KP Tissue: Earnings Rise, But Share Erosion and TAD Delay Temper Enthusiasm

Q2 2026 adjusted EBITDA up 25% but Canadian share losses and a third TAD facility timeline slip mark a shift in tone.

KPT.TO · Earnings Call · 2026-08-13

Strong Financials, Softer Consumer

KP Tissue (KPT.TO) delivered robust second-quarter numbers, with adjusted EBITDA of $90.6 million, up 25% year-over-year on revenue of $550.9 million. The 16.4% EBITDA margin improved 290 basis points, helped by lower pulp prices and higher U.S. volume. However, beneath the headline lies a more cautious tone. Management openly discussed private label products gaining traction as inflation-weary consumers trade down, especially in Canada. “We saw some erosion to our share probably around the month of March and then continued into April and May. We started... we start to see some recovery in June as we put some plans in place” — Dino Bianco, Chief Executive Officer · 2026-08-13 This admission marks a shift, as prior calls emphasized share gains and market leadership. The company has now put in place a share recovery plan for the back half, focusing on price gaps, promotional activity, and communication tweaks.

TAD Facility: Another Slippage

The most notable change relates to the third TAD (Through-Air Dried) facility. In February, management indicated an announcement was expected in the first half of 2026: “we hope to get that finalized in the coming weeks. ... we should be in a position to make an announcement, as I said, in the first half.” — Dino Bianco, Chief Executive Officer · 2026-02-18 That timeline has now slipped again. On the latest call, Dino Bianco acknowledged the delay and stated:

It's taking longer. ... I'm not going to give you a specific date. It's more based on the activity that I just explained, but I would hope before we got out of this year that we would have -- we provide clarity.
Dino Bianco, Chief Executive Officer · 2026-08-13

The reasons cited include greenfield complexities, permitting, and an uncertain economic environment. This is the second time the target has been pushed. Back in May 2025, the CEO had already lowered expectations from the first half to the second half of 2025: “My hope - our hope was that we would have an announcement in the first half of this year, but given just all the economic uncertainty and volatility that still exists, it will more likely be in the second half of the year.” — Dino Bianco, CEO · 2025-05-14 The repeated delays raise questions about the company's ability to execute on its U.S. growth strategy, especially as competitors announce new capacity.

Memphis Ramp and Tariff Exposure

Amid the softness, the Memphis facility remains a bright spot. The new converting line is ahead of plan, and management expects another year before full maturity. However, elevated freight costs continue to pressure AFH margins, which declined 1 point to 9.1%. On tariffs, the company downplayed risk, stating “we would be looking at less than 1% of our total sales would be related to this tariff” — Dino Bianco, Chief Executive Officer · 2026-08-13 but are monitoring the situation closely.

Outlook

The company guided Q3 adjusted EBITDA to be in line with Q2, a positive signal given seasonality. “our adjusted EBITDA outlook for the third quarter of 2026 is expected to be in the range of our Q2 2026 results” — Dino Bianco, Chief Executive Officer · 2026-08-13 Yet the combination of share losses, a delayed greenfield project, and ongoing cost pressures suggests a more cautious outlook than the strong earnings would otherwise imply. Investors will watch whether the share recovery plan can stabilize volumes and whether the TAD facility timeline holds.