Transcontinental Inc. Class A · TSX:TCL.A
Transcontinental Inc. Class A — Investor Presentation (September 2010)
39 slides from Transcontinental Inc. Class A's investor presentation, Sep 23, 2010
Slide 1: Presentation to Investors
Presentation to Investors MEDIA Leveraging Opportunities MARCOM in the New Playing Field PRINT September 23, 2010
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 Transcontinental Overview The New Playing Field Opportunities to Leverage Financials Key Take-Aways 3
Slide 4: Transcontinental Overview
MEDIA MARCOM Transcontinental Overview PRINT
Slide 5: Profile
Profile Transcontinental creates marketing products and services that allow businesses to attract, Overview reach and keep their target customers. New Playing Field The Corporation is the largest printer in Canada and in Mexico, and fourth-largest in Opportunities North America. Financials It
Slide 6: History & Recent Events
History & Recent Events History Recent Events Overview 1976 Founded by Rémi Marcoux, who is now the Executive Chairman of the Board Acquired Lipso, a leading New Playing Field Canadian mobile 1978 Beginning of distribution activities solutions provider Opportunities 1979 Beginning of publishing ac
Slide 7: Three Operating Sectors
Three Operating Sectors Overview 2009 Results Marketing Communications New Playing Field $2,169M Revenues (1) $217M EBIT (2) Opportunities 5% 1% Financials Printing Key Take-Aways 61% 68% Media 38% 27% While the media sector generates 27% of total revenues, it contributes 38% of total operating prof
Slide 8: Business Segments
Business Segments 2009 Revenues: $2,169M Overview Marketing (2) New Printing $1,530M 68% (1) Media $607M 27% (1) $124M 5% (1) Playing Field Communications Opportunities Magazine, Book & Digital Printing $487 22% $37 2% Catalogue Group Local Solutions Group $352 16% Solutions Financials Key Take-Away
Slide 9: Printing – National Network
Printing – National Network Overview New Playing Field Opportunities Financials Key Take-Aways Magazines & Catalogues (5) Books (3) Marketing Products (15) Retail (5) Newspapers (10) Mexico Plants (3) 9
Slide 10: Media – Strong Brands
Media – Strong Brands Overview New Playing Field Opportunities Financials Key Take-Aways Publisac.ca Magazine Readership: 11.6M Unique Monthly Visitors: Over 4 million Newspaper circulation: 300k daily, 2.5M weekly 10
Slide 11: Marketing Communications – New Services
Marketing Communications – New Services Overview New Playing Field Opportunities Financials 2002 March 2008 Sept 2008 Nov 2008 Jan 2009 May 2010 Key Take-Aways Building new capabilities to deliver interactive marketing programs Strategic Consulting Development Delivery STRATEGY STRATEGY && MULTI-CHA
Slide 12: A Quick Look at the Numbers
A Quick Look at the Numbers Revenues ($M) Cash Flow from Operations ($M) Dividends (¢) Overview $2,429 32¢ 31¢ $297 28¢ New $289 25¢ Playing Field $2,326 $2,282 $2,295 21¢ $271 Opportunities $264 $2,196 $248 Financials Key Take-Aways 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 2005 2006 2007 2
Slide 13: The New Playing Field
MEDIA MARCOM The New Playing Field PRINT
Slide 14: The Advertising & Marketing Landscapes are Changing
The Advertising & Marketing Landscapes are Changing Overview The world is going digital and media habits are changing: People are embracing new technologies for media consumption and ease of use New Playing Field End-users increasingly spend more time outside their homes, use more digital medi
Slide 15: Transcontinental: Two-Prong Strategy
Transcontinental: Two-Prong Strategy The goal of Transcontinental is to help our customers attract, reach and keep their target Overview customers New Playing Field Transcontinental derives about 80% of its revenues from the marketing budgets of its Opportunities customers Financials Key The c
Slide 16: Two-Prong Strategy: Primary Focus
Transcontinental: Two-Prong Strategy 1. Build on existing assets 2. Develop the New Overview PRINT MEDIA MARKETING COMMUNICATIONS New Playing Field Growth of interactive marketing Limited to no market growth In the early stages of a to communicate directly with Opportunities environment short
Slide 17: Transcontinental: An Integrated Offering
Transcontinental: An Integrated Offering MA RC NT DE OM TE L N IV CO E-f lye r ER le Cu Mobi Y s tom a il Em Pr em P ub ed ia . 1 1 to Re tai l Da taba se Mrktg Products CMO RY DELIVE g t in Digit r in al MEDIA tP g t in a g/C in M a Ne w Pr Ma T er ga EN p spa zin pa Distribution NT ws es Book p er
Slide 18: Understanding the Evolving Competitive Landscape
Understanding the Evolving Competitive Landscape Overview MA New RC Playing Field OM EDIA Opportunities M Financials Key Take-Aways Customers & Markets PRINT Note: this is not an exhaustive list 18
Slide 19: Opportunities to Leverage
MEDIA MARCOM Opportunities to Leverage PRINT
Slide 20: Print
Print Strategy: Manufacturing Overview New Playing Field Efficiency Competitive Advantage Results & Market Share Gains New Playing Field Limited to no market Optimize asset base National network of Gained new contracts growth environment plants from Rogers, Shoppers Opportunities short term
Slide 21: Print: Increase Profit Margin
Print: Increase Profit Margin Print EBITDA Margin Overview New Playing Field 20.1% 20.2% Opportunities 18.1% 18.2% 16.6% 15.6% 15.4% 15.6% Financials 14.3% 13.2% Key 11.9% Take-Aways Q1 Q2 Q3 Q4 2008 2009 2010 2010 Print Margins are Superior to 2008 (1) Note: Results exclude US Direct Mail Activitie
Slide 22: Print: Increase Profit Margin
Print: Increase Profit Margin Overview How? New Playing Field Opportunities Financials Leverage Newspaper & Retail Consolidate Plants Grow Market Share Hybrid Platform Key Take-Aways Optimize asset utilisation by de- Increase synergies by merging Increase revenues and specialising plants (merg
Slide 23: Media
Media Strategy: Strengthening Overview existing publishing New Playing Field Competitive Advantage Results assets & building new New Playing Field media channels Opportunities In the early stages of a Grow local content Strong brands Launched digital local transformation solutions including
Slide 24: Media: Grow Local Solutions
Media: Grow Local Solutions Overview Print: Local Print: Directories Pure Play Web Newspapers New Playing Field $1.25 billion – 2009 Opportunities $1 billion – 2009 $1.1B – 2009 $1.0 billion – 2013 Industry $925 million – 2013 $1.8B – 2013 -5.4% CAGR 2009- Financials -2% CAGR 2009-2013 14% CAGR 2009
Slide 25: Media: Grow Local Solutions
Media: Grow Local Solutions Overview How? New Playing Field Opportunities Financials Focus on targeted verticals in Expand service offering Create relationships major urban centers Key Take-Aways Focus on targeted verticals as Introduce new services such Create partnerships with other some ver
Slide 26: Marketing Communications
Marketing Communications Strategy: Expand service Overview New Playing Field Competitive Advantage Results offering New Playing Field Growth of interactive Build engagement Leverage strong Acquired Thindata marketing to marketing with customer relationships (email) Opportunities communicate
Slide 27: Marketing Communications: Expand Service Offering
Marketing Communications: Expand Service Offering Printing Sector Marketing Communications Sector Media Sector Overview Magazine, Catalogs & Marketing Products Digital Promotions Communications Mobile Solutions News Publishing Mag Publishing New Digital Printing 1:1 Marketing Digital Media Distribut
Slide 28: Marketing Communications: Expand Service Offering
Marketing Communications: Expand Service Offering Overview How? New Playing Field Opportunities Financials Pursue new acquisitions in Develop next generation solutions Develop new markets strategic areas Key Take-Aways Strengthen our leadership Leverage our mobile IP and Build consultative exp
Slide 29: Financials
MEDIA MARCOM Financials PRINT
Slide 30: Financial Strategy
Financial Strategy Overview Maintain adequate liquidity New Playing Field Maintain our currency hedging programs Opportunities Keep cost of capital as low as possible Financials Maintain financial discipline with regards to capital Key Take-Aways Maintain our net-debt-to-EBITDA, including
Slide 31: Third Quarter 2010 Results
Third Quarter 2010 Results Revenues ($M) Cash Flow from Operations ($M) Dividends (¢) Overview $76 $504 9¢ $500 New Playing Field $51 Opportunities 8¢ Financials Key Take-Aways Q3 2009 Q3 2010 Q3 2009 Q3 2010 Q3 2009 Q3 2010 Adjusted EBITDA ($M) Capital Exenditures ($M) Net Debt to EBITDA (incl. sec
Slide 32: Third Quarter Results
Third Quarter Results Organic Revenues ($M) Overview $16M or 3% growth New Playing Field It is the second consecutive $10M or 2% growth Opportunities quarter that the Corporation generates organic revenue growth Financials Key Take-Aways Q2 2010 Q3 2010 Adjusted EBITDA ($M) $90M or 18% margin Ad
Slide 33: Adjusted EBITDA: Evolution over the last few quarters
Adjusted EBITDA: Evolution over the last few quarters Consolidated EBITDA (LTM Basis) ($M) $382 Started to execute our restructuring Overview Started to execute $375 restructuring plan $361 plan in February 2009 New Playing Field $343 Saved $110 million over 1 year $339 $326 $327 (restructuring
Slide 34: Free Cash Flow: Evolution over the last few quarters
Free Cash Flow: Evolution over the last few quarters FCF ($M) Capex will be significantly reduced Overview Peak investment going forward as we accelerated our period for SFC and G&M capex program in the past few years New $51 Playing Field $33 $41 Capex is expected to be about $75 0 million goin
Slide 35: Net Debt to EBITDA: Evolution over the last few quarters
Net Debt to EBITDA: Evolution over the last few quarters Net Debt to EBITDA (incl. Securitization) Overview Net debt to EBITDA peaked mid-2009 3.3x 3.4x New 3.2x 2.5x during our combined investment for the Playing Field 2.0x 2.6x 2.6x San Francisco Chronicle and The Globe 2.4x 2.1x 2.1x Opportunit
Slide 36: Foreign Exchange Impact
Foreign Exchange Impact Geographic Segmentation of Revenues Hedging Program Overview Three-year rolling currency U.S. 12% hedging program on net cash flow New Playing Field 50%-100% the first year Mexico 25%-50% the second year Opportunities Canada 3% 0-33% the third year 76% Exports to U.S.
Slide 37: Key Take-Aways
MEDIA MARCOM Key Take-Aways PRINT
Slide 38: Key Take-Aways
Key Take-Aways Transcontinental is in a unique position in Canada to help customers identify, reach and retain Overview their target consumers by offering both traditional and new marketing communication solutions New Playing Field Transcontinental is the leader in most of the niches it serves a
Slide 39: Transcontinental
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