Supremex Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the SUPREMEX Third Quarter 2025 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 1 on your telephone keypad. Should you need assistance during the conference, you may signal an operator by pressing star then 0. Before turning the meeting over to 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, November 6, 2025. I will now turn the call over to Martin Goulet of NBC Capital Markets Advisors. Please go ahead.

Thank you and good morning, ladies and gentlemen. Thanks for joining this discussion of Supremex's financial and operating results for the third quarter ended September 30th, 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.supremex.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. 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 CEO of Supremex, as well as Norm McAuley, CFO. With that, I invite you to turn to slide 37 of the presentation for an overview of the third quarter, and I turn the call over to Stuart.

Hey, thank you, Martin, and good morning, everyone. I'm joined today by Norm McCauley, Supreme X's new Chief Financial Officer. Norm joined us mid-September and brings more than 20 years of experience as a financial executive with large private and public companies. We're very pleased to have him on board as the company will benefit from his leadership, skills, and expertise in all matters related to corporate finance, M&A, process optimization. Welcome aboard, Norm. While the results may not have been where we wanted them to be, largely due to external forces, We have been uber active in building the business, returning value to shareholders, and positioning ourselves to execute on our plan and long-term success. First, I want to draw your attention to our financial position, which is as strong as it has ever been. As you know, during the quarter, we completed the sale-leaseback of two owned properties in a transaction that grossed $53 million. This transaction unlocks significant value for our shareholders, who were rewarded with a $0.50 per share special dividend on top of the regular $0.05 quarterly payout. We also repaid a substantial amount of debt, leaving us with net debt of only $89 million at the end of 2023, which provides us with excellent flexibility to carry out our business strategy. Norm will discuss the net debt position in more detail shortly. Now, let's look more closely at operations, beginning with the envelope business. While revenue decreased 5% year-over-year, it was up 3% sequentially from Q2 as we battled significant headwinds. To provide colour on those headwinds, first, obviously, the Canada Post uncertainty continues to affect volumes, primarily in the high-value-added direct mail and fundraising space. I wish I could give you an exact number, but it's difficult. However, looking at the DM-centric accounts and anecdotally, it's clear that the uncertainty of when a time-sensitive piece will arrive in the mailbox has taken its toll on volumes. Second, if you recall from last quarter, we highlighted a substantial volume decline with an important U.S. direct mail client, and that situation affected Q3 results considerably. More on that later in the commentary. Finally, economic uncertainty, instability, and a slowing economy both in Canada and the U.S. is not helpful to volumes. particularly in the direct mail and fundraising segment. Frankly, being minus 5% versus last year and up 3% sequentially can be viewed as a good outcome through our prism. We've worked hard to manage costs effectively, augment our position in the Canadian market with a tuck-in acquisition of Canada's third largest producer, and while nothing is in the bucket, our relationship with the aforementioned U.S. direct mail account is solid. We continue to do work for them and we are optimistic about 2026. I understand quarter to quarter is an important measure. And as I said a moment ago, we view a 5% decline in revenue as a pretty good outcome given the challenges. But to me, year over year is a better measure. And in that case, despite the headwinds created by Canada Post, which has persisted virtually all year, and the slowing economies, That single U.S. customer reduction has accounted for more than 100% of the revenue decline year to year. In fact, net of the impact of one customer, U.S. units and revenue are up mid to high single-digit percentages, and across the entire Supremex envelope segment globally, units are down less than 1%, revenue is flat, and average selling price is up year over year. Our team has done a tremendous job, both operationally and on the sales side, to mitigate the effects in a tough environment on both sides of the border. A few moments ago, I mentioned the acquisition of the third largest envelope manufacturer in Canada, and I wanted to provide a little more context. In July, we acquired the assets of Envelope Laurentide in Saint Laurent, Quebec, a suburb a mere kilometers from our LaSalle envelope facility. Laurentide manufactured and brokered envelopes primarily in eastern Canada, As planned, we ceased production at their facility on August 15th and integrated both the manufactured and brokered volume within our existing network in Canada. This highly accretive acquisition will improve absorption and will deliver meaningful synergies going forward. In a nutshell, while on the surface envelope performance may not have been where we wanted or expected them to be, the team has done a good job navigating very choppy waters. Our underlying fundamentals are solid, and we have confidence in our ability to drive volume to maintain high levels of utilization and absorption across our highly efficient network. Turning to packaging, although revenue was down, we sustained our momentum with double-digit growth in both folding carton and e-commerce solutions, while Paragraph's commercial printing activities, largely for the direct mail market, not surprisingly had a difficult quarter. In folding carton, Double-digit growth both in the quarter and year to date was driven by continued strong performance in the health and beauty and over-the-counter pharmaceutical segments. New business wins from current and reactivated customers and revenue from the newly acquired transgraphic folding carton business, which supports our strategic plan to enhance our presence in the food-grade packaging where we see solid growth prospects. Well, the envelope-lorented transaction closed on July 14th and ceased production a month later. In this highly accretive transaction, we closed Transgraphique a week earlier on July 7th and ceased production 14 days later. As planned, most of Transgraphique's activities have been transferred to the Lachine facility, which will allow us to grow in the food packaging space, improve efficiency and absorption, as well as achieve meaningful synergies. It should be noted that we exited both facilities by the end of October. In e-commerce and specialty packaging, momentum created by new customer wins and greater volume from existing customers produced well into double-digit revenue growth for yet another quarter and year to date. While the core of the packaging business continues to perform admirably, both in terms of revenue and profitability, unfortunately, a less core commercial print business continues to have its challenges. We haven't really spoken about Paragraph's customer and product base in the past. However, like Envelope, this business has meaningful reliance on Canada Post, direct mail, and fundraising with respect to the inner components and couponing. Not surprisingly, these revenues have been materially impacted by Canada Post's uncertainty, delivery of time-sensitive offers and promotions. And while we are focused, we just haven't been able to offset the precipitous drop in volume and revenue in the relatively small Quebec market. As for profitability in the segment, the drop in paragraph revenue took the wind out of our sail after an encouraging first half and strong revenue performance of two of the three legs of the business in Q3. This quarter's adjusted EBITDA margin of 10.5% is clearly not acceptable. The stark lack of volume and contribution from paragraph has shaved off approximately 300 basis points of packaging margin on a year-to-date basis. I reiterate what I've said for several quarters now. We have high-quality assets, available capacity, deliver quality products and service, have a premium diversified customer base on both sides of the border, as well as the right leadership in the right seats. Volume is magic in terms of absorption, and we continue to look for profitable revenue growth, but there's also more to capture within our network in terms of efficiencies and synergies. This is our priority. With that, I turn the call over to Norm for a review of the financial results.