Thank you, Operator. Good morning, everyone, and thank you for joining us to review Kruger Products' fourth quarter 2025 financial results.

With me this morning is Dino Bianco, the CEO of KP Tissue and Kruger Products, and Michael Keays, the CFO of KP Tissue and Kruger Products. Today's discussion will include certain forward-looking statements.

Actual results could differ materially from these forward-looking statements due to known and unknown risks and uncertainties. A list of risk factors can be found in our public filings.

In addition, today's discussion will include certain non-GAAP financial measures. The reconciliation of these non-GAAP financial measures to the most comparable GAAP measure can be found in our MD&A.

The press release reporting our Q4 2025 results was published this morning and will be available on our website at kptissueinc.com. The financial statements and MD&A will also be posted on our website and on SEDAR+.

The investor presentation to accompany today's discussion can be found in the Investor Relations section of our website. I will now turn the call over to our CEO, Dino Bianco.

Dino?

Thank you, Doris. Good morning, everyone, and thank you for joining us for our fourth quarter and full year earnings call for fiscal 2025.

2025 proved to be a strong year across many areas of our business, marked by share gains and revenue growth, strong margins, and greater profitability, along with enhanced operational efficiency and an improved safety record. We are particularly pleased revenue growth was well diversified, both in Canada, leveraging our leadership position in this mature market, and in the US, which is our growth engine for future years.

In the fourth quarter of 2025, our momentum culminated with adjusted EBITDA growing more than 25% year-over-year to generate a run rate above $80 million for a second consecutive quarter. In addition, expanded insourcing of paper from our Sherbrooke expansion project improved the margins of our away-from-home segment and overall business.

Going forward, we intend to build on this solid foundation to deliver growth in 2026 and beyond. Now let's take a closer look at the quarterly numbers on slide 6.

Revenue improved nearly 4% in the fourth quarter of 2025, mainly driven by higher sales volume in both our consumer and away-from-home businesses. Revenue in Canada grew 5.1% in the fourth quarter, while US sales rose 2.2% year-over-year.

It should be noted that our US segment was facing a high comparable with revenue up almost 20% in Q4 last year. However, we're very pleased with the incremental growth year-over-year in the US market as our annual growth rate was 8.2%.

In terms of profitability, adjusted EBITDA increased 26% year-over-year to reach $84.2 million. The strong growth in adjusted EBITDA can be attributed to higher sales volume and improved productivity at our manufacturing sites, along with lower pulp costs and freight rates.

These factors were partially offset by a number of items that Michael will provide more details on in his financial review. On slide 7, I would like to highlight our revenue growth of 7.5% and adjusted EBITDA increase of 20.2% in fiscal 2025.

Following three consecutive years of profitable growth, we head into 2026 with strong momentum and are well positioned for further growth. On slide 8, average pulp prices in Canadian dollars varied between a decline of 6.6% to an increase of 3.3% in the fourth quarter of 2025 compared to the previous quarter.

On a year-over-year basis, average prices for NBSK and BEK declined 7.3% and 5.3% respectively. Moving forward into 2026, industry analysts continue to expect pulp prices to trend upwards over the year.

Let's move to our operations slide on page 9, slide 9. Production rates for our paper machine and converting operations remained positive in the fourth quarter, helping us exceed our targets for the full year.

At Memphis, our renewed asset strategy focused on producing premium products drove robust, sequential improvements across both paper machine and converting lines. As well, our new state-of-the-art converting line in Memphis remains on track for startup in early Q2 2026.

In terms of our newly proposed project in the western United States, we're in the process of firming up the location, project scope, and financial details of the new TAD facility, which is slated to open in 2028. We anticipate making a detailed announcement in the first half of 2026.

Finally, we're proud to report that we achieved record safety results across our manufacturing assets in 2025, with several sites achieving key milestones throughout the year. Let's turn to our brand support on slide 10.

During the fourth quarter, we continued developing equity-building campaigns behind Cashmere, SpongeTowels, Bonterra, and Scotties to reinforce these brand names with our consumers. Cashmere bathroom tissue was recently featured in a full episode of Project Runway Canada design challenge.

We're pleased with the exposure our Cashmere brand received from this televised event. Also during the fourth quarter we also initiated a Scott for Scotties activation with Toronto Raptors star Scottie Barnes.

The campaign featured a playful stunt on social media in which the NBA basketball star changed his name to Scotties with an S to promote our facial tissue brand across Canada. Limited-edition Scotties Barnes boxes were also released in December as part of this promotion.

In addition, we recently unveiled the sixth edition of the Kruger Big Assist program, which has made hockey more accessible to Canadian families through $1 million in donations to date. The program is highlighted in a Parent Assist new TV commercial airing during CBC's broadcast of the Olympic Winter Games Milano Cortina 2026.

The ad recognizes and celebrates the dedication and sacrifice of minor hockey parents across the country. Also airing during the CBC broadcast is Kruger Big Assist content series, which shines a light on 12 Canadian hockey icons, both men and women, representing Team Canada at the Winter Olympics.

Finally, we expanded support on Scotties seasonal cubes in the fourth quarter with the release of the Toronto Maple Leafs, Montreal Canadiens, and holiday cube formats. Let's turn to slide 11, where the data presented is taken from Nielsen and shows Kruger Products' branded market share in Canada over a 52-week period ending December 27, 2025.

The numbers reflect incremental growth year-over-year for Kruger Products in bathroom tissue, which is a highly competitive product category. Also in terms of facial tissue, we increased share by 130 basis points from the same period last year to reach 46.3% share of the Canadian market.

These share gains were driven by new innovations and continued support behind our market-leading Scotties brand, as I previously mentioned. Likewise, we grew share by 130 basis points on the paper towel category, raising our total to 25.3%.

This was driven by our Made in Canada promotions, leveraging our dual marketing strategy for both high-quality and base-level towels, as well as expanding our product portfolio with new formats and sizing options for consumers. Looking at our away-from-home segment on slide 12, revenue increased moderately year-over-year in the fourth quarter on higher volume, but decreased sequentially due to seasonality.

Similarly, profitability improved compared to the fourth quarter last year, highlighted by a healthy 11% adjusted EBITDA margin, but declined from the previous quarter. As mentioned earlier, the network insourcing of paper contributed AFH's greater profitability on a year-over-year basis in the fourth quarter.

Also, the launch of Cashmere, Scotties, and Titan in away-from-home are already showing strong performance in this market. Finally, we continue to monitor the AFH market environment given ongoing economic uncertainty.

I will now turn the call over to Michael.

Thank you, Dino, and good morning, everyone. Please turn to slide 13 for a summary of our financial performance for the fourth quarter of 2025.

As Dino mentioned, we generated an adjusted EBITDA of $84.2 million on sales of $560.1 million in the quarter, representing a strong year-over-year adjusted EBITDA growth of 26%. Net income totaled $23.4 million in Q4 2025 compared to a net loss of $13.7 million in the fourth quarter of 2024.

The year-over-year increase is due to a favorable foreign exchange difference of $29.7 million and a higher adjusted EBITDA of $17.4 million. These items were partially offset by increased income from non-controlling interest of $4.7 million, higher income tax expense of $3.8 million, as well as higher interest and other finance costs of $1.6 million.

In our quarterly segmented view on slide 14, revenue from our consumer business grew 4.3% year-over-year to $472.3 million, and this increase was driven by higher sales volume both in Canada and the US. In our away-from-home segment, revenue improved 1% year-over-year to $87.8 million, and this increase was also due to slightly higher sales volume in both Canada and US.

The consumer adjusted EBITDA in the fourth quarter totaled $78.1 million compared to $64 million in Q4 2024, with a margin of 16.5%, representing an improvement of two points over the same period last year. On a sequential basis, the consumer adjusted EBITDA remained stable from Q3 2025.

For our away-from-home business, adjusted EBITDA amounted to $9.7 million compared to $4.6 million in Q4 2024. The margin more than doubled year-over-year to 11%, partially driven by the expected benefit of insourcing our paper supply post-Sherbrooke expansion, as Dino mentioned, and sequentially the AFH adjusted EBITDA decreased $0.7 million from Q3 2025.

Moving on to slide 15, we show our consolidated revenue for Q4 2025, which improved 3.8% year-over-year to $560.1 million on the strength of higher sales volume across both segments. On a geographic basis, revenue in Canada grew $15 million or 5.1% year-over-year, while the US revenue rose $5.5 million or 2.2%.

On slide 16, we provide details of our year-over-year profitability. The adjusted EBITDA increased $17.4 million to $84.2 million, resulting in a margin of 15% compared to 12.4% for the same period last year.

The year-over-year increase was driven by the higher sales volume, favorable productivity at our manufacturing sites, lower pulp prices, and reduced freight costs. These items were partially offset by higher manufacturing overhead costs and increased SG&A expenses.

Now let's turn to slide 17, where we compare Q4 revenue to Q3. Revenue decreased slightly by $1 million sequentially or 0.2%, primarily due to lower US sales volume.

Geographically, revenue in Canada increased by $5 million or 1.7%, while the US revenue declined by $6 million or 2.3%. It's worth noting that Q3 is historically our strongest volume quarter, making the decrease in US sales largely a timing effect this quarter.

On slide 18, the adjusted EBITDA in the fourth quarter dropped by $1.5 million or 1.8%, driven by higher SG&A expenses, elevated freight and warehousing costs, increased marketing expenses, greater manufacturing overhead costs, and lower US sales volume. These factors were partially offset by the reduced pulp price, bringing the adjusted EBITDA margin to a comparable level to Q3 at 15%.

Turning to our balance sheet and financial position on slide 19, our cash position continued to improve, reaching $196.1 million at the end of the fourth quarter, up from $149.1 million at the end of Q3 2025. The increase was primarily due to the higher adjusted EBITDA and a decrease in working capital at the end of the year.

Long-term debt at quarter end stood at $1,074.1 million, a decrease of $9.4 million sequentially, reducing the net debt by $55.7 million. Our leverage ratio also declined to 3.1 times compared to 3.4 times in Q3 2025, demonstrating further a commitment to strengthening our balance sheet.

To conclude my section, we will review capital expenditures on slide 20. Our capex for Q4 2025 totaled $33.4 million, and for the full fiscal year capex totaled $78 million.

For 2026, we have raised our capex range to be between $100 and $120 million, which includes some spending for the new converting line in Memphis and other strategic projects, as previously shared. Thank you for joining us this morning, and I'll now turn the call back to Dino.

Thank you, Michael. Please turn to slide 22 for my closing comments, which reflect sustained momentum from the last three years of profitable growth.

We are finalizing details for a new TAD tissue plant in the western United States that will better serve our fast-growing US business with ultra-premium tissue products, which is slated to open in 2028. We will continue managing our margins and navigating through volatile economic conditions.

We are investing in our operations to enhance efficiency and support growing capacity, all the while keeping our people safe. We intend to continue to build market share across our brand portfolio on a long-term basis.

As mentioned on many calls, our away-from-home business has built a sustainable business model and is well positioned to maintain this positive momentum going forward. Of course, we will continue to build the foundation of our organization through capabilities that will enhance our adaptability and resilience in years to come.

Finally, let's turn to our outlook for the first quarter 2026, where we expect adjusted EBITDA to be in a similar range of Q4 2025. We'd be happy now to take your questions.

Good morning. Thanks for taking my question.

On the capex raise, does that include any preparatory spend for the TAD project?

Morning, Ahmed. It would include a small amount for the TAD project, mainly first-year expenses, which will be still fairly low for 2026.

Our base capex will be anywhere from $50 to $70 million this year. Line 11, which is the previously announced project, would be anywhere from $25 to $35 million.

That leaves a very small amount that could be expected for the TAD3 project, at least in the first year, but nothing significant.

Okay. Thanks for that.

You highlighted the US as your growth engine. What are the share trends that you're seeing there and kind of what's driving that for you?

Is it distribution wins, promos, or any other trends that you can highlight would be helpful.

Ahmed. It's Dino.

It's our growth engine because we're a relatively a small player there and we have been supporting some key customers and those customers continue to grow. Every time we pick up new distribution, could be a new customer or new warehouses of an existing customer, it has a fairly multiplier of impact on our growth rate given our smaller base there.

We see that as a great growth opportunity with existing assets that we have. Then of course, when the new asset comes on board in a few years, that will continue to fuel the growth and continue to serve our growing customers.

Thanks. That's helpful.

Just on volume versus price mix for the quarter, is there any comments you can give us there on any impact from price that helped you in the quarter, or is it purely we can assume 100% volume driven?

It would be 100% volume driven, Ahmed, for this quarter. No specific price impact as pulp has been fairly stable or a slight decline in the quarter.

Okay. I'll jump back in the queue.

Thank you very much.

Hi, good morning. Dino, we're seeing pulp list prices heading higher here in 2026.

Are you considering additional consumer tissue price hikes or desheeting in either Canada or the US?

Hamir. Good morning.

One thing we built over the last few years is a very robust pricing model for our businesses, both on the branded—well, branded, away-from-home, and our private label supply. We always look at a bundle of inputs, not just pulp.

We look at obviously energy, freight, labor, other inflation. We use that to determine whether we should go up, when we should go up, or whether we should go down.

We'll just let it go through that model. Pulp predictions are just that, they're forecast, and we'll watch the market and be ready to react accordingly if and when it does go up according to our pricing model.

Fair enough. Dino, when we look at list prices for North America, how should we think about actual realized costs?

Because I know that historically we see this sort of discount off list increase every year. What was that sort of discount factor for 2026 for the industry?

As you said, it's a big number and it seems to grow a couple of percentage points each year. I don't know if I could quote to you what it is this year relative to last year.

I'll give you a wide range. It's probably in the 40 to 60 range as a discount.

There is a wide range there. Honestly, we focus on our landed costs, which moves in directionally with the list, but we just focus on what is our landed cost of pulp.

We believe that to be common to market, and we will then use that as our input to determine any pricing action we need to take.

Fair enough. Just a last question I had here.

On the away-from-home side, it looks like margins they've been over 10% for the last three quarters in a row. Should we think of that as kind of a consistently double-digit margin business going forward?

Look, you asked me this question about 5 years ago, I think. I said I think we can get to 10%, and we have.

I'd also say it's a sustainable business model. It isn't just a one-off we got lucky.

I really believe this is the model that we run. The team's done a great job.

Certainly insourcing paper's helped, but we've got better OEEs on our operations. We've got a stronger pricing model.

We've got a better mix of premium products, a really robust growth in the United States. There's a lot of things going well in that business, which I believe, will it be 10% every quarter?

I don't know. There's still volatility in the business, but I think long term this is a business that should be in the low double digits.

Great. Thanks, Dino.

That's all I had. I'll turn it over.

Thank you, Hamir.

Thanks. Good morning, everyone.

Dino, a couple of questions on the TAD project coming. I guess we're going to get details in the coming months, but what are the remaining hurdles, milestones that need to be addressed before you make the final decision, whether it's site location or project scope?

Maybe we'll start there.

It's a great question, Sean, and it's exactly the right question because it is really activity-based that will make the decision versus time. We're assuming those activities will be concluded in time for us to make an announcement in the first half.

Really the big three are working—and we've been working tirelessly with a couple of communities, but one in particular, around solidifying any incentives, operational plan, labor stats, etc. We've been working through that.

We hope to get that finalized in the coming weeks. The community's very anxious and so are we to get that resolved.

The second area is making sure we've got all our permitting in place: construction permits, air permits, etc. We're well ahead on that.

Then the big one is making sure that we've got our project financing secured, which we are working actively with our lenders on that. I believe the conclusion of those three things will happen over the next month to 2 months, and we should be in a position to make an announcement, as I said, in the first half.

Thanks, Dino, for that. Then following on that, Michael, you guys have been comfortable taking leverage ratios higher through previous big capex initiatives.

Can you speak to any thresholds you're managing around for this project as you speak with your lenders on this project going forward?

Sean. Obviously, we wouldn't get back to a situation where we were in 2021, 2022 with this project, and our balance sheet is a much stronger position today than it was also at the beginning of our last few projects, whether it's the first TAD in Sherbrooke or the Sherbrooke expansion.

The leverage ratio could get back above 4 during a short period of time, but we would expect to be able to maintain an acceptable ratio of between 4 and 5 during that construction period, if not below.

I think we'll take a prudent approach here based on what we know today and our experience of the last few years to be able to get this project across the finish line.

That's great. That's all I have for now.

Thanks very much.

Thank you.

Thanks. Good morning.

Morning. A

question on insourcing paper in AFH. Do you feel like there's more to do there or have you reached the maximum quantity that you can get internally for that?

Do you feel like we've seen the full margin benefit from paper insourcing in AFH?

I think we'll be stable for a period of time. Depends how fast we grow before the new paper machine comes on board with the TAD project.

Even though that won't necessarily be AFH, it'll reset the network again. I think we're going to be okay.

There may be times that we might have to buy on the market, but nowhere near being a structural part of that business like it was past years. It'll be more tactical as we need paper or unique types of paper.

I don't see it as being a major thing, but I still see us needing to buy paper on the market in certain quantities when needed.

Okay. Switching to the new US facility, you mentioned earlier on the call supporting growth of existing customers and targeting new customers as well.

A bit of color on your expectations for customer mix on this new facility. Is it mainly going to support your current client base, or are you targeting an expansion of the customer base with that facility?

That's a great question. We represent customers either in whole or in part that are over 70% of the ACV of customers in the United States.

There are some customers we're not in, but we think we have a wide enough base. Given the fact that this facility will be in the western United States, I think it gives us a great opportunity to service the western divisions and warehouses of those existing customers who are also growing significantly in the west.

It lines us up quite well with existing customers and their growth and maybe an underserved area being their western US business. May there be new customers?

I think on the margin, yes, but the way we built our model, we will be able to satisfy the output of that facility with our existing customers and the growth from those existing customers.

Great. That's all I had.

Thank you.

Thank you. Before I conclude, as 2025 has come to a successful conclusion for our business, I really want to thank our 3,000 employees across North America for the amazing work that they are doing to drive these results and set up our company for continued success.

As I said on the call, we've certainly had strong financials, but also strong safety, strong share growth, capability building, operational performance. There's lots going on in the business, all moving in the right direction.

As important as it is delivering our current results, we're setting ourselves up for future success. I'm so proud of everything we have accomplished.

On that note, I also want to thank all of you on the call today. We look forward to speaking with you again following the release of our first quarter results for 2026.

Thank you. Have an amazing day.

Thanks. Thank you.