All financial information in Canadian dollars.

• Overview: Cascades’ fourth-quarter 2024 performance was in line with company expectations, said CEO Hugues Simon on an earnings call Thursday. Containerboard input costs decreased in Q4, with average OCC index prices showing a 23% decline, he said, noting that Cascades does not expect these market conditions to change in the coming months. Year-over-year shipments grew 3% in Q4, reflecting increased production at the company’s nearly two-year-old containerboard mill in Bear Island, Virginia.
• Bear Island progress: Earlier last year, the company experienced issues bringing Bear Island back online after scheduled maintenance. That contributed to a slower-than-expected ramp-up for the mill, resulting in production 20% below targets as of the Q3 earnings call in November. But improvements in Q4 shrunk that gap to 10% to 11%, Simon said. “It's a startup, so I expect we'll continue to have some some hiccups. But we're fixing stuff, and we're fixing them permanently,” he said. Cascades anticipates Bear Island will meet production targets by the end of this year.
• Strategic plan: Executives discussed a new two-year strategic plan for 2025 and 2026 focused on strengthening culture to drive profitability, aligning operational and commercial structure, and deploying capital to prioritize debt reduction. The latter includes selling unused or redundant assets, with a target of $80 million in proceeds this year.
• Anticipating tariffs: Much of the discussion on the Quebec-based company’s call focused on the impact from potential bilateral tariffs. Executives described possible hits to demand and customer purchasing patterns. Since Q4, Cascades has worked on “proactive measures to prepare” for potential tariff impacts, Simon said, including a plan for fiber products that Canada cited in proposed retaliatory tariffs. “It's something that is changing daily. The devil is in the details, but we have some pretty good action plans,” he said.
• Impact breakdown: About 11% of Cascades’ sales comes from products made in Canada and shipped to the United States, and “cross-border intercompany transfers, including raw material used in our operations, increase this tariff exposure to roughly 15% of our revenues,” Simon said. About two-thirds of raw production for Cascades’ linerboard and medium occurs in the U.S., said CFO Allan Hogg. He explained that a key risk to the company is the potential for an overall slowing of the Canadian economy following tariff implementation, which would “mean less shipments for every kind of product, whether it's shipped in the U.S. or within Canada.”
• Tariff preparations: Already, the company has worked on plans that alter raw material sourcing, reallocate production where possible and adapt commercial strategies with suppliers and customers, Simon said. Cascades also is joining other companies in “actively engaging with government” to explore how Canadian manufacturers can maintain a competitive position, Simon said. He emphasized that the company is not pre-implementing measures amid the fluid situation, but it’s preparing accordingly.
• Customer reactions: An analyst asked if Cascades has noticed any customer reactions to tariff threats so far, such as stocking up on products or dialing back on demand. The sales teams are monitoring that daily, Simon said, and discussing with customers how to mutually mitigate impacts. “I think customers realize that a 25% tariff will mean that pricing will be somehow different,” he said. “There's also a lot of discussions about alternatives outside of the U.S. ... It's not just Canada, right? So it's other countries as well.”
• Outlook: Cascades spent $148 million on capital expenditures in 2024, and it aims for approximately $175 million in 2025. Beyond that, executives declined to provide financial projections due to the uncertainty with macroeconomic and political conditions, specifically tariffs. The company will withhold guidance until the environment is more stable. “These are pretty interesting times, given all the actions between Canada and the U.S. — and, quite honestly, the rest of the world,” Simon said.