Transcontinental Inc. Announces Results for the Third Quarter of Fiscal Year 2025

Executive Summary

• TC Transcontinental reported third-quarter fiscal 2025 results ending July 27, 2025, with revenues of $684.4 million and adjusted net earnings per share of $0.70, representing a 16.7% year-over-year increase.
• The company announced strategic acquisitions to expand its in-store marketing capabilities: the completed acquisition of Middleton Group Inc. for $4.6 million and subsequent acquisitions of Mirazed Inc. and Intergraphics Decal Limited for a maximum of $72.7 million.
• While reported net earnings decreased 11.2% to $38.7 million due to the sale of industrial packaging operations and lower volumes in the Packaging Sector, adjusted profitability metrics improved, driven by cost reduction initiatives and favorable exchange rates.

Key Details

• Q3 2025 Financial Performance (Quarter ended July 27, 2025):
  • Revenues: $684.4 million (down 2.2% from $700.0 million in Q3 2024).
  • Operating Earnings: $57.4 million (down 17.1% from $69.2 million).
  • Adjusted Operating Earnings Before Depreciation and Amortization: $122.6 million (up 1.3% from $121.0 million).
  • Adjusted Operating Earnings: $85.4 million (up 1.4% from $84.2 million).
  • Net Earnings Attributable to Shareholders: $38.7 million ($0.46 per share), down from $43.6 million ($0.50 per share).
  • Adjusted Net Earnings Attributable to Shareholders: $58.9 million ($0.70 per share), up from $51.4 million ($0.60 per share).
• First Nine Months of Fiscal 2025 Performance:
  • Revenues: $2,011.5 million (down 2.5% from $2,063.6 million).
  • Net Earnings Attributable to Shareholders: $128.1 million ($1.53 per share), up 74.5% from $73.4 million ($0.85 per share).
  • Adjusted Net Earnings Attributable to Shareholders: $148.6 million ($1.77 per share), up 10.8% from $134.1 million ($1.55 per share).
• Acquisitions:
  • Middleton Group Inc.: Acquired on June 23, 2025, for $4.6 million.
  • Mirazed Inc. and Intergraphics Decal Limited: Acquired subsequent to the quarter-end for a maximum of $72.7 million (subject to adjustments). These acquisitions accelerate growth in in-store marketing activities.
• Sector Performance:
  • Packaging Sector: Experienced decreased revenues due to the sale of industrial packaging operations and weaker demand. Adjusted operating earnings before D&A were $65.3 million.
  • Retail Services and Printing Sector: Posted a 4.5% revenue increase and improved profitability for the fifth consecutive quarter, driven by book printing growth. Adjusted operating earnings before D&A were $52.0 million.
• Dividends:
  • Board declared a quarterly dividend of $0.225 per share on Class A Subordinate Voting Shares and Class B Shares.
  • Payable on October 20, 2025, to shareholders of record on September 25, 2025.
• Share Repurchases:
  • During the first nine months of fiscal 2025, the company repurchased and cancelled 934,434 Class A Shares and 3,600 Class B Shares for a total cash consideration of $16.3 million.
  • As of July 27, 2025, the Normal Course Issuer Bid program had concluded with no shares remaining to repurchase.
• Balance Sheet & Cash Flow:
  • Net Indebtedness: $790.5 million (down from $803.8 million at year-end 2024).
  • Net Indebtedness Ratio: 1.68x.
  • Cash Flow from Operating Activities (9 months): $181.7 million.
  • Cash Flow from Investing Activities (9 months): $51.9 million (driven by $132.0 million from business disposals).
  • Cash Flow from Financing Activities (9 months): $(388.2) million (driven by debt repayment and dividends).

Notable Quotes

• Thomas Morin, President and CEO: "For the third consecutive quarter, we significantly improved our adjusted net earnings per share, which continues to demonstrate the positive impact of the implementation of our two-year program aimed at improving our profitability and our financial position."
• Thomas Morin, President and CEO: "The Retail Services and Printing Sector posted another good quarter with a 4.5% increase in revenues and an increase in profitability for the fifth consecutive quarter... As announced, we are pleased with the Mirazed, Intergraphics and Middleton acquisitions, which accelerate growth in our in-store marketing activities."
• Donald LeCavalier, EVP and CFO: "The decrease in our financial expenses as a result of the significant reduction in net indebtedness during the last year, combined with the improvement in our earnings and our share repurchase program, allowed us to grow adjusted net earnings per share by 16.7% for the quarter."