Q4 2023Transcontinental Inc Earnings Call
first quarter we're at 14.2 and now we're flat with LASER so that shows the great work.
But you need to think two things for printing. What's growing right now is the ISM business, which we're very satisfied with the margin growth we have with this business. But obviously it's not the same margin we have on the renew side of the business.
We're getting better on the ISM. Renew with compensating with cost saving, but maintaining the same margin will be more as a challenge for printing group. Having said that, we will need to see the full effect of radar, but two are ready to call that.
Okay, and then I guess longer term, would it be possible to get back into that 19-20% margin range in printing in light of what you just mentioned?
Well, that depends on who changes the percentage of decrease over the longer term of the review, which is something that we don't control, but certainly what we control is the ISM part of the business, and that will push. And we think...
We did it in the last five years and we still have room to grow it. So I'm not going to make a call on the 19%, but for sure we will defend those IT margins.
One last question from me. Just on the other segment, are you able to break out how much of the year-over-year adjusted EBITDA growth in Q4 came from the higher media volumes versus the lower stock-based comp? And then as we start to think about adjusted EBITDA and other for 2024, would we expect that to go back to...
prior year levels sort of in the $13 million range. Just trying to get a sense of directionally where you think that's going.
Well, to give you more color regarding media, and as I said in my opening remarks, there was a transfer of business...
If you look at the other, for the media side of the business, I think the base for 2023 represents a good base because we have the full impact of both acquisitions we did.
month. We had the positive impact coming from acquisition, but now 2023 represent a good benchmark, but obviously we want to grow this business.
can take the full year number as a good number for media business. As far as the corporate cuts, I mentioned also that they will go probably up to 40 millions because of the positive we have from the stock base. And obviously, if the stock base moves, like OVA, it will be a negative impact.
As far as median Q4, I would say that in terms of dollars, the impact is around 5 million positive.
In the sound Peter vaudecaste you know mr.. Lapointe there are no further questions at this time
Thank you, Joélle, and thank you everyone for joining us on the call today. We look forward to speaking to you.
Thank you for participating. Please disconnect your lines.
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Margins held in for the most part here in Q4, how would you think about about printing margins into next year.
First one I would say is that we're very glad because when we began the year we were 5%.
Oh got peak assessed coughing also salaries, just he was real julep and there's some bandwidth walk.
Margin towards 'twenty. Two you may recall that we were at 19 point to our first quarter. We're at 14.2 and now were were flat with last year's so that shows the great work done by the team.
Welcome to the TC transcontinental fourth quarter and fiscal year 2023 results conference call. During the presentation. All participants will be in 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 being recorded today December $13 22.
But you need to think two things for printing, what's growing right now the ISS business, which we're very satisfied with the margin growth we have with us.
But obviously, it's not the same margin on the renewable side of the business. So we're getting better on the ISR radio we are compensating with cost saving but maintaining the same margin will be more of a challenge for printing group I think I said that we were.
'twenty three.
Speaker Change: I would like to turn the conference over to you on that point director Investor Relations and Treasury share My Amit and I said it up a whole a young at that point. So hectare last time of exit is avis sought a pause of heat Michelle I point. Please go ahead.
We'll need to see the full effect of radar, but too early to call on that site.
Speaker Change: Thank you Joanna and good morning, everyone.
Speaker Change: Welcome to cough cold snap ADS' fourth quarter and fiscal year 2020 earnings call.
Speaker Change: Okay, and then I guess longer term would it be possible to get back into that 19, 20% margin range in printing in light of what you just mentioned.
Before we begin please note that the press release MD&A, along with financial statements and related note as well as slides supporting managements remarks are all available on our website at Www Dot P. C. P C.
Well that depends on two things.
Speaker Change: Percentage of decrease over the longer term of the review, which is something that we don't control, but certainly what we control is the <unk> part of the business and that's where we'll portion we think we have great opportunity to increase that margin.
Speaker Change: Investor relation section.
Speaker Change: A replay of this conference call will also be available on our website shortly after the call.
Speaker Change: Did it in the last five years, and we still have room to grow it so I'm not going to make a call on a 19% but for sure. We will get back we will defend those high teens margin for the quarter printing group.
Speaker Change: Please note that this conference call is intended for the financial community.
Speaker Change: If you are in listen only mode and should contact Natalie senior.
Speaker Change: Can you advise our corporate communications for more information.
Speaker Change: Uh-huh okay.
Speaker Change: We have with US today are president and Chief Executive Officer, Tom O'hern and.
Speaker Change: One last question from me just on the other segment are you able to break out how much of a year over year adjusted EBITDA growth in Q4 came from the higher media volumes versus the lower stock based comp and then as we start to think about adjusted EBITDA and other for 2024, what do we expect that to go.
Speaker Change: And our executive Vice President and Chief Financial Officer, Don under Kevin.
Speaker Change: As referenced on slide two some of the financial measures discussed over the course of this conference call are non ifr.
Speaker Change: You can refer to the MD&A for a complete definition and reconciliation of these measures to ifr.
Back to you.
Speaker Change: Prior year levels sort of in the $13 million range, just trying to get a sense of Directionally, where do you think that's going.
In addition, this conference call might also contains forward looking statements.
Speaker Change: These statements are based on the current expectations of management and information available as of today and they involve numerous risks and uncertainties known and unknown.
Speaker Change: Well to give you more color regarding media and.
Speaker Change: And as I said in my in my opening remarks, there was a transfer of business between Q3 and Q4. So if you look at the other for the media side of the business I think the base for 'twenty two 'twenty three represent a good space because we have the full impact of bolt Yeah bolt acquisition, we did in the group the first six months.
Speaker Change: The risks uncertainties and other factors that could influence actual results are described in this fiscal 2023 annual MD&A and in the annual information form.
Speaker Change: With that I would like to turn the call over to our President and CEO Tom Amato.
Speaker Change: We had the positive impact coming from acquisition, but now 2023 represent a good benchmark and obviously you want to grow this business but.
Tom Amato: Thank you, yes very.
Tom Amato: Very good morning to everyone. Thank you for joining us are quite early call on mystic.
Speaker Change: You can think that the full year number is a good number for media business as far as the corporate cost I mentioned also that they will go probably up to 40 million because of the positive we have from the stock based on obviously.
Tom Amato: I'm pleased to be here with you to discuss our Q4 results my first full quarter as CEO.
Tom Amato: First on safety, we improved again this year as our fiscal 2020 incident rate dropped by another 17% following an improvement of 23% last year.
Speaker Change: If the stock base move.
Speaker Change: No.
Speaker Change: Well it will be a no go.
Tom Amato: We still have work to do to achieve an injury free workplace and yet we are moving in the right direction.
Speaker Change: Impact, so, but thats something with this call that the current price today as far as media in Q4, I will say that in terms of dollars. It's the impact is around 5 million positive.
Tom Amato: Turning to Q4, we are continuing to focus on our four key priorities.
Tom Amato: Number one growing organically and profitably we are pleased with our growth of 3% and adjusted EBITDA. Despite a decline in our boardroom.
Okay, great. Thanks for answering my questions.
Tom Amato: Number two delivering a strong reserve the return on assets in line with our new program to improve our profitability and our balance sheet to which I will come back later, we've announced the closing of about some obvious constant packaging plant and the transfer of its activities, we do not need to work on.
Speaker Change: In the assumption you have other questions. Mr. Le point, there are no further questions at this time.
Speaker Change: Thank you Joanna and thank you everyone for joining us on the call today and look forward to speak to you soon.
Speaker Change: Yeah.
Also mentioned during our Q3 call the closing of our mantra recycling facility with the integration of our plastic recycling activities directly interruption production plants.
Speaker Change: Medallion misuse as she told me that Petkoff analysts Prolusion LG now sort of.
Speaker Change: Perhaps posture because they've met now that question, ladies and gentlemen. This concludes the conference call for today. Thank you for participating please disconnect your lines.
Tom Amato: We have announced in early November the end of <unk> and its gradual replacement by radar throughout Quebec, as well as the rollout of radar in Ontario, and British Columbia.
Speaker Change: [music].
Tom Amato: On the third certainly a major highlight of the quarter. We've made great strides on the reduction of our net debt. Thanks to improve working capital for the third consecutive quarter and tourists and extend the monetization of one of our buildings in Quebec City. This led to a very solid performance in terms of cash flows.
Tom Amato: Fourth commercializing sustainable products, we are progressing well with the installation of <unk>.
Spartanburg for citizens and we continue to expect to start of production at the backend of spring.
Tom Amato: Early next summer.
Now, let's turn to our sectors.
<unk> group ended the fiscal year on a strong note in Q4, concluding a year of growth.
Lower volumes in the quarter were caused by lower demand certainly due to the economic context, particularly impacting some nonfood signals and second by the end of Destocking, which we could see early in the quarter.
Tom Amato: And our printing sector, we continue to face challenges in our book printing operations and have taken steps to mitigate the impact in 2024.
Tom Amato: Hence we are encouraged by the favorable of professional fees in our retail service businesses as well as the rollout of radar unless let me Jessica <unk> posted a strong performance in the fourth quarter.
Tom Amato: So altogether, we satisfied with these results given the current economic context, which may continuing to doing your year.
Tom Amato: Looking forward, we all agree that we need to do more to deliver higher profitability and.
Tom Amato: And we need to generate better return on what we've got this is infections are unnecessary.
Tom Amato: This is why I put in place an ambitious program to improve the company's earnings per share as well as our balance sheet.
Tom Amato: These two years' program is expected to deliver early impacts in the second half of fiscal 2024, and recurring savings between 20 and $40 million in fiscal 2025.
Tom Amato: We have four main categories of actions.
Tom Amato: First is to reduce addressable fixed costs across the organization.
Tom Amato: The site journeys to make decisions on less profitable activities with two options either a quick turnaround or consolidation.
Tom Amato: The third is to target a reduction of the cost of goods sold physically leveraging members of our operational excellence procurement and R&D teams combined into one project team to deliver savings and.
Tom Amato: And fourth.
Tom Amato: Real estate assets, which we anticipate to be approximately worth $100 million and this is the first step of this is part of a program, which can continue beyond the first two years.
Tom Amato: With increased profitability on the stronger balance sheet, we will be better positioned to grow earnings per share.
Tom Amato: This program is perfectly aligned with our four key priorities and it is the right thing to do at this point in time, especially in the current macroeconomic context I strongly believe in it and our team is fully mobilized to executed smartly and digital.
Speaker Change: Now over to your Donald.
Speaker Change: Thank you Tamara and good morning, everyone moving to consolidated numbers on slide six of the earnings call presentation for.
Tamara: For the fourth quarter of 2023, we reported at two 8% decrease in revenues versus the same period last year.
Tamara: This was mainly driven by lower volume in both our packaging and printing sectors.
Regarding profitability consolidated adjusted EBITDA for the quarter was $145 $5 million, an increase of three 1%. Thanks to the strong performance in the media sector and positive impact from the share based compensation.
Tamara: Financial expense increased by seven $8 million to $18 3 million in the fourth quarter of 2023.
Tamara: This was mainly due to the increase in interest rates and by the effects of exchange rate fluctuations.
Tamara: Adjusted income tax of $17 $4 million was $3 1 million lower than last year and represented.
Tamara: Effective tax rate of 19, 6%.
Tamara: This resulted in adjusted net earnings of 83 per share for the quarter.
Tamara: 5% improvement versus last year.
Tamara: Now moving to slide seven for the sector review.
Tamara: In packaging, we generated revenue of $428 million down two 9% versus last year.
Tamara: The decline is mainly due to lower volume from market softness and to a lesser extent customer destocking early in the quarter.
Tamara: This was partially offset by stronger U S dollar.
Tamara: In terms of profitability, despite lower volume adjusted EBITDA and packaging remained stable at 61 7 million as favorable exchange rates cost savings and efficiency improvements did offset the volume impact.
Tamara: Moving to printing on slide eight.
Tamara: Revenues decreased by four 8% to $311 3 million.
Tamara: This was mainly due to lower volume in retail player and book printing activity.
Tamara: <unk> adjusted EBITDA was $61 $1 million for the quarter compared to $64 6 million last year.
Tamara: The $3 $5 million decline, mainly due to lower volume is better to the $7 $1 million GAAP. We added in Q3 and enable more significant improvement when comparing with a $16 2 million decline in Q1.
Tamara: As we are accelerating the implementation of cost reduction measures, we should be better positioned to adapt to volume.
Tamara: Maybe at a solid quarter compared to last year due in part to the timing of orders between Q3 and Q4.
Tamara: Corporate expenses were positively impacted by $3 million lower share based compensation expense in Q4, following the stock performance.
Tamara: Now turning to cash flow.
Tamara: As expected.
Tamara: For 2023 was a strong quarter, we generated $246 $2 million from operating activities, an increase of $142 $7 million versus last year, mainly driven by improved working capital as we continue to make progress on reducing.
Tamara: <unk> and ventures.
Tamara: We also improved receivables with the successful implementation of a new factoring program.
Tamara: This third consecutive quarter of positive working capital supported our significant improvement in cash flow performance on a full year basis.
Tamara: Our capex at $29 million was $5 2 million lower than last year and was the lowest quarter over the last two years.
Tamara: In addition to the lower Capex, we also sold a building in <unk> for $12 million.
Tamara: Our solid cash flow performance combined with favorable profitability led to a significant improvement in our net debt ratio.
Tamara: We closed the year with a ratio of standing at 2.06 times compared to $2 40.
Tamara: 47 at the end of fiscal 2022.
Tamara: Yeah.
Tamara: We expect to continue to generate significant cash flow that will allow us to reduce our net debt, but the seasonality of working capital the ratio will likely increase early in the fiscal year 2024.
Tamara: In closing we finished the year strong to deliver a stable EBITDA on a full year. Despite significant volume headwinds we achieved this by driving by driven.
Tamara: Additional cost savings and efficiencies across the organization, but this is not enough.
This is why we are implementing a new program to improve profitability by reducing structural costs as outlined by summer.
Tamara: This way we are building a more resilient organization.
Tamara: In terms of outlook.
Tamara: And packaging, while we expect pressures on volume to persist in the near term, we expect improved profitability in fiscal 2024 compared to fiscal 2023.
Tamara: And grid, despite the benefits from the ongoing cost reduction initiatives, we expect lower adjusted EBITDA for the fiscal year of 2024 from lower volume.
Tamara: We expect corporate cost at EBITDA level to be close to $40 million for the year.
Tamara: This is around $10 million Ayers since fiscal 2023 benefitted from lower share based compensation from the stock price performance.
Tamara: Taking into account this this headwind and the challenging economy environment, We expect consolidated EBITDA in fiscal 2024 to be at least in line with 2023 as the improvement in packaging should more than offset the decline in print highlighting the benefits of our diversification into flexible.
Tamara: Jean.
Tamara: Finally savings from our profitability improvement program are likely to start to materialize late in fiscal 2024, and therefore, we'll have a more meaningful impact in fiscal 2025.
Tamara: Surplus capital allocation, we expect capex to decrease to around $135 million in fiscal year 2024, with a heavier weight in the first half of the year as we conclude our strategic investments and assisted consistently guilty before returning to a lower run rate in fiscal 2025.
Tamara: As for cash taxes, this should be around $50 million in fiscal year 2024.
Tamara: On that note I will now proceed with the question period.
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Speaker Change: Thanks, Joe.
Speaker Change: Indeed.
Speaker Change: The P select two ish MMS.
Speaker Change: Pardon me of course.
Speaker Change: Thank you one moment, please ladies and gentlemen, we will now begin the question and answer session. If you have a question. Please press star followed by the wondering your Touchtone phone, you'll hear tone acknowledging your request your questions will be pulled in the order they are received.
Speaker Change: Do you lift the handset if youre using a speakerphone before pressing any keys.
Speaker Change: Please for your first question.
Speaker Change: Midnight in question to Adam Shine.
Speaker Change: National Bank financial your first question comes from Adam Shine with National Bank Financial. Please go ahead. Thanks.
Adam Shine: Thanks, a lot good morning, Tamara, obviously, a very strong quarter, a good end to the year.
Adam Shine: First on <unk>.
Adam Shine: Improvement program a couple of questions. One is can you elaborate a little bit further on.
Adam Shine: The various buckets, obviously, the real estate, one is clearly obvious but the the context here.
Adam Shine: Number two the quick turnaround or consolidation of less profitable activities more and more of a sort of a node more of a variable, whereas more of the heavy lifting will come from the <unk>.
Adam Shine: <unk> costs, the cost of goods sold reduction efforts and to the extent that the fixed costs in cost of goods sold come down.
Adam Shine: <unk>.
Adam Shine: Specific key initiatives that might be planned and.
How perhaps you might allocate.
Adam Shine: The $20 billion to $40 billion.
Adam Shine: Potential savings coming from those particular buckets.
Adam Shine: And then just another question related to the program is does that offer you any particular line of sight to perhaps reinvesting some of those savings, which perhaps speaks to some of the range in terms of the anticipated savings is that part of the thought process.
Adam Shine: Follow up later thanks.
Adam Shine: Well, that's a very best question that you shared with me and thank you for and thank you for the nice words couple.
Adam Shine: A couple of things I would say I would say on this deal.
Adam Shine: The cost of goods sold reduction is obviously the largest potential.
Adam Shine: This is this is not a surprise we have a 50% cost of goods sold.
Adam Shine: Our top line will be street, so and you're saving on that generates a.
Adam Shine: Most notable.
Adam Shine: When it comes to fixed cost in the underperforming activities.
Adam Shine: I'd like to add something to what we communicated it is not really meant to address potential volume movements. This is really to strengthen our performance freedom. So what what we're looking at is shoe sites, which we will try to turn around it's a very few number but we will make quicker decisions.
Adam Shine: <unk> it has to be done.
Adam Shine: And then the.
Adam Shine: <unk>.
Adam Shine: What else what your question was should we invest should we reinvest some of this into growth.
Adam Shine: We'll be in a better position for sure will be will be or when this is achieved it will be more competitive obviously.
Adam Shine: Having.
Adam Shine: And improved our manufacturing network and I would say a improved cost of goods sold.
Adam Shine: So we tend to decide at this point in time, what we would do this right. Okay, alright I appreciate that.
Adam Shine: You touched on the leverage at just under two one times.
Adam Shine: As a goal to get down to around the two times level like some pointed in F. 'twenty. Four obviously you acknowledged that there is some working capital timing issues at the start of the new year, but nevertheless it.
Adam Shine: It does look like based on the outlook and some of the evolving initiatives that Tom is referencing that you could potentially have leverage down below one five times.
Adam Shine: At the end of this two year program and I think thats, even before factoring in the <unk>.
Real estate sales so could you just speak to that.
Adam Shine: Some of the particular priorities moving forward.
Adam Shine: Step into the buyback that's been a bit quiet.
Adam Shine: In recent quarters is there the prospect of.
Adam Shine: Examining dividend increases and as it relates to M&A.
Adam Shine: Maybe you can elaborate further as to what the pipeline potentially look like.
Adam Shine: Well, yes, we're glad proved to be very close to two that was the target and obviously beyond or two in fiscal 2004.
Adam Shine: As you can.
Adam Shine: Look at the free cash flow will generate.
Adam Shine: Including the 130 135 million Capex and even without selling real estate, yes, we will be under two as far as being a one 5% in 2025, obviously that will that.
Adam Shine: That will depend.
Adam Shine: The timing of the real estate transaction.
But we expect that the Capex program in 2025 should be will it be lower than the 135%. So you can make the calculation and see that the free cash flow was strong in 2025 in terms of priorities, we stick to the four priorities and the third one is to pay down the debt. So thats for sure the priorities for fiscal 2024.
Adam Shine: And that will that will put us in a position where we were before coat risks, where we are in a position to make acquisition, but we need to do this program first pay.
Adam Shine: Pay down the debt.
Adam Shine: The EBITDA and then we'll see where we go but for this fund today the priority is to pay down the debt.
Speaker Change: Okay I appreciate that I'll queue up again, thank you.
Speaker Change: This is Amit <unk>.
Speaker Change: And the pattern of CIBC capital markets. Your first your next question comes from Amir <unk> with CIBC capital markets. Please go ahead.
Amir: Hi, good morning.
Amir: I wanted to follow up on the cost reduction program, how much of the $20 million to $40 million savings would you expect to it to actually realize in fiscal 2025.
Amir: Sounds like most of those benefits are going to be building.
Amir: Over that year.
Amir: Yes. So thank you for the question and good morning by the way.
Amir: Youre right given given some objections, we've been talking about some we will have returned back than others.
Amir: As I previously said the largest one is addressing the cost of goods sold just takes longer as you can imagine so that's why we believe.
Amir: Full run rate will be in 2025.
Amir: Probably some some first signs in the backend of 2024.
Amir: Okay Fair enough. Thanks, that's helpful. And then just turning to packaging demand. Obviously is there any sense you have as to where.
Amir: Customer inventories sit today, maybe perhaps.
Amir: Perhaps that the Destocking has gone on for far too long and when you think about the.
Amir: Growth rates.
Amir: Any trends across the different categories that you would expect for 'twenty 'twenty four.
Amir: And thank you for asking the question.
Amir: They did discussion without without customers what I can say is in the non food segments, so, namely industrial insulation to some extent as well in the medical piece.
Amir: There is long steel long in batteries.
Amir: As we speak whilst into food and the food segments, which is the bulk of what we do it's in my opinion are finished.
Amir: Okay great.
Speaker Change: That's all I had I'll turn it over.
Speaker Change: A question and David.
Speaker Change: David Mcfadden Cormack Securities. Your next question comes from David Mcfadden with Carmax Securities. Please go ahead.
David Mcfadden: Great. Thank you a couple of questions. So first of all I'll just just on the guidance I guess the clarification.
David Mcfadden: When you're talking about the printing business you expect EBITDA to be down, but then in the guidance Josef say, but then it will be offset.
David Mcfadden: Bye.
David Mcfadden: Cost savings so I'm just.
David Mcfadden: EBITDA going to be down.
David Mcfadden: Fine.
David Mcfadden: What's your expectation for 'twenty four.
David Mcfadden: I think what we said.
David Mcfadden: That.
David Mcfadden: We have headwinds there is decline in volume like like we're facing.
David Mcfadden: Part of this business in <unk> and.
David Mcfadden: In cost saving and as such it we're putting in place will mitigate the decline, but not enough. So we said that the EBIT should be lower than 2023.
David Mcfadden: Okay. Okay. Thank you.
David Mcfadden: And so when you talk about.
Focusing on debt reduction.
David Mcfadden: Yeah.
David Mcfadden: Can you share with us a target leverage ratio that you want to get too that you feel more comfortable with.
David Mcfadden: Can you repeat just the beginning of your question.
David Mcfadden: Debt reduction.
David Mcfadden: Yes.
David Mcfadden: Yes, Okay I get it so so.
David Mcfadden: The target for us.
David Mcfadden: David has been always to be under two <unk>.
David Mcfadden: But there is no limit when we're under two wingo.
David Mcfadden: We're going to do acquisition or any program say, we target to be too. We feel we're comfortable this is at the level that the rating agency that Odyssey.
David Mcfadden: To better position for us is to be below two to do any acquisition or to grow the company. So now we're getting closer to that but we didn't fix any targets. We've set this level will start decreasing the debt.
David Mcfadden: Just before Covid risks, we have no debt on the balance sheet and it was good for us because we were able to make the acquisition. So the target is to be below two and the good news is that we're going in that direction.
David Mcfadden: Okay.
David Mcfadden: And then the cash flow statement, obviously, you guys had a nice working capital inflow this year.
David Mcfadden: And I know prior to that you invested a lot of money in working capital.
David Mcfadden: Took some back can.
Can we expect that you could cover some more cash this year from working capital.
That's the objective and Thats also part of the of the program that I spoke about we do.
David Mcfadden: <unk> on the EBITDA side of the business, but I've action also on the cash side.
David Mcfadden: Obviously, the one on real estate, but also too.
David Mcfadden: At our Capex program and Thats, what we do right now and the third one is.
David Mcfadden: As regarding the working cap and Youre right over the last two years before fiscal 2023, we we have to invest north of 200 million in working cap, we gained that about half of it. This year. So we're hoping to get.
David Mcfadden: Back in the next year or 18 months.
David Mcfadden: Okay. Okay, Great and then just a clarification on the Capex can you stay at the $135 million Thats your expectation for 'twenty.
David Mcfadden: Yep Yep.
David Mcfadden: Okay, so that excludes intangibles, obviously right.
David Mcfadden: That is <unk>.
David Mcfadden: Now the intangible.
David Mcfadden: That does include.
David Mcfadden: Capex, which are tangible that are mostly linked to the media business. So when we say 135, it's the whole.
David Mcfadden: Two capex, which is.
David Mcfadden: Yes. So it does include.
Speaker Change: Alright, guys.
Speaker Change: Your expectation for spending on intangibles.
Speaker Change: Okay, Okay great.
Speaker Change: And then just a question on the packaging side talking about lower demand you know most of your business is on the crude side. So is that just because hard.
Speaker Change: Okay.
Speaker Change: Discretionary spending coming on there.
Speaker Change: No pressure here and people are just opting for lower priced items on the food side I was just wondering what's driving that.
Speaker Change: Volume.
Speaker Change: Sure.
Speaker Change: We haven't seen any significant shelf loss I mean, that's something of course, we've looked at and said Hey did we lose some ground. We did not so obviously this is this is the performance of our customers.
Speaker Change: Difficult to say the price points via promotional activities have been not as high as in the past in the last quarter for.
Speaker Change: For the food segments.
Speaker Change: He'll probably an impact of the higher inflation on food My guess at this point in time.
Speaker Change: When we speak to customers I mean, I mean customers. They all remain extremely positive when it comes to the to the midterm.
Speaker Change: But there is obviously some adjustment short term.
Speaker Change: Okay alright, thank you.
David Mcfadden: Sure David.
David Mcfadden: With that many Mrs Yao covering flash foods everyday Castillo, who came out of <unk> at least on their tuition at flat right.
David Mcfadden: Is it a funk sale made nib, she noticed that Ty I want a piece of their tuition, ladies and gentlemen, if they're right.
David Mcfadden: If there are any additional questions at this time. Please press star followed by the one as a reminder, if you are using a speaker phone. Please lift the handset before pressing any keys.
David Mcfadden: No question <unk> yeah.
David Mcfadden: <unk> <unk> BMO capital markets. Your next question comes from <unk> <unk> with BMO capital markets. Please go ahead.
unk: Thanks, Good morning, guys have never on for Steve today.
unk: Just a question on the cost savings.
I'm wondering if you can talk about how that sort of flow through the model in terms of whats, which sectors you would expect to benefit the greatest.
unk: Mike on the margin side.
unk: Yeah, I think when we look at it this.
unk: At this point in time I would say.
unk: Part of it will be a corporate costs, obviously overall structural fixed costs in the other parts for the time being it's primarily in the in the packaging side. This is where we have the bulk of the cost of goods sold reduction.
unk: Okay great.
unk: And then staying on margins when we think about 2024 I would expect that you would have some margin expansion baked into the guidance.
unk: Would it be reasonable to expect that that packaging margins are greater than 14% this year or next year.
unk: It's always.
unk: As always we always careful to talk about margin because you.
unk: You might remember a couple of years ago with.
unk: Material increase of the roadmap.
unk: That affected us.
unk: Diminish our margin by far so we need to look at this if the raw mat remains stable like it is right now.
unk: When you look at the at what we had in terms of margin at the end of the Q4, we were at <unk> 40, $14 seven and the average is $13 six so tomo as I've said that we're pushing for the most of the program we're putting in places on the packaging side although.
unk: A large part of it will come later in fiscal 2024, I'm encouraged to say that 2014 should be the target for this fiscal year.
unk: Okay, Great and then maybe the same thing on the printing side I mean, we're obviously expecting some some volume pressure into 2024.
unk: You can see that like volumes Laura.
unk: Margins held in for the most part here in Q4, how would you think about about printing margins into next year.
unk: Yes.
unk: First one I would say is that we're very glad because when we began the year. We were 5% margin. In 2022, you may recall that we were at $19 two and we are first quarter, we're at $14, two and now where.
unk: Were flat with last years, so that shows a great oriented by the team.
unk: But you need to think two things for printing, what's growing right now the ISS business, which we're very satisfied with the margin growth we have with this business, but obviously, it's not the same margin we have on the renewable side of the business. So.
unk: We're getting better on the ISR revenue, we are compensating with cost saving but maintaining the same margin will be more as a challenge for printing group I think I said that we were.
unk: We'll need to see the full effect of radar, but too early to call on that site.
unk: Okay, and then I guess longer term would it be possible to get back into that 19, 20% margin range in printing in light of what you just mentioned.
unk: Well that depends on two things.
unk: Percentage of decrease over the longer term of the review, which is something that we don't control, but certainly what we control is the <unk> part of the business and that will push and we think we have great opportunity to increase that margin. We did it in the last five years and we still have room to grow it so I'm not going to make a call on a 19% but for sure we will.
unk: We will defend those high teens margin for the quarter printing group.
unk: Mhm Okay.
unk: One last question from me just on the other segment are you able to break out how much of a year over year adjusted EBITDA growth in Q4 came from the higher media volumes versus the lower stock based comp and then as we start to think about adjusted EBITDA and other for 2024, what do we expect that to go back.
unk: Back to you.
unk: Prior year levels sort of in that.
unk: $13 million range, just trying to get a sense of Directionally, where you think that's going.
unk: Well to give you more color regarding media.
unk: And as I said in my in my opening remarks, there was a transfer of business between Q3 and Q4. So if you look at the other for the media side of the business I think the base for 'twenty 2023 represent a good base because we have the full impact of bolt both acquisition. We did in the group the first six months.
unk: We had the positive impact coming from acquisition, but now 2023 represented a good benchmark and obviously, we want to grow this business but.
unk: You can think that the full year number is a good number for media business as far as the corporate cost I mentioned also that they will go probably up to 40 minions because of.
unk: The positive we have from the stock based and obviously.
unk: If the stock based move.
unk: No.
unk: Well it will be a negative impact so, but thats something with this got that the current price today as far as media on Q4, I will say that in terms of dollars. It's the impact is <unk> 5 million.
unk: Positive.
Speaker Change: Okay, great. Thanks for answering my questions.
Speaker Change: In the south pit of other questions Mr.
Speaker Change: Mr. <unk> there are no further questions at this time.
Speaker Change: Thank you Joanna and thank you everyone for joining us on the call today, we look forward to speak to you soon.
Speaker Change: [noise] medallion misuse, Utah midnight, Petkoff analysts Prolusion LG now sort of.
Speaker Change: Pascal.
Speaker Change: Now that question, ladies and gentlemen, this concludes the conference call for today. Thank you for participating please disconnect your lines.