Supremex announces third quarter 2015 results and declares a 10% increase of the quarterly dividend

MONTREAL, Nov. 6, 2015 /CNW Telbec/ - Supremex Inc. ("Supremex" or the "Company") (TSX: SXP), Canada's largest manufacturer and marketer of a broad range of stock and custom envelopes and growing provider of packaging and specialty products, today announced its results for the third quarter ended September 30, 2015 and declared its quarterly dividend.

Third Quarter Highlights:

  • 2015 Q3 revenues increased by 0.6% year-over-year to $32.4 million. Continued growth in the U.S. envelope market and packaging and specialty products offset a weaker Canadian envelope market.
  • EBITDA(1) and EBITDA(1) margins were stable year-over-year at $6.6 million or 20.3% of revenues. Adjusting for a non-cash gain to the Company's pension plan during last year's third quarter, Adjusted EBITDA(1) improved by 4.6%, reaching $6.6 million up from $6.3 million.
  • Net earnings grew by 5.7 %, reaching $2.8 million (or $0.10 per share) compared with $2.6 million (or $0.09 per share) during the third quarter of last year.
  • Revenue from the Canadian envelope market decreased by 6.5%, to $24.4 million
  • Revenue from the U.S. envelope market continued to increase significantly, growing by 47.6% to $5.5 million.
  • Revenue from packaging and specialty products grew by 5.7%, reaching $2.6 million.
  • The Company's Board of Directors approved a quarterly dividend payment of $0.055 per share, an increase of 10% over the previous dividend paid.

Subsequent Events:

  • Concluded a five-year committed $50 million senior secured revolving facility replacing existing borrowing facilities and increasing borrowing capacity.
  • Acquired Classic Envelope Inc., a Massachusetts-based envelope and related products manufacturer serving the greater Boston and New York City areas, extending the Company's reach in a key market.

 

_______________________________

1

See "Reconciliation from Net Earnings to EBITDA and to Adjusted EBITDA" and to their definition on page 3 of this press release.

 

"Since September of 2014, Supremex saw important changes to its shareholder base, board of directors and leadership. We have since strengthened our market leading position in Canada and further penetrated key growth markets both organically and through acquisitions. This has allowed us to consistently deliver overall revenue growth, quality earnings, generate strong operating cash flows and create value for our shareholders." said Stewart Emerson, President and CEO of Supremex.

"With a flexible financial position and efficiently run operations, we are well positioned to pursue growth opportunities in key markets. In the context of secular challenges in the envelope market, we will continue to execute our consolidation strategy and further expand our packaging and specialty products offering to bring additional value and further long term growth potential. With the onboarding of the experienced team and complimentary distribution network from the Classic Envelope acquisition, we are also well positioned to take advantage of growth opportunities in the U.S. envelope market." concluded Mr. Emerson.

Financial Results for the Third Quarter of 2015

Revenue for the three-month period ended September 30, 2015 amounted to $32.4 million compared with $32.2 million for the three-month period ended September 30, 2014, an increase of $0.2 million or 0.6%. Revenue growth is attributable to higher sales in the United States and in the packaging and specialty products, offsetting unit declines in the Canadian envelope market.

Revenue from the Canadian envelope market decreased by 6.5% to $24.4 million. A 12.1% reduction in the number of units sold nationally was partially offset by average selling price increases of 6.4% resulting from changes in the product mix and price increases to compensate the higher costs of raw materials as a result of the increase in the U.S. dollar.

Revenue in the U.S. envelope market continued to grow significantly, by 47.6%, to reach $5.5 million. A 24.9% increase in the number of units sold and an 18.2% increase in average selling prices translated in Canadian dollars supported these results. Changes in the competitive landscape and a strong U.S. dollar continue to make this a very attractive growth market for Supremex.

Revenue from packaging and specialty products during the quarter increased by 5.7% reaching $2.6 million, led by a 9.8% increase in the number of units sold.

EBITDA(1) remained stable year-over-year at $6.6 million or 20.3% of revenues. Adjusted EBITDA(1) also stood at $6.6 million compared with $6.3 million during last year's equivalent quarter. The improvement of 4.6% was driven mostly by lower selling, general and administrative expenses which offset the effect of the U.S. dollar appreciation on the cost of raw materials.

Net earnings increased by 5.7% or $0.2 million to $2.8 million, or $0.10 per share, compared to net earnings of $2.6 million or $0.09 in the third quarter of 2014.

During the quarter, operating activities before working capital adjustments generated $5.1 million compared with $4.9 million during the equivalent period of last year.

 

_______________________________

1

See "Definition of EBITDA or Adjusted EBITDA"

 

Capitalization and Normal Course Issuer Bid

As at September 30, 2015, the Company had 28,750,967 common shares outstanding. On July 2, 2015, the Company renewed the normal course issuer bid under which it can purchase up to 1,435,000 common shares until July 1, 2016. No shares were repurchased during the quarter ended September 30, 2015.  

Declaration of Dividend

The Board of Directors declared today a quarterly dividend of $0.055 per share, payable on January 14, 2016 to shareholders of record at the close of business on December 31, 2015. This dividend is designated as an "eligible" dividend for the purpose of the Income Tax Act (Canada) and any similar provincial legislation.

 

Reconciliation from Net Earnings to EBITDA and to Adjusted EBITDA

(In thousands of dollars)





Three-month periods
ended

Nine-month periods
ended


Sept. 30,
2015

Sept. 30,
2014

Sept. 30,
2015

Sept. 30,
2014


$

$

$

$

Net Earnings

2,771

2,621

12,127

8,320


Income tax expense

1,054

1,017

4,470

3,021


Financing charges

185

501

785

1,110


Loss on disposal of property, plant and equipment

19

19

6


Amortization of property, plant and equipment

1,016

880

2,958

2 642

Amortization of intangible assets

1,541

1,541

4,623

4,623

EBITDA(1)

6,586

6,560

24,982

19,722

Adjustments






Less: Gains on pension plans amendment

(264)

(4,341)

(264)


Less: Gain on post-retirement benefits plans amendment

(614)

Adjusted EBITDA(1)

6,586

6,296

20,027

19,458

(1)

See "Definition of EBITDA or Ajusted EBITDA".  EBITDA (or Adjusted EBITDA) is not a recognized measure under IFRS and does not have a standardized meaning prescribed by IFRS.  EBITDA (or Adjusted EBITDA) may not be comparable to similar measures presented by other issuers.

 

Definition of EBITDA (or Adjusted EBITDA) and Non-IFRS Measures

References to "EBITDA" are to earnings before financing charges, income tax expense, amortization of property, plant and equipment and of intangible assets, loss (gain) on disposal of property, plant and equipment.

References to "Adjusted EBITDA" are to EBITDA adjusted to remove non-recurring items such as gains on amendments to pension plans and post-retirement benefits plans.  Supremex believes that Adjusted EBITDA is a measurement commonly used by readers of financial statements to evaluate a company's operational cash-generating capacity and ability to discharge its financial expenses.

EBITDA (or Adjusted EBITDA) is not an earnings measure recognized under IFRS and does not have a standardized meaning prescribed by IFRS. Therefore, EBITDA (or Adjusted EBITDA) may not be comparable to similar measures presented by other entities. Investors are cautioned that EBITDA (or Adjusted EBITDA) should not be construed as an alternative to net earnings determined in accordance with IFRS as an indicator of the Company's performance. Supremex believes that EBITDA (or Adjusted EBITDA) is a measurement commonly used by readers of financial statements to evaluate a company's operational cash-generating capacity and ability to discharge its financial earnings.

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 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 liability 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 press release. Such assumptions, expectations and estimates are discussed throughout our MD&A for fiscal 2014 and for the quarter ended September 30, 2015.

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: economic cycles, availability of capital, decline in envelope consumption, increase of competition, exchange rate fluctuation, raw material increases, credits risks with respect to trade receivables, increase in funding of the Company's pension plans, postal services deficiencies, interest rates fluctuation and potential risk of litigation. Such risks and uncertainties are discussed throughout our MD&A for fiscal 2014 and, in particular, in "Risk Factors". Consequently, we 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.sedar.com and on Supremex' website.

About Supremex

Supremex is Canada's largest manufacturer and marketer of a broad range of stock and custom envelopes and growing provider of packaging and specialty products. Supremex is the only national envelope manufacturer in Canada, with facilities across seven (7) provinces and two (2) facilities in the United States and employs close to 600 people. Supremex' growing footprint allows it to efficiently manufacture and distribute products tailored to the specifications of major corporations, national resellers, government entities, as well as paper merchants, statement processors and solutions providers. For more information, please visit www.supremex.com.

NOVEMBER 6, 2015 CONFERENCE CALL AT 11:00 A.M. (EASTERN TIME)

Financial analysts and investors interested in participating in the conference call on Supremex' results to be held at 11:00 A.M. on November 6, 2015 may call (647) 427-7450 (Montreal area) or 1 888 231-8191 (North-American participants) a few minutes before the start of the call. For those unable to participate, the replay of the conference call will be available on the Company's website at www.supremex.com in the Investors section.

 

SOURCE Supremex Inc.

For further information: Benoît Crowe, CPA, CA, Vice-President, Finance, (514) 595-0555

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