Transcontinental Inc. Class A · TSX:TCL.A
Transcontinental Inc. Class A — Investor Presentation (September 2011)
38 slides from Transcontinental Inc. Class A's investor presentation, Sep 29, 2011
Slide 1: Generating Cash for Future Growth
Presentation to Investors Generating Cash for Future Growth September 29, 2011
Slide 2: Forward looking statement
Forward looking statement This presentation contains certain forward-looking statements concerning the future performance of the Corporation. Such statements, based on the current expectations of management, inherently involve numerous risks and uncertainties, known and unknown. We caution that all
Slide 3: Contents
Contents Key Take-Aways Transcontinental Overview Strategy Investment Case 3
Slide 4: Key Take-Aways
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Slide 5: Key Take-Aways
Key Take-Aways Overview Strategy Investment Case Key Take-Aways Transcontinental is in a unique position in Canada to help customers identify, reach and retain their target consumers by offering both traditional and new marketing communication solutions. Transcontinental is the leader in most of the
Slide 6: Transcontinental Overview
Transcontinental Overview
Slide 7: Moving From Entrepreneurial to Canadian Leader
Key Take-Aways Overview Strategy Investment Case Moving From Entrepreneurial to Canadian Leader 1976 1978 1979 1984 2000 2003 2005 2011 Revenues: $2.9M Revenues: $4.2M Revenues: $18M Revenues:$82.7M Revenues: $1.8B Revenues: $1.9B Revenues: $2.2B Revenues:$2.1B(1) • Founded by • Beginning of • Start
Slide 8: Operating in Niche Markets
Key Take-Aways Overview Strategy Investment Case Operating in Niche Markets 2010 Revenues: $2,092M(1) (2) $1,443M 66% (2) $608M 28% (2) $123M 6% Retail Group $424 19% Local Solutions $350 16% Premedia $39 2% Group Magazine, Book & Digital Printing $34 2% Catalogue Group $419 19% Solutions Business &
Slide 9: Offering a State-of-the-Art National Printing Network
Key Take-Aways Overview Strategy Investment Case Offering a State-of-the-Art National Printing Network Salt Lake City, UT (2) St John’s, NL Corner Brook, NL Quebec, QC (2) Borden - Carlton, PEI Louiseville, QC Montreal, QC (3 facilities) Sydney, NS Dartmouth, NS Calgary, AB Saskatoon, SK Montreal, Q
Slide 10: Reaching Over 18 Million Consumers
Key Take-Aways Overview Strategy Investment Case Reaching Over 18 Million Consumers BUSINESS AND CONSUMER MAGAZINES DIGITAL MEDIA BUSINESS MAGAZINES CONSUMER MAGAZINES More than 30 titles reaching 11M readers per month in French and English Network of 1,000+ websites reaching 11.3M Canadian UMV LOCA
Slide 11: Staying Relevant to Customers
Key Take-Aways Overview Strategy Investment Case Staying Relevant to Customers CUSTOM COMMUNICATIONS PREMEDIA From websites to emails, To retailers, publishers and videos to social media, we other brand-conscious create customized organizations, we create content for leading assets (visual, text, et
Slide 12: Delivering a Track Record of Performance
Key Take-Aways Overview Strategy Investment Case Delivering a Track Record of Performance Revenues ($M) Cash Flow from Operations Dividends (¢) ($M) Divested U.S. $2,429 $316 35¢ Direct Mail $289 $300 32¢ $271 31¢ $2,326 ($248M) 28¢ $247 $2,282 25¢ $2,170 $2,092 2006 2007 2008 2009 2010 2006 2007 20
Slide 13: Being a Responsible Corporate Citizen
Key Take-Aways Overview Strategy Investment Case Being a Responsible Corporate Citizen “Looking ahead I can say with renewed conviction that by delivering on our sustainability commitment on a day to day basis we will continue to create value for our shareholders, employees and customers, and make a
Slide 14: Strategy
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Slide 15: Helping to Attract, Reach and Keep Targeted Customers
Key Take-Aways Overview Strategy Investment Case Helping to Attract, Reach and Keep Targeted Customers 15
Slide 16: Generating 80% of Revenues from Advertising Budgets
Key Take-Aways Overview Strategy Investment Case Generating 80% of Revenues from Advertising Budgets Transcontinental’s Revenue Sources Advertising Other 80% 20% 16
Slide 17: Adapting to Changes in the Media Landscape
Key Take-Aways Overview Strategy Investment Case Adapting to Changes in the Media Landscape TRADITIONAL NEW TV Radio Print Digital 17
Slide 18: Building on Existing Assets and Developing the New
Key Take-Aways Overview Strategy Investment Case Building on Existing Assets and Developing the New Transcontinental’s Two-Prong Strategy 1. Building on existing assets 2. Developing the new Strengthening existing Building new publishing media Expanding into new marketing Generating Synergies assets
Slide 19: Print: Driving Growth Through Synergies
Key Take-Aways Overview Strategy Investment Case Print Driving Growth Through Synergies Plan Results Announced the closure of 5 plants in fiscal 1 Consolidate plants 2011. Sold Mexican operations. Leverage newspaper and 2 retail hybrid platform Started the Globe & Mail 18-year contract. Transferring
Slide 20: Increasing Profit Margin (Print EBITDA Margin)
Key Take-Aways Overview Strategy Investment Case Print Increasing Profit Margin (Print EBITDA Margin) 21.0% 20.7% 20.3% 20.2% 19.8% 19.1% 18.5% 18.3% 17.6% 15.6% 15.3% 14.3% 13.9% 14.0% 11.9% Q1 Q2 Q3 Q4 2008 2009 2010 2011 Note: Results are as reported. 20
Slide 21: Being the Best Printer
Key Take-Aways Overview Strategy Investment Case Print Being the Best Printer Print will remain a significant part of the media mix. The printing segment in Canada is faring better than the U.S. No significant CAPEX investments required in the short to medium term. Opportunity to expand outsourcing
Slide 22: Media: Expanding Our Reach in Communities of Interest
Key Take-Aways Overview Strategy Investment Case Media Expanding Our Reach in Communities of Interest Plan Results Became a Canadian Rep house for a number of websites (About.com, Geek.com, 1 Increase our UMV PCMag.com, Netplaces.com, Undertone, etc.). Increased TCL’s traffic from 4.2M to 11.3M than
Slide 23: Tripling our UMV in Less Than a Year
Key Take-Aways Overview Strategy Investment Case Media Tripling our UMV in Less Than a Year Health & Wellness Entertainment Sports Food Family Lifestyle 11.3M Business Fashion & Beauty Shopping Games Home & Garden Technology Automotive Green Living Local News 4.4M Humour 4.2M Pets 3.7M Travel 2008 2
Slide 24: Transforming in Line with the Market
Key Take-Aways Overview Strategy Investment Case Media Transforming in Line with the Market All of our magazine titles are available on tablet through PDF on the Zinio platform. All of our community newspapers are now available on a common web platform. 8 of our brands have a mobile App. Constantly
Slide 25: Interactive: Expanding our Turnkey Service Offering
Key Take-Aways Overview Strategy Investment Case Interactive Expanding our Turnkey Service Offering Plan Results Acquired many companies in the past few 1 Pursue acquisitions years offering services such as e-flyers, mobile solutions, print-to-web, etc. 2 Build partnerships Partnered with WIND Mobil
Slide 26: Generating New Revenue Streams
Key Take-Aways Overview Strategy Investment Case Interactive Generating New Revenue Streams $192.3M $183.0M $170.3M $78.0M 2008 2009 2010 2011 YTD LTM Note: Includes digital media, the Interactive sector and digital printing. 26
Slide 27: Growing Inline with our Customers' Spending
Key Take-Aways Overview Strategy Investment Case Interactive Growing Inline with our Customers’ Spending CMO’s spend about 10% of their marketing budget on new communication solutions, inline with Transcontinental’s numbers. CMO’s are in a testing mode. Therefore, Transcontinental is investing in bu
Slide 28: Investment Case
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Slide 29: Increasing Cash Flow (Index of EBITDA LTM Basis)
Key Take-Aways Overview Strategy Investment Case Increasing Cash Flow (Index of EBITDA LTM Basis) Announced the consolidation of the production activities of Litho Acme and Direct Montreal plants Announced Announced Positive Impact closure of closure of Spot Boucherville plant Graphics plant to come
Slide 30: Reducing CAPEX
Key Take-Aways Overview Strategy Investment Case Reducing CAPEX SFC G&M $257M $229M $155M $130M $127M $114M $75M $60M 2005 2006 2007 2008 2009 2010 2011E 2012E Note: Results are as reported. 30
Slide 31: Increasing Dividends More Aggressively
Key Take-Aways Overview Strategy Investment Case Increasing Dividends More Agressively Dividend Yield(1): 5.1% Payout ratio per cash flow(2): 13.8% 54¢ 54¢ Payout ratio per free cash flow(3): 17.1% 44¢ 44¢ 36¢ 36¢ 36¢ 32¢ 31¢ 28¢ 25¢ 2006 2007 2008 2009 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Note
Slide 32: Reducing Leverage
Key Take-Aways Overview Strategy Investment Case Reducing Leverage 3.4x 3.3x 3.2x 2.6x 2.6x 2.4x 2.1x 2.1x 1.9x 1.9x 1.8x 1.8x 1.7x 1.6x Target: 1.5x Net Debt to EBITDA(1) Q4-06 Q4-07 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Note: Results are as reported. (1) Including
Slide 33: Spreading Out Debt Maturities
Key Take-Aways Overview Strategy Investment Case Spreading Out Debt Maturities $115M $400M $285M $200M $14M $14M $50M $14M $71M $71M $50M $14M $47M $14M $10M 2012 2013 2014 2015 2016 & thereafter Private Placement HVB (amortized 5 years) Solidarity Fund Debenture ( 10 years) Securitization Program (
Slide 34: Leveraging Strong Customer Relationships
Key Take-Aways Overview Strategy Investment Case Leveraging Strong Customer Relationships Food & Drugstores Newspapers Home Improvement Consumer Products 34
Slide 35: Diversifying Revenue Streams
Key Take-Aways Overview Strategy Investment Case Diversifying Revenue Streams LONG MOVES IN SYNCH WITH THE ECONOMIC CYCLES TERM CONTRACTS Retail Flyers Printing 19% Community Newspapers Publishing WITH LOCAL ADVERTISING 10% LARGE NON ADVERTISING CUSTOMERS REPRESENTS ≈ 50% GROWING SEGMENT Notes: 2010
Slide 36: Managing for the Long Term
Key Take-Aways Overview Strategy Investment Case Managing for the Long Term The nomination of Isabelle Marcoux as Chair of the Board was the culmination of a process that started years ago and has been discussed regularly at the Board level since she was named Vice-Chair in 2007. This change will be
Slide 37: Generating Cash for Future Growth: Financial Guidance for 2012
Key Take-Aways Overview Strategy Investment Case Generating Cash for Future Growth Financial Guidance for 2012 Margin improvement in the Print sector. Margin pressure in the Media and Interactive sectors. CAPEX of $75 million at the most. Corporate expenses in line with 2011. Lower financial expense
Slide 38: ranscontinental
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Transcontinental — Investor Presentation (September 2011) on 6ix