Kp Tissue, Inc. · TSX:KPT
Kp Tissue — Q3 2021 Earnings Presentation
23 slides from Kp Tissue's earnings presentation, Nov 12, 2021
Slide 1: Q3 2021 Financial Results
Q3 2021 FINANCIAL RESULTS November 12, 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% 85.5% 14.5% *As of November 11, 2021 (14.5% as of September 30, 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: Q3 2021 Highlights
Q3 2021 Highlights Revenue Adjusted EBITDA1 Net Income $391.4 M $40.3 M $(9.3) M 6.0% 12.8% $27.8M Over Q3 2020 over Q3 2020 over Q3 2020 +4.6% +8.3% Revenue Canada Revenue U.S. 1 Non-GAAP measure – see MD&A for the definition and reconciliation of the most comparable GAAP measure. 5
Slide 6: Pulp Input Prices
Pulp Input Prices Q3 2021 NBSK average prices1 in CAD decreased 1.0% while BEK average prices1 increased 5.5% compared to Q2 2021. NBSK average prices in USD have decreased 3.5% while BEK average prices increased 2.8% quarter-over- quarter in Q3 2021. Based on industry forecasts, both NBSK and BEK p
Slide 7: Network Modernization: TAD Sherbrooke and Expansion
NETWORK MODERNIZATION TAD Sherbrooke • Continues to stay ahead of start-up plans • Phase 1 of AI implementation successful. Progressing to Phase 2 with additional use cases to be implemented through next year • AI and OPEX program providing additional capabilities to the site Sherbrooke Expansion ($
Slide 8: Network Modernization: Memphis Facial Tissue Line and OpEx
NETWORK MODERNIZATION New facial tissue line in Memphis • Current assets at capacity • Capable of producing both TAD and LDC products • Made in USA products • Provides opportunity for future growth in the U.S. OpEx • Waste reduction initiatives showing positive results in most sites • Overall equipm
Slide 9: Trademark: Continued focus on investing in our brands
TRADEMARK Continued focus on investing in our brands • Continued strong overall tissue market share growth • Incremental marketing investment for full year focused on driving share growth and brand equity • “Unapologetically Human” campaign continues to gain recognition with now 17 awards in total •
Slide 10: Canada's Leading Tissue Company
Canada’s Leading Tissue Company Bathroom Tissue Facial Tissue Paper Towel #1 #1 #2 35.6% 35.5% 23.2% 17.2% 18.3% 12.3% 10.9% 0.6% 34.9% 1.4% 17.0% 0.9% Source: Nielsen; dollar market share for the 52-week period ended October 09, 2021 10
Slide 11: Brand Leadership Position
Brand Leadership Position #1 Bathroom Tissue #1 Facial Tissue #2 Paper Towel 36.3% 36.9% 34.6% 35.6% 33.2% 35.5% 31.4% 31.6% 31.5% 31.5% 22.3% 21.9% 23.2% 21.8% 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 Recovery progressing across various end- markets • Market recovery continues with continued growth in Q3 2021. Volume was approximately 20% better than Q3 2020 and was approximately 10% below pre-covid Q3 volumes. Recovery in US continues to outpace Canada. • Benefitting from in-sourced
Slide 13: Quarterly Financial Summary
Quarterly Financial Summary % Change (Million CAD$, unless otherwise noted) Q3 2021 Q2 2021 Q3 2020 Y/Y Q/Q Revenue 391.4 339.3 369.1 6.0% 15.3% Cost of Sales 345.6 295.0 307.7 12.3% 17.2% Gross Profit 45.7 44.4 61.4 (25.5%) 3.0% Gross Margin 11.7% 13.1% 16.6% Adjusted EBITDA1 40.3 37.3 46.2 (12.8%)
Slide 14: Quarterly Segmented Results
Quarterly Segmented Results % Change (Million CAD$, unless otherwise noted) Q3 2021 Q2 2021 Q3 2020 Y/Y Q/Q Segmented Revenue Consumer 332.4 292.3 319.9 3.9% 13.7% AFH 59.0 47.0 49.2 19.9% 25.5% Total Segment Revenue 391.4 339.3 369.1 6.0% 15.3% Segment Adjusted EBITDA1 Consumer 39.1 40.3 55.3 (29.3
Slide 15: Q3 2021 Revenue Compared to Q3 2020
Q3 2021 Revenue Compared to Q3 2020 Increase due to several factors: $22.3 M • A selling price increase in Consumer Canada • Slightly higher sales volume in the Consumer segment Q3 Revenue Increase • An increase in sales volume in the AFH segment resulting from the beginning of Covid-19 related dema
Slide 16: Q3 2021 Adjusted EBITDA Compared to Q3 2020
Q3 2021 Adjusted EBITDA1 Compared to Q3 2020 Primarily due to the following factors: $5.9 M • Unfavourable impact of sales mix Q3 Adjusted EBITDA1 decrease • Higher pulp prices • Labour shortage in Memphis manufacturing 12.8% over Q3 2020 • Inflation • Higher freight rates and warehousing costs Adju
Slide 17: Q3 2021 Revenue Compared to Q2 2021
Q3 2021 Revenue Compared to Q2 2021 $52.1 M Increase due to a combination of: Q3 Revenue increase • Higher Consumer and AFH sales volume in both US and Canada 15.3% • Benefits of Consumer Canada pricing actions over Q2 2021 • Positive FX impact on U.S. sales (with constant currency U.S. sales +28.2%
Slide 18: Q3 2021 Adjusted EBITDA Compared to Q2 2021
Q3 2021 Adjusted EBITDA1 Compared to Q2 2021 Variance due to: $3.0 M • Higher Consumer and AFH sales volume Q2 Adjusted EBITDA1 Increase • Selling price increase in Consumer Canada 8.0% over Q2 2021 Partially offset by: • Higher pulp costs and inflation Adjusted EBITDA • Fixed cost absorption from i
Slide 19: Balance Sheet
Balance Sheet (Million CAD$, unless otherwise noted) Q3 2021 Q2 2021 Cash 118.6 129.7 Current Portion of Long-term Debt 26.4 22.1 Long-term Debt 927.9 935.2 Net Debt 835.7 827.6 LTM Adjusted EBITDA1 151.3 157.2 Net Debt/LTM Adjusted EBITDA1 5.5x 5.3x • Total debt decreased by $3.0 million due to rep
Slide 20: CAPEX
CAPEX CAPEX $350 • YTD 2021 TAD Sherbrooke CAPEX was $88.9 million $300 • YTD 2021 CAPEX excluding TAD Sherbrooke $250 was $20.2 million $200 • 2021 TAD Sherbrooke CAPEX estimated at Millions approximately $100 million $150 • Total 2021 CAPEX of $140-$150 million $100 $50 $0 2017 2018 2019 2020 YTD
Slide 21: Reimagine 2030 – The Next 10 Years of Sustainable Development
Reimagine 2030 – The Next 10 Years of Sustainable Development 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: • Additional price actions against widespread inflation • Investing in our brands and innovation to build market share leadership in Canada, while expanding White Cloud brand in the U.S. • TAD Sherbrooke facilit
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