aicc canada presentation€¦ · 13/9/2016 · source: factset; q3 16 data until aug 30, 2016...

Refer to pages 34-36 for Important Disclosures, including Analyst’s Certification. For Important Disclosures on the stocks discussed in this report, please go to http://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx

AICC CanadaAGM & General Meeting

Update on North American Containerboard & Corrugated Markets

Mark Wilde, PhDManaging [email protected] / 212-883-5102

Mississauga, ON, CanadaSeptember 13, 2016

2

Our Focus Today

1. Current Industry Backdrop

2. Trends in the Industry

3. The Industry From an Investor Perspective

3

Current Industry Backdrop

1. Demand Is Mixed

Many Emerging Markets Have Slowed

N.A. Volumes Are Expanding Slowly

European Demand Has Been Surprisingly Strong

2. Supply Is Creeping Up

Mix of Greenfield Recycled and PM Conversions

‒ Examples: IP/Madrid, Pratt, PCA, Hamburger, LEIPA, Metsa Board,

Parenco, SCA, StoraEnso, VPK/Klingele, Atlantic, Greenpac, Kruger

Note: SCA, StoraEnso, and Metsa = not covered

4

Current Industry Backdrop (Cont’d.)

3. Cost Pressure Has Been Limited OCC Has Been Near Historical Trough Levels, but Rising Since April

U.S. OCC Prices ($/s.ton)

Source: RISI, BMO Capital Markets

-

25

50

75

100

125

150

175

200

Jan-

03

Aug

-03

Apr

-04

Dec

-04

Aug

-05

Mar

-06

Nov

-06

Jul-0

7

Mar

-08

Nov

-08

Jun-

09

Feb-

10

Oct

-10

Jun-

11

Feb-

12

Sep

-12

May

-13

Jan-

14

Sep

-14

May

-15

Dec

-15

Aug

-16

Long-Term Avg since Jan 2003: $100

5


4. Limited Cost Pressure

Energy Costs Have Been Very Low

Spot Prices for Natural Gas Rose 21.9% q/q in Q3 QTD

Henry Hub Natural Gas Price (USD/MMBtu)

Source: Bloomberg, BMO Capital Markets

0

2

4

6

8

10

12

14

16

Jan-

05

May

-05

Oct

-05

Feb-

06

Jul-0

6

Dec

-06

Apr

-07

Sep

-07

Feb-

08

Jun-

08

Nov

-08

Apr

-09

Aug

-09

Jan-

10

May

-10

Oct

-10

Mar

-11

Jul-1

1

Dec

-11

May

-12

Sep

-12

Feb-

13

Jun-

13

Nov

-13

Apr

-14

Aug

-14

Jan-

15

Jun-

15

Oct

-15

Mar

-16

Aug

-16

Long-Term Avg: 5.0

6


5. Large Foreign Exchange Moves

U.S. Dollar Has Strengthened Against Most Currencies

Impact on Trade Flows and Pricing?

Creates Local Issues in Markets Like Canada

US Dollar vs Major Currencies

Source: FactSet; Q3 16 data until Aug 30, 2016

Exchange Rates Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 QTD Y/Y Change

EUR/USD 0.90 0.91 0.91 0.89 0.90 -0.2%

CAD / USD 1.31 1.34 1.37 1.29 1.30 0.5%

BRL / USD 3.55 3.85 3.90 3.51 3.24 9.4%

RUB / USD 63.20 66.09 74.61 65.83 64.67 -2.3%

AUD / USD 1.38 1.39 1.39 1.34 1.32 4.6%

CNY / USD 6.30 6.39 6.54 6.53 6.66 -5.4%

7


5. Large Foreign Exchange Moves (Cont’d.)

US Dollar vs CAD

Source: FactSet

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

Jan-

06

Apr

-06

Aug

-06

Nov

-06

Feb-

07

Jun-

07

Sep

-07

Jan-

08

Apr

-08

Aug

-08

Nov

-08

Mar

-09

Jun-

09

Sep

-09

Jan-

10

Apr

-10

Aug

-10

Nov

-10

Mar

-11

Jun-

11

Oct

-11

Jan-

12

May

-12

Aug

-12

Nov

-12

Mar

-13

Jun-

13

Oct

-13

Jan-

14

May

-14

Aug

-14

Dec

-14

Mar

-15

Jun-

15

Oct

-15

Jan-

16

May

-16

Aug

-16

Avg Since 2006 : 1.08

8


6. Export Pricing Has Been Under Pressure

Kraftliner Export Prices (USD/tonne)

Source: RISI-Pulp & Paper Week, BMO Capital Markets

Aug export prices to: 1) S. Europe are down $59/tonne y/y and -$205/tonne since mid-2013 peak; and 2) Mexico are down $55/tonne y/y and -$85/tonne since mid-2013 peak

350400450500550600650700750800850

Aug

-04

Feb-

05

Aug

-05

Feb-

06

Aug

-06

Feb-

07

Aug

-07

Feb-

08

Aug

-08

Feb-

09

Aug

-09

Feb-

10

Aug

-10

Feb-

11

Aug

-11

Feb-

12

Aug

-12

Feb-

13

Aug

-13

Feb-

14

Aug

-14

Feb-

15

Aug

-15

Feb-

16

Aug

-16

Unbleached Kraftliner, 42 lb (export, to Laredo for Mexico)

Unbleached Kraftliner, 175 g+ (export), Southern Europe

Unbleached Kraftliner, 175 g+ (export), Hong Kong

9


7. Domestic Containerboard Pricing

Producers Have Announced a $50/ton Price Hike Effective Oct 1

Containerboard Pricing (USD/s.ton)

Source: RISI-Pulp & Paper Week, BMO Capital Markets

100

200

300

400

500

600

700

Aug

-00

Aug

-01

Aug

-02

Aug

-03

Aug

-04

Aug

-05

Aug

-06

Aug

-07

Aug

-08

Aug

-09

Aug

-10

Aug

-11

Aug

-12

Aug

-13

Aug

-14

Aug

-15

Aug

-16

Linerboard - Open Market Price - 42-lb Corrugating Medium - Open Mkt Price - 26-lb

10

Trends in the Global Industry

1. Industry Consolidation

North America

‒ One More Large Deal, Several Smaller Deals?

Europe

‒ Potential for More Consolidation in Europe

• Could Involve Public, Private, or Offshore Players

Latin America (L.A.)

‒ Has Seen Moves by U.S./European Players

‒ SmurfitKappa Has Been Especially Active

‒ WestRock Is Becoming More Active

11

Trends in the Global Industry

2. Increased Emphasis on Vertical Integration

For Past 15+ Years, U.S. Integrated Producers Have Been

Buying Independent Converters

Recent Deals‒ PCA: TimBar / Crockett Packaging‒ GP: Reliable / Excel / LACorr‒ KapStone: Victory Packaging / Central Florida Box / US Corrugated‒ Hood: Action Box / Stronghaven / Packaging Unlimited‒ New-Indy: Carolina Container‒ Pratt: Visy / Minnesota Corrugated / Robert Mann / Triad Packaging‒ Atlantic / BlackHawk Corrugated JV / Skybox Packaging

Valuation Multiples for Independent Converters Have Risen:

‒ 6-7x 9-10+x

12

Trends in the Global Industry (Cont’d.)

3. Increasing Globalization

Large U.S. Players Have Limited Room at Home‒ IP into Brazil, Mill Conversion in Spain, Expansion in Morocco and Turkey

‒ WRK into Brazil, Mexico, and India

With Stronger Balance Sheet, SKG Has Become More Active in

U.S. and Latin America

Foreign Players Eye High Margins and Stable Prices in U.S.

Pratt, SmurfitKappa, SAICA?

4. Re-Purposing of Capacity Will Continue to Be Source of Supply

Both Virgin Fiber and Recycled Fiber

N.A., Europe, L.A., . . . Elsewhere?

13

The Industry From an Investor Perspective - What Do Investors Want?

1. Superior Financial Returns

2. Stable & Consistent Returns

Lower Volatility & Reduced Exposure to Outside "Shocks"

3. Strong & Steady Cash Flow Generation

Disciplined Use of Cash

‒ No Overly Aggressive Capital Programs

‒ No Overpriced & Poorly Executed Acquisitions

‒ In Absence of Good Growth or Deleveraging Opportunities, Return Cash to Shareholders

o Dividends - - Ordinary and Special

o Share Repurchases

• Tax Efficiency

14

How Do Investors “Score” Packaging Companies?

Current Market Valuations on Leading Packaging CompaniesEnterprise Value / Forward EBITDA (2017)

Source: FactSet, Company filings, BMO estimates

Average of BLL, SEE, ATR, BMS, SON, CCK, and SLGN = 10.4xAverage of IP, GPK, DS Smith, PKG, KS, WRK, and SKG = 8.1x

Note: Enterprise Value (EV) = Market Capitalization + Net Debt + Minority Interest; SKG and DS Smith – FactSet Consensus estimates, SKG and DS Smith are not covered; 2018 estimates for DS Smith. As of 8/26/2016.

12.0x

11.1x10.8x

10.1x9.7x 9.7x

9.3x 9.3x9.1x

8.7x 8.4x 8.4x 8.3x 8.2x7.8x 7.5x

7.1x 6.9x

6.0x

7.0x

8.0x

9.0x

10.0x

11.0x

12.0x

13.0x

BLL

SE

E

ATR

BM

S

SON

CC

K

SLG

N

LAB

L

BER

Y IP

GPK

DS

Sm

ith

PK

G KS

MP

SX

WR

K OI

SK

G

15

What Does This Tell Us?

They Aren't High Growth . . . at Least, Domestically

Canmakers Receive a Premium Valuation From Investors – Why??

Beverage Can Volumes (US & Canada) - % Chg Y/Y Food Can Volumes (US only) - % Chg Y/Y

Note: Beverage can data includes the U.S. and Canada, while food can data is U.S. onlySource: The Can Manufacturers Institute

2003 – 2015 CAGR: -0.6% 2003 – 2015 CAGR: -1.0%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

1H16

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

1H16

16


They Have Generated Growth via:

‒ Consolidation in Core Markets

‒ Selective Growth in Adjacent Markets

‒ Disciplined Expansion Into Offshore Markets

‒ Willingness to Return Cash to Shareholders

o Ball Has Repurchased $1.5B of Stock Since 2012

17


Reduced Earnings Volatility by Reducing “Commodity Risk”

‒ Commodity Price Risk Hedged or Passed to Customer

Segment EBITDA Margins for North America Canmakers

Note: BLL – includes Americas/Asia – Beverage Packaging, Europe Beverage Packaging and Metal Foods & Household Packaging segmentsCCK includes Americas Beverage, North America Food, European Beverage, and European Food segments SLGN – includes Metal Containers segmentSource: Company Filings, BMO Capital Markets

BLL

CCK

SLGN12%

13%

14%

15%

16%

17%

18%

19%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

1H 2

016

BLL CCK SLGN

18


How Have Stocks Performed?

Stock Performance (Indexed) of N.A. Metal Canmakers vs. Paper Packaging Companies vs S&P

Source: FactSet, BMO Capital Markets

Metal Cans Index includes – Ball (BLL), Crown (CCK), and Silgan (SLGN)Paper Packaging Index includes – International Paper (IP), WestRock (WRK), Packaging Corp of America (PKG), KapStone (KS)Note: WestRock is RKT prior to July 2015

0

200

400

600

800

1,000

1,200

1,400

1,600

Jan-

01

Aug

-01

Feb-

02

Sep

-02

Apr

-03

Nov

-03

Jun-

04

Jan-

05

Aug

-05

Mar

-06

Oct

-06

May

-07

Dec

-07

Jul-0

8

Feb-

09

Sep

-09

Apr

-10

Oct

-10

May

-11

Dec

-11

Jul-1

2

Feb-

13

Sep

-13

Apr

-14

Nov

-14

Jun-

15

Jan-

16

Aug

-16

Metal Cans - Indexed Paper Packaging - Indexed S&P500 - Indexed

19

Performance of Paper-Based Packagers

Paper Packaging Sector (Indexed) Relative to S&P 500 (Indexed)

Source: FactSet, BMO Capital Markets; Note: Paper-based packagers include IP, WRK, PKG, and KS (WRK is RKT prior to July 2015)

Historically, Most Paper Cos. Delivered Subpar & Highly Volatile Returns

1991 - 2000

2001 – To Date

- 50

100 150 200 250 300 350 400 450 500

1/4/

91

8/4/

91

3/4/

92

10/4

/92

5/4/

93

12/4

/93

7/4/

94

2/4/

95

9/4/

95

4/4/

96

11/4

/96

6/4/

97

1/4/

98

8/4/

98

3/4/

99

10/4

/99

5/4/

00

12/4

/00

Paper Packaging - Indexed S&P - Indexed

0

200

400

600

800

1,000

1,200

1/2/

01

10/1

/01

6/30

/02

3/29

/03

12/2

6/03

9/23

/04

6/22

/05

3/21

/06

12/1

8/06

9/16

/07

6/14

/08

3/13

/09

12/1

0/09

9/8/

10

6/7/

11

3/5/

12

12/2

/12

8/31

/13

5/30

/14

2/26

/15

11/2

5/15

8/23

/16

Paper Packaging - Indexed S&P500 - Indexed

20

What Have Investors Worried About?

Low Returns on Invested Capital

Overpriced & Poorly Executed Acquisitions

Cyclical Pricing

Containerboard Pricing ($/s.ton)

Source: RISI, BMO Capital Markets

-

100

200

300

400

500

600

700

Aug

-95

Aug

-96

Aug

-97

Aug

-98

Aug

-99

Aug

-00

Aug

-01

Aug

-02

Aug

-03

Aug

-04

Aug

-05

Aug

-06

Aug

-07

Aug

-08

Aug

-09

Aug

-10

Aug

-11

Aug

-12

Aug

-13

Aug

-14

Aug

-15

Aug

-16

Linerboard - Open Market Price - 42-lb Corrugating Medium - Open Mkt Price - 26-lb

21

How Do Investors Think About Paper Packaging Companies

Modestly Cyclical End Market Demand

Box Shipments (% Change Y/Y)

Source: FBA, BMO Capital Markets; 2016 YTD data until July

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

YTD

22


Unpredictable Export Volumes

U.S. Linerboard Export Volumes (‘000 Tons)

Source: AF&PA, BMO Capital Markets; * 2016 annualized using data until July

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

*

23


Periodic Surges in Capacity

North America Containerboard Capacity (% Change Y/Y)

Source: AF&PA, BMO Capital Markets

“Run Full” Mentality

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

24

The Situation Has Been Changing

The N.A. Industry Has Consolidated

WY, 8%

Stone, 8%

IP, 7%

Champion, 6%

Union Camp,

5%

Other, 66%

Stone, 14%

G-P, 9%

TIN, 7%

IP, 7%

WY, 7%

Other, 56%

SSCC, 25%

WY, 16%

IP, 13%G-P, 10%

TIN, 9%

Other, 27%

U.S. Containerboard Market Share – Changing Landscape

Source: FBA, BMO Capital Markets

1984 (Top 4 Players = 29%) 1995 (Top 4 Players = 37%)

2003 (Top 4 Players = 64%) 2016 (Top 4 Players = 71%)

IP, 33%

WRK, 19%G-P, 10%

PKG, 9%

KS, 4%

Other, 25%

25


Valuation Discipline on Deals Has Improved

Producers Have Become More Disciplined About Capital Spending

Capex as a % of D&A for Major Producers in North America

Source: Company Filings, BMO Capital Markets; Note: WRK is RKT for 2014 and prior

IP

WRK

PKG

KS

30%

40%

50%

60%

70%

80%

90%

100%

110%

120%

2008 2009 2010 2011 2012 2013 2014 2015

IP WRK PKG KS

205% 174% 124%

26


Increased Attention on Capacity and Attentive to Supply-Demand

Dynamics

Major Capacity Closures / Shutdowns in North America since 2006

Source: RISI, AF&PA, Company Filings and BMO Capital Markets

Date Company Name Location Volume (tons)1Q 06 Weyerhaeuser NC 350,000Mar-06 Groveton Paperboard NH 150,0003Q 06 Noram pac ONT 300,000Jan-07 Longview Fiber WA 246,000Jun-07 Sm urfit-Stone IN / CA 200,000Jul-07 Banner Fiberboard WV 20,000Oct-07 International Paper IN 200,000Oct-08 Sm urfit-Stone AZ 135,000Oct-08 International Paper OR 250,000Nov-08 Catalys t BC 131,000Nov-08 International Paper OK 430,0004Q 08 Sm urfit-Stone QC / MT / FL 515,0001Q 09 Georgia Pacific GA / FL 305,0001Q 09 Sm urfit-Stone MI 280,000Dec-09 Sm urfit-Stone MT 440,000Dec-09 International Paper OR / LA 720,0001Q 10 West Fraser BC 370,0001Q 12 Rock-Tenn QC 176,0002Q 12 Rock-Tenn LA 145,0004Q 12 Minas Bas in NS 90,0004Q 15 WestRock OR 140,0004Q 15 WestRock OH 310,0001Q 16 WestRock CT 165,000Total Closures / Shutdowns since 2006 6,068,000

ContainerboardDate Company Name Location Volume (tons)1Q 06 Meadwes tvaco TX 180,0003Q 09 Meadwes tvaco TX 200,0004Q 09 International Paper VA 140,0001Q 13 International Paper GA 140,0002Q 16 International Paper NC 350,000Total Closures / Shutdowns since 2006 1,010,000

Bleached Paperboard

27


Containerboard Inventories (In Weeks of Supply)

Source: FBA, AF&PA, BMO Capital Markets

Increased Attention on Capacity and Attentive to Supply-Demand

Dynamics

3.1

3.6

4.1

4.6

5.1

5.6

Jul-9

7

Jul-9

8

Jul-9

9

Jul-0

0

Jul-0

1

Jul-0

2

Jul-0

3

Jul-0

4

Jul-0

5

Jul-0

6

Jul-0

7

Jul-0

8

Jul-0

9

Jul-1

0

Jul-1

1

Jul-1

2

Jul-1

3

Jul-1

4

Jul-1

5

Jul-1

6

10 Year July Avg: 4.0

28


Historical EBITDA Margins for Key North America Containerboard Producers

Source: Company Filings, BMO Capital Markets

Margins Have Become Stable

PKGIPWRK

KS GEF

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q16

2Q16

3Q16

PKG IP WRK KS GEF

IP acq. WY Pkg RKT acq. SSCC IP acq. TINKS acq. Longview

PKG acq. BZ

29

The Market Has Begun to Reward Paper Packaging Companies

Historical Valuation: Enterprise Value / Forward EBITDA – Paperboard Packaging Companies

Source: FactSet, BMO Capital Markets: Data as of 8/26/16.Note: Procter & Gamble (PG), Kimberly Clark (KMB), SKG and DS Smith not covered by BMO; Forward EBITDA estimates are consensus estimates

Consumer Products

12.8x10.6x

9.7x 8.7x7.7x 7.3x 7.5x 7.3x

6.8x 6.9x 6.3x 5.8x 6.2x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

18.0x

PG KMB BLL CCK SON DS Smith GPK PKG KS GEF IP SKG WRK

5-yr avg. Premium to 5-yr Current 5-yr peak 5-yr trough

30

The Market Has Begun to Reward Paperboard Packaging Companies

What Will It Take to Move Closer to Average Market Values?

‒ Continue to Demonstrate Reduced Cyclicality

‒ Strong Track Record of Capital Discipline

‒ Some Element of Growth

31

Questions?

Sector Comparison

32

(in US$ millions, except per share amounts)

BMOCM Price 52-week Dilut. Market Revenues EBITDA EBITDA Margin EPS Div. YieldRating Target 9/8/16 High-Low Shrs Cap. 2016E 2017E 2016E 2017E 2016E 2017E 2016E 2017E Current

ContainerboardInternational Paper IP Mkt $47 $49.07 $50 - 33 414 $20,315 $31,017 $21,006 $21,336 $3,573 $3,567 17.0% 16.7% $3.43 $3.30 3.6%WestRock WRK OP 52 48.19 $63 - 30 257 12,404 17,726 14,541 14,619 2,328 2,356 16.0% 16.1% 2.55 2.80 3.1%Packaging Corp PKG OP 78 80.86 $82 - 44 94 7,617 10,096 5,709 5,973 1,148 1,205 20.1% 20.2% 4.85 5.20 2.7%KapStone KS Mkt 16 18.47 $25 - 9 98 1,801 3,328 3,052 3,098 385 391 12.6% 12.6% 1.10 1.20 2.2%

Other Paper/PackagingGraphic Packaging GPK OP 15.5 14.38 $15 - 11 324 4,662 6,853 4,413 4,560 787 815 17.8% 17.9% 0.76 0.80 1.4%Sonoco Products SON Mkt 46 52.38 $53 - 37 102 5,336 6,516 4,932 5,038 550 662 11.2% 13.1% 2.72 2.82 2.8%MPS MPSX Mkt 17 14.03 $19 - 13 77 1,087 1,950 1,661 1,608 254 255 15.3% 15.8% 0.61 0.75 -- Greif GEF Mkt 36 49.00 $49 - 24 59 2,891 3,733 3,355 3,480 431 476 12.8% 13.7% 2.30 2.70 3.4%Multi-Color LABL Mkt 61 69.57 $80 - 40 17 1,180 1,658 931 976 162 173 17.4% 17.8% 3.60 3.92 0.3%

Rigid PackagingBall BLL Mkt $79 $80.10 $81 - 60 177 $14,178 $21,794 $9,128 $10,732 $1,390 $1,800 15.2% 16.8% $3.45 $4.43 0.6%Crown CCK Mkt 56 55.66 $57 - 43 139 7,756 13,638 8,520 8,940 1,301 1,373 15.3% 15.4% 3.90 4.16 -- Owens-Illinois OI Mkt 20 18.33 $24 - 12 163 2,984 9,535 6,781 6,870 1,291 1,343 19.0% 19.5% 2.28 2.45 -- Berry Plastics BERY Mkt 43 44.69 $46 - 28 126 5,626 11,283 6,497 6,546 1,197 1,244 18.4% 19.0% 2.29 2.56 -- Silgan SLGN Mkt 47 49.89 $56 - 47 61 3,036 4,851 3,680 3,725 472 506 12.8% 13.6% 2.76 3.13 1.4%

Flexible/Other PackagingSealed Air SEE Mkt $50 $47.06 $53 - 38 198 $9,313 $13,894 $6,917 $7,151 $1,169 $1,252 16.9% 17.5% $2.55 $2.94 1.4%Bemis BMS Mkt 52 51.92 $54 - 39 96 4,969 6,535 4,166 4,362 607 649 14.6% 14.9% 2.70 3.00 2.2%AptarGroup ATR Mkt 79 79.21 $82 - 64 65 5,132 5,657 2,420 2,558 481 522 19.9% 20.4% 3.19 3.50 1.5%

Paper & Fiber ProductsDomtar UFS Mkt $37 $36.85 $43 - 30 63 $2,314 $3,476 $5,083 $5,202 $660 $680 13.0% 13.1% $3.10 $3.30 4.3%P H Glatfelter GLT Mkt 22 23.39 $24 - 14 44 1,031 1,324 1,670 1,691 173 179 10.3% 10.6% 1.53 1.65 2.1%

Source: BM O Research Estimates, Company filings, FactSet.

Note: BM O ratings abbreviated as M kt (M arket Perform), OP (Outperform), and Und (Underperform). WFT, CFP and IFP in Canadian do llars. LABL is on a M ar 31 fiscal year, so amounts shown are for F2017E and F2018E. BLL's market cap is pro forma for new shares to be issued.

Company Name Ticker EV

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DisclosuresImportant Disclosures

Analyst's CertificationI, Mark Wilde, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.

Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA (exception: Brodie Woods). These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Company Specific DisclosureFor Important Disclosures on the stocks discussed in this report, please go to http://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx.

Distribution of Ratings (September 7, 2016)Rating BMOCM US BMOCM US BMOCM US BMOCM BMOCM StarMineCategory BMO Rating Universe* IB Clients** IB Clients*** Universe**** IB Clients***** UniverseBuy Outperform 40.3% 20.1% 54.9% 41.4% 52.9% 54.7%Hold Market Perform 5.9% 10.9% 41.5% 55.0% 44.8% 39.8%Sell Underperform 3.8% 14.3% 3.7% 3.4% 1.8% 5.5%

* Reflects rating distribution of all companies covered by BMO Capital Markets Corp. equity research analysts.** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking services as percentage within

ratings category.*** Reflects rating distribution of all companies from which BMO Capital Markets Corp. has received compensation for Investment Banking services as percentage of

Investment Banking clients.**** Reflects rating distribution of all companies covered by BMO Capital Markets equity research analysts.***** Reflects rating distribution of all companies from which BMO Capital Markets has received compensation for Investment Banking services as percentage of Investment

Banking clients.

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DisclosuresRating and Sector Key (as of April 5, 2013):We use the following ratings system definitions:OP = Outperform - Forecast to outperform the analyst’s coverage universe on a total return basis;Mkt = Market Perform - Forecast to perform roughly in line with the analyst’s coverage universe on a total return basis; Und = Underperform - Forecast to underperform the analyst’s coverage universe on a total return basis;(S) = Speculative investment;NR = No rating at this time; andR = Restricted – Dissemination of research is currently restricted.

BMO Capital Markets' seven Top 15 lists guide investors to our best ideas according to different objectives (CDN Large Cap, CDN Small Cap, US Large Cap, US Small Cap, Income, CDN Quant, and US Quant have replaced the Top Pick rating).

Prior BMO Capital Markets Ratings System (January 4, 2010–April 4, 2013):http://researchglobal.bmocapitalmarkets.com/documents/2013/prior_rating_system.pdf

Other Important Disclosures For Important Disclosures on the stocks discussed in this report, please go to http://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx or write to Editorial Department, BMO Capital Markets, 3 Times Square, New York, NY 10036 or Editorial Department, BMO Capital Markets, 1 First Canadian Place, Toronto, Ontario, M5X 1H3.

Dissemination of ResearchDissemination of Research BMO Capital Markets Equity Research is available via our website https://research-ca.bmocapitalmarkets.com/Public/Secure/Login.aspx? ReturnUrl=/Member/Home/ResearchHome.aspx. Institutional clients may also receive our research via Thomson Reuters, Bloomberg, FactSet, and Capital IQ. Research reports and other commentary are required to be simultaneously disseminated internally and externally to our clients.

~ Research distribution and approval times are provided on the cover of each report. Times are approximations as system and distribution processes are not exact and can vary based on the sender and recipients’ services. Unless otherwise noted, times are Eastern Standard and when two times are provided, the approval time precedes the distribution time.

BMO Capital Markets may use proprietary models in the preparation of reports. Material information about such models may be obtained by contacting the research analyst directly. There is no planned frequency of updates to this report.

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DisclosuresGeneral Disclaimer“BMO Capital Markets” is a trade name used by the BMO Investment Banking Group, which includes the wholesale arm of Bank of Montreal and its subsidiaries BMO NesbittBurns Inc., BMO Capital Markets Limited in the U.K. and BMO Capital Markets Corp. in the U.S. BMO Nesbitt Burns Inc., BMO Capital Markets Limited and BMO CapitalMarkets Corp are affiliates. Bank of Montreal or its subsidiaries (“BMO Financial Group”) has lending arrangements with, or provide other remunerated services to, many issuerscovered by BMO Capital Markets. The opinions, estimates and projections contained in this report are those of BMO Capital Markets as of the date of this report and are subject tochange without notice. BMO Capital Markets endeavours to ensure that the contents have been compiled or derived from sources that we believe are reliable and containinformation and opinions that are accurate and complete. However, BMO Capital Markets makes no representation or warranty, express or implied, in respect thereof, takes noresponsibility for any errors and omissions contained herein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this report or its contents.Information may be available to BMO Capital Markets or its affiliates that is not reflected in this report. The information in this report is not intended to be used as the primarybasis of investment decisions, and because of individual client objectives, should not be construed as advice designed to meet the particular investment needs of any investor. Thismaterial is for information purposes only and is not an offer to sell or the solicitation of an offer to buy any security. BMO Capital Markets or its affiliates will buy from or sell tocustomers the securities of issuers mentioned in this report on a principal basis. BMO Capital Markets or its affiliates, officers, directors or employees have a long or short positionin many of the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. The reader should assume that BMO CapitalMarkets or its affiliates may have a conflict of interest and should not rely solely on this report in evaluating whether or not to buy or sell securities of issuers discussed herein.

Additional MattersTo Canadian Residents: BMO Nesbitt Burns Inc. furnishes this report to Canadian residents and accepts responsibility for the contents herein subject to the terms set out above. Any Canadian person wishing to effect transactions in any of the securities included in this report should do so through BMO Nesbitt Burns Inc.The following applies if this research was prepared in whole or in part by Alexander Pearce, David Round, Edward Sterck or Brendan Warn: This research is not prepared subjectto Canadian disclosure requirements. This research is prepared by BMO Capital Markets Limited and subject to the regulations of the Financial Conduct Authority (FCA) in theUnited Kingdom. FCA regulations require that a firm providing research disclose its ownership interest in the issuer that is the subject of the research if it and its affiliates own 5%or more of the equity of the issuer. Canadian regulations require that a firm providing research disclose its ownership interest in the issuer that is the subject of the research if it andits affiliates own 1% or more of the equity of the issuer that is the subject of the research. Therefore BMO Capital Markets Limited will disclose its and its affiliates' ownershipinterest in the subject issuer only if such ownership exceeds 5% of the equity of the issuer.To U.S. Residents: BMO Capital Markets Corp. furnishes this report to U.S. residents and accepts responsibility for the contents herein, except to the extent that it refers tosecurities of Bank of Montreal. Any U.S. person wishing to effect transactions in any security discussed herein should do so through BMO Capital Markets Corp.To U.K. Residents: In the UK this document is published by BMO Capital Markets Limited which is authorised and regulated by the Financial Conduct Authority. The contentshereof are intended solely for the use of, and may only be issued or passed on to, (I) persons who have professional experience in matters relating to investments falling withinArticle 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (II) high net worth entities falling within Article 49(2)(a) to (d) ofthe Order (all such persons together referred to as “relevant persons”). The contents hereof are not intended for the use of and may not be issued or passed on to retail clients.

Unauthorized reproduction, distribution, transmission or publication without the prior written consent of BMO Capital Markets is strictly prohibited.

Click here for data vendor disclosures when referenced within a BMO Capital Markets research document.

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Disclosures

ADDITIONAL INFORMATION IS AVAILABLE UPON REQUEST

BMO Financial Group (NYSE, TSX: BMO) is an integrated financial services provider offering a range of retail banking, wealth management, and investmentand corporate banking products. BMO serves Canadian retail clients through BMO Bank of Montreal and BMO Nesbitt Burns. In the United States, personaland commercial banking clients are served by BMO Harris Bank N.A., (Member FDIC). Investment and corporate banking services are provided in Canadaand the US through BMO Capital Markets.

BMO Capital Markets is a trade name used by BMO Financial Group for the wholesale banking businesses of Bank of Montreal, BMO Harris Bank N.A,(Member FDIC), BMO Ireland Plc, and Bank of Montreal (China) Co. Ltd. and the institutional broker dealer businesses of BMO Capital Markets Corp.(Member SIPC) in the U.S., BMO Nesbitt Burns Inc. (Member Canadian Investor Protection Fund) in Canada, Europe and Asia, BMO Capital Markets Limitedin Europe and Australia and BMO Advisors Private Limited in India.

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aicc canada presentation€¦ · 13/9/2016 · source: factset; q3 16 data until aug 30, 2016...

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