Transcontinental (TCL-A) Q3 2024 earnings summary

Executive summary

• Achieved fourth consecutive quarter of improved profitability, with adjusted EBITDA up 12.1% year-over-year to CAD 121 million, driven by cost reductions, manufacturing optimization, and improved product mix.

• Packaging sector saw 20.6% growth in adjusted EBITDA, while Retail Services and Printing grew 12.4%.

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

• Q3 2024 net earnings rose 108.6% to $43.6M ($0.50/share), with adjusted net earnings up 16.8% to $51.4M ($0.60/share).

• Repurchased 1.2M shares for $17.7M and sold a building for $7.1M.

Financial highlights

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

• Adjusted EBITDA reached CAD 121 million, up 12.1% from last year.

• Adjusted EPS was CAD 0.60, a CAD 0.09 increase year-over-year.

• Operating cash flow was CAD 98.3 million, down from CAD 109.1 million last year.

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

Outlook and guidance

• FY2024 adjusted EBITDA expected to grow versus FY2023, led by cost reductions in Packaging and stable performance in Retail Services & Printing.

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

• Ongoing cost-cutting program targets at least CAD 30 million in recurrent savings by year-end.

• Pricing pressure in packaging expected to intensify in 2025, with volume growth likely flat and medical segment recovery gradual.

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