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Second quarter 2023 financial results now available from KP Tissue

KP Tissue has reported the Q2 2023 financial and operational results of KPT and Kruger Products (Kruger Products). KPT currently holds a 13.3 percent interest in Kruger Products.

Kruger Products Q2 2023 business and financial highlights

• Revenue was $466.3 million in Q2 2023 compared to $397.5 million in Q2 2022, an increase of $68.8 million or 17.3 percent.
• Adjusted EBITDA was $55 million in Q2 2023, compared to $11.8 million in Q2 2022, an increase of 365.8 percent.
• Net income was $14.5 million in Q2 2023 compared to a net loss of $35.5 million in Q2 2022, an increase of $50 million.
• Declared a quarterly dividend of $0.18 per share to be paid on October 16, 2023.

“We are pleased that margin recovery, along with improved sales volume and a better mix in our Consumer business, generated strong Adjusted EBITDA of $55 million in the second quarter of 2023,” stated KP Tissue’s chief executive officer, Dino Bianco. “Ongoing cost management initiatives, including productivity gains and cost controls, also contributed to increasing profitability. In addition, our Away-From-Home segment delivered a fourth consecutive quarter of positive Adjusted EBITDA to maintain its growth momentum. As a result, our financial performance in the second quarter normalized versus a more challenging market and operating environment in the same period last year. On a sequential basis, revenue and Adjusted EBITDA continued to improve, rising 3.4 percent and 10.2 percent in the quarter, respectively.”

“Looking ahead to the second half of 2023, we anticipate a more favourable landscape as input costs trend downwards, TAD Sherbrooke and the Sherbrooke Expansion Project continue to ramp up production capacity to meet customer demand, and margins are restored to their pre-pandemic levels,” Bianco added.

For the third quarter of 2023, as commodity and other input costs begin to decline, the company will focus on maintaining its margins while also continuing to reinvest in the business to drive long-term value. Accordingly, Adjusted EBITDA in Q3 2023 is expected to be in the range of Q2 2023.

Revenue was $466.3 million in Q2 2023 compared to $397.5 million in Q2 2022, an increase of $68.8 million or 17.3 percent. The increase in revenue was primarily due to the favourable impact of selling price increases implemented across all segments and regions during 2022, along with a favourable sales mix and higher sales volume in the Consumer business. Revenue was also favourably impacted by foreign exchange fluctuations on U.S. dollar sales.

Cost of sales was $395.8 million in Q2 2023 compared to $372.5 million in Q2 2022, an increase of $23.3 million or 6.2 percent. Higher sales volumes increased cost of sales, along with the unfavourable impact of foreign exchange fluctuations on U.S. dollar costs, partially offset by improvements in Memphis operations. While the significant inflation experienced during 2022 has moderated in the second quarter of 2023, manufacturing input costs remain higher than the year ago quarter. Freight rates were lower compared to Q2 2022 as supply constraints and inflation moderated, while warehousing costs increased as a result of additional logistics network costs. As a percentage of revenue, cost of sales was 84.9 percent in Q2 2023 compared to 93.7 percent in Q2 2022.