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“Looking ahead to 2025, we continue to evaluate crystalizing the value of the two properties listed for sale in the third quarter, and expect to benefit from improved manufacturing absorption by increasing efficiency and consolidation efforts. In addition, we expect incremental cost savings and efficiency gains from the consolidation of our Envelope activities in the Greater Toronto Area, along with full-year benefits from optimizing our Packaging business, to support further margin improvement. Backed by a strong balance sheet and healthy cash flow generation, we remain focused on executing our business strategy and creating lasting value for our shareholders,” added Mr. Emerson.

Summary of three-month period ended December 31, 2024

Revenue

Total revenue for the three-month period ended December 31, 2024, was $69.1 million, representing a decrease of $3.2 million, or 4.5%, from the equivalent quarter of 2023.

Envelope Segment

Revenue was $48.8 million, down from $50.6 million in the equivalent quarter of 2023. The decrease reflects an average selling price decrease of 4.0% from last year’s fourth quarter primarily due to a less favourable customer and product mix between U.S. and the Canadian markets. These factors were partially offset by a 0.5% increase in the volume of units sold reflecting the contribution from the purchase of the Forest Envelope Group (“Forest Envelope”), and a favourable currency conversion effect. The Envelope segment represented 70.6% of total revenue in the quarter, versus 69.9% during the equivalent period of last year.

Packaging & Specialty Products Segment

Revenue was $20.3 million, down from $21.7 million in the corresponding quarter of 2023. The decrease reflects lower sales, partially offset by higher demand for e-commerce packaging solutions, while demand from certain sectors more closely correlated to economic conditions has stabilized compared to last year. Packaging & Specialty Products represented 29.4% of total revenue in the quarter, compared to 30.1% during the equivalent period of last year.

EBITDA² and Adjusted EBITDA²

EBITDA was $13.7 million, up from $6.9 million in the fourth quarter last year. This increase of $6.8 million includes lower restructuring expenses of $2.7 million. Adjusted EBITDA totalled $12.9 million, up from $9.0 million in the fourth quarter of 2023. This increase reflects lower operating expenses and lower selling, general and administrative expenses, partially offset by lower revenue, as detailed above. The Adjusted EBITDA margin reached 18.7% of revenue, up from 12.4% in the equivalent quarter of 2023.

Envelope Segment

Adjusted EBITDA was $9.2 million, up from $8.7 million in the fourth quarter of 2023. The increase mainly reflects benefits from optimization measures announced in July 2024 and from procurement optimization initiatives. As a percentage of segmented revenue, Adjusted EBITDA from the Envelope segment was 18.8%, compared to 17.2% in the equivalent period of 2023.

Packaging & Specialty Products Segment

Adjusted EBITDA was $2.4 million, up from $1.3 million in the fourth quarter of 2023. This increase is mainly due to benefits from optimization measures announced in October 2023 and from procurement optimization initiatives. As a percentage of segmented revenue, Adjusted EBITDA from the Packaging and Specialty Products operations was 11.6%, compared to 6.1% in the equivalent period of 2023.

Corporate and unallocated costs (recovery)

The corporate and unallocated recovery amounted to $1.4 million in the fourth quarter of 2024, as opposed to costs of $1.0 million in the fourth quarter of 2023. The variation mainly reflects a foreign exchange gain from the revaluation of foreign trade receivables and a favourable adjustment related to the DSUs and PSUs in the quarter due to different share price fluctuations this year versus last year.

Net Earnings, Adjusted Net Earnings, Net Earnings per share and Adjusted Net Earnings per share¹

Net earnings were $5.8 million or $0.23 per share for the three-month period ended December 31, 2024, compared to $0.7 million or net earnings of $0.03 per share for the equivalent period last year.

Adjusted net earnings were $5.2 million or $0.20 per share for the three-month period ended December 31, 2024, compared to $2.2 million or net earnings of $0.09 per share for the equivalent period in 2023.

Summary of twelve-month period ended December 31, 2024

Revenue

Total revenue for the twelve-month period ended December 31, 2024, reached $281.0 million, representing a decrease of $21.1 million, or 7.0%, from the equivalent period of 2023.

Envelope Segment

Revenue was $199.2 million, down from $213.6 million in 2023, which includes a record first quarter in 2023 that was positively affected by the tailwinds of the Company’s ability to capitalize on supply-chain issues in 2022. The variation reflects an average selling price decrease of 5.5% from last year primarily due to a less favourable customer and product mix in the U.S. and Canadian markets, and to a 1.3% decrease in the volume of units sold. These factors were partially offset by the contribution from the purchase of Forest Envelope Group and a favourable currency conversion effect. The Envelope segment represented 70.9% of the Company’s revenue during the period, compared with 70.7% in the prior year.

Packaging & Specialty Products Segment

Revenue was $81.9 million, down from $88.6 million in 2023. The decrease reflects lower sales and lower demand from certain sectors more closely correlated to the economic conditions in the first half of the year. These factors were partially offset by higher demand for e-commerce packaging solutions. Packaging & Specialty Products represented 29.1% of the Company’s revenue in 2024, compared with 29.3% in 2023.

EBITDA³ and Adjusted EBITDA³

EBITDA amounted to $15.6 million in the twelve-month period ended December 31, 2024, compared to $47.8 million in the equivalent period of 2023. The variation is essentially due to an asset impairment charge recorded in the third quarter, as well as lower restructuring expenses of $1.0 million. Adjusted EBITDA reached $40.3 million in the twelve-month period ended December 31, 2024, compared to $49.1 million last year. This decrease is the result of lower revenue and operating expenses, partially offset by higher selling, general and administrative expenses. The Adjusted EBITDA margin stood at 14.4% of revenue, compared to 16.3% in the equivalent period of 2023.

Envelope Segment

Adjusted EBITDA was $36.0 million, down from $45.1 million last year. The decrease reflects lower revenue due to a decrease in the average selling price and the effect of lower volume on the absorption of fixed costs, as well as a record first quarter in 2023 that was positively affected by the tailwinds of the Company’s ability to capitalize on supply-chain issues of 2022. These factors were partially offset by benefits from optimization measures and procurement optimization initiatives late in the year. As a percentage of segmented revenue, Adjusted EBITDA from the Envelope segment was 18.1%, down from 21.1% in the equivalent period of 2023.

Packaging & Specialty Products Segment

Adjusted EBITDA was $8.8 million, up from $8.5 million in the comparable period of 2023. The increase reflects benefits from optimization measures and procurement optimization initiatives, partially offset by lower demand from certain sectors more closely correlated to economic conditions in the first half of the year, which negatively impacted the absorption of fixed costs. As a percentage of segmented revenue, Adjusted EBITDA from the Packaging & Specialty Products segment was 10.7%, compared to 9.6% in the equivalent period of 2023.

Corporate and unallocated costs

Corporate and unallocated costs amounted to $4.5 million, versus $4.6 million in 2023, as a foreign exchange gain resulting from the revaluation of foreign trade receivables was offset by an unfavourable adjustment related to DSUs and PSUs and last year’s benefits from a retroactive COVID‑related subsidy for U.S. operations.

Net (Loss) Earnings, Adjusted Net Earnings, Net (Loss) Earnings per share and Adjusted Net Earnings per share⁴

The net loss was $11.7 million or net loss of $0.47 per share for the twelve-month period ended December 31, 2024, compared to net earnings of $17.3 million or $0.67 per share for the equivalent period in 2023.

Adjusted net earnings were $11.9 million or net earnings of $0.48 per share for the twelve-month period ended December 31, 2024, compared to $18.3 million or $0.72 per share for the equivalent period in 2023.

Liquidity and Capital Resources

Cash Flow

Net cash flows from operating activities were $9.2 million during the three-month period ended December 31, 2024, compared to $14.8 million in the equivalent period of 2023. The decrease is mainly attributable to working capital requirements this year as opposed to a working capital release last year, partially offset by higher profitability.

Net cash flows from operating activities were $32.1 million during the twelve-month period ended December 31, 2024, compared to $43.9 million in 2023. The variation essentially reflects a lower working capital release and lower profitability.

Free cash flow amounted to $8.7 million in the fourth quarter of 2024, compared to $15.1 million for the same period last year, essentially reflecting lower cash flows related to operating activities.

Free cash flow amounted to $31.7 million in the twelve-month period ended December 31, 2024, compared to $40.0 million in the corresponding period of 2023, mainly attributable to lower cash flows related to operating activities, partially offset by lower net acquisitions of property, plant and equipment.

Debt and Leverage

Total debt decreased to $43.1 million as at December 31, 2024, compared to $56.8 million as at December 31, 2023. The decrease reflects the repayment of $13.6 million in long-term debt during the 12-month period ended December 31, 2024, stemming from the Company’s solid free cash flow generation.

Dividend Declaration

On February 19, 2025, the Board of Directors declared a quarterly dividend of $0.05 per common share, payable on April 4, 2025, to the shareholders of record at the close of business on March 20, 2025. This dividend is designated as an "eligible" dividend for the purpose of the Income Tax Act (Canada) and any similar provincial legislation.

Outlook

Following challenging market conditions for 2023 and 2024, demand for the Company’s products is gradually returning to historical patterns, although the 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 sustaining capital returns to shareholders.

Tariffs

On February 1, 2025, the US President announced a 25% tariff on imports from Canada, to become effective on February 4, 2025. However, on February 3, 2025, the tariff was paused for at least 30 days. The duration of this pause and the final decision on the tariff remain uncertain. The Company is currently assessing mitigating strategies, which may lead the Company to adjust its business strategy in order to remain competitive in Canada and the US. The direct and indirect effects of these tariffs, retaliatory tariffs, and other trade protectionist measures could be material. There is no guarantee mitigating strategies, if and when implemented, will be sufficient or adequate to counteract, in whole or in part, the potential negative financial impacts on the Company of tariffs.

February 20, 2025 – Fourth Quarter and Year-End Results Conference Call:

A conference call to discuss the Company’s results for the fourth quarter and fiscal year ended December 31, 2024, will be held Thursday, February 20, 2025, at 10:00 a.m. (Eastern Time). A live broadcast of the Conference Call will be available on the Company’s website, in the Investors section under Webcast.

To participate (professional investment community only) or to listen to the live conference call, please dial the following numbers. We suggest that participants call in at least 5 minutes prior to the scheduled start time:

A replay of the conference call will be available on the Company’s website in the Investors section under Webcast. To listen to a recording of the conference call, please call toll-free 1 855-669-9658 or 412-317-0088 and enter the code 1709455. The recording will be available until Thursday, February 27, 2025.

Non-IFRS Financial Measures
Non-IFRS financial measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies and should not be viewed as alternatives to measures of financial performance prepared in accordance with IFRS. Management considers these metrics to be information which may assist investors in evaluating the Company’s profitability and enable better comparability of the results from one period to another.

These Non-IFRS Financial Measures are defined as follows:

The following tables provide the reconciliation of Non-IFRS Financial Measures:

Forward-Looking Information

This press release 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 share, Free cash flow, Net debt, Net debt to Adjusted EBITDA ratio⁵, split of revenue between its Envelope and Packaging segments, capital expenditures, dividend payments, and future performance of Supremex and similar statements or information concerning anticipated future results, circumstances, performance or expectations. Forward-looking information may include words such as anticipate, assumption, believe, could, expect, goal, guidance, intend, may, objective, outlook, plan, seek, should, strive, target and will. Such information relates to future events or future performance and reflects current assumptions, expectations and estimates of management regarding growth, results of operations, performance, business prospects and opportunities, Canadian economic environment and ability to attract and retain customers. Such forward-looking information reflects current assumptions, expectations and estimates of management and is based on information currently available to Supremex as at the date of this MD&A. Such assumptions, expectations and estimates are discussed throughout the MD&A for the year ended December 31, 2024. Supremex cautions that such assumptions may not materialize and that economic conditions such as economic uncertainty, downturns or recessions, or the imposition of tariffs or trade restrictions, may render such assumptions, although believed reasonable at the time they were made, subject to greater uncertainty.

Forward-looking information is subject to certain risks and uncertainties and should not be read as a guarantee of future performance or results and actual results may differ materially from the conclusion, forecast or projection stated in such forward-looking information. These risks and uncertainties include but are not limited to the following: decline in envelope consumption, growth and diversification strategy, key personnel, labour shortage, contributions to employee benefits plans, raw material price increases, cyber security and data protection, operational disruption, dependence on and loss of customer relationships, increase of competition, economic conditions and uncertainty, risk related to the international trade and tax environment (including tariffs, quotas and custom and other restrictions), exchange rate fluctuation, interest rate fluctuation, credit risks with respect to trade receivables, availability of capital, concerns about protection of the environment, potential risk of litigation and, no guarantee to pay dividends. Such risks and uncertainties are discussed throughout this MD&A for the year ended December 31, 2024, particularly in “Risk Factors”. Consequently, the Company cannot guarantee that any forward‑looking information will materialize. Readers should not place any undue reliance on such forward-looking information unless otherwise required by applicable securities legislation. The Company expressly disclaims any intention and assumes no obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

The Management Discussion and Analysis and Financial Statements can be found on www.sedarplus.ca and on Supremex’ website.

About Supremex

Supremex is a leading North American manufacturer and marketer of envelopes and a growing provider of paper-based packaging solutions. Supremex operates nine manufacturing facilities across four provinces in Canada and five manufacturing facilities in four states in the United States employing approximately 900 people. Supremex’ extensive network allows it to efficiently manufacture and distribute envelope and packaging solutions designed to the specifications of major national and multinational corporations, direct mailers, resellers, government entities, SMEs and solutions providers.

For more information, please visit www.supremex.com.

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¹ Non-IFRS financial measures or ratios. Refer to the non-IFRS financial measures section for definitions and reconciliations.
² Non-IFRS financial measures or ratios. Refer to the non-IFRS financial measures section for definitions and reconciliations.
³ Non-IFRS financial measures or ratios. Refer to the non-IFRS financial measures section for definitions and reconciliations.
⁴ Non-IFRS financial measures or ratios. Refer to the non-IFRS financial measures section for definitions and reconciliations.
⁵ Non-IFRS financial measures or ratios. Refer to the non-IFRS financial measures section for definitions and reconciliations.