Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Supremex Inc (SUMXF, Financial) reported a 10% revenue growth in its packaging business, marking the best performance in two years.
- The company achieved a 1.8% increase in envelope volume, driven by a greater presence in the US market.
- Supremex Inc (SUMXF) has a strong balance sheet with net debt reduced to $35.4 million, down $5.8 million from three months ago.
- The company has more than $82 million in available liquidity, providing flexibility for future investments and potential acquisitions.
- Supremex Inc (SUMXF) plans to renew its NCIB to acquire up to 5% of outstanding shares, indicating confidence in its financial position.
Negative Points
- Envelope revenue decreased by 9.4% year over year due to lower average selling prices outweighing volume gains.
- The average selling price in the envelope segment declined by 11% due to a less favorable customer and product mix between the US and Canada.
- Adjusted EBITDA for the envelope segment decreased, reflecting lower selling prices and a less favorable mix.
- Corporate and unallocated costs increased to $2.8 million from $1.6 million last year, driven by higher professional fees and foreign exchange losses.
- Net earnings were down to $1.9 million or $0.08 per share, compared to $3.5 million or $0.14 per share last year.
Q & A Highlights
Q: Can you provide an update on the Normal Course Issuer Bid (NCIB) and its relation to the leaseback transaction?
A: We are making great progress on the leaseback transaction and expect to announce it soon. However, the NCIB and the leaseback are not necessarily related. We intend to restart the NCIB, subject to TSX approval, regardless of the leaseback's completion. - Stuart Emerson, President and CEO
Q: What is the status of the CFO search process?
A: We are actively searching for a new CFO and expect to have someone in place by the next earnings call. The organization recognizes the importance of filling this position promptly. - Stuart Emerson, President and CEO
Q: Corporate costs were higher than expected. Can you explain the reasons and whether this will normalize?
A: Corporate costs increased due to higher professional fees, foreign exchange losses, and share-based compensation expenses. We expect these costs to return to more traditional levels moving forward. - Stuart Emerson, President and CEO
Q: Can you elaborate on the 11% year-over-year decline in average selling prices in the envelope segment and its future outlook?
A: The decline was due to a shift in the US-Canada sales mix, prioritizing US shipments to counteract tariff threats, and a reduction in direct mail revenues. We expect these dynamics to stabilize, but the tariff situation remains uncertain. - Stuart Emerson, President and CEO
Q: What is the company's approach to capital allocation given the current valuation and market conditions?
A: We plan to renew the NCIB to return value to shareholders and are considering leaseback transactions to retire outstanding debt. We are also exploring strategic M&A opportunities to enhance utilization and contribution in our factories. - Stuart Emerson, President and CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.