Supremex Inc

TSX:SXP

Earnings Call Transcript

[Operator]

Good morning. My name is Sylvie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Supremex Inc. fourth quarter results conference call.[Operator Instructions] Stewart Emerson, President and CEO, you may begin your conference.

[Danielle Ste-Marie]

Thank you, Sylvie. Good morning, ladies and gentlemen. My name is Danielle Ste-Marie, and I am an independent adviser and act as an investor relations capacity for Supremex. With me today is Stewart Emerson, President and CEO of the company; and Lyne Bégin, who is acting as Interim Vice President of Finance.I would like to welcome you to today's conference call to discuss our financial and operational results for the fourth quarter and fiscal year ended December 31, 2017. Results were released earlier today. This call will be held in English.[Foreign Language] For a more detailed analysis of our results, please see our financial statements, our management discussion and analysis, and our press release disclosed earlier this morning and available on the company's website as well as on SEDAR's website. In addition, we posted a presentation supporting this conference call, which was available through the webcast and on our website.I would like to remind listeners that this conference call contains forward-looking information within the meaning of applicable Canadian securities laws, and I refer the audience to the forward-looking statement as detailed in the presentation supporting this conference call.Furthermore, risks and uncertainties are discussed throughout the December 31, 2017, MD&A under heading Risk Factors. Unless stated otherwise, all figures are expressed in Canadian dollars.During this call and on the accompanying presentation, we use various non-IFRS measures, including EBITDA, adjusted EBITDA, adjusted net earnings and net indebtedness to EBITDA ratio. These terms are also defined in our MD&A.So with these formalities out of the way, I'd like to turn the call over to Stewart Emerson, our CEO, to review this quarter end fiscal year's key operational highlights and recent events. Stewart?

[Stewart Emerson, Chief Executive Officer, President and Director]

Thank you, Danielle, and welcome, everyone. I'm pleased to be here today to discuss our fourth quarter and our year-and results and the progress we've made at diversifying our business.As we stand today, revenue from the packaging, especially products market, along with the U.S. envelope market, accounted for almost 45% of our revenues at the end of 2017 compared to just 18% back in 2014. Interestingly, packaging outpaced our U.S. envelope revenues in the fourth quarter, with 26% of revenues compared to 22% on the U.S. envelope side.In 2017, we established an important cornerstone of our growth and diversification strategy with the acquisition of Stuart Packaging, a manufacturer of premium specialty folding carton solutions with annual revenues of $18 million at the time of acquisition in July. Along with our legacy packaging and specialty products business, which is focused on e-commerce solutions, and with the 2016 acquisition of Durabox, we now have a strong paper-based packaging offering, targeting high-growth and high value-added markets. More than half our packaging solutions are based on corrugated and utility grade papers, which we use to address high-growth e-commerce and food packaging markets.The balance is in folded carton, which operates in a market which has lower growth but higher added value, in markets like cosmetics, nutraceutical and pharmaceutical. We believe these 3 prongs provide us with an important product diversification within our diversification strategy. It also gives us the necessary building blocks on which to grow as an important player in the higher value-added packaging markets. We expect to continue to grow organically in packaging and augment that growth inorganically.On the legacy packaging side, and without being too granular and going into customer details, I did mention during our last conference call that we had started selling our Conformer packaging solution to an important U.S. e-commerce retailer. This noncontractual customer has allowed us to significantly grow our e-commerce legacy sales over the past 3 to 4 months. Perhaps more importantly, this win has demonstrated, both internally and externally, that our products can be an important and cost-effective solution in the e-commerce supply chain. We continue to apply resources to this business and believe that it's just starting to get its legs, despite already being an important part of our diversification strategy.At the end of 2017, we initiated the multiquarter CapEx program, whereby we are investing approximately $6 million towards organic-growth initiatives. The majority of this investment is going out to the corrugated side of our packaging business, and includes new manufacturing capacity and the move of Durabox over the quarters 2 and 3, 2018. This initiative will help us significantly increase our ability to fulfill anticipated growth, and at the same time, reduce our reliance on outside vendors.On the folding carton side, and as mentioned on the last call, over Q4 and Q1 we acquired and installed a new line and trained new personnel at Stuart Packaging. These additions have removed the capacity constraint and has allowed us to increase our production capacity to meet growing demand from a cross section of folding carton and e-commerce customers. As for the nonorganic piece of the strategy, we continue to pursue opportunities that are aligned with the vision and the strategy. That said, given existing growth opportunities at Stuart Packaging, Durabox and our legacy e-commerce offering, we can take our time and be prudent.I'm also very pleased with the recent performance of the U.S. envelope side. We are beginning to see positive EBITDA contribution from our Bowers Envelope business in the Midwest U.S. for the first time since its acquisition in mid-2016. With new customer wins in Q3 and a solid month of December, we expect the business to be on the right track and contribute both top and bottom line growth. As many of you know, the U.S. envelope market is going through ongoing structural changes. The industry's largest supplier has had its challenges and filed for Chapter 11 protection earlier in February. This company has approximately 40% market share and controls approximately 50% of the industry's capacity. Obviously, this has created some supply chain concerns for major customers, and we believe that as long as -- as a strong and well-respected player, this can provide important growth opportunities for Supremex.We have been adding talent, increasing capacity and building inventories to support expected additional demand from customers trying to shore up their sources of supply. We sense that this will create tailwinds for our U.S. operations over the next several quarters. In addition -- in order to ensure and support profitable growth across our U.S. operations and the packaging businesses, we recently made two key executive additions. Effective January 1, 2018, Joe Baglione was appointed Vice President and General Manager of Supremex USA. Joe has over 25 years of sales and management experience at Supremex. Joe and I worked extremely closely in both Canada and the U.S. over the past dozen years, and he is extremely familiar and comfortable in the U.S. envelope market. Effective March 1, 2018, Mr. Islem Yezza will act as Vice President, Strategic Growth and Business Development of our packaging division. He has 10-plus years of progressive experience in the paper and packaging business and holds a degree in chemical engineering and a Ph.D. in bioprocess engineering. Islem will work across the 3 packaging platforms on supply chain, sales, marketing and business development. I'm excited to start 2018 with excited -- excellent additions in key roles that are dedicated to our growth platforms. We are adding resources to an already strong management team, and we believe we're better suited to support and grow our diversified operations. These appointments should also facilitate collaboration and improved execution between all of our businesses.With respect to Printer Gateway. As many of you know, we have had integration issues with our Printer Gateway operations since their acquisition just over a year ago. From the beginning, we experienced a difficult transition, including equipment issues and acquired leadership resources. Compounding the difficulties in transition, one of Printer Gateway's largest and most integrated customer unexpectedly ceased to operate in Canada at precisely the same time we were moving the business. In the third quarter, after protracted negotiations with the seller, our full escrow of $500,000 was returned, in addition to modest other amounts to satisfy the reps and warranties. Despite all of the above, we believe we have a -- we had a clear path to profitability. However, after careful analysis, we determined that this business required disproportionate management attention and resources to achieve acceptable profitability, especially given the subsequent acquisition of Stuart Packaging and our other more profitable and growing operations. From there, a swift decision was made to close this business on January 22, 2018, and to dedicate our resources to further grow our packaging operations and ensure our envelope businesses had the resources and the attention they deserve and need. Printer Gateway was acquired on December 23, 2016, for an initial cash consideration of $2.9 million. The EBITDA loss attributable to Printer Gateway of $400,000 in the fourth quarter and $1.4 million during 2017. Closing this operation will not affect our other operations and will even improve our operational profitability going forward. The impairment charge, including cost to shutdown, amounted to $2.2 million. Finally, we are in the process of liquidating the business and selling the building.With these distractions behind us and significant opportunities on the packaging and U.S. envelope side ahead of us, we are starting 2018 in a much stronger position. Our packaging acquisitions are performing extremely well. Our legacy packaging, especially products business, continues its strong growth. Our Midwest U.S. businesses have been buoyed by improving operations and new customer acquisitions. Our overall U.S. envelope business has a unique opportunity to capitalize on some supply chain instability. Our Canadian envelope operations, while continuing to face headwinds, are performing well and generating strong cash flows. We've had a couple of strong operators and are now better equipped to support further growth, and the vast majority of business integration distractions are now behind us. We believe we are in a good position to continue to grow profitably.I will now quickly address the financial results of the fourth quarter and the year ended December 31, 2017. Revenue increased by 13.8%, reaching $49.4 million in Q4, resulting from the strong contribution of Stuart Packaging, which was acquired in Q3 2017. Revenue for fiscal 2017 increased by 11.5% to $179.1 million on the strength of our growing packaging and U.S. envelope sales.Fourth quarter revenue from the Canadian envelope market stood at $25.5 million, a decrease of 9.1%. The reduction in volume of 11.3%, primarily the result of industry-wide secular decline, combined with the effects of timing and ebbs and flows of customer movement, was partially compensated by the increase in average selling price of 2.5%. On a full year basis, revenue from Canadian envelope market stood at $102.1 million, down by 7.2% on volume declines of 7.7%. On a full year basis, the vast majority of the volume variation is attributable to secular decline. For a comparison, Canada Post most recently available information indicates transaction mail volume was down by 5.7% in the first 3 quarters of 2017 versus the same period in the prior year.Fourth quarter revenues from U.S. envelope market stood at $11 million, a decrease of 1.5%. The volume of units sold increased by 5.4% and average selling price decreased by 6.5%, primarily the effect -- from the effects of stronger Canadian dollar. On a full year basis, revenue from the U.S. envelope market grew by 10.4%, reaching $42.4 million, mainly from the acquisition of Bowers Envelope, which was concluded in August of last year. The number of units sold increased by 12.6% and average selling prices were slightly lower, primarily from the effects of a stronger Canadian dollar.Fourth quarter revenue from packaging and specialty products tripled, reaching $12.9 million from the acquisition of Stuart Packaging Inc. and, to a lesser extent, the acquisition of Durabox and continued growth of our legacy e-commerce packaging and specialty products business. On a full year basis, revenue from packaging and specialty products also almost tripled to $34.6 million on the strength of the acquisition and the legacy e-commerce business.Fourth quarter adjusted EBITDA increased 2.3% to $8 million compared to $7.8 million in Q4 2016. When removing the $4 million -- the $400,000 loss, EBITDA attributable to the now closed Printer Gateway operations, adjusted EBITDA would have been even higher at $8.4 million, which includes the positive contribution of the Q3 2017 Stuart Packaging acquisition compared to $7.8 million in the fourth quarter of 2016. Accordingly, adjusted EBITDA margin would have been 17.1% of revenues, excluding Printer Gateway sales, compared to 18% in the fourth quarter of 2016. On an annual basis, adjusted EBITDA was $26.7 million compared to $27.4 million last year, a decrease of 2.7%. Excluding the annual loss attributable to Printer Gateway of $1.4 million, adjusted EBITDA would have stood at $28.1 million, which includes the Stuart Packaging EBITDA I just mentioned, compared to $27.4 million last year. Accordingly, the adjusted EBITDA margin would have been at 15.9% of revenues versus 17.1% last year.Fourth quarter net earnings stood at $2.3 million or $0.08 per share compared with $4.6 million or $0.16 per share in equivalent period of 2016. The closure of the Printer Gateway operations resulted in nonrecurring expenses, including asset impairment charges and other closing expenses, totaling $2.2 million in the fourth quarter of 2017. Excluding these noncash items of $1.6 million net of tax and the provision for a contingent remuneration of $500,000, after-tax adjusted net earnings would have been $4.4 million or $0.16 per share compared to $4.6 million in Q4 2016. 2017 net earnings stood at $12.4 million or $0.43 per share compared to $14.6 million or $0.51 per share in 2016. Excluding the noncash after-tax nonrecurring expenses related to Printer Gateway in the fourth quarter and the annual provision for continued remuneration of $700,000 after tax, adjusted net earnings would have been $14.7 million or $0.52 per share compared to $14.6 million or $0.51 per share in 2016.Operating activities generated cash of $15.9 million compared with $21.6 million during the same period of 2016. Our capital expenditures totaled $8.1 million during the year, most of which was dedicated to improving capacity and capabilities in the packaging sector and to the acquisition of a building in Mississauga, Ontario.We paid a total of $6.8 million in dividends. We declared a total -- we declared a total declared dividends of $0.245 per share, representing an increase of 8.9% over the prior year. During 2017, we purchased, for cancellation, almost $1 million worth of shares under the NCIB, in effect representing a total of 205,882 common shares.Earlier in the year, we increased our credit facility from $50 million to $60 million. At the end of the year, our facility was drawn by $43 million compared to $27.2 million at the end of 2016. Our disciplined approach to maintaining a sound balance sheet continued all through the year. Our net debt to adjusted EBITDA ratio increased to 1.5x after the acquisition of Stuart Packaging in the third quarter of 2017.I'd like to now turn your -- I'd like to now turn the call over to questions.

[Operator]

[Operator Instructions] Your first question comes from the line of Neil Linsdell of Industrial Alliance Securities.

[Neil Linsdell, Head of Research & Equity Research Analyst]

All right. So let's start with the Printer Gateway. I think when the acquisition was announced, there was different things that you were looking for, one was the software that was a front end, I think, that was going to help you be able to process smaller transactions. So in hindsight, was there anything that you took away or you saved or it was positive from the transaction? Or was it really a, God, I wish we hadn't done that?

[Stewart Emerson, Chief Executive Officer, President and Director]

Well, it was a, God, I wish we hadn't done that. But at the same time, we're going to utilize the software in some of our envelope operations. So there is a bit of a benefit there. I think the primary driver of -- I mean, the software was sort of a secondary piece. The primary driver of the acquisition was to sell more printed products to existing customers, greater share of wallet. For example, postcards in the direct mail space as opposed to pure envelopes packages in the direct mail space or business cards and letterhead and other brochures and advertising activities that customer -- our current customers currently engage in. And then the software was certainly important but secondary, and we expect to use some of that software in the ongoing envelope operations.

[Neil Linsdell, Head of Research & Equity Research Analyst]

Okay. Is there anything lingering from this whole divestiture as far as -- you mentioned the building, any kind of onetime charges we should be looking for in Q1 or going beyond?

[Stewart Emerson, Chief Executive Officer, President and Director]

They're all accounted for, Neil. From a cost standpoint, the building, the timing for that is actually quite good in terms of valuations and the Toronto commercial real estate market.

[Neil Linsdell, Head of Research & Equity Research Analyst]

Okay. And switching to the U.S. market, obviously, with Cenveo and their situation. You had mentioned there was some Midwest contracts earlier on in 2017 which looked very positive. Can you talk a little bit more detail about the conversations you're having with customers or contracts that you've won, I guess, later on in the year or so far in 2018? And I know you have decent amount of history in this industry, so can you give us any kind of prediction as what you've seen previously when companies have gone through this type of restructuring? Could we expect any kind of irrational pricing? Or is it really closures, consolidation of manufacturing capability which creates a lot more opportunity for you and how your capacity is available to take on?

[Stewart Emerson, Chief Executive Officer, President and Director]

So we can talk a little bit about sort of past Chapter 11 filings because the largest manufacturer in the U.S. went into Chapter 11 twice, 2010, 2013, and Cenveo bought those assets. We really weren't in a position at that time. Our first acquisition was in the summer of 2015 in the U.S. market, so we had a small operation in Buffalo, but we weren't really in a position to capitalize on that. I would -- the sense is, from the industry and from our association, is that there will be some consolidation. Capacity and demand are out of balance right now, which leads to margin pressures, and I think the competitor that filed recently was chasing cash flow in a lot of ways. So we expect to see more rational pricing going forward, and we've already seen that. I mean, there's been an industry-wide price increase announcement that happened just before the filing. The Cenveo actually announced a 10% increase, and others have followed, including Supremex. And there's been no demand -- or no supply taken out of the market yet. So there's a lot in that, there was a lot in your question, there's a lot in my response. We -- and the conversations, we -- and -- for our MD&A, the envelope market really doesn't have a lot of long-term contracts. There are some sort of financial institutions, there are major mailers that might enter into contracts, but generally speaking, it's kind of implied contracts or right of first refusals or vendor of record kind of deals, but we talked about in my comments that we picked up some nice pieces of business primarily on the -- of the resale/wholesale side of the business in Qs 3 and beginning Q4. Conversations are exactly what you would expect at a time like this when the largest player is in Chapter 11. They're still making envelopes and they still got a lot of capacity, and they're out telling customers that it's business as usual, but I like to say that nobody really cares about envelopes until there's a risk they might not have them, and we're having accordingly conversations.

[Neil Linsdell, Head of Research & Equity Research Analyst]

Okay. And how are you prepared in your capacity with Bowers now turning EBITDA positive? How is your capacity available to deal with what could be more business coming your way, both in the U.S. operations and your ability to transfer production from Canada?

[Stewart Emerson, Chief Executive Officer, President and Director]

Yes. So you and I've talked in the past about this and on these calls that -- and I think our situation is sort of where it was in terms of -- we have equipment capacity. It's the human capacity that's challenged not -- across the industry, not just for Supremex and not just in the U.S., attracting the skilled trades to the envelope industry has been problematic for a few years now as guys time out. I would say we're, from a machine-capacity standpoint, just holistically in the U.S. that we're kind of trending around the 65%, 70% level, but from a human capacity, we're kind of up against at 85%, 90%. We're working to change that. We're hoping that we can attract a couple of -- attract some talents that might have some concerns about job stability. So we're aggressively pursuing there. We're also aggressively trying to increase the available capacity from Canada to support U.S. growth.

[Operator]

[Operator Instructions] Your next question comes from the line of Ahmad Shaath of Beacon Securities.

[Ahmad Shaath, Research Analyst]

I guess most of my questions have been answered. [ So I'll ] start with how was the search for the CFO going? How are you guys planning around that area of the business?

[Stewart Emerson, Chief Executive Officer, President and Director]

Yes. And I was planning to address that in sort of my final comments. Search is going well. We've met some interesting candidates. We think Supremex and those candidates seem to think that Supremex has a lot to offer, excited about sort of our diversification and the balance sheet. We hope to have that concluded certainly by the end of the first quarter. We're reasonably close with a couple of candidates and just trying to get down to final decisions and then, subsequently, meeting with the board. So by the end of the quarter, for sure.

[Ahmad Shaath, Research Analyst]

Okay. That's good. That's good to hear. I remember we talked before about the Stuart Packaging and the capacity there and your ability to increase your share of wallet with the one CPG customer, so can you provide a little bit more of an update there? How's that going? How did it go in Q4?

[Stewart Emerson, Chief Executive Officer, President and Director]

Yes. We can. It's a -- so we had a bit of a capacity constraint that we're pushing up against it along some die cutting and folding capabilities. So we did a modest CapEx at the -- say, the beginning of December, middle of November. We ordered some equipment. We received it in the first 2 weeks of January. Product -- or the machines are in, up and running, and has opened up or removed the capacity constraint for us. We also -- with the growth in our e-commerce business -- so sorry, just to finish the thought there, so we're taking that excess capacity to those customers that we referenced in the acquisition where we can improve the share of wallet, where they had a share of wallet issues with the legacy Stuart group. So we are taking that forward and being received very well. We've also moved with the growth of e-commerce business. We've moved some production from the Toronto envelope plant into the Stuart Packaging plant. That was part of the plan and the strategy all along was to use their capabilities in Montreal to help us grow the e-com business. So we're doing that as well. They're running a full line in -- at Stuart Packaging for the legacy business. So I mean, it's moving along exactly as we would've predicted it to be honest with you.

[Ahmad Shaath, Research Analyst]

Okay. Okay. That's good to hear. And just back on the U.S. envelope market. I think most of the points were covered, but I've just seen here, the last 2 quarter were seen like a -- is it fair to say the last 2 quarters, this good run rate of revenue growth going forward on that side of the business of around 1% to 2% all in pricing and volume included? Or do you expect that with this Cenveo situation to accelerate a bit with the pricing that you just talked about, the pricing increase you talked about?

[Stewart Emerson, Chief Executive Officer, President and Director]

Yes. So we should be able to -- I mean, we should be able to increase sales and we should be able to increase selling price, partially offset by increased cost in raw material. There's an industry-wide paper increase that's being implemented right now as a result of some reductions in capacity in the paper market and increased cost in pulp. So the price increases aren't all margin gain, and our opportunities are certainly greater now than they were a quarter ago or 2 quarters ago, but as I -- and as I replied to Neil's question, the challenge for us is being able to ramp up capacity to take advantage of the level of opportunity that exists.

[Ahmad Shaath, Research Analyst]

And on that -- I mean, with the current personnel, how much of capacity do you think you can add without adding human capital? Is there room or do you think you're just [indiscernible] [ that bad ] unless you got people?

[Stewart Emerson, Chief Executive Officer, President and Director]

Yes. There is short-term room in terms of running more overtime in the locations, additional shifts. Instead of going to continentals or running four 12-hour shifts, running five 10s or things like that, but it's not sustainable over the long, long term. You have to add people to make it happen. And we can also turn on the taps and it shouldn't be underestimated. We can also increase capacity in the Canadian market fairly short -- like in a short-term basis by doing exactly the same things, and we have so much more capacity here than we have in the U.S., that the modest increase in capacity percentage in Canada could have a good impact in the U.S., much greater than what our capacity is in U.S.

[Ahmad Shaath, Research Analyst]

That's good to hear. So -- and how are you thinking about your margins in 2018 and overall in terms of gross and EBITDA margins? I mean, 2017, there was a dip and some pressure from, I guess, Printer Gateway, but even adjusting for that, you're still below 2016 levels. Do you think 2018 will be trending towards 2016 levels or [indiscernible] all in?

[Stewart Emerson, Chief Executive Officer, President and Director]

Yes. I mean, there is -- there has been a shift in the diversification. The Canadian envelope business was -- generates very strong margins, mostly as a result of our market share and our sourcing capabilities on that side. To go in to diversify in that sort of other geographic markets, whether it'd be in the U.S. or into the packaging market, we knew there was going to be a bit of a drag on historical margins, but if you look at, I believe, Q4 with the adjustments was 17% -- pushing -- up against 17%, the adjustments for Printer Gateway, and then we had some in the first 3 quarters certainly, and even to an extent, in the beginning of Q4 some challenges in the Midwest U.S. So if we can keep 2018 running like Q4 did in 2017 in the Midwest U.S., we'll also get a little bump in margin.

[Ahmad Shaath, Research Analyst]

Okay. Okay. That's good to hear. And finally, just on the e-commerce side of things. What revived or what made you so positive on the comeback or the new growth in the e-commerce business? What -- can you give a little bit more color on that?

[Stewart Emerson, Chief Executive Officer, President and Director]

Yes. We can and I'm going to address that in my final comments as well. But we envelope guys knew that was a very interesting business and that there was great opportunity as less than 10% of retail transactions done on the Internet expected to grow at 10% a year, which is actually higher than that, for the next 10 years. We knew it was a good business, but we also knew the sales cycle was long, protracted. It was costing new studies. There were postage savings, things like that. And it just took us time to refine the pitch, to knock on the same doors long enough and to kind of get us through the sales cycle. And we also knew -- believed and knew that once we kind of punch through on a couple of key accounts that -- and the product becomes more well-known in the market and its benefits, it's kind of got a -- it takes on a bit of a momentum on its own. And we're somewhat protected by the patent of the Conformer, although we're not the -- we're a license holder, we're not a patent holder. But there's also -- not every packaging company can make that product or makes it as efficiently and as effectively as we can. So -- and we thought there were a lot of good attributes, and it -- we've finally been able to punch through on a couple of good accounts, and we just see the opportunity continuing to grow there.

[Operator]

There are no further questions at this time. I will turn the call back over to the presenters.

[Stewart Emerson, Chief Executive Officer, President and Director]

Okay. So thank you very much for that, for those good questions. I will just close with a couple of comments here. I'm pleased to see that our continued attention and dedication to Bowers is starting to pay off in the Midwest U.S., and with this business back on a more solid footing, I believe, we're well positioned to take on new business, both in the Midwest and the Northeast of the United States. With a renewed and experienced operator leading those U.S. operations and the heavy lifting behind us and the supply chain opportunities in the market, we should start seeing more organic growth and contribution from -- to this group's profitability in 2018. Our packaging acquisitions are performing very well and with a small -- our small investment program and equipment transfers, we expect to see continued improvement in our capacity and capabilities. We've worked diligently across training our envelope and packaging sales teams and are ready to leverage our existing relationships to start cross-selling product across new channels.Just as an update on the Durabox, we're well advanced in our plans to move Durabox to a new facility and increase our capacity. We concluded a long-term lease and expect to move and be fully operational in the second half of 2018. We do expect some additional short-term expenses, mainly in the third quarter as we plan to install and run this new and new to us equipment simultaneously with our legacy equipment. We believe this is prudent risk mitigation, but will come with some additional expenses.It was unfortunate our 2017 results were impacted by the non-core Printer Gateway operations. We acted swiftly and decided to dedicate our limited personnel and resources to our higher-performing assets as demonstrated by our adjusted numbers. Profitability should continue improving as we have more bandwidth to dedicate to these businesses.It's clear to us that we're on the right path and that we must move and continue to move to diversify and lessen our exposure to the Canadian envelope market. Our search for a new CFO, as I said earlier, is also going well, and we hope to conclude this by the end of the current quarter.After 3 consecutive quarters of good growth, we're buoyed for the future. 2017 is then -- was a very busy year, marked with business integrations and measures implemented to give our organization the structure and resources it needs to better execute our growth strategy. With most of the headwinds behind us on the integration front and an enhanced management team, I believe 2018 will be a year of organic growth and proving -- and improving operational leverage.On a go-forward basis, our priorities remain the same. Nurture our envelope business, build our packaging and specialty platform, mainly with organic-growth initiatives and some potential opportunistic acquisitions and provide strong returns to our shareholders.Finally, I would like to thank our 800-plus strong employees for their leadership and continued commitment and dedication to Supremex. So with that, we'll conclude the call. Thank you very much and have a great day.

[Operator]

This concludes today's conference call. You may now disconnect.