Supremex Inc. announced its results for the Q3 ended September 30, 2024. Total revenue for the three-month period ended September 30, 2024, was $69.4 million, representing a decrease of $0.4 million, or 0.6%, from the equivalent quarter of 2023.
EBITDA was negative $17.5 million, versus $13.0 million in the Q3 2023, essentially due to an asset impairment charge. Adjusted EBITDA amounted to $7.9 million, compared to $11.7 million for the same period last year. The decrease reflects higher operating and selling, general and administrative expenses. The Adjusted EBITDA margin was 11.4% of revenue, compared to 16.8% in the equivalent quarter of 2023.
Net loss was $23.0 million, or net loss of $0.92 per share, for the three-month period ended September 30, 2024, compared to net earnings of $5.0 million, or net earnings of $0.19 per share, for the equivalent period last year.
Adjusted net earnings were $1.0 million, or $0.04 per share, for the three-month period ended September 30, 2024, compared to $4.0 million, or $0.16 per share, for the equivalent period last year.
“Supremex’ Q3 operating performance was driven by higher envelope volume and improving packaging markets, and although profitability was impacted by approximately $1.9 million of non-operating items, it remains below its true potential,” said Stewart Emerson, President and CEO of Supremex. “As anticipated, envelope volumes continue to improve from the lows of 2023, and backlogs are stronger. However, the market continues to give back some of the pricing gains made in 2022 and profitability was also impacted by the temporary effect of our consolidation in the Greater Toronto Area, which is expected to yield important benefits going forward. In packaging, sales for e-commerce fulfillment remained solid and channels subject to discretionary consumer demand have improved, while increased profitability reflected greater efficiency from recent cost reduction and productivity initiatives and the benefits of improved absorption. Additionally, with a new senior leader steering our folding carton activities, we are confident that we will further leverage our high-quality assets, blue-chip customer base and dedicated employees. Based on a gradually improving market, efficiency and productivity gains, and the expectation of a substantial gain on the sale-leaseback transaction, the Board of Directors has decided to increase the dividend.”
Nine-month results
Total revenue for the nine-month period ended September 30, 2024, was $212.0 million, representing a decrease of $17.9 million, or 7.8%, from the equivalent period of 2023.
EBITDA was $1.8 million, versus $40.8 million in the first nine months of 2023, in part due to an asset impairment charge. Adjusted EBITDA was $27.4 million, down slightly from $40.1 million for the same period a year ago, reflecting lower revenue and higher selling, general and administrative expenses, partially offset by lower operating expenses. The Adjusted EBITDA margin was 12.9% in the first nine months of 2024, versus 17.5% in the corresponding period of 2023.
The net loss was $17.6 million, or net loss of $0.70 per share, for the nine-month period ended September 30, 2024, compared to net earnings of $16.6 million, or net earnings of $0.64 per share, for the equivalent period last year.
Adjusted net earnings amounted to $6.7 million, or $0.27 per share, for the nine-month period ended September 30, 2024, compared to $16.1 million, or $0.62 per share, for the equivalent period in 2023.
Outlook
Demand for the Company’s products is gradually returning to historical patterns, although market recovery is taking more time than anticipated. As it continues to expand in the vast and fragmented U.S. envelope market, Supremex will be increasingly subject to competitive pressures, but the Company will rely on its solid reputation and geographic reach to stimulate sales while continuing to proactively control expenses.
The Company remains focused on optimizing operating efficiency, productivity and capacity utilization throughout its network, as well as on capturing all sales and cost synergies from recent business acquisitions. In this regard, initiatives announced in July 2024 for the Envelope segment are expected to result in annual cost savings in excess of $2.0 million once all measures are implemented, while initiatives announced in October 2023 for the Packaging and Specialty Products segment are expected to yield annual cost savings of approximately $1.5 million once all measures are implemented.
With respect to capital deployment, the Company will continue to look for strategic acquisitions, mainly in the Packaging and specialty products segment, while continuing to selectively return capital to shareholders.
Supremex is a leading North American manufacturer and marketer of envelopes and a growing provider of paperbased packaging solutions
