Supremex Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the SUPREMEX 2025 Fourth Quarter and Year-End Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulties hearing the conference, please press star followed by zero for operator assistance at any time. 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, February 19th, 2026. I will now turn the call over to Martin Goulet of NBC Capital Markets Advisors. Please go ahead.

Thank you, Operator. Good morning, ladies and gentlemen, and thank you for joining this discussion of Supremex's financial and operating results for the fourth quarter and fiscal year ended December 31, 2025. The press release reporting these results was published earlier this morning via the Global 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, as well as Norm McCauley, CFO. With that, I invite you to turn to slide 37 of the presentation for an overview of the fourth quarter, and I turn the call over to Stuart.

Thank you, Martin, and good morning, everyone. Well, although 2025 had its ups and downs, Supremex made significant progress in further expanding its presence in key markets. With three acquisitions, the addition of many new customers, and multiple successful initiatives to enhance efficiency, it was indeed a busy year. Despite the persistent headwinds from over 12 months of labor unrest, unhelpful press, and delivery disruptions, yes, that word was plural, disruptions, at Canada Post, and the significant volume reduction from a single important U.S. direct mail client, we put our head down, got to work, and actually increased our envelope volume in a declining market and grew packaging revenue by more than 8% for the year and 18% in the fourth quarter alone. In parallel, we return significant value to our shareholders and finish the year with an exceptionally strong, call it a fortress, financial position with less than $1 million in net debt, putting us in the driver's seat to execute our business strategy. Right out of the gate, I want to thank our employees for believing in our plan and for their unwavering dedication to continuous improvement and superior customer service to help us achieve this important growth. Now turning to operations, Let's begin with the envelope business. While fourth quarter revenue held steady year over year, it was up 8.5% sequentially from Q3, which in itself was up 3% from Q2, despite those tremendous headwinds that I'll discuss in more detail shortly. Envelope volume grew 5.3%, again, against the backdrop of some tough headwinds, driven by the exceptional spade work in the U.S. envelope market and to a lesser extent, the contributions from Envelope Laurentide acquired in July and from Elite Envelope acquired in December, to which I'll come back to shortly. Clearly, we continue to increase our penetration of the U.S. market with substantial share of wallet growth and impressive organic business development throughout the year, which is a testament to the strength of our envelope sales and operations team. As I said earlier, this yeoman's work allowed us to offset significantly lower volume from 12-plus months of labour, service and delivery uncertainty at Canada Post and the continued substantial volume decline from customer number one in the US. On the latter, the change in mailing patterns and buying habits has persisted for a few quarters now, and we're getting closer to lapping the headwind, as evidenced in the decline was significantly less this quarter than earlier in the year. What I think is important is that despite the impact of this one customer, we have been able to pivot to the point where we sold more units in the U.S. in 2025 than in the prior year, which again is a reflection of the brand and the sales team. While the U.S. volume decline was offset, the mix in margin is different. New business or replacement business is of a much different profile than the higher value added volume that it was replacing. It comes with both lower cost and lower selling price, hence the sales decline. However, this increased replacement volume was critical in maintaining a high level of asset utilization and absorption, but it comes with more operating and SG&A expenses than dealing with a single large customer. Despite these additional expenses and lower pricing, we generated an adjusted EBITDA margin of nearly 16% for the quarter, again, marking a significant sequential increase over the third quarter where margin came in shy of 12%. This is another impressive example of the resiliency of our envelope business, the commitment of our people, and the quality of our assets. And as I alluded to earlier, in December, we completed the acquisition of Elite Envelopes. With relatively small annual volume of approximately 5 million US dollars, Elite has been servicing the New England market for over two decades out of a facility located in Randolph, Massachusetts, south of Boston. That facility is just less than an hour away from our existing and much larger Douglas, Massachusetts facility, and we completed the transfer of production and several hourly and sales staff to Douglas immediately after Christmas. As part of a three-month three-month transition services agreement, we are in the process of selling excess equipment and will exit the Randolph facility at the end of February. While it takes effort, we invested the energy because LEED is another perfect tuck-in acquisition for Supremex with a rapid payback of less than a year. The additional volume will improve asset utilization and absorption in Douglas while yielding additional synergies and importantly, leaves Supremex as one of the very last short-run local manufacturers in all of New England. In a subsequent event, we recently announced the decision to shutter our envelope manufacturing capabilities in Indianapolis, Indiana, as part of our rationalization and network optimization initiative. While the Indianapolis location played an important role in the Supremex success in the U.S. envelope market, dating back to its acquisition 2015, the location became significantly less strategic after the 2022 acquisition of the two plants in the Chicagoland area, some two hours away. In 2025, the facility produced less than 8% of the total Supremex units sold, and we are confident in our ability to retain the sales as we locate production to other facilities in the network. While it's true that the envelope market is in secular decline, let me repeat that despite the gas caused by one, albeit large, customer, our US volume was up in 2025, and excluding that customer, US volume increased almost 15%. And for all of Supremex, units have increased in excess of 5% and revenue by low single digits. I recognize there's a lot of ifs and buts in there. and it's not generally my style, but not providing the added color would do a disservice to the listener by under-reporting the significant gains we continue to make in envelope. As I said earlier, we've almost slapped the impact of the account and Canada Post ratifying its labor agreements a month ago. I look forward to not having to address these issues again anytime soon. Finally, with respect to envelope, To sustain and accelerate our momentum, we added Andy Shipke as Vice President of Sales for U.S. Envelope. Andy is well known in the envelope and mailing industries for building relationships and delivering results, and is responsible for leveraging the entire Supremex envelope platform to drive volume, improve customer reach, and strengthen Supremex's position as the third largest envelope manufacturer in North America. Turning to packaging, we had another solid quarter driven by Folding Carton's strong performance in the health and beauty and the over-the-counter pharmaceutical segments, coupled with impressive new business wins from current and reactivated customers and revenue from the Transgraphique acquisition in July, which supports our strategy of enhancing our presence in food-grade packaging where we see superior stable growth. In addition, we sustained our upward trajectory in e-commerce solutions and specialty packaging, driven by new customer wins and greater volume from existing customers, and looking ahead, we expect the momentum to continue unabated. Unfortunately, again this quarter and throughout the year, the impressive gains made by the core folding carton and e-commerce packaging solution verticals was partially offset by the commercial printing activities where they too have a meaningful reliance on Canada Post to deliver the coupons, direct mail, and its inner components which we produce. We anticipate some of this volume to come back now that the delivery uncertainty has ebbed with the signing of the new collective agreements in late January, and we continue to push for new opportunities to support absorption while at the same time managing the cost structure in line with the revenue stream. As for profitability in the overall packaging segment, we concluded both the quarter and the year with adjusted EBITDA margin of approximately 13% and approximately 16% excluding the commercial print activities, marking substantial improvements year over the prior year, but still shy of true potential. As I said in the past, potential is a great thing to have, but a bad one to keep. We're actively tackling transitioning potential into results. by stimulating revenue and volume growth to improve asset utilization and absorption, continue to push for operational improvements and synergies across the network, and evaluate the various business units on their individual merits. With that, I turn the call over to Norm for the financial results.