Transcontinental Reports Revenue Increase of 2.7 Percent for Q2 of Fiscal 2015
MONTREAL—June 12, 2015—Transcontinental Inc. announced its results for the second quarter of Fiscal 2015, which ended April 30, 2015.
"The increase in our revenues and profitability in the second quarter was once again supported by our strategic decisions," said François Olivier, president and CEO of TC Transcontinental. "The diversification of our operations into flexible packaging, the consolidation of the weekly newspaper market in Quebec and our efforts to optimize our cost structure were all factors that contributed to the growth of our results in an advertising market in transformation.
"We keep generating significant cash flows that will allow us to continue investing in our flexible packaging division and the development of our digital offering to our various customers, in particular local advertisers and retailers."
2015 Second Quarter Results
Revenues for the second quarter of 2015 increased 2.7 percent, from $477.5 million to $490.5 million. This increase is mainly attributable to the contribution from acquisitions, more specifically the acquisition of Capri Packaging and the Quebec weekly newspapers (net of disposals and closures). The appreciation of the US dollar against the Canadian dollar also had a favourable impact. This increase in revenues was however mitigated mainly by a decrease in flyer printing volumes as a result of the loss of an American customer and the consolidation of two brands by a customer in Canada. In addition, the transformation of the advertising market continues to impact the results of most of the Corporation's other niches.
Adjusted operating earnings went from $55.5 million to $61.6 million in the second quarter of 2015, an increase of 11.0 percent. This performance is attributable to the effect of acquisitions, disposals and closures, the optimization of the cost structure across the Corporation and the favourable impact of the exchange rate. It was however mitigated by the above-mentioned factors and the impact of the variation in the stock price on the stock-based compensation.
Adjusted net earnings applicable to participating shares grew 13.7 percent, from $34.4 million, or $0.44 per share, to $39.1 million, or $0.50 per share. Net earnings applicable to participating shares more than doubled, from $34.7 million, or $0.45 per share, to $81.2 million, or $1.04 per share. This improvement results mainly from the gain on the sale of consumer magazines produced in Montreal and Toronto, the reversal of the provision related to multi-employer pension plans and the increase in operating earnings.
Other Highlights
- On March 4, 2015, Transcontinental Capri received Safe Quality Food (SQF) Level 3 certification, an audit standard compliant with Global Food Safety Initiative requirements, established by the Safe Quality Food Institute.
- On March 17, 2015, TC Transcontinental announced the appointment of Mario Plourde, president and CEO of Cascades Inc., to the Corporation's Board of Directors.
- On April 10, 2015, the Corporation announced the renewal of its normal course issuer bid, between April 15, 2015 and April 14, 2016.
- On April 22, 2015, TC Transcontinental Packaging takes three prizes at the PAC (Packaging Consortium) Global Leadership Awards.
- On May 15, 2015, TC Media acquired the Atouts series from Septembre éditeur inc. This series has long had an excellent reputation in childcare centres (CPEs), pre-schools and elementary schools in Quebec, in addition to being well-known and used all across Canada.
Highlights of the First Half
For the first half of 2015, TC Transcontinental's revenues increased 2.2 percent, from $959.2 million to $980.2 million. This increase stems primarily from the contribution of acquisitions, more specifically the acquisition of Capri Packaging and the Quebec weekly newspapers (net of disposals and closures). The appreciation of the US dollar against the Canadian dollar also had a favourable impact. This increase in revenues was however mitigated mainly by a decrease in flyer printing volumes as a result of the loss of an American customer and the consolidation of two brands by a customer in Canada. In addition, the transformation of the advertising market continues to impact the results of most of the Corporation's other niches.
Adjusted operating earnings went from $102.8 million to $117.3 million, an increase of 14.1 percent. This increase is attributable to the contribution from acquisitions, disposals and closures, the optimization of the cost structure across the Corporation and the favourable impact of the exchange rate. It was however mitigated by the above-mentioned factors and the impact of the variation in the stock price on the stock- based compensation.
Adjusted net earnings applicable to participating shares grew 21.4 percent, from $63.7 million, or $0.82 per share, to $77.3 million, or $0.99 per share. Net earnings applicable to participating shares increased from $51.9 million, or $0.67 per share, to $119.1 million, or $1.53 per share. This improvement results mainly from the gain on the sale of consumer magazines produced in Montreal and Toronto, the reversal of the provision related to multi-employer pension plans and the increase in operating earnings.
For more detailed financial information, please see Management's Discussion and Analysis for the second quarter ended April 30th, 2015, as well as the financial statements in the "Investors" section of www.tc.tc.
Outlook
The company will continue to benefit from the savings realized as a result of the consolidation of our printing plants and the operational efficiencies that it is continuing to implement in order to maximize the profitability of the Printing & Packaging Sector. The impact of new printing agreements announced in 2014 and the development of its point-of-purchase marketing services will also have a positive effect on its results. However, these items should be offset by the transformation of the advertising market, which affects most of its printing niches, the loss of an American customer and the consolidation of two brands by one of its customers in Canada.
The integration of the Quebec weekly newspapers continues to progress and the evolution of our digital platforms is moving forward as anticipated. However, these catalysts are expected to be partially offset by the transformation of the advertising market, which will continue to impact our weekly newspaper publishing activities during fiscal 2015. The Corporation will also be affected by the exit from the Canadian market of a retailer, which will have an impact on our distribution activities. Despite these challenges, the company will continue to limit the impact on its profit margin by adjusting its cost structure so that it reflects the realities of the industry. Lastly, the company will continue to invest in the development of its digital and interactive marketing products, as well as enhance its business and education offerings.
The company will continue to generate significant cash flows in the next quarters, and its excellent financial position should permit it to continue investing in our growth. After the first year, the results from its acquisition of Capri Packaging continue to meet our expectations, and the company is taking steps to develop its existing operations. However, due to the long sales cycle in this niche, the results of its flexible packaging operations should be stable in the second half compared to last year. In addition, the company will maintain its disciplined acquisition approach in this promising market to ensure a sustained long-term growth for the Corporation.
Canada's largest printer, with operations in print and digital media, flexible packaging and publishing, TC Transcontinental's mission is to create products and services that allow businesses to attract, reach and retain their target customers. Respect, teamwork, performance and innovation are strong values held by the Corporation and its commitment to all stakeholders is to pursue its business and philanthropic activities in a responsible manner. Transcontinental Inc. (TSX:TCL.A)(TSX:TCL.B), known as TC Transcontinental, has over 8,000 employees in Canada and the United States, and revenues of C$2.1 billion in 2014.
Source: TC Transcontinental.
