Supremex (SXP) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was CAD 70.2 million, down 4.1% year-over-year, with envelope sales declining and packaging sales rising, marking packaging's best quarter in two years.

• Net earnings fell to CAD 1.9 million (CAD 0.08/share) from CAD 3.5 million (CAD 0.14/share) in Q1 2024.

• Adjusted EBITDA was CAD 8.8 million (12.6% margin), down from CAD 10.5 million (14.3% margin) a year ago.

• The company is a leading Canadian envelope manufacturer and #2 in North America, with a growing packaging platform targeting high-value niches.

• Teams prioritized U.S. shipments to get ahead of tariffs, impacting Canadian operations and average selling prices.

Financial highlights

• Envelope revenue dropped 9.4% to CAD 48.4 million, mainly due to an 11% decrease in average selling price, partially offset by a 1.8% volume increase.

• Packaging and specialty products revenue rose 9.9% to CAD 21.8 million, driven by higher demand in health, beauty, pharma, and e-commerce.

• Net cash from operating activities was CAD 7.0 million, up from CAD 5.1 million; free cash flow increased to CAD 6.8 million.

• Net debt decreased by CAD 5.8 million to CAD 35.4 million, with a net debt to adjusted EBITDA ratio of 0.9x.

• Dividend increased to CAD 0.20 annually, with a quarterly dividend of CAD 0.05 per share declared, payable June 20, 2025.

Outlook and guidance

• Focus remains on business development, innovation, and efficiency to sustain volume growth and improve absorption.

• Healthy backlog in envelopes and a strong pipeline in packaging, especially in folding carton and e-commerce.

• Sale-leaseback transaction on two properties is progressing, expected to further strengthen the balance sheet.

• Intention to renew the NCIB to repurchase up to 5% of outstanding shares, subject to TSX approval.

• Strategic acquisitions, especially in packaging, and capital returns to shareholders are priorities.