Overview

TC Transcontinental at a glance

Revenus ajustés

Carte

$2.6B Revenues 2018

($3.1B 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: become a top leader in flexible packaging in North America while maintaining our position as Canada’s largest printer and as the leading Canadian publishing group of French-language educational resources.

Our three-pronged strategy is:
1) Grow our Packaging Sector;
2) Develop our product and service offering and solidify our printing platform;
3) Develop our specialty media activities.

Key Investment Considerations

With a clear strategy focused on three objectives, TC Transcontinental is determined to create sustainable, long-term value by building on an already strong position. Thanks to important strategic decisions and to our leading position in our well-established verticals, we have increased our profitability and cash flows from operating activities over the past five years. Our excellent financial performance and healthy balance sheet enabled us to complete the transformational acquisition of Coveris Americas during fiscal 2018. This acquisition significantly strengthens our market share in the flexible packaging sector and gives us a strong position in many growing end markets such as dairy and pet food. It is also a creator of long-term value for our shareholders.

Sustained growth in our adjusted profitability: In the past five years that we have been in constant transformation, we have consistently improved our adjusted profitability. Through the execution of our business strategy supported by important strategic decisions and the implementation of operational efficiency measures, our adjusted profitability has increased every year, and at a more pronounced rate in 2018 with the transformational acquisition of Coveris Americas.

Operating earnings and adjusted operating earnings¹(in millions of dollars)

Operating earnings and adjusted operating earnings

¹ Non-IFRS financial measure. Operating earnings before the accelerated recognition of deferred revenues*, accelerated depreciation*, restructuring and other costs (gains), impairment of assets, as well as amortization of intangible assets and reversal of the fair value adjustment of inventory sold arising from business combinations.
² Adjusted operating earnings are presented on a comparable basis to 2018 according to the change in the definition of this measure.
^* Adjusted operating earnings are presented on a comparable basis to 2018 Related to the agreement signed with The Hearst Corporation on December 21, 2017. Please refer to Note 31, “New agreement with Hearst”, to the annual consolidated financial statements for the fiscal year ended October 28, 2018.according to the change in the definition of this measure.

Significant cash flows: TC Transcontinental continuously generates significant cash flows from its operating activities. Since we started our transformation in 2014, our excellent financial performance has enabled us to deploy more than $2 billion to make strategic acquisitions, particularly in flexible packaging.

Cash flows from operating activities¹ and capital allocation (in millions of dollars)

Cash flows from operating activities and capital allocation

¹ Before changes in non-cash operating items and income taxes paid.

Investment grade credit rating: Our objective has always been to maintain a healthy financial position and an investment grade credit rating while allowing a temporary increase in our indebtedness level in order to execute certain strategic decisions. In fact, just as we had invested more than $800 million between 2007 and 2010 to modernize our printing platform, our net indebtedness significantly increased during fiscal 2018 as a result of the transformational acquisition of Coveris Americas for a sum of US$1.32 billion (approximately C$1.69 billion). As was the case in the past, our main objective now is to reduce our net indebtedness level over the coming quarters.

Net indebtedness¹

Net indebtedness ratio

¹Net 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.
²Net indebtedness divided by the last 12 months’ adjusted operating earnings before depreciation and amortization, plus the effect of annualized business combinations, net of disposals.

History of dividend growth: One of our capital allocation priorities has always been to pay dividends to our shareholders on a regular basis. We have continuously increased dividends distributed to them due to the significant cash flows generated from our operating activities for a total of $287 million over the past five years. In addition, we deployed more than $45 million in share buybacks by adopting an opportunistic approach.

Dividends paid to our shareholders (in million of dollars)

Dividends paid to our shareholders

A responsible corporate citizen: Over time, TC Transcontinental has distinguished itself as a high-performing organization, which acts according to its values and demonstrates leadership in operating its activities in a responsible manner. As we pursue our transformation into flexible packaging for long-term growth, we intend to remain a leader in corporate social responsibility namely by setting objectives to reduce our environmental footprint.