May 13, 2021 - Supremex Inc. (TSX: SXP), a leading North American manufacturer and marketer of envelopes and a provider of paper-based packaging solutions, today announced its results for the first quarter ended March 31, 2021.
First Quarter Financial Highlights and Recent Events
"We continue to experience strong results from an expanded geographic reach and a diversified product offering and customer base. Increased revenues from packaging and specialty products offset the effects of secular decline and a temporary COVID related reduction in non-essential mail in the envelope segment. These revenue gains coupled with stringent cost optimization measures buoyed profitability," said Stewart Emerson, President & CEO.
"We continue to focus on the health and safety of our employees and take a prudent approach to managing cash flow and capital allocation while continuing to push on the revenue side. We are well advanced with the integration of the recent bolt-on acquisition of Vista Graphic Communications in Indianapolis which provides a turn-key platform close to our US customer base and needed capacity for continued growth in the e-commerce packaging business," concluded Stewart Emerson, President & CEO.
Total revenue for the three-month period ended March 31, 2021, was $53.6 million, representing an increase of 2.3% from the equivalent quarter of 2020.
Revenue from the envelope segment was $38.3 million, representing a decrease of 2.3% or $0.8 million, from $39.1 million in the equivalent quarter of 2020.
Revenue from the packaging and specialty products segment was $15.3 million, an increase of 15.6% or $2.0 million, from the corresponding quarter of 2020. The increase was the result of e-commerce packaging new customer growth and organic growth with existing customers, the contribution of our Vista acquisition on March 8, 2021 and higher folding carton sales in the pharmaceutical market. Packaging and specialty products represented 28.6% of the Company's revenue in the quarter, up from 25.3% during the equivalent period of last year.
EBITDA increased by 22.1% to $9.4 million in the first quarter of 2021, up from $7.7 million in the first quarter of 2020. Adjusted EBITDA increased by 14.5% to $9.5 million, up from $8.3 million in the equivalent quarter of last year as a result of higher packaging and specialty products sales, operational efficiencies derived from cost optimizations, improvements in folding carton manufacturing activities, and from the support of the CEWS. Adjusted EBITDA margins increased to 17.8% of revenue compared to 15.9% in the equivalent quarter of 2020. Excluding the contribution of the CEWS, Adjusted EBITDA margins stood at 16.7% of revenue in the first quarter of 2021.
Net Earnings were $4.1 million (or $0.15 per share) for the three-month period ended March 31, 2021, compared to $2.6 million (or $0.09 per share) for the equivalent period in 2020. Adjusted Net Earnings were $4.2 million (or $0.15 per share) for the three-month period ended March 31, 2021, compared to $3.1 million (or $0.11 per share) for the equivalent period in 2020.
Net cash flows from operating activities were $4.5 million during the three-month period ended March 31, 2021, compared to $8.1 million in the equivalent period of 2020. The variation is attributable to a negative net change in working capital adjustments.
Robert. B. Young, President of the Supremex Packaging Division, will be leaving the Company on May 28th, 2021. Mr. Young joined the Company in May 2020. Supremex will initiate a process to fill this position.
On March 8, 2021, the Company acquired substantively all of the assets of Vista Graphic Communications, LLC ("Vista"), for a cash consideration of $2,666,790 ($2,100,000 US). Vista is an Indianapolis, Indiana-based provider of print and folding carton packaging. In addition to the consideration paid, the Company has a contingent consideration payable to the previous owner on the realization of certain financial targets over the first 24 months after the acquisition date in the amount of $774,846 ($625,000 US). The fair value of the contingent consideration payable as at March 31, 2021 is $767,445.
This acquisition brings the Company's manufacturing closer to its growing e-commerce customer base in the U.S. and provides it with much needed print and converting capacity to meet existing and growing demand for its packaging solutions.
Supremex's complete first quarter 2021 report can be found on the company's website: www.supremex.com.
Supremex is a leading North American manufacturer and marketer of envelopes and a growing provider of paper-based packaging solutions. Supremex operates 12 manufacturing facilities across five provinces in Canada and three manufacturing facilities in the United States employing approximately 865 people. To learn more, please visit: www.supremex.com.
SOURCE: SupremeX Inc.
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