1. business and industrial
2. company
3. merger and acquisition

Q3 2014
EARNINGS
PRESENTATION
Presented by:
Joe Nemeth,
Presented
by: President & CEO
Kevin J. Clarke,
Brian Baarda, VP Finance
President & CEO
Brian Baarda,
November 5, 2014
VP Finance & CFO
May 7, 2013
1
| Q3 Earnings Presentation, November 5, 2014March
6, 2013
& CFO
FORWARD-LOOKING STATEMENTS
The presentation and answers to questions today contain forward-looking statements. Forward-looking statements are statements
that address or discuss activities, events or developments that we expect or anticipate may occur in the future and can be
identified by the use of words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “likely”, “predict”, “estimate”, “forecast”, and
similar words or phrases or the negative of such words or phrases. These forward-looking statements reflect our current beliefs,
intentions or expectations based on certain assumptions and estimates, which could prove to be significantly incorrect, including
our ability to develop, manufacture and sell new products and services that meet the needs of our customers and gain commercial
acceptance, our ability to continue to sell our products and services in the expected quantities at the expected prices and expected
times, our ability to successfully obtain cost savings from our cost reduction initiatives, our ability to implement business strategies
and pursue opportunities, expected cost of goods sold, expected component supply costs and constraints and expected foreign
exchange and tax rates.
While considered reasonable by management, these forward-looking statements are inherently subject to known and unknown
risks and uncertainties and other factors that could cause actual results or events to differ from historical or anticipated results or
events. These risks, uncertainties and other factors include the impact of general economic conditions in the countries in which we
do business, conditions in the capital markets and our ability to obtain financing and refinance existing debt, market conditions and
demand for our products (including declines in advertising and circulation), product selling prices, the implementation of trade
restrictions in jurisdictions where our products are marketed, fluctuations in foreign exchange or interest rates, raw material prices
(including wood fibre, chemicals and energy), our ability to successfully obtain cost savings from our cost reduction initiatives, the
effect of, or change in, environmental and other governmental regulations, labour relations, the availability of qualified personnel,
legal proceedings, the effects of competition from domestic and foreign producers, our ability to implement business strategies and
pursue opportunities, the risk of natural disaster and other factors beyond our control.
As a result, no assurance can be given that any of the events or results anticipated by such forward-looking statements will occur
or, if they do occur, what benefit they will have on our operations or financial condition. Readers are cautioned not to place undue
reliance on these forward-looking statements. We disclaim any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise, except as required by law.
2
| Q3 Earnings Presentation, November 5, 2014
NON-GAAP MEASURES
Except where otherwise indicated, the financial information in this presentation is determined on
the basis of U.S. GAAP.
“Adjusted EBITDA” is a non-GAAP measure, calculated as operating earnings (loss) plus
depreciation and amortization and impairment. We focus on adjusted EBITDA as we believe this
measure enables comparison of our results between periods without regard to debt service,
income taxes, capital expenditure requirements, and impairment.
“Adjusted EBITDA before restructuring costs”, “net earnings (loss) attributable to the Company
before specific items”, and “net earnings(loss) per share attributable to the Company’s common
shareholders before specific items” are non-GAAP measures. We use measures excluding
specific items in evaluating our results between periods without regard to specific items that
adversely or positively affect our adjusted EBITDA and net earnings (loss).
“Free cash flow” is a non-GAAP measure, calculated as adjusted EBITDA after capital
expenditures, interest and taxes paid, and adjustments to reflect employee future benefit
payments. The closest GAAP measure is cash provided by operating activities less cash used
by investing activities. We report free cash flow as we believe it is useful for investors and other
users to be aware of this measure so they can better assess our operating performance.
3
| Q3 Earnings Presentation, November 5, 2014
Q3 OVERVIEW
FINANCIAL PERFORMANCE:
 YTD Financial Performance has significantly improved vs 2013:
 YTD Adjusted EBITDA is $40.8M vs $27.0M in the first 9 months of 2013.
Q3 Adjusted EBITDA of $8.0M was $0.9M higher than Q2 2014
 YTD free cash flow was negative $5.0M vs negative $27.3M in the first 9
months of 2013. Q3 free cash flow was negative $8.0M for the quarter
 Q3 results were negatively impacted by Powell River’s Total Mill Outage
(TMO) and maintenance work on our power boilers at Powell River and Port
Alberni
 Operating results reflected record pulp productivity and lower pulp
manufacturing costs
 We sold our interest and repaid the related mortgage receivable on the
PRSC Limited Partnership and PRSC Land Development Ltd. for $3.0M
proceeds
4
| Q3 Earnings Presentation, November 5, 2014
Q3 OVERVIEW
OPERATIONS:
 Safety performance:
 Q3 MIR of 3.08 vs 3.91 in 2013
 2014 YTD MIR is 2.50
 Pulp Productivity: Best pulp productivity since 2007
 Paper Productivity: Impacted by the Powell River’s TMO
MARKETS:
 North American paper demand and price declined in the 3rd quarter
 Announced paper price increases of US$20/ton on our Coated Grades
effective November 1 and US$40/ton on Soft Calendered grades effective
December 1
 NBSK prices remained flat in the quarter and pulp shipments were down from
Q3 2013
5
| Q3 Earnings Presentation, November 5, 2014
Q3 OVERVIEW
PURCHASE OF PAPER MILLS IN WISCONSIN AND MAINE:
 Entered into Asset Purchase Agreement with NewPage to acquire the Biron
paper mill in Wisconsin and the Rumford pulp and paper mill in Maine for
consideration of US$74.0M, subject to certain adjustments
 The Biron paper mill produces 355,000 tonnes of lightweight coated and ultralightweight coated paper
 The Rumford pulp and paper mill produces 510,000 tonnes of coated
specialty, coated freesheet, coated groundwood paper and 130,000 tonnes of
Kraft market pulp
 Catalyst intends to finance the acquisition through a combination of advances
under our ABL Facility and US$25.0M in additional 2017 Notes
 Pending regulatory approval and completion of the previously announced
acquisition by Verso of NewPage and other customary closing conditions
6
| Q3 Earnings Presentation, November 5, 2014
DEMAND & SHIPMENTS
North American Paper Demand and NBSK Pulp Shipments
(in thousands of metric tonnes)
Source: PPPC
North American
demand declined
compared to Q3
2013 for all paper
segments
3,500
2,625
1,750
Pulp shipments
declined compared
to Q3 2013
875
‐
Q1
Q2
Q3
Q4
Q1
Q2
2011
NEWSPRINT
Q3
Q4
Q1
Q2
2012
Q3
Q4
Q2
Q3
2014
1,261
1,221
1,247
1,279
1,230
1,216
1,259
1,236
1,105
1,108
1,119
1,138
1,030
1,037
1,010
933
872
965
923
865
870
935
940
825
833
891
830
773
762
826
UNCOATED MECHANICAL*
1,033
1,018
1,069
986
833
873
862
905
833
887
968
975
828
922
892
LIGHTWEIGHT UNCOATED
135
130
130
128
111
105
110
94
94
89
98
81
75
71
81
3,254
3,117
3,071
2,954
3,340
3,058
3,242
3,125
3,310
3,162
3,286
3,306
3,204
3,170
3,149
COATED MECHANICAL
NBSK PULP
* Uncoated mechanical is comprised of high-gloss and standard grades
7
Q1
2013
| Q3 Earnings Presentation, November 5, 2014
FINANCIAL RESULTS
2013
($millions, except per share amounts)
Sales
Q1
Q2
Q3
Q4
Q1
Q2
Q3
$ 247.1
$ 263.4
$ 268.8
$ 272.1
$ 273.9
$ 283.5
$ 272.0
7.1
8.0
-
-
Adjusted EBITDA
Restructuring costs
Adjusted EBITDA before restructuring costs
2014
$
Adjusted EBITDA margin before restructuring costs
11.2
(0.6)
16.4
19.1
25.7
-
0.1
-
1.1
-
11.2
$
(0.5)
$
16.4
$
4.5%
(0.2%)
(9.8)
$ (28.0)
Net earnings (loss) attributable to the Company before
specific items
(11.6)
(18.1)
(3.5)
1.7
EPS from continuing operations
EPS before specific items
(0.89)
(0.80)
(1.93)
(1.25)
0.36
(0.24)
Average F/X spot rate (USD/CAD)
0.992
0.977
Average effective F/X rate (USD/CAD)
0.992
0.977
Net earnings (loss) attributable to the Company
8
$
6.1%
20.2
$
5.2
$
7.4%
$ (95.0)
25.7
$
9.4%
(3.8)
2.5%
$
$
8.0
2.9%
(6.3)
$ (22.5)
6.5
(13.6)
(10.8)
(6.55)
0.12
(0.26)
0.45
(0.43)
(0.94)
(1.55)
(0.74)
0.963
0.953
0.906
0.917
0.918
0.963
0.953
0.906
0.917
0.918
| Q3 Earnings Presentation, November 5, | Q3 Earnings Presentation, November 5, 2014
2014
$
7.1
8
ADJUSTED EBITDA RECONCILIATION
($millions)
Adjusted EBITDA (before restructuring costs)
Paper Prices
Pulp Prices
Impact of Canadian dollar
Volume and mix
Furnish mix and costs
Power and fuel costs
Labour costs
Maintenance costs
Selling, general and administrative costs
Lower of cost or market impact on inventory
De-recognition of interest in PREI
Power generation
Other, net
Q2 2014
$
2014 Q3 Adjusted EBITDA (before restructuring costs)
Depreciation
2014 Q3 Adjusted Operating Earnings (Loss)
Restructuring (costs) recovery
2014 Q3 Reported Operating Earnings (Loss)
9
| Q3 Earnings Presentation, November 5, 2014
$
7.1 $
(1.0)
(3.9)
0.4
3.5
(2.0)
2.3
3.2
(2.9)
1.3
1.7
(1.7)
Q3 2013
16.4 $
(4.7)
2.3
8.6
(0.3)
(4.4)
(2.0)
(1.4)
(4.2)
1.7
(1.5)
(0.3)
(2.2)
2013 YTD
27.1
(15.9)
15.6
35.3
10.5
(13.8)
(7.7)
(4.7)
3.3
3.3
(1.4)
(4.3)
0.7
(7.2)
8.0
8.0
40.8
(11.2)
(11.2)
(33.1)
(3.2)
(3.2)
7.7
-
-
-
(3.2) $
(3.2) $
7.7
FREE CASH FLOW
2014
2013
($millions)
Adjusted EBITDA before restructuring costs
Q1
Q2
$ 11.2 $
Restructuring costs
Q3
Q1
Q4
(0.5) $ 16.4
-
(0.1)
-
Adjusted EBITDA
11.2
(0.6)
16.4
Interest expense, excluding amortization
(10.6)
(8.2)
Capital expenditures
(5.9)
Reorganization costs
$ 20.2
$
7.1
Q3
$
8.0
-
-
-
19.1
25.7
7.1
8.0
(8.0)
(8.7)
(9.1)
(7.7)
(8.6)
(8.5)
(5.3)
(3.7)
(3.1)
(4.7)
(5.7)
(0.6)
-
-
-
-
-
-
Employee future benefits, net of funding
(1.9)
(2.0)
(2.3)
(0.8)
(1.9)
(3.3)
(1.7)
Net operating cash flow from discontinued
operations
(1.0)
-
-
-
-
-
-
5.9
$ 11.6
Free cash flow
10 | Q3 Earnings Presentation, November 5, 2014
$
(8.8) $ (19.3) $
0.8
(1.1)
$ 25.7
Q2
$
$
(8.6) $
(8.0)
LIQUIDITY
2014
2013
($millions)
Borrowing base
$
Letters of credit
Net amount drawn
Available to be drawn2
Q1
Q2
133.5 $
138.7
(22.1)
(19.8)
(4.7)
$
106.7
Cash on hand
14.1
Restricted cash
20.0
Total liquidity
$
Q3
$
$
140.8 $
118.9 $
16.0
134.9 $
Q4
145.8
$
140.4
$
Q1
Q2
Q3
148.2 $
141.3 $
139.9
(19.8)
(19.3)
(18.6)
(18.5)
(18.6)
(11.8)
(10.6)
(1.3)
(7.8)
(20.0)
114.2 $
110.5
128.3 $
115.0 $
101.3
$
13.8
12.1
9.9
8.2
-
-
22.5
-
128.0 $
122.6
$
160.7 $
123.2 $
9.1
110.4
1 Borrowing base for the ABL Facility is reduced by reserves of $1.3 million for pension, $2.0 million for creditor insurance deductibles, $2.0
million for landlord waivers, $1.6 million for employee source deductions, $0.3 million related to WorkSafeBC and $0.4 million related to
mark-to-market exposure on our foreign currency revenue hedges.
2 Requirement to maintain a minimum fixed charge coverage ratio of 1.0/1.0 if excess availability falls below $21.9 million.
11 | Q3 Earnings Presentation, November 5, 2014
1
PLANNED MAJOR MAINTENANCE SHUTDOWNS IN 2014
Q1
Mill Location
Alberni
TMO
Boilers
Crofton
TMO
Pulp
Boilers
Powell
TMO
Capital
Boilers
Total
2014
Q3
Q2
–
–
–
–
–
–
–
–
–
–
–
1.5
–
–
–
0.5
–
–
–
2.0
–
–
–
–
–
–
–
10,400
–
–
6.9
–
–
–
–
–
–
–
–
1,600
–
–
1.0
3.9
–
12,000
–
–
7.9
3.9
–
–
–
–
–
–
–
–
–
–
–
10,400
–
–
–
6.9
9,800
–
–
9,800
2.3
–
2.8
6.6
–
–
–
1,600
–
–
–
5.4
9,800
–
–
21,800
2.3
–
2.8
18.9
12 | Q3 Earnings Presentation, November 5, 2014
Tonnage
Impact
Mtce
Cost
($mm)
Total
Tonnage
Impact
Tonnage
Impact
Mtce
Cost
($mm)
Q4
Mtce
Cost
($mm)
Tonnage
Impact
Mtce
Cost
($mm)
Tonnage
Impact
Mtce
Cost
($mm)
OUTLOOK
 ECONOMY:
•
Economic growth expected to be sustained in the United States, which is
expected to support continued weakness in the C$
 MARKETS:
•
Demand decline for specialty paper grades expected to be tempered by
recently announced North American capacity reduction
•
Softwood pulp expected to trade in a narrow range for the balance of the year
 OPERATIONS:
•
Maintenance work scheduled for 4th quarter includes a limited maintenance
shut on Crofton’s recovery boiler and batch digester and maintenance on
Crofton’s power boiler
•
Powell River’s paper machine 9 curtailed on October 31st for 3 weeks whereby
6,500 tonnes specialty paper grades were removed from the market
•
Approval pending on paper mill purchase agreement
13 | Q3 Earnings Presentation, November 5, 2014
APPENDIX
14
| Q3 Earnings Presentation, November 5, 2014
ADJUSTED EBITDA SENSITIVITIES
($millions)
Adjusted EBITDA
(1), (2)
Product prices
Impact of US$10/t change in price of:
Specialty printing papers
Newsprint
Pulp
$
7
4
4
15
(3)
Foreign exchange
Impact of $0.01 change in US dollar relative to the Canadian dollar
7
(1), (4)
Energy cost sensitivity
Impact of 5% change in price of:
Natural gas and oil – direct purchases
Electricity – direct purchases
1
7
Freight cost sensitivity
Impact of US$5/bbl change in price of West Texas Int. (WTI) Oil
3
(1), (4)
Fibre sensitivity
Impact of US$5/unit change in the price of wood chips (Bdt)
(1)
(2)
(3)
(4)
$
9
Based on a foreign exchange rate of US$0.92.
Based on annualized sales of Q3 2014.
Based on Q3 2014 annualized net cash flows and a foreign exchange movement to US$0.93 from US$0.92
and excluding our hedging program and the impact of the translation of U.S. dollar denominated debt.
Based on annualized Q3 2014 consumption levels.
15 | Q3 Earnings Presentation, November 5, 2014
SUMMARY OF SEGMENTED
FINANCIAL INFORMATION
2013
($millions, except where otherwise
stated)
Sales (000 MT)
Specialty printing papers
Newsprint
Pulp
Sales
Specialty printing papers
Newsprint
Pulp
Adjusted EBITDA
Specialty printing papers
Newsprint
Pulp
Adjusted EBITDA before
restructuring costs
Specialty printing papers
Newsprint
Pulp
2014
Q1
Q2
Q3
Q4
Q1
Q2
Q3
LTM
180.0
69.3
80.3
329.6
195.8
72.6
78.2
346.6
197.4
66.1
87.1
350.6
188.8
75.3
82.4
346.5
175.9
77.6
82.2
335.7
184.9
93.2
78.4
356.5
171.1
82.1
95.0
348.2
720.7
328.2
338.0
1,386.9
$
149.6
46.6
50.9
$
161.1
49.4
52.9
$
164.6
44.3
59.9
$
159.8
52.0
60.3
$
153.5 $
54.4
66.0
158.2
63.4
61.9
$
145.5
55.6
70.9
$
617.0
225.4
259.1
$
247.1
$
263.4
$
268.8
$
272.1
$
273.9 $
283.5
$
272.0
$
1,101.5
$
7.7
2.1
1.4
$
(0.8) $
3.1
(2.9)
6.5
2.5
7.4
$
11.6
5.8
1.7
$
5.9 $
5.5
14.3
0.8
2.4
3.9
$
(7.4)
1.9
13.5
$
10.9
15.6
33.4
$
11.2
$
(0.6) $
16.4
$
19.1
$
25.7 $
7.1
$
8.0
$
59.9
$
7.7
2.1
1.4
$
(0.8) $
3.2
(2.9)
6.5
2.5
7.4
$
12.2
6.1
1.9
$
5.9 $
5.5
14.3
0.8
2.4
3.9
$
(7.4)
1.9
13.5
$
11.5
15.9
33.6
$
11.2
$
(0.5) $
16.4
$
20.2
$
25.7 $
7.1
$
8.0
$
61.0
$
(2.9) $
(10.7) $
(85.3)
$
(2.7) $
(8.2) $
$
(112.4)
3.8
13.7
1.0
3.3
0.1
12.9
14.8 $
(3.9) $
(3.2)
Operating earnings (loss)
Specialty printing papers
Newsprint
Pulp
0.7
1.0
$
(1.2) $
1.9
(3.2)
(12.0) $
(3.4) $
1.4
6.9
4.9
4.4
1.4
$
(79.5)
$
Numbers for all periods exclude the results of our Snowflake mill which have been classified as discontinued operations.
16
| Q3 Earnings Presentation, November 5, 2014
(16.2)
9.3
31.3
$
(71.8)
IMPACT OF SPECIFIC ITEMS ON NET EARNINGS (LOSS)
ATTRIBUTABLE TO THE COMPANY
2013
($millions, except where otherwise stated)
Net earnings (loss) attributable to the Company as
reported
Specific items, after taxes:
Foreign exchange loss (gain) on long-term debt
Settlement loss on PIUMPF pension liability
Impairment and other closure costs
Restructuring costs
Reorganization items, net
(Gain) Loss on purchase of debt
Net gain on sale of non-core assets
Settlement gain on special pension portability election
Net earnings (loss) attributable to the Company
before specific items
Net earnings (loss) per share attributable to the
Company’s common shareholders before specific
Q1
$
Q2
(9.8) $ (28.0) $
5.9
0.2
0.4
1.1
(9.4)
-
9.6
0.1
(2.1)
-
$ (11.6) $ (20.4) $
2014
Q3
5.2
Q4
$ (95.0)
(6.1)
(2.6)
Q2
Q1
$
9.4
86.9
1.1
(0.7)
-
LTM
Q3
(3.8) $
(6.3) $ (22.5)
11.2
(0.9)
-
(8.9)
1.9
(0.3)
-
$ (127.6)
12.6
1.2
(2.1)
-
24.3
1.2
86.9
1.1
1.0
(3.1)
-
(3.5) $
1.7
$
6.5
$ (13.6) $ (10.8)
$
(16.2)
$ (0.80) $ (1.41) $ (0.24) $
0.12
$
0.45
$ (0.94) $ (0.74)
$
(1.11)
17 | Q3 Earnings Presentation, November 5, 2014
CAPITALIZATION
($millions)
Term Loan, due July 2017
Senior secured notes, 11.0% due October 2017 (US$235.5 million;
December 31, 2013 – US$250.0 million)
Floating rate senior secured notes, due September 2016
(December 31, 2013 – US$19.4 million)
Revolving asset based loan facility of up to $175.0 million due July
2017
Capital lease obligations
Total debt
Less: Current portion
Total long-term debt
18 | Q3 Earnings Presentation, November 5, 2014
December 31,
2013
$
-
September 30,
2014
$ 19.0
265.9
263.9
20.2
286.1
282.9
10.6
7.1
20.0
8.3
303.8
(2.0)
$ 301.8
311.2
(3.0)
$ 308.2
19
| Q3 Earnings Presentation, November 5, 2014