KINGSEY FALLS, QC (News release) -- Cascades Inc. (TSX: CAS) reports its unaudited financial results for the three-month period ended June 30, 2026.

Q2 2026 Highlights

• Sales of $1,219 million (compared with $1,125 million in Q1 2026 and $1,187 million in Q2 2025);
• Operating income of $58 million (compared with $81 million in Q1 2026 and $36 million in Q2 2025);
• Net earnings per common share of $0.21 (compared with net earnings per common share of $0.38 in Q1 2026 and a net loss per common share of ($0.03) in Q2 2025);
• Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA (A))¹ of $140 million (compared with $118 million in Q1 2026 and $137 million in Q2 2025);
• Adjusted net earnings per common share¹ of $0.24 (compared with $0.07 in Q1 2026 and $0.19 in Q2 2025);
• Net debt¹ of $1,879 million as of June 30, 2026 (compared with $1,901 million as of March 31, 2026). Net debt to EBITDA (A) ratio¹ remained stable at 3.3x;
• Total capital expenditures of $40 million in Q2 2026, compared to $28 million in Q1 2026 and $44 million in Q2 2025. The Corporation's 2026 forecasted capital expenditures before disposals will be in a range of $150 million to $175 million.
• The Company generated $5 million in asset sale proceeds during the second quarter, bringing total proceeds to $154 million for the 2025 - 2026 period. The Company's objective of generating $230 million is progressing well and is now expected to be achieved in early 2027.

Hugues Simon, President and CEO, commented: "Our second quarter results exceeded expectations, driven by a stronger performance in Packaging, reflecting continued solid production and demand levels across our paper mill network, meaningful progress in onboarding new customers and a more favourable economic environment than initially anticipated. Packaging volumes tracked ahead of our forecasted assumptions, contributing to stronger profitability in the quarter. In Tissue, the results came in slightly ahead of our expected range. Performance benefited from improved productivity and sales volumes and the positive impact of ongoing cost reduction initiatives. The operational improvements achieved over the past several quarters are translating into greater efficiency and a stronger cost structure across the business. Overall, our leverage ratio remained stable during the quarter, while net debt decreased modestly despite unfavourable exchange rate movements."

Discussing near-term outlook, Mr. Simon commented, "On July 20, 2026, the U.S. administration announced new tariffs on a number of products imported into the United States and we are conducting an assessment of the potential impact on our operations. Based on information currently available, certain tissue and packaging products exported to the United States could be subject to the announced 50% tariffs.

While this represents a notable development, we believe the potential impact is manageable. We are actively pursuing several tactical initiatives that we expect will materially mitigate the potential financial impact of these tariffs over the coming months. In addition to the direct effects of this announcement, some customers whose products are subject to these tariffs may experience weaker demand or reduce production levels, which could negatively affect volumes in certain segments. Based on our current assessment and the mitigation actions underway, we remain confident in our ability to successfully manage these challenges.

Looking ahead, this situation does not change our confidence in the earnings trajectory of the business. Supported by our ongoing profitability improvement initiatives and the momentum we continue to see across our operations, and excluding the potential impact of the announced tariffs, we now expect annual run-rate Adjusted EBITDA to exceed $600 million during the second half of 2026, surpassing our original objective. The implementation of previously announced selling price increases in both Packaging and Tissue is progressing as planned. In Packaging, the recent $50 per ton price increase, announced in June, is expected to further strengthen earnings momentum in the coming quarters.

This confidence reflects the significant work completed over the past several quarters to make Cascades a more resilient and agile organization. Through operational excellence initiatives, cost optimization efforts and disciplined capital allocation, we have strengthened our ability to respond effectively to changing market conditions and navigate a period of heightened geopolitical uncertainty. We are also closely monitoring developments in the Middle East. Continued instability has increased volatility in energy markets, and sustained increases in oil prices could create additional inflationary pressures on transportation, manufacturing and other operating costs. We will continue to leverage the flexibility of our business model and disciplined cost-management approach to mitigate these pressures wherever possible.

We continue to make progress on the sale of non-core assets and remain committed to our objective of generating $230 million in proceeds. Although some transactions are taking longer than anticipated, this reflects our disciplined approach to ensuring we maximize value from these asset sales. Concurrently, we remain focused on improving our financial profile and creating long-term value for shareholders through a balanced approach to operational excellence, profitability improvement and disciplined capital allocation."

Financial Summary

Selected consolidated information

Segmented sales

Segmented operating income (loss)

Segmented EBITDA (A)¹

Analysis of results for the three-month period ended June 30, 2026 (compared to the same period last year)

The Corporation's second quarter sales of $1,219 million increased by $32 million compared with the same period last year. This increase reflects consolidated net benefits of $13 million from higher average selling prices and a favourable sales mix of $21 million. However, these factors were partially offset by a $2 million impact from lower volumes, mainly in the Packaging Products segment, reflecting the impact of business closures and dispositions in previous quarters.

The second quarter EBITDA (A)¹ totaled $140 million, an increase of $3 million, or 2%, from the $137 million generated in the same period last year. This increase was driven by higher volumes, higher average selling prices and cost reduction initiatives across the Corporation's businesses. These impacts were partially offset by higher raw material and transportation costs.

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

• $3 million of gains related to the sale of a business and some assets in Canada and in the United States (operating income and net earnings);
• $2 million of restructuring costs related to corporate organizational changes (operating income and net earnings);
• $6 million loss on financial instruments (operating income and net earnings).

For the three-month period ended June 30, 2026, the Corporation posted net earnings of $21 million, or $0.21 per common share, compared to a net loss of $(3) million, or ($0.03) per common share, in the same period of 2025. On an adjusted basis¹, the Corporation posted net earnings of $24 million in the second quarter of 2026, or $0.24 per common share, compared to net earnings of $19 million, or $0.19 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 September 3, 2026 to shareholders of record at the close of business on August 20, 2026. This dividend is an "eligible dividend" as per the Income Tax Act (R.C.S. (1985), Canada). During the second quarter of 2026, Cascades purchased no common shares for cancellation.