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Cascades Inc. reported its second-quarter 2025 earnings, surpassing analysts’ expectations with an adjusted earnings per share (EPS) of $0.19, slightly above the forecasted $0.1884. Revenue aligned with projections at $1.19 billion. The stock currently trades at $31.37, marking a significant recovery from its 52-week low of $21.93. According to InvestingPro data, net income is expected to grow this year, despite recent earnings forecast revisions by analysts.
Key Takeaways
- Cascades reported a 3% increase in Q2 sales from Q1, reaching $137 million.
- The company achieved a 22% year-over-year increase in EBITDA.
- The Niagara Falls mill closure is scheduled for August 11, impacting operations.
- Cascades expects stronger results in the third quarter.
- The stock price increased by nearly 4% following the earnings release.
Company Performance
Cascades Inc. demonstrated strong performance in Q2 2025, with a 3% sales increase from the previous quarter and a 22% year-over-year rise in EBITDA. The company’s strategic focus on optimizing existing assets, particularly in the packaging and tissue segments, contributed to these gains. The Bear Island facility’s production increase and investment in key facilities further bolstered performance.
Financial Highlights
- Revenue: $1.19 billion (met forecast)
- Earnings per share: $0.19 (surpassed forecast of $0.1884)
- Consolidated EBITDA: $137 million (up 10% from Q1)
- Cash flow from operations: $101 million (up from $95 million year-over-year)
Earnings vs. Forecast
Cascades reported an EPS of $0.19, slightly beating the forecast of $0.1884, marking a positive earnings surprise of 0.85%. The revenue of $1.19 billion met expectations, maintaining investor confidence. This performance aligns with Cascades’ historical trend of modest earnings beats, reflecting steady operational efficiency.
Market Reaction
Following the earnings release, Cascades’ stock saw continued momentum, with InvestingPro data showing a robust 26.66% year-to-date return. The stock has demonstrated low price volatility and currently trades near its 52-week high of $31.38, indicating positive investor sentiment. With a market capitalization of $11.76 million and a significant 3.06% dividend yield, Cascades has maintained dividend payments for an impressive 30 consecutive years, showcasing its commitment to shareholder returns.
Outlook & Guidance
Cascades anticipates stronger consolidated results in Q3 2025 and aims for a $100 million annual profitability improvement by 2026. The revised capital expenditure forecast stands at $150 million for 2025. For deeper insights into Cascades’ financial health and growth prospects, InvestingPro subscribers can access exclusive analysis, including 7 additional ProTips and comprehensive valuation metrics in the Pro Research Report, one of 1,400+ detailed company analyses available on the platform. The company also plans to monetize $80 million in redundant assets by June 2026, emphasizing its focus on asset optimization.
Executive Commentary
CEO Hugues Simon highlighted the company’s resilience in the food and beverage sectors and its significant presence in Canada. He stated, "We’re expecting stronger consolidated results in the third quarter," reflecting confidence in Cascades’ strategic direction and operational improvements.
Risks and Challenges
- Planned closure of the Niagara Falls mill may disrupt operations temporarily.
- Capacity limitations at the Greenpac mill due to steam supplier issues could impact production.
- Cautious demand amid trade policy uncertainty and economic conditions.
- Flat demand in the containerboard market poses challenges.
- Potential $4 million impact from operational disruptions.
Q&A
During the earnings call, analysts inquired about the Bear Island facility’s profitability and the company’s flexible pulp sourcing strategy. Cascades emphasized its cautious approach to demand due to economic uncertainties, reiterating its commitment to operational efficiency and strategic asset management.
Full transcript - Cascades Inc. (CAS) Q2 2025:
Sylvie, Conference Operator: Good morning. My name is Sylvie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cascade Second Quarter twenty twenty five Financial Results Conference Call. Note that all lines are currently in listen only mode. After the speakers’ remarks, there will be a question and answer session.
I will now pass the call to Jennifer Aitken, Director of Investor Relations for Cascade. Ms. Aitken, you may begin your conference.
Jennifer Aitken, Director of Investor Relations, Cascade: Thank you, operator. Good morning, everyone, and thank you for joining our second quarter twenty twenty five 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 Alan Hogg, CFO. Also joining us for the question period at the end of the call are Jean David Tarzif, Executive Vice President Packaging and Jerome Parnier, Executive Vice President Tissue.
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 Q2 twenty twenty five investor presentation for details.
This presentation, along with our second 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 the call over to our CEO, Yug Simone, who will begin with a review of our performance. Yug?
Hugues Simon, President and CEO, Cascade: Thank you, Jennifer, and good morning, everyone. Our second quarter performance was consistent with our projection. Continue to see cautiousness on the demand side from some customers due to the ongoing uncertainty regarding tariffs and trade policies around the world. Factors impacted our performance both in terms of sales volume and production costs. Notwithstanding this, sales levels increased 3% from Q1.
It was driven by volume and selling price, the benefit of which offset the impact of a less favorable exchange rate. Year over year sales increased 1% with selling prices and exchange rate fully offsetting negative impacts from lower volume and sales mix. Consolidated EBITDA of $137,000,000 increased 10% from Q1, It was driven by a stronger performance from our packaging segment which benefited from improved pricing. Freight and energy costs were tailwinds and partially offset higher operating costs related to lower production volume. Year over year consolidated EBITDA increased 22%.
Stronger pricing in our packaging activity offset lower volume and higher energy and production costs across our two business segments. Provide a financial breakdown of the impact of these factors, partially and year over year on slide four. Trends continue to be favorable for our raw material input costs. Provide an overview of raw material average quarterly costs and trends on Slide five and six. Moving now to the results of our businesses, which are highlighted on slide seven through 12 of the presentation.
Beginning with packaging, our second quarter sales were stable sequentially. Improved pricing and slightly stronger volumes offset by a negative exchange rate impact. Cement levels remained softer in Q2. Customers continue to be cautious given the ongoing broad economic and trade uncertainty. This end will provide box shipments data for Cascade and the Canadian and U.
S. Industries on slide seven and eight. Second quarter EBITDA increased by 9% sequentially to $119,000,000 driven by higher selling prices. EBITDA margins improved by 1.3% to 15.6% in Q2. While OCC pricing was favorable, this was offset by higher input costs resulting from a different mix of products sold.
As expected, production costs per ton were elevated in the quarter due to lower operating rates, but were largely offset by favorable energy, transportation and SG and A costs. Previously disclosed, capacity was limited at the Greenpac mill due to operational issues at the third party steam supplier. Our team rapidly put in place remediation measures to limit the impact and production was almost back to normal in June. Estimated impact of this event was $4,000,000 in the quarter. Supplier resumed normal production forecast CAB as of the July.
Year over year sales increased by 2% with benefits from higher selling prices and more favorable exchange rates more than offsetting negative volume and mix impact. EBITDA levels increased 38% from year ago period driven by higher selling prices and lower raw material costs. Margin improved by 4.1% compared to last year. These were partially offset by a negative impact related to volume and corresponding higher production cost per ton. We are pleased with the progress made at our Bear Island facility during the quarter.
Production increased 8% to 82,000 tons versus the first quarter. We saw steady improvements and more resilient when faced with operational challenges. Progress continued in July during which production levels averaged 1,100 tons per day which represents approximately 91% of the targeted ramp up production level. It is our employees at Bear Island who are driving this difference. We’d like to thank them for their focus, hard work and incredible commitment.
We are forecasting a stronger 2025 and are confident that we’ll continue to close the gap before the end of the year. I would note that this improved momentum at Bear Island contributed to our decision to seize production Niagara Falls on August 11, a month earlier than originally planned. For Island is our priority. As we have previously stated, we have dedicated resources focused on continuing to improve its speed, availability while maintaining a high level of quality. Moving now to our tissue business.
Second quarter sales increased 8% sequentially, stronger volumes and favorable pricing and mix fully offset the negative exchange rate impact. Converted project shipments in short tons increased 10% with away from home up 15% and retail up 7%. EBITDA of $38,000,000 marginally increased from Q1 with benefits from volume, mix and selling prices offset by higher operating costs. Sales were slightly below last year decreasing 1%. Expected a more favorable exchange rate offset by impacts from lower volume.
Shipments decreased 2% year over year, reflecting a 1% decrease in retail and a 4% decrease in away from home. Year over year EBITDA decreased by $16,000,000 reflecting lower volumes, higher operating costs and a slightly lower average selling price. Our tissue production was lower in the quarter, largely a reflection of our planned shutdown, maintenance activities and investments in our operational platform and carry out strategic realignment of our go to market approach. Recent $9,000,000 of announced investments in our King’s DePaul and Granby facility all within this strategy. Additional volume will be added in 2025 as this transition is complete.
Corporate activity costs of $20,000,000 in Q2 were largely unchanged sequentially but decreased $8,000,000 year over year. We expect this lower cost level to continue for the remainder of the year. We’ll now pass the call over to Alan who will briefly discuss some of the financial highlights. Alan?
Alan Hogg, CFO, Cascade: Thanks, Zwick and good morning everyone. Slide thirteen and fourteen illustrate the specific items recorded during the quarter which impacted operating income by $29,000,000 Main items were 23,000,000 of impairment charges resulting from the closure of the Niagara Falls mill. In addition, there was also a $4,000,000 loss on derivatives financial instruments. Slide fifteen and sixteen illustrate the year over year and sequential variance of our Q2 adjusted earnings per share and the reconciliation with the specific items that affected our quarterly results. As reported, Q2 net loss per share were $03 This compared to net earnings per share of $01 last year and $07 in Q1.
On an adjusted basis, net earnings per share were zero one nine dollars in the current quarter. This compared to net earnings per share of $08 last year and $0.13 in the 2025. These increases reflect stronger EBITDA in the current quarter. As highlighted on slide seventeen, second quarter adjusted cash flow from operations was 101,000,000 up from $95,000,000 in the year ago period and from $62,000,000 in Q1. This improved year over year largely reflecting stronger operating results and lower levels of capital investments in 2020.
These were offset by higher dividends paid to minority interest. Sequentially adjusted cash flow generated increased for the same reason. Slide 18 provides detail about our capital investments. New investments for the second quarter totaled $38,000,000 For 2025, we revised our forecast to $150,000,000 of capital expenditures. In the second quarter, we also received cash proceeds of $26,000,000 from asset divestitures.
Moving now to our net debt reconciliation as detailed on slide 19, essentially our net debt decreased by $112,000,000 in the second quarter mainly due to a more favorable exchange rate on our U. S. Denominated debt. Our leverage ratio went down to 3.8 times from 4.2 times at the end of the first quarter. In the quarter, we also refinanced a portion of our U.
S. Dollar senior notes and we increased and extended the revolving facility in Greenpac. In addition, on July 31 we also concluded the extension of our revolving facility from 2027 to 2029. Financial conditions of these two facilities remained the same. These refinancing activities improved our maturity and liquidity profile.
Our available liquidity improved by $400,000,000 since the end of Q1 to $595,000,000 Financial ratios and information about maturities are detailed on slide 20 and other information and analysis can be found on slide 24 through 32 of the deck. Now I’ll pass the call back to Ugg who will conclude for some brief comments before we begin the question period.
Hugues Simon, President and CEO, Cascade: Ugg? Thank you, Alan. We’re expecting stronger consolidated results in the third quarter and provide a breakdown by segment on Slide 21. Packaging, raw material and selling price trends are anticipated to be favorable. However, we remain cautious regarding demand levels due to the potential impact from continued macro uncertainty.
Future results are expected to strengthen sequentially with stronger volume supported by raw material and selling price trends. Opening the call to questions, I’d like to provide an update on our near term areas of focus for 2025 and 2026. For recent months, we’ve identified a variety of value creating opportunities to our focus on excellence. We have stated in the past, our key priorities are targeting production efficiency, commercial strategies and cost reduction. I’m pleased to share today that we expect ongoing initiatives to benefit our baseline profitability levels, dollars 100,000,000 on an annual run rate basis by the 2026.
Continue to pursue other opportunities with you to both offset any potential adverse market conditions and optimize our go to market approach. Lastly, we are on track to achieve our $80,000,000 objective of the monetization of redundant assets. Now expect to reach this target before the June 2026, six months earlier than originally planned. Free cash flow will be allocated to the reduction of our long term debt. With that, we can now open the call to questions.
Operator?
Sylvie, Conference Operator: Thank you. Merci. Thank you. And And your first question will be from Amir Patel at CIBC Capital Markets. Go
Amir Patel, Analyst, CIBC Capital Markets: ahead. Good morning. Hugh, with respect to the £100,000,000 annual run rate profitability improvement by the 2026. How much of that has been achieved so far?
Hugues Simon, President and CEO, Cascade: Well, when we look at the achievements today, we’re ahead of what put in our forecast. The base here is that we always make sure with the initiative on excellence that we started earlier this year, that we have a funnel of improvements coming our way. And when we say a 100,000,000, everything else being equal with moving parts on the economy and so on, you know, we’ve put the deadline at the 2026 to give us time to put something that’s very resilient to anything in the economy and that the leakage is as minimum as possible. I want to say that we’re on schedule. If you took put like a stable curve of 100 by the 2026, Some of it is already achieved.
Amir Patel, Analyst, CIBC Capital Markets: Okay. And sorry, just to clarify, so that’s the starting point at the 2024?
Hugues Simon, President and CEO, Cascade: That’s the starting point at the 2024, exactly.
Amir Patel, Analyst, CIBC Capital Markets: Okay, great. Thanks. That’s helpful. And are you able to give us some visibility on how profitability is faring at Bear Island relative to perhaps where steady state would be? And when do you expect to be fully ramped up there?
Hugues Simon, President and CEO, Cascade: Oh, great question. As we stated in the call, mean, we’ve seen consistent improvement in Bear Island over the last twelve weeks from a productivity standpoint. When we discussed the Q4 and Q1 results, we also stated that it was either breakeven or making a small profit. So clearly right now, with improved pricing and better productivity, we are on the positive side on berainen. We don’t provide a specific mill by mill, but you know on just simple math, an 8% improvement quarter over quarter with the month of July being very positive with additional improvement from the second quarter is even more positive.
We’re at 91% of our ramp up curve in July and we expect to continue to fill that gap as we stated before and we’re still very confident to fill it before the end of this year, which makes boronin a profitable asset.
Amir Patel, Analyst, CIBC Capital Markets: Great, thanks. And just the last question, from a recovered paper standpoint, I know one of the benefits of Bear Island was its flexibility. Is it running a lot more mixed papers? It’s still largely OCC? OCC?
Hugues Simon, President and CEO, Cascade: We’re mostly running on OCC. When you look at the price gap between mixed paper and OCC versus the plus and minus from a cost standpoint, it’s providing also more stability on the productivity level at Bear Island. So we’ll start playing with that when we have more economic reasons to do it, giving the pricing spread between UCC and mixed paper. And the flexibility will help us to change depending on dynamics and pricing. We’re seeing very steady pricing in OCC with the recent closure announcement of Niagara Falls.
I mean, it’s also reducing some of our consumption. So we’re able to optimize our system to get further better price for our platform.
Amir Patel, Analyst, CIBC Capital Markets: Great, thanks. That’s all I had. I’ll turn it over.
Sylvie, Conference Operator: Next question will be from Sean Steuart at TD Cowen. Please go ahead.
Sean Steuart, Analyst, TD Cowen: Thank you. Good morning. A couple of questions. I want to start with tissue. You referenced more positive Q3 outlook on primarily driven by volume gains.
I’m wondering if you can speak to magnitude of the pulp price correction we’ve seen here in recent months. And I suppose the potential for tissue price concessions on the back of that, you’re guiding to flat pricing here in the near term, but how you expect weaker input costs could translate into the price environment for tissue?
Hugues Simon, President and CEO, Cascade: Yeah, great question. You got a few questions in your question, I’ll try to take them a bit separate. On the pulp prices, we’ve done a lot of work over the last few quarters to have more flexibility, you know between hardwood, softwood, eucalyptus or recycled fiber, so that we can therefore optimize with pricing changes and we’re starting to see some of the benefits of that with more flexibility. As for supply and demand, we’re running full on our tissue segment. Everything we produce is sold, so we’re very confident with the spread that we’re forecasting in the third quarter.
So we foresee that it’s all about making sure to deliver the volume that’s already committed and sold at a specific
Sean Steuart, Analyst, TD Cowen: Understood on that front. Containerboard markets, you more generally, we’ve seemingly got opposing forces, demand headwinds near term mainly tied to trade issues. It does seem like there’s a capacity closures coming through the back half of the year. How do you view tension in that market evolving here as presumably we could be in a situation with rising operating rates later in the year?
Hugues Simon, President and CEO, Cascade: Yeah, I mean, we announced that next week or April, August sorry, we’re closing our Niagara Falls facility. When you look at the assets that we have in the kind of pure linerboard and medium, we have first quartile assets. You look at the market, I mean, we remain very, very cautious. We’re seeing more resilience in the food and beverage. We’re trying to focus our long term partnerships where we can have a bit more resilience and more stability.
We use the additional production at Bear Island to, you know, it’s a steady flow of improvement. We’ve seen more stability in the increase, so it’s giving us the ability to plan better and to build on those sales. But we remain cautious with, I mean, they need to explain in much details, all the unknown in the economy. We are seeing, you know, we talked about flat demand for the second quarter and that’s basically what we saw versus the first quarter. When you look at our guidance for the third quarter, it’s pretty flat.
What we’re seeing today, I mean, we have some seasonal positive trends with the farming industry in Quebec and Ontario, that’s very seasonal, but that’s looking pretty decent. We’re pleased with what we’re seeing right now. But again, I mean, we’re, as you well mentioned, the instability with trade policies can flip that. So, you know, we’ll be ready for any upswing in demand with planning as long as we can, but also like looking at the type of business where we want to put our sales to have more resilience in our system.
Sean Steuart, Analyst, TD Cowen: That’s great detail. That’s all I have for now. Thanks very much.
Sylvie, Conference Operator: Your next question will be from Matthew McKellar at RBC Capital Markets. Please go ahead.
Matthew McKellar, Analyst, RBC Capital Markets: Good morning. Thanks for taking my questions. I was wondering if you could give us just a bit more detail on some of the most significant initiatives to drive the 100,000,000 in targeted profitability improvements and how that might split between packaging and tissue? And then how should we think about the closure of Niagara Falls in the context of that $100,000,000 target? Thanks.
Hugues Simon, President and CEO, Cascade: Thank you for your question. The $100,000,000 initiative, when you look at, as a good practice, we always have a funnel that adds up to more than a 100,000,000 of initiatives, understanding that there’s leakage, there’s good ideas that won’t convert to EBITDA improvement. So I like to say that to achieve 100,000,000, you got to work on probably twice as much to make sure that you net a significant amount. So to provide a breakdown by business is not something that we’re going to do. But what I can share is that to achieve 100,000,000, you got to work on more than 100,000,000 And they’re basically split in efficiency initiatives, cost reduction and sales strategy on all of our product lines.
We have 10 key priorities internally that we focus on right now and the approach that we’ve taken is that, lots of focus, not too many priorities, but making sure that we convert those initiatives into real dollars for the bottom line. And as for Niagara Falls, I mean, the closure would bring some cost reduction overall too when you look at equal volume across our system. I mean that brings a significant cost reduction on our platform.
Matthew McKellar, Analyst, RBC Capital Markets: Thanks for that color. And then last for me, we’ve seen a lot of consolidation in the containerboard space over the past couple of years. Do you see any strategic value in getting bigger in containerboard? And to just zoom out a bit, could you remind us how you view the strategic value of Cascade being a producer of both packaging products and tissue products? Thanks.
Hugues Simon, President and CEO, Cascade: Yeah, so if you look at the size that we have, where we see the big strategic value is more with the existing assets. And I mean, the 100,000,000 that we discussed is part of that strategy. You look at the efficiency of some of our operations versus where they can be to be like second quartile, not even top of the first quartile, we can increase our ability to go to market with that. So that’s where we’re going to focus. And as far as the value to customers with Cascade, I mean, we’re really focusing on being the best in service, being time all the time, good quality, reliable supplier.
And we’re seeing every day some good examples of that. We’re small in North America, but we have a significant presence in Canada. So that part of the market, are a significant player. And we’re seeing similar trends Q2 where the operating rate of Cascade and even the industry is very full. It’s a very resilient business in uncertain economic times like today, where we see a lot more stability and predictability in sales volume.
So the plan right now is to optimize what we have to make it either in the first or second quartile so that we’re more resilient when the economy turns down.
Matthew McKellar, Analyst, RBC Capital Markets: Thanks for the detail. I’ll pass it back.
Sylvie, Conference Operator: Thank you. And at this time, there are no further questions registered. Please proceed.
Hugues Simon, President and CEO, Cascade: Well, you for all the great questions. Thanks for taking the time and looking forward to have some of the one on one discussion.
Sylvie, Conference Operator: Thank you, ladies and gentlemen. This does conclude your conference call for today. You may now disconnect.
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