Transcontinental Inc. Announces 4Q, Fiscal 2014 Results

Transcontinental Inc.’s revenues increased 1.7% in the fourth quarter, from $562.6 million to $571.9 million. The increase is mainly due to the contribution from the acquisitions of Capri Packaging and the Quebec weekly newspapers owned by Sun Media Corporation, as well as new printing and distribution agreements. This growth was partly offset by lower advertising revenues in both sectors.
 
In the fourth quarter, adjusted operating earnings rose 16.4%, from $83.4 million to $97.1 million. This performance stems from cost-reduction initiatives in both sectors and the positive impact of the share-price variance on the stock-based compensation expense, as well as the net contribution from acquisitions and disposals. It was partly offset by lower advertising revenues.
 
In 2014, TC Transcontinental’s revenues were down 1.3%, from $2,096.7 million to $2,069.4 million. The decrease is mainly due to lower advertising revenues in both sectors, particularly in the newspaper and marketing-products printing activities and the consumer magazine publishing activities, and to the sale of Rastar’s assets. The decline was partially offset by the contribution from new distribution, newspaper-printing and magazine-printing agreements, and from acquisitions.
 
Adjusted operating earnings was up 10.2%, from $233.6 million to $257.4 million, due to cost-reduction initiatives in its two sectors, the positive impact of the share-price variance on the stock-based compensation expense and the net contribution from acquisitions and disposals. This increase was, however, mitigated by lower revenues.
 
“We had an excellent year in fiscal 2014, thanks to all the initiatives we rolled out during the year,” said François Olivier, president and CEO of TC Transcontinental. “Our solid performance is the result of our sales development efforts, the optimization of our cost structure and the proactive management of our portfolio of assets. All these actions more than offset the impact of a challenging advertising market in 2014.
 
“More specifically, we signed new printing and distribution agreements, consolidated the weekly newspaper market in Quebec and diversified our operations by investing in a new area of growth, flexible packaging. We also divested certain segments that no longer met our growth requirements and continued to adapt our cost structure to market realities. We believe that by continuing to maximize our printing platform, by strengthening the Media Sector, by growing our digital offering and by developing the packaging division we will be able to keep generating significant cash flows and maintain our excellent financial position so that we can continue our transformation,” said Olivier.
 
The corporation completed the acquisition of the assets of Capri Packaging, a supplier of flexible packaging solutions, operating two facilities located in Clinton, MO. The acquisition will add about US$72 million to Transcontinental Inc.’s revenues. As part of the transaction, the seller, Schreiber Foods, Inc. has signed a 10-year agreement to secure Capri Packaging as a strategic supplier of flexible packaging, which represents about 75% of Capri’s total revenues.
 
The corporation recorded a $41.4 million charge for restructuring and other costs, related to the completion of the integration of the operations of Quad/Graphics Canada, Inc. and to workforce reductions stemming from the integration of the weekly newspapers acquired from Sun Media Corporation.