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- Growth of 4% in revenues and 9% in adjusted operating
income before amortization; excluding the foreign exchange
rate impact, growth of 8% and 16%, respectively.
- Significant increase in adjusted operating income
margin before amortization, from 13.2% in the first quarter
of 2007 to 13.8% in 2008; excluding the foreign exchange
rate impact, margin of 14.2%.
- Increase of 69% in net income; on a per-share
basis, net income rose from $0.24 to $0.41, a 71% increase.
- Increase of 13% in adjusted net income before
unusual items; on a per-share basis, adjusted net income
grew 17%, from $0.29 to $0.34.
- Signing of exclusive six-year contract, valued
at $210 million, to print Rogers’ magazines starting
in February 2009.
- Acquisition of ThinData, a Canadian leader in
permission-based email marketing.
- Announcements of the launch of a French edition
of More in Canada in the fall of 2008 and of investments
totalling $80 million in two Montreal-area printing
facilities.
- Announcement by the Corporation of a 14% increase
in its quarterly dividend, to $0.08 per share.
- Excellent financial position to support further
growth.
- As previously announced, François Olivier
has become President and Chief Executive Officer.
Montreal, March 13, 2008 – Transcontinental today
announced a significant increase in revenues and earnings
for the first quarter ended January 31, 2008. This excellent
performance is due to organic growth throughout the organization,
as well as to the new sales development and operational efficiency
measures introduced as part of the Evolution 2010
business project. Acquisitions made during 2007 offset the
negative impact of the exchange rate between the Canadian
dollar and U.S. and Mexican currencies.
“We are very satisfied with these first quarter results,
which demonstrate the soundness of our business project and
our niche strategy,” said François Olivier, President
and Chief Executive Officer of Transcontinental. “We
are reaping the benefits of our major restructuring projects
and investments of recent years. Especially promising is the
fact that we have almost reached our goal of 5% organic growth
in revenues, and we have continued to invest in developing
our printing, publishing and digital media activities. Our
solid financial position also gives us the flexibility needed
to better serve both existing and new customers, as demonstrated
by the new contract to print the Rogers magazine portfolio.
We have also continued to develop new non-print-related growth
platforms that will allow our customers to optimize their
marketing effectiveness and make Transcontinental the obvious
choice as marketing partner. The recent acquisition of ThinData,
a Canadian leader in permission-based email marketing, is
a good example of this.
“I am very confident that we will continue to grow
in the medium and long term,” said Mr. Olivier. “Our
solid financial position, combined with our ability to generate
cash flow, gives us the latitude we need to continue investing
in our development, notably through acquisitions. As a reflection
of our confidence in the future and our commitment to passing
on to our shareholders the benefits of Transcontinental’s
growth, we are today announcing a 14% increase in shareholder
dividends, which will rise from $0.28 to $0.32 per year.”
As at January 31, 2008, the Corporation’s net indebtedness
totalled $525 million and its net funded debt to total
capitalization ratio was 31%, compared to 29% at the end of
fiscal 2007, below the long-term objective of 35% to 50% set
by management.
Financial Highlights
In the first quarter ended January 31, 2008, Transcontinental
recorded consolidated revenues of $596 million, up 4%
compared to $572 million in the same quarter of 2007.
Adjusted operating income before amortization rose 9% to $
82.4 million, compared to $75.7 million in 2007.
This dual increase was fuelled by organic growth of 5% in
revenues and 8% in adjusted operating income before amortization,
as well as the contribution of acquisitions. These two factors
more than offset the unfavourable changes in the exchange
rate between the Canadian dollar and the U.S. and Mexico currencies,
which caused a decrease of $21 million in revenues and
$5.2 million in adjusted operating income before amortization.
Net income grew by 69%, from $20.2 million for the
first quarter of 2007 to $34.1 million in 2008. This
growth stemmed mainly from the increase in adjusted operating
income before amortization and the favourable change in unusual
items. On a per-share basis, net income rose 71%, from $0.24
to $0.41.
Adjusted net income, which does not take into account unusual
items arising from asset impairment, restructuring costs and
unusual adjustments to income taxes, was up 13%, from $25.1 million
in the first quarter of 2007 to $28.4 million in 2008.
On a per-share basis, the increase in adjusted net income
was 17%, rising from $0.29 to $0.34. This higher percentage
reflects the positive impact of the Corporation’s normal
course issuer bid. Excluding the negative foreign exchange
rate impact, adjusted net income would have been $0.37 per
share, up 28%. This measure provides a good indication of
Transcontinental’s first quarter operating performance.
For more detailed financial information, please see Management’s
Discussion and Analysis for the First Quarter ended January
31, 2008 at www.transcontinental.com, under “Investors.”
Operating Highlights
The main operating highlights from the beginning
of the first quarter of 2008 to date are as follows.
- Once an acquisition has been made, the challenge is to
achieve a swift, effective and harmonious integration. Transcontinental
is well known for its ability to do this. Indeed, one of
the highlights of the first quarter was the successful integration
of PLM Group, Canada’s fourth-largest printer and
a major player in the direct marketing industry, and its
500 employees. PLM Group’s diversified customer base
includes many leading companies that will now benefit from
access to Transcontinental’s entire service offering.
This promising complementarity quickly manifested itself.
- Transcontinental signed an exclusive six-year contract
to print Rogers’ complete magazine portfolio, which
comprises more than 70 titles, including Chatelaine,
Maclean’s, L’actualité
and Canadian Business. This contract, valued at
about $210 million, represents all new business for
Transcontinental and takes effect on February 1, 2009, at
which time Transcontinental will become the largest catalogue
and magazine-printer in Canada.
- Transcontinental announced that in the fall of 2008 it
will launch a French-language Canadian edition of More
magazine, which targets the 40+ women’s demographic.
This addition builds on the unprecedented success of the
English-language edition of More launched in March
2007, and strengthens Transcontinental Media’s position
as Canada’s leading publisher of consumer magazines,
with more than 40 titles.
- In February, Transcontinental announced plans to invest
a total of $80 million to upgrade two facilities in
the Montreal area. A first investment of $60 million
will go to expand the Transcontinental Transmag newspaper
printing plant and purchase state-of-the-art equipment.
Clients, including Transcontinental Media, which has around
40 of its newspapers printed there, will have the option
of including 100% colour on every page of a publication,
a capability upon which growth in the industry is largely
based. The second project will see an investment of $20 million
in advanced equipment for Transcontinental Interweb Montreal,
a catalogue and magazine printing facility on the South
Shore.
- Loblaw has outsourced its premedia activities to Transcontinental,
including design, digital photography, image archiving,
colour management and remote proofing.
- On February 11, Transcontinental ceased the publication
of the Halifax Daily News and on February 14 it
launched a free daily newspaper, Metro, in partnership
with Metro International S.A. and Torstar Corporation. Management
believes that this type of publication is better suited
to the Halifax market.
- On March 11,Transcontinental Inc. acquired ThinData Inc.,
Canada’s leading permission-based email marketing
services firm. ThinData’s offering fits perfectly
with Transcontinental’s value-added services growth
strategy which includes expanding its premedia, database
management, direct marketing and analytics and e-marketing
capabilities to deliver unique solutions to its clients
and its media properties.
Reconciliation of Non-GAAP Financial
Measures
Financial data have been prepared in conformity
with Canadian Generally Accepted Accounting Principles (GAAP).
However, certain measures used in this press release do not
have any standardized meaning under GAAP and could be calculated
differently by other companies. The Corporation believes that
certain non-GAAP financial measures, when presented in conjunction
with comparable GAAP financial measures, are useful to investors
and other readers because that information is an appropriate
measure for evaluating the Corporation's operating performance.
Internally, the Corporation uses this non-GAAP financial information
as an indicator of business performance, and evaluates management's
effectiveness with specific reference to these indicators.
These measures should be considered in addition to, not as
a substitute for or superior to, measures of financial performance
prepared in accordance with GAAP.
A table that reconciles GAAP financial measures
to non-GAAP financial measures can be found on the following
page.
Corporate Affairs
As announced in September 2007, François
Olivier officially became President and Chief Executive Officer
of Transcontinental on February 20, 2008, at the annual shareholders’
meeting.
A new Board member was also appointed during
the meeting: Lino A. Saputo, Jr., President and Chief Executive
Officer of Saputo Inc. Mr. Saputo will bring to Transcontinental
the benefit of his long experience with one of the most respected
companies in the North American business community.
Normal Course Issuer Bid
On December 17, 2007, the Corporation was authorized
to purchase for cancellation on the open market, between December
20, 2007 and December 19, 2008, up to 3,333,994 of its Class
A Subordinate Voting Shares, representing 5% of the 66,679,889
issued and outstanding Class A Subordinate Voting Shares as
of December 10, 2007, and up to 845,271 of its Class B Shares,
representing 5% of its 16,905,432 issued and outstanding Class
B shares as of December 10, 2007. The purchases will be made
in the normal course of business at market prices through
the facilities of the Toronto Stock Exchange in accordance
with the requirements of the exchange.
In the first quarter of 2008, the Corporation
purchased 718,300 of its Class A Subordinate Voting Shares
at an average price of $15.07 for a total consideration of
$10.8 million, and 4,000 of its Class B Shares at an
average price of $20.76 for a total consideration of $0.1 million.
Dividend Increase
At its March 13, 2008 meeting, the Corporation’s
Board of Directors declared a quarterly dividend of $0.08
per share on Class A Subordinate Voting Shares and Class B
Shares, which represents an increase of 14% over the dividend
paid in the previous quarter. These dividends are payable
on April 25, 2008 to shareholders of record at the close of
business on April 7, 2008. On an annual basis, this represents
a dividend of $0.32 per share. This new dividend increase
reflects management’s confidence in the future and its
commitment to passing on to shareholders the benefits of the
Corporation’s growth.
Additional Information
Upon releasing its quarterly results, Transcontinental will
hold a conference call for the financial community today at
4:15 p.m. (ET). Media may hear the call in listen-only mode
or tune in to the simultaneous audio broadcast on Transcontinental’s
website, which will be archived for 30 days. For Media requests
for information or interviews, please contact Nessa Prendergast,
director, media relations, at 514 954-2809.
About Transcontinental
The largest printer in Canada and sixth-largest
in North America, Transcontinental is also the country’s
leading publisher of consumer magazines and French-language
educational resources, and its second-largest community newspaper
publisher. Transcontinental distinguishes itself by creating
strategic partnerships that integrate the company into its
customers’ value chain, notably through its unique newspaper
printing outsourcing model and its value-added services. From
mass to highly personalized marketing, the Corporation offers
its clients integrated solutions which include a continent-leading
direct marketing offering, a diverse digital platform and
a door-to-door advertising material distribution network.
Transcontinental is a company whose values, including respect,
innovation and integrity, are central to its operation.
Transcontinental (TSX: TCL.A, TCL.B) has close
to 15,000 employees in Canada, the United States and Mexico,
and reported revenues of C$2.3 billion in 2007.
Note: This press release contains
certain forward-looking statements concerning the future performance
of the Corporation. Such statements, based on the current
expectations of management, inherently involve numerous risks
and uncertainties, known and unknown. We caution that all
forward-looking information is inherently uncertain and actual
results may differ materially from the assumptions, estimates
or expectations reflected or contained in the forward-looking
information, and that actual future performance will be affected
by a number of factors, many of which are beyond the Corporation’s
control, including, but not limited to, the economic situation,
exchange rate, energy costs, increased competition and the
Corporation’s capacity to implement its strategic plan
and cost-reduction program and make and integrate acquisitions
into its activities. The risks, uncertainties and other factors
that could influence actual results are described in the Corporation’s
Management’s Discussion and Analysis and the Annual
Information Form.
The forward-looking information in this release
is based on current expectations and information available
as of March 13, 2008. The Corporation’s management disclaims
any intention or obligation to update or revise any forward-looking
statements unless otherwise required by the Securities Authorities.
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For information:
Media
Nessa Prendergast
Director, Media Relations
Transcontinental Inc.
Telephone: (514) 954 2809
nessa.prendergast@transcontinental.ca
Financial Community
Jennifer F. McCaughey
Director, Investor Relations
Transcontinental Inc.
Telephone: (514) 954 2821
jennifer.mccaughey@transcontinental.ca |
