Good morning and welcome to KP Tissue's Fourth Quarter 2024 Results Conference Call. This call is being recorded for replay. All participants are currently in listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. If at any time you have difficulties hearing the conference, please press star followed by zero for operator assistance. I will now turn the call over to Doris Grbic, Director of Investor Relations. You may begin your conference. Thank you, Operator. Good morning, everyone, and thank you for joining us to review Kruger Products' fourth quarter 2024 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 2024 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 2024. We are pleased with our financial performance in 2024, highlighted by record revenue of more than CAD 2 billion and strong adjusted EBITDA in all four quarters. We are particularly proud of our profitability results, which were relatively stable in each quarter despite a volatile market and input costs. The fourth quarter culminated with double-digit revenue growth year-over-year and a near double-digit improvement in terms of adjusted EBITDA. Looking ahead, we are closely monitoring the evolving North American trade environment to assess its impact on our business. We have developed various scenarios and contingency plans to understand the potential impact to our company. I do believe that as we enter this period of uncertainty, our business is in a very strong position to manage any potential risk. Now, let's take a look at our quarterly numbers on slide six. Revenue growth of 11.9% in the fourth quarter of 2024 was mainly driven by higher sales volume in the U.S., favorable selling prices in Canada, and a positive foreign exchange impact. Canadian revenues increased 6% in the fourth quarter, while U.S. sales grew 19.7% on continued business growth in this market. In terms of profitability, adjusted EBITDA improved 9.2% year- over- year to CAD 66.8 million in the fourth quarter, mainly due to higher sales volume, increased selling prices, as well as lower marketing and SG&A expenses. These factors were partially offset by a number of items, including higher pulp prices. Michael will provide you with the details in his financial review. On slide seven, we have our full- year results, where we delivered very strong revenue growth of 9.4% and adjusted EBITDA growth of 11% in fiscal 2024. We have reported eight consecutive quarters of strong financial results following a challenging 2022. This sustained performance reflects the adaptability and resiliency of our teams in the wake of rising inflationary pressure in recent years and the benefit of the new capacity from our recently added new assets. On slide eight, pulp average prices in Canadian dollars decreased in the fourth quarter of 2024 from the previous quarter, while year-over-year average prices for NBSK and BEK were up 32.1% and 22.9% respectively versus Q4 2023. Although market pulp prices declined sequentially in the fourth quarter, industry analysts anticipate prices will rise again in 2025. We're also keeping a close eye on the Canadian dollar since a weakened Canadian exchange rate could further increase our input costs in 2025. Let's move on to our operations on slide nine. We are pleased to report that our assets performed well across the network in 2024. At Sherbrooke, the successful startup of our new paper machine and facial tissue line exceeded production targets for the year. At Memphis, the turnaround continued to move in the right direction through increased investments in staffing, training, and maintenance spending to achieve improved performance. In summary, we delivered improved results at all our sites with ongoing production increases expected in 2025. Let me give a quick word about our capacity outlook on slide ten. Following the startup of our tissue plant in Sherbrooke last year, we are currently evaluating the construction of a new manufacturing facility that will contain a state-of-the-art TAD paper machine and converting lines. The proposed plan supports our continued focus to grow revenue, build our market share, and offer high-quality tissue products to customers across North America. The current uncertainty in the North American business environment will require us to perform additional scenario planning and due diligence on this project before we make any official announcement. Let's turn to slide 11. We continued investing and expanding our made-in-Canada positioning in the fourth quarter amid an uncertain trade environment. Our latest marketing campaign is built on the renewed patronism of consumers seeking to buy products made in Canada. As a long-standing Canadian company, Kruger Products has focused on making and selling high-quality branded products from coast to coast for Canadian consumers. We also recently activated our Scotties Tournament of Hearts campaign related to the Canadian Women's Curling Championship. Congratulations to Team Homan for repeating as Canadian champions at the 2025 Scotties Tournament of Hearts that was held in Thunder Bay, Ontario. Early in the fourth quarter, we generated record engagement at the 21st Cashmere Collection Show in Toronto. The fashion show and fundraiser, which was enhanced by nationwide live streaming and first-ever live voting, celebrated the strength, courage, and hope of breast cancer survivors in Canada. Sixteen of the country's top designers took part in creating the 2024 collection, including Chavah Lindsay, who drew inspiration from her mother's journey through cancer to design the winning dress made of Cashmere bathroom tissue. Over the last 20 years, the Cashmere Collection has raised over CAD 5 million in support of breast cancer awareness, prevention, and treatment programs for its charitable partners, the Canadian Cancer Society and the Quebec Breast Cancer Foundation. In addition, we continued our distribution drive behind our facial tissue business in the fourth quarter with the launch of new Scotties Ultra Soft Pocket Packs and Holiday Cubes. Finally, Kruger Products was recognized for its marketing excellence in 2024 with a number of industry awards such as Strategy Magazine's Brand of the Year, a Bronze Effie Award for marketing effectiveness related to Scotties, as well as multiple national and international awards for our Cashmere Ultra Luxe Bathroom Guide and our Love Is Messy Media Campaign. Turning to slide 12, the data presented is taken from Nielsen. It shows branded market share over a 52-week period ended December 28, 2024. Our decline in bathroom tissue and paper towel share in the fourth quarter of 2024 reflects higher pricing that we took in the Canadian consumer segment, which took effect during the fourth quarter. In the facial tissue category, we continued to make incremental gains, with total market share reaching 45% at the end of the year. Looking at the away-from-home segment on slide 13, sales volume slightly decreased year-over-year and sequentially in Q4 2024. Ongoing strong orders, coupled with challenges on our paper supply, hampered our order fulfillment. We expect that our new paper machine in Sherbrooke will provide additional internal paper in 2025 for our away-from-home business and reduce our external requirements. It should be noted that we are rebranding our away-from-home segment to Kruger Pro during Q1 2025. We intend to leverage our strong consumer brands like Scotties, Cashmere, and White Cloud to grow this business. Finally, strong fiscal 2024 full year results for our AFH segment, both in terms of revenue and adjusted EBITDA, will provide a solid foundation for future growth. I will now turn the call over to Michael. Thank you, Dino, and good morning, everyone. Please turn to slide 14 for a summary of our financial performance for the fourth quarter of 2024. As previously mentioned by Dino, we delivered revenue of CAD 539.6 million and a strong adjusted EBITDA of CAD 66.8 million, slightly above our expectation. Meanwhile, net loss totaled CAD 13.7 million in the fourth quarter of 2024, compared to a net income of CAD 16.5 million in the fourth quarter of 2023. The year-over-year decrease can be attributed to a higher foreign exchange loss of CAD 33.2 million, greater depreciation expense of CAD 3.3 million, as well as higher interest expense and other finance costs of CAD 2.9 million. These factors were partially offset by a higher adjusted EBITDA of CAD 5.6 million, increased income from non-controlling interest of CAD 3.1 million, reduced income tax expense of CAD 2.2 million, and a lower loss on the sale of fixed asset of CAD 1.5 million. In the quarterly segmented view on slide 15, revenue from our consumer business grew 12.9% year-over-year to CAD 452.7 million in the fourth quarter of 2024. The double-digit increase was due to higher sales volume, primarily in the U.S., the positive impact of consumer selling prices in Canada, and a more favorable foreign exchange impact on U.S. dollar sales in the quarter. In the away-from-home segment, the revenue improved 6.8% year-over-year to CAD 86.9 million on the strength of higher selling prices. AFH revenue increased in both U.S. and Canada on a year-over-year basis. When looking at our consumer- adjusted EBITDA in the fourth quarter, it totaled CAD 64 million compared to CAD 59.8 million in Q4 2023, with a margin of 14.1% versus 14.9% for the same period last year. On a sequential basis, the consumer adjusted EBITDA grew CAD 1.6 million from Q3 2024. For our away-from-home business, adjusted EBITDA amounted to CAD 4.6 million in the fourth quarter, compared to CAD 5.7 million in Q4 2023, a decrease of CAD 1.1 million, with a margin of 5.3% for the quarter, while sequentially AFH adjusted EBITDA declined CAD 2 million from Q3 2024. Now moving on to slide 16, we can review consolidated revenue for Q4 2024, which grew CAD 57.3 million, or 11.9% year-over-year. The increase was driven by higher sales volume, primarily in the U.S., favorable selling prices in Canada, and a positive FX impact on U.S. dollar sales. On a geographic basis, revenue in Canada rose CAD 16.5 million, or 6% year-over-year, while U.S. revenues grew CAD 40.8 million, or 19.7%. On slide 17, we provide details about year-over-year profitability in the fourth quarter. The adjusted EBITDA increased by CAD 5.6 million-CAD 66.8 million in the quarter, resulting in a margin of 12.4% compared to 12.7% for the same period last year. Several factors account for the year-over-year growth in adjusted EBITDA. That was the higher sales volume, the increase in selling prices, and lower marketing and SG&A expenses. These items were partially offset by a higher pulp price, additional outsourcing activity during the quarter, and a greater freight and warehousing cost. Now, if we turn to slide 18, where we compare Q4 revenue to Q3 2024, revenue increased CAD 18.5 million sequentially, or 3.6%, mainly due to the increased selling prices, higher consumer sales volume, and a positive FX impact. Geographically, revenue in Canada rose by CAD 9.2 million, or 3.2%, while revenue in the U.S. grew CAD 9.3 million, or 3.9%. On slide 19, adjusted EBITDA in the fourth quarter improved sequentially by CAD 1.1 million-CAD 66.8 million, mainly due to the favorable selling prices, lower SG&A expenses, and improved sales mix. These factors were partially offset by higher manufacturing overhead costs, as well as greater freight and warehousing expenses. Now turning to our balance sheet and financial position on slide 20, our cash position reached CAD 119.5 million at the end of the fourth quarter, an increase of CAD 8.3 million from Q3 2024. Our net debt at quarter end stood at CAD 1.1 billion, up CAD 59 million sequentially. Accordingly, our net debt-to-last-12-month adjusted EBITDA ratio rose slightly to 4.2x in the fourth quarter. In terms of total liquidity, we had CAD 344.6 million available at the end of the fourth quarter, and in addition, CAD 16.6 million of cash was held for the Sherbrooke expansion project. I will conclude my section by reviewing capital expenditures on slide 21. CapEx for Q4 2024 was CAD 48.1 million, which included CAD 16.1 million for the Sherbrooke expansion project. The total CapEx for the fiscal year of 2024 reached CAD 185.5 million. Finally, our CapEx outlook remains between CAD 40 million-CAD 60 million for 2025. This outlook is for our base CapEx and excludes approximately CAD 30 million-CAD 40 million left for the completion of the Sherbrooke expansion project. Thank you for joining us this morning, and I'll now turn the call back to Dino. Thank you, Michael. Please turn to slide 23 for my closing comments. Building on fiscal 2024, we expect strong continued sales growth in 2025. We are closely monitoring the evolving North American trade environment to assess its impact on our business. We believe that the category and our company are in a strong position to manage any potential impacts. We will continue to pass on any necessary market cost increases while delivering against cost and productivity initiatives to protect our margins. We will continue investing in our brands to drive long-term share gains. We expect our new paper machine in Sherbrooke will enable the reduction of purchased paper in 2025. Our away-from-home business, which continues to deliver against the sustainable profit model, is being rebranded Kruger Pro in Q1 2025. We are developing our organizational capability to strengthen the adaptability and resiliency of our employees in the face of an uncertain environment. As we enter a period of great business uncertainty, we believe the foundation of our business is in a strong position. However, given the evolving news and volatility, we will not provide profit guidance for Q1 2025. Our intention is that once there is more market clarity, we will return to providing quarterly guidance. We will now be happy to take your questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press star followed by the number one on your telephone keypad. If you are using a speakerphone, please pick up your headset before pressing any keys. To withdraw your question, please press star two. Once again, please press star one to join the queue. Your first question comes from the line of Sean Steuart with TD Cowen. Please go ahead. Thank you. Good morning, everyone. A couple of questions. Dino, first, I'd like to start with tariff exposure. You referenced, I guess, some potential to mitigate this exposure. I'm wondering if you can give us context there. Can you tell us in 2024, whether it's a specific number or general range, how much of your 2024 sales last year were from Canada to the U.S.? Yeah. Good morning, Sean. It did not take long for that question to come up. Obviously, it is a very important but an evolving, uncertain topic as we continue to watch how it is unfolding. A couple of things. First of all, let me talk about the exposure piece because then that will lead to mitigating actions. On the exposure piece, we are about one-third of our revenue is what I would call exposed to tariffs. It is a range, let's say, of CAD 600 million-CAD 700 million. These are all Canadian dollars, CAD 600 million-CAD 700 million. That would be exposed to a tariff risk on finished goods going primarily from Canada into the U.S. We would also have some exposure, as most companies would, from the tariff impact on pulp and NBSK primarily. Most North American companies source their softwood from Canada. There is a general cost increase for all tissue manufacturers, regardless of where they are, particularly, as I said, the United States, since it is a tariff going into the U.S. Our mitigation plans have a few things at play. Certainly, we are and have been moving as much volume in advance into the United States, into our customers, into our warehouses. We are moving as much production as we can with our network into the United States from a short-term point of view. Our expectation is also, given the tariff, that we would pass that through as a surcharge to our customers. Obviously, it is a significant amount, and we believe, as most of any industry will do, we will pass it through as a surcharge to our customers. Midterm, we're looking at—and we've been looking at this for a while, so this isn't new to tariffs—but midterm, we're looking at adding additional assets, near-in assets, if you will, into the United States. We're also continuing to look at M&A activity. Longer term, as I mentioned in my notes, we're looking at a new greenfield site or new sites. That would be some of the mid and longer-term actions that we would look at to mitigate the tariff risk. Thanks for all that detail. With respect to the potential new TAD machine, I appreciate you probably want to see how the dust settles here on the trade issue, but any context on scale of that project and what the cost might look like relative to previous expansion initiatives into that technology? Yeah. We announced in our assessment that we were evaluating this project. We had said that to start, the project would be one paper machine and three converting lines. It would basically be a replication of what we started up in Sherbrooke. I think you've seen others who have recently announced new similar machines in the United States, and you're seeing costs range from CAD 600 million+. I think we are going to be, once we finalize all the costs, it will be likely in the similar range to what you're seeing announced already. Does the timing get pushed out until there's clarity on what's going on with trade, or do you just say, "All right, it's going to be a U.S. project, and let's move on"? Yeah. I mean, look, we're looking at it very aggressively. We're getting to the point now. We're putting the dots on the I's and the crosses on the T. The cost to do business is a big factor, so the tariffs play into that. There are other costs like energy, access to water, access to labor, freight distribution. We're putting it into the model. My point in that comment is that we had said we would announce in early 2025, given what's happening in the economic environment. It's not just the tariffs. It's the exchange rate. It's the reciprocal tariffs. Is there a recession? It's the global impacts, collateral impacts around freight. It's more than just the tariffs, although a lot of it is obviously the tariffs. We're going to wait till that all settles out before we make a major announcement like that. I'm not expecting years of delay. It might be months just to wait to see how this thing shakes out because we are anxious to get going, and we know the market needs more capacity, particularly in the ultra-premium. We are continuing to grow, and we've shown that with the assets we put in place. We will need new assets. Hopefully, it's a short period of time, if any delay, before we announce. Okay. Thanks for that, Dino. I'll leave it there for now. Thanks, Sean. Your next question comes from the line of Hamir Patel with CIBC Capital Markets. Please go ahead. Hi. Good morning. Dino, how has the push to sort of buy Canada affected your market share stats here in 2025? Yeah. Thank you, Hamir. Great question. First of all, our brand identity has always been made in Canada. We've been doing made in Canada before it got fashionable to do made in Canada the last few months. We're reinforcing that point that we are made in Canada. Obviously, we're a Canadian company, Canadian production, made by Canadians, for Canadians. Our brands have been long-standing connections with consumers across this country and Canada. What we ended up doing is, like most companies now that you're seeing, is just picking up on that communication as part of the period that we're going through now with the made in Canada mindset, both at the retailer level—you are seeing that—and then at the consumer level. We are very active in activating and activating both our in-store and our marketing programs to support that and our PR, quite frankly. There is a lot of press about it. It's too early to tell. Have we seen any share yet? You'll probably start to see it as we get out of the Q1 share period to see that. We do believe, based on activation, we do believe, based on the promotions that we are getting, additional support on promotions, that it should manifest itself in improved share performance. Okay. Dino, just given the economic uncertainty, have you seen any signs of the Canadian consumer maybe trading down to some of the lower-tier products? Not yet, Hamir. I mean, obviously, the growth of private label has been very strong and continues to be strong. It really started ramping up during 2022 with the increased inflation that we saw. We saw a bit of it in Q4 from we took pricing in Q4. Whenever we take pricing, we're always the first to go. There's always a lag. There's always uncertainty in the market. We end up losing a little bit in the—as we're moving to protect our margin, we lose a little bit on the volume noise for a short period of time. We saw a little bit of that. I would say I don't see that as a trend yet. Maybe we will as we go through this. It's just part of its normal growth that many of the private label brands have been gaining is continuing, but I haven't seen any acceleration in that. Okay. Great. Thanks. Dino, just last question. If you do go forward with a TAD 3 project, how do you think about the sort of percent mix debt equity to finance that project? Yeah. Probably very similar to what you saw in Sherbrooke, which I think was a 40% equity, 60% debt kind of range is the model we like to work within. It could obviously move on the edges just depending on what's available and where, but that's kind of the model that we have been adhering to. Okay. Fair enough. Thanks. That's all I had. I'll turn it over. Thanks, Hamir. If you would like to ask a question, simply press star one on your telephone keypad. Your next question comes from the line of Zach Evershed with National Bank Financial. Please go ahead. Good morning, everyone. This is Nate calling in for Zach. My next question is, what's your view on how global pulp markets react to tariffs and the trade war and reciprocal tariffs? What would KP T's sourcing playbook be in this scenario? What kind of options are you exploring? I think you raise a question that most people are focused on the tariff and the 25% and what that's doing. You raise a great point. There are a lot of collateral impacts that happen longer term. Short term, it's hard to move supply networks. In the midterm, there are a lot of collateral impacts. We're even looking at what happens to the freight market. Very important cost for us as load product flows change, etc. On the pulp side, obviously, like many tissue companies, we source our hardwood mainly from South America and our softwood mainly from Canada. There are options in Nordic countries. There are obviously U.S. softwood and U.S. hardwood. We look at the full mix. It's very important for us that we maintain our quality. That narrows down the scope of where you can go. Quality is a very important aspect for us, both in our own brands and any private label that we produce. Within that constraint, we try to maximize our relationships with our long-standing pulp suppliers. We also look at alternative sources as a backup plan. You can only do so much of that, but we are looking at that as well. Thank you. Yes, of course, we can all appreciate the complexity of how the situation is continuously evolving. Thus far, what can you say has been the most disruptive part of the business? Perhaps, where do you see the most opportunity amidst all of the volatility? One thing I would say, and I alluded a little bit to it in my remarks, the tissue category is a very healthy category. It's a product that's in demand. We know that demand will be—we can predict demand. It's not a discretionary product. There'll be movement within there between quality tiers and so forth. At the end of the day, I don't think people are going to stop using tissue because of tariffs or disruption. I think we're very pleased that we're working in a strong category that will continue to grow. I also believe at this point in the cycle that capacity is very tight in the North American market, both in the U.S. and in Canada and as a North American market, if you will. Capacity is fairly tight. I think that just my worry is that you could easily get supply disruptions if there's impacts to the supply chain because there isn't a lot of headroom in the supply chain. It's instantaneous because inventory levels are fairly low. We're just watching to make sure we're not having supply chain impacts from the tariffs or the availability of freight carriers, etc. That's something that we continue to watch. We do not want to get into what we got into during COVID with respect to empty shelves and panic buying. We understand the dramatic impact that has on consumers and retailers. We're trying to build some redundancy into our systems as best we can to deal with any supply shocks that may happen because of the tariffs. That's the piece that we watch the most and probably most challenging, but also I think the greatest opportunity for us too is to manage through that. Great color. With the expectation of the surcharge of the tariffs being passed through, can you give any color as to how quickly retail prices can be adjusted in the U.S.? I think we're talking about inventory levels of two weeks to maybe four weeks. Every retailer is in a different position. By the way, if you're a retailer, you're not just worried about tissue. You get thousands and thousands and thousands of SKUs that are coming from all over the world, quite frankly. There's a lot of work being done on the retailers. Some of them spoke yesterday, some large retailers, about how they're going to have to respond. We've been in close contact with all our retailers, our customers, if you will, in the U.S. and in Canada. We're very close to them and knowing how this is playing out and what the impact is for them and what actions we're taking. I suspect, in general, that on the consumer side of these tariffs, anything that you're buying through a grocery store or a grocery channel is going to start hitting the consumer within weeks. Think of vegetables, other staples, etc., fruits, and so forth. I think it's weeks before it starts hitting the consumer, maybe even faster. Great color. Thank you. Just one last one regarding the new machines ramp- up and how that'll feed into the AFH segment. How much incremental benefits are you expecting from the reduction in externally sourced paper? We expect as a network that we will be essentially in balance. There are some grades that we just can't produce that we'll have to buy, but that's a really small portion. For the bulk of our main grades, we will be in balance internally with respect to paper. That will benefit our Kruger Pro division the most because they were, as we were short on paper, they were the ones that had to go out and buy paper. This will, I think, we'll start seeing it as we move through 2025 across the business. You'll start to see that in the Kruger Pro division. It isn't just there's consistency of paper, the quality of paper, and obviously the cost benefit. All those things will materialize in our businesses as we ramp up that machine. Thank you very much. I'll turn it over. There are no further questions at this time. I would like to turn it back to Dino Bianco for closing remarks. Thank you. Before I end the call, I want to take the opportunity to thank our 3,000 employees across North America for their continued dedication and efforts to deliver these results while creating a strong culture and really setting our business up for future success. I'm grateful and humbled by this incredible team. I want to thank you for the work that you've done and thank you for the work that you do and will continue to do to continue to look after our consumers and our customers. I also want to thank you all for joining us on the call today. We look forward to speaking with you again following the release of our first quarter results for 2025. Thank you and have an amazing day. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.