KP Tissue Releases Fourth Quarter and Full Year 2021 Financial Results

KP Tissue Inc. (KPT) reports the Q4 2021 and full year 2021 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, White Swan and Bonterra) 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 14.4% interest in KPLP.

Here are the highlights from the fourth quarter of 2021 for KPLP:

• Revenue was $424.1 million in Q4 2021 compared to $385.0 million in Q4 2020, an increase of $39.1 million or 10.2 percent.
• Adjusted EBITDA was $38.3 million in Q4 2021, compared to $36.2 million in Q4 2020, an increase of 5.8 percent.
• Net income was $42.3 million in Q4 2021, compared to a loss of $28.5 million in Q4 2020, an increase of $70.8 million.
• Announced additional investment of $111.5 million in the Sherbrooke Expansion Project, for a total investment of $351.5 million.
• Declared a quarterly dividend of $0.18 per share to be paid on April 15, 2022.

The highlights for the full year of 2021 for KPLP are as follows:

• Revenue was $1,465.2 million in 2021 compared to $1,516.0 million in 2020, a decrease of $50.8 million or 3.4 percent.
• Adjusted EBITDA was $153.4 million in 2021, down from $197.8 million in 2020, a decrease of 22.4 percent.
• Net income was $42.0 million in 2021, up from $27.3 million in 2020, an increase of $14.7 million.

“We are pleased by our performance in the face of volatile market conditions and unprecedented headwinds in 2021 and contrasted against an extraordinary market environment in 2020. The first half of 2021 was marked by destocking challenges due to the COVID-19 pandemic while mounting supply chain and inflationary pressures affected both our consumer and AwayFrom-Home segments in the latter part of the year. We did regain sales momentum in the second half of 2021 and closed the fourth quarter on a high note with more than 10 percent revenue growth and improved adjusted EBITDA,” stated KP Tissue’s CEO, Dino Bianco.

Bianco added, “Against this backdrop, we continued to invest in the future through market-driven innovations. The successful launch of SpongeTowels Ultra Pro in 2021 delivered significant share gains in the paper towel category. This year we have introduced a new sustainably focused brand, Bonterra, to offer consumers a more environmentally-conscious option with unique features addressing packaging, recycled fibre, a neutral carbon footprint and partnerships with 4Ocean and One Tree Planted. In addition, we have upgraded Cashmere and Purex UltraLuxe to offer our softest and most luxurious bathroom tissue ever.”

“In terms of network modernization, Year 1 of TAD Sherbrooke proved to be a major success with a ramp-up curve well above our expectations. We also announced the Sherbrooke expansion project early into 2021 and followed up with an incremental investment at the end of the year to double production capacity to over 60,000 metric tonnes by 2024. The project’s total value of approximately $350 million will effectively create a tissue hub in Canada using both TAD and conventional technologies.”

“Looking ahead to 2022, we intend to leverage our ongoing investments, innovations and share gains to drive revenue growth, while pricing the business and managing costs to offset inflation,” concluded Bianco.

OUTLOOK FOR FIRST QUARTER OF 2022

The company anticipates Q1 sales momentum to continue in both AFH and Consumer as customer and consumer behavior returns to more pre-COVID levels. However, cost inflation across the supply chain is expected to continue impacting results in the near term, therefore Q1 2022 Adjusted EBITDA is expected to be in the range of $30-$35 million.