Transcontinental Reports Q2 Results: Revenue and Earnings Up
Press release from the issuing company
June 12, 2003 -- MONTREAL, QUEBEC -- Transcontinental Inc. continued to stand out in its industry by pursuing revenue and income growth in the second quarter despite difficult market conditions in some niches and by reaffirming its confidence in attaining its financial objectives for fiscal 2003.
For the second quarter ended April 30, 2003, consolidated revenues reached $476 million, an 8% increase over revenues of $440 million posted in the second quarter of 2002. Operating income before depreciation and amortization rose from $76 million in 2002 to $82 million in 2003, an increase of 8%. In both cases, growth stemmed primarily from the rapid integration of the acquisitions completed in 2002, which added $47 million to revenues and $11 million to operating income before amortization and depreciation. It should be noted that the paper effect accounted for a negative factor of $14 million in terms of revenues, but did not affect income. Furthermore, significant exchange rate fluctuations between Canadian currency and its U.S. and Mexican counterparts reduced revenues by $4 million and operating income before depreciation and amortization by $1 million.
Net income grew by 14%, from $33 million in the second quarter of 2002 to $37 million in 2003. On a per common share basis, it rose from $0.39 to $0.42, an 8% increase, despite an increase in the average number of shares outstanding. Cash flow from continuing operations before changes in non-cash operating items grew 8%, from $59 million in 2002 to $64 million in 2003.
In the first six months of the year, Transcontinental's consolidated revenues reached $952 million, up 9% from $873 million in the corresponding period of 2002, and operating income before depreciation and amortization totalled $159 million, up 9% from $146 million in the same period of 2002. As a result, net income grew by 12%, from $60 million in 2002 to $68 million in 2003. On a per common share basis, it rose from $0.73 to $0.76, a 4% increase. Cash flow from continuing operations before changes in non-cash operating items reached $124 million, up 12% over the $111 million posted in 2002.
"We are satisfied with our results for the second quarter and the first six months of the year," said Daniel Denault, Vice President and Chief Financial Officer of Transcontinental Inc. "These results are in line with our outlook for fiscal 2003, released last December, which anticipated difficult market conditions for the first half of the year. We continued to distinguish ourselves in our industry in North America thanks to the rapid and successful integration of acquisitions completed in 2002, as well as the positive impact of the many efficiency and sales development measures implemented as part of our Horizon 2005 project.
"The Corporation is in a solid financial position to pursue growth in its strategic niches," continued Mr. Denault. "Our net funded debt to total capitalization ratio is 32%, well below the long-term target of 45% set by management. Furthermore, our investments in business acquisitions and fixed assets in 2002 and in the first part of 2003, along with the many initiatives related to our Horizon 2005 project, will continue to have a positive impact between now and the end of the year. We are therefore maintaining our guidance, set at the beginning of the year, for earnings per common share of $1.60 to $1.68 for 2003."
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