Cascades reported stronger-than-expected financial results for the second quarter of 2026, driven by solid performance in its Packaging business, operational improvements in Tissue and ongoing cost optimization efforts.
Sales reached $1.219 billion in the quarter ended June 30, up from $1.187 billion a year earlier. Adjusted EBITDA increased 2% year over year to $140 million, while adjusted earnings per share rose to $0.24 from $0.19. The company posted net earnings of $21 million, or $0.21 per share, compared with a net loss of $3 million, or $0.03 per share, in the second quarter of 2025.
Operating income improved to $58 million from $36 million a year earlier. Net debt edged down to $1.879 billion, with the net debt-to-adjusted EBITDA ratio remaining stable at 3.3x.
Capital expenditures totaled $40 million during the quarter. Cascades maintained its full-year capital spending guidance of $150 million to $175 million and said it remains on track to complete its $230 million non-core asset divestiture program by early 2027. Since the initiative began, the company has generated $154 million in proceeds.
Commenting on the quarter, President and CEO Hugues Simon said results exceeded internal expectations, supported by stronger demand in Packaging and continued operational improvements: “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.”
COMPANY EVALUATES IMPACT OF NEW U.S. TARIFFS
Cascades also commented on the new U.S. tariffs announced in July. The company said certain tissue and packaging products exported to the United States could be subject to the new 50% duties, but believes the financial impact can be mitigated through a series of tactical initiatives.
“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,” Simon commented.
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.”
Despite the tariff uncertainty, Simon reaffirmed confidence in the company’s earnings outlook, saying profitability initiatives continue to gain traction: “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.”
Simon also said the company continues to strengthen its resilience through operational improvements while monitoring geopolitical risks, including tensions in the Middle East.
“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.”
HIGHER PRICES AND OPERATIONAL GAINS OFFSET COST PRESSURES
Compared with the second quarter of 2025, sales benefited from higher average selling prices, a more favorable product mix and stronger volumes, partially offset by lower shipments in the Packaging Products segment following previous business closures and asset disposals.
Adjusted EBITDA also increased year over year, driven by higher selling prices, increased volumes and cost-reduction initiatives despite continued pressure from raw material and transportation costs.
During the quarter, Cascades recorded a $3 million gain from the sale of a business and certain assets in Canada and the United States, $2 million in restructuring costs related to corporate organizational changes and a $6 million loss on financial instruments.
