RE:DividendWith the stock still only in the $1.20 - 1.25 range, and those surprisingly solid results, there's far more upside for shareholders in the company aggressively using the NCIB vs. resuming any dividend.
I doubt SXP could have gone ahead with the NCIB without getting the okay from their bankers (dividend too, if & when the time comes), and so all the more impressive in a way. In other words, their bankers must really believe in this as a continuing solid cash flow story. Note that the NCIB is currently only for 5% of shares vs. the customary 10%. But if the positive results continue SXP will ultimately get the go-ahead for more.
One interesting thing. Note how there were no questions at all from analysts on the CC. I suspect their firms, before the call, were so concerned that Q2 results would be a disaster that they chose to distance themselves from SXP. To quote from "Monty Python and the Holy Grail":
"Run away!! Run away!!"
That's Bay Street for you.
The (constructive) conversations with SXP's bankers were evident in the tone of the CC, which was different from previous quarters. It was all about cost management--which is what should be central to their thinking right now. (Not to suggest that sales growth doesn't matter.)
One key question that remains is whether the big dip in envelope sales will prove more temporary or permanent. No doubt the covid-19 lockdown has taught some users how to do more stuff online and thus they will never need to go back to envelopes. But some of the drop will also reflect buyers simply holding off restocking inventories amidst the uncertainty. Time will tell how that plays out.
Congratulations to board, management, and all employees for guiding the company so well through this turbulent episode.