Mr. Thomas Morin reports

TRANSCONTINENTAL INC. ANNOUNCES RESULTS FOR THE FIRST QUARTER OF FISCAL 2024

Transcontinental Inc. has released its results for the first quarter of fiscal 2024, which ended Jan. 28, 2024.

Highlights

• Growth in adjusted operating earnings before depreciation and amortization of 14.3 per cent for the quarter, including an increase of 29.6 per cent in the packaging sector.
• Revenues of $680.4-million for the quarter ended Jan. 28, 2024; operating earnings of $27.8-million; and net earnings attributable to shareholders of the corporation of $13.9-million (16 cents per share).
• Adjusted operating earnings before depreciation and amortization of $96.1-million for the quarter ended Jan. 28, 2024; adjusted operating earnings of $59.0-million; and adjusted net earnings attributable to shareholders of the corporation of $37.4-million (43 cents per share).
• Announced, on Feb. 1, 2024, the closure of the Saint-Hyacinthe plant in April, 2024, and the transfer of its operations to the other plants in the network.

"We had a solid first quarter despite persistently challenging market conditions," said Thomas Morin, president and chief executive officer of TC Transcontinental. "This performance is largely attributable to cost reductions in line with our priorities and the profitability and financial position improvement program announced in December.

"The packaging sector had an excellent start with a 29.6-per-cent growth in adjusted operating earnings before depreciation and amortization for the quarter compared with last year, as the initiatives implemented to reduce our costs and a more favourable product mix more than offset the softer demand across the market. While there are still uncertainties surrounding short-term demand, we are satisfied with the progress made with the deployment of new equipment related to our strategic investments and the market interest in that respect.

"In our printing sector, our cost reduction initiatives allowed us to mitigate the persistent challenges facing our book printing activities. We are encouraged by the opportunities in our retail related services, in particular the continued rollout of raddar as well as our in-store marketing activities.

"I'm pleased that our two-year program aimed at improving our earnings per share and our financial position has already started to show results. By the end of the second quarter, we will have reduced our overall work force by 6 per cent. We also achieved significant cost of goods sold savings, and our solid earnings and free cash flows enabled us to reduce our indebtedness ratio to 2.00 times at the end of the first quarter."

"Our financial position is solid, and we expect to generate significant cash flows by the end of fiscal 2024 that will enable us to pursue our debt reduction objective," concluded Donald LeCavalier, executive vice-president and chief financial officer of TC Transcontinental.

Results of the first quarter of fiscal 2024

Revenues decreased by $26.6-million, or 3.8 per cent, from $707.0-million in the first quarter of 2023 to $680.4-million in the corresponding period of 2024. This decrease is mainly due to lower volume in the printing sector and, to a lesser extent, in the packaging sector.

Operating earnings before depreciation and amortization increased by $6.8-million, or 9.0 per cent, from $75.9-million in the first quarter of 2023 to $82.7-million in the first quarter of 2024. Adjusted operating earnings before depreciation and amortization increased by $12.0-million, or 14.3 per cent, from $84.1-million in the first quarter of 2023 to $96.1-million in the first quarter of 2024. These increases are mainly attributable to the company's cost reduction initiatives, partially offset by lower volume. In addition, the increase in restructuring and other costs and, to a lesser extent, asset impairment charges had an adverse impact on operating earnings before depreciation and amortization.

Net earnings attributable to shareholders of the corporation increased by $12.9-million, from $1.0-million in the first quarter of 2023 to $13.9-million in the first quarter of 2024. This increase is mainly attributable to the previously explained increase in operating earnings before depreciation and amortization and the decrease in depreciation and amortization and financial expenses, partially offset by higher income taxes. On a per-share basis, net earnings attributable to shareholders of the corporation went from one cent to 16 cents, respectively.

Adjusted net earnings attributable to shareholders of the corporation increased by $16.3-million, or 77.3 per cent, from $21.1-million in the first quarter of 2023 to $37.4-million in the first quarter of 2024. This increase is mainly attributable to the previously explained increase in adjusted operating earnings before depreciation and amortization and the decrease in depreciation and amortization and financial expenses, partially offset by higher income taxes. On a per-share basis, adjusted net earnings attributable to shareholders of the corporation went from 24 cents to 43 cents, respectively.

For more detailed financial information, please see the management's discussion and analysis for the first quarter ended Jan. 28, 2024, as well as the financial statements in the investors section of the company's website.

Outlook

In the packaging sector, the company's investments in sustainable packaging solutions position it well for the future and should be a key driver of the company's long-term growth. The economic environment should however continue to affect short-term demand. In terms of profitability, despite the pressure on volume, the company expects an increase in adjusted operating earnings before depreciation and amortization for fiscal 2024 compared with fiscal 2023.

In the printing sector, the company expects lower volume in its traditional activities. This anticipated volume reduction should result in lower adjusted operating earnings before depreciation and amortization for fiscal 2024 compared with fiscal 2023. The company expects this decrease to be mostly offset by cost reduction initiatives and the continued rollout of raddar.

Finally, given the economic environment and the early impact of the company's profitability and financial position improvement program, the company expects consolidated adjusted operating earnings before depreciation and amortization to remain at the very least stable for fiscal 2024 compared with fiscal 2023. In addition, the company expects to continue generating significant cash flows from operating activities, which will enable it to reduce its net indebtedness while continuing its strategic investments.

Dividend

The corporation's board of directors declared a quarterly dividend of 22.5 cents per share on Class A subordinate voting shares and Class B shares. This dividend is payable on April 22, 2024, to shareholders of record at the close of business on April 3, 2024.

Additional information

Conference call

Upon releasing its 2024 first quarter results, the corporation will hold a conference call for the financial community on March 13, 2024, at 8 a.m. The dial-in numbers are 1-289-514-5100 or 1-800-717-1738. Media may hear the call in listen-only mode or tune in to the simultaneous audio broadcast on TC Transcontinental's website, which will then be archived for 30 days.

About Transcontinental Inc.

TC Transcontinental is a leader in flexible packaging in North America, and Canada's largest printer. The corporation is also the leading Canadian French-language educational publishing group. For over 45 years, TC Transcontinental's mission has been to create quality products and services that allow businesses to attract, reach and retain their target customers.

Respect, teamwork, performance and innovation are the strong values held by the corporation and its employees. TC Transcontinental's commitment to its stakeholders is to pursue its business activities in a responsible manner.

Transcontinental, known as TC Transcontinental, has approximately 8,000 employees, the majority of which are based in Canada, the United States and Latin America. TC Transcontinental generated revenues of $2.9-billion during the fiscal year ended Oct. 29, 2023.

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