Ladies and gentlemen, welcome to the 2025 annual general meeting of shareholders of KP Tissue Inc. Please note, the meeting will be recorded. I would like to introduce Mr. François Vimard, Chairman of the Board of the Corporation. Mr. Vimard, the floor is yours.
Thank you, Zora, and good afternoon, everyone. Welcome to the annual meeting of shareholders of KP Tissue Inc. My name is François Vimard, and as Zora said, I'm the chairman of the board of the corporation, and I will chair the business portion of today's meeting. We're glad you could 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 question, and vote. Joining us today on this virtual meeting are Mr. Dino Bianco, Chief Executive Officer, Mr. Michael Keays, Chief Financial Officer, Mr. François Paroyan, General Counsel and Corporate Secretary, Ms. Doris Grbic, Director of Investor Relations, and Steve Turner, Vice President, Special Projects, Kruger Products Inc. Also joining us virtually are my other KP Tissue directors, Mr. James Hardy, Ms. Sarah Kruger, and Mr.
John “Jay” Wright. Also invited to attend today are the board members of Kruger Products Inc., in which the corporation owns a 12.33% interest. Welcome, Mr. Joseph Kruger II, Mr. David Angel, Mr. Gene Kruger, and Mr. 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 TSX Trust Company or go to the KP Tissue page for assistance. A question period will be held following the formal business portion of the meeting. Shareholders and duly appointed proxyholders can send a question anytime online in the meeting. In order to ask a question, please click 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 of a similar theme, and your specific question may be grouped and summarized in the interest of efficiency in addressing as many themes as possible. Questions sent via the online platform will be sent to the chair or the CEO by François Paroyan, our corporate secretary. I encourage you to submit your question 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 the 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 include a more complete discussion of the risks and uncertainties facing KP Tissue appears in the corporation's 2024 MD&A and annual information form, both of which are available on SEDAR+. I officially call the annual meeting to order and appoint François Paroyan to act as secretary of the meeting, and Julie Laviglia and Zora Ljubisic of TSX Trust Company to act as scrutineer of the meeting.
Only share-registered shareholders who held shares in the name as of May 2, 2025, the record date of this meeting, or their validly appointed proxyholders, are entitled to vote at this meeting. I will now commence the formal comments, the formal business of the meeting. The business of the meeting is described in the management information circular, dated April 30, 2025, which accompanying the notice of meeting. It will have the notice of meeting as well. We will conduct a vote upon the matters before us by poll. On a poll, each registered shareholders or their duly appointed proxyholders 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 of 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 are concluded, I will give you a minute to enter your votes and then declare voting closed on all motions. The results of the meeting will be included in the press release that will be filed on SEDAR+ later today and available on website. We will run through each of the items on the agenda in turn. So I now declare the poll open on all motions. The corporate secretary of KP Tissue has advised me that the notice calling this meeting, together with a formal proxy for the fiscal year ending December 31, 2024-...
has been sent to each director of the corporation, the auditors of the corporation, and each intermediary and registered holder of common shares of the corporation as of record on May 2, 2025, 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 management proxy circular, and provided shareholders the information on how to access the management proxy circular for this meeting online. The scrutineer has provided me with a preliminary report regarding shareholders' attendance at this meeting. The scrutineer reports that there are present at this meeting, virtually or by proxy, shareholders holding 2,281,518 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 containing of the notice of meeting received by TSX Trust Company and the scrutineer's complete report on attendance be annexed to the minutes of the meeting. The next item of business is the presentation of the corporation audited consolidated financial statement as at and for the fiscal year ended December 31, 2024, and the auditor's report thereon. These documents were mailed to the shareholders who requested. Additional copies of these materials are also available on our company website and also on SEDAR+ . I would ask the secretary to attach a copy of the corporation 2024 financial statement and auditor's report thereon to the minutes of this meeting. Next is our first item of business for vote. We will now proceed with the election of directors until the next annual general meeting.
The number of directors to be elected in the meeting is four. Four nominees were named in the management proxy circular, namely James Hardy, Sarah Kruger, John "Jay" Wright, and myself. I shall now call for the aforementioned individuals to be formally nominated, nominated for election as director of the corporation.
Mr. Chairman, my name is Steve Turner. I'm a shareholder of the corporation. I nominate the following persons for election as directors as specified in the management proxy circular dated April 3, 2025. François Vimard, James Hardy, Sarah Kruger, and John "Jay" Wright.
Is there a second to the motion?
Mr. Chairman, my name is Michael Keays. 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 motion, the nomination closed. Unless there are any questions, we will proceed by vote for the election of directors. Seeing we have no question, I will now call for a vote to elect the nominees. Please cast your vote for voting item one before we move on to the next item. The next item of business is the reappointment of auditors. PricewaterhouseCoopers LLP, the current auditors of the corporation, is proposed as auditors 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 the successor is appointed?
I so move.
Is there a second to the motion?
I second the motion.
Unless there are any questions, we will proceed by vote for the appointment of auditors. Hearing and seeing no question, I will now call for a vote to reappoint the auditors. To carry the motion, we need the affirmative vote of at least a majority of the vote cast by the shareholders. All members, please cast your vote now on item two. For those of you who have not voted on all the motions, please do so now, as I will shortly close the poll. I will close the poll on all motions in 30 seconds. The polls are now closed. Thank you all for your attention.
Given that over 96% of the shares entitled to vote at this meeting have already voted in favor of the election of directors, and over 98% of the shares entitled to vote at this meeting have already voted in favor of the election of auditors, 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 of directors and the auditors in its report of voting results filed in SEDAR+ after this meeting and by way of press release. That wraps up the official portion of our agenda. If there is no other business to be brought before the meeting, I will ask for permission that the meeting be concluded.
Mr. Chairman, I propose that this meeting be concluded.
Would someone second the motion?
I second the motion.
Thank you. Now I'm pleased to invite Mr. Dino Bianco, Chief Executive Officer of KP Tissue, to address the meeting on behalf of management to provide a business overview including our fiscal 2024 results. Dino?
Thank you, François. Good afternoon, everyone, and thank you for joining us for the annual meeting of shareholders of KP Tissue. As François said, we have opted to hold the meeting virtually again this year to provide access to as many participants as possible. Registered shareholders are welcome to pose questions following my presentation. Let's begin with slide five. Our vision reflects our customer-driven culture to be the most trusted and best known tissue company in North America. And closely aligned to this is our vision, which is to make everyday life more comfortable for our consumers. This means comfort in our products, our ethics, our social giving, our respect for individuals and for the environment. And it guides everything that we do. As outlined on slide six, our long-term growth plan is predicated on five underlying strategies.
These strategies include using the consumer as our compass, expanding our business footprint, ensuring end-to-end supply chain excellence, delivering sustainability, and building a winning team and culture. But ultimately, our objective is to drive profitable growth in a sustainable manner to increase shareholder value. Turning to our corporate highlights on slide seven, Kruger Products delivered another solid financial performance in fiscal 2024, marked by record revenue and strong Adjusted EBITDA. We are particularly proud of our profit results, which were relatively stable in all four quarters, despite a continued volatile environment. Revenue increased 9.4% to more than CAD 2 billion in 2024 on the strength of higher sales volume, the positive effect of selling price increases across our consumer and away-from-home segments, as well as favorable foreign exchange impact on our U.S. dollar sales.
Adjusted EBITDA improved 11% year-over-year to CAD 264.8 million for the same reasons as revenue growth, along with more favorable sales mix and lower pulp prices. These factors were partially offset by higher manufacturing and warehousing costs and increased SG&A expenses. On the operation side, the construction of a new manufacturing plant in Sherbrooke, Quebec, including the startup of our LDC paper machine and facial tissue line, represented a key highlight in 2024. These assets, which are part of the overall Sherbrooke expansion project, help us exceed production targets for the year. Moving forward, we are fulfilling our vision and making Sherbrooke a major hub for tissue manufacturing, enabling additional share gains and growth in North America and reducing our need for outside purchased paper and products.
Other highlights in 2024 include expanding our Made in Canada positioning within an uncertain trade environment. Our latest marketing campaign built upon the renewed patriotism of consumers seeking to buy products made in Canada. As a genuine Canadian company who has been proud of its Canadian heritage long before the arrival of tariffs, Kruger Products is focused on selling high quality products from coast to coast for consumers throughout Canada. In addition, we continued the distribution drive behind our facial tissue business with the introduction of new Scotties Ultra Soft Pocket Packs and holiday SKUs in 2024. A year in, we made incremental share gains with our leadership position, reaching 45% of the facial tissue market in Canada.
Finally, with the rebranding of our away-from-home segment to Kruger PRO, which we did at the end of the year, we intend to leverage some of our most trusted consumer brands into commercial settings to grow this business in both Canada and the U.S. Slide eight summarizes Kruger Products' financial performance over the past five years. As shown, fiscal 2024 was a solid year for both revenue and adjusted EBITDA. Following a high inflationary period in 2022, we have reported two consecutive years of strong financial results. This sustained performance reflects the adaptability and resiliency of our organization in the wake of rising inflationary pressure and the benefit of our new capacity for our recently added assets. On slide nine, this outlines our geographic and segment revenue breakdown in 2024.
As shown, approximately 55% of our revenue was generated in Canada and 45% in the U.S.. Revenue in Canada rose 4.7% in 2024, while in the U.S., revenue grew 15.7% as we're building our share in that larger market. Consumer sales, which account for the majority of our business, increased 10.1% year over year, while away from home rose 6.2%. On a consolidated basis, total revenue increased 9.4% in 2024. Slide 10 provide a glance at our first quarter results for 2025. Revenue growth of nearly 14% in the first quarter of 2025 was driven by pre-ship volume into the U.S. ahead of tariffs, favorable selling prices across both consumer and AFH segments, and a positive foreign exchange impact on U.S. dollar sales.
Revenue in Canada increased 7.6% in the first quarter, while U.S. sales continued its strong upward trend with growth of 21.7% year-over-year. Adjusted EBITDA, meanwhile, grew nearly 13% year-over-year to CAD 75.8 million in the first quarter. The year-over-year improvement can be attributed to higher sales volume, increased selling prices, and lower manufacturing overhead costs. These factors were partially offset by a number of items, including higher pulp prices and greater freight pro- costs, including the impact of tariffs. On slide 11, we take a look at Kruger Products market leadership in the Canadian tissue industry, which are based on Nielsen numbers for the 52-week period ending March 22, 2025.
These figures reflect relatively stable share of the bathroom tissue and paper towel categories in the first quarter, which are a result of us taking pricing action in the fourth quarter of last year. In facial tissue, as indicated before, we consolidated our leadership position in the Canadian market with a 45% share on the strength of our Scotties brand and our new innovations. Now let's move on to brand support on slide 12. In addition to our continued Made in Canada positioning in Q1 2025, we made investments behind brand-specific campaigns for Scotties, Bonterra, and SpongeTowels, both on TV and digital platforms to drive top-of-mind awareness.
We also joined forces with Volkswagen to celebrate Earth Month in April by launching our Bonterra Driving Good Together contest, where Canadian shoppers had an opportunity to win the all-electric ID. Buzz Microbus through the purchase of Bonterra products, which is our sustainability-focused line. The campaign demonstrated that making environmentally conscious decisions to protect the planet can be simple and rewarding. In terms of hockey-related campaigns, we recently completed the fifth year of our Kruger Big Assist program by committing CAD 200,000 to five minor hockey associations across Canada. The Kruger Big Assist program helps provide financial assistance to Canadian hockey families, removing barriers to Canada's national game and giving more kids the chance to participate. Over the last five years, we have donated CAD 1 million to over 50 hockey communities across Canada.
And finally, we implemented in-market activations with our key partners, the Toronto Maple Leafs, Montreal Canadiens, and the NHL during the playoffs. Looking at the away-from-home segment on slide 13, sales volume increased year-over-year in Q1 2025, but was down sequentially due to typical seasonality. Although orders remained stronger in the quarter, as you can imagine, there was much discussion with our customers around tariffs and supply and sourcing. However, our strong business fundamentals and customer relationships allowed us to deliver sales growth in the quarter. Profitability decreased year-over-year, driven primarily by purchases of external paper. We expect that our new paper machine startup in Sherbrooke will meet internal requirements for paper and improve margins going forward. And finally, we launched our Cashmere and Scotties brands into the away-from-home market earlier this month as part of our rebranding efforts towards Kruger PRO.
As mentioned earlier, the availability of our most trusted brands in key commercial settings is directly related to our mission of making business comfortable for our customers and for our consumers. Turning to operations on slide 14, production rates exceeded our forecast in Q1 2025, which has been critical as North American demand for tissue continues to be very strong. Our new LDC paper machine in Sherbrooke and facial tissue line are surpassing startup expectations, while our TAD paper machine and converting output remains ahead of last year. For 2025, we anticipate that production will further increase as these new assets reach their maturity curve. Now shifting our attention to a topic that has dominated headlines in recent months. Slide 15 discusses the uncertain trade environment.
Given the changing tariff announcements affecting North America, the impact to our business in the fourth quarter was not significant. The impact to our business amounts to approximately CAD 3 million in Q1 2025. This includes tariff charges and supply chain disruptions. We will continue to closely monitor the impact of any potential tariffs and have developed contingency plans to mitigate any financial risk. Let's move on to Kruger Products' balance sheet and financial position on slide 16. Cash and cash equivalents reached CAD 141.8 million at the end of the first quarter of 2025, an increase of CAD 22.3 million from Q4 2024. Long-term debt at the end of Q1 2025 was CAD 1.19 billion, up CAD 6.2 million sequentially, while net debt decreased by CAD 9.3 million.
Accordingly, our leverage ratio improved slightly to 4x in the first quarter of 2025 versus 4.2x in Q4 2024. This has achieved a lower debt and higher Adjusted EBITDA over the last 12 months. On slide 17, we provide an update on our sustainability focus. As we approach the halfway mark of our 10-year sustainability plan, titled Reimagine 2030, we are convinced more than ever that we can continue to grow our business while having a positive impact on the planet. Our four pillars supporting this strategy remain unchanged: Products Emp ower, Planet Conscious, Employee Impact, and Community Embrace. A new sustainability report was published this month that disclosed the progress achieved in 2024.
I wanted to share with you some of the highlights of this report, including a 26% reduction in GHG emissions, a 35% reduction of water consumption, a 2% reduction in virgin plastic packaging and a 100% use of third-party certified fibers in the manufacturing of our products. The next slide, 18, touches on the human resources and corporate responsibility awards we received in 2024. At Kruger Products, we believe that our employees represent our greatest strength. Our people, after all, fuel the innovation that drives business growth and progress in our sustainability development. Consequently, these awards are dedicated to our approximately 3,000 employees who work to serve our customers, our suppliers, our communities, and our stakeholders every day.
Looking ahead to the remainder of 2025 on slide 19, Kruger Products intends to focus on several priorities to sustain growth across our network. We will continue to drive sales growth as we started off the quarter strong and given by our strategic initiatives are in place to continue this trend for the balance of the year. We will continue to monitor closely the impact of potential tariffs while leveraging our made in Canada positioning and developing contingency plans accordingly. We'll manage our margins amid a changing cost base through productivity and through potential pricing, if required. We will invest in our brands to drive long-term share growth across all our segments. We utilize our Sherbrooke LDC paper machine to significantly reduce our reliance on purchased paper. We'll leverage our consumer brands and our new Kruger PRO, while benefiting from internally sourced paper to drive sustainable profit.
We will continue to develop our core organizational capabilities, strengths, and adaptability, and resilience. In closing, I would like to thank Kruger Products employees for their dedicated efforts in delivering nine consecutive quarters of remarkable results, including Q1 2025. I would also like to extend thanks to consumers and customers for wholeheartedly supporting our brands and our company. Finally, I am grateful to the Kruger family and the board of directors for their support and counsel. I will now turn the call back to François Paroyan for the Q&A period. François?
Thank you. 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 is for you: What was the rationale behind rebranding your AFH segment to Kruger PRO?
It's a great question. I mean, this is a natural evolution for us because at the end of the day, the consumers who use our products in away from home are the same consumers that use our products at home. So they have an affinity to our, our company, our products. So it's a natural evolution for us to move those brands into places where those consumers also use the products. And the twist that we also added was the fact that, you know, given we work with a lot of distributors, we also want to make business more comfortable for our customers. So it's not just the consumer, it's also making it more comfortable for our customers and making sure that we're doing everything we can to enable them to be successful.
Also, as you look at the investment we make in our brands, whether they be SpongeT owels or Scotties or Cashmere, Purex, or White Cloud in the U.S., that investment is made in those brands that should now halo over to our away-from-home channel. And I believe it gives us a point of differentiation in the marketplace to have brands that consumers recognize with the quality that they are going to grow accustomed to. So for me, this is a natural extension of what we're already doing strongly in our away-from-home segment.
Thanks, Dino. Our next question is also for you. Now that you have completed the construction of the new Sherbrooke plant, including the startup of the LDC paper machine and facial tissue converting line, how do you intend to continue growing?
That's a great question. First of all, I wanna, you know, I voiced it over in my prepared remarks, but I want to recognize the team, and it is a seasoned team that we're able to start, not just the recent line, but the TAD line, the original line in Sherbrooke a few years ago. It is a monumental task to start up a greenfield site, and this team has done incredible work to make sure we delivered against our objectives. We over-delivered, in fact, both in quantity and time, and we're able to really drive growth in our business. You know, as we look at the next phase of growth, I think there's a couple of tangents where that could come from.
You know, first of all, we always look at adding new capacity at our existing facilities, and we will continue to investigate that. We're always have our radar on the market in terms of any M&A or partnership opportunities, so we'll continue to scan for that. Obviously, greenfield sites, and I did issue a letter late last year that talked about us advancing a look at a greenfield site for ultra-premium products. And that is because that market is growing and capacity is very tight across North America, so we are continuing to look at that option. Another, I would say, there's some category options, too. As you noted on the shares, we're number two in paper towel.
I think we have an opportunity to continue to grow in Canada on paper towel through Sponge. We're also looking at some adjacencies. These are categories that are near tissue and relevant for the consumer and a natural extension for our brands. So we're also have that as part of our innovation pipeline. So I think there's continued growth, and as I mentioned in my prepared remarks, we're still a small player pretty small player in the United States, and I think we have great opportunity to grow both on the consumer side and on the pro side as we pick up new customers and growing customers.
Thank you, Dino. Mr. Chairman, there are no further questions.
Thanks, François. Thanks, Dino, for another great year under your leadership and then another good start for 2025. I'm looking forward to the numbers for the next year. And to all shareholders, thank you for joining us today and stay safe, stay safe and be well. Thank you.
Thank you for attending today's meeting. You may now disconnect.