Cascades Inc ((TSE:CAS)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Cascades Inc’s recent earnings call for Q3 2025 painted a picture of robust performance, marked by significant strides in both the Packaging and Tissue segments, alongside successful debt reduction efforts. However, the company expressed concerns over environmental and restructuring costs, and a cautious outlook for Q4 due to potential demand fluctuations.
Stronger Than Expected Q3 Performance
Cascades Inc exceeded expectations in Q3 2025, driven by improved volumes, higher average selling prices, and reduced production costs. The company reported a consolidated EBITDA increase of 16% from Q2 and 14% year-over-year, showcasing a solid financial performance.
Packaging Segment Improvement
The Packaging segment saw a 4% sequential increase in sales, with Q3 EBITDA rising 14% sequentially to $136 million. This improvement was reflected in EBITDA margins, which improved to 17.1% from 15.6% in Q2, highlighting the segment’s strong performance.
Tissue Business Growth
The Tissue segment also demonstrated growth, with third-quarter sales increasing 5% sequentially. The segment’s EBITDA rose 21% from Q2 to $46 million, and year-over-year sales increased by 6%, driven by stronger volumes and higher average selling prices.
Net Debt Reduction
Cascades successfully reduced its net debt by $81 million in the third quarter, primarily due to stronger cash flow from operations and a reversal in working capital requirements, underscoring the company’s focus on financial stability.
Asset Sale and Debt Repayment
The company completed the sale of its Flexible Packaging operation for $31 million, contributing to debt repayment. Total proceeds from asset sales amounted to $57 million this year, aiding in the company’s debt reduction strategy.
Environmental and Restructuring Costs
Operating income was impacted by $12 million due to a $10 million environmental provision related to a plant closure in Canada and $6 million of restructuring charges mainly from the Niagara Falls mill closure, indicating challenges in managing operational costs.
Demand Level Concerns
Cascades expressed a cautious outlook for Q4, with an anticipated 5% decrease in Packaging volumes due to unusual post-Thanksgiving seasonality and ongoing macroeconomic uncertainty, reflecting concerns over future demand levels.
Forward-Looking Guidance
Looking ahead, Cascades anticipates favorable trends in raw material and selling prices for the Packaging segment, although demand levels are expected to be stable to 10% below Q3 levels due to seasonality and economic uncertainty. The company plans to reduce capital expenditures slightly, with expectations set at approximately $140 million for 2025. Additionally, Cascades aims to achieve $100 million in run rate profitability improvements by the end of 2026 through ongoing initiatives.
In conclusion, Cascades Inc’s Q3 2025 earnings call highlighted a strong performance with significant improvements in key segments and successful debt reduction efforts. However, the company remains cautious about future demand levels and the impact of environmental and restructuring costs. Investors will be keenly watching how Cascades navigates these challenges in the coming quarters.