Transcontinental (TCL-A) Q3 2024 earnings summary

Executive summary

• Achieved fourth consecutive quarter of improved profitability, with Q3 2024 adjusted EBITDA up 12.1% year-over-year, driven by cost reductions, manufacturing optimization, and improved product mix.

• Packaging sector adjusted EBITDA grew 20.6%, while Retail Services and Printing sector increased 12.4%, supported by r.a.d.a.r. product expansion and in-store marketing.

• Net debt ratio improved to 1.91x, reflecting strong cash flow and over $200M net debt reduction since Q3 FY2023.

• Two-year profitability and financial position improvement program remains on track, targeting at least CAD 30 million in recurrent savings by year-end.

• Repurchased 1.2M shares for CAD 17.7 million and sold a Montreal building for CAD 7.1 million.

Financial highlights

• Q3 2024 revenues were CAD 700 million, down 0.9% year-over-year due to lower Retail Services and Printing volumes, partially offset by packaging growth and positive exchange rates.

• Consolidated adjusted EBITDA reached CAD 121 million, up 12.1% year-over-year, mainly from cost reductions and efficiency initiatives.

• Adjusted earnings per share was CAD 0.60, up CAD 0.09 from the prior year; net earnings per share doubled to CAD 0.50.

• Operating cash flow was CAD 98.3 million, down from CAD 109.1 million last year due to prior working capital benefits.

• CapEx was CAD 30.6 million, in line with full-year guidance.

Outlook and guidance

• Expect stable adjusted EBITDA in Retail Services and Printing for fiscal 2024 versus 2023.

• Packaging sector adjusted EBITDA expected to grow for the full year, reflecting strong year-to-date performance.

• Q4 adjusted EBITDA in both main sectors anticipated to be in line with a strong prior-year quarter, but higher stock-based/incentive compensation expense is expected.

• Ongoing cost-cutting efforts and cautious approach to pricing and costs will continue into 2025.

• Continued strong cash flow expected to support debt reduction, investments, and shareholder returns.