Highlights
- Revenues of $728.9 million, down 3.8% compared to the third quarter of 2018.
- Adjusted operating earnings before depreciation and amortization (1) of $112.9 million, down 3.0%.
- Operating earnings of $56.6 million, up 42.9%.
- Adjusted operating earnings (1) of $80.9 million, down 4.4%.
- Net earnings of $3.4 million ($0.04 per share) compared to $19.3 million ($0.22 per share) for the corresponding period in 2018.
- Adjusted net earnings (1) of $52.2 million ($0.60 per share) compared to $52.1 million ($0.59 per share) for the corresponding period in 2018.
- Cash flows from operating activities of $90.2 million, up 17.0%.
- Appointed Thomas Morin as President of the Packaging Sector.
- On September 3, 2019, announced the sale of the Fremont, California building to Hearst for US$75 million, subject to customary closing conditions.
- On September 3, 2019, announced the acquisition of a 60% participation in Industrial y Commercial Trilex C.A., a plastic packaging supplier located in Guayaquil, Ecuador.
(1) Please refer to the section entitled "Non-IFRS Financial Measures" in this press release for a definition of these measures.
MONTRÉAL, Sept. 05, 2019 (GLOBE NEWSWIRE) -- Transcontinental Inc. (TSX: TCL.A TCL.B) announces its results for the third quarter of fiscal 2019, which ended July 28, 2019.
"I am satisfied with the synergies achieved to date from the integration of Coveris Americas and their impact on our profitability in the Packaging Sector, said François Olivier, President and Chief Executive Officer of TC Transcontinental. We are building solid foundations for the future growth of the company, in particular by signing long-term contracts with major customers.
"Our Printing Sector continued to be affected by the same trends observed in recent quarters with respect to our retailer-related service offering. We are however confident that the extent of the decrease in revenues recorded this year will be lower in the coming quarters and that the efficiency measures in place will enable us to optimize our cost structure.
"In summary, we are pursuing our business plan with confidence. The sale of the Fremont building, combined with the significant cash flows we continue to generate, will allow us to accelerate the reduction of our net indebtedness."
Financial Highlights
| (in millions of dollars, except per share amounts) | Q3-2019 | Q3-2018 | Variation
in % | | | NINE
MONTHS
2019 | NINE
MONTHS
2018 | Variation
in % | | |
| Revenues | $728.9 | $757.9 | (3.8 | ) | % | $2,247.9 | $1,794.3 | 25.3 | | % |
| Adjusted revenues (1) | 728.9 | 757.9 | (3.8 | ) | | 2,247.9 | 1,692.2 | 32.8 | | |
| Operating earnings before depreciation and amortization | 107.2 | 89.7 | 19.5 | | | 304.6 | 383.2 | (20.5 | ) | |
| Adjusted operating earnings before depreciation and amortization (1) | 112.9 | 116.4 | (3.0 | ) | | 336.7 | 297.2 | 13.3 | | |
| Operating earnings | 56.6 | 39.6 | 42.9 | | | 153.3 | 262.2 | (41.5 | ) | |
| Adjusted operating earnings (1) | 80.9 | 84.6 | (4.4 | ) | | 241.2 | 225.3 | 7.1 | | |
| Net earnings | 3.4 | 19.3 | (82.4 | ) | | 53.8 | 146.4 | (63.3 | ) | |
| Net earnings per share | 0.04 | 0.22 | (81.8 | ) | | 0.62 | 1.81 | (65.7 | ) | |
| Adjusted net earnings (1) | 52.2 | 52.1 | 0.2 | | | 150.3 | 152.4 | (1.4 | ) | |
| Adjusted net earnings per share (1) | 0.60 | 0.59 | 1.7 | | | 1.72 | 1.89 | (9.0 | ) | |
| (1) Please refer to the section entitled "Reconciliation of Non-IFRS Financial Measures" in this press release for the adjusted data presented above. Certain comparative figures have been reclassified to conform to the presentation adopted in the current period. |
2019 Third Quarter Results
Revenues decreased by $29.0 million, or 3.8%, from $757.9 million in the third quarter of 2018 to $728.9 million in the corresponding period in 2019. This decrease is essentially related to a decline in Printing Sector revenues, mostly due to a decrease in revenues from our retailer-related service offering, and, to a lesser extent, a decline in Packaging Sector revenues, mostly due to lower volume in one of our segments as well as legislative changes having an unfavourable impact on our agricultural packaging product offering. This decrease was partially offset by the favourable exchange rate effect.
Operating earnings increased by $17.0 million, or 42.9%, from $39.6 million in the third quarter of 2018 to $56.6 million in the third quarter of 2019, mainly as a result of expenses related to the acquisition of Coveris Americas recorded in the third quarter of 2018, namely restructuring and other costs (gains) and the reversal of the fair value adjustment of inventory sold arising from business combinations. Adjusted operating earnings decreased by $3.7 million, or 4.4%, from $84.6 million to $80.9 million, mainly due to the decrease in revenues from our retailer-related service offering in the Printing Sector.
Net earnings decreased by $15.9 million, or 82.4%, from $19.3 million in the third quarter of 2018 to $3.4 million in the third quarter of 2019. This decrease is mainly due to an income tax expense of $30.2 million resulting from the retroactive application of a new directive as part of the U.S. tax reform, partially offset by the increase in operating earnings. On a per share basis, net earnings went from $0.22 to $0.04 due to the above-mentioned items. Adjusted net earnings increased by $0.1 million, or 0.2%, from $52.1 million in the third quarter of 2018 to $52.2 million in the third quarter of 2019, mainly as a result of lower adjusted income taxes, which were partially offset by the decrease in adjusted operating earnings and an increase in financial expenses. On a per share basis, adjusted net earnings went from $0.59 to $0.60.
2019 First Nine Months Results
Revenues increased by $453.6 million, or 25.3%, from $1,794.3 million in the first nine months of 2018 to $2,247.9 million in the corresponding period in 2019. This increase is essentially attributable to the acquisition of Coveris Americas, which contributed $624.3 million to revenues. It was mitigated by the impact of the accelerated recognition of deferred revenues of $102.1 million recorded in 2018, the effect of the sale of our California newspaper printing operations and the decline in Printing Sector revenues, which is mainly due to a decrease in printed flyer volume largely related to two major customers.
Operating earnings decreased by $108.9 million, or 41.5%, from $262.2 million in the first nine months of 2018 to $153.3 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. To a lesser extent, workforce reduction costs recorded in 2019 also contributed to the decrease in operating earnings. Adjusted operating earnings increased by $15.9 million, or 7.1%, from $225.3 million to $241.2 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 $92.6 million, or 63.3%, from $146.4 million in the first nine months of 2018 to $53.8 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 nine months of 2019 compared to the corresponding period in 2018, partially mitigated by a decrease in income tax expense. On a per share basis, net earnings went from $1.81 to $0.62 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 $2.1 million, or 1.4%, from $152.4 million in the first nine months of 2018 to $150.3 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 and the decrease in income tax expense. On a per share basis, adjusted net earnings went from $1.89 to $1.72, mainly as a result of the issuance of 10.8 million Class A Subordinated Voting Shares of the Corporation in May 2018 and the decrease in adjusted net earnings.
For more detailed financial information, please see the Management’s Discussion and Analysis for the third quarter ended July 28, 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 that the decrease in revenues will be more significant in the fourth quarter than in the third quarter, mostly as a result of lower volume within a segment, in addition to the effect of legislative changes in Europe having an impact on our agricultural packaging product offering. We will continue to focus on profit margins and the achievement of synergies, which should help mitigate the 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, and more specifically with respect to the retailer-related service offering, we expect a decrease in volume that will be slightly less significant than the trends observed in recent quarters. In addition, our in-store marketing products and book printing offerings should continue to grow. The other printing verticals should be affected by the same trends observed in recent quarters. Our operational efficiency initiatives already under way will have a positive impact in the fourth quarter, which should partially offset the effect of the decrease in volume on operating earnings. We therefore expect that the decrease in our profit margins will be less significant in the fourth quarter of 2019.
We expect that the Media Sector will continue to record a good performance in the fourth quarter, 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 third quarter ended July 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, 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 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 - Third quarter and cumulative |
| | Three months ended | Nine months ended |
| (in millions of dollars) | July 28, 2019 | July 29, 2018 | July 28, 2019 | | July 29, 2018 | |
| Revenues | $728.9 | $757.9 | $2,247.9 | | $1,794.3 | |
| Accelerated recognition of deferred revenues (1) | — | — | — | | (102.1 | ) |
| Adjusted revenues | $728.9 | $757.9 | $2,247.9 | | $1,692.2 | |
| (1) 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 operating earnings - Third quarter and cumulative |
| | Three months ended | Nine months ended |
| (in millions of dollars) | July 28, 2019 | July 29, 2018 | July 28, 2019 | | July 29, 2018 | |
| Operating earnings | $56.6 | $39.6 | $153.3 | | $262.2 | |
| Restructuring and other costs (gains) | 5.7 | 14.3 | 31.6 | | — | |
| Impairment of assets | — | 2.9 | 0.5 | | 6.6 | |
| Amortization of intangible assets arising from business combinations (1) | 18.6 | 18.3 | 55.8 | | 27.1 | |
| Accelerated recognition of deferred revenues (2) | — | — | — | | (102.1 | ) |
| Accelerated depreciation (2) | — | — | — | | 22.0 | |
| Reversal of the fair value adjustment of inventory sold arising from business combinations | — | 9.5 | — | | 9.5 | |
| Adjusted operating earnings | $80.9 | $84.6 | $241.2 | | $225.3 | |
| Depreciation and amortization (3) | 32.0 | 31.8 | 95.5 | | 71.9 | |
| Adjusted operating earnings before depreciation and amortization | $112.9 | $116.4 | $336.7 | | $297.2 | |
| (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. |
| (3) Depreciation and amortization exclude amortization of intangible assets arising from business combinations and accelerated depreciation presented above. |
| |
| |
| Reconciliation of net earnings - Third quarter |
| | Three months ended |
| | July 28, 2019 | July 29, 2018 |
| (in millions of dollars, except per share amounts) | Total | Per share | Total | | Per share | |
| Net earnings | $3.4 | $0.04 | $19.3 | | $0.22 | |
| Restructuring and other costs, net of related income taxes | 4.5 | 0.05 | 10.0 | | 0.11 | |
| Impairment of assets, net of related income taxes | — | — | 2.1 | | 0.02 | |
| Amortization of intangible assets arising from business combinations, net of related income taxes (1) | 14.1 | 0.16 | 13.5 | | 0.16 | |
| Reversal of the fair value adjustment of inventory sold arising from business combinations, net of related income taxes | — | — | 7.2 | | 0.08 | |
| Retroactive application of a new directive as part of the U.S. tax reform | 30.2 | 0.35 | — | | — | |
| Adjusted net earnings | $52.2 | $0.60 | $52.1 | | $0.59 | |
| (1) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements. |
| |
| |
| Reconciliation of net earnings - Cumulative |
| | Nine months ended |
| | July 28, 2019
| July 29, 2018 |
| (in millions of dollars, except per share amounts) | Total | Per share | Total | | Per share | |
| Net earnings | $53.8 | $0.62 | $146.4 | | $1.81 | |
| Restructuring and other costs (gains), net of related income taxes | 23.8 | 0.27 | (3.6 | ) | (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) | 42.1 | 0.48 | 20.0 | | 0.25 | |
| Accelerated recognition of deferred revenues, net of related income taxes (2) | — | — | (75.4 | ) | (0.93 | ) |
| Accelerated depreciation, net of related income taxes (2) | — | — | 16.3 | | 0.20 | |
| Impact of the U.S. tax reform on deferred taxes | — | — | 36.6 | | 0.45 | |
| 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 | $150.3 | $1.72 | $152.4 | | $1.89 | |
| (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 July 28, 2019 | | | As at October 28, 2018 | | |
| Long-term debt | $1,392.5
| | | $1,209.8 | | |
| Current portion of long-term debt | 1.2 | | | 251.2 | | |
| Cash | (41.5 | ) | | (40.5 | ) | |
| Net indebtedness | $1,352.2
| | | $1,420.5 | | |
| Adjusted operating earnings before depreciation and amortization (last 12 months) | $498.9
| | | $459.4 | | |
| Net indebtedness ratio | 2.7 | | 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 October 16, 2019 to shareholders of record at the close of business on September 30, 2019.
Conference Call
Upon releasing its 2019 third 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, sustainable development and use of certain products, 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 September 5, 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 September 5, 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:
| CONSOLIDATED STATEMENTS OF EARNINGS |
| Unaudited |
| | Three months ended | Nine months ended |
| | July 28, | July 29, | July 28, | July 29, |
| (in millions of Canadian dollars, unless otherwise indicated and per share data) | 2019 | 2018 | 2019 | 2018 |
| | | | | |
| Revenues | $ | 728.9 | $ | 757.9 | $ | 2,247.9 | $ | 1,794.3 |
| Operating expenses | 616.0 | 651.0 | 1,911.2 | 1,404.5 |
| Restructuring and other costs | 5.7 | 14.3 | 31.6 | — |
| Impairment of assets | — | 2.9 | 0.5 | 6.6 |
| | | | | |
| Operating earnings before depreciation and amortization | 107.2 | 89.7 | 304.6 | 383.2 |
| Depreciation and amortization | 50.6 | 50.1 | 151.3 | 121.0 |
| | | | | |
| Operating earnings | 56.6 | 39.6 | 153.3 | 262.2 |
| Net financial expenses | 16.3 | 14.5 | 50.2 | 20.5 |
| | | | | |
| Earnings before income taxes | 40.3 | 25.1 | 103.1 | 241.7 |
| Income taxes | 36.9 | 5.8 | 49.3 | 95.3 |
| | | | | |
| Net earnings | $ | 3.4 | $ | 19.3 | $ | 53.8 | $ | 146.4 |
| | | | | |
| Net earnings per share - basic | $ | 0.04 | $ | 0.22 | $ | 0.62 | $ | 1.81 |
| | | | | |
| Net earnings per share - diluted | $ | 0.04 | $ | 0.22 | $ | 0.62 | $ | 1.81 |
| | | | | |
| Weighted average number of shares outstanding - basic (in millions) | 87.3 | 87.6 | 87.3 | 80.7 |
| | | | | |
| Weighted average number of shares - diluted (in millions) | 87.4 | 87.7 | 87.4 | 80.8 |
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) |
| Unaudited |
| | Three months ended | Nine months ended |
| | July 28,
| | July 29, | | July 28,
| | July 29, | |
| (in millions of Canadian dollars) | 2019
| | 2018 | | 2019
| | 2018 | |
| | | | | |
| Net earnings | $ | 3.4 | | $ | 19.3 | | $ | 53.8 | | $ | 146.4 | |
| | | | | |
| 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 | 3.1 | | (0.5 | ) | 0.4 | | (0.5 | ) |
| Net change in the fair value of derivatives designated as cash flow hedges - | | | | |
| Interest rate risk | (7.4 | ) | — | | (12.0 | ) | — | |
| 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 | (0.4 | ) | 0.2 | | (0.3 | ) | (0.9 | ) |
| Related income taxes | (2.5 | ) | (0.1 | ) | (3.2 | ) | (0.4 | ) |
| | (2.2 | ) | (0.2 | ) | (8.7 | ) | (1.0 | ) |
| | | | | |
| Cumulative translation differences | | | | |
| Net unrealized exchange gains (losses) on the translation of the financial statements of foreign operations | (27.3 | ) | 16.8 | | 5.6 | | 16.2 | |
| Net gains (losses) on hedge of the net investment in foreign operations | 0.2 | | (4.9 | ) | (0.8 | ) | (4.5 | ) |
| Related income taxes | — | | (0.8 | ) | (0.2 | ) | (0.7 | ) |
| | (27.1 | ) | 12.7 | | 5.0 | | 12.4 | |
| | | | | |
| Items that will not be reclassified to net earnings | | | | |
| Changes related to defined benefit plans | | | | |
| Actuarial gains (losses) on defined benefit plans | 0.5 | | 8.7 | | (7.2 | ) | 8.8 | |
| Related income taxes | 0.2 | | 2.3 | | (2.0 | ) | 2.6 | |
| | 0.3 | | 6.4 | | (5.2 | ) | 6.2 | |
| | | | | |
| Other comprehensive income (loss) | (29.0 | ) | 18.9 | | (8.9 | ) | 17.6 | |
| Comprehensive income (loss) | $ | (25.6 | ) | $ | 38.2 | | $ | 44.9 | | $ | 164.0 | |
| 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 | — | | — | 53.8 | | — | | 53.8 | |
| Other comprehensive loss | — | | — | — | | (8.9 | ) | (8.9 | ) |
| Shareholders' contributions and distributions to shareholders | | | | | |
| Dividends | — | | — | (56.8 | ) | — | | (56.8 | ) |
| Income taxes on share issuance costs | (0.5 | ) | — | — | | — | | (0.5 | ) |
| Balance as at July 28, 2019 | $ | 641.9 | | $ | 1.1 | $ | 976.8 | | $ | 1.9 | | $ | 1,621.7 | |
| | | | | | |
| Balance as at October 29, 2017 | $ | 371.6 | | $ | 1.1 | $ | 851.5 | | $ | (5.5 | ) | $ | 1,218.7 | |
| Net earnings | — | | — | 146.4 | | — | | 146.4 | |
| Other comprehensive income | — | | — | — | | 17.6 | | 17.6 | |
| Shareholders' contributions and distributions to shareholders | | | | | |
| Share redemptions | (2.9 | ) | — | (10.0 | ) | — | | (12.9 | ) |
| Dividends | — | | — | (50.1 | ) | — | | (50.1 | ) |
| Issuance of shares, net of issuance costs | 278.2 | | — | — | | — | | 278.2 | |
| Balance as at July 29, 2018 | $ | 646.9 | | $ | 1.1 | $ | 937.8 | | $ | 12.1 | | $ | 1,597.9 | |
| CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
| Unaudited |
| | As at | As at |
| | July 28, | October 28, |
| (in millions of Canadian dollars) | 2019 | 2018 |
| | | |
| Current assets | | |
| Cash | $ | 41.5 | $ | 40.5 |
| Accounts receivable | 470.6 | 565.4 |
| Income taxes receivable | 24.8 | 6.9 |
| Inventories | 306.1 | 305.6 |
| Prepaid expenses and other current assets | 23.9 | 24.7 |
| Assets available for sale | 55.2 | — |
| | 922.1 | 943.1 |
| | | |
| Property, plant, equipment and investment properties | 819.1 | 888.6 |
| Intangible assets | 701.5 | 747.1 |
| Goodwill | 1,156.3 | 1,150.0 |
| Deferred taxes | 22.7 | 18.4 |
| Other assets | 33.9 | 35.0 |
| | $ | 3,655.6 | $ | 3,782.2 |
| | | |
| Current liabilities | | |
| Accounts payable and accrued liabilities | $ | 366.6 | $ | 431.6 |
| Provisions | 12.2 | 3.7 |
| Income taxes payable | 10.2 | 14.8 |
| Deferred revenues and deposits | 14.8 | 16.0 |
| Current portion of long-term debt | 1.2 | 251.2 |
| | 405.0 | 717.3 |
| | | |
| Long-term debt | 1,392.5 | 1,209.8 |
| Deferred taxes | 113.7 | 98.4 |
| Provisions | 2.0 | 2.3 |
| Other liabilities | 120.7 | 120.3 |
| | 2,033.9 | 2,148.1 |
| | | |
| Equity | | |
| Share capital | 641.9 | 642.4 |
| Contributed surplus | 1.1 | 1.1 |
| Retained earnings | 976.8 | 979.8 |
| Accumulated other comprehensive income | 1.9 | 10.8 |
| | 1,621.7 | 1,634.1 |
| | $ | 3,655.6 | $ | 3,782.2 |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| Unaudited |
| | Three months ended | Nine months ended |
| | July 28,
| | July 29, | | July 28,
| | July 29, | |
| (in millions of Canadian dollars) | 2019
| | 2018 | | 2019
| | 2018 | |
| | | | | |
| Operating activities | | | | |
| Net earnings | $ | 3.4 | | $ | 19.3 | | $ | 53.8 | | $ | 146.4 | |
| Adjustments to reconcile net earnings and cash flows from operating activities: | | | | |
| Impairment of assets | — | | 2.9 | | 0.5 | | 6.6 | |
| Depreciation and amortization | 56.0 | | 56.1 | | 167.4 | | 139.6 | |
| Financial expenses on long-term debt | 14.8 | | 15.0 | | 46.6 | | 23.8 | |
| Net losses (gains) on disposal of assets | — | | (1.4 | ) | 0.3 | | (5.6 | ) |
| Net gains on business disposals | — | | (2.3 | ) | — | | (37.5 | ) |
| Income taxes | 36.9 | | 5.8 | | 49.3 | | 95.3 | |
| Net foreign exchange differences and other | (1.3 | ) | (4.1 | ) | 0.2 | | 7.0 | |
| Cash flows generated by operating activities before changes in non-cash operating items and income taxes paid | 109.8 | | 91.3 | | 318.1 | | 375.6 | |
| Changes in non-cash operating items (1) | (6.2 | ) | (7.2 | ) | 10.0 | | (116.4 | ) |
| Income taxes paid | (13.4 | ) | (7.0 | ) | (54.6 | ) | (36.0 | ) |
| Cash flows from operating activities | 90.2 | | 77.1 | | 273.5 | | 223.2 | |
| | | | | |
| Investing activities | | | | |
| Business combinations, net of acquired cash | — | | (1,561.5 | ) | — | | (1,616.3 | ) |
| Business disposals | — | | 2.4 | | — | | 35.0 | |
| Acquisitions of property, plant and equipment | (20.1 | ) | (19.5 | ) | (73.4 | ) | (37.6 | ) |
| Disposals of property, plant and equipment | — | | 4.4 | | — | | 25.0 | |
| Increase in intangible assets | (6.0 | ) | (9.0 | ) | (17.2 | ) | (16.9 | ) |
| Dividends received from joint ventures | — | | — | | — | | 3.4 | |
| Cash flows from investing activities | (26.1 | ) | (1,583.2 | ) | (90.6 | ) | (1,607.4 | ) |
| | | | | |
| Financing activities | | | | |
| Increase in long-term debt, net of issuance costs | 300.0 | | 959.0 | | 300.0 | | 959.0 | |
| Reimbursement of long-term debt | (250.0 | ) | (143.9 | ) | (250.0 | ) | (162.8 | ) |
| Net increase (decrease) in credit facility | (91.3 | ) | 175.8 | | (127.1 | ) | 175.8 | |
| Financial expenses on long-term debt | (17.5 | ) | (13.1 | ) | (49.1 | ) | (21.3 | ) |
| Proceeds from issuance of shares in exchange for subscription receipts, net of issuance cost | — | | 274.9 | | — | | 274.9 | |
| Dividends | (19.2 | ) | (18.4 | ) | (56.8 | ) | (50.1 | ) |
| Share redemptions | — | | — | | — | | (12.9 | ) |
| Cash flows from financing activities | (78.0 | ) | 1,234.3 | | (183.0 | ) | 1,162.6 | |
| | | | | |
| Effect of exchange rate changes on cash denominated in foreign currencies | — | | 1.4 | | 1.1 | | 2.2 | |
| | | | | |
| Net change in cash | (13.9 | ) | (270.4 | ) | 1.0 | | (219.4 | ) |
| Cash at beginning of period | 55.4 | | 298.1 | | 40.5 | | 247.1 | |
| Cash at end of period | $ | 41.5 | | $ | 27.7 | | $ | 41.5 | | $ | 27.7 | |
| | | | | |
| Non-cash investing activities | | | | |
| Net change in capital asset acquisitions financed by accounts payable | $ | (0.1 | ) | $ | — | | $ | 3.7 | | $ | (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 nine-month periods ended July 28, 2018 (Note 31 to the annual consolidated financial statements as of October 28, 2018). |
