MONTREAL, Aug. 1, 2014 /CNW Telbec/ - Supremex Inc.,
Canada's largest producer of stock
and custom-manufactured envelopes and growing provider of packaging
and related products (TSX: SXP), today announced its results for
the second quarter ended June 30,
2014.
- Revenue of $30.6 million
- EBITDA of $5.8 million
- Cash flows from operating activities before working capital
adjustments relatively stable at $4.4
million
- Debt repayment of $7.3 million
year-to-date; total debt to TTM EBITDA ratio reduced to 1.2
times
- Entered into a multi-year agreement valued at approximately
$9 million per year to supply
packaging products to a customer in the U.S
- Board of directors has approved a 12.5% increase to the
annualized dividend rate from $0.16
to $0.18 per share. Effective
immediately, the new quarterly dividend rate will be $0.045 per share
"We are pleased to have achieved an EBITDA of $5.8 million" said Stewart Emerson, President and Chief Operating
Officer of Supremex. "The decline in units sold during the quarter
was largely offset by improved average selling prices, and we also
realized the benefits of manufacturing efficiencies and our ongoing
efforts to contain costs. With solid cash flow from operations, we
have reduced our debt level by $7.3
million year-to-date and have begun repurchasing shares with
the NCIB program put in place in May.
Units sold and sales in the U.S. were somewhat lower than
anticipated this quarter, but our outlook on the U.S. market
remains positive," Mr. Emerson added. "There have been some
reductions in capacity and changes to the competitive environment
south of the border, and these factors, combined with the increased
sales efforts that we have made, are translating into many more
quotation opportunities for us. The recent win of a $27 million agreement in the U.S. over a period
of three years certainly validates our efforts and strategy.
At this stage, our continuing efforts to expand in the U.S.
market with value-added products, to manage costs and to reduce our
debt level remain key priorities," Mr. Emerson concluded.
Financial Results
Revenue in the second quarter of
2014 amounted to $30.6 million
compared with $31.9 million in
the second quarter of 2013, a decrease of $1.3 million or 4.1%, which is attributable to a
decrease of units sold both in Canada and in the US. The decline was largely
offset by improved average selling price related to inflation price
adjustments, an improved product mix, and management's focus on
value-added products. When compared to last year, units sold during
the second quarter in Canada and
in the U.S. both decreased by 14%.
EBITDA for the second quarter of 2014 amounted to $5.8 million compared with $6.1 million in 2013, a decrease of
$0.3 million or 5.1%. The EBITDA
margin of 19.0% for the quarter was relatively stable when compared
with 19.2% last year. The higher average selling price achieved
this quarter, combined with cost containment efforts, compensated
in large part for the negative impact of lower sales and higher raw
material prices.
Net earnings in the second quarter of 2014 amounted to
$2.3 million compared with
$2.5 million in the second quarter of
2013. Earnings per share amounted to $0.08 in the second quarter of 2014 compared to
$0.09 in the comparative period of
2013.
Cash Flow from Operations
During the second quarters
of 2013 and 2014, cash flows from operating activities before
working capital adjustments remained stable at $4.4 million. Most of the cash flows
generated during the quarter were used to voluntarily repay
$4.8 million under the company's
credit and to pay $1.2 million in
dividends to shareholders.
Major Multi-Year Agreement
On July 29, 2014, the Company announced that it
entered into an agreement with a customer in the U.S. to supply
packaging products for a period of three years. The agreement has a
value of $27 million over the initial
three year period and could potentially reach over $80 million if all options to extend for an
additional six years are exercised.
Declaration of Dividend
The Board of Directors
declared today a quarterly dividend of $0.045 per common share, an increase of 12.5%
over the last dividend paid, which is payable on October 10, 2014 to shareholders of record at the
close of business on September 30,
2014. This dividend is designated as an "eligible" dividend
for the purpose of the Income Tax Act (Canada) and any similar provincial
legislation.
Corporate Outlook
The multi-year contract signed with
a customer in the U.S. for packaging products will ramp-up at the
end of the fourth quarter of fiscal 2014 and is expected to
generate annualized sales of approximately $9 million. To execute this agreement, the
Company will invest approximately $1
million in CAPEX during the second half of fiscal
2014.
"For the remainder of fiscal 2014, the emphasis will be placed
on selling value-added products in all our markets, taking
advantage of U.S. market opportunities, maintaining a tight control
over expenses and further reducing our debt level," said Mr.
Emerson.
Forward-Looking Statements
This press release contains
"forward-looking statements" within the meaning of applicable
Canadian securities laws, including (but not limited to) statements
about the EBITDA projection, future performance of Supremex and
similar statements concerning anticipated future results,
circumstances, performance or expectations. A statement is
forward-looking when it uses what Supremex knows and expects today
to make a statement about the future. Forward-looking statements
may include words such as anticipate, assumption, believe, could,
expect, goal, guidance, intend, may, objective, outlook, plan,
seek, should, strive, target and will. These statements relate to
future events or future performance and reflect 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 statements
reflect current assumptions, expectations and estimates of
management and are based on information currently available to
Supremex as at the date of this press release.
Forward-looking statements are subject to certain risks and
uncertainties, and should not be read as guarantees of future
performance or results and actual results may differ materially
from the conclusion, forecast or projection stated in such
forward-looking statements. These risks, uncertainties and other
factors 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 pension plans, postal services deficiencies,
interest rates fluctuation and potential risk of litigation. Such
assumptions, expectations, estimates, risks and uncertainties are
discussed throughout our MD&A for fiscal 2013 and, in
particular, in "Risk Factors". Consequently, we cannot guarantee
that any forward-looking statements will materialize. Readers
should not place any undue reliance on such forward-looking
statements.
The Management Discussion and Analysis and Financial Statements
can be found on www.sedar.com and on Supremex's website
www.supremex.com
Definition of 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.
EBITDA is not an earnings measure recognized under IFRS and does
not have a standardized meaning prescribed by IFRS. Therefore,
EBITDA may not be comparable to similar measures presented by other
entities. Investors are cautioned that EBITDA should not be
construed as an alternative to net earnings determined in
accordance with IFRS as an indicator of the Company's
performance.
About Supremex
Supremex Inc. is Canada's largest manufacturer and marketer of
a broad range of stock and custom envelopes and growing provider of
packaging and related products. Supremex is the only national
envelope manufacturer in Canada,
with facilities across six provinces and employs approximately 500
people. This nationwide presence enables it to manufacture products
tailored to the specifications of major national customers such as
leading corporations, national resellers and governmental entities,
as well as paper merchants and process and solutions providers.
SOURCE Supremex Inc.