Q3 2025 Transcontinental Inc Earnings Call

Speaker #1: May I have your name, please? Merci d'avoir patienté. Et bienvenue à la conférence téléphonique concernant les résultats du troisième trimestre de l'exercice 2025 de TC Transcontinental.

Joanne: Mesdames et messieurs, merci d'avoir patienté et bienvenue à la conférence téléphonique concernant les résultats du troisième trimestre de l'exercice 2025 de TC Transcontinental. Pendant la conférence, tous les participants seront en mode d'écoute seulement. Une période de questions suivra la présentation et des directives vous seront données à ce moment. Nous désirons vous rappeler que cette conférence est enregistrée aujourd'hui, le 5 septembre 2025. Welcome to the TC Transcontinental Third Quarter Fiscal Year 2025 Results Conference Call. During the presentation, all participants will be in listen-only mode. Afterwards, we will conduct the question and answer session, and instructions will be provided at that time. As a reminder, this conference is being recorded today, September 5, 2025. I would like to turn the conference over to Yan Lapointe, Senior Director, Investor Relations and Treasury. J'aimerais maintenant céder la parole à Yan Lapointe, Directeur principal, Relations avec les investisseurs et trésorerie.

Speaker #1: Pendant la conférence, tous les participants seront en mode d'écoute seulement. Une période de questions suivra la présentation et des directives vous seront données à ce moment.

Speaker #1: Nous désirons vous rappeler que cette conférence est enregistrée aujourd'hui, le 5 septembre 2025. Welcome to the TC Transcontinental Third Quarter Fiscal Year 2025 Results Conference Call.

Speaker #1: During the presentation, all participants will be in listen-only mode. Afterwards, we will conduct the question-and-answer session, and instructions will be provided at that time.

Speaker #1: As a reminder, this conference is being recorded today, September 5, 2025. I would like to turn the conference over to Yan Lapointe, Senior Director, Investor Relations and Treasury.

Speaker #1: J'aimerais maintenant céder la parole à Yan Lapointe, Directeur Principal, Relations avec les Investisseurs et Trésorerie. Monsieur Lapointe, please go ahead.

Joanne: Monsieur Lapointe, please go ahead.

Speaker #3: Thank you, Joanne. And good morning, everyone. Welcome to Transcontinental's third quarter of fiscal year 2025 earnings call. Before we begin, please note that you can find on our website our quarterly report, including financial statements and related notes, as well as the slides supporting management's remarks.

Yan Lapointe: Thank you, Joanne, and good morning, everyone. Welcome to TC Transcontinental's Third Quarter of Fiscal Year 2025 earnings call. Before we begin, please note that you can find on our website our quarterly report, including financial statements and related notes, as well as the slides supporting management's remarks. A replay of this conference call will also be available on our website shortly after the call. Please note that this conference call is intended for the financial community, and media are in listen-only mode. You should contact Laurence Boucicault, Senior Advisor, Corporate Communications, for more information. We have with us today our President and Chief Executive Officer, Thomas Morin, and our Executive Vice President and Chief Financial Officer, Donald LeCavalier. As referenced on slide two, some of the financial measures discussed over the course of this conference call are non-IFRS.

Speaker #3: A replay of this conference call will also be available on our website shortly after the call. Please note that this conference call is intended for the financial community, and media are in listen-only mode.

Speaker #3: You should contact Laurence Boucico, Senior Advisor, Corporate Communications, for more information. We have with us today our President and Chief Executive Officer, Thomas Morin, and our Executive Vice President and Chief Financial Officer, Donald LeCavalier.

Speaker #3: As referenced on slide two, some of the financial measures discussed over the course of this conference call are non-IFRS. You can refer to the MD&A for a complete definition of the reconciliation of these measures to IFRS.

Yan Lapointe: You can refer to the MD&A for a complete definition of reconciliation of these measures to IFRS. In addition, this conference call might also contain forward-looking statements. These statements are based on the current expectations of management and information available as of today. Forward-looking statements also involve numerous risks and uncertainties, known and unknown. The risks, uncertainties, and other factors that could influence actual results are described in the fiscal 2024 annual MD&A and in the latest annual information form. With that, I would like to turn the call over to our President and CEO, Thomas Morin.

Speaker #3: In addition, this conference call might also contain forward-looking statements. These statements are based on the current expectations of management and information available as of today.

Thomas Morin: Thank you, Yan, and good morning, everyone, and bonjour à toutes et à tous. First, I'm pleased to report a significant improvement in our adjusted earnings per share versus last year for the third quarter in a row. This is a direct result of our relentless execution of the program to improve our earnings per share and balance sheet we put in place almost two years ago now. In Q3, the packaging sector saw a revenue decrease, mainly due to the sale of our industrial packaging activities and to a weaker than anticipated seasonality in some of our markets, despite a good start of the quarter. Thanks to our disciplined improvement initiatives and to our agility to quickly adjust our costs to slower demand, we were able to improve the sector's adjusted profit despite a less favorable product week.

Thomas Morin: Q3 was actually better than Q2 in terms of profits, contrary to the pattern we have normally seen in the past. We're now seeing a recovery in demand, and therefore expect to close fiscal year 2025 with organic profit growth. The retail services and printing sector had another strong quarter, with revenues up for the second consecutive quarter, while profitability was up for the fifth consecutive quarter. This solid performance was mostly due to the continued growth in our book printing activity. In line with our growth strategy and disciplined approach to capital allocation, we were active on the M&A front, with the acquisition of Middleton Group in late June and New Residentia Graphics in early August. I am pleased with these acquisitions as they will significantly enhance our in-store and marketing capabilities in Québec and Western Canada.

Thomas Morin: We're also growing our customer base and diversifying our offering with new product segments, such as slit and vehicle graphics, to name one amongst others. Also of note for the sector is the introduction of artificial intelligence to automate content production for flyers. Phase one of this project represented an investment of $2.5 million, including $1 million coming from ScaleAI, Canada's global innovation cluster in artificial intelligence. Our partners in this project, which was announced publicly on July 10, are Evado Labs, Canada Tire, and KPDI Digital. The tools we are developing will allow our employees to work more efficiently and provide our customers with better speed to market and better tailored offering for consumers. The main development is complete, and implementation has begun. This is another step in the reinvention of our retail services business. Phase two of the project is underway, so more to come on that.

Our partners in this project, which was announced publicly on July 10, are Labs Canadian Tire and KPI Digital.

The tools we are developing will allow our employees to work more efficiently and provide our customers with better speed to market and better tailored offerings for consumers.

The main development is complete, and implementation has begun.

This is another step in the reinvention of our flyer for our Retail Services business.

Thomas Morin: In summary, and looking ahead for the full fiscal year, despite demand challenges, we're confident to achieve organic profit growth in both of our two main sectors for the second year in a row. Now over to you, Donald.

Based on Project 2, the project is underway. So, more to come on that.

In summary, I'm looking ahead for the full fiscal year, despite demand challenges. We're confident we will achieve organic profit growth in both of our two main sectors for the second year in a row.

Donald LeCavalier: Thank you, Thomas, and good morning, everyone. Moving to slide five of the earnings call presentation. For the third quarter of 2025, we reported a 2.2% decrease in revenues versus the same quarter last year. This decrease was mainly caused by the sale of our industrial packaging operations. The lower top line in packaging was offset by solid growth in our book printing activities and a favorable FX impact. Regarding profitability, we delivered a consolidated adjusted EBITDA of $122.6 million, a $1.6 million increase compared to last year. This performance included $4.2 million in organic profit growth, with improvement in each of our three sectors. Financial expense decreased by $4.6 million to $11 million, mainly due to our lower debt level following strong cash flow generation in the last 12 months, favorable FX impact, and from lower interest rates.

now over to you, Donald

Thank you, Tom, and good morning, everyone. Moving to slide 5 of the earnings call presentation for the third quarter of 2025, we reported a 2.2% decrease in revenues versus the same quarter last year.

This decrease was mainly caused by the sale of our Industrial Packaging operations.

The lower top line and packaging was offset by solid growth in our book, printing activities, and a favorable FX impact.

Regarding profitability, we delivered a consolidated adjusted EBITDA of $122.6 million, a $1.6 million increase compared to last year.

This performance included $4.2 million in organic profit growth, with improvement in each of our three sectors.

Donald LeCavalier: Adjusted income tax decreased by $2.8 million at $14.2 million and represented an effective rate of 19.4%. This led to adjusted earnings per share improvement of 16.7%, going from $0.60 in Q3 last year to $0.70 in Q3 this year. A significant improvement for the third quarter in a row, as mentioned by Thomas. Now, moving to slide six for the sector review. In packaging for the third quarter, we generated revenues of $391.2 million, a 6.3% decrease compared to last year. The decrease is mainly due to the sale of our industrial activities and to lower volume and mix, partially offset by a favorable exchange rate. In terms of profitability, adjusted EBITDA in packaging increased by 0.6% to $65.3 million. Excluding the sale of our industrial activities and favorable FX, the sector grew profits by close to 5% from our cost reduction efforts.

Financial expense decreased by $4.6 million to $11 million, mainly due to our lower debt level following strong cash flow generation in the last 12 months, favorable FX impact, and lower interest rates.

Adjusted income tax decreased by $2.8 million to $14.2 million and represented an effective rate of 19.4%.

This led to adjusted earnings per share improvement of 16.7%, going from $0.60 in Q3 last year to $0.70 in Q3 this year.

A significant improvement for a third quarter in a row, as mentioned by Tama.

Now, moving to slide 6 for the sector review.

In packaging for the third quarter, we generated revenues of $391.2 million, a 6.3% decrease compared to last year.

The decrease is mainly due to the sale of it, our industrial activities, and lower volume and mix, partially offset by favorable exchange rates.

In terms of profitability, adjusted a bit by packaging, increased by 6% to $65.3 million.

Donald LeCavalier: This is a strong performance considering lower volume and a less favorable mix. EBITDA margin increased 110 basis points to 16.7% as we continue to be disciplined by adapting our cost structure to volumes. Moving to retail services and printing sector on slide seven, revenue increased by 4.5% to $261.2 million. This second consecutive quarter of growth was mainly due to an increase in our book printing activities as we continue to benefit from a weaker Canadian dollar and from the impact of a U.S. book printer outsourcing volume to our book platform. While we are very pleased with this performance of the segment this year, some of this recent growth will not be recurring in the coming quarters. Adjusted EBITDA grew by 2.4% to $52 million, reflecting the high volume in our book printing activities. This is the fifth consecutive quarter of profitability improvement for the sector.

Excluding the sale of our industrial activities and favorable effects, the sector group profits by close to 5% from our cost reduction efforts.

This is a strong performance, considering lower volume and a less favorable mix.

A bit, the margin increased 110 basis points to 16.7% as we continue to be disciplined by adapting our cost structure to volumes.

Moving to retail services and the printing sector on slide 7.

This second consecutive quarter of growth was mainly due to an increase in our book printing activities, as we continued to benefit from a weaker Canadian dollar and from the impact of a U.S. book printer outsourcing volume to our book platform.

While we are very pleased with the performance of the segment this year, some of this recent growth will not be recurring in the coming quarters.

Adjusted a bit that grew by 2.4% to $52 million, reflecting the eye volume in our brick book printing activities. This is the fifth consecutive quarter of profitability improvement for a sector.

Donald LeCavalier: Looking at media, Q3 performance was solid as the growth in the educational business more than offset the impact of the end of the SRO contract last year and the closing of Group Constructo in July. Corporate costs were slightly higher than last year due to the higher share-based compensation. Now turning to cash flow. In line with normal seasonality, we saw working capital usage of $21.1 million in the third quarter of 2025, mainly due to the variation in payables and prepaid expense. Despite this working capital timing, we generated $77.8 million from operating activities. Our CapEx at $29.6 million was $1 million lower than last year and positions us well to finish the fiscal year in line with our target of $120 million. Our net debt ratio improved slightly to 1.68 times at the end of the third quarter of 2025, compared to 1.70 times three months ago.

Looking at media Q3 performance, the growth in the educational business more than offset the impact of the end of the SRO contract last year and the closing of Group Constructor in July.

Corporate tests were slightly higher than last year due to the higher share-based compensation.

Now, turning to cash flow.

In line with normal seasonality, we saw working capital usage of $21.1 million in the third quarter of 2025, which may relate to the variation in tables and prepaid expenses.

Despite this working capital timing, we generated $77.8 million from operating activities.

Our capex of $29.6 million was $1 million lower than last year and positions us well to finish the fiscal year in line with our target of $120 million.

Donald LeCavalier: Our net debt ratio should continue to improve in Q4 as the significant cash flows we expect to generate from operations should finance our investments in CapEx, as well as the acquisitions of Mirazed and Integratics. Our financial position continues to be solid, and we remain confident in our outlook. In packaging, despite weaker than anticipated volume in the third quarter, we expect to finish the year strong and grow organically the adjusted EBITDA for the full year 2025. In our retail services and printing sector, following a solid performance in the first nine months of the year, and despite a more challenging comparable in Q4, we are upgrading our outlook and are confident to increase adjusted EBITDA in fiscal 2025 compared to 2024. On that note, we will now proceed with the question period.

Our net debt ratio improves slightly to 1.68 times at the end of the third quarter of 2025, compared to 1.7 times three months ago.

Our net debt ratio should continue to improve in Q4 as the significant cash flows we expect to generate from operations should finance our investments in CapEx, as well as the acquisitions of Mirror Mirror, Zed, and a graphics.

Our financial position continues to be solid, and we remain confident in our outlook.

And packaging, despite weaker-than-anticipated volume in the third quarter. We expect to finish the year strong and grow organically, adjusted a bit for the full year 2025.

In our retail services and printing sector, following a solid performance in the first 9 months of the year, and despite a more challenging comparable in Q4, we are upgrading our outlook and our confidence to increase adjusted earnings a little bit in fiscal 2025 compared to 2024.

And that's not noted. We will now proceed with the question period.

Speaker 8: Merci, Mesdames et Messieurs. Nous allons maintenant procéder à la période de questions et réponses. Si vous avez une question, veuillez appuyer sur les touches « Étoile » suivies de un sur votre téléphone à clavier. Une tonalité se fera entendre confirmant votre demande. Les questions seront prises dans l'ordre qu'elles auront été acheminées. Veuillez également vous assurer de décrocher le récepteur de votre appareil téléphonique si vous utilisez la fonction « Mains libres » avant d'appuyer sur les touches. Un moment, s'il vous plaît, pour la première question. Thank you. One moment, please. Ladies and gentlemen, we will now conduct the question and answer session. If you have a question, please press star followed by the one on your touch-tone phone. You will hear a tone acknowledging your request. Your questions will be pulled in the order they are received.

Speaker 8: Please ensure you lift a handset if you are using a speaker phone before pressing any keys. One moment, please, for your first question. Nous avons maintenant une question de Amir Patel avec CIBC Capital Markets. Your first question comes from Amir Patel with CIBC Capital Markets. Your line is now open.

Speaker 9: Hi, good morning. Thomas, could you speak to the revenue contribution and margin profile of the three latest acquisitions on the print side?

Thank you. One moment, please, ladies and gentlemen. We will not conduct the question and answer session. If you have a question, please press star followed by the 1 on your touchtone phone. You will hear a tone acknowledging your request. Your questions will be pulled in the order they are received. Please ensure you lift the handset if you are using a speakerphone before pressing any keys. One moment, please, for your first question. Your first question comes from Amir Patel with CIBC Capital Markets. Your line is now open.

Hi, uh, good morning.

Thomas, could you, uh, speak to the revenue contribution and margin profile of, uh, the three, uh, latest acquisitions on the print side?

Thomas Morin: Good morning. Good morning, Amir. These three companies we're talking about, Middleton Group, Integratics, and Mirazed, they contribute in line with what we do today in terms of margin levels, slightly lower, and therefore we can, with the synergies, bring this up to where we are as ISM today. I think more importantly, Amir, this is the product portfolio they bring, as well as the footprint, geographical footprint they come in with, which definitely expands our reach coast to coast, certainly Western Canada and Québec to our ISM customers. This was really the rationale for this investment, the product portfolio, the expansion, and the footprint.

Speaker 9: Okay, great. Thanks, Thomas. How should we think about the top-line contribution before any synergies on the sales side?

Good morning. Good morning are the uh these 3 companies. So we're talking about Milton in graphics and mirrored. Um, they contribute in line with what we do today in terms of of margin levels, slightly slightly lower and therefore, we can, we can with the synergies bring this up to, to where we are. As, as I ASM today, I think more importantly are this is the, the product portfolio, they bring as well as the footprint geographical footprint. The the they come in with, which definitely expands our, our reach the coast to coast, certainly West Canada, and and Quebec to, uh, to ISM customers. So, this was really uh, the rationale for this investment was the product portfolio expansion and the footprint.

For, uh, before any synergies on the sales side?

Thomas Morin: It's about $60 million. Combined, it's about $60 million so far.

10 million combined. It's about $60 million.

Speaker 9: Okay, great. Thanks. Just turning to the packaging side, how was the volume and pricing breakdown in Q3? How do you see Q4 shaping up?

Thomas Morin: Yeah, it's about 50/50 volume-price mix. So 50% volume, 50% price mix in Q3. As far as Q4 is concerned, the early signs we see is an increase in.

Okay great. Uh thanks and and just turning to the packaging side. How was the volume and and pricing breakdown in uh in Q3. Um and how do you see Q4 shaping up?

Speaker 9: Excellent. Have prices stabilized here in Q4?

Yeah, so that's just 50 volume price, mix. So 50% volume, 50% price, mix in in Q3, uh, as far as Q4 is concerned, the the early signs. We see as an increase in volume,

So, and uh, as the price is stabilized here in Q4.

Thomas Morin: It's more or less in line with what we've seen so far. What's a bit unpredictable, Amir, is the mix. The mix obviously varies from one month to another. We don't expect to see significant price movements in Q4, because price, Amir, most of the price impact, we see it's concession that we had already gave to clients. Recall at the beginning of the year, we said that price will be lower, but volume should compensate. There's a mix, but the price impact should remain in Q4.

Speaker 9: Okay, great. Thanks, Thomas. That's all I had. I'll turn it over.

Uh it's it's more or less in line with what we've seen so far. What's a bit unpredictable? Amir is the mix. The mix obviously varies from from 1 month to another. We don't expect to see a significant price movements in in Q4 because price Amir most of the price. And back, we see its concession that we had already already gave to clients. We recall that the beginning of the year we said that uh, price will be lower, but volume should compensate. Then there's a mix but the price impact should remain into 4.

Thomas Morin: Okay, thank you.

That's great. Uh, thanks, thanks, Donald. Uh, that's uh, that's all I had. I'll turn it over.

Speaker 8: Notre prochaine question vient d'Adam Schein, avec National Bank Financial. Your next question comes from Adam Schein with National Bank Financial. Your line is now open.

Speaker 9: Thanks a lot. Good morning. Thomas, maybe just continuing on packaging. The quarter started off quite well as per your disclosures back in June, and then I guess things weakened a little bit. Can you give us, you know, just a little bit more color? Looks also like, you know, medical might have stood out, maybe a bit of growth there. Maybe talk to some of the negatives and some of the positives. Stepping into Q4, what, you know, has changed? Is it just a different dynamic in terms of seasonality trends, improvement in default from the summer, or something else on a positive trend? Thanks.

Adam Schein IC. National Bank Financial your. Next question comes from Adam Schein with National Bank Financial. Your line is now open. Thanks a lot. Good morning. So uh maybe just continuing on packaging, the uh the quarter started off quite well as per your disclosures back in June. Um, and then I guess things uh, weakened a little bit. Can you give us? You know, just a little bit more color. Uh, looks also like, you know, medical might have stood out uh, maybe a bit of growth there. So maybe talk to some of the negatives and some of the positives and

Thomas Morin: Thank you. Thank you, Adam, and good morning. Indeed, Q3 started strong when P7, our first month, was actually good. What happened in the rest of the quarter is we have a lot of segments which are on a stock, you know, make-to-stock type of approach. So based on call-ups from customers, we saw the call-ups lower than the forecast they had given us in P8 and P9. Mainly in beverage, I remember I had this question from one of you. Beverage was lower than expected in the back end of the quarter. This is primarily due to slightly lower temperatures in the summer than we had in the previous years. For the carbonated drinks, some inflation impact. The second thing that impacted Q3 was a delay in the protein and dairy business, which we see coming in strong in Q4. I'll come back to that.

You know then stepping into Q4. Um what you know has has changed. Um, is it just a different dynamic in terms of seasonality Trends Improvement into fall from the summer or something else? Uh, on a positive trend. Thanks.

Thank you, thank you. And and good morning. Uh, indeed Q3 started, the started strong. Uh, when you know p7 our first month was was actually good. The, uh, what happened in the, in the rest of the quarter is we have a lot of segments, which are on the stock, you know, make to stock type of a type of approach. So, based on colors from customers and we saw the colors lower than the forecast. They had given us in in p8 and P9. Mainly in beverage. I remember, I had this question from from 1 of you,

Was lower than expected in the, in the in the back end of the quarter, this is primarily due to a slightly lower temperatures in the summer than we had in the previous years and for the carbonated drinks, some some inflation impact.

Thomas Morin: Meanwhile, we saw the volumes growing in LATAM as expected, as well as medical continuing to be strong. That's in a nutshell Q3. When we look towards Q4, to answer your question, Adam, we see coming strong the protein business. There was a delay from Q3 to Q4. Beverage continues to be low, that's the seasonality which is as such. LATAM and medical continues to be strong.

Um, the second thing that impacted Q3 was a delay in the protein and dairy business, which we see coming in strong in Q4. I'll come back to that.

Meanwhile, we saw the volumes growing in LATAM as expected, as well as the Medical segment continuing to be strong. That's, in a nutshell, Q3.

Speaker 9: Okay. I'll take flag color. If I could turn to Donald, maybe for the next two. You know, the buyback ran its course in mid-June. We've seen no renewal. Of course, you have pursued some M&A, but you know, the leverage certainly stays well below two times. I'll tie it into the follow-up question just around real estate. There's still this assumption that heading into perhaps at this point, early F26, you might conclude the two building sales. Maybe just a little color on timing, expectations around the building sales, and then, of course, tying that into the fact that you do have the wherewithal perhaps to do more buyback unless there's some further M&A brewing. Thanks.

When we look towards Q4 to answer your question, Adam, we see the protein business coming in strong. So there was a delay from Q3 to Q4; beverage continues to be low, but that's the seasonality, which is as such, and lateral and medical continues to be strong.

Okay, so thank you for that color. If I could turn to Del maybe for the next 2, um, you know, the buyback ran, its course in, uh, in mid June, uh, we've seen no renewal, uh, of course you have, uh, pursued some m&a. But, you know the leverage certainly stays well below uh, 2 types and um you know I'll tie it into the the the follow-up question. Just around real estate, you know, there's still this assumption that heading into perhaps at this point early f-26, you know, you might conclude you know, the 2 Building Sales. So maybe just a little color on timing expectations around the building sales and then of course, tying that in

Thomas Morin: Yeah, you're right. Real estate, we said at the end of Q2 that the market was a little bit soft, and it's still the case. Having said that, we continue to have discussions, but for model purpose, I think Q1, early 2026, might make good sense as we speak right now. As far as the NCIB, you're right. We mentioned that we were working on M&A side. You saw two transactions in the last two, three months. We were not able to renew the program at that time because of this M&A process. We're still working for some more acquisitions on the ISM side. I totally agree with you that the strength in our balance sheet will allow us to do NCIB, but we'll see regarding the timing versus acquisition. Yes, this is something that we can look at in 2026 when we're done with acquisition.

The fact that, you know, you do have the wherewithal, perhaps to do more buybacks, unless there's some further M&A brewing. Thanks.

You too that, uh, that the market was, was a little bit soft and it's still the case. Having said that we continue up to, to have discussion. But for model purpose,

Uh, I think Q1, uh, early 2026 might make good sense as we speak right now. As far as the NCIB, you're right. Uh, we mentioned that we were, uh, working on the M&A side; you saw two transactions in the last two to three months.

Speaker 9: Thank you for that. Okay, have a good day. Thank you.

This, uh, many processes, and we're still working on some more acquisition on the ISM side. So I totally agree with you that the strength in our balance sheet will allow us to do NCIB, but we'll see regarding the timing versus acquisition. But yes, this is something that we can look at in 2026 when we're done with acquisition.

Thank you for that. Okay, have a good day. Thank you.

Speaker 8: La prochaine question vient de Steven McLeod avec BMO Capital Markets. Your next question comes from Steven McLeod with BMO Capital Markets. Your line is now open.

Speaker 10: Thank you. Good morning, guys.

Next question comes from Stephen McCloud with BMO Capital Markets. Your line is now open.

Uh, thank you. Good morning, guys.

Thomas Morin: Morning.

Speaker 10: Morning. Just a couple of questions from my side. Just with respect to the retail services and printing business, and you know the increased guidance looking for growth now year over year in adjusted EBITDA, can you just break down how much of that is coming from the acquisitions that you announced versus sort of underlying organic growth?

Um, morning. Just, uh, just a couple of questions from my side, just with respect to the, uh, the retail services and printing business. And, um,

Thomas Morin: Yeah, our comment is regarding organic growth. Obviously, the few months with the acquisition will help, but our comments were for organic growth.

You know, the the increase, uh, increased guidance, looking for growth now year-over-year and adjusted ebit dot. Um, can you just break down how much of that is coming from? Uh, the Acquisitions that you announced versus uh sort of underlying organic growth?

Yeah, our comment is regarding organic growth. Obviously, a few months with the acquisition will help. But our comments were for argument and growth.

Speaker 10: Right. Okay, that's great. I am just wondering if you can give an update on your cost-saving initiatives and where you sit. I know you gave some color around the real estate sales, which sounds like they are maybe a Q1 2026 item, but in terms of the underlying cost savings, are you still on track for what you've guided to in the past?

Thomas Morin: Oh, yeah, we're definitely on track. I think we will be done, not done, but the $40 million will be definitely achieved by the end of this fiscal year. Actually, it's part of the reason where, as an example, in Q3, we mentioned that on the packaging side, you know, lower volume, less of a good mix, but still higher margin. That's the efficiency of our cost-cutting program, and we have the same at corporate. This program is in good shape. Still, in 2026, if growth doesn't come, you know, we will keep going on adjusting our costs. This is the way we work.

Right. Okay, okay. That's, uh, that's great. And then, just wondering if you can give an update on sort of your Cost Savings Program and where you sit. I know you gave some color around the real estate sales, which sounds like are maybe a Q1 2026 item, but just in terms of the underlying cost savings, are you still sort of on track for what you've guided to in the past?

Oh yeah, we're just

The not that, but the $40 million will definitely be achieved by the end of this fiscal year. And actually, it's part of the reason where, as an example, in Q3 we mentioned that on the packaging side, you know, lower volume.

Less of a good mix, but still higher margin. That's the efficiency of our cost-cutting program, and we have the same at corporate. So this program is in good shape.

Speaker 10: Yeah. Okay, that's great. Maybe just finally, Donald, you had a couple of questions or a couple of answers, comments around acquisitions and still looking at more on the ISM side. You know, is that sort of more of what you've currently done with respect to just kind of building out your geographic diversity around that business, or is there anything else sort of nuanced in those acquisition commentaries?

Still, if in 2026 growth doesn't come, we will keep going on adjusting our costs. This is the way we work.

Yeah. Okay that's that's great. And then maybe just finally um Deneuve you had a couple of questions or a couple of answers uh, comments around Acquisitions. And still looking at more on the ism side. Um, you know, is, is that sort of uh more of what you've what you've currently done with respect to, uh, just kind of building out your your Geographic diversity around that business, or is there, is there anything else uh sort of nuanced in in those in those acquisition commentary?

Thomas Morin: Right now, we'll say that Canada is the market we're active in. We still have, there's still an opportunity out there in Canada. We're really happy with the two latest acquisitions, but we still see room for this business to grow, obviously, organically. We're really excited by the possibility of this business. We're still focusing on the Canadian market for the growth and for acquisition in ISM.

Uh well right now, I was saying that Canada is the market were were active, we still have there's still opportunity out there in Canada. We're really happy with the 2 latest acquisition, but we're still see room for this business to grow obviously organically. We're really excited by the possibility of this business but uh we we're still focusing on the Canadian market for the growth in a for acquisition in ism.

Speaker 10: Okay, that's great. Thanks, guys. I'll get back on the line.

Okay, that's—uh, that's great. Thanks, guys. I'll get back on the line.

Speaker 8: La prochaine question vient de Drew McReynolds avec RBC. Your next question comes from Drew McReynolds with RBC. Your line is now open.

Drew McReynolds, AIC, RBC. Your next question comes from Drew McReynolds with RBC.

Your line is now open.

Speaker 9: Good morning. Donald, just on the book printing contributions here for Q3, you alluded to, obviously, some of that being non-recurring, presumably that's as early as Q4. I'm just wondering if you could quantify what the temporary impact is on a year-over-year basis or otherwise your organic growth in Q3, what would it have been without book printing? My second question, just more broadly, any kind of updates from your perspective with respect to tariff impacts, direct or indirect? Obviously, still fluid, and I know not a big issue for TC Transcontinental in general. Also, any update on the macro environment as we head into the fall here. Thank you.

And good morning. Um, don't know, just on the book printing contributions here for Q3, alluded to, um, obviously some of that being non-recurring. Presumably, if that's as early as Q4. But just wondering if you could quantify.

Um, you know what, the, the temporary impact is on a year-over-year basis or or otherwise, um, your organic growth uh, in Q3 what would it have been without book printing. And then second question, just more broadly, any kind of updates uh from your perspective just with respect to kind of tariff impacts director and direct um obviously still fluid and I know not a big issue for transcon in general. Uh and also

So, any update on the macro environment? Um, you know, as we head into the fall here. Thank you.

Thomas Morin: Maybe just for the macro, what was the latest of your question? There was tariffs, macro, and the overall book. Yeah, overall book, I will say to you that the third quarter book by far was the reason why we had organic growth in the retail and service sector. The other ISM was good, but we were expecting more for ISM, but also including in ISM, we had the direct mail, and direct mail was definitely impacted by the possibility of a strike. Some clients postponed some of their programs regarding mailing. That was something that affected us in the third quarter. Definitely, the book business is the reason why we had organic growth.

Um, maybe just for the macro. What was the latest, uh, your question? There was Paris and the...

Thomas Morin: The flyer sector was down, and this is why you see that the EBITDA growth was not as high as the growth on the top line because obviously book doesn't have the same margin as the renewed business. That's regarding your first question. Regarding tariff, we are affected as we speak. Obviously, not at the level we thought we would be expected when the first tariff numbers came out back in January or February. We still have some raw material that we buy in other countries, either from the U.S. mostly, that affect us. I will say year to date, it's about $1 million. It's not that material. Regarding the macro, are you talking more about the economic environment?

Some of their program regarding, uh, mailing. So that was something that affect us in the third quarter. But definitely the book business is the reason why we had organic growth. Uh, the flyer sector was done and this is why I'll show you see that the event, uh, was not the the growth in it, but that was not as high as the growth on the top line because obviously, book does not have the same margin as the renew business. So that's that's regarding your first question regarding tariff. We we are affected as we speak. Uh, obviously not that the level we thought we will be expected when the, the, the first tariff. Uh, numbers came out back in, in January or February, uh, but we still have some, you know, stuff that

Raw material that we buy in other countries, primarily from the U.S., mostly affects us. But I would say year to date is about $1 million, so it's not that material.

Speaker 10: Yeah, that's right, Donald.

And regarding the macro. Uh are you talking more about the economic I'm in? I'm in Ramadan.

Thomas Morin: Right now, I won't comment on what can happen. Even on tariff, I can comment about what's behind us. Regarding the, I think our business on the printing side during recession has been good historically. Hard to comment what will happen in the next year regarding the macroeconomics. Tariffs too. Tariffs also, yes. Tariffs is really, I mean, actually, it's not between Canada and the U.S. It's really the United States importing from European countries or Asian countries. There is no big impact between the two countries tariff-wise.

Uh, yeah, that's right. I don't know.

Well, it's right now, I won't comment on what can happen even on Cherry. If you know I I can comment about what's behind us. Uh, but regarding the, uh, you know, I think our business, uh, on the, on the, on the printing side during recession has been good historically, but our to comment. What will happen in in the next year regarding the Meco economics.

And terrorists to, to, hey, Jared also. Yes, as far as it is really. I mean, it's not between Canada and the United States. It's really the United States importing from, you know, European countries or Asian countries. There is no, no beginning.

Speaker 10: Okay, that's great. Understood. Thank you very much.

Okay, that's great. Understood. Thank you very much.

Speaker 8: La prochaine question vient de Mary Haggé avec Scotia Bank. Your next question comes from Mary Haggé with Scotia Bank. Your line is now open.

Thank you.

Speaker 9: Merci d'avoir pris mes questions. Bonjour tout le monde. Just wanted to just focus quickly on the packaging side. Your expectation was for the second half to see volume growth. I know you're still focused on Q4 to see volume growth, but is the volume that you were expecting to see in Q3 got pushed out to Q4, or the guidance now is just for Q4 to see volume growth? Thank you. I just wanted to just clarify on that.

No problem. Your next question comes from Mary Yagi with Kosha Bank. Your line is now open.

just wanted to, um,

Uh, just focus quickly on the packaging side. Um,

Thomas Morin: Merci, Mayer. As I mentioned earlier, there were two things. Really, beverage was lower than expected in Q3, which is contrary to what we see seasonality-wise. The summer period is usually strong for beverage, and it was only strong one month out of three. This will not come back in Q4, where the seasonality actually goes down. What was pushed from Q3 to Q4 is more the protein and dairy business, which was lower than expected in Q3, but we see already being strong in Q4.

Your expectation was for the second half to see volume growth. Uh, you you I know you're you're still focused on Q4 to see volume growth, but is the volume that you were expecting to see in Q3 that pushed out to Q4 or, um, the the, the guidance now is just for Q4 to see volume growth. Thank you. I just wanted to just the clarification on that.

So as, as I, as I mentioned earlier, the uh, there were 2 things really beverage was was lower than expected in in Q3, which is contrary to what we see is, you know, Season, 80 wise, some a period is usually strong for for beverage, and it was only strong 1 month out of 3. This will not come back in, in Q4 where the season it actually goes down. What was pushed from Q3 to Q4?

More in the protein and dairy business, which was lower than expected in Q3. However, we see it already being strong in Q4.

Speaker 9: Okay. Perfect. Thank you. Just to continue on that thought, you're obviously the focus of the company and the management team is to grow volumes in packaging. Apart from growing market share with your existing customer base, can you discuss a little bit what you're doing to gain market share from new customers, new clients, in order to make sure that organic growth continues to be positive, irrespective, let's say, of the order volumes from your existing customer base?

Okay, perfect. Thank you. And, uh, just to continue on that thought. Um, so you're, uh, obviously the focus of the company and the management team is to grow volumes.

In packaging, uh, apart from growing, uh, market share with your existing customer base. Uh, can you discuss a little bit? What you're doing to gain market? Share from new customers, new clients, um, in order to, um,

Thomas Morin: We have a dedicated team of, I would say, hunters, if you will, we call it this way, dedicated to land new business and new customers. They do this full-time. That's very much so far in line with the segments we're in. We still have opportunities to grow in the segments we're focusing on. We grow a share of work at existing accounts, as you mentioned, and we have a dedicated team which is focusing on growing new customers and new products. This team is really well connected with our R&D team, and we push forward our innovation as we gain shares.

Make sure that organic growth continues to be positive, irrespective, let's say, of the order volumes from your existing customer base.

we have, uh, we have a dedicated team, uh, of uh, of

I would say, Hunters if you will, we call it this way dedicated to, to land new business, uh, and new customers. Um, they do this full-time and that's very much so far. In line, with the segments we're in, we still have opportunities to grow in, in the segments, we focusing in on. So we grow a share of our that existing accounts as you mentioned. And we have a dedicated team which is focusing on growing. Uh, new customers and new products. This team is is you know really well connected with our R&D team and we push we push forward our Innovation as we as we gain share.

Speaker 9: Generally, that pipeline of potential new clients, is it, how would you characterize its health? Is it improving? You know, where are the biggest opportunities in your view?

Thomas Morin: Yeah, we focus on.

Speaker 9: In which segment?

And and generally, that pipeline of potential new new clients, is it? Uh, how would you characterize? Its uh, Health? Uh, is it improving is? Is you know where are the biggest opportunities in your view?

Thomas Morin: Yeah, thanks. We do obviously have a tool that measures this pipeline. It's made of either very large, very large deals, and we really use our BOP investment to push forward some innovative solutions. This gets a lot of traction as we speak on a big scale. We're also looking at, you know, smaller accounts in line with us, right? We want to be really dealing with, you know, tier two and tier three customers as we've been doing from the beginning. Two things: large deals with the breakthrough innovation, which gets a lot of traction as we speak and very promising, and on the second part, continuing to build and strengthen our share of wallets with the smaller and second-tier, third-tier customers.

Yeah, we focus.

Innovative solutions. And this gets a lot of traction as we speak on, on the big scale. Um, but we're also looking at, you know, smaller smaller accounts in line with our strategy. We want to be really dealing with the with, you know, tier 2 and tier 3 customers as we've been, as we've been doing for from the beginning. So, 2 things, larger, large deals with the, you know, break 3 Innovation, which gets a lot of traction as we speak and very promising.

Speaker 9: Just on that, is it focused on specific industries where you're strong at, you know, like let's say food and medical, or it's more broad-based?

And on the second part, continuing to build and strengthen our show, what it with the smaller and second-tier, third-tier custom.

Thomas Morin: Two things. First, on the second-tier, third-tier type of customers, this is still obviously focusing on our existing product portfolio and the existing market segments. When it comes to breakthrough innovation, we can go wider. We don't limit ourselves to the existing segments we're in anymore.

And uh just so sorry finally just on that. Uh is it focused on specific uh Industries where you're strong at, you know like let's say food and and medical or uh it could you know it's more broad-based.

Speaker 9: Okay. Just one last question on margins because obviously it has been a key strength for the organization over the last two years, and we continue to see margins' contribution to the bottom line. I know you obviously want to continue that pace, but at what point do you start to focus more on growing the top line versus keeping costs down, i.e., cycling some of the cost savings into growing revenue, growing your marketing push? When does that switch over?

So, 2, 2 things first on on, on, on, on the second tier third, tier type of customers. This is still, obviously focusing on our existing product portfolio and existing market segments. When it comes to breakthrough Innovation, we can go wider. So we don't limit ourselves to the existing segments we're in anymore.

Okay. Uh and and just 1 last question on on margins because obviously it has been a a key strength for the organization over the last 2 years and we continue to see margins uh contribution to the bottom line. Um I know you you obviously want to continue that pace uh but you know at what

Point, do you start to?

um,

focus more.

On growing the top line versus keep you know, keep cost down IE you know cycling some some of the cost savings into.

Thomas Morin: That's a very, very long question to answer. Basically, we adjust and align our pricing strategy based off of, you know, where do we want to grow for sure and how can we make these volumes profitable? It's really a case-by-case approach here, Mayer. Looking at the opportunity, looking at where these volumes would be manufactured, what can we leverage in terms of cost savings following this pricing activity? It's really a case-by-case approach. It's not like a general statement that says, at this point in time, I go full on volume and less on margins. It's really case-by-case.

Growing Revenue growing your, your, your marketing push. Uh, where are you know, when when does, when does that switches over?

It's a a very, very long question to answer. And, and basically we, we, we adjust and align our pricing strategy. Uh, best of, of, you know, where where do we want to grow for sure and how can we make these volumes profitable?

Thomas Morin: I believe, Mayer, to continue on that, that when growth will come, obviously, some costs will increase, but we have a much leaner structure that will allow to maybe give some of this cost saving to our clients, but now with a better structure, I think that should generate very good EBITDA. We're obviously much more competitive than we were.

So, it's really a case-by-case approach here. The, um, looking at the opportunity, looking at where these volumes would be manufactured. What can we leverage in terms of cost savings following this, uh, this pricing activity? So, it's really a case-by-case approach. It's not like a general statement that says at this point in time I go full on volume and less on margins. It's really the case by case.

And I believe my to continue on that, that 1 growth will come. Obviously, some costs will increase, but we have a much leaner structure that will allow us to maybe give some of this cost saving to our clients. But now, with a better structure, I think that should generate very good evidence.

Speaker 9: Great. Merci beaucoup.

Yeah, we are obviously much more competitive than we were.

Thomas Morin: Merci.

Great.

Speaker 8: La prochaine question vient de Sean Stewart avec TD Cowan. Your next question comes from Sean Stewart with TD Cowan. Your line is now open.

Speaker 9: Thank you. Good morning, everyone. I have a follow-on question on the ISM opportunity set. It sounds like you have more opportunities in Canada. I'm wondering if you can give some context on what the scale of that opportunity set might look like. Is there a point at which expansion into the U.S. and that side of the business makes sense for Transcontinental as well?

Sean Stewart, your next question comes from Sean Stewart. Your line is now open.

Thank you. Good morning, everyone. Um, I have a follow-up question on the ISM opportunity set. It sounds like you have more opportunities in Canada. I’m wondering if you can give some context on what the scale of that opportunity set might look like.

And is there a point at which expansion into the U.S. and that side of the business makes sense for Transcon as well?

Thomas Morin: We have a target of doubling the size of ISM in the next coming years. We have some way to go. We believe there is, in Canada, opportunities to continue and to achieve this goal. The U.S. are not in scope as we speak today.

well, the uh,

We have another, we have a target of of doubling the size of ism in the next coming years. So we have some some way to go. We believe there is a in in Canada opportunities to continue and to achieve this goal, the United States are not in scope as we speak today.

Speaker 9: Okay. The second question is a broader one. You had very strong EPS growth this quarter, 17%. That's accelerated through this year. I think the general expectation is that EPS growth track will slow as, I guess it'll be dependent on further cost reduction initiatives and this transition between the legacy business and packaging. When you're thinking about longer-term projections, do you have an EPS growth target you think is sustainable over the long run, or are your objectives more based on free cash flow, yield, and growth? Can you give some perspective on what you think long-term trend potential is for the company?

Okay, um, the second question is a broader one. You had very strong EPS growth this quarter, 17%, that's accelerated through this year. Um, you know, I think the general expectation is that EPS growth track will slow as, you know, I guess it'll be dependent on further cost reduction initiatives and this.

Transition between the legacy business and packaging.

When you're thinking about longer-term projections, do you have an EPS growth target that you think is sustainable over the long run? Or are your objectives more based on free cash flow yield and growth? Can you give some perspective on what you think?

Thomas Morin: I think for sure, and that's the good news. I think we mentioned it is that packaging has now become also very good at producing free cash flow. The turnaround has been done a couple of years ago. We will definitely need less CapEx in the coming years because we have invested a lot. We have capacity. Therefore, I expect that packaging will still produce a lot of free cash flow. Retail and servicing and service sector is a very good cash flow business. Obviously, the switch to ISM is different. It's not the same level of margin. Through the years, we've been increasing the margin, and I definitely see opportunity to still increase the margins in the coming years, including the impact of acquisition where we can definitely be better. That's positive for the EPS growth.

Long-term trend potential is for the company.

Uh, the turnaround has been done a couple of years ago. We will definitely need less capex in the coming years because we have invested a lot. We have capacity, and therefore, I expect that packaging will still produce a lot of free cash flow. Retail and servicing in the service sector is a cache; it is a very good cash flow business. Obviously, the switch to ISM is different; it's not the same level of margin, but through the years, we've been increasing the margin.

Thomas Morin: Where you might see less of an impact is obviously our debt to EBITDA. Our debt on the balance sheet was much higher a couple of years ago, and the interest rate that we had to pay was higher. Therefore, that plays a lot in the EPS growth we saw over the last two years. We definitely have the balance sheet and the EBITDA opportunity to keep growing the EBITDA. Maybe not at the same. I think we had a 14% figure over the last two years. That might not be what's going to happen, but we're aiming for a 10% increase for sure.

I definitely see opportunity to still increase the margins and the coming years, uh, including the impact of acquisition where we can definitely be better. So that that's positive for the EPS growth, uh, where where you might see less of an impact is obviously our our debt to it, but our debt uh, on the balance sheet was much higher a couple years ago and the interest rate that we had to pay was higher. So therefore that plays a lot in the, in the EPS growth, we saw over the last 2 years, but we definitely, uh, have the balance sheet and the opportunity to keep growing the event up, maybe not at the same. I think we had a 14% kicker over the last 2 years that might not be what's going to happen, but we aiming for 10%, increase for sure.

Speaker 9: That's great context. That's all I have. Thanks very much.

That's great context. Uh, that's all I have. Thanks very much.

Speaker 8: Mesdames et messieurs, encore une fois, si vous avez des questions supplémentaires, veuillez s'il vous plaît appuyer sur les touches « Étoile ». Si vous utilisez la fonction « Mains libres », veuillez décrocher le récepteur avant d'appuyer sur les touches. Ladies and gentlemen, 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. La prochaine question vient de David McFadden avec CoreMark Securities. Your next question comes from David McFadden with CoreMark Securities. Your line is now open.

Speaker 9: Great. Yeah, a couple of questions on the retail services and printing segment. Clearly, you know, the book printing was strong in the quarter. I was just wondering, what was the driver of that?

Ladies and gentlemen, if there are any additional questions at this time, please press star followed by the 1. As a reminder, if you are using a speakerphone, please lift the handset before pressing any keys. Your next question comes from David McFadden with CM Mark Securities. Your line is now open.

Thomas Morin: The driver, as I said in my opening comments, obviously, a large part of our book business is selling to the U.S. market. We took advantage in the last 12 months of, you know, the Canadian dollar was as high at $1.45 when we were bidding for jobs. That definitely helped to gain new business. As we said, we were able to get a business, a strong sales with a printer in the U.S. that had a lot of book to print in a short period and he outsourced to us. We definitely benefited from that contract in the last three quarters, I will say. We have a great infrastructure in Québec to support the American market. We see opportunity to grow this business, and the Canadian dollar is still at $1.35.

Okay, yeah. Um, so a couple of questions on the retail services and printing segment. Um, clearly, you know, the book printing was strong in the quarter. I was just wondering what the driver of that was?

Well, the driver, uh, as I said in my opening comments, obviously a large part of our book business.

Selling to the US market.

And we took advantage in the last 12 months of, you know, the the dollar was was as high as 145 when we were bidding for jobs. So that definitely helped to gain new business. And as we said, we were able to get a business, a strong, a strong sales, with a printer in the US that had a lot to book to print in the, in the short period and he outsourced to us. And we definitely benefited from that uh, that that contract in the last 3 quarter,

I was.

Thomas Morin: We're still confident about next year, but this specific contract had definitely a great impact over the last three quarters. This is why I say it might not repeat in the next fiscal year.

We had a great infrastructure and, and and, and and Quebec to, to support the American Market. We see opportunity to grow this business and the Canadian dollar is still at 135. So we're still confident about next year. But this specific contract has definitely, uh, a great impact over the last 3 quarter. And this is why I say it might not repeat in the next uh,

Fiscal year.

Speaker 9: Okay. Is the fulfillment of that contract basically complete at the end of Q3, Q4, that short-term contract?

Thomas Morin: Yeah, we're getting close. Obviously, we will have some more business with this printer, but we're getting close to the end of this contract, yes.

Speaker 9: Okay, you're just not sure that's going to repeat next year, right?

Okay, so the fulfillment of that contract is basically completed at the end of Q3 or Q4, that short-term contract. Yeah, we're getting close. Obviously, we will have some more business with this printer, but we're getting close to the end of this contract. Yes.

Thomas Morin: Obviously, we're first the team. We think we have opportunity, and as I say, Canadian dollar at $1.35 or $1.38 this morning is good for us. We're really proactive to get new business. We're confident with the team, but you know, those contracts sometimes take time to get, similar to what we had in the packaging. We have a business development team that is extremely active, primarily in the U.S., as you said, Donald. Yes, we have the fact that we could seize this opportunity is credit to this team, which has been at the right place at the right time, and we continue to be so.

Okay, and you're just not sure if that's going to repeat next year, right?

Well obviously, we push the team. I think we think we have a fortune. See, and as I say, 10 dollars at 135 or 138 this morning is good for us. So we're we're really, really proactive to get new business. We're we're, uh, we're confident with the team but, you know, those contracts sometimes takes time to to

To get.

Yeah, it's similar to what we had in in the packaging. We have a, a business development team that is extremely active primarily in the United States as you said Donald. So, yes, we have the fact that we could see this opportunity is credit to this team, uh, which been which been at the right place at the right time at the right time and we continue to be so,

Speaker 9: Okay. When I look at the marketing and media solutions revenue, it was down. Is it down primarily due to flyers, or are there other factors in there?

Okay, and then when I look at the marketing Immediate Solutions revenue, you know it was down. Is it down primarily due to flyers, or are there other factors in there?

Thomas Morin: Yes, it's down to flyers. We see the normal trend of volume decline in the flyers group, and I think it's mid-single-digit for the quarter. That's no different than what we've experienced in the past.

Yeah, yeah, yes, it's it's down to flowers. We see we see the, you know, normal trend of of volume decline in in the Flyers group and I think it's mid single digit for for the quarter. Um, that's no different than what we've experienced in the past.

Speaker 9: Okay, because if you look at the nine months revenue decline, you know, it was down 14%. As you said, it was down about 6% in Q3. I'm just kind of wondering if the mid-single digit is kind of the new rate here, and it's primarily driven by flyers, or if you could provide some context, that'd be helpful.

Thomas Morin: Yeah, that is, you know, that over the years, we used to say that when we were a flyer business and during the public sector year, the decrease actually was more important for a few years. The radar in Québec definitely helped us to stop this important decrease. This is not a market for us that's growing overall. We see opportunity, you know, to maintain that market, but it's not a growth market for us. Radar will definitely open some new options for us. We're not in Québec and BC. Overall, the flyer has been decreasing over the year, and this is why we've been adjusting our cost structure throughout the years to maintain the margins. It's the same story.

Okay, because if you look at the 9 months or I mean, you decline it, you know, it's down 14% as you said, it was down about 6 and Q3. So I'm just, I'm just kind of wondering if if the mid single digit is kind of the new, the new rate here and it's primarily driven by flyers or vegan fried, some contacts that may help.

Know that over the years we we used to say that when we uh, when we for a flyer business, when during the public site here, the decrease actually was more important for a few years than the radar in Quebec. Definitely helped us to, uh,

Thomas Morin: Having said that, that group overall with ISM getting bigger, you know, and this, like this quarter book being very strong, it's encouraging to see that we just produced two quarters in a row with organic growth for retail service and printing.

Stop that, that's an important decrease, but this is not a market for us that's growing overall. We see opportunity, you know, to maintain that market, but it's not a growth market for us. Radar will definitely open some new options for us. We're not in Quebec and BC, but overall the flyer has been decreasing over the year, and this is why we've been adjusting our cost structure throughout the years to maintain the margin. So it's the same story. But having said that, that group overall with ISM getting bigger, you know, and this like this quarter book being very strong, it's encouraging to see that we just produced two quarters in a row with organic growth for.

Speaker 9: Okay. Just on working capital, you know, there was so far for the nine months, just a fairly big investment in working capital. I was just kind of wondering where you expect to come out for fiscal 2025.

service at printing.

Okay.

Thomas Morin: Q4, as we said in your opening remarks, should be good. This year is, you know, even third quarter was not, you know, we're a little bit less good. We were more affected, I should say, this quarter, less usage of factoring due to the change of some of our clients. More inventory. Also, we had to put in regarding the tariffs. We opened a little bit more to buy more material. Overall, we expect to have a good fourth quarter regarding working capital.

Um, and then just so I'm working on capital, you know, there was so far for the 9 months, this is a fairly big investment in working capital. I'm just kind of wondering where you expect to come out for fiscal 2025.

Well, I guess Q4, as we said, in our opening remarks should be good. Uh, this year is, you know, even third quarter was not, uh, you know, we're, we're a little bit less. Good less. Um, we were more affected that we should see this quarter. Uh, let's usage of factoring due to the change of some of our clients. Um, more inventory. Also, we have to protect regarding the tariffs. So we, we open a little bit more to buy more material, uh, but overall, we expect to have a good 4 quarter regarding for, uh, working cap.

Speaker 9: Where do you think you might end up for the year? Would you still be looking at a pretty big investment, or do you think you could kind of be more towards neutral?

Thomas Morin: To go more into details with the model, maybe Yan can help you, but I would say that I'm more confident that with the free cash flow we're going to generate, the working cap movement, and negatively affected by the acquisition of ISM, we should be in a better position for debt to EBITDA at the end of the fiscal year compared to Q3. Yan can support you in a separate call regarding the models, but that will be my comment regarding the working cap.

So, uh, where do you think in my hand up right here? Would you, would you still be looking at a pretty big investment, or do you think you could kind of be more towards neutral?

Maybe for to go.

We are going to generate the working capital movement and it was negatively affected by the acquisition of ISM. We should be in a better position for debt to it, but at the end of the fiscal year compared to Q3, so Yan can support you.

Separate call regarding the models. But that's my comment regarding the working capital.

Speaker 9: Okay. All right. Okay. Thank you.

Thomas Morin: All right. Thank you, David.

Okay. All right. Okay. Thank you.

All right. Thank you, David.

Speaker 8: Il ne semble plus avoir de questions. Mr. Lapointe, there are no further questions at this time.

Thomas Morin: Thank you, everyone, for joining us on the call today. We look forward to speaking to you soon.

Mr. Lapointe, there are no further questions at this time.

Thank you everyone for joining us on the call today and we look forward to speaking to you soon.

Speaker 8: Mesdames et messieurs, ceci termine la téléconférence pour aujourd'hui. Merci de votre participation. Vous pouvez maintenant raccrocher. Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.

Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.