Slide 1: Q2 2023 Financial Results
Q 2 2 0 2 3 F I N AN C I AL R E S U LT S August 10, 2023
Slide 2: Forward-Looking and Cautionary Statements
F O RWAR D - L O O K I N G AN D C AU T I O N ARY S TAT E M E N T S Certain statements in this presentation about KPT's and Kruger Products’ current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future events or development
Slide 3: Corporate Structure
C O R P O R AT E S T R U C T U R E 1 100% 2 86.7% 13.3% 1On Jan. 1, 2023, KPLP undertook a corporate reorganization pursuant to which the limited partnership was essentially replaced by a corporate entity, Kruger Products Inc. ("Kruger Products"), without adversely affecting KPT. For more informatio
Slide 4: Our vision is to be the most trusted and best loved tissue company in North America
OUR VISION IS TO BE THE MOST TRUSTED AND BEST LOVED TISSUE COMPANY IN NORTH AMERICA. PU rox wu Amer > (sponge white,. 9 A \* cloud, a | | Bonterra i «& atti ) | Making everyday life more comfortable. » @KP
Slide 5: 5 Underlying Strategies
5 U N D E R LY I N G S T R AT E G I E S Drive Strong Revenue, Profit and Shareholder Value in a Sustainable Manner 1 2 3 4 5 Consumer As Our Expand Our End-to-End Supply Deliver Winning Team Compass Business Footprint Chain Excellence Sustainability and Culture 5
Slide 6: Q2 2023 Highlights
Q2 2023 HIGHLIGHTS Revenue Adjusted EBITDA1 Net Income $466.3 M $55.0 M $14.5 M 17.3% 365.8% $50.0 M over Q2 2022 over Q2 2022 over Q2 2022 +10.8% +27.1% Revenue Canada Revenue U.S. 1 Non-GAAP measure – see MD&A for the definition and reconciliation of the most comparable GAAP measure. 6
Slide 7: Pulp Input Prices
PULP INPUT PRICES Q2 2023 NBSK average prices1 in CAD decreased 10.4% and BEK average prices1 decreased 17.0% from Q1 2023. Q2 2023 NBSK average prices1 in CAD decreased 8.9% and BEK average prices1 decreased 11.4% year-over-year. Based on industry commentary for 2023, pulp prices are at or near the
Slide 8: Sherbrooke Operations and Expansion
SHERBROOKE OPERATIONS AND EXPANSION • TAD operations continue to perform well, surpassing production expectations on the paper machine and in converting • Implementation of facial line (Q4 2023) and paper machine (Q4 2024) tracking to plan, but closely watching supply chain and inflation • New conve
Slide 9: Memphis Operations
MEMPHIS OPERATIONS • Strengthened focus on TAD operations, both converting and paper machine • Deploying digital twin AI tools to accelerate start-up curve of new facial tissue line • New facial line continues to exceed ramp-up curve • Sales volume and cost structure progressively improving • Employ
Slide 10: Focused Brand Support
FOCUSED BRAND SUPPORT • Ongoing investments to support brand equity and grow share • Marketing focused on multi-brand activities like “NHL Bring Home the Stanley Cup” and “Made in Canada” promotions • Successful launch of second chapter of Unapologetically Human Campaign: “Love is Messy” • Release o
Slide 11: Brand Leadership Position
B R AN D L E AD E R S H I P P O S I T I O N Bathroom Tissue Facial Tissue Paper Towel #1 #1 #2 33.1% 35.5% 22.9% 15.4% 15.9% 9.3% 11.1% 0.8% 33.7% 1.1% 16.2% 0.2% 35.7% 36.0% 35.5% 36.9% 34.6% 31.5% 31.5% 24.0% 22.4% 22.9% 33.2% 33.2% 33.1% 20.6% 21.8% 2019 2020 2021 2022 2023 2019 2020 2021 2022 20
Slide 12: AFH Segment
AFH SEGMENT • Volume strength reflects market recovery and accelerated growth at key customers • Fourth consecutive quarter of positive Adjusted EBITDA • AFH asset performance continued to improve versus prior year and prior quarter • Monitoring potential impact of economic slowdown on commercial vo
Slide 13: Quarterly Financial Summary
Q U AR T E R LY F I N AN C I AL S U M M ARY % Change (Million CAD$, unless otherwise noted) Q2 2023 Q1 2023 Q2 2022 Y/Y Q/Q Revenue 466.3 451.0 397.5 17.3% 3.4% Cost of Sales 395.7 389.0 372.5 6.2% 1.7% Gross Profit 70.6 62.0 25.0 182.3% 13.9% Gross Margin 15.1% 13.7% 6.3% Adjusted EBITDA1 55.0 50.0
Slide 14: Quarterly Segmented Results
Q U AR T E R LY S E G M E N T E D R E S U LT S % Change (Million CAD$, unless otherwise noted) Q2 2023 Q1 2023 Q2 2022 Y/Y Q/Q Segmented Revenue Consumer 383.5 376.5 326.3 17.5% 1.8% AFH 82.8 74.5 71.2 16.4% 11.2% Total Segment Revenue 466.3 451.0 397.5 17.3% 3.4% Segment Adjusted EBITDA1 Consumer 5
Slide 15: Q2 2023 Revenue Compared to Q2 2022
Q 2 2 0 2 3 R E V E N U E C O M PAR E D TO Q 2 2 0 2 2 Increase due to the following factors: $68.8 M • Selling price increase carry-forward from 2022 across all segments and regions Q2 Revenue increase • Favourable sales mix and higher sales volume in Consumer segment • Positive FX impact on U.S. d
Slide 16: Q2 2023 Adjusted EBITDA Compared to Q2 2022
Q 2 2 0 2 3 AD J U S T E D E B I T D A 1 C O M PAR E D TO Q 2 2 0 2 2 $55.0M in Q2 2023 compared to $11.8M in Q2 2022 $43.2 M Q2 Adjusted EBITDA1 increase Increase primarily due to the following factors: 365.8% • Higher selling prices versus Q2 2022 over Q2 2022 • Favourable sales mix and higher sal
Slide 17: Q2 2023 Revenue Compared to Q1 2023
Q 2 2 0 2 3 R E V E N U E C O M PAR E D TO Q 1 2 0 2 3 Sequential increase in revenue due to: $15.3 M • Higher sales volume across both segments Q2 Revenue increase • Partially offset by slightly negative FX impact on U.S. dollar sales 3.4% over Q1 2023 $4.4 M $10.9 M 1.7% 5.7% Canada U.S. 17
Slide 18: Q2 2023 Adjusted EBITDA Compared to Q1 2023
Q 2 2 0 2 3 AD J U S T E D E B I T D A 1 C O M PAR E D TO Q 1 2 0 2 3 $55.0M in Q2 2023 compared to $50.0M in Q1 2023 $5.0 M Q2 Adjusted EBITDA1 increase Variance due to: 10.2% • Higher sales volume over Q1 2023 • Lower freight costs Adjusted EBITDA Margin1 Partially offset by: 11.8% 11.1% • Increas
Slide 19: Balance Sheet
B AL AN C E S H E E T (Million CAD$, unless otherwise noted) Q2 2023 Q1 2023 Q2 2022 Cash 88.2 45.3 100.3 Current Portion of Long-term Debt 34.1 34.4 33.8 Long-term Debt 1,077.7 1,096.1 1,039.5 Net Debt 1,023.6 1,085.2 973.0 LTM Adjusted EBITDA1 180.1 136.9 119.5 Net Debt/LTM Adjusted EBITDA1 5.7x 7
Slide 20: Capital Expenditures
C AP I TAL E X P E N D I T U R E S CAPEX • Q2 2023 CAPEX was $42.8 million, $350 including $36.9 million related to $300 Sherbrooke Expansion Project $250 • Year-to-date CAPEX stood at $77.4 million $200 Millions • Projected 2023 CAPEX of $200-$230 $150 million, including Sherbrooke Expansion Projec
Slide 21: Sustainability Focus
KEY TARGETS TO ACHIEVE BY 2030 S U S TAI N AB I L I T Y F O C U S 21
Slide 22: Progressing Along Recovery Curve to Drive Long-Term Value
P R O G R E S S I N G AL O N G R E C O V E RY C U R V E T O D R I V E L O N G - T E R M VAL U E • Continuing to deliver strong top-line growth • Managing pricing margins • Reinvesting in brands to drive long-term growth • Sherbrooke expansion moving forward and Memphis turnaround progressing • AFH d
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