovery & Recycling activities were higher due to a favourable sales mix. income decreased to $7 million as lower results in Recovery & Recycling more than offset improved performances in Industrial Packaging, driven by higher URB prices and lower raw material costs, and Consumer Product Packaging, attributable to lower operational costs. (1) Please click here for supplemental information on non-ifrs measures. 25

26 TISSUE PAPERS Results Change vs. Q4 Shipments ('000 s.t.) 149 2% 7% Average selling price (CAN$/unit) 2,055 0% -6% Comments on sequential performance Shipments of converted products decreased by 1%, most notably in Canada due to the usual seasonality. Shipments of parents rolls increased by 6%, reflecting market seasonality and successful efforts undertaken to reduce inventories. Average selling prices in CAN$ remained stable as the benefits from a price increase announced for the Canadian retail market last quarter were offset by a less favourable sales mix. Sales ($M) 305 1% 0% The 1% increase in sales was mainly driven by higher shipments. loss ($M) (2) 67% -125% ($M) 13 8% -43% % of sales 4% The sequentially improved operating results reflected higher sales coupled with lower SG&A costs, which are historically lower in versus Q4, partially offset by higher virgin pulp prices and higher transportation costs. (1) Please click here for supplemental information on non-ifrs measures. 26

27 CONCLUDING REMARKS AND Q&A

28 NEAR TERM OUTLOOK US$50/s.t. containerboard price increase reflected in RISI on March 23, ; corrugated box price increases in progress Continuing challenging market conditions for the Tissue Papers segment Higher NBSK and NBHK pulp prices + OCC Northeast prices at ~US$80 / s.t. Good market conditions in Europe Announced URB price increase Volume seasonally favourable I Higher SOP recycled grade prices Impact of Chinese restrictions on recycled paper imports & lower recycled fibre (OCC) prices expected to negatively impact Specialty Product Recovery & Recycling activities Q2 Containerboard Packaging Boxboard Europe Specialty Products Tissue Papers OPERATING INCOME FORECAST YoY QoQ YoY QoQ YoY QoQ YoY QoQ REFLECTING : VOLUME SELLING PRICE RAW MATERIAL COST EXCHANGE RATE ENERGY COST 28

29 APPENDIX

30 Q2-15 Q3-15 Q Q2-16 Q3-16 Q Q2-17 Q3-17 Q FOREIGN EXCHANGE US$/CAN$ Exchange rates US$/CAN$ Euro /CAN$ Euro /CAN$ Hedging Program US$ Cash flows 32% to 54% of exposure (net of interest) hedged at an average rate of 1.33 CAN$/US$ to 1.34 CAN$/US$ % to 43% of exposure (net of interest) hedged at an average rate of 1.33 CAN$/US$ to 1.34 CAN$/US$ % to 13% of exposure (net of interest) hedged at an average rate of 1.30 CAN$/US$ As a percentage of EBITDA Between 10% to 20% hedged for next 12 to 36 months income sensitivity estimated to be $3M for every US$0.01 variation versus the CAN$ Source: Bloomberg. 30

31 Q2-15 Q3-15 Q Q2-16 Q3-16 Q Q2-17 Q3-17 Q ENERGY PRICES Natural gas (US$) Energy prices Crude oil (US$) Hedging Program Natural gas Canada: : 35% at 3.98 CAN$/GJ 2019: 8% at 3.60 CAN$/GJ U.S.: : 43% at 3.37 US$/mmBtu 2019: 34% at 2.90 US$/mmBtu Natural gas (US$/mmBtu) Crude oil (US$/barrel) 2016 Change Averages Year Q2 Q3 Q4 Year Q4 Energy prices Natural gas Henry Hub (US$/mmBtu) (10%) 2% Crude oil WTI (US$/barrel) % 16% Source: Bloomberg. 31

32 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jan 18 Apr 18 Jan 15 Mar 15 May 15 Jul 15 Sep 15 Nov 15 Jan 16 Mar 16 May 16 Jul 16 Sep 16 Nov 16 Jan 17 Mar 17 May 17 Jul 17 Sep 17 Nov 17 Jan 18 Mar 18 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jan 18 Apr 18 Jan 15 Mar 15 May 15 Jul 15 Sep 15 Nov 15 Jan 16 Mar 16 May 16 Jul 16 Sep 16 Nov 16 Jan 17 Mar 17 May 17 Jul 17 Sep 17 Nov 17 Jan 18 Mar 18 SELECTED REFERENCE PRICES (US$/s.t.) Containerboard - Selected Products Linerboard 42-lb. unbleached kraft, Eastern U.S. Corrugating medium 26-lb. semichemical, Eastern U.S. Current (Apr.) (Euro /m.t.) 1,200 1,100 1, Boxboard Europe - Selected Products Coated duplex - virgin board (FBB) White-lined chipboard - recycled board (WLC) Current (Mar.) 1, (US$/s.t.) Specialty Products - Selected Products Current (Apr.) 680 (US$/s.t.) 1,500 1,400 1,300 Tissue Papers - Selected Products Current (Mar.) 1, , ,100 1,000 1, Uncoated recycled folding boxboard, Series B Price Virgin parent rolls Recycled parent rolls Source: RISI. 32

33 SELECTED REFERENCE PRICES AND FIBRE COSTS These indexes should only be used as an indicator of trends and they may be different than our actual selling prices or purchasing costs Year Q2 Q3 Q4 Year vs. vs. Q4 (units) (%) (units) (%) Selling prices (average) PACKAGING PRODUCTS Containerboard (US$/ton) Linerboard 42-lb. unbleached kraft, Eastern U.S. (open market) % 17 2% Corrugating medium 26-lb. semichemical, Eastern U.S. (open market) % 17 3% Boxboard Europe (Euro/tonne) Recycled white-lined chipboard (WLC) index % (2) (0%) Virgin coated duplex boxboard (FBB) index 2 1,045 1,031 1,031 1,031 1,031 1,031 1, % 42 4% Specialty Products (US$/ton) Uncoated recycled boxboard - 20pt. bending chip (series B) % 3 0% TISSUE PAPERS (US$/ton) Parent rolls, recycled fibres (transaction) 1,013 1,023 1,040 1,053 1,057 1,043 1, % 15 1% Parent rolls, virgin fibres (transaction) 1,280 1,297 1,320 1,334 1,339 1,323 1, % 27 2% Raw materials (average) RECYCLED PAPER North America (US$/ton) Sorted residential papers, no. 56 (SRP - Northeast average) (33) (36%) (4) (6%) Corrugated containers, no. 11 (OCC - Northeast average) (50) (35%) (7) (7%) Sorted office papers, no. 37 (SOP - Northeast average) (8) (5%) 5 3% Europe (Euro/tonne) Recovered paper index (36) (24%) (24) (18%) VIRGIN PULP (US$/tonne) Northern bleached softwood kraft, Canada 978 1,033 1,093 1,110 1,183 1,105 1, % 50 4% Bleached hardwood kraft, mixed, Canada/U.S , , % 25 2% Sources: RISI, Cascades and Reno de Medici. (1) The index is based on publication prices and represents an approximation of Cascades recycled grades selling prices in Europe. It is weighted by country. (2) The index is based on publication prices and represents an approximation of Cascades virgin grades selling prices in Europe. It is weighted by country. (3) The recovered paper index is based on publication prices and represents an approximation of Cascades recovered paper purchase prices in Europe. It is weighted by country. 33

34 For more information: Jennifer Aitken, MBA Director, Investor Relations or 34