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1. Company Snapshot

1.a. Company Description

Cascades Inc.produces, converts, and markets packaging and tissue products in Canada and the United States.The company operates through three segments: Containerboard, Specialty Products, and Tissue Papers.


It manufactures containerboards, as well as converts corrugated products.The company also offers uncoated recycled paperboards for use in packaging converters and industrial users of headers and wrappers for the paper industry, as well as partitions that are used as protective packaging; honeycomb paperboards for the beer, wine, and spirits industry; laminated paperboards for food packaging and furniture backing industries; and specialty containers, structural components, and paperboard and fiber composites.In addition, it provides egg filler flats and egg cartons for egg processors and four-cup carriers for the quick-service restaurant industry; polystyrene foam trays for processors and retailers in the food industry; rigid plastic packaging products for food industry, processors, and retailers; and flexible films for frozen foods, bakery, and ice industries.


Further, the company offers bathroom and facial tissues, paper towels, paper hand towels and napkins, and other related products and services under the Cascades PRO Signature, Cascades PRO Perform, Cascades PRO Select, Cascades PRO Tandem, and Cascades PRO Tuff-Job brands; and under the Cascades Fluff, Cascades Tuff, and Satin Soft labels, as well as private labels and other secondary marks.Additionally, it offers services to recover and process discarded materials for the municipal, industrial, commercial, and institutional sectors.The company sells its products through own sales force and external representatives.


Cascades Inc.was incorporated in 1964 and is headquartered in Kingsey Falls, Canada.

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1.b. Last Insights on CAS

Cascades Inc.'s recent performance was negatively driven by a net loss of CA$0.31 per share in FY 2024, compared to a loss of CA$0.76 per share in FY 2023. Although revenue increased by 1.4% to CA$4.70 billion, the company's net loss persisted. Additionally, Cascades' rising debt levels and declining profitability in certain segments, such as its newsprint business, may have contributed to the negative sentiment. The company's efforts to improve its EBITDA, with a 20% year-over-year increase, were not enough to offset these challenges.

1.c. Company Highlights

2. Cascades' Q3 2025 Earnings: A Stronger than Expected Performance

Cascades reported a robust third quarter, with consolidated EBITDA reaching $159 million, a 16% increase from Q2 and a 14% year-over-year increase. The company's net earnings per share were $0.29, compared to $0.01 last year, and on an adjusted basis, net earnings per share were $0.38, beating analyst estimates of $0.3649. The revenue growth was driven by improved volumes, higher average selling prices, and lower production costs in both the Packaging and Tissue businesses. EBITDA margins improved to 17.1% from 15.6% in Q2 for Packaging, and the Tissue business saw a 21% increase in EBITDA from Q2.

Publication Date: Nov -23

📋 Highlights
  • Q3 Consolidated EBITDA:: $159 million, up 16% from Q2 and 14% YoY.
  • Packaging EBITDA:: $136 million (Q3), 14% sequential increase with margins rising to 17.1%.
  • Tissue EBITDA:: $46 million, 21% higher than Q2, driven by volume and cost efficiencies.
  • Net Earnings Per Share:: $0.29 (Q3) vs. $0.01 YoY, with adjusted EPS at $0.38.

Segmental Performance

The Packaging segment saw a 4% sequential increase in sales, driven by stronger volumes and improved average selling prices. Demand levels exceeded expectations, with September coming in stronger than anticipated. The Tissue business also performed well, with a 5% sequential increase in sales driven by stronger volumes. Converted product shipments increased 6% in both away-from-home and retail tissue markets.

Guidance and Outlook

The company expects Q4 results in Packaging to be stable to 10% below Q3 levels, driven by an expected 5% decrease in volumes, mainly in December. Tissue results are expected to strengthen sequentially with lower raw material and maintenance costs. As Hugues Simon stated, "The company is focused on its strategic priorities for 2025 and 2026, including monetizing redundant assets and achieving a $100 million net run rate of profitability improvements by the end of 2026."

Valuation and Metrics

With a P/E Ratio of -157.92, the stock is trading at a significant discount, likely due to the company's recent net losses. However, the EV/EBITDA ratio of 7.73 suggests that the company's enterprise value is relatively reasonable compared to its EBITDA. The Dividend Yield of 3.84% provides a relatively stable source of return for investors. Analysts estimate next year's revenue growth at 0.6%, indicating a relatively stable outlook for the company.

Future Prospects

The company's focus on debt repayment and achieving a lower net debt-to-EBITDA ratio is evident, with a current ratio of 4.83. The management is cautious about the economic uncertainty and seasonality, but is optimistic about achieving its profitability improvement objectives. As Hugues Simon mentioned, they want to maintain over $100 million in the pipeline of improvement to handle headwinds and inflation.

3. NewsRoom

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Solid Earnings Reflect Cascades' (TSE:CAS) Strength As A Business

Nov -13

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Cascades recognized for its commitment to sustainability

Nov -07

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Cascades Q3 Profit Jumps to $29 Million on Higher Sales; Beats Estimates

Nov -06

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Cascades Reports Results for the Third Quarter of 2025

Nov -06

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Smurfit Westrock removed from price-fixing case, others file for dismissal

Oct -22

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TSX Closer: Up More Than 500 Pts As Gold and Silver Shine, and Desjardins Plays Down Impact of Latest Targeted U.S. Tariffs

Oct -14

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Cascades unveils bronzes in honour of Cascades co-founders Laurent and Alain Lemaire

Oct -10

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/R E P E A T -- MEDIA ADVISORY - OFFICIAL INAUGURATION OF THE BRONZE SCULPTURES HONORING LAURENT AND ALAIN LEMAIRE/

Oct -10

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.73%)

6. Segments

Containerboard

Expected Growth: 4.83%

Cascades Inc.'s containerboard segment growth of 4.83% is driven by increasing demand for sustainable packaging, expansion in e-commerce, and growing need for corrugated packaging in the food and beverage industry. Additionally, the company's strategic investments in modernizing its mills and improving operational efficiency have contributed to the growth.

Tissue Papers

Expected Growth: 4.65%

Cascades Inc.'s tissue paper segment growth of 4.65% is driven by increasing demand for sustainable and eco-friendly products, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on innovation, cost savings initiatives, and strong relationships with customers contribute to its growth momentum.

Specialty Products

Expected Growth: 4.65%

Cascades Inc.'s Specialty Products segment growth of 4.65% is driven by increasing demand for sustainable packaging solutions, expansion in the e-commerce sector, and strategic acquisitions. Additionally, the company's focus on innovation, cost savings initiatives, and operational efficiency improvements have contributed to the segment's growth.

Inter-segment Sale, Corporate, Recovery and Recycling

Expected Growth: 4.5%

Cascades Inc.'s 4.5% growth is driven by inter-segment sales, corporate cost savings, and recovery of operational efficiencies. The recycling segment benefits from increased demand for sustainable products, driving revenue growth. Additionally, the company's focus on strategic acquisitions and investments in emerging markets contributes to its overall growth.

Inter-segment

Expected Growth: 4.83%

Cascades Inc.'s 4.83% inter-segment growth is driven by increasing demand for sustainable packaging solutions, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on operational efficiency, cost savings initiatives, and investments in innovation have contributed to this growth.

7. Detailed Products

Containerboard

A type of paperboard used to manufacture corrugated boxes and other packaging materials

Kraft Paper

A type of paper made from wood pulp, used for packaging, wrapping, and other industrial applications

Tissue Products

A range of tissue-based products, including toilet paper, paper towels, and facial tissues

Specialty Papers

A range of specialty papers used in filtration, electrical insulation, and other industrial applications

Recovered Fibers

Recycled fibers used to produce new paper products, reducing waste and conserving natural resources

Packaging Solutions

Customized packaging solutions for industrial and consumer goods

8. Cascades Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Cascades Inc. operates in a highly competitive market, but the threat of substitutes is mitigated by the company's strong brand recognition and customer loyalty.

Bargaining Power Of Customers

Cascades Inc. has a large customer base, but the bargaining power of customers is high due to the availability of alternative products and services.

Bargaining Power Of Suppliers

Cascades Inc. has a diversified supplier base, which reduces the bargaining power of suppliers. The company's strong relationships with suppliers also help to mitigate this risk.

Threat Of New Entrants

The threat of new entrants is moderate due to the capital requirements and regulatory barriers to entry in the industry. However, Cascades Inc.'s strong brand recognition and established customer base provide a competitive advantage.

Intensity Of Rivalry

The intensity of rivalry in the industry is high due to the presence of several established players and the low switching costs for customers. Cascades Inc. must focus on differentiating its products and services to maintain its market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 52.68%
Debt Cost 4.31%
Equity Weight 47.32%
Equity Cost 4.31%
WACC 4.31%
Leverage 111.33%

11. Quality Control: Cascades Inc. passed 0 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Winpak

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Growth: 5.4

Quality: 5.9

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Momentum: 1.5

Volatility: 10.0

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Cascades

A-Score: 5.7/10

Value: 8.5

Growth: 3.6

Quality: 2.6

Yield: 8.0

Momentum: 3.5

Volatility: 8.0

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Growth: 4.6

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Volatility: 7.3

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A-Score: 4.4/10

Value: 5.6

Growth: 1.9

Quality: 1.6

Yield: 3.0

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A-Score: 4.0/10

Value: 9.5

Growth: 3.7

Quality: 5.8

Yield: 0.0

Momentum: 5.0

Volatility: 0.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

12.31$

Current Price

12.31$

Potential

-0.00%

Expected Cash-Flows