KP Tissue Q3 2025 slides: Revenue up 7.7%, EBITDA soars 30.4% amid expansion plans

Introduction & Market Context

KP Tissue Inc. (TSX:KPT) presented its third-quarter 2025 financial results on November 13, showcasing strong performance across its business segments. The company, which holds leading positions in multiple tissue product categories in North America, reported significant year-over-year growth in both revenue and profitability, outperforming analyst expectations.

Following the earnings announcement, KPT’s stock rose 0.85% to $9.50, approaching its 52-week high of $9.69. The company’s shares have shown resilience, trading well above the 52-week low of $7.54, reflecting investor confidence in its growth strategy and operational improvements.

Quarterly Performance Highlights

KP Tissue delivered impressive financial results for Q3 2025, with revenue reaching $561.1 million, a 7.7% increase compared to the same period last year. The company’s adjusted EBITDA showed even stronger growth, jumping 30.4% year-over-year to $85.7 million.

As shown in the following quarterly highlights:

Net income for the quarter stood at $14.6 million, a substantial improvement from the $3.4 million loss reported in Q3 2024. This performance significantly exceeded analyst expectations, with earnings per share of $0.836 outperforming the forecasted $0.1433 by 483.39%.

The company’s growth was geographically balanced, with revenue in Canada increasing by 6.8% to $19.1 million and U.S. revenue rising by 8.8% to $20.9 million compared to the prior year.

Detailed Financial Analysis

KP Tissue’s quarterly financial summary reveals consistent improvement across key metrics, with both sequential and year-over-year growth:

The adjusted EBITDA margin expanded to 15.3% in Q3 2025, up from 12.6% in the same period last year and 13.5% in the previous quarter. This margin improvement was driven by several factors, including higher sales volume, increased selling prices, lower pulp prices, and reduced freight costs.

When examining segment performance, both the Consumer and Away-From-Home (AFH) divisions contributed to the overall growth. Consumer segment revenue reached $468.3 million, while the AFH segment generated $92.8 million in revenue:

The company’s balance sheet also showed improvement, with net debt decreasing by $87.9 million on a sequential basis to $1,032.3 million. The leverage ratio, measured as Net Debt to LTM Adjusted EBITDA, declined to 3.4x, reflecting stronger earnings and debt reduction.

A key factor in the company’s improved profitability was the favorable movement in pulp input prices. During Q3 2025, NBSK average prices in Canadian dollars decreased 7.1% and BEK average prices were down 8.6% sequentially, providing a tailwind for margins.

Strategic Initiatives & Future Outlook

KP Tissue maintains strong market positions across its product categories, holding the #1 position in both bathroom tissue (32.1% market share) and facial tissue (45.4% market share), as well as the #2 position in paper towels (25.3% market share) in Canada:

The company announced plans for a new Through-Air-Dried (TAD) tissue plant scheduled to begin operations in 2028, which will enhance its production capacity to serve the growing U.S. market. CEO Dino Bianco emphasized the importance of this expansion, stating, "We are preparing for the launch of a new state-of-the-art tissue plant in 2028 to better serve our fast-growing U.S. business."

Capital expenditures for 2025 are projected to be between $70-$80 million, including investments in the Sherbrooke Expansion Project. For 2026, the company anticipates CAPEX of $70-$90 million, reflecting its continued focus on strategic growth initiatives.

The Away-From-Home segment, branded as Kruger Pro, showed promising results with growth in volume, revenue, and profitability both year-over-year and sequentially. The company launched the TITAN® Wipers and Cloths brand in Q3 to drive growth in the wiper category, while in-sourcing of paper has improved profitability and converting efficiency.

Sustainability Focus

KP Tissue has established ambitious sustainability targets to be achieved by 2030, demonstrating its commitment to environmental stewardship and social responsibility:

The company’s sustainability strategy encompasses four key areas: Products Empower, Planet Conscious, Employee Impact, and Community Embrace. Specific targets include utilizing 100% third-party certified fibers, reducing greenhouse gas emissions by 35%, decreasing water consumption by 35%, and reducing virgin plastic packaging in branded products by 50%.

These sustainability initiatives align with growing consumer preferences for environmentally responsible products and may provide a competitive advantage in both retail and commercial markets.

Looking ahead, KP Tissue expects Q4 2025 adjusted EBITDA to remain similar to Q3, as it continues to focus on long-term market share growth and operational efficiency. While the company faces potential challenges from economic volatility and competitive pressures, its strong brand portfolio, operational improvements, and strategic investments position it well for continued growth.

Full presentation:

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