Supremex (SXP) Q4 2024 earnings summary

Executive summary

• Q4 2024 revenue was $69.1M, down 4.5% year-over-year, with net earnings of $5.8M versus $0.7M last year, driven by optimization initiatives and improved margins.

• Full-year 2024 revenue was $281.0M, a 7.0% decrease from 2023, with a net loss of $11.7M due to a $23.4M asset impairment; adjusted net earnings for 2024 were $11.9M.

• Both adjusted EBITDA margins and absolute dollars improved significantly in Q4, reflecting successful cost-saving measures and operational efficiencies.

• Strategic focus on acquisitions, diversification into packaging, and U.S. market expansion, supported by experienced leadership.

• Major consolidation in the Greater Toronto Area reduced facilities, resulting in recurring rent savings and a more efficient operating network.

Financial highlights

• Q4 total revenue was $69.1M, down from $72.3M year-over-year; envelope revenue was $48.8M (down 3.5%), and packaging revenue was $20.3M (down 6.7%).

• Q4 adjusted EBITDA rose to $12.9M (18.7% margin) from $9.0M (12.4%) last year; full-year adjusted EBITDA was $40.3M (14.4% margin).

• Q4 net earnings were $5.8M ($0.23/share), up from $0.7M ($0.03/share) last year; Q4 adjusted net earnings were $5.2M ($0.20/share).

• Free cash flow for Q4 was $8.7M (down from $15.1M); full-year free cash flow was $31.7M, down from $40.0M in 2023.

• Net debt at year-end was $41.2M, down over $14M year-over-year; net debt to adjusted EBITDA improved to 1.0x.

Outlook and guidance

• Management expects further margin and productivity improvements as optimization benefits are fully realized.

• Demand is gradually returning to historical patterns, but recovery is slower than anticipated.

• Priorities include capturing synergies from recent acquisitions, improving efficiency, and pursuing further strategic acquisitions, mainly in packaging.

• Annual cost savings of over $2.0M expected from Envelope segment initiatives and $1.5M from Packaging segment measures once fully implemented.

• The company is confident in its ability to leverage recent initiatives for continued success in 2025.