KINGSEY FALLS, QC (News release) -- Cascades Inc. reports its unaudited financial results for the three-month period ended March 31, 2026.

Q1 2026 Highlights

• Sales of $1,125 million (compared with $1,197 million in Q4 2025 and $1,154 million in Q1 2025);
• Operating income of $81 million (compared with $76 million in Q4 2025 and $50 million in Q1 2025);
• Net earnings per common share of $0.38 (compared with $0.37 in Q4 2025 and $0.07 in Q1 2025);
• Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA (A)¹) of $118 million (compared with $155 million in Q4 2025 and $125 million in Q1 2025);
• Adjusted net earnings per common share¹ of $0.07 (compared with $0.40 in Q4 2025 and $0.13 in Q1 2025);
• Net debt¹ of $1,901 million as of March 31, 2026 (compared with $1,896 million as of December 31, 2025). Net debt to EBITDA (A) ratio¹ remained stable at 3.3x;
• Total capital expenditures of $28 million in Q1 2026, compared to $42 million in Q4 2025 and $36 million in Q1 2025. The Corporation's 2026 forecasted capital expenditures before disposals will be in a range of $150 million to $175 million.
• The Company generated $91 million in asset sale proceeds during the first quarter, bringing total proceeds to $149 million for the 2025 - 2026 period. The Company's objective of generating $230 million is progressing well and is expected to be achieved by the end of third quarter of 2026.

Hugues Simon, President and CEO, commented: "First quarter results came in below our initial forecast, reflecting equally weighted external and operational factors. As disclosed in our revised outlook on April 10, weather‑related disruptions across the U.S., combined with heightened volatility in transportation and fuel costs, drove operating costs above plan. Additionally, recent geopolitical developments weighed on consumer confidence and spending, resulting in packaging volumes below our original assumptions. Performance was further impacted by temporary execution inefficiencies in the second half of the quarter. Despite this, net debt remained stable sequentially, and the leverage ratio was unchanged at 3.3x."

Discussing near-term outlook, Mr. Simon commented, "We expect results in the second quarter to be modestly lower sequentially. This outlook reflects a cautious packaging volume outlook amid restrained consumer spending levels, as well as continued volatility and upward pressure on input costs. The implementation of announced price increases in both segments is expected to fully offset these headwinds, with pricing actions taking effect in packaging beginning in the second quarter and during the second half of the year in tissue.

Amid the dynamic macro-economic environment we have strengthened our execution discipline to achieve our objective of generating $100 million of profitability improvements by the end of 2026. Key drivers include ongoing cost reduction initiatives, logistics optimization, productivity efficiency enhancements and targeted pricing actions to mitigate significant cost headwinds. We expect to achieve our target of proceeds from the sale of non-core assets by the end of the third quarter, and continue to actively review our portfolio of assets to ensure strong alignment with the Company's long-term strategic objectives. Given persistent cost pressures in the first half of 2026, annual results are currently expected to be below 2025 levels; however countermeasures, including selling price initiatives, that are currently underway are projected to restore annual run rate adjusted EBITDA (A)¹ to a level of approximately $600 million in the second half of the year. In this context, achieving our targeted leverage ratio of 2.5x-3.0x by year-end may be challenging, though the target remains unchanged."

Financial Summary

Selected consolidated information

Segmented sales

Segmented operating income (loss)

Segmented EBITDA (A)¹

Analysis of results for the three-month period ended March 31, 2026 (compared to the same period last year)

The Corporation's first quarter sales of $1,125 million decreased by $29 million compared with the same period last year. This decrease reflects consolidated net benefits of $18 million from higher selling prices and a favourable sales mix of $21 million. However, these factors were more than offset by an unfavourable foreign exchange rate of $33 million and by a $35 million impact from lower volumes, mainly in the Packaging Products segment, reflecting the impact of business closures and dispositions.

The first quarter EBITDA (A)¹ totaled $118 million, a decrease of $7 million, or 6%, from the $125 million generated in the same period last year. This decrease was driven by higher logistics, production and energy costs across the Corporation's businesses, and lower volumes in the Packaging Products segment. These impacts were partially offset by the benefits from higher selling prices and lower raw material costs.

The main specific items, before income taxes, that impacted our first quarter of 2026 operating income and/or net earnings were:

• $8 million of impairment on a building and equipment related to a previously closed plant in the United States (operating income and net earnings);
• $49 million of gains related to the sale of a business and some assets in Canada (operating income and net earnings);
• $3 million of restructuring costs related to plants closure in Canada and in the United States and corporate organizational changes (operating income and net earnings);
• $4 million loss on financial instruments (operating income and net earnings).

For the three-month period ended March 31, 2026, the Corporation posted net earnings of $39 million, or $0.38 per common share, compared to net earnings of $7 million, or $0.07 per common share, in the same period of 2025. On an adjusted basis¹, the Corporation posted net earnings of $7 million in the first quarter of 2026, or $0.07 per common share, compared to net earnings of $13 million, or $0.13 per common share, in the same period of 2025.

Dividend on common shares and normal course issuer bid

The Board of Directors of Cascades declared a quarterly dividend of $0.12 per common share to be paid on June 4, 2026 to shareholders of record at the close of business on May 21, 2026. This dividend is an "eligible dividend" as per the Income Tax Act (R.C.S. (1985), Canada). During the first quarter of 2026, Cascades purchased no common shares for cancellation.