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MISSISSAUGA, ONTARIO--Aug. 9, 2017-- - KP Tissue Inc. (KPT) (TSX:KPT) reports the Q2 2017 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 16.0% interest in KPLP.

KPLP Q2 2017 Business and Financial Highlights

Revenue increased by 6.3% to $314.4 million in Q2 2017 compared to Q2 2016
Adjusted EBITDA was $37.3 million in Q2 2017 compared to $35.9 million in Q2 2016, up 3.9%
TAD Products sales and profits continue to be strong, in line with previously set targets
AFH business segment improved profitability
Declared a quarterly dividend of $0.18 per share to be paid on October 16, 2017

We are pleased with our second quarter Adjusted EBITDA performance of $37.3 million, despite the continued upward trend of pulp market prices to near peak levels in Canadian dollars. Supported by new customers and higher manufacturing efficiency, TAD products sales and profits continue to meet our targets in the U.S., while the Away-from-Home business started to get the benefits from new production lines," said Mario Gosselin, CEO of KP Tissue and KPLP.

"We are pleased by the progress achieved in Crabtree with our new paper machine project, representing a total investment of $55 million. The project is on time and on budget, and in the third quarter we will start the commissioning process and will incur some start-up costs. Considering the commercial ramp-up phase in 2017, we expect to achieve a positive contribution from the project in the first quarter of 2018.

"A selling price increase to our Canadian retail customers was announced in late July 2017 and will take effect in the fourth quarter. This price increase will partially offset a double digit increase in pulp market prices over the past year as well as increases in other commodity costs in Canadian dollars.

"Adjusted EBITDA for Q3 2017 is expected to decrease over Q3 2016 due to higher input costs but increase sequentially over Q2 2017 due to higher promotional activities in Q3," concluded Mr. Gosselin.

KPLP Q2 2017 Financial Results

Revenue in Q2 2017 was $314.4 million, compared to $295.8 million in Q2 2016, an increase of $18.6 million or 6.3%. The increase in revenue was primarily due to higher sales volume and the favourable impact of foreign exchange on U.S. dollar sales.

Cost of sales in Q2 2017 increased to $267.1 million, compared to $249.9 million in Q2 2016, primarily due to higher sales volumes, an increase in fibre and natural gas prices and the unfavourable impact of foreign exchange on U.S. dollar denominated costs, as well as higher freight and warehousing costs, partially offset by cost reduction initiatives and the impact of capital projects. As a percentage of revenue, cost of sales were 85.0% in Q2 2017 compared to 84.5% in Q2 2016.

Selling, general and administrative (SG&A) expenses in Q2 2017 were $22.5 million, compared to $22.0 million in Q2 2016. The increase was primarily due to higher selling expenses related to higher sales volume and the unfavourable impact of foreign exchange. As a percentage of revenue, SG&A expenses were 7.2% in Q2 2017, compared to 7.4% in Q2 2016.

Adjusted EBITDA in Q2 2017 was $37.3 million, compared to $35.9 million in Q2 2016, primarily due to increased sales volume and the benefit of cost reduction initiatives and capital projects, partially offset by higher commodity, logistics and SG&A costs and the unfavourable impact of foreign exchange.

Net income in Q2 2017 was $9.9 million, compared to $12.0 million in Q2 2016, primarily due to an increase in the change in amortized cost of Partnership units liability of $2.5 million and an increase in tax expense of $1.3 million. These increases were partially offset by higher Adjusted EBITDA of $1.4 million.

Total liquidity, representing cash and cash equivalents and availability under the credit line within covenant limitations, was $80.3 million as of June 25, 2017, compared to $88.6 million as of March 26, 2017.

KPT Q2 2017 Financial Results

KPT incurred a net loss of $0.6 million in Q2 2017. Included in the net loss was $1.6 million representing KPT's share of KPLP's income. The income was reduced by depreciation expense of $1.5 million related to adjustments to carrying amounts on acquisition and income tax expense of $0.8 million.

Dividends on Common Shares

The Board of Directors of KPT declared a quarterly dividend of $0.18 per share to be paid on October 16, 2017 to shareholders of record at the close of business on September 29, 2017.

Additional Information

For additional information please refer to Management's Discussion and Analysis (MD&A) of KPT and KPLP for the second quarter ended June 25, 2017 available on SEDAR at www.sedar.com or our website at www.kptissueinc.com.

Second Quarter Results Conference Call Information

KPT will hold its second quarter conference call on Wednesday, August 9, 2017 at 8:30 a.m. Eastern Time.

Via telephone: 1-877-223-4471 or 647-788-4922

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, September 9, 2017 by dialing 800-585-8367 or 416-621-4642 and entering passcode 47442643.

The replay of the webcast will remain available on the website until midnight, September 9, 2017.

About KP Tissue Inc. (KPT)

KPT was created to acquire, and its business is limited to holding, a limited partnership interest in KPLP, which is accounted for as an investment on the equity basis. KPT currently holds a 16.0% interest in KPLP. For more information visit www.kptissueinc.com.

About Kruger Products L.P. (KPLP)

KPLP is Canada's leading manufacturer of quality tissue products for household, industrial and commercial use. KPLP serves the Canadian consumer market with such well-known brands as Cashmere®, Purex®, SpongeTowels®, Scotties® and White Swan®. In the U.S., KPLP 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. KPLP has approximately 2,500 employees and operates eight FSC® COC-certified (FSC® C-104904) production facilities in North America. For more information visit www.krugerproducts.ca.

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