Highlights
Revenues of $683.2 million for the quarter ended April 28, 2024; operating earnings of $33.2 million; and net earnings attributable to shareholders of the Corporation of $15.9 million ($0.18 per share).
Adjusted operating earnings before depreciation and amortization(1) of $110.1 million for the quarter ended April 28, 2024; adjusted operating earnings(1) of $72.3 million; and adjusted net earnings attributable to shareholders of the Corporation(1) of $45.3 million ($0.52 per share).
Growth in adjusted operating earnings before depreciation and amortization(1) of 1.0%, including an increase of 5.6% in the Packaging Sector.
Continued to roll-out raddarTM.
Closed the Tomah, Wisconsin, plant on February 2, 2024 and the Saint-Hyacinthe, Québec, plant on April 20, 2024 with a transfer of operations to other plants in the network, and ended the Publisac distribution activities in Québec.
(1) Please refer to the section entitled “Non-IFRS Financial Measures” in this press release for a definition of these measures.
MONTRÉAL, June 05, 2024 (GLOBE NEWSWIRE) — Transcontinental Inc. (TSX:TCL) announces its results for the second quarter of fiscal 2024, which ended April 28, 2024.
“I am very satisfied with our performance for the quarter in terms of profitability,” said Thomas Morin, President and Chief Executive Officer of TC Transcontinental. “We pursued our cost reduction initiatives with determination, while our efforts to improve our product mix toward higher value-added products are showing results.
“In our Packaging Sector, the financial performance was strong with a 5.6% increase in adjusted operating earnings before depreciation and amortization, despite a solid performance last year. In spite of the continued pressure on our non-food related activities, we are starting to see demand improving in most of our end markets.
“In our Retail Services and Printing Sector, renamed to reflect our expanded offering and growth opportunities in retail services, we are satisfied with the roll-out of raddarTM in Québec and the positive customer response to this new, innovative product as well as the growth in our in-store marketing activities. The sector’s profitability is stable as a result of the actions taken to improve our cost structure.
“We are encouraged by the results to date of our two-year program aimed at improving our profitability and our financial position. We are expecting recurring annual savings of approximately $30 million from this program by the end of fiscal 2024.”
“Repaying our debt remains a priority, and we are confident we will continue to reduce our indebtedness and improve our balance sheet with the significant cash flows that we expect to generate during the second half of the fiscal year, added Donald LeCavalier, Executive Vice President and Chief Financial Officer of TC Transcontinental. In that context, we are requesting the approval of the Toronto Stock Exchange to launch a normal course issuer bid in the near-term.”
Financial Highlights
(in millions of dollars, except per share amounts)
Q2-2024
Q2-2023
Variation
in %
Revenues
$683.2
$747.2
(8.6
)
%
Operating earnings before depreciation and amortization
88.7
105.2
(15.7
)
Adjusted operating earnings before depreciation and amortization(1)
110.1
109.0
1.0
Operating earnings
33.2
43.8
(24.2
)
Adjusted operating earnings(1)
72.3
66.2
9.2
Net earnings attributable to shareholders of the Corporation
15.9
22.2
(28.4
)
Net earnings attributable to shareholders of the Corporation per share
0.18
0.26
(30.8
)
Adjusted net earnings attributable to shareholders of the Corporation(1)
45.3
39.1
15.9
Adjusted net earnings attributable to shareholders of the Corporation per share(1)
0.52
0.45
15.6
(1) Please refer to the section entitled “Reconciliation of Non-IFRS Financial Measures” in this Press release for adjusted data presented above.
Results for the Second Quarter of Fiscal 2024
Revenues decreased by $64.0 million, or 8.6%, from $747.2 million in the second quarter of 2023 to $683.2 million in the corresponding period of 2024. This decrease is mainly due to lower volume in the two main operating sectors.
Operating earnings before depreciation and amortization decreased by $16.5 million, or 15.7%, from $105.2 million in the second quarter of 2023 to $88.7 million in the second quarter of 2024. This decrease is mainly due to the increase in restructuring and other costs, asset impairment charges and lower volume, partially mitigated by our cost reduction initiatives related to the profitability and financial position improvement program announced in December 2023 in addition to a favourable product mix.
Adjusted operating earnings before depreciation and amortization increased by $1.1 million, or 1.0%, from $109.0 million in the second quarter of 2023 to $110.1 million in the second quarter of 2024. This increase is mainly attributable to our cost reduction initiatives and a favourable product mix, partially offset by lower volume.
Net earnings attributable to shareholders of the Corporation decreased by $6.3 million, or 28.4%, from $22.2 million in the second quarter of 2023 to $15.9 million in the second quarter of 2024. This decrease is mainly due to the previously explained decrease in operating earnings before depreciation and amortization, partially mitigated by the decrease in depreciation and amortization, in financial expenses and in income taxes. On a per share basis, net earnings attributable to shareholders of the Corporation went from $0.26 to $0.18, respectively.
Adjusted net earnings attributable to shareholders of the Corporation increased by $6.2 million, or 15.9%, from $39.1 million in the second quarter of 2023 to $45.3 million in the second quarter of 2024. This increase is mainly attributable to the previously explained increase in adjusted operating earnings before depreciation and amortization and the decrease in depreciation and amortization and in financial expenses, partially offset by higher income taxes. On a per share basis, adjusted net earnings attributable to shareholders of the Corporation went from $0.45 to $0.52, respectively.
Results for the First Six Months of Fiscal 2024
Revenues decreased by $90.6 million, or 6.2%, from $1,454.2 million in the first six months of fiscal 2023 to $1,363.6 million in the corresponding period of 2024. This decrease is mainly due to lower volume in the two main operating sectors.
Operating earnings before depreciation and amortization decreased by $9.7 million, or 5.4%, from $181.1 million in the first six months of fiscal 2023 to $171.4 million in the corresponding period of 2024. This decrease is mainly due to lower volume as well as the increase in restructuring and other costs and asset impairment charges, partially mitigated by our cost reduction initiatives and a favourable product mix.
Adjusted operating earnings before depreciation and amortization increased by $13.1 million, or 6.8%, from $193.1 million in the first six months of fiscal 2023 to $206.2 million in the corresponding period of 2024. This increase in adjusted operating earnings before depreciation and amortization is mainly attributable to our cost reduction initiatives and a favourable product mix, partially offset by lower volume.
Net earnings attributable to shareholders of the Corporation increased by $6.6 million, or 28.4%, from $23.2 million in the first six months of fiscal 2023 to $29.8 million in the corresponding period of 2024. This increase is mainly attributable to the decrease in depreciation and amortization and in financial expenses, partially offset by the previously explained decrease in operating earnings before depreciation and amortization. On a per share basis, net earnings attributable to shareholders of the Corporation went from $0.27 to $0.34, respectively.
Adjusted net earnings attributable to shareholders of the Corporation increased by $22.5 million, or 37.4%, from $60.2 million in the first six months of fiscal 2023 to $82.7 million in the corresponding period of 2024. This increase is mostly attributable to the previously explained increase in adjusted operating earnings before depreciation and amortization and the decrease in depreciation and amortization and in financial expenses, partially offset by higher income taxes. On a per share basis, adjusted net earnings attributable to shareholders of the Corporation went from $0.70 to $0.95, respectively.
For more detailed financial information, please see the Management’s Discussion and Analysis for the second quarter ended April 28, 2024, as well as the financial statements in the “Investors” section of our website at www.tc.tc.
Outlook
In the Packaging Sector, our investments, including those related to sustainable packaging solutions, position us well for the future and should be a key driver of our growth. The economic environment has however had a negative impact on demand since the beginning of the fiscal year. In terms of profitability, we expect an increase in adjusted operating earnings before depreciation and amortization for fiscal 2024 compared to fiscal 2023.
In the Retail Services and Printing Sector, we are encouraged by the roll-out of raddarTM and growth opportunities in our in-store marketing activities. The decrease in volume in our traditional activities should be offset by our cost reduction initiatives, the favourable impact of the roll-out of raddarTM and the growth in our in-store marketing activities. We therefore expect adjusted operating earnings before depreciation and amortization for fiscal 2024 to be stable compared to fiscal 2023.
Given the solid financial performance since the beginning of the fiscal year and the benefits of our profitability and financial position improvement program, we expect an increase in consolidated adjusted operating earnings before depreciation and amortization for fiscal 2024 compared to fiscal 2023. In addition, we expect to continue generating significant cash flows from operating activities, which will enable us to reduce our net indebtedness while continuing to make strategic investments and return capital to our shareholders.
Non-IFRS Financial Measures
In this document, unless otherwise indicated, all financial data are prepared in accordance with International Financial Reporting Accounting Standards (“IFRS”) and the term “dollar”, as well as the symbol “$” designate Canadian dollars.
In addition, in this press release, we also use certain non-IFRS financial measures for which a complete definition is presented below and for which a reconciliation to financial information in accordance with IFRS is presented in the section entitled “Reconciliation of Non-IFRS Financial Measures” and in Note 3, “Segmented Information”, to the condensed interim consolidated financial statements for the second quarter ended April 28, 2024.
Terms Used
Definitions
Adjusted operating earnings before depreciation and amortization
Operating earnings before depreciation and amortization as well as restructuring and other costs (revenues) and impairment of assets.
Adjusted operating earnings
Operating earnings before restructuring and other costs (revenues), amortization of intangible assets arising from business combinations and impairment of assets.
Adjusted income taxes
Income taxes before income taxes on restructuring and other costs (revenues), impairment of assets and amortization of intangible assets arising from business combinations.
Adjusted net earnings attributable to shareholders of the Corporation
Net earnings attributable to shareholders of the Corporation before restructuring and other costs (revenues), amortization of intangible assets arising from business combinations and impairment of assets, net of related income taxes.
Net indebtedness
Total of long-term debt, of current portion of long-term debt, of lease liabilities and of current portion of lease liabilities, less cash.
Net indebtedness ratio
Net indebtedness divided by the last 12 months’ adjusted operating earnings before depreciation and amortization.
Reconciliation of Non-IFRS Financial Measures
The financial information has been prepared in accordance with IFRS. However, financial measures used, namely adjusted operating earnings before depreciation and amortization, adjusted operating earnings, adjusted income taxes, adjusted net earnings attributable to shareholders of the Corporation, adjusted net earnings attributable to shareholders of the Corporation per share, net indebtedness and net indebtedness ratio, for which a reconciliation is presented in the following table, do not have any standardized meaning under IFRS and could be calculated differently by other companies. We believe that many of our readers analyze the financial performance of the Corporation’s activities based on these non-IFRS financial measures as such measures may allow for easier comparisons between periods. These measures should be considered as a complement to financial performance measures in accordance with IFRS. They do not substitute and are not superior to them.
The Corporation also believes that these measures are useful indicators of the performance of its operations and its ability to meet its financial obligations. Furthermore, management also uses some of these non-IFRS financial measures to assess the performance of its activities and managers.
Reconciliation of operating earnings – Second quarter and cumulative
Three months ended
Six months ended
(in millions of dollars)
April 28, 2024
April 30, 2023
April 28, 2024
April 30, 2023
Operating earnings
$33.2
$43.8
$61.0
$58.8
Restructuring and other costs
16.0
3.8
27.3
12.0
Amortization of intangible assets arising from business combinations (1)
17.7
18.6
35.5
37.2
Impairment of assets
5.4
—
7.5
—
Adjusted operating earnings
$72.3
$66.2
$131.3
$108.0
Depreciation and amortization (2)
37.8
42.8
74.9
85.1
Adjusted operating earnings before depreciation and amortization
$110.1
$109.0
$206.2
$193.1
(1) Amortization of intangible assets arising from business combinations includes our customer relationships, non-compete agreements, rights of first refusal and educational book titles.
(2) Depreciation and amortization excludes the amortization of intangible assets arising from business combinations.
Reconciliation of operating earnings – Second quarter and cumulative for the Packaging Sector
Three months ended
Six months ended
(in millions of dollars)
April 28, 2024
April 30, 2023
April 28, 2024
April 30, 2023
Operating earnings
$32.3
$26.5
$54.7
$30.7
Restructuring and other costs
3.7
1.9
7.3
5.9
Amortization of intangible assets arising from business combinations (1)
16.1
16.1
32.2
32.1
Impairment of assets
0.3
—
0.6
—
Adjusted operating earnings
$52.4
$44.5
$94.8
$68.7
Depreciation and amortization (2)
18.8
22.9
36.8
45.3
Adjusted operating earnings before depreciation and amortization
$71.2
$67.4
$131.6
$114.0
(1) Amortization of intangible assets arising from business combinations includes our customer relationships.
(2) Depreciation and amortization excludes the amortization of intangible assets arising from business combinations.
Reconciliation of operating earnings – Second quarter and cumulative for the Retail Services and Printing Sector
Three months ended
Six months ended
(in millions of dollars)
April 28, 2024
April 30, 2023
April 28, 2024
April 30, 2023
Operating earnings
$16.7
$33.5
$34.3
$55.5
Restructuring and other costs
11.8
1.3
17.9
4.5
Amortization of intangible assets arising from business combinations (1)
1.0
2.0
2.3
4.1
Impairment of assets
5.1
—
6.9
—
Adjusted operating earnings
$34.6
$36.8
$61.4
$64.1
Depreciation and amortization (2)
12.5
13.2
25.2
26.5
Adjusted operating earnings before depreciation and amortization
$47.1
$50.0
$86.6
$90.6
(1) Amortization of intangible assets arising from business combinations includes our customer relationships.
(2) Depreciation and amortization excludes the amortization of intangible assets arising from business combinations.
Reconciliation of operating earnings – Second quarter and cumulative for the Other Sector
Three months ended
Six months ended
(in millions of dollars)
April 28, 2024
April 30, 2023
April 28, 2024
April 30, 2023
Operating earnings
($15.8
)
($16.2
)
($28.0
)
($27.4
)
Restructuring and other costs
0.5
0.6
2.1
1.6
Amortization of intangible assets arising from business combinations (1)
0.6
0.5
1.0
1.0
Adjusted operating earnings
($14.7
)
($15.1
)
($24.9
)
($24.8
)
Depreciation and amortization (2)
6.5
6.7
12.9
13.3
Adjusted operating earnings before depreciation and amortization
($8.2
)
($8.4
)
($12.0
)
($11.5
)
(1) Amortization of intangible assets arising from business combinations includes non-compete agreements, rights of first refusal and educational book titles.
(2) Depreciation and amortization excludes the amortization of intangible assets arising from business combinations.
Reconciliation of net earnings attributable to shareholders of the Corporation – Second quarter and cumulative
Three months ended
Six months ended
(in millions of dollars, except per share amounts)
April 28, 2024
April 30, 2023
April 28, 2024
April 30, 2023
Net earnings attributable to shareholders of the Corporation
$15.9
$22.2
$29.8
$23.2
Restructuring and other costs
16.0
3.8
27.3
12.0
Tax on restructuring and other costs
(4.0
)
(0.9
)
(6.8
)
(3.0
)
Amortization of intangible assets arising from business combinations (1)
17.7
18.6
35.5
37.2
Tax on amortization of intangible assets arising from business combinations
(4.3
)
(4.6
)
(8.7
)
(9.2
)
Impairment of assets
5.4
—
7.5
—
Tax on impairment of assets
(1.4
)
—
(1.9
)
—
Adjusted net earnings attributable to shareholders of the Corporation
$45.3
$39.1
$82.7
$60.2
Net earnings attributable to shareholders of the Corporation per share
$0.18
$0.26
$0.34
$0.27
Adjusted net earnings attributable to shareholders of the Corporation per share
$0.52
$0.45
$0.95
$0.70
Weighted average number of shares outstanding
86.6
86.6
86.6
86.6
(1) Amortization of intangible assets arising from business combinations includes our customer relationships, non-compete agreements, rights of first refusal and educational book titles.
Reconciliation of net indebtedness
(in millions of dollars, except ratios)
As at April 28, 2024
As at October 29, 2023
Long-term debt
$663.0
$937.8
Current portion of long-term debt
199.3
2.1
Lease liabilities
87.7
94.6
Current portion of lease liabilities
22.3
23.5
Cash
(55.1
Leave a Reply