Q3 2024 Transcontinental Inc Earnings Call Transcript
Key Points
- Transcontinental Inc (TCLAF) reported a consolidated adjusted EBITDA of $121 million, a 12.1% improvement versus last year.
- The packaging sector saw a 3.5% revenue increase to $417.3 million, driven by positive exchange rates and modest volume growth.
- Adjusted EBITDA in the packaging sector grew by 20.6% to $64.9 million, resulting in a 15.6% EBITDA margin.
- Retail services and printing sector's adjusted EBITDA grew by 12.4% to $50.8 million, with margins improving by 380 basis points to 20.3%.
- The company generated $98.3 million from operating activities and reduced CapEx by $13.5 million compared to last year, aligning with full-year guidance.
- Revenues in the retail services and printing sector decreased by 8.7% to $250 million, primarily due to lower volumes in traditional printing activities.
- The medical market in the packaging sector continues to face pressures due to destocking, impacting demand.
- Higher stock-based compensation expenses are expected in Q4 due to share price performance.
- The company anticipates pricing pressure in the packaging sector, which could impact margins in 2025.
- The market for building sales is softer than anticipated, potentially delaying the achievement of the $100 million target from asset sales.
(audio in progress) in the packaging sector. Regarding profitability, we delivered another strong quarter with consolidated adjusted EBITDA of $121 million a 12.1% improvement versus last year.
This increase was mainly due to our cost reductions and efficiency initiatives related to the profitability improvement program and also a positive exchange rate impact.
Volume growth in our packaging sector and a favorable product mix in the retail services and printing sector also contributed to the strong performance. Financial expense decreased by $0.5 million, mainly due to a lower debt level following strong cash flow generation in the last 12 months, partially offset by exchange rate fluctuations. Adjusted income tax increased by $7 million to $17 million and represented an effective rate of 24.8%. This led to an adjusted earnings per share of $0.60, a $0.09 increase compared to the same quarter last year.
Now moving to Slide 6 for the sector review. In packaging, we generated revenue of
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