MISSISSAUGA, Ontario, March 09, 2023 (GLOBE NEWSWIRE) -- KP Tissue Inc. (KPT) (TSX: KPT) reports the Q4 2022 and full year 2022 financial and operational results of KPT and Kruger Products L.P. (KPLP). Kruger Products is Canada's leading manufacturer of quality tissue products for the Consumer market (Cashmere®, Purex®, SpongeTowels®, Scotties®, White Swan® and Bonterra) and the Away-From-Home (AFH) market and continues to grow in the U.S. Consumer tissue business with the White Cloud® brand and premium private label products. KPT currently holds a 13.7% interest in Kruger Products.
KPLP Q4 2022 Business and Financial Highlights
- Revenue was $458.1 million in Q4 2022 compared to $424.1 million in Q4 2021, an increase of $34.0 million or 8.0%.
- Adjusted EBITDA1 was $44.4 million in Q4 2022, compared to $38.3 million in Q4 2021, an increase of 15.8%.
- Net income was $16.0 million in Q4 2022, compared to net income of $42.3 million in Q4 2021, a decrease of $26.3 million.
- Declared a quarterly dividend of $0.18 per share to be paid on April 17, 2023.
KPLP Full Year 2022 Financial Highlights
- Revenue was $1,681.4 million in 2022 compared to $1,465.2 million in 2021, an increase of $216.2 million or 14.8%.
- Adjusted EBITDA1 was $116.0 million in 2022, down from $153.4 million in 2021, a decrease of 24.4%.
- Net loss was $56.9 million in 2022, compared to net income of $42.0 million in 2021, a decrease of $98.9 million.
1 Adjusted EBITDA is a non-GAAP financial measure. Refer to the Non-GAAP Financial Measures section of this news release for more information on these measures.
"We are highly encouraged by the ongoing recovery of our financial results in 2022 despite uncertain market conditions and persistent inflationary pressure," stated KP Tissue's Chief Executive Officer, Dino Bianco. "Revenue improved 15% year-over-year to $1.7 billion mainly due to selling price increases across all segments and regions to counter higher pulp, manufacturing and freight costs. In the Consumer segment, we witnessed lower volume in the latter part of the year as some consumers traded down on purchases given higher market pricing. Away-From-Home had a strong quarter driven by greater volume as the segment continues to recover.
"Adjusted EBITDA was lower in 2022 as price increases did not fully catch up to inflation until later into the year, while cost management initiatives helped mitigate the impact. Our solid performance in the fourth quarter reflects that we are headed in the right direction with revenue growing 8% to $458 million and Adjusted EBITDA rising 16% to $44.4 million vs. Q4 2021.
"In January 2023, we further enhanced profitability by shutting down certain legacy assets at our Memphis plant, including a paper machine and six converting lines. The impact on US customers has been negligible as we refocus production capacity on TAD and facial tissue products. In addition, our Sherbrooke expansion project will become a key, long-term catalyst with two new lines starting up this year.
"In 2023, we intend to deliver continued topline growth with improved profitability, while prudently investing in our brands to support price increases and manage price gaps," Mr. Bianco concluded.
Outlook for Q1 2023
Looking ahead to the first quarter of 2023, our price increases are in place, and we believe inflationary pressure has stabilized, while our operating efficiency continues to gain traction and we are tightly managing our discretionary spending. As a result, we expect Adjusted EBITDA1 in Q1 2023 to be similar to Q4 2022 and to significantly exceed Q1 2022.
KPLP Q4 2022 Financial Results
Revenue was $458.1 million in Q4 2022 compared to $424.1 million in Q4 2021, an increase of $34.0 million or 8.0%. The increase in revenue was due to selling price increases in all segments and regions partially offset by lower sales volume in the Consumer segment and unfavourable mix. Revenue was also favourably impacted by foreign exchange fluctuations on U.S. dollar sales.
Cost of sales was $416.4 million in Q4 2022 compared to $376.0 million in Q4 2021, an increase of $40.4 million or 10.7%. Manufacturing costs increased primarily due to significantly increased pulp costs and high inflation on other input costs, along with the unfavourable impact of foreign exchange fluctuations on U.S. dollar costs, partially offset by lower sales volumes. Depreciation expense increased compared to Q4 2021 primarily due to accelerated depreciation related to the shutdown of certain LDC assets at the Memphis plant. Freight costs increased compared to Q4 2021 primarily due to increased freight rates resulting from cost inflation. As a percentage of revenue, cost of sales was 90.9% in Q4 2022 compared to 88.7% in Q4 2021.
Selling, general and administrative (SG&A) expenses were $30.6 million in Q4 2022 compared to $31.7 million in Q4 2021, a decrease of $1.1 million or 3.4%. The decrease was primarily due to lower advertising and promotion expenses resulting from cost containment activities partially offset by consulting and legal costs related to the Reorganization and higher personnel costs. As a percentage of revenue, SG&A expenses were 6.7% in Q4 2022 compared to 7.5% in Q4 2021.
Adjusted EBITDA1 was $44.4 million in Q4 2022 compared to $38.3 million in Q4 2021, an increase of $6.1 million or 15.8%. The increase was primarily due to higher selling prices and lower SG&A expenses, partially offset by significant inflation on pulp, manufacturing costs and freight as described above, lower sales volume and the unfavourable impact of foreign exchange fluctuations.
Net income was $16.0 million in Q4 2022 compared to net income of $42.3 million in Q4 2021, a decrease of $26.3 million. The decrease was primarily due to a significantly lower income tax recovery, higher depreciation expense and restructuring costs, partially offset by higher Adjusted EBITDA of $6.1 million as discussed above, a higher change in the amortized costs of the Partnership units liability, a higher foreign exchange gain and lower interest expense and other finance costs.
KPLP 2022 Financial Results
Revenue was $1,681.4 million in Fiscal 2022 compared to $1,465.2 million in Fiscal 2021, an increase of $216.2 million or 14.8%. The increase in revenue was due to selling price increases in all segments and regions, and significantly higher sales volume in the AFH segment as the business recovered from the impact of COVID-19. Revenue was also favourably impacted by foreign exchange fluctuations on U.S. dollar sales.
Adjusted EBITDA1 was $116.0 million in Fiscal 2022 compared to $153.4 million in Fiscal 2021, a decrease of $37.4 million or 24.4%. The decrease was primarily due to significant inflation on pulp and manufacturing and freight costs, higher SG&A expenses and the unfavourable impact of foreign exchange fluctuations, partially offset by selling price increases and higher sales volume.
Net loss was $56.9 million in Fiscal 2022 compared to net income of $42.0 million in Fiscal 2021, a decrease of $98.9 million. The decrease was primarily due to lower Adjusted EBITDA of $37.4 million as discussed above, a lower income tax recovery, a higher foreign exchange loss and higher depreciation and interest expense, partially offset by a decrease in the amortized costs of the Partnership units liability.
KPLP Q4 2022 Liquidity
Total liquidity, representing cash and availability under the revolving credit agreements, was $137.5 million as of December 31, 2022. In addition, $29.7 million of cash was held by KPLP for the TAD Sherbrooke and Sherbrooke Expansion Projects.
Reorganization of KPLP
On January 1, 2023, KPLP undertook a corporate reorganization (the Reorganization) pursuant to which KPLP, a limited partnership, was essentially replaced by a corporate entity without adversely affecting KPT. More specifically, KPLP sold and assigned to its wholly-owned subsidiary, Kruger Products Inc. (Kruger Products), and Kruger Products purchased and assumed from KPLP, in exchange for common shares, all of the properties, operations, assets and liabilities of KPLP, and KPLP was subsequently dissolved and wound-up into its partners. As a result of the Reorganization, Kruger Products, as the successor corporate entity to KPLP, now operates the business previously operated by KPLP.
The interest that KPT previously held in KPLP is now held in Kruger Products, and, through a shareholders' agreement dated January 1, 2023, entered into with Kruger Inc. (the Shareholders' Agreement), KPT has substantially equivalent rights in respect of the operation of, and its investment in, Kruger Products, as it had in respect of KPLP. The Reorganization was undertaken to realize certain tax efficiencies for Kruger Products and to simplify Kruger Products' corporate structure and financial reporting. The Reorganization was approved by the independent directors of KPT.
The Shareholders' Agreement, and certain other agreements with Kruger Inc. that were amended and restated to reflect the Reorganization, are described in KPT's Annual Information Form dated March 9, 2023, and copies of those agreements are available under KPT's profile on SEDAR at www.sedar.com.
Information for KPLP Noteholders
In connection with the Reorganization, Kruger Products assumed all of KPLP's obligations under its 6.00% senior unsecured notes due April 24, 2025 and its 5.375% senior unsecured notes due April 9, 2029, and related trust indentures, and KPLP was released and discharged from its obligations thereunder, in accordance with the terms of the trust indentures. We encourage any noteholders to seek advice from a financial and/or legal advisor in respect of any tax implications of Kruger Products' assumption of the notes.
KPT Q4 2022 Financial Results
KPT had a net loss of $0.9 million in Q4 2022. Included in the net loss was income of $2.3 million representing KPT's share of KPLP's net income and a dilution gain of $0.3 million, depreciation expense of $1.2 million related to adjustments to carrying amounts on acquisition and an income tax expense of $2.3 million.
KPT 2022 Financial Results
KPT had a net loss of $10.2 million in 2022. Included in net loss was $8.1 million representing KPT's share of KPLP's net loss, a dilution gain of $0.8 million, depreciation expense of $5.2 million related to adjustments to carrying amounts on acquisition and an income tax recovery of $2.3 million.
Dividends on Common Shares
The Board of Directors of KPT declared a quarterly dividend of $0.18 per share to be paid on April 17, 2023 to shareholders of record at the close of business on April 1, 2023.
Change to Board of Directors
Michel Letellier resigned as a director of KP Tissue and Kruger Products effective February 6, 2023, to focus on other endeavours. He had served on the boards of KP Tissue and Kruger Products since October 2012. The Boards would like to thank Mr. Letellier for his dedicated service throughout these years and wish him the best in his future endeavours. Following a process to identify a candidate with appropriate skills and experience to fill the vacant position on the KP Tissue Board, the Nominating and Governance Committee recommended to the KP Tissue Board the appointment of John (Jay) Wright, which was approved by the KP Tissue Board to take effect March 9, 2023. Mr. Wright is an independent director who will replace Mr. Letellier as one of KP Tissue's three nominees on the Kruger Products Board. He will also serve on the KP Tissue and Kruger Products Audit committees, replacing Louise Wendling who had been appointed to those committees on an interim basis following Mr. Letellier's resignation, and on the Kruger Products HR & Compensation committee.
Additional Information
For additional information please refer to Management's Discussion and Analysis (MD&A) of KPT and KPLP for the fourth quarter and fiscal year ended December 31, 2022 available on SEDAR at www.sedar.com or our website at www.kptissueinc.com.
Fourth Quarter Results Conference Call Information
KPT will hold its fourth quarter conference call on Thursday, March 9, 2023 at 8:30 a.m. Eastern Time.
Via telephone: 1-888-886-7786 or 416-764-8658
Via the internet at: www.kptissueinc.com
Presentation material referenced during the conference call will be available at www.kptissueinc.com.
A rebroadcast of the conference call will be available until midnight, March 16, 2023 by dialing 1-877-674-7070 or 416-764-8692 and entering passcode 461040.
The replay of the webcast will remain available on the website until midnight, March 16, 2023.
About KP Tissue Inc. (KPT)
KPT was created to acquire, and its business is limited to holding, an equity interest in Kruger Products, which is accounted for as an investment on the equity basis. After the Reorganization, KPT currently holds a 13.7% interest in Kruger Products. For more information visit www.kptissueinc.com.
About Kruger Products
Kruger Products is Canada's leading manufacturer of quality tissue products for household, industrial and commercial use. Kruger Products serves the Canadian consumer market with such well-known brands as Cashmere®, Purex®, SpongeTowels®, Scotties®, White Swan® and Bonterra. In the U.S., Kruger Products 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. Kruger Products has approximately 2,700 employees and operates nine FSC® COC-certified (FSC® C-104904) production facilities in North America. For more information visit www.krugerproducts.ca.
Non-GAAP Financial Measures
This press release uses certain non-GAAP financial measures which Kruger Products believes provide useful information to management of Kruger Products and the readers of the financial information in measuring the financial performance and financial condition of Kruger Products. These measures do not have a standardized meaning prescribed by GAAP and therefore may not be comparable to similarly titled measures presented by other companies. An example of such a measure is Adjusted EBITDA. Adjusted EBITDA is not a measurement of operating performance computed in accordance with GAAP and should not be considered as a substitute for operating income, net income or cash flows from operating activities computed in accordance with GAAP. "Adjusted EBITDA" is calculated by Kruger Products as net income (loss) before (i) interest expense and other finance costs, (ii) income taxes, (iii) depreciation, (iv) amortization, (v) impairment (gain on sale) of non-financial assets, (vi) loss (gain) on disposal of property, plant and equipment, (vii) foreign exchange loss (gain), (viii) costs related to restructuring activities, (ix) changes in amortized cost of Partnership units liability, (x) change in fair value of derivatives, (xi) consulting costs related to operational transformation initiatives, (xii) corporate development related costs and (xiii) loss (gain) on sale of shares. A reconciliation of Adjusted EBITDA to the relevant reported results can be found in the Segment and Geographic Results table of this news release.
Forward-Looking Statements
Certain statements in this press release about KPT's and Kruger Products' 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. Forward-looking statements in this press release include, but are not limited to, statements regarding continued growth in the U.S. Consumer tissue business with the White Cloud® brand and premium private label products, the expected impact of our Sherbrooke Expansion Project, expected growth and profitability in 2023 and our expectation that Adjusted EBITDA in Q1 2023 will be similar to Q4 2022 and significantly exceed Q1 2022. 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 statements are based on certain key expectations and assumptions made by KPT or Kruger Products, including that inflationary pressure has stabilized. Although KPT and Kruger Products believe 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 statements since no assurance can be given that such expectations and assumptions will prove to be correct.
The outlook provided in respect of Adjusted EBITDA for Q1 2023 and expected growth and profitability in 2023 is forward-looking information and is based on the assumptions and subject to the risk and uncertainties referred to below. The purpose of the outlook is to provide the reader with an indication of management's expectations, at the date of this press release, regarding Kruger Products' future financial performance. Readers are cautioned that this information may not be appropriate for other purposes.
Many factors could cause Kruger Products' actual results, level of activity, performance or achievements or future events or developments (which could in turn affect the economic benefits derived from KPT's economic interest in Kruger Products), 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 Kruger Products' Business" section of the KPT Annual Information Form dated March 9, 2023 available on SEDAR at www.sedar.com: Kruger Inc.'s influence over Kruger Products; Kruger Products' reliance on Kruger Inc.; consequences of an event of insolvency relating to Kruger Inc.; risks associated with the TAD Sherbrooke Project; risks associated with the Sherbrooke Expansion Project; operational risks; significant increases in input costs; reduction in supply of fibre; increased pricing pressure and intense competition; Kruger Products' inability to innovate effectively; adverse economic conditions; dependence on key retail trade customers; damage to the reputation of Kruger Products or Kruger Products' brands; Kruger Products' sales being less than anticipated; Kruger Products' failure to implement its business and operating strategies; Kruger Products' obligation to make regular capital expenditures; Kruger Products' entering into unsuccessful acquisitions; Kruger Products' dependence on key personnel; Kruger Products' inability to retain its existing customers or obtain new customers; Kruger Products' loss of key suppliers; Kruger Products' failure to adequately protect its intellectual property rights; Kruger Products' reliance on third party intellectual property licenses; adverse litigation and other claims affecting Kruger Products; material expenditures due to comprehensive environmental regulation affecting Kruger Products' cash flow; Kruger Products' pension obligations are significant and can be materially higher than predicted if Kruger Products Management's underlying assumptions are incorrect; labour disputes adversely affecting Kruger Products' cost structure and Kruger Products' ability to run its plants; exchange rate and U.S. competitors; Kruger Products' inability to service all of its indebtedness; exposure to potential consumer product liability; covenant compliance; interest rate and refinancing risk; and risks relating to information technology; cyber-security; insurance; internal controls; trade; and risks related to COVID-19.
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.
INFORMATION:
Francois Paroyan
General Counsel and Corporate Secretary
KP Tissue Inc.
Tel.: 905.812.6936
francois.paroyan@krugerproducts.ca
INVESTORS:
Mike Baldesarra
Director of Investor Relations
KP Tissue Inc.
Tel.: 905.812.6962
IR@KPTissueinc.com
Kruger Products L.P.
Consolidated Statements of Financial Position
(thousands of Canadian dollars)
| December 31, 2022 | December 31, 2021 | |||||||
| $ | $ | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | 71,261 | 148,519 | ||||||
| Restricted cash | 7,145 | 2,506 | ||||||
| Trade and other receivables | 119,681 | 88,802 | ||||||
| Receivables from related parties | 223 | 271 | ||||||
| Advances to partners | - | 13,752 | ||||||
| Inventories | 286,566 | 251,071 | ||||||
| Income tax recoverable | 1,306 | 1,171 | ||||||
| Prepaid expenses | 5,640 | 5,455 | ||||||
| 491,822 | 511,547 | |||||||
| Non-current assets | ||||||||
| Property, plant and equipment | 1,294,838 | 1,224,698 | ||||||
| Right-of-use assets | 81,715 | 91,626 | ||||||
| Other long-term assets | 27,554 | 37,456 | ||||||
| Pensions | 83,080 | - | ||||||
| Goodwill | 152,021 | 152,021 | ||||||
| Intangible assets | 30,027 | 29,222 | ||||||
| Deferred income taxes | 95,711 | 75,742 | ||||||
| Total assets | 2,256,768 | 2,122,312 | ||||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Trade and other payables | 279,425 | 258,626 | ||||||
| Payables to related parties | 11,363 | 11,485 | ||||||
| Income tax payable | - | 300 | ||||||
| Distributions payable | 12,866 | 12,300 | ||||||
| Current portion of long-term debt | 34,411 | 48,550 | ||||||
| Current portion of lease liabilities | 28,349 | 30,170 | ||||||
| Current portion of long-term payable to related party | 5,800 | - | ||||||
| Current portion of provisions | 3,252 | 3,705 | ||||||
| 375,466 | 365,136 | |||||||
| Non-current liabilities | ||||||||
| Long-term debt | 1,077,297 | 920,331 | ||||||
| Long-term lease liabilities | 70,579 | 82,354 | ||||||
| Long-term payable to related party | 39,042 | 42,454 | ||||||
| Long-term provisions | 3,076 | 6,929 | ||||||
| Pensions | 20,847 | 58,481 | ||||||
| Post-retirement benefits | 43,739 | 57,331 | ||||||
| Liabilities to non-unitholders | 1,630,046 | 1,533,016 | ||||||
| Current portion of Partnership units liability | - | 14,064 | ||||||
| Long-term portion of Partnership units liability | 133,551 | 159,137 | ||||||
| Total Partnership units liability | 133,551 | 173,201 | ||||||
| Total liabilities | 1,763,597 | 1,706,217 | ||||||
| Equity | ||||||||
| Partnership units | 494,459 | 461,536 | ||||||
| Deficit | (87,835 | ) | (117,123 | ) | ||||
| Accumulated other comprehensive income | 86,547 | 71,682 | ||||||
| Total equity | 493,171 | 416,095 | ||||||
| Total equity and liabilities | 2,256,768 | 2,122,312 | ||||||
| Kruger Products L.P. | |||||||||||||
| Consolidated Statements of Comprehensive Income (Loss) | |||||||||||||
| (thousands of Canadian dollars) | |||||||||||||
| 3-month period ended December 31, 2022 | 3-month period ended December 31, 2021 | 12-month period ended December 31, 2022 | 12-month period ended December 31, 2021 | ||||||||||
| $ | $ | $ | $ | ||||||||||
| Revenue | 458,139 | 424,029 | 1,681,403 | 1,465,161 | |||||||||
| Expenses | |||||||||||||
| Cost of sales | 416,378 | 375,966 | 1,547,318 | 1,279,851 | |||||||||
| Selling, general and administrative expenses | 30,611 | 31,668 | 124,636 | 118,072 | |||||||||
| Loss on sale of non-financial assets | 1 | 4 | 12 | 9 | |||||||||
| Restructuring costs, net | 3,543 | 377 | 4,550 | 584 | |||||||||
| Operating income | 7,606 | 16,014 | 4,887 | 66,645 | |||||||||
| Interest expense and other finance costs | 20,658 | 22,785 | 74,468 | 70,710 | |||||||||
| Other (income) expense | (30,956 | ) | (5,838 | ) | 3,373 | 4,943 | |||||||
| Income (loss) before income taxes | 17,904 | (933 | ) | (72,954 | ) | (9,008 | ) | ||||||
| Income tax expense (recovery) | 1,908 | (43,184 | ) | (16,072 | ) | (51,007 | ) | ||||||
| Net income (loss) for the period | 15,996 | 42,251 | (56,882 | ) | 41,999 | ||||||||
| Other comprehensive income (loss) | |||||||||||||
| Items that will not be reclassified to net income (loss): | |||||||||||||
| Remeasurements of pensions | (69,666 | ) | (31,450 | ) | 122,075 | 106,968 | |||||||
| Remeasurements of post-retirement benefits | 1,009 | 891 | 14,767 | 6,910 | |||||||||
| Items that may be subsequently reclassified to net income (loss): | |||||||||||||
| Cumulative translation adjustment | (6,630 | ) | (1,721 | ) | 14,865 | (1,652 | ) | ||||||
| Total other comprehensive income (loss) for the period | (75,287 | ) | (32,280 | ) | 151,707 | 112,226 | |||||||
| Comprehensive income (loss) for the period | (59,291 | ) | 9,971 | 94,825 | 154,225 | ||||||||
| Kruger Products L.P. | ||||||||||||
| Consolidated Statements of Cash Flows | ||||||||||||
| (thousands of Canadian dollars) | ||||||||||||
| 3-month period ended December 31, 2022 | 3-month period ended December 31, 2021 | 12-month period ended December 31, 2022 | 12-month period ended December 31, 2021 | |||||||||
| $ | $ | $ | $ | |||||||||
| Cash flows from (used in) operating activities | ||||||||||||
| Net income (loss) for the period | 15,996 | 42,251 | (56,882 | ) | 41,999 | |||||||
| Items not affecting cash | ||||||||||||
| Depreciation | 32,008 | 20,789 | 98,452 | 82,081 | ||||||||
| Amortization | 1,142 | 1,099 | 4,419 | 3,638 | ||||||||
| Loss on sale of property, plant and equipment | 103 | 55 | 121 | 381 | ||||||||
| Change in amortized cost of Partnership units liability | (25,586 | ) | (4,971 | ) | (25,586 | ) | 5,312 | |||||
| Foreign exchange loss (gain) | (5,418 | ) | (1,258 | ) | 28,911 | (760 | ) | |||||
| Interest expense and other finance costs | 20,658 | 22,785 | 74,468 | 70,710 | ||||||||
| Pension and post-retirement benefits | 3,656 | 3,700 | 14,632 | 16,186 | ||||||||
| Provisions | 1,373 | 398 | 2,640 | 1,945 | ||||||||
| Income tax expense (recovery) | 1,908 | (43,184 | ) | (16,072 | ) | (51,007 | ) | |||||
| Loss on sale of non-financial assets | 1 | 4 | 12 | 9 | ||||||||
| Total items not affecting cash | 29,845 | (583 | ) | 181,997 | 128,495 | |||||||
| Net change in non-cash working capital | 20,004 | 53,974 | (65,241 | ) | (66,769 | ) | ||||||
| Contributions to pension and post-retirement benefit plans | (2,638 | ) | (4,071 | ) | (15,192 | ) | (15,522 | ) | ||||
| Provisions paid | (150 | ) | (100 | ) | (4,153 | ) | (4,273 | ) | ||||
| Income tax payments | (49 | ) | (533 | ) | (1,806 | ) | (2,552 | ) | ||||
| Net cash from operating activities | 63,008 | 90,938 | 38,723 | 81,378 | ||||||||
| Cash flows from (used in) investing activities | ||||||||||||
| Purchases of property, plant and equipment | (10,349 | ) | (26,693 | ) | (37,660 | ) | (46,131 | ) | ||||
| Purchases of property, plant and equipment and software related to the TAD Sherbrooke Project | (5,517 | ) | (5,601 | ) | (20,702 | ) | (93,874 | ) | ||||
| Purchases of property, plant and equipment related to the Sherbrooke Expansion Project | (23,174 | ) | (5,186 | ) | (53,118 | ) | (5,186 | ) | ||||
| Interest paid on credit facilities related to the TAD Sherbrooke Project | - | - | - | (608 | ) | |||||||
| Interest paid on credit facilities related to the Sherbrooke Expansion Project, net | 51 | - | (238 | ) | - | |||||||
| Government assistance received | - | 931 | 1,023 | 931 | ||||||||
| Purchases of software | (7 | ) | (50 | ) | (4,946 | ) | (824 | ) | ||||
| Proceeds on sale of property, plant and equipment | - | 5 | 1 | 13 | ||||||||
| Net cash used in investing activities | (38,996 | ) | (36,594 | ) | (115,640 | ) | (145,679 | ) | ||||
| Cash flows from (used in) financing activities | ||||||||||||
| Proceeds from long-term debt, net | (4,071 | ) | 14,085 | 244,255 | 239,282 | |||||||
| Repayment of long-term debt | (5,801 | ) | (2,030 | ) | (141,519 | ) | (23,943 | ) | ||||
| Payment of deferred financing fees | (218 | ) | (610 | ) | (3,036 | ) | (9,545 | ) | ||||
| Payment of lease liabilities | (6,850 | ) | (5,646 | ) | (28,113 | ) | (24,600 | ) | ||||
| Change in Restricted cash | (1,167 | ) | (1,068 | ) | (4,639 | ) | (2,506 | ) | ||||
| Interest paid on long-term debt | (15,750 | ) | (17,228 | ) | (51,948 | ) | (41,981 | ) | ||||
| Distributions and advances paid, net | (1,731 | ) | (10,466 | ) | (17,495 | ) | (51,826 | ) | ||||
| Net cash from (used in) financing activities | (35,588 | ) | (22,963 | ) | (2,495 | ) | 84,881 | |||||
| Effect of exchange rate changes on cash and cash | ||||||||||||
| equivalents held in foreign currency | 714 | (63 | ) | 2,154 | (800 | ) | ||||||
| Increase (decrease) in cash and cash equivalents during the period | (10,862 | ) | 31,318 | (77,258 | ) | 19,780 | ||||||
| Cash and cash equivalents - Beginning of period | 82,123 | 117,201 | 148,519 | 128,739 | ||||||||
| Cash and cash equivalents - End of period | 71,261 | 148,519 | 71,261 | 148,519 | ||||||||
| Kruger Products L.P. | |||||||||||||
| Segment and Geographic Results | |||||||||||||
| (thousands of Canadian dollars) | |||||||||||||
| 3-month period ended December 31, 2022 | 3-month period ended December 31, 2021 | 12-month period ended December 31, 2022 | 12-month period ended December 31, 2021 | ||||||||||
| $ | $ | $ | $ | ||||||||||
| Segment Information | |||||||||||||
| Segment Revenue | |||||||||||||
| Consumer | 378,814 | 363,959 | 1,394,052 | 1,260,103 | |||||||||
| AFH | 79,325 | 60,070 | 287,351 | 205,058 | |||||||||
| Total segment revenue | 458,139 | 424,029 | 1,681,403 | 1,465,161 | |||||||||
| Adjusted EBITDA | |||||||||||||
| Consumer | 42,709 | 43,726 | 117,428 | 167,289 | |||||||||
| AFH | 5,690 | (1,733 | ) | 7,375 | (4,907 | ) | |||||||
| Corporate and other costs | (3,993 | ) | (3,655 | ) | (8,812 | ) | (8,951 | ) | |||||
| Total Adjusted EBITDA | 44,406 | 38,338 | 115,991 | 153,431 | |||||||||
| Reconciliation to net income (loss): | |||||||||||||
| Depreciation and amortization | 33,150 | 21,888 | 102,871 | 85,719 | |||||||||
| Interest expense and other finance costs | 20,658 | 22,785 | 74,468 | 70,710 | |||||||||
| Change in amortized cost of Partnership units liability | (25,586 | ) | (4,971 | ) | (25,586 | ) | 5,312 | ||||||
| Loss on sale of property, plant and equipment | 103 | 55 | 121 | 381 | |||||||||
| Loss on sale of non-financial assets | 1 | 4 | 12 | 9 | |||||||||
| Other expense | 48 | 391 | 48 | 391 | |||||||||
| Restructuring costs, net | 3,543 | 377 | 4,550 | 584 | |||||||||
| Foreign exchange loss (gain) | (5,418 | ) | (1,258 | ) | 28,911 | (760 | ) | ||||||
| Consulting costs related to operational transformation initiatives | 3 | - | 3,550 | - | |||||||||
| Corporate development related costs | - | - | - | 93 | |||||||||
| Income (loss) before income taxes | 17,904 | (933 | ) | (72,954 | ) | (9,008 | ) | ||||||
| Income tax expense (recovery) | 1,908 | (43,184 | ) | (16,072 | ) | (51,007 | ) | ||||||
| Net income (loss) | 15,996 | 42,251 | (56,882 | ) | 41,999 | ||||||||
| Geographic Revenue | |||||||||||||
| Canada | 262,335 | 245,142 | 994,368 | 892,658 | |||||||||
| US | 195,804 | 178,887 | 687,035 | 572,503 | |||||||||
| Total revenue | 458,139 | 424,029 | 1,681,403 | 1,465,161 | |||||||||
| KP Tissue Inc. | ||||||||
| Statements of Financial Position | ||||||||
| (thousands of Canadian dollars) | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| $ | $ | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Distributions receivable | 1,790 | 1,781 | ||||||
| Income tax recoverable | 580 | 208 | ||||||
| 2,370 | 1,989 | |||||||
| Non-current assets | ||||||||
| Investment in associate | 79,338 | 78,727 | ||||||
| Total Assets | 81,708 | 80,716 | ||||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Dividend payable | 1,790 | 1,781 | ||||||
| Payable to Partnership | 170 | 246 | ||||||
| Current portion of advances from Partnership | - | 2,014 | ||||||
| 1,960 | 4,041 | |||||||
| Non-current liabilities | ||||||||
| Deferred income taxes | 5,718 | 806 | ||||||
| Total liabilities | 7,678 | 4,847 | ||||||
| Equity | ||||||||
| Common shares | 22,379 | 21,844 | ||||||
| Contributed surplus | 144,819 | 144,819 | ||||||
| Deficit | (108,008 | ) | (103,561 | ) | ||||
| Accumulated other comprehensive income | 14,840 | 12,767 | ||||||
| Total equity | 74,030 | 75,869 | ||||||
| Total liabilities and equity | 81,708 | 80,716 | ||||||
| KP Tissue Inc. | ||||||||||||
| Statements of Comprehensive Income (Loss) | ||||||||||||
| (thousands of Canadian dollars, except share and per share amounts) | ||||||||||||
| 3-month period ended December 31, 2022 | 3-month period ended December 31, 2021 | 12-month period ended December 31, 2022 | 12-month period ended December 31, 2021 | |||||||||
| $ | $ | $ | $ | |||||||||
| Equity income (loss) | 1,068 | 4,833 | (13,299 | ) | 800 | |||||||
| Dilution gain | 269 | 78 | 752 | 321 | ||||||||
| Income (loss) before income taxes | 1,337 | 4,911 | (12,547 | ) | 1,121 | |||||||
| Income tax expense (recovery) | 2,327 | 1,424 | (2,298 | ) | (118 | ) | ||||||
| Net income (loss) for the period | (990 | ) | 3,487 | (10,249 | ) | 1,239 | ||||||
| Other comprehensive income (loss) | ||||||||||||
| net of tax expense (recovery) | ||||||||||||
| Items that will not be reclassified to net income (loss): | ||||||||||||
| Remeasurements of pensions | (6,256 | ) | (3,584 | ) | 11,493 | 13,568 | ||||||
| Remeasurements of post-retirement benefits | 116 | 78 | 1,470 | 614 | ||||||||
| Items that may be subsequently reclassified to net income (loss): | ||||||||||||
| Cumulative translation adjustment | (908 | ) | (252 | ) | 2,073 | (294 | ) | |||||
| Total other comprehensive income (loss) for the period | (7,048 | ) | (3,758 | ) | 15,036 | 13,888 | ||||||
| Comprehensive income (loss) for the period | (8,038 | ) | (271 | ) | 4,787 | 15,127 | ||||||
| Basic earnings (loss) per share | (0.10 | ) | 0.35 | (1.03 | ) | 0.13 | ||||||
| Weighted average number of shares outstanding | 9,944,972 | 9,889,893 | 9,936,187 | 9,835,582 | ||||||||
| KP Tissue Inc. | ||||||||||||
| Statements of Cash Flows | ||||||||||||
| (thousands of Canadian dollars) | ||||||||||||
| 3-month period ended December 31, 2022 | 3-month period ended December 31, 2021 | 12-month period ended December 31, 2022 | 12-month period ended December 31, 2021 | |||||||||
| $ | $ | $ | $ | |||||||||
| Cash flows from (used in) operating activities | ||||||||||||
| Net income (loss) for the period | (990 | ) | 3,487 | (10,249 | ) | 1,239 | ||||||
| Items not affecting cash | ||||||||||||
| Equity loss (income) | (1,068 | ) | (4,833 | ) | 13,299 | (800 | ) | |||||
| Dilution gain | (269 | ) | (78 | ) | (752 | ) | (321 | ) | ||||
| Income tax expense (recovery) | 2,327 | 1,424 | (2,298 | ) | (118 | ) | ||||||
| Total items not affecting cash | 990 | (3,487 | ) | 10,249 | (1,239 | ) | ||||||
| Net change in non-cash working capital | - | 138 | (76 | ) | 233 | |||||||
| Tax refunds (payments) | - | (709 | ) | 38 | (4,020 | ) | ||||||
| Tax Distribution received, net | - | - | 38 | 1,738 | ||||||||
| Advances received | - | 571 | - | 2,049 | ||||||||
| Net cash from (used in) operating activities | - | - | - | - | ||||||||
| Cash flows from investing activites | ||||||||||||
| Partnership unit distributions received | 1,731 | 1,402 | 6,617 | 5,560 | ||||||||
| Net cash from investing activities | 1,731 | 1,402 | 6,617 | 5,560 | ||||||||
| Cash flows used in financing activities | ||||||||||||
| Dividends paid, net | (1,731 | ) | (1,402 | ) | (6,617 | ) | (5,560 | ) | ||||
| Net cash used in financing activities | (1,731 | ) | (1,402 | ) | (6,617 | ) | (5,560 | ) | ||||
| Increase (decrease) in cash and cash equivalents during the period | - | - | - | - | ||||||||
| Cash and cash equivalents - Beginning of period | - | - | - | - | ||||||||
| Cash and cash equivalents - End of period | - | - | - | - | ||||||||
