KP Tissue Releases Second Quarter 2017 Financial Results

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(R) 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.
more detail at:  http://ir.kptissueinc.com/releasedetail.cfm?ReleaseID=1036669

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