Overview

TC Transcontinental at a glance

Map EN

$2.6B Revenues 2018

($3.0B Pro forma^* 2018)

9,000+
Employees

44 Operating
facilities

2 Media
niches

*Adjusted revenues, plus the effect of annualized business combinations, net of disposals.

TC Transcontinental is a leader in flexible packaging in North America, and Canada’s largest printer. The Corporation is also a Canadian leader in its specialty media segments.

Our mission: create products and services that allow businesses to attract, reach and retain their target customers

Our vision: secure our position as Canada’s largest printer and as a leader in our specialty media segments while evolving the organization to be a North American leader in flexible packaging.

Our growth strategy is focused on 4 basic principles:
1) Be the leader in the markets served;
2) Establish a competitive advantage;
3) Build a loyal clientele;
4) Maintain a disciplined approach to acquisitions and financial management.

For the next three years, we will:
1) Defend and strengthen our printing platform;
2) Grow our Packaging division;
3) Develop our specialty media activities.

Key Investment Considerations

With a clear strategy focused on three objectives, TC Transcontinental is committed to creating sustainable long-term value by building on an already strong position. Our excellent financial performance and our strong balance sheet are two of the key elements that allow us to reward our shareholders and allocate capital to support our growth.

Operational excellence: One of the drivers of TC Transcontinental’s long-term growth is the optimization of its printing platform. From 2007 to 2010, we first strategically invested over $800 million to modernize our equipment to innovative technologies. With these investments, we were able to offer our services to new customers, increase productivity and lower our cost structure, making printing less costly and more competitive compared to other forms of media, especially in the flyer printing segment. Since then, we have continuously been aiming to maximize the capacity utilization rate of this state-of-the-art hybrid platform.

Printing division⁽²⁾adjusted operating earnings⁽¹⁾ (in millions of dollars)
printing-division-adjusted-operating-earnings

⁽¹⁾ Non-IFRS financial measure. Adjusted operating earnings is operating earnings before restructuring and other costs (gains) and impairment of assets.
⁽²⁾ Historical revenues and adjusted operating margin⁽¹⁾ of the printing division include those of the distribution and premedia activities.
⁽³⁾ The 2013 figures have been restated to reflect the impact of amended IAS 19 "Employee Benefits", IFRS 11 "Joint Arrangements" and other items.

Investing for the future

Since 2014, TC Transcontinental has completed seven acquisitions in flexible packaging, namely the transformational acquisition of Coveris Americas on May 1^st, 2018. On a Pro Forma 2017 basis, our packaging division’s revenues are estimated at $1.6 billion or 48% of our consolidated revenues⁽¹⁾. We intend to continue to grow our division by relying on our sales force to retain our current customers and develop further our sales funnel and by diversifying our offering and increasing our market share by continuing acquiring assets that will complement our platform.

⁽¹⁾ Excluding inter-segment sales. Revenues for Coveris Americas for its fiscal year ending December 31, 2017 translated at an average CAD/USD exchange rate of 1.3031.

Investing for the future

Capturing growth opportunities: TC Transcontinental decided to refocus its media activities in promising niches generating revenues that are less exposed to advertising budgets. Today, we offer rich and relevant content, including an event planning component, to communities of interest in the business, financial and construction fields. We have also published, to date, 12,700 French-language educational, professional and general interest titles. In 2017, these activities generated $99 million in revenues, of which close to 75% are non-advertising based. We have increased the potential of our portfolio and are well-positioned to capture growth opportunities both organically and through acquisitions.

media-activities-at-tc-transcontinental

Maintaining significant cash flows*

TC Transcontinental generates significant cash flows from its operating activities⁽¹⁾. Our financial strength has enabled us, since the start of our transformation into packaging in 2014, to deploy $428 million to make acquisitions, in particular in flexible packaging, and reinvest $274 million in initiatives aimed at sustaining organic growth and increasing productivity. In addition, we distributed $248 million to our shareholders through dividends and share buybacks.

* Narrative covers the period from fiscal 2014 to fiscal 2017.

Cash flows from operating activities⁽¹⁾ and capital allocation (in millions of dollars)

cash-flow-from-operating-activities-and-capital-allocation

⁽¹⁾ Cash flow generated by operating activities before changes in non-cash operating items and income taxes paid.
⁽²⁾ Payment of a special dividend of $77.9 million in addition to the regular dividend of $45.2 million.

Strong financial position: TC Transcontinental did not hesitate in the past to temporarily increase its indebtedness level over a net indebtedness ratio⁽¹⁾ of 2.0x to implement certain strategic decisions. This was the case from 2007 to 2010, when we modernized our printing platform. We have since continuously reduced our indebtedness ratio, which stood at 0.3x at the end of 2017. With the acquisition of Coveris Americas, our Pro Forma net debt to adjusted EBITDA is at 2.7x at the closing of the acquisition and is expected to decline back below 2.0x within the next 24 months. We are committed in reducing our indebtedness level and to maintain our investment grade credit rating.

Net indebtedness⁽¹⁾ (in millions of dollars) and net indebtedness ratio⁽¹⁾

⁽¹⁾ Non-IFRS financial measure. Net indebtedness represents total of long-term debt plus current portion of long-term debt less cash. The net indebtedness ratio is calculated by dividing the net indebtedness by the last 12 months adjusted operating earnings before depreciation and amortization.
⁽²⁾ As previously reported and including securitization.
⁽³⁾ As previously reported.
⁽⁴⁾ The 2013 figures have been restated to reflect the impact of amended IAS 19 "Employee Benefits", IFRS 11 "Joint Arrangements" and other items.

Attractive dividend payments: One of TC Transcontinental’s capital allocation priorities has always been to regularly pay dividends to its shareholders. Our strong financial position has enabled us to distribute $61 million to our shareholders in 2017, or 79 cents per participating share. Since 1993, the year when we started paying dividends, our dividends have increased at a compound annual growth rate of 11.3%. Further, in 2013, we paid a special dividend of one dollar in addition to the regular dividend of 58 cents. We also deployed over $220 million to buyback shares using an opportunistic approach.

Dividends paid per participating share (in cents)

Dividends-paid-per-participaging-share

⁽¹⁾ Payment of a special dividend of $1.00, in addition to the regular dividend of $0.58.

A responsible corporate citizen: For TC Transcontinental, acting as a corporate citizen means pursuing its activities by managing environmental issues in a responsible manner, being actively involved in the communities where it operates, being an employer of choice committed to developing talent and using its financial resources wisely to ensure its long-term growth.

Ranked 15 times by Corporate Knights as one of the Best 50 Corporate Citizens in Canada

Participates in the Carbon Disclosure Project since 2012

Included in the Jantzi Social Index^® since 2004