Cascades Inc. ($CAS)

The form of proxy and the confirmation of the mailing for these documents and to please file them in the record of this meeting.

The documents have been filed.

Thank you, Michael. Representatives from Computershare Investor Services, the company's transfer agents and registrars are serving as scrutineers for this meeting. They are counting the proxy votes and the votes cast online today. I'm informed that their report is now ready, and I would like to invite Mr. Steve Gilbert to read us the report.

Hello, Mr. Chairman. The scrutineers from Computershare Investor Services would like to confirm that there's at least 3 shareholders representing in person or by proxy, 70,247,352 common shares, 69.34% of the 101,310,210 common shares. And I have the report signed by myself and [indiscernible] that we can provide.

Thank you, Mr. Gilbert. I hereby declare that the meeting is duly called and validly constituted to consider the items on the agenda. Once voting rights have been exercised on all items on the meeting agenda, the scrutineers will tally the votes for each item. The next item on the agenda is the receipt of the company's audited consolidated financial statement for the fiscal year ended December 31, 2025, as well as the independent auditor's report. I would ask the secretary to file the company's audited consolidated financial statements for the fiscal year ended December 31, 2025, along with the related independent auditor's report and the mailing affidavit certifying that a copy of these documents was sent on April 13, 2026, to shareholders who requested them.

I am filing the documents.

Thank you, Michael. The next item on the agenda is the election of the 11 candidates proposed by the company and the Board to serve as directors of the company, the corporation. Can an authorized person make a nomination for each of these 11 persons?

My name is Michael Guerra, shareholder. Mr. Chairman, I move that each of the following individuals be nominated as directors of the company: Mr. Patrick Lemaire, Mr. Alain Lemaire, Ms. Sylvie Lemaire, Ms. Sylvie Vachon, Ms. Michelle Cormier, Mr. Hubert T. Lacroix, Mr. Nelson Gentiletti, Ms. Melanie Dunn, Ms. Elif Levesque, Mr. Alex N. Blanco and Mr. Hugues Simon.

Thank you, Michael. Are there any other candidates to propose? Since there are no other candidates, may an authorized person make a motion to elect each of these 11 persons?

My name is Allan Hogg. I'm a shareholder. Mr. Chair, I move that each of the 11 candidates be elected as members of the company's Board of Directors to serve until the next Annual General Meeting or until their successor is elected.

Thank you, Allan. This motion be seconded.

I'm Michael Guerra. I'm a shareholder, and I second this motion.

Thank you, Michael. The motion has been made and seconded. We remind you that for all motions, voting rights are exercised using a single electronic ballot. Click on the button for or abstain next to the name of each candidate for the position of Director. The next item on the agenda is the appointment of the independent auditor for fiscal year 2026 to the Board of Directors on the recommendations of the Audit and Finance Committee recommends that PricewaterhouseCoopers, chartered professional accounting firm, be appointed as the company's independent auditor and that the directors be authorized to set its compensation. I see that Michael Guerra would like to make a motion to that effect.

Mr. Chair, I would move that PricewaterhouseCoopers, chartered professional accountants, be appointed as the company's independent auditor for the coming fiscal year and that the Board of Directors be authorized to set its remuneration.

Thank you, Michael. Would anyone like to second the motion?

My name is Allan Hogg. I'm a shareholder, Mr. Chairman, I second this motion.

Thank you, Allan. The motion has been made and seconded. Please click on the for or abstain button next to the resolution regarding the appointment of PricewaterhouseCoopers as the company's independent auditor. The next item on the agenda is the approval of the advisory resolution accepting the corporation's approach to executive compensation. And this as described in the proxy circular. I see that Michael Guerra would like to present a proposal to this effect.

Mr. Chair, I move that the advisory resolution accepting the corporation's approach to executive compensation be adopted.

Thank you, Michael. Would Allan Hogg like to second the motion?

Mr. Chair, I second this motion.

Well, thank you, Allan. The motion has been duly moved and seconded. Click on the for or against button next to the advisory resolution accepting the company's approach to executive compensation. The next item on the agenda are the proposals submitted by MEDAC and described in Appendix A of the proxy circular. After discussing the matter with the company, MEDAC has agreed to withdraw 1 of its 3 proposals. It will, therefore, be presented, but no vote will be held on it, whereas a vote will be held on the other 2. I will now ask the MEDAC representative to present the 2 proposals. Mr. Willie Gagnon, you have the floor.

Hello, Mr. Chair. Can you hear me? I'm on the phone.

Yes, we can hear you.

I'm Willie Gagnon from MEDAC. I will reduce my volume if you'll allow me because there is an echo that we can hear. Willie Gagnon from MEDAC [indiscernible] shareholders since 2014, we submitted 3 proposals. One has been withdrawn, will not be put to a vote. The first one is entitled Strengthening Shareholder participation in Annual General Meetings. Last year, there is a problem in terms of the quorum of 1 AGM of a company that we are shareholders of. And we have never seen that since we've been created. So we ask ourselves some different questions about why this topic, for example, virtual meetings, the pandemic and many sources that if were through could be systemic causes. And we've asked all corporations that we are shareholders of to implement a process to help strengthen shareholder participation. So you have here most of the things that are already in place, but the third one, which was to publish a small chart that would enable us to see if the participation rate of shareholders increases or decreases. And the corporation decided not to do that. You have a chart, and this was produced by Broadridge. And the corporation also has some data available. So this little chart will not be easy to produce by the corporation. But it's very difficult to produce one when you are a shareholder since data comes from documents over several years. So it would be very useful, for example, if the participation rate is going up or down and to compare the participation rate of individual shareholders compared to institutional shareholders. We know that it is not the same. So if the company had accepted to produce such a chart, we would not be asking or proposing this today. So we're also asking in-person annual meetings, many corporations hold in-person meetings. I see that you actually are in a room that you could certainly welcome shareholders. This is a [indiscernible] room. And also you've opened a new building on the South Shore. So it would have been a good idea for us to be able to visit it, and you probably have meeting rooms in that building. So we obtained over 36% support last year for this proposal. So we're asking shareholders to support this. And also the Board to review the idea of holding in-person annual meetings. So we did not obtain 50%, but 36% is a high percentage. As for the other proposal that we agreed on, this was on advisory vote on executive compensation. And after last year, the company decided to do so without us having to send a proposal such as this one. So I hope you can still hear me, Mr. Chair, because I needed to lower the volume for technical issues, but we are happy of the time that you will spend talking with MEDAC about these proposals and the time you've granted today, so we can discuss these proposals.

Yes, Mr. Gagnon, we've heard you. As you know, the Board of Directors has stated its position on the proposal in the proxy statement and recommends voting against both proposals. If you haven't already done so, we invite you to vote on all items on the agenda. Please note that shareholders who have already cast their votes in advance do not need to vote again and may simply ignore the online ballot. Once the electronic voting has ended, the voting page will disappear and your votes will be automatically recorded. We're giving registered shareholders and proxies 1 more minute to complete the electronic ballot. Once voting is complete, I will ask the scrutineers to compile a report on the voting results for all items on the agenda. We will be back shortly for the announcement. Thank you for your patience. I would now like to invite Mr. Steve Gilbert from Computershare to read the scrutineers' report on the preliminary voting results.

Thank you, Mr. Lemaire. Can you hear me clearly? I've turned down the volume. Thank you. So thank you, Mr. Lemaire. Once again, regarding the election of directors, I confirm that all 11 candidates have been duly elected as directors of the company. I'm also able to announce that the resolution regarding the appointment of PricewaterhouseCoopers as the corporation's independent auditor as well as the advisory resolution accepting Cascades' approach to executive compensation have been adopted. And finally, I would like to inform that -- the 2 proposals submitted by MEDAC were rejected. That is all, and I will, of course, provide a report, Mr. Chair.

Thank you, Mr. Gilbert. I confirm that the final voting results will be available on SEDAR later on today. And now I invite Hugues Simon, President and CEO, to take the floor.

Thank you, Mr. Lemaire. Good morning, everyone. Thank you for joining us today. On behalf of the management team, the Board of Directors and myself, I would like to thank our shareholders, our customers and our partners for their continued support throughout the past year. I would also like to thank our employees for their hard work and dedication during these times that have been to say the least turbulent -- their resilience and commitment has been at the heart of the company's evolution over the years and will continue to be a driving force for value creation, ensuring our future growth. Against the backdrop of rapid geopolitical changes, the determination of the Cascaders is undoubtedly one of the highlights of the past year. Revenues for 2025 amounted to $4.8 billion, representing a 2% increase compared to 2024. These results reflect higher selling prices in our packaging operations, a more favorable exchange rate and a more profitable product mix across all our sectors. These positive factors were partially offset by lower volumes in the packaging products sector. Adjusted earnings before interest, taxes and amortization or EBITDA reached $576 million in 2025, up 15% from the previous fiscal year. In terms of margin, this represents 12.1% of sales in 2025 compared to 10.7% in 2024. As we have indicated in our annual report, this improvement in performance is due to higher selling prices and a decline in raw material costs, these factors more than offset lower volumes and higher operating costs. Throughout 2025, we continued to make measured investments across all our operations. In this regard, capital expenditures totaled $137 million, a 7% decrease compared to the previous fiscal year. Our investments in 2025 focused primarily on smaller scale projects aimed at improving operational efficiency as well as on maintenance initiatives for our assets. Broken down by business segment, approximately 60% of these investments were made in the Packaging Products segment, 31% in the Tissue Paper segment with the remainder allocated to corporate activities as well as recovery and recycling operations. The higher levels of operating cash flow generated by our operation in 2025, combined with lower capital expenditures, asset disposals and a favorable exchange rate resulted in a decrease in the company's net debt of $200 million year-over-year. The reduction in our debt level and the improvement in our profitability have led to a decrease in the company's debt-to-equity ratio from 4.2x at the end of 2024 to 3.3x. We remain committed to achieving our target debt ratio with a range of 2.5x to 3x within the next 12 months. Let's now move on to a brief overview of the performance of each of our business segments in 2025. Our Packaging Products segment generated revenue of $3.1 billion last year, an increase of 2%. This growth is attributable to higher selling prices as well as the more favorable exchange rate and sales mix. However, these positive factors were offset by a decline in volumes for both paper rolls and processed products. We're pleased with the progress made at our Bear Island mill in 2025. Production volumes increased by 8% year-over-year, and the mill operated at 88% of its usual capacity in both the third and fourth quarters. We successfully increased production of lower basis weight papers at this mill, which is a key competitive differentiator and broadens the company's product offering. Against a backdrop of rising selling prices and favorable raw material costs, our packaging operations generated adjusted EBITDA up 21% compared to 2024. Let's now turn to the Tissue Paper segment. Sales in this segment also increased by 2%, reflecting a more favorable exchange rate and sales mix. However, adjusted EBITDA level decreased by 15% compared to the previous fiscal year. This decline is due to an increase in operating costs attributable to inflationary pressures as well as significant planned equipment maintenance carried out to increase capacity. In the fourth quarter, one of our plants also experienced an unexpected power outage, which disrupted operations and resulted in additional operating costs. Despite these factors, we are satisfied with the strategic realignment and repositioning of the sector's operational platform, which we believe bodes well for future growth. I'll now turn the floor over to Allan, who will present the highlights of our first quarter 2026 results released yesterday. Allan?

Thank you, Hugues. Good morning, everyone, and thank you for joining us today. Since Hugues has presented the highlights of our operation and financial results for 2025, I will focus on the results for the first quarter of 2026, which were released yesterday morning. Sales for the first quarter of 2026 totaled $1.1 billion. They were slightly lower than the $1.2 billion recorded in the fourth quarter of 2024 and remained stable compared to the same period in the previous fiscal year. Compared to the first quarter of 2025, sales were supported by higher average selling prices as well as a more favorable product mix. These factors were, however, offset by lower volumes by the impact of divestitures and business closures in the packaging product sector as well as by a less favorable exchange rate. If we have a quick look at raw material prices, it shows that the average prices for all corrugated containers increased by 7% compared to the fourth quarter, while those for white recycled fiber rose by 3%. Softwood pulp prices remained relatively stable while hardwood pulp prices rose by 12% and eucalyptus pulp prices increased by 11% compared to fourth quarter levels. Compared to 2025, OCC prices decreased by 19%, while prices for white recycled fiber fell by 5%. Softwood pulp prices decreased by 11% compared to the same period last year, while hardwood and eucalyptus pulp prices increased by 6% and 7%, respectively, on the same basis. Let's now turn to the consolidated first quarter results for operating income and adjusted EBITDA. The company generated operating income of $81 million during the quarter compared to $15 million for the same period in the previous fiscal year. Excluding certain specific items, consolidated adjusted EBITDA decreased by 6% or $7 million on a year-over-year basis, reflecting higher costs related to logistics, production and energy as well as lower volumes in our packaging operations. These impacts were, however, partially offset by higher selling prices and lower raw material costs. On a quarter-over-quarter basis, the decline in adjusted EBITDA is attributable to higher production, transportation and energy costs as well as lower volumes. These impacts were partially mitigated by lower raw material costs. Let's now turn to the trend in net debt during the first quarter. Higher cash flows from operating activities as well as proceeds from the disposal of assets were offset by a negative impact from exchange rates, our capital expenditures, seasonal working capital requirements and the renewal of leases during the period. These various factors resulted in net debt remaining unchanged from December 31 level and our debt-to-equity ratio remaining stable at 3.3x. The company's capital expenditures will range between $150 million and $175 million in 2026. Since my comments on our first quarter 2026 results were brief, we invite you to review our investor presentation, our press release and our quarterly management report for full details. Additionally, the webcast of our quarterly conference call, which was held yesterday morning, is available on our website. Thank you for your attention. I will now turn the floor over to Hugues, who will briefly present our strategic priorities for 2026. Thank you, Alan. Well, this comes as no surprise to surprise to anyone. The results for the first quarter of 2026 fell short of our expectations. events as unpredictable as they were significant, notably the conflict in iron and the blockade of the straight of our moves have severely shrinkened consumer confidence, slowed economic activity and exacerbated inflationary pressures on a global scale. This challenging environment serves as a stark reminder of the importance of exercising rigorous control over the levers within our reach in order to weather adversity while preserving our profitability. This crisis has, amongst other things, allowed us to confirm the relevance of our goal to generate $100 million in profitability improvements by the end of 2026 through targeted initiatives in productivity and efficiency, logistics optimization, pricing strategy and cost reduction. as well and allowed to reaffirm the importance of strict discipline in capital allocation and debt reduction. In this regard, annual capital expenditures will range between $150 million and $175 million. We encouraged to redouble our efforts in order to achieve $100 million in monetization of excess assets in 2026, which would bring the total to $230 million for the 2025, 2026 period as well maintain our objective of reducing our debt-to-EBITDA ratio to between 2.5 and 3x. However, given the results recorded during the first half of 2026, achieving this objective will need to be postponed to 2027. We will need to address inefficiencies in execution and flexibility given the rapid changes in the environment in which we operate. Despite the significant impact observed in the first quarter and that anticipated in the second quarter of 2026, we diligently implemented a rigorous tactical planning. This will enable us starting in the second half of the year to reposition ourselves on an annual trajectory of approximately $600 million in adjusted EBITDA -- we will achieve all of this while remaining true to our values, continuing to place sustainable development and the circular economy at the heart of our business strategy. Once again, in 2025, Cascade's achievements in this area were widely recognized, notably amongst other things, our inclusion for a seventh consecutive year in the prestigious Global 100 ranking of the world's most responsible companies compiled by Corporate Knights. And as well, Forbes Magazine ranks Cascade among the top 200 companies in terms of greenhouse gas emissions reduction our most recent sustainability plan concluded at the end of 2025. Detailed results will be published in June, but allow me to share a few highlights with you right now. Since 2019, our mills have reduced their greenhouse gas emissions by 22.2%, decreased their energy consumption by 16.6% and lowered the intensity of the effluence by 34%. These results exceed the targets we had initially set for ourselves. These results demonstrate our tangible commitment to reducing our environmental footprint and by expansion that of our customers. The circular economy remains at the heart of our business model, and it remains at the heart of our business model. Social responsibility, as you know, is deeply embedded in Cascade's DNA. In an uncertain geopolitical climate where many organizations have chosen to put certain sustainability priorities on the back burner, we've made a clear choice to stay the course -- starting next month, we will launch a new ambitious sustainability plan. We invite you to stay tuned. In conclusion, I want to remind our shareholders that for nearly 2 years now, we've implemented numerous changes that have increased our agility, our speed of execution and our profitability. Over the past few quarters, we reported results that compare favorably to those of our main competitors. While the current quarter is disappointing, particularly due to external factors beyond our control, it nonetheless serves as a test of our increased resilience and our ability to bounce back -- despite an unstable geopolitical environment and persistent inflationary pressures, we remain fully confident in our ability to adapt and achieve our ambitious goals guided by our values, driven by the expertise of our team and aligned with a clear and consistent business strategy, we approach the coming years with confidence and determination. We sincerely thank you for your support and your continued trust. We look forward to keeping you informed of our progress throughout the year, and we are now available to answer your questions. Speaker 0 We're now moving to the question-and-answer session, and we will answer a question from any registered shareholders or duly appointed proxy holders. So we want to remind you that to ask a question, we've explained the process by the Secretary at the beginning of the meeting. You still have a few seconds to do so. Michael, have we received any questions? Speaker 1 Mr. Chair, we have received no questions. Since we have not received any questions, we will now close the question period for the meeting. Having gone through all items on the agenda, I hereby adjourn the meeting. Journalists who would like to conduct individual interviews following the meeting are invited to contact Ritigaemou, Vice President of Communications, Public Affairs and Sustainable Development, whose contact information is displayed on your screens. Thank you for your attention, and please take care. [Statements in English on this transcript were spoken by an interpreter present on the live call.]