Supremex Announces Q1 2020 Results

Supremex Inc. (“Supremex” or the “Company”) (TSX: SXP), a leading North American manufacturer and marketer of envelopes and a growing provider of paper-based packaging solutions, today announced its results for the first quarter ended March 31, 2020.

First Quarter Financial Highlights and Recent Events

  • Net Earnings of $2.6 million (or $0.09 per share), up from $1.8 million (or $0.06 per share) in the first quarter of 2019.
  • EBITDA1 was $7.7 million, up $1.3 million from $6.4 million in the first quarter of 2019. Adjusted EBITDA1was $8.2 million, up $1.7 million from $6.5 million in the first quarter of 2019.
  • Total revenue increased 5.6% to $52.4 million from $49.7 million in the first quarter of 2019.
  • Envelope segment revenue increased by 10.3% to 39.1 million from $35.5 million in the first quarter of 2019.
  • Packaging and specialty products segment revenue was down by 6.3% to $13.3 million from $14.2 million in the first quarter of 2019.
  • Acquired Royal Envelope on February 18, 2020, a leading envelope manufacturer and printer, for a total purchase price of $27.4 million. Integration plan executing as expected at time of acquisition.
  • Hired Robert B. Young, an industry veteran, to the newly created position of President, Supremex Packaging Division to drive future profitable growth in the segment.
  • Suspended the regular quarterly dividend as a prudent and preventative measure as a result of the COVID-19 pandemic.

“We delivered strong overall performance in the first quarter of 2020. Profitability improved on solid results from Canadian envelope operations, including the recent acquisition of Royal Envelope in Eastern Canada, and from our growing U.S. envelope platform, which continues to gain market share. Envelope remains a highly profitable segment and a key driver to our bottom line and cash flow generation,” said Stewart Emerson, President & CEO of Supremex. “On the packaging side, we continue to improve our operations, grow sales and recently hired a highly experienced executive to lead this segment to profitable expansion.”

“We experienced a decline in activity towards the end of March however the impact of the COVID-19 pandemic on our operations was limited in the first quarter of 2020. Overall in April, including the effects of COVID19, Canadian Envelope secular decline and U.S. Envelope growth, we experienced a revenue decline of approximately 20% on our legacy businesses. Including Royal Envelope operations, sales were down approximately 6% in April. The second quarter will be a challenge as the duration and scope of the pandemic and its effect on the economy remains uncertain. As a result, we are taking a very prudent approach to managing our business through this crisis by tightly controlling variable expenses, preserving cash and suspending the quarterly dividend to further de-leverage our balance sheet. We have a diversified product offering and customer base, many of whom are or supply essential businesses with a wide range of envelopes and packaging. All of our businesses and markets will be affected differently, and we are focused on navigating them through these changing times,” said Mr. Emerson. “We remain dedicated to the health and safety of our employees who are critical to our ability to manufacture and supply these essential businesses with the products they require. I am extremely proud of their dedication and hard work”. concluded Stewart Emerson, President & CEO of Supremex.
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