Supremex Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the SUPREMEX fourth quarter 2024 earnings conference call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question and answer session. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. Before turning the meeting over to management, please be advised that this conference call will contain certain statements that are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. I would like to remind everyone that this conference call is being recorded on Thursday, February 20th, 2025. I will now turn the call over to Martin Goulet of MBC Capital Markets Advisors. Please go ahead.

Thank you, operator, and good morning, ladies and gentlemen. Thank you for joining this discussion of Supremix's financial and operating results for fourth quarter and fiscal year ended December 31st, 2024. The press release reporting these results was published earlier this morning, and it can also be found in the investor section of the company's website at www.supremix.com, along with the MD&A and financial statements. These documents are available on CRU Plus as well. A presentation supporting this conference call has also been posted on the website. Let me remind you that all figures expressed on today's call are in Canadian dollars unless otherwise stated. Presenting today will be Stuart Emerson, President and Chief Executive Officer, as well as François Bolduc, Chief Financial Officer. With that, I invite you to turn to slide 38 of the presentation for an overview of the third quarter, And out of the fourth quarter, sorry.

And I turn the call over to Stuart. Hey, thank you, Martin. And good morning, everyone. I will apologize in advance for any background noise you might hear directly above our heads. Out of an abundance of caution, we have a firm cleaning the snow off the roof after the storms over the weekend in Montreal. And they happen to be right over our heads at this point. So apologize in advance. So getting into it, Supremex concluded 2024 with a solid fourth quarter financial results. Our envelope volume was up year over year for the third consecutive quarter, while our core packaging business continued to recover. Both adjusted EBITDA margins in both segments improved significantly in terms of margins and absolute dollars. These important gains were driven by optimization initiatives put in place over the past year that had a positive impact on operations, procurement, and productivity. This progress reflects the ongoing efforts of our teams throughout the organization. While there is still room for further improvement, I would be remiss if I didn't take this opportunity to thank our employees for their belief in the plan, passion, and steadfast commitment to continuous improvement. First, let's look at the envelope business. Revenue is down 3.5% in the quarter on a year-over-year basis, as lower average selling prices outweighed slight volume gains. Volume gains reflect our U.S. activities, where market conditions continue to gradually recover and our sales teams successfully push for additional business. A portion of the volume increase can also be attributed to the tuck-in acquisition of Forest Envelope last May, now fully integrated in our Chicago operations. In Canada, units sold were tempered with the Canada Post labour disruption in November-December, but despite that disruption and uncertainty, CAD volumes were in line with traditional secular decline. Frankly, manufacturing and selling more units in the quarter was a remarkable feat, given the major undertaking associated with the consolidation in the Greater Toronto Area, where three of our largest facilities underwent an overhaul as we consolidated from three plants to two. As part of the consolidation, a total of 21 pieces of envelope manufacturing and printing equipment were moved, and another 20 were decommissioned. The team charged with the project did a remarkable job, and the employees in the affected facilities are to be commended for staying focused on producing high-quality envelopes cost-effectively and safely. I'm pleased to confirm that the last pieces of equipment have moved as planned, and that we will exit the Concord facility next week on time and on budget. With the lease expiring at the end of February, we will have recurring rent savings going forward, and the business will be the beneficiary of a more efficient operating network. And we have already started to reap noticeable productivity gains, while higher volume in remaining installations improves absorption over a lower cost base. As I said last quarter and several times over the last 10 years, we are fortunate to have a deep and talented envelope team. Now that all measures are firmly in place, we should fully achieve the expected annual cost savings run rate of more than $2 million going forward. With respect to selling price, pressures were anticipated given the combination of our mixed evolution between Canadian and U.S. markets, and U.S. manufacturers giving back a portion of the gains made in 2022 and early 2023 when supply was constrained. During the last call, I called out a stronger backlog, and this remains the case in early 2025, and we expect to deliver these orders with better margins. Supporting this statement and despite the Toronto consolidation distraction and disruption impacting Q4, Envelope adjusted EBITDA margin reached 18.8%, which was 160 basis points improvement over Q4 last year, and also up sequentially more than two percentage points. We have yet to fully harvest the benefits from the optimization efforts and consequently believe there is room for further improvement. Turning to packaging, while revenue was lower, the shortfall was primarily connected to the Q4 2023 restructuring of the specialty products business following the closure of a facility outside of Montreal, which narrowed the focus of the business and materially reduced costs. We do not talk a lot about volume and average selling price in the packaging segment, but while units sold were down over 50% in the quarter, average selling price was up in excess of 200%, and the segment margins improved. we have focused the business on lower-touch, higher-value activities and reduced our costs appropriately. Sometimes less is more. Outside of the restructuring dynamics, our core markets continue to rebound with solid demand from e-commerce fulfillment packaging activities and improvements in channels more closely related to discretionary consumer spending. In fact, we recorded our first year-over-year folding cart in revenue growth in several quarters, which can be attributed to new business wins recovery of the health and beauty channel and a build out of our sales organization margins continue to gain momentum reflecting the initiatives undertaken the aforementioned restructuring in late 2023 to improve operating efficiencies and achieve synergies focus on more value-added products and the work done and the work done to improve absorption as indicated last quarter we've gone back to a more traditional small business structure in packaging of general managers in each line of business to be entrepreneurial and focused on driving their individual businesses to greater performance. We added a new general manager in Folding Carton in late Q3, increased our sales presence and profile, and have upgraded talents in all of our businesses over 2024. With most cost-related initiatives in place, we focused our efforts on building volume. We are reengaging with customers that may have left or reduced their spending with us. are knocking on new doors and getting new wins and leveraging narrow focus, improved talents, and a better cost structure to drive volume. And with better absorption, we'll be able to deliver the growth at improved margins. With that, I turn the call over to Francois for review of the financial results.