Kp Tissue, Inc. · TSX:KPT
Kp Tissue — Q1 2024 Earnings Presentation
23 slides from Kp Tissue's earnings presentation, May 14, 2024
Slide 1: Q1 2024 Financial Results
Q1 2024 FINANCIAL RESULTS May 14, 2024
Slide 2: Forward-Looking and Cautionary Statements
FOR WA RD - LOOKING AND CAUTIONARY STATEMENTS 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
CORPORATE STRUCTURE 100% 87.2% 12.8%1 As of May 14, 2024 (12.9% as of March 7, 2024). 1 3
Slide 4: Our Vision
OUR VISION TO BE THE MOST TRUSTED AND BEST LOVED TISSUE COMPANY IN NORTH AMERICA. MAKING EVERYDAY LIFE MORE COMFORTABLE.
Slide 5: 5 Underlying Strategies
5 UNDERLYING STRATEGIES 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: Q1 2024 Highlights
Q 1 2024 HIGHLIGHTS Revenue Adjusted EBITDA1 Net Income $479.4 M $67.1 M $9.0 M 6.3% 34.3% $58.3 M over Q1 2023 over Q1 2023 over Q1 2023 +2.1% +12.1% 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 Q1 2024 NBSK average prices1 in CAD increased 8.8% and BEK average prices1 increased 12.5% from Q4 2023. Q1 2024 NBSK average prices1 in CAD decreased 14.2% and BEK average prices1 decreased 19.2% year-over-year. Substantial sequential increases in pulp prices witnessed in Q1 2024
Slide 8: Operations
OPERATIONS • New facial tissue line in Sherbrooke meeting start-up expectations and producing high-quality products • Paper machine construction progressing well for Sherbrooke with expectations to start production in Q4 2024 • TAD paper machine production continues to improve year- over-year in Mem
Slide 9: Facial Market Update
FACIAL MARKET UPDATE • Retail shelves have been reset following Kleenex exit • Gaining fair share of the market with industry leader Scotties recently achieving 40.3% of total facial tissue sales in Canada • In addition to Sherbrooke, new facial converting line in Gatineau running at full capacity •
Slide 10: Focused Brand Support
FOCUSED BRAND SUPPORT • Strong Q1 brand support to drive awareness and share • Multi-brand activities focused on Unapologetically Human “Love is Messy” campaign, 43rd Scotties Tournament of Hearts and Kruger Big Assist program • Additional targeted media behind Bonterra in support of incremental cus
Slide 11: Brand Leadership Position
BRAND LEA D ER SHIP POSITION Bathroom Tissue Facial Tissue Paper Towel #1 #1 #2 32.9% 40.3% 24.6% 14.3% 18.2% 9.4% 11.3% 1.1% 32.8% 0.9% 7.1% 0.2% 40.3% 24.6% 36.9% 34.6% 33.2% 32.7% 32.9% 38.9% 21.8% 24.0% 22.4% 24.5% 35.7% 36.0% 31.5% 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 2020 2021 202
Slide 12: AFH Segment
AFH SEGMENT • Sustainable recovery in AFH with robust EBITDA results in first quarter that improved over Q1 2023 and Q4 2023 • Volume increased in Q1 2024 from same period in 2023 but decreased sequentially due to seasonality • Portfolio management focus has improved premium vs. value mix (YoY) • AF
Slide 13: Quarterly Financial Summary
QUARTERLY FINA NC IA L SUMMARY % Change (Million CAD$, unless otherwise noted) Q1 2024 Q4 2023 Q1 2023 Y/Y Q/Q Revenue 479.4 482.3 451.0 6.3% (0.6)% Cost of Sales 394.0 400.5 389.0 (1.6%) 1.3% Gross Profit 85.4 81.8 62.0 37.9% 4.4% Gross Margin 17.8% 17.0% 13.7% Adjusted EBITDA1 67.1 61.2 50.0 34.3%
Slide 14: Quarterly Segmented Results
QUARTERLY SEGM ENTED RESULTS % Change (Million CAD$, unless otherwise noted) Q1 2024 Q4 2023 Q1 2023 Y/Y Q/Q Segmented Revenue Consumer 404.3 400.9 376.5 7.4% 0.9% AFH 75.1 81.4 74.5 0.9% (7.7%) Total Segment Revenue 479.4 482.3 451.0 6.3% (0.6)% Segment Adjusted EBITDA1 Consumer 62.6 59.8 51.3 22.0
Slide 15: Q1 2024 Revenue Compared to Q1 2023
Q 1 2024 REVENUE COMPARED TO Q 1 2023 Increase due to the following factors: $28.4 M • Higher sales volume Q1 Revenue increase • Favourable sales mix • Partially offset by lower selling prices 6.3% over Q1 2023 Geographic revenue segmentation $5.4 M $23.0 M +2.1% +12.1% Canada U.S. 15
Slide 16: Q1 2024 Adjusted EBITDA Compared to Q1 2023
Q 1 2 0 2 4 ADJ U S T E D E BI T DA 1 CO M PARE D TO Q 1 2 0 2 3 $17.1 M $67.1M in Q1 2024 compared to $50.0M in Q1 2023 Q4 Adjusted EBITDA1 increase Increase primarily due to the following factors: 34.3% • Higher sales volume and improved sales mix over Q1 2023 • Lower pulp prices • Improved freigh
Slide 17: Q1 2024 Revenue Compared to Q4 2023
Q 1 2024 REVENUE COMPARED TO Q 4 2023 Sequential decrease in revenue due to: ($2.9 M) • Lower sales volume in the AFH segment Q1 Revenue decrease Partially offset by: • Higher volume in the Consumer segment (US) (0.6%) over Q4 2023 ($8.7 M) $5.8 M (3.2%) +2.8% Canada U.S. 17
Slide 18: Q1 2024 Adjusted EBITDA Compared to Q4 2023
Q 1 2 0 2 4 ADJ U S T E D E BI T DA 1 CO M PARE D TO Q 4 2 0 2 3 $5.9 M $67.1M in Q1 2024 compared to $61.2M in Q4 2023 Q1 Adjusted EBITDA1 increase Variance due to: 9.6% • Improved sales mix over Q4 2023 • Lower freight costs • Reduction in SG&A expenses, including advertising Adjusted EBITDA Margi
Slide 19: Balance Sheet
BALANCE SHEET (Million CAD$, unless otherwise noted) Q1 2024 Q4 2023 Q1 2023 Cash 117.1 135.7 36.9 Current Portion of Long-term Debt 41.1 35.2 34.4 Long-term Debt 1,105.0 1,034.0 1,096.1 Net Debt 1,029.0 933.5 1,093.6 LTM Adjusted EBITDA1 255.7 238.6 136.9 Net Debt/LTM Adjusted EBITDA1 4.0x 3.9x 8.0
Slide 20: Capital Expenditures
CAPITAL EXPENDITURES CAPEX • Q1 2024 CAPEX totaled $50.1 million, $350 including $46.0 million related to Sherbrooke Expansion Project $300 • Capital cost of $378 million estimated for $250 Sherbrooke Expansion Project $200 Millions • Anticipating $200-$220 million in total CAPEX $150 for 2024 $100
Slide 21: Sustainability Focus
KEY TARGETS TO ACHIEVE BY 2030 SUSTAINABILITY FOCUS 21
Slide 22: Strong Agility and Resilience Amid Uncertain Economic Environment
S T RO N G AG I L I T Y AN D RE S I L I E N CE AM I D U N CE RTAI N E CO N O M I C E N VI RO N M E N T • Broad top-line growth • Preparing action plan to mitigate significantly escalating pulp prices • Investing in brands to drive long-term growth • Increasing capacity through Sherbrooke paper machi
Slide 23: www.kptissueinc.com
WWW.KPTISSUEINC.COM