KP Tissue (KPT) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached CAD 509.8 million, up 9.3% year-over-year and 6.3% sequentially, driven by higher sales volume, favorable mix, and pricing in both Consumer and Away-from-Home segments.

• Adjusted EBITDA rose 18.6% year-over-year to CAD 65.3 million, with a margin of 12.8%, though it declined 2.7% sequentially.

• Net income declined to CAD 10.6 million from CAD 14.5 million in Q2 2023, mainly due to higher FX losses and depreciation.

• Maintained leadership in Canadian facial tissue (42.8% share), and top positions in bathroom tissue and paper towels.

• Resolved labor disruption at Crabtree, Quebec, with a new five-year collective bargaining agreement.

Financial highlights

• Revenue grew 9.3% year-over-year to CAD 509.8 million, with Canada up 5.2% and U.S. up 14.8%.

• Adjusted EBITDA margin improved to 12.8% from 11.8% in Q2 2023.

• Net income margin was 2.1% in Q2 2024, down from 3.1% in Q2 2023.

• Cash position at quarter-end: CAD 127.2 million; total liquidity: CAD 428.7 million.

• CapEx for Q2: CAD 50.4 million (CAD 46.2 million for Sherbrooke expansion); YTD CapEx: CAD 100.4 million.

Outlook and guidance

• Announced consumer segment price increase effective September to offset escalating pulp prices.

• Q3 2024 Adjusted EBITDA expected to be in line with Q2, despite higher pulp costs and labor settlement impacts.

• Sherbrooke paper machine startup on track for Q4 2024, expected to enhance internal supply and margins.

• 2024 CAPEX anticipated at CAD 200–220 million, with significant investment in Sherbrooke Expansion.