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- Growth of 6% in revenues for the third quarter
and 4% for the first nine months of fiscal 2008; excluding
the foreign exchange rate impact, growth of 8% and 7%, respectively.
- Increase of 2% in adjusted operating income before
amortization for the quarter and for the first nine months
of the year; excluding the foreign exchange rate impact,
growth of 4% and 8%, respectively.
- Increase of 9% in net income for the third quarter
and 25% for the first nine months; on a per-share basis,
net income rose from $0.33 to $0.38 in third quarter, a
14% increase, and from $0.96 to $1.25 in the first nine
months, an increase of 29%.
- Increase of 7% in adjusted net income for the
third quarter and 6% for the first nine months of the year.
- On a per-share basis, adjusted net income rose
from $0.34 to $0.38 in the third quarter, up 12%, and from
$1.03 to $1.14 in the first nine months, up 11%; excluding
the foreign exchange rate impact, growth was 12% and 17%,
respectively.
- Announcement in August of an 18-year contract
valued at $1.7 billion, coming into effect at the end of
2010, to print The Globe and Mail in most of its major markets
in Canada, and of a $200 million investment in a new and
innovative Canada-wide platform for newspaper and flyer
printing.
- Announcement today of a multi-year arrangement,
valued at approximately $25 million per year, to print flyers
for Shoppers Drug Mart (Pharmaprix in Quebec) all across
Canada and to deliver other value-added services.
- Acquisition of Rastar, a U.S.-based direct marketing
company that specializes in interactive database marketing
and variable data digital printing.
- Excellent financial position with a view to continuing
growth.
Montreal, September 11, 2008 – Transcontinental today
announced a solid financial performance for its third quarter
ended July 31, 2008, and for the first nine months of fiscal
2008. Despite the negative impact of the foreign exchange
rate, nearly all financial performance indicators are up compared
to the same period in 2007. The acquisition of PLM Group,
as well as a series of smaller but strategic acquisitions
in 2007 and 2008, combined with the strong performance of
newspapers, Publi-Sac (Ad-Bag), flyer and book printing, and
Mexican operations, as well as strict cost controls and disciplined
financial management, more than offset the negative exchange
rate impact and the backlash of the U.S. credit crunch on
the Corporation’s direct mail operations.
“We are very pleased with our performance for the
third quarter and the first nine months of the year, which
shows clear growth compared to 2007,” said François
Olivier, President and Chief Executive Officer of Transcontinental.
“Two areas in particular are very encouraging for the
future: we have continued to invest in organic growth, especially
in strategic segments such as digital media and newspaper
printing; and we have continued to attract major customers
in Canada in our printing sectors. We fully intend to maintain
this momentum in the quarters ahead.”
After signing the six-year contract, valued at $35 - $40
million per year, to print all of Rogers Communications’
magazines starting February 1, 2009, Transcontinental today
confirms another major advance in the context of the consolidation
of Canada’s printing industry. Since last April, Transcontinental
has been printing Shoppers Drug Mart flyers all across Canada.
The work is handled by Transcontinental’s Canada-wide
network of printing plants in Vancouver, Calgary, Toronto,
Montreal, and Halifax. This multi-year arrangement, valued
at about $25 million per year, is new business for the Corporation
with no additional investment required. Shoppers Drug Mart
will also benefit from other value-added services, including
door-to-door distribution in Quebec with Publi-Sac (Ad-Bag).
The Corporation is in a solid financial position to pursue
its development, including growth through acquisitions, with
a net indebtedness to total capitalization ratio of 35% as
at July 31, 2008, at the bottom end of the target range of
35% to 50% set by management.
Financial Highlights
In the third quarter, Transcontinental recorded
consolidated revenues of $584.9 million, compared to $551.1
million in the same quarter of 2007, an increase of 6%. Adjusted
operating income before amortization was up by 2%, from $81.3
million in 2007 to $82.7 million in 2008. Excluding the exchange
rate fluctuations between the Canadian dollar and its U.S.
and Mexican counterparts, which had a negative impact of $9.3
million on revenues and $2 million on adjusted operating income
before amortization, growth would have been 8% in revenues
and 4% in adjusted operating income before amortization. Thus,
the acquisitions made in 2007 and 2008, in addition to organic
growth in a number of niches, more than offset the negative
impact of the foreign exchange rate.
Net income rose from $27.8 million to $30.3 million, an
increase of 9%; on a per-share basis, net income grew 14%,
from $0.33 to $0.38. Adjusted net income, which does not take
into account impairment of assets, restructuring costs, and
unusual adjustments to income taxes, increased 7%, from $28.4
million to $30.3 million; on a per-share basis, adjusted net
income rose 12%, from $0.34 to $0.38.
In the first nine months of fiscal 2008, consolidated revenue
rose 4%, from $1.708 billion to $1.776 billion, while adjusted
operating income before amortization increased 2%, from $249.8
million to $255.8 million. Excluding the foreign exchange
rate impact, which reduced revenues by $49.6 million and adjusted
operating income before amortization by $13.8 million, growth
would have been 7% for revenues and 8% for adjusted operating
income before amortization.
Net income rose 25%, from $82 million in the first nine
months of 2007 to $102.1 million in 2008. This substantial
increase is primarily due to a favourable change in unusual
items, the contribution of business acquisitions, and a decrease
in financial expenses. On a per-share basis, net income increased
29%, from $0.96 to $1.25. Adjusted net income, which does
not take into account impairment of assets, restructuring
costs, and unusual adjustments to income taxes, increased
6%, from $87.9 million to $93.6 million. On a per-share basis,
adjusted net income increased 11%, from $1.03 to $1.14.
Excluding the adverse effect of the exchange rate in the
first nine months of 2008, adjusted earnings per share would
have been $1.21, for an increase of 17% compared to the same
period of 2007. This measure provides a good indicator of
the Corporation’s operating performance in the first
nine months of the year.
For more detailed financial information, please see Management’s
Discussion and Analysis for the Third Quarter Ended July 31,
2008 at www.transcontinental.com, under “Investors.”
Operating Highlights
The main operating highlights for the third quarter
of 2008 are as follows.
• In the third quarter, Transcontinental invested
approximately $2 million in digital and interactive initiatives
in the Media sector. Other developments include the acquisition
of the most important marketplace in Canada for buying and
selling businesses, Acquizition.biz, a site that also makes
it easier to find strategic or financial partners; the launch
of recipefeast.com, the English-language counterpart of the
highly popular site recettes.qc.ca, which receives close to
a million visitors a month; and the introduction of mobile
technology (mobile phone, BlackBerry and Apple’s iPhone)
to the popular thehockeynews.com site, which receives close
to 300,000 visitors a month and has a readership of over two
million for its print publication.
• On August 26, 2008, Transcontinental announced that
it was awarded a $1.7 billion contract to print The Globe
and Mail in most of its major markets in Canada until 2028.
This contract, which comes into effect at the end of 2010,
represents an extension of existing contracts with The Globe
and Mail in the Atlantic Provinces, Quebec, and Ontario¬,
and adds two new markets: Alberta and British Columbia. For
Transcontinental, this represents approximately $95 million
per year in revenue, of which about $25 million per year is
new revenue. The printing will be done in Halifax, Montreal,
Toronto, Calgary and Vancouver. In 2009 and 2010, Transcontinental
will invest approximately $200 million in a new and innovative
Canada-wide platform for newspaper and flyer printing, the
first Canadian network to integrate the printing of these
two products. This network will provide the capacity to deliver
colour on every page for The Globe and Mail, and it will also
address the needs of Transcontinental’s retail customers
on the flyer side.
• On September 4, 2008, Transcontinental announced
the acquisition of Rastar, Inc. This U.S.-based direct marketing
company, headquartered in Salt Lake City, Utah, specializes
in interactive database marketing and variable data digital
printing, which enable it to offer fully personalized marketing
communications services. Rastar’s industry experience,
combined with its digital printing expertise, will allow Transcontinental
to further expand its integrated marketing services offering
and enable its clients to achieve the best possible returns
on their marketing campaigns. A privately-owned company with
approximately US$50 million in annual revenue and 350 employees,
Rastar counts many Fortune 500 companies among its clients
in verticals such as the auto, consumer goods, and retail
industries.
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.
The following table reconciles GAAP financial measures
to non-GAAP financial measures.
Environment
Transcontinental plans to continue exercising its
leadership in sustainable development in its own way: by mobilizing
its employees and taking concrete action. Achievements in
the third quarter include the sponsorship, in cooperation
with its Métro daily newspaper, of the National Environment
Show, the largest event of its kind in Quebec, held at the
Old Port of Montreal, June 13-15, 2008; publication of the
seventh issue of Vision durable, the business magazine aimed
at bridging the gap between the concept and implementation
of sustainable development for Quebec business people; distribution
to customers of Transcontinental’s printing plants of
the seventh issue of EnviroTerms and Trends, focusing on printing
industry issues, trends, and terms; and the ongoing systematic
presentation on the corporate intranet of new environmental
initiatives completed by employees from the operating sectors
as well as head office. Transcontinental management is solidly
committed to sustainable development and firmly believes that
the outcome of all these initiatives will be the creation
of long-term value for Transcontinental’s employees,
customers, and shareholders.
Corporate Affairs
On May 23, 2008, Transcontinental announced the
appointment of François R. Roy to the company’s
board of directors. Mr. Roy is Vice Principal (Administration
and Finance) at McGill University, and was previously Chief
Financial Officer at Télémédia, Avenor,
and Quebecor Inc. He also has a long history of involvement
in the Montreal arts community and has been a board member
of the Opéra de Montreal, the Montreal Museum of Fine
Arts, the Canadian Centre for Architecture, and the International
Festival of Films on Art. Mr. Roy earned his BA and MBA from
the University of Toronto.
On June 18, 2008, Rémi Marcoux, the founder and Executive
Chairman of the Board of Transcontinental, was invested as
an Officer of the National Order of Quebec by the Premier,
Jean Charest. This prestigious award of merit was presented
at a ceremony at the Hôtel du Parlement in Quebec City.
Dividend
At its September 11, 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. These dividends are payable on October 24, 2008 to
shareholders of record at the close of the Toronto Stock Exchange
on October 6, 2008. On an annual basis, this represents a
dividend of $0.32 per share.
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 company 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 more than 15,000
employees in Canada, the United States and Mexico, and reported
revenues of C$2.3 billion in 2007. For more information about
the Corporation, please visit www.transcontinental.com.
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 September
11, 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
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