Kp Tissue, Inc. · TSX:KPT
Kp Tissue — Q4 2015 Earnings Presentation
25 slides from Kp Tissue's earnings presentation, Mar 10, 2016
Slide 1: Q4 2015 Financial Results
Q4 2015 FINANCIAL RESULTS March 10, 2016
Slide 2: Forward-Looking and Cautionary Statements
FORWARD-LOOKING AND CAUTIONARY STATEMENTS This Presenta@on on behalf of KP Tissue Inc. (the “Corpora@on” or “KPT”) does not cons@tute or form part of any offer for sale or solicita@on of any offer to buy or subscribe for any securi@es nor shall it or any part of it form the basis of or be relied on in
Slide 3: Corporate Structure
CORPORATE STRUCTURE PUBLIC INVESTORS KRUGER INC. 100% 83.7% KP TISSUE INC. KRUGER PRODUCTS L.P. 16.3%* K.T.G. (USA) INC. KRUGER PRODUCTS AFH L.P. Exis>ng Memphis Opera>ons Metro Paper Acquisi>on TAD Project Kruger Products L.P. is the opera>ng company KP Tissue Inc. is the publicly traded en>ty * As
Slide 4: Presenters
PRESENTERS MARIO GOSSELIN MARK HOLBROOK Chief Execu@ve Officer Chief Financial Officer KP Tissue Inc. & Kruger KP Tissue Inc. & Kruger Products L.P. Products L.P. 4
Slide 5: 2015 Highlights
2015 HIGHLIGHTS • Revenue of $1.14 billion, up 8.9% over 2014 – Revenue in the U.S. increased by 22.9% • Adjusted EBITDA1 of $126.4 million, up 3.9% over 2014, due to higher sales volumes, par>ally offset by nega>ve impact of F/X • Weaker Canadian dollar translated into approximately $11.0 million of
Slide 6: Q4 2015 Highlights
Q4 2015 HIGHLIGHTS • Q4 2015 revenue of $300.6 million, up 7.9% over Q4 2014 • Adjusted EBITDA of $30.3 million compared to $30.4 million last year primarily due to the nega>ve impact of F/X, par>ally offset by higher sales volumes • Weaker Canadian dollar translated into approximately $3.2 million o
Slide 7: Canada's Leading Tissue Company
CANADA’S LEADING TISSUE COMPANY Bathroom Tissue Facial Tissue Paper Towels 36.2 32.7 24.7 #2 #2 #3 21.7% 18.8% 8.1% #3 #4 #1 10.8% 2.0% 32.1% #4 #3 #4 5.0% 17.9% 3.3% Source: Nielsen; dollar market share for the 52-week period ended January 9, 2016. 7
Slide 8: Brand Leadership Position
BRAND LEADERSHIP POSITION 1st BATHROOM TISSUE 1st FACIAL TISSUE 2nd PAPER TOWEL Increased market share Market share has rebounded Maintained market share 33.2% 32.7% 37.1% 31.9% 24.9% 24.7% 31.4% 24.3% 36.2% 30.2% 23.7% 29.1% 23.3% 35.2% 22.3% 34.8% 35.0% 34.7% 35.0% 22.0% 22.2% 21.9% 34.4% 25.4% 25
Slide 9: Commodity Input Prices
COMMODITY INPUT PRICES • NBSK USD market price declined slightly to US$972/metric tonne in 2015 compared to an average of US$1024/metric tonne in 2014. However, commodity input costs further increased due to weaker CAD. • Based on industry informa>on, management expects pulp prices to remain in a >g
Slide 10: Yearly Financial Summary
YEARLY FINANCIAL SUMMARY (C$ millions, unless otherwise noted) 2015 2014 % Change Revenue 1,138.9 1,046.2 8.9% Gross Profit 168.1 167.0 0.6% Gross Margin 14.8% 16.0% Adjusted EBITDA 126.4 121.6 3.9% Adjusted EBITDA Margin 11.1% 11.6% Operating Income (EBIT) 78.4 81.6 EBIT Margin 6.9% 7.8% Net Income
Slide 11: Yearly Segmented Results
YEARLY SEGMENTED RESULTS (C$ millions, unless otherwise noted) 2015 2014 % Change Segmented Revenue Consumer 898.0 842.6 6.6% AFH 220.3 184.3 19.6% Other 20.6 19.3 Total segment revenue 1,138.9 1,046.2 8.9% Segment Adjusted EBITDA Consumer 122.5 123.6 (0.9)% AFH 5.4 1.7 220.5% Other (1.5) (3.7) Tota
Slide 12: Fiscal 2015 Revenue Compared to Fiscal 2014
FISCAL 2015 REVENUE COMPARED TO FISCAL 2014 • Fiscal 2015 revenue increased to $1.14 billion or 8.9% over Fiscal 2014 primarily due to the following factors: – Consumer segment revenue increased $55.4 million or 6.6% driven by sales volume growth across all regions, as well as the favourable impact
Slide 13: Fiscal 2015 Adjusted EBITDA Compared to Fiscal 2014
FISCAL 2015 ADJUSTED EBITDA COMPARED TO FISCAL 2014 • Fiscal 2015 Adjusted EBITDA increased by $4.8 million compared to Fiscal 2014 due to the following factors: – Higher sales volumes in Consumer and AFH segments – Lower costs of pulp and natural gas in U.S. dollars – Cost reduc>on ini>a>ves – Par>
Slide 14: Quarterly Financial Summary
QUARTERLY FINANCIAL SUMMARY % Change (C$ millions, unless otherwise noted) Q4 2015 Q3 2015 Q4 2014 Y/Y Q/Q Revenue 300.6 293.6 278.6 7.9% 2.4% Gross Profit 40.7 45.6 44.6 (8.7)% (10.7)% Gross Margin 13.6% 15.5% 16.0% Adjusted EBITDA 30.3 34.8 30.4 (0.6)% (13.1)% Adjusted EBITDA Margin 10.1% 11.9% 10
Slide 15: Quarterly Segmented Results
QUARTERLY SEGMENTED RESULTS % Change (C$ millions, unless otherwise noted) Q4 2015 Q3 2015 Q4 2014 Y/Y Q/Q Segmented Revenue Consumer 240.6 230.2 217.8 10.4% 4.5% AFH 54.8 59.5 53.9 1.7% (7.9)% Other 5.2 3.9 6.9 Total segment revenue 300.6 293.6 278.6 7.9% 2.4% Segment Adjusted EBITDA Consumer 30.7
Slide 16: Q4 2015 Revenue Compared to Q4 2014
Q4 2015 REVENUE COMPARED TO Q4 2014 • Q4 2015 revenue increased by $22.0 million or 7.9% over Q4 2014 primarily due to the following factors: – Consumer segment revenue increased $22.8 million or 10.4% driven by sales volume growth in the U.S. market, as well as the favourable impact of F/X – AFH se
Slide 17: Q4 2015 Adjusted EBITDA Compared to Q4 2014
Q4 2015 ADJUSTED EBITDA COMPARED TO Q4 2014 • Q4 2015 Adjusted EBITDA decreased by $0.1 million compared to Q4 2014 due to the following factors: – Net nega>ve F/X impact of approximately $3.2 million – Higher warehousing costs – Almost offset by higher sales volumes and lower SG&A • Gross margin dec
Slide 18: Q4 2015 Revenue Compared to Q3 2015
Q4 2015 REVENUE COMPARED TO Q3 2015 • Q4 2015 revenue increased by $7.0 million or 2.4% over Q3 2015, primarily due to the following factors: – Consumer segment revenue increased by $10.4 million or 4.5% due to sales volume growth in the U.S. and Canada combined with the favourable impact of F/X – A
Slide 19: Q4 2015 Adjusted EBITDA Compared to Q3 2015
Q4 2015 Adjusted EBITDA COMPARED TO Q3 2015 • Q4 2015 Adjusted EBITDA decreased by $4.5 million over Q3 2015 due to the combina>on of the following factors: – Slightly higher sales volume offset by unfavourable sales mix – Seasonally higher adver>sing spending – Timing of plant overhead spending, par
Slide 20: Balance Sheet/Capex
BALANCE SHEET/CAPEX (C$ millions, unless otherwise noted) Q4 2015 Cash & cash equivalents 25.5 Current portion of long-term debt 10.2 Long-term debt 425.9 Net Debt 410.6 Net Debt/LTM EBITDA 3.2 ! 2015 CAPEX of $57.4 million versus $42.3 million in 2014. Q4 2015 CAPEX of $22.3 million versus $14.1 mi
Slide 21: TAD Products
TAD PRODUCTS TAD PRODUCT Adjusted EBITDA (In millions of Cdn. dollars) 14.0 13.2 12.0 11.2 11.2 10.0 9.7 9.1 7.8 8.0 6.5 6.0 4.0 3.5 2.0 1.1 - FY2011 FY2012 FY 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 (2.0) (1.1) (4.0) (3.6) • 2015 TAD Product Adjusted EBITDA was $45.3 mi
Slide 22: TAD Product Update
TAD PRODUCT UPDATE • Solid 2015 and Q4 2015 Adjusted EBITDA of $13.2 million reflect increased sales volume, favourable F/X and con>nued ramp-up in manufacturing efficiencies • White Cloud bathroom >ssue ranked #1(*) by high-profile U.S. consumer magazine • Q1 2016 TAD Product Adjusted EBITDA expected t
Slide 23: Conclusion
CONCLUSION • Maintain market share leadership in Canadian consumer segment in the context of a compe>>ve and price sensi>ve environment • Recently announced a price increase effec>ve at the end of April 2016 to our Canadian retailers to par>ally offset the rise of raw material prices in Canadian dolla
Slide 24: Conclusion
CONCLUSION • Incremental CAPEX in Fiscal 2016 dedicated to improve profitability and manufacturing efficiencies, both in the Consumer and AFH segments – Es>mated at $65-$70 million. Benefits on Adjusted EBITDA will start in Fiscal 2017 • Adjusted EBITDA outlook for Q1 2016: – Year-over-year decrease pri
Slide 25: For More Information
FOR MORE INFORMATION: WWW.KPTISSUEINC.COM WWW.KRUGERPRODUCTS.CA