Kp Tissue, Inc. · TSX:KPT
Kp Tissue — Q1 2017 Earnings Presentation
21 slides from Kp Tissue's earnings presentation, May 4, 2017
Slide 1: Q1 2017 Financial Results
Q1 2017 FINANCIAL RESULTS May 4, 2017
Slide 2: Forward-Looking and Cautionary Statements
FORWARD-LOOKING AND CAUTIONARY STATEMENTS This Presentation on behalf of KP Tissue Inc. (the “Corporation” or “KPT”) does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for any securities nor shall it or any part of it form the basis of or be relie
Slide 3: Corporate Structure
CORPORATE STRUCTURE * *As of March 26, 2017 (16.1% as of May 3, 2017) 3
Slide 4: Q1 2017 Highlights
Q1 2017 HIGHLIGHTS • Q1 2017 revenue of $289.3 million, up 3.4% over Q1 2016, driven primarily by higher sales volume, and favourable selling prices in Canada, partially offset by unfavourable F/X on U.S. sales • Revenues increased in both Canada and the U.S. 1 • Adjusted EBITDA of $33.8 million, up
Slide 5: Canada's Leading Tissue Company
CANADA’S LEADING TISSUE COMPANY Bathroom Tissue Facial Tissue Paper Towel #1 #1 #2 37.5% 30.9% 23.6% 20.1% 21.1% 10.7% 10.4% 0.8% 31.9% 3.9% 17.9% 2.7% Source: Nielsen; dollar market share for the 52-week period ended April 1, 2017. 5
Slide 6: Brand Leadership Position
BRAND LEADERSHIP POSITION #1 Bathroom Tissue #1 Facial Tissue #2 Paper Towel 37.5% 33.2% 24.9% 24.7% 32.7% 24.3% 37.1% 31.9% 24.1% 23.6% 31.4% 31.4% 23.7% 36.2% 30.9% 30.2% 34.8% 35.0% 34.7% 35.0% 21.9% 2011 2012 2013 2014 2015 2016 2017 2011 2012 2013 2014 2015 2016 2017 2011 2012 2013 2014 2015 20
Slide 7: Pulp Input Prices
PULP INPUT PRICES • Q1 pulp prices (NBSK) rose sequentially compared to Q4 2016, and also year-over-year, in both USD and CAD, while Eucalyptus prices (BEK) were sequentially higher but slightly lower than Q1 last year. Overall higher pulp prices will have further impact starting in Q2 2017. • Based
Slide 8: Quarterly Financial Summary
QUARTERLY FINANCIAL SUMMARY % Change (C$ millions, unless otherwise noted) Q1 2017 Q4 2016 Q1 2016 Y/Y Q/Q # of days in Qtr 85 97 87 (2.3)% (12.4)% Revenue 289.3 339.6 279.7 3.4% (14.8)% Cost of Sales 244.3 284.2 240.7 Gross Profit 45.0 55.4 39.0 15.4% (18.8)% Gross Margin 15.6% 16.3% 14.0% Adjusted
Slide 9: Quarterly Segmented Results
QUARTERLY SEGMENTED RESULTS % Change (C$ millions, unless otherwise noted) Q1 2017 Q4 2016 Q1 2016 Y/Y Q/Q # of days in Qtr 85 97 87 (2.3)% (12.4)% Segmented Revenue Consumer 238.9 278.0 228.1 4.7% (14.1)% AFH 48.7 59.5 49.1 (0.8)% (18.2)% Other 1.7 2.1 2.5 Total segment revenue 289.3 339.6 279.7 3.
Slide 10: Q1 2017 Revenue Compared to Q1 2016
Q1 2017 REVENUE COMPARED TO Q1 2016 • Q1 2017 revenue increased by $9.6 million or 3.4% over Q1 2016 primarily due to the following factors: – Consumer segment revenue increased $10.8 million or 4.7% driven by sales volume growth in Canada and the U.S., and favourable selling prices in Canada – AFH
Slide 11: Q1 2017 Adjusted EBITDA Compared to Q1 2016
Q1 2017 ADJUSTED EBITDA COMPARED TO Q1 2016 • Q1 2017 Adjusted EBITDA increased by $5.7 million or 20.3% to $33.8 million primarily due to the following factors: – Higher sales volume in the Consumer segment – Favourable impact of the prior year’s selling price increase in the Canadian Consumer busi
Slide 12: Q1 2017 Revenue Compared to Q4 2016
Q1 2017 REVENUE COMPARED TO Q4 2016 • Q1 2017 revenue decreased by $50.3 million or 14.8% over Q4 2016, primarily due to 12 fewer sales days in Q1 2017 (impact of 12.4%): – Consumer segment revenue decreased by $39.1 million or 14.1% – AFH segment revenue decreased by $10.8 million or 18.2%, reflect
Slide 13: Q1 2017 Adjusted EBITDA Compared to Q4 2016
Q1 2017 ADJUSTED EBITDA COMPARED TO Q4 2016 • Q1 2017 Adjusted EBITDA decreased by $9.1 million over Q4 2016 due to the combination of the following factors: – Lower sales volumes, due primarily to 12 fewer sales days in Q1 2017 – Higher pulp prices – Partially offset by lower SG&A costs • Gross mar
Slide 14: Balance Sheet
BALANCE SHEET (C$ millions, unless otherwise noted) Q1 2017 Q4 2016 Cash & bank indebtedness 34.8 27.5 Current portion of long-term debt 8.8 8.9 Long-term debt 443.5 415.4 Net Debt 417.5 396.8 LTM Adjusted EBITDA 158.2 152.5 Net Debt/LTM Adjusted EBITDA 2.6 2.6 14
Slide 15: CAPEX
CAPEX § Q1 2017 CAPEX of $12.7 million, down from $16.3 million in Q1 2016 due to project timing § 2017 focus on high return CAPEX projects – total estimated at approximately $75-$85 million CAPEX, excluding TAD Project CAPEX COMPONENTS Target $90 Millions $75-$85M Capacity/Growth 50% $70 Cost reduc
Slide 16: PM8 - Crabtree
PM8 - CRABTREE § Paper machine in Crabtree primarily dedicated to AFH § Total project CAPEX of $55 million with approximately $25 million of CAPEX remaining as of March 31, 2017. Project on time and on budget. § PM8 to be operational starting in Q4 2017 and positive contribution expected in Q1 2018
Slide 17: TAD Product
TAD PRODUCT ADJUSTED EBITDA from TAD products 15.7 16.0 (In millions of Cdn. dollars) 13.8 14.0 13.2 12.7 12.0 12.0 11.2 11.2 10.5 9.7 10.0 9.1 7.8 8.0 6.5 6.0 4.0 3.5 2.0 1.1 - FY2012 FY 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 (2.
Slide 18: White Cloud
WHITE CLOUD • White Cloud® was exclusive to Walmart in the U.S. until recently • White Cloud® benefits from a strong brand name recognition in the U.S. and continues to be recognized by a high-profile U.S. consumer magazine as the #1(*) bathroom tissue • The White Cloud® products expanded distributi
Slide 19: Conclusion
CONCLUSION • Maintain market share leadership in Canadian consumer segment in the context of a competitive and price sensitive environment • Continued benefits of cost reduction program and capital projects • Pursue White Cloud® customer diversification strategy in the U.S. • Continue to leverage TA
Slide 20: Conclusion
CONCLUSION • Paper machine in Crabtree primarily dedicated to AFH with CAPEX of $55 million to be operational starting in Q4 2017 and positive contribution expected in Q1 2018 • Above normal CAPEX in fiscal 2017 dedicated to improve profitability and manufacturing efficiencies, both in the Consumer
Slide 21: For More Information
FOR MORE INFORMATION: WWW.KPTISSUEINC.COM WWW.KRUGERPRODUCTS.CA