Business News

Transcontinental Inc adjusted operating income increases for fourth consecutive quarter

Monday 16. September 2013 - Highlights Increase of 10.4% in adjusted operating income.

Significant growth of 43.4% in adjusted net income applicable to participating shares, from $24.9 million to $35.7 million; on a per-share basis, it rose from $0.31 to $0.46.
Revenues down 4.5%, mainly due to the end of the contract to print and distribute Zellers flyers, a change in the format and type of paper used by some of our major customers, and difficult market conditions which affected our magazine, book and catalogue printing business as well as our publications.
TC Transcontinental Printing signed a five-year agreement to print the Calgary Herald, owned by Postmedia Network Inc.
More than $35 million to date in synergies from the acquisition of Quad/Graphics Canada, Inc.
Maintained a solid financial position with a net indebtedness ratio of 1.02x.
Transcontinental Inc.’s (TSX: TCL.A, TCL.B, TCL.PR.D) third-quarter revenues decreased from $517.0 million in 2012 to $493.8 million in 2013, mainly due to the end of the contract to print and distribute Zellers flyers after its store closures. Other factors were the change in the format and type of paper used by some of our major customers, difficult market conditions affecting our magazine, book and catalogue printing business, and a soft advertising market which continued to impact our Media Sector, particularly with respect to local markets. The decrease was partially offset by new printing contracts, higher volume in educational book publishing and the acquisitions of Modulo and Redux Media, among others.
Third quarter adjusted operating income rose 10.4%, from $49.9 million to $55.1 million. This growth stems mainly from additional synergies from the integration of Quad/Graphics Canada, Inc. and higher volume in our educational book publishing business. It was partially offset by the above-noted soft advertising market and lower volume in our custom content creation business. Net income applicable to participating shares rose from $8.1 million, or $0.10 per share, to $32.4 million, or $0.42 per share. Excluding unusual items, adjusted net income applicable to participating shares rose 43.4%, from $24.9 million to $35.7 million. On a per-share basis, it rose from $0.31 to $0.46.
“Our third quarter results clearly outperformed in our industry,” said François Olivier, President and Chief Executive Officer. “The growth in adjusted operating income is due mainly to the excellent work by our Printing Sector in achieving synergies from the acquisition of Quad/Graphics Canada, Inc., and our strategy to optimize our cost structure. Efforts to leverage our relationships with our major retail customers also continued to produce results. Despite the pressure we are facing with regards to the advertising market in our Media Sector, we have continued to roll out our digital offering and have launched several new products and services. For upcoming quarters, our solid financial position in conjunction with our capacity to generate significant cash flows, gives us the flexibility we need to continue to invest in our development and transform our operations in order to better meet the continually evolving needs of our customers.”
Quarter Highlights
To date, TC Transcontinental has achieved more than $35 million in synergies from the acquisition of Quad/Graphics Canada, Inc. The Corporation is on track to reach its initial objective of $40 million in synergies by the end of fiscal 2013 and plans to generate additional synergies in fiscal 2014.
TC Transcontinental Printing signed a five-year agreement with Postmedia Network Inc. to print the Calgary Herald, which is published Monday to Saturday and has a daily circulation of about 80,000 copies. The contract will start in November 2013 and will not require additional investments by TC Transcontinental Printing given its highly efficient and flexible hybrid printing platform.
TC Media launched AutoGo.ca, a new website designed specifically for motorists looking for a new or used vehicle all across Canada. AutoGo.ca is the only automobile website that lets users search based on lifestyle. AutoGo.ca received more than 30,000 unique visitors in the first month after it was launched.
TC Media announced the launch of the TC Media Incubator, a laboratory for the creation, development and incubation of new digital products in the company. The TC Media Incubator will be headed by Bruno Leclaire, appointed Chief Digital Officer of TC Media. The lab will get officially underway in November 2013.
TC Transcontinental was again named one of the best 50 corporate citizens in Canada in the annual ranking by independent media company Corporate Knights. This recognition shows the relevance of the steps taken by the Corporation to meet its commitment to sustainability.
Highlights of the first nine months
For the first nine months of 2013, TC Transcontinental’s revenues were up 1.1%, from $1,527.0 million to $1,543.8 million. The increase stems mainly from the acquisition of Quad/Graphics Canada, Inc. and acquisitions in the Media Sector. It was partially offset by the end of the contract to print and distribute Zellers flyers, by a difficult advertising environment and by the incentives granted for the early renewal of some contracts in 2012. Adjusted operating income grew 6.0%, from $148.8 million to $157.7 million, principally due to the synergies achieved from the acquisition of Quad/Graphics Canada, Inc. The increase was partially offset by the same factors as indicated above. Net income applicable to participating shares rose from a loss of $131.4 million, or $1.62 per share, to a profit of $77.7 million, or $1.00 per share. Excluding unusual items, adjusted net income applicable to participating shares rose 13.1%, from $87.5 million, or $1.08 per share, to $99.0 million, or $1.27 per share