Transcontinental Reports Organic Growth in All Three Market SectorsMarch 9, 2011
• As at Jan. 31, 2011, the ratio of net indebtedness (including the securitization program) to adjusted operating income before amortization was 1.78x, as compared to 1.82x as at October 31, 2010 and 2.40x as at Jan. 31, 2010. The ratio of net indebtedness to operating income before amortization is slightly above the target of 1.5x set by management. Over the next few quarters, it should get closer to the target given the expected increase in cash flow generation and reduction in capital expenditures.
• In the past few months, Transcontinental improved its financial flexibility and optimized its debt portfolio. On Dec. 21, 2010, Standard & Poor’s raised Transcontinental’s credit rating from BBB- (stable) to BBB (stable) reflecting the continued improvement in Transcontinental's financial position and prospects. In addition, after the end of the quarter, Transcontinental prepaid and cancelled its $100 million term credit facility with Caisse de dépôt et placement du Québec. To increase its financial flexibility, Transcontinental also set up a new two-year $200 million securitization program with a Canadian bank, however it does not believe it will use this program in the near term.
• Transcontinental concluded a four-year agreement with Canadian Tire, worth several hundred million dollars, starting in January 2012. This new agreement expands services to cover Canadian Tire’s flyer printing needs on a national scale, for all of its banners, and the printing of marketing materials as well as distribution service in Eastern Canada. In addition, Canadian Tire will be able to draw on Transcontinental's other services, such as data analytics, Canada-wide distribution, e3 flyer production, direct marketing programs via print, mobile and email channels, and advertising campaigns in Transcontinental's consumer magazines, newspapers and media websites. This new agreement will add about $30 to $40 million in incremental revenues on an annual basis and makes Transcontinental Canadian Tire’s leading provider of marketing solutions across Canada.
• Transcontinental continued to invest in new digital products and services in its Media and Interactive sectors. It recently launched Search Engine Marketing (SEM) services and Website design services for its small and medium-sized business customers in local communities. It also acquired Vortex, a leading provider of integrated mobile solutions located in Toronto and developed the first mobile portal for Quebec’s job seekers for Tele-Ressources.
• Transcontinental launched its second Sustainability Report, based on the Global Reporting Initiative (GRI), an international standard for sustainability methodology. The Report meets Application Level B of the GRI standard, an improvement over Level C received last year. The 2010 Sustainability Report includes the results from stakeholder engagement initiatives as well as the elaboration of objectives and targets. The full web report, a downloadable pdf as well as a highlights brochure are all available at www.transcontinental-ecodev.com.
Reconciliation of Non-GAAP Financial Measures
Financial data have been prepared in conformity with Canadian Generally Accepted Accounting Principles (GAAP). However, certain measures used in this press release do not have any standardized meaning under GAAP and could be calculated differently by other companies. The Corporation believes that certain non-GAAP financial measures, when presented in conjunction with comparable GAAP financial measures, are useful to investors and other readers because that information is an appropriate measure for evaluating the Corporation's operating performance. Internally, the Corporation uses this non-GAAP financial information as an indicator of business performance, and evaluates management's effectiveness with specific reference to these indicators. These measures should be considered in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP.
Transcontinental creates marketing products and services that allow businesses to attract, reach and retain their target customers. The Corporation is the largest printer in Canada and Mexico, and fourthlargest in North America. As the leading publisher of consumer magazines and French-language educational resources, and of community newspapers in Quebec and the Atlantic provinces, it is also one of Canada's top media groups. In addition, its digital platforms deliver unique content through more than 250 websites. Transcontinental also offers interactive marketing products and services that use new communications platforms supported by marketing strategy and planning services, database analytics, premedia, e-flyers, email marketing, custom communications and mobile solutions.
Transcontinental (TSX: TCL.A, TCL.B, TCL.PR.D) has 10,500 employees in Canada, the United States and Mexico, and reported revenues of C$2.1 billion in 2010. For more information about the corporation, please visit www.transcontinental.com.
Source: Financial release.