Transcontinental Inc. Class A · TSX:TCL.A
Transcontinental Inc. Class A — TC Transcontinental — Investor Presentation (April 2016)
36 slides from Transcontinental Inc. Class A's investor presentation, Apr 18, 2016
Slide 1: Well Positioned to Pursue Our Transformation
WELL POSITIONED TO PURSUE OUR TRANSFORMATION INVESTOR PRESENTATION APRIL 18, 2016 TSX: TCL.A, TCL.B
Slide 2: Forward-Looking Information
FORWARD-LOOKING INFORMATION This presentation contains certain forward-looking statements concerning the goals of the Corporation, its strategy, its projected financial results and expectations as to its operations. Such statements, based on the current expectations of management, inherently involve
Slide 3: Table of Contents
TABLE OF CONTENTS WELL POSITIONED TO PURSUE OUR TRANSFORMATION 1 LEVERAGING AN ARRAY OF ASSETS FOR A MULTI-YEAR TRANSFORMATION section Financial Positioning Offering Relationships Network Expertise performance p.5 p.6 p.8 p.10 p.11 p.12 2 DELIVERING RESULTS BY EXECUTING OUR STRATEGIES section Contin
Slide 4: Leveraging an Array of Assets for a Multi-Year Transformation
LEVERAGING AN ARRAY OF ASSETS FOR A MULTI-YEAR TRANSFORMATION section 1 4
Slide 5: Maintaining Lead Position in Markets Served
POSITIONING MAINTAINING LEAD POSITION IN MARKETS SERVED Largest printer in Canada and third-largest printer in North America Largest printer of retail Leading printer of Leading printer of flyers in Canada newspapers in Canada magazines in Canada Leading provider of local media and educational publi
Slide 6: Offering Relevant and Diversified Book of Business
OFFERING OFFERING RELEVANT AND DIVERSIFIED BOOK OF BUSINESS 2015 Revenues: $2.1B(1) 72% Printing and Packaging Sector $1,477M Retail and Newspapers $895M Magazines and Books $238M Marketing Products $230M Flexible Packaging $114M 28% Media Sector $575M Local Solutions $381M Interactive Marketing Sol
Slide 7: Remaining a Solution-Driven Partner for Customers
OFFERING REMAINING A SOLUTION-DRIVEN PARTNER FOR CUSTOMERS Solutions for Solutions for Solutions for Solutions for Solutions for Solutions for food retailers and publishers large and small local businesses businesses, processors, large marketers advertisers and advertisers professionnals beverage an
Slide 8: Sustaining Strong Long-Standing Relationships with Leading Customers
RELATIONSHIPS SUSTAINING STRONG LONG-STANDING RELATIONSHIP WITH DIVERSE MIX OF LEADING CUSTOMERS Grocery DRUGSTORE HOME IMPROVEMENT BIG BOX NEWSPAPER PUBLISHERS BOOK AND MAGAZINE PUBLISHERS FOOD PROCESSOR, BEVERAGE AND TOBACCO SECTION • 1 8
Slide 9: Generating Recurring Revenues; Printed Flyers Still Strong
RELATIONSHIPS GENERATING RECURRING REVENUES 84% 73% 9% Shoppers read Millennials read Shoppers using digital printed flyers printed flyers flyers / flyer app only IN A DIGITAL WORLD, PRINTED FLYERS ARE STILL STRONG * ≈ 50% OF REVENUES ARE RETAILER RELATED * Research conducted by BrandSpark Internati
Slide 10: Offering a State-of-the-Art National Printing Network
NETWORK OFFERING A STATE-OF-THE-ART NATIONAL PRINTING NETWORK 22 printing plants (As at April 18, 2016) Quebec British Columbia Beauceville Delta Boucherville Gatineau Newfoundland Montreal (3) Corner Brook Quebec St. John’s St-Hyacinthe Prince Edward Island Ontario Borden-Carlton Markham & Aurora B
Slide 11: Building on Solid Manufacturing Competencies
EXPERTISE BUILDING ON SOLID MANUFACTURING COMPETENCIES 1 Specialist in raw material procurement 2 Expertise in equipment purchases 3 Specialist in manufacturing network management Expert in organizing labour around technology (continous 4 improvements, best practices, etc.) 5 Experience in establish
Slide 12: Delivering a Track Record of Performance
FINANCIAL PERFORMANCE DELIVERING A TRACK RECORD OF PERFORMANCE (IN MILLIONS OF $) Stable Revenues Strong and Consistent Cash Flow From Operating Activities Before Changes in Non-cash Operating Items and Income Taxes 2,112 2,097 2,028 1,989 1,990 2,002 2,011 373 379 374 344 321 327 311 2010 2011 2012
Slide 13: Requiring Low Capital Expenditures
FINANCIAL PERFORMANCE REQUIRING LOW CAPITAL EXPENDITURES CAPITAL EXPENDITURES (INCL. INTANGIBLE ASSETS) (IN MILLIONS OF $) More than $800M invested in state-of-the- Enabling opportunities for: art printing platform • Onboarding of new clients • Increasing productivity 284 • More efficiencies 260 • L
Slide 14: Solid Balance Sheet for Future Strategic Investments
FINANCIAL PERFORMANCE SOLID BALANCE SHEET FOR FUTURE STRATEGIC INVESTMENTS NET INDEBTEDNESS (IN MILLIONS OF $) AND LEVERAGE RATIO 903 2.6x 699 1.9x 539 471 442 1.5x 346 352 321 1.3x 1.2x 1.0x 0.9x 0.9x 2009* 2010** 2011** 2012** 2013*** 2014 2015 Q1-2016 * As originally reported and including securi
Slide 15: Delivering Results by Executing Our Strategies
DELIVERING RESULTS BY EXECUTING OUR STRATEGIES section 2 15
Slide 16: Continued Optimization of Our Printing Platform
CONTINUED OPTIMIZATION OF OUR PRINTING PLATFORM PRINTING DIVISION ADJUSTED EBIT (IN MILLIONS OF $) 54 plants 48 plants 246 250 38 plants 29 29 230 plants 222 plants 198 200 27 26 180 plants 23 22 plants plants plants 148 147 2008 2009 2010 2011 2012 2013* 2014** 2015 2016 (LTM) Pursuing Organic Gr
Slide 17: Pursuing Organic Growth
CONTINUED OPTIMIZATION OF OUR PRINTING PLATFORM PURSUING ORGANIC GROWTH Focus Strategy Increasing share of wallet with key customers • Assessing various pockets of growth (In-store marketing products printing presently worth $50M annualized, building to $75M) • Renewing and gaining new contracts • E
Slide 18: Driving Efficiencies
CONTINUED OPTIMIZATION OF OUR PRINTING PLATFORM DRIVING EFFICIENCIES Focus Strategy Continuing to right-size our platform • Closing plants (54 to 22 printing plants) • Reorganizing press lines • Increasing utilization rate Reviewing manufacturing processes • Improving scheduling • Increasing use of
Slide 19: Maintaining Profitability of Our Media Sector
MAINTAINING PROFITABILITY OF OUR MEDIA SECTOR MEDIA SECTOR ADJUSTED EBIT (IN MILLIONS OF $) 62 54 55 49 41 38 2011 2012 2013 2014 2015 2016 (LTM) Strenghthening our Media Offering Maintaining Profitability SECTION • 2 19 19
Slide 20: Strengthening Our Media Offering
MAINTAINING PROFITABILITY OF OUR MEDIA SECTOR STRENGHTHENING OUR MEDIA OFFERING Focus Strategy Optimizing our portfolio of core media assets • Growing our offering to local merchants • Reviewing newspaper asset base • Growing local digital ad solutions offering (recently launched TC Media Nouvelles
Slide 21: Backbone of Diversification into Flexible Packaging
Our solid balance sheet + Our strong printing network + An optimized media portfolio + Our manufacturing capabilities = BACKBONE OF DIVERSIFICATION INTO FLEXIBLE PACKAGING SECTION • 2 21
Slide 22: Building Our Packaging Division
BUILDING OUR PACKAGING DIVISION 2014 Revenues Pro forma 2015 Revenues 69% 28% 2% 10% 29% 62% Printing Division Packaging Division Media Sector Pursuing Acquisition Pursuing Organic Increasing Share of Strategy + Growth Division’ Revenues Two acquisitions Revenues up since 2014 from 2% to 10% SECTI
Slide 23: Pursuing Acquisition Strategy: Ultra Flex and Capri
BUILDING OUR PACKAGING DIVISION PURSUING ACQUISITION STRATEGY Focus Acquiring companies • Transaction closed on Sept. 30, 2015 • Transaction closed on May 3, 2014 • Revenues: US$72M • Revenues: US$72M • Employees: ≈ 300 • Employees: ≈ 200 Ultra Flex Packaging Capri Packaging Expanding manufacturing
Slide 24: Pursuing Acquisition Strategy (Cont'd)
BUILDING OUR PACKAGING DIVISION PURSUING ACQUISITION STRATEGY (CONT’D) Building a North American network Transcontinental Capri 1 912 East Nusbaum Place Clinton, MO 64735 • Built in 1994 • 56,000 sq.ft • SQF Level 3. Transcontinental Capri 2 1801 North Gerhart Drive Clinton, MO 64735 Transcontinenta
Slide 25: Pursuing Organic Growth
BUILDING OUR PACKAGING DIVISION PURSUING ORGANIC GROWTH Focus Strategy Selling to new customers and selling more to • Leveraging our new national sales force to attract existing customers new customers in dairy, pet food, beverage and confectionary • Increasing share of wallet with current customers
Slide 26: Driving a High-Performing and Enduring Company
DRIVING A HIGH-PERFORMING AND AN ENDURING COMPANY AND CREATING LONG-TERM SHAREHOLDER VALUE section 3 26
Slide 27: Producing Attractive Free Cash Flow Yield
CREATING LONG-TERM SHAREHOLDER VALUE PRODUCING ATTRACTIVE FREE CASH FLOW YIELD Printing division is backbone of free 20.7% cash flow story 19.8% 18.4% 13.8% 12.3% 10.0% 9.4% 2010 2011 2012 2013* 2014 2015 2016 (LTM) Note : Free cash flow is adjusted operating earnings before amortization less the su
Slide 28: Deploying Capital Efficiently
CREATING LONG-TERM SHAREHOLDER VALUE DEPLOYING CAPITAL EFFICIENTLY PRIMARY USE OF CASH (IM MILLIONS OF $) Total allocated since FY’2007: Share repurchases $141M Acquisitions $675M Dividends $460M Capital expenditures $1,217M (incl. intangibles) $49 $53 $67 $226 Focus on $14 $26 packaging acquisition
Slide 29: Sustaining Dividend Growth
CREATING LONG-TERM SHAREHOLDER VALUE SUSTAINING DIVIDEND GROWTH DIVIDENDS PAID PER PARTICIPATING SHARE ON AN ANNUAL BASIS +9% + Paid special dividend of $1.00 5-year CAGR 8.6% $0.74 and 3.7% yield $0.67 $0.63 (as at April 13, 2016) $0.57 $0.58 $0.49 $0.35 $0.31 $0.32 $0.28 $0.25 $0.21 $0.17 2004 200
Slide 30: Deploying Capital to Create Long-Term Shareholder Value
CREATING LONG-TERM SHAREHOLDER VALUE DEPLOYING CAPITAL TO CREATE LONG-TERM SHAREHOLDER VALUE About $2.1B of capital deployed since 2007 to create shareholder value ≈ 8% allocated to ≈ 70% allocated to ≈ 22% allocated to share repurchases strategic investments dividends (Acquisitions + Growth Capex)
Slide 31: Appendix
Appendix 31
Slide 32: Moving from Revenues of $2M to $2B
MOVING FROM REVENUES OF $2M TO $2B AND FROM 30 TO 8,000 EMPLOYEES 1976 1978 1979 1984 1990’s 2003 2005 2009-15 $2.9M $4.2M $18M $83M $1.6B $1.9B $2.2B $2.0B-$2.0B Revenues Revenues Revenues Revenues Revenues Revenues Revenues Revenues Flyers Distribution Publishing Public Acquisitions Newspaper Digi
Slide 33: Presenting the Executive Management Team
PRESENTING THE EXECUTIVE MANAGEMENT TEAM François Olivier Christine Desaulniers Nelson Gentiletti President and Chief Legal Officer and Chief Financial and Chief Executive Officer Corporate Secretary Development Officer Katya Laviolette Donald Lecavalier Brian Reid Chief Human Resources Senior Vice
Slide 34: Relying on Our Values
RELYING ON OUR VALUES TO OUR PILLARS, TC TRANSCONTINENTAL IS: CUSTOMERS: A long-standing partner with premium service offerings Innovation Teamwork EMPLOYEES: An employer of choice committed to talent development SHAREHOLDERS: A family-controlled business driving long-term growth Respect Performance
Slide 35: Committing to Reach Corporate Social Responsibility Objectives
COMMITTING TO REACH CORPORATE SOCIAL RESPONSIBILITY OBJECTIVES “Our 2013-2015 plan has enriched our CSR experience. We have built on this three- year plan to create our 2016-2018 plan. We worked on the development of objectives and set targets that are even more tangible, all of which is in line wit
Slide 36: years
40 years 36
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