Highlights

• Third quarter 2026 sales reached $1,267 million versus $1,238 million a year earlier, with adjusted EBITDA of $162 million.

• Net Debt fell to $1,863 million and net debt to adjusted EBITDA improved to 3.2x from 3.3x at the end of June.

• Fourth quarter results are expected to be slightly lower than the third quarter; a $0.12 per share Dividend is payable on December 3, 2026.

Cascades Inc. (TSX:CAS), the North American maker of packaging, tissue and recovery products, released its financial results for the third quarter of this year on Thursday, and the report described a Business that is growing sales modestly while working against a stubborn mix of tariffs and input costs. The company reported sales of roughly one point two six seven billion dollars, up about two per cent from the same period a year earlier, alongside adjusted EBITDA of about one hundred and sixty-two million dollars. Management also guided to a slightly weaker fourth quarter and confirmed the regular quarterly dividend.

A Quarter Built on Pricing, Not Volume

The sales increase was driven by pricing and mix rather than by shipments. Higher average selling prices, a more favourable product mix and a helpful currency translation effect more than offset lower volumes, which were concentrated in the tissue business. Closures and asset disposals in the packaging division in earlier quarters also trimmed the top line. In other words, the company earned more per tonne sold even as it moved somewhat fewer tonnes, a pattern that tends to define mature, capital-intensive Manufacturing groups when end markets are uneven.

Operating income improved to about seventy-eight million dollars, and net Earnings attributable to shareholders landed near thirty million dollars, or thirty cents per share. Adjusted earnings per share, which strips out items such as asset impairments, restructuring costs and gains on property sales, finished at thirty-three cents. That figure was lower than the thirty-eight cents posted a year earlier, a reminder that headline growth in EBITDA did not fully translate into per-share earnings once depreciation, financing costs, taxes and minority interests were counted.

What Moved Inside the Segments

Packaging Products remains the larger engine, generating most of the group's EBITDA. Higher raw material and transportation costs, together with a modest Tariff drag of roughly four million dollars in the quarter, outweighed pricing gains and operational improvements. Management described volumes as broadly in line with plan, although Demand was uneven across end markets. Segment adjusted EBITDA slipped compared with the prior year even as sales edged higher.

Tissue Papers delivered the more encouraging story. Price increases announced earlier in the year largely offset cost Inflation and softer away-from-home volumes, and productivity programs supported profit. Segment profitability finished ahead of the company's own expectations. The corporate and recovery and recycling grouping also beat plan, helped by cost reductions and a stronger contribution from the recycling operations that feed fibre into the paper mills. For a company whose margins depend heavily on the spread between recycled fibre costs and finished product prices, that vertical integration is a meaningful, if cyclical, advantage.

Balance Sheet Progress Remains the Central Theme

Debt reduction continues to anchor the story. Net debt ended September at about one point eight six billion dollars, a little lower than at the end of June and noticeably lower than a year earlier. The ratio of net debt to trailing adjusted EBITDA improved to three point two times from three point three times in the prior quarter. The company repurchased a block of unsecured senior notes during the period, using Credit facilities to do so, which fits a stated focus on cash generation and Capital discipline.

Capital spending rose to about forty-seven million dollars for the quarter, and the full-year budget remains in a band between one hundred and fifty and one hundred and seventy-five million dollars before disposals. Management also reiterated that its programme of asset sales is progressing, but the target of two hundred and thirty million dollars in cumulative proceeds is now expected to be reached in early next year rather than on the original schedule. Delays of that kind are common when buyers weigh tariffs and cyclical demand, and the timeline is worth tracking because proceeds are earmarked to strengthen the balance sheet.

Dividend and Capital Allocation

The board declared a regular quarterly dividend of twelve cents per share, payable in early December to shareholders of record in mid-November, and designated as an eligible dividend under Canadian tax rules. No common shares were repurchased under the normal course issuer bid during the quarter, which underlines that debt repayment and reinvestment are taking priority over share buybacks. Readers following Midcap Stocks often watch this mix, because mid-sized industrial issuers with leveraged balance sheets typically balance payouts against deleveraging goals.

Sector Backdrop: Tariffs, Fibre and Consumer Demand

Cascades operates in North America with roughly sixty facilities and close to nine thousand employees, according to its own description, and the business dates back to the early nineteen sixties. That footprint straddles the Canada and American border, which makes trade policy a live operating variable rather than an abstract risk. Tariffs affect both finished goods moving across the border and certain inputs, and management repeatedly flagged them as a reason for caution about customer purchasing patterns.

The wider Canadian macroeconomic setting adds another layer. The Bank of Canada has been guiding policy in an environment of slow growth and uneven consumer spending, and industrial manufacturers have had to absorb transportation and energy inflation without always being able to pass it through quickly. Packaging demand follows consumer staples and E-commerce volumes, while tissue demand is relatively defensive but exposed to institutional channels such as hotels, restaurants and offices. The latest results show the company leaning on both sides of that equation, with tissue pricing offsetting weaker volumes and packaging margins squeezed by costs.

Risks and What to Watch Next

Management expects the final quarter of the year to come in slightly lower than the third quarter, citing continued pressure from raw materials, transportation and tariffs. Priorities named in the release include disciplined capital management, productivity across the asset network, optimization of the customer portfolio and initiatives intended to improve long-term competitiveness. None of those are quantified, so progress will have to be judged through subsequent reporting.

Several indicators will shape how the market reads the next update. The first is whether adjusted EBITDA can stay near current levels without the benefit of the tissue pricing gains already realized. The second is the pace of asset sales, since slippage would delay Balance Sheet benefits. The third is cash flow: operating Cash Flow before Working Capital remained healthy, but adjusted cash generation after specific items was weaker than a year earlier, which leaves less room for Shareholder returns if conditions soften.

Index Context and Market Positioning

Cascades is a mid-sized, TSX-listed issuer and is therefore tracked within broader Canadian benchmarks such as the [S&P/TSX Composite Index] and the [S&P/TSX Completion Index], the latter of which captures mid-cap constituents outside the largest names. Companies of this size often react sharply to changes in Interest Rate expectations, Commodity inputs and trade headlines because earnings are more concentrated than those of diversified large caps. The latest quarter showed stable operating performance and gradual deleveraging, with caution about the year-end run rate.