Transcontinental's Q2 net income climbs 12.9% to C$36.8M on lower restructuring, other costs, increased operating profits; revenues down 3.8% due primarily to weak advertising market

MONTREAL , June 5, 2014 (press release) –

Highlights

  • Decrease of 3.8% of revenues mainly due to the weak advertising market.
  • Growth in adjusted net income attributable to participating shares decreased from $ 32.6 million to 36.8 million, an increase of 12.9%. Per participating share is increased from $ 0.42 to $ 0.47.
  • Completion of the acquisition of the assets of Capri Packaging, a manufacturer of flexible packaging.
  • Completion of the acquisition of weekly newspapers in Quebec and web related thereto owned by Sun Media Corporation properties. Under the agreement with the Competition Bureau, the company will have to sell some weekly newspapers.
  • Closing of a private financing agreement of $ 250 million of unsecured senior notes.
  • Conclusion of a multi-year agreement with Postmedia Network Inc.. for printing the newspaper The Gazette .
Revenues Transcontinental inc. (TSX: TCL.A, TCL.B, TCL.PR.D) decreased by 3.8% in the second quarter, from 517.8 to 498.2 million dollars, mainly due to weak market advertising that continues to influence our print marketing products and our publishing newspapers and magazines activities. This decrease was partially offset by the strong performance of our flyer printing activities as well as by obtaining new contracts in both our operating segments.

EBITA increased from 54.2 to 58.5 million dollars. This performance is due to the optimization of our cost structure across the company and the effectiveness of our printing platform. It was offset by weakness in the advertising market above. Net income applicable to participating shares increased from $ 25.3 million, or $ 0.32 per share, to 34.7 million, or $ 0.45 per share. This improvement is due to lower restructuring and other costs, an increase in adjusted operating profit and a reduction in our financial expenses, partially offset by higher income taxes. The adjusted net income attributable to participating shareholders increased 12.9% from $ 32.6 million, or $ 0.42 per share, to 36.8 million, or $ 0.47 per share.

"We are proud to have completed two significant transactions on the strategic plan for the future of TC Transcontinental. On the one hand, with the acquisition of the assets of Capri Packaging, we took the first step towards the flexible packaging market, a niche that looks promising and represents a new area of ​​growth for the Company. On the other hand, the conclusion of the acquisition weekly Sun Media newspapers in Quebec reinforces our assets in this market, while ensuring our ability to evolve our offer local solutions in Quebec. In addition, our second quarter results were satisfactory. Despite the pressure that we experience in the advertising market, increased our profitability demonstrates the effectiveness of our strategy is to strengthen our existing assets and develop new sources of revenue, said François Olivier, President and Chief direction.

"In the coming quarters, our strong financial position, combined with our ability to generate strong cash flow gives us the flexibility to integrate our recent acquisitions continue our transformation and invest in the future of the company. "

Additional information

April 10, 2014, the Company announced the renewal of its share repurchase program in the normal course of business, between 15 April 2014 and 14 April 2015.

May 3, 2014, the Company completed the acquisition of the assets of Capri Packaging, a flexible packaging manufacturer which operates two plants in Clinton, Missouri. This acquisition will add approximately $ 72 million U.S. income TC Transcontinental. As part of the transaction, the seller, Schreiber Foods, Inc., has signed a 10 year contract that guarantees the position of Capri Packaging as a strategic supplier of flexible packaging, which represents approximately 75% of total revenues of Capri.

May 5, 2014, TC Transcontinental Printing has signed a multi-year agreement with Postmedia Network Inc.. for printing the newspaper The Gazette, published mainly in the Montreal market. This agreement follows on the heels of our recent announcement regarding the printing Vancouver Sun and Calgary Herald. Postmedia Network The contract will come into force in August 2014.

May 8, 2014, the Company entered into a private financing agreement in the amount of $ 250 million of unsecured Senior 3.897% due 2019 Transcontinental inc. Tickets. used the net proceeds of the offering to repay amounts owing under its credit facility and for general corporate purposes.

1 st June 2014, Transcontinental inc. has completed the acquisition of weekly newspapers in Quebec and web properties related thereto owned by Sun Media Corporation. Under the agreement with the Competition Bureau, the company will have to sell some weekly newspapers. Despite this requirement, this transaction will add approximately $ 20 million in operating income before amortization of Transcontinental inc. and continue the development of a local supply of multiplatform media for business and communities.

Highlights of the semester
for the first half of 2014, revenues from TC Transcontinental decreased by 4.4% from 1 043.4 to 997.5 million dollars. This decrease is mainly related to the weak advertising market in both our operating segments. EBITA increased by 4.4% from 97.7 million to 102.0 million, due to the optimization of our cost structure. This increase was partially offset by the same reasons as above. Net income applicable to participating shares increased from $ 41.0 million, or $ 0.52 per share, to 51.9 million, or $ 0.67 per share. This improvement is explained by the reduction in financial expenses, lower restructuring and other costs, and the increase in our adjusted operating income, partially offset by higher income taxes. Excluding unusual items, adjusted net income attributable to participating shares increased 7.1% from $ 59.0 million, or $ 0.76 per share, to 63.2 million, or $ 0.81 per share.

For more detailed financial information, please see the Management Report for the second quarter ended April 30, 2014 and available in the "Investors" section of our website financial statements www.tc.tc

Outlook
The new magazine printing agreements, newspapers and marketing products entered since the beginning of the year will reduce the impact of difficult market conditions in these niches. In terms of our offer printing large retailers, we believe that these activities remain relatively stable and we continue to improve our marketing offers at the point of sale. The printing industry also continue to optimize its cost structure and its operations to maintain its long-term profitability.

Our media sector should continue to benefit from optimizing our cost structure and the signing of new agreements for the distribution of circulars that will stabilize our profit margin and reduce the impact of conditions difficult advertising market initiatives. In addition, we will continue our investments to develop and present to the market offers new digital products. The acquisition of weekly newspapers in Quebec owned by Sun Media Corporation should also allow us to strengthen our media assets and improve our offer in local markets.

The Company completed the transaction to acquire the assets of Capri Packaging to develop a new growth area that will focus on flexible packaging. We started the process of integrating operations by adapting our organizational structure with the creation of a division of the package administered by a management team with exceptional skills in manufacturing. The long-term agreement reached with the seller, Schreiber Foods, Inc., will secure a majority of the revenues of this division. Over the coming months, we will implement a plan to retain existing customers and attract new ones to ensure our success in this promising niche.

We secure additional long-term financing in order to continue to have the financial flexibility to pursue our transformation and implement our growth strategy. With our strong financial position, we will continue our balanced approach to managing capital to repay our debt, pay dividends and invest in our focus on our core competencies transformation. We will also continue the development of internal projects and evaluation of acquisitions to maintain our leading position in our respective niches, while developing our new line of growth in flexible packaging to ensure growth and profitability long term business.

Reconciliation of non-IFRS financial information
The financial information has been prepared in accordance with IFRS. However, some data used in this press release are not defined by IFRS and could be calculated differently by other companies. We believe that many readers analyze our results in terms of some of these non-GAAP financial information to IFRS because that information is measured in a standardized way the business performance of the Company. Management also uses these supplemental non-IFRS to assess the performance of its operations and its managers. These measures should be considered supplemental to, measures of financial performance under IFRS. They did not replace it and there are not higher.

The following table shows the reconciliation of financial data and those IFRS Non-IFRS.




Dividends

Dividend to equity shares
The Board of Directors of the Company declared a quarterly dividend of $ 0.16 per share on the right of Class A Subordinate Voting and Class B Shares, payable on July 17, 2014 shareholders on the register of the Company at the close of business June 30, 2014.

Dividend for preferred shares
The Board of Directors of the Company declared a quarterly dividend of $ 0.4207 per share on the First Preference Shares rank rate reset every five years and cumulative Series D. The dividend will be paid July 15, 2014. On an annual basis, this represents a dividend of $ 1.6875 per Preferred Share.

Additional Information

Conference Call
on the occasion of the dissemination of its results for the second quarter 2014, the Company will hold a conference call for the financial community today at 16 h 15. Telephone numbers are 788-4922 or 1647 1877223 -4471. Journalists may follow the conference mode "listen-only" or listen to the simultaneous audio broadcast on the website of TC Transcontinental, which will be archived for 30 days. For any further information or interviews, media should contact Nathalie St-Jean, Senior Advisor, Corporate Communications TC Transcontinental, at 514 954-3581.

Profile
The largest printer and a leader in media and marketing solutions enabling Canada, TC Transcontinental creates products and services that allow businesses to attract, reach and retain their target audiences. The Company specializes in print and digital media, production of magazines, newspapers, books, and custom content, mass marketing and personalized, mobile and interactive applications, distributing door to door, and produces a range flexible packaging in the United States.

Transcontinental inc. (TSX: TCL.A, TCL.B, TCL.PR.D), known under the brand TC Transcontinental, TC Media, TC Transcontinental Printing and Packaging TC Transcontinental, has more than 9,000 employees in Canada and the United States, and reported revenues of C $ 2.1 billion in 2013. Site www.tc.tc .

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