Slide 1: Q3 2024 Financial Results
Q3 2024 FINANCIAL RESULTS November 13, 2024
Slide 2: Forward-Looking Statements
F O R W A R D - LO O K I N G 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 developments constitute forward
Slide 3: Corporate Structure
C O R P O R AT E S T RU C T U R E 100% 87.4% 12.6%1 1As of November 13, 2024 (12.7% as of August 13, 2024). 3
Slide 4: Our Vision
OUR VISION TO BE THE MOST TRUSTED AND BEST LOVED TISSUE COMPANY IN NORTH AMERICA. 4/4 || . Bonterra r MAKING EVERYDAY LIFE MORE COMFORTABLE. » @KP
Slide 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 Culture 5
Slide 6: Q3 2024 Highlights
Q3 2024 HIGHLIGHTS Revenue Adjusted EBITDA1 Net Income $521.1M $65.7M $18.0M 10.1% (9.3)% 39.2% over Q3 2023 over Q3 2023 over Q3 2023 +5.5% +16.1% Revenue Canada Revenue U.S. 1 Non-GAAP measure – see MD&A for the definition and reconciliation of the most comparable GAAP measure. 6
Slide 7: Pulp Input Prices
PULP INPUT PRICES Q3 2024 NBSK average prices1 in CAD increased 3.5% and BEK average prices1 rose 0.8% from Q2 2024. Q3 2024 NBSK average prices1 in CAD climbed 38.5% and BEK average prices1 soared 49.4% year-over-year. Market pulp prices2 declined in the third quarter; based on industry forecasts,
Slide 8: Operations
O P E R AT I O N S • New paper machine started up successfully in September and exceeding ramp-up curve • New facial assets continue to perform well with solid market demand • Our overall production rates on target, while North American utilization rates remain high • TAD paper machine and convertin
Slide 9: Focused Brand Support
FOCUSED BRAND SUPPORT • Brand support driving share growth with new campaigns behind Sponge Towels “Nothing Absorbs Like It” and Scotties “Let’s Get the Name Right” • Ongoing support behind Bonterra campaign targeting the sustainable consumer, including new shopper marketing program to drive engagem
Slide 10: Brand Leadership Position
BRAND LEADERSHIP POSITION Bathroom Tissue Facial Tissue Paper Towel #1 #1 #2 32.5% 44.1% 24.1% 14.3% 19.9% 9.5% 11.8% 0.9% 33.3% 36.9% 34.6% 44.1% 24.5% 24.1% 33.2% 32.7% 32.5% 35.7% 36.0% 38.9% 21.8% 24.0% 22.4% 31.5% 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 Source
Slide 11: AFH Segment
AFH SEGMENT • Sales volume slightly increased from Q3 2023 and was flat sequentially • Strong orders, coupled with challenges in paper supply, hampered order fulfillment • EBITDA performance negatively affected by additional outsourcing activity compared to Q3 2023 • Sherbrooke start-up will provide
Slide 12: Quarterly Financial Summary
Q UA R T E R LY F I N A N C I A L S U M M A RY % Change (Million CAD$, unless otherwise noted) Q3 2024 Q2 2024 Q3 2023 Y/Y Q/Q Revenue 521.1 509.8 473.4 10.1% 2.2% Cost of Sales 437.3 431.2 386.3 13.2% 1.4% Gross Profit 83.8 78.6 87.1 (3.6)% 6.8% Gross Margin 16.1% 15.4% 18.4% Adjusted EBITDA1 65.7
Slide 13: Quarterly Segmented Results
Q UA R 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) Q3 2024 Q2 2024 Q3 2023 Y/Y Q/Q Segmented Revenue Consumer 429.2 421.9 390.3 10.0% 1.7% AFH 91.9 87.9 83.1 10.6% 4.6% Total Segment Revenue 521.1 509.8 473.4 10.1% 2.2% Segment Adjusted EBITDA1 Consumer 62
Slide 14: Q3 2024 Revenue Compared to Q3 2023
Q 3 2 0 2 4 R E V E N U E C O M PA R E D TO Q 3 2 0 2 3 Increase due to the following factors: $47.7M • Higher sales volume across both segments Q3 Revenue increase • Favourable selling prices • Positive FX impact on U.S. dollar sales 10.1% over Q3 2023 Geographic revenue segmentation $14.6M $33.1M
Slide 15: Q3 2024 Adjusted EBITDA Compared to Q3 2023
Q 3 2 0 2 4 A D J U S T E D E B I T DA 1 C O M PA R E D TO Q 3 2 0 2 3 ($6.7)M $65.7M in Q3 2024 compared to $72.4M in Q3 2023 Q3 Adjusted EBITDA1 decrease Decrease primarily due to the following factors: 9.3% • Higher pulp prices over Q3 2023 • Additional outsourcing activity • Rising freight rates
Slide 16: Q3 2024 Revenue Compared to Q2 2024
Q 3 2 0 2 4 R E V E N U E C O M PA R E D TO Q 2 2 0 2 4 Sequential increase mainly due to: $11.3M • Favourable selling prices Q3 Revenue increase • Higher sales volume 2.2% over Q2 2024 $3.2M $8.1M 1.2% 3.5% Canada U.S. 16
Slide 17: Q3 2024 Adjusted EBITDA Compared to Q2 2024
Q 3 2 0 2 4 A D J U S T E D E B I T DA 1 C O M PA R E D TO Q 2 2 0 2 4 $0.4M $65.7M in Q3 2024 compared to $65.3M in Q2 2024 Q3 Adjusted EBITDA1 increase Sequential increase due to: 0.6% • Lower manufacturing overhead costs over Q2 2024 • Favourable selling prices • Higher sales volume Adjusted EBIT
Slide 18: Balance Sheet
BA L A N C E S H E E T (Million CAD$, unless otherwise noted) Q3 2024 Q2 2024 Q3 2023 Cash 111.2 127.2 151.1 Current Portion of Long-term Debt 169.9 171.6 34.4 Long-term Debt 997.5 1,007.3 1,065.6 Net Debt 1,056.2 1,051.7 948.8 LTM Adjusted EBITDA1 259.3 266.0 221.8 Net Debt/LTM Adjusted EBITDA1 4.1
Slide 19: Capital Expenditures
C A P I TA L E X P E N D I T U R E S • Q3 2024 CAPEX totaled $37.0 million, $350 including $26.7 million related to $300 Sherbrooke Expansion Project $250 • Year-to-date CAPEX stood at $137.4 $200 million Millions $150 • Lowered CAPEX outlook to $190-$210 $100 million for 2024 $50 • Anticipating $40
Slide 20: Sustainability Focus
KEY TARGETS TO ACHIEVE BY 2030 S U S TA I N A B I L I T Y F O C U S 20
Slide 21: Driving Growth and Margins
DRIVING GROWTH AND MARGINS • Top-line growth driven primarily by U.S. sales • Pricing expected to offset pulp costs • Investing in brands to drive long-term share • Sherbrooke paper machine to enable reduction of purchased paper • AFH delivering against a sustainable profit model • Leverage ratio wi
Slide 22: Thank You