Slide 1: Q1 2021 Financial Results
Q1 2021 FINANCIAL RESULTS May 7, 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% 85.4% 14.6% *As of May 6, 2021 (14.7% as of March 31, 2021). 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: Q1 2021 Highlights
Q1 2021 Highlights Decline due to significant sales volume decreases $310.4 M compared to high COVID-19 buying activity last year, de- stocking of tissue inventories by retailers and consumers Revenue in Q1 2021, and the unfavourable impact of COVID-19 (15.4%) (20.2%) 17.3% restrictions on the AFH s
Slide 6: Pulp Input Prices
Pulp Input Prices Q1 2021 NBSK average prices in CAD increased 11.5% and BEK average prices increased 13.8% compared to Q4 2020. NBSK average prices in USD have increased 14.3% and BEK average prices increased 16.7% quarter-over- quarter in Q1 2021 with Q2 2021 prices escalating further. Based on in
Slide 7: COVID-19 Impact and Priorities
COVID-19 Impact and Priorities • Continue to protect the health and safety of our employees • No major business disruptions and inter-site transmission • Increasing the availability of our products with supply chain remaining stable • Significant de-stocking in Consumer tissue by retailers and consu
Slide 8: Network Modernization
NETWORK MODERNIZATION TAD Sherbrooke • Successful ramp-up and beginning to flow to P&L • Paper machine and converting-line start-ups continue to track well ahead of start-up curve • New SpongeTowels Ultra ProTM, with industry leading quality in terms of strength and absorbency Sherbrooke Expansion •
Slide 9: Trademark
TRADEMARK Continued focus on investing and building our brands • Strong share gains across all categories continued in Q1 • Continued incremental marketing investment for full year 2021 • Full distribution of quality improved Cashmere supported by strong advertising • New “Unleash the Scotties” Camp
Slide 10: Canada's Leading Tissue Company
Canada’s Leading Tissue Company Bathroom Tissue Facial Tissue Paper Towel #1 #1 #2 37.1% 33.0% 22.2% 18.7% 19.6% 13.2% 10.5% 0.4% 34.0% 1.2% 16.7% 0.9% Source: Nielsen; dollar market share for the 52-week period ended March 27, 2021 10
Slide 11: Brand Leadership Position
Brand Leadership Position #1 Bathroom Tissue #1 Facial Tissue #2 Paper Towel 36.3% 36.9% 37.1% 34.6% 33.2% 33.0% 31.4% 31.6% 31.5% 31.5% 22.3% 21.9% 21.8% 22.2% 20.6% 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Source: Nielsen Canadian dollar market share for 52-week p
Slide 12: AFH Segment
AFH SEGMENT Performance Tied to End-Market Recovery • Volume trends improving, but Q1 volume remained approximately 25% below pre-pandemic levels • Encouraging trends in U.S. market with lessening in restrictions and progress from vaccination efforts • Operations performing well and ready for recove
Slide 13: Quarterly Financial Summary
Quarterly Financial Summary % Change (Million CAD$, unless otherwise noted) Q1 2021 Q4 2020 Q1 2020 Y/Y Q/Q Revenue 310.4 385.0 375.1 (17.3%) (19.4%) Cost of Sales 263.3 332.2 314.5 (16.3%) (20.7%) Gross Profit 47.0 52.8 60.6 (22.4%) (10.8%) Gross Margin 15.2% 13.7% 16.2% Adjusted EBITDA1 37.5 36.2
Slide 14: Quarterly Segmented Results
Quarterly Segmented Results % Change (Million CAD$, unless otherwise noted) Q1 2021 Q4 2020 Q1 2020 Y/Y Q/Q Segmented Revenue Consumer 271.4 333.2 313.2 (13.3%) (18.6%) AFH 39.0 51.8 61.9 (37.0%) (24.6%) Total Segment Revenue 310.4 385.0 375.1 (17.3%) (19.4%) Segment Adjusted EBITDA1 Consumer 44.1 4
Slide 15: Q1 2021 Revenue Compared to Q1 2020
Q1 2021 Revenue Compared to Q1 2020 Impacted due to a combination of: $64.7 M • Sales volume decreases in Canada and U.S. due to: Q1 Revenue Decrease – Comparison to high COVID-19 buying activity across all business segments in Q1 2020 – De-stocking of tissue inventories by retailers and consumers i
Slide 16: Q1 2021 Adjusted EBITDA Compared to Q1 2020
Q1 2021 Adjusted EBITDA1 Compared to Q1 2020 $13.5 M Primarily due to the following factors: Q1 Adjusted EBITDA1 decrease • Lower sales volume net of overhead absorption • Unfavourable impact of higher pulp prices • Higher outsourcing costs 26.5% • Increase in freight and warehousing costs over Q1 2
Slide 17: Q1 2021 Revenue Compared to Q4 2020
Q1 2021 Revenue Compared to Q4 2020 Decrease due to a combination of: • Significantly lower Consumer volume due to retailer and consumer de- $74.6 M stocking Q1 Revenue decrease • Lower AFH sales reflecting new wave of COVID-19 restrictions in Canada • Lower F/X on USD sales 19.4% over Q4 2020 Geogr
Slide 18: Q1 2021 Adjusted EBITDA Compared to Q4 2020
Q1 2021 Adjusted EBITDA1 Compared to Q4 2020 Increase due to the following factors: $1.3 M • Reduced SG&A spending, particularly lower seasonal Q1 Adjusted EBITDA1 increase advertising • One-time hourly workforce bonus paid in Q4 2020 3.5% • TAD Sherbrooke modest positive contribution in Q1 2021 ove
Slide 19: Balance Sheet
Balance Sheet (Million CAD$, unless otherwise noted) Q1 2021 Q4 2020 Cash 57.6 128.7 Current Portion of Long-term Debt 9.9 9.5 Long-term Debt 842.8 744.0 Net Debt 795.2 624.7 LTM Adjusted EBITDA1 184.3 197.8 Net Debt/LTM Adjusted EBITDA1 4.3x 3.2x • Leverage increased due to the higher level of net
Slide 20: CAPEX
CAPEX CAPEX, excluding TAD Sherbrooke $40 • Q1 2021 TAD Sherbrooke CAPEX was $35 $51.1 million • $25.2 million of accrued and unpaid $30 capital spending as of March 31, 2021 $25 • Q1 2021 CAPEX excluding TAD Millions $20 Sherbrooke was $3.6 million • 2021 TAD Sherbrooke CAPEX estimated $15 at appro
Slide 21: Reimagine 2030 - New 10-Year Sustainable Development Strategy
Reimagine 2030 - New 10-Year Sustainable Development Strategy 21
Slide 22: 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: • Investing in our brands and innovation to build market share leadership in Canada while expanding White Cloud in the U.S. • Pricing action plan in Consumer and AFH to counter exceptional rise in pulp prices •
Slide 23: AL STORE
{ 7% AL STORE WWW.KPTISSUEINC.COM 23