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K.P Tissue reports improved Q3 2022 results, compared to same quarter in previous year

KP Tissue reported the third quarter financial and operational results of KPT and Kruger Products L.P. (KPLP) for 2022.

Highlights from the quarter are as follows.

• Revenue was $427 million in Q3 2022 compared to $391.4 million in Q3 2021, an increase of $35.6 million or 9.1 percent.
• Adjusted EBITDA was $30.7 million in Q3 2022, compared to $40.3 million in Q3 2021, a decrease of $9.6 million.
• Net loss was $38.8 million in Q3 2022 compared to $9.3 million in Q3 2021, a decrease of $29.5 million.
• The company declared a quarterly dividend of $0.18 per share to be paid on January 16, 2023.

“We continued to deliver solid top-line growth in the third quarter of 2022 with revenue increasing 9.1 percent year-over-year, while profitability significantly improved from the previous quarter based on the disciplined execution of a multi-faceted strategy. This included price increases across all segments as well as productivity gains, along with prudent cash management through reductions in working capital and discretionary spending,” stated KP Tissue CEO Dino Bianco.

“I’m very pleased with the strong performance of our AFH segment in the third quarter with sales growth of 37.3 percent year-over year and Adjusted EBITDA of $5.4 million, signalling a market recovery in Canada and the U.S. post-COVID. For the consumer segment, revenue growth was 4.1 percent, as we are seeing slower consumer purchases as they adjust to higher price points. We plan to maintain targeted investments in our consumer brands, including recently launched Bonterra, SpongeTowels UltraPRO, UltraLuxe and White Cloud while watching post-pricing price gaps.

Although inflationary upward pressure appears to be easing, higher price points for products have created sales volatility with some consumers trading down during these uncertain times. The recovery of our Memphis operations is also taking a little longer than anticipated, but we believe this situation will be largely resolved by early 2023. Despite the volatile business environment, we are moving in the right direction and fully expect to generate profitable growth in the fourth quarter and beyond,” Bianco concluded.

Cost of sales was $394.6 million in Q3 2022 compared to $345.6 million in Q3 2021, an increase of $49 million or 14.2 percent. Manufacturing costs increased primarily due to significantly increased pulp costs and high inflation on other input costs, along with the impact of labour shortages and productivity in Memphis manufacturing, plant overhead increases primarily in maintenance and the unfavourable impact of foreign exchange fluctuations on U.S. dollar costs, partially offset by lower sales volumes. Freight costs increased significantly compared to Q3 2021 primarily due to increased freight rates resulting from cost inflation. As a percentage of revenue, the cost of sales was 92.4 percent in Q3 2022 compared to 88.3 percent in Q3 2021.