Transcontinental Inc. Class A · TSX:TCL.A
Transcontinental Inc. Class A — TC Transcontinental — Non-Deal Roadshow (April 2017)
32 slides from Transcontinental Inc. Class A's roadshow presentation, Apr 25, 2017
Slide 1: Investor relations presentation
Investor relations presentation Well-positioned to pursue our transformation April 25, 2017
Slide 2: Notes to readers
NOTES TO READERS In this presentation, 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 this presentation, we also use non-IFRS financial m
Slide 3: Table of contents
Table of contents ● Our transformation - Who we are - Our strategy - Backbone of our transformation - Focus on our diversification ● Appendix - Our business by activity - Our means to finance growth - Return to shareholders - Contact and additional information 3
Slide 4: Our transformation
Our transformation 4
Slide 5: TC Transcontinental at a glance
WHO WE ARE TC Transcontinental at a glance Canada’s largest printer with operations in print, flexible packaging, publishing and digital media Mission: create products and services that allow businesses to attract, reach and retain their target customers Values: respect, teamwork, performance and in
Slide 6: An optimization and diversification strategy
OUR STRATEGY An optimization and diversification strategy Mature segment Growth segment Evolving segment Defend and strengthen Build our Packaging Optimize our media our printing platform division activities ● Improve efficiencies ● Pursue acquisitions ● Improve efficiencies ● Gain market share ● Gr
Slide 7: Revenue profile
OUR STRATEGY Revenue profile Transformation 1st Packaging 4 Packaging Exit of local community Strategic investments acquisition acquisitions completed newspaper business 65% 69% 74% 79% pro forma 2010 2014 2016 2016 2% 11% 5% 35% 29% 15% 16% 2007- 2010 2017 – and beyond Invested over $800M in the
Slide 8: Profitability growth despite transformation
OUR STRATEGY Profitability growth despite transformation Adjusted EBITDA ($M) and adjusted EBITDA margins 19% 19% 19% 18% 18% 18% 17% 16% 390 394 379 373 365 358 354 339 2010 2011 2012 2013* 2014 2015 2016 2017 LTM * 2013 financial information has been restated to reflect the impact of the adoption
Slide 9: Our revenue profile by market
OUR STRATEGY Our revenue profile by market (1) Pro forma 2016 Revenues $1,535M 79% Retail and Newspapers $859M Magazines and Books $245M Marketing Products $224M Distribution & Premedia $207M (1,2) $300M $2B $100M Business and Education $100M Notes: (1) Pro forma 2016 revenues include annualized acq
Slide 10: Demand for retailer-related services remains stable
BACKBONE OF OUR TRANSFORMATION Demand for retailer-related services remains stable Printed flyer is a relevant medium More than 40% of our consolidated 1 to drive traffic to the stores 3 revenues are linked to retailers ● 84% of shoppers read printed flyers Flyer printing, 31% ● 73% of millennials r
Slide 11: Focusing on selected markets
BACKBONE OF OUR TRANSFORMATION Focusing on selected markets Printing Media Solid and long-standing relationships Investing in our B2B and Education 1 with diverse mix of leading publishers 4 portfolio on an opportunistic basis ● Acquired all B2B brands of the Advisor and Financial Services Groups fr
Slide 12: Recording solid financial performance
BACKBONE OF OUR TRANSFORMATION Recording solid financial performance REVENUES ($M) ADJUSTED EBITDA ($M) Stable revenues and change in 1 revenue mix due to our portfolio 2,097 2,020 2,024 379 390 394 1,990 2,002 management initiatives 354 339 2 Efficient operator 2013* 2014 2015 2016 2017 LTM 2013* 2
Slide 13: Committing to a prudent diversification into flexible packaging
FOCUS ON OUR DIVERSIFICATION Committing to a prudent diversification into flexible packaging 1 M&A philosophy: investing in the right assets and at the right price ● Verticals where we can see added-value ● Verticals where we can leverage our manufacturing know-how ● Geographies where we can manage
Slide 14: Building a high-performance North American flexible packaging platform
FOCUS ON OUR DIVERSIFICATION Building a high-performance North American flexible packaging platform TC Flexstar TC Optium – Premedia facility TC Ultra Flex Richmond, British Columbia Aurora, Ontario Brooklyn, New York 120 employees 50 employees 300 employees Transaction closed: Oct. 17, 2016 T
Slide 15: Generating packaging revenues from four acquired businesses
FOCUS ON OUR DIVERSIFICATION Generating packaging revenues from four acquired businesses Pro Forma 2016 Revenues: $300M* TC Capri 34% 32% TC Ultra Flex TC Robbie TC Flexstar 12% 22% * * Annual revenues as published on the date of the acquisition of Robbie Manufacturing (converted into CAD) and Flexs
Slide 16: Deploying capital toward strategic acquisitions in last 3 years
FOCUS ON OUR DIVERSIFICATION Deploying capital toward strategic acquisitions in last 3 years Primary use of cash (in $M) Total allocated since FY’2007: Share repurchases $154M Acquisitions $769M Dividends $517M Capital expenditures $1,290M (incl. intangibles) 49 53 67 14 26 25 133 12 1 25 226 22 14
Slide 17: Appendix
Appendix @ TRANSCONTINENTAL
Slide 18: Providing a broad range of solutions as the largest printer in Canada
OUR BUSINESS BY ACTIVITY – PRINTING Providing a broad range of solutions as the largest printer in Canada and one of the largest in North America Retail flyers Flyer distribution Door-to-door distribution and geotargeting In-store marketing products, direct mail, Marketing products catalogs, etc. Pr
Slide 19: Providing a broad range of solutions as the largest printer in Canada
OUR BUSINESS BY ACTIVITY – PRINTING Providing a broad range of solutions as the largest printer in Canada and one of the largest in North America Magazines and books Newspapers Unique outsourcing model for publishers 19
Slide 20: State-of-the-art national printing network
OUR BUSINESS BY ACTIVITY – PRINTING State-of-the-art national printing network 18 printing plants (As of April 25, 2017) Quebec (8) British Columbia (1) Beauceville Delta Boucherville Gatineau Prince Edward Island (1) Montreal (3) Borden-Carlton Quebec St-Hyacinthe Nova Scotia (1) Halifax Ontario (4
Slide 21: Continued optimization of our printing platform
OUR BUSINESS BY ACTIVITY – PRINTING Continued optimization of our printing platform Printing division adjusted EBITDA (in $M) $1.7M Revenues $1.5M 48 plants 363 366 359 346 314 326 324 333 280 38 plants 29 plants 29 plants 27 plants 26 plants 23 plants 18 plants 18 plants 2009 2010 2011 2012 2013* 2
Slide 22: Flexible packaging solutions
OUR BUSINESS BY ACTIVITY – PACKAGING Providing a broad range of innovative and attention-grabbing flexible packaging solutions Assorted pouches and bags Overwrap Printed shrink and stretch films 22
Slide 23: Flexible packaging solutions
OUR BUSINESS BY ACTIVITY – PACKAGING Providing a broad range of innovative and attention-grabbing flexible packaging solutions Rollstock Non-forming web Lidding 23
Slide 24: Providing a broad range of multiplatform media solutions
OUR BUSINESS BY ACTIVITY – MEDIA Providing a broad range of multiplatform media solutions Multiplatform speciality publications, business Leader in French-language Business Educational & Trade events, conferences and seminars, content educational book publishing in Solutions solutions Book Publicati
Slide 25: Solid balance sheet for future strategic investments
OUR MEANS TO FINANCE GROWTH Solid balance sheet for future strategic investments Net indebtedness (in $M) and leverage ratio 903 2.6x 699 539 471 1.9x 442 346 331 321 1.5x 281 1.3x 1.2x 1.0x 0.9x 0.8x 0.7x 2009* 2010** 2011** 2012** 2013*** 2014 2015 2016 Q1-2017 * As originally reported and includi
Slide 26: No significant debt maturities before 2019
OUR MEANS TO FINANCE GROWTH No significant debt maturities before 2019 As at January 29, 2017 (in $M) 50 400 250 50 2017 2018 2019 2020 2021 2022 Private Placement Solidarity Fund Debenture (10 years) Solidarity Fund Debenture (6 years) Revolving Credit Facility-Unused Revolving Credit Facility-Used
Slide 27: Generating strong free cash flow and yield
OUR MEANS TO FINANCE GROWTH Generating strong free cash flow and yield Free cash flow (in $M) and yield 27.0% 276 250 247 232 225 223 24.3% 210 23.0% 152 17.8% 16.0% 14.5% 13.3% 12.3% 2010 2011 2012 2013 2014 2015 2016 2017 LTM Note: Free cash flow is adjusted operating earnings before amortization
Slide 28: Requiring low capital expenditures
OUR MEANS TO FINANCE GROWTH Requiring low capital expenditures Capital expenditures (incl. intangible assets) (in $M) 2007-2010 CAPEX More than $800M invested primarily in state-of-the-art printing platform Enabling opportunities to: Increase capacity and onboard new clients Increase productivit
Slide 29: Sustaining dividend growth
RETURN TO SHAREHOLDERS Sustaining dividend growth Dividends paid per participating share on an annual basis (in $) +8% 0.80 + Paid special dividend of $1.00 0.73 0.67 0.63 0.57 0.58 0.49 0.35 0.31 0.32 0.28 0.25 0.21 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F Annualized 5-year
Slide 30: Using normal course issuer bid opportunistically
RETURN TO SHAREHOLDERS Using normal course issuer bid opportunistically Participating share redemptions (in $M) 67 53 49 22 17 12 No share No share buybacks buybacks 1 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1-2017 30
Slide 31: Contact and additional information
Contact and additional information Transcontinental Inc. 1 Place Ville Marie Suite 3240 Montreal (QC) H3B 0G1 Telephone: 514 954-4000 Website: www.tc.tc Investor’s kit: Corporate Presentation 2016-2018 Corporate Social Responsibility Plan 31
Slide 32: tc @ TRANSCONTINENTAL
tc @ TRANSCONTINENTAL