Supremex Inc. · TSX:SXP
Supremex — Q4 2024 Earnings Presentation
59 slides from Supremex's earnings presentation, February 2025
Slide 1: Investor Presentation February 2025
SupremeX (TSX: SXP.TO) INVESTOR PRESENTATION FEBRUARY 2025 1
Slide 2: Forward Looking Information
Forward Looking Information • This presentation contains “forward-looking information” within the meaning of applicable Canadian securities laws, including (but not limited to) statements about the EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net earnings, Adjusted net earnings per shar
Slide 3: Agenda
Agenda • INVESTMENT THESIS • SUPREMEX OVERVIEW • DETAILED SEGMENT OVERVIEW • Envelope • Packaging & Specialty Products • THE MARKET • Envelope • Packaging & Specialty Products • GROWTH STRATEGY • FINANCIAL TRACK RECORD • Q4 2024 RESULTS • APPENDIX • Q4 Supplemental Information • Reconciliation of No
Slide 4: Investment Thesis
Investment Thesis • Building packaging platform in growing market niches • Leading Canadian envelope manufacturer and 2nd largest in North America • Strong customer relationships • Solid cash flow generation • Experienced leadership team • Attractive valuation 4
Slide 5: Supremex Overview
TSX: SXP.TO SUPREMEX OVERVIEW INVESTOR PRESENTATION February 2025 5
Slide 6: SupremeX at a Glance
SupremeX at a Glance Envelope #1 in Canada Packaging #1 Independent folding carton #2 in North America(1) provider in Quebec(1) PACKAGING: REVENUE YEAR ENDED December 31, 2024 ~29% ENVELOPE: $281M ~71% (1) Based on Management estimates SupremeX is a leading North American manufacturer and marketer o
Slide 7: Growing By Acquisitions for Nearly 50 Years
Growing By Acquisitions for Nearly 50 Years • Founded in 1977 by four envelope industry executives • Acquired by private equity in 1990; sold to Cenveo in 1995 Focused on envelope manufacturing in Canada Diversifying by geography & product 1991 1994 1996 1998 2000 2001 2006 2007 2008 2010 2011 2014
Slide 8: Vast North American Network
Vast North American Network Location Type 1 Richmond, BC Envelope Canada ● 2 Winnipeg, MB Envelope Canada ● 3 Etobicoke, ON* Envelope Canada & Packaging ● 4 Mississauga, ON Envelope Canada ● 5 Moncton, NB Envelope Distribution Center ● 6 LaSalle, QC* Envelope Canada & Packaging ● 7 Lachine, QC Packa
Slide 9: Experienced Leadership Team
Experienced Leadership Team 35 years of industry experience STEWART EMERSON Started at predecessor to Supremex in 1990. Previously VP and GM Central Region and Buffalo Envelope. President & CEO Responsible for leading many successful M&A integrations. Holds a Bachelor’s Degree in Business (Director
Slide 10: Recent Financial Performance
Recent Financial Performance Revenue (M$) Adjusted EBITDA (M$)(1) Net Earnings (M$) 28 302 57 281 17 272 49 16 39 40 226 7 33 205 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 (12) 2020 2021 2022 2023 2024* (1) This is a non-IFRS financial measure. Non-IFRS financial measures do not have any sta
Slide 11: Historical Price Chart
Historical Price Chart (as of February 13, 2025) Shares outstanding 24.6M 2,000 $8 Float 15.5M Average daily volume 23,397 (52 weeks on TSX) 1,500 $6 52 week (high-low) $4.53-$3.40 Market capitalization $90.4M (in ‘000s of shares) 1,000 $4 $3.68 500 $2 0 $0 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22
Slide 12: Detailed Segment Overview
TSX: SXP.TO DETAILED SEGMENT OVERVIEW INVESTOR PRESENTATION February 2025 12
Slide 13: The Envelope Segment - Overview
The Envelope Segment - Overview The Company utilizes an industry leading equipment base and platform to manufacture a broad range of stock and custom envelopes. “Everything in the letter carrier’s bag.” 2024 Revenue 2020-2024 Revenue Key Points 214 • Optimal geographical network 200 199 • Leading pl
Slide 14: The Envelope Segment – Broad Products Offering
The Envelope Segment – Broad Products Offering Stock Envelopes Custom Envelopes Complementary Services Product A generic product that can be used by Custom envelopes are manufactured • Graphic arts services (basic design and creative Description customers for a variety of applications. according to
Slide 15: The Envelope Segment – Strong Customer Base
The Envelope Segment – Strong Customer Base Supplier to essential businesses and services Regional Envelope Revenue Contracts Supremex Edge Distribution(1) • The industry does not typically National footprint & local distribution: 11% enter into long-term agreements. • Local market intimacy Informal
Slide 16: The Packaging Segment - Overview
The Packaging Segment - Overview The Company manufactures and distributes a diverse range of packaging and specialty products including high-end folding carton packaging, e-Commerce fulfillment packaging solutions and labels. 2024 Revenue 2020-2024 Revenue Key Points 89 82 • #1 independent folding c
Slide 17: The Packaging Segment – Diversified Offering
The Packaging Segment – Diversified Offering Folding Carton E-commerce Specialty Products Product • Made of paperboard that is • Innovative products to optimize • Pressure sensitive labels, Description printed, laminated, cut, then shipping and reduce over booklets & other inserts folded and glued p
Slide 18: The Packaging Segment – Diversified Customer Base
The Packaging Segment– Diversified Customer Base Supplier to varied consumer staples and discretionary consumer end-markets. End-market Approximate Contracts Supremex Edge Packaging Revenue Distribution(1) 7% • Agreements vary according to the Proximity to customer base: type of packaging and custom
Slide 19: The Market
TSX: SXP.TO THE MARKET INVESTOR PRESENTATION February 2025 19
Slide 20: The North American Envelope Market is in Secular Decline
The North American Envelope Market is in Secular Decline Through internal growth and acquisitions, Supremex is now the second largest manufacturer in North America Canadian Envelope Market U.S. Envelope Market Market Size –Sales $125M(1) US$2.0B(2) Competitive Landscape • Supremex is a leading playe
Slide 21: Transaction Mail Volume Trends in North America
Transaction Mail Volume Trends in North America Transaction mail volume in Canada has First-class mail volume in the U.S. also steadily declined since 2019 decreased, but at a lesser rate 5-YR CAGR: 2,826 5-YR CAGR: 54,936 (4.2%) 2,540 (5.8%) 52,628 2,478 50,664 2,313 48,960 2,196 2,133 45,982 44,31
Slide 22: Marketing Mail Volume Trends in North America
Marketing Mail Volume Trends in North America Marketing mail volume in Canada contracted Marketing mail volume in the U.S. historically sharply due to COVID, but growing since then more stable, but affected by COVID, then by economic uncertainty since 2023 5-YR CAGR: 4,578 (0.1%) 4,558 75,653 5-YR C
Slide 23: The Packaging Market is Growing
The Packaging Market is Growing Growing e-commerce activity and sustainability trends support the expansion of paper packaging Paper Packaging Folding Carton Boxes Market Size Largest subsector with approx. 34%(1) of the global consumer packaging market. Global folding carton packaging market valued
Slide 24: Package and Parcel Volume Trends in North America
Package and Parcel Volume Trends in North America Canada Post parcel volume is below the COVID- Even after the COVID-related spike, U.S. Package & related spike, but has been relatively stable since Parcel volume remains higher than 5 years ago 389 5-YR CAGR: 5-YR CAGR: (2.5%) 3.3% 361 7,585 7,325 7
Slide 25: Growth Strategy
TSX: SXP.TO GROWTH STRATEGY INVESTOR PRESENTATION February 2025 25
Slide 26: Executing on a Three-Pronged Growth Strategy
Executing on a Three-Pronged Growth Strategy Leverage our Envelope capacity, knowhow and cash flow to fund the pivot to packaging 1 2 3 Maintaining its leading Pursuing growth opportunities Building Supremex’ packaging position in the Canadian in the U.S. envelope market capabilities organically and
Slide 27: Maintaining Market-Leading Position in Canada and Diversifying in the U.S.
Maintaining Market-Leading Position in Canada and Diversifying in the U.S. Manage the secular decline in the Envelope segment by maintaining EBITDA and strong cash flow generation 1. Maintain Leading Position in Canada 2. Diversify into the U.S. Market • Have a disciplined approach to pricing • Take
Slide 28: Acquisition of Forest Envelope Group
Acquisition of Forest Envelope Group Synergistic tuck-in acquisition in the U.S. Mid-West Quick Facts Rationale Objectives • Concluded on May 1, 2024 • Excellent fit with current Midwest • Operations integrated within existing • Leading regional envelope operations facilities in the Greater Chicago
Slide 29: Diversifying into Paper-Based Packaging in Canada & the U.S.
Diversifying into Paper-Based Packaging in Canada & the U.S. Accelerate diversification into high-value growth markets and execute pivot to Packaging 3. Diversify into Paper-Based Packaging Focus on 3 Pillars of Growth MAKE ACQUISITIONS TO DEVELOP SCALE FOLDING CARTON • Build capacity closer to the
Slide 30: Financial Track Record
TSX: SXP.TO FINANCIAL TRACK RECORD INVESTOR PRESENTATION February 2025 30
Slide 31: Growing Revenues
Growing Revenues Successfully managing secular decline of Envelope Segment and diversification into Packaging Segment 302 281 272 CAGR: 89 205 226 72 82 8.5% 192 69 58 (in millions of $) 55 CAGR: 214 157 200 199 7.8% 137 147 2019 2020 2021 2022 2023 2024 Envelope Packaging Note: Totals may not add u
Slide 32: Adjusted EBITDA and Margin
Adjusted EBITDA and Margin Focusing on operational leverage and extracting cost efficiencies 20.9% 56.8 49.1 15.9% 17.2% 16.3% 40.3 14.4% 39.0 32.5 28.4 (in millions of $) 15.8 10.4% 17.3 7.5 7.0% 5.7% 3.7% -4.2% (11.7) 2020 2021 2022 2023 2024* (1) (1) Adjusted EBITDA Net Earnings Adjusted EBITDA m
Slide 33: Generating Solid Cash Flows
Generating Solid Cash Flows Tight working capital management and disciplined capital investment has significantly improved cash flow 43.9 40.0 37.0 34.4 32.1 31.7 30.0 26.1 26.9 (in millions of $) 24.4 2020 2021 2022 2023 2024 Net cash flows related to operating activities Free Cash Flow (1) (1) Thi
Slide 34: Optimizing Capital Allocation
Optimizing Capital Allocation Returning short term value to shareholders while investing in future growth 40.2 36.4 33.6 (in millions of $) 11.5 9.4 2020 2021 2022 2023 2024 (2) (1) Capex Acquisitions Dividends Share repurchases Growth investments $104.9M Return to shareholders $26.1M 2020 – 2024 20
Slide 35: Dividend Payments
Dividend Payments Quarterly dividend reinstated in Q1-22; increased four times since then Current payment is 5 cents per share ($0.20 annually) Increased in November 2024, annual payout represents 13.3% of trailing 12-month free cash flow Dividend Reinstated Q1-22 (5 payments in 2022) $0.20 $0.17 $0
Slide 36: Healthy Balance Sheet And Leverage Position
Healthy Balance Sheet And Leverage Position Historically, debt has been reduced through a Targeting a leverage ratio below 2.0x strong cash flow generation Total Debt Net Debt to Adj. EBITDA Ratio (1) 56.7 54.7 56.8 56.8 (in millions of $, except ratios) 53.4 44.6 55.4 43.1 53.4 1.6x 55.4 49.1 52.5
Slide 37: Q4-2024 Results
TSX: SXP.TO Q4-2024 RESULTS INVESTOR PRESENTATION February 2025 37
Slide 38: Q4-2024 Highlights & Recent Events
Q4-2024 • Revenue of $69.1M, compared to $72.3M last year. Highlights & • Adjusted EBITDA(1) of $12.9M (18.7% of revenue), vs. $9.0M Recent Events (12.4% of revenue) last year. • Net earnings of $5.8M ($0.23 per share), vs. $0.7M ($0.03 per share) last year. • Adjusted net earnings(1) of $5.2M ($0.2
Slide 39: Revenue Overview
Revenue Overview Revenue (M$) Y/Y Variance Analysis Highlights $72.3 $69.1 Envelope: 21.7 (M$, except %) Envelope Packaging TOTAL (-) Lower average selling price from less 20.3 favourable product and customer mix Q4-23 50.6 21.7 $72.3 between U.S. and Canadian markets Revenue Volume 0.5% - - (+)High
Slide 40: Adjusted EBITDA and Net Earnings
Adjusted EBITDA(1) and Net Earnings Adjusted EBITDA (M$)(1) & margin (%)(1) Net earnings (M$) & margin $12.9 12.0 1.4 $9.0 2.4 $5.8 1.3 18.7% 8.4% 7.0 12.4% 8.7 9.2 2.0 $0.7 1.0% (1.0) Q4-23 Q4-24 Q4-23 Q4-24 -3.0 Envelope Packaging Corporate Margin (1) This is a non-IFRS financial measure or ratio.
Slide 41: Net Earnings and Adjusted Net Earnings
Net Earnings and Adjusted Net Earnings(1) Net earnings (M$) & EPS Adjusted net earnings(1) (M$) & per share(1) Q4 Elements 2024: $5.8 $5.2 - Reversal of Restructuring expenses $0.23 2023: $2.2 $0.20 - Restructuring expenses $0.7 $0.09 - Acquisition costs $0.03 Q4-23 Q4-24 Q4-23 Q4-24 (1) This is a n
Slide 42: Cash Flow from Operating Activities and Free Cash Flow
Cash Flow from Operating Activities and Free Cash Flow (1) Net Cash flow related to operating activities (M$) Free cash flow(1) (M$) Highlights $15.1 $14.8 (+) Higher profitability $9.2 $8.7 (-) Working capital requirements in Q4-24 versus release in Q4-23 Q4-23 Q4-24 Q4-23 Q4-24 (1) This is a non-I
Slide 43: Solid Financial Position
Solid Financial Position Total Debt (M$) Net Debt to Adj. EBITDA Ratio (1) Highlights Forest Envelope • Q4 debt decrease (in millions of $, except ratios) 56.8 54.9 51.8 49.6 reflects free cash flow 43.1 49.1 53.7 55.4 53.7 55.4 50.4 46.3 generation (in millions of $) 50.4 40.8 40.2 40.3 46.3 36.4 4
Slide 44: Outlook
Outlook Positive factors • Financial position and cash flow are strong • Strong team, broad product offering, geographical diversification, solid supplier relationships Short-term concern • Pace of recovery is slower than expected in industries served Priorities • Capture all sales and cost synergie
Slide 45: Appendix
TSX: SXP.TO APPENDIX INVESTOR PRESENTATION February 2025 45
Slide 46: Q4 Supplemental Information - Summary
Q4 Supplemental Information - Summary Selected Consolidated Financial Information Three-month periods Twelve-month periods (In thousands of dollars, except for margins) ended December 31 ended December 31 2024 2023 2024 2023 Revenue 69,075 72,301 281,035 302,187 Operating expenses 48,496 54,271 201,
Slide 47: Q4 Supplemental Information - Segmentation
Q4 Supplemental Information - Segmentation Segmented Information Three-month periods Twelve-month periods (in thousands of dollars, except %) ended December 31 ended December 31 2024 2023 2024 2023 Segmented Revenue Envelope 48,797 50,571 199,164 213,566 Packaging & specialty products 20,278 21,730
Slide 48: Non-IFRS Financial Measures
Non-IFRS Financial Measures Measure Definition EBITDA represents earnings before net financing charges, income tax expense, depreciation of property, plant and equipment and right-of-use assets and amortization of intangible assets. EBITDA The Company uses EBITDA to assess its performance. Managemen
Slide 49: Reconciliation of Non-IFRS Financial Measures
Reconciliation of Non-IFRS Financial Measures Reconciliation of Net earnings (loss) to Adjusted EBITDA Three-month periods Twelve-month periods (In thousands of dollars, except for margins) ended December 31 ended December 31 2024 2023 2024 2023 Net earnings (loss) 5,819 724 (11,743) 17,334 Income t
Slide 50: Reconciliation of Non-IFRS Financial Measures
Reconciliation of Non-IFRS Financial Measures Reconciliation of Net earnings (loss) to Adjusted net earnings and Three-month periods Twelve-month periods of Net earnings (loss) per share to Adjusted net earnings per share ended December 31 ended December 31 (In thousands of dollars, except for per s
Slide 51: Reconciliation of Non-IFRS Financial Measures
Reconciliation of Non-IFRS Financial Measures Reconciliation of Net earnings (loss) to Adjusted EBITDA 2024 2023 2022 2021 2020 (In thousands of dollars, except for margins) Revenue 281,035 302,187 272,467 226,430 204,604 Net earnings (loss) (11,743) 17,334 28,436 15,752 7,495 Income tax expense 2,7
Slide 52: Reconciliation of Non-IFRS Financial Measures
Reconciliation of Non-IFRS Financial Measures Reconciliation of Net earnings (loss) to Adjusted net earnings and of Net earnings (loss) per share to Adjusted net earnings per share 2024 2023 2022 2021 2020 (In thousands of dollars, except for per share amounts) Net earnings (loss) (11,743) 17,334 28
Slide 53: Reconciliation of Non-IFRS Financial Measures
Reconciliation of Non-IFRS Financial Measures Reconciliation of Net cash flows related to operating activities to Free Cash Flow 2024 2023 2022 2021 2020 (In thousands of dollars) Net cash flows related to operating activities 32,087 43,897 26,914 29,996 37,025 Acquisitions (net of disposals) of pro
Slide 54: Reconciliation of Non-IFRS Financial Measures
Reconciliation of Non-IFRS Financial Measures Reconciliation of Net cash flows related to operating activities to 2024 Q4-24 Q3-24 Q2-24 Q1-24 2023 Q4-23 Q3-23 Q2-23 Q1-23 Free Cash Flow (In thousands of dollars) Net cash flows related 32,087 9,201 7,568 10,222 5,096 43,897 14,813 11,538 10,006 7,54
Slide 55: Reconciliation of Non-IFRS Financial Measures
Reconciliation of Non-IFRS Financial Measures Net Debt to Adjusted EBITDA ratio 2024 2023 2022 2021 2020 (in thousands of dollars) Total debt 43,142 56,766 54,748 44,529 56,750 Deferred financing costs (159) (256) (334) (178) (307) Cash (1,794) (1,066) (1,929) (6,365) (3,036) Net debt 41,189 55,444
Slide 56: Reconciliation of Non-IFRS Financial Measures
Reconciliation of Non-IFRS Financial Measures Net Debt to Adjusted EBITDA ratio (in thousands of dollars) Q4-2024 Q3-2024 Q2-2024 Q1-2024 Q4-2023 Total debt 43,142 49,619 51,833 54,877 56,766 Deferred financing costs (159) (158) (186) (203) (256) Cash (1,794) (3,193) (1,279) (1,006) (1,066) Net debt
Slide 57: Reconciliation of Non-IFRS Financial Measures
Reconciliation of Non-IFRS Financial Measures Reconciliation of EBITDA and Adjusted Dec. 31 Sep.30 Jun.30 Mar.31 Dec.31 Sep.30 Jun.30 Mar.31 EBITDA for the past eight quarters 2024 2024 2024 2024 2023 2023 2023 2023 (In thousands of dollars, except for margins) Net earnings (loss) 5,819 (23,038) 1,9
Slide 58: Acquisition Details
Acquisition Details Date Acquired Company Location Description May 1, 2024 Forest Envelope Group Bolingbrook, Illinois Specialty envelope manufacturer May 8, 2023 Graf-Pak Inc. Quebec Provider of folding carton packaging solutions January 16, 2023 Impression Paragraph Inc. Quebec Integrated provider
Slide 59: Head Office and Contact
www.supremex.com Head Office investors@supremex.com 7213 Cordner Street Tel: (514)-731-0000 extension 229 LaSalle, Quebec H8N 2J7