Highlights
- Lower volume in the Packaging and Printing Sectors, partially offset by the positive impact of actions implemented to adjust our cost structure.
- Revenues of $706.7 million for the quarter ended July 30, 2023; operating earnings of $39.2 million; and net earnings attributable to shareholders of the Corporation of $20.9 million ($0.24 per share).
- Adjusted operating earnings before depreciation and amortization(1) of $107.9 million for the quarter ended July 30, 2023; adjusted operating earnings(1) of $70.2 million; and adjusted net earnings attributable to shareholders of the Corporation(1) of $44.0 million ($0.51 per share).
- On August 22, 2023, announced a major investment to accelerate the commercialization of innovative recyclable flexible packaging.
(1) Please refer to the section entitled "Non-IFRS Financial Measures" in this press release for a definition of these measures.
MONTRÉAL, Sept. 06, 2023 (GLOBE NEWSWIRE) -- Transcontinental Inc. (TSX: TCL.A TCL.B) announces its results for the third quarter of fiscal 2023, which ended July 30, 2023.
"During this quarter, we accelerated the implementation of actions to reduce costs, improve operational efficiency and increase cash flow generation," said Thomas Morin, President and Chief Executive Officer of TC Transcontinental. "This partially mitigated the effect of pressure on volume in our Packaging and Printing Sectors.
"In our Packaging Sector, customer destocking continued, and demand softened due to economic conditions. Despite pressure on volume, the sector's adjusted operating earnings before depreciation and amortization for the quarter increased by 3%. This profitability improvement resulted mainly from price increases to offset the impact of inflation, cost reduction initiatives and the favourable exchange rate effect. Meanwhile, we continue our investments to commercialize sustainable packaging solutions that should be a key driver of our long-term growth.
"As for our Printing Sector, the actions implemented since the beginning of the year are exceeding $20 million on an annualized basis. These recurring initiatives partially offset the lower volume in the sector during the quarter. Lastly, we are pleased with the progress on the deployment of raddarTM, our reinvented flyer, in Montréal and Vancouver."
"The decrease in working capital for a second consecutive quarter is aligned with our strategic priorities, and our financial position remains solid," added Donald LeCavalier, Executive Vice President and Chief Financial Officer of TC Transcontinental. "We expect to generate significant cash flows in the fourth quarter of fiscal 2023, which will enable us to reduce our net indebtedness."
Financial Highlights
| (in millions of dollars, except per share amounts) | Q3-2023 | Q3-2022 | Variation in % | ||||
| 13 weeks | 13 weeks | ||||||
| Revenues | $706.7 | $747.8 | (5.5)% | ||||
| Operating earnings before depreciation and amortization | 95.3 | 110.0 | (13.4) | ||||
| Adjusted operating earnings before depreciation and amortization (1) | 107.9 | 113.0 | (4.5) | ||||
| Operating earnings | 39.2 | 52.1 | (24.8) | ||||
| Adjusted operating earnings (1) | 70.2 | 72.6 | (3.3) | ||||
| Net earnings attributable to shareholders of the Corporation | 20.9 | 34.1 | (38.7) | ||||
| Net earnings attributable to shareholders of the Corporation per share | 0.24 | 0.39 | (38.5) | ||||
| Adjusted net earnings attributable to shareholders of the Corporation (1) | 44.0 | 49.6 | (11.3) | ||||
| Adjusted net earnings attributable to shareholders of the Corporation per share (1) | 0.51 | 0.57 | (10.5) | ||||
| (1) Please refer to the section entitled "Reconciliation of Non-IFRS Financial Measures" in this Press release for adjusted data presented above. | |||||||
Results of the Third Quarter of Fiscal 2023
Revenues decreased by $41.1 million, or 5.5%, from $747.8 million in the third quarter of 2022 to $706.7 million in the corresponding period of 2023. This decrease is mainly due to the organic decline largely related to lower volume, partially offset by the favourable exchange rate effect mainly in the Packaging Sector, and the acquisitions of Éditions du renouveau pédagogique Inc. and Banaplast S.A.S.
Operating earnings before depreciation and amortization decreased by $14.7 million, or 13.4%, from $110.0 million in the third quarter of 2022 to $95.3 million in the third quarter of 2023. Adjusted operating earnings before depreciation and amortization decreased by $5.1 million, or 4.5%, from $113.0 million in the third quarter of 2022 to $107.9 million in the third quarter of 2023. These decreases are mainly due to the organic decline largely related to lower volume, partially offset by cost reduction initiatives and, to a lesser extent, the acquisitions and the favourable impact of the change in stock-based compensation expense. Lastly, the $9.6 million increase in restructuring and other costs, mainly due to the increase in workforce reduction costs related to senior management changes and actions implemented to adjust our cost structure, had a negative effect on operating earnings before depreciation and amortization.
Net earnings attributable to shareholders of the Corporation decreased by $13.2 million, from $34.1 million in the third quarter of 2022 to $20.9 million in the third quarter of 2023. This decrease is mainly due to lower operating earnings, largely attributable to the increase in restructuring and other costs, as well as the increase in financial expenses, partially mitigated by lower income taxes. On a per share basis, net earnings attributable to shareholders of the Corporation went from $0.39 to $0.24, respectively.
Adjusted net earnings attributable to shareholders of the Corporation decreased by $5.6 million, or 11.3%, from $49.6 million in the third quarter of 2022 to $44.0 million in the third quarter of 2023. This decrease is mainly due to the increase in financial expenses and lower adjusted operating earnings before depreciation and amortization, partially offset by lower income taxes. On a per share basis, adjusted net earnings attributable to shareholders of the Corporation went from $0.57 to $0.51, respectively.
Results of the First Nine Months of Fiscal 2023
Revenues increased by $7.0 million, or 0.3%, from $2,153.9 million in the first nine months of fiscal 2022 to $2,160.9 million in the corresponding period of 2023. This increase is mainly explained by the favourable exchange rate effect, the net impact of the price increases due to the current inflationary situation and the acquisitions. These factors were partially offset by the organic decline mainly related to lower volume.
Operating earnings before depreciation and amortization decreased by $27.1 million, or 8.9%, from $303.5 million in the first nine months of fiscal 2022 to $276.4 million in the corresponding period of 2023. Adjusted operating earnings before depreciation and amortization decreased by $4.6 million, or 1.5%, from $305.6 million in the first nine months of fiscal 2022 to $301.0 million in the corresponding period of 2023. These decreases are mainly due to the organic decline largely related to lower volume, partially offset by cost reduction initiatives, the favourable exchange rate effect and our acquisitions. Lastly, the $22.5 million increase in restructuring and other costs had a negative effect on operating earnings before depreciation and amortization.
Net earnings attributable to shareholders of the Corporation decreased by $36.7 million, or 45.4%, from $80.8 million in the first nine months of fiscal 2022 to $44.1 million in the corresponding period of 2023. This decrease is mainly due to the increase in restructuring and other costs, depreciation and amortization, and financial expenses, partially offset by lower income taxes. On a per share basis, net earnings attributable to shareholders of the Corporation went from $0.93 to $0.51, respectively.
Adjusted net earnings attributable to shareholders of the Corporation decreased by $17.1 million, or 14.1%, from $121.3 million in the first nine months of fiscal 2022 to $104.2 million in the corresponding period of 2023, mostly as a result of the increase in financial expenses and depreciation and amortization, partially offset by lower income taxes. On a per share basis, adjusted net earnings attributable to shareholders of the Corporation went from $1.40 to $1.20, respectively.
For more detailed financial information, please see the Management’s Discussion and Analysis for the third quarter of fiscal 2023 ended July 30, 2023 as well as the financial statements in the “Investors” section of our website at www.tc.tc.
Outlook
In the Packaging Sector, our investments in sustainable packaging solutions position us well for the future and should be a key driver of our long-term growth. The economic environment should however continue to affect short-term demand. In terms of profitability, despite the pressure on volume, we expect an increase in adjusted operating earnings before depreciation and amortization for fiscal year 2023 compared to fiscal year 2022.
In the Printing Sector, the price increases due to higher costs should have a negative impact on volume in retail flyer printing and distribution activities. This anticipated volume reduction, combined with the effect of inflationary pressure, should result in lower adjusted operating earnings before depreciation and amortization for fiscal year 2023 compared to fiscal year 2022. We expect this decrease to be partially offset by cost reduction initiatives and the continued deployment of raddarTM which allows us to secure our retail flyer printing activities.
Finally, we expect to continue generating significant cash flows from operating activities, which will enable us to reduce our net indebtedness while continuing our strategic investments.
Non-IFRS Financial Measures
In this document, unless otherwise indicated, all financial data are prepared in accordance with International Financial Reporting Standards (IFRS) and the term "dollar", as well as the symbol "$" designate Canadian dollars.
In addition, in this press release, we also use certain 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 unaudited interim condensed consolidated financial statements for the third quarter ended July 30, 2023.
| Terms Used | Definitions |
| Adjusted operating earnings before depreciation and amortization | Operating earnings before depreciation and amortization as well as restructuring and other costs (revenues) and impairment of assets. |
| Adjusted operating earnings | Operating earnings before restructuring and other costs (revenues), amortization of intangible assets arising from business combinations and impairment of assets. |
| Adjusted income taxes | Income taxes before income taxes on restructuring and other costs (revenues), 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 (revenues), 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 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 - Third quarter and cumulative | |||||||||
| Three months ended | Nine months ended | ||||||||
| (in millions of dollars) | July 30, 2023 | July 31, 2022 | July 30, 2023 | July 31, 2022 | |||||
| Operating earnings | $39.2 | $52.1 | $98.0 | $132.0 | |||||
| Restructuring and other costs | 12.6 | 3.0 | 24.6 | 2.1 | |||||
| Amortization of intangible assets arising from business combinations (1) | 18.4 | 17.5 | 55.6 | 51.9 | |||||
| Adjusted operating earnings | $70.2 | $72.6 | $178.2 | $186.0 | |||||
| Depreciation and amortization (2) | 37.7 | 40.4 | 122.8 | 119.6 | |||||
| Adjusted operating earnings before depreciation and amortization | $107.9 | $113.0 | $301.0 | $305.6 | |||||
| (1) Intangible assets arising from business combinations include our customer relationships, trademarks, non-compete agreements, rights of first refusal and educational book titles. (2) Depreciation and amortization excludes the amortization of intangible assets arising from business combinations. | |||||||||
| Reconciliation of operating earnings - Third quarter and cumulative for the Packaging Sector | |||||||||
| Three months ended | Nine months ended | ||||||||
| (in millions of dollars) | July 30, 2023 | July 31, 2022 | July 30, 2023 | July 31, 2022 | |||||
| Operating earnings | $17.7 | $12.9 | $48.4 | $30.0 | |||||
| Restructuring and other costs | 1.5 | 2.7 | 7.4 | 5.4 | |||||
| Amortization of intangible assets arising from business combinations (1) | 15.9 | 15.4 | 48.0 | 45.7 | |||||
| Adjusted operating earnings | $35.1 | $31.0 | $103.8 | $81.1 | |||||
| Depreciation and amortization (2) | 18.7 | 21.4 | 64.0 | 62.6 | |||||
| Adjusted operating earnings before depreciation and amortization | $53.8 | $52.4 | $167.8 | $143.7 | |||||
| (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 - Third quarter and cumulative for the Printing Sector | |||||||||
| Three months ended | Nine months ended | ||||||||
| (in millions of dollars) | July 30, 2023 | July 31, 2022 | July 30, 2023 | July 31, 2022 | |||||
| Operating earnings | $27.3 | $36.7 | $82.8 | $113.8 | |||||
| Restructuring and other costs | 2.7 | 0.1 | 7.2 | 1.9 | |||||
| Amortization of intangible assets arising from business combinations (1) | 1.9 | 2.1 | 6.0 | 6.1 | |||||
| Adjusted operating earnings | $31.9 | $38.9 | $96.0 | $121.8 | |||||
| Depreciation and amortization (2) | 13.3 | 13.4 | 39.8 | 42.0 | |||||
| Adjusted operating earnings before depreciation and amortization | $45.2 | $52.3 | $135.8 | $163.8 | |||||
| (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 - Third quarter and cumulative for the Other Sector | |||||||||
| Three months ended | Nine months ended | ||||||||
| (in millions of dollars) | July 30, 2023 | July 31, 2022 | July 30, 2023 | July 31, 2022 | |||||
| Operating earnings | ($5.8 | ) | $2.5 | ($33.2 | ) | ($11.8 | ) | ||
| Restructuring and other costs (revenues) | 8.4 | 0.2 | 10.0 | (5.2 | ) | ||||
| Amortization of intangible assets arising from business combinations (1) | 0.6 | — | 1.6 | 0.1 | |||||
| Adjusted operating earnings | $3.2 | $2.7 | ($21.6 | ) | ($16.9 | ) | |||
| Depreciation and amortization (2) | 5.7 | 5.6 | 19.0 | 15.0 | |||||
| Adjusted operating earnings before depreciation and amortization | $8.9 | $8.3 | ($2.6 | ) | ($1.9 | ) | |||
| (1) Intangible assets arising from business combinations include our trademarks, non-compete agreements, rights of first refusal and educational book titles. (2) Depreciation and amortization excludes the amortization of intangible assets arising from business combinations. | |||||||||
| Reconciliation of net earnings attributable to shareholders of the Corporation - Third quarter and cumulative | ||||||||
| Three months ended | Nine months ended | |||||||
| (in millions of dollars, except per share amounts) | July 30, 2023 | July 31, 2022 | July 30, 2023 | July 31, 2022 | ||||
| Net earnings attributable to shareholders of the Corporation | $20.9 | $34.1 | $44.1 | $80.8 | ||||
| Restructuring and other costs | 12.6 | 3.0 | 24.6 | 2.1 | ||||
| Tax on restructuring and other costs | (3.3 | ) | (0.7 | ) | (6.3 | ) | (0.7 | ) |
| Amortization of intangible assets arising from business combinations (1) | 18.4 | 17.5 | 55.6 | 51.9 | ||||
| Tax on amortization of intangible assets arising from business combinations | (4.6 | ) | (4.3 | ) | (13.8 | ) | (12.8 | ) |
| Adjusted net earnings attributable to shareholders of the Corporation | $44.0 | $49.6 | $104.2 | $121.3 | ||||
| Net earnings attributable to shareholders of the Corporation per share | $0.24 | $0.39 | $0.51 | $0.93 | ||||
| Adjusted net earnings attributable to shareholders of the Corporation per share | $0.51 | $0.57 | $1.20 | $1.40 | ||||
| Weighted average number of shares outstanding | 86.6 | 86.6 | 86.6 | 86.8 | ||||
| (1) Intangible assets arising from business combinations include our customer relationships, trademarks, non-compete agreements, rights of first refusal and educational book titles. | ||||||||
| Reconciliation of net indebtedness | ||||||
| (in millions of dollars, except ratios) | As at July 30, 2023 | As at October 30, 2022 | ||||
| Long-term debt | $1,000.4 | $979.3 | ||||
| Current portion of long-term debt | 6.3 | 10.7 | ||||
| Lease liabilities | 113.6 | 135.0 | ||||
| Current portion of lease liabilities | 23.7 | 25.3 | ||||
| Cash | (38.5 | ) | (45.7 | ) | ||
| Net indebtedness | $1,105.5 | $1,104.6 | ||||
| Adjusted operating earnings before depreciation and amortization (last 12 months) | $442.1 | $446.7 | ||||
| Net indebtedness ratio | 2.50 | x | 2.47 | 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 October 23, 2023 to shareholders of record at the close of business on October 3, 2023.
Normal Course Issuer Bid
On September 29, 2022, 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 3, 2022 and October 2, 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 191,343 of its Class B Shares. Repurchases are made in the normal course of business at market prices through the Toronto Stock Exchange.
During the first nine months of fiscal 2023, the Corporation did not repurchase any of its Class A Subordinate Voting Shares or Class B shares. The Corporation was under no obligation to repurchase its Class A Subordinate Voting Shares and Class B Shares as at July 30, 2023.
Additional information
Conference Call
Upon releasing its 2023 third quarter results, the Corporation will hold a conference call for the financial community on September 7, 2023 at 8:00 a.m. The dial-in numbers are 1-416-764-8658 or 1-888-886-7786. Media may hear the call in listen-only mode or tune in to the simultaneous audio broadcast on TC Transcontinental’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 generated revenues of C$3.0 billion during the fiscal year ended October 30, 2022. 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 impact of digital product development and adoption on the demand for retailer-related services and printed products, the global economic environment, including inflation and recession risks and disruptions in the supply chain, the Corporation's ability to generate organic growth in highly competitive industries, the Corporation's ability to complete acquisitions and properly integrate them, the inability to maintain or improve operational efficiency and avoid disruptions that could affect its ability to meet deadlines, raw materials, transportation and consumed energy costs, availability of raw materials, the impact of a pandemic, an epidemic or an outbreak of an infectious disease on the Corporation's operations, operating results and financial position, cybersecurity and data protection, recruiting and retaining qualified personnel, the political and social environment as well as regulatory and legislative changes, in particular with regard to the environment or door-to-door distribution and use of plastic, 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, loss of a major customer, customer consolidation, structural changes in the industries in which the Corporation operates, the safety and quality of its packaging products used in the food industry, the impact of economic cycles on product demand, data confidentiality, the protection of its intellectual property rights, bad debts from certain customers, import and export controls, exchange rate fluctuations, interest rates and availability of capital at a reasonable cost, litigation and respect of privacy, the impact of major market fluctuations on the solvency of defined benefit pension plans, taxation, including changes in tax legislation that could adversely affect profitability, disputes with tax authorities or amendments to statutory rates in force, and results of impairment tests on the value of assets. 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 30, 2022 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 September 6, 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 September 6, 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.
For information:
| Media | Financial Community |
| Nathalie St-Jean | Yan Lapointe |
| Senior Advisor, Corporate Communications | Director, Investor Relations and Treasury |
| TC Transcontinental | TC Transcontinental |
| Telephone: 514-954-3581 | Telephone: 514-954-3574 |
| nathalie.st-jean@tc.tc | yan.lapointe@tc.tc |
| www.tc.tc | www.tc.tc |
CONSOLIDATED STATEMENTS OF EARNINGS
Unaudited
(in millions of Canadian dollars, unless otherwise indicated and per share data)
| Three months ended | Nine months ended | ||||||||||||
| July 30, | July 31, | July 30, | July 31, | ||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||
| Revenues | $ | 706.7 | $ | 747.8 | $ | 2,160.9 | $ | 2,153.9 | |||||
| Operating expenses | 598.8 | 634.8 | 1,859.9 | 1,848.3 | |||||||||
| Restructuring and other costs | 12.6 | 3.0 | 24.6 | 2.1 | |||||||||
| Operating earnings before depreciation and amortization | 95.3 | 110.0 | 276.4 | 303.5 | |||||||||
| Depreciation and amortization | 56.1 | 57.9 | 178.4 | 171.5 | |||||||||
| Operating earnings | 39.2 | 52.1 | 98.0 | 132.0 | |||||||||
| Net financial expenses | 16.1 | 9.8 | 48.0 | 29.5 | |||||||||
| Earnings before income taxes | 23.1 | 42.3 | 50.0 | 102.5 | |||||||||
| Income taxes | 2.1 | 8.2 | 5.6 | 21.8 | |||||||||
| Net earnings | 21.0 | 34.1 | 44.4 | 80.7 | |||||||||
| Non-controlling interests | 0.1 | — | 0.3 | (0.1 | ) | ||||||||
| Net earnings attributable to shareholders of the Corporation | $ | 20.9 | $ | 34.1 | $ | 44.1 | $ | 80.8 | |||||
| Net earnings attributable to shareholders of the Corporation per share - basic and diluted | $ | 0.24 | $ | 0.39 | $ | 0.51 | $ | 0.93 | |||||
| Weighted average number of shares outstanding - basic and diluted (in millions) | 86.6 | 86.6 | 86.6 | 86.8 | |||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unaudited
(in millions of Canadian dollars)
| Three months ended | Nine months ended | ||||||||||||
| July 30, | July 31, | July 30, | July 31, | ||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||
| Net earnings | $ | 21.0 | $ | 34.1 | $ | 44.4 | $ | 80.7 | |||||
| Other comprehensive (loss) income | |||||||||||||
| Items that may be subsequently reclassified to net earnings | |||||||||||||
| Net change related to cash flow hedges | |||||||||||||
| Net change in the fair value of designated derivatives - foreign exchange risk | 7.3 | 1.5 | 14.3 | (2.6 | ) | ||||||||
| Net change in the fair value of designated derivatives - interest rate risk | 3.4 | (0.6 | ) | 2.8 | 2.8 | ||||||||
| Reclassification of the net change in the fair value of designated derivatives | |||||||||||||
| recognized in net earnings during the period | (0.4 | ) | 0.1 | (0.8 | ) | 1.6 | |||||||
| Related income taxes | 2.7 | 0.3 | 4.3 | 0.5 | |||||||||
| 7.6 | 0.7 | 12.0 | 1.3 | ||||||||||
| Cumulative translation differences | |||||||||||||
| Net unrealized exchange (losses) gains on the translation of the financial | |||||||||||||
| statements of foreign operations | (32.7 | ) | (18.7 | ) | (30.0 | ) | 33.7 | ||||||
| Net gains (losses) on hedge of the net investment in foreign operations | 11.4 | 1.9 | 8.6 | (8.3 | ) | ||||||||
| Related income taxes (recovery) | (1.4 | ) | 0.1 | 0.4 | (0.1 | ) | |||||||
| (19.9 | ) | (16.9 | ) | (21.8 | ) | 25.5 | |||||||
| Items that will not be reclassified to net earnings | |||||||||||||
| Changes related to defined benefit plans | |||||||||||||
| Actuarial (losses) gains on defined benefit plans | (3.8 | ) | 0.4 | (6.4 | ) | 22.4 | |||||||
| Related income taxes (recovery) | (1.0 | ) | 0.1 | (1.7 | ) | 6.0 | |||||||
| (2.8 | ) | 0.3 | (4.7 | ) | 16.4 | ||||||||
| Other comprehensive (loss) income | (15.1 | ) | (15.9 | ) | (14.5 | ) | 43.2 | ||||||
| Comprehensive income | $ | 5.9 | $ | 18.2 | $ | 29.9 | $ | 123.9 | |||||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Unaudited
(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 30, 2022 | $ 636.6 | $ 0.9 | $ 1,219.0 | $ 20.7 | $ 1,877.2 | $ 4.8 | $ 1,882.0 | ||||||||
| Net earnings | — | — | 44.1 | — | 44.1 | 0.3 | 44.4 | ||||||||
| Other comprehensive loss | — | — | — | (14.5 | ) | (14.5 | ) | — | (14.5 | ) | |||||
| Shareholders' contributions and | |||||||||||||||
| distributions to shareholders | |||||||||||||||
| Dividends | — | — | (58.5 | ) | — | (58.5 | ) | — | (58.5 | ) | |||||
| Balance as at July 30, 2023 | $ 636.6 | $ 0.9 | $ 1,204.6 | $ 6.2 | $ 1,848.3 | $ 5.1 | $ 1,853.4 | ||||||||
| Balance as at October 31, 2021 | $ 640.0 | $ 0.9 | $ 1,159.5 | $ (41.3 | ) | $ 1,759.1 | $ 5.2 | $ 1,764.3 | |||||||
| Net earnings | — | — | 80.8 | — | 80.8 | (0.1 | ) | 80.7 | |||||||
| Other comprehensive income | — | — | — | 43.2 | 43.2 | — | 43.2 | ||||||||
| Shareholders' contributions and | |||||||||||||||
| distributions to shareholders | |||||||||||||||
| Share redemptions | (3.4 | ) | — | (3.6 | ) | — | (7.0 | ) | — | (7.0 | ) | ||||
| Dividends | — | — | (58.6 | ) | — | (58.6 | ) | — | (58.6 | ) | |||||
| Balance as at July 31, 2022 | $ 636.6 | $ 0.9 | $ 1,178.1 | $ 1.9 | $ 1,817.5 | $ 5.1 | $ 1,822.6 | ||||||||
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Unaudited
(in millions of Canadian dollars)
| As at | As at | ||
| July 30, | October 30, | ||
| 2023 | 2022 | ||
| Current assets | |||
| Cash | $ 38.5 | $ 45.7 | |
| Accounts receivable | 504.6 | 575.7 | |
| Income taxes receivable | 29.4 | 12.2 | |
| Inventories | 420.9 | 479.3 | |
| Prepaid expenses and other current assets | 28.1 | 21.8 | |
| 1,021.5 | 1,134.7 | ||
| Property, plant and equipment | 785.9 | 756.0 | |
| Right-of-use assets | 118.0 | 140.8 | |
| Intangible assets | 465.1 | 519.6 | |
| Goodwill | 1,165.0 | 1,181.7 | |
| Deferred taxes | 36.6 | 37.5 | |
| Other assets | 31.4 | 30.7 | |
| $ 3,623.5 | $ 3,801.0 | ||
| Current liabilities | |||
| Accounts payable and accrued liabilities | $ 379.6 | $ 492.2 | |
| Income taxes payable | 12.3 | 7.0 | |
| Deferred revenues and deposits | 11.6 | 11.8 | |
| Current portion of long-term debt | 6.3 | 10.7 | |
| Current portion of lease liabilities | 23.7 | 25.3 | |
| 433.5 | 547.0 | ||
| Long-term debt | 1,000.4 | 979.3 | |
| Lease liabilities | 113.6 | 135.0 | |
| Deferred taxes | 102.1 | 126.0 | |
| Other liabilities | 120.5 | 131.7 | |
| 1,770.1 | 1,919.0 | ||
| Equity | |||
| Share capital | 636.6 | 636.6 | |
| Contributed surplus | 0.9 | 0.9 | |
| Retained earnings | 1,204.6 | 1,219.0 | |
| Accumulated other comprehensive income | 6.2 | 20.7 | |
| Attributable to shareholders of the Corporation | 1,848.3 | 1,877.2 | |
| Non-controlling interests | 5.1 | 4.8 | |
| 1,853.4 | 1,882.0 | ||
| $ 3,623.5 | $ 3,801.0 | ||
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(in millions of Canadian dollars)
| Three months ended | Nine months ended | ||||||||||||
| July 30, | July 31, | July 30, | July 31, | ||||||||||
| 2023 | 2022 | 2023 | 2022(1) | ||||||||||
| Operating activities | |||||||||||||
| Net earnings | $ | 21.0 | $ | 34.1 | $ | 44.4 | $ | 80.7 | |||||
| Adjustments to reconcile net earnings and cash flows from operating activities: | |||||||||||||
| Depreciation and amortization | 56.1 | 57.9 | 178.4 | 171.5 | |||||||||
| Financial expenses on long-term debt and lease liabilities | 14.4 | 8.2 | 42.3 | 26.4 | |||||||||
| Net losses (gains) on disposal of assets | 0.4 | 0.5 | 1.2 | (5.4 | ) | ||||||||
| Income taxes | 2.1 | 8.2 | 5.6 | 21.8 | |||||||||
| Net foreign exchange differences and other | (2.6 | ) | 4.5 | (0.7 | ) | 12.3 | |||||||
| Cash flows generated by operating activities before changes in non-cash operating | |||||||||||||
| items and income taxes paid | 91.4 | 113.4 | 271.2 | 307.3 | |||||||||
| Changes in non-cash operating items | 26.0 | (46.9 | ) | (2.4 | ) | (128.3 | ) | ||||||
| Income taxes paid | (8.3 | ) | (17.2 | ) | (42.7 | ) | (61.7 | ) | |||||
| Cash flows from operating activities | 109.1 | 49.3 | 226.1 | 117.3 | |||||||||
| Investing activities | |||||||||||||
| Business combinations, net of acquired cash | 0.6 | (67.3 | ) | 0.3 | (124.8 | ) | |||||||
| Acquisitions of property, plant and equipment | (37.6 | ) | (31.6 | ) | (123.7 | ) | (88.5 | ) | |||||
| Disposals of property, plant and equipment | — | 0.4 | — | 8.5 | |||||||||
| Increase in intangible assets | (6.5 | ) | (7.6 | ) | (24.8 | ) | (19.7 | ) | |||||
| Cash flows from investing activities | (43.5 | ) | (106.1 | ) | (148.2 | ) | (224.5 | ) | |||||
| Financing activities | |||||||||||||
| Increase in long-term debt | — | — | — | 200.0 | |||||||||
| Reimbursement of long-term debt | (0.6 | ) | (0.4 | ) | (2.2 | ) | (330.1 | ) | |||||
| Net (decrease) increase in credit facilities | (26.7 | ) | 95.8 | 30.6 | 145.6 | ||||||||
| Financial expenses paid on long-term debt and credit facilities | (9.4 | ) | (8.8 | ) | (34.3 | ) | (27.3 | ) | |||||
| Repayment of principal on lease liabilities | (6.3 | ) | (5.8 | ) | (18.6 | ) | (18.3 | ) | |||||
| Interest paid on lease liabilities | (0.8 | ) | (1.0 | ) | (2.5 | ) | (2.6 | ) | |||||
| Dividends | (19.5 | ) | (19.5 | ) | (58.5 | ) | (58.6 | ) | |||||
| Share redemptions | — | (1.0 | ) | — | (7.0 | ) | |||||||
| Cash flows from financing activities | (63.3 | ) | 59.3 | (85.5 | ) | (98.3 | ) | ||||||
| Effect of exchange rate changes on cash denominated in foreign currencies | (0.2 | ) | (0.9 | ) | 0.4 | 0.8 | |||||||
| Net change in cash | 2.1 | 1.6 | (7.2 | ) | (204.7 | ) | |||||||
| Cash at beginning of period | 36.4 | 24.8 | 45.7 | 231.1 | |||||||||
| Cash at end of period | $ | 38.5 | $ | 26.4 | $ | 38.5 | $ | 26.4 | |||||
| Non-cash investing activities | |||||||||||||
| Net change in capital asset acquisitions financed by accounts payable | $ | 1.0 | $ | (0.9 | ) | $ | 1.9 | $ | 2.4 | ||||
| (1) Certain comparative figures have been reclassified to conform to the presentation adopted in the current period. | |||||||||||||
