KP Tissue Releases First Quarter 2025 Financial Results

Written by Customer Service on May 14, 2025. Posted in Earnings Releases And Operating Results.

Strong performance despite volatile economic environment

MISSISSAUGA, Ontario, May 14, 2025 (GLOBE NEWSWIRE) — KP Tissue Inc. (KPT) (TSX: KPT) reports the Q1 2025 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^TM) 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 12.3% interest in Kruger Products.

Kruger Products Q1 2025 Business and Financial Highlights

Revenue was $546.1 million in Q1 2025 compared to $479.4 million in Q1 2024, an increase of $66.7 million or 13.9%.
Adjusted EBITDA¹ was $75.8 million in Q1 2025 compared to $67.1 million in Q1 2024, an increase of 12.9%.
Net income was $15.4 million in Q1 2025 compared to net income of $9.0 million in Q1 2024, an increase of $6.4 million.
Declared a quarterly dividend of $0.18 per share to be paid on July 15, 2025.

“We are pleased with our strong first-quarter results, especially considering the uncertain and volatile economic environment,” stated KP Tissue’s Chief Executive Officer, Dino Bianco. “Adjusted EBITDA reached $75.8 million in the quarter on revenue that increased nearly 14% year-over-year. Revenue for the Consumer segment was driven by higher sales volume in Canada and in the U.S., and improved pricing. Our Away-from-Home business, which has been rebranded Kruger PRO, also generated higher sales volume than the same period last year, although profitability was unfavourably impacted by freight costs, warehousing costs and the purchase of external products. We expect that our newly deployed LDC paper machine in Sherbrooke will essentially meet all in-house paper requirements beginning in the second quarter of 2025. The LDC paper machine and new facial tissue converting line, part of the overall Sherbrooke Expansion Project, have exceeded start-up expectations, while TAD paper machine and converting output remains strong year-over-year.”

“Given the changing tariff announcements affecting North America, the impact to our business in the first quarter was not significant. We continue to closely monitor the impact of potential tariffs on our business and have developed contingency plans to mitigate any financial risk,” Mr. Bianco added.

Outlook for Q2 2025
Assuming a similar tariff environment, we expect Q2 2025 Adjusted EBITDA¹ to be in the range of $70 million to $75 million.

Kruger Products Q1 2025 Financial Results
Revenue was $546.1 million in Q1 2025 compared to $479.4 million in Q1 2024, an increase of $66.7 million or 13.9%. The increase in revenue was primarily due to higher sales volume in the Consumer segment and favourable selling prices across both segments. Revenue was also favourably impacted by foreign exchange fluctuations on U.S. dollar sales.

Cost of sales was $451.0 million in Q1 2025 compared to $394.0 million in Q1 2024, an increase of $57.0 million or 14.5%. The increase in cost of sales was primarily due to higher sales volume and pulp prices along with the unfavourable impact of foreign exchange fluctuations on U.S. dollar costs, partially offset by lower manufacturing overhead costs due primarily to overhead cost absorption resulting from higher inventory levels in the quarter. Freight costs were higher compared to Q1 2024, including the impact of tariffs, while warehousing costs increased as a result of handling costs related to higher sales volume. As a percentage of revenue, cost of sales was 82.6% in Q1 2025 compared to 82.2% in Q1 2024.

Selling, general and administrative (SG&A) expenses were $51.2 million in Q1 2025 compared to $44.1 million in Q1 2024, an increase of $7.1 million or 16.1%. The increase was primarily due to additional investment in advertising and promotion and IT, along with additional headcount costs to support growth, resulting in lower consulting costs, and higher selling expense related to sales volume, partially offset by lower operational and corporate initiatives compared to the year ago quarter and lower bad debt expenses. As a percentage of revenue, SG&A expenses were 9.4% in Q1 2025 compared to 9.2% in Q1 2024.

Adjusted EBITDA¹ was $75.8 million in Q1 2025 compared to $67.1 million in Q1 2024, an increase of $8.7 million or 12.9%. The increase was primarily due to higher sales volumes and selling prices along with lower manufacturing overhead costs as a result of overhead cost absorption, partially offset by higher pulp prices and freight costs as described above, and warehousing and SG&A expenses.

Net income was $15.4 million in Q1 2025 compared to $9.0 million in Q1 2024, an increase of $6.4 million. The increase was primarily due to a higher foreign exchange gain and higher Adjusted EBITDA¹, partially offset by higher depreciation expense and higher interest expense and other finance costs.

Kruger Products Q1 2025 Liquidity
Total liquidity, representing cash and availability under the revolving credit agreements, was $356.8 million as of March 31, 2025. In addition, $4.4 million of cash was held for the Sherbrooke Expansion Project.

KPT Q1 2025 Financial Results
KPT had net income of $1.7 million in Q1 2025. Included in the net income was $1.9 million representing KPT’s share of Kruger Products’ net income, a dilution gain of $0.1 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, 2025 to shareholders of record at the close of business on June 30, 2025.

Additional Information
For additional information please refer to Management’s Discussion and Analysis (MD&A) of KPT and Kruger Products for the first quarter ended March 31, 2025 available on SEDAR+ at www.sedarplus.ca or our website at www.kptissueinc.com.

First Quarter Results Conference Call Information
KPT will hold its first quarter conference call on Wednesday, May 14, 2025 at 8:30 a.m. Eastern Time.

Via telephone: 1-888-699-1199 or 416-945-7677

Via the internet at: www.kptissueinc.com

Presentation material referenced during the conference call will be available at www.kptissueinc.com.

A rebroadcast of the conference call will be available until midnight, May 21, 2025 by dialing 1-888-660-6345 or 289-819-1450 and entering passcode 89122.

The replay of the webcast will remain available on the website until midnight, May 21, 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 12.3% interest in Kruger Products. For more information visit www.kptissueinc.com.

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^TM. 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 2,800 employees and operates ten FSC® COC-certified (FSC® C-104904) production facilities in North America. For more information visit www.krugerproducts.ca.

Non-GAAP Financial Measures
This press release uses certain non-GAAP financial measures which Kruger Products believes provide useful information to management of Kruger Products and the readers of the financial information in measuring the financial performance and financial condition of Kruger Products. These measures do not have a standardized meaning prescribed by GAAP and therefore may not be comparable to similarly titled measures presented by other companies. An example of such a measure is Adjusted EBITDA. Adjusted EBITDA is not a measurement of operating performance computed in accordance with GAAP and should not be considered as a substitute for operating income, net income or cash flows from operating activities computed in accordance with GAAP. “Adjusted EBITDA” is calculated by Kruger Products as net income (loss) before (i) interest expense and other finance costs, (ii) income taxes, (iii) depreciation, (iv) amortization, (v) loss on sale of non-financial assets, (vi) loss (gain) on disposal of property, plant and equipment, (vii) foreign exchange loss (gain), (viii) costs related to restructuring activities and (ix) changes in amortized cost of Partnership units liability. A reconciliation of Adjusted EBITDA to the relevant reported results can be found in the Segment and Geographic Results table of this news release.

Forward-Looking Statements
Certain statements in this press release about KPT’s and Kruger Products’ current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future events or developments constitute forward-looking statements. The words “may”, “will”, “would”, “should”, “could”, “expects”, “plans”, “intends”, “trends”, “indications”, “anticipates”, “believes”, “estimates”, “predicts”, “likely” or “potential” or the negative or other variations of these words or other comparable words or phrases, are intended to identify forward-looking statements. The forward-looking statements are based on certain key expectations and assumptions made by KPT or Kruger Products, including the moderation of inflationary pressure on input costs and continued inflationary pressure on SG&A as labour, marketing and IT costs continue to rise. Although KPT and Kruger Products believe that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking statements since no assurance can be given that such expectations and assumptions will prove to be correct.

The outlook provided in respect of Adjusted EBITDA¹ for Q2 2025 is forward-looking information and is based on the assumptions and subject to the risk and uncertainties referred to below. The purpose of the outlook is to provide the reader with an indication of management’s expectations, at the date of this press release, regarding Kruger Products’ future financial performance. Readers are cautioned that this information may not be appropriate for other purposes.

Many factors could cause Kruger Products’ actual results, level of activity, performance or achievements or future events or developments (which could in turn affect the economic benefits derived from KPT’s economic interest in Kruger Products), to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors, which are discussed in greater detail in the “Risk Factors – Risks Related to Kruger Products’ Business” section of the KPT Annual Information Form dated March 5, 2025 available on SEDAR+ at www.sedarplus.ca: Kruger Inc.’s influence over Kruger Products; Kruger Products’ reliance on Kruger Inc.; consequences of an event of insolvency relating to Kruger Inc.; risks associated with the ownership of the TAD Sherbrooke Project; risks associated with the operation of the TAD Sherbrooke Project; risks associated with the Sherbrooke Expansion Project; operational risks; significant increases in input costs; reduction in supply of fibre; increased pricing pressure and intense competition; Kruger Products’ inability to innovate effectively; adverse economic conditions; dependence on key retail trade customers; damage to the reputation of Kruger Products or Kruger Products’ brands; Kruger Products’ sales being less than anticipated; Kruger Products’ failure to implement its business and operating strategies; Kruger Products’ obligation to make regular capital expenditures; Kruger Products entering into unsuccessful acquisitions; Kruger Products’ dependence on key personnel; Kruger Products’ inability to retain its existing customers or obtain new customers; Kruger Products’ loss of key suppliers; Kruger Products’ failure to adequately protect its intellectual property rights; Kruger Products’ reliance on third party intellectual property licenses; adverse litigation and other claims affecting Kruger Products; material expenditures due to comprehensive environmental regulation affecting Kruger Products’ cash flow; Kruger Products’ pension obligations are significant and can be materially higher than predicted if Kruger Products Management’s underlying assumptions are incorrect; labour disputes adversely affecting Kruger Products’ cost structure and Kruger Products’ ability to run its plants; exchange rate and U.S. competitors; Kruger Products’ inability to service all of its indebtedness; exposure to potential consumer product liability; covenant compliance; interest rate and refinancing risk; and risks relating to information technology; cyber-security; insurance; internal controls, trade and tax.

Readers should not place undue reliance on forward-looking statements made herein. The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. The forward-looking information contained herein is made as of the date of press release and KPT undertakes no obligation to publicly update such forward-looking information to reflect new information, subsequent or otherwise, unless required by applicable securities laws.

INFORMATION:
Francois Paroyan
General Counsel and Corporate Secretary
KP Tissue Inc.
905-812-6936
francois.paroyan@krugerproducts.ca

INVESTORS:
Doris Grbic
Director, Investor Relations
KP Tissue Inc.
437-882-2596
IR@krugerproducts.ca

________________________
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


Kruger Products Inc.
Unaudited Condensed Consolidated Statements of Financial Position
(thousands of Canadian dollars)


		March 31, 2025		December 31, 2024
		$		$
Assets
Current assets
	Cash and cash equivalents	141,778		119,460
	Restricted cash	50,364		48,375
	Trade and other receivables	133,345		138,177
	Receivables from related parties	80		80
	Inventories	307,684		287,756
	Income tax recoverable	1,774		3,208
	Prepaid expenses	20,104		6,383
		655,129		603,439
Non-current assets
	Property, plant and equipment	1,490,571		1,509,592
	Right-of-use assets	175,001		186,460
	Other long-term assets	55		92
	Pensions	87,343		92,661
	Goodwill	152,021		152,021
	Intangible assets	41,309		42,572
	Deferred income taxes	6,011		10,500
Total assets		2,607,440		2,597,337

Liabilities
Current liabilities
	Trade and other payables	320,119		346,264
	Payables to related parties	38,186		17,829
	Income tax payable	3		3
	Dividends payable	14,449		14,308
	Current portion of long-term debt	61,028		54,168
	Current portion of lease liabilities	39,923		40,156
	Current portion of long-term payable to related party	5,800		5,800
	Current portion of provisions	4,648		4,184
		484,156		482,712
Non-current liabilities
	Long-term debt	1,186,720		1,180,488
	Long-term lease liabilities	158,935		165,563
	Long-term payable to related party	32,446		31,925
	Long-term provisions	11,938		9,398
	Pensions	17,661		17,845
	Post-retirement benefits	48,352		47,140
Total liabilities		1,940,208		1,935,071

Equity
	Share capital	314,907		308,622
	Contributed surplus	395,382		395,382
	Deficit	(174,472	)	(171,874	)
	Accumulated other comprehensive income	99,972		100,177
	Equity attributable to Kruger Products	635,789		632,307
	Non-controlling interest	31,443		29,959
Total equity		667,232		662,266
Total equity and liabilities		2,607,440		2,597,337

Kruger Products Inc.
Unaudited Condensed Consolidated Statements of Income
(thousands of Canadian dollars)


	3-month period ended March 31, 2025		3-month period ended March 31, 2024
	$		$

Revenue	546,110		479,432

Expenses
Cost of sales	450,983		394,003
Selling, general and administrative expenses	51,215		44,142
Restructuring costs	–		216

Operating income	43,912		41,071

Interest expense and other finance costs	20,951		16,280
Other expense (income)	(343	)	8,473

Income before income taxes	23,304		16,318

Current tax expense	730		769
Deferred tax expense	5,695		5,471

Income tax expense	6,425		6,240

Net income including non-controlling interest	16,879		10,078

Net income attributable to non-controlling interest	1,484		1,122

Net income attributable to Kruger Products	15,395		8,956

Kruger Products Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(thousands of Canadian dollars)



	3-month period ended March 31, 2025		3-month period ended March 31, 2024
	$		$
Cash flows from (used in) operating activities
Net income including non-controlling interest	16,879		10,078
Items not affecting cash
Depreciation	29,889		24,451
Amortization	1,972		1,065
Loss (gain) on sale of property, plant and equipment	(5	)	271
Loss on disposal of leased assets	–		632
Foreign exchange loss (gain)	(343	)	9,355
Interest expense and other finance costs	20,951		16,280
Pension and post-retirement benefits	2,745		2,576
Provisions	2,864		1,073
Income tax expense	6,425		6,240
Loss on sale of non-financial assets	–		12
Total items not affecting cash	64,498		61,955

Net change in non-cash working capital	(25,056	)	(86,070	)
Contributions to pension and post-retirement benefit plans	(1,009	)	(1,153	)
Provisions paid	–		(470	)
Income tax payments, net	654		(340	)
Net cash from (used in) operating activities	55,966		(16,000	)

Cash flows from (used in) investing activities
Purchases of property, plant and equipment	(2,145	)	(4,041	)
Purchases of property, plant and equipment related to the
Sherbrooke Expansion Project	(15,386	)	(45,873	)
Interest paid on credit facilities related to the Sherbrooke Expansion
Project	–		(116	)
Government assistance received	3,150		–
Purchases of software	40		(47	)
Proceeds on sale of property, plant and equipment	–		(4	)
Net cash used in investing activities	(14,341	)	(50,081	)

Cash flows from (used in) financing activities
Proceeds from long-term debt	22,188		74,864
Repayment of long-term debt	(9,998	)	(7,147	)
Payment of deferred financing fees	(32	)	(864	)
Payment of lease liabilities	(9,023	)	(8,650	)
Change in restricted cash	(1,989	)	(1,412	)
Interest paid on long-term debt	(12,426	)	(8,863	)
Dividends paid, net	(8,000	)	(1,753	)
Net cash from (used in) financing activities	(19,280	)	46,175

Effect of exchange rate changes on cash and cash
equivalents held in foreign currency	(27	)	1,298

Increase (decrease) in cash and cash equivalents during the period	22,318		(18,608	)

Cash and cash equivalents – Beginning of period	119,460		135,728

Cash and cash equivalents – End of period	141,778		117,120

Kruger Products Inc.
Unaudited Segment and Geographic Results
(thousands of Canadian dollars)


	3-month period ended March 31, 2025		3-month period ended March 31, 2024
	$		$

Segment Information

Segment Revenue
Consumer	465,190		404,289
AFH	80,920		75,143

Revenue from external customers	546,110		479,432

Other segment items

Consumer	389,137		341,627
AFH	78,131		67,373
Corporate and other costs	3,074		3,345

Total other segment items	470,342		412,345

Adjusted EBITDA
Consumer	76,053		62,662
AFH	2,789		7,770
Corporate and other costs	(3,074	)	(3,345	)

Total Adjusted EBITDA	75,768		67,087

Reconciliation to net income:

Depreciation and amortization	31,861		25,516
Interest expense and other finance costs	20,951		16,280
Loss (gain) on sale of property, plant and equipment	(5	)	271
Loss on sale of non-financial assets	–		12
Change in amortized cost of Partnership unit liability	–		(881	)
Restructuring costs, net	–		216
Foreign exchange loss (gain)	(343	)	9,355

Income before income taxes	23,304		16,318

Income tax expense	6,425		6,240

Net income including non-controlling interest	16,879		10,078

Geographic Revenue

Canada	286,522		266,172
US	259,588		213,260

Total revenue	546,110		479,432

KP Tissue Inc.
Unaudited Condensed Statements of Financial Position
(thousands of Canadian dollars)


	Monday, March 31, 2025		December 31, 2024
	$		$
Assets

Current assets
Dividends receivable	1,799		1,798
	1,799		1,798

Non-current assets
Investment in associate	68,952		69,517

Total assets	70,751		71,315

Liabilities

Current liabilities
Dividend payable	1,799		1,798

Total liabilities	1,799		1,798

Equity

Common shares	22,816		22,762
Contributed surplus	144,819		144,819
Deficit	(117,169	)	(116,673	)
Accumulated other comprehensive income	18,486		18,609

Total equity	68,952		69,517

Total liabilities and equity	70,751		71,315

KP Tissue Inc.
Unaudited Condensed Statements of Income
(thousands of Canadian dollars, except share and per share amounts)

	3-month period ended March 31, 2025		3-month period ended March 31, 2024
	$		$

Share of income	1,917		1,155
Depreciation of fair value increments	(284	)	(286	)

Equity income	1,633		869
Dilution gain	114		262

Net income	1,747		1,131


Basic earnings per share	0.17		0.11

Weighted average number of shares outstanding	9,993,168		9,967,627

KP Tissue Inc.
Unaudited Condensed Statements of Cash Flows
(thousands of Canadian dollars)

	3-month period ended March 31, 2025		3-month period ended March 31, 2024
	$		$
Cash flows from (used in) operating activities
Net income	1,747		1,131
Items not affecting cash
Equity income	(1,633	)	(869	)
Dilution gain	(114	)	(262	)
Total items not affecting cash	(1,747	)	(1,131	)

Decrease in payable to investee	–		(84	)
Tax refunds, net	–		84

Net cash from (used in) operating activities	–		–

Cash flows from investing activities
Dividends received, net	1,744		1,752

Net cash from investing activities	1,744		1,752

Cash flows used in financing activities
Dividends paid, net	(1,744	)	(1,752	)

Net cash used in financing activities	(1,744	)	(1,752	)

Increase (decrease) in cash and cash equivalents during the period	–		–

Cash and cash equivalents – Beginning of period	–		–

Cash and cash equivalents – End of period	–		–

KP Tissue Releases First Quarter 2025 Financial Results

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