KINGSEY FALLS, QC (News release) - Cascades Inc. reports its unaudited financial results for the three-month period and fiscal year ended December 31, 2024.

Q4 2024 Highlights

• Sales of $1,211 million (compared with $1,201 million in Q3 2024 and $1,138 million in Q4 2023);

• Operating income of $16 million (compared with operating income of $36 million in Q3 2024 and operating loss of $(24) million in Q4 2023);

• Net loss per common share of ($0.13) (compared with net earnings per common share of $0.01 in Q3 2024 and a net loss per common share of ($0.57) in Q4 2023);

• Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA (A)¹) of $146 million (compared with $140 million in Q3 2024 and $122 million in Q4 2023);

• Adjusted net earnings per common share¹ of $0.25 (compared with $0.27 in Q3 2024 and $0.05 in Q4 2023);

2024 Annual Highlights

• Sales of $4,701 million (compared with $4,638 million in 2023);

• Operating income of $95 million (compared with $40 million in 2023);

• Net loss per common share of ($0.31) (compared with ($0.76) in 2023);

• Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA (A)¹) of $501 million (compared with $558 million in 2023);

• Adjusted net earnings per common share¹ of $0.60 (compared with $1.08 in 2023);

• Net debt¹ of $2,096 million as of December 31, 2024 (compared with $1,882 million as of December 31, 2023). Net debt to EBITDA (A) ratio¹ of 4.2x, versus from 3.4x as of December 31, 2023;

• Total capital expenditures, net of disposals, totaled $29 million in Q4 2024 and $127 million in 2024. The Corporation's 2025 forecasted capital expenditures will be approximately $175 million.

Hugues Simon, President and CEO, commented: "Our fourth quarter 2024 performance was in line with expectations. Favourable average selling prices and raw material costs in the Containerboard business drove stronger sequential results, offsetting the impact of usual lower seasonal volumes. Specialty Products continued to perform well despite slightly lower volume sequentially. In Tissue, average selling prices and raw material costs were advantageous, and fully offset slightly higher operational costs. Broadly, the depreciation of the Canadian dollar benefited quarterly results, but led to higher reported debt levels at the end of the year given the company's $1.3 billion of US denominated debts."

Discussing near-term outlook, Mr. Simon commented, "Operationally, raw material costs remain a tailwind for our businesses in the first quarter, and we are currently seeing steady seasonal demand levels. We will not be providing an outlook for near-term financial or business-specific performance given the lack of clarity regarding the implementation of bilateral tariffs between Canada and the United States. The continued risk has resulted in significant near-term macro-economic uncertainty, and may disrupt or negatively impact future demand levels, customer buying patterns and the economic performance of both countries.

As we have previously disclosed in our financial filings, approximately 11% of our annual sales are derived from finished products made in Canada and sold to US customers. In addition to this, cross-border inter-company transfers and raw material sourcing increases this potential annual exposure to tariffs to approximately 15% of revenues. Proactive steps to mitigate these impacts have been initiated, and include changes to raw material sourcing, reallocating production to minimize inter country shipping, and adapting our commercial strategies with our customers and our suppliers. We are diligently working on these strategies and have a process in place to minimize potential impacts on our cash flow, our customers and our operations.

Financial Summary

Selected consolidated information

Segmented sales

Segmented operating income (loss)

Segmented EBITDA (A)¹

Analysis of results for the three-month period ended December 31, 2024 (compared to the same period last year)

The Corporation's fourth quarter sales of $1,211 million increased by $73 million compared with the same period last year. This was driven by consolidated net benefits of $42 million from higher selling prices, $23 million from stronger volumes, and $21 million from a more favourable foreign exchange. These were partially offset by a $13 million sales mix impact.

The fourth quarter EBITDA (A)¹ totaled $146 million, an increase of $24 million, or 20%, from the $122 million generated in the same period last year. This increase was driven by consolidated net benefits of $42 million from higher selling prices, mainly in the Containerboard segment. These were partially offset by impacts of $15 million from higher raw material costs and $4 million from higher production costs.

The main specific items, before income taxes, that impacted our fourth quarter 2024 operating income and/or net loss were:

• $55 million of impairment charge on assets related to a previously closed plant in the United States and to a decision to discontinue product lines in the United States (operating income and net loss);

• $8 million of restructuring costs related to plant closures in Canada and in the United States (operating income and net loss);

• $8 million gain from sale of some assets, net of additional environmental cost (operating income and net loss);

• $1 million unrealized gain on financial instruments (operating income and net loss);

• $2 million unrealized gain on interest rate hedge instruments (net loss);

• $1 million foreign exchange loss on long-term debt and financial instruments (net loss).

For the three-month period ended December 31, 2024, the Corporation posted a net loss of $(13) million, or ($0.13) per common share, compared to a net loss of $(57) million, or ($0.57) per common share, in the same period of 2023. On an adjusted basis¹, the Corporation posted net earnings of $25 million in the fourth quarter of 2024, or $0.25 per common share, compared to net earnings of $5 million, or $0.05 per common share, in the same period of 2023.

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 March 20, 2025 to shareholders of record at the close of business on March 6, 2025. This dividend is an "eligible dividend" as per the Income Tax Act (R.C.S. (1985), Canada). During the fourth quarter of 2024, Cascades purchased no common shares for cancellation.