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KP Tissue reports Q1 2024 financial results

May 14, 2024  By P&PC Staff/KP Tissue


KP Tissue has reported the Q1 2024 financial and operational results of KPT and Kruger Products. KPT currently holds a 12.8 percent interest in Kruger Products.

“We delivered strong financial results in the first quarter of 2024, highlighted by increased sales volume and Adjusted EBITDA of $67.1 million,” stated KP Tissue’s chief executive officer, Dino Bianco. “In our Consumer segment, we continued to build on our leadership position in facial tissue following the grocery exit of Kleenex in Canada through incremental marketing, added manufacturing capacity and product innovation. We also invested in brand support to drive awareness and share gains in our bathroom tissue and paper towel categories. Our Away-From-Home business maintained its recovery curve in the first quarter with robust growth in profitability, both year-over-year and sequentially, combined with solid sales growth.”

“Looking ahead to the remainder of 2024, we will continue to take a multi-faceted approach to drive profitable growth. Given anticipated headwinds in commodity markets, we are preparing an action plan to mitigate escalating pulp prices,” Bianco concluded.

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Kruger Products Q1 2024 business and financial highlights:

  • Revenue was $479.4 million in Q1 2024 compared to $451.0 million in Q1 2023, an increase of $28.4 million or 6.3 percent.
  • Adjusted EBITDA was $67.1 million in Q1 2024, compared to $50 million in Q1 2023, an increase of 34.3 percent.
  • Net income was $9 million in Q1 2024 compared to a loss of $49.3 million in Q1 2023, an improvement of $58.3 million.
  • Declared a quarterly dividend of $0.18 per share to be paid on July 15, 2024.
  • Facial tissue line in the Sherbrooke Expansion Project started up successfully in February 2024.
  • Announced a 25 percent increase in facial production at the Gatineau plant on March 5, 2024 with a $14.5 million investment.

Revenue was $479.4 million in Q1 2024 compared to $451 million in Q1 2023, an increase of $28.4 million or 6.3 percent. The increase in revenue was primarily due to higher sales volume and favourable sales mix in the Consumer segment, partially offset by lower selling prices in the Consumer segment.

Cost of sales was $394 million in Q1 2024 compared to $389 million in Q1 2023, an increase of $5 million or 1.3 percent. The increase in cost of sales was primarily due to higher sales volume and higher manufacturing overhead costs resulting primarily from start-up costs related to the Sherbrooke Expansion Project and additional spending on maintenance in the quarter, partially offset by lower pulp prices and realized benefits related to the shutdown of certain LDC assets in our Memphis operations. Freight costs were lower compared to Q1 2023 as inflation moderated throughout 2023, while warehousing costs increased as a result of handling costs related to higher sales volume and additional logistics network costs due to contract renewals. As a percentage of revenue, cost of sales was 82.2 percent in Q1 2024 compared to 86.3 percent in Q1 2023.

Selling, general and administrative (SG&A) expenses were $44.1 million in Q1 2024 compared to $36.3 million in Q1 2023, an increase of $7.8 million or 21.7 percent. The increase was primarily due to additional investment in advertising and promotion, higher selling expense to support additional sales volume, higher IT spend and consulting costs to support operational initiatives and higher management fees, partially offset by lower personnel costs and foreign exchange gains in Q1 2024 compared to losses in the year ago quarter. As a percentage of revenue, SG&A expenses were 9.2 percent in Q1 2024 compared to eight percent in Q1 2023.

Adjusted EBITDA was $67.1 million in Q1 2024 compared to $50 million in Q1 2023, an increase of $17.1 million or 34.3 percent. The significant increase was primarily due to higher sales volumes, favourable sales mix and lower pulp prices, partially offset by lower selling prices, higher manufacturing overhead spending and higher warehousing and SG&A expenses.

Net income was $9 million in Q1 2024 compared to a loss of $49.3 million in Q1 2023, an improvement of $58.3 million. The improvement was primarily due to lower income tax expense due to a deferred tax expense in Q1 2023 resulting from the Reorganization on January 1, 2023, higher Adjusted EBITDA and lower restructuring costs, partially offset by a foreign exchange loss and a loss from non-controlling interest.

On March 22, 2024, Kruger Products entered into the 9th Amended and Restated Credit Agreement to increase the facility from $200 million to $325 million.

Total liquidity, representing cash and availability under the revolving credit agreements, was $409 million as of March 31, 2024. In addition, $20.7 million of cash was held for the Sherbrooke Expansion Project.

Kruger Inc. reduced its participation in the dividend reinvestment plan (DRIP) from 100 percent to 50 percent effective April 15, 2024.


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