Q4 2021 Transcontinental Inc Earnings Call
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Welcome to the TC transcontinental fourth quarter and fiscal 2021 results conference call.
During the presentation, all participants are no listen only mode.
Afterwards, we will conduct a question and answer session and instructions will be provided at that time.
As a reminder, this conference is recorded today December nine 2021.
Like to turn the conference over to young director Investor Relations, Joanne and I said I like to call our young appoint Jack to Atlassian, and fact based and get yourself because I point. Please go ahead.
Yeah. Good afternoon, everyone on the line and thank you for joining us on the call.
Welcome to the piece of cough cold snap ADS' fourth quarter and fiscal year 2021 results Conference call. You can find the press release, the presentation and the annual MD&A with complete financial statements and related notes on our website.
P C under our Investor Relations section.
A replay of this conference call will also be available on our website after the call.
We have with US today are president and Chief Executive Officer, Paul <unk>.
And our Chief Financial Officer.
Yeah.
We also have with tuck Peter Bruce will succeed Pascua and will officially assumed the position of President and Chief Executive Officer Tomorrow.
I will also say a few words after pathways remarks.
Before I turn the call over to management I would like to specify that this conference call is intended for the financial community media.
Are in listen only mode and should contact methotrexate as a senior advisor corporate communications.
Our interview requests.
Please be reminded that some of the financial measures discussed over the course of this conference call are non ifr can refer to the MD&A for a complete definition and reconciliation of such measures.
In addition, the conference call also contains forward looking statements.
These statements are based on the current expectations of management and information available as of today.
Numerous risks and uncertainties known and unknown.
Risks uncertainties and other factors that could influence actual results are described in the fiscal 2021 annual meeting.
The latest annual information form.
With that I would now like to turn the call over to our president and CEO.
Thank you and good afternoon, everyone.
This is a special day for me is this is my 56 in last quarterly earnings call as President and CEO of Tc transcontinental.
Working with theater and the management team on that transition over the last couple of months as made me reflect on the strong and resilient company, we have built our agility and the success of our transformation.
We have stood the test of time, overcoming challenges and adapting to major changes in our environment and in our business.
When I became CEO in 2008, almost 80% of our revenues came from our Canadian operations with the balance coming from our printing operations in the U S and in Mexico.
Our media sector represented close to $700 million in revenue and next significant portion of this came from publishing magazines and newspaper, which we're dependent on advertising revenue.
A lot has changed since then.
We are a very different and diversified company.
With most of our sectors were facing headwinds 10 years ago.
To date, the large majority of our revenue comes from businesses with favorable prospects.
While we continue to have a north American focus we now have operations in eight countries with half of our revenue generated outside of Canada.
TC transcontinental less transformed from being a Canadian company to an international organization that is more resilient than ever whether it be two economies shock or technological change.
The results we released today reflect this resilience.
Our 2021 performance shows that our business is solid when.
When excluding external factors like the Canadian wage subsidy the price of resin in the exchange rate, we delivered a much higher consolidated EBITDA than last year.
In packaging, we saw an unprecedented rise in resin prices almost every single month saw a new increase in addition, the Canadian dollar declined versus the U S dollar, making the comparison with 2020 much harder.
But we stayed focused on what we could control we worked diligently to pass through the higher resin prices as per our contractual agreements to minimize the negative impact.
Looking at fiscal year 2021, as a whole when excluding the impact of higher resin prices and the additional week, we delivered an organic revenue growth close to 2% and an EBITDA margin of over 16%, which is in line with what we have said at the beginning of the year.
Sure.
In printing, we suddenly get lost close to half of our revenues in March of 2020, when governments put in place measures to limit the spread of COVID-19. This.
Despite the continued impact of restrictions on our customers our revenues gradually begin to recover in fiscal year 2021, our revenues grew despite the fact that we face a tough pre COVID-19 comparable for the first five months as we continue to improve our efficiency and benefited from a higher volume.
We delivered an adjusted EBITDA margin of 21, 3%, excluding the Canadian emergency wage subsidy.
That's an improvement of 120 basis points over fiscal year, 2020, and 130 points over fiscal 2019.
How did we achieve this resilience.
Yes.
Our decision to move into flexible packaging over seven years ago proves to be the right. One we started slowly taking the time necessary to build our industry knowledge build our team while delivering great value to our customers and that in 2018, we took a big leap with our App.
Position of <unk> America, a pivotal moment for our company.
And again, we took the time necessary to stabilize the business increased margins by delivering on our synergies and now we are seeing the results.
As we continue to make acquisitions and grow organically through innovation by developing sustainable solutions for our customer but percentage of revenue coming from our stable sector like flexible packaging will continue to rise and this will serve to protect us in times of economic challenges.
By continuing to generate strong free cash flow in the long term our printing sector will participate on our growth and play a key role in our future Here's why.
We have seen another transformation in our printing sector portfolio.
13 years ago newspapers magazines and catalogs printing represented a significant part of our revenue.
Today following the secular decline in those industry and our strategic portfolio management, only 15% of our printing revenue come from these markets over the years, we successfully adapted our printing platform to the market and improve our cost base.
We also offset some of the loss revenue by expanding into new verticals like in store marketing.
We grew the in store marketing business from about $12 million in revenue 10 years ago to a run rate of around 200 million to date and this is only the beginning of our ISN journey as we have a long way to go and to grow.
When we include other rolling activities like book pre media and also factoring our growing media revenue. These growth activities represent today around 35% of the combined revenue of our printing and media sectors.
That percentage of increase significantly over the last five years and we expect that it will continue to do so organically and through acquisitions.
As they grow these activity helps <unk> Prince overall revenues by offsetting the decline of other activities print.
<unk> is actually undergoing a similar successful transformation as Tc transcontinental with true witness movement to flexible packaging.
Finally, another important strategic shift that's been in our media sector over the last several years, we sold almost all of the publishing assets to retain only those related to education and to the construction industry.
Markets that are not dependent on advertising revenue.
And these are proven to be not only resilient, but growing as well.
I am proud that we have successfully transform Tc transcontinental in each of our three sectors and I'm equally proud that we did so while maintaining a strong balance sheets.
We always used leverage prudently, we we're not afraid to take calculated risks when a fortunate <unk> showed up for.
For example, we invested over $800 million 13 years ago to build a state of the art national print platform. The key strategic move that led to our successful consolidation of the Canadian print market.
The success, we have to date and our print sector is in part a direct result of these investments.
We were not afraid to do it again in 2018, when we acquired Cobra Americas for $1 7 billion another key strategic move to semi.
Our move into flexible packaging.
Then successfully integrated the acquisition and delivered on the planned synergies and our and our margin improvement objectives.
And each time, we use our strong and stable cash flow from operations to bring the debt levels back below two times in order to be ready for the next opportunity.
This sound financial management is another one of our strengths.
Can do this again given the opportunity.
I am leaving today very proud of what we've accomplished as a team simply we did what we say we would do with.
We transformed the company by divesting assets in declining markets and entered the flexible packaging space.
We also built a strong printing sector with solid profitability and growth potential and the significant portion of its portfolio.
I am confident that Tc transcontinental as a bright future for three simple reasons.
First our strategy are sound and have put us in leading position in the tree sectors. We operated.
Our solid financial position give us the means to achieve our ambitions at a loss to continue to invest and transform our print and media portfolio and to grow our flexible packaging platform, while delivering on our sustainability objectives.
And third we have an experienced and talented team with Peter a great successor lined up the right person for the job.
Unified by a strong corporate culture. The team is working together with a common long term vision.
Finally, I'd like to thank our employees for their many years of hard work and dedication our customer for their confidence our board of director and Mark who family or their guidance trust and support over the year and finally, our analyst and investor for a productive relationship over the years.
As a credit to you. Many of you are program questions avail us refine our thinking Europe feedback and advice over the years has been much appreciated with that I'll turn it over to Peter.
Yes.
Thank you Francois.
Since joining the board in 2018, I've had the opportunity to watch Tc develop from Canada print leader complemented by a solid specialty media group into a business that is balanced by strong packaging operation.
Spending time with Mr. Moskow Isabel in cost well I appreciate the effort and passion that has created a successful business driven by our strong culture and entrepreneurial spirit.
Over my first six weeks I have worked closely with Isabella fastweb to ensure a smooth transition I appreciate that fast when the team positioned us to successfully transition the businesses leadership by focusing on finishing the year strongly this.
This gave me the opportunity to spend my first weeks meeting and listening to coworkers and customers.
Having had one on one meetings with over 70 coworkers I can confirm the quality of the team. Our coworkers are smart hard working good people, who exemplify <unk> values and who are determined to win having.
Having had the opportunity to meet many customers I am convinced that the team has established strong relationships our customers appreciate the TC as an organization that is committed to supporting their success by.
What should be extremely proud of the team. He has led and the business. They have built the investments in people innovation and capital have been positioned us to be the leader in all of our sectors. So to conclude I appreciate the trust that the.
<unk> family and the board have placed in me of Love My first six weeks and as I take on the role as CEO I am excited by the opportunity to work with the team and build an even stronger business.
And now I'll hand, it over to Dana.
Thank you Peter and welcome.
On behalf of the management team and I, Let me take a moment to thank you fastweb for your many years of leadership and dedication to our customers employees and investors.
I speak for all of Us when I say that we will Miss you and wish you all the best.
Now turning to our results in term of numbers for the fourth quarter on slide six we reported an increase in revenue of 100 $120 million or 18, 3% percent versus last year.
This was driven by higher pricing and packaging following our diligent pass through of higher resin cost to our customers by organic growth.
Growth in packaging and print AD by the acquisition of BPI retail and our printing sector.
This year the fourth quarter also included an additional week.
Excluding the extra week, both the print and packaging sectors recorded solid volume growth.
As expected the revenue growth was partially offset by a negative currency impact of $16 million, mainly in packaging due to the rise in value of the Canadian dollar versus the U S dollar.
On the profitability front EBITDA was negatively impacted by the three same factor as last quarter.
But to a lesser extent first will receive a much lower Canadian wage subsidy this year.
We received $3 7 million this quarter versus $14 5 million for the same quarter last year.
Second short term contractual lags and passing through higher resin prices to our customer.
And third the stronger Canadian dollar.
In total these three factors impacted EBITDA by more than $20 million in Q4.
We were able to offset most of this headwinds with strong operational performance higher volume and with the extra week to deliver an adjusted EBITDA of $145 million for the quarter.
Considering the business context in which we operated in inflation labor shortage and supply chain issues. This was a strong performance.
Financial expenses increased slightly following a currency gain recorded last year and also due to the extra week this year.
The tax rate was at 23, 7% in the fourth quarter in line with our mid <unk> guidance, leading to adjusted net earnings of 81.
Per share for the quarter.
Now moving to slide seven for the sector with you.
And our packaging sector in the fourth quarter, we recorded organic revenue growth of $88 1 million.
This was mainly due to the pass through of higher resin prices, but also included the positive impact of having an extra week and volume growth of more than 2%.
I highlight the strong performance of our events Holdings group during the quarter.
Going forward. This group should also benefit from the recent acquisition of Hs Crocker as one of its two plants is specialized and labels for the pharmaceutical industry and.
In addition to the launch of the total medical product portfolio.
We also continued to see solid performance from the rest of our packaging groups exchange rate exchange rates, mainly the strong Canadian dollar had a negative impact of $14 9 million, leading to packaging revenues of $417 4 million in the fourth quarter.
Yes.
Moving to profitability as resin prices were still increasing in the spring and summer, we still a negative impact in the quarter from the lag in passing through price increases, although lower than what we saw in the last two quarters.
Despite this impact we were able to deliver an EBITDA of $57 9 million.
<unk> was in the line was in line with last year due to good operational performance volume growth and the additional week.
Considering that it included it included over 300 basis points of negative risen price impact caused by the lag in pass through and dilution caused by our related related increase in revenues. We were also pleased with the EBITDA margin of 13, 9% for the quarter.
Excluding the impact of resin prices packaging margins would have been higher than last year.
On slide eight you can see that our printing sector at another very strong quarter with 14, 4% of organic growth versus Q4 last year.
The extra week was a contributor but excluding its impact. We also saw strong business recovery with organic growth in the mid single digits.
Towards especially in our growth activities like in store marketing and book printing, where we saw double digit growth.
This growth was driven by existing customers spending more and by new customers revs.
Revenues in the quarter were also positively impacted by the acquisition of BPI retail and the in store marketing space.
As Pascal mentioned earlier, our print portfolio is changing in a larger part of its revenues is coming from growth activities, both organically and through acquisitions.
Printing adjusted EBITDA for the quarter was $81 $1 million compared to $79 5 million in Q4 2020.
This is a solid performance when we consider that the wage subsidy was $9 million lower than last year.
A demonstration of our efficient operational performance.
Excluding the wage subsidy adjusted EBIDTA margin in print for the quarter was at 23, 3% in line with last year on a full year basis. It was 21, 3% compared to 21% last year of 120 basis point improvement.
In our media business you may recall that seasonality was more pronounced in Q4 last year. This.
This year was back to a more normal level with approximately 38% of its annual revenues in the fourth quarter.
On a full year basis, the media sector had another excellent year with close to 10% revenue and EBITDA growth when excluding the subsidy received in 2020.
Corporate expenses were higher than last year, mainly due to stock based compensation and nonrecurring costs that included the extra week at our vaccination clinic.
Turning to cash flow from operating activities, we generated $92 $7 million in the quarter of.
<unk> with last year is mostly due to higher inventory, which continues to be impacted by resin prices.
As we indicated last quarter, we continued to increase our investment in Capex with a total spend of close to $34 million in the quarter, bringing us to $138 million for the year.
These investments will position us well to capture growth opportunities and will help us meet our 2025 sustainability objectives.
Finally, with distributed $19 6 million in dividends.
Despite the investments we made during the quarter, we continued to maintain a very strong financial position with over $660 million of available liquidity at the end of the quarter.
In conclusion overall, we delivered an excellent quarter and ended the fiscal year strong.
As for the outlook and packaging following the investments we've made in new equipment, the signing of new customer contracts and the introduction of new products to market, we expect to generate organic growth for 2022, excluding the impact of resin prices and the 50 <unk> week of <unk>.
'twenty one.
As for profitability, we expect to grow packaging EBITDA in fiscal year 2022.
Assuming no major resin price increases that negative impacts from the lag and resin pass through we experienced this year are not expected to reoccur.
Resin will however, still having an effect on margin percentage due to the higher revenues.
This has been said the strong efficiency gains we made during the year across all our sectors will stay with us and should reflect it in our profitability.
And Brent we expect volumes to continue to recover we also expect to see growth in our in store marketing, both printing and other growth activities.
This gave us confidence that we should see higher revenues in fiscal 2022, when excluding the extra week of 2021.
In terms of profitability, we don't expect to receive any wage subsidies in fiscal 2022, but we expect volume growth in printing to act as a partial offset to that.
Therefore, excluding the impact of the subsidy and the additional week in 2021, we expect growth in adjusted EBITDA for fiscal year 2022.
Corporate cost at the EBITDA level should be around $40 million for the year.
In terms of the use of cash for the year, we will continue to pursue potential acquisitions and invest in our future through our Capex program.
Do that and depending on the timing of potential key investments capex in fiscal year 2022 is likely to be similar to 2021.
Our tax rate should continue to be in the mid <unk> and as far as for cash taxes, we estimate around $60 million for the year.
On that note. We will now proceed with the question period.
Next Ian Mackenzie, Michigan is that all that no question today and that have yet to receive Pos keyboard Debbie Visteon P. Silva <unk> you may now ask your questions today Catherine.
I will ask you will pay polak from after sales.
Thank you one moment, please ladies and gentlemen, we will conduct a question and answer session. If you have a question. Please press star followed by the number one on your Touchtone phone.
For your first question.
Your first question comes from Mark Neville from Scotiabank. Please go ahead. Your line is open.
Hello, Good afternoon first off <unk>, congratulations and best of luck.
Peter Congratulations as well.
Hi, Thanks, maybe.
So maybe my first question just on then all of the on pricing.
Within packaging.
At this point of view.
Fully caught up.
On your pricing adjustments, if not a helper.
Hi.
When should we expect.
Fully caught up.
We're.
Almost there.
Just a couple more months.
Most of them is about a two to three month lag we added <unk> six that are longer to caught up but they're not meaningful so I would say one or two more months than we've seen in certain grades of resin price decrease so.
And in some area stabilize and maybe even four circle there isn't like I say turn the other way so.
Monitor too, but each month is a lot less.
Les Mark because we we are we are at the end of the line.
Okay.
In terms of the outlook for 2022.
China, I guess estimates as a baseline.
Okay.
Excluding.
Susan a few other things youre expecting growth but.
Hey, guys I guess my question within print and sort of the 21, 3% margin.
Number to think about growing off of whatever the sales might be then.
I guess the same question within packaging is again the center on a baseline for EBITDAR EBIT.
Excellent out all these one time items.
Mark on the margin obviously, we're really proud of the 21, 3% that we delivered in fiscal 2021, I think it's our best margin in the <unk>.
Going back to 2017, if im not wrong, and we said for many years and the intention with print is to protect the 20% margin and to produce a lot of free cash flow. So this is the direction. We're going obviously, we're growing in business like in store marketing that are not the same margin that we have in the auto business, but those.
Our growing up to 20% is really what we're aiming for to protect in the future.
Got it.
But in terms of the maybe absolute dollar figures when youre talking about growing.
Next year, each segment sort of excluding.
The wage subsidy next week.
Is there sort of round numbers, you can help us with.
In terms of boardwalk.
Regarding model you may talk with yet, but what we're certainly facing in the first five months of fiscal 'twenty two will have an easier comparable if we compared to larger if you look at.
The growth that we add this year first quarter were very negative compared to 2020 than almost flat second quarter, and I think close to 15% in the third quarter and have very again good good growth in this quarter. So from what we see and obviously I won't comment of what's going to happen with Covid and 2022, but the threat is good.
At least for the first half of the year and we have good momentum with the with the part of the business is growing right. Now. So this is our overall, we're confident to deliver growth in 2022.
Yes.
Maybe one last question can you maybe I missed it but have you disclosed the purchase price.
Correct.
No.
Okay.
Okay. Thanks for the time.
Your next question comes from drew Mcreynolds from RBC. Please go ahead. Your line is open.
Yeah, Thanks, very much good afternoon and congratulations.
One Peter.
First of all I, just want to say it.
Absolute pleasure working with you.
A class act all around so to speak.
All the best.
Your future.
Thank you and very helpful.
Couple of.
Mr follow ups for me.
I guess, one just big picture for you Peter I know.
Obviously, it doesn't sound like there's really any change here in this strategy are the priorities for the company, but maybe talk to that.
Talk to that at a high level.
And then secondly on the Capex a little higher in fiscal 2022, then certainly what is in our model.
As we look through the medium term business now.
New run rate for the total business.
Or do you still expect some some ebb and flow from from these levels.
Thanks drew so what I'd say is first in a while I'm new to the day to day and there's certainly a difference between data Dan being a member of the board have been part of the board for quite a while now so from a strategic point of view.
I've been across.
<unk> been part of the board team that's approved the company's strategy.
For me more than excited to take on the role.
Understanding that we have print and media business that are very strongly positioned to create value for our customers.
We have a print business.
That now has legs that have growth elements to them that I think are important tend to continue on so for me there is strong future for print.
And from a packaging perspective, you know I come from that part of the industry and I'm excited by the opportunity to grow the business significantly so I don't see a change in the strategy.
In terms of your number Andrew for the model as we said in 2021 were higher than last year, we said that this year we might be.
Are we close to 2021, but those are specific areas, where we see opportunity for us to.
Invest in capacity growth innovation and sustainability, but I won't say that this this amount is the new bench markets and specific to somewhat investment will make over a two year period, but this is not the benchmark for the long term with our current top line the way it is right now.
Okay Super and maybe.
Maybe one follow up.
It's a little bit related to the last question you quantified the impact can be extra week at $57 million in revenue.
Can we just kind of simplistically roll that down to EBITDA to get an EBITDA impact of that extra week in the quarter is that a fair way to do it.
Yes, you can make some some regarding the sectors, but don't forget the corporate doesn't deliver any event, thus with an extra cost. So it's not a question of divided by the number of weeks, but it will give you a good benchmark by doing so but consider that we have expenses at corporate level debt.
That comes in this 50 <unk> week also so it's not the equivalent.
Got it got it thanks for that okay. Thank you very much.
Your next question comes from Stephen Macleod from BMO Capital markets. Please go ahead. Your line is open.
Thank you and good evening.
Good evening.
First of all congratulations on your long tenure and Peter I look forward to working with you.
Okay.
A couple of a couple of questions here.
Specifically when you think about the packaging segment in the quarter and sort of what you've seen on a year to date basis.
Can you talk a little bit about.
Where youre seeing the volume growth in terms of the end markets and the segments and if there's any differentiation across that spectrum.
Well.
Don I'll mention that Vince coding in the medical space, we had a good quarter, but for the most part all of the sector, we operate in where there's.
The dairy.
The consumer space or the agriculture in Latam.
The level of activity is pretty good so.
Everybody participate too.
Organic growth a positive organic growth in Q4.
And we expect everybody to participate in 2022, so we highlighted for Q4, the coating business around the medical space that have the best year over year growth, but.
Theres not a specific sector.
That is over performing or one that is underperforming we have good loading and most of our factory and frankly, we have more.
Supply chain issue in terms of delivering our customer.
Then than we have right now problem with the with the loading.
Great. Thank you.
And then for Peter.
I know you sort of addressed this in previous questions but.
Can you just talk a little bit about sort of where your priorities are.
Obviously understanding that there's no necessarily a change in strategy considering you've had.
<unk> oversight on that but can you just talk a bit about where your priorities are over the next sort of six to 12 months.
But I'd say Steven is my priority in the short term our early has been around customer.
And co workers.
And so for me I don't want to pretend that after six weeks.
Going to extend.
And my focus will be over the next year I think the starting point is to get a strong understanding of the business.
And speaking to people and customers gives me the strong understanding and I still have a bit of work to do there. So I think when we catch up next quarter I'll be in a better position to answer your question more fully.
That's great. Thank you.
And then just finally I was wondering.
You can sort of just summarize if you have it in front of you.
Just the the CDW U S dollar impact in both the printing segment in the packaging segment.
While in the packaging segment this year.
In fact, we received minimum dollars.
But overall at the consolidated level, we received this year, 50% of what we received in 2020.
And obviously as I said in my opening remarks, we don't expect to receive any dollars. So you can look at Orange and DNA body is close to $30 million.
If you want negative coming from that end of fiscal 2022, and it's mainly print level.
Okay. That's helpful. Thank you that's it for me.
Manhattan Genocea on coffee for Steve.
Okay.
I think it.
<unk>.
Ladies and gentlemen is there any additional questions. Please press star followed by the number one.
Your next question comes from Adam Shine from National Bank. Please go ahead. Your line is open.
Thanks, a lot good afternoon, so first of all goodbye at.
At least as it relates to trans Continental and of course, I wish you well and Meanwhile, Hello to you Peter.
Just a few questions left I guess in packaging was something that looked interesting.
In Canada revenues doubled is there anything specific to that.
Whether it fits again, the advanced coatings or just general performance, but that wouldn't that was sort of stood out as is interesting maybe I'll pause there and move on to the others. After.
I think we'll need to take that offline I'm kind of surprised by your comments you just mentioned that the Canadian revenue of packaging up double yes.
Okay.
Well, we'll take it offline.
Surprisingly.
Okay fair enough.
When we think about some of the disclosure around predict as it relates to outlook.
Is it fair to say that given the moving pieces and acknowledging exing out the 50 <unk> week.
That was the level in fiscal 2022 should be ultimately.
Slightly above that of fiscal 2020.
Is that a reasonable way maybe for you the analysis to look at printing revenues.
It will be above because what's happening is the <unk>.
Our decreasing now and printing the most are not a significant part of the portfolio anymore and what it's growing double digits like SME book is becoming to be a more significant part of the portfolio and in retail.
Ben.
Growing this year compared to the core with year end, and we expect especially with what's going on with <unk>.
Price of food going up in Canada.
<unk> going to be more relevant than.
And then ever before going forward. So that's why we mentioned that.
Excluding.
The 50, <unk> week, we see growth in printing and the transformation of the portfolio is at 35% of the portfolio combined portfolio of what I call. The traditional transcontinental wishes on print and media is actually growing in a lot of those sector are growing double digits. So.
And we have a view to make that to.
We continue to grow that so the outlook on revenue.
Is going to improve from what it was a couple of years ago. The only thing that we are not sure about is the impact of the Covid in 2022, and nobody can predict that and obviously when restriction often.
<unk>.
In general retail is affected and when retail is affected while the big part of the portfolio is related to retail, especially the U S.
Sector of <unk> as in retail so yes.
Sure I can give you.
Okay I appreciate that and then maybe just one last one for <unk> just in regards to the 40.
Or so of outlook and corporate cost line for fiscal 2022 sort of similar to that.
Out of the past year.
We see some puts and takes some benefit perhaps earlier in the year on the queues at the same time you did have some additional costs as you alluded to on the vaccination front anything else in terms of incremental buckets of items, whether its head count or anything else that we should be thinking about in terms of moving forward into next year.
Sure.
No I think if you compare to this year, obviously, we had some one timers, but the share as you know the share units increase.
Increase in Youre aware that we hedge most of the cost impact with volume wise, we were hit this year and I guess, the new threat because now since the acquisition of Cole risks we have more people that are part of this program. So therefore this is the first year, where we have the full run rate of the new <unk>.
Cost of this program. So this is why it's higher this year than was higher for Q.
Q1 timers, but this is why we're comfortable with the $40 million for next year.
Okay Super Thanks, a lot.
Yep.
Your last question comes from David Mcfadden from Cormack Securities. Please go ahead. Your line is open.
Thank you Yeah I just wanted to also echo my congratulations too.
Peter.
A couple of questions just on the corporate cost line as you indicated that fiscal 'twenty. Two you expect it to be about $40 million was.
Was it $40 million in fiscal 'twenty one.
Then you know you didn't hear that.
Now it was higher than that though.
Give you the exact numbers.
41.
Total of 31, okay.
And then on your.
I would like you talked about packaging organic volume growth in fiscal 'twenty to grow despite the additional week.
Do you need to grow even even.
With that additional week in fiscal 2002, or you think that's tough to say.
We're packaging yes.
Well I think what.
We.
Should be similar in term of percentage to what we had in 2021 and so that's where we're aiming.
Okay.
And then I was just looking at the cash flow statement.
I noticed there is a large working capital drag.
Our investment in fiscal 'twenty, one and I'm. Just wondering do you think you could recover some of that in fiscal 'twenty two.
Yes.
22 on the working capital.
Yes, yeah, we definitely want to have.
Better working cap, but what was really hit us this year as the impact of the resin price inhibit us not only in terms of inventory, which what was the impact with very large but also on the <unk> side, because obviously your sales you're selling to your customer. Therefore var comes with inflation of there is.
Price also and on the supplier side, we use all of the discount we can use and therefore were less affected by that so overall, we're very satisfied with.
The way, we manage the receivable the AAR in Canada.
Yes.
The COVID-19 impact, but it's most most of the impact as I said is related to tourism price. So if you compare to next year I won't make any predictions over where will be the resin price if it's stable or lower we should be in a better position and we will make sure that we get better on the on the working cap.
Overall.
So do you think.
So it sort of sounds like you would need rather than price.
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Towards Florida.
What I'm, saying is that by far the biggest impact this year to explain that negative over to working cap is linked with the price of there is a large part of inventory there.
Largest increase we added was on the inventory side and was due to the pricing a little bit on the quantity.
This time, where we had issues with the supply chain we were more.
Wanted to ask a little bit more in our stocks to make sure that if anything happened we have enough to cover our needs for our clients.
At a huge impact I'm, not saying that we bet on the resin price to decrease throughout the work better working cap what im saying regarding your question.
Next year, we will be we will make everything to be in a better position, but thats. Excluding the fact that reserve price may have an impact again.
Next year.
Okay, all right. Okay. Thank you so much.
In the foundry Psf all because steel. This is a point there are no further questions at this time.
Thank you all for joining us on the call today and I look forward to speaking to you soon.
Madame Jimmi Sue City County that Kelly Coffey has pulled out of <unk>.
Poppy special propane now.
Ladies and gentlemen, this concludes the conference call for today. Thank you for participating you may now disconnect your lines.
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The host has ended this call goodbye.
A question.