Supremex (SXP) AI Stock Analysis

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Supremex

(TSX:SXP)

63Neutral

Supremex's overall stock score reflects strong cash flow and improvements in profitability, alongside positive market momentum. However, challenges in revenue growth and profitability pressure the valuation. Notable strengths include effective cost optimization and debt reduction strategies.

Supremex (SXP) vs. S&P 500 (SPY)

Market Cap

C$90.13M

Dividend Yield4.9%

Average Volume (3M)17.02K

Price to Earnings (P/E)―

Beta (1Y)1.16

Revenue Growth-7.00%

EPS Growth-171.90%

CountryCA

Employees900

SectorConsumer Cyclical

Sector Strength62

IndustryPackaging & Containers

Share Statistics

EPS (TTM)-0.48

Shares Outstanding24,559,870

10 Day Avg. Volume21,281

30 Day Avg. Volume17,025

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.35

Price to Cash Flow (P/CF)2635.90

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Supremex Business Overview & Revenue Model

Company DescriptionSupremex (SXP) is a leading manufacturer and supplier of envelopes and a growing provider of paper-based packaging solutions in North America. The company operates in the industrial and consumer packaging sectors, offering a range of products including envelopes, folding cartons, and specialty packaging. Supremex serves various industries, including e-commerce, pharmaceuticals, and food and beverage, leveraging its extensive manufacturing facilities to deliver quality and innovative packaging solutions tailored to its clients' needs.

How the Company Makes MoneySupremex makes money primarily through the sale of its envelopes and packaging products. The company generates revenue by manufacturing and distributing a wide range of envelopes, such as standard, window, and specialty envelopes, to businesses and consumers across North America. Additionally, Supremex earns income by providing paper-based packaging solutions, including folding cartons and specialty packaging, which cater to the growing demand in e-commerce and other industries. The company benefits from long-standing relationships with key clients and partners in various sectors, enhancing its distribution channels and market reach. Supremex's ability to adapt to market trends, such as the increasing need for sustainable packaging, also contributes to its revenue growth.

Supremex Financial Statement Overview

Summary

Supremex shows resilience through strong cash flow generation and a stable balance sheet despite declining revenue and profitability pressures. The company has a moderate debt-to-equity ratio and maintains positive free cash flow, which indicates good liquidity. However, challenges in revenue growth and profitability necessitate strategic adjustments.

Income Statement

Neutral

Supremex's recent annual results show a decline in revenue and a negative net income, which negatively impacts net profit margin and EBIT margin. This suggests challenges in profitability and operational efficiency. The revenue growth rate has also turned negative, indicating a contraction in sales. However, the gross profit margin remains steady, suggesting some stability in core operations.

Balance Sheet

Neutral

The company's balance sheet indicates a moderate debt-to-equity ratio, reflecting a balanced use of debt and equity financing. However, a decline in stockholders' equity and total assets is noticeable, which may impact the financial stability. The equity ratio remains relatively stable, indicating a reasonable proportion of equity financing.

Cash Flow

Positive

Supremex maintains a strong operating cash flow, which exceeds net income, indicating good cash generation capabilities. The free cash flow remains positive, and its growth rate shows resilience despite reduced earnings. This suggests the company can cover its capital expenditures and still generate cash, reflecting strong liquidity.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
281.04M	302.19M	272.47M	226.43M	204.60M
	Gross Profit
281.04M	87.22M	75.10M	53.11M	57.25M
	EBIT
-4.09M	28.94M	40.66M	23.28M	18.08M
	EBITDA
15.91M	48.28M	55.11M	36.91M	27.47M
	Net Income Common Stockholders
-11.74M	17.33M	28.44M	15.75M	7.49M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.79M	1.07M	1.93M	6.36M	3.04M
	Total Assets
236.97M	263.76M	260.56M	206.37M	186.55M
	Total Debt
87.92M	89.25M	88.10M	67.60M	75.68M
	Net Debt
86.12M	88.18M	86.17M	61.23M	72.65M
	Total Liabilities
122.00M	139.22M	136.24M	108.97M	107.59M
	Stockholders Equity
114.97M	134.72M	124.32M	97.40M	78.96M
Cash Flow		Free Cash Flow
30.36M	37.64M	23.82M	26.09M	34.45M
	Operating Cash Flow
32.09M	43.90M	26.91M	30.00M	37.03M
	Investing Cash Flow
-2.92M	-35.50M	-31.72M	-6.61M	-29.98M
	Financing Cash Flow
-27.36M	-9.59M	-48.85K	-20.02M	-5.71M

Supremex Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price3.67

Price Trends

50DMA

3.81

Positive

100DMA

3.80

Positive

200DMA

3.87

Negative

Market Momentum

MACD

0.05

Positive

RSI

52.16

Neutral

STOCH

46.67

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:SXP, the sentiment is Neutral. The current price of 3.67 is below the 20-day moving average (MA) of 3.88, below the 50-day MA of 3.81, and below the 200-day MA of 3.87, indicating a neutral trend. The MACD of 0.05 indicates Positive momentum. The RSI at 52.16 is Neutral, neither overbought nor oversold. The STOCH value of 46.67 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:SXP.

Supremex Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MFI	73 Outperform	C$2.87B	29.51	6.33%	3.88%	0.89%	―
WPK	71 Outperform	C$2.44B	12.29	11.45%	0.41%	0.56%	4.94%
CCL.B	70 Outperform	$12.01B	14.45	17.16%	1.82%	8.95%	64.88%
SXP	63 Neutral	C$90.13M	―	-9.41%	4.90%	-7.00%	-171.90%
CAS	60 Neutral	$974.59M	―	-1.80%	5.06%	1.36%	59.36%
Sector *	59 Neutral	$11.38B	10.18	-0.84%	4.04%	1.25%	-16.04%
CFX	43 Neutral	C$48.93M	―	-63.11%	―	-8.78%	-68.46%

* Consumer Cyclical Sector Average

Performance Comparison

TSE:SXP

Supremex

3.82

-0.03

-0.78%

TSE:CAS

Cascades

9.41

0.50

5.65%

TSE:CCL.B

CCL Industries

67.75

0.23

0.34%

TSE:MFI

Maple Leaf Foods

23.65

1.82

8.34%

TSE:CFX

Canfor Pulp Products

0.80

-0.81

-50.31%

TSE:WPK

Winpak Limited

40.12

2.92

7.85%

Supremex Earnings Call Summary

Earnings Call Date: Feb 20, 2025 | % Change Since: 3.67% | Next Earnings Date: May 8, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted significant improvements in profitability and operational efficiency, particularly in EBITDA margins across both segments. However, these gains were partially offset by declines in overall revenue, driven by lower average selling prices and restructuring impacts. The company's proactive measures in cost optimization and debt reduction were notable, yet challenges in revenue growth remain.

Highlights

Improved EBITDA Margins

Adjusted EBITDA improved significantly to $12.9 million or 18.7% of sales, compared to $9 million or 12.4% of sales a year ago.

Envelope Segment Performance

Envelope adjusted EBITDA margin reached 18.8%, which was a 160 basis points improvement over Q4 last year.

Packaging Segment Growth

Packaging and Specialty Products adjusted EBITDA was $2.4 million or 11.6% of sales compared to $1.4 million or 6.1% of sales last year.

Debt Reduction

Net debt reduced by more than $5 million in the past three months and more than $14 million over the year, improving the net debt to adjusted EBITDA ratio to 1x.

Successful Toronto Consolidation

The consolidation in Toronto from three plants to two was completed on time and on budget, with expected annual cost savings of more than $2 million.

Lowlights

Decline in Total Revenue

Q4 total revenue amounted to $69.1 million compared to $72.3 million last year, reflecting a decrease in both the Envelope and Packaging segments.

Envelope Revenue Decline

Envelope revenue was down 3.5% year-over-year due to a 4% decrease in average selling price, despite a slight volume increase of 0.5%.

Packaging Revenue Decline

Packaging and Specialty Products revenue was $20.3 million versus $21.7 million last year, mainly due to the restructuring of the Specialty Products business.

Company Guidance

During the Supremex Fourth Quarter 2024 Earnings Conference Call, the company provided guidance highlighting several key metrics and strategic initiatives. Supremex reported a total revenue of $69.1 million for Q4, with Envelope revenue at $48.8 million and Packaging and Specialty Products revenue at $20.3 million. The company achieved an adjusted EBITDA of $12.9 million, representing 18.7% of sales, with the Envelope segment's adjusted EBITDA margin reaching 18.8%, up 160 basis points year-over-year. The Packaging segment saw a significant improvement with an adjusted EBITDA margin of 11.6%, driven by a restructuring effort and a focus on higher value, lower touch activities. Supremex also reported a net earnings increase to $5.8 million or $0.23 per share, with adjusted net earnings at $5.2 million or $0.20 per share. The company noted a free cash flow conversion ratio of 0.79 and a substantial free cash flow yield of 36%. Furthermore, Supremex announced a quarterly dividend of $0.05 per common share and highlighted a reduction in net debt to $41.2 million, with a net debt to adjusted EBITDA ratio of 1x. The company emphasized ongoing optimization efforts, including the consolidation of facilities in Toronto, which are expected to result in annual cost savings exceeding $2 million. Supremex also mentioned a strong balance sheet and available liquidity of over $77 million, positioning the company well for future investments and operational flexibility.

Supremex Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

Supremex Announces CFO Departure and Transition Plan

Neutral

Feb 27, 2025

Supremex announced the departure of its Chief Financial Officer, François Bolduc, who will leave to pursue new professional challenges, concluding his duties on March 20, 2025. The company has established a transition plan, with President & CEO Stewart Emerson working closely with the finance team while a search for a replacement is initiated. This leadership change comes as Supremex continues to strengthen its position in the envelope and paper-based packaging industry, ensuring minimal disruption to its operations and maintaining focus on its strategic goals.

Business Operations and StrategyFinancial Disclosures

Supremex Reports Strong Q4 2024 Profitability Amid Revenue Decline

Positive

Feb 20, 2025

Supremex reported significant profitability improvements for the fourth quarter of 2024 despite a slight decline in total revenue compared to the previous year. Driven by optimization initiatives, the company saw a notable increase in net earnings and adjusted EBITDA margins. The firm is focused on further enhancing efficiency and cost savings in 2025, aiming to consolidate its operations and capitalize on improved manufacturing absorption, which is expected to support continued margin improvement. Supremex remains committed to executing its business strategy and creating lasting value for shareholders.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.