KP Tissue (TSE:KPT) and Kruger Products used their fourth-quarter fiscal 2025 earnings call to highlight a year of revenue growth, expanding profitability, and continued investment to support future capacity, including progress toward a proposed new U.S. tissue facility. Management said momentum carried into the end of the year, with adjusted EBITDA above an $80 million run rate for the second consecutive quarter.
Fourth-quarter results show higher volume and improved margins
For the fourth quarter of 2025, Kruger Products reported revenue of CAD 560.1 million, up 3.8% year over year, which executives attributed mainly to higher sales volume in both its consumer and away-from-home (AFH) segments. CEO Dino Bianco said revenue growth was “well diversified” between Canada and the U.S., noting that the U.S. comparison was difficult because revenue was up nearly 20% in the prior-year quarter.
Net income for the quarter was CAD 23.4 million, compared with a net loss of CAD 13.7 million in the fourth quarter of 2024. Keays said the change reflected a favorable foreign exchange difference of CAD 29.7 million and higher adjusted EBITDA, partly offset by higher income from non-controlling interests, higher income tax expense, and higher interest and other finance costs.
Segment performance: consumer strength and AFH margin gains
On a segmented basis, Keays said consumer revenue increased 4.3% year over year to CAD 472.3 million, driven by higher sales volume in both Canada and the U.S. Consumer adjusted EBITDA was CAD 78.1 million versus CAD 64.0 million a year earlier, with a margin of 16.5%, representing a 2-point improvement. Sequentially, consumer adjusted EBITDA was described as stable compared with the third quarter.
In AFH, revenue increased 1% year over year to CAD 87.8 million on slightly higher volume in Canada and the U.S., though Bianco said the segment declined sequentially due to seasonality. AFH adjusted EBITDA increased to CAD 9.7 million from CAD 4.6 million a year earlier, and the adjusted EBITDA margin improved to 11%. Management attributed the year-over-year profitability improvement in part to “network insourcing of paper” following the Sherbrooke expansion, with Keays adding that AFH adjusted EBITDA declined CAD 0.7 million sequentially from the third quarter.
During the Q&A, Bianco said he views the AFH business as a sustainable model and suggested that while quarterly results can be volatile, the segment should be “in the low double digits” on a long-term margin basis.
Full-year growth and pulp cost commentary
Bianco highlighted fiscal 2025 results that included 7.5% revenue growth and a 20.2% increase in adjusted EBITDA, marking a third consecutive year of profitable growth, according to management.
On input costs, Bianco said average pulp prices in Canadian dollars were mixed in the fourth quarter versus the previous quarter, ranging from a decline of 6.6% to an increase of 3.3% depending on grade. Year over year, average prices for NBSK and BEK declined 7.3% and 5.3%, respectively. Looking to 2026, he noted analysts expect pulp prices to trend upward over the year.
Asked whether higher pulp list prices could prompt consumer price increases or “de-sheeting,” Bianco said the company uses a pricing model that considers a bundle of inputs beyond pulp—including energy, labor, freight, and broader inflation—and that the company would monitor markets and react based on that model. He also noted that pulp price forecasts are “just that, they’re forecast.”
Another analyst asked whether fourth-quarter performance was driven by price or volume. Management responded that the quarter was “100% volume driven” with no specific price impact.
Operations: Memphis upgrades, safety milestones, and brand activity
Operationally, Bianco said production rates across paper machines and converting operations remained positive in the fourth quarter, helping the company exceed its targets for the full year. In Memphis, management cited a renewed asset strategy focused on premium products, driving sequential improvements across both paper machine and converting lines. The company’s new “state-of-the-art” converting line in Memphis remains on track for startup in early Q2 2026.
Bianco also said the company achieved record safety results across manufacturing assets in 2025, with several sites achieving milestones.
On brand support in Canada, Bianco outlined marketing and promotion activities across Cashmere, SpongeTowels, Bonterra, and Scotties, including a Cashmere feature on a televised “Project Runway Canada Design Challenge” episode and a “Scottie for Scotties” activation with Toronto Raptors player Scottie Barnes. The company also discussed the sixth edition of the Kruger Products Big Assist program, which management said has reached CAD 1 million in donations to date and will be highlighted in a new TV commercial during CBC’s broadcast of the Olympic Winter Games Milano Cortina 2026.
Using Nielsen data for the 52-week period ending Dec. 27, 2025, Bianco said the company posted incremental branded share gains in Canada, including:
- Facial tissue share up 130 basis points year over year to 46.3%
- Paper towel share up 130 basis points year over year to 25.3%
Balance sheet, capital spending, and the proposed western U.S. TAD facility
Keays said cash improved to CAD 196.1 million at quarter-end, up from CAD 149.1 million at the end of the third quarter, driven mainly by higher adjusted EBITDA and a decrease in working capital. Long-term debt was CAD 1,074.1 million, down CAD 9.4 million sequentially, contributing to a CAD 55.7 million reduction in net debt. The leverage ratio declined to 3.1x from 3.4x in Q3 2025.
Capital expenditures were CAD 33.4 million in Q4 and CAD 78 million for fiscal 2025. For 2026, management raised its CapEx range to CAD 100 million to CAD 120 million, including spending for the Memphis converting line and other strategic projects. In response to an analyst question, management said the 2026 plan includes only a small amount of preparatory spending for the proposed TAD project, with “first year expenses” described as fairly low.
Bianco said the company is finalizing details for a proposed new TAD tissue plant in the western United States slated to open in 2028 and anticipates a detailed announcement in the first half of 2026. In the Q&A, he identified key milestones before a final decision, including solidifying incentives and operational planning with a community under consideration, securing permits, and arranging project financing. Keays added that during the construction period, leverage could rise above four times for a short period, but the company expects to maintain an acceptable ratio in a range of four to five, “if not below.”
For the near term, Bianco said the company expects first-quarter 2026 adjusted EBITDA to be in a similar range to Q4 2025.
About KP Tissue (TSE:KPT)
KP Tissue Inc operates as a holding company. The firm produces, distributes, markets, and sells a range of disposable tissue products in North America. It offers bathroom and facial tissues, paper towels, paper towels, and napkins, as well as disposable wiping products and washroom dispensing systems.
