Transcontinental Inc. Class A · TSX:TCL.A
Transcontinental Inc. Class A — Investor Presentation (January 2022)
44 slides from Transcontinental Inc. Class A's investor presentation, January 2022
Slide 1: Building a sustainable future
Building a sustainable future Transcontinental inc. Investor Relations Presentation January 2022 www.tc.tc
Slide 2: Note to readers
Note to readers In this document, unless otherwise indicated, all financial data are prepared in accordance with International Financial Reporting Standards (IFRS) and the term ‘’dollars’’ as well as the symbol ‘’$’’ designate Canadian dollars. In this document, we also use non-IFRS financial measur
Slide 3: Forward-looking information
Forward-looking information 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
Slide 4: Overview
Overview TC Transcontinental Overview Our Business Sectors Conclusion www.tc.tc
Slide 5: TC Transcontinental Overview
TC Transcontinental Overview Our vision is to become a market leader in flexible packaging in North America while maintaining our position as Canada’s largest printer and as the leading Canadian French-language educational publishing group. Family-controlled business founded in 1976 Investment grade
Slide 6: Successful transformation into a growth company
Successful transformation into a growth company 2016 2021 Future 36% 12% 54% 29% $2.0B $2.6B >$3B 20% 9% 12% 3% 11% Growth 11% 3% Segments Growth Segments 23% 69% >80% Proven track record of operational excellence and ability to integrate acquisitions Long term sustainable organic growth outlook
Slide 7: Demonstrated ability to deleverage rapidly using solid free cash flow
Demonstrated ability to deleverage rapidly using solid free cash flow Net indebtedness1 (in millions of $) and net indebtedness ratio1 2 Lease liabilities Net indebtedness (excl. Lease liabilities) 3.1 Net indebtedness ratio (excl. IFRS 16) 2 $687 Net indebtedness ratio (incl. IFRS 16) 2.5 1,421 1.9
Slide 8: Allocating capital prudently
Allocating capital prudently 500 600 Cash flows from operating activities and capital allocation ($M) 450 CAPEX (incl. intangibles) 500 400 Dividends Average 432 427 Share buybacks (2016 – 2021) 350 Cash flows from operating activities Cash flows 400 324 Operations 300 313 315 250 273 300 $347M 200
Slide 9: Returning capital to shareholders
Returning capital to shareholders TC Transcontinental has been distributing a quarterly dividend since 1993 Dividends paid per participating share Dividends paid in 2021 90 ¢ represented only 24.8% of cash flows from operating activities 6¢ 1993 2021 Strong cash flow generation provides confidence i
Slide 10: Our CSR Approach
Our CSR Approach Corporate Social Responsibility is embedded in everything we do, while our sustainability focus drives innovation and provides a key competitive advantage Collaborate across the value chain between all stakeholders Deliver on our 11 goals related to our people, our operations, our p
Slide 11: Pursuing our business activities responsibly
Pursuing our business activities responsibly Top 50 Global ESG from Sustainalytics (Top 1%) (#1 in Containers & Packaging industry worldwide) Rated “A” by MSCI ESG Ratings for the last 6 years Corporate Knights: Among the top 10 Corporate Citizens in Canada in 2019 and 2020 and ranked 45th in top Gl
Slide 12: Overview
Overview TC Transcontinental Overview Our Business Sectors Conclusion www.tc.tc
Slide 13: TC Transcontinental Packaging
TC Transcontinental Packaging www.tc.tc 13
Slide 14: Packaging Sector Overview
Packaging Sector Overview Specializing in extrusion, lamination, printing, converting and recycling 28 Production Sites CANADA ~3,900 Employees UNITED STATES UNITED KINGDOM $1.45B FY2021 Revenues MEXICO Top 10 converter in North America with a leadership position in several verticals and GUATEMALA
Slide 15: Achievements in our Packaging Sector
Achievements in our Packaging Sector Significant improvement in profitability in FY2020 and diligently managing supply chain disruptions and inflation (including significant resin price increases) in FY2021 Managed the strong order uptake and supported our customers by optimizing capacity and ke
Slide 16: Packaging Sector Outlook
Packaging Sector Outlook Generate long-term profitable growth Capital expenditures directed towards innovation and increasing capacity Expect to grow profitability in FY2022 Sustainable packaging is an important key differentiator Continue to strengthen our packaging portfolio with targete
Slide 17: Leading Flexible Packaging Platform Built Through a Disciplined M&A Strategy
Leading Flexible Packaging Platform Built Through a Disciplined M&A Strategy 2014 2015 2016 2016 Acquisition of Acquisition of Acquisition of Acquisition of Capri Packaging Ultra Flex Packaging Corp. Robbie Manufacturing Flexstar Packaging Inc. Clinton, Missouri Brooklyn, New York Lenexa, Kansas Ric
Slide 18: Successful integration of Coveris Americas
Successful integration of Coveris Americas Exceeded synergy targets EBIT and adjusted EBITDA1 increased significantly in the 2 years following the acquisition. Adjusted EBITDA margins1 grew from 11.9% in FY2018 to 12.8% in FY2019, and to 16.0% in FY2020, a 410bps improvement in 2 years. Insourcing o
Slide 19: Strong Position in a Variety of Industries
Strong Position in a Variety of Industries Labels Stand-up pouches 19
Slide 20: Packaging Innovation and Sustainability
Packaging Innovation and Sustainability Key considerations for clients Product • Oxygen, Moisture, Light Protection • Transportation Consumer • On the Shelf Image Engagement • Convenience of Use Total Cost of • Purchase Price Ownership • Processing Speed & Ease • Carbon Footprint Impact Sustainabili
Slide 21: The Benefits of Flexible Packaging
The Benefits of Flexible Packaging 21
Slide 22: The Benefits of Flexible Packaging
The Benefits of Flexible Packaging 22
Slide 23: The Benefits of Flexible Packaging
The Benefits of Flexible Packaging Guess how many trucks you would need to transport the same volume of rigid containers? 23
Slide 24: Flexible Packaging plays a vital role in preserving food and reducing food waste
Flexible Packaging plays a vital role in preserving food and reducing food waste Significantly improves Increases shelf life Offers unprecedented Provides confidence Informs the consumer product protection and reduces food convenience features in sterility and of the contents and freshness waste pro
Slide 25: The Benefits of Flexible Packaging
The Benefits of Flexible Packaging 25
Slide 26: vieVERTe: Our Growing Sustainable Packaging Line
vieVERTe: Our Growing Sustainable Packaging Line 100% RECYCLED READY BARRIER RECYCLED READY COMPOSTABLE PCR SHRINK FILMS • Low barrier outer • First to commercialize • Leader in packaging films • Use of post-industrial bag/pouch barrier structure barrier for compostable recycled (PIR), post- • Lamin
Slide 27: Making strides towards a circular economy for plastics
Making strides towards a circular economy for plastics We share the Ellen MacArthur Foundation’s common vision of a circular economy for plastic, where plastic never becomes waste TC Transcontinental was the first Canadian-based manufacturer to join the Ellen MacArthur Foundation’s New Plastics
Slide 28: Integrating the recycling of plastics in our production chain
Integrating the recycling of plastics in our production chain Our equipment is used for converting plastic waste recovered from sorting facilities and other commercial, industrial and agricultural sources into 100% post-consumer recycled resin (PCR). Our recycling activities allow us to offer our cu
Slide 29: TC Transcontinental Printing
TC Transcontinental Printing www.tc.tc 29
Slide 30: Printing Sector Overview
Printing Sector Overview Offering a state-of-the-art national printing network 13 Production Sites ~ 3,700 Employees $1.13B FY2021 Revenues Largest printer in Canada and also offers in-store-marketing, premedia, and distribution services Key clients include book, magazine and newspaper publisher
Slide 31: Achievements in Printing
Achievements in Printing Took swift actions at the onset of the pandemic to protect profitability and deliver solid free cash flows through the crisis Demonstrated ability in FY2021 to maintain 21.3% Adj. EBITDA margin1 excluding subsidy Lessons learned to be applied post-pandemic Simplified
Slide 32: Printing Sector Outlook
Printing Sector Outlook Expect a continued recovery in printing volume Will continue to control costs to protect operational profitability A larger proportion from portfolio of activities coming from verticals with growth potential like in- store marketing product, book printing and premedia s
Slide 33: Dynamically Adapting Print Portfolio to Market
Dynamically Adapting Print Portfolio to Market Printing Revenues by product / market ISM / Book / ISM / Book / Premedia News / Mag ISM / Book / News / Mag Premedia 11% / Comm Premedia / Comm 18% News / Mag / 29% 26% 27% Comm 42% FY2015 FY2019 FY2021 Flyers / Distr. 47% Flyers / Flyers / Distr. Distr
Slide 34: Helping retailers improving customers experience throughout a comprehensive service offering
Helping retailers improving customers experience throughout a comprehensive service offering Pre-Shopping In-Store After-Sale Experience Experience Experience / Building Loyalty Flyers Promotional POP Distribution Customized displays Direct Mail Catalogues Permanent signage Comprehensi
Slide 35: Printed Flyers
Printed Flyers A Resilient Solution with a Significant Reach Providing Strong ROI for Retailers Turnkey solution for retailers including designing, targeting, printing, distribution, and other related services enabling the measurement of programs efficiency with a view to increase advertisers’ sal
Slide 36: In-Store Marketing (ISM)
In-Store Marketing (ISM) A growth vertical within our Printing sector Grew from ~$10M revenues in 2012 to a run-rate of ~$200M (through organic growth & acquisitions) Recent acquisition of Holland & Crosby, Artisan Complete and BGI Retail to complement our offering while providing scale Signif
Slide 37: In-Store Marketing (ISM)
In-Store Marketing (ISM) Building capabilities across ISM markets TC Transcontinental ISM Promotional POP Custom displays 8ft & above signage POP displays for CPGs (Temporary signage) (Durable floor displays) (Permanent signage) Predominantly high-frequency Low frequency promotional Customized fixtu
Slide 38: In-Store Marketing (ISM)
In-Store Marketing (ISM) Strong track record of organic growth Revenues Acquisititions ~$200M Holland & Crosby (Oct. 2019) Artisan Complete (Jan. 2020) BGI Retail (June 2021) ~$10M 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Run-rate Organic annual growth rate >20% from 2012-2021 Imp
Slide 39: TC Media
TC Media www.tc.tc 39
Slide 40: Media Sector now focused on Educational Material and Groupe Constructo
Media Sector now focused on Educational Material and Groupe Constructo Educational book publishing and distribution activities through TC Media Books, and publishing activities for Quebec’s construction industry through Constructo Group Completed the transformation in Media Sector with the sale
Slide 41: Overview
Overview TC Transcontinental Overview Our Business Sectors Conclusion www.tc.tc
Slide 42: Key Investment Highlights
Key Investment Highlights Diversified operations in flexible packaging, printing and media Leadership position in most verticals driven by deep relationships with blue chip customers Best-in-class operator with long track-record of driving strong margins Leading commitment to sustainability and a ci
Slide 43: Conclusion
Conclusion The pandemic has highlighted our resilience, agility and operational excellence We are well positioned to grow profitability in our Packaging Sector and to benefit from a gradual recovery in our Printing Sector We have a solid financial position, generating strong and consistent cash flow
Slide 44: Contact information
Contact information Yan Lapointe Director, Investor Relations Transcontinental Inc. 1 Place Ville Marie, Suite 3240 Montréal (QC) H3B 0G1 www.tc.tc Telephone: 514 954-3574 [email protected]
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