KP Tissue Releases Second Quarter 2020 Financial Results

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Higher Volume and Productivity Drive Continued Robust Results

MISSISSAUGA, Ontario, Aug. 06, 2020 -- KP Tissue Inc. (KPT) (TSX: KPT) reports the Q2 2020 financial and operational results of KPT and Kruger Products L.P. (KPLP). Kruger Products is Canada's leading manufacturer of quality tissue products for the Consumer market (Cashmere, Purex, SpongeTowels, Scotties, and White Swan) and the Away-From-Home 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 14.8% interest in KPLP.

KPLP Q2 2020 Business and Financial Highlights

  • Revenue increased by $21.1 million or 5.8% to $386.8 million in Q2 2020 compared to $365.7 million in Q2 2019. Excluding the divested Mexico business, Q2 2020 revenue increased by $46.5 million or 13.7%.
  • Adjusted EBITDA was $64.4 million in Q2 2020 compared to $31.5 million in Q2 2019, an increase of 104.6%.
  • TAD Sherbrooke site progressing on time and on budget despite the temporary shutdown in Q1 2020 due to the implementation of strict COVID-19 protocols.
  • Declared a quarterly dividend of $0.18 per share to be paid on October 15, 2020.         

“Our robust second quarter results were driven by a consistent increased demand in our Consumer segment and strong operational performance. We continued to benefit from the trust in our brands, leading to market share gains that began at the end of last year. We also gained new listings and new customers, and saw good growth and increased distribution in our U.S. White Cloud brand. As expected, the Away-from-Home segment faced challenging market conditions during the quarter and the road to recovery in this market will depend on the evolving COVID-19 situation,” stated KP Tissue Chief Executive Officer, Dino Bianco.

“Adjusted EBITDA performance was exceptional with growth of over 100% to $64.4 million. The increase reflects higher Consumer volume and a favourable cost environment as well as the sustainable benefits of our OpEx program across all operations.

“Despite a temporary halt to construction as we implemented COVID-19 procedures, we are pleased to report that TAD Sherbrooke remains on time and on budget. As planned, the first converting-line started in July and the ramp-up is progressing well. With paper production expected to begin in early 2021, the new facility is central to our long-term North American growth strategy in the ultra-premium tissue segment. Furthermore, we have a fully committed sales pipeline in support of our largest investment in Kruger Products’ history. 

“In addition to robust quarterly performance, we continue to reinvest in our brands and business in order to build an even stronger future. Lastly, I would like to thank the entire Kruger Products team for working safe while driving strong performance during COVID-19,” concluded Mr. Bianco.

Outlook
Demand for our products is expected to remain strong but at a diminishing growth rate in the Consumer segment and weaker in the Away-From-Home segment, with input costs expected to remain unchanged. As COVID-19 continues to evolve, there are many opportunities and uncertainties in the market. Given this, we are providing a wide range for Q3 2020 Adjusted EBITDA that is above Q3 2019 and below Q2 2020.

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Source: KP Tissue