North American Tissue News

KP Tissue Releases Fourth Quarter and Full Year 2020 Financial Results

“To further support our North American footprint and consumer demand, we recently announced a new $240 million investment at our Sherbrooke site.” – Dino Bianco, KP Tissue CEO

KP Tissue Inc. reports the Q4 2020 and full year 2020 financial and operational results of KPT and Kruger Products L.P.. 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-FromHome (AFH) market, and continues to expand in the U.S. Consumer market with the White Cloud® brand and premium private label products. KPT currently holds a 14.7% interest in KPLP.

“The year 2020 brought more than its share of challenges along with unprecedented market conditions that our team successfully tackled. Strong demand across all consumer product categories and market share momentum translated into a record high Adjusted EBITDA, while the Away-From-Home segment remained under pressure from the impact of COVID-19. Revenues increased a solid 11.7% to just over $1.5 billion while Adjusted EBITDA increased significantly by 36.4% to $197.8 million,” stated KP Tissue Chief Executive Officer, Dino Bianco.

“Under the most challenging circumstances, our team did amazing work completing TAD Sherbrooke on time and on budget. Production on the new TAD paper machine has commenced and, at this stage, is tracking ahead of the ramp-up curve. To further support our North American footprint and consumer demand, we recently announced a new $240 million investment at our Sherbrooke site. A new facility will house a Light-Dry-Crepe paper machine and facial tissue converting line while a new bathroom tissue converting line will be added to the existing TAD Sherbrooke facility. At maturity, the combined annual capacity of the two facilities will reach over 100,000 metric tonnes.

“We completed the initial 2-year phase of our OpEx program ahead of our annual cost saving targets. As indicated before, the program was instrumental in our ability to more effectively address strong market demand and volatility caused by the pandemic. Among the longer-term benefits, this program fosters a culture shift with a higher-level of employee engagement towards operational excellence.

“In 2021, we look forward to leveraging TAD Sherbrooke to further support our North American customers. We are closely monitoring the unprecedented increase in pulp prices and developing action plans to address. Finally, we will be continuing further investments in our brands, and leveraging our innovation and marketing strategy to reinforce our leadership position,” concluded Mr. Bianco.

OUTLOOK FOR Q1 2021

Demand for our products is expected to remain healthy and more stable in the Consumer segment. The AFH segment will however continue to see suppressed demand due to COVID-19 restrictions. For Q1 2021, with increased investments in marketing to support our brands, higher pulp prices and TAD Sherbrooke start-up costs, Adjusted EBITDA is expected to be in the same range as Q4 2020.

KPLP Q4 2020 FINANCIAL RESULTS

Revenue was $385.0 million in Q4 2020 compared to $348.1 million in Q4 2019, an increase of $36.9 million or 10.6%. Revenue continued to be favourably impacted primarily by COVID-19 buying activity, with volume increasing in the Consumer segment while decreasing in the AFH segment. Geographically, revenue increased in Canada by 9.9% and in the U.S. by 11.8%.

Cost of sales was $332.2 million in Q4 2020 compared to $294.1 million in Q4 2019, an increase of $38.1 million or 13.0%. The increase was primarily due to higher sales volume, additional manufacturing overhead costs, in part due to precautions taken in our manufacturing facilities as a result of COVID-19 and a one-time hourly workforce bonus, start-up costs related to the TAD Sherbrooke Project, increased outsourcing costs compared to Q4 2019 required to meet continuing demand, and increased freight costs. These increases were partially offset by slightly lower pulp costs. As a percentage of revenue, cost of sales was 86.3% in Q4 2020 compared to 84.5% in Q4 2019.

Selling, general and administrative (SG&A) expenses were $36.7 million in Q4 2020 compared to $26.4 million in Q4 2019, an increase of $10.3 million or 38.8%. The increase compared to Q4 2019 was primarily due to increased investment in marketing to support our brands, higher compensation and personnel related costs, and increased spending on Information Technology. As a percentage of revenue, SG&A expenses were 9.5% in Q4 2020 compared to 7.6% in Q4 2019.

Adjusted EBITDA was $36.2 million in Q4 2020 compared to $46.0 million in Q4 2019, a decrease of $9.8 million or 21.3%. The decrease was primarily due to higher cost of sales as described above along with higher SG&A costs, partially offset by the favourable sales impact.

Net loss was $28.5 million in Q4 2020 compared to a net loss of $6.1 million in Q4 2019, an increase in the loss of $22.4 million. The increase was primarily due to lower EBITDA, a higher loss on the change in amortized cost of the Partnership units liability and an impairment charge on AFH goodwill of $8.9 million, partially offset by a foreign exchange gain.

KPLP Q4 2020 FINANCING ACTIVITY

Total liquidity, representing cash and availability under the Senior Credit Facility within covenant limitations, was $316.8 million as of December 31, 2020. In addition, $32.3 million of cash was held by KPSI and committed to the TAD Sherbrooke Project.

KPLP 2020 FINANCIAL RESULTS

Revenue was $1,516.0 million in Fiscal 2020 compared to $1,434.1 million in Fiscal 2019, an increase of $81.9 million or 5.7%. Excluding revenue of $76.9 million from the divested Mexico business in Fiscal 2019, revenue increased by $158.8 million or 11.7%. Revenue was favourably impacted primarily by COVID-19 buying activity, with volume increasing in the Consumer segment in Canada and the U.S. and decreasing in the AFH segment.

Adjusted EBITDA was $197.8 million in Fiscal 2020 compared to $145.0 million in Fiscal 2019, an increase of $52.8 million or 36.4%. The increase was primarily due to favourable sales volume and mix impact, lower pulp prices, the OpEx program and the COVID-19 transition to a reduced sku production environment that increased production efficiency, partially offset by additional manufacturing overhead costs in part due to precautions taken in our manufacturing facilities as a result of COVID19 and a one-time hourly workforce bonus, start-up costs related to the TAD Sherbrooke Project, inflation, and higher SG&A costs.

Net income was $27.3 million in Fiscal 2020 compared to $2.1 million in Fiscal 2019, an increase of $25.2 million. The increase was primarily due to higher Adjusted EBITDA and a foreign exchange gain, partially offset by a higher loss on the change in amortized cost of the Partnership units liability, the impairment charge on AFH goodwill and higher depreciation expense.

KPT Q4 2020 FINANCIAL RESULTS

KPT had a net loss of $4.3 million in Q4 2020. Included in the net loss was $4.2 million representing KPT’s share of KPLP’s net loss and a dilution gain of $0.1 million, depreciation expense of $1.4 million related to adjustments to carrying amounts on acquisition and an income tax recovery of $1.2 million.

KPT 2020 FINANCIAL RESULTS

KPT had a net loss of 2.0 million in 2020. Included in net loss was $4.1 million representing KPT’s share of KPLP’s net income, a dilution gain of $0.6 million, depreciation expense of $5.5 million related to adjustments to carrying amounts on acquisition and income tax expense of $1.2 million.

Check the complete report in KP Tissue Inc. website.

Source
KP Tissue Inc.
Show More

Leave a Reply

Your email address will not be published.

Back to top button