Highlights:
*Deployed the crisis management plan rapidly and effectively in response to the COVID-19 pandemic, including putting in place strict measures to protect employee health and safety as well as financial support programs for employees who were temporarily laid off or on reduced work schedules.
*Revenues of $625.1 million; operating earnings of $44.1 million; and net earnings attributable to shareholders of the Corporation of $25.7 million ($0.30 per share).
*Adjusted operating earnings before depreciation and amortization(1) of $104.3 million; adjusted operating earnings(1) of $68.5 million; and adjusted net earnings attributable to shareholders of the Corporation(1) of $43.6 million ($0.50 per share).
*Maintained solid financial health with liquidities of $104.6 million and access to unused lines of credit of $435.3 million.
*Repaid Canadian dollar term loans of $300.0 million and U.S. dollar term loans of US$50.0 million ($66.4 million) in February 2020.
*Controlled costs and liquidities by temporarily laying off employees, mainly in the Printing Sector, reducing salaries throughout the sectors, at head office and for members of senior management, and deferring certain investment expenditures.
“I am very proud of the role we have played since the beginning of the COVID-19 crisis in ensuring the pursuit of our operations to support essential services to the population, in particular food packaging and printing services for newspapers and retailers, said François Olivier, President and Chief Executive Officer of TC Transcontinental. I am also very proud of the leadership and commitment of our teams, which successfully protected the health and safety of our employees and their families, thereby ensuring the continuity of our essential operations. I would especially like to thank our approximately 1,600 colleagues who were unfortunately temporarily laid off in the Printing Sector for their patience and understanding, and am glad that about 600 of them are already back to work.
“Our strength and resilience throughout this crisis, despite the suspension of a large portion of our printing activities, eloquently demonstrate our operational excellence and the relevance of our transformation into flexible packaging. In addition, the discipline, speed and effectiveness of our actions enabled us to maintain our financial health.
“In our Packaging Sector, we had a very solid quarter thanks to our agility in responding to the increased demand by our customers for packaging for food and everyday consumer products. This higher level of activity, combined with the continued realization of our synergies and efficiency gains, allowed us to generate improved profitability for the quarter.
“In the Printing Sector, our rapid cost reduction measures, combined with the various cost reduction initiatives implemented early in the fiscal year, allowed us to adjust to the volume decrease caused by the crisis and effectively protect the sector. In addition, our in-store marketing products printing team created innovative pandemic-related products, such as signage for physical distancing and plexiglass panels for several large Canadian retailers to protect their customers and employees. In addition, we manufactured protective visors for our employees and for local community organizations.
“To conclude, I am grateful for the exceptional commitment of our managers and employees in unprecedented circumstances, and very satisfied with the measures we implemented to manage the situation. We took great care of the health and safety of our employees while generating good profitability and significant cash flows. Although there is uncertainty in the immediate future, we are strongly positioned to take advantage of future opportunities.”
Revenues decreased by $142.3 million, or 18.5%, from $767.4 million in the second quarter of 2019 to $625.1 million in the corresponding period of 2020. This decrease is largely due to the impact of the disposal of our paper packaging operations ($70.8 million), which were sold at the end of the first quarter of 2020, and a decrease in volume in the Printing Sector, mostly due to the impact of the COVID-19 pandemic in April 2020. The sale of the specialty media assets and event planning activities also contributed to this decrease. The organic decline in the Packaging Sector of $7.0 million, or 1.7%, is mainly due to the decrease in raw material costs.
Operating earnings increased by $1.0 million, or 2.3%, from $43.1 million in the second quarter of 2019 to $44.1 in the second quarter of 2020 following a decrease in restructuring and other costs. Adjusted operating earnings decreased by $15.1 million, or 18.1 %, from $83.6 million in the second quarter of 2019 to $68.5 million in the second quarter of 2020. This decrease is mostly attributable to lower revenues in the Printing Sector. In addition to cost reduction measures related to COVID-19, the operational efficiency initiatives introduced early in the fiscal year helped to mitigate this decline. In addition, the Corporation benefited from a government subsidy that contributed in particular to maintaining jobs related to delivering essential services and putting in place programs to support financially employees who were temporarily laid off or on reduced work schedules. The Printing Sector’s adjusted operating earnings margin decreased from 16.6% in the second quarter of 2019 to 14.9% in the second quarter of 2020.
In the Packaging Sector, despite the impact of the disposal of the paper packaging segment, adjusted operating earnings increased by $4.1 million, from $34.1 million in the second quarter of 2019 to $38.2 million in the second quarter of 2020. This increase is attributable to the realization of synergies and operational efficiency initiatives in the sector and the significant volume increase in the operations supporting the supply chain for food retailers. The sector’s adjusted operating earnings margin increased from 8.1% in the second quarter of 2019 to 10.8% in the second quarter of 2020.
Net earnings attributable to shareholders of the Corporation increased by $3.4 million, or 15.2%, from $22.3 million in the second quarter of 2019 to $25.7 million in the second quarter of 2020. This increase is mainly attributable to the stability of operating earnings combined with the decrease in net financial expenses resulting from a reduction in net indebtedness during the year. On a per share basis, net earnings attributable to shareholders of the Corporation went from $0.26 in the second quarter of 2019 to $0.30 in the second quarter of 2020.
details at: https://tctranscontinental.com/company-overview/news-room/press-releases/transcontinental-inc-announces-its-results-second-1