KP Tissue Inc.

Good morning and welcome to KP Tissue's third quarter 2025 results conference call. Today's call is being recorded for replay. All participants are currently in listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. If at any time you have difficulties hearing the conference, please press star followed by zero for operator assistance. I will now turn the call over to Doris Gerbic Director of Investor Relations, you may begin your conference.

Thank you, Operator. Good morning, everyone, and thank you for joining us to review Kruger Products' third quarter 2025 financial results. With me this morning is Dino Bianco, the CEO of KP Tissue and Kruger Products, and Michael Keyes, the CFO of KP Tissue and Kruger Products. Today's discussion will include certain forward-looking statements. Actual results could differ materially from these forward-looking statements due to known and unknown risks and uncertainties. A list of risk factors can be found in our public filing. In addition, today's discussion will include certain non-GAAP financial measures. The reconciliation of these non-GAAP financial measures to the most comparable GAAP measure can be found in our MD&A. The press release recording our Q3 2025 results was published this morning and will be available on our website at kptissue.com. The financial statements and MD&A will also be posted on our website and on CDAR+. The investor presentation to accompany today's discussion can be found in the investor relations section of our website. I will now turn the call over to our CEO, Dino Bianco. Dino?

Thank you, Doris. Good morning, everyone, and thank you for joining us for our third quarter earnings call for fiscal 2025. We accelerated profitable growth in the third quarter of 2025, highlighted by strong adjusted EBITDA of $85.7 million on revenue of $561.1 million. We are particularly pleased with consumer share gains in the paper towel and facial tissue categories, which grew over a 52-week period despite a highly competitive market. In terms of our away-from-home division, or Kruger Pro, as we call it now, sales and profitability increased by both year-over-year and sequentially, bolstered by consumer brands like Scotty's and Cashmere selling well in the commercial market. Looking ahead, we are on our way to delivering a third consecutive year of strong financial results. In addition, we have significantly deleveraged our balance sheet to prepare for the next phase of investment. Now let's take a look at our quarterly numbers on slide six. Revenue growth of nearly 8% in the third quarter of 2025 was driven by higher sales volume in our consumer business, favorable selling prices across both consumer and AFH segments, and a positive foreign exchange impact. Revenue in Canada rose 6.8% in the third quarter, while US sales grew 8.8% year over year. In terms of profitability, adjusted EBITDA increased 30.4% year over year to reach $85.7 million The significant improvement in adjusted EBITDA can be attributed to higher sales volume, favorable selling prices, lower pulp prices, and reduced freight costs. These factors were partially offset by a number of items, including higher manufacturing overhead costs, which Michael will provide more details on in his review. On slide 7, average pulp prices in Canadian dollars decreased single digits in the third quarter of 2025 from the previous quarter, while year-over-year average prices for both NBSK and BEK declined 2.6% and 18.4% respectively. Heading into the upcoming year, industry analysts do expect pulp prices to trend upwards. Let's move on to our operations on slide 8. To increase tissue capacity and accelerate the growth of our business, we are proud to announce the construction of a new state-of-the-art tissue plant in the western United States to better serve our fast-growing U.S. business with ultra-premium tissue products. The new facility, equipped with the most modern TAD paper machine and related converting lines, will have annual production capacity of approximately 75,000 metric tons, and the startup is scheduled for 2028. Location, project scope, and financing details will be announced at a later date. The new facility, along with our Memphis plant and nine existing Canadian plants, gives us a strong network to service our growing North American business. Looking at our current operations, overall our network production rates exceeded our targets for the third quarter. In Memphis, we are seeing positive benefits from our renewed asset strategy focused on producing premium products. Converting manufacturing results in Memphis improved sequentially, while our new multi-purpose converting line is on track for startup in the second quarter of 2026. We expect to deliver an improved cost structure in 2026 following the closure of our old legacy equipment last quarter. Finally, our Sherbrooke expansion assets continue to perform above expectations. Turning to brand support on slide nine, we sustained our Made in Canada positioning in Q3 2025, supported by widespread in-store promotions across our portfolio. During the third quarter, we also continued equity building campaigns behind Cashmere, Purex, Sponge Towels, Scotties, and Bonterra to strengthen our brand presence in their respective categories. In addition, we pursued targeted expansion and support behind our premium product portfolio, including Scotty's Ultra Soft, Cashmere and Purex Ultra and Ultra Luxe, as well as Sponge Towels Pro and Premium. We also launched our 22nd Annual Cashmere Collection in support of breast cancer awareness prevention and treatment programs. Inspired by this year's theme of Tapestry of the North, 16 of the top Canadian designers showcased garments made entirely of cashmere, Canada's leading bathroom tissue, at a galley evening and fundraiser in Toronto on September 16th. The annual campaign has raised over $5 million for the breast cancer cause since 2004 through the Canadian Cancer Society and the Quebec Breast Cancer Foundation. Turning to slide 10. The data presented is taken from Nielsen and shows Kruger Products' branded market share in Canada over a 52-week period ending September 6, 2025. The figures reflect strong growth for Kruger Products in the paper towel category compared to the same period last year, as sponge towels increased share on the strength of heightened brand support. In terms of facial tissue, our market-leading Scotties brand also enjoyed solid share gains driven by innovations in the premium product segment. For bathroom tissue, our share declined slightly over the same period due to higher pricing taken in our Canadian consumer segment in the fourth quarter of last year. Looking at our away from home segment, on slide 11, sales volume increased both year-over-year and sequentially in the third quarter of 2025. Similarly, revenue and profitability improved in the third quarter, highlighted by a robust 11.2% adjusted EBITDA margin. As mentioned earlier, these strong financial results were supported by consumer brands like Scotty's and Cashmere selling well in the commercial market, along with growing Made in Canada segment among distribution partners and end users. The expanded insourcing of our own paper also contributed to enhanced profitability and converting efficiency. And finally, we introduced Titan wipers and cloths to our AFH portfolio in the third quarter, to meet the evolving needs of customers seeking high performance and reliability for the most demanding cleaning jobs. With a bold new name and look, Titan reflects Kruger Pro's vision of being a trusted partner to our customers. Equally important, this new product line enables Kruger Pro to increase its share in the rapidly growing commercial wiper and cloth market. With that, I will now turn the call over to Michael.