T3 2025 retranscription

FINAL TRANSCRIPT

Cascades Inc.

Third Quarter 2025 Results

Event Date/Time: November 6, 2025 — 9:00 a.m. E.T.

CORPORATE PARTICIPANTS

Jennifer Aitken

Cascades Inc. — Director, Investor Relations

Hugues Simon

Cascades Inc. — President and Chief Executive Officer

Allan Hogg

Cascades Inc. — Vice-President and Chief Financial Officer

CONFERENCE CALL PARTICIPANTS

Hamir Patel

CIBC Capital Markets — Analyst

Sean Steuart

TD Cowen — Analyst

Matthew McKellar

RBC Capital Markets — Analyst

Nathan Po

National Bank Financial — Analyst

2

PRESENTATION

Operator

[Remarks in French]

Good morning, my name is Joëlle (phon) and I will be your conference Operator today. At this time, I would like to welcome everyone to the Cascade’s Third Quarter 2025 Financial Results Conference

Call.

All lines are currently in listen-only mode.

After the speakers’ remarks, there will be a question-and-answer session.

I will now pass a call to Jennifer Aitken, Director of Investor Relations for Cascades. Ms. Aitken, you may begin your conference.

Jennifer Aitken — Director, Investor Relations, Cascades Inc.

Thank you, Operator. Good morning, everyone, and thank you for joining our third quarter 2025 conference call.

We will begin with an overview of our operational and financial results, followed by some concluding remarks, after which, we will begin the question period.

Today’s speakers will be Hugues Simon, President and CEO, and Allan Hogg, CFO.

Before turning over the call, I would like to highlight that certain statements made during this call will discuss historical and forward-looking matters. The accuracy of these statements is subject to risk factors that can have a material impact on actual results. These risks are listed in our public filings.

These statements, the investor presentation, and the press release also include data that are not measures of performance under IFRS. Please refer to our Q3 2025 investor presentation for details.

3

This presentation, along with our third quarter press release, can be found in the Investors section of our website. If you have any questions, please feel free to contact us after the session.

I will now turn over the call to our CEO, Hugues Simon, who will begin with a review of our Q3 performance.

Hugues?

Hugues Simon — President and Chief Executive Officer, Cascades Inc.

Thank you, Jennifer, and good morning, everyone.

Our third quarter performance was stronger than our projections. This was driven by improved volumes, higher average selling prices, and lower production costs in both businesses. This reflects the growing momentum achieved by our profitability initiatives.

Volume showed steady positive momentum in the quarter. In packaging, the flexibility of our operating platform enabled us to capture volume above our forecast.

We continue to remain laser-focused on our balance sheet, allocating free cash flow to reduce our debt.

Consolidated EBITDA of $159 million increased 16 percent from Q2. As I mentioned, this was driven by a stronger performance in both of our businesses due to higher volume, higher selling price, and lower production costs.

Year-over-year consolidated EBITDA increased 14 percent. Results in both businesses benefitted from stronger pricing and favourable raw material costs. These offset higher operating costs and lower utilization rate in packaging. We provide a breakdown of the impact of these factors sequentially and year- over-year on Slide 5.

4

Trends continue to be favourable on raw material input costs. We provide an overview of raw material average, quarterly costs, and trends on Slides 6 and 7.

Moving now to the results of our businesses, which are highlighted on Slide 8 through 13 of the presentation.

Beginning with packaging.

Our second quarter sales increased 4 percent sequentially. This reflects stronger volume and improved average selling prices. Demand levels exceeded our cautious outlook, with September in particular coming in stronger than expected. We provide box shipments data for Cascade and the industry on Slide 8 and 9.

Q3 EBITDA increased by 14 percent sequentially to $136 million. This was driven by higher volumes and selling prices.

EBITDA margins improved to 17.1 percent from 15.6 percent in Q2.

Results in this business have begun capturing benefits from our improved operating cost structure and profitability initiatives. The closure of our Niagara Falls facility went well and production was transitioned to other operating units ahead of schedule.

Similarly, we had a strong quarter at Bear Island and we are pleased with the sequential progress.

Production increased 24 percent to just over 102,000 tons. The mill ran at 90 percent of our targeted ramp-up curve and 88 percent of its total production capacity in the quarter.

We have continued to see this positive operational pace in October and we are forecasting a strong end of 2025. We remain committed to closing the gap by year-end.

Our employees at Bear Island are driving this momentum and we would like to thank them for their hard work and incredible focus.

5

Year-over-year sales increased by 3 percent. This reflected higher selling prices and favourable exchange rates, which offset lower volume due to plant closures and softer demand as a result of economic headwinds.

EBITDA increased 16 percent from last year, driven by higher selling prices and lower raw material costs.

Margins improved to 17.1 percent from 15.1 percent last year.

Moving now to our tissue business.

Third quarter sales increased 5 percent sequentially on stronger volumes. Converted product shipments increased 6 percent in both away-from-home and retail tissue markets.

EBITDA of $46 million increased 21 percent from Q2, as benefits from volume, mix, and lower printing costs mitigated slightly higher raw material costs related to a higher proportion of virgin fibre.

Sales increased 6 percent from last year. This reflected stronger volumes and higher average selling price.

Shipments increased 5 percent year over year, with a 7 percent increase in retail and a 1 percent increase in away-from-home.

Year-over-year EBITDA increased by $3 million, reflecting higher volume, higher average selling price, and lower material costs. These were partially offset by higher operating costs due to planned maintenance.

We continue to focus on our Pryor, Oklahoma mill. We are building a strong foundation to accelerate efficiency improvements. We have started to see benefits in October and are confident that this trend will continue through Q4.

Also, our recent investments in Kingsey Falls and Granby facilities are delivering good results.

6

I’ll now pass the call over to Allan, who will briefly discuss some of the financial highlights. Allan?

Allan Hogg — Vice-President and Chief Financial Officer, Cascades Inc.

Thank you, Hugues, and good morning, everyone.

Let’s start with the specific items recorded during the quarter, which impacted operating income by $12 million on Slide 14 and 15.

The main items were $10 million for an environmental provision related to a closure in 2024 of a plant in Canada and $6 million of restructuring charges mainly related to the closure of the Niagara Falls mill.

In addition, there was also a $4 million gain on derivative financial instruments.

Slide 16 and 17 illustrate the year-over-year and sequential variance of our Q3 adjusted earnings per share and the reconciliation with the specific items that affected our quarterly results.

As reported, Q3 net earnings per share were $0.29. This compared to net earnings per share of

$0.01 last year and a net loss of $0.03 per share in Q2.

On an adjusted basis, net earnings per share were $0.38 in the current quarter. This compared to net earnings per share of $0.27 last year and $0.19 in the second quarter of 2025.

These increases were both driven by stronger adjusted EBITDA in the current quarter.

As highlighted on Slide 18, third quarter adjusted cash flow from operations was $137 million, up from $86 million in the year-ago period and $101 million in Q2.

Adjusted cash flow generated in the second quarter improved year over year, mainly reflecting stronger operating results and lower financing expense.

Capital investments and dividends paid to minority interests were largely unchanged.

7

Sequentially, the increase in levels of adjusted cash flow generated reflects stronger operating results and lower amounts of dividends paid to minority interests, net of higher financing expense paid.

Slide 19 provides details about capital investments.

New investments for the third quarter totalled $30 million, bringing the year-to-date level to $91 million.

For 2025, we expect CapEx to total approximately $140 million, slightly lower than the $150 million stated at the end of Q2.

Moving now to our net debt reconciliation as detailed on Slide 20.

Sequentially, net debt decreased by $81 million in the third quarter, mainly due to a stronger cash flow from operation and a reversal in working capital requirements.

The less favourable exchange rate on our US-denominated debt increased debt levels by $42 million.

Our leverage ratio decreased to 3.6 times from 3.8 times at the end of the second quarter.

Our available liquidity under our credit facility stood at $630 million at the end of the third quarter.

We also announced that we’ve completed the sale of the flexible packaging operation on

October 8th. The $31 million of cash proceeds have gone towards debt repayment in the fourth quarter.

Including this amount, total proceeds from asset sales amount to $57 million this year.

Financial ratios and information about maturities are detailed on Slide 21. And other information and analysis can be found on slides 26 through 34 of the deck.

I will now pass the call back to Hugues who will conclude with some brief comments before we begin the question period.

8

Hugues?

Hugues Simon

Thank you, Allan.

We provide our outlook for Q4 on Slide 22.

In packaging, raw material and selling price trends are anticipated to be favourable. However, we remain cautious regarding demand levels due to usual post-Thanksgiving seasonality and continued macro uncertainty.

To this end, we are currently forecasting packaging results to be in the range of stable to 10 percent below Q3 levels. This is driven by an expected 5 percent decrease in volumes, mainly in December.

Tissue results are expected to strengthen sequentially with lower raw material and maintenance costs.

Corporate costs are expected to be stable. However, share-based compensation costs are expected to be higher given the recent increase in our share price.

Before opening the call to questions, I would like to provide an update on our strategic priorities for 2025 and 2026.

First, our plan to monetize redundant assets is progressing well and we are increasing our target to $120 million by June 2026 from the $80 million disclosed previously.

Lastly, our culture-of-excellence focus is starting to show benefits and have helped mitigate the impact from headwinds.

On Slide 24, we provide a few examples of what has been done and our current areas of focus.

Looking at our most recent quarter, our initiatives contributed approximately $10 million to our results sequentially.

9

We are on track to achieve our $100 million objective of run rate profitability improvements by the end of 2026.

With that, we can now open the call to questions.

Operator?

Q&A

Operator

[Remarks in French]

Thank you. If you would like to ask a question, simply press *, then 1 on your telephone keypad.

If you would like to withdraw your question, please press *, 2. Again, if you have a question, please press

*, then 1 on your telephone keypad.

We will pause for just a moment to compile the Q&A roster.

Your first question comes from Hamir Patel with CIBC Capital Markets. Your line is now open.

Hamir Patel — CIBC Capital Markets

Hi. Good morning and congrats on a strong quarter. Hugues, I wanted to ask about the profitability improvement objectives there, the $100 million by the end of 2026. You mentioned you captured $10 million in Q3. How much have you captured cumulatively to date?

And then the sort of longer-term goalpost of over $200 million, what do you see as the timeline of achieving that?

Hugues Simon

10

Yeah, thank you for your question, Hamir. If you look at what we’ve done so far this year, the first two quarters of the year was mostly focused on building the foundation to drive improvements. And we really started to see some good benefits in the third quarter. So, we’re building momentum.

And as we stated on the second quarter, we’re really looking at a net run rate of $100 million by the end—on last quarter of 2026. So, we expect the momentum to continue; I won’t say on a straight curve, but most of it has to be achieved like before the fourth quarter. It’s not all going to happen at the end of 2026.

So, we expect some momentum to be building over the next three quarters. And we’re focusing on twice of the amount because obviously, there are some headwinds. You look at the uncertainty in the market today. There’s a volume impact. That drove some of our decisions in the third quarter to shut down our Niagara Falls facility. We were able to redistribute the customer mix, focus on linerboard versus medium, and look at profitability on a per-hour basis, putting the right product on the right machine for the right customer. So, that momentum is going to continue to build and obviously, the focus is to get it as fast as we can.

Hamir Patel

Great. Thanks. That’s helpful. And, Allan, with respect to the CapEx budget for 2026, the $175 million, what are the sort of larger projects that drive the increase there?

Allan Hogg

Well, our team are just planning for that, but there’s no, I would say, major strategy, but maybe a bit more investment in this year to continue to improve where we need to improve, improve quality, reduce our costs, so. But there’s nothing, I would say, like a major addition to what we have. But that’s what we have on the table right now, and yeah.

11

Hamir Patel

Okay. Great. And just a last question I had, and maybe this is for Hugues. Just with respect to what you’re seeing in the recovered paper market, do you feel OCC prices are bottoming here? And kind of what are you seeing in your local markets?

Hugues Simon

Yeah, I mean, we just had the latest publication going down $5 here and $10 in the Southeast yesterday.

I mean, we’re getting to a point—it’s a low number. We’re really tracking the percentage of people that are doing the recycling. We’re also tracking the quality of the product that we’re getting.

Sometimes when pricing deteriorates, you see an impact on quality and that’s something that we pay very, very close attention. There’s also more of a headwind for people to export out of North America.

But in the meantime, we’re also seeing, with the shutdown in the US, a lower recovery rate or a lower generation of OCC as well, as consumers have reduced their spending.

So, per region, we’re tracking the balance of all that, making sure that our strategy provides for the low generation that we’ll typically get as well after Christmas and match that with our operating rate.

But overall, for the next quarter, we see that as, if you do the summation of everything I just mentioned, it’s a positive trend for us. But paying close attention to the volume generated.

Hamir Patel

Yeah. Fair enough. That’s all I had. I’ll pass it over. Thanks.

Operator

Your next question comes from Sean Steuart with TD Cowen. Your line is now open.

Sean Steuart — TD Cowen

12

Thanks. Good morning, everyone. Congrats on a solid result.

Hugues, a number of the US packaging comps have provided cautious 2026 guidance with respect to the volumes and margins. Do you have enough visibility in your order file, maybe past the fourth quarter, to really comment on expectations, I suppose on the volume side to start with, for your packaging business in 2026?

Hugues Simon

Thank you for your question, Sean.

I mean, the visibility, I mean, we typically guide one quarter ahead. All the economic uncertainty right now gives a bit more of a—it’s a bit muddy out there for 2026.

If you look back over the last few quarters, we’ve been very cautious on the guidance and we’ve also been cautious on volumes that we put in our operating plan. The key here for us is really, we want to be able to capture any uptake in demand. And we’ve been able to do that in the third quarter.

We are able to do that right now in the fourth quarter. You look at the fourth quarter, the biggest uncertainty is post-Thanksgiving, given the US shutdown and how much money the US consumer have to spend. So, it’s going to be the same reality until we see more stability in the economy.

But we’ll be ready to capture any uptake. And we’re really focusing right now on partnering with customers that are more resilient, that don’t see too much of a drop, that are using basic products.

And then we have our mix in Canada and in the West, that does behave differently than the US.

It’s very busy in our Western operation. It’s very busy in Ontario as well. Quebec is probably the one that is the most difficult market, given the type of businesses and the type of product that we produce. So, we’re working on that as well on a per-region basis to partner with the most resilient customers.

13

But as far as visibility, I mean, we’ll continue to be cautious. We’re not going to be over optimistic. And we’ll make sure that we have a quick turnaround time to capture any available business over and above our forecast.

Sean Steuart

Thanks for that detail. Second question for Allan. The increase in the asset sales target to $120 million, is that incremental just exclusively the addition of the flexible packaging divestiture?

And further to that, can you give us a sense of any associated EBITDA tied to these initiatives, i.e., how much are you giving up as you sell these assets down?

Allan Hogg

Well, no, it’s not necessarily linked to the flexible packaging transaction. As we go, we continue to evaluate what we have and we see that there’s may be new opportunities that are coming on the table.

So that’s why we feel comfortable to increase this target.

And in terms of EBITDA contributions, it’s nothing—I would say, nothing major. And as for flexible, they’re approximately $5 million to $6 million a year. So that’s nothing significant.

And we continue to progress. And we might have new opportunities in the future and some might just be not achievable. So that’s why we are comfortable with the level we have right now.

Sean Steuart

Okay. Thanks very much. I’ll pass it over.

Operator

Your next question comes from Matthew McKellar with RBC Capital Markets. Your line is now open.

Matthew McKellar — RBC Capital Markets

14

Good morning. Thanks for taking my question. Just reflecting back on some of the presentation materials around the time you were constructing Bear Island would suggest there could still be pretty substantial incremental EBITDA to unlock as Bear Island ramps up from, I guess, 88 percent in Q3 to the full potential of the facility.

So, recognizing that price input cost spreads and operating costs have evolved over time, how do you think about the incremental EBITDA Bear Island running full would generate compared to what you did in Q3? Thanks.

Hugues Simon

Yeah. Thank you, Matt, for that question.

You look at the last six months, we saw consistent improvement from an operating rate standpoint or operating efficiencies. We’re now to a point where we’re at 90 percent of our ramp-up curve, but also at 80 percent of the capacity of the mill. So, we’ll continue to push on that to get to the

100 percent.

And we’ve now started to look at usage, so cost components, whether it’s chemical, all the materials that we use here (phon). So, this is going to be a main focus for the next six to 12 months is how do we get benefits from both operating efficiencies and usage, so cost structure.

We don’t disclose profitability per mill, but there’s still enough benefits to capture between where we are today versus where we want to be. That remains our number-one priority on packaging.

Matthew McKellar

Thanks. And would that 6- to 12-month timeline align with when you would expect to essentially hit the full run rate profitability of the mill?

Hugues Simon

15

From an efficiency standpoint, we expect Bear Island by the end of next year, to be at the same.

You’re never at 100 percent of the capacity all the time, but we’d be running at the equivalent, from an operating standpoint, of our Greenpac operation.

And our cost initiative, I want to say that it’s going to take 24 months to get to a full where we are. That being said, we always reassess that. Right? So, sometimes we’re somewhere and then we feel we can get better. And that’s a bit of the mindset that we’ve put in place with our excellence initiatives, where we always want to have over $100 million in the pipeline of improvement, so that we can take care of headwinds, inflation, and other cost components that we have less controls on.

Matthew McKellar

Thanks very much. I’ll turn it back.

Operator

Again, if you would like to ask a question, please press *, then 1 on your telephone keypad.

Your next question comes from Nathan Po with National Bank Capital Market. Your line is now open.

Nathan Po — National Bank Financial

Good morning, everyone. Thanks for taking my question and congrats on the quarter.

So, I want to ask about your packaging segment because EBITDA came in above expectations this quarter. Were there any one-time incremental volumes that contributed to this?

And can you describe whether those are more permanent volumes or temporary, given you mentioned you’re ready to capture any incremental uptake?

Hugues Simon

16

Yeah. No, so there’s no one-time incremental volume that we don’t feel that are going to come back. We are going to have this normal seasonability (sic) on the fourth quarter. And now, I mean, we have the economic uncertainties in both Canada and the US, to be quite honest, like mostly post-

Thanksgiving.

We saw good traction, more than expected, in September. That continued throughout the month of October, and we’re not really seeing much of a slowdown to date right now in November.

But we know that from a season standpoint, it is going to slow down. And you look at the accumulation of negative news for the North American consumers, we want to be cautious.

So, if you look at our guidance, we took 5 percent off in volume for the fourth quarter. And it was not front-loaded, but, I mean, back-loaded in the second part of the quarter, given Thanksgiving and

Christmas.

That being said, we’re continuing to work on customer mix, the right product at the right place on the right machine, an improved mix of linerboard versus medium, because there is a significant difference in profitability between the two products. So, really pushing to have a more resilient volume base, which will enable us to plan better and look long-term ahead with more stable volumes.

Nathan Po

Thank you. Appreciate the colour. And with the talk about the CapEx budget constraints and lowering that guidance and focus on debt repayments, I want to invert that a little.

What needs to change in the environment in 2026 or even 2027 for you to revise that CapEx budget upwards or start investing for growth?

Hugues Simon

17

Well, we’ve said for many quarters, we want to be between the 2.5 and 3. We’re at 3.6, so we’re making good progress. We’re not announcing any significant CapEx for 2026.

We have options. Our strategy is to really build different options in both packaging and tissue to see what has the best return for Cascades. So, I mean, we’ve started looking at what are our alternatives and we’ll continue to do that.

But for now, we’re going to continue our focus on debt repayment. We’re making good progress.

We’re looking at our forecast at the end of Q4. We’ll make additional progress in the third quarter results.

That does not include the flexible packaging sale, which cash came in in the fourth quarter and we’re pushing our $80 million to $120 million.

So, we’re really focused on the 2.5 to 3. We’re not waiting to get there to assess our options. But we want to maintain a good ratio so that we maintain flexibility in an environment that it’s ever changing.

So, a strong balance sheet will always give us more alternatives and put us more in the driver’s seat versus like a 4 times ratio on debt.

Nathan Po

Thank you. I’ll turn it over.

Operator

Thank you. There are no further questions at this time. Mr. Hugues, please continue.

Hugues Simon

Well, thank you everyone for your time. We’re very satisfied with the quarter. Looking forward for the fourth quarter and we’ll try to maintain the trend. Thank you.

Operator

[Remarks in French]

18

Thank you, ladies and gentlemen. This concludes today’s conference call. You may now disconnect.

19