Slide 1: Q2 2024 Financial Results
Q2 2024 FINANCIAL RESULTS August 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% 87.3% 12.7%1 1As of August 13, 2024 (12.8% as of May 14, 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: 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: Q2 2024 Highlights
Q2 2024 HIGHLIGHTS Revenue Adjusted EBITDA1 Net Income $509.8 M $65.3 M $10.6 M 9.3% 18.6% (26.9)% over Q2 2023 over Q2 2023 over Q2 2023 +5.2% +14.8% 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 Q2 2024 NBSK average prices1 in CAD increased 19.5% and BEK average prices1 climbed 21.6% from Q1 2024. Q2 2024 NBSK average prices1 in CAD grew 14.5% and BEK average prices1 rose 18.4% year-over-year. Based on industry forecasts for 2024, pulp prices are expected to remain elevate
Slide 8: Operations
OPERATIONS • Production rates at plan, while North American market remains highly utilized • Upcoming paper machine start-up on track for Q4 2024 • New facial tissue assets in Gatineau and Sherbrooke exceeding expectations and producing high-quality products • Network TAD paper and converting output
Slide 9: Facial Market Update
FACIAL MARKET UPDATE • Grocery facial category has been reset following Kleenex exit • Gaining fair share of the market with industry leader Scotties recently achieving 42.8% of total facial tissue sales in Canada • Both legacy and new facial lines operating above plan • Launched Scotties’ pocket pa
Slide 10: Focused Brand Support
FOCUSED BRAND SUPPORT • Ongoing brand support to drive awareness and share in Q2 • Introduced multi-brand shopper marketing programs with the NHL’s “Find the Cup to Win” and “Only in Canada” promotions • Continued targeted media behind Bonterra to drive awareness and trials with sustainable consumer
Slide 11: Brand Leadership Position
BRAND LEADERSHIP POSITION Bathroom Tissue Facial Tissue Paper Towel #1 #1 #2 32.8% 42.8% 24.5% 14.2% 19.0% 9.4% 11.3% 0.9% 33.1% 36.9% 34.6% 42.8% 24.5% 24.5% 33.2% 32.7% 32.8% 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 12: AFH Segment
AFH SEGMENT • Robust EBITDA results in Q2 2024 improved over Q2 2023 and Q1 2024 • Sales volume increased in Q2 2024 from same period in 2023 and rose sequentially due to seasonality • AFH converting asset performance supporting growth in volume • Sherbrooke start-up will provide internal paper to r
Slide 13: 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) Q2 2024 Q1 2024 Q2 2023 Y/Y Q/Q Revenue 509.8 479.4 466.3 9.3% 6.3% Cost of Sales 431.2 394.0 395.7 9.0% 9.4% Gross Profit 78.6 85.4 70.6 11.3% (8.0%) Gross Margin 15.4% 17.8% 15.1% Adjusted EBITDA1 65.3 6
Slide 14: 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) Q2 2024 Q1 2024 Q2 2023 Y/Y Q/Q Segmented Revenue Consumer 421.9 404.3 383.5 10.0% 4.4% AFH 87.9 75.1 82.8 6.1% 17.0% Total Segment Revenue 509.8 479.4 466.3 9.3% 6.3% Segment Adjusted EBITDA1 Consumer 60.
Slide 15: Q2 2024 Revenue Compared to Q2 2023
Q 2 2 0 2 4 R E V E N U E C O M PA R E D TO Q 2 2 0 2 3 Increase due to the following factors: $43.5 M • Higher sales volume Q2 Revenue increase • Favourable sales mix in Consumer segment • Higher selling prices across both Consumer and AFH businesses 9.3% • Positive FX impact over Q2 2023 Geographi
Slide 16: Q2 2024 Adjusted EBITDA Compared to Q2 2023
Q 2 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 3 $10.3 M $65.3M in Q2 2024 compared to $55.0M in Q2 2023 Q2 Adjusted EBITDA1 increase Increase primarily due to the following factors: 18.6% • Higher sales volume over Q2 2023 • Favourable sales mix • Higher selling prices Adjuste
Slide 17: Q2 2024 Revenue Compared to Q1 2024
Q 2 2 0 2 4 R E V E N U E C O M PA R E D TO Q 1 2 0 2 4 Sequential increase in revenue due to: $30.4 M • Higher selling prices Q2 Revenue increase • Increased sales volume • Positive FX impact 6.3% over Q1 2024 $12.8 M $17.6 M 4.8% +8.2% Canada U.S. 17
Slide 18: Q2 2024 Adjusted EBITDA Compared to Q1 2024
Q 2 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 1 2 0 2 4 ($1.8) M $65.3M in Q2 2024 compared to $67.1M in Q1 2024 Q2 Adjusted EBITDA1 decrease Decrease primarily due to: (2.7)% • Increased manufacturing overhead over Q1 2024 • Higher pulp prices Adjusted EBITDA Margin1 Partially offset
Slide 19: Balance Sheet
BA L A N C E S H E E T (Million CAD$, unless otherwise noted) Q2 2024 Q1 2024 Q2 2023 Cash 127.2 117.1 88.2 Current Portion of Long-term Debt 171.6 41.1 34.1 Long-term Debt 1,007.3 1,105.0 1,077.7 Net Debt 1,051.7 1,029.0 1,023.6 LTM Adjusted EBITDA1 266.0 255.7 180.1 Net Debt/LTM Adjusted EBITDA1 4
Slide 20: Capital Expenditures
C A P I TA L E X P E N D I T U R E S • Q2 2024 CAPEX totaled $50.4 million, $350 including $46.2 million related to Sherbrooke Expansion Project $300 • Year-to-date CAPEX stood at $100.4 million $250 • Anticipating $200-$220 million in total CAPEX $200 Millions for 2024 $150 $100 $50 $0 2020 2021 20
Slide 21: 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 21
Slide 22: Driving Growth and Margins
DRIVING GROWTH AND MARGINS • Top-line growth across all business units • Pricing announced to mitigate significantly escalating pulp prices • Investing in brands to drive long-term share • Increasing capacity through Sherbrooke paper machine and new facial lines • AFH delivering against a sustainabl
Slide 23: Thank You