Highlights
- Revenues increased by $232.7 million, or 43.5%, from $534.7 million to $767.4 million, essentially as a result of the transformational acquisition of Coveris Americas, which contributed $318.4 million to revenues. This increase was mitigated by the accelerated recognition of deferred revenues of $62.3 million recorded in the second quarter of 2018 as well as the unfavourable effect of the sale of our California newspaper printing operations and the disposal of local and regional newspapers in Québec.
- Adjusted revenues (1) increased by $295.0 million, or 62.4%, from $472.4 million to $767.4 million.
- Operating earnings decreased by $55.9 million, or 56.5%, from $99.0 million to $43.1 million, mainly as a result of the effect of the accelerated recognition of deferred revenues recorded in the second quarter of 2018.
- Adjusted operating earnings (1) increased by $13.3 million, or 18.9%, from $70.3 million to $83.6 million, mainly as a result of the contribution from the acquisition of Coveris Americas.
- Net earnings decreased by $46.6 million, or 67.6%, from $68.9 million to $22.3 million due to the decline in operating earnings and higher financial expenses arising from the acquisition of Coveris Americas.
- Adjusted net earnings (1) increased by $4.1 million, or 8.5%, from $48.5 million to $52.6 million due to higher adjusted operating earnings combined with a decrease in adjusted income taxes (1).
- Optimization of the printing platform with the installation of two state-of-the-art presses as well as the gradual reduction of activities at Transcontinental Brampton in Ontario, leading to the plant's complete closure at the end of December 2019.
- First Canadian-based manufacturer to join the Ellen MacArthur Foundation's New Plastics Economy Global Commitment. TC Transcontinental pledged, by 2025, for 100% of its plastic packaging to be reusable, recyclable or compostable.
- Commitment to take a leadership role in the creation of a circular economy for plastic, in order to ensure the transition into a model where plastic is better managed from sourcing to end-of-life. In this context, as of this fall, the Publisac bag will be replaced by a bag made of 100% recycled plastic.
(1) Please refer to the section entitled "Non-IFRS Financial Measures" in this press release for a definition of these measures.
MONTRÉAL, June 06, 2019 (GLOBE NEWSWIRE) -- Transcontinental Inc. (TSX: TCL.A TCL.B) announces its results for the second quarter of fiscal 2019, which ended April 28, 2019.
"We have just proudly marked the first anniversary of our transformational acquisition of Coveris Americas and we are very satisfied with it, said François Olivier, President and Chief Executive Officer of TC Transcontinental. This acquisition is performing in line with our plan and has seen a gradual increase in its profit margins from quarter to quarter over the past year. In the second quarter of 2019, Coveris Americas contributed significantly to our revenues and profitability in the Packaging Sector. We remain focused on improving our profit margins, which should continue to progressively increase in the coming quarters, notably by realizing our synergies.
"On the printing side, our results continued to reflect more moderate performance in some of our verticals, including our retailer-related service offering. As we have always done, we are working to align our printing network's capacity and our costs with our business volume. Among other things, during the quarter, we installed state-of-the-art presses in our Canadian platform and we recently announced the closure of a plant. These measures should enable us to improve our cost structure and positively contribute to this sector's profitability.
"In summary, we expect to continue generating significant cash flows, which will first be allocated to reducing our indebtedness, while continuing to execute our business plan."
Financial Highlights
| (in millions of dollars, except per share amounts) | Q2-2019 | Q2-2018 | Variation in % | SIX MONTHS 2019 | SIX MONTHS 2018 | Variation in % | ||||
| Revenues | $767.4 | $534.7 | 43.5 | % | $1,519.0 | $1,036.4 | 46.6 | % | ||
| Adjusted revenues (1) | 767.4 | 472.4 | 62.4 | 1,519.0 | 934.3 | 62.6 | ||||
| Operating earnings before depreciation and amortization | 93.7 | 138.7 | (32.4 | ) | 197.4 | 293.5 | (32.7 | ) | ||
| Adjusted operating earnings before depreciation and amortization (1) | 115.7 | 89.7 | 29.0 | 223.8 | 180.8 | 23.8 | ||||
| Operating earnings | 43.1 | 99.0 | (56.5 | ) | 96.7 | 222.6 | (56.6 | ) | ||
| Adjusted operating earnings (1) | 83.6 | 70.3 | 18.9 | 160.3 | 140.7 | 13.9 | ||||
| Net earnings | 22.3 | 68.9 | (67.6 | ) | 50.4 | 127.1 | (60.3 | ) | ||
| Net earnings per share | 0.26 | 0.89 | (70.8 | ) | 0.58 | 1.64 | (64.6 | ) | ||
| Adjusted net earnings (1) | 52.6 | 48.5 | 8.5 | 98.1 | 100.3 | (2.2 | ) | |||
| Adjusted net earnings per share (1) | 0.60 | 0.63 | (4.8 | ) | 1.12 | 1.30 | (13.8 | ) | ||
| (1) Please refer to the section entitled "Reconciliation of Non-IFRS Financial Measures" in this press release for adjusted data presented above. Certain comparative figures have been reclassified to conform to the presentation adopted in the current period. | ||||||||||
2019 Second Quarter Results
Revenues increased by $232.7 million, or 43.5%, from $534.7 million in the second quarter of 2018 to $767.4 million in the corresponding period in 2019. Excluding the favourable effect of the accelerated recognition of deferred revenues of $62.3 million recorded in the second quarter of 2018 resulting from the agreement signed with Hearst, adjusted revenues increased by 62.4%, from $472.4 million in the second quarter of 2018 to $767.4 million in the corresponding period of 2019. This increase is largely attributable to the transformational acquisition of Coveris Americas, which contributed $318.4 million to revenues. It was partially offset by the $12.2 million unfavourable effect of the sale to Hearst of our newspaper printing operations and the unfavourable effect of disposals of local and regional newspapers in Québec. It was also mitigated by the organic decline in Printing Sector revenues, which is mostly due to a decrease in printed flyer volume related to two major customers.
Operating earnings decreased by $55.9 million, or 56.5%, from $99.0 million in the second quarter of 2018 to $43.1 million in the second quarter of 2019. This decrease is mainly due to the accelerated recognition of deferred revenues, net of accelerated depreciation, of $46.6 million recorded in the second quarter of 2018 resulting from the agreement signed with Hearst. Adjusted operating earnings increased by $13.3 million, or 18.9%, from $70.3 million to $83.6 million. This increase in mainly attributable to the contribution from the acquisition of Coveris Americas, partially offset by the above-mentioned organic decline in the Printing Sector.
Net earnings decreased by $46.6 million, or 67.6%, from $68.9 million in the second quarter of 2018 to $22.3 million in the second quarter of 2019. This decrease is mainly due to the accelerated recognition of deferred revenues, net of accelerated depreciation and related income taxes, of $34.4 million recorded in the second quarter of 2018 resulting from the agreement signed with Hearst, as well as higher financial expenses in the second quarter of 2019 compared to the corresponding period in 2018. These items were partially offset by a decrease in income taxes. On a per share basis, net earnings went from $0.89 to $0.26 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 in May 2018. Adjusted net earnings increased by $4.1 million, or 8.5%, from $48.5 million in the second quarter of 2018 to $52.6 million in the second quarter of 2019. This increase is due to higher adjusted operating earnings combined with a decrease in adjusted income taxes, partially offset by higher financial expenses. On a per share basis, adjusted net earnings went from $0.63 to $0.60, mostly due to the effect of the issuance of 10.8 million Class A Subordinate Voting Shares of the Corporation, partially offset by the increase in adjusted net earnings.
2019 First Six Months Results
Revenues increased by $482.6 million, or 46.6%, from $1,036.4 million in the first six months of 2018 to $1,519.0 million in the corresponding period in 2019. Excluding the favourable effect of the accelerated recognition of deferred revenues of $102.1 million recorded in the first six months of 2018 resulting from the agreement signed with Hearst, adjusted revenues increased by 62.6%, from $934.3 million in the first six months of 2018 to $1,519.0 million in the corresponding period in 2019. This increase is essentially attributable to the transformational acquisition of Coveris Americas, which contributed $624.3 million to revenues. It was mitigated by the effect of the sale of our California newspaper printing operations and the disposal of local and regional newspapers in Québec, as well as by the organic decline in the Printing Sector in the first six months of 2019, which is mostly due to a decrease in printed flyer volume related to two major customers.
Operating earnings decreased by $125.9 million, or 56.6%, from $222.6 million in the first six months of 2018 to $96.7 million in the corresponding period in 2019. This decrease is mainly due to the accelerated recognition of deferred revenues, net of accelerated depreciation, of $80.1 million recorded in the first six months of 2018 resulting from the agreement signed with Hearst as well as the increase in restructuring and other costs (gains). Adjusted operating earnings increased by $19.6 million, or 13.9%, from $140.7 million to $160.3 million. This increase is mostly attributable to the contribution from the acquisition of Coveris Americas, partially offset by the above-mentioned organic decline in the Printing Sector.
Net earnings decreased by $76.7 million, or 60.3%, from $127.1 million in the first six months of 2018 to $50.4 million in the corresponding period in 2019. This decrease is due to the previously explained decline in operating earnings as well as higher financial expenses in the first six months of 2019 compared to the corresponding period in 2018, and was partially offset by a decrease in income taxes. On a per share basis, net earnings went from $1.64 to $0.58 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 in May 2018. Adjusted net earnings decreased by $2.2 million, or 2.2%, from $100.3 million in the first six months of 2018 to $98.1 million in the corresponding period in 2019, mostly as a result of higher financial expenses, which more than offset the increase in adjusted operating earnings. On a per share basis, adjusted net earnings went from $1.30 to $1.12 as a result of the issuance of 10.8 million Class A Subordinated Voting Shares of the Corporation and the decrease in adjusted net earnings.
For more detailed financial information, please see the Management’s Discussion and Analysis for the second quarter ended April 28, 2019 as well as the financial statements in the “Investors” section of our website at www.tc.tc
Outlook
In our Packaging Sector, May 1, 2019 marked the first anniversary of the acquisition of Coveris Americas. Since then, many contracts with major customers have been renewed, bringing stability and enabling our well-established sales force to focus on growth. However, we expect revenues will be slightly lower in the second half of fiscal 2019 as a result of a reduction in volume in one of our segments. Manufacturing efficiencies, combined with the effect of synergies, should enable us to achieve our profitability objectives and will contribute to gradually improving our profit margins over the coming quarters.
In our Printing Sector, we expect that the current trends with respect to our service offering to Canadian retailers will continue. However, our in-store marketing products and book printing offerings should continue to grow. In all the other printing verticals, we expect that our revenues will be affected by the same trends observed in recent quarters, with the exception of our newspaper printing offering which will no longer be impacted by the effect of the end of the recognition of deferred revenues related to the printing contract with Hearst. Lastly, to limit the impact on profitability, we will continue to align our printing platform's capacity and our costs with our business volume. In addition, we expect that our operational efficiency initiatives already under way will have a positive impact on our profit margins in the second half of fiscal 2019.
We expect that the Media Sector will continue to record a good performance in fiscal 2019, both in terms of revenues and profitability.
To conclude, we expect to continue generating significant cash flows from all our operating activities, which will enable us to reduce our indebtedness in line with our strategy.
Non-IFRS Financial Measures
In this document, 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 addition, in this press release, we also use non-IFRS financial measures for which a complete definition is presented below and for which a reconciliation to financial information in accordance with IFRS is presented in the section entitled "Reconciliation of Non-IFRS Financial Measures" and in Note 3 "Segmented Information" to the unaudited condensed interim consolidated financial statements for the second quarter ended April 28, 2019.
| Terms Used | Definitions | ||
| Adjusted revenues | Revenues before the accelerated recognition of deferred revenues (1) | ||
| Adjusted operating earnings before depreciation and amortization | Operating earnings before depreciation and amortization as well as the accelerated recognition of deferred revenues (1), restructuring and other costs (gains), impairment of assets and reversal of the fair value adjustment of inventory sold arising from business combinations | ||
| Adjusted operating earnings | Operating earnings before the accelerated recognition of deferred revenues (1), accelerated depreciation (1), restructuring and other costs (gains), impairment of assets, as well as amortization of intangible assets and reversal of the fair value adjustment of inventory sold arising from business combinations | ||
| Adjusted operating earnings margin | Adjusted operating earnings divided by adjusted revenues | ||
| Adjusted income taxes | Income taxes before income taxes on the accelerated recognition of deferred revenues (1), accelerated depreciation (1), restructuring and other costs (gains), impairment of assets, amortization of intangible assets and reversal of the fair value adjustment of inventory sold arising from business combinations as well as the effect of the U.S. tax reform on deferred taxes | ||
| Adjusted net earnings | Net earnings before the accelerated recognition of deferred revenues (1), accelerated depreciation (1), restructuring and other costs (gains), impairment of assets, amortization of intangible assets and reversal of the fair value adjustment of inventory sold arising from business combinations, net of related income taxes, as well as the effect of the U.S. tax reform on deferred taxes | ||
| Net indebtedness | Total of long-term debt plus current portion of long-term debt less cash | ||
| Net indebtedness ratio | Net indebtedness divided by the last 12 months’ adjusted operating earnings before depreciation and amortization | ||
| (1) Related to the agreement signed with The Hearst Corporation on December 21, 2017. Please refer to the annual consolidated financial statements for the year ended October 28, 2018. | |||
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 reconciliation is presented in the following table, do not have any standardized meaning under IFRS and could be calculated differently by other companies. 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 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 - Second quarter and cumulative | |||||||||
| Three months ended | Six months ended | ||||||||
| (in millions of dollars) | April 28, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | |||||
| Revenues | $767.4 | $534.7 | $1,519.0 | $1,036.4 | |||||
| Accelerated recognition of deferred revenues (1) | — | (62.3 | ) | — | (102.1 | ) | |||
| Adjusted revenues | $767.4 | $472.4 | $1,519.0 | $934.3 | |||||
| (1) Related to the agreement signed with Hearst on December 21, 2017. Please refer to the consolidated financial statements for the year ended October 28, 2018. | |||||||||
| Reconciliation of operating earnings - Second quarter and cumulative | |||||||||
| Three months ended | Six months ended | ||||||||
| (in millions of dollars) | April 28, 2019 | April 29, 2018 | April 28, 2019 | April 29, 2018 | |||||
| Operating earnings | $43.1 | $99.0 | $96.7 | $222.6 | |||||
| Accelerated recognition of deferred revenues (1) | — | (62.3 | ) | — | (102.1 | ) | |||
| Restructuring and other costs (gains) | 21.5 | 11.6 | 25.9 | (14.3 | ) | ||||
| Accelerated depreciation (1) | — | 15.7 | — | 22.0 | |||||
| Impairment of assets | 0.5 | 1.7 | 0.5 | 3.7 | |||||
| Amortization of intangible assets arising from business combinations (2) | 18.5 | 4.6 | 37.2 | 8.8 | |||||
| Adjusted operating earnings | $83.6 | $70.3 | $160.3 | $140.7 | |||||
| Depreciation and amortization (3) | 32.1 | 19.4 | 63.5 | 40.1 | |||||
| Adjusted operating earnings before depreciation and amortization | $115.7 | $89.7 | $223.8 | $180.8 | |||||
| (1) Related to the agreement signed with Hearst on December 21, 2017. Please refer to the 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 and accelerated depreciation presented above. | |||||||||
| Reconciliation of net earnings - Second quarter | |||||||||
| Three months ended | |||||||||
| April 28, 2019 | April 29, 2018 | ||||||||
| (in millions of dollars, except per share amounts) | Total | Per share | Total | Per share | |||||
| Net earnings | $22.3 | $0.26 | $68.9 | $0.89 | |||||
| Amortization of intangible assets arising from business combinations, net of related income taxes (1) | 13.9 | 0.16 | 3.4 | 0.05 | |||||
| Restructuring and other costs, net of related income taxes | 16.0 | 0.18 | 9.2 | 0.12 | |||||
| Impairment of assets, net of related income taxes | 0.4 | — | 1.4 | 0.02 | |||||
| Accelerated recognition of deferred revenues, net of related income taxes (2) | — | — | (46.0 | ) | (0.60 | ) | |||
| Accelerated depreciation, net of related income taxes (2) | — | — | 11.6 | 0.15 | |||||
| Adjusted net earnings | $52.6 | $0.60 | $48.5 | $0.63 | |||||
| (1) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements. | |||||||||
| (2) Related to the agreement signed with Hearst on December 21, 2017. Please refer to the consolidated financial statements for the year ended October 28, 2018. | |||||||||
| Reconciliation of net earnings - Cumulative | |||||||||
| Six months ended | |||||||||
| April 28, 2019 | April 29, 2018 | ||||||||
| (in millions of dollars, except per share amounts) | Total | Per share | Total | Per share | |||||
| Net earnings | $50.4 | $0.58 | $127.1 | $1.64 | |||||
| Amortization of intangible assets arising from business combinations, net of related income taxes (1) | 28.0 | 0.32 | 6.5 | 0.08 | |||||
| Restructuring and other costs (gains), net of related income taxes | 19.3 | 0.22 | (13.6 | ) | (0.17 | ) | |||
| Impairment of assets, net of related income taxes | 0.4 | — | 2.8 | 0.04 | |||||
| Accelerated recognition of deferred revenues, net of related income taxes (2) | — | — | (75.4 | ) | (0.97 | ) | |||
| Accelerated depreciation, net of related income taxes (2) | — | — | 16.3 | 0.21 | |||||
| Impact of the U.S. tax reform on deferred taxes | — | — | 36.6 | 0.47 | |||||
| Adjusted net earnings | $98.1 | $1.12 | $100.3 | $1.30 | |||||
| (1) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements. | |||||||||
| (2) Related to the agreement signed with Hearst on December 21, 2017. Please refer to the annual consolidated financial statements for the year ended October 28, 2018. | |||||||||
| Reconciliation of net indebtedness | ||||||
| (in millions of dollars, except ratios) | As at April 28, 2019 | As at October 28, 2018 | ||||
| Long-term debt | $1,206.2 | $1,209.8 | ||||
| Current portion of long-term debt | 251.2 | 251.2 | ||||
| Cash | (55.4 | ) | (40.5 | ) | ||
| Net indebtedness | $1,402.0 | $1,420.5 | ||||
| Adjusted operating earnings before depreciation and amortization (last 12 months) | $502.4 | $459.4 | ||||
| Net indebtedness ratio | 2.8 | x | 3.1 | x | ||
Dividend
The Corporation's Board of Directors declared a quarterly dividend of $0.22 per share on Class A Subordinate Voting Shares and Class B Shares. This dividend is payable on July 17, 2019 to shareholders of record at the close of business on July 2, 2019.
Conference Call
Upon releasing its 2019 second quarter 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 the 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 more than 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 generate organic growth in its Packaging Sector, 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 and social environment as well as regulatory and legislative changes, in particular with regard to the environment and sustainable development, the impact of digital product adoption on the demand for its printed products, change in consumption habits or loss of a major customer, 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 non-recurring or other unusual items, nor of disposals, business combinations, mergers or acquisitions which may be announced after the date of June 6, 2019.
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 June 6, 2019. 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 | Financial Community |
| Nathalie St-Jean | Yan Lapointe |
| Senior Advisor, Corporate Communications | Director, Investor Relations |
| TC Transcontinental | TC Transcontinental |
| Telephone: 514-954-3581 | Telephone: 514-954-3574 |
| nathalie.st-jean@tc.tc | yan.lapointe@tc.tc |
| www.tc.tc | www.tc.tc |
CONSOLIDATED STATEMENTS OF EARNINGS
Unaudited
| Three months ended | Six months ended | ||||||||
| April 28, | April 29, | April 28, | April 29, | ||||||
| (in millions of Canadian dollars, unless otherwise indicated and per share data) | 2019 | 2018 | 2019 | 2018 | |||||
| Revenues | $ | 767.4 | $ | 534.7 | $ | 1,519.0 | $ | 1,036.4 | |
| Operating expenses | 651.7 | 382.7 | 1,295.2 | 753.5 | |||||
| Restructuring and other costs (gains) | 21.5 | 11.6 | 25.9 | (14.3 | ) | ||||
| Impairment of assets | 0.5 | 1.7 | 0.5 | 3.7 | |||||
| Operating earnings before depreciation and amortization | 93.7 | 138.7 | 197.4 | 293.5 | |||||
| Depreciation and amortization | 50.6 | 39.7 | 100.7 | 70.9 | |||||
| Operating earnings | 43.1 | 99.0 | 96.7 | 222.6 | |||||
| Net financial expenses | 16.2 | 3.4 | 33.9 | 6.0 | |||||
| Earnings before income taxes | 26.9 | 95.6 | 62.8 | 216.6 | |||||
| Income taxes | 4.6 | 26.7 | 12.4 | 89.5 | |||||
| Net earnings | $ | 22.3 | $ | 68.9 | $ | 50.4 | $ | 127.1 | |
| Net earnings per share - basic | $ | 0.26 | $ | 0.89 | $ | 0.58 | $ | 1.64 | |
| Net earnings per share - diluted | $ | 0.26 | $ | 0.89 | $ | 0.58 | $ | 1.64 | |
| Weighted average number of shares outstanding - basic (in millions) | 87.3 | 77.1 | 87.3 | 77.3 | |||||
| Weighted average number of shares - diluted (in millions) | 87.4 | 77.2 | 87.4 | 77.4 | |||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unaudited
| Three months ended | Six months ended | |||||||||||
| April 28, | April 29, | April 28, | April 29, | |||||||||
| (in millions of Canadian dollars) | 2019 | 2018 | 2019 | 2018 | ||||||||
| Net earnings | $ | 22.3 | $ | 68.9 | $ | 50.4 | $ | 127.1 | ||||
| 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 - | ||||||||||||
| Foreign exchange risk | (2.3 | ) | (1.4 | ) | (2.7 | ) | — | |||||
| Net change in the fair value of derivatives designated as cash flow hedges - | ||||||||||||
| Interest rate risk | (4.6 | ) | — | (4.6 | ) | — | ||||||
| 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 | (0.1 | ) | (0.4 | ) | 0.1 | (1.1 | ) | |||||
| Related income taxes | (0.6 | ) | (0.5 | ) | (0.7 | ) | (0.3 | ) | ||||
| (6.4 | ) | (1.3 | ) | (6.5 | ) | (0.8 | ) | |||||
| Cumulative translation differences | ||||||||||||
| Net unrealized exchange gains (losses) on the translation of the financial statements | ||||||||||||
| of foreign operations | 20.6 | 22.8 | 32.9 | (0.6 | ) | |||||||
| Net gains (losses) on hedge of the net investment in foreign operations | (0.4 | ) | (1.1 | ) | (1.0 | ) | 0.4 | |||||
| Related income taxes | — | (0.3 | ) | (0.2 | ) | 0.1 | ||||||
| 20.2 | 22.0 | 32.1 | (0.3 | ) | ||||||||
| Items that will not be reclassified to net earnings | ||||||||||||
| Changes related to defined benefit plans | ||||||||||||
| Actuarial gains (losses) on defined benefit plans | (4.6 | ) | (5.3 | ) | (7.7 | ) | 0.1 | |||||
| Related income taxes | (1.4 | ) | (1.4 | ) | (2.2 | ) | 0.3 | |||||
| (3.2 | ) | (3.9 | ) | (5.5 | ) | (0.2 | ) | |||||
| Other comprehensive income (loss) | 10.6 | 16.8 | 20.1 | (1.3 | ) | |||||||
| Comprehensive income | $ | 32.9 | $ | 85.7 | $ | 70.5 | $ | 125.8 | ||||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Unaudited
| Accumulated | ||||||||||||||
| other | ||||||||||||||
| Share | Contributed | Retained | comprehensive | Total | ||||||||||
| (in millions of Canadian dollars) | capital | surplus | earnings | income (loss) | equity | |||||||||
| Balance as at October 28, 2018 | $ | 642.4 | $ | 1.1 | $ | 979.8 | $ | 10.8 | $ | 1,634.1 | ||||
| Net earnings | — | — | 50.4 | — | 50.4 | |||||||||
| Other comprehensive income | — | — | — | 20.1 | 20.1 | |||||||||
| Shareholders' contributions and distributions to shareholders | ||||||||||||||
| Dividends | — | — | (37.6 | ) | — | (37.6 | ) | |||||||
| Income taxes on share issuance costs | (0.3 | ) | — | — | — | (0.3 | ) | |||||||
| Balance as at April 28, 2019 | $ | 642.1 | $ | 1.1 | $ | 992.6 | $ | 30.9 | $ | 1,666.7 | ||||
| Balance as at October 29, 2017 | $ | 371.6 | $ | 1.1 | $ | 851.5 | $ | (5.5 | ) | $ | 1,218.7 | |||
| Net earnings | — | — | 127.1 | — | 127.1 | |||||||||
| Other comprehensive loss | — | — | — | (1.3 | ) | (1.3 | ) | |||||||
| Shareholders' contributions and distributions to shareholders | — | |||||||||||||
| Share redemptions | (2.9 | ) | — | (10.0 | ) | — | (12.9 | ) | ||||||
| Dividends | — | — | (31.7 | ) | — | (31.7 | ) | |||||||
| Balance as at April 29, 2018 | $ | 368.7 | $ | 1.1 | $ | 936.9 | $ | (6.8 | ) | $ | 1,299.9 | |||
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Unaudited
| As at | As at | |||
| April 28, | October 28, | |||
| (in millions of Canadian dollars) | 2019 | 2018 | ||
| Current assets | ||||
| Cash | $ | 55.4 | $ | 40.5 |
| Accounts receivable | 501.1 | 565.4 | ||
| Income taxes receivable | 20.7 | 6.9 | ||
| Inventories | 311.5 | 305.6 | ||
| Prepaid expenses and other current assets | 22.3 | 24.7 | ||
| 911.0 | 943.1 | |||
| Property, plant and equipment and investment properties | 897.2 | 888.6 | ||
| Intangible assets | 731.6 | 747.1 | ||
| Goodwill | 1,173.6 | 1,150.0 | ||
| Deferred taxes | 20.5 | 18.4 | ||
| Other assets | 30.1 | 35.0 | ||
| $ | 3,764.0 | $ | 3,782.2 | |
| Current liabilities | ||||
| Accounts payable and accrued liabilities | $ | 392.1 | $ | 431.6 |
| Provisions | 14.8 | 3.7 | ||
| Income taxes payable | 10.8 | 14.8 | ||
| Deferred revenues and deposits | 14.6 | 16.0 | ||
| Current portion of long-term debt | 251.2 | 251.2 | ||
| 683.5 | 717.3 | |||
| Long-term debt | 1,206.2 | 1,209.8 | ||
| Deferred taxes | 85.5 | 98.4 | ||
| Provisions | 1.8 | 2.3 | ||
| Other liabilities | 120.3 | 120.3 | ||
| 2,097.3 | 2,148.1 | |||
| Equity | ||||
| Share capital | 642.1 | 642.4 | ||
| Contributed surplus | 1.1 | 1.1 | ||
| Retained earnings | 992.6 | 979.8 | ||
| Accumulated other comprehensive income | 30.9 | 10.8 | ||
| 1,666.7 | 1,634.1 | |||
| $ | 3,764.0 | $ | 3,782.2 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
| Three months ended | Six months ended | |||||||||||
| April 28, | April 29, | April 28, | April 29, | |||||||||
| (in millions of Canadian dollars) | 2019 | 2018 | 2019 | 2018 | ||||||||
| Operating activities | ||||||||||||
| Net earnings | $ | 22.3 | $ | 68.9 | $ | 50.4 | $ | 127.1 | ||||
| Adjustments to reconcile net earnings and cash flows from operating activities: | ||||||||||||
| Impairment of assets | 0.5 | 1.7 | 0.5 | 3.7 | ||||||||
| Depreciation and amortization | 56.0 | 45.7 | 111.4 | 83.5 | ||||||||
| Financial expenses on long-term debt | 15.6 | 4.4 | 31.8 | 8.8 | ||||||||
| Net losses (gains) on disposal of assets | 0.1 | (4.7 | ) | 0.3 | (4.2 | ) | ||||||
| Net gains on business disposals | — | (2.0 | ) | — | (35.2 | ) | ||||||
| Income taxes | 4.6 | 26.7 | 12.4 | 89.5 | ||||||||
| Net foreign exchange differences and other | 1.8 | 10.0 | 1.5 | 11.1 | ||||||||
| Cash flows generated by operating activities before changes in non-cash operating items and income taxes paid | 100.9 | 150.7 | 208.3 | 284.3 | ||||||||
| Changes in non-cash operating items (1) | 19.3 | (77.9 | ) | 16.2 | (109.2 | ) | ||||||
| Income taxes paid | (20.7 | ) | (16.7 | ) | (41.2 | ) | (29.0 | ) | ||||
| Cash flows from operating activities | 99.5 | 56.1 | 183.3 | 146.1 | ||||||||
| Investing activities | ||||||||||||
| Business combinations, net of acquired cash | — | (43.4 | ) | — | (54.8 | ) | ||||||
| Business disposals | — | 2.3 | — | 32.6 | ||||||||
| Acquisitions of property, plant and equipment | (17.6 | ) | (9.0 | ) | (53.3 | ) | (18.1 | ) | ||||
| Disposals of property, plant and equipment | — | 20.5 | — | 20.6 | ||||||||
| Increase in intangible assets | (6.1 | ) | (4.2 | ) | (11.2 | ) | (7.9 | ) | ||||
| Dividends received from joint ventures | — | — | — | 3.4 | ||||||||
| Cash flows from investing activities | (23.7 | ) | (33.8 | ) | (64.5 | ) | (24.2 | ) | ||||
| Financing activities | ||||||||||||
| Reimbursement of long-term debt | — | (15.2 | ) | — | (18.9 | ) | ||||||
| Net decrease in credit facility | (40.1 | ) | — | (35.8 | ) | — | ||||||
| Financial expenses on long-term debt | (14.4 | ) | (2.7 | ) | (31.6 | ) | (8.2 | ) | ||||
| Dividends | (19.3 | ) | (16.2 | ) | (37.6 | ) | (31.7 | ) | ||||
| Share redemptions | — | (6.0 | ) | — | (12.9 | ) | ||||||
| Cash flows from financing activities | (73.8 | ) | (40.1 | ) | (105.0 | ) | (71.7 | ) | ||||
| Effect of exchange rate changes on cash denominated in foreign currencies | (0.3 | ) | 2.2 | 1.1 | 0.8 | |||||||
| Net change in cash | 1.7 | (15.6 | ) | 14.9 | 51.0 | |||||||
| Cash at beginning of period | 53.7 | 313.7 | 40.5 | 247.1 | ||||||||
| Cash at end of period | $ | 55.4 | $ | 298.1 | $ | 55.4 | $ | 298.1 | ||||
| Non-cash investing activities | ||||||||||||
| Net change in capital asset acquisitions financed by accounts payable | $ | 1.3 | $ | — | $ | 3.8 | $ | (0.4 | ) | |||
| (1) Includes the accelerated recognition of the deferred revenues opening balance as at October 29, 2017 as part of the transaction with Hearst for the three-month and six-month periods ended April 28, 2018 (Note 31 to the annual consolidated financial statements as of October 28, 2018). | ||||||||||||