Q1 2026 Transcontinental Inc Earnings Call

March 10, 2026

Speaker #2: 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 10 mars 2026.

Speaker #2: Welcome to the TC Transcontinental first quarter of fiscal year 2026 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.

Speaker #2: As a reminder, this conference is being recorded today, March 10, 2026. I would now like to turn the conference over to Mr. Yan Lapointe, Senior Director Investor Relations and Treasury.

Operator: I would now like to turn the conference over to Mr. Yan Lapointe, Senior Director, Investor Relations and Treasury., please go ahead.

Operator: J'aimerais maintenant céder la parole à Yan Lapointe, Directeur, Relations avec les investisseurs et trésorerie. Monsieur Lapointe, please go ahead.

Speaker #2: J'aimerais maintenant céder la parole à Yan Lapointe, Directeur, Relations avec les investisseurs et trésorerie. Monsieur Lapointe, please go ahead. Thank you, Joelle, and good afternoon, everyone on the call.

Yan Lapointe: Thank you, Yan Lapointe, and good afternoon, everyone on the call. Welcome to Transcontinental's Q1 of fiscal 2026 earnings call. Before we begin, please note that you can find on our website at www.tc.tc, 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. Media are in listen-only mode and should contact Nathalie St-Jean, Senior Advisor, Corporate Communications, for more information. We have with us today our Executive Chair of the Board, Isabelle Marcoux, our next Chief Executive Officer, Sam Bendavid, our President and Chief Executive Officer, Thomas Morin, and our Executive Vice President and Chief Financial Officer, Donald LeCavalier.

Speaker #2: Welcome to Transcontinental's first quarter of fiscal 2026 earnings call. Before we begin, please note that you can find on our website at www.tc.tc our quarterly report, including financial statements and related notes, as well as the slides supporting management's remarks.

Speaker #2: A replay of this our website shortly after the call. Please note that this conference call is intended for the financial community. Media are in listen-only mode and should contact Florence Boussicot, Senior Advisor Corporate Communications, for more information.

Speaker #2: We have with us today our Executive Chair of the Board, Isabelle Marcou; our next Chief Executive Officer, Sam Ben-David; and our President and Chief Executive Officer, Thomas Morin.

Speaker #2: 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.

Yan Lapointe: 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 and 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 risk, uncertainties, and other factors that could influence actual results are described in the fiscal 2025 annual MD&A and in the latest annual information form. With that, I would like to turn the call over to our Executive Chair of the Board, Isabelle Marcoux.

Speaker #2: You can refer to the MDNA for a complete definition and reconciliation of these measures to IFRS. In addition, this conference call might also contain forward-looking statements.

Speaker #2: 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.

Speaker #2: The risk uncertainties and other factors that could influence actual results are described in the fiscal 2025 annual MDNA and in the latest annual information form.

Speaker #2: With that, I would like to turn the call over to our Executive Chair of the Board, Isabelle Marcou. Thank you, Yan, and good afternoon, everyone.

Isabelle Marcoux: Thank you, Yan, and good afternoon, everyone. First and foremost, let me say how proud I am that we successfully completed the sale of our packaging business. Earlier today, our board approved a special dividend of CAD 20 per share. This delivers immediate and tangible value to our shareholders. It reflects the strength of a business we've built over the past 12 years, as well as our courage to act decisively, and our determination to keep building the company. With this transaction behind us, we're opening a new chapter for TC Transcontinental with a clear focus on growing our businesses of Retail Services and Printing, and Educational Publishing. To lead the company through this next phase, we announced earlier today senior management changes effective 6 April. This transition is part of a strong succession planning process focused on continuity and growth.

Speaker #2: First and foremost, let me say how proud I am that we successfully completed the sale of our packaging business. Earlier today, our Board approved a special dividend of $20 per share.

Speaker #2: This delivers immediate and tangible value to our shareholders. It reflects the strength of a business we've built over the past 12 years, as well as our courage to act decisively and our determination to keep building the company.

Speaker #2: With this transaction behind us, we're opening a new chapter for TC Transcontinental with a clear focus on growing our businesses of retail services and printing, and educational publishing.

Speaker #2: To lead the company through this next phase, we announced earlier today senior management changes, effective April 6. This transition is part of a strong succession planning process focused on continuity and growth.

Isabelle Marcoux: I'm pleased that these changes come from internal promotions of leaders we know well and who have delivered strong results for us over many years. Before introducing our upcoming CEO, Sam Bendavid, I wanna take a moment to express my deepest gratitude to Thomas Morin for the role he's played at Transcontinental. Thomas, in 2019, we were looking for a leader with deep packaging expertise to lead our sector, and we were fortunate to find you. You did such an outstanding job that four years later, the board and I asked you to become CEO, bringing your leadership and operational expertise to the entire organization. You delivered in both roles, and I'm deeply grateful for everything you've done. Today, with the sale of the packaging business you helped build and elevate, we come full circle.

Speaker #2: I'm pleased that these changes come from internal promotions of leaders we know well and who have delivered strong results for us over many years.

Speaker #2: Before introducing our upcoming CEO, Sam Ben-David, I want to take a moment to express my deepest gratitude to Thomas Morin for the role he's played at Transcontinental.

Speaker #2: Thomas, in 2019, we were looking for a leader with deep packaging expertise to lead our sector, and we were fortunate to find you. You did such an outstanding job that, four years later, the board and I ask you to become CEO.

Speaker #2: Bringing your leadership and operational expertise to the entire organization. You delivered in both roles, and I'm deeply grateful for everything you've done. Today, with the sale of the packaging business, you helped build and elevate we come full circle.

Isabelle Marcoux: You can be very proud of your accomplishments in operational and financial performance, in people leadership, and in reinforcing our health and safety culture. On a personal note, Thomas, it's been an immense pleasure working with you every day and a true privilege to have such a great partner. I will miss you. On behalf of the board and my family, thank you warmly and sincerely for everything. Turning now to Sam. I hired Sam more than 18 years ago, and I've worked closely with him ever since. I can say this without hesitation. He's a man of action, focused on performance, and an exceptional deal maker. I know him well, and I trust him fully. At this stage in our journey, we need a leader with a vision for growth, analytical rigor, and strong execution capabilities.

Speaker #2: You can be very proud of your accomplishments—in operational and financial performance, in people leadership, and in reinforcing our health and safety culture. On a personal note, Thomas, it's been an immense pleasure working with you every day, and a true privilege to have such a great partner.

Speaker #2: I will miss you. On behalf of the board and my family, thank you warmly and sincerely. For everything. Turning now to Sam. I hired Sam more than 18 years ago and have worked closely with him ever since.

Speaker #2: I can say this without hesitation: he's a man of action, focused on performance, and an exceptional dealmaker. I know him well, and I trust him fully.

Speaker #2: At this stage in our journey, we need a leader with a vision for growth, analytical rigor, and strong execution capabilities. Given his drive, his track record, and his experience, the board saw in Sam the leader we need to generate profitable growth.

Isabelle Marcoux: Given his drive, his track record, and his experience, the board saw in Sam the leader we need to generate profitable growth. Sam has consistently delivered results, whether in M&A, procurement, leading our coatings business, or executing our recent two-year program to increase profitability and strengthen our financial position. Sam will be supported by Pat Brayley, who will step into the newly created role of CFO. Currently leading our Retail Services & Printing activities, Pat has driven the sector's positioning. He has also led key innovation initiatives, including the launch of raddar and the deployment of artificial intelligence in the production of content for retail flyers while improving operational performance. He's the right leader to support Sam in transforming our organization with discipline and innovation. Patrick Lutzy, a respected industry leader with more than 20 years at TC, will continue to lead our educational publishing business as President of TC Media.

Speaker #2: Sam has consistently delivered results, whether in M&A, procurement, leading our coatings business, or executing our recent two-year program to increase profitability and strengthen our financial position.

Speaker #2: Sam will be supported by Pat Braley, who will step into the newly created role of COO. Currently leading our retail services and printing activities, Pat has driven the sector's strategic risk repositioning.

Speaker #2: He has also led key innovation initiatives, including the launch of Radar and the deployment of artificial intelligence in the production of content for retail flyers, while improving operational performance.

Speaker #2: He's the right leader to support Sam in transforming our organization with discipline and innovation. Patrick Luzi, a respected industry leader with more than 20 years at TC, will continue to lead our educational publishing business as President of TC Media.

Isabelle Marcoux: Under his leadership, the media sector has more than doubled revenues over the past decade. He's also introduced AI to improve processes and product offerings, reinforcing our leadership in educational publishing across print and digital. In conclusion, the board is very pleased to promote Sam and Pat, two leaders we know extremely well and who have proven themselves time and again. These appointments reflect our ability to develop and promote strong leaders from within. This is an important and exciting moment for Transcontinental, and I look forward to working with our leadership team as we pursue our next phase of growth. Sam will now say a few words before turning the call over to Thomas and Donald to discuss our Q1 results. Over to you, Sam.

Speaker #2: Under his leadership, the media sector has more than doubled revenues over the past decade. He's also introduced AI to improve processes and product offerings, reinforcing our leadership in educational publishing, across print and digital.

Speaker #2: In conclusion, the Board is very pleased to promote Sam and Pat—leaders we know extremely well, and who have proven themselves time and again.

Speaker #2: These appointments reflect our ability to develop and promote strong leaders from within. This is an important and exciting moment for Transcontinental, and I look forward to working with our leadership team as we pursue our next phase of growth.

Speaker #2: Sam will now say a few words before turning the call over to Thomas, and then on to discuss our Q1 results. Over to you, Sam.

Sam Bendavid: Thank you for your kind words, Isabelle, and good afternoon, everyone. I strongly believe in the growth potential of our company, and I am energized by the opportunity to turn that potential into reality. My objective is clear. Through discipline, profitable growth, and targeted acquisitions, as well as smart use of technology, including AI, we will build an innovative, high-performing organization, one that delivers real value to our customers across the retail, education, books, and information sectors. We have a strong balance sheet, businesses with a strong competitive advantages, and an outstanding team that has repeatedly proven its ability to execute. With the support of Isabelle and the board, I'm excited and confident as I embark on this next chapter with our leadership team. I also feel very fortunate to carry forward the experience and insights I have gained working closely with exceptional leaders such as Thomas.

Speaker #2: Thank you for your kind words, Isabelle, and good afternoon, everyone. I strongly believe in the growth potential of our company, and I'm energized by the opportunity to turn that potential into reality.

Speaker #2: My objective is clear: Through discipline, profitable growth, and targeted acquisitions, as well as smart use of technology—including AI—we will build an innovative, high-performing organization—one that delivers real value to our customers across the retail, education, books, and information sectors.

Speaker #2: We have a strong balance sheet, businesses with a strong competitive advantages, and an outstanding team that has repeatedly proven its ability to execute. With the support of Isabelle and the board, I'm excited and confident as I embark on this next chapter with our leadership team.

Speaker #2: I also feel very fortunate to carry forward the experience and insights I've gained working closely with exceptional leaders such as Thomas. Thomas—thank you for all your insights, coaching, and mentoring.

Sam Bendavid: Thomas, thank you for all your insights, coaching, and mentoring. I wish you all the best in what's to come. With that, I'll now turn it over to Thomas, and I look forward to speaking with many of you in the weeks ahead.

Speaker #2: I wish you all the best in what's to come. With that, I'll now turn it over to Thomas, and I look forward to speaking with many of you in the weeks ahead.

Thomas Morin: Thank you, Sam, and thank you, Isabelle. It's truly been an honor to work alongside with you, Isabelle, as well as Donald and so many talented colleagues around the organization. I have a great confidence in the future of the new TC Transcontinental because of your leadership and because of the exceptional talent I've encountered at every level of the company. I also want to say that the board has made excellent choices. Having worked closely with Sam and Pat over the years, I can attest to their talent, their high energy, and their readiness to take on these important new roles. I'm convinced they will do a tremendous job, and I wish them every success. Thank you, Isabelle, again, for your wise counsel.

Speaker #3: Thank you, Thomas, and thank you, Sam, and thank you, Isabelle. It's truly been an honor to work alongside you, Isabelle, as well as Donald.

Speaker #3: And so many talented colleagues around the organization. I have great confidence in the future of the new TC Transcontinental because of your leadership and because of the exceptional talent I've encountered at every level of the company.

Speaker #3: I also want to say that the board has made excellent choices. Having worked closely with Sam and Pat over the years, I can attest to their talent, their high energy, and their readiness to take on these important new roles.

Speaker #3: I'm convinced they will do a tremendous job, and I wish them every success. Thank you, Isabelle, again, for your wise counsel. I also thank the Martin family, the board of directors, and the talented employees of TC Transcontinental for their unwavering support.

Thomas Morin: I also thank the Marcoux family, the board of directors, and the talented employees of TC Transcontinental for their unwavering support. Let's now turn to our Q1 continuing operating operations results. In the Retail Services & Printing sector, our recent ISM acquisitions have enabled us to partially offset lower volumes in our traditional books and flyers printing activity. Profitability was also affected by price concessions. It is important to note that strategic price concessions are an important element of our toolkit to secure multi-year commitments from large customers for our traditional activity. In our media sector, we saw lower volumes, mainly attributable to the end of the contract related to the electronic tendering system. Also let's keep in mind that this is a seasonal business, as Q3 and Q4 are the important quarters for the media sector.

Speaker #3: Let's now turn to our Q1 continuing operating operations results. In the retail services and printing sector, our recent ISM acquisitions have enabled us to partially offset lower volumes in our traditional books and flyers printing activities.

Speaker #3: Profitability was also affected by price concessions. It is important to note that strategic price concessions are an important element of our toolkit to secure multi-year commitments from large customers for our traditional activities.

Speaker #3: In our media sector, we saw lower volumes, mainly attributable to the end of the contract related to the electronic tendering system. But also, let's keep in mind that this is a seasonal business, as Q3 and Q4 are the important quarters for the media sector.

Thomas Morin: As this is my last call with you, I must say how confident I am with to pass it on to Sam Bendavid. Two solid sectors, both well-advanced in their transformation and both with potential to grow. As an illustration of this, our flyers business continued to evolve. In response to a challenging flyer market dynamic, we're preparing to launch raddar™ in Ontario in the next few months, providing our customers with lower costs and greater reach. This will set the stage for further deployments as we see an opportunity for raddar™ to become a national advertising platform within the next 12 months. Another example is the growth of our in-store marketing business. As we continue the integration of the three acquisitions we made in 2025 that have reinforced our geographical footprint and expanded our offering, we're expecting to close yet another ISM acquisition soon within Q2.

Speaker #3: As this is my last call with you, I must say I'm confident I am to pass it on to Sam. Two solid sectors, both well advanced in their transformation and both with potential to grow.

Speaker #3: As an illustration of this, our flyers business continues to evolve. In response to a challenging flyer market in Ontario in the next few months, we are providing our customers with lower costs and greater reach.

Speaker #3: This will set the stage for further deployments, as we see an opportunity for Radar to become a national advertising platform within the next 12 months.

Speaker #3: Another example is the growth of our in-store marketing business. As we continue the integration of the three acquisitions we made in 2025 that have reinforced our geographical footprint and expanded our offering, we're expecting to close yet another ISM acquisition soon, within Q2.

Thomas Morin: We maintain, of course, an active pipeline for further other opportunities. In conclusion, I'm confident in our growth plans, and I believe that the new TC has a bright future ahead. On this, I will pass it over to you, Donald.

Speaker #3: And we maintain of course an active pipeline for further other opportunities. In conclusion, I'm confident in our growth plans, and I believe that the new TC has a bright future ahead.

Speaker #3: On this, I will pass it over to

Donald LeCavalier: Thank you, Thomas. It's been a real pleasure to work with you over the last 6 years, and I wish you the best. To you, Sam, congratulations on your new role. I'm confident you'll do a great job. Moving to slide 5 of the earnings call presentation.

Speaker #2: Thank you, Thomas. It's been a real pleasure to work with you over the last six years, and I wish you the best. And to you, Sam, congratulations on your new role.

Speaker #2: I'm confident you'll do a great job. Moving to slide five of the earnings call presentation. For the first quarter of fiscal 2026, we reported a 2.3% increase in revenues from continuing operations versus the same quarter last year.

Donald LeCavalier: For Q1 of fiscal 2026, we reported a 2.3% increase in revenues from continuing operations versus the same quarter last year. This growth comes from acquisitions in our in-store marketing activities and a positive exchange rate impact. The growth was partially offset by lower volume and price concessions in our Retail Services & Printing sector. Regarding profitability, consolidated adjusted EBITDA declined CAD 7.2 million, or 17.9%, to CAD 33.1 million. The decline was mainly due to lower volume and price concessions in the Retail Services & Printing sector, partially offset by recent acquisitions and favorable exchange rate. The increase in our share price also contributed to higher incentive compensation expenses.

Speaker #2: This growth comes from acquisitions in our in-store marketing activities and a positive exchange rate impact. The growth was partially offset by lower volume and price concessions in our retail services and printing sector.

Speaker #2: Regarding profitability, consolidated adjusted EBITDA declined $7.2 million, or 17.9%, to $33.1 million. The decline was mainly due to lower volume and price concessions in the retail services and printing sector, partially offset by recent acquisitions and a favorable exchange rate.

Speaker #2: The increase in our sharp share price also contributed to higher incentive compensation expenses. Net financial expenses decreased by $4.4 million to $9.3 million.

Donald LeCavalier: Net financial expenses decreased by CAD 4.4 million to CAD 9.3 million, mainly due to a lower debt level following strong cash flow generation in the last 12 months. This was partially offset by lower interest income we earned last year from the proceeds of the sale of our industrial packaging activities before we declared a special dividend in April last year. Adjusted income tax decreased by CAD 4 million to CAD 1.5 million and represented an effective rate of 18.3%. This led to adjusted earnings per share from continuing operations of CAD 0.08 compared to CAD 0.10 in Q1 last year. While our results after Q1's are lower than last year, we remain confident in our outlook.

Speaker #2: Mainly due to a lower debt level following strong cash flow generation in the last 12 months. This was partially offset by lower interest income we earned last year from the proceeds of the sale of our industrial packaging activities before we declared a special dividend in April last year.

Speaker #2: Adjusted income tax decreased by $4 million to $1.5 million and represented an effective rate of 18.3%. This led to adjusted earnings per share from continuing operations of $0.08, compared to $0.10 in Q1 last year.

Speaker #2: While our results after Q1 are lower than last year, we remain confident in our outlook. We expect adjusted EBITDA to be below last year in the second quarter (Q2), before recovering in the second half of the year as we start seeing the positive impact of significant cost reductions and profit improvement initiatives.

Donald LeCavalier: We expect adjusted EBITDA to be below last year in Q2 before recovering in the second half of the year as we start seeing the positive impact of significant cost reductions and profit improvement initiatives. Now turning to cash flow. As expected and in line with normal seasonality, we saw negative working capital in Q1 of 2026. At CAD 10.8 million working capital usage, it was however much better than CAD 36.4 million we had in Q1 last year. Improvement was mainly due to lower inventory. Our CapEx at CAD 11.9 million was in line with last year and on target to be around our guidance of CAD 55 to 60 million for the full year.

Speaker #2: Now, turning to cash flow. As expected, and in line with normal seasonality, we saw negative working capital in the first quarter of 2026. At $10.8 million working capital usage, it was much better than the $36.4 million we had in Q1 last year.

Speaker #2: Improvement was mainly due to lower inventory. Our CAPEX at 11.9 million dollars was in line with last year, and on target to be around our guidance of 55 to 60 million dollars for the full year.

Donald LeCavalier: Our adjusted net debt ratio was at 1.69x at the end of Q1 of fiscal 2026, compared to 1.59x three months ago. While we expect to generate strong operating cash flows in the rest of the year, our adjusted net debt ratio is expected to increase over the next two quarters before improving in Q4 of fiscal 2026. As for the monetization of real estate, we expect to close the sale of one building in the next few months. Our financial position is solid. The board has approved today to return most of the proceeds from the sale of our packaging business to shareholders with a special dividend cash distribution of CAD 20 per share.

Speaker #2: Our adjusted net ratio was at 1.69 times at the end of the first quarter of fiscal 2026, compared to 1.59 times three months ago.

Speaker #2: While we expect to generate strong operating cash flows in the rest of the year, our adjusted net ratio is expected to increase over the next two quarters before improving in the fourth quarter of fiscal year 2026.

Speaker #2: As for the monetization of real estate, we expect to close the sale of one building in the next few months. Our financial position is solid.

Speaker #2: The board has approved today the return of most of the proceeds from the sale of our packaging business to shareholders with a special cash dividend distribution of $20 per share.

Donald LeCavalier: With the sale of our packaging business, we also sign a revised credit agreement with our banks, securing the funds to repay our CAD 250 million notes that are due in July 2026. The new agreement will also provide the flexibility to pursue our growth strategy. On that note, we will now proceed with the question period.

Speaker #2: With the sale of our packaging business, we also signed a revised credit agreement with our banks, securing the funds to repay our $250 million notes that are due in July 2026.

Speaker #2: The new agreement will also provide the flexibility to pursue our growth strategy. On that note, we will now proceed with the question period.

Operator: 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 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. Please ensure you lift the handset before you are using a speakerphone before pressing any keys. One moment please for your first question. Your first question comes from Sean Steuart, TD Cowen. Your line is now open.

Speaker #1: 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 du 1 sur votre téléphone à clavier.

Speaker #1: Une tonalité se fera entendre, confirmant votre demande. Les questions seront prises dans l'ordre où elles ont 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.

Speaker #1: Un moment, s'il vous plaît, pour la première question. Thank you. One moment, please, ladies and gentlemen. We will now begin the question-and-answer session.

Speaker #1: If you have a question, please press star, followed by the one on your touchscreen phone. You will hear a tone acknowledging your request. Your questions will be pulled in the order they are received.

Speaker #1: Please ensure you lift your hands up before using the speakerphone, and before pressing any keys. One moment, please, for your first question. La première question vient de Sean Stewart avec TD Cowen.

Speaker #1: Your first question comes from Sean Stewart with TD Cowen. Your line is now open.

Sean Steuart: Thanks. Good afternoon, everyone. Congratulations to Thomas, Sam, and Pat. I have a couple of questions. I guess just trying to dial in on the guidance that you would expect that adjusted net debt ratios are gonna increase the next couple of quarters before starting to improve in fiscal Q4. Can you give us a bit of perspective on what's feeding into that expectation? You know, I imagine a part of this is the back-end-weighted cost savings coming through later in the year. Can you give some perspective on the dollar magnitude there and expected follow-through into 2027?

Speaker #3: Thanks. Good afternoon, everyone. Congratulations to Thomas, Sam, and Pat. I have a couple of questions. I guess just trying to dial in on the guidance—you would expect that adjusted net debt ratios are going to increase in the next couple of quarters before starting to improve in fiscal Q4.

Speaker #3: Can you give us a bit of perspective on what's feeding into that expectation? And then I imagine a part of this is the back-end weighted cost savings coming through later in the year.

Speaker #3: Can you give some perspective on the dollar magnitude there, and the expected follow-through into 2027?

Donald LeCavalier: Well, you're right. Actually, the cost saving not only will help on the debt-to-EBITDA ratio at the end of the quarter, but this is why also we're positive regarding maintaining EBITDA compared to last year. That's one thing. Second thing is when we gave guidance for Q2 and Q3, we include the possible acquisition that Thomas mentioned a bit earlier. There's some timing and payments. I will say lastly, Q4 is always a very strong quarter for us in terms of EBITDA and free cash flow. Those are the key elements.

Speaker #2: Well, you're right. Actually, the cost savings not only will help on the debt to EBITDA ratio at the end of the quarter, but this is also why we're positive regarding maintaining EBITDA compared to last year.

Speaker #2: That's one thing. Second thing is, we, when we gave guidance for Q2 and Q3, we included the possible acquisition that Thomas mentioned a little bit earlier.

Speaker #2: And there's some timing in payments, and I would say lastly, the fourth quarter is always a very strong quarter for us in terms of EBITDA and free cash flow.

Speaker #2: So those are the key elements.

Sean Steuart: Okay. Thanks for that. You touched on an expectation that there'll be one property sale in the near term. Any updated thoughts on, I believe there was at least two properties that you had line of sight on and maybe some more behind that. Context on expected proceeds and timing of additional real estate sales.

Speaker #3: Okay, thanks for that. And you touched on an expectation that there will be one property sale in the near term. Any updated thoughts on—I believe there are at least two properties that you had line of sight on, and maybe some more behind that?

Speaker #3: Context on expected proceeds and timing of additional real estate sales.

Donald LeCavalier: Yeah. The one that's close in the pipeline and hopefully that will close in the next few months is on the order of CAD 30 million in value. So that's one of the big ones that we had in the pipeline. We'll see for the rest of the market. It's still a market depending on the region where you are. I would say it's kind of slow, and it will depend also on what's going on in the current global economy. We're confident at least to close this one in fiscal year, and we'll see the timing for the other ones. We have two other ones in the pipeline also. A small one in the US and one other one in the south of Montreal.

Speaker #2: Yeah. The one that's closing the pipeline and hopefully that will close in the next few months is North of 30 million of value. So that's one of the big ones that we had in the pipeline.

Speaker #2: I will say for the rest of market, it's still a market depending on the region where you are. I will say it's kind of slow.

Speaker #2: And it will depend also on what's going on in the current global economy. But we're confident, at least, to close this one in the fiscal year.

Speaker #2: And we'll see the timing for the other ones. We have two other ones in the pipeline also: a small one in the US, and one other one in the south of Montreal.

Sean Steuart: Okay. Just one last question from me. Your credit rating was downgraded yesterday. Any thoughts on how that changes your overall cost of capital, perspective on, I guess, higher borrowing costs going forward?

Speaker #3: Okay. Just one last question for me. Your credit rating was downgraded yesterday. Any thoughts on how that changes your overall cost of capital perspective on, I guess, higher borrowing costs going forward?

Donald LeCavalier: Well, not really, because the new financing, as I mentioned in my opening comment that we put in place, will be based more on debt-to-EBITDA ratio. That current rating pricing will be close to the pricing we had regarding BBB- or investment grade. And as far as, you know, the investment grade for us, it's more a question of the size of business because the balance sheet, as you can see, will be very solid. It's more a question of the size of the business regarding the decision by the agency.

Speaker #2: Well, not really, because the new financing, as I mentioned in my opening comments that we put in place, will be based more on debt to EBITDA.

Speaker #2: The ratio is that current rating pricing will be close to the pricing we had regarding triple D minus or investment grade. And as far as the investment grade for us, it's more a question of the size of the business because the balance sheet, as you can see, will be very solid.

Speaker #2: So it's more a question of the size of the business regarding the decision by the agency.

Sean Steuart: Okay. Okay, thanks very much for all of that. I'll get back in the queue.

Speaker #3: Okay. Okay. Thanks very much for all of that. I'll get back in the queue.

Operator: Hamir Patel with CIBC Capital Markets. Your next question comes from Hamir Patel with CIBC Capital Markets. Your line is now open.

Speaker #1: La prochaine question vient de Nicolai G avec CIBC Capital Markets. Your next question comes from Nicolai G with CIBC Capital Markets. Your line is now open.

Hamir Patel: Hi. Could you elaborate more on the price concessions you took, how these developments unfolded and potentially quantify the impact on revenue growth as well?

[Analyst] (CIBC Capital Markets): Hi. Could you elaborate more on the price concessions you took, how these developments unfolded and potentially quantify the impact on revenue growth as well?

Speaker #4: Hi. Could you elaborate more on the price concessions you took? How did these developments unfold, and could you potentially quantify the impact on revenue growth as well?

Donald LeCavalier: The price concession we took in Q1 is, I would say it's in order of CAD 1 million. It's in that region, so annually it's about CAD 4 million. This is something that when we do important renewal that we had in the past, and we always find ways in the coming quarters to, with our synergies or efficiencies to compensate for that. Since it's the beginning of new contracts, it did hit us directly in the P&L for this quarter.

Speaker #2: The price concession we took in the first quarter is, I would say, it's north of 1 million. It's in that region. So over annually, it's about 4 million.

Speaker #2: But this is something that when we do important renewal that we had in the past, and we always find ways in the coming quarters to with our synergies or efficiencies to compensate for that.

Speaker #2: But since it's the beginning of new contracts, it did hit us directly in the P&L for this quarter.

Hamir Patel: Okay, I see. Thanks. Could you also provide some more detail on the size of the new acquisition you're expecting to close? How do you expect the rest of the year to shape up on the M&A front?

[Analyst] (CIBC Capital Markets): Okay, I see. Thanks. Could you also provide some more detail on the size of the new acquisition you're expecting to close? How do you expect the rest of the year to shape up on the M&A front?

Speaker #4: Okay, I see. Thanks. And could you also provide some more detail on the size of the new acquisition you're expecting to close? And how do you expect the rest of the year to shape up on the M&A front?

Donald LeCavalier: Well, we're confident, as we said in the comment, we're pretty much advanced on discussion, but obviously we need to close some transaction. In terms of size, we won't disclose any amount, but you can expect that it is in the area we did for this group over the last few years. Not a big one compared to what we're doing in packaging, but very important for us and that will create a lot of good synergies, on cost side and commercial side also.

Speaker #2: Well, we're confident, as we said in the comment, we're pretty much advanced on discussion. But obviously, we need to close the transaction. In terms of size, we won't disclose any amount, but you can expect that it is in the area we've done for this group over the last few years.

Speaker #2: So, not a big one compared to what we were doing in packaging, but very important for us. And that would create a lot of good synergies on the cost side and commercial side also.

Hamir Patel: Okay, great. I see. Thank you. I'll turn it over.

[Analyst] (CIBC Capital Markets): Okay, great. I see. Thank you. I'll turn it over.

Speaker #4: Okay, great. I see. Thank you. I'll turn it over.

Operator: Adam Shine with National Bank. Your next question comes from Adam Shine with National Bank. Your line is now open.

Speaker #1: La prochaine question vient d'Adam Schein avec National Bank. Your next question comes from Adam Schein with National Bank. Your line is now open.

Adam Shine: Okay. Thanks a lot. Sam, congratulations. Of course, Thomas, it was wonderful interacting with you, and I wish you all the best. Maybe we just start in terms of, you know, the Q1 disclosure around ISM timing, where the volumes were a little bit lighter in the Q1. Can you just maybe speak to that, both in terms of quantum and, you know, what was the driver of that?

Speaker #3: Okay, thanks a lot. So, Sam, congratulations. And of course, Thomas, it was wonderful interacting with you, and I wish you all the best. Maybe we just start in terms of the Q1 disclosure around ISM timing, where the volumes were a little bit lighter in Q1.

Speaker #3: Can you just maybe speak to that, both in terms of quantum, and what was the driver of that?

Donald LeCavalier: You know, regarding ISM, that was for us in Q1. We were expecting, when we disclose at the end of fiscal year, you know, on the retail side because of the current condition in Ontario and the rest of Canada, it will be tough. ISM, we were expecting a little bit better in this quarter, but it's mostly timing. Having said that, if you look at the impact of pure growth in the quarter, this is something we disclose in our financial notes, it's about 5% decline. We still expect that overall in fiscal 2026, we will have positive organic growth, excluding acquisition for that group. It's mostly because of timing of some contract renewal or some, you know, stores that delay some of the improvement they were supposed to make in Q1.

Speaker #2: Yeah. Regarding ISM, that was for us in Q1. We were expecting, when we disclosed at the end of fiscal year, on the retail side, because of the current condition in Ontario and the rest of Canada, it will be tough.

Speaker #2: But ISM, we were expecting a little bit better in this quarter. But it's mostly timing. Having said that, if you look at the impact of pure growth in the quarter, this is something we disclosed in our financial notes.

Speaker #2: It's about a 5% decline. But we still expect that overall, in fiscal 2026, we will have positive organic growth excluding acquisitions for that group. So, it's mostly because of the timing of some contract renewals or some stores that delayed some of the improvements they were supposed to make in the first quarter.

Donald LeCavalier: We're still very confident for the rest of the year.

Adam Shine: Okay. No, I appreciate that. Obviously, you know, interesting development in regards to raddar going into Ontario. I didn't think that was gonna happen until like a year or two from now. Is that based on some negotiation with Torstar that allows this to happen? Is there something different going on?

Speaker #2: But we're still very confident for the rest of the year.

Speaker #3: Okay. No, I appreciate that. And then obviously, interesting development in regards to Radar going into Ontario. I didn't think that was going to happen until like a year or two from now.

Speaker #3: So, is that based on some negotiation with Torstar that allows this to happen, or is there something different going on?

Donald LeCavalier: Well, obviously they're an important partner of us, so anything we will do in Ontario, rest of Canada will be in discussion, negotiation, and collaboration with them. You know, regarding the timing, we say that we will do more in Ontario. The timing of where we will be doing all Ontario, rest of Canada is still not decided, but we will certainly do some tests in the coming quarter. You know, it's important for us to stabilize this business, and raddar™ is a great solution for us regarding that.

Speaker #2: Well, obviously, they are important partners of ours. So anything we will do in Ontario or the rest of Canada will be in discussion, negotiation, and collaboration with them.

Speaker #2: But regarding the timing, we say that we will do more in Ontario. The timing of where we will be doing all Ontario, rest of Canada, is still not decided.

Speaker #2: But we will certainly do some tests in the coming quarter. And it's important for us to stabilize this business and Radar is a great solution for us regarding that.

Adam Shine: Just to be clear, if Torstar is doing, you know, flyers and distributing it in their territory for you, are you looking to offer raddar as sort of a complementary alternative solution to replace those flyers? Or it comes in as an alternative solution for customers to decide upon.

Speaker #3: But just to be clear, if Torstar is doing flyers and distributing them in their territory for you, are you looking to offer Radar as sort of a complementary alternative solution to replace those flyers?

Speaker #3: Or it comes in as an alternative solution for customers to decide upon?

Donald LeCavalier: Well, first we're doing all flyers are done by us. It's just we're talking about distribution.

Speaker #2: Well, first, we're doing all flyers ourselves. It's just, we're talking about distribution. So, what you might see in coming months is some regions might have a distribution of Radar, but they will still, like, in pieces, have some flyers that might be done directly by Canada Post.

Adam Shine: Yeah.

Donald LeCavalier: What you might see in coming months is some region might have a distribution of raddar, but they will still likely, you know, be some flyer that might be done directly by Canada Post. What we're saying is we will do in some region in Ontario some tests regarding raddar in coming months in Ontario. Yeah.

Speaker #2: But what we're saying is we will do, in some region in Ontario, some tests regarding Radar in the coming months in Ontario. Yeah.

Adam Shine: Okay. No, I appreciate that. Maybe, you know, given that Isabelle's on the line. Hi, Isabelle. Just a quick question in terms of the nature of the new sort of structure, just having a COO, is that something where we kinda look upon Patrick as pseudo-president, Sam as CEO, although he does have both titles or will get both titles? Or do we look upon this as something whereby there's maybe more in play regarding COO in regards to a future transitionary dynamic? Just curious.

Speaker #3: Okay. No, I appreciate that. Maybe given that Isabelle's on the line—hi Isabelle—just a quick question in terms of the nature of the new sort of structure. Just having a COO, is that something where we kind of look upon Patrick as pseudo-president?

Speaker #3: Sam as CEO, although he does have both titles. Or will get both titles. Or do we look upon this as something whereby there's maybe more in play regarding COO in regards to a future transitionary dynamic?

Isabelle Marcoux: no. You're way ahead. There's no

Speaker #3: Just curious.

Speaker #5: No, no, no. You're way ahead. There's no.

Adam Shine: Okay.

Isabelle Marcoux: Upcoming transition. I think you should look at Sam as a very strong growth-oriented person, deal maker. He's done M&A for the company for the past 18 years, and you should look at Patrick Braley as a true operator, innovator, knowing print so well. A great team with both of them. I think we have 1 plus 1 is 2.5.

Speaker #3: Okay.

Speaker #5: Upcoming transition. I think you should look at Sam as a very strong, growth-oriented person, dealmaker. He's done M&A for the company for the past 18 years.

Speaker #5: And you should look at Patrick Braylee as a true operator, innovator, knowing Prince so well. So a great team with both of them. I think we have one plus one is two and a half.

Adam Shine: Okay. I appreciate that. Thank you. I'll queue up again.

Speaker #3: Okay. I appreciate that. Thank you. I'll queue up again.

Operator: Stephen MacLeod with BMO Capital Markets. Your next question comes from Stephen MacLeod with BMO Capital Markets. Your line is now open.

Speaker #1: La prochaine question vient de Steven McCloud avec BMO Capital Markets. Your next question comes from Steven McCloud with BMO Capital Markets. Your line is now open.

Stephen MacLeod: Thank you. Good evening, everyone. Thomas, congratulations on your tenure, and congrats to Sam and Patrick as well. Just wanted to touch on a couple of things. Just firstly with respect to ISM, I mean, you sort of touched upon a pending transaction, or one that's in advanced discussions. I was just wondering if you can just remind us kind of the strategy with ISM M&A. Is it about filling in geographic coverage, or is it more about broadening your customer base, or is it a little bit of both?

Speaker #4: Thank you. Good evening, everyone. And Thomas, congratulations on your tenure. And congrats to Sam and Patrick as well. Just wanted to touch on a couple of things.

Speaker #4: Just firstly, with respect to ISM, I mean, you sort of touched upon a pending transaction. Or one that's in advanced discussions. I was just wondering if you can just remind us kind of the strategy with ISM M&A.

Speaker #4: Is it about filling in geographic coverage? Or is it more about broadening your customer base? Or is it a little bit of both?

Donald LeCavalier: Yeah, it's a little bit of both. We also already, you know, moving in Western Canada with our own platform on the retail side, so we're active over there. But it's adding products, but also it will be geographical. We see many opportunities in the next few years to grow that business. Yes. To expand offering to our own clients, also.

Speaker #2: Yeah. It's a bit of both that we also already moving in the western Canada with our own platform on the retail side. So we're active over there.

Speaker #2: But it's adding products, but also, it will be a geographical. So, we see many opportunities in the next few years to grow that business.

Speaker #2: So yes. And expanding to expand offering to our own clients, also.

Stephen MacLeod: Okay. That's.

Donald LeCavalier: Yeah.

Stephen MacLeod: Okay. Sorry, go ahead.

Speaker #4: Okay. Okay. That's okay. That's sorry. Go ahead.

Thomas Morin: No, no. I mean, I was insisting on Donald's message. It is really both, the geographic reach and the product offering, yeah, at the same time. It's both.

Speaker #2: No, no. I mean, I was insisting on Donald's message. It is really both—the rich geographical and the product offering. Yep. At the same time.

Stephen MacLeod: Okay. That's helpful. When you think about both of those vectors, geographic and product, I mean, are there any notable geographies or products where you're underrepresented?

Speaker #2: So it's both.

Speaker #4: Okay, that's helpful. And, are there any—when you think about both of those vectors, geographic and product—I mean, are there any notable geographies or products where you're underrepresented?

Donald LeCavalier: In terms of product, it's a very large market, so we can go into a lot of details. We have a very good position in the product that we deliver for our main clients right now. In terms of regional geography, we're solid in Quebec and Ontario. We have some operations in Western Canada, but I think we have the right balance regarding where the business is done, actually.

Speaker #2: In terms of products, it's a very large market. So we can go with a lot of details. We have a very good position in the product that we deliver for our main clients right now.

Speaker #2: In terms of regional geography, we're solid in Québec and Ontario. We have some operations in Western Canada. But I think we have the right balance regarding where the business is done, actually.

Thomas Morin: Well, we were under.

Stephen MacLeod: Okay.

Speaker #4: But we were on the wrong side. Okay.

Thomas Morin: We've acquired the businesses in Quebec to balance indeed the footprint between Ontario and Quebec. Now we pretty okay.

Speaker #2: We've acquired businesses in Québec to balance, indeed, the footprint between Ontario and Québec. Now, we're pretty okay.

Donald LeCavalier: Yeah.

Stephen MacLeod: Okay. That's great. Thank you. I just wanted to clarify, Donald, did you say that ISM was down 5% in Q1?

Speaker #4: Okay. That's great. Thank you. And then I just wanted to clarify. Donald, did you say that ISM was down 5% in Q1?

Donald LeCavalier: Yes.

Stephen MacLeod: Okay. Okay, perfect. Thank you. Maybe just turning to leverage as you think about your, is it still fair to assume that your net debt EBITDA target exiting 2026 is in that 1.6x to 1.7x range?

Speaker #2: Yes.

Speaker #4: Okay. Okay. Perfect. Thank you. And then maybe just turning to leverage, as you think about your—is it still fair to assume that your net debt to EBITDA target exiting 2026 is in that 1.7 times range?

Donald LeCavalier: Well, first, we don't have a target. This is something that we said that, we're not doing acquisition. It was the case before. Even though the rating is not there anymore, we will remain very prudent with the balance sheet. We have a solid balance sheet, and the idea is to maintain it to give us the flexibility to do M&A. I would say that we don't have a target, but right now we can be in the zone of 1.7 to 2, depending on timing of acquisition. But other than acquisition, we should be under 2 and going, you know, very rapidly close to 1 because this business, our business will manage a lot of free cash flow in the coming years. If there's no acquisition, we should be in a very good position.

Speaker #2: Well, first, we don't have a target. This is something that we said—when we're not doing acquisitions, it was the case before. And even though the rating is not there anymore, we will remain very prudent with the balance sheet.

Speaker #2: We have a solid balance sheet. And the idea is to maintain it. To give us the flexibility to that we don't have a target.

Speaker #2: But we were, right now, we can be in a zone of 1.70 to 2.00, depending on the timing of acquisition. But other than acquisition, we should be under 2.00 and going very rapidly close to 1.00.

Speaker #2: Because this business, our business, will manage a lot of free cash flow in the coming years. So, if there’s no acquisition, we should be in a very good position.

Stephen MacLeod: Okay. That's very helpful. Maybe just finally, if you're able to give some color around it, can you give some guidance or color on what the magnitude of the corporate cost savings might be in the back half of the year?

Speaker #4: Okay. That's very helpful. And then maybe just finally, if you're able to give some color around it, can you give some guidance or color on what the impact what the magnitude of the corporate cost savings might be in the back half of the year?

Donald LeCavalier: You know, we're working on it, but it depends also on the TSC we have with ProAmpac right now because we will, you know, we will work with them. But we said over the next 2 years is, to say, you know, roughly CAD 30 million of corporate costs. The timing still need to be established regarding exactly when we'll be able to do some movement. Some of it will come in the second half, and some of it will be mostly next year for full run rate. Okay, that's great. Thanks so much for the color, guys. Appreciate it.

Speaker #2: We're working on it. But it depends also on the TSA. We have with Pro Impact right now because we will work with them. But we years, to say roughly $30 million of cost of corporate.

Speaker #2: So the timing still needs to be established regarding exactly when we will be able to do some movement. So it will be some of it will come in the next in the second half.

Speaker #2: And some of it will be mostly next year for full run rate.

Speaker #4: Okay, that's great. Thanks so much for the color, guys. Appreciate it.

Speaker #1: La prochaine question vient de Mayor Yaghi avec Scotiabank. Your next question comes from Mayor Yaghi with Scotiabank. Your line is now open.

Operator: Your next question comes from Maher Yaghi with Scotiabank. Your line is now open.

Maher Yaghi: Just wanted to ask you a question. You know, putting aside the incentive compensation cost increase, just, you know, on the retail, services, and printing. I was trying to figure out the drop in organic revenue of CAD 6.7 million came with a drop of approximately CAD 5 million on the EBITDA side. Seems pretty high. Can you just help me understand? You mentioned earlier that pricing was about CAD 1 million. I was trying to figure out why the EBITDA decrease was so elevated compared to the revenue drop. Thank you.

Speaker #3: Bonjour. Merci d'avoir pris ma question. I just wanted to ask a question. Putting aside the incentive compensation cost increase, just on the Retail and Services and Printing, I was trying to figure out—the drop in organic revenue of $6.7 million came with a drop of approximately $5 million on the EBITDA side.

Speaker #3: It seems pretty high. Can you just help me understand? You mentioned earlier that pricing was about $1 million. So I was trying to figure out why the EBITDA decrease was so elevated compared to the revenue drop.

Donald LeCavalier: Yeah. Well, yeah, you're right. For sure, price concession north of CAD 1 million had an impact. Also where we had some decrease is in the distribution of flyers in the rest of Canada, and you know that this is very high margin for us. That had an impact for sure also. I would say that that's the mix that didn't help us on the EBITDA side versus what we lost on the sales side.

Speaker #3: Thank you.

Speaker #2: Yeah. Well, yeah. You're right. For sure, price concession, north of $1 million at an impact. And also, where we had some decrease is in the distribution of flyers and the rest of Canada.

Speaker #2: And you know that this is very high margin for us. So that had an impact for sure also. So I would say that that's the mix that didn't help us on the EBITDA side versus what we lost on the sales side.

Maher Yaghi: Okay. Is that running through the P&L completely now, or there could be, like, an additional step-down function in Q2 on that, side?

Speaker #3: Okay. So is that running through the P&L completely now? Or there could be an additional step-down function in Q2 on that side?

Donald LeCavalier: When you said step-down function, what do you mean by it? Can you-

Speaker #2: When you said step-down function, what did you mean? Can you clarify?

Maher Yaghi: I mean the lower profitability from the lower distribution that you have in the rest of Canada, is that running through or there are additional geographies that will be affected in Q2 that have not been affected yet?

Speaker #3: I mean the lower profitability from the lower distribution that you have in the rest of Canada. Is that running through, or are there additional geographies that will be affected in Q2 that have not been affected yet?

Donald LeCavalier: Well, what we said, and that's what I said in my opening comments, we remain confident for the full year to be stable versus last year. The impact you see in Q1 should be roughly the same in Q2 because the cost saving program we put in place and some other action we're taking will start to kick more in the second half of the year.

Speaker #2: Well, what we said—and that's what I said in my opening comments—we're going to remain confident for the full year to be stable versus last year.

Speaker #2: But the impact you see in the first quarter should be roughly the same in the second quarter because the cost saving program we put in place and some other actions we're taking will start to kick in more in the second half of the year.

Maher Yaghi: Okay. You know, looking back at the revenue line, you mentioned you're you know launching raddar™ in the rest of the country. How should we think about the revenue trajectory in the second half if you're launching that process in Q2?

Speaker #3: Okay. So looking back at the revenue line, you mentioned you're launching Radar in the rest of the country. How should we think about the revenue trajectory in the second half if you're launching that process in Q2?

Donald LeCavalier: Yeah. Hard to say for the moment because we don't know at which speed the progress will come. As we said, when we have this transition for Quebec and also a little bit of BC, you know, for sure top line will go down. The most important for us is to maintain the EBITDA. It's really hard to say what will be the impact of percentage. It depends on the timing. The reason, to be clear, that the top line will be affected is that we're using less paper, therefore, it does have an impact, but the value-add and the EBITDA is not affected. We saw the impact in Quebec. It's hard for us to say right now because it depends, again, at the speed the progress will go. It will affect the top line, for sure.

Speaker #2: Yeah. Hard to say for the moment because we don't know at which speed the progress will come. As we said, when we had this transition for Québec, and also a little bit of BC, for sure, top line will go down.

Speaker #2: But the most important for us is to maintain the EBITDA. But it's really hard to say what will be the impact of percentage. It depends on the timing.

Speaker #2: And the reason, to be clear, that the top line will be affected is that we're using less paper. Therefore, it does have an impact.

Speaker #2: But the VA and the EBITDA are not affected. And we saw the impact in Québec. So it's hard for us to say right now because it depends, again, on the speed of progress we'll go.

Donald LeCavalier: It will stabilize the EBITDA, and this is the most important thing for that part of the business.

Speaker #2: But it will affect the top line for sure. But it will stabilize the EBITDA, and this is the most important thing for that part of the business.

Maher Yaghi: Yeah. No, I totally get that. Maybe just if you can give us the total revenue that you currently generate that could eventually transition to raddar™ for the rest of Canada, just to get an understanding of how much, you know, we're talking about.

Speaker #3: Yeah. No, I totally get that. Maybe just if you can give us the total revenue that you currently generate that could eventually transition to Radar for the rest of Canada, just to give just to get an understanding of how much we're talking about?

Donald LeCavalier: Well, this is something that Yan can give you some more color offline.

Speaker #2: Well, this is something that Yan can give you some more color on offline.

Maher Yaghi: Okay, great.

Donald LeCavalier: Yeah.

Maher Yaghi: Just on the leverage side, you know, there's a lot of wacky, I mean, ratios going on now that, you know, you still haven't cycled through the P&L, and you're on a pro forma basis. Let's say a year from now, Donald, where would you like that leverage to land?

Speaker #3: Okay, great. And just on the leverage side, there are a lot of wacky—I mean, ratios going on now that you still haven't cycled through the P&L, and you're on a pro forma basis.

Speaker #3: But let's say, a year from now, Donald, where would you like that leverage to land?

Donald LeCavalier: Well, again, it depends on the timing of acquisition. As Sam mentioned in his comments, we're confident to grow the business on the ISM. Therefore, we will be active on acquisition. We have a business that will generate a lot of free cash flow. This is business I mentioned that will need maybe CAD 50 to 55 million of CapEx. We don't have a target for that. Obviously, the approach remains the same for us to be prudent regarding the balance sheet. We're confident regarding our balance sheet as we speak right now. We will have room for acquisition. If there's no acquisition, we don't mind to get to a position of, you know, 1x debt to EBITDA, but it's not a target for us.

Speaker #2: Well, again, it depends on the timing of acquisition. As Sam mentioned in his comment, we're confident to grow the business on the ISM. Therefore, we will be active on acquisition.

Speaker #2: We have a business that will generate a lot of free cash flow. This is business I mentioned that will need maybe 50, 55 million of capex.

Speaker #2: So, we don't have a target for that. Obviously, the approach remained the same for us—to be prudent regarding the balance sheet. And we were confident regarding our balance sheet as we speak right now.

Speaker #2: We will have room for acquisition. But if there's no acquisition, we don't mind to get to a position of one-time debt to EBITDA. But it's not a target for us.

Donald LeCavalier: The target for us is to stabilize the business on the flyer side and to grow the business on the ISM, obviously, organic growth and acquisition. This is-

Speaker #2: The target for us is to stabilize the business on the flyer side and to grow the business on the ISM. Obviously, our getting growth and acquisition.

Maher Yaghi: Okay.

Donald LeCavalier: more to look at it while maintaining a strong balance sheet.

Speaker #2: So this is more the way we look at it. While maintaining a strong balance sheet.

Maher Yaghi: Okay, maybe I'll ask it a different way. Assuming, you know, the M&A transactions are available to you and everything, where do you think the business could run long term in terms of leverage? What level would you be comfortable taking the leverage up to? That's what I'm trying to figure out.

Speaker #3: Okay. Maybe I'll ask it a different way. Assuming the M&A transactions are available to you and everything, where do you think the business could run long-term in terms of leverage?

Speaker #3: What level would you be comfortable taking the leverage up to? That's what I'm trying to figure out.

Donald LeCavalier: Well, it's I would say, honestly, it's a little bit of a hypothetical question. Like, when we did in the past coverage, we were comfortable going up as far as 3.50 because we were strongly confident in our ability to get back under 2, and that's what we did, that's what we deliver. Again, we don't see, and this is something we mentioned earlier, any big acquisition coming in the ISM, so I don't see any big acquisition that will push us like above 3. But it's, like I said, we think we should be in a range of 1.50 to 2.50 in the next months. If there's no acquisition, we don't mind to be, you know, close to 1x debt to EBITDA.

Speaker #2: Well, I would say honestly, it's a little bit of a hypothetical question. When we did, in the past covers, we were comfortable to go up as far as 350 because we were strongly confident in our ability to get back under 2.

Speaker #2: And that's what we did. That's what we delivered. So again, we don't see and this is something we mentioned earlier, any big acquisition coming the ISM.

Speaker #2: So I don't see any big acquisition that will push us above 3. But like I said, we think we should be in a range of 150 to 250 in the next months if there's no acquisition.

Speaker #2: We don't mind to be close to 1-time debt to EBITDA. When we bought covers to last comment on that one, we had almost no debt on the balance sheet.

Donald LeCavalier: When we bought Coveris, the last comment on that one, we had almost no debt on the balance sheet, and we were quite happy about that.

Speaker #2: And we were quite happy about that.

Yan Lapointe: Okay. Merci beaucoup.

Donald LeCavalier: C'est bon. Merci.

Speaker #3: Okay. Merci beaucoup.

Speaker #2: C'est bon? Merci.

Operator: Mesdames et Messieurs, encore une fois, si vous avez des questions supplémentaires, veuillez s'il vous plaît appuyer sur la touche étoile un. Si vous utilisez la fonction main libre, 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 one. As a reminder, if you're using a speakerphone, please lift the handset up before pressing any keys. La prochaine question vient de J. Sebastian van Berkom avec Van Berkom and Associates. The next question comes from J. Sebastian van Berkom with Van Berkom and Associates. Your line is now open.

Speaker #1: Mesdames et messieurs, encore une fois, si vous avez des questions supplémentaires, veuillez, s'il vous plaît, appuyer sur les touches étoile 1. Si vous utilisez la fonction mains libres, veuillez décrocher le récepteur avant d'appuyer sur les touches.

Speaker #1: Ladies and gentlemen if there are any additional questions at this time, please press star followed by the one. As a reminder for using a speakerphone, please lift the hands up before pressing any keys.

Speaker #1: La prochaine question vient de Sébastien Van Burckham. Van Burckham and Associates. The next question concerns Sebastien Van Burckham with. Van Burckham and Associates. Your line is now open.

J. Sebastian van Berkom: Thank you very much for taking my call. Isabelle, I know you're on the line, so hello again to you. I have two simple questions. I just arrived, so I was a little late in kicking into the conference call. I guess number one, I would like to know what is the exact date of the CAD 20 share distribution?

Speaker #3: Thank you very much for taking my call. Isabelle, I know you're on the line, so hello again to you. I have two simple questions.

Speaker #3: I just arrived, so I was a little late in kicking into the conference call. So, I guess number one, I would like to know, what is the exact date of the $20 share distribution?

Isabelle Marcoux: We will be paying out the dividend on 20 March, and that's next Friday.

Speaker #4: So we will be paying out the dividend on the 20th of March. And that's next Friday.

J. Sebastian van Berkom: March?

Isabelle Marcoux: Twenty.

Speaker #3: March?

J. Sebastian van Berkom: March 20?

Speaker #4: 20th.

Isabelle Marcoux: Exactly.

J. Sebastian van Berkom: Okay. Number two, given that you sold a substantial part or all of the packaging business, the stub or the remaining Transcontinental, can you, Isabelle, give us some kind of a sense of, you know, what kind of a company this is gonna become in the next, you know, five years? Because at the moment, the market seems to say that, you know, it's only worth about CAD 3 after this distribution. It's it means a very, very low multiple, and for me, it's just there's something wrong with this picture. I was wondering if you could give us some clarification.

Speaker #3: March 20?

Speaker #4: Exactly.

Speaker #3: Okay. And number two, given that you sold a substantial part or all of the packaging business, the stub or the remaining Transcontinental—Isabelle, give us some kind of a sense of what kind of a company this is going to become in the next five years?

Speaker #3: Because at the moment, the market seems to say that it's only worth about $3 after this distribution. And it means a very, very low multiple.

Speaker #3: And for me, it's just there's something wrong with this picture. So I was wondering if you could give us some clarification.

Isabelle Marcoux: Sure looks like a great buy right now.

Speaker #4: Sure, it looks like a great buy right now.

J. Sebastian van Berkom: Well, the stub isn't trading yet, but it probably will trade soon after the 20 March distribution. I'm just trying to figure that out. Like, it seems to be there's something wrong with the picture in that it seems to be awfully cheap, the remaining part of the business. Is the remaining part of the business so bad that it's being traded at such a low price?

Speaker #3: Well, the stub isn't trading yet. But it probably will trade soon after the March 20th distribution. So I'm just trying to figure that out.

Speaker #3: It seems to me there's something wrong with the picture, in that it seems to be awfully cheap, the remaining part of the business. So is the remaining part of the business so bad that it's being sold at, being traded at, such a low price?

Isabelle Marcoux: We think it's a good business. It's a business with potential.

Speaker #4: So I think it's a good business. It's a business with potential. We think it's a good business. It's a business with great cash flows.

J. Sebastian van Berkom: Pardon me.

Isabelle Marcoux: We think it's a good business. It's a business with great cash flows. It's a business that's poised for growth. We see growth opportunities in the ISM sector, and we see growth opportunity in the education-

Speaker #4: It's a business that's poised for growth. We see growth opportunities in the ISM sector. And we see growth opportunity in the—

J. Sebastian van Berkom: Is this a business that you expect to grow top line at 10% a year or 15% a year? Like, what kind of order of magnitude are we talking over the next five years?

Speaker #3: But is this a business that you expect to grow top line at 10% a year or 15% a year? What kind of order of magnitude are we talking over the next five years?

Isabelle Marcoux: We'll surely look to grow it internally and through acquisitions. We have already started doing that with 3 acquisitions under our belt only in the last year in the ISM business.

Speaker #4: We'll surely look to grow it internally and through acquisition. And we have already started doing that, with three acquisitions under our belt—only in the last year in the ISM business.

J. Sebastian van Berkom: What kind of order of magnitude are you talking, Isabelle? Are we talking a 15% grower or a 10% grower? Like, where are we in the next five years?

Speaker #3: So what kind of order of magnitude are you talking? Isabelle, are we talking a 15% grower or a 10% grower? Where are we? In the next five years?

Donald LeCavalier: I think this is not something that we will disclose today. What we have said in the past is that we're, you know, now with the sale of packaging, over the last 2 years, we were able to stabilize the Retail Services & Printing business. We have growth in the media business. Today, for us, and by saying that we're confident to again stabilize the EBITDA business, we're putting this business for growth in the next few years because the portion that's growing is getting bigger and bigger, which is the ISM and even the education side of the business. We're confident to grow the business organically over years and then add it over acquisition. But we won't disclose any organic plan or acquisition plan for the next 5 years.

Speaker #2: I think this is not something that we will disclose today. What we have said in the past is that we're now with a sell-off packaging.

Speaker #2: Over the last two years, we were able to stabilize the retail and service printing business. We have grown in the media business. So today, for us—and by saying that, we're confident to, again, stabilize the EBITDA business—we're putting this business in position for growth in the next few years because the portion that's growing is getting bigger and bigger, which is the ISM and even the education side of the business.

Speaker #2: So we're confident to grow the business organically over the years. And then add it over acquisition. But we want to disclose any organic plan or acquisition plan for the next five years.

J. Sebastian van Berkom: Oh, no, why not? Many companies do.

Speaker #3: Oh, no. Why not? Many companies do.

Donald LeCavalier: Well, this is not our approach, so we're not gonna disclose that.

Speaker #2: Well, this is not our approach. So we're not going to disclose that.

J. Sebastian van Berkom: Okay. Thank you very much.

Donald LeCavalier: All right. Thank you.

Speaker #3: Okay. Thank you very much.

Speaker #2: All right. Thank you.

Operator: Il n'y a plus d'autres questions, Mr. Lapointe. There are no further questions at this time.

Speaker #1: Is some the two of other questions, Monsieur Lapointe, there are no further questions at this time.

Yan Lapointe: Before closing the call, I'd like to turn it over to Thomas for a few words.

Speaker #2: Before closing the call, I'd like to turn it over to Thomas for a few words.

Thomas Morin: Thank you. Thank you, Yan, and in closing, I'd like to thank you all, our participants to these quarterly calls, and especially to you financial analysts on the line. I want to say that your questions were always so thoughtful and well-received, and today is no different, obviously, as you could all hear. It's been a pleasure getting to know you over the past two years, and I'd like to thank you all today. Thank you very much.

Speaker #5: Thank you. Thank you, Yan. And in closing, I'd like to thank you. Thank you all, our participants to this quarterly call, and especially to you, financial analysts on the line.

Speaker #5: And I want to say that your questions were always thoughtful and well received. And today, it's no different. Obviously, as you could all hear.

Speaker #5: And it's been a pleasure getting to know you over the past three years. And I'd like to thank you all today. Thank you very much.

Operator: Mesdames et Messieurs, ceci termine l'appel conférence 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.

Speaker #1: Mesdames et messieurs, ceci termine l'appel conférence pour aujourd'hui. Merci de votre participation. Vous pouvez maintenant raccrocher. Ladies and gentlemen, this concludes the conference call for today.

Q1 2026 Transcontinental Inc Earnings Call

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