MISSISSAUGA, Ontario (News release) -- KP Tissue Inc. reports the Q1 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 BonterraTM) 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 12.3% interest in Kruger Products.
Kruger Products Q1 2025 Business and Financial Highlights
- Revenue was $546.1 million in Q1 2025 compared to $479.4 million in Q1 2024, an increase of $66.7 million or 13.9%.
- Adjusted EBITDA1 was $75.8 million in Q1 2025 compared to $67.1 million in Q1 2024, an increase of 12.9%.
- Net income was $15.4 million in Q1 2025 compared to net income of $9.0 million in Q1 2024, an increase of $6.4 million.
- Declared a quarterly dividend of $0.18 per share to be paid on July 15, 2025.
"We are pleased with our strong first-quarter results, especially considering the uncertain and volatile economic environment," stated KP Tissue's Chief Executive Officer, Dino Bianco. "Adjusted EBITDA reached $75.8 million in the quarter on revenue that increased nearly 14% year-over-year. Revenue for the Consumer segment was driven by higher sales volume in Canada and in the U.S., and improved pricing. Our Away-from-Home business, which has been rebranded Kruger PRO, also generated higher sales volume than the same period last year, although profitability was unfavourably impacted by freight costs, warehousing costs and the purchase of external products. We expect that our newly deployed LDC paper machine in Sherbrooke will essentially meet all in-house paper requirements beginning in the second quarter of 2025. The LDC paper machine and new facial tissue converting line, part of the overall Sherbrooke Expansion Project, have exceeded start-up expectations, while TAD paper machine and converting output remains strong year-over-year."
"Given the changing tariff announcements affecting North America, the impact to our business in the first quarter was not significant. We continue to closely monitor the impact of potential tariffs on our business and have developed contingency plans to mitigate any financial risk," Mr. Bianco added.
Outlook for Q2 2025
Assuming a similar tariff environment, we expect Q2 2025 Adjusted EBITDA1 to be in the range of $70 million to $75 million.
Kruger Products Q1 2025 Financial Results
Revenue was $546.1 million in Q1 2025 compared to $479.4 million in Q1 2024, an increase of $66.7 million or 13.9%. The increase in revenue was primarily due to higher sales volume in the Consumer segment and favourable selling prices across both segments. Revenue was also favourably impacted by foreign exchange fluctuations on U.S. dollar sales.
Cost of sales was $451.0 million in Q1 2025 compared to $394.0 million in Q1 2024, an increase of $57.0 million or 14.5%. 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, partially offset by lower manufacturing overhead costs due primarily to overhead cost absorption resulting from higher inventory levels in the quarter. Freight costs were higher compared to Q1 2024, including the impact of tariffs, while warehousing costs increased as a result of handling costs related to higher sales volume. As a percentage of revenue, cost of sales was 82.6% in Q1 2025 compared to 82.2% in Q1 2024.
Selling, general and administrative (SG&A) expenses were $51.2 million in Q1 2025 compared to $44.1 million in Q1 2024, an increase of $7.1 million or 16.1%. The increase was primarily due to additional investment in advertising and promotion and IT, along with additional headcount costs to support growth, resulting in lower consulting costs, and higher selling expense related to sales volume, partially offset by lower operational and corporate initiatives compared to the year ago quarter and lower bad debt expenses. As a percentage of revenue, SG&A expenses were 9.4% in Q1 2025 compared to 9.2% in Q1 2024.
Adjusted EBITDA1 was $75.8 million in Q1 2025 compared to $67.1 million in Q1 2024, an increase of $8.7 million or 12.9%. 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 freight costs as described above, and warehousing and SG&A expenses.
Net income was $15.4 million in Q1 2025 compared to $9.0 million in Q1 2024, an increase of $6.4 million. The increase was primarily due to a higher foreign exchange gain and higher Adjusted EBITDA1, partially offset by higher depreciation expense and higher interest expense and other finance costs.
Kruger Products Q1 2025 Liquidity
Total liquidity, representing cash and availability under the revolving credit agreements, was $356.8 million as of March 31, 2025. In addition, $4.4 million of cash was held for the Sherbrooke Expansion Project.
KPT Q1 2025 Financial Results
KPT had net income of $1.7 million in Q1 2025. Included in the net income was $1.9 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.
Dividends on Common Shares
The Board of Directors of KPT declared a quarterly dividend of $0.18 per share to be paid on July 15, 2025 to shareholders of record at the close of business on June 30, 2025.
Additional Information
For additional information please refer to Management's Discussion and Analysis (MD&A) of KPT and Kruger Products for the first quarter ended March 31, 2025 available on SEDAR+ at www.sedarplus.ca or our website at www.kptissueinc.com.
