Q3 2026 Transcontinental Inc Earnings Call

September 9, 2026

Operator 2: Mesdames et Messieurs, merci d'avoir patienté et bienvenue à la conférence téléphonique de TC Transcontinental. 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 9 septembre 2026. Welcome to the TC Transcontinental Earnings Conference Call. After management's remarks, we will conduct a question and answer session and instructions will be provided at that time. As a reminder, this conference is being recorded today, 9 September 2026. 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 Relations avec les investisseurs et Trésorerie. Monsieur Lapointe, please go ahead.

Operator: [Foreign language]. Welcome to the TC Transcontinental Earnings Conference Call. After management's remarks, we will conduct a question-and-answer session and instructions will be provided at that time. As a reminder, this conference is being recorded today, 9 September 2026. I would like to turn the conference over to Yan Lapointe, Senior Director, Investor Relations and Treasury. [Foreign language]. Mr. Lapointe, please go ahead.

Speaker #1: Mid-Antony issue. Merci d'avoir patienté. Et bienvenue à la conférence téléphonique de TC Transcontinental. 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 9 septembre 2026. Welcome to the TC Transcontinental Earnings Conference Call. After management's remarks, we will conduct a question-and-answer session, and instructions will be provided at that time.

Speaker #1: As a reminder, this conference is being recorded. Today is September 9, 2026. 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 des relations avec les investisseurs et trésorerie. Monsieur Lapointe, please go ahead.

Speaker #2: Thank you, Sylvie. And good afternoon, everyone on the call. Welcome to Transcontinental's third quarter of fiscal 2026 earnings call. Before we begin, please note that we can find on our website our quarterly report, including financial statements and related notes.

Yan Lapointe: Thank you, Sylvie, and good afternoon everyone on the call. Welcome to Transcontinental's Q3 fiscal 2026 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. We have with us today our Chief Executive Officer, Sam Bendavid, and our Executive Vice President and Chief Financial Officer, Donald LeCavalier. As referenced on slide 2, 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 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.

Speaker #2: 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.

Speaker #2: We have with us today our Chief Executive Officer, Sam Ben-David, and our Executive Vice President and Chief Financial Officer, Dana Le Cavelier. As referenced on slide 2, some of the financial measures discussed over the course of this conference call are non-IFRS.

Yan Lapointe: e have with us today our Chief Executive Officer, Sam Bendavid, 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. You can refer to the MD&A for a definition and reconciliation of these measures to IFRS.

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

Yan Lapointe: 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.

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.

Yan Lapointe: 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 annual information form. With that, I will turn the call over to Sam.

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

Speaker #2: With that, I will turn the call over to Sam.

Speaker #3: Thank you, Yan. And good afternoon, everyone. Our improved third quarter performance reinforces our confidence in our ability to close fiscal 2026 in line with our financial outlook.

Sam Bendavid: Thank you, Yan, and good afternoon, everyone. Our improved Q3 performance reinforces our confidence in our ability to close fiscal 2026 in line with our financial outlook. In retail services and printing, two highlights are particularly noteworthy. First, our ISM and specialty business delivered revenue and profitability growth over and above the contribution from recent acquisitions. Integration is progressing ahead of plan. We have completed the consolidation of our operations into our existing platforms, and we continue to capture synergies that are supporting margin expansion. Second, we successfully completed the nationwide rollout of raddar in mid-June, with strong participation from both existing and new customers. This represents a significant milestone and strengthens our retail services offering through this cost-effective national mass media platform. With national coverage now in place, the distribution build-out is complete, and the revenue opportunity lies ahead.

Speaker #3: In retail services and printing, two highlights are particularly noteworthy. First, our ISM and specialty business delivered revenue and profitability growth over and above the contribution from recent acquisitions.

Speaker #3: Integration is progressing ahead of plan. We have completed the consolidation of our operations into our existing platforms, and we continue to capture synergies that are supporting margin expansion.

Sam Bendavid: We have completed the consolidation of our operations into our existing platforms, and we continue to capture synergies that are supporting margin expansion. Second, we successfully completed the nationwide rollout of raddar in mid-June, with strong participation from both existing and new customers.

Speaker #3: Second, we successfully completed the nationwide rollout of RADAR in mid-June. With strong participation from both existing and new customers, this represents a significant milestone and strengthens our retail services offering through this cost-effective, national mass-media platform.

Sam Bendavid: This represents a significant milestone and strengthens our retail services offering through this cost-effective national mass media platform. With national coverage now in place, the distribution build-out is complete, and the revenue opportunity lies ahead.

Speaker #3: With national coverage now in place, the distribution build-out is complete, and the revenue opportunity lies ahead. Every week, Radar is delivered to approximately 3.4 million Canadian households.

Sam Bendavid: Every week, raddar is delivered to approximately 3 in 4 Canadian households, a reach that is hard to rival in today's media landscape. We are encouraged by advertisers' interest, particularly among retailers in grocery, pharmacy, and home improvement. I also want to acknowledge the strong execution of our many teams involved in the launch, expanding from roughly 5 million to more than 11 million households in a single step. That was a significant operational undertaking. Our teams executed with discipline and delivered. In books and education, the slight decrease in revenue was related to the timing of orders, which we expect to recover in Q4. Looking ahead, we remain focused and disciplined on commercial execution, cost management, operational efficiency, and technology initiatives, including AI-enabled projects that support long-term productivity and growth.

Speaker #3: A reach that is hard to rival in today's media landscape. We are encouraged by advertisers' interest, particularly among retailers, grocery, pharmacy, and home improvement.

Speaker #3: I also want to acknowledge the strong execution of many of our teams involved in the launch, expanding from roughly 5 million to more than 11 million households in a single step.

Speaker #3: That was a significant operational undertaking. Our team's executed with discipline and delivered. In books and education, the slight decrease in revenue was related to the timing of orders.

Speaker #3: Which we expect to recover in the fourth quarter. Looking ahead, we remain focused and disciplined on commercial execution, cost management, operational efficiency, and technology initiatives, including AI-enabled projects that support long-term productivity and growth.

Speaker #3: Our transformation continues to build momentum and the progress we're making across the organization gives us confidence in our ability to deliver. With that, I turn it over to Donald to review our financial performance in more detail.

Sam Bendavid: Our transformation continues to build momentum, and the progress we are making across the organization gives us confidence in our ability to deliver. With that, I turn it over to Donald to review our financial performance in more detail.

Speaker #2: Thank you, Sam. And good afternoon, everyone. Moving to slide 5 of the earnings call presentation. For the third quarter of fiscal 2026, revenues were 3.8% higher versus the same quarter last year.

Donald LeCavalier: Thank you, Sam, and good afternoon, everyone. Moving to slide 5 of the earnings call presentation. For Q3 of fiscal 2026, revenues were 3.8% higher versus the same quarter last year, mainly as a result of acquisitions in ISM, partially offset by lower volume in our traditional activities. Regarding profitability, consolidated adjusted EBITDA at CAD 60.9 million was 4.1% higher than last year. The increase was mainly due to the acquisitions and our cost reduction initiatives, partially offset by lower volume. This performance is in line with our anticipations of having a stronger H2 of fiscal year, and we remain confident in our outlook to generate an adjusted EBITDA for fiscal 2026 in line with the previous year. Despite a significant decrease in our debt level, net financial expense increased by CAD 5.3 million following the impact of foreign exchange loss on financial instruments accounting to CAD 12 million.

Speaker #2: Mainly as a result of acquisitions in ISM. Partially offset by lower volume in our traditional activities. Regarding profitability, consolidated adjusted EBITDA at 60.9 million was 4.1% higher than last year.

Speaker #2: The increase was mainly due to the acquisitions and our cost reduction initiatives, partially offset by lower volume. Dispersed per month performance is in line with our anticipation of having a stronger second half of the fiscal year.

Speaker #2: And we remain confident in our outlook to generate an adjusted EBITDA for fiscal 2026 in line with the previous year. Despite a significant decrease in our debt level, net financial expense increased by 5.3 million dollars following the impact of foreign exchange loss on financial instruments accounting to 12 million dollars.

Speaker #2: This effects loss is not related to our current operation. As it is related to the sale of our packaging business, excluding this, our financial expense would have been $6.7 million lower.

Donald LeCavalier: This FX loss is not related to our current operation, as it related to the sale of our packaging business. Excluding this, our financial expense would have been CAD 6.7 million lower. Adjusted income tax increased by CAD 3.7 million to CAD 14.4 million and represented an effective rate of 32.3%. The increase is mainly due to timing of different income tax expenses, and we continue to expect to have an effective tax rate in the mid-20s. This led to adjusted earnings per share from continuing operation of CAD 0.32 compared to CAD 0.27 in Q3 last year, an 18.5% improvement. Now, moving to the sector review on slide 6. Revenues for the Retail Services and Printing sector increased by 7.1% to CAD 233.3 million. This increase is mainly due to the recent acquisitions and the nationwide rollout of raddar, partially offset by lower volume, mostly in traditional flyer printing activities.

Speaker #2: Adjusted income tax increased by 3.7 million to 14.4 million and represented an effective rate of 32.3%. The increase is mainly due to timing and different income tax expenses and we continue to expect to have an effective tax rate in the mid-20s.

Speaker #2: This led to adjusted earnings per share from continuing operations of $0.32, compared to $0.27 in Q3 last year, an 18.5% improvement. Now, moving to the sector review on slide 6.

Speaker #2: Revenues for the retail services and printing sector increased by 7.1% to 233.3 million. This increase is mainly due to the recent acquisitions and the nationwide rollout of radar, partially offset by lower volume mostly in traditional flyer printing activities.

Speaker #2: I would like to highlight that our in-store marketing and specialty products activities had a strong quarter with 38% revenue growth reaching 19.99.7 million dollars.

Donald LeCavalier: I would like to highlight that our in-store marketing and specialty products activities had a strong quarter with 38% revenue growth reaching CAD 99.7 million. While a significant portion of the growth came from our acquisitions, this activity generated close to 7% organic growth in the quarter. Adjusted EBITDA increased by 2.3% to CAD 49.4 million. The improvement came mainly from the recent acquisitions and our cost reduction initiative, partially offset by the lower volume in our traditional flyer printing activities. Moving to our books and education sector on slide 7. Despite the tough comparable, the sector delivered solid result with revenues of CAD 73.1 million, down from CAD 77.5 million the same quarter last year. The 5.7% decrease is mainly due to timing and should recover in Q4. Adjusted EBITDA decreased by CAD 1.1 million to CAD 20.5 million as a result of temporary shift in volume and exchange rate.

Speaker #2: While a significant portion of the growth came from our acquisitions, this activity generated close to 7% organic growth in the quarter. Adjusted EBITDA increased by 2.3% to $49.4 million. The improvement came mainly from the recent acquisitions and our cost reduction initiative, partially offset by the lower volume in our traditional flying printing activities.

Speaker #2: Moving to our books and education sector on slide 7. Despite a tough comparable, the sector delivered solid results with revenues of 73.1 million down from 77.5 million the same quarter last year.

Speaker #2: The 5.7% decrease is mainly due to timing and should recover in the fourth quarter. Adjusted EBITDA decreased by 1.1 million to 20.5 million dollars as a result of temporary shift in volume and exchange rate.

Speaker #2: Now turning to cash flow. In the third quarter of 2026, we generated 25 million dollars in cash flow from operating activities compared to 36.5 million dollars for the same quarter last year.

Donald LeCavalier: Now turning to cash flow. In Q3 2026, we generated CAD 25 million in cash flow from operating activities compared to CAD 36.5 million for the same quarter last year. The CAD 11.5 million difference is mainly due to higher tax paid, partially offset by improved working capital. In line with our normal seasonality, we expect an important portion of the negative working capital we have year-to-date to reverse in Q4 of fiscal year. Our CapEx at CAD 19.8 million were higher than last year, but remain in line with our target of about CAD 60 million for the full year. The sale of two buildings, including the sale of Boucherville warehouse early in Q3, generated net inflow of CAD 36.5 million in the quarter and contributed to lower our net debt to 2.06 times at the end of the quarter compared to 2.14 times three months ago.

Speaker #2: The 11.5 million difference is mainly due to higher tax pay partially offset by improved working capital in line with our normal seasonality we expect an important portion of the negative working capital we have year to date to reverse in the fourth quarter of fiscal year.

Speaker #2: Our capex at 19.8 million dollars were higher than last year but remain in line with our target of about 60 million for the full year.

Speaker #2: The sale of two buildings including the sale of Bouchaville Warehouse early in the third quarter generated net inflow of 36.5 million dollars in the quarter and contributed to lower our net debt to 2.06 time at the end of the quarter compared to 2.14 times three months ago.

Speaker #2: We continue to expect bringing this ratio lower for year end at around 1.75 times. These sales bring our total monetization of real estate to 60 million since we launched the program over two years ago.

Donald LeCavalier: We continue to expect bringing this ratio lower for year-end at around 1.75 times. These sales bring our total monetization of real estate to CAD 60 million since we launched the program over two years ago. In addition to Saint-Hyacinthe, we are putting for sale another building in Montreal. We expect to sell these two buildings over the next 12 months, and together they should allow us to reach our original target of CAD 100 million. On that note, we will now proceed with the question period.

Speaker #2: In addition to Saint-Hyacinthe, we are putting for sale another building in Montreal. We expect to sell these two buildings over next 12 months and together this should allow us allow us to reach our original target of 100 million dollars.

Speaker #2: On that note, we will now proceed with the question period.

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 étoiles suivies du 1 sur votre clavier téléphonique.

Operator 2: Thank you. Ladies and gentlemen, we will now conduct a question-and-answer session. If you have any questions, please press star followed by 1 on your touch-tone phone. Our first question is from Adam Shine at National Bank Financial. Please go ahead, Adam.

Operator: Thank you. Ladies and gentlemen, we will now conduct a question-and-answer session. If you have any questions, please press star followed by 1 on your touch-tone phone. Our first question is from Adam Shine at National Bank Financial. Please go ahead, Adam.

Speaker #1: Thank you. Ladies and gentlemen, we will now conduct a question and answer session. If you have any questions, please press star followed by 1 on your touchdown phone.

Speaker #1: Nous avons notre première question d'Adam Shine, de la Banque Nationale Financière. Our first question is from Adam Shine at National Bank Financial. Please go ahead, Adam.

Speaker #3: Thanks a lot. Good afternoon. Maybe we could start with the newspaper outsourcing mandates—I think there were two of them that were announced earlier in the spring.

Adam Shine: Thanks a lot. Good afternoon. Maybe we could start with the newspaper outsourcing mandates. I think there were two of them that were announced earlier in the spring, and some new business was ultimately going to transition, I think, into your facilities maybe by the end of August, which spills into Q4. Can you just talk about how that is going, how business might have started to flow in Q3, and then, of course, I think the reality that there is more of a ramp to come in Q4? Can you also elaborate on the puts and takes of the raddar rollout? I think, Sam, you noted that you are pleased with how it went, and obviously a meaningful step up in terms of number of households reached.

Speaker #3: And some new business was ultimately going to transition, I think, into your facilities maybe by the end of August, which spills into Q4.

Speaker #3: But can you just talk about how that's going? How business might have started to flow in Q3, and then, of course, I think the reality that there's more of a ramp to come in Q4.

Speaker #3: And then also, can you elaborate on the puts and takes of the radar rollout? I think, Sam, you noted that you're pleased with how it went, and obviously, it's a meaningful step up in terms of number of households reached.

Speaker #3: But maybe just speak to the fact that revenue might have been a contributor in Q3, but perhaps not necessarily any real profitability quite yet.

Adam Shine: But maybe just talk to the fact that revenue might have been a contributor in Q3, but perhaps not necessarily any real profitability quite yet, and what expectations around that might evolve going into next year. Thanks.

Speaker #3: And what expectations around that might evolve going into next year? Thanks.

Speaker #2: Great. Thank you. Thank you, Adam. Good afternoon. So, on your first question regarding the newspaper insourcing, there are two phases to that. Phase one is pretty much complete.

Sam Bendavid: Great. Thank you, Adam. Good afternoon. On your first question regarding the newspaper insourcing, two phases to that. Phase 1 is pretty much complete. Well, phase 2 is also complete, but that started in August for the insourcing of the newspaper within our Halifax plant. You will see most of those benefits effectively in Q3. On the raddar side of things, happy to share that the interest from our advertisers is there. Current advertisers, potential advertisers, there is good feedback from the market on raddar and the launch. Happy to report that. We do see the increase in revenue on the raddar for the product versus the traditional retail flyers.

Speaker #2: While we expect we will, phase two is also complete, but that started in August for the insourcing of the newspaper within our Halifax plant.

Speaker #2: So you'll see most of those benefits effectively in Q3. On the radar side of on the radar side of things, happy to share that the interest from our advertisers is there current advertisers, potential advertisers.

Speaker #2: I mean, there's good feedback from the market on Radar and the launch, so happy to report that. And we do see the increase in revenue on Radar for the product versus the traditional retail flyers.

Speaker #2: So, we do expect—down the road—for things to settle down, but it's a little bit early to say what the exact puts and takes are in terms of what it means for profitability and revenue growth going forward.

Sam Bendavid: We do expect down the road things to settle down, but it is a little bit early to say what is the exact put and takes of what it means in terms of profitability and revenue growth going forward. But the feedback is pretty good.

Speaker #2: But the feedback is pretty good.

Speaker #3: For the radar oh, sorry. Go ahead, Bruno.

Speaker #2: I just want regarding your assumption for Q3, you were right to saying it did affect revenues, but regarding bottom line, no real impact, but too early to see what will be the impact in the near future.

Adam Shine: Thanks

Sean Stewart: Oh, sorry. Go ahead, Donald.

Sean Steuart: Oh, sorry. Go ahead, Donald.

Donald LeCavalier: Just to add, regarding your assumption for Q3, you were right in saying it is a tech reduce, but regarding the bottom line, no real impact, but too early to see what will be the impact in the near future.

Speaker #3: Okay, so the presumption there is that, obviously, there are some puts and takes. But perhaps, maybe you can just further elaborate: were any investments required in regard to the Q3 rollout?

Adam Shine: Okay. So the presumption there is that, obviously some puts and takes, but perhaps, maybe Donald, you can just further elaborate, any investments were required, in regards to the Q3 rollout?

Speaker #2: No, nothing major regarding that. We have made some investment in Quebec for the first phase. There were some investment to be ready for the phase two, but nothing major in Q3 regarding that.

Donald LeCavalier: No, nothing major regarding that. We have made some investment in Quebec for the first phase. There were some investment to be ready for the phase 2, but nothing major in Q3 regarding that.

Speaker #3: just one last comment going back to your reference to leverage at 1.75 or thereabouts. A nice step down as you've telegraphed sub two times going into the Q4.

Adam Shine: Okay. Just one last comment, going back to your reference to leverage at 1.75 or thereabout, a nice step down as you have telegraphed sub-2 times going into Q4. I am just curious, though, because from what I am looking at in terms of the forecast, and maybe there are some items below EBITDA to reflect upon, any update on where either CapEx is going and/or free cash flow? I mean, is free cash flow poised to be more, perhaps closer to, let us say, CAD 50 overall for the year than necessarily maybe CAD 70 or CAD 80 to get you to 1.75 rather than, let us say, a 1.6 leverage or lower? Thanks.

Speaker #3: I'm just curious though because from what I'm looking at in terms of the forecast and maybe there's some items below EBITDA to reflect upon, but any update on where either capex is going and/or free cash flow?

Speaker #3: I mean, is free cash flow poised to be more, perhaps, closer to, let's say, $50 million overall for the year, rather than necessarily maybe $70 million or $80 million—to get you to $175 million—rather than, let's say, a 1.6 leverage or lower?

Speaker #3: Thanks.

Speaker #2: I would say the mode as I said, my opening remark is usual positive movement. We see in Q4 on the working cap. That's the big impact that will help us to achieve the 175 target.

Donald LeCavalier: I would say the mode, as I said in my opening remark, is usual positive movement we see in Q4 on the working Cap. That is the big impact that will help us to achieve the 1.75 target. There is no real estate impact. CapEx, we said that we figure that we should be in the CAD 60 million region.

Speaker #2: There's no real estate impact. And capex, we said that we figure that we should be in a 60 million region. So for your model, it's mostly on the working cap that you'll see the big improvement in Q4.

Donald LeCavalier: Yeah.

Donald LeCavalier: For our model, it is mostly on the working Cap that you will see the big improvement in Q4.

Speaker #3: Perfect. Thank you very much.

Speaker #1: La prochaine question the next question is from Stephen McLeod at BMO Capital Market. Please go ahead, Stephen.

Adam Shine: Perfect. Thank you very much.

Operator 2: The next question is from Stephen MacLeod at BMO Capital Markets. Please go ahead, Steven.

Operator: The next question is from Stephen MacLeod at BMO Capital Markets. Please go ahead, Steven.

Speaker #3: Thank you. Good evening, everyone. I just wanted to ask about some of the shift in orders that you saw into Q3 from Q4 in the B&E.

Stephen MacLeod: Thank you. Good evening, everyone. I just wanted to ask about just some of the shift in orders that you saw into Q3 from Q4 in the V and E segment. I am just curious if you can quantify what that amount was so we can model it back into Q4.

Speaker #3: B&E segment. And I'm just curious if you can quantify what that amount was, so we can model it back into Q4.

Speaker #2: We won't comment on the amount, but I would say that it's mostly coming from our educational sector and sometimes it's just school ordering depending on the timing of their ordering.

Donald LeCavalier: We won't comment on the amount, but I will say that it is mostly coming from our educational sector and sometime it is just school ordering, depending on the timing of their ordering. There were some issue regarding also some delivery from one of our suppliers. So what we said is overall, we should catch the miss in Q3 and Q4.

Speaker #2: There were some issue regarding also some delivery from one of our suppliers. So what we said is overall we should catch the miss in Q3 and Q4.

Speaker #3: Okay, okay. That's helpful. And then, maybe just turning to the ISM business, you had some nice organic growth in that business in the quarter.

Stephen MacLeod: Okay. That is helpful. Then maybe just turning to the ISM business. You had some nice organic growth in that business in the quarter. Just two follow-up questions regarding ISM. The first one is, can you just comment a little bit about what the acquisition pipeline looks like currently? Sam, you mentioned just some of the synergies you are seeing from some of the acquisitions, and I am just wondering if you can get some commentary around where you are seeing synergies and what the margin profiles of the fully synergized business look like.

Speaker #3: And I was just two follow-up questions regarding ISM. The first one is, can you just comment a little bit about what the acquisition pipeline looks like currently?

Speaker #3: And Sam, you mentioned just some of the synergies you're seeing from some of the acquisitions. And I'm just wondering if you can give some commentary around sort of where you're seeing synergies and what the margin profiles of the fully synergized business look like.

Speaker #2: Great. Thanks. Good afternoon, Stephen. So regarding your first question, the pipeline remains strong for the ISM business. We do expect to have a continuing trend of Q3 into Q4.

Sam Bendavid: Great. Thanks. Good afternoon, Stephen. Regarding your first question, the pipeline remains strong for the ISM business. We do expect to have a continuing trend of Q3 into Q4. With regards to synergies, we see synergies within many levels as we are integrating the platforms mostly within the Quebec regions. We see synergies on the procurement side, we see synergies on the operational side, and that lifts margins by a couple of percentage points.

Speaker #2: With regards to synergies, we see synergies that within many levels as we're integrating the platforms mostly within the Quebec regions. We see synergies on the procurement side.

Speaker #2: We see synergies on the operational side, and that lifts margins by a couple of percentage points.

Speaker #3: That's great, thank you. And then maybe just finally, I'm just wondering if you can comment a little bit about what you're seeing on the inflationary pressure side and how you're managing through higher costs, if you're seeing them.

Stephen MacLeod: That is great. Thank you. Then maybe just finally, I am just wondering if you can comment a little bit about what you are seeing on the inflationary pressure side and how you are managing through higher costs, if you are seeing them.

Speaker #2: We do have across our lines of business, we do have strong contracts. Long-term contracts in some cases. Therefore, inflationary pressures and impact is very limited for us at this point.

Sam Bendavid: We do have, across our lines of business, we do have strong contracts, long-term contracts in some cases. Therefore, inflationary pressures, and impact is very limited for us at this point.

Speaker #3: Great. Thanks so much.

Speaker #1: La prochaine question the next question is from Sean Stewart at PD Cowan. Please go ahead, Sean.

Stephen MacLeod: Great. Thanks so much.

Operator 2: The next question is from Sean Stewart at TD Cowen. Please go ahead, Sean.

Operator: The next question is from Sean Stewart at TD Cowen. Please go ahead, Sean.

Speaker #4: Thanks. Good afternoon, everyone. Just one question. Sam, now that the dust has settled after the packaging sale and the dividend, do you have any perspective on the board's view with respect to the company's trading valuation, which looks cheap to us? And, I guess, opportunities to address that discount at a faster pace?

Sean Stewart: Thanks. Good afternoon, everyone. Just one question. Sam, now that the dust is settled after the packaging sale and the dividend, any perspective on the board's view with respect to the company's trading valuation, which looks cheap to us and, I guess opportunities to address that discount at a faster pace? Are you content just to let free cash flow build and pick off bolt-on ISM acquisitions or are there other bigger picture initiatives you're thinking about to address the valuation?

Sean Steuart: Thanks. Good afternoon, everyone. Just one question. Sam, now that the dust is settled after the packaging sale and the dividend, any perspective on the board's view with respect to the company's trading valuation, which looks cheap to us and, I guess opportunities to address that discount at a faster pace? Are you content just to let free cash flow build and pick off bolt-on ISM acquisitions or are there other bigger picture initiatives you're thinking about to address the valuation?

Speaker #4: Are you content just to let free cash flow build and pick off, bolt on ISM acquisitions or other bigger picture initiatives you're thinking about to address the valuation?

Speaker #2: No, thanks. Thanks for the question, Sean. Good afternoon. I'm not really in a position to comment on the valuation. Obviously, the higher, the better.

Sam Bendavid: Thanks for the question, Sean. Good afternoon. I am not really in a position to comment on the valuation. Obviously, the higher the better. That being said, what we are focused on is growing the business, and making sure EBITDA trends where it should trend for the rest of the year and in 2027. So, the valuation will take care of itself.

Speaker #2: That being said, what we're focused on is growing the business and making sure EBITDA trends where it should transfer for the rest of the year and in will take care of itself.

Speaker #4: And appreciating your smaller float now, do buybacks enter the discussion at any point? Do you worry about lack of trading liquidity undermining the valuation further?

Sean Stewart: Appreciating your smaller float now, does buybacks enter the discussion at any point? Do you worry about lack of trading liquidity undermining the valuation further? How do you weigh that option longer term?

Sean Steuart: Appreciating your smaller float now, does buybacks enter the discussion at any point? Do you worry about lack of trading liquidity undermining the valuation further? How do you weigh that option longer term?

Speaker #4: How do you weigh that option longer term?

Speaker #2: I would say that for the moment, capital allocation for us, we announced the dividend payment. That was the first thing, the return to the shareholders.

Sam Bendavid: I would say that for a moment, capital allocation for us, we announced the dividend payment that was the first thing, the return to the shareholders, obviously following the big payment of CAD 20. On the short term, it is going to be dividend and then ISM acquisition or maybe education acquisition, or not if we do not do any acquisition, pay down the debt. Obviously, we will have a CapEx program, but in line with what we had in recent years. That is the strategy for the moment.

Speaker #2: Obviously, following the big payment of $20. So on the short term, it's going to be dividend and then ISM acquisition or maybe education acquisition or not if we don't do any acquisition, pay down the debt and obviously we'll have a capex program.

Speaker #2: But in line with what we had in recent years. So that's the strategy for the moment.

Speaker #4: And Donald, capex, we should assume going forward similar level to what you had this year?

Sean Stewart: Donald, the CapEx, we should assume going forward similar level to what you had this year?

Sean Steuart: Donald, the CapEx, we should assume going forward similar level to what you had this year?

Speaker #2: Well, it will depend also if we the timing of acquisition, if we do acquisition, but that should be in line. Having said that, if we see opportunity to defend ourself or maybe to support radar with some technology, we might increase in following years, but that's something that we will see with the deployment of radar.

Sam Bendavid: Well, it will depend also on the timing of acquisition, if we do acquisition, but that should be in line. Having said that, if we see opportunity to defend ourselves or maybe to support raddar with some technology, we might increase in following years, but that is something that we will see with the deployment of raddar.

Speaker #4: Okay. Thanks very much, everyone. That's all I had.

Sean Stewart: Okay. Thanks very much, everyone. That is all I had.

Sean Steuart: Okay. Thanks very much, everyone. That is all I had.

Speaker #1: Thank you. La prochaine question the next question will be from Amir Patel at CRBC Capital Markets. Please go ahead.

Operator 2: The next question will be from Hamir Patel at CIBC Capital Markets. Please go ahead.

Operator: The next question will be from Hamir Patel at CIBC Capital Markets. Please go ahead.

Speaker #3: Hi, good afternoon. Sam, as you look out to 2027, I realize the top line might have less visibility, just depending on how that radar's growth plays out.

Hamir Patel: Hi, good afternoon. Sam, as you look out to 2027, I realize the top line might have less visibility just depending on how that raddar's growth plays out. Do you see the base business being capable of organic EBITDA growth next year?

Speaker #3: But do you see the base business being capable of organic EBITDA growth next year?

Speaker #2: Good afternoon. Amir, right now our focus—our laser focus—is on Q4 for the rest of the year. It's really a little bit too early to talk about the outlook for 2027.

Sam Bendavid: Good afternoon, Amir. Really, right now our focus and laser focus is on Q4. For the rest of the year, really, a little bit too early to talk about outlook for 2027.

Speaker #3: Okay. Fair enough. And just on the ISM side, how big could you see that business growing over time? And maybe if you could give us a sense as to the potential scale of acquisition opportunities that you see in that market.

Hamir Patel: Okay, fair enough. On the ISM side, how big could you see that business growing over time? Maybe if you could give us a sense as to the potential scale of acquisition opportunities that you see in that market.

Speaker #2: Sure. There is definitely a world where the ISM business we currently have could double in size. Not within that's within reach. And there is a good pipeline of potential deals.

Sam Bendavid: Sure. There is definitely a world where the ISM business we currently have could double in size. That is within reach, and there is a good pipeline of potential deals. We are active and when the right opportunity comes forward, we will act on it.

Speaker #2: So we're active and on the right opportunity comes forward, we'll act on it.

Speaker #3: Okay, fair enough. Thanks to all you had. I'll turn it over.

Hamir Patel: Okay. Fair enough. Thanks. That is all I had. I will turn it over.

Speaker #1: Next question la prochaine question. Drew McReynolds, RBC. Please go ahead.

Operator 2: Next question, Drew McReynolds, RBC. Please go ahead.

Operator: Next question, Drew McReynolds, RBC. Please go ahead.

Speaker #5: Yeah, thanks very much. Donald, can you just—sorry, I missed the real estate that's still outstanding with respect to the $100 million target. Can you just kind of clarify your comments on that?

Drew McReynolds: Yeah, thanks very much. Donald, can you just, sorry, I missed the real estate that is still outstanding with respect to the CAD 100 million target. Can you just clarify your comments on that? Secondly, just on the book printing volume side, I think in Q3, book printing volumes were up. Just wondering what Q4 looks like and seems like, I think last quarter you were pretty confident in that pipeline building. So if you could just provide an update on that. Thank you.

Speaker #5: And then secondly, just on the book printing, volume side, I think in Q3, book printing volumes were up. Just wondering what Q4 looks like and seems like I think last quarter you were pretty confident in that pipeline of building.

Speaker #5: So, if you could just provide an update on that, thank you.

Speaker #2: Yes. For the real estate, the 40 million that will get to 60 to the 100 is by the addition of the new building in Montreal.

Donald LeCavalier: Yes. For the real estate, the CAD 40 million that will get to CAD 60 million to the CAD 100 million is by the addition of the new building in Montreal. That is a building that we use to actually print La Presse on the printing side, then we transfer it to the packaging sector and part of the transaction with the buyer of packaging was that we kept the building, and this is why now we are putting this building for sale. That was not in the plan at the beginning, but we know we have some other buildings that will come in play and that we just confirmed this one this week. It is for sale as we speak. We are confident that both building, the other one is Saint-Hyacinthe. Recall that we closed that plant in April 2025. It is in the market right now.

Speaker #2: That's a building that we use to actually print La Presse on the printing side. Then we transfer it to the packaging sector. And part of the transaction with the buyer of packaging was that we kept the building.

Speaker #2: And this is why now we're putting this building for sale. So, that was not in the plan at the beginning, but we knew we had some other buildings that would come into play and we just confirmed this one this week.

Speaker #2: So it is for sale as we speak. So we're confident that both buildings, the other one is Saint-Hyacinthe, recall that we closed that plan in April 2025.

Speaker #2: It's in the market right now. We have some movement, and we're confident about the next 12 months. Obviously, the market is slower right now than it was a couple of years ago, when we launched that program.

Donald LeCavalier: We have some movement, and we are confident that the next 12 months, obviously the market is lower right now than two years ago when we launched that program. But we are still confident new transaction in the next 12 months. As far as the question regarding book, I think that something to highlight in that business is last year was a strong year for TC because we had a one-timer, and we mentioned it a couple of quarters, Q2 and Q3 last year. It was a great impact for us. This year, this one-timer was not there, so we are really encouraged by the Q3 and the forecast for that business because we were able, with the team, to get out there and replace that business. That business that we are getting in in our plant right now is not a one-timer.

Speaker #2: But we're still confident in the transaction in the next 12 months. As far as the question regarding book, I think that's something to highlight in that business is last year we were it was a strong year for TC because we had a one-timer and we mentioned it a couple of quarters, Q2 and Q3 last year.

Speaker #2: It was a great impact for us. So this year, this one-timer was not there. So we're really encouraged by the third quarter and the forecast for that business because we were able with the team to get out there and replace that business and that business that was getting in and our plan right now is not a one-timer.

Speaker #2: Obviously, we still need to produce and deliver every year, but that's a good turnaround for that business. So very encouraged to see the forecast for that business.

Sam Bendavid: Obviously, we still need to produce and deliver every year, but that is a good turnaround for that business. So very encouraged to see the forecast for that business.

Speaker #5: Okay. Just thank you. And one follow-up just on the corporate costs post-packaging and kind of the running off of the transition agreement. Just where are you in kind of hitting or landing where you want to be ultimately with corporate costs?

Drew McReynolds: Okay. Thank you. And one follow-up just on the corporate costs, post packaging and kind of the running off of the transition agreement. Just where are you in kind of hitting or landing where you want to be ultimately with corporate costs?

Speaker #2: Yeah. We'll get more color at year-end regarding that, regarding the way we will present the number because management fees will change also. But I would say the good news is, if you look in the MD&A right now, year to date after Q3, the real decline in cost is $3 million.

Donald LeCavalier: Yeah. We will give more color at year-end regarding that, regarding the way we will present a number because management fees will change also. I would say the good news is if you look in the MD&A right now, year to date after three quarters, what is the real decline in cost is CAD 3 million. Obviously, there were noise coming from the share for management. If you look at Q3, there is CAD 2.1 million. We are definitely going in the good direction. We are not up to the run rate that we should have, but we see the movement in the right direction. Obviously, we should maintain that momentum in Q4, and it should even get bigger next year. Great momentum on that side.

Speaker #2: Obviously, there were noise coming from the share for management. And if you look at Q3, there's 2.1 million. So that. We're definitely going in the good direction.

Speaker #2: So we're not up to the run rate that we should have, but we see movement in the right direction. So, obviously, we should maintain that momentum in Q4.

Speaker #2: And it should even get bigger next year. So great momentum on that side. We start to see the impact of what was recently done.

Speaker #5: Okay, got it. Thank you very much.

Sam Bendavid: See the impact of what was recently done.

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

Drew McReynolds: Okay, got it. Thank you very much.

Operator 2: Ladies and gentlemen, if there are any additional questions at this time, please press the star followed by the one. As a reminder, if you are using a speakerphone, please lift the handset before pressing the keys. Thank you. The next question is from Maher Yaghi at Scotiabank. Please go ahead.

Operator: Ladies and gentlemen, if there are any additional questions at this time, please press the star followed by the one. As a reminder, if you are using a speakerphone, please lift the handset before pressing the keys. Thank you. The next question is from Maher Yaghi at Scotiabank. Please go ahead.

Speaker #1: Thank you. La prochaine question, the next question, is from Maher Yagi at Scotiabank. Please go ahead.

Speaker #3: Parfait. Merci d'avoir pris mes questions. I wanted to ask you, in terms of your previous question on how do we grow EBITDA. I know you, David, mentioned that we're not in a situation to talk about that yet for 2027.

Maher Yaghi: I wanted to ask you in terms of your previous question on how do we grow EBITDA. I know, David, you mentioned that we are not in a situation to talk about that yet for 2027. But maybe just if I wanted to double down. What needs to happen for us to see EBITDA grow? Do we need a combination of revenue growth and margin improvement, or that can happen just on the cost side, improving margins? Maybe, Sam, if you can elaborate a little bit on your strategy for growing revenue next year, that would help us maybe just understand where you are heading. Thank you.

Speaker #3: But maybe just if I wanted to double down, what needs to happen for us to see EBITDA grow? Is it do we need a combination of revenue growth and margin improvement, or that can happen just on the cost side improving margins?

Speaker #3: Maybe, Sam, if you could elaborate a little bit on your strategy for growing revenue next year, that would help us better understand where you're heading.

Speaker #3: Thank you.

Speaker #2: Thanks for the question. It's a heavy question to answer because we've got a mixed— we've got a mixed portfolio, right? So it's hard to pinpoint the answer, obviously.

Sam Bendavid: Thanks for the question. It is a heavy question to answer because we have got a mixed portfolio, right? So hard to pinpoint the answer. Obviously, if there is revenue growth, then that solves the problem. But, again, this is looking ahead, right? We are really remaining focused on Q4 and the rest of the year. So it is hard at this point to provide more colors than that the teams are really working on changing the trajectory of some of the legacy business, and continuing to grow the ISM business. That is as much as I can share at this point.

Speaker #2: If there's revenue growth, then that solves the problem. But again, this is looking ahead, right? And we're really, really remaining focused on Q4 and the rest of the year.

Speaker #2: So it's hard at this point to provide more color, but the teams are really working on changing the trajectory of some of the legacy business and continuing to grow the ISM business.

Speaker #2: That's as much as I can share at this point.

Speaker #4: And maybe.

Speaker #2: Just to add some color on it, Maher, you might recall some of the presentation we did where we encourage is that if you look at the pie of our business 10 years ago, regarding our pie today, the portion that is growing is getting bigger and bigger—mostly ISM—but we see education also, like we said a couple of times, probably growing in the future either by organic growth or acquisition.

Donald LeCavalier: Maybe just to add some color on it, Maher, you might recall some of the presentation we did. Where we encourage is that if you look at the pie of our business 10 years ago regarding our pie today, the portion that is growing is getting bigger and bigger, mostly ISM, but we see Education also, like we said a couple of times, being probably growing in the future, either by organic growth or acquisition. So that portion is getting bigger and bigger. What was the old printing business, the magazine, the flyer, newspaper, obviously still important for us, but in terms of percentage of business, that is much lower than it used to be. So where exactly that the organic growth on one side will compensate for the negative, we are not there to make the call today, but we like the direction we are going with the portfolio.

Speaker #2: So, that portion is getting bigger and bigger. And what was your—the old printing business, the magazine, the flyer, newspaper—obviously it's still important for us, but in terms of percentage of business, that is much lower than it used to be.

Speaker #2: So where exactly is it that the organic growth on one side will compensate for the negative? We're not there to make the call today, but we like the direction we're going with the portfolio.

Speaker #3: Okay, thanks, Donald, for that. Sam, maybe I can go back to—I think you mentioned earlier that you saw growth in ISM both organically and through the M&A side.

Maher Yaghi: Okay, thanks, Donald, for that. Sam, maybe I can go back to you. I think you mentioned earlier that you saw growth in ISM, both from organically and through the M&A side. Is there a way to give us maybe a sense of how much organic growth you saw in ISM in revenues in the quarter?

Speaker #3: Is there a way to give us maybe a sense of how much organic growth you saw in ISM revenues in the quarter?

Speaker #2: Sure. That organic growth for the business was roughly 7%.

Sam Bendavid: Sure. That organic growth for the business was roughly 7%.

Speaker #3: Okay, nice. Okay. Okay, perfect. Maybe just a follow-up on an earlier question about the books and education. I understand you didn't want to quantify how much revenue got pushed into Q4, but have those orders been signed and firmed up since they got pushed out, or are we still waiting for them to be finalized?

Maher Yaghi: Okay, nice. Okay. Okay, perfect. Just a follow-up on an earlier question on the books and Education. I understand you didn't want to quantify how much revenue got pushed into Q4, but have those orders been signed and firmed up since they got pushed out, or are we still waiting for them to be finalized?

Speaker #2: I'll say that the Q4, the momentum is there. Are we going to catch everything back? We're confident. Having said that, our year-end this year will be October 2024, I think.

Donald LeCavalier: I'll say that the Q4, the momentum is there. Are we going to catch everything back? We're confident. Having said that, our year-end this year will be 25 October 2024. So the timing of one week might be an impact, but we're confident. This is why I reiterate our confidence to deliver year over year flat. This is part of the reason why we're confident to deliver that. We expect Education, to name them, to get back to their normal level of sale in Q4 to compensate for the missing Q3.

Speaker #2: 25th. So the timing of one week might be an impact, but we're confident that this is why we're I reiterate our confidence to deliver year-over-year flat.

Speaker #2: This is part of our this is part of the reason why we're confident to deliver that. We expect education to name them to get back to their normal level of sale in Q4 to compensate for the missing Q3.

Speaker #3: Okay, and just one last question on Radar. There was an earlier question regarding how that is maybe starting to help on the revenue side.

Maher Yaghi: Okay. Just one last question on raddar. So there was an earlier question regarding how that is maybe starting to help on the revenue side. We did see some pressure in printing on the margin side. Is that because of this launch and this rollout that you're doing, or is it because of other reasons that we saw that pressure come in?

Speaker #3: We did see some pressure in printing on the margin side. Is that because of this launch and this rollout that you're doing, or it's because of other reasons that we saw that pressure come in?

Speaker #2: I would say it's a mix. So what you just said as an impact, also recall that the ISM business through the year we've been increasing and we're confident to increase the margin, but the margin of the ISM business is not at the level of the what I'll call the flyer business and newspaper business.

Donald LeCavalier: I would say it is a mix. What you just said has an impact. Also recall that the ISM business through the year, we have been increasing, and we are confident to increase the margin, but the margin of the ISM business is not at the level of the, what I will call the flyer business and newspaper business. But the good news is that the margin is growing in that sector. It was a very strong quarter for that group. That coming with some decrease in the printing and the old flyer business, that is part of the reason the margin is going down.

Speaker #2: But the good news is that the margin is growing in that sector, so it was a very strong quarter for that group. And that's coming with some decrease in the printing and the old flyer business.

Speaker #2: That's part of the reason the margin is going down.

Speaker #3: Okay. And on the revenue contribution side from radar, is that additive to your total revenue generation, or there's some puts and takes in terms of yes, you're making more money from doing it, but there could be some revenue churn.

Maher Yaghi: Okay. On the revenue contribution side from raddar, is that additive to your total revenue generation or there is some puts and takes in terms of, yes, you are making more money from doing it, but there could be some revenue churn for some of your existing client base. How should we think about the revenue opportunity in that segment for 2027?

Speaker #3: For some of your existing client base, how should we think about the revenue opportunity in that segment for 2027?

Speaker #2: Yeah. Like Sam said, we'll have definitely more colors regarding 2027 for the entire impact of radar. But what I can tell you, it does have an impact right now the revenues, like we said earlier, because recall that distribution rest of Canada was not done by TC, was done by other players.

Donald LeCavalier: Yeah. As Sam said, we will have definitely more colors regarding 2027 for the entire impact of raddar. But what I can tell you, it does have an impact right now on the revenues, as we said earlier, because recall that distribution rest of Canada was not done by TC, was done by other players. Now that we do distribution with Canada Post, there is an impact on the top line. That was a few million impact into Q3, and we will comment more regarding the model for 2027.

Speaker #2: And now that we do distribution with Canada Post, there's an impact on the top line. That was a few million impact in the Q3, and we will comment more regarding the model for 2027.

Speaker #3: Okay. Thank you, very much.

Speaker #2: Thank you.

Speaker #1: Thank you. Merci. Mr. Lapointe, there are no further questions at this time.

Maher Yaghi: Okay. Thank you very much.

Sam Bendavid: Thank you.

Operator 2: Thank you. Merci. Mr. Lapointe, there are no further questions at this time.

Operator: Thank you. Merci. Mr. Lapointe, there are no further questions at this time.

Speaker #2: Thank you, everyone, for joining us on the call today. And we look forward to speaking to you soon.

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

Speaker #1: Madames 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.

Operator 2: Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.

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