Supremex (SXP) Q4 2023 earnings summary

Executive summary

• FY2023 revenue rose 10.9% to $302.2M; Adjusted EBITDA fell to $49.1M from $56.8M and net earnings declined to $17.3M from $28.4M.

• Q4 revenue decreased 8.2% YoY to $72.3M; Adjusted EBITDA was $9.0M versus $15.3M, and net earnings were $0.7M versus $6.7M.

Financial highlights

• Q4 adjusted net earnings were $2.2M, or $0.09/share, versus $7.9M, or $0.31/share.

• FY2023 operating cash flow was $43.9M and free cash flow was $40.0M, versus $26.9M and $24.4M in 2022.

• Q4 operating cash flow was $14.8M and free cash flow was $15.1M, compared with $11.7M and $10.2M in Q4 2022; lower working capital requirements supported cash generation.

Outlook and guidance

• Priorities include capturing acquisition synergies, improving efficiency and asset utilization after folding-carton consolidation, expanding in the U.S. envelope market, and pursuing strategic acquisitions mainly in Packaging.

• Packaging optimization initiatives announced in October 2023 are expected to generate annual cost savings of ~$1.5M once fully implemented.

• Demand is expected to gradually return to historical patterns, though high interest rates and inflation could slow recovery.