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Mar 11, 2014
Transcontinental posts first-quarter results
Transcontinental's revenues decreased by 5.0% in the first quarter of 2014, from $525.6 to $499.3 million, primarily due to the soft advertising market, which affected both our operating sectors. In the Printing Sector, the volume in our marketing products and magazine operations decreased. In the Media Sector, the soft advertising market continued to impact our local solutions, magazines and interactive marketing solutions.

Adjusted operating earnings remained stable at $43.5 million. This performance is primarily due to the optimization of our cost structure, especially in the Printing Sector; the positive impact of the Canadian dollar versus the U.S. dollar; and the share price variance in the first quarter of 2014 compared to 2013, which decreased the stock-based compensation expense. Net earnings applicable to participating shares increased, from $15.7 million, or $0.20 per share, to $17.2 million, or $0.22 per share. This improvement stems primarily from the significantly lower financial expenses, partially offset by higher income taxes compared to the first quarter of 2013. Adjusted net earnings applicable to participating shares remained stable at $26.4million, or $0.34 per share.

"We concluded a definitive agreement to acquire the assets of Capri Packaging, a company that specializes in printed flexible packaging. This is a strategic acquisition for TC Transcontinental's future in a new growth area," said François Olivier, President and Chief Executive Officer. "This acquisition is an attractive asset for us as it allows us to leverage our core manufacturing competencies, and focuses on a production process that is similar to our current printing process. It also marks the start of a long-term partnership with Schreiber Foods Inc., and of our activities in a new niche.

"Moreover, our quarterly results reflect the impact of a challenging advertising environment, which led to lower revenues in both our operating sectors. That being said, despite the soft market conditions in which we operate, we were able to maintain our profitability due to the many cost saving initiatives company-wide. In the months ahead, we will continue to adjust our cost-optimization strategy to ensure the Corporation is aligned with the current market reality, and will continue to strengthen our existing assets and develop new products and services.

Furthermore, we continue to be in excellent financial position and to generate significant cash flows. In fact, as a result of our solid balance sheet, we have been able to increase the dividend per participating share by 10% and continue to reduce our debt. We are ideally positioned to pursue our transformation, invest in the future and diversify our operations into a promising new niche."

Other Highlights
  • On February 5, 2014, the credit rating of the Corporation was lowered one level by DBRS (from BBB to BBB (low)). This change will have impact on the interest rate applicable to the credit facility, which is based on the credit rating assigned by Standard & Poor's and DBRS.
  • On February 6, 2014, the Corporation amended the terms of its $50.0 million unsecured debenture with the Solidarity Fund QFL. The debenture now expires on February 6, 2020 and bears interest at 4.011% payable every six months.
  • On February 11, 2014, TC Transcontinental Printing announced the sale of the assets of Rastar, based in Utah, USA, a subsidiary which specializes in commercial products.
  • TC Transcontinental plans to renew its normal course issuer bid when the current one expires on April 14, subject to regulatory approval.
  • On March 11, 2014, the Corporation released its fifth annual Sustainability Report titled "Guide. Mobilize. Achieve." The report outlines the Corporation's progress with respect to its three-year plan (2013-2015) based on three pillars: the environment, employees and communities.
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