KP Tissue ((TSE:KPT)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for KP Tissue presented a balanced sentiment, highlighting both positive strides and notable challenges. The company reported significant improvements in adjusted EBITDA, revenue, and net income, yet faced hurdles such as a slowdown in U.S. revenue growth, increased pulp prices, and a reduction in cash position. This mix of highs and lows paints a complex picture of KP Tissue’s current financial landscape.
Improved Adjusted EBITDA
KP Tissue reported a double-digit improvement in adjusted EBITDA, reaching $72.5 million, which marks an 11% increase compared to the previous year. This growth underscores the company’s operational efficiency and ability to enhance profitability despite market challenges.
Revenue Growth
The company experienced a revenue increase of over 5% in Q2 2025, driven by higher sales volumes in the consumer business and favorable selling prices. Notably, Canadian revenue saw a 7.4% rise, while U.S. sales increased by 2.4% year-over-year, reflecting strong market demand.
Memphis Facility Investment
KP Tissue announced a significant investment of USD 35 million in their Memphis manufacturing facility. This investment aims to deploy a new multipurpose converting line, which is expected to support the growth of their U.S. business and enhance production capabilities.
Net Income Increase
The company’s net income rose to $22.1 million in Q2 2025, a substantial increase from $10.6 million in the same quarter of 2024. This growth was driven by foreign exchange gains, income tax recovery, and improved adjusted EBITDA.
Expansion of Brand Support
KP Tissue has expanded its brand support through new campaigns for Cashmere and Purex brands and sponsorship of Canada’s Got Talent. These initiatives have contributed to increased consumer awareness and market share growth, strengthening the company’s brand presence.
U.S. Revenue Growth Slowdown
Despite overall revenue growth, the U.S. market experienced a slowdown due to front-loaded shipments in the previous quarter and softness in the away-from-home market. This presents a challenge for KP Tissue as they navigate market dynamics.
Higher Pulp Prices and Unfavorable Mill Performance
The company faced higher pulp prices and unfavorable mill performance at the Memphis site, which partially offset the improvements in adjusted EBITDA. These factors highlight the ongoing operational challenges impacting profitability.
Away-From-Home Revenue Decline
Revenue in the Away-From-Home segment decreased by 1.1% year-over-year, primarily due to lower sales volumes. This decline indicates a shift in market demand that KP Tissue must address.
Cash Position Decrease
KP Tissue’s cash position decreased to $85.3 million at the end of Q2 2025 from $141.8 million at the end of Q1 2025. This was mainly due to the movement of USD 29 million to a restricted cash account, impacting the company’s liquidity.
Forward-Looking Guidance
Looking ahead, KP Tissue anticipates further strengthening in Q3 2025, with expected adjusted EBITDA ranging from $75 million to $80 million. The company remains focused on efficiency improvements and strategic investments, including the significant investment in their Memphis facility, to bolster U.S. business growth.
In conclusion, KP Tissue’s earnings call reflects a balanced sentiment with notable achievements in financial performance and strategic investments, alongside challenges in market dynamics and operational costs. The company’s forward-looking guidance suggests optimism for continued growth and efficiency improvements.