This article first appeared on GuruFocus .
Release Date: November 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Cascades Inc ( CADNF ) achieved record safety performance in Q3 2026, reflecting strong employee commitment to workplace safety.
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Tissue segment results exceeded expectations, with adjusted EBITDA up 34% sequentially to $47 million and EBITDA margin improving to 11.4%.
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Packaging segment sales increased 5% sequentially to $807 million, with adjusted EBITDA up 5% to $126 million, driven by higher selling prices.
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Cascades Inc ( CADNF ) realized $50 million in profitability improvement benefits in 2026 and expects to capture the remaining $20 million in Q4, supporting its $100 million target.
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The company confirmed its run-rate adjusted EBITDA above $600 million for the second half of 2026 and targets above $650 million for 2027, supported by price increases and operational initiatives.
Negative Points
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Packaging segment results were slightly below expectations due to $4 million in tariff-related costs and elevated raw material costs.
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Raw material costs increased significantly, with recycled fiber prices up 12-19% sequentially and 15-29% year-over-year, pressuring margins.
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Adjusted EBITDA in packaging declined year-over-year to $126 million from $136 million, reflecting cost inflation and lower shipments.
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Away-from-home tissue volumes declined 10% sequentially due to a customer ceasing operations, and the segment faces import pressure.
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Cascades Inc ( CADNF ) expects continued pressure from raw material and transportation costs, and Q4 consolidated results are expected to be slightly lower sequentially due to seasonality and economic uncertainty.
Q & A Highlights
Q: With containerboard markets extremely tight, how has Cascades been able to raise corrugated box prices at the same pace, and is there tension between tight board markets and box markets? A: CEO Hugo Simon explained that with the number of closures in 2025, roll markets are extremely tight, and the company's ability to move forward with announced price increases is progressing well, with three price increases in 2026. For boxes, there is capacity to produce additional boxes in some markets, but with rolls being tight, Cascades is able to raise prices. The lag differs from previous quarters due to uneven demand across marketsfood and beverage volumes are more resilient, while Eastern Canada (particularly Quebec) sees more tariff-related slowdowns. Cascades is focusing on customers with resilient demand levels across the year.
Q: What is the initial read on 2027 CapEx plans, and has the balance sheet delevered quickly enough to increase discretionary spend? A: CFO Allan Hogg stated that cash usage in 2027 will be quite similar to this year. The company is getting ready to potentially unlock some projects or decision-making to strengthen the company, though any project launches would likely be limited in cash usage and may come toward the end of the year or the year after. He noted the balance sheet situation is exactly where they want to be to have optionality and potentially accelerate or unlock decisions.
Q: Can you provide more detail on the major away-from-home tissue customer ceasing operationshow quickly can those tons be rehomed, and are there further opportunities in away-from-home? A: CEO Hugo Simon explained that away-from-home is roughly one-third of the tissue business. The customer sold its private brand to a new company entering the paper component of distribution, and Cascades has an agreement with them. Recovery of the reduction in cash flow generation is expected rather quicklyin less than a yearthough volume recovery will be slower. This component is not the biggest cash flow generator for Cascades, so the impact on coming quarters is non-material.
Q: Can you give an update on Bear Island's performance and when it will be fully optimized and contributing from an EBITDA standpoint? A: CEO Hugo Simon reported that in recent quarters Bear Island reached as high as 95% of total capacity, though Q3 was just above 90% due to a minor hiccup in September 2026 that reduced production for a couple of days. October is back to previous levels. The mill is now focusing on cost reduction initiatives and testing faster speeds. For 2027, Cascades expects the mill to run close to capacityabove 93%and is already ahead on lighter basis weight production, which provides less tonnage but more sales and profitability, differentiating Cascades from peers.
Q: What percentage are you realizing on tissue price hikes, and what is the timing across different end markets? A: CEO Hugo Simon said the company doesn't disclose percentages per segment, but pricing announced this summer is mostly fully implemented. There are two speeds: retail is extremely busy with everything being produced being sent, and Cascades likes its pricing position there, with customers able to sell more. In away-from-home, pricing has been more difficult due to imports from overseas into the United States and more import capacity, so Cascades is focusing on service levels and additional quality.
Q: How much of the Q4 sequential decline reflects normal seasonality versus cost pressures that could persist into 2027? A: CEO Hugo Simon noted significant increases in energy costs (particularly fuel/diesel) between Q2 and Q3, with high energy costs expected for the full fourth quarter. Uneven packaging demand is expected, along with normal seasonality of lower December volumes and shipments phasing down in the last week of December. Cascades will still run most operations at full pace in December to build inventory for 2027. Recent energy price declines could be an upside. The company gained market share in Q3 where it wanted to and is positioned to capture any demand spike.
Q: How are customer order rates holding into Q4, and how much further growth do you see from new business already won? A: CEO Hugo Simon said that after unsatisfactory onboarding of new customers in Q1, execution was upgraded in Q2 with results continuing to show. October has been a good, busy month. Cautiousness is more for December, when post-Thanksgiving demand typically drops heavily, and given where Christmas falls, shipments in the last week of December could be challengedthough Cascades can serve customers needing extra volume to capture sales in 2026.
Q: What prompted the deeper evaluation of recovery and recycling operations, what is being evaluated, and what do you hope to achieve? A: CEO Hugo Simon explained that Cascades has a nationwide recycling operation from British Columbia to Quebec. The review focuses on security of supply at a competitive price, assessing where and how to be positioned and who to partner with. With the significant investment at Bear Island, more fiber needs to be purchased there, so the company is reshuffling to determine the best way to serve operations going forward. Canadian regulations about fiber ownership are also part of the equation.
Q: How meaningful has the shift in your packaging customer portfolio been over the past while? A: CEO Hugo Simon described it as a never-ending process to have a customer mix that fits the equipment for greater efficiency. Longer runs in box plants generate efficiency gains that can be shared with partners through more competitive pricing in exchange for more volume. This also informs decisions on the right equipment mix going forward, given faster geopolitical and economic swings. The process started roughly a year or five quarters ago, and net market share gains versus industry show progress, though the West Coast facility sale must be factored in.
Q: With respect to potential decisions later next year or in 2028, any updated thoughts on tissue versus corrugated box plant spend? A: CEO Hugo Simon said Cascades has always wanted to provide optionality. The company is progressing well on different options, and the instability in the economy is creating some opportunities. Cascades is positioned very well in both segments, which provides options, but at this point the company will keep its options open and continue working on all of them to make a decision sometime in the coming years.
Q: Can you provide an update on the CFO transition? A: CFO Allan Hogg announced that after 36 years with Cascades, including the last 16 as CFO, he has informed the company
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
