Mr. Stewart Emerson reports

SUPREMEX ANNOUNCES RECORD Q1 2023 RESULTS

Supremex Inc. has released the first quarter ended March 31, 2023. The company will hold a conference call to discuss these results tomorrow at 8 a.m. Eastern Time.

First quarter financial highlights and recent events:

• Total revenue increased by 39.8 per cent to $88.4-million from $63.3-million in the first quarter of 2022.
• Envelope segment revenue was up 44.4 per cent to $64.5-million from $44.6-million in the first quarter of 2022.
• Packaging and specialty products segment revenue rose by 28.7 per cent to $24.0-million from $18.6-million last year.
• Net earnings increased 50.7 per cent to $9.5-million from $6.3-million in the first quarter of 2022.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $18.8-million, or 21.3 per cent of revenue, versus $12.1-million, or 19.1 per cent of revenue, last year.
• Earnings per share increased to 37 cents, up from 24 cents in the first quarter of 2022.
• Impression Paragraph Inc., on Jan. 16, 2023, and Graf-Pak Inc. on May 8, 2023, were acquired.
• On May 9, 2023, the board of directors declared a quarterly dividend of 3.5 cents per common share.

"Supremex posted solid first quarter results with recent acquisitions driving revenue growth, leading to a 13th consecutive period of year-over-year improvement in adjusted EBITDA. Our robust performance in the envelope segment reflects a focused penetration of the U.S. market and a continued emphasis on improving customer and product mix. In packaging, revenue and profitability were affected by residual inefficiencies from a recent relocation of our primary folding carton facility in the Montreal area, and we continue to focus on leveraging the benefits from a larger and more efficient facility," said Stewart Emerson, president and chief executive officer of Supremex.

"For the balance of 2023, our focus remains on integrating recent acquisitions with a priority on capturing all sales and cost synergies. Looking to the immediate future, both segments we operate in are experiencing a slowdown in new orders as customers throughout the supply chain focus on reducing inventory levels built in 2022. Beyond this temporary ebb, we believe our solid position in the North American envelope market, combined with a greater presence in the growing folding carton and e-commerce fulfilment packaging markets, should drive further earnings and cash flow growth," concluded Mr. Emerson.

Dividend declaration

On May 9, 2023, the board of directors declared a quarterly dividend of 3.5 cents per common share, payable on June 23, 2023, to the shareholders of record at the close of business on June 8, 2023. This dividend is designated as an eligible dividend for the purpose of the Income Tax Act (Canada) and any similar provincial legislation.

Subsequent event

On May 8, 2023, the company announced the acquisition of substantially all of the assets of Graf-Pak, a provider of folding carton packaging solutions to a variety of commercial markets, based in Pointe-Claire, Que. The transaction was concluded for total consideration of approximately $6.0-million, on a cash-free and debt-free basis, subject to customary closing adjustments, financed through the company's existing credit facility. The company announced that it would tuck Graf-Pak's operations into Montreal-area folding carton locations within 90 days.

Outlook

Driven by its solid backlogs amassed in the second half of 2022 and early in the first quarter of 2023, Supremex has been operating at high capacity levels given its current labour force. Since the beginning of 2023, market conditions in the supply chain have returned to more normal levels, and new order intake from customers working through excess inventory built through overordering in a time of tight supply in 2022 have slowed down through the first quarter. Given these conditions, the company expects some sales softness in the second quarter and potentially into the third quarter, but will rely on its solid reputation and geographic reach to assist in mitigating a slowdown while continuing to tightly control expenses.

The company will continue to focus on the integration of the Royal Envelope, Paragraph and Graf-Pak acquisitions, including the merger of the latter's operation into Lachine, over the next 90 days, while actively seeking to capture all sales and cost synergies.

With respect to capital deployment for 2023, the company will continue to look for strategic acquisitions, mainly in the packaging and specialty products segment, while sustaining capital returns to shareholders.

May 10, 2023, first quarter results conference call

A conference call to discuss the company's results for the first quarter ended March 31, 2023, will be held Wednesday, May 10, 2023, at 8 a.m. Eastern Time.

A live broadcast of the conference call will be available on the company's website in the investors section under webcast.

To participate (professional investment community only) or to listen to the live conference call, please dial the following numbers. The company suggests that participants call in at least five minutes prior to the scheduled start time.

Confirmation No.:  98010853

Local participants (Toronto area), dial:  416-764-8658

International participants, dial:  416-764-8658

North American participants, dial toll-free:  1-888-886-7786

A replay of the conference call will be available on the company's website in the investors section under webcast. To listen to a recording of the conference call, please call toll-free 1-877-674-7070 or 416-764-8692 and enter the code 010853. The recording will be available until Wednesday, May 17, 2023.

About Supremex Inc.

Supremex is a leading North American manufacturer and marketer of envelopes and a growing provider of paper-based packaging solutions. Supremex operates 11 manufacturing facilities across four provinces in Canada and six manufacturing facilities in four states in the United States employing over 1,000 people. Supremex's growing footprint allows it to efficiently manufacture and distribute envelope and packaging solutions designed to the specifications of major national and multinational corporations, direct mailers, resellers, government entities, small- and medium-sized enterprises, and solutions providers.

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