KP Tissue ((TSE:KPT)) has held its Q4 earnings call. Read on for the main highlights of the call.
KP Tissue’s recent earnings call painted a picture of optimism, underscored by record revenue and notable growth in both revenue and EBITDA for fiscal 2024. Despite facing challenges such as a net loss in the fourth quarter, tariff exposure risks, and a decrease in consumer EBITDA margin, the company demonstrated strong financial performance and strategic agility. This positions KP Tissue as a resilient player in the market, capable of navigating external challenges effectively.
Record Revenue in 2024
KP Tissue achieved a milestone in fiscal 2024, recording revenue exceeding $2 billion. This achievement was bolstered by strong adjusted EBITDA across all four quarters, showcasing the company’s robust financial health and operational efficiency.
Fourth Quarter Revenue Growth
The fourth quarter of 2024 saw a revenue growth of 11.9%, driven by increased sales volume in the U.S., favorable selling prices in Canada, and a positive foreign exchange impact. This growth highlights the company’s successful market strategies and adaptability to varying economic conditions.
Full Year Revenue and EBITDA Growth
For the full year 2024, KP Tissue reported a revenue growth of 9.4% and an adjusted EBITDA growth of 11%. These figures reflect the company’s consistent performance and strategic initiatives that have contributed to its financial success.
Successful Start-up at Sherbrooke
The start-up of a new paper machine and facial tissue line at Sherbrooke exceeded production targets for the year. This success underscores KP Tissue’s commitment to innovation and capacity expansion, which are crucial for sustaining growth.
Market Share in Facial Tissue
KP Tissue made incremental gains in the Facial Tissue category, with its total market share reaching 45% by the end of the year. This increase in market share demonstrates the company’s competitive edge and effective market penetration strategies.
Marketing Achievements
Kruger Products, a subsidiary of KP Tissue, received several industry awards for marketing excellence, including Brand of the Year and a bronze FE Award. These accolades highlight the company’s strong brand presence and innovative marketing approaches.
Net Loss in Fourth Quarter
Despite the positive growth, KP Tissue reported a net loss of $13.7 million in Q4 2024, compared to a net income of $16.5 million in Q4 2023. This loss was primarily due to higher foreign exchange losses and increased depreciation and interest expenses.
Impact of Tariff Exposure
The company expressed concerns about tariff exposure, with approximately CAD 600-700 million of revenue at risk. This situation could lead to potential pass-through costs to customers, posing a challenge to the company’s pricing strategies.
Challenges in Away-From-Home Segment
KP Tissue faced a slight decrease in sales volumes year-over-year in the Away-From-Home segment, attributed to challenges in paper supply and order fulfillment. This highlights the operational hurdles the company needs to address to maintain segment growth.
Decline in Consumer EBITDA Margin
The consumer adjusted EBITDA margin decreased to 14.1% in Q4 2024 from 14.9% in Q4 2023. This decline points to the need for strategic adjustments to improve profitability in the consumer segment.
Forward-Looking Guidance
Looking ahead, KP Tissue remains optimistic about continued sales growth in 2025, despite the uncertain economic climate. The company is closely monitoring the North American trade environment and plans to evaluate a new state-of-the-art TAD paper machine. Strategic initiatives include a focus on their “Made in Canada” marketing campaign and rebranding their Away-From-Home segment to Kruger Pro. However, the company refrained from providing profit guidance for Q1 2025.
In conclusion, KP Tissue’s earnings call highlighted a company that is both resilient and forward-thinking. With record revenue and strategic initiatives in place, KP Tissue is well-positioned to navigate future challenges and capitalize on growth opportunities. Despite some setbacks, the overall sentiment remains positive, reflecting confidence in the company’s ability to sustain its upward trajectory.