- Not for distribution in the United States or over United States wire -
MONTREAL, May 7, 2014 /CNW Telbec/ - Supremex Inc., Canada's largest
provider of stock and custom-manufactured envelopes (TSX: SXP),
announced today its results for the first quarter ended March 31, 2014
as well as the establishment of a normal course issuer bid.
Revenues increased 0.7% to $33.9 million
Gaining momentum in the U.S. market with unit sold increasing by 26.3%
EBITDA(1) of $7.3 million
Earnings per share of $0.12
Cash flows from operating activities before working capital adjustments
were $5.3 million, up 8.6%
Debt repayment of $2.5 million
Board declared $0.04 per share dividend in April 2014
Establishment of a normal course issuer bid
(1) See "Definition of EBITDA"
"We are pleased with the EBITDA achieved in the first quarter, and with
our solid revenue growth in the U.S. market when compared to last year.
As expected, we sold less units in Canada but the decline was partially
offset by improved average selling prices. Considering the dynamics of
industry, we remain very focused on our cost structure and
manufacturing efficiencies" said Dany Paradis, Chairman of the Board
and Interim President and Chief Executive Officer.
Canada Post recently introduced new tiered pricing structure for stamps.
While some of the postage increases were steep, the impact on some
commercial mailers will be moderated by changes in the incentive rate
volume structure and other measures to support smaller businesses and
charities. Moreover, the Federal Government recently proposed to
eliminate the practice to pay to receive paper invoice and we are
awaiting the final outcome on that proposal. The next few quarters will
allow us to better assess the full impact on our Canadian operations.
"The TSX recently approved our Normal Course Issuer Bid ("NCIB") program
which will allow the purchase of up to 1,448,000 common shares from the
period commencing on May 12, 2014 until May 11, 2015. The new NCIB
program will not impede our key objective of reducing our debt level in
fiscal 2014," concluded Mr. Paradis.
Revenue in the first quarter of 2014 amounted to $33.9 million compared
with $33.7 million in the first quarter of 2013. This increase is
mainly attributable to the 55.8% increase in U.S. sales partially
offset by the 4.2% decline in Canadian sales. The increase in U.S.
sales reflects an increase in volume, higher average selling prices and
the lower Canadian dollar. Lower volume in Canada of 13.3% was
partially offset by an improved product mix resulting in higher average
EBITDA in the first quarter of 2014 amounted to $7.3 million compared
with $7.0 million for the first quarter of 2013 which excludes the
non-cash gain of $2.8 million resulting from the 2013 defined benefit
plan amendment. Higher raw material costs were offset by lower labor
costs reflecting an ongoing process to improve manufacturing
Net earnings for the first quarter of 2014 amounted to $3.4 million
compared with $4.8 million for the same period in 2013. As indicated
above, the first quarter 2013 benefitted from a non-cash gain. Earnings
per share amounted to $0.12 in the first quarter of 2014 compared to
$0.16 in the comparative period of 2013.
Cash Flow from Operations
During the first quarter of 2014, cash flows from operating activities
before working capital adjustments amounted to $5.3 million compared
with $4.9 million for the same period 2013. Most of the cash flows
generated during the quarter were used in the Company's financing
activities to reimburse $2.5 million of its secured credit term
facility and to pay $1.2 million in dividends to its shareholders.
Declaration of Dividend
On April 22, 2014, the Board of Directors declared a quarterly dividend
of $0.04 per common share, payable on May 6, 2014 to shareholders of
record at the close of business on April 25, 2014. This dividend is
designated as an "eligible" dividend for the purposes of the Income Tax Act (Canada) and any similar provincial legislation.
Management remains committed to continue reducing the debt level in
fiscal 2014. In the first quarter of 2014, debt level was reduced by
Normal Course Issuer Bid
Supremex also announced today that it has received approval from the
Toronto Stock Exchange ("TSX") to purchase by way of a normal course
issuer bid (the "NCIB"), for cancellation, up to 1,448,000 of its
common shares, representing approximately 5.0% of its 28,960,867 issued
and outstanding common shares as of April 30, 2014.
Purchases under the NCIB will be made through the facilities of the TSX
or alternative trading facilities in Canada, if eligible, in accordance
with applicable securities laws and regulations, over a maximum period
of 12 months beginning on May 12, 2014, being the first day after the
end of Supremex's current self-imposed trading blackout period, and
ending on May 11, 2015.
The average daily trading volume of Supremex's common shares over the
six (6) calendar months prior to the date hereof was 15,054.
Accordingly, Supremex is entitled to purchase, on any trading day, up
to 3,763 common shares representing 25% of such average daily trading
volume. In addition, Supremex may make, once per week, a block purchase
(as such term is defined in the TSX Company Manual) of common shares
not directly or indirectly owned by insiders of Supremex, in accordance
with TSX rules.
Purchases under the NCIB will be made by means of open market
transactions or such other means as the TSX or a securities regulatory
authority may permit, including pre-arranged crosses, exempt offers and
private agreements under an issuer bid exemption order issued by a
securities regulatory authority.
The price to be paid by Supremex for any common share will be the market
price at the time of acquisition, plus brokerage fees, or such other
price as the TSX may permit. In the event that Supremex purchases
common shares by private agreements, the purchase price of the common
shares will be at a discount to the market price of the common shares
at the time of the acquisition.
Supremex also announced that it has entered into an automatic purchase
plan ("APP") agreement with a broker to allow for the purchase of its
common shares under the NCIB at times when Supremex ordinarily would
not be active in the market due to self-imposed trading blackout
periods. Before entering into a blackout period, Supremex may, but is
not required to, instruct the designated broker to make purchases under
the NCIB in accordance with the terms of the APP. Such purchases will
be determined by the broker in its sole discretion based on parameters
established by Supremex prior to the blackout period in accordance with
TSX rules, applicable securities laws and the terms of the APP. The
terms of the APP have been pre cleared by the TSX. Outside of these
pre-determined blackout periods, common shares will be purchased in
accordance with management's discretion.
Supremex believes that the purchase by it of its own common shares may
represent a responsible and advisable use of its funds on hand to
increase shareholder value.
This press release contains "forward-looking statements" within the
meaning of applicable Canadian securities laws, including (but not
limited to) statements about the EBITDA or future performance of
Supremex, the potential repurchase of common shares, and similar
statements concerning anticipated future results, circumstances,
performance or expectations. A statement is forward-looking when it
uses what Supremex knows and expects today to make a statement about
the future. Forward-looking statements may include words such as
anticipate, assumption, believe, could, expect, goal, guidance, intend,
may, objective, outlook, plan, seek, should, strive, target and will.
These statements relate to future events or future performance and
reflect current assumptions, expectations and estimates of management
regarding growth, results of operations, performance, business
prospects and opportunities, Canadian economic environment and
liability to attract and retain customers. Such forward-looking
statements reflect current assumptions, expectations and estimates of
management and are based on information currently available to Supremex
as at the date of this press release.
Forward-looking statements are subject to certain risks and
uncertainties, and should not be read as guarantees of future
performance or results and actual results may differ materially from
the conclusion, forecast or projection stated in such forward-looking
statements. These risks, uncertainties and other factors include but
are not limited to the following: economic cycles, availability of
capital, decline in envelope consumption, increase of competition,
exchange rate fluctuation, raw material increases, credits risks with
respect to trade receivables, increase in funding of pension plans,
postal services deficiencies, interest rates fluctuation and potential
risk of litigation. Such assumptions, expectations, estimates, risks
and uncertainties are discussed throughout our Management Discussion
and Analysis and Financial Statements for fiscal 2013 and, in
particular, in "Risk Factors". Consequently, we cannot guarantee that
any forward-looking statements will materialize. Readers should not
place any undue reliance on such forward-looking statements.
The Management Discussion and Analysis and Financial Statements can be
found on www.sedar.com and on Supremex's website www.supremex.com
Definition of EBITDA
References to "EBITDA" are to earnings before financing charges, income
tax expense, amortization of property, plant and equipment and of
intangible assets, gain on disposal of property, plant and equipment
and impairment of goodwill.
EBITDA is not an earnings measure recognized under IFRS and does not
have a standardized meaning prescribed by IFRS. Therefore, EBITDA may
not be comparable to similar measures presented by other entities.
Investors are cautioned that EBITDA should not be construed as an
alternative to net earnings determined in accordance with IFRS as an
indicator of the Company's performance.
Supremex Inc. is Canada's largest manufacturer and marketer of a broad
range of stock and custom envelopes and related products. Supremex is
the only national envelope manufacturer in Canada, with facilities
across six provinces and employs approximately 525 people. This
nationwide presence enables it to manufacture products tailored to the
specifications of major national customers such as leading Canadian
corporations, national resellers and governmental entities, as well as
paper merchants and process and solutions providers.
SOURCE Supremex Inc.