KP Tissue Releases Second Quarter 2025 Financial Results

MISSISSAUGA, Ontario, Aug. 13, 2025 (GLOBE NEWSWIRE) -- KP Tissue Inc. (KPT) (TSX: KPT) reports the Q2 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®) 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 12.2% interest in Kruger Products. Kruger Products Q2 2025 Business and Financial Highlights Revenue was $536.1 million in Q2 2025 compared to $509.8 million in Q2 2024, an increase of $26.3 million or 5.2%. Adjusted EBITDA1 was $72.5 million in Q2 2025 compared to $65.3 million in Q2 2024, an increase of 11.0%. Net income was $22.1 million in Q2 2025 compared to $10.6 million in Q2 2024, an increase of $11.5 million. Declared a quarterly dividend of $0.18 per share to be paid on October 15, 2025. “We are pleased with our overall performance in the second quarter of 2025 with Adjusted EBITDA improving 11% year-over-year to $72.5 million,” stated KP Tissue’s Chief Executive Officer, Dino Bianco. “U.S. revenue growth slowed down in Q2 2025 due to front-loaded shipments made during the previous quarter to mitigate potential tariffs, along with softness in the AFH market. Nevertheless, U.S. sales have grown 12% after six months into 2025 and represent a key growth driver for Kruger Products. “In early July, we announced an additional investment of approximately US$35 million at our Memphis manufacturing facility to deploy a state-of-the-art, multi-purpose converting line for bathroom tissue and paper towels. This initiative is part of a broader strategy to drive efficiency and support our growing U.S. business,” Mr. Bianco added. Outlook for Q3 2025 We expect a stronger performance in Q3 2025, with Adjusted EBITDA1 in the range of $75 million to $80 million. Kruger Products Q2 2025 Financial Results Revenue was $536.1 million in Q2 2025 compared to $509.8 million in Q2 2024, an increase of $26.3 million or 5.2%. The increase in revenue was primarily due to higher sales volume in the Consumer segment and favourable selling prices across both segments, partially offset by somewhat lower sales volume in the AFH segment. Revenue was also favourably impacted by foreign exchange fluctuations on U.S. dollar sales. Cost of sales was $462.2 million in Q2 2025 compared to $431.2 million in Q2 2024, an increase of $31.0 million or 7.2%. 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 and unfavourable mill performance at our Memphis site, partially offset by lower manufacturing overhead costs due primarily to overhead cost absorption resulting from higher inventory levels in the quarter and costs related to the Q2 2024 labour disruption that did not recur in Q2 2025. Freight rates were higher compared to Q2 2024. As a percentage of revenue, cost of sales was 86.2% in Q2 2025 compared to 84.6% in Q2 2024. Selling, general and administrative (SG&A) expenses were $47.2 million in Q2 2025 compared to $42.5 million in Q2 2024, an increase of $4.7 million or 11.1%. The increase was primarily due to additional investment in IT and foreign exchange losses on working capital compared to gains in Q2 2024, partially offset by lower operational and corporate initiatives compared to the year ago quarter. As a percentage of revenue, SG&A expenses were 8.8% in Q2 2025 compared to 8.3% in Q2 2024. Adjusted EBITDA1 was $72.5 million in Q2 2025 compared to $65.3 million in Q2 2024, an increase of $7.2 million or 11.0%. 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 unfavourable mill performance at our Memphis site along with higher freight rates and SG&A expenses. Net income was $22.1 million in Q2 2025 compared to $10.6 million in Q2 2024, an increase of $11.5 million. The increase was primarily due to a foreign exchange gain and higher Adjusted EBITDA1, partially offset by higher depreciation expense resulting from the Sherbrooke Expansion Project and a one-time expense related to reducing the useful life of certain older assets in our Memphis site and higher interest expense and other finance costs. Kruger Products Q2 2025 Liquidity Total liquidity, representing cash and availability under the revolving credit agreements, was $293.1 million as of June 30, 2025. KPT Q2 2025 Financial Results KPT had net income of $2.6 million in Q2 2025. Included in net income was $2.8 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. Memphis Site Investment  During Q2 2025, Kruger Products completed the shutdown of the remaining LDC assets at its Memphis, TN site. Subsequent to the end of the quarter, on July 9, 2025, Kruger Products also announced that its subsidiary, K.T.G. (USA) Inc., will be investing approximately USD$35 million in a new converting line for bathroom tissue and paper towels at its site in Memphis, TN. These actions together will drive efficiency in our Memphis site by shutting down older assets, focusing on premium products supported by modern equipment and on-site warehousing. Dividends on Common Shares The Board of Directors of KPT declared a quarterly dividend of $0.18 per share to be paid on October 15, 2025 to shareholders of record at the close of business on September 30, 2025. Additional Information For additional information please refer to Management’s Discussion and Analysis (MD&A) of KPT and Kruger Products for the second quarter ended June 30, 2025 available on SEDAR+ at www.sedarplus.ca or our website at www.kptissueinc.com. Second Quarter Results Conference Call Information KPT will hold its second quarter conference call on Wednesday, August 13, 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, August 20, 2025 by dialing 1-888-660-6345 or 289-819-1450 and entering passcode 53401. The replay of the webcast will remain available on the website until midnight, August 20, 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 12.2% 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®. 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. 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 Q3 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 [email protected] INVESTORS: Doris Grbic Director, Investor Relations KP Tissue Inc. 437-882-2596 [email protected] ___________________ 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)         June 30, 2025     December 31, 2024       $     $   Assets       Current assets         Cash and cash equivalents 85,307     119,460     Restricted cash 76,325     48,375     Trade and other receivables 132,700     138,177     Receivables from related parties 80     80     Inventories 302,251     287,756     Income tax recoverable 4,007     3,208     Prepaid expenses 17,703     6,383       618,373     603,439   Non-current assets         Property, plant and equipment 1,449,424     1,509,592     Right-of-use assets 167,865     186,460     Other long-term assets 10     92     Pensions 91,235     92,661     Goodwill 152,021     152,021     Intangible assets 40,592     42,572     Deferred income taxes 10,249     10,500   Total assets 2,529,769     2,597,337             Liabilities       Current liabilities         Trade and other payables 311,583     346,264     Payables to related parties 12,473     17,829     Income tax payable -     3     Dividends payable 14,595     14,308     Current portion of long-term debt 79,981     54,168     Current portion of lease liabilities 41,003     40,156     Current portion of long-term payable to related party 5,800     5,800     Current portion of provisions 5,795     4,184       471,230     482,712   Non-current liabilities         Long-term debt 1,125,503     1,180,488     Long-term lease liabilities 154,513     165,563     Long-term payable to related party 27,147     31,925     Long-term provisions 7,872     9,398     Pensions 17,371     17,845     Post-retirement benefits 47,989     47,140   Total liabilities 1,851,625     1,935,071             Equity         Share capital 321,455     308,622     Contributed surplus 395,382     395,382     Deficit (162,522 )   (171,874 )   Accumulated other comprehensive income 88,346     100,177     Equity attributable to Kruger Products 642,661     632,307     Non-controlling interest 35,483     29,959   Total equity 678,144     662,266   Total equity and liabilities 2,529,769     2,597,337   Kruger Products Inc. Unaudited Condensed Consolidated Statements of Income (thousands of Canadian dollars)                   3-month period ended June 30, 2025     3-month period ended June 30, 2024   6-month period ended June 30, 2025     6-month period ended June 30, 2024   $     $   $     $                 Revenue 536,080     509,800   1,082,190     989,232                 Expenses               Cost of sales 462,204     431,228   913,187     825,231 Selling, general and administrative expenses 47,157     42,470   98,371     86,612 Restructuring costs 3,702     3   3,702     219                 Operating income 23,017     36,099   66,930     77,170                 Interest expense and other finance costs 21,306     16,855   42,257     33,135 Other expense (income) (19,941 )   3,945   (20,284 )   12,418                 Income before income taxes 21,652     15,299   44,957     31,617                 Current tax expense 1,078     612   1,808     1,381 Deferred tax expense (recovery) (5,612 )   3,008   83     8,479                 Income tax expense (recovery) (4,534 )   3,620   1,891     9,860                 Net income including non-controlling interest 26,186     11,679   43,066     21,757                 Net income attributable to non-controlling interest 4,039     1,087   5,524     2,209                 Net income attributable to Kruger Products 22,147     10,592   37,542     19,548 Kruger Products Inc. Unaudited Condensed Consolidated Statements of Cash Flows (thousands of Canadian dollars)                   3-month period ended June 30, 2025     3-month period ended June 30, 2024     6-month period ended June 30, 2025     6-month period ended June 30, 2024     $     $     $     $   Cash flows from (used in) operating activities               Net income including non-controlling interest 26,186     11,679     43,066     21,757   Items not affecting cash               Depreciation 43,727     27,675     73,616     52,127   Amortization 2,008     1,496     3,980     2,561   Loss (gain) on sale of property, plant and equipment -     (2 )   (5 )   269   Loss on disposal of leased assets 23     (632 )   23     -   Foreign exchange loss (gain) (19,941 )   3,945     (20,284 )   13,299   Interest expense and other finance costs 21,306     16,855     42,257     33,135   Pension and post-retirement benefits 2,828     2,708     5,573     5,284   Provisions 1,065     1,045     3,929     2,118   Income tax expense (4,534 )   3,620     1,891     9,860   Loss on sale of non-financial assets -     -     -     12   Total items not affecting cash 46,482     56,710     110,980     118,665                   Net change in non-cash working capital (29,511 )   40,383     (54,568 )   (45,687 ) Contributions to pension and post-retirement benefit plans (1,006 )   (1,111 )   (2,015 )   (2,264 ) Provisions paid (4,024 )   (3,225 )   (4,024 )   (3,695 ) Income tax payments, net (2,465 )   (2,101 )   (1,811 )   (2,441 ) Net cash from (used in) operating activities 35,662     102,335     91,628     86,335                   Cash flows from (used in) investing activities               Purchases of property, plant and equipment (7,717 )   (3,923 )   (9,862 )   (7,964 ) Purchases of property, plant and equipment related to the               Sherbrooke Expansion Project (1,991 )   (43,554 )   (17,377 )   (89,427 ) Interest paid on credit facilities related to the Sherbrooke                Expansion Project -     (2,673 )   -     (2,789 ) Government assistance received -     -     3,150     -   Purchases of software (1,134 )   (240 )   (1,094 )   (287 ) Proceeds on sale of property, plant and equipment -     32     -     28   Net cash used in investing activities (10,842 )   (48,778 )   (25,183 )   (100,439 )                 Cash flows from (used in) financing activities               Proceeds from long-term debt 9,000     38,568     31,188     113,432   Repayment of long-term debt (22,507 )   (14,046 )   (32,505 )   (21,193 ) Payment of deferred financing fees 39     (365 )   7     (1,229 ) Payment of lease liabilities (7,714 )   (8,622 )   (16,737 )   (17,272 ) Change in restricted cash (25,961 )   (29,786 )   (27,950 )   (31,198 ) Interest paid on long-term debt (18,995 )   (14,516 )   (31,421 )   (23,379 ) Payment to related party (5,800 )   (5,800 )   (5,800 )   (5,800 ) Dividends paid, net (8,069 )   (7,804 )   (16,069 )   (9,557 ) Net cash from (used in) financing activities (80,007 )   (42,371 )   (99,287 )   3,804                   Effect of exchange rate changes on cash and cash               equivalents held in foreign currency (1,284 )   428     (1,311 )   1,726                   Increase (decrease) in cash and cash equivalents                       during the period (56,471 )   11,614     (34,153 )   (8,574 )                 Cash and cash equivalents - Beginning of period 141,778     117,120     119,460     135,728                   Cash and cash equivalents - End of period 85,307     127,154     85,307     127,154   Kruger Products Inc. Unaudited Segment and Geographic Results (thousands of Canadian dollars)                   3-month period ended June 30, 2025     3-month period ended June 30, 2024     6-month period ended June 30, 2025     6-month period ended June 30, 2024     $     $     $     $                   Segment Information                               Segment Revenue               Consumer 449,222     421,925     914,412     826,214   AFH 86,858     87,875     167,778     163,018                   Revenue from external customers 536,080     509,800     1,082,190     989,232                   Other segment items                               Consumer 380,038     361,628     769,176     703,255   AFH 77,895     78,306     156,026     145,679   Corporate and other costs 5,669     4,595     8,743     7,940                   Total other segment items 463,602     444,529     933,945     856,874                   Adjusted EBITDA               Consumer 69,184     60,297     145,236     122,959   AFH 8,963     9,569     11,752     17,339   Corporate and other costs (5,669 )   (4,595 )   (8,743 )   (7,940 )                 Total Adjusted EBITDA 72,478     65,271     148,245     132,358                   Reconciliation to net income:                               Depreciation and amortization 45,736     29,171     77,596     54,688   Interest expense and other finance costs 21,306     16,855     42,257     33,135   Loss (gain) on sale of property, plant and equipment 23     (2 )   18     269   Loss on sale of non-financial assets -     -     -     12   Change in amortized cost of Partnership unit liability -     -     -     (881 ) Restructuring costs, net 3,702     3     3,702     219   Foreign exchange loss (gain) (19,941 )   3,945     (20,284 )   13,299                   Income before income taxes 21,652     15,299     44,956     31,617                   Income tax expense (4,534 )   3,620     1,891     9,860                   Net income including non-controlling interest 26,186     11,679     43,065     21,757                   Geographic Revenue                               Canada 299,654     278,969     586,177     545,141   US 236,426     230,831     496,013     444,091                   Total revenue 536,080     509,800     1,082,190     989,232   KP Tissue Inc. Unaudited Condensed Statements of Financial Position (thousands of Canadian dollars)           June 30, 2025   December 31, 2024   $   $ Assets               Current assets       Dividends receivable 1,800     1,798     1,800     1,798           Non-current assets       Investment in associate 68,718     69,517           Total assets 70,518     71,315           Liabilities               Current liabilities       Dividend payable 1,800     1,798           Total liabilities 1,800     1,798           Equity               Common shares 22,870     22,762   Contributed surplus 144,819     144,819   Deficit (115,830 )   (116,673 ) Accumulated other comprehensive income 16,859     18,609           Total equity 68,718     69,517           Total liabilities and equity 70,518     71,315   KP Tissue Inc. Unaudited Condensed Statements of Income (thousands of Canadian dollars, except share and per share amounts)                   3-month period ended June 30, 2025     3-month period ended June 30, 2024     6-month period ended June 30, 2025     6-month period ended June 30, 2024     $     $     $     $                   Share of income 2,755     1,344     4,672     2,499   Depreciation of fair value increments (279 )   (283 )   (563 )   (569 )                 Equity income 2,476     1,061     4,109     1,930   Dilution gain 95     131     209     393                   Net income 2,571     1,192     4,318     2,323                   Basic earnings per share 0.26     0.12     0.43     0.23                   Weighted average number of shares outstanding 9,999,883     9,973,312     9,996,544     9,970,470   KP Tissue Inc. Unaudited Condensed Statements of Cash Flows (thousands of Canadian dollars)                   3-month period ended June 30, 2025     3-month period ended June 30, 2024     6-month period ended June 30, 2025     6-month period ended June 30, 2024     $     $     $     $   Cash flows from (used in) operating activities               Net income 2,571     1,192     4,318     2,323   Items not affecting cash               Equity income (2,476 )   (1,061 )   (4,109 )   (1,930 ) Dilution gain (95 )   (131 )   (209 )   (393 ) Total items not affecting cash (2,571 )   (1,192 )   (4,318 )   (2,323 )                 Decrease in payable to investee -     (200 )   -     (284 ) Tax refunds, net -     200     -     284                   Net cash from (used in) operating activities -     -     -     -                   Cash flows from investing activities               Dividends received, net 1,746     1,744     3,490     3,496                   Net cash from investing activities 1,746     1,744     3,490     3,496                   Cash flows used in financing activities               Dividends paid, net (1,746 )   (1,744 )   (3,490 )   (3,496 )                 Net cash used in financing activities (1,746 )   (1,744 )   (3,490 )   (3,496 )                 Increase (decrease) in cash and cash equivalents                       during the period -     -     -     -                   Cash and cash equivalents - Beginning of period -     -     -     -                   Cash and cash equivalents - End of period -     -     -     -