Transcontinental Reports Q2 Results: 12% Increase in Income
Press release from the issuing company
Montreal, May 30, 2002 – Despite the continued slowdown in advertising spending across North America, Transcontinental Group today announced a strong second quarter and, for the second consecutive quarter, issued an upward revision of its earnings per common share guidance for fiscal 2002.
For the second quarter ended April 30, 2002, consolidated revenues stood at $439.8 million, down 2% over revenues of $450 million for the same quarter in 2001. This $10.2 million drop stems from decreased business related to the slowdown in advertising spending and lower paper prices. Income from continuing operations before amortization of goodwill reached $32.6 million, up 12% over the $29 million posted in the second quarter of 2001; on a per share basis, it rose 10%, from $0.72 to $0.79. Cash flow from continuing operations increased 15%, from $50.3 million in 2001 to $58 million in 2002 (or from $1.25 to $1.40 per share). Both 2001 and 2002 results mentionned above reflect the application of the new accounting rules for amortization of goodwill. (See “New Accounting Rules” section.)
For the first six months of fiscal 2002, Transcontinental posted consolidated revenues of $872.9 million compared to $898.6 million for the corresponding period in 2001, which represents a 3% decrease caused by the slowdown in advertising spending and lower paper prices. Income from continuing operations before amortization of goodwill reached $60.2 million, up 20% over the $50.3 million posted for the same period in 2001; on a per share basis, it rose 12%, from $1.30 to $1.46. Cash flow from continuing operations rose 17%, from $93.3 million in 2001 to $109.3 million in 2002 (or from $2.41 to $2.65 per share). Both 2001 and 2002 results mentionned above reflect the application of the new accounting rules for amortization of goodwill. (See “New Accounting Rules” section)
Given its performance over the first six months, recent acquisitions, and anticipating further improvement of its results, Transcontinental is announcing a second upward revision of its earnings per share guidance for 2002 from a range of $2.70 to $2.80 to a range of $2.80 to $2.95, an increase of 12% to 18% over the earnings per share from continuing operations before amortization of goodwill of $2.50 recorded in 2001.
“This performance, which continues to distinguish us from the majority of the industry, confirms the appropriateness of Transcontinental’s strategy of targeted growth, both as a printer and as a publisher, and its leading position in almost all of its niches,” said Daniel Denault, Vice-President and Chief Financial Officer of Transcontinental Group. “This performance also reflects the determination of our employees to increase the company’s market share, to expand the opportunities for growth with customers, particularly through cross selling and teamwork, and to improve productivity in each of the three operating sectors. In fact, these are the main objectives of the Horizon 2005 mobilization project, whose implementation continued throughout the second quarter. Furthermore, as a result of its efforts to reduce its debt, the Corporation has benefited from a substantial decrease in its financial expenses, thereby putting Transcontinental in an excellent position to pursue its growth.”
The Corporation continues to maintain a solid balance sheet with a net funded debt to total capitalization ratio of 30%, which is significantly lower than the long-term target level of 45% set by management.
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