Highlights
- Revenues increased by $616.3 million, or 30.7%, from $2,007.2 million to $2,623.5 million, mainly as a result of the transformational acquisition of Coveris Americas completed on May 1, 2018. This increase was partially mitigated by the sale of our local and regional newspaper media assets in Québec and the sale of the printing operations of our Fremont, California, plant. Adjusted revenues, which exclude the accelerated recognition of deferred revenues of $102.1 million, increased by $514.2 million, or 25.6%, from $2,007.2 million to $2,521.4 million.
- Operating earnings increased by $65.6 million, or 21.7%, from $302.0 million to $367.6 million. Adjusted operating earnings, which exclude the accelerated recognition of deferred revenues, accelerated depreciation, restructuring and other costs (gains), impairment of assets, amortization of intangible assets and the reversal of the fair value adjustment of inventory sold arising from business combinations, increased by $46.1 million, or 14.8%, from $310.7 million to $356.8 million.
- Net earnings increased by $1.9 million, or 0.9%, from $211.5 million to $213.4 million. Adjusted net earnings, which exclude the accelerated recognition of deferred revenues, accelerated depreciation, restructuring and other costs (gains), impairment of assets, amortization of intangible assets and the reversal of the fair value adjustment of inventory sold arising from business combinations, net of related income taxes, increased by $25.7 million, or 12.0%, from $213.7 million to $239.4 million.
- Completed the acquisition of Coveris Americas, positioning TC Transcontinental as a North American leader in flexible packaging.
- Concluded an agreement with The Hearst Corporation whereby the Corporation transferred to Hearst, on April 2, 2018, the printing of the San Francisco Chronicle.
- Finalized the sale process of local and regional newspapers in Québec as well as their related web properties.
MONTREAL, Dec. 13, 2018 (GLOBE NEWSWIRE) — Transcontinental Inc. (TSX: TCL.A TCL.B) announces its results for fiscal 2018, which ended October 28, 2018.
“I am proud of our financial results for 2018, a landmark year for our company as we completed the transformational acquisition of Coveris Americas, said François Olivier, President and Chief Executive Officer of TC Transcontinental. We rigorously executed our business strategy to propel our growth while reporting the highest profitability in our history for a fourth consecutive year.
“In the Packaging Sector, we invested close to $1.8 billion in strategic acquisitions that elevated the Corporation to the leader ranks in flexible packaging in North America. We thus recorded a significant increase in our financial results, particularly as a result of Coveris Americas’ performance. We also remain on track in terms of the targets we established at the time of this transaction and are continuing the integration of our activities while staying focused on realizing expected synergies.
“On the printing side, we are very satisfied with our 2018 results. Once again, this sector had a strong year, both in terms of revenues and profitability. In fact, excluding the non-cash effect of the end of the recognition of deferred revenues related to certain newspapers, our profitability was similar to that of 2017. In addition, the demand for our integrated service offering to retailers remained relatively stable, demonstrating that it creates value for our customers.
“In summary, 2018 was a successful year, and we will pursue the implementation of our long-term plan on a solid foundation. We also expect to continue generating significant cash flows from our operating activities, which will first be allocated to reducing our indebtedness.”
Financial Highlights
| (in millions of dollars, except per share amounts) | Q4-2018 |
Q4-2017 |
Variation in % |
2018 | 2017 | Variation in % |
||||||||||||||||
| Revenues | $ | 829.2 | $ | 527.2 | 57.3 | % | $ | 2,623.5 | $ | 2,007.2 | 30.7 | % | ||||||||||
| Adjusted revenues (1) | 829.2 | 527.2 | 57.3 | 2,521.4 | 2,007.2 | 25.6 | ||||||||||||||||
| Operating earnings before depreciation and amortization | 153.6 | 128.5 | 19.5 | 536.7 | 405.4 | 32.4 | ||||||||||||||||
| Adjusted operating earnings before depreciation and amortization (1) | 162.2 | 123.3 | 31.5 | 459.3 | 396.7 | 15.8 | ||||||||||||||||
| Operating earnings | 105.5 | 103.6 | 1.8 | 367.6 | 302.0 | 21.7 | ||||||||||||||||
| Adjusted operating earnings (1) | 131.6 | 102.4 | 28.5 | 356.8 | 310.7 | 14.8 | ||||||||||||||||
| Net earnings | 67.0 | 73.4 | (8.7 | ) | 213.4 | 211.5 | 0.9 | |||||||||||||||
| Net earnings per share | 0.76 | 0.95 | (20.0 | ) | 2.59 | 2.74 | (5.5 | ) | ||||||||||||||
| Adjusted net earnings (1) | 87.0 | 71.0 | 22.5 | 239.4 | 213.7 | 12.0 | ||||||||||||||||
| Adjusted net earnings per share (1) | 0.99 | 0.91 | 8.8 | 2.91 | 2.76 | 5.4 | ||||||||||||||||
| (1) Please refer to the section entitled “Reconciliation of Non-IFRS Financial Measures” in this press release for adjusted data presented above. | ||||||||||||||||||||||
Fiscal 2018 Results
Revenues increased by $616.3 million, or 30.7%, from $2,007.2 million in fiscal 2017 to $2,623.5 million in fiscal 2018. Excluding the $102.1 million favourable effect of the accelerated recognition of deferred revenues related to the agreement signed with Hearst in December 2017, adjusted revenues went from $2,007.2 million in fiscal 2017 to $2,521.4 million in fiscal 2018, an increase of 25.6%. This increase is mainly attributable to the contribution from the acquisition of Coveris Americas and, to a lesser extent, to the acquisitions of Multifilm Packaging and Les Industries Flexipak, as well as organic growth in Packaging Sector revenues. However, this increase was partially offset by the effect of the disposals and closures of local newspapers, the unfavourable exchange rate effect and, to a lesser extent, the organic decline in revenues in certain Printing Sector verticals in fiscal 2018. Revenues from our service offering to Canadian retailers remained relatively stable.
Operating earnings increased by $65.6 million, or 21.7%, from $302.0 million in fiscal 2017 to $367.6 million in fiscal 2018. This increase is mostly attributable to the favourable effect of the accelerated recognition of deferred revenues, which was partially offset by the unfavourable impact of restructuring and other costs (gains) and the accelerated depreciation of equipment at our Fremont, California, printing plant. Adjusted operating earnings increased by $46.1 million, or 14.8%, from $310.7 million to $356.8 million. Excluding the favourable effect of the stock-based compensation expense, which decreased by $18.9 million as a result of the change in the share price in fiscal 2018 compared to fiscal 2017, and the $28.9 million unfavourable non-cash effect of the end of the recognition of deferred revenues related to the San Francisco Chronicle, La Presse and The Globe and Mail in the Maritimes, adjusted operating earnings increased by $56.1 million, or 18.1%. This increase is mostly attributable to the contribution from our acquisitions and the organic growth in adjusted operating earnings as a result of the favourable effect of Corporation-wide cost reduction initiatives, which more than offset the above-mentioned volume decreases in certain Printing Sector verticals.
Net earnings increased by $1.9 million, or 0.9%, from $211.5 million in fiscal 2017 to $213.4 million in fiscal 2018. This increase is mostly attributable to the growth in operating earnings, partially offset by higher income taxes and financial expenses. On a per share basis, net earnings went from $2.74 to $2.59, mainly due the effect of the issuance of 10.8 million Class A Subordinate Voting Shares of the Corporation at the beginning of the third quarter of 2018. Adjusted net earnings increased by $25.7 million, or 12.0%, from $213.7 million in fiscal 2017 to $239.4 million in fiscal 2018. On a per share basis, adjusted net earnings went from $2.76 to $2.91 as a result of the growth in adjusted operating earnings, partially offset by higher financial expenses and the effect of the issuance of 10.8 million Class A Subordinate Voting Shares of the Corporation at the beginning of the third quarter of 2018.
2018 Fourth Quarter Results
Revenues increased by $302.0 million, or 57.3%, from $527.2 million in the fourth quarter of 2017 to $829.2 million in the corresponding period in 2018. This increase is mainly attributable to the contribution from the acquisition of Coveris Americas completed on May 1, 2018 and, to a lesser extent, to the acquisitions of Multifilm Packaging and Les Industries Flexipak, as well as the favourable effect of the price increase for certain types of paper in the Printing Sector. This increase was partially offset by the $18.4 million unfavourable effect related to the sale of our California newspaper printing operations, including the $7.3 million non-cash effect of the end of the recognition of deferred revenues and, to a lesser extent, to the effect of disposals and closures of local newspapers. In the Packaging Sector, organic revenue growth remained stable in the fourth quarter of 2018 compared to the corresponding quarter last year. Finally, revenues from our service offering to Canadian retailers in the Printing Sector remained relatively stable.
Operating earnings increased by $1.9 million, or 1.8%, from $103.6 million in the fourth quarter of 2017 to $105.5 million in the fourth quarter of 2018. This increase in mostly attributable to the decrease in the stock-based compensation expense and the impact of the acquisition of Coveris Americas, which were partially offset by the unfavourable effect of restructuring and other costs (gains). Adjusted operating earnings increased by $29.2 million, or 28.5%, from $102.4 million in the fourth quarter of 2017 to $131.6 million in the fourth quarter of 2018. This increase is mainly attributable to the contribution from acquisitions, the favourable effect of the decrease in the stock-based compensation expense as well as the favourable effect of Corporation-wide cost reduction initiatives, partially offset by the non-cash effect of the end of the recognition of deferred revenues related to the San Francisco Chronicle, La Presse and The Globe and Mail in the Maritimes. In our Packaging Sector, the increase in raw materials costs affected our activities and had an unfavourable effect on adjusted operating earnings for the quarter.
Net earnings decreased by $6.4 million, or 8.7%, from $73.4 million in the fourth quarter of 2017 to $67.0 million in the fourth quarter of 2018. This decrease is mostly due to higher financial expenses, partially offset by lower income taxes and a slight increase in operating earnings. On a per share basis, net earnings went from $0.95 to $0.76 due to the above-mentioned items, but also to the effect of the issuance of 10.8 million Class A Subordinate Voting Shares of the Corporation. Adjusted net earnings increased by $16.0 million, or 22.5%, from $71.0 million in the fourth quarter of 2017 to $87.0 million in the fourth quarter of 2018, mostly attributable to the increase in adjusted operated earnings, partially offset by higher financial expenses. On a per share basis, adjusted net earnings went from $0.91 to $0.99 as a result of the increase in adjusted net earnings, partially offset by the effect of the issuance of 10.8 million Class A Subordinate Voting Shares of the Corporation.
For more detailed financial information, please see the Management’s Discussion and Analysis for the year ended October 28, 2018 as well as the financial statements in the “Investors” section of our website at www.tc.tc
Outlook
In our Packaging Sector, the acquisitions, in particular that of Coveris Americas completed on May 1, 2018, will significantly contribute to revenues and adjusted operating earnings for the next two quarters compared to the corresponding quarters of the prior year. With respect to Coveris Americas, we expect revenues to be similar to those anticipated at the time of the acquisition and our profit margins to gradually improve over the coming quarters as a result of the effect of the announced synergies, which should gradually start at the beginning of fiscal 2019 to reach the target of US$10 million on an annualized basis at the end of the second quarter of 2019, as well as an increased focus on manufacturing efficiency. In our packaging operations other than those of Coveris Americas, we should continue generating organic growth in revenues with the help of our well-established sales force, which should also contribute to profitability. Raw materials and transportation costs could once again have an unfavourable effect on the Sector’s profit margins should they experience a sustained increase.
In our Printing Sector, we expect revenues from our service offering to Canadian retailers to remain relatively stable in fiscal 2019. The newspaper publishing vertical will continue to be affected by the end of the recognition of deferred revenues related to certain newspaper printing contracts (see Table #4), which will have an unfavourable non-cash effect on adjusted operating earnings of $9.9 million in the first quarter of 2019 and $4.5 million in the second quarter of 2019. In addition, no revenues will be recognized for transition services to Hearst in 2019, compared to revenues of approximately $9 million recognized for such services in fiscal 2018. In all the other printing verticals, we expect our revenues will continue to be affected by the same trends observed in recent quarters. Lastly, to limit the impact of these decreases, we will continue with our operational efficiency initiatives.
In line with our strategy, we will continue to generate significant cash flows from all our operating activities, which will enable us to reduce our net indebtedness.
Reconciliation of Non-IFRS Financial Measures
The financial information has been prepared in accordance with IFRS. However, financial measures used, namely the adjusted revenues, the adjusted operating earnings before depreciation and amortization, the adjusted operating earnings, the adjusted net earnings, the adjusted net earnings per share, the net indebtedness and the net indebtedness ratio, for which a complete definition is presented in the Management’s Discussion and Analysis for the year ended October 28, 2018, and for which a reconciliation is presented in the following table, do not have any standardized meaning under IFRS and could be calculated differently by other companies. During the three-month period ended July 29, 2018, the Corporation updated its definition of certain terms presented in the tables hereafter, which now excludes the amortization of intangible assets and the reversal of the fair value adjustment of inventory sold arising from business combinations. We believe that many of our readers analyze the financial performance of the Corporation’s activities based on these non-IFRS financial measures as such measures may allow for easier comparisons between periods. These measures should be considered as a complement to financial performance measures in accordance with IFRS. They do not substitute and are not superior to them.
We also believe that the adjusted revenues, the adjusted operating earnings before depreciation and amortization, the adjusted operating earnings, that takes into account the impact of past investments in property, plant and equipment and intangible assets, and the adjusted net earnings are useful indicators of the performance of our operations. Furthermore, management also uses some of these non-IFRS financial measures to assess the performance of its activities and managers.
Regarding the net indebtedness and net indebtedness ratio, we believe that these indicators are useful to measure the Corporation’s financial leverage and ability to meet its financial obligations.
| Reconciliation of revenues – Fourth quarter and fiscal year | |||||||||||||||||||||||||||||||||||
| Three months ended | Year ended | ||||||||||||||||||||||||||||||||||
| (in millions of dollars) | October 28, 2018 |
October 29, 2017 |
October 28, 2018 |
October 29, 2017 |
|||||||||||||||||||||||||||||||
| Revenues | $ | 829.2 | $ | 527.2 | $ | 2,623.5 | $ | 2,007.2 | |||||||||||||||||||||||||||
| Accelerated recognition of deferred revenues (1) | — | — | (102.1 | ) | — | ||||||||||||||||||||||||||||||
| Adjusted revenues | $ | 829.2 | $ | 527.2 | $ | 2,521.4 | $ | 2,007.2 | |||||||||||||||||||||||||||
| (1) Related to the agreement signed with Hearst on December 21, 2017. Please refer to Note 31, “New agreement with Hearst”, to the annual consolidated financial statements for the year ended October 28, 2018. | |||||||||||||||||||||||||||||||||||
| Reconciliation of operating earnings – Fourth quarter and fiscal year | |||||||||||||||||||||||||||||||||||
| Three months ended | Year ended | ||||||||||||||||||||||||||||||||||
| (in millions of dollars) | October 28, 2018 |
October 29, 2017 |
October 28, 2018 |
October 29, 2017 |
|||||||||||||||||||||||||||||||
| Operating earnings | $ | 105.5 | $ | 103.6 | $ | 367.6 | $ | 302.0 | |||||||||||||||||||||||||||
| Accelerated recognition of deferred revenues (1) | — | — | (102.1 | ) | — | ||||||||||||||||||||||||||||||
| Accelerated depreciation (1) | — | — | 22.0 | — | |||||||||||||||||||||||||||||||
| Restructuring and other costs (gains) | 8.6 | (7.6 | ) | 8.6 | (13.6 | ) | |||||||||||||||||||||||||||||
| Impairment of assets | — | 2.4 | 6.6 | 4.9 | |||||||||||||||||||||||||||||||
| Amortization of intangible assets arising from business combinations (2) | 17.5 | 4.0 | 44.6 | 17.4 | |||||||||||||||||||||||||||||||
| Reversal of the fair value adjustment of inventory sold arising from business combinations | — | — | 9.5 | — | |||||||||||||||||||||||||||||||
| Adjusted operating earnings | $ | 131.6 | $ | 102.4 | $ | 356.8 | $ | 310.7 | |||||||||||||||||||||||||||
| Depreciation and amortization (3) | $ | 30.6 | $ | 20.9 | $ | 124.5 | $ | 86.0 | |||||||||||||||||||||||||||
| Accelerated depreciation (1) | — |
— | (22.0 | ) | — | ||||||||||||||||||||||||||||||
| Adjusted operating earnings before depreciation and amortization | $ | 162.2 | $ | 123.3 | $ | 459.3 | $ | 396.7 | |||||||||||||||||||||||||||
| (1) Related to the agreement signed with Hearst on December 21, 2017. Please refer to Note 31, “New agreement with Hearst”, to the annual consolidated financial statements for the year ended October 28, 2018. (2) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements. (3) Depreciation and amortization excludes amortization of intangible assets arising from business combinations presented above. |
|||||||||||||||||||||||||||||||||||
| Reconciliation of net earnings – Fourth quarter | |||||||||||||||||||||||||||||||||||
| Three months ended | |||||||||||||||||||||||||||||||||||
| October 28, 2018 | October 29, 2017 | ||||||||||||||||||||||||||||||||||
| (in millions of dollars, except per share amounts) | Total |
Per share |
Total | Per share | |||||||||||||||||||||||||||||||
| Net earnings | $ | 67.0 |
$ | 0.76 |
$ | 73.4 | $ | 0.95 | |||||||||||||||||||||||||||
| Restructuring and other costs (gains), net of related income taxes | 6.6 | 0.08 |
(6.8 | ) | (0.09) | ||||||||||||||||||||||||||||||
| Impairment of assets, net of related income taxes | — | — | 1.7 | 0.02 | |||||||||||||||||||||||||||||||
| Amortization of intangible assets arising from business combinations, net of related income taxes (1) | 13.4 | 0.15 | 2.7 | 0.03 | |||||||||||||||||||||||||||||||
| Adjusted net earnings | $ | 87.0 | $ | 0.99 |
$ | 71.0 | $ | 0.91 | |||||||||||||||||||||||||||
| (1) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements. | |||||||||||||||||||||||||||||||||||
| Reconciliation of net earnings – Fiscal year | |||||||||||||||||||||||||||||||||||
| Year ended | |||||||||||||||||||||||||||||||||||
| October 28, 2018 | October 29, 2017 | ||||||||||||||||||||||||||||||||||
| (in millions of dollars, except per share amounts) | Total |
Per share |
Total | Per share | |||||||||||||||||||||||||||||||
| Net earnings | $ | 213.4 |
$ | 2.59 |
$ | 211.5 | $ | 2.74 | |||||||||||||||||||||||||||
| Accelerated recognition of deferred revenues, net of related income taxes (1) | (75.4 | ) | (0.91 | ) | — | — | |||||||||||||||||||||||||||||
| Accelerated depreciation, net of related income taxes (1) | 16.3 | 0.20 | — | — | |||||||||||||||||||||||||||||||
| Restructuring and other costs (gains), net of related income taxes | 3.0 | 0.04 | (12.8 | ) | (0.17 | ) | |||||||||||||||||||||||||||||
| Impairment of assets, net of related income taxes | 4.9 | 0.06 | 3.5 | 0.05 | |||||||||||||||||||||||||||||||
| Impact of the U.S. tax reform on deferred taxes | 36.6 | 0.44 | — | — | |||||||||||||||||||||||||||||||
| Amortization of intangible assets arising from business combinations, net of related income taxes (2) | 33.4 | 0.40 | 11.5 | 0.14 | |||||||||||||||||||||||||||||||
| Reversal of the fair value adjustment of inventory sold arising from business combinations, net of related income taxes | 7.2 | 0.09 | — | — | |||||||||||||||||||||||||||||||
| Adjusted net earnings | $ | 239.4 |
$ | 2.91 | $ | 213.7 | $ | 2.76 | |||||||||||||||||||||||||||
| (1) Related to the agreement signed with Hearst on December 21, 2017. Please refer to Note 31, “New agreement with Hearst”, to the annual consolidated financial statements for the year ended October 28, 2018. (2) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements. |
|||||||||||||||||||||||||||||||||||
| Reconciliation of net indebtedness | |||||||||||||||||||||||||||||||||||
| (in millions of dollars, except ratios) | As at October 28, 2018 |
As at October 29, 2017 |
|||||||||||||||||||||||||||||||||
| Long-term debt | $ | 1,209.8 | $ | 348.3 | |||||||||||||||||||||||||||||||
| Current portion of long-term debt | 251.2 | — | |||||||||||||||||||||||||||||||||
| Cash | (40.5 | ) | (247.1 | ) | |||||||||||||||||||||||||||||||
| Net indebtedness | $ | 1,420.5 | $ | 101.2 | |||||||||||||||||||||||||||||||
| Adjusted operating earnings before depreciation and amortization (last 12 months) | $ | 459.3 | $ | 396.7 | |||||||||||||||||||||||||||||||
| Net indebtedness ratio | 3.1 | x | 0.3 | x | |||||||||||||||||||||||||||||||
Dividend
The Corporation’s Board of Directors declared a quarterly dividend of $0.21 per share on Class A Subordinate Voting Shares and Class B Shares. This dividend is payable on January 22, 2019 to shareholders of record at the close of business on January 4, 2019.
Conference Call
Upon releasing its fiscal 2018 results, the Corporation will hold a conference call for the financial community today at 4:15 p.m. The dial-in numbers are 1 647 788-4922 or 1 877 223-4471. Media may hear the call in listen-only mode or tune in to the simultaneous audio broadcast on the Corporation’s website, which will then be archived for 30 days. For media requests or interviews, please contact Nathalie St-Jean, Senior Advisor, Corporate Communications of TC Transcontinental, at 514 954-3581.
Profile
TC Transcontinental is a leader in flexible packaging in North America, and Canada’s largest printer. The Corporation is also a Canadian leader in its specialty media segments. For over 40 years, TC Transcontinental’s mission has been to create products and services that allow businesses to attract, reach and retain their target customers.
Respect, teamwork, performance and innovation are strong values held by the Corporation and its employees. TC Transcontinental’s commitment to its stakeholders is to pursue its business activities in a responsible manner.
Transcontinental Inc. (TSX: TCL.A TCL.B), known as TC Transcontinental, has over 9,000 employees, the majority of which are based in Canada, the United States and Latin America. TC Transcontinental had revenues of approximately C$2.6 billion for the fiscal year ended October 28, 2018. For more information, visit TC Transcontinental’s website at www.tc.tc.
Forward-looking Statements
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 are derived from both general and specific assumptions. The Corporation cautions against undue reliance on such statements since actual results or events may differ materially from the expectations expressed or implied in them. Forward-looking statements may include observations concerning the Corporation’s objectives, strategy, anticipated financial results and business outlook. The Corporation’s future performance may also be affected by a number of factors, many of which are beyond the Corporation’s will or control. These factors include, but are not limited to, the economic situation in the world, structural changes in the industries in which the Corporation operates, the exchange rate, availability of capital, raw materials costs, competition, the Corporation’s capacity to engage in strategic transactions and effectively integrate acquisitions into its activities without affecting its growth and its profitability, while achieving the expected synergies, the political, social, regulatory and legislative environment, in particular with regard to the environment and sustainable development, the safety of its packaging products used in the food industry, innovation of its offering, the protection of its intellectual property rights, concentration of its sales in certain segments, cybersecurity and data protection, recruiting and retaining qualified personnel in certain geographic areas and industry sectors, taxation, interest rate and indebtedness level. The main risks, uncertainties and factors that could influence actual results are described in the Management’s Discussion and Analysis (MD&A) for the year ended October 28, 2018 and in the latest Annual Information Form.
Unless otherwise indicated by the Corporation, forward-looking statements do not take into account the potential impact of nonrecurring or other unusual items, nor of divestitures, business combinations, mergers or acquisitions which may be announced after the date of December 13, 2018.
The forward-looking statements in this press release are made pursuant to the “safe harbour” provisions of applicable Canadian securities legislation.
The forward-looking statements in this release are based on current expectations and information available as at December 13, 2018. Such forward-looking information may also be found in other documents filed with Canadian securities regulators or in other communications. The Corporation’s management disclaims any intention or obligation to update or revise these statements unless otherwise required by the securities authorities.
For information:
| Media
Nathalie St-Jean |
Financial Community
Mathieu Hébert |
|
CONSOLIDATED STATEMENTS OF EARNINGS
Years ended October 28, 2018 and October 29, 2017
(in millions of Canadian dollars, except per share data)
| October 28, |
October 29, | |||||
| 2018 |
2017 | |||||
| Revenues | $ | 2,623.5 | $ | 2,007.2 | ||
| Operating expenses | 2,071.6 | 1,610.5 | ||||
| Restructuring and other costs (gains) | 8.6 | (13.6 | ) | |||
| Impairment of assets | 6.6 | 4.9 | ||||
| Operating earnings before depreciation and amortization | 536.7 | 405.4 | ||||
| Depreciation and amortization | 169.1 | 103.4 | ||||
| Operating earnings | 367.6 | 302.0 | ||||
| Net financial expenses | 36.5 | 17.7 | ||||
| Earnings before share of net earnings in interests in joint ventures and income taxes | 331.1 | 284.3 | ||||
| Share of net earnings in interests in joint ventures, net of related taxes | 0.1 | 0.3 | ||||
| Income taxes | 117.8 | 73.1 | ||||
| Net earnings | $ | 213.4 | $ | 211.5 | ||
| Net earnings per share – basic | $ | 2.59 | $ | 2.74 | ||
| Net earnings per share – diluted | $ | 2.58 | $ | 2.73 | ||
| Weighted average number of shares outstanding – basic (in millions) | 82.5 | 77.3 | ||||
| Weighted average number of shares – diluted (in millions) | 82.6 | 77.5 | ||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years ended October 28, 2018 and October 29, 2017
(in millions of Canadian dollars)
| October 28, |
October 29, | |||||
| 2018 |
2017 | |||||
| Net earnings | $ | 213.4 | $ | 211.5 | ||
| Other comprehensive income (loss) | ||||||
| Items that will be reclassified to net earnings | ||||||
| Net change related to cash flow hedges | ||||||
| Net change in the fair value of derivatives designated as cash flow hedges | (0.6 | ) | 2.3 | |||
| Reclassification of the net change in the fair value of derivatives designated as cash flow | ||||||
| hedges in prior periods, recognized in net earnings during the period | (0.5 | ) | 1.3 | |||
| Related income taxes | (0.3 | ) | 1.0 | |||
| (0.8 | ) | 2.6 | ||||
| Cumulative translation differences | ||||||
| Net unrealized exchange gains (losses) on the translation of the financial statements of foreign operations | 13.9 | (19.5 | ) | |||
| Net gains (losses) on hedge of the net investment in foreign operations | (0.7 | ) | 3.4 | |||
| Related income taxes | (0.6 | ) | 0.9 | |||
| 13.8 | (17.0 | ) | ||||
| Items that will not be reclassified to net earnings | ||||||
| Changes related to defined benefit plans | ||||||
| Actuarial gains on defined benefit plans | 5.1 | 8.6 | ||||
| Related income taxes | 1.8 | 2.4 | ||||
| 3.3 | 6.2 | |||||
| Other comprehensive income (loss) | 16.3 | (8.2 | ) | |||
| Comprehensive income | $ | 229.7 | $ | 203.3 | ||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Years ended October 28, 2018 and October 29, 2017
(in millions of Canadian dollars)
| Accumulated | ||||||||||||||||||
| other | ||||||||||||||||||
| Share | Contributed | Retained | comprehensive | Total | ||||||||||||||
| capital | surplus | earnings | income (loss) | equity | ||||||||||||||
| Balance as at October 29, 2017 | $ | 371.6 | $ | 1.1 | $ | 851.5 | $ | (5.5 | ) | $ | 1,218.7 | |||||||
| Net earnings | — | — | 213.4 | — | 213.4 | |||||||||||||
| Other comprehensive income | — | — | — | 16.3 | 16.3 | |||||||||||||
| Shareholders’ contributions and | ||||||||||||||||||
| distributions to shareholders | ||||||||||||||||||
| Share redemptions | (7.1 | ) | — | (16.5 | ) | — | (23.6 | ) | ||||||||||
| Dividends | — | — | (68.6 | ) | — | (68.6 | ) | |||||||||||
| Issuance of shares, net of issuance costs | 277.9 | — | — | — | 277.9 | |||||||||||||
| Balance as at October 28, 2018 | $ | 642.4 | $ | 1.1 | $ | 979.8 | $ | 10.8 | $ | 1,634.1 | ||||||||
| Balance as at October 31, 2016 | $ | 361.9 | $ | 3.2 | $ | 700.9 | $ | 2.7 | $ | 1,068.7 | ||||||||
| Net earnings | — | — | 211.5 | — | 211.5 | |||||||||||||
| Other comprehensive loss | — | — | — | (8.2 | ) | (8.2 | ) | |||||||||||
| Shareholders’ contributions and | ||||||||||||||||||
| distributions to shareholders | ||||||||||||||||||
| Exercise of stock options | 9.7 | (2.1 | ) | — | — | 7.6 | ||||||||||||
| Dividends | — | — | (60.9 | ) | — | (60.9 | ) | |||||||||||
| Balance as at October 29, 2017 | $ | 371.6 | $ | 1.1 | $ | 851.5 | $ | (5.5 | ) | $ | 1,218.7 | |||||||
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Years ended October 28, 2018 and October 29, 2017
(in millions of Canadian dollars)
| As at |
As at | |||||
| October 28, |
October 29, | |||||
| 2018 |
2017 (1) | |||||
| Current assets | ||||||
| Cash | $ | 40.5 | $ | 247.1 | ||
| Accounts receivable | 565.4 | 380.6 | ||||
| Income taxes receivable | 6.9 | 17.2 | ||||
| Inventories | 305.6 | 116.9 | ||||
| Prepaid expenses and other current assets | 24.7 | 18.4 | ||||
| 943.1 | 780.2 | |||||
| Property, plant and equipment and investment properties | 888.6 | 500.8 | ||||
| Intangible assets | 747.1 | 171.1 | ||||
| Goodwill | 1,150.0 | 505.0 | ||||
| Deferred taxes | 18.4 | 139.0 | ||||
| Other assets | 35.0 | 40.6 | ||||
| $ | 3,782.2 | $ | 2,136.7 | |||
| Current liabilities | ||||||
| Accounts payable and accrued liabilities | $ | 431.6 | $ | 304.7 | ||
| Provisions | 3.7 | 6.4 | ||||
| Income taxes payable | 14.8 | 9.5 | ||||
| Deferred revenues and deposits | 16.0 | 44.7 | ||||
| Current portion of long-term debt | 251.2 | — | ||||
| 717.3 | 365.3 | |||||
| Long-term debt | 1,209.8 | 348.3 | ||||
| Deferred taxes | 98.4 | 44.1 | ||||
| Provisions | 2.3 | 1.3 | ||||
| Other liabilities | 120.3 | 159.0 | ||||
| 2,148.1 | 918.0 | |||||
| Equity | ||||||
| Share capital | 642.4 | 371.6 | ||||
| Contributed surplus | 1.1 | 1.1 | ||||
| Retained earnings | 979.8 | 851.5 | ||||
| Accumulated other comprehensive income (loss) | 10.8 | (5.5 | ) | |||
| 1,634.1 | 1,218.7 | |||||
| $ | 3,782.2 | $ | 2,136.7 | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended October 28, 2018 and October 29, 2017
(in millions of Canadian dollars)
| October 28, |
October 29, | ||||||
| 2018 |
2017 | ||||||
| Operating activities | |||||||
| Net earnings | $ | 213.4 | $ | 211.5 | |||
| Adjustments to reconcile net earnings and cash flows from operating activities: | |||||||
| Impairment of assets | 6.6 | 4.9 | |||||
| Depreciation and amortization | 193.5 | 127.8 | |||||
| Financial expenses on long-term debt | 40.7 | 17.5 | |||||
| Net gains on disposal of assets | (5.1 | ) | (1.2 | ) | |||
| Net gains on business disposals | (37.5 | ) | (24.1 | ) | |||
| Income taxes | 117.8 | 73.1 | |||||
| Net foreign exchange differences and other | 9.8 | 1.4 | |||||
| Cash flows generated by operating activities before changes in non-cash operating items and income taxes paid | 539.2 | 410.9 | |||||
| Changes in non-cash operating items (1) | (184.8 | ) | (31.0 | ) | |||
| Income taxes paid | (41.9 | ) | (55.8 | ) | |||
| Cash flows from operating activities | 312.5 | 324.1 | |||||
| Investing activities | |||||||
| Business combinations, net of acquired cash | (1,573.3 | ) | (15.9 | ) | |||
| Business disposals | 35.0 | 33.7 | |||||
| Acquisitions of property, plant and equipment | (59.4 | ) | (33.2 | ) | |||
| Disposals of property, plant and equipment | 24.7 | 7.1 | |||||
| Increase in intangible assets | (20.6 | ) | (15.6 | ) | |||
| Dividends received from joint ventures | 3.4 | — | |||||
| Net cash outflow on acquisition of an associate | (2.5 | ) | — | ||||
| Cash flows from investing activities | (1,592.7 | ) | (23.9 | ) | |||
| Financing activities | |||||||
| Increase in long-term debt, net of issuance costs | 958.9 | — | |||||
| Reimbursement of long-term debt | (164.0 | ) | (0.2 | ) | |||
| Net increase in credit facility, net of issuance costs | 128.4 | — | |||||
| Financial expenses on long-term debt | (35.0 | ) | (16.2 | ) | |||
| Proceeds from issuance of shares in exchange for subscription receipts, net of issuance costs | 274.9 | — | |||||
| Exercise of stock options | — | 7.6 | |||||
| Dividends | (68.6 | ) | (60.9 | ) | |||
| Share redemptions | (23.6 | ) | — | ||||
| Cash flows from financing activities | 1,071.0 | (69.7 | ) | ||||
| Effect of exchange rate changes on cash denominated in foreign currencies | 2.6 | (0.1 | ) | ||||
| Net change in cash | (206.6 | ) | 230.4 | ||||
| Cash at beginning of year | 247.1 | 16.7 | |||||
| Cash at end of year | $ | 40.5 | $ | 247.1 | |||
| Non-cash investing activities | |||||||
| Net change in capital asset acquisitions financed by accounts payable | $ | 1.3 | $ | (0.4 | ) | ||
| (1) Includes the accelerated recognition of deferred revenues balance as at October 29, 2017 as part of the transaction with Hearst for the year ended October 28, 2018. | |||||||
