Transcontinental Reports Large Profitability Increase Among Its Q1 Fiscal 2015 Results

MONTREAL—March 17, 2015—Transcontinental Inc. announced its results for the first quarter of Fiscal Year 2015, which ended January 31, 2015.

Highlights:

• Revenues increased 1.1 percent.
• Adjusted net earnings applicable to participating shares grew 36.7 percent.
• Increased the dividend per participating share by 6 percent, to $0.68 per year.
• Maintained a solid financial position, with a net indebtedness ratio of 1.24x.
• Announced the sale of consumer magazines produced in Montreal and Toronto to TVA Group Inc. for $55.5 million. The Competition Bureau issued a No Action letter, which clears this transaction. The sale is expected to close in April 2015.

"With the results for the first quarter of Fiscal 2015, namely the 1.1 percent growth in consolidated revenues and the 36.7 percent increase in our profitability, the year is off to a good start," said Francois Olivier, president and CEO of TC Transcontinental. "Our strategy aimed at consolidating the weekly newspaper market in Quebec and diversifying into flexible packaging has been fruitful. The integration of Transcontinental Capri was successfully completed, and this asset is performing as expected. Despite lower advertising revenues, our various initiatives allowed us to be profitable and to keep generating significant cash flows. We maintain an excellent financial position, which permits us, once again this year, to increase the dividend per participating share."

"In the coming quarters, we intend to continue growing our flexible packaging business, optimizing our operating activities as well as investing in our digital offering," concluded Olivier.

2015 First Quarter Results
Revenues for the first quarter of 2015 increased 1.1 percent, from $499.3 million to $504.6 million. This increase is mainly attributable to the contribution from acquisitions, more specifically the acquisition of Capri Packaging and the Quebec weekly newspapers from Sun Media. New printing and distribution agreements signed in 2014 also contributed to the increase in revenues. In addition, the appreciation of the US dollar against the Canadian dollar had a favorable impact. This growth in revenues was mitigated by disposals and closures, namely the sale of Rastar's assets, a reduction in marketing products printing activities, a transitional slowdown in flyer printing activities in the United States and, to a lesser extent, in Canada, and challenging market conditions for advertising spending.

In the first quarter of 2015, adjusted operating earnings rose 21.6 percent, from $43.5 million to $52.9 million. On the one hand, this performance is due to the contribution from acquisitions, disposals and closures, as well as the favorable impact of the US dollar versus the Canadian dollar. On the other hand, this increase stems from the new printing and distribution agreements and the cost-reduction initiatives in the Media Sector. However, this growth was partly offset by the above-mentioned lower advertising revenues and the variation in the stock- based compensation expense.

Adjusted net earnings applicable to participating shares grew 36.7 percent, from $26.4 million to $36.1 million. On a per share basis, it increased from $0.34 to $0.46. Net earnings applicable to participating shares more than doubled, from $17.2 million, or $0.22 per share, to $37.9 million, or $0.49 per share. This improvement results mostly from the increase in operating earnings before amortization compared to the first quarter of 2014.

Other Highlights

• On December 9, 2014, the Corporation extended its credit facility for two additional years, until February 2020.
• On March 17, 2015, the Corporation released its sixth annual Sustainability Report titled "Guide. Mobilize. Achieve." This edition outlines the Corporation's progress with respect to its three-year plan (2013-2015) based on three pillars: the environment, employees and communities.
• To learn more about the commitments and achievements of TC Transcontinental with respect to corporate social responsibility, refer to the 2014 report, which is on the Corporation's Website at www.tc.tc/socialresponsibility.

Outlook
TC Transcontinental will continue its efforts to maximize the profitability of its printing platform in fiscal 2015. The impact of the new agreements to print newspapers and magazines, announced in 2014, should keep contributing to its operating earnings, and the cmopany will maintain its efforts to attract other Canadian newspaper publishers to its highly efficient print network. It will also continue developing solutions to meet the evolving needs of retailers, in particular with respect to its point-of-purchase marketing services. However, a decline in advertising spending should continue to impact its printing operations.

The challenging conditions with respect to advertising revenues should continue to impact the company's weekly newspaper publishing activities, as well as its interactive marketing solutions during fiscal 2015. However, these items should be offset by the company's synergies related to its two recent transactions within the Media sector. Lastly, it will continue to invest in the development of its digital and interactive marketing products, as well as enhance its business and education offerings.

TC Transcontinental will continue to generate significant cash flows in the next quarters, and its excellent financial position should permit it to continue applying its multi-pronged capital management approach, which allows it to invest in its growth while increasing its dividends and reducing debt. The results from the acquisition of Capri Packaging continue to meet its expectations, and TC Transcontinental will maintain a disciplined approach to growth opportunities in this niche.

Dividend on Participating Shares
The Corporation's Board of Directors declared a quarterly dividend of $0.17 per share on Class A Subordinate Voting Shares and Class B Shares. This dividend is payable on April 30, 2015 to shareholders of record at the close of business on April 10, 2015. The Corporation thus increased the dividend per participating share by 6 percent, or $0.04, raising the annual dividend from $0.64 to $0.68 per share. This increase reflects TC Transcontinental's solid cash flow position.

About TC Transcontinental
Canada's largest printer, with operations in print and digital media, publishing and flexible packaging, TC Transcontinental's mission is to create products and services that allow businesses to attract, reach and retain their target customers. Respect, teamwork, performance and innovation are strong values held by the Corporation and its commitment to all stakeholders is to pursue its business and philanthropic activities in a responsible manner. Transcontinental Inc. (TCL.A)(TCL.B), known as TC Transcontinental, has over 8,500 employees in Canada and the United States, and revenues of C$2.1 billion in 2014.

Source: TC Transcontinental.