KP Tissue Releases Fourth Quarter and Full Year 2024 Financial Results

KP Tissue Inc. (KPT) reports the Q4 2024 and full year 2024 financial and operational results of KPT and Kruger Products Inc. (Kruger Products). Kruger Products is Canada's leading manufacturer of quality tissue products for the Consumer market (Cashmere, Purex, SpongeTowels, Scotties, White Swan and Bonterra) and the Away-From-Home (AFH) market and continues to grow in the U.S. Consumer tissue business with the White Cloud brand and premium private label products. KPT currently holds a 12.5 percent interest in Kruger Products.

Kruger Products Q4 2024 Business and Financial Highlights:

Revenue was $539.6 million in Q4 2024 compared to $482.3 million in Q4 2023, an increase of $57.3 million or 11.9 percent.
Adjusted EBITDA1 was $66.8 million in Q4 2024 compared to $61.2 million in Q4 2023, an increase of 9.2 percent.
Net loss was $13.7 million in Q4 2024 compared to net income of $16.5 million in Q4 2023, a decrease of $30.2 million.
Declared a quarterly dividend of $0.18 per share to be paid on April 15, 2025.

Kruger Products Full Year 2024 Financial Highlights:

Revenue was $2,049.9 million in Fiscal 2024 compared to $1,873.0 million in Fiscal 2023, an increase of $176.9 million or 9.4 percent.
Adjusted EBITDA1 was $264.8 million in Fiscal 2024 compared to $238.6 million in Fiscal 2023, an increase of 11.0 percent.
Net income was $23.8 million in Fiscal 2024 compared to a net loss of $5.3 million in Fiscal 2023, an improvement in net income of $29.1 million.

“We are pleased with our financial performance in 2024, highlighted by record revenue of more than $2 billion and strong Adjusted EBITDA in all four quarters,” stated KP Tissue’s Chief Executive Officer, Dino Bianco. “We are particularly proud of our profitability results which were relatively stable in each quarter despite volatile pulp prices and input costs for most of the year. The fourth quarter culminated with revenue growth of 11.9 percent year-over-year to $539.6 million, driven by higher sales volume in the United States, favourable selling prices in Canada and a positive foreign exchange impact.”

“Following the successful start-up of our tissue plant at Sherbrooke in 2024, we are currently evaluating the construction of a new manufacturing facility that would contain a state-of-the-art TAD paper machine and three converting lines. The proposed plan supports our continued focus to grow revenue and our market share as well as offer high-quality tissue products to customers across North America. The current business uncertainty will require us to complete additional due diligence prior to making any announcement.”

“Finally, we have contingency measures ready to deploy to mitigate the impact of potential U.S. tariffs on our business, while marketing campaigns have been launched to leverage increasingly patriotic consumer sentiment in Canada,” Mr. Bianco added.

Outlook for Q1 2025:

As we look to Q1 results, we believe the fundamentals of our business remain strong, however given the uncertainty driven by the proposed tariffs we will not provide Q1 guidance. We hope to return to providing quarterly guidance once the impact of tariffs are better known.

Kruger Products Q4 2024 Financial Results:

Revenue was $539.6 million in Q4 2024 compared to $482.3 million in Q4 2023, an increase of $57.3 million or 11.9 percent. The increase in revenue was primarily due to higher sales volume, primarily in the U.S., and the favourable impact of the previously announced Consumer selling price increase in Canada. Revenue was also favourably impacted by foreign exchange fluctuations on U.S. dollar sales.

Cost of sales was $459.3 million in Q4 2024 compared to $400.5 million in Q4 2023, an increase of $58.8 million or 14.7 percent. The increase in cost of sales was primarily due to higher sales volume and pulp prices, additional outsourcing activity compared to Q4 2023, higher manufacturing overhead spend and the unfavourable impact of foreign exchange fluctuations on U.S. dollar costs, partially offset by the favourable impact of overhead cost absorption resulting from higher inventory levels in the quarter. Freight rates were higher compared to Q4 2023, while warehousing costs increased as a result of handling costs. As a percentage of revenue, cost of sales was 85.1 percent in Q4 2024 compared to 83.0 percent in Q4 2023.

Selling, general and administrative (SG&A) expenses were $45.1 million in Q4 2024 compared to $50.3 million in Q4 2023, a decrease of $5.2 million or 10.4 percent. The decrease was primarily due to lower advertising spend in the quarter, foreign exchange gains in Q4 2024 compared to losses in Q4 2023 and higher losses on the sale of fixed assets in Q4 2023, partially offset by consulting and legal costs to support operational and corporate initiatives. As a percentage of revenue, SG&A expenses were 8.4 percent in Q4 2024 compared to 10.4 percent in Q4 2023.

Adjusted EBITDA1 was $66.8 million in Q4 2024 compared to $61.2 million in Q4 2023, an increase of $5.6 million or 9.2 percent. The increase was primarily due to higher sales volume and selling prices, the favourable impact of overhead cost absorption and lower SG&A expenses, partially offset by additional outsourcing activity, higher manufacturing overhead spend and higher freight and warehousing expenses.

Net loss was $13.7 million in Q4 2024 compared to net income of $16.5 million in Q4 2023, a decrease of $30.2 million. The decrease was primarily due to a higher foreign exchange loss and higher depreciation and interest expenses, partially offset by higher Adjusted EBITDA1 and higher income from non-controlling interest, lower income tax expense and lower losses on the sale of fixed assets.

Kruger Products 2024 Financial Results:

Revenue was $2,049.9 million in Fiscal 2024 compared to $1,873.0 million in Fiscal 2023, an increase of $176.9 million or 9.4 percent. The increase in revenue was primarily due to higher sales volume and selling prices across both segments. Revenue was also favourably impacted by foreign exchange fluctuations on U.S. dollar sales.

Adjusted EBITDA1 was $264.8 million in Fiscal 2024 compared to $238.6 million in Fiscal 2023, an increase of $26.2 million or 11.0 percent. The increase was primarily due to higher sales volumes, selling prices and favourable sales mix along with lower pulp prices, partially offset by higher manufacturing costs and higher warehousing and SG&A expenses.

Net income was $23.8 million in Fiscal 2024 compared to a net loss of $5.3 million in Fiscal 2023, an improvement in net income of $29.1 million. The improvement was primarily due to higher Adjusted EBITDA1 and lower income tax expense, partially offset by higher foreign exchange losses and higher depreciation expense.

Kruger Products Q4 2024 Financing Activity and Liquidity:

On November 1, 2024, Kruger Products issued $135 million in an aggregate principal amount of 6.625 percent Senior Unsecured Notes (the Notes) due November 1, 2031 through a private placement. Interest on the Notes is payable semi-annually in arrears on May 1 and November 1 of each year, commencing on May 1, 2025. The majority of the proceeds were used to redeem the $125 million Senior Unsecured Notes with the remainder being used for general corporate purposes.

Kruger Products completed the previously announced redemption of its outstanding $125 million principal amount of 6.0 percent Senior Unsecured Notes on November 12, 2024 at a redemption price of 100 percent of the principal amount plus accrued and unpaid interest.

Total liquidity, representing cash and availability under the revolving credit agreements, was $344.6 million as of December 31, 2024. In addition, $16.6 million of cash was held for the Sherbrooke Expansion Project.

KPT Q4 2024 Financial Results:

KPT had a net loss of $2.0 million in Q4 2024. Included in the net loss was $1.8 million representing KPT’s share of Kruger Products’ net loss, a dilution gain of $0.1 million and depreciation expense of $0.2 million related to adjustments to carrying amounts on acquisition and income tax expense of $0.1 million.

KPT 2024 Financial Results:

KPT had net income of $2.4 million in Fiscal 2024. Included in the net income was $3.0 million representing KPT’s share of Kruger Products’ net income, a dilution gain of $0.6 million, depreciation expense of $1.1 million related to adjustments to carrying amounts on acquisition and an income tax expense of $0.1 million.

Dividends on Common Shares

The Board of Directors of KPT declared a quarterly dividend of $0.18 per share to be paid on April 15, 2025 to shareholders of record at the close of business on March 31, 2025.

About KP Tissue Inc.

KPT was created to acquire, and its business is limited to holding, a limited equity interest in Kruger Products, which is accounted for as an investment on the equity basis. KPT currently holds a 12.5 percent interest in Kruger Products.

About Kruger Products Inc.

Kruger Products is Canada's leading manufacturer of quality tissue products for household, industrial and commercial use. Kruger Products serves the Canadian consumer market with such well-known brands as Cashmere, Purex, SpongeTowels, Scotties, White Swan and Bonterra. In the U.S., Kruger Products manufactures the White Cloud brand, as well as many private label products. The Away-From-Home division manufactures and distributes high-quality, cost-effective product solutions to a wide range of commercial and public entities. Kruger Products has approximately 3,000 employees and operates ten FSC COC-certified (FSC C-104904) production facilities in North America.

1 Adjusted EBITDA is a non-GAAP financial measure. Refer to the Non-GAAP Financial Measures section of this news release for more information on these measures.

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