Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Year-over-year consolidated EBITDA increased by 21%, driven by stronger pricing in packaging activities.
- Sales increased by 4% year over year, with selling prices and exchange rates offsetting negative volume impacts.
- Lower raw material costs benefited manufacturing results by $10 million.
- The company expects favorable OCC pricing in the coming months due to increased fiber availability.
- Cascades Inc (CADNF, Financial) has reinitiated near-term guidance, indicating confidence in navigating tariff discussions and macroeconomic uncertainties.
Negative Points
- Sales levels decreased by 5% from Q4 due to lower volumes, despite favorable exchange rates and average selling prices.
- Consolidated EBITDA decreased by 14% from Q4, impacted by lower volumes and higher operational costs.
- First-quarter sales in the tissue business decreased by 8% sequentially, driven by lower volumes.
- The Bear Island facility is behind its scheduled ramp-up objective, affecting production levels.
- Net debt increased by $120 million in the first quarter, primarily due to higher working capital requirements.
Q & A Highlights
Q: Your box shipments in Q1 were down 3.6%, underperforming both the US and Canadian industry stats. What drove this share loss, and were there any particular weak end markets?
A: Hugues Simon, President and CEO, explained that the decline was more pronounced in the US market, while the Canadian operations performed well. The reduction was mainly in the industrial segment, which is not their core business. They remain confident that any reduction in business will not be significant if the environment remains stable.
Q: Given the weaker Q1 shipments and disruptions at Niagara, how should we think about annual container board production?
A: Hugues Simon stated that they expect production to track up for the year. They are cautious about Q2 due to the economic environment but are positioned to capture any demand uptick in the latter half of the year.
Q: Can you provide more color on the ramp-up at Bear Island and its progress relative to targets?
A: Hugues Simon noted that while there were improvements in Q4, Q1 was challenging. They are about 20% below their target ramp-up line but have taken actions to provide additional support and aim to catch up by year-end. The mill operates well, but efficiency during breakdowns needs improvement.
Q: What are your expectations for OCC pricing in the coming months?
A: Hugues Simon expects favorable OCC pricing due to reduced demand in the Northeast and Southeast regions and stable inventory levels. They anticipate positive tailwinds from the ability to ship to Asia.
Q: How are you addressing the January 2026 note maturity, and what could borrowing costs look like?
A: Allan Hogg, CFO, mentioned they have ample liquidity to address the maturity but are exploring alternatives to limit higher borrowing costs compared to the current notes. They are considering options to provide more flexibility.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
