Transcontinental Inc. completes two acquisitions and increases its profitability in the second quarter
Tuesday, June 10, 2014
Press release from the issuing company
Transcontinental Inc.'s revenues decreased by 3.8% in the second quarter, from $517.8 million to $498.2 million, primarily due to the soft advertising market, which continues to influence our marketing products printing as well as our newspaper and magazine publishing operations. This decrease was partially offset by the sustained performance of our flyer printing operations and by new contracts in both operating sectors.
Adjusted operating earnings rose from $54.2 million to $58.5 million. This performance is due to the company-wide optimization of our cost structure and our highly efficient printing platform. It was partially offset by the soft advertising market as mentioned above. Net earnings applicable to participating shares increased from $25.3 million, or $0.32 per share, to $34.7 million, or $0.45 per share. This improvement is due to lower restructuring and other costs, an increase in adjusted operating earnings and lower financial expenses, partially offset by an increase in income taxes. Adjusted net earnings applicable to participating shares grew 12.9%, from $32.6 million, or $0.42 per share, to $36.8 million, or $0.47 per share.
"We are proud to have completed two major transactions that position TC Transcontinental strategically for the future. With the acquisition of the Capri Packaging assets, we have taken a first step into the flexible packaging market, which is a new promising growth area for the Corporation. In addition, the acquisition of the Sun Media weekly newspapers in Quebec strengthens our assets in this market, while ensuring our ability to evolve our local solutions offering in Quebec. Furthermore, our second quarter results were satisfactory. Despite the pressure we are experiencing in the advertising market, the increase in our profitability demonstrates the effectiveness of our strategy, namely strengthening existing assets and developing new revenue sources," said François Olivier, President and Chief Executive Officer.
"For coming quarters, our excellent financial position combined with our ability to generate significant cash flows gives us the flexibility we need to integrate our recent acquisitions, continue our transformation and invest in the future of the Corporation," Mr. Olivier added.
Highlights of the First Half
For more detailed financial information, please see Management's Discussion and Analysis for the second quarter ended April 30th, 2014 as well as the financial statements in the "Investors" section of our website at www.tc.tc
The Media Sector should continue to benefit from cost-structure optimization initiatives and the new flyer-distribution agreements that will help stabilize our operating margin and reduce the impact of difficult conditions in the advertising market. We will also continue to invest in the development and commercialization of new digital products. The acquisition of the Sun Media Corporation weekly papers in Quebec should also enable us to strengthen our media assets and improve our offering in local markets.
The Corporation completed the transaction to acquire the assets of Capri Packaging in order to start a new growth vector in flexible packaging. We have initiated the operational integration process, modifying our organizational structure and creating a packaging division headed by a team of senior executives with outstanding capabilities in manufacturing. The long-term agreement with the seller, Schreiber Foods, Inc., will secure most of the revenues for this division. In the coming months we will be implementing a plan to build the loyalty of our existing customers and attract new ones to ensure our success in this promising niche.
We have secured additional long-term financing to give us the financial flexibility required to pursue our transformation and execute our growth strategy. Given our excellent financial position, we will continue our balanced approach to capital management, which allows us to reduce our debt, pay dividends and invest in our transformation focused on our core competencies. We will also keep on developing internal projects and evaluating strategic acquisitions to maintain our position in our niches, while developing our new packaging growth vector to ensure the long-term success and profitability of the business.
Reconciliation of Non-IFRS Financial Measures
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