KP Tissue Releases Third Quarter 2016 Financial Results

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Mississauga (ON), November 3, 2016 KP Tissue Inc. (KPT) (TSX: KPT) reports the Q3 2016 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 16.1% interest in KPLP.

KPLP Q3 2016 Business and Financial Highlights

  • Revenue increased by 6.5% to $312.8 million in Q3 2016 compared to Q3 2015
  • Adjusted EBITDA was $45.7 million in Q3 2016 compared to $34.8 million in Q3 2015, up 31.3%
  • Continue to be the market share leader in Canada
  • Declared a quarterly dividend of $0.18 per share to be paid on January 16, 2017

"For the third quarter, we recorded very solid seasonal performance with Adjusted EBITDA of $45.7 million. The Consumer segment drove these results with higher volume, improved pricing, and favourable product mix including higher TAD product sales, as well as the benefits from strong manufacturing performance and operating efficiencies, and cost reduction initiatives," said Mario Gosselin, CEO of KP Tissue and KPLP.

"Starting last year, we invested more aggressively in CAPEX for projects dedicated to capacity growth and cost reduction. We are now starting to get the benefits of these strategic investments. "With regard to our outlook for the fourth quarter of 2016, we anticipate an increase in Adjusted EBITDA over last year and a seasonal decline when compared with the third quarter of 2016," concluded Mr. Gosselin.

KPLP Q3 2016 Financial Results

Revenue in Q3 2016 was $312.8 million, compared to $293.6 million in Q3 2015, an increase of $19.2 million or 6.5%. The increase in revenue was primarily due to higher sales volumes and a selling price increase in Canada.

Cost of sales in Q3 2016 increased to $256.8 million compared to $248.0 million in Q3 2015, primarily due to higher sales volumes and increased warehousing costs, somewhat offset by cost reduction initiatives and the impact of capital projects. As a percentage of revenue, cost of sales were 82.1% in Q3 2016 compared to 84.5% in Q3 2015.

Selling, general and administrative (SG&A) expenses in Q3 2016 were $22.7 million compared to $21.6 million in Q3 2015. The increase was primarily due to higher selling expenses related to higher sales volumes. As a percentage of revenue, SG&A expenses decreased slightly to 7.3% in Q3 2016 from 7.4% in Q3 2015.

Adjusted EBITDA in Q3 2016 was $45.7 million compared to $34.8 million in Q3 2015 primarily due to higher sales volume and better margins from improved pricing, lower overall costs and improved mix of products sold. Adjusted EBITDA attributable to the sale of KTG's TAD products was $12.7 million in Q3 2016 compared to $11.2 million in Q3 2015.

Net income in Q3 2016 was $21.6 million compared to a net loss of $5.9 million in Q3 2015 primarily due to higher Adjusted EBITDA of $10.9 million and a decrease in interest expense of $14.1 million. Also there was a decrease in the unrealized foreign exchange loss, a change in the amortized cost of the Partnership units liability and in restructuring costs, an increase in depreciation expense, and a decrease in the recovery of non-financial assets.

Total liquidity, representing cash and cash equivalents and availability under the credit line within covenant limitations, was $90.6 million as of September 25, 2016 compared to $77.8 million as of June 26, 2016.

KPT Q3 2016 Financial Results

KPT had net income of $0.8 million in Q3 2016. Included in the net income was $3.5 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 $1.3 million.

Dividends on Common Shares

The Board of Directors of KPT declared a quarterly dividend of $0.18 per share to be paid on January 16, 2017 to shareholders of record at the close of business on December 30, 2016.

Additional Information

For additional information please refer to Management's Discussion and Analysis (MD&A) of KPT and KPLP for the third quarter ended September 25, 2016 available on SEDAR at www.sedar.com or our website at www.kptissueinc.com.

Third Quarter Results Conference Call Information

KPT will hold its third quarter conference call on Thursday, November 3, 2016 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, December 2, 2016 by dialing 800-585-8367 or 416-621-4642 and entering passcode 90143905.
The replay of the webcast will remain available on the website until midnight, December 2, 2016.

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 16.1% 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 seven production facilities in North America, including five FSC® CoC- certified plants (FSC® C104904), four of which are located in Canada and one in the U.S. For more information visit www.krugerproducts.ca.

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Source: KP Tissue

 

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