Investor Presentation September 16, 2015
CREATING FUTURE VALUE THROUGH DIVERSIFICATION
FORWARD-LOOKING STATEMENT
This presentation contains certain forward-looking statements concerning the goals of the Corporation, its strategy, its projected financial results and expectations as to its operations. Such statements, based on the current expectations of management, inherently involve numerous risks and uncertainties, known and unknown. We caution that all forward-looking statements are inherently uncertain and actual results may differ materially from the expectations reflected or implied in the forward-looking statements, and that actual results will be affected by a number of factors, many of which are beyond the Corporation’s control, including the economic situation, exchange rates, energy costs, increased competition, the Corporation’s capacity to implement its strategic plan and to make and integrate acquisitions, the regulatory environment, the safety of our packaging products used in the food industry, innovation of our offering and concentration of our sales in certain segments. The principal risks, uncertainties and other factors that could influence actual results are described in the Management’s Discussion and Analysis for the fiscal year ended on October 31, 2014 and in the latest Annual Information Form and have been updated in the Management’s Discussion and Analysis for the third quarter ended July 31, 2015. The forward-looking statements in this presentation are based on current expectations and information available as of September 16, 2015. We disclaim any intention or obligation to update or revise any forward-looking statements unless otherwise required by the securities authorities. 2
TABLE OF CONTENTS section 1 • GROWING FOR 40 YEARS AND COUNTING
section 2 • MAXIMIZING OUR PRINTING PLATFORM
section 3 • BUILDING OUR PACKAGING DIVISION
section 4 • MAINTAINGING PROFITABILITY IN A CHALLENGING MEDIA ENVIRONMENT
section 5 • HAVING THE MEANS TO FINANCE GROWTH
3
GROWING FOR 40 YEARS AND COUNTING
4
MOVING FROM REVENUES OF $2M TO $2 BILLION 1976
1978
$2.9M Revenues
Flyers
SECTION • 1
1979
1984
$4.2M
$18M
$83M
Revenues
Revenues
Revenues
Distribution
Publishing
Public Corporation
1990’s
2003
2005 2009-14
$1.6B
$1.9B
$2.2B $2.0B-$2.1B
Revenues
Revenues
Acquisitions
Newspaper Outsourcing
Revenues
Digital Activities
Revenues
Acquisitions and Consolidation
5
FOCUSING ON SELECTED NICHES 2014 Revenues: $2.1B(1)
Marketing Products, $234M Magazines and Books, $341M
Printing and Packaging(1)
$1,452M
Media(1) 68%
32%
$694M
Local Solutions, $383M Retail and Newspapers, $835M
(1) Excludes intercompany eliminations. (2) Completed the transaction to sell the consumer magazines produced in Quebec and Ontario and their websites, as well as all related platforms on April 12, 2015.
SECTION • 1
6
LEVERAGING STRONG CUSTOMER RELATIONSHIPS FOOD
DRUGSTORE
HOME IMPROVEMENT
BIG BOX
NEWSPAPER PUBLISHERS BOOK AND MAGAZINE PUBLISHERS FOOD MANUFACTURERS SECTION • 1
7
DELIVERING A TRACK RECORD OF PERFORMANCE Revenues ($M) 2,028
1,989
Cash Flow From Operations* ($M) 2,112
2,097
Dividends Paid Per Participating Share (₵)
373
1,990
327
321
311
348
57¢
58¢
2012
2013*
63¢
49¢ 35¢
2010
2011*
2012
2013**
2010
2014***
* Divested Mexican operations ($64M) & B&W Book operations ($60M) ** 2013 financial information has been restated to reflect the impact of the adoption of IFRS 11 “Joint Arrangements” and amended IAS 19 “Employee benefits” and other elements *** 2014 financial data have been restated to exclude earnings from discontinued operations.
Adjusted EBITDA ($M)
2011
2012
2013
2014
* Cash flows generated by operating activities before changes in non-cash operating items and income taxes recovered (paid)
Capital Expenditures ($M)
1.9x 1.5x
358
1.3x
354
2012
2013*
2014**
* 2013 financial information has been restated to reflect the impact of the adoption of IFRS 11 “Joint Arrangements” and amended IAS 19 “Employee benefits” and other elements ** 2014 financial data have been restated to exclude earnings from discontinued operations.
SECTION • 1
2010
74
65
59
2011
2012
339
2011
2014
* Paid a special dividend of $1.00 per share in addition to regular quarterly dividend
365
2010
2011
Adjusted Net Indebtedness Ratio ($M)
149
373
2010
2013
Note: Capital expenditures including intangible assets
62
2014
1.2x 1.0x
2010
2011*
2012*
2013**
2014
* As originally reported ** 2013 financial information has been restated to reflect the impact of the adoption of IFRS 11 “Joint Arrangements” and amended IAS 19 “Employee benefits” and other elements
8
OUR VALUES Innovation
Teamwork
1. We challenge the status quo and continuously improve our way of doing things to deliver innovative solutions to our customers.
1. We work collaboratively with our partners across organizational boundaries to offer relevant and integrated solutions to our customers.
2. We venture into new areas of opportunity.
2. We take responsibility for our own contributions as well as for the team’s results.
3. We have the courage and judgment that risk taking requires.
3. We create a stimulating environment that fosters expertise sharing and development.
4. We take initiative and learn from every experience.
4. The success of our customers drives what we do.
CUSTOMER EMPLOYEE SHAREHOLDER
Respect
COMMUNITY
1. We have honest and respectful behaviours that foster open communication. 2. We are straightforward and real issues are solved with real actions. 3. We accept that ideas can and should be challenged to be improved. 4. We care for the communities where we do business and are known as a respectful and trusted partner.
SECTION • 1
Performance 1. We strive to be among the best in our industry. 2. Our culture of personal accountability and pride in what we do is embraced by all of our employees. 3. Our customers know they can depend on us to deliver on their needs. 4. We are always looking for new ways to create value for our customers, employees and shareholders.
9
CARRYING OUT OUR CORPORATE SOCIAL RESPONSIBILITY PLAN “For our 2013-2015 plan, we identified three pillars to help guide our strategic roadmap: the environment, employees and communities. This plan is aligned with our corporate strategy and is aimed at supporting our operational goals.” François Olivier President and CEO
employees
• •
Attract, develop and retain talent Maintain and enhance employee health, safety and wellness
SECTION • 1
+
environment
+
• Track and reduce the environmental impact of our activities • Adopt ecoresponsible procurement practices • Promote ecoresponsible corporate practices
communities
• Invest in community wellbeing through donations of cash, goods and services
10
TRACKING STOCK PRICE PERFORMANCE Stock Price: 1 Year
Stock Price: 5 Years
TCL.A on the TSX
TCL.A on the TSX
$20
$20
$19
$18
$18
$16
$17
$14
$16 $12
$15
$10
$14 $13
$8
$12
$6
Intraday high
$19.55
$19.55
Intraday low
$13.18
$7.97
Avg. volume
175,535
157,157
SECTION • 1
11
PRESENTING THE EXECUTIVE MANAGEMENT TEAM
François Olivier President and Chief Executive Officer
Donald Lecavalier Senior Vice President, Finance, TC Transcontinental
SECTION • 1
Christine Desaulniers Chief Legal Officer and Corporate Secretary
Nelson Gentiletti Chief Financial and Development Officer
Katya Laviolette Chief Human Resources Officer
Ted Markle President, TC Media
Sylvain Morissette Chief Communications Officer
Brian Reid President, TC Transcontinental Printing & TC Transcontinental Packaging 12
MAXIMIZING OUR PRINTING PLATFORM
13
OFFERING A STATE-OF-THE-ART NATIONAL PRINTING NETWORK
printing plants (As at September 16, 2015) Quebec Beauceville Boucherville Gatineau Montreal (3) Quebec (2) St-Hyacinthe Ontario Markham & Aurora Brampton Owen Sound Vaughan Manitoba Winnipeg
British Columbia Delta Newfoundland Corner Brook St. John’s Prince Edward Island Borden-Carlton Nova Scotia Dartmouth Halifax USA Fremont
Saskatchewan Saskatoon Alberta Calgary
SECTION • 2
14
DIVESTING NON-CORE ASSETS (in millions)
U.S. retail operations
Over $400M
$30
in revenues divested
U.S. direct mail
$248
2009
SECTION • 2
Black & white Book printing
$60
Mexican operations
U.S personalized print
$64
$25
2011
2014
15
FOCUSING ON THE RETAIL NICHE 3 1
Close to 50% of
Flyer demand
2
consolidated revenues
4
remains stable
Flyers drive
are linked to retail flyers
Repetitive and
SECTION • 2
traffic to the
contractual
store
business
16
FOCUSING ON LONG-TERM CONTRACTS
2014 Revenues : $2.0B(1) 54% ≈ 70% of total
31%
revenues are under contract (3 years
15%
and over)(2) 0 to
