Hello, and welcome to the annual meeting of shareholders of KP Tissue Inc. Please note that today's meeting is being recorded. During the meeting, we will have a Q&A session. You can submit a written question at any time by clicking on the message icon at the top of your screen. Please note that your registered name will be announced along with your question during the Q&A session, following the formal portion of the meeting. Guests will not be able to submit questions. Please also note that all participants are in listen-only mode. If you experience technical difficulties during the meeting, please click on the support link on the broadcast screen. It is now my pleasure to turn today's meeting over to Michael Korenberg, its Board Chair. Mr. Korenberg, the floor is yours.
Thank you so much. Good afternoon, ladies and gentlemen. Welcome to the annual meeting of shareholders or AGM of KP Tissue Inc. As Daniel said, my name is Michael Korenberg. I'm the Chair of KP Tissue, and I'm gonna act as Chair of the business portion of today's meeting. We're very pleased you could join us for our AGM. This is our first trying out as a virtual AGM, and we're pleased that you're here. Through this virtual meeting platform, which is accessible to all of our shareholders, regardless of their physical location, we're giving people the opportunity to submit questions and to vote. While it's historically been our practice to hold our annual meetings in person, due to the challenges presented by social distancing, we felt that it would be more prudent to hold the AGM using this Lumi platform.
Joining us today on the virtual meeting are Dino Bianco, the Chief Executive Officer, Mark Holbrook, the Chief Financial Officer, and François Paroyan, the General Counsel and Corporate Secretary of the company. Also joining us online are my fellow KPT directors, James Hardy, Michel Letellier, and Louise Denise Wendling, as well as the directors of KPGP, including two generations of the Kruger family, Dr. Joseph Kruger II, Gene Kruger, and Sarah Kruger, as well as the two senior officers of Kruger Inc., David Angel and David Spraley. As indicated on the meeting agenda displayed on your screen, if you experience any technical issues during the meeting, please email them to tsxtvgminfo@tmx.com. That email is included on the agenda. A question period will be held following the formal business portion of the meeting.
Shareholders and duly appointed proxy holders are invited to submit questions anytime online by clicking on the Ask a Question icon and then typing their question in the message box and then clicking the Send button. In an online format, we may receive questions of a similar theme, and your specific question may be grouped or summarized in the interest of efficiency and allowing us to address as many themes as possible. Questions sent via the online platform will be sent to either me as chair of the meeting or to the CEO by François, our corporate secretary. I encourage you to submit your questions as soon as possible so we can address them during the question period. Before we begin, let me remind you that during the course of this meeting, we may make certain statements which contain forward-looking information.
These statements reflect the corporation's current expectations regarding future events. Actual results could differ materially from the conclusion, forecast, or projection in the forward-looking information and depend on a number of factors or assumptions applied in drawing a conclusion or making a forecast or projection in the forward-looking information. Additional information on these factors and assumptions, including a more complete discussion of the risks and uncertainties facing KP Tissue, appears in the corporation's 2019 management discussion and analysis, as well as the annual information form, both of which are available to review on SEDAR. I'm now going to officially call the annual meeting to order and appoint François Paroyan as the secretary of the meeting, and Julien Lavallière and Oliver Keung of the TSX Trust Company to act as the scrutineers of the meeting.
Only registered shareholders who held their shares in their name as of April 15, 2020, the record date for this meeting, or their duly appointed proxy holders, are entitled to vote at this meeting. I'll now commence the formal business of the meeting. The business of the meeting is described in the Management Information Circular dated April 27, 2020, which accompanied the Notice of Meeting. I will take the Notice of Meeting as having been read. We will conduct the votes on the matters before us by a poll. On a poll, each registered shareholder or their duly appointed proxyholder that has not voted prior to the meeting is entitled to vote on each matter. As a reminder, each share equals one vote. The poll will be open for all motions at the same time.
This will allow you to choose to vote on each matter immediately or wait until conclusion of discussion on each matter prior to casting your vote. Votes may be changed up to the time voting is closed. Once discussion on all items of business has concluded, I will give you a minute to enter your votes and then declare voting closed on all motions. The voting results on each motion will be included in a press release that will be issued and filed on SEDAR later today. We will run through each of the items on the agenda in turn. I now declare the polls to be open on all motions.
The corporate secretary of KP Tissue has advised me that the notice of meeting, calling this meeting, together with a form of proxy for the fiscal year ended December 31, 2019, have been sent to each director of the corporation to the auditors of the corporation and to each intermediary and registered holder of common shares of the corporation of record on April 15, 2020, the record date for this meeting. As indicated in the form of proxy, the corporation elected to utilize Notice and Access with respect to the delivery of the management proxy circular, and provided shareholders with information on how to access the management proxy circular for this meeting online. Our scrutineers have provided me with a preliminary report regarding shareholder attendance at this meeting.
They report that there are present at this meeting, virtually or by proxy, shareholders holding 4,549,731 common shares. Accordingly, the requisite quorum of shareholders is present, and the meeting is duly and properly constituted for the transaction of business. I direct that the confirmation of mailing of the notice of meeting received by TSX Trust Company and the scrutineers' complete report on attendance be annexed to the minutes of this meeting. The next item of business is the presentation of the corporation's audited consolidated financial statements as at and for the fiscal year ended December 31, 2019, and the auditor's report on them. These documents were mailed to the shareholders who requested a copy. Additional copies of these materials are also available on our company's website as well as through SEDAR.
I would ask the secretary to attach a copy of the corporation's 2019 financial statements and auditor's report to the minutes of this meeting. Next is our first item of business for voting regarding the election of directors. We'll proceed with the election of directors until the next annual general meeting. The number of directors to be elected at the meeting is four. Four nominees were named in the Management Proxy Circular, namely myself, James Hardy, Michel Letellier, and Louise Denise Wendling. I shall now call for the aforementioned individuals to be formally nominated for election as directors of the corporation.
Mr. Chairman, my name is Mike Baldesarra. I'm a proxy holder of the corporation. I nominate the following persons for election as directors, as specified in the management proxy circular dated April 27, 2020. Michael Korenberg, James Hardy, Michel Letellier, Louise Denise Wendling.
Thank you very much, Mike. Is there a seconder for the motion?
Mr. Chairman, my name is Mina Fior, and I am a proxy holder. I second the motion.
Thank you, Mina. As there are no further nominations made in accordance with the advance notice procedure set out in the corporation's bylaws, I declare that the nominations are, in fact, closed. Unless there are any questions, we will proceed by a vote for the election of directors. François, are there any questions?
No questions, Mr. Chair.
Thank you. I'll now call for a vote to elect the nominees. Please cast your votes for voting item one before we move to the next item. I'll give you some time to do that. Thank you. Thank you. You can continue voting, but I'll move to the next item. The next item of business is the reappointment of the auditors, PricewaterhouseCoopers LLP, Chartered Accountants, the current auditors of the corporation. They've been proposed as auditors of the corporation to hold office until the next annual meeting of shareholders.
May I therefore have a motion that PricewaterhouseCoopers LLP, Chartered Accountants, be reappointed as auditors of the corporation until the next annual meeting of shareholders or until a successor is appointed?
This is Mike Baldesarra. I so move.
Thanks, Mike. Is there a seconder for the motion?
I second the motion.
Thank you, Mina. Unless there are any questions, we'll proceed by vote for the reappointment of the auditors. So I'll wait for François to advise me if there's any questions.
There are no questions.
Thank you. I'll now therefore call for a vote to reappoint the auditors. To carry the motion, we need the affirmative vote of at least a majority of the votes cast by the shareholders present at today's meeting. All members, all shareholders, or the proxy holders, please cast your votes now on item two. I'll wait a little while for you to complete that vote. For any of you who have not voted on all of the motions, please do so now, as I shall shortly close the polls. Just wait 15 more seconds until the polls are closed on all motions. Thank you.
In accordance with the procedures set for this meeting, the polls are now closed. Thank you for your attention. Given that over 98% of the shares entitled to vote at this meeting have already been voted in favor of the election of the directors, and I should note that Denise Wendling, Madam, received the most votes, as well as 98% of the shares were voted in favor of the election of the auditors, I declare the motions have been passed. Thank you on behalf of your board of directors to all of our shareholders for your ongoing support. The corporation will report the detailed results of voting for each nominee to the board and to the auditors in its report on voting results to be filed on SEDAR at www.sedar.com after this meeting by way of press release.
That wraps up the official portion of our AGM. If there is no other business to be brought before the meeting itself, I will ask for a motion that the meeting be concluded.
Mr. Chairman, I propose that this meeting be concluded.
Thank you, Mike. Would someone be prepared to second the motion?
Yes, I second the motion.
Thank you, Mina. That concludes the business portion of the meeting, but the really important part of it is now the session that will be led by our Chief Executive Officer, Dino Bianco, who will address the meeting on behalf of management to provide a business overview, including our fiscal 2019 results. Over to you, Dino.
Thank you, Michael. Good afternoon, ladies and gentlemen. Thank you for joining us for the annual meeting of shareholders of KP Tissue. This is certainly not the format we envisioned for our AGM, but no one could have predicted the events of the past few months. There will be a Q&A session after my remarks, and you will be able to ask your questions online at that time. During this presentation, I will refer to Kruger Products or KPLP, which is the operating entity. Let's start on slide five. I'd like to begin with our vision and mission that we introduced last year. Our vision is to be the most trusted and best-loved tissue company in North America. Considering the current situation affecting our daily lives, this statement that guides all our initiatives seems more relevant than ever, with the emphasis placed on the words trust and love.
We believe that it's truly important to create an emotional bond with all our stakeholders. We do feel the responsibility of living up to these expectations, especially during these difficult times. Our mission is quite clear and simple, making everyday life more comfortable. We recognize the need for our products to bring comfort in the daily lives of our consumers. On line six, our vision is support or on slide six, I should say, our vision is supported by five underlying strategies, which are pivotal to drive strong long-term revenue and profit growth and build shareholder value. At a very high level, these strategies include building our consumer muscle, expanding in the U.S. and away from home, building a more efficient supply chain, evolving our customer strategy, and having a winning team and culture.
As I go through the presentation, you will see elements of these strategies come to life. On slide 7, I am pleased to say we posted solid results for 2019, and we made notable advances in several areas. We progressed on the construction of our important TAD facility in Sherbrooke. We launched our operational and logistics excellence programs. We implemented pricing actions in response to cost increases. We sequentially improved the performance of our away from home business, and we are growing trademark share. COVID-19 hit in March, and we quickly responded to the challenges brought on by this unprecedented crisis, and I'm very proud of how our people rose to these challenges. Now, please go to slide 8 and 9 for our discussion related to COVID-19.
We saw early signs of the pandemic, and it activated our pandemic response and business continuity teams and protocols in late February. Our first and foremost priority was for the welfare and safety of our employees. We took immediate steps to ensure their well-being with supplemental measures taken in our production facilities and had our office staff work from home. A crisis of this magnitude has effects in so many ways, and it is a tribute to our employees that we maintain our production without any major disruption as our people dealt with their own family issues as well. It was essential to keep our employees safe while being able to meet the surge in demand for all our products. As for the impact of COVID-19 on sales, we saw a very well-publicized rush on consumer tissue products beginning in early March.
This was driven by pantry loading and increased usage as people worked from home. While there was much publicity about bathroom tissue, demand of paper towels and facial tissue also benefited from stay-at-home measures and from increased usage due to heightened personal hygiene habits. However, over the next few months, we expect consumer demand to normalize, driven by high personal inventories and as people start returning to work. Although our away-from-home business performed well in the Q1 of this year, we do expect the business to face future headwinds considering end market closures and a projected slow recovery. As a way of giving back to the community, particularly to those hardest hit by the crisis, we elevated our corporate giving by providing tissue products and financial support to food banks and frontline healthcare workers in both Canada and the United States. Let's turn to slide 10.
We present our financial performance over the past five years. Our numbers last year were quite respectable, with solid gains in key metrics, particularly during the second half of the year. Excluding the impact of the divested Mexico business, our revenues increased by 5.8% to CAD 1.4 billion. This was on top of a 7% increase in revenue in the previous year. Adjusted EBITDA for 2019 totaled CAD 145 million, an increase of 22.6% over last year. This reflects volume growth and the benefit of previous pricing actions in all our business segments, as well as favorable cost environment as we move through the second half of the year. On slide 11, I wanna touch a little bit on our Q1 results.
The unprecedented COVID-19 consumer demand that I have discussed resulted in exceptional results for our Q1 of 2020. Revenue increased by CAD 24.1 million or 6.9% to CAD 375 million on the quarter, while our adjusted EBITDA grew by a remarkable 116% to CAD 51 million. These results were primarily driven by strong demand for our products. As I said earlier, we see sales normalizing during the Q2, as well as reduced demand for our away-from-home products. For an update of TAD Sherbrooke on slide 12, we started construction of the facility in May 2019. We chose Sherbrooke, Quebec, as this location is well-positioned for the North American markets we serve, and it was also the most financially attractive option.
As a reminder, this project, which provides us with a second state-of-the-art TAD machine, is being funded by a CAD 575 million financing facility and is non-dilutive to shareholders. Despite a temporary halt to the work in March at the height of the pandemic, I'm pleased to say that this project is essentially progressing on time and on budget. Capital expenditures in 2019 for this project reached CAD 143.1 million, and are expected to be between CAD 340 million and CAD 365 million for the current year. The start of production is slated for early 2021, and we are ready to ramp up TAD-enabled product sales with new and existing customers across North America.
TAD Sherbrooke was designed to allow our paper towels to be manufactured at very high speeds, and is expected to produce an additional 70,000 metric tons per year. This plant will be central to our long-term North American growth strategy in the ultra-premium tissue segment. On slide 13, we put in place an operational excellence improvement plan, one that we call the OpEx program. This was implemented at the beginning of 2019. The five key pillars of the program are environment, health and safety, asset care, progressive maintenance, end-to-end quality, and strategic deployment. Together with the logistics program, this is expected to yield significant savings, estimated at between CAD 15 million and CAD 20 million on a run rate basis by the end of the current year. This ambitious undertaking will drive manufacturing excellence and increase capacity.
We are into year 2 of OpEx, and it has now been rolled out to all our sites. We are seeing tangible benefits with more constant, improved performance at all our plants and assets. During the Q1 of 2020, we were able to reduce our reliance on outsourced manufacturing when compared to last year, and we are now expanding the focus of the program to help us reduce waste. I am very pleased with the cultural shift and ownership of our employees of this program, and the progress to date has been excellent. We are delivering against the objectives that we set. On slides 14 and 15, I'd like to review our trademark business. We have some of the best-recognized and loved brands in Canada, and our focus remains on further building our brands to even stronger and more resilient positions.
In the consumer segment, we continue to be the clear Canadian leader in two of the three main categories and in overall tissue market share. We are increasing our investments to make our products even better through meaningful innovations and enhanced quality. Marketing and the support of our brands to connect with additional consumers is very important for Kruger Products. The ongoing pandemic has forced us to rethink some of our marketing initiatives and plans for the year with a significant change in strategy and tactics. However, we remain committed to continue to spend the increased marketing investment for this year. In the bath and tissue category, we are unquestionably the recognized Canadian market leader with an approximate 34% market share. And with a market share of 31% in the facial tissue category, we hold a very comfortable lead over our closest competitor.
In paper towels, our market share is approximately 21%, which gives us a strong number two position to grow from. We have been able to maintain this market leadership with the support of exceptional brands, strong and comprehensive product offering, key innovations, and the recognized quality of our tissue. Consumers know they can count on us and our products. You may also recall that late last year, we signed a multi-year exclusive partnership with the NHL, as we feel this agreement will strengthen our Canadian roots with the connection to hockey. This is one partnership among many other long-term collaborations in our portfolio. Over the years, we have been closely associated with the Scotties Tournament of Hearts, the Canadian Cancer Society, Nature Conservancy of Canada, and the Rogers Cup, just to name a few.
We know our consumers support brands that align to causes and entities that matter to them. Moving to the away from home segment on slide 16. This segment sells commercial tissue products, primarily through distributors, to businesses involved in property management, healthcare, education, food service, lodging, and other public facilities. Products consist primarily of bathroom tissue, facial tissue, paper towels, and napkins. We are the leader in Canada with a market share of approximately 30%, and away from home represents approximately 17% of total Kruger Products revenue. AFH results were negatively impacted early in 2019 by higher pulp and freight costs, combined with a competitive environment and increased outsourcing costs. However, performance sequentially improved during the year, driven by price increases and the growing traction of our OpEx program.
The adjusted EBITDA contribution during 2019 in the Q4 remained negative, but marked a significant improvement over the prior quarters. Away-from-Home has had a relatively good start to 2020, supported by solid orders and some crossover opportunities with the consumer segment. Results for the Q2 and going forward will face more challenging market conditions due to the severe impact of COVID-19 on AFH end user markets. Much has been accomplished with the OpEx program to rebuild and create stronger foundations for this business. However, at this stage, future performance will be primarily driven by market demand, which, given the evolving environment, is very difficult to predict. On slide 17, we present a small sample of our 2019 Employee and Corporate Social Responsibility Awards. Corporate social responsibility is very important for us and for the many stakeholders we represent.
We are proud of our role in the community, supporting various worthy causes and doing our part to protect the environment. You may be interested in some of these recognitions we have received over the past 12 months, specifically, Corporate Knights Best Corporate Citizens in Canada for the second consecutive year, Canada's Best Managed Companies Award for the second year in a row, Forbes Canada's Best Employers for the third consecutive year in a row, and Greater Toronto Area Top Employer for the seventh year. On slide 18, we present some of our sustainability efforts. In 2010, we launched our initial five-year sustainability development program, followed by a second five-year plan, which culminates this year. This important initiative will be further renewed going forward. Our most recent program has been highly successful.
We have delivered on the ambitious four main objectives we set for ourselves, notably reducing energy consumption, reducing water consumption and greenhouse gas emissions, as well as improving employee health and safety. Our efforts are focused on balancing the three Ps of our people, the planet, and profit. Let me now end my presentation on slide 19. Notwithstanding a volatile market environment, our vision and long-term strategies remain unchanged. Our products are non-discretionary consumer goods, which allows us to focus on driving top-line growth across North America. We have strong brands, and we will continue to invest in those brands for the long term. Our new TAD Sherbrooke facility will give a state-of-the-art tissue capacity to grow in the ultra-premium segment. The OpEx program is creating a more efficient supply chain network, and given the headwinds in AFH, we are executing a plan to improve its performance long term.
However, the foundation of our strategy is developing a strong, results-driven, and inclusive culture. On a personal note, I cannot thank our employees enough for their remarkable commitment and passion, especially during these very challenging times. It is this loyalty and dedication to the success of our company that makes me so proud. Despite the pandemic and our supply demands, our employees also took time to give back to those in need. To each and every one of the 2,500 employees across North America, thank you, and merci. I also want to express my heartfelt gratitude to the members of our board for their valuable advice and guidance. Much has been accomplished since I joined Kruger Products as CEO just over 2 years ago, and the board has been highly supportive every step of the way.
Thank you as well to our consumers, customers, and suppliers for making us a company of choice. To you, our shareholders, be assured that everything we do is geared towards enhancing shareholder value. I am convinced that the initiatives we are undertaking will make us a better company and deliver stronger, sustained returns. Hopefully, next year, we will have the opportunity to see each other face to face. Please stay safe, and thank you for being with us today. I will now turn the meeting back to François Paroyan.
Thank you, Dino. We will now entertain questions from our shareholders. Again, if you are a shareholder or proxy holder and have questions, please feel free to submit your questions online. Our first question is, where will your future growth come from? Will it be primarily from TAD Sherbrooke? Dino, could you answer that question?
Yes, thank you, François. I love this question, because, you know, as a company, we are absolutely growth-focused. And if I look at this question, if you think about organic growth, it'll come from several areas. And yes, most of them will be enabled by TAD Sherbrooke, but also by our existing asset base. Let me just walk through some vectors that I think are gonna yield growth for our business. First of all, as I said earlier, the tissue market is a non-discretionary category. It will continue to grow 1% to 2% across North America. The other opportunity for us is gaining share, particularly in paper towels, where I think we have room to grow in our paper towel business in Canada.
We also are undertaking new U.S. private label customers, particularly supplying ultra-premium private label. We have branded growth opportunity in the U.S. with our White Cloud brand. We are driving new innovation going forward in the areas of sustainability, our facial category, and napkins. And even our away-from-home growth is an opportunity, particularly in upscale branded products and with new customers. So I think the future looks very bright for our business, and we are enabling an asset base that will allow us to continue to grow, and we will continue to invest in our assets to make sure that we can meet the growing demand of the future.
Our next question is: how will the uncertainty of post-COVID-19 impact your business? Dino, could you take that one as well?
That's a tough one. My crystal ball broke about three months ago, so this one's a difficult one. I did learn one thing, though. I did learn that toilet paper is the most important product ever for consumers. So it's been an interesting few months. A lot of learning is going on. I would say one of the things, and I've talked about this before, as a company and as a leader, we're gonna be facing a lot of uncertainty, and the key is to stay focused on our values and our principles, because that will guide us to make the right decisions. And we've also learned that we need to be ready for anything. In you know, in technology, they refer to it as ITTT, if this, then that.
You know, we have to be ready. If this happens, then what are we gonna do? And that's. That means a lot of scenario planning. One of the fallouts of the last couple of months is we were able to reduce the number of SKUs that we produce and ship to the market. This helped us become more efficient, increased our capacity, it helped our customers manage fewer SKUs, and it gave consumers what they want. I'd like to be able to stay to that principle. We may be adding some SKUs back as we move, start to move out of this crisis, but the learnings have been incredible, and I think it provides for a more efficient, tissue supply chain. We're also relooking at how our brands connect with our consumers.
They are very, very much in a different emotional state today and coming out of this crisis. We wanna make sure that our brands are sensitive, compassionate, and relevant for those consumers, as they've been in the past, but in the new, in the new sphere of where consumers' minds and hearts are. You know, I think the other area for us is, is continuing to be vigilant on the safety of our employees. You know, it's always been part of who we are.
It's taken now, I think, a broader view of how we think of safety beyond just physical safety, emotional safety, mental safety, and something that maybe we've taken for granted, that we wanna make sure that we continue to make sure that our population base, whether they're in a home office or in a plant, are safe and feel safe in the environment that they work in. And then probably lastly, as many companies, and of course, this AGM is a testament to this, is just having a more flexible work technology arrangement for the future. I think, I think, the way people work, the way people connect, will continue to evolve as we roll out of this crisis, and we wanna be ready to make sure that we continue to be a high-performing organization.
Mr. Chairman, there are no further questions. I turn it back over to you.
Okay, well, thank you to Dino, to you and your team. Let me just call out for the record, the board's overall satisfaction with the results, but especially our very high regard and genuine appreciation for the truly exceptional nature and execution by the company of its pandemic response. Those protocols that you put in place clearly were focused first on the welfare and safety of our employees. And you not only sustained our business activity, but successfully ramped it up to keep our customers supplied with products to meet the needs of the consumers of Kruger's Tissue Products overall. And for that, I give you a great big plug, and I know the board feels exactly the same way. So thank you for that. Thank you to all the shareholders for having joined us today.
We wish you all that you remain safe and well, and look forward to seeing you next year. Thank you very much. That ends the annual general meeting.
This concludes the meeting. You may now disconnect.