Net sales increased 2.4% during the third quarter 2018 to $1 billion, reflecting the impact of the Ivie & Associates and Rise Interactive investments. Organic sales declined 3.2% after excluding acquisition sales impact of 4.6%, increased pass-through paper sales of 1.6% and a 0.6% unfavorable foreign exchange impact. The organic results reflect ongoing print industry volume and pricing pressures and are consistent with the Company's expectations. Net cash provided by operating activities was $47 million for the first nine months of 2018 compared to $180 million in 2017, and Free Cash Flow was negative $38 million. The year-over-year decline was primarily attributable to expected timing differences in 2018 versus 2017 for cash generated from working capital which includes an intentional build-up of paper inventories that will be reduced in the fourth quarter. Click read more below for additional detail.
In the pursuit of its transformation, TC Transcontinental (TSX: TCL.A TCL.B) announces today the sale of the majority of its specialty media assets and event planning activities to two corporations, namely to Contex Group Inc., an event planning and media company recently founded and headed by Pierre Marcoux, and to Newcom Media Inc., a Canadian company dedicated to specialty publishing and event planning, led by Joe Glionna. Contex Group becomes the owner of Les Affaires, Les Affaires Plus, Les Événements Les Affaires, Acquizition.biz, Benefits Canada, Avantages, Canadian Investment Review, Canadian Institutional Investment Network and Contech, while Newcom Media is acquiring Finance et Investissement, Investment Executive, Advisor’s Edge and Conseiller.
The sale announced today of specialty media activities, which rely on advertising, represents a well-thought-out decision by the Corporation in the context of its strategic shift into flexible packaging – which accelerated in 2018 with the transformational acquisition of Coveris Americas – and its sustained efforts to maintain its Canadian leadership position in printing. TC Transcontinental, therefore, remains active in the media industry in its capacity as a printer and distributor and continues to operate TC Media Books and Groupe Constructo.
“Today, we are turning an important page in our history with the sale of the majority of our specialty media assets and event planning activities,” said François Olivier, President and Chief Executive Officer of TC Transcontinental. “We are convinced that these transactions represent the best avenue for these brands as they are passed on to seasoned managers who will be fully dedicated to them. We would like to thank all our employees and wish them continued success with Contex Group and Newcom Media.”
Mr. Olivier added the following: “Forty years ago, our founder Rémi Marcoux purchased his first publication, Les Affaires newspaper, with great pride and a solid vision for the future. We are pleased that these renowned assets are being acquired by Pierre who will know how to make them evolve thanks to his extensive business experience. He was able to build and develop these brands and their related event activities over the years, with the support of his talented team.”
Pierre Marcoux has an in-depth understanding of the assets he is acquiring today since he has been at their helm for many years. Son of Transcontinental Inc.’s founder, Pierre Marcoux has always shown his entrepreneurial spirit at TC Transcontinental and now intends to make Contex Group Inc. a leading reference in the market for event planning and the creation of quality content. He has developed a solid business plan and intends to provide an enhanced range of conferences, trade shows, and training, that will be rooted in content from the multiplatform specialty brands.
Mr. Olivier is also very satisfied with the transaction with Newcom Media: “This company is an acquirer of choice for Finance et Investissement, Investment Executive, Advisor’s Edge and Conseiller. These four renowned brands complement Newcom Media’s portfolio which has long been active in the media industry. It’s a pleasure doing business once again with Mr. Glionna and his team who had acquired our specialty magazine Canadian Insurance Top Broker from TC Media last year.” Newcom Media is a publisher of B2B products in Canada, notably present in the trucking, insurance and dental markets.
As part of these two transactions, the vast majority of employees remain employed in Montréal and Toronto. The Corporation is, unfortunately, announcing that approximately 20 employees are being terminated, mostly positions that served the whole group. These employees will be supported through their career transition.
Moreover, the two acquirers are entrusting the printing of the acquired publications to TC Transcontinental Printing through multi-year agreements.