Cascades Inc. Earnings Call: Mixed Sentiments Amid Challenges

Cascades Inc ((TSE:CAS)) has held its Q1 earnings call. Read on for the main highlights of the call.

Cascades Inc. recently held its earnings call, revealing a mixed sentiment. While the company showcased positive year-over-year performance in sales and EBITDA, it faced significant sequential declines, particularly in the tissue segment. Challenges with the Bear Island ramp-up and macroeconomic uncertainties have led to a cautious outlook, despite strategic efforts in asset monetization and operational efficiencies providing some optimism.

Year-Over-Year Sales Growth

Cascades Inc. reported a 4% increase in sales year-over-year, primarily driven by favorable exchange rates and higher selling prices, even though there was a decrease in volume. This growth highlights the company’s ability to leverage market conditions to its advantage.

Consolidated EBITDA Increase

The company saw a 21% increase in consolidated EBITDA year-over-year. This was achieved through stronger pricing in packaging activities, which offset the impact of lower volumes and higher costs, showcasing Cascades’ resilience in challenging times.

Packaging Segment Performance

The packaging segment experienced a 7% increase in sales year-over-year, with a remarkable 45% rise in EBITDA. This growth was driven by higher selling prices and lower raw material costs, underscoring the segment’s robust performance.

Strategic Asset Monetization

Cascades has embarked on a strategic asset monetization plan, selling a closed tissue facility for US$8 million. The company aims to achieve $80 million from monetizing nonstrategic assets in the coming quarters, reflecting its focus on optimizing asset utilization.

Sequential Sales and EBITDA Decline

Despite the positive year-over-year results, Cascades faced a 5% sequential decrease in sales and a 14% decline in consolidated EBITDA from Q4. This was attributed to lower volumes and higher operational costs, indicating short-term challenges.

Tissue Business Struggles

The tissue segment struggled in the first quarter, with sales decreasing 8% sequentially and EBITDA dropping 18%. These declines were due to lower volumes, higher energy costs, and increased freight costs, highlighting the segment’s vulnerability.

Bear Island Ramp-Up Challenges

The ramp-up at Bear Island is 20% behind the target, with production issues causing delayed recovery times after breakdowns. This has been a significant hurdle for Cascades, impacting its operational efficiency.

Increased Net Debt

Cascades’ net debt increased by $120 million in the first quarter, mainly due to working capital requirements and higher inventories. This rise in debt reflects the financial pressures the company is facing amid its operational challenges.

Forward-Looking Guidance

Looking ahead, Cascades remains cautious due to economic uncertainties affecting demand in both packaging and tissue segments. The company reported a 5% sequential decrease in sales for the first quarter of 2025, despite a 4% year-over-year increase. Consolidated EBITDA decreased by 14% from the previous quarter, influenced by reduced volumes and increased operational costs. The packaging segment saw a 3% drop in sales quarter-over-quarter, while the tissue segment experienced an 8% sales decline sequentially. Cascades continues to navigate these challenges with a focus on strategic initiatives.

In conclusion, Cascades Inc.’s earnings call reflected a cautious yet optimistic sentiment. While the company achieved notable year-over-year growth in sales and EBITDA, it faces immediate challenges with sequential declines and operational hurdles. The strategic focus on asset monetization and operational efficiencies provides a glimmer of hope amid macroeconomic uncertainties, as Cascades navigates the complex landscape of the financial markets.