Slide 1: Q4 2023 Financial Results
Q4 2023 FINANCIAL RESULTS March 7, 2024
Slide 2: Forward-Looking and Cautionary Statements
F O R W A R D - LO O K I N G A N D C AU T I O N A RY 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 develop
Slide 3: Corporate Structure
C O R P O R AT E S T RU C T U R E 100% 87.1% 12.9%2 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 information, s
Slide 4: Our Vision
OUR VISION TO BE THE MOST TRUSTED AND BEST LOVED TISSUE COMPANY IN NORTH AMERICA. eS MAKING EVERYDAY LIFE MORE COMFORTABLE.
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: Q4 2023 Highlights
Q4 2023 HIGHLIGHTS Revenue Adjusted EBITDA1 Net Income $482.3 M $61.2 M $16.5 M 5.3% 37.9% $0.5 M over Q4 2022 over Q4 2022 over Q4 2022 +4.8% +5.9% 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: FY 2023 Highlights
FY 2023 HIGHLIGHTS Revenue Adjusted EBITDA1 Net Loss $1,873.0 M $238.6 M ($5.3 M) 11.4% 105.7% $51.6 M over FY 2022 over FY 2022 over FY 2022 +7.4% +17.1% Revenue Canada Revenue U.S. 1 Non-GAAP measure – see MD&A for the definition and reconciliation of the most comparable GAAP measure. 7
Slide 8: Pulp Input Prices
PULP INPUT PRICES Q4 2023 NBSK average prices1 in CAD increased 3.0% and BEK average prices1 increased 8.3% from Q3 2023. Q4 2023 NBSK average prices1 in CAD decreased 24.6% and BEK average prices1 decreased 32.1% year-over-year. Based on industry forecasts for 2024, pulp prices are expected to incr
Slide 9: Sherbrooke Operations and Expansion
SHERBROOKE OPERATIONS AND EXPANSION • TAD operations continues to surpass production expectations on paper machine and converting, including new bathroom tissue converting line • New production facility construction progressing well as facial tissue line started up in early February and delivering q
Slide 10: Facial Market Update
FACIAL MARKET UPDATE • Fulfilling consumer demand following exit of Kleenex in Canada through innovation and expanded distribution • Strong gains in Q4 2023 with Scotties, the market share leader, recently achieving 38.9% of total facial tissue sales in Canada • In addition to Sherbrooke, recently a
Slide 11: Memphis Operations
MEMPHIS OPERATIONS • TAD paper machine productivity has stabilized and continues to improve • Converting still a long learning curve, made investments in maintenance operations and hiring technical leadership • Deployment of digital twin AI tools has proven successful on new facial line. Use of thes
Slide 12: Focused Brand Support
FOCUSED BRAND SUPPORT • Added incremental investments in fourth quarter to drive brand share • Multi-brand activities continued with Unapologetically Human “Love is Messy” campaign and launched fourth year of successful Kruger Big Assist program • Increased media support of Scotties, Bonterra, and U
Slide 13: Brand Leadership Position
BRAND LEADERSHIP POSITION Bathroom Tissue Facial Tissue Paper Towel #1 #1 #2 32.7% 38.9% 24.5% 14.6% 16.7% 8.6% 11.0% 1.0% 33.4% 1.0% 10.7% 0.2% 36.9% 34.6% 35.7% 36.0% 38.9% 24.0% 22.4% 24.5% 33.2% 33.2% 32.7% 31.5% 31.5% 20.6% 21.8% 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 2019 2020 2021
Slide 14: AFH Segment
AFH SEGMENT • Volume increased in Q4 2023 compared to same period in 2022 and was sequentially stable • Sustainable recovery in AFH with robust EBITDA results in fourth quarter and consistent with Q4 2022 • AFH asset performance enables strong fulfillment and capacity for growth • Monitoring potenti
Slide 15: 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) Q4 2023 Q3 2023 Q4 2022 Y/Y Q/Q Revenue 482.3 473.4 458.1 5.3% 1.9% Cost of Sales 400.5 386.4 416.4 (3.8%) 3.6% Gross Profit 81.8 87.0 41.8 95.9% (6.0)% Gross Margin 17.0% 18.4% 9.1% Adjusted EBITDA1 61.2
Slide 16: 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) Q4 2023 Q3 2023 Q4 2022 Y/Y Q/Q Segmented Revenue Consumer 400.9 390.3 378.8 5.8% 2.7% AFH 81.4 83.1 79.3 2.6% (2.1%) Total Segment Revenue 482.3 473.4 458.1 5.3% 1.9% Segment Adjusted EBITDA1 Consumer 59.
Slide 17: Q4 2023 Revenue Compared to Q4 2022
Q 4 2 0 2 3 R E V E N U E C O M PA R E D TO Q 4 2 0 2 2 Increase due to the following factors: $24.2 M • Higher sales volume Q4 Revenue increase • Partially offset by increased promotional spending year-over-year 5.3% over Q4 2022 Geographic revenue segmentation $12.5 M $11.7 M +4.8% +5.9% Canada U.
Slide 18: Q4 2023 Adjusted EBITDA Compared to Q4 2022
Q 4 2 0 2 3 A D J U S T E D E B I T DA 1 C O M PA R E D TO Q 4 2 0 2 2 $16.8 M $61.2M in Q4 2023 compared to $44.4M in Q4 2022 Q4 Adjusted EBITDA1 increase Increase primarily due to the following factors: 37.9% • Higher sales volume over Q4 2022 • Lower pulp and other input costs • Increased product
Slide 19: Q4 2023 Revenue Compared to Q3 2023
Q 4 2 0 2 3 R E V E N U E C O M PA R E D TO Q 3 2 0 2 3 Sequential increase in revenue due to: $8.9 M • Slightly higher sales volume in the Consumer segment Q4 Revenue increase • Increase in FX on US dollar sales 1.9% over Q3 2023 $7.3 M $1.6 M 2.7% 0.8% Canada U.S. 19
Slide 20: Q4 2023 Adjusted EBITDA Compared to Q3 2023
Q 4 2 0 2 3 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 $(11.2) M $61.2M in Q4 2023 compared to $72.4M in Q3 2023 Q4 Adjusted EBITDA1 decrease Variance due to: (15.4)% • Higher pulp costs over Q3 2023 • Increased freight and warehousing expenses • Higher plant overhead costs Adjusted
Slide 21: Balance Sheet
BA L A N C E S H E E T (Million CAD$, unless otherwise noted) Q4 2023 Q3 2023 Q4 2022 Cash 135.7 151.1 78.4 Current Portion of Long-term Debt 35.2 34.4 34.6 Long-term Debt 1,033.5 1,065.6 1,077.3 Net Debt 933.0 948.8 1,033.3 LTM Adjusted EBITDA1 238.6 221.8 116.0 Net Debt/LTM Adjusted EBITDA1 3.9x 4
Slide 22: Capital Expenditures
C A P I TA L E X P E N D I T U R E S CAPEX • Q4 2023 CAPEX totaled $79.6 million, $350 including $58.1 million related to Sherbrooke Expansion Project $300 • Fiscal 2023 CAPEX amounted to $185.4 $250 million, including $148.4 million for Sherbrooke Expansion Project $200 Millions $150 • Capital cost
Slide 23: 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 23
Slide 24: Strong Agility and Resilience Amid Uncertain Economic Environment
STRONG AGILITY AND RESILIENCE AMID U N C E R TA I N E C O N O M I C E N V I R O N M E N T • Broad top-line growth • Managing margins amid an increasing pulp price environment • Investing in brands to drive long-term growth • Increasing capacity to meet strong demand through Sherbrooke Expansion and
Slide 25: www.kptissueinc.com
WWW.KPTISSUEINC.COM