Welcome to the 2024 Annual General Meeting of KP Tissue Inc. Please note that this meeting is being recorded. I would like to introduce François Vimard, Chairman of the Board of the Corporation. Mr. Vimard, the floor is yours.
Thanks a lot, Lucas. Good afternoon, everyone. Welcome to the Annual Meeting of Shareholders of KP Tissue Inc. My name is François Vimard, Chairman of the Board of the Corporation, and I will chair the business portion of today's meeting. We're so glad you can join us today for our virtual AGM. We are pleased to host this meeting through this virtual meeting platform accessible to all shareholders, regardless of physical location, to participate, submit questions, and vote. Joining us today on this virtual meeting are Dino Bianco, Chief Executive Officer; Michael Keays, Chief Financial Officer; François Paroyan, General Counsel and Corporate Secretary; Mike Baldesarra, Director, Investor Relations; and Mark Holbrook, Special Advisor. Also joining us virtually are my other KP Tissue directors: Mr. James Hardy, Ms. Sarah Kruger, and Mr. John J. Wright.
Also invited to attend today are the board members of Kruger Inc., in which the Corporation owns a 12.78% interest. We welcome Mr. Joseph Kruger II, David Angel, Jean Kruger, and David Spraley, who are attending the meeting virtually. As indicated on the meeting agenda displayed on your screen, if you experience any technical issues during the meeting, please email tsxtrustcompany@tsxtgminfo.tmx.com or go to the FAQ page for assistance. The question period will be held following the formal business portion of the meeting. Shareholders and duly appointed proxy holders can submit questions anytime online in the meeting. In order to ask a question, please click the "Ask a Question" button on the left menu. Type your question in the text box and click "Ask Now" to submit.
In an online format, we may receive questions on a similar theme, and your specific question may be grouped and summarized in the interest of efficiency and addressing as many themes as possible. Questions sent via the online platform will be sent to myself or the CEO, by François Paroyan, our Corporate Secretary. I encourage you to submit your questions as soon as possible so that we may 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 a conclusion, forecast, or projection in the forward-looking information and depend on the 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 risk and uncertainty, is in KP Tissue Inc. and the Corporation 2023 MD&A Annual Information Form, both of which are available on SEDAR+. I will officially call the meeting to order and appoint François Paroyan to act as the Secretary of the Meeting and Julien Lavallière of TSX Trust Company to act as Scrutineer of the Meeting. Only registered shareholders who held shares in their name as of April 26, 2024, the record date of this meeting, or their validly-appointed proxy holders, are entitled to vote at this meeting. I will now commence the formal business of the meeting. The business of the meeting is described in the Management Information Circular dated April 29, 2024, which accompanied the Notice of Meeting. I will take the Notice of Meeting as read.
We will conduct the vote on the matter before us by a poll. On the poll, each registered shareholder or their duly appointed proxy holder that has not voted prior to the meeting is entitled to vote on each matter. As a reminder, each share is equal to 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 the conclusion of discussion on each matter prior to casting your vote. Votes may be changed after the time voting is closed. Once discussion on all items of business is concluded, I will give you a minute to enter your vote and then declare voting closed on our motion.
The results of the meeting will be included in the press release that will be filed on SEDAR+ later today and available on our website. We will run through each of the items on the agenda in turn. I now declare the poll open on our motions. The Corporate Secretary of KP Tissue has advised me that the notice calling this meeting, together with the form of proxy for the fiscal year ended December 31, 2023, that be sent to each director of the Corporation, the auditors of the Corporation, and each intermediary and registered holder of the common share of the Corporation of record on April 26, 2024, the record date of this meeting.
As indicated in the form of proxy, the Corporation elected to utilize Notice and Access with respect to the delivery of Management Information Circular and provided shareholders with information on how to access the Management Information Circular for this meeting online. The Scrutineer have provided me with a preliminary report regarding shareholders' attendance at the meeting. The Scrutineer report that they are present at this meeting virtually or by proxy shareholders holding 2,821,268 common shares. Accordingly, the requisite quorum of the shareholders is present, and the meeting is duly and properly constituted for the transaction of business. I direct the confirmation of mailing of the Notice of Meeting received by TSX Trust Company and the Scrutineer complete report on attendance beyond the minute of the 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, 2023, and the auditor's report thereof. These documents were mailed to the shareholders who requested. Additional copies of these materials are also available on our company website and also on Seller Plus. I would ask the Secretary to attach a copy of the Corporation's 2023 financial statements and auditor's report thereof to the minutes of this meeting. Next is our first item of business for voting. We will now 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 Mr. James Hardy, Ms. Sarah Kruger, Mr. John J. Wright, and myself.
I shall now call for the aforementioned individual to be formally nominated for election as Director of the Corporation.
Mr. Chairman, my name is Mark Holbrook, and I'm a shareholder of the Corporation. I nominate the following persons for election as directors as specified in the Management Information Circular dated April 29, 2024: François Vimard, James Hardy, Sarah Kruger, and John J. Wright.
Is there a second to the motion?
Mr. Chairman, my name is Mike Baldesarra. I am a shareholder of the Corporation. I second the motion.
As no further nominations were made in accordance with the advance notice procedure set out in the Corporation bylaws, I declare the nomination closed. Unless there are any questions, we will proceed by vote to the election of director. I don't see any questions, so I will now call for the vote to elect the nominees. Please cast your vote for voting item 1 before we move on to the next item. I'll give you 30 seconds. The next item of business is the reappointment of auditors PricewaterhouseCoopers LLP, the current auditors of the Corporation, as proposed as auditor of the Corporation to hold office until the next Annual Meeting of shareholders. May I have a motion that PricewaterhouseCoopers LLP be reappointed as auditors of the Corporation until the next Annual Meeting of shareholders or until a successor is appointed?
I so move.
Is there a second to the motion?
I second the motion.
Unless there are any questions, we'll proceed by vote with reappointment of auditors. There's no questions, so I will now call for a vote to reappoint the auditors. To carry the motion, we need the affirmative vote of at least the majority of votes cast by the shareholders. All members, please cast your vote now on item 2. Again, I'll give you 30 seconds to cast your vote. The next item of business is the bylaw amendment resolution. May I have a motion that the ordinary resolution of the shareholders of the Corporation to amend Bylaw Number 3 be adopted?
I so move.
Is there a second to the motion?
I second the motion.
Unless there are any questions, I will now call for a vote to adopt the bylaw amendment resolution. To carry the motion, we need the affirmative vote of the simple majority of the vote cast by the shareholders. Again, I don't see any questions. All members, please cast your vote now on item 3. I'll give you another 30 seconds for this vote. For those of you who have not voted on all the motions, please do so now as I will shortly close the poll. I'll give you an additional 30 seconds to vote on all the motions. The polls are now closed. Thank you all for your attention.
Given that over 97% of the share entitled to vote at this meeting have already voted in favor of the election of directors, over 90% of the share entitled to vote at this meeting have already voted in favor of the election of the auditors, and over 64% of the share entitled to vote at this meeting have already voted in favor of the bylaw amendment resolution, I declare the motion passed. Thank you on behalf of the board to our shareholders for your support. The Corporation will report the detailed results of the voting for each nominee to the board and the auditor in its report of voting results to be filed on Seller Plus at www.sedarplus.ca after this meeting and by way of press release. That's wrapped up the official portion of the AGM.
If there is no other business to be brought before the meeting, I would ask for a motion that the meeting be concluded.
Mr. Chairman, I propose that this meeting be concluded.
Someone second this motion?
I second the motion.
Now, I'm pleased to pass it to the Chief Executive Officer, Mr. Dino Bianco, who will address the meeting on behalf of management to provide a business overview including our fiscal 2022 result. Dino.
Thank you, François. Good afternoon, and thank you for joining us for the Annual Meeting of Shareholders of KP Tissue Inc. As François mentioned, after holding our Annual Meeting on-site in Toronto in 2023, we have opted to hold it virtually this year to make the meeting accessible to a wider group of people. We plan to alternate between virtual and on-site meetings on an annual basis. For shareholders with questions, you will be able to ask them following my presentation. Let's begin with slide 5. Our vision is directly aligned with our customer-driven culture. We want to be the most trusted and best-loved tissue company in North America. And our mission, which is closely tied to our vision, focuses on making everyday life more comfortable for our consumers. These two reference points, which define us as an organization, support our growth strategy and dictate everything that we do.
As outlined on slide 6, our long-term growth plan is based on five underlying strategies. These strategies include using the consumer as our compass, expanding our business footprint, delivering end-to-end supply chain excellence, ensuring sustainability, and building a winning team and culture, not just for today, but for tomorrow. Our fundamental objective of all this is to drive profitable growth in a sustainable manner to increase shareholder value. Let's turn to our corporate highlights on slide 7. Fiscal 2023 was marked by record revenue and record Adjusted EBITDA that were driven by several positive factors. Our business benefited from robust sales volume, positive margin management, this amidst volatile costs, and strong operational efficiency across our network. In our consumer segment, we gained market share within the facial tissue and paper towel categories during the past year while improving our share trend on bathroom tissue.
We also stepped up to support and supply Scotties facial tissue to consumers and customers following the exit of a competitor in the Canadian grocery market. Our away-from-home business, meanwhile, continued to deliver sustained results with another strong year of profitability. Consolidated revenue improved 11.4% year-over-year to CAD 1.9 billion in 2023 on the strength of higher sales volume, positive effect of selling price increases that we implemented in 2022, and a favorable foreign exchange impact on US dollar sales. Our Adjusted EBITDA more than doubled to CAD 238.6 million, largely for the same reasons as revenue growth, along with lower pulp prices and reduced freight expenses. These factors were partially offset by other input cost inflation, increased manufacturing overhead, and higher SG&A expenses compared to the prior year.
Other highlights in 2023 include investing in multifaceted manufacturing capabilities at our Sherbrooke site and other sites to meet heightened consumer demand across North America. If you recall, in 2023 marked the second year of a three-year expansion project in Sherbrooke, which will become a long-term growth catalyst for Kruger Products. We're also encouraged by the turnaround of our manufacturing operations in Memphis, with output expected to progressively improve in 2024. Finally, we announced the CFO transition in December 2023 that was seamlessly carried out, with Michael Keays taking over from Mark Holbrook in March of 2024. I would like to take this opportunity to recognize Mark for a successful 26-year career at Kruger Products and his many contributions to the industry over a distinguished 30-year period.
Mark's steadfast leadership and sound advice have been instrumental to the success of our organization, while his guidance, objectivity, and knowledge have been particularly critical for me as a CEO over the past 6 years. Thankfully, Mark has agreed to remain a special advisor reporting to me until the end of 2025. Michael Keays, meanwhile, has been with Kruger Products since 2008 and has built his career in various progressive finance leadership roles across our business in Canada, the U.S., and Mexico. We are confident that Michael will play a pivotal role in driving our financial objectives, fostering continued sustainable growth, and building the finance team's capabilities and culture. Slide 8 summarizes our financial performance over the past 5 years. As you can see, fiscal 2023 was an unprecedented year in terms of revenue and Adjusted EBITDA. This followed a highly inflationary period in 2022.
Adjusted EBITDA caught up with revenue growth in 2023 to generate a solid margin of 12.7%. The next slide outlines our geographic and segment split in 2023. As shown, 57% of our revenue was generated in Canada and 43% in the U.S. Revenue in Canada and the U.S. grew 7.4% and 17.1%, respectively, mainly reflecting higher sales volume and selling price increases during the past year. Revenue was also favorably impacted by foreign exchange fluctuations on the U.S. dollar sales in 2023. Our consumer sales, which account for the majority of our business, improved 11.3% year-over-year, while our away-from-home business rose 12%. Slide 10 provides a snapshot of our first quarter results for 2024. Revenue growth of 6.3% in the first quarter of 2024 can mainly be attributed to higher sales volume and favorable sales mix, partially offset by lower selling prices year-over-year.
Canadian revenues increased 2.1% in the first quarter, while the U.S. improved 12.1%, mainly due to new business. Adjusted EBITDA was up 34.3% year-over-year to $67.1 million in the first quarter, largely driven by higher sales volume, improved sales mix, and lower pulp prices, along with improved freight costs. These factors were partially offset by several items, including reduced selling prices. We have guided for Q2 2024 adjusted EBITDA to be in a similar range of Q1 2024. On slide 11, we take a look at our market leadership. After some share loss to private label during a period of high inflation in the past 24 months, our first quarter data from Nielsen demonstrates that we have begun to recover share in all three of our product categories.
Facial tissue, with the exit of a key competitor, delivered the highest share gains of 4.7 percentage points from the previous 52-week period, followed by paper towels, which grew up 0.7%, and bathroom tissue up 0.6%. Market share of 40.3% and 24.6% for facial tissue and paper towels, respectively, reached their highest level in the last four years for Kruger Products. Our bathroom tissue share, which is a very competitive category, continued to climb back and drive share growth. Now, let's move on to brand support on slide 12. We continued reinforcing our brands in the first quarter to drive awareness and share gains in a highly competitive environment. Multi-brand activities continued with our Unapologetically Human Love Is Messy campaign, and we unveiled the fourth year of our successful Kruger Big Assist program for young hockey players across the country.
One key area where we made additional investments involved Bonterra, our sustainable brand for environmentally conscious consumers. We introduced this product family in 2022 to offer consumers a viable option at the shelf for building a better planet. In Q1 2024, we increased our media in support of incremental customer listings and continued brand growth with our environmentally conscious consumers. We also maintained strong shopper marketing and activation behind sports partnerships, such as our entrenched relationship with the National Hockey League. In the United States, strategic shopper investments behind our White Cloud continue to drive trial and awareness across that portfolio. Looking at the away-from-home segment on slide 13, its sustained recovery continued in the first quarter with robust Adjusted EBITDA results above Q1 2023 and Q4 2023. Sales volume in the first quarter increased year-over-year, but was down sequentially due to seasonality and away-from-home.
Going forward, asset performance and the startup of our new paper machine will provide new growth opportunities for our away-from-home business. Let's turn to our Sherbrooke expansion project on slide 14. It's largely unfolding according to plan. The startup of our new bathroom tissue line in the first quarter of 2023 surpassed expectations, while our facial tissue line, which launched in the first quarter of 2024, and our paper machine rollout is scheduled for Q4 2024. At maturity, the paper machine will increase annual output by 60,000 metric tons. However, due to supply chain inflation and higher expenses, we previously announced an anticipated capital cost increase of $26 million to $378 million for the Sherbrooke expansion project. In terms of our other manufacturing sites on slide 15, we acquired a new facial line for our Gatineau facility, which has been running at full capacity since earlier this year.
This will supplement the facial capacity that we've added recently on our Sherbrooke site. This new Gatineau line required an investment of $14.5 million, and it will deliver much-needed supply for us to continue to grow in facial, not just in Canada, but in North America. We're also encouraged by progress made at our manufacturing operations in Memphis. Paper production efficiency has stabilized, and we expect performance to continue improving. In terms of converting, we're riding a longer learning curve, but investments are being made in maintenance and technical leadership to upgrade our performance. We expect to see progressive improvement in output through 2024 and beyond. I don't get to speak about our other facilities, but generally, I would say our network is very strong with our other facilities operating at plan. Let's move to the balance sheet slide on slide 16.
Net debt totaled CAD 1.03 billion at the end of Q1 2024, which was up CAD 95.5 million from the end of the previous quarter. This increase can be attributed to the spending related to the Sherbrooke expansion project, as well as use of cash involving credit facilities to support higher working capital levels in Q1. As a result, our net debt to last 12 months Adjusted EBITDA ratio rose slightly to 4.0x in the first quarter from the 3.9x in Q4 2023. This was significantly below the Q1 2023 ratio of 8x. On a year-over-year basis, leverage improved on the strength of lower net debt and higher Adjusted EBITDA in the last 12 months. At quarter end, total liquidity representing cash and cash equivalents and availability from revolving credit agreements stood at CAD 409 million. In addition, CAD 20.7 million of cash was held for the Sherbrooke expansion project.
Let's go to Slide 17, which touches on the human resources and corporate responsibility awards we received as an organization in 2023. We strive to lead by example and continuously seek to raise our profile as a model corporate citizen. We share with our employees the honors and awards that celebrate their hard work and commitment and continue to make Kruger Products a great company and a great place to work. On Slide 18, we summarize our sustainability focus. Kruger Products' sustainability plan, which is titled Reimagine 2030, has been designed with the firm conviction that we can grow our business while having a positive impact on the planet and the communities we serve.
In our most recent report, Kruger Products made significant progress in a number of areas, including a 26% reduction in greenhouse gas emissions, a 31% decline in water consumption, a 79% improvement in employee health and safety, and 100% use of third-party certified fibers in the manufacturing of our products. I do want to note that the target percentages for 2030 have been recast from 25% to 35% for greenhouse gas reductions and from 50% to 35% for water decreases to better align with industry peers. Baseline years for greenhouse gas and water targets have also been updated from 2009 to 2015. These numbers will be reflected in our upcoming and ongoing reporting, which will be released later this month. Looking ahead to 2024, on slide 19, we intend to focus on four key priorities for this year. First, managing our margins amidst rising costs.
Based on industry forecasts, and we have already witnessed this so far in 2024, pulp prices, which is our major ingredient in our product, are expected to rise over the course of the year and continue to rise. Accordingly, we are preparing an action plan to mitigate escalating pulp prices. The second item is to continue investing in our brands. After a period of severe cost inflation, we began intensifying our efforts in 2023, which reflected in our strong share gains. In 2024, we'll maintain our multi-brand marketing activities across Canada and the United States, as well as invest in our individual brands to secure additional share and drive long-term growth. Third, growing our facial tissue position. Facial tissue is a high priority of growth for us for the upcoming year.
We will strengthen investments in the Scotties brand while capitalizing on the added capacity and additional product innovation to drive this category in North America. Lastly, implementing the successful startup of our Sherbrooke expansion project. This project represents a long-term catalyst for Kruger Products. A startup of the bathroom tissue and facial tissue converting lines has been completed, and the paper machine rollout is expected in quarter four of 2024. These new assets will allow us to fulfill expanding customer demand and continue to grow across North America. In closing, I would like to thank our 2,800 employees for their hard work and dedication in returning our organization to profitable growth in 2023 and beyond. I would also like to recognize consumers and customers alike for their loyalty to our company and to our brands.
In addition, I want to thank the Kruger family and our board of directors for their counsel and support during the past year. And finally, many thanks to you, our shareholders, for supporting our long-term strategy. I will now turn the call back to François Paroyan for the start of the Q&A period.
Thanks, Dino. We will now entertain questions from our shareholders. Again, if you are a shareholder or a proxy holder and have questions, please feel free to submit your questions online. Dino, our first question, can you elaborate on the action plan that you intend to implement in order to mitigate escalating pulp prices? Yes, thank you, François. Yeah, very important question, and I alluded to it in my prepared remarks. I mean, pulp is a major ingredient for any tissue supplier, and it is a cyclical cycle, and we're starting to see it now move up.
This is a common industry impact. It doesn't just impact Kruger Products. The one thing about managing pulp is we have a game plan. The game plan really is about looking at a couple of different areas. First and foremost is looking at our productivity and our cost management, making sure that we're ready to handle the increased cost that we're going to get. We do have product formulation flexibility. We'll continue to utilize that to take advantage of any opportunities that exist in the pulp markets and different pulp grades. We have many of our customers that are under contract pricing. We've increased the number that are under contract pricing, which means that their prices will move up and down closer to the pulp market, which will keep us closer to the cost curve.
And then we will also look at pricing or potentially resizing where the opportunity exists, our products. This is being looked at across our Canadian consumer business, our U.S. consumer business, and our away-from-home business. We hope by implementing all the various actions, we'll be able to manage and continue to deliver the margins that we deliver for this business. Thanks, Dino. Our second question is, what are the share gain potential for Scotties in the facial tissue market? Another excellent question, and I referenced some of it in my prepared remarks. We had the exit of a major competitor last year. First off, I'm pretty happy and proud of what this organization did to prepare for that exit so that we can continue to meet the needs of Canadian consumers and customers with facial.
So we stepped in, obviously, as being the largest share with Scotties, the largest brand. We stepped in and secured additional capacity. As I alluded to, brought in a new equipment that was unplanned with a quick turnaround in our Gatineau facility. The team there did a fantastic job. And if you're listening, incredible leadership and pride in turning that around very quickly to get product in the market. And then, of course, with our new Sherbrooke expansion, we had a planned new facial line coming on board, which it did in February. So that provided a lot of capacity. Specifically to the question, when Kleenex exited the market, there were about 16 share points in the consumer grocery segment. So that was the 16 shares that were available. Obviously, as a market leader, we're looking for at least our first share, if not more.
But that share needs to be earned. It's not given. And we need to earn it by doing several things right, which includes the capacity that I talked about and be able to supply the product. And we have invested in our marketing for our Scotties brand. We were ready immediately after we heard of the exit to come to market with a marketing campaign that was not just talking about Scotties, but talking about the fact that we have supply. We can supply this market so that consumers weren't panicking or worried about how they were going to get facial. We've reset shelving in the customer shelves. So if you go there, you will see the facial shelves being reset. We're increasing our promotion and our customer activities.
And we have and are continuing to innovate to provide more products and quality segmentation to fill in some of the gaps that have been left and should be now a part of the Scotties portfolio. So I think a lot being done there, and I'm looking forward to continued growth in this category as we move through the next few years. Thanks, Dino. Our third question, revenue grew double digits in the U.S., both in fiscal year 2023 and in Q1 2024. Can you provide some color on what is driving that growth? Yes. So first of all, our Canadian business, we are a big player in the Canadian marketplace, and we continue to grow. We can grow through category and share growth. In the U.S. business, even though it's a fairly good-sized business, still a fairly small player in that marketplace.
So the ability for us to grow either through existing customers and new customers is very strong. And that's what you're seeing in 2023 and into 2024. We're seeing good growth as we picked up some key customers. Not only picked up some key customers, we picked up some customers that are rapidly growing, faster than the market in the United States. So that means that we're lining our supply up with customers that are fast growing, and that has driven a lot of the growth that you're seeing. And then our away-from-home business, which is also incorporated in the way we report our U.S. numbers, has also been growing from the benefit of some existing new customers, but particularly continue to expand as we build the trust of our U.S. customer base, continue to expand with those customers.
So you're seeing good growth across both segments and a combination of new customers and continued growth with existing customers. And by the way, the new assets that we put in place, even though I talked about those primarily being in Sherbrooke or Gatineau, we use those assets and we look at those assets as North American assets. That'll help us supply the full growth of the North American market despite the fact that they may be located in Canada. Mr. Chairman, there are no further questions.
Thank you, François. Thanks, Dino, for that nice business overview and great result for 2023 and good start for 2024. So thank you all for joining us and stay well and stay safe and be well.
Thank you for attending today's meeting. You may now disconnect.