Supremex Q2 2025 presentation slides: Navigating envelope decline amid packaging growth

Introduction & Market Context

Supremex Inc. (TSX:SXP) presented its Q2 2025 investor presentation on August 7, 2025, outlining the company’s strategic direction as it navigates the secular decline in its traditional envelope business while building its packaging segment. The company, which trades at $4.21 (up 1.43% on the presentation day), has positioned itself as the leading envelope manufacturer in Canada and among the top three in North America.

The North American envelope market continues its structural decline, with transaction mail volumes decreasing at a 5-year CAGR of 4.9% in Canada and 4.3% in the U.S. This challenging backdrop has pushed Supremex to accelerate its diversification efforts, particularly in the growing packaging sector.

As shown in the following chart depicting transaction mail volume trends in North America, both markets face persistent declines, though the U.S. market is eroding at a slightly slower pace:

Marketing mail volumes present a more mixed picture, with Canada showing growth (5-year CAGR of 5.5%) while the U.S. market contracts (5-year CAGR of -2.2%), as illustrated below:

Quarterly Performance Highlights

Supremex reported Q2 2025 revenue of $66.0 million and Adjusted EBITDA of $5.8 million, reflecting ongoing profitability pressures. This follows a disappointing Q1 2025 where the company missed both EPS and revenue forecasts, with EPS of $0.09 versus the expected $0.1914.

The company’s revenue breakdown shows the envelope segment contributing 66.4% ($43.8 million) in Q2 2025, while the packaging segment accounted for 33.6% ($22.2 million). This represents a continued shift toward packaging, which has grown from approximately 30% of revenue in previous periods.

The following chart provides a comprehensive overview of Supremex’s scale and revenue distribution:

The Q2 revenue performance reflected several factors, as explained in the presentation:

Adjusted EBITDA and net earnings continued to face pressure, with the company reporting net losses in recent periods:

Strategic Initiatives

Supremex is executing a three-pronged growth strategy aimed at balancing the management of its declining envelope business while building its packaging capabilities:

In the envelope segment, Supremex maintains a dominant position in Canada with approximately 85% market share, while pursuing growth opportunities in the larger and more fragmented U.S. market, where it currently holds about 10% share. The company can reach 70% of the U.S. envelope market with its current footprint.

For the packaging segment, which has shown resilience and growth potential, Supremex is focusing on folding carton, e-commerce solutions, and specialty products. The packaging market presents significant opportunities, with the folding carton market valued at US$155 billion in 2024:

Recent strategic moves include the July 7, 2025 acquisition of Trans-Graphique, a provider of folding carton packaging solutions, and a July 10, 2025 sale-leaseback transaction for two properties in LaSalle, Quebec and Etobicoke, Ontario, generating gross proceeds of $53 million. These transactions strengthen the company’s balance sheet while supporting its growth initiatives.

Detailed Financial Analysis

Supremex’s financial performance has shown mixed results in recent years. Revenue increased from $226 million in 2021 to a peak of $302 million in 2023 before declining to $281 million in 2024 and $275 million for the last twelve months ending Q2 2025:

The envelope segment, while still the largest revenue contributor, has been declining from its 2023 peak:

Meanwhile, the packaging segment has shown more resilience and growth potential, though with some fluctuations:

Adjusted EBITDA margins have been under pressure, declining from a peak in 2022:

Despite these challenges, Supremex maintains a healthy balance sheet with a leverage ratio below its target of 2.0x:

The company has also maintained its dividend program, with the current quarterly payment at 5 cents per share ($0.20 annually), representing approximately 20% of trailing 12-month free cash flow as of June 30, 2025.

Forward-Looking Statements

Looking ahead, Supremex identified several factors that will influence its performance. Positive factors include a stronger financial position following the sale-leaseback transaction, a strong team, and a broad product offering. However, the company also acknowledged short-term concerns including current economic volatility and ongoing trade uncertainty.

The company’s priorities include improving efficiency, increasing market share in both envelope and packaging segments, and continuing to search for strategic acquisition opportunities, particularly in the packaging sector.

Package and parcel volume trends in North America present both challenges and opportunities, with volumes declining after the COVID-related spike but still representing a substantial market:

Supremex appears well-positioned to navigate the secular decline in its traditional envelope business while building its presence in the growing packaging sector. However, the company’s recent financial performance suggests that this transition continues to present challenges, with ongoing pressure on revenue and profitability despite strategic initiatives.

Full presentation:

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.