Cascades : Q3 - Financial Results

Q3 2020

FINANCIAL RESULTS

November 12, 2020

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:

• 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.
• 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 herefor supplemental information on non-IFRS measures.

2

SUMMARY OF QUARTERLY FINANCIAL RESULTS2

161

108

152	161	186	162
90	94		73

43	28	29	22	39	54	58	49	48
		(26)

(1)

Q3 2019 2

Q4 2019

Q1 2020

Q2 2020

Q3 2020

1

Operating Income (loss)

Adjusted OIBD

Figures above in millions of CAN$

2

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Net Earnings (loss)

Adjusted Net Earnings 1

Figures above in millions of CAN$

(In millions of CAN$, except amount					2018					2019 2			2020	LTM 3
per share)	Q1	Q2	Q3	Q4	Year	Q1	Q2	Q3 2	Q4	Year	Q1	Q2	Q3
Financial results
Sales	1,098	1,180	1,175	1,196	4,649	1,230	1,275	1,264	1,227	4,996	1,313	1,285	1,275	5,100
Operating income (loss)	112	73	78	(35)	228	72	82	108	(1)	261	90	94	73	256
Adjusted OIBD1	105	134	137	113	489	135	156	161	152	604	161	186	162	661
Net earnings (loss)	61	27	36	(67)	57	24	31	43	(26)	72	22	54	49	99
Adjusted net earnings1	12	29	38	-	79	13	26	28	29	96	39	58	48	174
Net earnings (loss) per share	$0.65	$0.28	$0.38	$(0.71)	$0.60	$0.26	$0.33	$0.45	$(0.27)	$0.77	$0.24	$0.57	$0.51	$1.05
Adjusted net earnings per share1	$0.13	$0.30	$0.40	-	$0.83	$0.14	$0.28	$0.30	$0.30	$1.02	$0.42	$0.61	$0.50	$1.83

Q3 adjusted OIBD decrease QoQ largely driven by impact of Covid on Tissue AfH demand; YoY results reflect increases in Tissue & Boxboard Europe, offset by lower Containerboard results

(1) Please click herefor supplemental information on non-IFRS measures. (2) 2019 third quarter results have been adjusted to reflect retrospective adjustments of purchase price	3
allocation. Please refer to Note 4 of the 2020 third quarter Unaudited Condensed Interim Consolidated Financial Statements for more details. (3) Last twelve months

HISTORICAL SEGMENTED QUARTERLY OPERATING INCOME (LOSS) & ADJUSTED OIBD1,2

Containerboard (millions of CAN$)

118

106

Boxboard Europe2 (millions of CAN$)

43

91	99	94	100
74		71
69	54

25

14

24	30	30	29
20		19

Q3 2019	Q4 2019	Q1 2020	Q2 2020		Q3 2020

	Operating Income		Adjusted OIBD 1

			(6)
Q3 2019	Q4 2019	Q1 2020	Q2 2020		Q3 2020
		Operating Income (loss)		Adjusted OIBD 1

Specialty Products2 (millions of CAN$)	Tissue Papers (millions of CAN$)

16		12	17	16
10	9	11	11
8
	5
Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020

	Operating Income		Adjusted OIBD 1

34	24	35	28	45	54	36
	31
						3
		(21)
Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020

	Operating Income (Loss)		Adjusted OIBD 1

(1) Please click herefor supplemental information on non-IFRS measures. (2) 2019 third quarter results have been adjusted to reflect retrospective adjustments of purchase price	4
allocation. Please refer to Note 4 of the 2020 third quarter Unaudited Condensed Interim Consolidated Financial Statements for more details.

HISTORICAL SEGMENTED QUARTERLY SHIPMENTS

Containerboard ('000 s.t. and % capacity utilization1)
				411
377	365	374	360
	98%	98%
94%
92%		92%
Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020

Boxboard Europe ('000 s.t. and % capacity utilization1) 351

		101%	326
321			316
		94%
93%
305		91%
	88%
Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020

Tissue Papers ('000 s.t. and % capacity utilization1)

161	167	181	167
	144
93%
	88%	87%
	84%
				73%
Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020

(1) Utilization rate defined as total manufacturing shipments divided by practical capacity.

5