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Kruger Products Q1 2025 Financial Results
Revenue was $546.1 million in Q1 2025 compared to $479.4 million in Q1 2024, an increase of $66.7 million or 13.9%. The increase in revenue was primarily due to higher sales volume in the Consumer segment and favourable selling prices across both segments. Revenue was also favourably impacted by foreign exchange fluctuations on U.S. dollar sales.

Cost of sales was $451.0 million in Q1 2025 compared to $394.0 million in Q1 2024, an increase of $57.0 million or 14.5%. The increase in cost of sales was primarily due to higher sales volume and pulp prices along with the unfavourable impact of foreign exchange fluctuations on U.S. dollar costs, partially offset by lower manufacturing overhead costs due primarily to overhead cost absorption resulting from higher inventory levels in the quarter. Freight costs were higher compared to Q1 2024, including the impact of tariffs, while warehousing costs increased as a result of handling costs related to higher sales volume. As a percentage of revenue, cost of sales was 82.6% in Q1 2025 compared to 82.2% in Q1 2024.

Selling, general and administrative (SG&A) expenses were $51.2 million in Q1 2025 compared to $44.1 million in Q1 2024, an increase of $7.1 million or 16.1%. The increase was primarily due to additional investment in advertising and promotion and IT, along with additional headcount costs to support growth, resulting in lower consulting costs, and higher selling expense related to sales volume, partially offset by lower operational and corporate initiatives compared to the year ago quarter and lower bad debt expenses. As a percentage of revenue, SG&A expenses were 9.4% in Q1 2025 compared to 9.2% in Q1 2024.

Adjusted EBITDA¹ was $75.8 million in Q1 2025 compared to $67.1 million in Q1 2024, an increase of $8.7 million or 12.9%. The increase was primarily due to higher sales volumes and selling prices along with lower manufacturing overhead costs as a result of overhead cost absorption, partially offset by higher pulp prices and freight costs as described above, and warehousing and SG&A expenses.

Net income was $15.4 million in Q1 2025 compared to $9.0 million in Q1 2024, an increase of $6.4 million. The increase was primarily due to a higher foreign exchange gain and higher Adjusted EBITDA¹, partially offset by higher depreciation expense and higher interest expense and other finance costs.

Kruger Products Q1 2025 Liquidity
Total liquidity, representing cash and availability under the revolving credit agreements, was $356.8 million as of March 31, 2025. In addition, $4.4 million of cash was held for the Sherbrooke Expansion Project.

KPT Q1 2025 Financial Results
KPT had net income of $1.7 million in Q1 2025. Included in the net income was $1.9 million representing KPT’s share of Kruger Products’ net income, a dilution gain of $0.1 million and depreciation expense of $0.3 million related to adjustments to carrying amounts on acquisition.

Dividends on Common Shares
The Board of Directors of KPT declared a quarterly dividend of $0.18 per share to be paid on July 15, 2025 to shareholders of record at the close of business on June 30, 2025.

Additional Information
For additional information please refer to Management’s Discussion and Analysis (MD&A) of KPT and Kruger Products for the first quarter ended March 31, 2025 available on SEDAR+ at www.sedarplus.ca or our website at www.kptissueinc.com.

First Quarter Results Conference Call Information
KPT will hold its first quarter conference call on Wednesday, May 14, 2025 at 8:30 a.m. Eastern Time.

Via telephone: 1-888-699-1199 or 416-945-7677

Via the internet at: www.kptissueinc.com

Presentation material referenced during the conference call will be available at www.kptissueinc.com.

A rebroadcast of the conference call will be available until midnight, May 21, 2025 by dialing 1-888-660-6345 or 289-819-1450 and entering passcode 89122.

The replay of the webcast will remain available on the website until midnight, May 21, 2025.

About KP Tissue Inc.

KPT was created to acquire, and its business is limited to holding, a limited equity interest in Kruger Products, which is accounted for as an investment on the equity basis. KPT currently holds a 12.3% interest in Kruger Products. For more information visit www.kptissueinc.com.

About Kruger Products Inc.
Kruger Products is Canada's leading manufacturer of quality tissue products for household, industrial and commercial use. Kruger Products serves the Canadian consumer market with such well-known brands as Cashmere®, Purex®, SpongeTowels®, Scotties®, White Swan® and Bonterra^TM. In the U.S., Kruger Products manufactures the White Cloud® brand, as well as many private label products. The Away-From-Home division manufactures and distributes high-quality, cost-effective product solutions to a wide range of commercial and public entities. Kruger Products has approximately 2,800 employees and operates ten FSC® COC-certified (FSC® C-104904) production facilities in North America. For more information visit www.krugerproducts.ca.

Non-GAAP Financial Measures
This press release uses certain non-GAAP financial measures which Kruger Products believes provide useful information to management of Kruger Products and the readers of the financial information in measuring the financial performance and financial condition of Kruger Products. These measures do not have a standardized meaning prescribed by GAAP and therefore may not be comparable to similarly titled measures presented by other companies. An example of such a measure is Adjusted EBITDA. Adjusted EBITDA is not a measurement of operating performance computed in accordance with GAAP and should not be considered as a substitute for operating income, net income or cash flows from operating activities computed in accordance with GAAP. “Adjusted EBITDA” is calculated by Kruger Products as net income (loss) before (i) interest expense and other finance costs, (ii) income taxes, (iii) depreciation, (iv) amortization, (v) loss on sale of non-financial assets, (vi) loss (gain) on disposal of property, plant and equipment, (vii) foreign exchange loss (gain), (viii) costs related to restructuring activities and (ix) changes in amortized cost of Partnership units liability. A reconciliation of Adjusted EBITDA to the relevant reported results can be found in the Segment and Geographic Results table of this news release.

Forward-Looking Statements
Certain statements in this press release about KPT’s and Kruger Products' current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future events or developments constitute forward-looking statements. The words "may", "will", "would", "should", "could", "expects", "plans", "intends", "trends", "indications", "anticipates", "believes", "estimates", "predicts", "likely" or "potential" or the negative or other variations of these words or other comparable words or phrases, are intended to identify forward-looking statements. The forward-looking statements are based on certain key expectations and assumptions made by KPT or Kruger Products, including the moderation of inflationary pressure on input costs and continued inflationary pressure on SG&A as labour, marketing and IT costs continue to rise. Although KPT and Kruger Products believe that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking statements since no assurance can be given that such expectations and assumptions will prove to be correct.

The outlook provided in respect of Adjusted EBITDA¹ for Q2 2025 is forward-looking information and is based on the assumptions and subject to the risk and uncertainties referred to below. The purpose of the outlook is to provide the reader with an indication of management’s expectations, at the date of this press release, regarding Kruger Products’ future financial performance. Readers are cautioned that this information may not be appropriate for other purposes.

Many factors could cause Kruger Products’ actual results, level of activity, performance or achievements or future events or developments (which could in turn affect the economic benefits derived from KPT’s economic interest in Kruger Products), to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors, which are discussed in greater detail in the “Risk Factors – Risks Related to Kruger Products’ Business” section of the KPT Annual Information Form dated March 5, 2025 available on SEDAR+ at www.sedarplus.ca: Kruger Inc.’s influence over Kruger Products; Kruger Products’ reliance on Kruger Inc.; consequences of an event of insolvency relating to Kruger Inc.; risks associated with the ownership of the TAD Sherbrooke Project; risks associated with the operation of the TAD Sherbrooke Project; risks associated with the Sherbrooke Expansion Project; operational risks; significant increases in input costs; reduction in supply of fibre; increased pricing pressure and intense competition; Kruger Products’ inability to innovate effectively; adverse economic conditions; dependence on key retail trade customers; damage to the reputation of Kruger Products or Kruger Products’ brands; Kruger Products’ sales being less than anticipated; Kruger Products’ failure to implement its business and operating strategies; Kruger Products’ obligation to make regular capital expenditures; Kruger Products entering into unsuccessful acquisitions; Kruger Products’ dependence on key personnel; Kruger Products’ inability to retain its existing customers or obtain new customers; Kruger Products’ loss of key suppliers; Kruger Products’ failure to adequately protect its intellectual property rights; Kruger Products’ reliance on third party intellectual property licenses; adverse litigation and other claims affecting Kruger Products; material expenditures due to comprehensive environmental regulation affecting Kruger Products’ cash flow; Kruger Products’ pension obligations are significant and can be materially higher than predicted if Kruger Products Management’s underlying assumptions are incorrect; labour disputes adversely affecting Kruger Products’ cost structure and Kruger Products’ ability to run its plants; exchange rate and U.S. competitors; Kruger Products’ inability to service all of its indebtedness; exposure to potential consumer product liability; covenant compliance; interest rate and refinancing risk; and risks relating to information technology; cyber-security; insurance; internal controls, trade and tax.

Readers should not place undue reliance on forward-looking statements made herein. The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. The forward-looking information contained herein is made as of the date of press release and KPT undertakes no obligation to publicly update such forward-looking information to reflect new information, subsequent or otherwise, unless required by applicable securities laws.

INFORMATION:
Francois Paroyan
General Counsel and Corporate Secretary
KP Tissue Inc.
905-812-6936
francois.paroyan@krugerproducts.ca

INVESTORS:
Doris Grbic
Director, Investor Relations
KP Tissue Inc.
437-882-2596
IR@krugerproducts.ca

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¹ Adjusted EBITDA is a non-GAAP financial measure. Refer to the Non-GAAP Financial Measures section of this news release for more information on these measures