Transcontinental Inc Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Adam Shine - National Bank Financial Inc. - Analyst : Hi. Thanks a lot. Good morning. Thomas, can you talk a little bit about what you're seeing out there in the packaging marketplace? We're seeing a lot of consolidation activity. Maybe speak to opportunities for you to pick up either key talent out there and/or even potential customers. At the same time, when talking about M&A opportunities going forward, particularly with a stronger balance sheet, talk about what maybe the M&A pipeline might look like. Thanks.

Question: Adam Shine - National Bank Financial Inc. - Analyst : When we think about the $20 million to $40 million cost-cutting target that obviously you have hit the $30 million mark as you telegraphed a couple of quarters ago, do you see opportunity just in terms of momentum to potentially get beyond that $40 million? I pushed you a little bit harder here, but do you believe that momentum has evolved such that there is additional lines of sight to go beyond that initial target that you put out a year ago?

Question: Adam Shine - National Bank Financial Inc. - Analyst : Okay. I'll queue up again. Thank you.

Question: Yaghi Maher - Scotiabank GBM - Analyst : (spoken in foreign language) I just wanted to first talk about the strike and its impact. You detail in the note and in your prepared remarks the potential downside from the strike so far up to December 11. I was trying maybe if you can just give us the numbers on revenue and EBITDA separately, and if you can also quantify the impact on a per-week basis. I was just trying to figure out what's included up to December 11th because I think the first week of the strike you still got paid because you printed the flyers, but then the second week and third week you did not. So I was just trying if you can just clarify a little bit these things for us. Thank you.

Question: Yaghi Maher - Scotiabank GBM - Analyst : [$1 million] a week, okay, on EBITDA. Okay, that's good color. Thank you. Thank you, Donald. Okay, and then on more a bigger question as a long-term tale from the strike. Now habits form, habits can be taken, lost. And so, what's your thinking about if the strike is prolonged, do your customers -- are starting to think about finding other ways to send their flyers? And if so, how do you see that behavior change potentially affecting raddar long-term? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 12, 2024 / 1:00PM, TCLa.TO - Q4 2024 Transcontinental Inc Earnings Call

Question: Yaghi Maher - Scotiabank GBM - Analyst : Okay, great. Thank you. And just more on the packaging side, good color from you guys; and in terms the volume growth, it's nice to see. On the tariffs, can you maybe clarify a little bit for us? And again, this is a hypothetical question as everybody's thinking about tariffs. How tariffs, if they were to be implemented by the new US administration, how that can affect both volumes, how you operate the business, and its impact on your financial results?

Question: Yaghi Maher - Scotiabank GBM - Analyst : Okay, great. Thank you. Finally, just on your buyback, now with the stock, the stock has done nice performance lately. What's your thinking? Have you updated your view on the share buyback given the strength you're seeing in the stock or you still see it as undervalued and we should expect you to continue buying back your stock going forward at these levels at least?

Question: Yaghi Maher - Scotiabank GBM - Analyst : Sorry, the back half of the year, or out of the blackout period? I did not hear you properly, sorry. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 12, 2024 / 1:00PM, TCLa.TO - Q4 2024 Transcontinental Inc Earnings Call

Question: Yaghi Maher - Scotiabank GBM - Analyst : Okay, okay. Thank you very much.

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Thank you. Good morning, guys. Thanks for all the color so far. Just a couple of questions I wanted to follow up on. The first one is in the packaging business. Can you talk a little bit about what you're seeing on volumes outside of medical, what you saw in Q4 and how you're seeing that evolving as you turn the page into fiscal 2025?

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Okay, that's great. And are there any areas that are notably driving the slightly positive growth that you're seeing sort of on a year-to-date basis,

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Yes, okay. Okay, that's great. And then you seem to talk quite positively around the potential for acquisitions given the balance sheet and obviously the inflows from the sale of the industrial packaging business. So I'm just curious if you could give a little bit of color around kind of how you would view your preferred end markets on acquisitions. I mean, are we right to believe that you'd sort of focus on packaging and the retail services and printing business would be secondary to that? Just wondering if you can give a little bit of any incremental color.

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Okay, that's great. And then maybe just finally, if you did find an acquisition that you thought was compelling, would you be willing to use the balance sheet to fund that acquisition? Is there a sort of a comfort level or a target level around net debt EBITDA that we should be thinking about? Or would you be -- would the preference be to use your free cash flow to fund any potential acquisitions going forward?

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Okay. That makes sense. Thanks, guys. Appreciate it.

Question: David McFadgen - Cormark Securities Inc. - Analyst : Great. Thank you. A couple questions. You said that you expect corporate costs to be $44 million in fiscal '25. Can you give us the comparable number, what it was in fiscal '24?

Question: David McFadgen - Cormark Securities Inc. - Analyst : No, what was it for fiscal '24?

Question: David McFadgen - Cormark Securities Inc. - Analyst : So it was $44 million. Okay. Sorry, I misunderstood you. Okay, yes, and your expectation for '25? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 12, 2024 / 1:00PM, TCLa.TO - Q4 2024 Transcontinental Inc Earnings Call

Question: David McFadgen - Cormark Securities Inc. - Analyst : Same zone. Okay, all right. Despite the higher stock comp that you incurred in '24, you still expect that it's going to be about the same in '25?

Question: David McFadgen - Cormark Securities Inc. - Analyst : Okay. So when I look at the working capital, you pulled out $34 million in fiscal '24, [under $11 million] in fiscal '23. Should we assume that you've pulled out what you can and now the business is going to be stable from a working capital point of view going forward?

Question: David McFadgen - Cormark Securities Inc. - Analyst : Okay. So you're expecting a pickup in volume on packaging in fiscal '25 because fiscal '24 volumes were down. So I was just wondering, what gives you the confidence to say that you think volume's going to be higher in '25, and what's really driving that? And what did the dairy volumes do in packaging in fiscal 24?

Question: David McFadgen - Cormark Securities Inc. - Analyst : Yes, I'm just curious because obviously, you're the second largest dairy packager in the US, I believe. And then I was just wondering, yes, how did that perform in '24, and then what gives you the confidence for '25?

Question: David McFadgen - Cormark Securities Inc. - Analyst : Okay. All right. Thanks.

Question: Drew McReynolds - RBC Capital Markets - Analyst : Yes, thanks very much. Good morning, too, for me. Thomas, just on the overall packaging market, thanks for all your commentary on volume and market demand. On the pricing side, you've made the comment, all the investment that you've made in the business that drives the value proposition. Are you able to kind of shield yourselves from some of that more commoditized pricing pressure within the market? And then secondly, maybe for you, Donald, just could you remind us the EBITDA impact when you sold industrial packaging? Thank you.

Question: Drew McReynolds - RBC Capital Markets - Analyst : That's great. Thank you both.