Supremex (SXP) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was CAD 69.4M, nearly flat year-over-year, with envelope revenue down 3.7% and packaging up 6.7% due to improved market conditions and internal efficiencies.

• Adjusted EBITDA declined to CAD 7.9M (11.4% margin) from CAD 11.7M (16.8%) a year ago.

• Net loss of CAD 23.0M (CAD 0.92 per share) due to a CAD 23.3M non-cash asset impairment and CAD 2.1M restructuring expenses.

• Free cash flow generation remained strong at CAD 7.4M in Q3, supporting debt reduction and share buybacks.

• Announced intention for a sale-leaseback of two properties (book value CAD 9M, appraised at CAD 57M) and a 25% dividend increase.

Financial highlights

• Q3 2024 revenue: CAD 69.4M vs. CAD 69.8M last year; nine-month revenue: CAD 212.0M vs. CAD 229.9M.

• Adjusted EBITDA: CAD 7.9M (11.4% margin) vs. CAD 11.7M (16.8%) last year; nine-month Adjusted EBITDA: CAD 27.4M (12.9%) vs. CAD 40.1M (17.5%).

• Net loss: CAD 23.0M (Q3 2024) vs. net earnings of CAD 5.0M (Q3 2023); adjusted net earnings were CAD 1.0M (CAD 0.04–0.05 per share).

• Free cash flow: CAD 7.4M in Q3 2024 and over CAD 38M for the last 12 months (CAD 1.51 per share).

• Total debt reduced to CAD 46.2M as of September 30, 2024, down over CAD 4M in the quarter.

Outlook and guidance

• Healthy envelope backlog and improved market conditions position both segments for future growth.

• Annual cost savings from Toronto consolidation expected to exceed CAD 2M; Packaging segment to benefit from sales growth and improved absorption.

• Focus on optimizing efficiency, capacity utilization, and pursuing strategic acquisitions, mainly in Packaging.

• Short-term concern is the slower-than-expected recovery in key industries.