MISSISSAUGA, ON, May 9, 2014 /CNW Telbec/ - KP Tissue Inc. ("KPT") (TSX: KPT) reports the Q1 2014 Financial and Operational Results of Kruger Products:
- Revenue increased by 5.8% to $234.6 million in Q1 2014 compared to $221.8 million in Q1 2013
- EBITDA result of $24.2 million in Q1 2014 compared to $25.1 million in Q1 2013
- TAD Project continued to progress well, with EBITDA contribution of $3.5 million in Q1 2014
- Maintained number one overall market share in Canada
"EBITDA of $24.2 million for the first quarter of 2014 continued to reflect high input costs and extreme weather conditions, which impacted margins. Despite a challenging market environment, we maintained our number one overall market share in Canada. The TAD Project was in line with expectations and contributed $3.5 million to EBITDA," said Mario Gosselin, CEO of KP Tissue and KPLP.
"During the quarter, we completed the consolidation of our Eastern distribution activities with expected annual savings of approximately $1.6 million. We also undertook an optimization program at the corporate level which should represent annual savings of approximately $2.4 million, once finalized.
"Going forward, we continue to see headwinds related to pulp and energy costs for the second quarter, and then a gradual decrease in pulp prices in the back half of 2014. This should alleviate some of the pressure on our margins. EBITDA for the second quarter of 2014 is expected to be higher compared to the first quarter of 2014 and moderately lower compared to the second quarter of 2013. For the TAD Project, some significant promotional activities are planned in the second quarter which should contribute to a higher EBITDA contribution when compared to the first quarter of 2014," concluded Mr. Gosselin.
KP Tissue Inc.
KPT holds a 16.6% interest in Kruger Products L.P. ("KPLP"), Canada's
leading manufacturer of quality tissue products for household and
commercial use. The highlights, discussion and analysis in this
earnings release, unless identified specifically as representing the
financial results of only KPT, relates entirely to the financial
results of KPLP.
Q1 2014 Financial Results
Revenue in Q1 2014 was $234.6 million, compared to $221.8 in Q1 2013, an
increase of $12.8 million driven by improved Consumer segment revenue
in both Canada and the U.S. resulting from new business related to the
TAD Project and the favourable impact of foreign exchange on U.S. based
sales.
Cost of sales in Q1 2014 was $198.9 million, compared to $183.2 million in Q1 2013 due to the impact of increases in commodity prices, particularly pulp fibre and natural gas, the unfavourable impact of foreign exchange, and an increase in freight and warehousing expenses related primarily to higher sales volume. As a percentage of revenue, cost of sales increased to 84.8 percent in Q1 2014 from 82.6 percent in Q1 2013.
Selling, general and administrative expenses in Q1 2014 were $20.5 million, compared to $20.8 million in Q1 2013 due to a slight decrease in advertising and promotion expenses.
EBITDA in Q1 2014 was $24.2 million (included TAD Project EBITDA of $3.5 million), compared to $25.1 million in Q1 2013 (included TAD Project EBITDA loss of $2.9 million). EBITDA was impacted by lower margins as a result of higher cost of sales.
There was a Net loss in Q1 2014 of $3.2 million, compared to net income of $11.7 million in Q1 2013. The net loss was driven by a number of non-operational charges in Q1 2014 including charges related to restructuring of $2.8 million, the change in the amortized cost of the partnership unit liability of $3.3 million and a decrease in the deferred tax recovery of $4.6 million.
The cash balance as of March 30, 2014 was $52.7 million compared to $87.7 million as December 31, 2013. Cash was used in operating activities to support additional working capital requirements, consistent with the year ago quarter and with the seasonal nature of our business, and cash was also used in investing and financing activities.
KPT Results
Q1 2014 Results
- Net loss of $1.7 million in Q1 2014
- Loss per share of $0.19 in Q1 2014
KPLP Distribution
KPLP will pay a distribution of $0.18 per KPLP unit to its partners on
or prior to July 15, 2014.
Dividends on Common Shares
The Board of Directors of KP Tissue Inc. declared a quarterly dividend
of $0.18 per share to be paid on July 15, 2014 to shareholders of
record at the close of business on June 30, 2014.
Conference Call Information
KPT will hold its first quarter conference call on Friday, May 9, 2014
at 8:30 a.m. Eastern Time.
Details of conference call:
Via telephone: 1-888-231-8191 or 647-427-7450
Via the internet at: www.kptissueinc.com
Presentation material referenced during the conference call will be available at www.kptissueinc.com.
Conference Call Rebroadcast
A rebroadcast of the conference call will be available until midnight,
June 6, 2014 by dialing 1-855-859-2056 or 416-849-0833 and entering
passcode 24880769.
The replay of the webcast will remain available on the web site until midnight, June 6, 2014.
About KP Tissue Inc. (KPT)
KPT was created to acquire, and its business is limited to holding, a
limited partnership interest in KPLP. As of March 30, 2014, KPT held a
16.7% interest in KPLP, accounted for as an investment on the equity
basis. On April 15, 2014, KPLP paid a distribution to its partners.
Following the reinvestment by the partners of KPLP of a portion of such
distribution pursuant to KPLP's distribution reinvestment plan, KPT
held a 16.6% 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 2,300 employees
across North America and operates five FSC® CoC- certified mills (FSC®
C104904), four of which are located in Canada and one in the US. For
more information visit www.krugerproducts.ca.
Non-IFRS Measures
This press release uses certain non-IFRS financial measures and ratios
which KPLP believes provide useful information to both management of
KPLP and the readers of the financial information in measuring the
financial performance and financial condition of KPLP. These measures
do not have a standardized meaning prescribed by IFRS and therefore may
not be comparable to similarly titled measures presented by other
companies. An example of such measures is EBITDA. EBITDA is not a
measurement of operating performance computed in accordance with IFRS
and should not be considered as a substitute for operating income, net
income or cash flows from operating activities computed in accordance
with IFRS. "EBITDA" is calculated by KPLP as net income (loss) before
(i) interest expense, (ii) income taxes, (iii) depreciation,
(iv) amortization, (v) impairment of non-financial assets, (vi) loss
(gain) on disposal of property, plant and equipment, (vii) unrealized
foreign exchange loss (gain), (viii) one-time costs related to
restructuring activities, and (ix) change in amortized cost of the
Partnership unit liability. A reconciliation of EBITDA to the relevant
reported results can be found in the Management's Discussion and
Analysis ("MD&A") of KPT and KPLP for the first quarter ended March 30,
2014 available on SEDAR at www.sedar.com.
Forward-Looking Statements
Certain statements in this press release about KPT's and KPLP's current
and future plans, expectations and intentions, results, levels of
activity, performance, goals or achievements or any other future events
or developments constitute forward-looking statements. The words "may",
"will", "would", "should", "could", "expects", "plans", "intends",
"trends", "indications", "anticipates", "believes", "estimates",
"predicts", "likely" or "potential" or the negative or other variations
of these words or other comparable words or phrases, are intended to
identify forward-looking statements. The forward-looking information is
based on certain key expectations and assumptions made by KPT,
including expectations and assumptions concerning the impact of the TAD
Project on EBITDA. Although KPT believes that the expectations and
assumptions on which such forward-looking information is based are
reasonable, undue reliance should not be placed on the forward-looking
information since no assurance can be given that such expectations and
assumptions will prove to be correct.
Many factors could cause KPLP's actual results, level of activity, performance or achievements or future events or developments (which could in turn affect the economic benefits derived from the Corporation's economic interest in KPLP) to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors, which are discussed in greater detail in the "Risk Factors - Risks Related to KPLP's Business" section of the KPT Annual Information Form dated March 19, 2014 available on SEDAR at www.sedar.com: Kruger Inc.'s influence over KPLP; KPLP's reliance on Kruger Inc.; consequences of an event of insolvency relating to Kruger Inc.; risks associated with the TAD Project; operational risks; Gatineau Plant land lease; significant increases in prices; reduction in supply of fibre; increased pricing pressure and intense competition; KPLP's inability to innovate effectively; adverse economic conditions; dependence on key retail trade customers; damage to the reputation of KPLP or KPLP's brands; KPLP's sales being less than anticipated; KPLP's failure to implement its business and operating strategies; KPLP's obligation to make regular capital expenditures; KPLP's entering into unsuccessful acquisitions; KPLP's dependence on key personnel; KPLP's inability to retain its existing customers or obtain new customers; KPLP's loss of key suppliers; KPLP's failure to adequately protect its intellectual property rights; KPLP's reliance on third party intellectual property licenses; adverse litigation and other claims affecting KPLP; material expenditures due to comprehensive environmental regulation affecting KPLP's cash flow; KPLP's pension obligations are significant and can be materially higher than predicted if KPLP Management's underlying assumptions are incorrect; labour disputes adversely affecting KPLP's cost structure and KPLP's ability to run its plants; exchange rate and U.S. competitors; KPLP's inability to service all of its indebtedness; exposure to potential consumer product liability, restrictive covenants; interest rate and refinancing risk; information technology and innovation; insurance; and internal controls.
Readers should not place undue reliance on forward-looking statements made herein. The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. The forward-looking information contained herein is made as of the date of press release and KPT undertakes no obligation to publicly update such forward-looking information to reflect new information, subsequent or otherwise, unless required by applicable securities laws.
| Kruger Products L.P. | ||||
| Unaudited Condensed Consolidated Statement of Financial Position | ||||
| (thousands of Canadian dollars) | ||||
| March 30, 2014 | December 31, 2013 | |||
| $ | $ | |||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | 52,736 | 87,674 | ||
| Trade and other receivables | 106,998 | 94,789 | ||
| Receivables from related parties | 592 | 1,429 | ||
| Advances to partners | 347 | - | ||
| Inventories | 156,940 | 151,505 | ||
| Current portion of income tax recoverable | 474 | 630 | ||
| Prepaid expenses | 6,180 | 4,777 | ||
| 324,267 | 340,804 | |||
| Non-current assets | ||||
| Property, plant & equipment | 625,993 | 616,687 | ||
| Other long-term assets | 10,389 | 10,268 | ||
| Income tax recoverable | 14,857 | 14,132 | ||
| Goodwill | 152,021 | 152,021 | ||
| Intangible assets | 13,348 | 13,483 | ||
| Deferred income taxes | 15,727 | 14,141 | ||
| Total assets | 1,156,602 | 1,161,536 | ||
| Liabilities | ||||
| Current liabilities | ||||
| Trade and other payables | 169,406 | 188,470 | ||
| Payables to related parties | 6,084 | 5,134 | ||
| Distributions payable | 9,500 | 9,455 | ||
| Current portion of provisions | 2,528 | 999 | ||
| Current portion of long-term debt | 11,547 | 8,276 | ||
| 199,065 | 212,334 | |||
| Non-current liabilities | ||||
| Long-term debt | 351,239 | 342,013 | ||
| Other long-term liabilities | 276 | 323 | ||
| Provisions | 7,181 | 6,615 | ||
| Pensions | 75,232 | 80,380 | ||
| Post-retirement benefits | 50,004 | 48,746 | ||
| Liabilities to non-unitholders | 682,997 | 690,411 | ||
| Current portion of Partnership units liability | 3,475 | 3,475 | ||
| Long-term portion of Partnership units liability | 114,364 | 114,364 | ||
| Total Partnership units liability | 117,839 | 117,839 | ||
| Total liabilities | 800,836 | 808,250 | ||
| Equity | ||||
| Partnership units | 286,860 | 282,672 | ||
| Retained earnings | 38,456 | 50,945 | ||
| Accumulated other comprehensive income | 30,450 | 19,669 | ||
| Total equity | 355,766 | 353,286 | ||
| Total equity and liabilities | 1,156,602 | 1,161,536 | ||
| Kruger Products L.P. | ||||
| Unaudited Condensed Consolidated Statement of Comprehensive Income | ||||
| (thousands of Canadian dollars) | ||||
| 13-week period ended March 30, 2014 | 13-week period ended March 31, 2013 | |||
| $ | $ | |||
| Revenue | 234,608 | 221,785 | ||
| Expenses | ||||
| Cost of sales | 198,871 | 183,171 | ||
| Selling, general and administrative expenses | 20,526 | 20,785 | ||
| Restructuring costs | 2,784 | - | ||
| Operating income | 12,427 | 17,829 | ||
| Interest expense | 10,908 | 9,890 | ||
| Other expense | 5,028 | 1,076 | ||
| Income (loss) before income taxes | (3,509) | 6,863 | ||
| Income taxes | (286) | (4,853) | ||
| Net income (loss) for the period | (3,223) | 11,716 | ||
| Other comprehensive income (loss) | ||||
| Items that will not be reclassified to net income: | ||||
| Remeasurements of pensions | 1,081 | 12,495 | ||
| Remeasurements of post-retirement benefits | (847) | - | ||
| Items that may be subsequently reclassified to net income: | ||||
| Available-for-sale investment | (25) | - | ||
| Cumulative translation adjustment | 10,806 | 4,539 | ||
| Total other comprehensive income for the period | 11,015 | 17,034 | ||
| Comprehensive income for the period | 7,792 | 28,750 | ||
| Kruger Products L.P. | ||||
| Unaudited Condensed Consolidated Statement of Cash Flows | ||||
| (thousands of Canadian dollars) | ||||
| 13-week period ended March 30, 2014 | 13-week period ended March 31, 2013 | |||
| $ | $ | |||
| Cash flows from (used in) operating activities | ||||
| Net income (loss) for the period | (3,223) | 11,716 | ||
| Items not affecting cash | ||||
| Depreciation | 8,807 | 7,333 | ||
| Amortization | 144 | 132 | ||
| Gain on sale of fixed assets | - | (4) | ||
| Change in amortized cost of Partnership units liability | 3,350 | - | ||
| Unrealized foreign exchange loss | 1,679 | 855 | ||
| Interest expense | 10,908 | 9,890 | ||
| Pension and post retirement benefits | 2,696 | 2,708 | ||
| Provisions | 2,184 | 262 | ||
| Income taxes | (286) | (4,853) | ||
| Total items not affecting cash | 29,482 | 16,323 | ||
| Net change in non-cash working capital | (27,002) | (34,442) | ||
| Contributions to pension and post-retirement benefit plans | (7,850) | (7,328) | ||
| Provisions paid | (501) | (1,490) | ||
| Income tax payments | (373) | (994) | ||
| Net cash used in operating activities | (9,467) | (16,215) | ||
| Cash flows from (used in) investing activities | ||||
| Purchase of property, plant & equipment | (4,135) | (3,017) | ||
| Purchases of through-air-dried (TAD) expansion | (6,221) | (19,661) | ||
| Purchases of software | (9) | (3) | ||
| Proceeds on sale of property, plant and equipment | - | 4 | ||
| Net cash used in investing activities | (10,365) | (22,677) | ||
| Cash flows from (used in) financing activities | ||||
| Proceeds from credit facilities | - | 4,571 | ||
| Repayment of credit facilities | (204) | (76) | ||
| Interest paid on credit facilities | (7,164) | (7,216) | ||
| Distributions paid | (12,805) | - | ||
| Equity issuance costs | - | (835) | ||
| Proceeds from issuing partnership units | 4,188 | 13,125 | ||
| Net cash from (used in) financing activities | (15,985) | 9,569 | ||
| Effect of exchange rate changes on cash and cash equivalents held in foreign currency | 879 | 255 | ||
| Decrease in cash and cash equivalents during the period | (34,938) | (29,068) | ||
| Cash and cash equivalents - Beginning of period | 87,674 | 121,489 | ||
| Cash and cash equivalents - End of period | 52,736 | 92,421 | ||
| Kruger Products L.P. | ||||
| Segment and Geographic Results | ||||
| (thousands of Canadian dollars) | ||||
| 13-week period ended March 30, 2014 | 13-week period ended March 31, 2013 | |||
| $ | $ | |||
| Segment Information | ||||
| Segment Revenue | ||||
| Consumer | 198,378 | 184,403 | ||
| AFH | 33,482 | 35,281 | ||
| Other | 2,748 | 2,101 | ||
| Total segment revenue | 234,608 | 221,785 | ||
| Segment EBITDA | ||||
| Consumer | 24,949 | 23,923 | ||
| AFH | (524) | 1,463 | ||
| Other | (262) | (317) | ||
| Total segment EBITDA | 24,163 | 25,069 | ||
| Reconciliation to Net Income: | ||||
| Depreciation and amortization | 8,951 | 7,465 | ||
| Interest expense | 10,908 | 9,890 | ||
| Change in amortized cost of Partnership units liability | 3,350 | - | ||
| Gain on sale of fixed assets | - | (4) | ||
| Restructuring costs | 2,784 | - | ||
| Unrealized foreign exchange loss | 1,679 | 855 | ||
| Income before income taxes | (3,509) | 6,863 | ||
| Income taxes | (286) | (4,853) | ||
| Net income (loss) for the period | (3,223) | 11,716 | ||
| Geographic Revenue | ||||
| Canada | 161,160 | 157,562 | ||
| U.S. | 66,758 | 57,134 | ||
| Mexico | 6,690 | 7,089 | ||
| Total Revenue | 234,608 | 221,785 | ||
| KP Tissue Inc. | ||||
| Unaudited Condensed Statement of Financial Position | ||||
| (thousands of Canadian dollars) | ||||
| March 30, 2014 | December 31, 2013 | |||
| $ | $ | |||
| Assets | ||||
| Current assets | ||||
| Distributions receivable | 1,585 | 1,583 | ||
| Income taxes receivable | 125 | - | ||
| Non-current assets | ||||
| Investment in associate | 160,143 | 161,584 | ||
| Total Assets | 161,853 | 163,167 | ||
| Liabilities | ||||
| Current liabilities | ||||
| Dividend payable | 1,585 | 1,583 | ||
| Payables to related party | 210 | - | ||
| Income taxes payable | - | 580 | ||
| 1,795 | 2,163 | |||
| Non-current liabilities | ||||
| Deferred income taxes | 3,022 | 3,033 | ||
| Total liabilities | 4,817 | 5,196 | ||
| Equity | ||||
| Common shares | 9,321 | 9,068 | ||
| Contributed surplus | 144,819 | 144,819 | ||
| Retained earnings (deficit) | (2,524) | 709 | ||
| Accumulated other comprehensive income | 5,420 | 3,375 | ||
| Total equity | 157,036 | 157,971 | ||
| Total liabilities and equity | 161,853 | 163,167 | ||
| KP Tissue Inc. | ||||
| Unaudited Condensed Statement of Comprehensive Income | ||||
| (thousands of Canadian dollars, except share and per share amounts) | ||||
| 13-week period ended March 30, 2014 | 13-week period ended March 31, 2013 | |||
| $ | $ | |||
| Equity loss | (2,083) | (747) | ||
| Gain on remeasurement of over allotment option | - | 375 | ||
| Dilution gain | 44 | - | ||
| Loss before income taxes | (2,039) | (372) | ||
| Income tax expense (recovery) | ||||
| Current | (35) | 213 | ||
| Deferred | (322) | 106 | ||
| (357) | 319 | |||
| Net loss for the period | (1,682) | (691) | ||
| Other comprehensive income (loss) | ||||
| Items that will not be reclassified to net loss: | ||||
| Remeasurements of pensions - net of tax expense of $23 and $272 | 157 | 1,823 | ||
| Remeasurements of post-retirement benefits - net of tax recovery of $18 | (123) | - | ||
| Items that may be subsequently reclassified to net loss: | ||||
| Available-for-sale investment - net of tax recovery of $1 | (4) | - | ||
| Cumulative translation adjustment - net of tax expense of $307 and $99 | 2,049 | 662 | ||
| Total other comprehensive income for the period | 2,079 | 2,485 | ||
| Comprehensive income for the period | 397 | 1,794 | ||
| Basic loss per share | (0.19) | (0.08) | ||
| Weighted average number of shares outstanding | 8,805,820 | 8,667,583 | ||
| KP Tissue Inc. | ||||
| Unaudited Condensed Statement of Cash Flows | ||||
| (thousands of Canadian dollars) | ||||
| 13-week period ended March 30, 2014 | 13-week period ended March 31, 2013 | |||
| $ | $ | |||
| Cash flows from (used in) operating activities | ||||
| Net loss for the period | (1,682) | (691) | ||
| Items not affecting cash | ||||
| Equity loss | 2,083 | 747 | ||
| Gain on remeasurement of overallotment option | - | (375) | ||
| Dilution gain | (44) | - | ||
| Current income taxes | (35) | 213 | ||
| Deferred income taxes | (322) | 106 | ||
| Total items not affecting cash | 1,682 | 691 | ||
| Tax payments | (460) | - | ||
| Net cash from (used in) operating activities | (460) | - | ||
| Cash flows from (used in) investing activites | ||||
| Investment in associate | (253) | (13,125) | ||
| Distributions received | 1,583 | - | ||
| Tax distribution received | 460 | - | ||
| Net cash from (used in) investing activities | 1,790 | (13,125) | ||
| Cash flows from (used in) financing activities | ||||
| Issuance of common shares | 253 | 13,125 | ||
| Dividends paid | (1,583) | - | ||
| Net cash from (used in) financing activities | (1,330) | 13,125 | ||
| Increase (decrease) in cash and cash equivalents during the period | - | - | ||
| Cash and cash equivalents - Beginning of period | - | - | ||
| Cash and cash equivalents - End of period | - | - | ||
SOURCE KP Tissue Inc.
Wendy Kelley
General Counsel and Corporate Secretary
KP Tissue Inc.
Tel.: 905.812.6936
[email protected]
INVESTORS:
Mike Baldesarra
Director of Investor Relations
KP Tissue Inc.
Tel.: 905.812.6962
[email protected]