Transcontinental (OTCPK:TCLA.F) Update / Briefing Transcript

Summary of TC Transcontinental Conference Call - December 08, 2025 Company Overview - Company: TC Transcontinental (OTCPK:TCLA.F) - Industry: Packaging and Printing Services Key Points from the Conference Call Transaction Announcement - Sale of Packaging Business: TC Transcontinental announced the sale of its packaging activities to ProAmpac, which is expected to deliver immediate value to shareholders at a substantial premium [4][5][9] - Valuation: The transaction is valued at approximately nine times EBITDA, consistent with recent industry transactions, and represents a strong outcome given the company's previous trading multiple of about 5.5 times [5][12] Financial Implications - Shareholder Value: Shareholders are expected to receive a cash distribution of approximately CAD 20 per share, which aligns with the current trading price [5][12] - Debt Management: Post-transaction, the company anticipates a net debt of around CAD 360 million and an adjusted EBITDA of about CAD 215 million, resulting in a debt ratio of approximately 1.7 times [13][52] Strategic Direction - Focus Shift: The company is transitioning to focus on retail services, printing, and educational publishing, moving away from packaging due to modest organic growth prospects in that sector [6][10][20] - Growth Strategy: TC Transcontinental plans to grow its remaining sectors through both organic initiatives and strategic acquisitions, particularly in in-store marketing (ISM) and educational publishing [15][20][51] Market Position and Performance - Retail Services Growth: The retail services and printing sector has evolved into a diversified platform, generating nearly CAD 300 million in revenues, supported by recent acquisitions [7][10] - Educational Publishing: The media sector, particularly in French-language educational publishing, has more than doubled its revenue to CAD 110 million over the past decade [8][10] Future Outlook - Dividend Policy: The company expects to maintain a dividend of CAD 0.24 per share, with a low payout ratio relative to free cash flow, allowing room for growth and acquisitions [26][28] - M&A Opportunities: The company sees significant opportunities for acquisitions in Canada, particularly in the ISM and media sectors, which remain fragmented [51][62] Regulatory and Approval Process - Transaction Closing: The transaction is expected to close in the first quarter of calendar 2026, subject to regulatory approvals and shareholder votes [14][39] Additional Insights - Employee Transition: The leadership of ProAmpac is seen as complementary, with shared values in innovation and employee safety, which is expected to benefit employees transitioning from TC Transcontinental [9][20] - No Plans for Privatization: There are currently no intentions to privatize the remaining parts of the company post-transaction [20] This summary encapsulates the key discussions and strategic directions outlined during the TC Transcontinental conference call, highlighting the company's focus on maximizing shareholder value through strategic divestitures and growth in core business areas.