KP Tissue reports the Q4 and full year 2015 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 16.3% interest in KPLP.
KPLP Q4 2015 Business and Financial Highlights
– Revenue increased by 7.9% to $300.6 million in Q4 2015 compared to Q4 2014
– Adjusted EBITDA was $30.3 million in Q4 2015, consistent with Q4 2014 despite significant cost pressures
– TAD Product Q4 2015 Adjusted EBITDA increased by $4.1 million year-over-year to $13.2 million
– Market share leader in Canada with Q4 growth
– Declared a quarterly dividend of $0.18 per share to be paid on April 15, 2016
KPLP Full Year 2015 Business and Financial Highlights
– Revenue increased by 8.9% to $1,138.9 million in 2015 compared to $1,046.2 million in 2014
– Adjusted EBITDA of $126.4 million in 2015, up from $121.6 million in 2014
– TAD Product 2015 Adjusted EBITDA increased by $18.4 million year-over-year to $45.3 million
– Redeemed $175 million of senior notes by increasing existing credit facility to $300 million, resulting in interest expense savings of approximately $8 million annually at expected interest rates
“In Fiscal 2015, the solid performance of our U.S. Business combined with cost reduction initiatives, was masked by the significant negative impact of the lower Canadian dollar. This is reflected in higher commodity prices which impacted our Canadian business results,” said Mario Gosselin, CEO of KP Tissue and Kruger Products L.P.”
“We are pleased with the progress of our TAD Products for their third full year of commercialization considering Adjusted EBITDA of $45 million. We remain confident that North American industry demand will absorb incremental capacity in upcoming years and provide us with solid growth opportunities in the private label market.
“The Away-from-Home segment reported a solid Adjusted EBITDA improvement over the prior year reflecting improved volume in the base business combined with cost reduction initiatives and also benefits from the Metro Paper acquisition.
“From a market share perspective in the Canadian Consumer segment, we maintained our momentum and continued to be the clear overall industry leader. Despite efforts to mitigate higher input costs, the pressure exercised by the weak Canadian dollar on commodity prices has had a significant and increasing negative impact on our Adjusted EBITDA over the past several quarters. In the context of a competitive and price sensitive environment, we recently announced a price increase effective at the end of April 2016 to our Canadian retailers to partially offset the rise of raw material prices.
“We expect first quarter Adjusted EBITDA for Fiscal 2016 to be below the same quarter last year, reflecting the ongoing impact of the weak Canadian dollar. In 2016, we plan to significantly invest in our operations to improve manufacturing costs with CAPEX in the range of $65-$70 million. Despite some important headwinds, we have an action plan in place to improve manufacturing costs and support growth opportunities,” concluded Mr. Gosselin.