Kp Tissue, Inc. · TSX:KPT
Kp Tissue — Q4 2020 Earnings Presentation
26 slides from Kp Tissue's earnings presentation, Mar 11, 2021
Slide 1: Q4 2020 Financial Results
Q4 2020 FINANCIAL RESULTS March 11, 2021
Slide 2: Forward-Looking and Cautionary Statements
Forward-Looking and Cautionary Statements This Presentation on behalf of KP Tissue Inc. (the “Corporation” or “KPT”) does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for any securities nor shall it or any part of it form the basis of or be relie
Slide 3: Corporate Structure
Corporate Structure 100% 85.3% 14.7% *As of March 10, 2021 (14.7% as of December 31, 2020). 3
Slide 4: Kruger Products Overview
Kruger Products Overview 1 2 3 Canada’s Leading Strong Customer Strong Portfolio of Brands Tissue Company Relationships 4 5 6 Broad Manufacturing Growth Focused Experienced Infrastructure Management Team 4
Slide 5: Fiscal 2020 Highlights
Fiscal 2020 Highlights Higher sales volume $1,516.0 M in Canada and U.S. Revenue Excluding Mexico and favourable F/X, +8.9 % +16.2% 5.7%* 11.7%* partially offset by Canada U.S. over 2019 over 2019 AFH The increase was primarily due to the favourable sales volume and $197.8 M mix impact and lower pul
Slide 6: Q4 2020 Highlights
Q4 2020 Highlights $385.0 M Volume increases in Canadian and U.S. Consumer, partially offset by AFH and Revenue unfavourable F/X +9.9% +11.8% 10.6% Canada U.S. Over Q4 2019 $36.2 M The decrease was primarily due to higher manufacturing costs related Adjusted EBITDA1 to COVID-19, TAD Sherbrooke start
Slide 7: Pulp Input Prices
Pulp Input Prices Q4 2020 NBSK prices in CAD decreased 1.7% and BEK prices decreased 1.8% compared to Q3 2020. NBSK prices in USD have slightly increased while BEK prices remained the same during Q4 2020. Based on industry forecasts, for 2021, both NBSK and BEK prices are expected to significantly i
Slide 8: COVID-19 Impact
COVID-19 Impact • Continued to invest in safety protocols • Strong asset performance with no major disruptions • Post COVID-19, recovery plan prepared • Carry forward benefits derived from COVID-19 including SKU reduction and new listings • Consumer trust in our brand is a key differentiator in peri
Slide 9: TAD Sherbrooke
TAD SHERBROOKE Start-up Progressing Ahead of Ramp-up Curve • Start-up of paper machine on time and on budget despite COVID-19 protocols and challenges • $4.5 million in start-up costs incurred in Q4 and more expected in Q1-2021 • Converting-lines and the paper machine are tracking ahead of ramp-up c
Slide 10: Sherbrooke Expansion Project
SHERBROOKE EXPANSION PROJECT Investment to Support Long-Term Growth • $240 million investment to add BT converting line to existing Sherbrooke facility and build a new facility with LDC tissue machine and FT converting line • Construction to start in summer of 2022. BT Line and FT Line will be commi
Slide 11: Sustainable Culture Shift
Sustainable Culture Shift • Delivered above target cost savings on an annual run rate basis • OpEx has matured with measurable progress at all sites • SKU consolidation helped run more efficiently and increased output and productivity • Investing more in enhanced maintenance to drive stronger asset
Slide 12: Trademark: Investing and Building Our Brands
TRADEMARK Continued focus on investing and building our brands • Share gain momentum supported by strong shipments • As planned, higher advertising and promotion spend in 2H of 2020 • “Unapologetically Human” purpose-driven advertising campaign a huge success with consumers including South Asian and
Slide 13: Canada's Leading Tissue Company
Canada’s Leading Tissue Company Bathroom Tissue Facial Tissue Paper Towel #1 #1 #2 36.9% 31.5% 21.8% 18.9% 19.8% 13.0% 10.4% 0.5% 34.0% 1.2% 17.7% 0.9% Source: Nielsen; dollar market share for the 52-week period ended December 26, 2020. 13
Slide 14: Brand Leadership Position
Brand Leadership Position #1 Bathroom Tissue #1 Facial Tissue #2 Paper Towel 36.3% 36.9% 34.3% 34.6% 33.2% 33.3% 31.4% 31.6% 31.5% 31.5% 22.9% 22.3% 21.9% 21.8% 20.6% 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Source: Nielsen Canadian dollar market share for 52-week p
Slide 15: AFH Segment
AFH SEGMENT Success Depend on End-Market Recovery • Market conditions remain challenging for Foodservice, Lodging and Property Management • End-user consumption has improved from Q2-2020 but stabilized at approximately 15% below prior year volume • Strong consumer business sales requiring more outso
Slide 16: Quarterly Financial Summary
Quarterly Financial Summary % Change (Million CAD$, unless otherwise noted) Q4 2020 Q3 2020 Q4 2019 Y/Y Q/Q Revenue 385.0 369.1 348.1 10.6% 4.3% Cost of Sales 332.2 307.7 294.1 13.0% 8.0% Gross Profit 52.8 61.4 54.0 (2.3%) (14.0%) Gross Margin 13.7% 16.6% 15.5% Adjusted EBITDA1 36.2 46.2 46.0 (21.3)
Slide 17: Quarterly Segmented Results
Quarterly Segmented Results % Change (Million CAD$, unless otherwise noted) Q4 2020 Q3 2020 Q4 2019 Y/Y Q/Q Segmented Revenue1 Consumer 333.2 319.9 285.6 16.7% 4.2% AFH 51.8 49.2 62.5 (17.2%) 5.2% Total Segment Revenue 385.0 369.1 348.1 10.6% 4.3% Segment Adjusted EBITDA2 Consumer 44.2 55.3 47.4 (6.
Slide 18: Q4 2020 Revenue Compared to Q4 2019
Q4 2020 Revenue Compared to Q4 2019 Impacted due to a combination of: • Strong volume increases in Canada and the U.S. primarily $36.9 M related to COVID-19 demand Q4 Revenue Increase • Partially offset by lower AFH revenue impacted by COVID-19, Consumer U.S. selling prices contractually tied to U.S
Slide 19: Q4 2020 Adjusted EBITDA Compared to Q4 2019
Q4 2020 Adjusted EBITDA1 Compared to Q4 2019 $9.8 M Primarily due to the following factors: Q4 Adjusted EBITDA1 decrease • Additional manufacturing overhead costs related to COVID-19 including a one-time hourly workforce bonus • Start-up costs related to TAD Sherbrooke 21.3% • Lower AFH sales over Q
Slide 20: Q4 2020 Revenue Compared to Q3 2020
Q4 2020 Revenue Compared to Q3 2020 Increase due to a combination of: • Higher Consumer and AFH sales $15.9 M • Partially offset by U.S. Consumer segment contractual selling prices tied to Q4 Revenue increase pulp moderating lower • Lower F/X on USD sales 4.3% over Q3 2020 Geographic revenue segment
Slide 21: Q4 2020 Adjusted EBITDA Compared to Q3 2020
Q4 2020 Adjusted EBITDA1 Compared to Q3 2020 Due to the following factors: $10.0 M • Increased investment in marketing Q4 Adjusted EBITDA1 decrease • Higher freight and warehousing costs 21.7% • One-time hourly workforce bonus over Q3 2020 • TAD Sherbrooke start-up costs Partially offset by: Gross M
Slide 22: Balance Sheet
Balance Sheet (Million CAD$, unless otherwise noted) Q4 2020 Q3 2020 Cash 128.7 117.5 Current Portion of Long-term Debt 4.9 4.9 Long-term Debt 748.5 705.0 Net Debt 624.7 592.5 LTM Adjusted EBITDA1 197.8 207.6 Net Debt/LTM Adjusted EBITDA1 3.2 2.9 • Leverage increased slightly due to the higher level
Slide 23: CAPEX
CAPEX CAPEX, excluding TAD Sherbrooke $90 • 2020 TAD Sherbrooke CAPEX was $80 $274.0 million. $70 • $47.0 million of accrued and unpaid capital spending at year-end $60 • 2020 CAPEX excluding TAD Sherbrooke $50 Millions was $36.6 million $40 • 2021 TAD Sherbrooke CAPEX estimated $30 at approximately
Slide 24: Sustainability Efforts Deliver Impact
Sustainability Efforts Deliver Impact Program launched in 2010 Program launched in 2016 2020 TARGET 2020 RESULTS Employee Safety(1) 50% improvement from 2015 58% improvement from 2015 Energy Consumption(2) 15% reduction from 2009 15% reduction from 2015 Greenhouse Gas Emissions(2) 27% reduction from
Slide 25: Reinvesting in the business to build a strong future
Reinvesting in the business to build a strong future Our focus going forward will be on: • Continuing to drive consumer revenue growth • Investing in our brands and innovation to build market share leadership in Canada while expanding White Cloud in the U.S. • Ramp-up TAD Sherbrooke facility and del
Slide 26: AL STORE
{ 7% AL STORE WWW.KPTISSUEINC.COM 26