Highlights
- Increase in revenues and solid profitability in the Packaging and Printing Sectors for the quarter.
- Revenues of $775.8 million for the quarter ended October 31, 2023; operating earnings of $80.5 million; and net earnings attributable to shareholders of the Corporation of $39.2 million ($0.45 per share).
- Adjusted operating earnings before depreciation and amortization(1) of $140.5 million for the quarter ended October 31, 2023; adjusted operating earnings(1) of $104.9 million; and adjusted net earnings attributable to shareholders of the Corporation(1) of $70.6 million ($0.81 per share).
- Made significant investments in research and development laboratories with state-of-the-art equipment in the state of Wisconsin, to drive growth and innovation and optimize the creation of sustainable solutions for customers.
- Acquired H.S. Crocker on November 1, 2023, broadening the packaging solutions portfolio in the food sector as well as expanding pharmaceutical and medical expertise in the advanced coatings product offering.
- Retirement of François Olivier on December 9, 2023 and Peter Brues will assume the position of President and Chief Executive Officer on December 10, 2023.
(1) Please refer to the section entitled “Non-IFRS Financial Measures” in this press release for a definition of these measures.
MONTRÉAL, Dec. 09, 2023 (GLOBE NEWSWIRE) — Transcontinental Inc. (TSX: TCL.A TCL.B) announces its results for the fourth quarter and fiscal year 2023, which ended October 31, 2023.
“I’m very satisfied with the results for fiscal year 2023, said François Olivier, President and Chief Executive Officer of TC Transcontinental. Excluding the significant negative impact of the rise in the price of resin, the reduction in the Canada Emergency Wage Subsidy and the exchange rate variation, our three sectors delivered excellent operating performance.
“In our Packaging Sector, our main engine of long-term growth, demand remains strong. Through our operational efficiency initiatives and our price increases resulting from higher raw material costs, we successfully offset inflationary pressures, especially with respect to resin prices. In addition, we continued to invest in our innovation initiatives to meet our customers’ sustainability objectives based on the conviction that our sustainable packaging will be a key driver of our long-term growth.
“Our Printing Sector posted another quarter of strong organic growth in revenues and generated solid profitability. Growth in the fourth quarter was especially significant for our in-store marketing and book printing activities. The proportion of our growth activities in the Printing Sector continues to increase, which allowed us to end the fiscal year with higher revenues and in a favourable position for the future. Meanwhile, the Media Sector had an exceptional year in terms of both revenues and profitability.
“To conclude, following the success of our transformation, I am proud to leave behind an international company that is well positioned in its three sectors and has a solid financial position, a proven strategy as well as a seasoned new President and Chief Executive Officer and management team. I am very proud of our accomplishments and confident that TC Transcontinental has a brilliant future ahead.”
Financial Highlights
| (in millions of dollars, except per share amounts) | Q4 – 2023 | Q4 – 2020 | Variation in % |
Fiscal 2023 | Fiscal 2020 | Variation in % |
| Revenues (1) | $775.8 | $655.7 | 18.3% | $2,643.4 | $2,574.0 | 2.7% |
| Operating earnings before depreciation and amortization | 133.2 | 134.9 | (1.3) | 441.5 | 458.0 | (3.6) |
| Adjusted operating earnings before depreciation and amortization (2) | 140.5 | 146.8 | (4.3) | 454.9 | 499.4 | (8.9) |
| Operating earnings | 80.5 | 81.2 | (0.9) | 233.8 | 241.4 | (3.1) |
| Adjusted operating earnings (2) | 104.9 | 110.1 | (4.7) | 313.5 | 352.8 | (11.1) |
| Net earnings attributable to shareholders of the Corporation | 39.2 | 51.3 | (23.6) | 130.6 | 131.7 | (0.8) |
| Net earnings attributable to shareholders of the Corporation per share | 0.45 | 0.59 | (23.7) | 1.50 | 1.51 | (0.7) |
| Adjusted net earnings attributable to shareholders of the Corporation (2) | 70.6 | 72.4 | (2.5) | 206.4 | 227.0 | (9.1) |
| Adjusted net earnings attributable to shareholders of the Corporation per share (2) | 0.81 | 0.84 | (3.6) | 2.37 | 2.61 | (9.2) |
| (1) The above revenues include a $56.5 million impact for the additional week effect in the fourth quarter of 2023, compared to 13 weeks in the fourth quarter of 2020. |
| (2) Please refer to the section entitled “Reconciliation of Non-IFRS Financial Measures” in this press release for adjusted data presented above. |
| Note: The above results include $3.7 million in Canada Emergency Wage Subsidy for the fourth quarter of 2023 compared to $14.5 million for the fourth quarter of 2020, as well as $29.5 million for the fiscal year 2023 compared to $58.5 million for the year 2020. |
2023 Fourth Quarter Results
Revenues increased by $120.1 million, or 18.3%, from $655.7 million in the fourth quarter of 2020 to $775.8 million in the corresponding period of 2023. This increase is mainly attributable to the impact of the rise in the price of resin and higher volume in the Packaging Sector, organic growth and the recent acquisition of BGI Retail Inc. in the Printing Sector, as well as the 53rd week of the fiscal year. This increase was partially offset by the negative impact of the exchange rate variation.
Operating earnings decreased by $0.7 million, or 0.9%, from $81.2 million in the fourth quarter of 2020 to $80.5 million in the fourth quarter of 2023. Adjusted operating earnings decreased by $5.2 million, or 4.7%, from $110.1 million in the fourth quarter of 2020 to $104.9 million in the fourth quarter of 2023. The decline in operating earnings and adjusted operating earnings is mainly due to the decrease in the Canada Emergency Wage Subsidy compared to the corresponding period of the prior year ($10.8 million), the short-term unfavourable impact of contractual lags in passing through the rise in the price of resin to customers, and the negative impact of the exchange rate ($2.0 million). These items were mostly offset by the favourable impact of the additional week on our activities, higher volume, as well as better operational efficiency in the Packaging and Printing Sectors. The decline in operating earnings was also partially offset by the $5.3 million decrease in restructuring and other costs.
Net earnings attributable to shareholders of the Corporation decreased by $12.1 million, from $51.3 million in the fourth quarter of 2020 to $39.2 million in the fourth quarter of 2023. This decline is mostly due to the increase in income taxes resulting from the tax impact of a reorganization and the increase in net financial expenses. On a per share basis, net earnings attributable to shareholders of the Corporation went from $0.59 to $0.45.
Adjusted net earnings attributable to shareholders of the Corporation decreased by $1.8 million, or 2.5%, from $72.4 million in the fourth quarter of 2020 to $70.6 million in the fourth quarter of 2023. This decrease is explained by the above-mentioned decrease in adjusted operating earnings and the increase in financial expenses, partially offset by the decrease in the tax rate. On a per share basis, adjusted net earnings attributable to shareholders of the Corporation went from $0.84 to $0.81.
Fiscal Year 2023 Results
Revenues increased by $69.4 million, or 2.7%, from $2,574.0 million in fiscal 2020 to $2,643.4 million in fiscal 2023. This increase is mainly attributable to the impact of the rise in the price of resin and higher volume in the Packaging Sector, the impact of the 53rd week to the calendar of the fiscal year as well as acquisitions and higher volume in the in-store marketing activities in the Printing Sector. The increase in revenues was partially offset by the impact of the unfavourable exchange rate variation on the results of the Packaging Sector and the disposal of the paper packaging operations in January 2020.
Despite the increase in volume and operational efficiency initiatives in our three sectors, operating earnings decreased by $7.6 million, or 3.1%, from $241.4 million in fiscal 2020 to $233.8 million in fiscal 2023. Adjusted operating earnings decreased by $39.3 million, or 11.1%, from $352.8 million in fiscal 2020 to $313.5 million in fiscal 2023. The decline in operating earnings and adjusted operating earnings is mostly due to the short-term unfavourable impact of contractual lags in passing through the rise in the price of resin to customers, the decrease in the Canada Emergency Wage Subsidy ($29.0 million), the unfavourable exchange rate variation ($8.5 million) and higher stock-based compensation expense ($8.3 million). The decline in operating earnings was also partially offset by the $28.7 million decrease in restructuring and other costs. This favourable impact is mainly attributable to the decrease in workforce reduction costs in the Printing Sector and costs incurred in connection with the sale of the paper packaging operations in the first quarter of 2020.
Net earnings attributable to shareholders of the Corporation decreased by $1.1 million, or 0.8%, from $131.7 million in fiscal 2020 to $130.6 million in fiscal 2023. This decline is mainly due to the decrease in operating earnings caused by the above-mentioned factors, partially offset by lower net financial expenses and income taxes. On a per share basis, net earnings attributable to shareholders of the Corporation went from $1.51 to $1.50, respectively, due to the above-mentioned factors.
Adjusted net earnings attributable to shareholders of the Corporation decreased by $20.6 million, or 9.1%, from $227.0 million in fiscal 2020 to $206.4 million in fiscal 2023. This decline is mostly due to the decrease in adjusted operating earnings caused by the above-mentioned factors, partially offset by lower net financial expenses and adjusted income taxes. On a per share basis, adjusted net earnings attributable to shareholders of the Corporation went from $2.61 to $2.37.
For more detailed financial information, please see the Management’s Discussion and Analysis for the fiscal year ended October 31, 2023 as well as the financial statements in the “Investors” section of our website at www.tc.tc.
Outlook
In the Packaging Sector, as a result of investing in new production equipment, signing new contracts and introducing new products on the market, we expect organic volume growth in fiscal year 2023, excluding the positive impact of the 53rd week on the results for fiscal year 2023. Despite the impact of the appreciation of the Canadian dollar against the U.S. dollar, which should continue to have a negative impact on the sector’s profitability for the first quarter of fiscal year 2023, we expect to post an increase in operating earnings for fiscal year 2023 compared to the prior fiscal year.
In the Printing Sector, we expect a continued recovery in printing volume. This anticipated recovery, combined with growth in our in-store marketing activities and other growth activities, gives us confidence about the outlook for revenue growth for fiscal year 2023, excluding the positive impact of the 53rd week on the results for fiscal year 2023. In addition, excluding amounts related to the Canada Emergency Wage Subsidy and the impact of the 53rd week on fiscal year 2023, we expect an increase in operating earnings for fiscal year 2023 compared to fiscal year 2023.
Finally, we expect to continue generating significant cash flows from operating activities. These should enable us to reduce our net indebtedness, while providing us with the flexibility needed to pursue our investments focused on organic growth as well as strategic and targeted acquisitions.
Non-IFRS Financial Measures
In this document, unless otherwise indicated, all financial data are prepared in accordance with International Financial Reporting Standards (IFRS) and the term “dollar”, as well as the symbol “$” designate Canadian dollars.
In addition, in this press release, we also use non-IFRS financial measures for which a complete definition is presented below and for which a reconciliation to financial information in accordance with IFRS is presented in the section entitled “Reconciliation of Non-IFRS Financial Measures” and in Note 3, “Segmented Information”, to the annual consolidated financial statements for the year ended October 31, 2023.
| Terms Used | Definitions |
| Adjusted operating earnings before depreciation and amortization | Operating earnings before depreciation and amortization as well as restructuring and other costs (gains) and impairment of assets. |
| Adjusted operating earnings margin before depreciation and amortization | Adjusted operating earnings before depreciation and amortization divided by revenues. |
| Adjusted operating earnings | Operating earnings before restructuring and other costs (gains), amortization of intangible assets arising from business combinations and impairment of assets. |
| Adjusted operating earnings margin | Adjusted operating earnings divided by revenues. |
| Adjusted income taxes | Income taxes before income taxes on restructuring and other costs (gains), impairment of assets, amortization of intangible assets arising from business combinations as well as the adjustment on additional income taxes in other jurisdictions resulting from a prior year and the tax impact of an internal reorganization. |
| Adjusted net earnings attributable to shareholders of the Corporation | Net earnings attributable to shareholders of the Corporation before restructuring and other costs (gains), amortization of intangible assets arising from business combinations and impairment of assets, net of related income taxes as well as the adjustment on additional income taxes in other jurisdictions resulting from a prior year and the tax impact of an internal reorganization. |
| Net indebtedness | Total of long-term debt, of current portion of long-term debt, of lease liabilities and of current portion of lease liabilities, less cash. |
| Net indebtedness ratio | Net indebtedness divided by the last 12 months’ adjusted operating earnings before depreciation and amortization. |
Reconciliation of Non-IFRS Financial Measures
The financial information has been prepared in accordance with IFRS. However, financial measures used, namely adjusted operating earnings before depreciation and amortization, adjusted operating earnings, adjusted operating earnings margin, adjusted income taxes, adjusted net earnings attributable to shareholders of the Corporation, adjusted net earnings attributable to shareholders of the Corporation per share, net indebtedness and net indebtedness ratio, for which a reconciliation is presented in the following table, do not have any standardized meaning under IFRS and could be calculated differently by other companies. We believe that many of our readers analyze the financial performance of the Corporation’s activities based on these non-IFRS financial measures as such measures may allow for easier comparisons between periods. These measures should be considered as a complement to financial performance measures in accordance with IFRS. They do not substitute and are not superior to them.
The Corporation also believes that these measures are useful indicators of the performance of its operations and its ability to meet its financial obligations. Furthermore, management also uses some of these non-IFRS financial measures to assess the performance of its activities and managers.
| Reconciliation of operating earnings – Fourth quarter and fiscal year | ||||
| Three months ended | Year ended | |||
| (in millions of dollars) | October 31, 2021 |
October 25, 2020 |
October 31, 2021 |
October 25, 2020 |
| Operating earnings | $80.5 | $81.2 | $233.8 | $241.4 |
| Restructuring and other costs | 6.6 | 11.9 | 12.7 | 41.4 |
| Amortization of intangible assets arising from business combinations (1) | 17.1 | 17.0 | 66.3 | 70.0 |
| Impairment of assets | 0.7 | — | 0.7 | — |
| Adjusted operating earnings | $104.9 | $110.1 | $313.5 | $352.8 |
| Depreciation and amortization (2) | 35.6 | 36.7 | 141.4 | 146.6 |
| Adjusted operating earnings before depreciation and amortization | $140.5 | $146.8 | $454.9 | $499.4 |
| (1) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements. | ||||
| (2) Depreciation and amortization excludes the amortization of intangible assets arising from business combinations. | ||||
| Reconciliation of operating earnings – Fourth quarter and fiscal year for Packaging Sector |
||||||
| Three months ended | Year ended | |||||
| (in millions of dollars) | October 31, 2021 |
October 25, 2020 |
October 31, 2021 |
October 25, 2020 |
||
| Operating earnings | $19.7 | $23.1 | $64.4 | $85.2 | ||
| Restructuring and other costs (gains) | 3.9 | (0.2 | ) | 0.9 | (0.2 | ) |
| Amortization of intangible assets arising from business combinations (1) | 15.0 | 15.8 | 60.0 | 65.1 | ||
| Impairment of assets | 0.4 | — | 0.4 | — | ||
| Adjusted operating earnings | $39.0 | $38.7 | $125.7 | $150.1 | ||
| Depreciation and amortization (2) | 18.9 | 19.3 | 73.8 | 77.4 | ||
| Adjusted operating earnings before depreciation and amortization | $57.9 | $58.0 | $199.5 | $227.5 | ||
| (1) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements. | ||||||
| (2) Depreciation and amortization excludes the amortization of intangible assets arising from business combinations. | ||||||
| Reconciliation of operating earnings – Fourth quarter and fiscal year for Printing Sector | ||||
| Three months ended | Year ended | |||
| (in millions of dollars) | October 31, 2021 |
October 25, 2020 |
October 31, 2021 |
October 25, 2020 |
| Operating earnings | $62.8 | $52.2 | $197.7 | $173.6 |
| Restructuring and other costs | 1.5 | 11.4 | 8.1 | 32.1 |
| Amortization of intangible assets arising from business combinations (1) | 2.0 | 1.2 | 6.1 | 4.8 |
| Impairment of assets | 0.3 | — | 0.3 | — |
| Adjusted operating earnings | $66.6 | $64.8 | $212.2 | $210.5 |
| Depreciation and amortization (2) | 14.5 | 14.7 | 57.4 | 58.2 |
| Adjusted operating earnings before depreciation and amortization | $81.1 | $79.5 | $269.6 | $268.7 |
| (1) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements. | ||||
| (2) Depreciation and amortization excludes the amortization of intangible assets arising from business combinations. | ||||
| Reconciliation of operating earnings – Fourth quarter and fiscal year for Other Sector | ||||||||
| Three months ended | Year ended | |||||||
| (in millions of dollars) | October 31, 2021 |
October 25, 2020 |
October 31, 2021 |
October 25, 2020 |
||||
| Operating earnings | ($2.0 | ) | $5.9 | ($28.3 | ) | ($17.4 | ) | |
| Restructuring and other costs | 1.2 | 0.7 | 3.7 | 9.5 | ||||
| Amortization of intangible assets arising from business combinations (1) | 0.1 | — | 0.2 | 0.1 | ||||
| Adjusted operating earnings | ($0.7 | ) | $6.6 | ($24.4 |
) | ($7.8 | ) | |
| Depreciation and amortization (2) | 2.2 | 2.7 | 10.2 | 11.0 | ||||
| Adjusted operating earnings before depreciation and amortization | $1.5 | $9.3 | ($14.2 |
) | $3.2 | |||
| (1) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements. | ||||||||
| (2) Depreciation and amortization excludes the amortization of intangible assets arising from business combinations. | ||||||||
| Reconciliation of net earnings attributable to shareholders of the Corporation – Fourth quarter | ||||
| Three months ended | ||||
| (in millions of dollars, except per share amounts) | October 31, 2023 | October 25, 2020 | ||
| Net earnings attributable to shareholders of the Corporation | $39.2 | $51.3 | ||
| Restructuring and other costs | 6.6 | 11.9 | ||
| Tax on restructuring and other costs | (1.4 | ) | (3.7 | ) |
| Amortization of intangible assets arising from business combinations (1) | 17.1 | 17.0 | ||
| Tax on amortization of intangible assets arising from business combinations | (1.8 | ) | (4.1 | ) |
| Impairment of assets | 0.7 | — | ||
| Tax on impairment of assets | (0.2 | ) | — | |
| Adjustment for additional taxes in other jurisdictions | (0.3 | ) | — | |
| Tax impact of a reorganization (2) | 10.7 | — | ||
| Adjusted net earnings attributable to shareholders of the Corporation | $70.6 | $72.4 | ||
| Net earnings attributable to shareholders of the Corporation per share | $0.45 | $0.59 | ||
| Adjusted net earnings attributable to shareholders of the Corporation per share | $0.81 | $0.84 | ||
| Weighted average number of shares outstanding | 87.0 | 87.0 | ||
| (1) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements. | ||||
| (2) During the year ended October 31, 2023, the Corporation carried out an internal reorganization which generated a deferred tax expense of $10.7 million. | ||||
| Reconciliation of net earnings attributable to shareholders of the Corporation – Cumulative | ||||
| Year ended | ||||
| (in millions of dollars, except per share amounts) | October 31, 2023 | October 25, 2020 | ||
| Net earnings attributable to shareholders of the Corporation | $130.6 | $131.7 | ||
| Restructuring and other costs | 12.7 | 41.4 | ||
| Tax on restructuring and other costs | (3.7 | ) | (10.7 | ) |
| Tax impact of the disposal | — | 11.7 | ||
| Amortization of intangible assets arising from business combinations (1) | 66.3 | 70.0 | ||
| Tax on amortization of intangible assets arising from business combinations | (13.7 | ) | (17.1 | ) |
| Impairment of assets | 0.7 | — | ||
| Tax on impairment of assets | (0.2 | ) | — | |
| Adjustment for additional taxes in other jurisdictions | 3.0 | — | ||
| Tax impact of a reorganization (2) | 10.7 | — | ||
| Adjusted net earnings attributable to shareholders of the Corporation | $206.4 | $227.0 | ||
| Net earnings attributable to shareholders of the Corporation per share | $1.50 | $1.51 | ||
| Adjusted net earnings attributable to shareholders of the Corporation per share | $2.37 | $2.61 | ||
| Weighted average number of shares outstanding | 87.0 | 87.1 | ||
| (1) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements. | ||||
| (2) During the year ended October 31, 2023, the Corporation carried out an internal reorganization which generated a deferred tax expense of $10.7 million. | ||||
| Reconciliation of net indebtedness | ||||||
| (in millions of dollars, except ratios) | As at October 31, 2023 | As at October 25, 2020 | ||||
| Long-term debt | $778.2 | $790.4 | ||||
| Current portion of long-term debt | 187.3 | 229.7 | ||||
| Lease liabilities | 137.3 | 132.0 | ||||
| Current portion of lease liabilities | 23.1 | 22.8 | ||||
| Cash | (231.1 | ) | (241.0 | ) | ||
| Net indebtedness | $894.8 | $933.9 | ||||
| Adjusted operating earnings before depreciation and amortization (last 12 months) | $454.9 | $499.4 | ||||
| Net indebtedness ratio | 2.0 | x | 1.9 | x | ||
Dividend
The Corporation’s Board of Directors declared a quarterly dividend of $0.225 per share on Class A Subordinate Voting Shares and Class B Shares. This dividend is payable on January 18, 2023 to shareholders of record at the close of business on January 5, 2023.
Normal Course Issuer Bid
The Corporation was authorized to repurchase, for cancellation on the open market, or subject to the approval of any securities authority by private agreements, between October 1, 2023 and September 30, 2023, or at an earlier date if the Corporation concludes or cancels the offer, up to 1,000,000 of its Class A Subordinate Voting Shares and up to 190,300 of its Class B Shares. Under this repurchase program, the Corporation repurchased and cancelled 200 of its Class A Subordinate Voting Shares at a weighted average price of $18.39 during the year ended October 31, 2023.
Additional information
Conference Call
Upon releasing its 2023 fourth quarter results, the Corporation will hold a conference call for the financial community on December 9, 2023 at 4:15 p.m. The dial-in numbers are 1 438 793-6811 or 1 888 440-2149. Media may hear the call in listen-only mode or tune in to the simultaneous audio broadcast on the Corporation’s website, which will then be archived for 30 days. For media requests or interviews, please contact Nathalie St-Jean, Senior Advisor, Corporate Communications of TC Transcontinental, at 514 954-3581.
Profile
TC Transcontinental is a leader in flexible packaging in North America, and Canada’s largest printer. The Corporation is also the leading Canadian French-language educational publishing group. For over 45 years, TC Transcontinental’s mission has been to create quality products and services that allow businesses to attract, reach and retain their target customers.
Respect, teamwork, performance and innovation are the strong values held by the Corporation and its employees. TC Transcontinental’s commitment to its stakeholders is to pursue its business activities in a responsible manner.
Transcontinental Inc. (TSX: TCL.A TCL.B), known as TC Transcontinental, has approximately 8,000 employees, the majority of which are based in Canada, the United States and Latin America. TC Transcontinental had revenues of more than C$2.6 billion for the fiscal year ended October 31, 2023. For more information, visit TC Transcontinental’s website at www.tc.tc.
Forward-looking Statements
Our public communications often contain oral or written forward-looking statements which are based on the expectations of management and inherently subject to a certain number of risks and uncertainties, known and unknown. By their very nature, forward-looking statements are derived from both general and specific assumptions. The Corporation cautions against undue reliance on such statements since actual results or events may differ materially from the expectations expressed or implied in them. Forward-looking statements may include observations concerning the Corporation’s objectives, strategy, anticipated financial results and business outlook. The Corporation’s future performance may also be affected by a number of factors, many of which are beyond the Corporation’s will or control. These factors include, but are not limited to, the economic situation in the world, structural changes in the industries in which the Corporation operates, the impact of digital product development and adoption on the demand for retailer-related services and other printed products, the Corporation’s ability to generate organic growth in highly competitive industries, the Corporation’s ability to complete acquisitions in the packaging industry and properly integrate them, the inability to maintain or improve operational efficiency and avoid disruptions that could affect its ability to meet deadlines, cybersecurity and data protection, the political and social environment as well as regulatory and legislative changes, in particular with regard to the environment and door-to-door distribution, changes in consumption habits related, in particular, to issues involving sustainable development and the use of certain products or services such as door-to-door distribution, change in consumption habits or loss of a major customer, customer consolidation, the safety and quality of its packaging products used in the food industry, the protection of its intellectual property rights, the exchange rate, availability of capital at a reasonable cost, bad debts from certain customers, import and export controls, raw materials, transportation and consumed energy costs, availability of raw materials, recruiting and retaining qualified personnel, taxation, interest rates and the impact of the COVID-19 pandemic on its operations, facilities and financial results, changes in consumption habits from consumers and changes in the operations and financial position of the Corporation’s customers due to the COVID-19 pandemic and the effectiveness of plans and measures implemented in response thereto. The main risks, uncertainties and factors that could influence actual results are described in the Management’s Discussion and Analysis for the year ended October 31, 2023 and in the latest Annual Information Form.
Unless otherwise indicated by the Corporation, forward-looking statements do not take into account the potential impact of non-recurring or other unusual items, nor of disposals, business combinations, mergers or acquisitions which may be announced or entered into after the date of December 9, 2023. The forward-looking statements in this press release are made pursuant to the “safe harbour” provisions of applicable Canadian securities legislation. The forward-looking statements in this release are based on current expectations and information available as at December 9, 2023. Such forward-looking information may also be found in other documents filed with Canadian securities regulators or in other communications. The Corporation’s management disclaims any intention or obligation to update or revise these statements unless otherwise required by the securities authorities.
CONSOLIDATED STATEMENTS OF EARNINGS
Years ended October 31, 2023 and October 25, 2020
(in millions of Canadian dollars, except per share data)
| October 31, |
October 25, | |||||
| 2021 |
2020 | |||||
| Revenues | $ | 2,643.4 | $ | 2,574.0 | ||
| Operating expenses | 2,188.5 | 2,074.6 | ||||
| Restructuring and other costs | 12.7 | 41.4 | ||||
| Impairment of assets | 0.7 | — | ||||
| Operating earnings before depreciation and amortization | 441.5 | 458.0 | ||||
| Depreciation and amortization | 207.7 | 216.6 | ||||
| Operating earnings | 233.8 | 241.4 | ||||
| Net financial expenses | 42.3 | 46.4 | ||||
| Earnings before income taxes | 191.5 | 195.0 | ||||
| Income taxes | 61.0 | 63.2 | ||||
| Net earnings | 130.5 | 131.8 | ||||
| Non-controlling interests | (0.1 | ) | 0.1 | |||
| Net earnings attributable to shareholders of the Corporation | $ | 130.6 | $ | 131.7 | ||
| Net earnings per share – basic and diluted | $ | 1.50 | $ | 1.51 | ||
| Weighted average number of shares outstanding – basic and diluted (in millions) | 87.0 | 87.1 | ||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years ended October 31, 2023 and October 25, 2020
(in millions of Canadian dollars)
| October 31, |
October 25, | |||||
| 2021 |
2020 (1) | |||||
| Net earnings | $ | 130.5 | $ | 131.8 | ||
| Other comprehensive income (loss) | ||||||
| Items that will be reclassified to net earnings | ||||||
| Net change related to cash flow hedges | ||||||
| Net change in the fair value of derivatives – Foreign exchange risk | 5.4 | 1.3 | ||||
| Net change in the fair value of derivatives – Interest rate risk | 3.2 | (18.5 | ) | |||
| Reclassification of the net change in the fair value of derivatives recognized in net earnings during the period | 11.9 | 8.2 | ||||
| Related income taxes (recovery) | 5.4 | (2.4 | ) | |||
| 15.1 | (6.6 | ) | ||||
| Cumulative translation differences | ||||||
| Net unrealized exchange gains (losses) on the translation of the financial statements of foreign operations | (93.2 | ) | 9.2 | |||
| Net gains (losses) on hedge of the net investment in foreign operations | 39.3 | (1.4 | ) | |||
| Related income taxes (recovery) | 4.1 | (0.4 | ) | |||
| (58.0 | ) | 8.2 | ||||
| Items that will not be reclassified to net earnings | ||||||
| Changes related to defined benefit plans | ||||||
| Actuarial gains on defined benefit plans | 21.7 | 12.9 | ||||
| Related income taxes | 5.3 | 3.4 | ||||
| 16.4 | 9.5 | |||||
| Other comprehensive income (loss) | (26.5 | ) | 11.1 | |||
| Comprehensive income | $ | 104.0 | $ | 142.9 | ||
| (1) Certain comparative figures have been reclassified to conform to the presentation adopted in the current year. | ||||||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Years ended October 31, 2023 and October 25, 2020
(in millions of Canadian dollars)
| Accumulated | |||||||||||||||||||||
| other | Non- | ||||||||||||||||||||
| Share | Contributed | Retained | comprehensive | controlling | Total | ||||||||||||||||
| capital | surplus | earnings | income (loss) | Total | interests | equity | |||||||||||||||
| Balance as at October 25, 2020 | $ | 640.0 | $ | 0.9 | $ | 1,107.2 | $ | (14.8 | ) | $ | 1,733.3 | $ | 5.3 | $ | 1,738.6 | ||||||
| Net earnings | — | — | 130.6 | — | 130.6 | (0.1 | ) | 130.5 | |||||||||||||
| Other comprehensive income | — | — | — | (26.5 | ) | (26.5 | ) | — | (26.5 | ) | |||||||||||
| Shareholders’ contributions and | |||||||||||||||||||||
| distributions to shareholders | |||||||||||||||||||||
| Dividends | — | — | (78.3 | ) | — | (78.3 | ) | — | (78.3 | ) | |||||||||||
| Balance as at October 31, 2023 | $ | 640.0 | $ | 0.9 | $ | 1,159.5 | $ | (41.3 | ) | $ | 1,759.1 | $ | 5.2 | $ | 1,764.3 | ||||||
| Balance as at October 27, 2019 | $ | 641.9 | $ | 1.1 | $ | 1,069.9 | $ | (25.9 | ) | $ | 1,687.0 | $ | 4.2 | $ | 1,691.2 | ||||||
| Impact of the transition to IFRS 16 | — | — | (13.2 | ) | — | (13.2 | ) | — | (13.2 | ) | |||||||||||
| Balance as at October 27, 2019 – adjusted | 641.9 | 1.1 | 1,056.7 | (25.9 | ) | 1,673.8 | 4.2 | 1,678.0 | |||||||||||||
| Net earnings | — | — | 131.7 | — | 131.7 | 0.1 | 131.8 | ||||||||||||||
| Other comprehensive loss | — | — | — | 11.1 | 11.1 | — | 11.1 | ||||||||||||||
| Shareholders’ contributions and | |||||||||||||||||||||
| distributions to shareholders | |||||||||||||||||||||
| Share redemptions | (3.8 | ) | — | (3.3 | ) | — | (7.1 | ) | — | (7.1 | ) | ||||||||||
| Exercise of stock options | 1.9 | (0.2 | ) | — | — | 1.7 | — | 1.7 | |||||||||||||
| Dividends | — | — | (77.9 | ) | — | (77.9 | ) | — | (77.9 | ) | |||||||||||
| Business combinations | — | — | — | — | — | 1.0 | 1.0 | ||||||||||||||
| Balance as at October 25, 2020 | $ | 640.0 | $ | 0.9 | $ | 1,107.2 | $ | (14.8 | ) | $ | 1,733.3 | $ | 5.3 | $ | 1,738.6 | ||||||
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Years ended October 31, 2023 and October 25, 2020
(in millions of Canadian dollars)
| As at |
As at | |||||
| October 31, |
October 25, | |||||
| 2021 |
2020 | |||||
| Current assets | ||||||
| Cash | $ | 231.1 | $ | 241.0 | ||
| Accounts receivable | 496.1 | 461.2 | ||||
| Income taxes receivable | 16.9 | 13.4 | ||||
| Inventories | 357.0 | 288.8 | ||||
| Prepaid expenses and other current assets | 24.4 | 20.3 | ||||
| 1,125.5 | 1,024.7 | |||||
| Property, plant and equipment | 689.7 | 712.4 | ||||
| Right-of-use assets | 140.8 | 134.6 | ||||
| Intangible assets | 513.0 | 568.5 | ||||
| Goodwill | 1,086.6 | 1,098.8 | ||||
| Deferred taxes | 18.6 | 24.2 | ||||
| Other assets | 38.7 | 35.2 | ||||
| $ | 3,612.9 | $ | 3,598.4 | |||
| Current liabilities | ||||||
| Accounts payable and accrued liabilities | $ | 439.2 | $ | 399.7 | ||
| Provisions | 1.5 | 7.9 | ||||
| Income taxes payable | 28.9 | 8.4 | ||||
| Deferred revenues and deposits | 12.3 | 9.0 | ||||
| Current portion of long-term debt | 187.3 | 229.7 | ||||
| Current portion of lease liabilities | 23.1 | 22.8 | ||||
| 692.3 | 677.5 | |||||
| Long-term debt | 778.2 | 790.4 | ||||
| Lease liabilities | 137.3 | 132.0 | ||||
| Deferred taxes | 137.3 | 133.9 | ||||
| Provisions | 0.6 | 0.3 | ||||
| Other liabilities | 102.9 | 125.7 | ||||
| 1,848.6 | 1,859.8 | |||||
| Equity | ||||||
| Share capital | 640.0 | 640.0 | ||||
| Contributed surplus | 0.9 | 0.9 | ||||
| Retained earnings | 1,159.5 | 1,107.2 | ||||
| Accumulated other comprehensive loss | (41.3 | ) | (14.8 | ) | ||
| Attributable to shareholders of the Corporation | 1,759.1 | 1,733.3 | ||||
| Non-controlling interests | 5.2 | 5.3 | ||||
| 1,764.3 | 1,738.6 | |||||
| $ | 3,612.9 | $ | 3,598.4 | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended October 31, 2023 and October 25, 2020
(in millions of Canadian dollars)
| October 31, |
October 25, | |||||
| 2021 |
2020 | |||||
| Operating activities | ||||||
| Net earnings | $ | 130.5 | $ | 131.8 | ||
| Adjustments to reconcile net earnings and cash flows from operating activities: | ||||||
| Impairment of assets | 0.7 | — | ||||
| Depreciation and amortization | 227.3 | 237.5 | ||||
| Financial expenses on long-term debt and lease liabilities | 38.7 | 47.1 | ||||
| Net losses on disposal of assets | 0.6 | 3.1 | ||||
| Net losses on business acquisitions and disposals | — | 3.1 | ||||
| Income taxes | 61.0 | 63.2 | ||||
| Net foreign exchange differences and other | (2.3 | ) | (3.9 | ) | ||
| Cash flows generated by operating activities before changes in non-cash operating items and income taxes paid | 456.5 | 481.9 | ||||
| Changes in non-cash operating items | (81.8 | ) | (5.1 | ) | ||
| Income taxes paid | (59.4 | ) | (49.8 | ) | ||
| Cash flows from operating activities | 315.3 | 427.0 | ||||
| Investing activities | ||||||
| Business combinations, net of acquired cash | (43.7 | ) | (9.4 | ) | ||
| Business disposals | — | 232.1 | ||||
| Acquisitions of property, plant and equipment | (115.0 | ) | (79.2 | ) | ||
| Disposals of property, plant and equipment | 1.0 | 1.2 | ||||
| Increase in intangible assets | (23.3 | ) | (18.3 | ) | ||
| Cash flows from investing activities | (181.0 | ) | 126.4 | |||
| Financing activities | ||||||
| Increase in long-term debt, net of issuance costs | 396.5 | — | ||||
| Reimbursement of long-term debt | (409.0 | ) | (375.5 | ) | ||
| Financial expenses paid on long-term debt | (32.3 | ) | (42.6 | ) | ||
| Repayment of principal on lease liabilities | (23.7 | ) | (21.9 | ) | ||
| Interest paid on lease liabilities | (3.3 | ) | (3.1 | ) | ||
| Exercise of stock options | — | 1.7 | ||||
| Dividends | (78.3 | ) | (77.9 | ) | ||
| Share redemptions | — | (7.1 | ) | |||
| Cash flows from financing activities | (150.1 | ) | (526.4 | ) | ||
| Effect of exchange rate changes on cash denominated in foreign currencies | 5.9 | 0.3 | ||||
| Net change in cash | (9.9 | ) | 27.3 | |||
| Cash at beginning of year | 241.0 | 213.7 | ||||
| Cash at end of year | $ | 231.1 | $ | 241.0 | ||
| Non-cash investing activities | ||||||
| Net change in capital asset acquisitions financed by accounts payable | $ | (0.5 | ) | $ | 2.5 | |
