Supremex Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Supremex Inc. First Quarter 2025 Warnings Conference Call. At this time, all participants are in a listen-only mode. Following today's presentation, we will conduct a question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then 0. Before turning the meeting over to the management, please be advised that this conference call will contain 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, May 8, 2025. I will now turn the call over to Martin Gullit from MBC Capital Markets Advisors. Please go ahead.

Thank you, operator. Good morning, ladies and gentlemen. Thank you for joining this discussion of Supremix's financial and operating results for the first quarter ended March 31st, 2025. The press release reporting these results was published earlier this morning via the Globe Newswire News Services. It can also be found in the investors section of the company's website at www.supremix.com, along with the MD&A and financial statements. These documents are available on CEDAR Plus as well. A presentation supporting this conference call has also been posted on the website. We may 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 CEO, as well as Silvana Reyes, Interim CFO. With that, I invite you to turn to slide 37 of the presentation for an overview of the first quarter, and I turn the call over to Stuart.

Thank you, Martin, and good morning, everyone. Supremex began 2025 with relatively solid results, especially in light of the persistent uncertainty emanating from the threat of tariffs in North America and around the world. While it wasn't exactly the start we were shooting for, our envelope volume was up year over year for the fourth consecutive quarter, and our packaging business had its best quarter in two years, validating the strength of the business in our two main verticals. Our teams have done a masterful job of navigating through a volatile environment. And while there are still levers to pull, our foundation remains rock solid and is ready to further build on it. First, let's look at the envelope business. Yes, it's true that volume was up slightly, but revenue was down 9.4% year over year as lower average selling prices outweighed volume gains. But as I'll explain in more detail, this dynamic was more about preparing for and reacting to tariffs than it was any fundamental shift. In the quarter, our volume gains were heavily concentrated in the U.S. market as we prioritized January and February shipping to get ahead of and counteract the threat of tariffs. In addition to our own inventory buildups in our U.S. facilities, many customers worked closely with us and took on additional inventory. That dynamic and our ability to continue to win new volume, predominantly in bills and statements, drove a sizable spike in U.S. envelope volume in the quarter. It is said that markets, generally the stock market, abhors uncertainty, but direct mail and credit card solicitation marketers also abhor the economic uncertainty resulting from the volatile tariff situation. Credit card solicitation was and is adversely impacted by the ambiguity surrounding the direction of the US economy which directly impacts mailers' promotional rate decisions and by the risk of stagflation or an economic downturn. This, unfortunately, affects the higher-priced direct mail envelope volume that is produced predominantly out of the Chicagoland facilities. While we played the hand we were dealt with very well, the other edge of the knife was that as we prioritized U.S. bills and statement volumes for the aforementioned reasons, it reduced available capacity for Canadian envelope customers. As a tactic to deal with the challenges, we reduced Canadian-centric stock envelope inventory, which delayed shipments to Canadian resellers, and we worked closely with large Canadian end-user customers to deplete inventories on a managed basis where we didn't let them run out of envelopes, but we didn't replenish as timely as we normally would, all to prioritize U.S. shipments ahead of tariffs, which affected mixed, which impacted average selling price. The tariff situation seems to be in perpetual evolution, and we would have preferred a more traditional blend of Canadian and U.S. volume, but our hand was forced, and we did what we had to do to protect the company's interests. While I'm not sure I'm ready to say the USMCA is safe from future uncertainty, we believe we managed the situation well and are in a good position no matter what happens next. Finally, on envelope, As part of Project North America, we exited the Concord facility at the end of its lease in February. While January and February were a little rocky as equipment was commissioned and employees got accustomed to their new surroundings, we are now fully functional in our revamped Greater Toronto Area network with efficiency and productivity improving appreciably in March. Turning to the packaging business, we are pleased with the substantial improvement in our financial performance in the quarter. With 10% revenue growth and adjusted EBITDA margin of 15%, as I said at the outset, this was our best performance in two years. The main drivers of the sales gain were, first, in folding carton. We're seeing recovery in channels related to discretionary consumer spending with a sizable year-over-year increase in business with our primary customers operating in the health and beauty and over-the-counter pharma segments. as well as the ongoing momentum in the at-home food channel, which is a focus area for us as an important hedge against economic downturns or future public health crises. Second, demand for our e-commerce fulfillment solutions remains solid across the board. We have enjoyed the expansion and have gone along for the ride with some emerging brands in the B2C e-commerce channel, and we have had several new wins, particularly in the large U.S. markets. The investment in the build-out of our sales force is paying off as we re-engage with customers that may not have experienced the attention or love that they rightfully deserve, and we continue to win new business with new customers. Finally, in package, as you've heard me express previously, we've gone back to a traditional management structure whereby a general manager was installed in each line of business, and they are accountable and take ownership. to build a strong culture and where every interaction, internally or externally, matters. We're reaping benefits from these initiatives, and it's starting to show in the numbers. But we believe there is much more to capture as we grow our volume to improve absorption, make further efficiency gains, and achieve synergies within our network. With that, I'll turn the call over to Silvana for a review of the financial results.