Q4 2025 Cascades Inc Earnings Call

February 26, 2026

Operator: Mesdames et Messieurs, bienvenue à la téléconférence des résultats financiers du Q4 2025 de Cascades. Je m'appelle Sylvie et je serai votre opérateur aujourd'hui. Veuillez noter que toutes les lignes sont présentement en mode d'écoute seulement. Suite aux commentaires des dirigeants, il y aura une période de questions. Good morning! My name is Sylvie. I will be your conference operator today. At this time, I would like to welcome everyone to Cascades's Q4 2025 Financial Results Conference Call. Note that all lines are currently in the listen-only mode. After the speaker's remarks, there will be a question-and-answer session. I will now pass the call over to Jennifer Aitken, Director of Investor Relations for Cascades. Ms. Aitken, you may begin.

Speaker #1: Veuillez noter que toutes les lignes sont présentement en mode d'écoute seulement. Suite aux commentaires des dirigeants, il y aura une période de questions. Good morning.

Speaker #1: My name is Sylvie and I will be your conference operator today. At this time, I would like to welcome everyone to CASCADE, fourth quarter 2025 financial results conference call.

Speaker #1: Note that all lines are currently in the listen-only mode. After the speakers' remarks, there will be a question-and-answer session. I will now pass the call over to Jennifer Aitken, Director of Investor Relations for CASCADE; Ms. Aitken, you may begin.

Speaker #2: Thank you, Operator. Good morning, everyone, and thank you for joining our fourth quarter. 2025 conference call. We will begin with an overview of our operational and financial results, followed by some concluding remarks.

Jennifer Aitken: Thank you, operator. Good morning, everyone. Thank you for joining our Q4 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 Q4 2025 investor presentation for details.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: These statements, the investor presentation, and the press release also include data that are not measures of performance under IFRS. Please refer to our Q4 2025 investor presentation for details.

Speaker #2: This presentation, along with our fourth quarter press release, can be found in the investor section of our website. If you have any questions, please feel free to contact us after the session.

Jennifer Aitken: This presentation, along with our Q4 press release, can be found in the investor 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 Q4 performance. Hugues?

Speaker #2: I will now turn over the call to our CEO, Hugues Simon, who will begin with a review of our Q4 performance. Hugues?

Speaker #3: Thank you, Jennifer, and good morning, everyone. Our fourth quarter consolidated performance was in line with our projections. As forecasted, sales and adjusted EBITDA levels both decreased marginally from Q3 levels.

Hugues Simon: Thank you, Jennifer. Good morning, everyone. Our Q4 consolidated performance was in line with our projections. As forecasted, sales and adjusted EBITDA levels both decreased marginally from Q3 levels, reflecting usual softer volumes and the current geopolitical environment. Our key focus initiatives continue to deliver good results, with our Bear Island facility averaging 88% of total capacity during the quarter, while running at a lower average basis weight. We have also successfully reached our capacity speed targets in all of our grades. Our Pryor, Oklahoma facility made significant progress during the quarter, increasing its total output by 11% from Q3 levels. Globally, our overall margin improved to 12.9%, led by a 17.4% margin in our packaging sector. Year-over-year, consolidated sales decreased 1%.

Speaker #3: Reflecting usual softer volumes and the current geopolitical environment, our key focus initiatives continue to deliver good results, with our Bear Island facility averaging 88% of total capacity during the quarter, while running at a lower average basis rate.

Speaker #3: We have also successfully reached our capacity speed targets, in all of our grades. Our prior Oklahoma facility made significant progress during the quarter, increasing its total output by 11% from Q3 levels.

Speaker #3: Globally, our overall margin improved to 12.9%, led by a 17.4% margin in our packaging sector. Year-over-year consolidated sales decreased 1%. This was driven by lower volumes in packaging, which fully offset pricing and favorable mixed benefits in both segments.

Hugues Simon: This was driven by lower volumes in packaging, which fully offset pricing and favorable mixed benefits in both segments. Consolidated adjusted EBITDA of CAD 155 million increased 9%, reflecting lower corporate costs. We continue to remain focused on our balance sheet, allocating free cash flow to reduce our debt. To this end, net debt decreased by CAD 127 million sequentially, and leverage decreased to 3.3x from 3.6x at the end of Q3. For the full year, sales increased to CAD 4.8 billion, and adjusted EBITDA increased 15% to CAD 576 million on a consolidated basis, reflecting a solid improvement from our packaging segment. EBITDA margins increased 140 basis points to 12.1% for the year.

Speaker #3: Consolidated adjusted EBITDA of $155 million increased 9%, reflecting lower corporate costs. We continue to remain focused on our balance sheet, allocating free cash flow to reduce our debt.

Speaker #3: To this end, net debt decreased by $127 million sequentially, and leverage decreased to 3.3 times from 3.6 times at the end of Q3. For the full year, sales increased to $4.8 billion, and adjusted EBITDA increased 15% to $576 million, on a consolidated basis.

Speaker #3: Reflecting a solid improvement from our packaging segment, EBITDA margins increased 140 basis points to 12.1% for the year. We provide a more detailed breakdown of factors that impacted results, sequentially and year-over-year, on Slide 5.

Hugues Simon: We provide a more detailed breakdown of factors that impacted results sequentially and year-over-year on slide 5. Trends continue to be favorable for raw material costs in Q4. We provide an overview of average quarterly costs and trends on slides 6 and 7. Moving now to the results of our business segments, which are highlighted on slide 8 through 13 of the presentation. Beginning with packaging, our Q4 sales decreased 5% sequentially. In addition to usual softer seasonal volumes, this reflects lower average selling prices, driven by changes in customer and sales mix for the converted products. Notwithstanding this, our box shipments increased 1.5%, outperforming the industry's 2.4% decrease. Q4 adjusted EBITDA decreased 3% sequentially to CAD 132 million, in line with expectations.

Speaker #3: Trends continue to be favorable for raw material costs in Q4. We provide an overview of average quarterly costs and trends on Slide 6 and 7.

Speaker #3: Moving now to the results of our business segments, which are highlighted on Slide 8 through 13 of the presentation. Beginning with packaging, our fourth quarter sales decreased 5% sequentially.

Speaker #3: In addition to usual softer seasonal volumes, this reflects lower average selling prices driven by changes in customer and sales mix for the converted products.

Speaker #3: Notwithstanding this, our bulk shipments increased 1.5%, outperforming the industry's 2.4% decrease. Fourth quarter adjusted EBITDA decreased 3% sequentially, to 132 million dollars. In line with expectations.

Speaker #3: This was driven by the volume and selling price factors that I just discussed, offset by benefits from lower operating and raw material costs. EBITDA margins improved sequentially to 17.4% from 17.1% in Q3.

Hugues Simon: This was driven by the volume and selling price factors that I just discussed, offset by benefits from lower operating and raw material costs. EBITDA margins improved sequentially to 17.4% from 17.1% in Q3. We had a solid quarter at our Berlin facility. In addition to running the mill at 88% of its total production capacity, we increased production levels of lower basis weight paper by 7% sequentially, a key differentiating factor from an industry perspective, while remaining focused on machine availability. We do continue to see this positive operational pace in early 2026. Year-over-year, sales in this business decreased by 3%. This was driven by lower volumes that reflects the permanent closure and/or sales of three facilities and a decrease in corrugated shipments following strong demand in the year-ago period.

Speaker #3: We had a solid quarter at our Bear Island facility. In addition to running the mill at 88% of its total production capacity, we increased production levels of lower basis weight paper by 7% sequentially, a key differentiating factor from an industry perspective, while remaining focused on machine availability.

Speaker #3: We do continue to see this positive operational pace in early 2026. Year-over-year sales in this business decreased by 3%. This was driven by lower volumes that reflect the permanent closure and/or sales of three facilities, and a decrease in corrugated shipments following strong demand in the year-ago period.

Hugues Simon: Higher selling prices and favorable mix partially offset these impacts. Adjusted EBITDA was stable year-over-year, as selling price and raw material cost tailwinds fully offset volume-related impacts. Margins improved to 17.4% from 16.9% last year. Before moving to tissue, I'd like to say that we're pleased with the growing resiliency of profitability levels in this segment. Improvements made to our cost and organizational structures are being captured and are helping to offset cost inflation and other external headwinds. Initiatives we've put in place are gaining traction, key amongst which is ensuring that the right product is produced on the right equipment. This, along with other decisive actions we're taking, are positioning Cascades to be more resilient in an ever-changing business environment. Moving now to our tissue segment. Q4 results were below expectations.

Speaker #3: Higher selling prices and favorable mixed partially offset these impacts. Adjusted EBITDA was stable year-over-year as selling price and raw material costs tailwinds fully offset volume-related impacts.

Speaker #3: Margins improved to 17.4% from 16.9% last year. Before moving to tissue, I'd like to say that we're pleased with the growing resiliency of profitability levels in this segment.

Speaker #3: Improvements made to our costs and organizational structures are being captured and are helping to offset cost inflation and other external headwinds. Initiatives we've put in place are gaining traction.

Speaker #3: Key amongst which is ensuring that the right product is produced on the right equipment. This, along with other decisive actions we're taking, are positioning CASCADES to be more resilient, in an ever-changing business environment.

Speaker #3: Moving now to our tissue segment. Fourth quarter results were below expectations. In addition to efficiency and logistics execution falling short of our targets, our North Carolina wagram facility experienced a major electrical outage.

Hugues Simon: In addition to efficiency and logistics execution falling short of our targets, our North Carolina Wagram facility experienced a major electrical outage. These factors reduced output, increased operational support requirements, and required our network volume to be redirected to other plants, increasing logistics costs. Sales in this segment decreased by 1% sequentially, driven by a 3% decrease in away from home market that reflects expected seasonality. This was partially offset by a slight increase in the retail market. The segment adjusted EBITDA of $42 million, decreased 9% sequentially. While lower raw material costs were a tailwind, benefits were more than offset by higher operating costs as well as negative volume, which includes effects related to the power outage at our Wagram plant. Year-over-year sales increased 3%, driven by an 8% increase in retail and stable volume in away from home.

Speaker #3: These factors reduced output, increased operational support requirements, and required our network volume to be redirected to other plants increasing logistics costs. Sales in this segment decreased by 1% sequentially, driven by a 3% decrease in away-from-home market that reflects expected seasonality.

Speaker #3: This was partially offset by a slight increase in the retail market. The segment adjusted EBITDA of $42 million decreased 9% sequentially. While lower raw material costs were a tailwind, benefits were more than offset by higher operating costs, as well as negative volume, which includes effects related to the power outage at our wagram plant.

Speaker #3: Year-over-year sales increased 3%, driven by an 8% increase in retail, and stable volume in away-from-home. Adjusted EBITDA decreased 7% from last year, with benefits from raw material costs volume and higher selling prices offset by higher operating costs.

Hugues Simon: Adjusted EBITDA decreased 7% from last year, with benefits from raw material costs, volume, and higher selling prices offset by higher operating costs. While we're disappointed with quarterly results in this business, the countermeasures already in place to strengthen our operation are gaining traction. The temporary challenge at the Wagram facility should also not overshadow the good progress being made at our Pryor, Oklahoma mill. The efficiency improvement initiatives at this facility are generating benefits and helped drive the 11% sequential increase in converting production in Q4. Similarly, our recent investments in our Kingsey Falls and Grand Bay facilities are delivering good results. We're confident that the actions we have taken will successfully strengthen this business, both from a profitability and cash flow generation standpoint. I'll now pass the call to Alain, who will briefly discuss some of the financial highlights. Alain?

Speaker #3: While we're disappointed with quarterly results in this business, the countermeasures already in place to strengthen our operation are gaining traction. The temporary challenge at the wagram facility should also not overshadow the good progress being made at our prior Oklahoma mill.

Speaker #3: The efficiency improvement initiatives at this facility are generating benefits and help drive the 11% sequential increase in converting production in Q4. Similarly, our recent investments in our Kingsley Falls and Granbay facilities are delivering good results.

Speaker #3: We're confident that the actions we have taken will successfully strengthen this business, both from a profitability and cash flow generation standpoint. I'll now pass the call to Allan, who will briefly discuss some of the financial highlights.

Speaker #3: Allan?

[Company Representative] (Cascades): Yes, thank you, Hugues, good morning, everyone. Let's start with the specific items recorded during the quarter, which impacted operating income by CAD 7 million on slide 14 and 15. The main items were CAD 25 million of impairment charges related to facilities closed in Canada and the US, and CAD 4 million of restructuring costs. These reflect the company's ongoing optimization initiatives. In addition, there were gains totaling CAD 22 million from the sale of our Flexible Packaging activities and on derivative financial instruments. Slide 16 and 17 illustrate the year-over-year and sequential variance of our Q4 adjusted earnings per share, and the reconciliation with the specific items that affected our quarterly results. As reported, Q4 net earnings per share were CAD 0.37. This compared to a net loss per share of CAD 0.13 last year, and net earnings of CAD 0.29 per share in Q3.

Speaker #4: Yes. Thank you, Hugues, and good morning, everyone. So let's start with the specific items recorded during the quarter, which impacted operating income by 7 million on Slide 14 and 15.

Speaker #4: The main items were $25 million of impairment charges related to facilities close in Canada and the US, and $4 million of restructuring costs. These reflect the company's ongoing optimization initiatives.

Speaker #4: In addition, there were gains totaling $22 million from the sale of our flexible packaging activities and on derivative financial instruments. Slide 16 and 17 illustrate the year-over-year and sequential variance of our Q4 adjusted earnings per share, and the reconciliation with the specific items that affected our quarterly results.

Speaker #4: As reported, Q4 net earnings per share were $37, this compared to a net loss per share of $0.13 last year, and net earnings of $0.29 per share in Q3.

Speaker #4: On an adjusted basis, net earnings per share were $0.40 in the current quarter, this compared to net earnings per share of $0.25 last year, and $0.38 in the third quarter of 2025.

[Company Representative] (Cascades): On an adjusted basis, net earnings per share were CAD 0.40 in Q4. This compared to net earnings per share of CAD 0.25 last year, and CAD 0.38 in Q3 2025. The year-over-year increase was driven by stronger adjusted EBITDA in Q4, while the sequential improvement reflects lower depreciation and financing expense. We also added the 2025 year-over-year earnings per share reconciliation on page 18. As highlighted on slide 19, Q4 adjusted cash flow from operations was CAD 165 million, up from CAD 129 million in the year ago period, and CAD 137 million in Q3. Adjusted cash flow generated in Q4 improved year-over-year and sequentially, mainly reflecting stronger operating results, higher dividends received from our JV partners, and lower financing expense paid. Capital investments and lease obligations payments increased slightly.

Allan Hogg: On an adjusted basis, net earnings per share were CAD 0.40 in Q4. This compared to net earnings per share of CAD 0.25 last year, and CAD 0.38 in Q3 2025. The year-over-year increase was driven by stronger adjusted EBITDA in Q4, while the sequential improvement reflects lower depreciation and financing expense. We also added the 2025 year-over-year earnings per share reconciliation on page 18. As highlighted on slide 19, Q4 adjusted cash flow from operations was CAD 165 million, up from CAD 129 million in the year ago period, and CAD 137 million in Q3. Adjusted cash flow generated in Q4 improved year-over-year and sequentially, mainly reflecting stronger operating results, higher dividends received from our JV partners, and lower financing expense paid. Capital investments and lease obligations payments increased slightly.

Speaker #4: The year-over-year increase was driven by stronger adjusted EBITDA in the current quarter, while the sequential improvement reflects lower depreciation and financing expense. We also added the 2025 year-over-year earnings per share reconciliation on page 18.

Speaker #4: As highlighted on Slide 19, fourth quarter adjusted cash flow farm operations was $165 million, up from $129 million in the year-ago period and $137 million in Q3.

Speaker #4: Adjusted cash flow generated in the fourth quarter improved year-over-year and sequentially, mainly reflecting stronger operating results, higher dividends received from IGV partners, and lower financing expense paid.

Speaker #4: Capital investments and lease obligations payments, increased slightly. Slide 20 provides detail about our capital investments. Investment for the fourth quarter totaled $42 million, bringing the full year level to $152 million.

[Company Representative] (Cascades): Slide 20 provides detail about our capital investments. Investment for the Q4 totaled CAD 42 million, bringing the full year level to CAD 152 million. For 2026, we expect CapEx to total approximately CAD 175 million. Moving now to our net debt reconciliation, as detailed on slide 21 and 22. Sequentially, net debt decreased by CAD 127 million in the Q4, mainly due to stronger cash flow from operations, a reversal in working capital requirements, proceeds from business disposal, and a more favorable exchange rate on our US-denominated debt. Our leverage ratio decreased 3.3x from 3.6 at the end of the Q3. For the full year, net debt decreased by CAD 200 million, and our 3.3x leverage ratio decreased from 4.2x at the end of 2024.

Allan Hogg: Slide 20 provides detail about our capital investments. Investment for the Q4 totaled CAD 42 million, bringing the full year level to CAD 152 million. For 2026, we expect CapEx to total approximately CAD 175 million. Moving now to our net debt reconciliation, as detailed on slide 21 and 22. Sequentially, net debt decreased by CAD 127 million in the Q4, mainly due to stronger cash flow from operations, a reversal in working capital requirements, proceeds from business disposal, and a more favorable exchange rate on our US-denominated debt. Our leverage ratio decreased 3.3x from 3.6 at the end of the Q3. For the full year, net debt decreased by CAD 200 million, and our 3.3x leverage ratio decreased from 4.2x at the end of 2024.

Speaker #4: For 2026, we expect capex to total approximately $175 million. Moving now to our net debt reconciliation, as detailed on Slide 21 and 22. Sequentially, net debt decreased by $127 million in the fourth quarter, mainly due to stronger cash flow farm operations, a reversal in working capital requirements, proceeds from business disposal, and a more favorable exchange rate on our US denominated debt.

Speaker #4: Our leverage ratio decreased 3.3 times from 3.6 at the end of the third quarter. For the full year, net debt decreased by $200 million, and our 3.3 times leverage ratio decreased from 4.2 times at the end of 2024.

[Company Representative] (Cascades): Our available liquidity under our credit facility stood at CAD 737 million at the end of 2025. In early 2026, we announced that we've completed the sale of our Richmond, BC, packaging plant and the exit from the honeycomb and partition business segments. The cash proceeds received of CAD 69 million have gone toward debt repayment in the Q1. Some additional closing adjustment may occur within the Q1. Including this amount, we have achieved our objective of generating CAD 120 million in proceeds from the sale of redundant and non-core assets ahead of our mid-2026 schedule. Financial ratios and information about maturities are detailed on slide 23. Additional information and analysis can be found on slides 27 through 36 of the presentation, including our updated sensitivity analysis based on our 2025 consumption and shipment levels on slide 34.

Allan Hogg: Our available liquidity under our credit facility stood at CAD 737 million at the end of 2025. In early 2026, we announced that we've completed the sale of our Richmond, BC, packaging plant and the exit from the honeycomb and partition business segments. The cash proceeds received of CAD 69 million have gone toward debt repayment in the Q1. Some additional closing adjustment may occur within the Q1. Including this amount, we have achieved our objective of generating CAD 120 million in proceeds from the sale of redundant and non-core assets ahead of our mid-2026 schedule. Financial ratios and information about maturities are detailed on slide 23. Additional information and analysis can be found on slides 27 through 36 of the presentation, including our updated sensitivity analysis based on our 2025 consumption and shipment levels on slide 34.

Speaker #4: Our available liquidity under our credit facility stood at $737 million at the end of 2025. In early 2026, we announced that we completed the sale of our Richmond BC packaging plant and the exit from the Honeycomb and Partition business segments.

Speaker #4: The cash proceeds received of $69 million have gone toward debt repayment in the first quarter. Some additional closing adjustment may occur within the first quarter.

Speaker #4: Including this amount, we have achieved our objective of generating $120 million in proceeds from the sale of redundant and non-core assets ahead of our mid-2026 schedule.

Speaker #4: Financial ratios and information about maturities are detailed on Slide 23. Additional information and analysis can be found on Slides 27 through 36 of the presentation, including our updated sensitivity analysis based on our 2025 consumption and shipment levels on Slide 34.

[Company Representative] (Cascades): I will now pass the call back to Hugues, who will conclude with some brief comments before we begin the question period. Hugues?

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

Speaker #4: I will now pass the call back to Hugues, who will conclude with some brief comments before we begin the question period. Hugues?

Speaker #5: Thank you, Allan. We provide our outlook for Q1 and Slide 24. We're expecting our consolidated results to decrease sequentially but to increase year-over-year for the sixth consecutive quarter.

Hugues Simon: Thank you, Alain. We provide our outlook for Q1 on slide 24. We're expecting our consolidated results to decrease sequentially, but to increase year-over-year for the sixth consecutive quarter. For packaging, we're expecting softer sequential results. This reflects usual demand seasonality. Additionally, we're planning maintenance downtime totaling approximately 16,000 tons across our platform in Q1, including at Bear Island and at our uncoated recycled board mill in Kingsey Falls, where we're completing an upgrade to increase capacity. Raw material and selling price trends are expected to remain largely stable, while energy and logistics costs will be headwinds following the challenging weather in early 2026. The sequential decrease we're forecasting in tissue is driven by lower seasonal demand, mainly in away from home, and impacts stemming from the severe weather in the US early in 2026.

Speaker #5: For packaging, we're expecting softer sequential results. This reflects usual demand seasonality; additionally, we're planning maintenance downtime totaling approximately 16,000 tons across our platform in Q1, including at Bear Island and at our uncoated recycled board mill in Kingsley Falls.

Speaker #5: Where we're completing an upgrade to increase capacity. Raw material and selling price trends are expected to remain largely stable, while energy and logistics costs will be headwinds following the challenging weather in early 2026.

Speaker #5: The sequential decrease we're forecasting in tissue is driven by lower seasonal demand, mainly in a way from home, and impacts stemming from the severe weather in the US early in 2026.

Hugues Simon: Ramp-up at the Wagram plant following the power outage is progressing well. We expect the facility to return to full production capacity before the end of Q1. Raw material prices are expected to remain largely stable, while energy and logistics costs will be higher due to inflation and ongoing adjustments within our network due to weather-related impacts. Looking ahead, we're focused on executing our 2026 plan. We're centered on the key drivers we control to mitigate external headwinds. To this end, our internal objective is to generate adjusted EBITDA above CAD 600 million in 2026, before factoring any net effect of selling price increases. This target is being driven by our strategic objectives, which are centered on increasing our baseline annualized profitability levels by CAD 100 million. We made meaningful progress in 2025, generating CAD 30 million. We are focused on accelerating this momentum throughout 2026.

Speaker #5: Ramp-up at the wagram plant following the power outage is progressing well, and we expect the facility to return to full production capacity before the end of Q1.

Speaker #5: Raw material prices are expected to remain largely stable, while energy and logistics costs will be higher due to inflation, and ongoing adjustments within our network due to weather-related impacts.

Speaker #5: Looking ahead, we're focused on executing our 2026 plan. We're centered on the key drivers we control to mitigate external headwinds. To this end, our internal objective is to generate adjusted EBITDA above $600 million in 2026 before factoring any net effect of selling price increases.

Speaker #5: This target is being driven by our strategic objectives which are centered on increasing our baseline annualized profitability levels by $100 million. We maintain meaningful progress in 2025, generating $30 million in our focus on accelerating this momentum throughout 2026.

Hugues Simon: Similarly, we achieved our concurrent objective of generating CAD 120 million in proceeds from asset sales ahead of schedule. We're now targeting an additional CAD 100 million of proceeds from the divestiture of redundant assets this year, which will bring the total to approximately CAD 230 million over 2 years. Our strategy is anchored on strengthening the company's resiliency, performance, and competitiveness, grounded by a customer-centric vision that includes best-in-class service. To drive strong execution across our organization, we work within a focused 90-day cycle. Inside each of these cycles, our teams commit to a set of clear, measurable targets that ensure that we're aligned, disciplined, and fully focused on delivering results. Targets are refined and recalibrated as needed to reflect evolving economic conditions. Our path forward remains very clear. Successfully navigating this landscape requires agility, flexibility, and resilience.

Speaker #5: Similarly, we achieved our concurrent objective of generating $120 million in proceeds from asset sales ahead of schedule. We're now targeting an additional $100 million of proceeds from the divestiture of redundant assets this year which will bring the total to approximately $230 million, over two years.

Speaker #5: Our strategy is anchored on strengthening the company's resiliency performance and competitiveness, grounded by a customer-centric vision that includes best-in-class service. To drive strong execution across our organization, we work within a focused 90-day cycle.

Speaker #5: Inside each of these cycles, our teams commit to a set of clear, measurable targets that ensure that we're aligned, disciplined, and fully focused on delivering results.

Speaker #5: Targets are refined and recalibrated as needed to reflect evolving economic conditions. Our path forward remains very clear. Successfully navigating this landscape requires agility, flexibility, and resilience.

Speaker #5: These qualities are key elements of our strategy. Alongside these, we remain committed to reducing debt levels, to strengthen the company's financial flexibility, and unlock future growth opportunities.

Hugues Simon: These qualities are key elements of our strategy. Alongside these, we remain committed to reducing debt levels to strengthen the company's financial flexibility and unlock future growth opportunities. With that, we can now open the call to questions. Operator?

Speaker #5: With that, we can now open the call to questions. Operator?

Speaker #6: Merci. Si vous voulez poser une question, veuillez, s'il vous plaît, composer l'étoile suivie du 1 sur votre clavier téléphonique. Et si vous voulez retirer votre question, composez l'étoile suivie du 2.

Operator: Merci. Si vous voulez poser une question, veuillez s'il vous plaît composer l'étoile suivi du un sur votre clavier téléphonique. Si vous voulez retirer votre question, composez l'étoile suivi du deux. Thank you. If you would like to ask a question, simply press star, then number one on your telephone keypad. If you would like to withdraw your question, please press star, then number two. Again, if you have a question, please press star one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Ahmed Abdullah at National Bank of Canada. Please go ahead.

Speaker #6: Thank you. If you would like to ask a question, simply press star, then number 1 on your telephone keypad. If you would like to withdraw your question, please press star, then number 2.

Speaker #6: Again, if you have a question, please press star 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.

Speaker #6: And your first question comes from Ahmed Abdullah at National Bank of Canada. Please go ahead.

Speaker #4: Yeah, good morning, and thanks for taking my question. You've achieved $120 million of proceeds, or ahead of that, as you're targeting asset sales and now you're targeting another $100 million.

Ahmed Abdullah: Good morning, and thanks for taking my question. You've achieved CAD 120 million of proceeds or ahead of that, as you're targeting asset sales. Now you're targeting another CAD 100 million. Can you tell us what's the mix of what you've already identified that you wanna sell versus what's still to be determined? Can we expect any EBITDA dyssynergies from such sales?

Speaker #4: Can you tell us what's the mix of what you've already identified that you want to sell versus what's still to be determined? And can we expect any EBITDA dissynergies from such sales?

Speaker #5: Yeah, thank you for your question. So basically, when we talk about the $120 million that we've achieved, so far ahead of schedule, the number is more like $126, $127.

Hugues Simon: Yeah, thank you for your question. Basically, when we talk about the CAD 120 million that we've achieved so far ahead of schedule, the number is more like CAD 126, CAD 127. We are targeting another CAD 100 million. We have identified all of the CAD 100 million, and to be quite clear, we identified more. Understanding and some of the things that we were looking to sell are likely not going to work. We do not anticipate any EBITDA erosion overall in the additional CAD 100 million that we're targeting.

Speaker #5: So we are targeting another $100. We have identified all of the $100, and to be quiet, clear, we identified more. I understand some of the things that we were looking to sell are likely not going to work.

Speaker #5: We do not anticipate any EBITDA erosion overall in the additional $100 million that we're targeting.

Speaker #4: So to be clear, you still expect to have an EBITDA that's above $600 million at the end of 2026, despite all these sales?

Ahmed Abdullah: To be clear, you still expect to have an EBITDA that's above CAD 600 million at the end of 2026, despite all these sales?

Speaker #5: Yes, sir. Exactly. That's correct.

Hugues Simon: Yes, sir. Exactly. That's correct.

Speaker #4: Okay, perfect. And just touching on the recent price hike announcements that have taken place in the industry—pressure, including yourself—pressures seem to still be there as demand remains modest, and we saw last week that open market prices are highlighting some cracks there.

Ahmed Abdullah: Okay, perfect. Just touching on the recent price hike announcements that have taken place in the industry, including yourself, pressures seem to still be there as demand remains modest. We saw last week that open market prices are highlighting some cracks there. How have discussions unfolded around price hikes that are actually expected to be implemented by next week?

Speaker #4: How have discussions unfolded around price hikes that are actually expected to be implemented by next week?

Speaker #5: Yeah, so we were kind of surprised with the $20 decrease that was announced last week. That's not what we're seeing in our order file.

Hugues Simon: Yeah. We, we were kind of surprised with the CAD 20-dollar decrease that was announced last week. That's not what we're seeing in our order file. If we go back to December, we made that decision to run our paper mills during the Christmas holidays, because what we saw for us looking ahead, it was the right thing to do. If we had to make that decision again, we'd do the same decision. We have a good order file. We ship some of our rolls to our internal box plants. And when we look at what we ship externally, we feel confidence with what we have.

Speaker #5: If we go back to December, we made that decision to run our paper mills during the Christmas holidays, because what we saw for us looking ahead was the right thing to do.

Speaker #5: If we had to make that decision again, we'd do the same decision. We have a good order file. We shipped some of our roles to our internal box plants.

Speaker #5: And when we look at what we ship externally, we feel confident with what we have. Clearly, in the first quarter, there's a typical seasonal slowdown.

Hugues Simon: Clearly, in the first quarter, there's a typical seasonal slowdown, and that's one of the reasons why we try to take the opportunity as much as we can to make some annual outage. We're doing a major shutdown at the Bear Island facility. We just restarted from the one in Kingsey Falls, that restarted this morning, and a successful restart. So, you know, when we look at the spring, we look at the inventory that we have. We're focused on implementing the $70 increase that we've announced in linerboard, at $60 in URB, and the additional increase as well in the medium mill. So it's not, we don't see any reduction in pace in the rolls.

Speaker #5: And that's one of the reasons why we tried to take the opportunity as much as we can to make some annual outage. We're doing a major shutdown at the Bear Island facility.

Speaker #5: We just restarted from the one in Kingsley Falls that restarted this morning, and successful restart. So you know when we look at the spring, we look at the inventory that we have, we're focused on implementing the $70 increase that we've announced in line of board.

Speaker #5: $60 in URB. And the additional increase as well in the medium. So it's not we don't see any reduction in pace in the roles.

Hugues Simon: What is clear for us is that when we look at 2025, there was a significant reduction of capacity in North America. We see the rolls market being tight. There is some capacity in box making right now, and it's a seasonal low. It's different than what we see in rolls, clearly.

Speaker #5: What is clear for us is when we look at 2025, there was a significant reduction of capacity in North America. So we see the roles market being tight.

Speaker #5: There is some capacity in box-making right now, and it's a seasonal low. But it's different than what we see in rolls, clearly.

Speaker #4: Okay, that's very appreciated, Cutler. Thank you. And just finally, on the tissue outage EBITDA impact, have you quantified how much or how much you expect as a spillover into the first quarter?

Ahmed Abdullah: Okay. That's a very appreciated color. Thank you. Just finally, on the tissue outage, EBITDA impact, have you quantified how much or how much you expect as a spillover into Q1?

Hugues Simon: Yeah.

Ahmed Abdullah: I know you provided guidance, but.

Speaker #4: I know you provided guidance, but yeah, I just wanted to get the number, perhaps.

Hugues Simon: Yeah.

Ahmed Abdullah: I just wanted to get the number, perhaps.

Hugues Simon: Yeah.

Ahmed Abdullah: I just wanted to get the number, perhaps.

Speaker #5: Yeah, so when we look at the first quarter, obviously, it is within our guidance. The restart of the operation at our Waygrant facility, we were able to run, but to run with slightly lower volume at the start, and then we pushed our volume back to be almost at pace.

Hugues Simon: Yeah. When we look at the Q1, obviously it is within our guidance. The restart of the operation at our Wagram facility, we were able to run, but to run with a slightly lower volume at the start, and then we pushed our volume back to be almost at pace. The additional cost was the thing that was significant, where we had a switchgear failure that comes from the provider of power at the facility, and they had a replacement, and it was not successful. We took the decision to put some generator, and the generator brought some additional cost. The restart of the main switchgear, that's the one that's gonna be there for a long time, actually happened yesterday. We had a good restart.

Speaker #5: The additional cost was the thing that was significant, where we had a switch gear failure that comes from the provider of power at the facility.

Speaker #5: And the other replacement, and it was not successful. So we took the decision to put some generator, and the generator brought some additional cost.

Speaker #5: The restart of the main switch gear that's the one that's going to be there for a long time, actually happened yesterday. So we had a good restart.

Speaker #5: We're still looking at making sure that all the equipment have stable power and they have protection, because the switch gear provides stability of power for some of the equipment to make sure it's safe.

Hugues Simon: We're still looking, making sure that all the equipment have stable power and they have protection, because the switchgear provides stability of power.

Hugues Simon: We're still looking, making sure that all the equipment have stable power and they have protection, because the switchgear provides stability of power. for some of the equipment to make sure it's safe. What we're seeing so far is very positive. We have sent our experts from our excellence teams in Canada into the US to make sure that we do the proper tracking and that we're more preventive. Although it's an external switchgear, it's a Cascades impact. In Q1, we expect to be much lower than what we had in Q4, understanding that the restart happened yesterday, so roughly 2 out of the 3 months of Q1 of the year.

Ahmed Abdullah: Yeah

Hugues Simon: ... for some of the equipment to make sure it's safe. What we're seeing so far is very positive. We have sent our experts from our excellence teams in Canada into the US to make sure that we do the proper tracking and that we're more preventive. Although it's an external switchgear, it's a Cascades impact. In Q1, we expect to be much lower than what we had in Q4, understanding that the restart happened yesterday, so roughly 2 out of the 3 months of Q1 of the year.

Speaker #5: What we're seeing so far is very positive. We have sent our experts from our Excellence teams in Canada into the US to make sure that we do the proper tracking and that we're more preventive.

Speaker #5: Although it's an external switch gear, it's a CASCADE impact. So in the first quarter, we expect to be much lower than what we had in Q4, understanding that the restart happened yesterday.

Speaker #5: So roughly two out of the three months of the first quarter of the year. And I can add the one of the key reasons why we decided to put some generators is, you know, you look at the North American industry of tissue, and I'll give you the example of retail.

Ahmed Abdullah: Right

Hugues Simon: ... I can add the...

Ahmed Abdullah: Sure

Hugues Simon: One of the key reasons why we decided to put some generators is that, you know, you look at the North American industry of tissue, and I'll give you the example of retail. In Canada, the top two sellers or the top two retailers, basically sell 50% of the tissue in Canada. In the US, if you look at the top three, they're basically 2/3 of the sales in the US. Customer first for us. We wanted to make sure that it was as transparent as possible for our customers, because they're in the heart of everything we do, and we want to maintain those, you know, long-term trust and make sure that we supply and we continue to grow with them. We did spend additional money in Q4.

Speaker #5: In Canada, the top two sellers, so the top two retailers, basically sell 50% of the tissue in Canada. And in the US, if you look at the top three, they're basically two-thirds of the sales in the US.

Speaker #5: So customer first for us. We wanted to make sure that it was as transparent as possible for our customers. Because they're in the heart of everything we do.

Speaker #5: And we want to maintain those long-term trust and make sure that we supply and we continue to grow with them. So we did spend additional money in the fourth quarter.

Hugues Simon: We see that as obviously, a cost, and it does have an impact on our EBITDA in the Q4, but also as an investment to show our dedication to our customers, that we're there for the long term. When things happen in the mail, it has to be as transparent as possible for them.

Speaker #5: We see that as obviously a cost, and it does have an impact on our EBITDA in the fourth quarter. But also as an investment to show our dedication to our customers that we're there for the long term.

Speaker #5: And when things happen at the mill, it has to be as transparent as possible for them.

Speaker #4: Okay, well, thanks for that. I appreciate the Cutler. I'll jump back in queue.

Ahmed Abdullah: Okay. Well, thanks for that. I appreciate the color. I'll jump back in queue.

Speaker #6: Thank you. Next question will be from Amir Patel at CIBC Capital Markets. Please go ahead.

Operator: Thank you. Next question will be from Hamir Patel at CIBC Capital Markets. Please go ahead.

Hamir Patel: Hi, good morning, Hugh. Just following up on the, on the pricing moves, you know, obviously, RISI cut the benchmark by 20 tons. Should we, given that I know you've got your ongoing hike, it's for March. Historically, even when these hikes are recognized, it typically only follows a month later. Should we expect, just given the RISI move, that your realized containerboard prices would decline sequentially in Q1? I know you're also working on increasing the mix of lightweight, so is there a bit of a mix impact as well?

Speaker #7: Hi, good morning, Hugues Simon. Just following up on the pricing moves. Obviously, we've recently cut the benchmark by 20 tonnes. So should we given I know you've got your ongoing hike.

Speaker #7: It's for March, historically, even when these hikes are recognized, it typically only follows a month later. So should we expect just given the recent move that you were realized container board prices would decline sequentially in Q1?

Speaker #7: And I know you're also working on increasing the mix of lightweights. So is there a bit of a mix impact as well?

Speaker #5: Yeah, so good question. I mean, as I said, we were surprised by the $20 reduction, understanding that we're two months into Q1. We do have a mix impact as well.

Hugues Simon: Yeah. Good question. I mean, as I said, we were surprised by the $20 reduction, understanding that, you know, we're 2 months into Q1. You look at what we've announced for 2 March, you know, it's a $70 hike. When you look at Q1, it's within the range of the guidance that we've provided.

Speaker #5: And you look at what we've announced for March 2nd, it's a $70 hike. So when you look at Q1, it's within the range of the guidance that we've provided.

Hamir Patel: Okay, great. Hugh, just thinking around, you know, USMCA, if you could, just maybe update us on how you've been adjusting the business to prepare for different scenarios around, you know, potential future tariffs.

Speaker #7: Okay, great. And Hugues, just thinking around USMCA if you could just maybe update us on how you've been adjusting the business to prepare for different scenarios around potential future tariffs.

Speaker #5: Yeah, this is a never-moving discussion on tariff. If you remember back in early 2025, we did position ourselves for tariffs that lasted for three days.

Hugues Simon: Yeah. This is an ever-moving, you know, discussion on tariff. If you remember back in early 2025, we did position ourself for tariffs that lasted for 3 days. Since then, we've done additional work, and I'll provide you an example with tissue. We, you know, we're able to add some SKUs in the US for US sales, and those SKUs were produced in Canada before. We're still, you know, have a good list of things that we can do to minimize any potential impacts. In some of the cases, like the recent potential 15% across the board for the next 150 days will not impact Canada, what will impact other countries, and some of them were already impacted.

Speaker #5: Since then, we've done additional work, and I'll provide you an example with tissue. We were able to add some SKUs in the US for US sales, and those SKUs were produced in Canada before.

Speaker #5: We still have a good list of things that we can do to minimize any potential impacts. And some of the cases, like the recent potential 15% across the board for the next 150 days, will not impact Canada.

Speaker #5: What will impact other countries? And some of them were already impacted. So there will be pockets of opportunities short term. The biggest thing for us, it provides for unstability.

Hugues Simon: There will be pockets of opportunities short-term. The biggest thing for us, it provides for instability and, you know, like, customers wanna keep, since some cases, less inventory because they're unsure about the economy in the US. We're looking at all alternative to make sure that we minimize, and that will include, like, trading and swapping volumes with others.

Speaker #5: And customers want to keep in some cases less inventory because they're unsure about the economy in the US. But we're looking at all alternatives to make sure that we minimize.

Speaker #5: And that will include trading and swapping volumes with others.

Hamir Patel: Great. Thank you. That's all I had. I'll turn it over.

Speaker #7: Great. Thanks, Hugues. That's all I had. I'll turn it over.

Speaker #6: Thank you. Next question will be from Sean Stewart at TD Cowen. Please go ahead.

Operator: Thank you. Next question will be from Sean Steuart at TD Cowen. Please go ahead.

Speaker #8: Thanks. Good morning. One follow-up question on the container board price volatility. Can you remind us what percentage of your container board or corrugated box volume is officially tied to RECI in your contracts?

Sean Steuart: Thanks. Good morning. One follow-up question on the container board price volatility. Can you remind us what percentage of your container board or corrugated box volume is officially tied to RISI in your contracts?

Speaker #5: Yeah, so roughly. And I mean, that varies depending on the period and the season, what customers are using. But I think using a two-thirds, one-third—two-thirds being contracted, one-third non-contracted—is a good trend number to use.

Hugues Simon: Yeah. Roughly, I mean, that varies, you know, depending of the period and the season, with what customers are using. You know, we, I think using a two-third, one-third, two-third being contracted, one-third non-contracted is a good, like, trend numbers to use. We did include that. Because obviously, in Q1, I mean, it doesn't have an impact, understanding that we're basically in March right now. You look at the guidance that we provided, I mean, our CAD 600 million of EBITDA, before any net impact of all this, like this -20 and the announcement, for us, remains. That's what we target, and we have a clear path to that with the current state of the economy.

Speaker #5: We did include that when we because obviously in the first quarter, I mean, it doesn't have an impact understanding that we're basically in March right now.

Speaker #5: But you look at the guidance that we provided, I mean, our 600 million of EBITDA before any net impact of all this, like this minus 20 and the announcement, for us remains and that's what we target.

Speaker #5: And we have a clear path to that with the current state of the economy.

Speaker #8: Okay. Understood. And on the tissue results, I appreciate Wagram was a big part of this. But there were further comments around execution and efficiency headwinds that the company dealt with.

Sean Steuart: Okay, understood. On the tissue results, you know, appreciate Wagram was a big part of this, but, you know, there were further comments around execution and efficiency headwinds that the company dealt with. I'm just trying to understand, does that follow on from the Wagram outage and having to shift your business around to other assets? There's a broader issues across the platform. If so, I guess, how concentrated were those issues in Q4, and what's the timeframe to remedy that?

Speaker #8: And I'm just trying to understand, is that follow-on from the Wagram outage and having to shift your business around to other assets? Or is it broader issues across the platform?

Speaker #8: And if so, I guess, how how concentrated were those issues in the fourth quarter? And what's the timeframe to remedy that?

Speaker #5: Yeah, so great question. And I mean, all of what I'm going to share with you here is included in our guidance for Q1. Basically, when you look at our system given, the concentration of where the consumer buys its tissue needs when you have one facility, that's lagging in this case in Q4, it was Wagram.

Hugues Simon: Yeah, great question, and I mean, all of what I'm gonna share with you here is included in our guidance for Q1. Basically, when you look at our system, given the concentration of, you know, where the consumer buys its tissue needs, when you have one facility that's lagging, and in this case, in Q4, it was Wagram, we make sure that it's as transparent as possible for our customers. We move stuff around. In January, we had this severe weather in the US, and when you look at the location of our facilities, I mean, we were impacted quite drastically by this cold front, including snow. It delayed a bit more, and it also put some pressure in freight costs.

Speaker #5: We make sure that it's as transparent as possible for our customers. So we move stuff around. Then in January, we had this severe weather in the US.

Speaker #5: And when you look at the location of our facilities, I mean, we were impacted quadratically by this cold front, including snow. So it delayed a bit more.

Speaker #5: And it also put some pressure in freight costs. So logistic costs, if to answer the second part of your question, it's really concentrated within the US for US deliveries where cold weather and extreme weather, they're not as used to it.

Hugues Simon: Logistic costs, if to answer the second part of your question, it's really concentrated within the US, for US deliveries, where, you know, cold weather and extreme weather, they're not as used to it, and it takes a while to come back to normal. Has a small impact on sales if they close their distribution center, but it's just, you know, a time issue. It's really the cost to deliver. With the Wagram facility now back up, which, I mean, it took like, you know, basically over four and a half months for us to go back to normal, incurring some additional costs on the generators and also the movement of material. We feel that this is behind us.

Speaker #5: And it takes a while to come back to normal. As a small impact on sales, if they close their distribution center. But it's just a time issue.

Speaker #5: It's really the cost to deliver. With the Wagram facility, now back up, which I mean, it took basically over four and a half months for us to go back to normal.

Speaker #5: Incurring some additional costs on the generators and also the movement of material. We feel that this is behind us. The weather will continue to have some impact for us as long as we don't see good weather for a while.

Hugues Simon: The weather will continue to have some impact for us, as long as we don't see like, you know, good weather for a while. I mean, we're basically getting into March and April here, so it's not going to be an issue as much. We do have plans that we've put in place, including in the execution of operation and logistics to be ahead of the game. We want to be a couple steps ahead. There will be snow storms and cold weather next year, so, you know, we need, as a group, to be more prepared for that. That being said, the industry is running at close to full capacity, and every case we make is sold.

Speaker #5: I mean, we're basically getting into March and April here. So it's not going to be an issue as much. We do have plans that we've put in place including in execution of operation in logistics to be ahead of the game.

Speaker #5: So we want to be a couple of steps ahead there will be snowstorms and cold weather next year. So we need as a group to be more prepared for that.

Speaker #5: That being said, the industry is running at close to full capacity. And every case we make is sold. So we're apt to operate in a tight market, which is something that we're overall we're happy with that.

Hugues Simon: We have to operate in a tight market, which is something that overall, we're happy with that. We like that, but we want to maintain a level of service to our customers to continue to be their number one choice.

Speaker #5: We like that. But we want to maintain a level of service to our customers to continue to be their number one choice.

Speaker #8: Thank you for that detail. That's all I have for now.

Sean Steuart: Thank you for that detail. That's all I have for now.

Speaker #6: Thank you. Again, if you would like to ask a question, please press star the number one on your telephone keypad. Thank you. Next question will be from Matthew McKeller at RBC.

Operator: Thank you. Again, if you would like to ask a question, please press star, then number one on your telephone keypad. Thank you. Next question will be from Matthew McKellar at RBC. Please go ahead.

Speaker #6: Please go ahead.

Speaker #9: Good morning. Thanks for taking my questions. First, just reflecting on the packaging segment result in Q4, I think in your outlook as of Q3, you'd expected favorable average selling prices.

Matthew McKellar: Good morning. Thanks for taking my questions. First, just reflecting on the packaging segment result in Q4, I think in your outlook, as in Q3, you expected favorable average selling prices, but your sequential bridge would suggest that selling prices and mix were a meaningful, I guess, drag on your results sequentially. I think you'd mentioned a change in customer mix for converted boxes in your prepared remarks. Can you help us understand, I guess, what happened and how the quarter developed against your expectations as of early November, please? Thanks.

Speaker #9: But your sequential bridge would suggest that selling prices in mix were a meaningful, I guess, drag on your results sequentially. I think you'd converted boxes in your prepared remarks.

Speaker #9: Could you help us understand, I guess, what happened and how the quarter developed against your expectations as of early November, please? Thanks.

Speaker #5: Yeah, so I mean, when you look at the plan we have in packaging, we want to simplify the business. And we want to make sure that we sell the right product on the right machine to the right set of customers.

Hugues Simon: I mean, you know, when you look at the plan we have in packaging, we wanna simplify the business, and we wanna make sure that we sell the right product on the right machine, you know, to the right set of customers. I mean, the selling price is one thing, but then you have the operating costs as well. We're really looking at profitability per hour, making sure that, you know, we increase the level of resiliency that we have in volume. Reduce a bit, you know, some of the seasonality as much as we can. When you look, you know, at food and beverage, more stable business that doesn't swing as much between quarter.

Speaker #5: So I mean, the selling price is one thing. But then you have the operating costs as well. So we're really looking at profitability per hour, making sure that we increase the level of resiliency that we have in volume, reduce a bit some of the seasonality as much as we can, and when you look at food and beverage, more stable, business that doesn't swing as much between quarter, sometimes from a percentage standpoint of profitability, it might be low.

Hugues Simon: Sometimes, you know, from a percentage standpoint of profitability, it might be low. When you look at the overall for the year and the long term of Cascades, it's the right thing to do. Reducing the number of SKUs, have longer runs on our equipment, higher efficiencies, so the profitability per, by hour of operation, will increase, and in some cases, have already increased, and also increasing the number of hours that we run our equipment. It's something that, you know, we're pushing to do where, you know, box plant is not a given, like paper machine, that they run 24/7. We wanna take advantage at running more hours where the economy is giving us the opportunity.

Speaker #5: But when you look at the overall for the year and the long-term of cascade, it's the right thing to do. Reducing the number of SKUs, have longer runs on our equipment, higher efficiencies.

Speaker #5: So the profitability by hour of operation will increase. And in some cases, have already increased. And also increasing the number of hours that we run our equipment.

Speaker #5: It's something that we're pushing to do where box plant is not a given like paper machine that they run 24/7. So we want to take advantage at running more hours where the economy is giving us the opportunity.

Speaker #9: Great. Thanks for that, Colin. That's helpful. And then just last for me, you've talked about wanting to be between two and a half and three times levered, I think.

Matthew McKellar: Great. Thanks for that color. That's helpful. Just last for me, you talked about wanting to be between 2.5 and 3 times levered, I think, and you actually did CAD 25 at 3.3 times. You've got some further proceeds from asset monetization plans in the pipeline. That 3 times marker is coming into clearer view, is there anything you can share with us today about potential priorities for capital allocation or strategic CapEx, specifically, beyond your current plans for 2026? Thank you.

Speaker #9: And you actually did 25 at 3.3 times. You've got some further proceeds from asset monetization plans in the pipeline. Now that that three times marker is coming into clear view, is there anything you could share with us today about potential priorities for capital allocation or strategic CapEx specifically beyond your current plans for 26?

Speaker #9: Thank you.

Speaker #5: Yeah, great question. I mean, we have started a while ago to look at the alternative. And really, when you look back, we our ratio was above four.

Hugues Simon: Yeah, great question. I mean, we have started a while ago to look at the alternative. Really, when you know, you look back, we, our ratio was above 4, so, I mean, expansion, buying things or building things was not like a short-term thing that we had in mind. We wanted to provide for options for Cascades, and that's exactly what's happening. We do have a roadmap internally on, you know, what are the options, what is best. What's driving this, you know, is, you know, long-term view of supply-demand, return on capital for our projects and shareholders, so ROIC has a big thing to do. The nice thing here is that you look at both segments. We have opportunities in both to expand.

Speaker #5: So I mean, expansion, buying things, or building things was not a short-term thing that we had in mind. We wanted to provide for options for cascade.

Speaker #5: And that's exactly what's happening. So we do have a roadmap internally on what are the options, what is best, what's driving this is long-term view of supply demand.

Speaker #5: Return on capital for our projects and shareholders. So Roche has a big thing to do. The nice thing here is that you look at both segments.

Speaker #5: We have opportunities in both. To expand, we have a good set of customers that also have a good growth plans as well. So we're well positioned to choose.

Hugues Simon: We have a good set of customers that also have good growth plans as well. We're well positioned to choose. You know, internally, we're looking at what the options are, what's best for Cascades. For now, the focus is really, like, let's make that CAD 2.5 to 3 behind us so that it's not. You know, we do have a clear path to it this year, but we wanna say, you know, check mark, like the CAD 120 million, it's done. Then we can move to other things, and we'll be ready for the options that we have once we get there.

Speaker #5: So we're internally, we're looking at what the options are, what's best for cascade. But for now, the focus is really let's make that 2.5 to 3 behind us so that it's not a we do have a clear path to it this year.

Speaker #5: But we want to say, check mark like the 120 million. It's done. And then we can move to other things. And we'll be ready for the options that we have once we get there.

Speaker #9: Great. Thanks very much. I'll turn it back.

Matthew McKellar: Great. Thanks very much. I'll turn it back.

Speaker #6: Thank you. There are no further questions at this time. Monsieur Simon, please continue.

Operator: Thank you. There are no further questions at this time. Monsieur Simon, please continue.

Speaker #5: Yeah, thank you. I mean, great question. We're very happy with quarter and packaging. As you can feel, I mean, we have some work to do.

Hugues Simon: Yeah, thank you. I mean, great question. We're very happy with quarter and packaging, as you can feel. I mean, we have some work to do. In tissue, we did the actions that we had to do, and we're looking forward for the 2026 quarters, which is gonna bring its own share of interesting things, given what the geopolitical is doing. Thank you very much.

Speaker #5: We in tissue, we did the actions that we had to do. And we're looking forward for the 2026 quarters, which is going to bring its own share of interesting things given what the geopolitical is doing.

Speaker #5: Thank you very much.

Speaker #6: Thank you. Merci. Ladies and gentlemen, this does conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your line.

Operator: Thank you. Merci. Ladies and gentlemen, this does conclude your conference call for today. Once again, thank you for attending, and at this time, we do ask that you please disconnect your line. „Mesdames et Messieurs, ceci met fin à la conférence d'aujourd'hui. Vous pouvez maintenant raccrocher.“

Q4 2025 Cascades Inc Earnings Call

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