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KP Tissue Releases First Quarter 2024 Financial Results
KP Tissue Inc. (KPT) reports the Q1 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 12.8 percent interest in Kruger Products. Kruger Products Q1 2024 Business and Financial Highlights:
“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,” Mr. Bianco concluded.
Outlook for Q2 2024 For the second quarter of 2024, we expect Adjusted EBITDA1 to be in the range of Q1 2024. Kruger Products Q1 2024 Financial Results: 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. 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 $394.0 million in Q1 2024 compared to $389.0 million in Q1 2023, an increase of $5.0 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 8.0 percent in Q1 2023. Adjusted EBITDA1 was $67.1 million in Q1 2024 compared to $50.0 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 $9.0 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 EBITDA1 and lower restructuring costs, partially offset by a foreign exchange loss and a loss from non-controlling interest.
Kruger Products Q1 2024 Financing Activity and Liquidity 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 $409.0 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.
KPT Q1 2024 Financial Results KPT had net income of $1.1 million in Q1 2024. Included in net income was $1.1 million representing KPT’s share of Kruger Products’ net income, a dilution gain of $0.3 million and depreciation expense of $0.3 million related to adjustments to carrying amounts on acquisition.
Dividends on Common Shares The Board of Directors of KPT declared a quarterly dividend of $0.18 per share to be paid on July 15, 2024 to shareholders of record at the close of business on June 28, 2024. 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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