MISSISSAUGA, ON , May 9, 2014 (CNW) - KP Tissue Inc. ("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.
Q1 2014 Results
Net loss of $1.7 million in Q1 2014
Loss per share of $0.19 in Q1 2014
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 .
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.
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.