KP Tissue (KPT) investor relations material

Executive summary

• Q1 2026 revenue was CAD 544.6 million, down 0.3% year-over-year, mainly due to unfavorable FX and lower U.S. Consumer prices, but Canadian revenue grew 0.8% and AFH segment gains partially offset declines.

• Adjusted EBITDA rose 14.6% year-over-year to CAD 86.9 million, with margin improving to 16%, driven by lower pulp and warehousing costs.

• Net income increased to CAD 19.8 million from CAD 15.4 million in Q1 2025, aided by higher EBITDA, lower depreciation, and reduced finance costs.

• Strong operational performance with production rates exceeding targets and a new converting line ramping up in Memphis to support U.S. growth.

• Quarterly dividend increased to CAD 0.21 per share, reflecting a change in tax designation.

Financial highlights

• Gross profit grew 13.2% year-over-year to CAD 107.7 million, with gross margin at 19.8%.

• Adjusted EBITDA of CAD 86.9 million, up 14.6% year-over-year; margin improved to 16% from 13.9%.

• Net income margin increased to 3.6% from 2.8% year-over-year.

• Cash position improved to CAD 205.9 million; long-term debt reduced to CAD 1.058 billion.

• Total liquidity at March 31, 2026 was CAD 461.9 million.

Outlook and guidance

• Adjusted EBITDA for Q2 2026 expected to be in line with Q1 2026.

• Ongoing focus on margin delivery amid escalating input, fuel, and freight costs; pricing actions will be considered if necessary.

• New Memphis converting line to drive U.S. capacity and sales growth.

• TAD facility in western U.S. expected to start up in late 2028, with final incentives and financing being secured.

• Strategic CAPEX for 2026 expected at CAD 100–120 million, focused on growth projects.