Kruger Products Inc. reported a 5.1% increase in revenue to C$589.7 million in the third quarter of 2026, compared with C$561.1 million in the same period last year. Adjusted EBITDA increased 9.1% to C$93.5 million, supported by higher sales volumes, favorable selling prices in the US Consumer business and lower pulp costs.

Net income rose to C$27.7 million, compared with C$14.6 million in Q3 2025, primarily reflecting higher Adjusted EBITDA and a favorable foreign exchange difference.

Revenue increased in both Canada and the United States. Canadian sales grew 3.2% to approximately C$312.5 million, while US revenue increased 7.3% to approximately C$277.2 million. Growth in the US was supported by continued strength in premium private-label tissue products, while the Canadian business benefited from higher sales volumes and the company's ongoing brand investment and market-share recovery initiatives.

Consumer Business Drives Earnings Growth

Revenue in the Consumer segment increased 5.2% to C$492.8 million, compared with C$468.3 million a year earlier. The increase reflected higher sales volumes in Canada and the US, increased selling prices in the US and a favorable foreign exchange impact on US dollar sales.

Adjusted EBITDA rose 12.5% to C$88.0 million, from C$78.2 million, with the segment's adjusted EBITDA margin improving to 17.9%, an increase of more than one percentage point year over year.

In Canada, Kruger Products continued to implement its market-share recovery strategy across its core brands, including Cashmere, Purex, Scotties, SpongeTowels and Bonterra. The company reported continued market-share pressure in bathroom tissue and paper towels, while facial tissue performed well, further strengthening Scotties' position. Management described the initial results of its recovery initiatives as encouraging.

The strategy includes increased brand investment, targeted pricing and promotional activity, product innovation and stronger retail execution. Recent developments include a softer Scotties facial tissue, new Canadian Series carton designs and an upgraded SpongeTowels Ultra Pro product.

Away-From-Home Revenue Grows, but Profitability Declines

Revenue in the Away-From-Home (AFH) segment increased 4.4% to C$96.9 million, compared with C$92.8 million in Q3 2025. Growth was primarily driven by higher sales volumes in the US, partly offset by slightly lower volumes in Canada.

However, Adjusted EBITDA declined 14.4% to C$8.9 million, from C$10.4 million, mainly due to higher logistics costs. The segment recorded an Adjusted EBITDA margin of 9.2%.

Kruger Products implemented a price increase in its Kruger PRO business on September 1 to offset inflationary pressures, particularly higher fuel and transportation costs. The company is also expanding its commercial portfolio and distribution, including its recently launched Titan wipers and cloths.

Despite the year-over-year decline, AFH Adjusted EBITDA improved by C$0.4 million sequentially from Q2 2026, with the margin remaining stable at 9.2%.

Pulp Costs and Operating Expenses

Consolidated Adjusted EBITDA increased by C$7.8 million year over year to C$93.5 million, with the margin improving to 15.9% from 15.3%. Lower pulp prices and higher sales volumes were the main contributors to the improvement, partly offset by higher manufacturing overhead and logistics costs.

During the quarter, average NBSK pulp prices in Canadian dollars declined 6.2% year over year, reflecting industry overcapacity, while BEK pulp prices increased by more than 30%. Both grades recorded slight sequential price increases.

Management also highlighted rising freight and transportation costs, packaging expenses and other petroleum-related inputs. In the earnings call, CEO Dino Bianco indicated that NBSK prices could increase in 2027, adding to the cost pressures facing the business.

Kruger Products is evaluating productivity initiatives and potential pricing adjustments to mitigate these pressures and protect margins. Bianco noted that the last Consumer business price increase in Canada was implemented in 2024, while the AFH business received a price increase effective September 1, 2026.

Operational Performance and Financial Position

Production rates at Kruger Products' paper machines and converting operations exceeded expectations across its network during the quarter and year to date. The ramp-up of the new converting line in Memphis, Tennessee, also remained ahead of plan, adding capacity to support future growth.

At September 30, 2026, cash stood at C$176.4 million, compared with C$165.2 million at the end of Q2. Total debt was C$1.14 billion, down C$18.4 million sequentially, while net debt decreased by C$29.6 million. The leverage ratio improved to 2.7 times from 2.9 times at the end of the previous quarter.

Capital expenditure through the first nine months of 2026 totaled C$22.1 million. The company lowered its full-year 2026 capital expenditure outlook to C$80–100 million, including pre-engineering work for its planned US TAD expansion and other strategic projects. Capital expenditure for 2027 is expected to range from C$60–80 million, excluding spending related to the TAD expansion.

Fourth-Quarter Outlook

Assuming a similar tariff environment, Kruger Products expects Q4 2026 Adjusted EBITDA to be slightly below Q3 levels, while remaining above the same quarter last year.

Management cited escalating input costs and inflationary pressures as key considerations for the coming quarters, while reiterating its focus on brand investment, market-share recovery, productivity improvements and margin delivery.

KP Tissue Reports C$3.1 Million Net Income

KP Tissue Inc., which holds a 12.0% interest in Kruger Products, reported net income of C$3.1 million for the third quarter of 2026. This included C$3.3 million representing its share of Kruger Products' net income, a dilution gain of C$0.1 million and C$0.3 million in depreciation expense related to adjustments to carrying amounts on acquisition.

KP Tissue's Board of Directors declared a quarterly dividend of C$0.21 per share, payable on January 15, 2027, to shareholders of record at the close of business on December 31, 2026.