Transcontinental (TCL-A) Q3 2025 earnings summary

Executive summary

• Achieved significant improvement in adjusted EPS for the third consecutive quarter, rising 16.7% to $0.70, driven by disciplined execution of profit and balance sheet improvement programs and cost reduction initiatives.

• Q3 2025 revenues were $684.4 million, down 2.2% year-over-year, mainly due to the sale of industrial packaging operations and lower Packaging Sector volume, partially offset by growth in Retail Services and Printing and favorable exchange rates.

• Retail Services & Printing delivered 4.5% revenue growth and higher profit, while Packaging sector achieved close to 5% organic profit growth despite weaker volumes.

• Recent acquisitions (Middleton Group, Mirazed & Intergraphics) expand in-store marketing capabilities and geographic reach in Canada.

• Introduced AI-driven automation for flyer content production, with CAD 2.5 million invested in partnership with Scale AI and others.

Financial highlights

• Adjusted EBITDA rose to $122.6 million, up $1.6 million year-over-year, with $4.2 million in organic profit growth from cost reductions.

• Adjusted EPS increased 16.7% to $0.70 from $0.60 year-over-year, driven by higher adjusted EBITDA, lower financial expenses, and a reduced share count.

• Net financial expenses dropped by $4.6 million to $11.0 million, and adjusted income tax was $14.2 million with an effective rate of 19.4%.

• Net debt ratio improved to 1.68x from 1.91x a year earlier, with over $110 million in net debt reduction since Q3 FY2024.

• Dividend of $0.225 per share declared for Q3 2025.

Outlook and guidance

• Expect to close FY2025 with organic profit growth in both Packaging and Retail Services & Printing sectors.

• Upgraded outlook for Retail Services & Printing, confident in increasing adjusted EBITDA for FY2025 versus FY2024.

• Continued strong cash flow from operations is anticipated, supporting debt reduction, growth investments, and shareholder returns.

• Outlook excludes potential impacts from tariffs, protectionist trade measures, and Canada Post labor conflict.