Highlights
- Revenues increased by $249.9 million, or 49.8%, from $501.7 million to $751.6 million, essentially as a result of the transformational acquisition of Coveris Americas, which contributed $306.0 million to revenues. This increase was partially mitigated by the accelerated recognition of deferred revenues of $39.8 million recorded in the first quarter of 2018 and the $19.5 million unfavourable effect of the sale of our California newspaper printing operations resulting from the agreement signed with Hearst. Adjusted revenues, which exclude the accelerated recognition of deferred revenues, increased by $289.7 million, or 62.7%, from $461.9 million to $751.6 million. Organic growth remained stable in the first quarter of 2019 compared to the corresponding period in 2018.
- Operating earnings decreased by $70.0 million, or 56.6%, from $123.6 million to $53.6 million, mainly as a result of the $39.8 million positive effect of the accelerated recognition of deferred revenue recorded in the first quarter of 2018 and the favourable impact of gains on the sale of certain activities amounting to $33.0 million in the first quarter of 2018. Adjusted operating earnings, which exclude the accelerated recognition of deferred revenues, accelerated depreciation, restructuring and other costs (gains), impairment of assets and amortization of intangible assets arising from business combinations, increased by $6.3 million, or 8.9%, from $70.4 million to $76.7 million.
- Net earnings decreased by $30.1 million, or 51.7%, from $58.2 million to $28.1 million. Adjusted net earnings, which exclude the accelerated recognition of deferred revenues, accelerated depreciation, restructuring and other costs (gains), impairment of assets and amortization of intangible assets arising from business combinations, net of related income taxes, as well as the impact of the U.S. tax reform on deferred taxes, decreased by $6.3 million, or 12.2%, from $51.8 million to $45.5 million.
- A sign of confidence in the Corporation's transformation, the Board of Directors approved a 4.8% increase in the annual dividend, bringing it to $0.88 per share.
MONTREAL, Feb. 28, 2019 (GLOBE NEWSWIRE) -- Transcontinental Inc. (TSX: TCL.A TCL.B) announces its results for the first quarter of fiscal 2019, which ended January 27, 2019.
"I am satisfied with the revenue growth we experienced in the Packaging Sector in the first quarter of 2019, said François Olivier, President and Chief Executive Officer of TC Transcontinental. We remain committed to gradually improving our profit margins during the year, in particular by realizing the expected synergies related to the transformational acquisition of Coveris Americas.
"Our Printing Sector had a more moderate start, mainly as a result of the sale of our newspaper printing operations in California. Furthermore, while we saw a slight decrease in our revenues from our retailer-related service offering, it remains healthy and resilient.
"In summary, our consolidated results demonstrated solid growth in terms of revenues reflecting the dynamic implementation of our transformation. Though our profitability was somewhat softer than expected, we continue to rigorously execute our business plan.
"To conclude, we will continue generating significant cash flows from our operating activities, which will first be allocated to reducing our indebtedness."
Financial Highlights
| (in millions of dollars, except per share amounts) | Q1-2019 | Q1-2018 | Variation in % | ||||||
| Revenues | $ | 751.6 | $ | 501.7 | 49.8 | % | |||
| Adjusted revenues (1) | 751.6 | 461.9 | 62.7 | ||||||
| Operating earnings before depreciation and amortization | 103.7 | 154.8 | (33.0 | ) | |||||
| Adjusted operating earnings before depreciation and amortization (1) | 108.1 | 91.1 | 18.7 | ||||||
| Operating earnings | 53.6 | 123.6 | (56.6 | ) | |||||
| Adjusted operating earnings (1) | 76.7 | 70.4 | 8.9 | ||||||
| Net earnings | 28.1 | 58.2 | (51.7 | ) | |||||
| Net earnings per share | 0.32 | 0.75 | (57.3 | ) | |||||
| Adjusted net earnings (1) | 45.5 | 51.8 | (12.2 | ) | |||||
| Adjusted net earnings per share (1) | 0.52 | 0.67 | (22.4 | ) | |||||
| (1) Please refer to the section entitled "Reconciliation of Non-IFRS Financial Measures" in this press release for adjusted data presented above. Certain comparative figures have been reclassified to conform to the presentation adopted in the current period. | |||||||||
2019 First Quarter Results
Revenues increased by $249.9 million, or 49.8%, from $501.7 million in the first quarter of 2018 to $751.6 million in the corresponding period in 2019. Excluding the favourable effect of the accelerated recognition of deferred revenues of $39.8 million recorded in the first quarter of 2018 resulting from the agreement signed with Hearst, adjusted revenues increased by 62.7%, from $461.9 million in the first quarter of 2018 to $751.6 million in the corresponding period of 2019. This increase is essentially attributable to the acquisition of Coveris Americas, which contributed $306.0 million to revenues, and to organic growth in revenues in the Packaging Sector resulting from an increase in volume in the majority of our plants. This increase was partially offset by the $19.5 million unfavourable effect of the sale to Hearst of our newspaper printing operations, including the $7.9 million unfavourable non-cash effect of the end of the recognition of deferred revenues and, to a lesser extent, the unfavourable effect of disposals of local and regional newspapers in Québec. The increase in revenues was also mitigated by the organic decline in revenues in certain Printing Sector verticals, in particular revenues from our service offering to Canadian retailers, which decreased slightly compared to the corresponding quarter of the previous year.
Operating earnings decreased by $70.0 million, or 56.6%, from $123.6 million in the first quarter of 2018 to $53.6 million in the first quarter of 2019. This decrease is mostly due to the positive effect of the accelerated recognition of deferred revenues of $39.8 million resulting from the agreement signed with Hearst and recorded in the first quarter of 2018, as well as the favourable impact of gains on the sale of certain activities amounting to $33.0 million in the first quarter of 2018. Adjusted operating earnings increased by $6.3 million, or 8.9%, from $70.4 million to $76.7 million. Excluding the $9.9 million unfavourable non-cash effect of the end of the recognition of deferred revenues related to the San Francisco Chronicle, La Presse and The Globe and Mail in the Maritimes as well as the unfavourable effect of the stock-based compensation expense, which increased by $1.4 million as a result of the change in the share price in the first quarter of 2019 compared to the corresponding period in 2018, adjusted operating earnings increased by $17.6 million, or 25.0%. This increase is mainly attributable to the contribution from the acquisition of Coveris Americas as well as the organic growth in revenues in our Packaging Sector, partially offset by the above-mentioned organic decline in certain Printing Sector verticals.
Net earnings decreased by $30.1 million, or 51.7%, from $58.2 million in the first quarter of 2018 to $28.1 million in the first quarter of 2019. This decrease is due to lower operating earnings and higher financial expenses in the first quarter of 2019 as a result of the increase in long-term debt related to the financing of the acquisition of Coveris Americas, offset by the favourable effect of the U.S. tax reform on taxes compared to the first quarter of 2018. On a per share basis, net earnings went from $0.75 to $0.32 due to the above-mentioned items, but also to the effect of the issuance of 10.8 million Class A Subordinate Voting Shares of the Corporation. Adjusted net earnings decreased by $6.3 million, or 12.2%, from $51.8 million in the first quarter of 2018 to $45.5 million in the first quarter of 2019, mostly due to higher financial expenses, partially offset by the increase in adjusted operated earnings. On a per share basis, adjusted net earnings went from $0.67 to $0.52 as a result of the decrease in adjusted net earnings and the effect of the issuance of 10.8 million Class A Subordinate Voting Shares of the Corporation in May 2018.
For more detailed financial information, please see the Management’s Discussion and Analysis for the first quarter ended January 27, 2019 as well as the financial statements in the “Investors” section of our website at www.tc.tc
Outlook
In our Packaging Sector, the acquisitions, in particular that of Coveris Americas completed on May 1, 2018, will significantly contribute to adjusted revenues and adjusted operating earnings for the next quarter compared to the corresponding quarter of the prior year. With respect to Coveris Americas, we expect our profit margins to gradually improve over the coming quarters as a result of the effect of the synergies, to reach the target of US$10 million on an annualized basis at the end of the second quarter of 2019, as well as an increased focus on manufacturing efficiency. In our packaging operations other than those of Coveris Americas, we should continue generating organic growth in revenues throughout fiscal 2019 with the help of our well-established sales force, which should also contribute to profitability
In our Printing Sector, we expect revenues from our service offering to Canadian retailers will be slightly lower in fiscal 2019. The newspaper publishing vertical will continue to be affected by the end of the recognition of deferred revenues related to certain newspaper printing contracts, which will have an unfavourable non-cash effect on adjusted operating earnings of $4.5 million in the first two months of the second quarter of 2019 (see Table #4). In addition, no revenues will be recognized for transition services to Hearst in 2019, compared to revenues of approximately $9 million recognized for such services in fiscal 2018. In all the other printing verticals, we expect that our revenues will continue to be affected by the same trends observed in recent quarters. Lastly, to limit the impact of these decreases, we will continue with our operational efficiency initiatives.
We expect that the Media Sector will continue to record a solid performance in fiscal 2019, both in terms of revenues and profitability.
In line with our strategy, we will continue to generate significant cash flows from all our operating activities, which will enable us to reduce our net indebtedness.
Reconciliation of Non-IFRS Financial Measures
The financial information has been prepared in accordance with IFRS. However, financial measures used, namely the adjusted revenues, the adjusted operating earnings before depreciation and amortization, the adjusted operating earnings, the adjusted net earnings, the adjusted net earnings per share, the net indebtedness and the net indebtedness ratio, for which a reconciliation is presented in the following table, do not have any standardized meaning under IFRS and could be calculated differently by other companies. We believe that many of our readers analyze the financial performance of the Corporation’s activities based on these non-IFRS financial measures as such measures may allow for easier comparisons between periods. These measures should be considered as a complement to financial performance measures in accordance with IFRS. They do not substitute and are not superior to them.
We also believe that the adjusted revenues, the adjusted operating earnings before depreciation and amortization, the adjusted operating earnings, that takes into account the impact of past investments in property, plant and equipment and intangible assets, and the adjusted net earnings are useful indicators of the performance of our operations. Furthermore, management also uses some of these non-IFRS financial measures to assess the performance of its activities and managers.
Regarding the net indebtedness and net indebtedness ratio, we believe that these indicators are useful to measure the Corporation’s financial leverage and ability to meet its financial obligations.
| Reconciliation of revenues - First quarter | ||||||||||||||
| Three months ended | ||||||||||||||
| (in millions of dollars) | January 27, 2019 | January 28, 2018 | ||||||||||||
| Revenues | $ | 751.6 | $ | 501.7 | ||||||||||
| Accelerated recognition of deferred revenues (1) | — | (39.8 | ) | |||||||||||
| Adjusted revenues | $ | 751.6 | $ | 461.9 | ||||||||||
| (1) Related to the agreement signed with Hearst on December 21, 2017. Please refer to the condensed interim consolidated financial statements for the quarter ended January 28, 2018. | ||||||||||||||
| Reconciliation of operating earnings - First quarter | ||||||||||||||
| Three months ended | ||||||||||||||
| (in millions of dollars) | January 27, 2019 | January 28, 2018 | ||||||||||||
| Operating earnings | $ | 53.6 | $ | 123.6 | ||||||||||
| Accelerated recognition of deferred revenues (1) | — | (39.8 | ) | |||||||||||
| Restructuring and other costs (gains) | 4.4 | (25.9 | ) | |||||||||||
| Accelerated depreciation (1) | — | 6.3 | ||||||||||||
| Impairment of assets | — | 2.0 | ||||||||||||
| Amortization of intangible assets arising from business combinations (2) | 18.7 | 4.2 | ||||||||||||
| Adjusted operating earnings | $ | 76.7 | $ | 70.4 | ||||||||||
| Depreciation and amortization (3) | $ | 31.4 | 20.7 | |||||||||||
| Adjusted operating earnings before depreciation and amortization | $ | 108.1 | $ | 91.1 | ||||||||||
| (1) Related to the agreement signed with Hearst on December 21, 2017. Please refer to the condensed interim consolidated financial statements for the quarter ended January 28, 2018. | ||||||||||||||
| (2) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements. | ||||||||||||||
| (3) Depreciation and amortization excludes amortization of intangible assets arising from business combinations and accelerated depreciation presented above. | ||||||||||||||
| Reconciliation of net earnings - First quarter | ||||||||||||||
| Three months ended | ||||||||||||||
| January 27, 2019 | January 28, 2018 | |||||||||||||
| (in millions of dollars, except per share amounts) | Total | Per share | Total | Per share | ||||||||||
| Net earnings | $ | 28.1 | $ | 0.32 | $ | 58.2 | $ | 0.75 | ||||||
| Amortization of intangible assets arising from business combinations, net of related income taxes (1) | 14.1 | 0.16 | 3.2 | 0.04 | ||||||||||
| Restructuring and other costs (gains), net of related income taxes | 3.3 | 0.04 | (22.8 | ) | (0.29 | ) | ||||||||
| Accelerated recognition of deferred revenues, net of related income taxes (2) | — | — | (29.4 | ) | (0.38 | ) | ||||||||
| Accelerated depreciation, net of related income taxes (2) | — | — | 4.6 | 0.06 | ||||||||||
| Impairment of assets, net of related income taxes | — | — | 1.4 | 0.02 | ||||||||||
| Impact of the U.S. tax reform on deferred taxes | — | — | 36.6 | 0.47 | ||||||||||
| Adjusted net earnings | $ | 45.5 | $ | 0.52 | $ | 51.8 | $ | 0.67 | ||||||
| (1) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements. | ||||||||||||||
| (2) Related to the agreement signed with Hearst on December 21, 2017. Please refer to the condensed interim consolidated financial statements for the quarter ended January 28, 2018. | ||||||||||||||
| Reconciliation of net indebtedness | |||||||||||
| (in millions of dollars, except ratios) | As at January 27, 2019 | As at October 28, 2018 | |||||||||
| Long-term debt | $ | 1,227.1 | $ | 1,209.8 | |||||||
| Current portion of long-term debt | 251.2 | 251.2 | |||||||||
| Cash | (53.7 | ) | (40.5 | ) | |||||||
| Net indebtedness | $ | 1,424.6 | $ | 1,420.5 | |||||||
| Adjusted operating earnings before depreciation and amortization (last 12 months) | $ | 476.4 | $ | 459.4 | |||||||
| Net indebtedness ratio | 3.0 | x | 3.1 | x | |||||||
Dividend
The Corporation's Board of Directors declared a quarterly dividend of $0.22 per share on Class A Subordinate Voting Shares and Class B Shares. This dividend is payable on April 10, 2019 to shareholders of record at the close of business on March 25, 2019. The Corporation thus increased the dividend per participating share by 4.8%, or $0.04, raising the annual dividend from $0.84 to $0.88 per share. This increase reflects TC Transcontinental's solid cash flow position.
Conference Call
Upon releasing its 2019 first quarter results, the Corporation will hold a conference call for the financial community today at 4:15 p.m. The dial-in numbers are 1 647 788-4922 or 1 877 223-4471. Media may hear the call in listen-only mode or tune in to the simultaneous audio broadcast on the Corporation’s website, which will then be archived for 30 days. For media requests or interviews, please contact Nathalie St-Jean, Senior Advisor, Corporate Communications of TC Transcontinental, at 514 954-3581.
Profile
TC Transcontinental is a leader in flexible packaging in North America, and Canada’s largest printer. The Corporation is also a Canadian leader in its specialty media segments. For over 40 years, TC Transcontinental's mission has been to create products and services that allow businesses to attract, reach and retain their target customers.
Respect, teamwork, performance and innovation are the strong values held by the Corporation and its employees. TC Transcontinental's commitment to its stakeholders is to pursue its business activities in a responsible manner.
Transcontinental Inc. (TSX: TCL.A TCL.B), known as TC Transcontinental, has over 9,000 employees, the majority of which are based in Canada, the United States and Latin America. TC Transcontinental had revenues of more than C$2.6 billion for the fiscal year ended October 28, 2018. For more information, visit TC Transcontinental's website at www.tc.tc.
Forward-looking Statements
Our public communications often contain oral or written forward-looking statements which are based on the expectations of management and inherently subject to a certain number of risks and uncertainties, known and unknown. By their very nature, forward-looking statements are derived from both general and specific assumptions. The Corporation cautions against undue reliance on such statements since actual results or events may differ materially from the expectations expressed or implied in them. Forward-looking statements may include observations concerning the Corporation's objectives, strategy, anticipated financial results and business outlook. The Corporation's future performance may also be affected by a number of factors, many of which are beyond the Corporation's will or control. These factors include, but are not limited to, the economic situation in the world, structural changes in the industries in which the Corporation operates, the exchange rate, availability of capital, raw materials costs, competition, the Corporation's capacity to generate organic growth in its Packaging Sector, the Corporation's capacity to engage in strategic transactions and effectively integrate acquisitions into its activities without affecting its growth and its profitability, while achieving the expected synergies, the political, social, regulatory and legislative environment, in particular with regard to the environment and sustainable development, the impact of digital product adoption on the demand for its printed products, change in consumption habits or loss of a major customer, the safety of its packaging products used in the food industry, innovation of its offering, the protection of its intellectual property rights, concentration of its sales in certain segments, cybersecurity and data protection, recruiting and retaining qualified personnel in certain geographic areas and industry sectors, taxation, interest rate and indebtedness level. The main risks, uncertainties and factors that could influence actual results are described in the Management's Discussion and Analysis (MD&A) for the year ended October 28, 2018 and in the latest Annual Information Form.
Unless otherwise indicated by the Corporation, forward-looking statements do not take into account the potential impact of non-recurring or other unusual items, nor of disposals, business combinations, mergers or acquisitions which may be announced after the date of February 28, 2019.
The forward-looking statements in this press release are made pursuant to the “safe harbour” provisions of applicable Canadian securities legislation.
The forward-looking statements in this release are based on current expectations and information available as at February 28, 2019. Such forward-looking information may also be found in other documents filed with Canadian securities regulators or in other communications. The Corporation's management disclaims any intention or obligation to update or revise these statements unless otherwise required by the securities authorities.
For information:
| Media Nathalie St-Jean Senior Advisor, Corporate Communications TC Transcontinental Telephone: 514-954-3581 nathalie.st-jean@tc.tc www.tc.tc | Financial Community Mathieu Hébert Corporate Treasurer TC Transcontinental Telephone: 514-954-4029 mathieu.hebert@tc.tc www.tc.tc |
CONSOLIDATED STATEMENTS OF EARNINGS
Unaudited
| Three months ended | ||||||
| January 27, | January 28, | |||||
| (in millions of Canadian dollars, unless otherwise indicated and per share data) | 2019 | 2018 | ||||
| Revenues | $ | 751.6 | $ | 501.7 | ||
| Operating expenses | 643.5 | 370.8 | ||||
| Restructuring and other costs (gains) | 4.4 | (25.9 | ) | |||
| Impairment of assets | — | 2.0 | ||||
| Operating earnings before depreciation and amortization | 103.7 | 154.8 | ||||
| Depreciation and amortization | 50.1 | 31.2 | ||||
| Operating earnings | 53.6 | 123.6 | ||||
| Net financial expenses | 17.7 | 2.6 | ||||
| Earnings before income taxes | 35.9 | 121.0 | ||||
| Income taxes | 7.8 | 62.8 | ||||
| Net earnings | $ | 28.1 | $ | 58.2 | ||
| Net earnings per share - basic | $ | 0.32 | $ | 0.75 | ||
| Net earnings per share - diluted | $ | 0.32 | $ | 0.75 | ||
| Weighted average number of shares outstanding - basic (in millions) | 87.3 | 77.5 | ||||
| Weighted average number of shares - diluted (in millions) | 87.4 | 77.6 | ||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unaudited
| Three months ended | ||||||
| January 27, | January 28, | |||||
| (in millions of Canadian dollars) | 2019 | 2018 | ||||
| Net earnings | $ | 28.1 | $ | 58.2 | ||
| Other comprehensive income (loss) | ||||||
| Items that will be reclassified to net earnings | ||||||
| Net change related to cash flow hedges | ||||||
| Net change in the fair value of derivatives designated as cash flow hedges | (0.4 | ) | 1.4 | |||
| Reclassification of the net change in the fair value of derivatives designated as | ||||||
| cash flow hedges in prior periods, recognized in net earnings during the period | 0.2 | (0.7 | ) | |||
| Related income taxes | (0.1 | ) | 0.2 | |||
| (0.1 | ) | 0.5 | ||||
| Cumulative translation differences | ||||||
| Net unrealized exchange gains (losses) on the translation of the financial statements of foreign operations | 12.3 | (23.4 | ) | |||
| Net gains (losses) on hedge of the net investment in foreign operations | (0.6 | ) | 1.5 | |||
| Related income taxes | (0.2 | ) | 0.4 | |||
| 11.9 | (22.3 | ) | ||||
| Items that will not be reclassified to net earnings | ||||||
| Changes related to defined benefit plans | ||||||
| Actuarial gains (losses) on defined benefit plans | (3.1 | ) | 5.4 | |||
| Related income taxes | (0.8 | ) | 1.7 | |||
| (2.3 | ) | 3.7 | ||||
| Other comprehensive income (loss) | 9.5 | (18.1 | ) | |||
| Comprehensive income | $ | 37.6 | $ | 40.1 | ||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Unaudited
| Accumulated | ||||||||||||||||
| other | ||||||||||||||||
| Share | Contributed | Retained | comprehensive | Total | ||||||||||||
| (in millions of Canadian dollars) | capital | surplus | earnings | income (loss) | equity | |||||||||||
| Balance as at October 28, 2018 | $ | 642.4 | $ | 1.1 | $ | 979.8 | $ | 10.8 | $ | 1,634.1 | ||||||
| Net earnings | — | — | 28.1 | — | 28.1 | |||||||||||
| Other comprehensive income | — | — | — | 9.5 | 9.5 | |||||||||||
| Shareholders' contributions and distributions to shareholders | ||||||||||||||||
| Dividends | — | — | (18.3 | ) | — | (18.3 | ) | |||||||||
| Income taxes on share issuance costs | (0.2 | ) | — | — | — | (0.2 | ) | |||||||||
| Balance as at January 27, 2019 | $ | 642.2 | $ | 1.1 | $ | 989.6 | $ | 20.3 | $ | 1,653.2 | ||||||
| Balance as at October 29, 2017 | $ | 371.6 | $ | 1.1 | $ | 851.5 | $ | (5.5 | ) | $ | 1,218.7 | |||||
| Net earnings | — | — | 58.2 | — | 58.2 | |||||||||||
| Other comprehensive loss | — | — | — | (18.1 | ) | (18.1 | ) | |||||||||
| Shareholders' contributions and distributions to shareholders | ||||||||||||||||
| Share redemptions | (1.6 | ) | — | (5.3 | ) | — | (6.9 | ) | ||||||||
| Dividends | — | — | (15.5 | ) | — | (15.5 | ) | |||||||||
| Balance as at January 28, 2018 | $ | 370.0 | $ | 1.1 | $ | 888.9 | $ | (23.6 | ) | $ | 1,236.4 | |||||
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Unaudited
| As at | As at | |||||
| January 27, | October 28, | |||||
| (in millions of Canadian dollars) | 2019 | 2018 | ||||
| Current assets | ||||||
| Cash | $ | 53.7 | $ | 40.5 | ||
| Accounts receivable | 485.0 | 565.4 | ||||
| Income taxes receivable | 8.9 | 6.9 | ||||
| Inventories | 308.3 | 305.6 | ||||
| Prepaid expenses and other current assets | 25.1 | 24.7 | ||||
| 881.0 | 943.1 | |||||
| Property, plant and equipment and investment properties | 899.8 | 888.6 | ||||
| Intangible assets | 736.7 | 747.1 | ||||
| Goodwill | 1,158.9 | 1,150.0 | ||||
| Deferred taxes | 18.4 | 18.4 | ||||
| Other assets | 33.5 | 35.0 | ||||
| $ | 3,728.3 | $ | 3,782.2 | |||
| Current liabilities | ||||||
| Accounts payable and accrued liabilities | $ | 356.3 | $ | 431.6 | ||
| Provisions | 2.6 | 3.7 | ||||
| Income taxes payable | 8.4 | 14.8 | ||||
| Deferred revenues and deposits | 16.1 | 16.0 | ||||
| Current portion of long-term debt | 251.2 | 251.2 | ||||
| 634.6 | 717.3 | |||||
| Long-term debt | 1,227.1 | 1,209.8 | ||||
| Deferred taxes | 93.4 | 98.4 | ||||
| Provisions | 1.6 | 2.3 | ||||
| Other liabilities | 118.4 | 120.3 | ||||
| 2,075.1 | 2,148.1 | |||||
| Equity | ||||||
| Share capital | 642.2 | 642.4 | ||||
| Contributed surplus | 1.1 | 1.1 | ||||
| Retained earnings | 989.6 | 979.8 | ||||
| Accumulated other comprehensive income | 20.3 | 10.8 | ||||
| 1,653.2 | 1,634.1 | |||||
| $ | 3,728.3 | $ | 3,782.2 | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
| Three months ended | ||||||
| January 27, | January 28, | |||||
| (in millions of Canadian dollars) | 2019 | 2018 | ||||
| Operating activities | ||||||
| Net earnings | $ | 28.1 | $ | 58.2 | ||
| Adjustments to reconcile net earnings and cash flows from operating activities: | ||||||
| Impairment of assets | — | 2.0 | ||||
| Depreciation and amortization | 55.4 | 37.8 | ||||
| Financial expenses on long-term debt | 16.2 | 4.4 | ||||
| Net losses on disposal of assets | 0.2 | 0.5 | ||||
| Net gains on business disposals | — | (33.2 | ) | |||
| Income taxes | 7.8 | 62.8 | ||||
| Net foreign exchange differences and other | (0.3 | ) | 1.1 | |||
| Cash flows generated by operating activities before changes in non-cash operating items and income taxes paid | 107.4 | 133.6 | ||||
| Changes in non-cash operating items (1) | (3.1 | ) | (31.3 | ) | ||
| Income taxes paid | (20.5 | ) | (12.3 | ) | ||
| Cash flows from operating activities | 83.8 | 90.0 | ||||
| Investing activities | ||||||
| Business combinations, net of acquired cash | — | (11.4 | ) | |||
| Business disposals | — | 30.3 | ||||
| Acquisitions of property, plant and equipment | (35.7 | ) | (9.1 | ) | ||
| Disposals of property, plant and equipment | — | 0.1 | ||||
| Increase in intangible assets | (5.1 | ) | (3.7 | ) | ||
| Dividends received from joint ventures | — | 3.4 | ||||
| Cash flows from investing activities | (40.8 | ) | 9.6 | |||
| Financing activities | ||||||
| Reimbursement of long-term debt | — | (3.7 | ) | |||
| Net increase in credit facility | 4.3 | — | ||||
| Financial expenses on long-term debt | (17.2 | ) | (5.5 | ) | ||
| Dividends | (18.3 | ) | (15.5 | ) | ||
| Share redemptions | — | (6.9 | ) | |||
| Cash flows from financing activities | (31.2 | ) | (31.6 | ) | ||
| Effect of exchange rate changes on cash denominated in foreign currencies | 1.4 | (1.4 | ) | |||
| Net change in cash | 13.2 | 66.6 | ||||
| Cash at beginning of period | 40.5 | 247.1 | ||||
| Cash at end of period | $ | 53.7 | $ | 313.7 | ||
| Non-cash investing activities | ||||||
| Net change in capital asset acquisitions financed by accounts payable | $ | 2.5 | $ | (0.4 | ) | |
| (1) Includes the accelerated recognition of the deferred revenues opening balance as at October 29, 2017 as part of the transaction with Hearst for the three-month period ended January 28, 2018 (Note 31 to the annual consolidated financial statements as of October 28, 2018). | ||||||