Highlights
- Revenues of $3,038.8 million for fiscal 2019, the highest in the company's history, up 15.8% compared to 2018.
- Adjusted revenues (1) of $3,027.1 million for fiscal 2019, up 20.1% compared to 2018.
- Adjusted operating earnings before depreciation and amortization (1) of $475.8 million, up 3.6%.
- Operating earnings of $309.5 million, down 15.8%.
- Adjusted operating earnings (1) of $348.0 million, down 2.5%.
- Net earnings of $166.1 million ($1.90 per share) for fiscal 2019 compared to $213.4 million ($2.59 per share) for 2018.
- Adjusted net earnings (1) of $220.2 million ($2.52 per share) for fiscal 2019 compared to $239.4 million ($2.91 per share) for 2018.
- Cash flows from operating activities of $431.6 million, up 38.1%.
- Sold the Fremont, California building to Hearst for US$75 million (approximately C$100 million).
- Sold specialty media assets and event planning activities to Contex Group Inc. and Newcom Media Inc.
- Acquired Holland & Crosby Limited, a manufacturing company specialized in in-store marketing product printing.
- On November 27, 2019, announced it entered into a definitive agreement to sell its paper and woven polypropylene packaging operations to Hood Packaging Corporation for a price of US$180 million (approximately C$239 million) subject to working capital adjustments and regulatory approvals.
(1) Please refer to the section entitled "Non-IFRS Financial Measures" in this press release for a definition of these measures.
MONTRÉAL, Dec. 12, 2019 (GLOBE NEWSWIRE) -- Transcontinental Inc. (TSX: TCL.A TCL.B) announces its results for the fourth quarter and fiscal 2019, which ended October 27, 2019.
"2019 was marked by the successful integration of Coveris Americas, a turning point in our transformation, said François Olivier, President and Chief Executive Officer of TC Transcontinental. In only two years, we grew our revenues by 50% to reach more than $3 billion in 2019, a first in our company’s history. We executed on our growth strategy and rigorously managed risk. I am very pleased with our company's evolution in positioning us to create long-term value.
"In our Packaging Sector, in accordance with our plan, we increased our operating earnings margin before depreciation and amortization quarter after quarter during the fiscal year, thanks to realized synergies and efficiency gains. We are building the foundations needed to generate long-term sustainable organic growth and remain committed to improving profitability in the coming years. We are well positioned and our portfolio of products and services will continue to evolve in line with our strategy to focus on markets where we have a lasting competitive advantage.
"In our Printing Sector, we experienced a difficult year overall, marked by the greater than expected decline in our revenues from retailer-related services. Despite the circumstances, we once again recorded an excellent operating earnings margin before depreciation and amortization and strong cash flows. In addition, we implemented cost management measures to help mitigate these impacts. In the coming years, we will continue optimizing our printing platform and seize growth opportunities in certain promising verticals, such as book printing and in-store marketing products.
"Despite the challenges we faced in the Printing Sector, we generated cash flows from operating activities of over $430 million, up 38.1% compared to the previous fiscal year, which were mainly used to reduce our net indebtedness, as per our plan. Finally, I am confident that the Publisac will continue to play an important role in the years ahead. We are committed to defending the interests of the Publisac and of all its stakeholders, namely the thousands of employees who are part of the production and distribution process everywhere across Québec, merchants, local newspaper publishers as well as the millions of citizens who benefit from it every week. We remain convinced that the situation will result in a positive outcome."
Financial Highlights
| (in millions of dollars, except per share amounts) | Q4-2019 | Q4-2018 | Variation in % | 2019 | 2018 | Variation in % | ||||||||
| Revenues | $790.9 | $829.2 | (4.6 | ) | % | $3,038.8 | $2,623.5 | 15.8 | % | |||||
| Adjusted revenues (1) | 779.2 | 829.2 | (6.0 | ) | 3,027.1 | 2,521.4 | 20.1 | |||||||
| Operating earnings before depreciation and amortization | 206.9 | 153.6 | 34.7 | 511.5 | 536.8 | (4.7 | ) | |||||||
| Adjusted operating earnings before depreciation and amortization (1) | 139.1 | 162.2 | (14.2 | ) | 475.8 | 459.4 | 3.6 | |||||||
| Operating earnings | 156.2 | 105.5 | 48.1 | 309.5 | 367.7 | (15.8 | ) | |||||||
| Adjusted operating earnings (1) | 106.8 | 131.6 | (18.8 | ) | 348.0 | 356.9 | (2.5 | ) | ||||||
| Net earnings | 112.3 | 67.0 | 67.6 | 166.1 | 213.4 | (22.2 | ) | |||||||
| Net earnings per share | 1.28 | 0.76 | 68.4 | 1.90 | 2.59 | (26.6 | ) | |||||||
| Adjusted net earnings (1) | 69.9 | 87.0 | (19.7 | ) | 220.2 | 239.4 | (8.0 | ) | ||||||
| Adjusted net earnings per share (1) | 0.80 | 0.99 | (19.2 | ) | 2.52 | 2.91 | (13.4 | ) | ||||||
| (1) Please refer to the section entitled "Reconciliation of Non-IFRS Financial Measures" in this press release for the adjusted data presented above. | ||||||||||||||
Fiscal 2019 Results
Revenues increased by $415.3 million, or 15.8%, from $2,623.5 million in fiscal 2018 to $3,038.8 million in fiscal 2019. This increase is essentially attributable to acquisitions, in particular that of Coveris Americas, which contributed $643.4 million to revenues. It was mitigated by the impact of the accelerated recognition of deferred revenues recorded in 2018 in the Printing Sector, the decrease in volume in the Printing Sector as well as the effect of the sale of the California newspaper printing operations.
Operating earnings decreased by $58.2 million, or 15.8%, from $367.7 million in fiscal 2018 to $309.5 million in the corresponding period in 2019. This decrease is mainly due to the accelerated recognition in 2018 of deferred revenues of $102.1 million, net of accelerated depreciation of $22.0 million. The decline in Printing Sector revenues and workforce reduction costs also contributed to the decrease in operating earnings. This change was partially offset by the impact of the acquisition of Coveris Americas and the gain on sale of assets resulting from the sale of the Fremont, California building to Hearst. Adjusted operating earnings decreased by $8.9 million, or 2.5%, from $356.9 million to $348.0 million.
Net earnings decreased by $47.3 million, or 22.2%, from $213.4 million in fiscal 2018 to $166.1 million in fiscal 2019. This decrease is due to the previously explained decline in operating earnings as well as higher financial expenses, partially offset by a decrease in income tax expense. On a per share basis, net earnings went from $2.59 to $1.90 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 $19.2 million, or 8.0%, from $239.4 million in fiscal 2018 to $220.2 million in fiscal 2019, mostly as a result of higher financial expenses and lower adjusted operating earnings, partially offset by the decrease in adjusted income tax expense. On a per share basis, adjusted net earnings went from $2.91 to $2.52, mainly due to the decrease in adjusted net earnings and, to a lesser extent, to the effect of the issuance of 10.8 million Class A Subordinate Voting Shares of the Corporation in May 2018.
2019 Fourth Quarter Results
Revenues decreased by $38.3 million, or 4.6%, from $829.2 million in the fourth quarter of 2018 to $790.9 million in the corresponding period of 2019. This decrease is essentially related to a decline in revenues of the Printing Sector and, to a lesser extent, of the Packaging Sector. In the Printing Sector, the decline is mainly explained by lower volume in our retailer-related service offering and, to a lesser extent, the end of transition services related to the Hearst transaction. The decrease in revenues for the quarter was partially offset by the accelerated recognition of deferred revenues in relation to the sale of the Fremont, California building to Hearst.
Operating earnings increased by $50.7 million, or 48.1%, from $105.5 million in the fourth quarter of 2018 to $156.2 million in the fourth quarter of 2019. This increase is mainly attributable to the change in restructuring and other costs (gains), primarily due to the gain on sale of assets, combined with the effect of the accelerated recognition of deferred revenues of $11.7 million in relation with the sale of the Fremont, California building to Hearst and, to a lesser extent, the increase in the Packaging Sector's operating earnings. This increase was partially offset by the decline in the Printing Sector operating earnings as well as the $10.9 million unfavourable effect of the stock-based compensation expense as a result of the change in the share price in the fourth quarter of 2019 compared to the corresponding period in 2018. Adjusted operating earnings decreased by $24.8 million, or 18.8%, from $131.6 million to $106.8 million.
Net earnings increased by $45.3 million, or 67.6%, from $67.0 million in the fourth quarter of 2018 to $112.3 million in the fourth quarter of 2019. This increase is mainly attributable to the previously explained increase in operating earnings. On a per share basis, net earnings went from $0.76 to $1.28.
Adjusted net earnings decreased by $17.1 million, or 19.7%, from $87.0 million in the fourth quarter of 2018 to $69.9 million in the fourth quarter of 2019. This decrease is mainly due to lower adjusted operating earnings in 2019 compared to the corresponding period in 2018. On a per share basis, adjusted net earnings went from $0.99 to $0.80.
For more detailed financial information, please see the Management’s Discussion and Analysis for the year ended October 27, 2019 as well as the financial statements in the “Investors” section of our website at www.tc.tc
Outlook
In the Packaging Sector, we expect a decrease in revenues in fiscal 2020 as a result of the definitive agreement to sell the paper and woven polypropylene packaging operations, which generated revenues of about US$215 million (approximately C$286 million) in fiscal 2019. With respect to organic growth, we expect a slight increase in the majority of our other verticals. We will continue to focus on profit margins and the achievement of synergies, which should have a positive impact on operating earnings. To support our customers and strengthen our position in the packaging industry, we will also continue to invest in the research and development of innovative and eco-responsible products. Lastly, by signing long-term contracts with major customers and developing business opportunities, we are building solid foundations for the company's growth.
In the Printing Sector, we expect that the organic decline will continue to affect the majority of our verticals, excluding book printing and in-store marketing products. The acquisition of Holland & Crosby Limited will help partially offset this organic decline. Lastly, our operational efficiency initiatives will have a positive impact in fiscal 2020, which should mitigate the effect of the decrease in volume on operating earnings.
We expect that the Media Sector will continue to record a good performance in the coming quarters in terms of profitability.
To conclude, we expect to continue generating significant cash flows from all our operating activities, which will enable us to reduce our net indebtedness and continue our transformation through targeted acquisitions in line with our strategy.
Non-IFRS Financial Measures
In this document, unless otherwise indicated, all financial data are prepared in accordance with International Financial Reporting Standards (IFRS) and the term "dollar", as well as the symbol "$" 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 annual consolidated financial statements for the year ended October 27, 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, the effect of the U.S. tax reform on deferred taxes as well as the retroactive application of a new directive as part of the U.S. tax reform |
| 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, the effect of the U.S. tax reform on deferred taxes as well as the retroactive application of a new directive as part of the U.S. tax reform |
| 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 agreements signed with Hearst. Please refer to Note 31 to the annual consolidated financial statements for the year ended October 27, 2019. | |
Reconciliation of Non-IFRS Financial Measures
The financial information has been prepared in accordance with IFRS. However, financial measures used, namely adjusted revenues, adjusted operating earnings before depreciation and amortization, adjusted operating earnings, adjusted operating earnings margin, adjusted income taxes, adjusted net earnings, adjusted net earnings per share, net indebtedness and 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 adjusted revenues, adjusted operating earnings before depreciation and amortization, adjusted operating earnings and 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 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 - Quarter and fiscal year | |||||||||
| Three months ended | Year ended | ||||||||
| (in millions of dollars) | October 27, 2019 | October 28, 2018 | October 27, 2019 | October 28, 2018 | |||||
| Revenues | $790.9 | $829.2 | $3,038.8 | $2,623.5 | |||||
| Accelerated recognition of deferred revenues (1) | (11.7 | ) | — | (11.7 | ) | (102.1 | ) | ||
| Adjusted revenues | $779.2 | $829.2 | $3,027.1 | $2,521.4 | |||||
| (1) Related to the agreements signed with The Hearst Corporation. Please refer to Note 31 to the annual consolidated financial statements for the year ended October 27, 2019. | |||||||||
| Reconciliation of operating earnings - Quarter and fiscal year | ||||||||
| Three months ended | Year ended | |||||||
| (in millions of dollars) | October 27, 2019 | October 28, 2018 | October 27, 2019 | October 28, 2018 | ||||
| Operating earnings | $156.2 | $105.5 | $309.5 | $367.7 | ||||
| Restructuring and other costs (gains) | (56.1 | ) | 8.6 | (24.5 | ) | 8.6 | ||
| Impairment of assets | — | — | 0.5 | 6.6 | ||||
| Amortization of intangible assets arising from business combinations (1) | 18.4 | 17.5 | 74.2 | 44.6 | ||||
| Accelerated recognition of deferred revenues (2) | (11.7 | ) | — | (11.7 | ) | (102.1 | ) | |
| Accelerated depreciation (2) | — | — | — | 22.0 | ||||
| Reversal of the fair value adjustment of inventory sold arising from business combinations | — | — | — | 9.5 | ||||
| Adjusted operating earnings | $106.8 | $131.6 | $348.0 | $356.9 | ||||
| Depreciation and amortization (3) | 32.3 | 30.6 | 127.8 | 102.5 | ||||
| Adjusted operating earnings before depreciation and amortization | $139.1 | $162.2 | $475.8 | $459.4 | ||||
| (1) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements. | ||||||||
| (2) Related to the agreements signed with The Hearst Corporation. Please refer to Note 31 to the annual consolidated financial statements for the year ended October 27, 2019. | ||||||||
| (3) Depreciation and amortization exclude amortization of intangible assets arising from business combinations and accelerated depreciation presented above. | ||||||||
| Reconciliation of net earnings - Fiscal year | ||||||||
| Year ended | ||||||||
| October 27, 2019 | October 28, 2018 | |||||||
| (in millions of dollars, except per share amounts) | Total | Per share | Total | Per share | ||||
| Net earnings | $166.1 | $1.90 | $213.4 | $2.59 | ||||
| Restructuring and other costs (gains), net of related income taxes | (23.8 | ) | (0.27 | ) | 3.0 | 0.04 | ||
| Impairment of assets, net of related income taxes | 0.4 | — | 4.9 | 0.06 | ||||
| Amortization of intangible assets arising from business combinations, net of related income taxes (1) | 56.3 | 0.64 | 33.4 | 0.40 | ||||
| Accelerated recognition of deferred revenues, net of related income taxes (2) | (9.0 | ) | (0.10 | ) | (75.4 | ) | (0.91 | ) |
| Accelerated depreciation, net of related income taxes (2) | — | — | 16.3 | 0.20 | ||||
| Impact of the U.S. tax reform on deferred taxes | — | — | 36.6 | 0.44 | ||||
| Reversal of the fair value adjustment of inventory sold arising from business combinations, net of related income taxes | — | — | 7.2 | 0.09 | ||||
| Retroactive application of a new directive as part of the U.S. tax reform | 30.2 | 0.35 | — | — | ||||
| Adjusted net earnings | $220.2 | $2.52 | $239.4 | $2.91 | ||||
| (1) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements. | ||||||||
| (2) Related to the agreements signed with The Hearst Corporation. Please refer to Note 31 to the annual consolidated financial statements for the year ended October 27, 2019. | ||||||||
| Reconciliation of net earnings - Quarter | ||||||||
| Three months ended | ||||||||
| October 27, 2019 | October 28, 2018 | |||||||
| (in millions of dollars, except per share amounts) | Total | Per share | Total | Per share | ||||
| Net earnings | $112.3 | $1.28 | $67.0 | $0.76 | ||||
| Restructuring and other costs (gains), net of related income taxes | (47.6 | ) | (0.54 | ) | 6.6 | 0.08 | ||
| Amortization of intangible assets arising from business combinations, net of related income taxes (1) | 14.2 | 0.16 | 13.4 | 0.15 | ||||
| Accelerated recognition of deferred revenues, net of related income taxes (2) | (9.0 | ) | (0.10 | ) | — | — | ||
| Adjusted net earnings | $69.9 | $0.80 | $87.0 | $0.99 | ||||
| (1) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements. | ||||||||
| (2) Related to the agreements signed with The Hearst Corporation. Please refer to Note 31 to the annual consolidated financial statements for the year ended October 27, 2019. | ||||||||
| Reconciliation of net indebtedness | ||||||
| (in millions of dollars, except ratios) | As at October 27, 2019 | As at October 28, 2018 | ||||
| Long-term debt | $1,381.9 | $1,209.8 | ||||
| Current portion of long-term debt | 1.2 | 251.2 | ||||
| Cash | (213.7 | ) | (40.5 | ) | ||
| Net indebtedness | $1,169.4 | $1,420.5 | ||||
| Adjusted operating earnings before depreciation and amortization (last 12 months) | $475.8 | $459.4 | ||||
| Net indebtedness ratio | 2.5 | 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 January 22, 2020 to shareholders of record at the close of business on January 6, 2020.
Conference Call
Upon releasing its fourth quarter and fiscal 2019 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 positioned as the leading Canadian French-language educational publishing group. 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$3.0 billion for the fiscal year ended October 27, 2019. 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 at a reasonable rate, bad debts from certain customers, import and export controls, raw materials and transportation costs, competition, the Corporation's ability to generate organic growth in its Packaging Sector, the Corporation's ability to identify and 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 door-to-door distribution, changes in consumption habits related, in particular, to issues involving sustainable development and the use of certain products or services such as door-to-door distribution, the impact of digital product development and adoption on the demand for retailer-related services and other printed products, change in consumption habits or loss of a major customer, the impact of customer consolidation, the safety and quality 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, the inability to maintain or improve operational efficiency and avoid disruptions that could affect its ability to meet deadlines, recruiting and retaining qualified personnel in certain geographic areas and industry sectors, taxation, interest rates and indebtedness level. The main risks, uncertainties and factors that could influence actual results are described in the Management's Discussion and Analysis for the year ended October 27, 2019 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 or entered into after the date of December 12, 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 December 12, 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
Years ended October 27, 2019 and October 28, 2018
(in millions of Canadian dollars, except per share data)
| October 27, | October 28, | ||||
| 2019 | 2018 | ||||
| Revenues | $ | 3,038.8 | $ | 2,623.5 | |
| Operating expenses | 2,551.3 | 2,071.5 | |||
| Restructuring and other costs (gains) | (24.5 | ) | 8.6 | ||
| Impairment of assets | 0.5 | 6.6 | |||
| Operating earnings before depreciation and amortization | 511.5 | 536.8 | |||
| Depreciation and amortization | 202.0 | 169.1 | |||
| Operating earnings | 309.5 | 367.7 | |||
| Net financial expenses | 66.9 | 36.5 | |||
| Earnings before income taxes | 242.6 | 331.2 | |||
| Income taxes | 76.5 | 117.8 | |||
| Net earnings attributable to shareholders of the Corporation | $ | 166.1 | $ | 213.4 | |
| Net earnings per share - basic | $ | 1.90 | $ | 2.59 | |
| Net earnings per share - diluted | $ | 1.90 | $ | 2.58 | |
| Weighted average number of shares outstanding - basic (in millions) | 87.3 | 82.5 | |||
| Weighted average number of shares - diluted (in millions) | 87.4 | 82.6 | |||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years ended October 27, 2019 and October 28, 2018
(in millions of Canadian dollars)
| October 27, | October 28, | |||||
| 2019 | 2018 | |||||
| Net earnings | $ | 166.1 | $ | 213.4 | ||
| 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 | 1.2 | (0.6 | ) | |||
| Net change in the fair value of derivatives designated as cash flow hedges - Interest rate risk | (14.8 | ) | — | |||
| 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 | ) | (0.5 | ) | ||
| Related income taxes | (3.7 | ) | (0.3 | ) | ||
| (10.0 | ) | (0.8 | ) | |||
| Cumulative translation differences | ||||||
| Net unrealized exchange gains (losses) on the translation of the financial statements of foreign operations | (22.2 | ) | 12.7 | |||
| Net unrealized exchange gains on the translation of the financial statements of foreign operations reversed to net | ||||||
| earnings | 8.7 | 1.2 | ||||
| Net losses on hedge of the net investment in foreign operations | (0.8 | ) | (0.7 | ) | ||
| Related income taxes | (0.8 | ) | (0.6 | ) | ||
| (13.5 | ) | 13.8 | ||||
| Items that will not be reclassified to net earnings | ||||||
| Changes related to defined benefit plans | ||||||
| Actuarial gains (losses) on defined benefit plans | (17.9 | ) | 5.1 | |||
| Related income taxes | (4.7 | ) | 1.8 | |||
| (13.2 | ) | 3.3 | ||||
| Other comprehensive income (loss) | (36.7 | ) | 16.3 | |||
| Comprehensive income attributable to shareholders of the Corporation | $ | 129.4 | $ | 229.7 | ||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Years ended October 27, 2019 and October 28, 2018
(in millions of Canadian dollars)
| Accumulated | Non- | ||||||||||||||||||
| other | controlling | ||||||||||||||||||
| Share | Contributed | Retained | comprehensive | interests | Total | ||||||||||||||
| capital | surplus | earnings | income (loss) | Total | (Note 4) | equity | |||||||||||||
| Balance as at October 28, 2018 | $ | 642.4 | $ | 1.1 | $ | 979.8 | $ | 10.8 | $ | 1,634.1 | $ | — | $ | 1,634.1 | |||||
| Net earnings | — | — | 166.1 | — | 166.1 | — | 166.1 | ||||||||||||
| Other comprehensive loss | — | — | — | (36.7 | ) | (36.7 | ) | — | (36.7 | ) | |||||||||
| Shareholders' contributions and | |||||||||||||||||||
| distributions to shareholders | |||||||||||||||||||
| Dividends | — | — | (76.0 | ) | — | (76.0 | ) | — | (76.0 | ) | |||||||||
| Income taxes on share issuance costs | (0.5 | ) | — | — | — | (0.5 | ) | — | (0.5 | ) | |||||||||
| Business acquisition | — | — | — | — | — | 4.2 | 4.2 | ||||||||||||
| Balance as at October 27, 2019 | $ | 641.9 | $ | 1.1 | $ | 1,069.9 | $ | (25.9 | ) | $ | 1,687.0 | $ | 4.2 | $ | 1,691.2 | ||||
| Balance as at October 29, 2017 | $ | 371.6 | $ | 1.1 | $ | 851.5 | $ | (5.5 | ) | $ | 1,218.7 | $ | — | $ | 1,218.7 | ||||
| Net earnings | — | — | 213.4 | — | 213.4 | — | 213.4 | ||||||||||||
| Other comprehensive income | — | — | — | 16.3 | 16.3 | — | 16.3 | ||||||||||||
| Shareholders' contributions and | |||||||||||||||||||
| distributions to shareholders | |||||||||||||||||||
| Share redemptions | (7.1 | ) | — | (16.5 | ) | — | (23.6 | ) | — | (23.6 | ) | ||||||||
| Dividends | — | — | (68.6 | ) | — | (68.6 | ) | — | (68.6 | ) | |||||||||
| Issuance of shares, net of issuance costs | 277.9 | — | — | — | 277.9 | — | 277.9 | ||||||||||||
| Balance as at October 28, 2018 | $ | 642.4 | $ | 1.1 | $ | 979.8 | $ | 10.8 | $ | 1,634.1 | $ | — | $ | 1,634.1 | |||||
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Years ended October 27, 2019 and October 28, 2018
(in millions of Canadian dollars)
| As at | As at | |||||
| October 27, | October 28, | |||||
| 2019 | 2018 | |||||
| Current assets | ||||||
| Cash | $ | 213.7 | $ | 40.5 | ||
| Accounts receivable | 520.7 | 565.4 | ||||
| Income taxes receivable | 10.2 | 6.9 | ||||
| Inventories | 304.2 | 305.6 | ||||
| Prepaid expenses and other current assets | 20.0 | 24.7 | ||||
| 1,068.8 | 943.1 | |||||
| Property, plant and equipment and investment properties | 820.1 | 888.6 | ||||
| Intangible assets | 686.2 | 747.1 | ||||
| Goodwill | 1,145.3 | 1,150.0 | ||||
| Deferred taxes | 27.2 | 18.4 | ||||
| Other assets | 34.2 | 35.0 | ||||
| $ | 3,781.8 | $ | 3,782.2 | |||
| Current liabilities | ||||||
| Accounts payable and accrued liabilities | $ | 434.7 | $ | 431.6 | ||
| Provisions | 14.1 | 3.7 | ||||
| Income taxes payable | 12.8 | 14.8 | ||||
| Deferred revenues and deposits | 9.3 | 16.0 | ||||
| Current portion of long-term debt | 1.2 | 251.2 | ||||
| 472.1 | 717.3 | |||||
| Long-term debt | 1,381.9 | 1,209.8 | ||||
| Deferred taxes | 120.2 | 98.4 | ||||
| Provisions | 1.9 | 2.3 | ||||
| Other liabilities | 114.5 | 120.3 | ||||
| 2,090.6 | 2,148.1 | |||||
| Equity | ||||||
| Share capital | 641.9 | 642.4 | ||||
| Contributed surplus | 1.1 | 1.1 | ||||
| Retained earnings | 1,069.9 | 979.8 | ||||
| Accumulated other comprehensive income (loss) | (25.9 | ) | 10.8 | |||
| Attributable to shareholders of the Corporation | 1,687.0 | 1,634.1 | ||||
| Non-controlling interests | 4.2 | — | ||||
| 1,691.2 | 1,634.1 | |||||
| $ | 3,781.8 | $ | 3,782.2 | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended October 27, 2019 and October 28, 2018
(in millions of Canadian dollars)
| October 27, | October 28, | |||||
| 2019 | 2018 | |||||
| Operating activities | ||||||
| Net earnings | $ | 166.1 | $ | 213.4 | ||
| Adjustments to reconcile net earnings and cash flows from operating activities: | ||||||
| Impairment of assets | 0.5 | 6.6 | ||||
| Depreciation and amortization | 223.6 | 193.5 | ||||
| Financial expenses on long-term debt | 60.7 | 40.7 | ||||
| Net gains on disposal of assets | (42.0 | ) | (5.1 | ) | ||
| Net gains on business acquisitions and disposals | (4.8 | ) | (37.5 | ) | ||
| Income taxes | 76.5 | 117.8 | ||||
| Net foreign exchange differences and other | (10.0 | ) | 9.8 | |||
| Cash flows generated by operating activities before changes in non-cash operating items and income taxes paid | 470.6 | 539.2 | ||||
| Changes in non-cash operating items (1) | 20.5 | (184.8 | ) | |||
| Income taxes paid | (59.5 | ) | (41.9 | ) | ||
| Cash flows from operating activities | 431.6 | 312.5 | ||||
| Investing activities | ||||||
| Business combinations, net of acquired cash | (18.5 | ) | (1,573.3 | ) | ||
| Business disposals | 9.5 | 35.0 | ||||
| Acquisitions of property, plant and equipment | (104.1 | ) | (59.4 | ) | ||
| Disposals of property, plant and equipment | 100.5 | 24.7 | ||||
| Increase in intangible assets | (21.5 | ) | (20.6 | ) | ||
| Dividends received from joint ventures | — | 3.4 | ||||
| Net cash outflow on acquisition of an associate | — | (2.5 | ) | |||
| Cash flows from investing activities | (34.1 | ) | (1,592.7 | ) | ||
| Financing activities | ||||||
| Increase in long-term debt, net of issuance costs | 302.9 | 958.9 | ||||
| Reimbursement of long-term debt | (250.0 | ) | (164.0 | ) | ||
| Net increase (decrease) in credit facility, net of issuance costs | (134.3 | ) | 128.4 | |||
| Financial expenses on long-term debt | (64.0 | ) | (35.0 | ) | ||
| Proceeds from issuance of shares in exchange for subscription receipts, net of issuance costs | — | 274.9 | ||||
| Dividends | (76.0 | ) | (68.6 | ) | ||
| Share redemptions | — | (23.6 | ) | |||
| Cash flows from financing activities | (221.4 | ) | 1,071.0 | |||
| Effect of exchange rate changes on cash denominated in foreign currencies | (2.9 | ) | 2.6 | |||
| Net change in cash | 173.2 | (206.6 | ) | |||
| Cash at beginning of year | 40.5 | 247.1 | ||||
| Cash at end of year | $ | 213.7 | $ | 40.5 | ||
| Non-cash investing activities | ||||||
| Net change in capital asset acquisitions financed by accounts payable | $ | 3.8 | $ | 1.3 | ||
| (1) Includes the accelerated recognition of deferred revenues balance as at October 29, 2017 as part of the transaction with Hearst for the years ended October 27, 2019 and October 28, 2018 (Note 31). | ||||||