- Revenue: $749.3 million for Q4, a 3.9% decrease year-over-year.
- Adjusted EBITDA: $142.2 million for Q4; $469.4 million for the full fiscal year, a 5.1% increase from the previous year.
- Adjusted Earnings Per Share (EPS): $0.79 for Q4; $2.34 for the full fiscal year, a 15.3% increase from fiscal 2023.
- Packaging Sector Revenue: $415.7 million for Q4, a 1.2% decrease year-over-year.
- Packaging Sector Adjusted EBITDA: $65.7 million for Q4, a 6.5% increase year-over-year; $262.2 million for the full fiscal year, a 14.2% increase from fiscal 2023.
- Retail Services and Printing Sector Revenue: $288.3 million for Q4, a 7.4% decrease year-over-year.
- Retail Services and Printing Sector Adjusted EBITDA: $63.6 million for Q4, a 4.1% increase year-over-year; $201 million for the full fiscal year.
- Cash Flow from Operating Activities: $185 million for Q4.
- Capital Expenditures (CapEx): $24.2 million for Q4; $121.5 million for the full fiscal year.
- Net Debt Ratio: Improved to 1.71 times at the end of the fiscal quarter.
- Sale of Industrial Packaging Operations: $95 million transaction announced, subject to working capital adjustment.
Release Date: December 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Transcontinental Inc (TCLAF, Financial) achieved a record adjusted EBITDA of $262 million in the packaging sector, marking a 14.2% increase over the previous year.
- The company successfully reduced costs and improved profitability, contributing to a 5.1% growth in adjusted EBITDA for the fiscal year 2024.
- The startup of the new BOP line in Spartanburg, South Carolina, went well, enhancing the company's recyclable packaging capabilities.
- Transcontinental Inc (TCLAF) achieved a 9% reduction in workplace accidents, improving their safety frequency rate to 1.0.
- The company generated over $30 million in recurring savings from its two-year profit improvement program, nearing its $40 million target.
Negative Points
- Revenues for the fourth quarter decreased by 3.9% to $749.3 million, primarily due to lower volumes in the main sectors.
- The Canada Post strike negatively impacted the distribution of printed flyers, resulting in an estimated $7 million profit impact.
- The packaging sector experienced a 1.2% revenue decrease in Q4, mainly due to continued weakness in the medical market.
- Pricing pressures are expected to offset volume growth in the packaging sector for fiscal 2025.
- The sale of industrial packaging operations, while strategic, resulted in a loss of a business segment that previously contributed to the company's revenue.
Q & A Highlights
Q: Can you discuss the current state of the packaging marketplace and potential M&A opportunities?
A: Thomas Morin, President and CEO, noted that despite recent consolidation in the packaging market, Transcontinental's strategy remains focused on agility and cost efficiency. The company is alert to opportunities for acquiring key talent and potential customers. M&A opportunities are being considered, but they must align with the company's strategy of strengthening its current segments rather than just scaling up.
Q: Is there potential to exceed the $40 million cost-cutting target?
A: Thomas Morin confirmed that the company is proud of achieving $30 million in savings and will continue to pursue cost reductions as part of their DNA. There is potential to exceed the $40 million target as they remain focused on competitiveness and cost efficiency.
Q: What is the impact of the Canada Post strike on revenue and EBITDA?
A: Donald Lecavalier, CFO, stated that the strike has resulted in an estimated $7 million EBITDA impact, with a weekly impact slightly over $1 million. The company has adjusted its distribution network to mitigate the impact, maintaining 70% flyer distribution.
Q: How might potential tariffs from the US administration affect your business?
A: Thomas Morin explained that Transcontinental's cross-border exposure is limited to about 10% of sales. The company has a significant footprint in the US, which can be leveraged to mitigate potential tariff impacts, suggesting a limited exposure should tariffs be implemented.
Q: What are your plans regarding share buybacks given recent stock performance?
A: Donald Lecavalier indicated that the company plans to remain active in share buybacks, supported by a strong balance sheet. They will continue to support the stock and pursue acquisitions when opportunities arise.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
