Transcontinental Inc. announces its financial results for the third quarter of fiscal 2018

Highlights

• Revenues increased by $280.2 million, or 58.7%, from $477.7 million to $757.9 million, mainly as a result of the transformational acquisition of Coveris Americas completed on May 1, 2018. This increase was slightly mitigated by the sale of our local and regional newspaper media assets in Québec and the sale of the printing activities of our Fremont, California, plant.
  
• Operating earnings decreased by $28.6 million, or 41.9%, from $68.2 million to $39.6 million. Adjusted operating earnings, which exclude restructuring and other costs (gains), impairment of assets, amortization of intangible assets and the reversal of the fair value adjustment of inventory sold arising from business combinations, increased by $10.5 million, or 14.2%, from $74.2 million to $84.7 million.
  
• Net earnings decreased by $29.7 million, or 60.6%, from $49.0 million to $19.3 million. Adjusted net earnings, which exclude restructuring and other costs (gains), impairment of assets, amortization of intangible assets and the reversal of the fair value adjustment of inventory sold arising from business combinations, net of related income taxes, decreased by $0.8 million, or 1.5%, from $52.9 million to $52.1 million.
  
• Completed the transformational acquisition of Coveris Americas on May 1, 2018, positioning TC Transcontinental as a North American leader in flexible packaging.

MONTRÉAL, Sept. 06, 2018 (GLOBE NEWSWIRE) -- Transcontinental Inc. (TSX: TCL.A TCL.B) announces its results for the third quarter of fiscal 2018, which ended July 29, 2018.

"The third quarter represents a significant milestone for us, marking the transformational acquisition of Coveris Americas and its first contribution to our results, said François Olivier, President and Chief Executive Officer of TC Transcontinental.

"Coveris Americas generated solid revenues, with more moderate profitability than anticipated. That being said, we are maintaining our previously established targets and we are confident that this acquisition will further contribute to our profitability as of the fourth quarter. We launched the rigorous integration of our activities and we are on track to realize the anticipated synergies. Lastly, we are satisfied with the performance of our packaging activities acquired prior to the Coveris Americas acquisition, both in terms of revenue growth and profitability.

"On the printing side, we posted another good quarter excluding the non-cash effect of the end of certain newspaper printing contracts. In addition, the demand for our service offering to retailers remained relatively stable, which reflects the effectiveness of flyers for driving traffic to the store.

"In summary, we are pursuing our business plan with confidence. We expect to continue generating significant cash flows, which will enable us to reduce our net indebtedness."

 Financial Highlights

(in millions of dollars, except per share amounts)	Q3-2018			Q3-2017		Variation in %			NINE MONTHS 2018		NINE MONTHS 2017		Variation in %
Revenues	$	757.9		$	477.7	58.7		%	$	1,794.3	$	1,480.0	21.2		%
Adjusted revenues (1)	757.9			477.7		58.7			1,692.2		1,480.0		14.3
Operating earnings before depreciation and amortization	89.7			93.7		(4.3	)		383.1		276.9		38.4
Adjusted operating earnings before depreciation and amortization (1)	116.4			95.4		22.0			297.1		273.4		8.7
Operating earnings	39.6			68.2		(41.9	)		262.1		198.4		32.1
Adjusted operating earnings (1)	84.7			74.2		14.2			225.2		208.3		8.1
Net earnings	19.3			49.0		(60.6	)		146.4		138.1		6.0
Net earnings per share	0.22			0.64		(65.6	)		1.81		1.79		1.1
Adjusted net earnings (1)	52.1			52.9		(1.5	)		152.4		142.7		6.8
Adjusted net earnings per share (1)	0.59			0.68		(13.2	)		1.89		1.85		2.2
(1) Please refer to the section entitled "Reconciliation of Non-IFRS financial measures" in this press release for adjusted data presented above.

2018 Third Quarter Results

Revenues increased by $280.2 million, or 58.7%, from $477.7 million in the third quarter of 2017 to $757.9 million in the corresponding period of 2018. This increase is mainly attributable to the contribution from the acquisition of Coveris Americas completed on May 1, 2018 and, to a lesser extent, to the acquisitions of Multifilm Packaging and Les Industries Flexipak, the organic growth in our Packaging Sector revenues as well as the favourable effect of the price increase for certain types of papers in the Printing Sector. In the Printing Sector, the end of the printing of the San Francisco Chronicle, La Presse and The Globe and Mail in the Maritimes drove a major portion of the decrease in sales in the quarter. In addition, revenues from our service offering to Canadian retailers were slightly lower in the third quarter of 2018 compared to a solid quarter in the prior year. In the other Printing Sector verticals, the decline in revenues followed the same trends as in previous quarters.

Operating earnings decreased by $28.6 million, or 41.9%, from $68.2 million in the third quarter of 2017 to $39.6 million in the third quarter of 2018. This decrease in mostly due to the unfavourable impact of items related to the acquisition of Coveris Americas, namely the amortization of intangible assets, acquisition and integration costs and the reversal of the fair value adjustment of inventory sold arising from business combinations. Adjusted operating earnings increased by $10.5 million, or 14.2%, from $74.2 million in the third quarter of 2017 to $84.7 million in the third quarter of 2018. Excluding the $11.3 million unfavourable impact of the end of the printing of the San Francisco Chronicle, La Presse and The Globe and Mail in the Maritimes, which had no impact on cash, adjusted operating earnings increased by $21.8 million, or 29.4%. This increase is mostly attributable to the contribution from our acquisitions in the Packaging Sector, the favourable effect of Corporation-wide cost reduction initiatives as well as the impact of the price increase for certain types of paper in the third quarter of 2018, partially offset by the above-mentioned decreases in volume in certain Printing Sector verticals. With respect to the acquisition of Coveris Americas, profit margins were lower than expected at the time of the acquisition, namely as a result of the impact of a delay in the pass-through of increases in the cost of paper, resin and freight provided for in several customer contracts, which had an unfavourable impact on the quarter's adjusted operating earnings.

Net earnings decreased by $29.7 million, or 60.6%, from $49.0 million in the third quarter of 2017 to $19.3 million in the third quarter of 2018. This decrease is mostly due to lower operating earnings and higher financial expenses, partially offset by lower income taxes. On a per share basis, net earnings went from $0.64 to $0.22. Excluding restructuring and other costs (gains), impairment of assets, amortization of intangible assets and the reversal of the fair value adjustment of inventory sold arising from business combinations, net of related income taxes, adjusted net earnings decreased by $0.8 million, or 1.5%, from $52.9 million in the third quarter of 2017 to $52.1 million in the third quarter of 2018. This decrease is mostly due to the lower adjusted operated earnings explained above. On a per share basis, adjusted net earnings went from $0.68 to $0.59 due to higher financial expenses, as explained above, but also due to the issuance of 10.8 million Class A Subordinate Voting Shares of the Corporation.

2018 First Nine Months Results

Revenues increased by $314.3 million, or 21.2%, from $1,480.0 million in the first nine months of 2017 to $1,794.3 million in the corresponding period in 2018. Excluding the $102.1 million favourable effect of the accelerated recognition of deferred revenues related to the agreement signed with Hearst in December 2017, adjusted revenues went from $1,480.0 million in the first nine months of 2017 to $1,692.2 million in the same period in 2018, an increase of 14.3%. This increase is mainly attributable to the contribution from the acquisition of Coveris Americas and, to a lesser extent, of Multifilm Packaging and Les Industries Flexipak, as well as the organic growth in Packaging Sector revenues as a result of higher volume in our existing operations. However, this increase was partially offset by the effect of the disposals and closures of local newspapers, the unfavourable exchange rate effect and, to a lesser extent, the organic decline in revenues in certain Printing Sector verticals in the first nine months of 2018.

Operating earnings increased by $63.7 million, or 32.1%, from $198.4 million in the first nine months of 2017 to $262.1 million in the corresponding period in 2018. This increase is mostly attributable to the favourable effect of the accelerated recognition of deferred revenues, higher gains on the sale of certain activities in the Media Sector and net gains on the sale of buildings, partially offset by the unfavourable impact of items related to the acquisition of Coveris Americas, namely the amortization of intangible assets, acquisition and integration costs and the reversal of the fair value adjustment of inventory sold arising from business combinations. Adjusted operating earnings increased by $16.9 million, or 8.1%, from $208.3 million to $225.2 million. Excluding the stock-based compensation expense, which decreased by $5.8 million as a result of the change in the share price in the first nine months of 2018 compared to the corresponding period in 2017, and the unfavourable impact of the end of the printing of the San Francisco Chronicle, La Presse and The Globe and Mail in the Maritimes of $16.9 million, adjusted operating earnings increased by $28.0 million, or 13.4%. This increase is mostly attributable to the contribution from our acquisitions and the organic growth in adjusted operating earnings as a result of the favourable effect of Corporation-wide cost reduction initiatives, mostly offset by the above-mentioned decreases in volume in certain Printing Sector verticals.

Net earnings increased by $8.3 million, or 6.0%, from $138.1 million in the first nine months of 2017 to $146.4 million in the corresponding period in 2018. This increase is mostly attributable to the growth in operating earnings, partially offset by higher income taxes and financial expenses. On a per share basis, net earnings went from $1.79 to $1.81. Excluding the accelerated recognition of deferred revenues, accelerated depreciation, restructuring and other costs (gains), impairment of assets, amortization of intangible assets and the reversal of the fair value adjustment of inventory sold arising from business combinations, net of related income taxes, as well as the impact of the U.S. tax reform on deferred taxes, adjusted net earnings increased by $9.7 million, or 6.8%, from $142.7 million in the first nine months of 2017 to $152.4 million in the corresponding period in 2018. On a per share basis, adjusted net earnings went from $1.85 to $1.89 due to the above-mentioned items, partially offset by the effect of the issuance of 10.8 million Class A Subordinate Voting Shares of the Corporation during the third quarter of 2018.

For more detailed financial information, please see the Management’s Discussion and Analysis for the third quarter ended July 29, 2018 as well as the financial statements in the “Investors” section of our website at www.tc.tc

Outlook

In our Packaging Sector, the acquisition of Coveris Americas will significantly contribute to revenues and adjusted operating earnings for the next three quarters compared to the corresponding quarters of the prior year. We expect revenues to be similar to those anticipated at the time of the acquisition and our profit margins to gradually improve over the coming quarters as a result of an increased focus on manufacturing efficiency as well as the effect of the announced synergies, which should gradually begin at the end of the fourth quarter of 2018 to reach the target of US$10 million on an annualized basis at the end of the second quarter of 2019. In our packaging operations other than those of Coveris Americas, we should continue generating sustained organic growth in revenues with the help of our well-established sales force, which should also contribute to profitability. Raw materials and transportation costs could once again have an unfavourable effect on profit margins should they experience a sustained increase.

In the Printing Sector, we expect revenues from our service offering to Canadian retailers to remain relatively stable over the next 12 months. The newspaper publishing vertical will continue to be affected by the end of the recognition of deferred revenues related to certain newspaper printing contracts (see Table #4), including the contract to print the San Francisco Chronicle, which will have an unfavourable effect on adjusted operating earnings of approximately $12 million in the next quarter, $10 million in the first quarter of 2019 and $4 million in the second quarter of 2019, with a limited impact on cash. In addition, revenues from the transition with Hearst, which began in January 2018, will cease at the end of the fourth quarter of 2018. In all the other printing verticals, we expect our revenues will continue to be affected by the same trends observed in recent quarters. Lastly, to limit the impact of these decreases, we will continue with our operational efficiency initiatives and will benefit from the cost reductions associated with the closure of a plant located in Montréal until the end of the first quarter of 2019.

To conclude, we will continue to generate significant cash flows from all our operating activities, which should enable us to reduce our net indebtedness.

Reconciliation of Non-IFRS Financial Measures

The financial information has been prepared in accordance with IFRS. However, financial measures used, namely the adjusted revenues, the adjusted operating earnings, the adjusted operating earnings before depreciation and amortization, the adjusted net earnings, the adjusted net earnings per share, the net indebtedness and the net indebtedness ratio, for which a complete definition is presented in the Management's Discussion and Analysis for the third quarter ended July 29, 2018, and for which a reconciliation is presented in the following table, do not have any standardized meaning under IFRS and could be calculated differently by other companies. During the three-month period ended July 29, 2018, the Corporation updated its definition of certain terms presented in the tables hereafter, which now exclude the amortization of intangible assets and the reversal of the fair value adjustment of inventory sold arising from business combinations. We believe that many of our readers analyze the financial performance of the Corporation’s activities based on these non-IFRS financial measures as such measures may allow for easier comparisons between periods. These measures should be considered as a complement to financial performance measures in accordance with IFRS. They do not substitute and are not superior to them.

We also believe that the adjusted revenues, the adjusted operating earnings before depreciation and amortization, the adjusted operating earnings, that takes into account the impact of past investments in property, plant and equipment and intangible assets, and the adjusted net earnings are useful indicators of the performance of our operations. Furthermore, management also uses some of these non-IFRS financial measures to assess the performance of its activities and managers.

Regarding the net indebtedness and net indebtedness ratio, we believe that these indicators are useful to measure the Corporation’s financial leverage and ability to meet its financial obligations.

Reconciliation of revenues - Third quarter and cumulative
			Three months ended										Nine months ended
(in millions of dollars)							July 29, 2018				July 30, 2017			July 29, 2018				July 30, 2017
Revenues			$				757.9		$		477.7		$	1,794.3		$		1,480.0
Accelerated recognition of deferred revenues (1)							—				—			(102.1	)			—
Adjusted revenues			$				757.9		$		477.7		$	1,692.2		$		1,480.0
(1) Related to the agreement signed with Hearst on December 21, 2017. Please refer to note 18, "New agreement with Hearst", in the unaudited condensed interim consolidated financial statements  for the third quarter ended July 29, 2018.
Reconciliation of operating earnings - Third quarter and cumulative
				Three months ended									Nine months ended
(in millions of dollars)				July 29, 2018						July 30, 2017				July 29, 2018		July 30, 2017
Operating earnings				$		39.6				$	68.2		$	262.1		$	198.4
Accelerated recognition of deferred revenues (1)				—							—			(102.1	)	—
Accelerated depreciation (1)				—							—			22.0		—
Restructuring and other costs (gains)				14.3							1.7			—		(6.0				)
Impairment of assets				2.9							—			6.6		2.5
Amortization of intangible assets arising from business combinations (2)				18.4							4.3			27.1		13.4
Reversal of the fair value adjustment of inventory sold arising from business combinations				9.5							—			9.5		—
Adjusted operating earnings				$		84.7				$	74.2		$	225.2		$	208.3
Depreciation and amortization (3)				50.1							25.5		121.0			78.5
Accelerated depreciation (1)				—							—		(22.0		)	—
Adjusted operating earnings before depreciation and amortization				$		116.4				$	95.4		$	297.1		$	273.4
(1) Related to the agreement signed with Hearst on December 21, 2017. Please refer to note 18, "New agreement with Hearst", in the unaudited condensed interim consolidated financial statements for the third quarter ended July 29, 2018. (2) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements. (3) Depreciation and amortization excludes amortization of intangible assets arising from business combinations presented above.
Reconciliation of net earnings - Third quarter
				Three months ended
				July 29, 2018									July 30, 2017
(in millions of dollars, except per share amounts)				Total							Per share			Total		Per share
Net earnings				$		19.3				$	0.22		$	49.0		$	0.64
Restructuring and other costs (gains), net of related income taxes				10.0						0.11				1.1		0.01
Impairment of assets, net of related income taxes				2.1						0.02				—		—
Amortization of intangible assets arising from business combinations, net of related income taxes (1)				13.5						0.16				2.8		0.04
Reversal of the fair value adjustment of inventory sold arising from business combinations, net of related income taxes				7.2						0.08				—		—
Adjusted net earnings				$		52.1				$	0.59		$	52.9		$	0.68
(1) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements.
Reconciliation of net earnings - Cumulative
				Nine months ended
				July 29, 2018									July 30, 2017
(in millions of dollars, except per share amounts)							Total				Per share			Total		Per share
Net earnings				$		146.4				$	1.81		$	138.1		$	1.79
Accelerated recognition of deferred revenues, net of related income taxes (1)				(75.4				)		(0.93		)		—		—
Accelerated depreciation, net of related income taxes (1)				16.3						0.20				—		—
Restructuring and other costs (gains), net of related income taxes				(3.6				)		(0.04		)		(6.0	)	(0.08				)
Impairment of assets, net of related income taxes				4.9						0.06				1.8		0.02
Impact of the U.S. tax reform on deferred taxes				36.6						0.45				—		—
Amortization of intangible assets arising from business combinations, net of related income taxes (2)				20.0						0.25				8.8		0.11
Reversal of the fair value adjustment of inventory sold arising from business combinations, net of related income taxes				7.2						0.09				—		—
Adjusted net earnings				$		152.4				$	1.89		$	142.7		$	1.85
(1) Related to the agreement signed with Hearst on December 21, 2017. Please refer to note 18, "New agreement with Hearst", in the unaudited condensed interim consolidated financial statements for the third quarter ended July 29, 2018. (2) Intangible assets arising from business combinations include our customer relationships, trademarks and non-compete agreements.

Reconciliation of net indebtedness
(in millions of dollars, except ratios)		As at July 29, 2018						As at October 29, 2017
Long-term debt				$	1,256.0			$	348.3
Current portion of long-term debt				250.0				—
Cash				(27.7		)		(247.1		)
Net indebtedness				$	1,478.3			$	101.2
Adjusted operating earnings before depreciation and amortization (last 12 months)				$	420.4			$	396.7
Net indebtedness ratio				3.5			x	0.3			x

Dividend

The Corporation's Board of Directors declared a quarterly dividend of $0.21 per share on Class A Subordinate Voting Shares and Class B Shares. This dividend is payable on October 16, 2018 to shareholders of record at the close of business on September 28, 2018.

Conference Call

Upon releasing its third quarter 2018 results, the Corporation will hold a conference call for the financial community today at 4:15 p.m. The dial-in numbers are 1 647 788-4922 or 1 877 223-4471. Media may hear the call in listen-only mode or tune in to the simultaneous audio broadcast on the Corporation’s website, which will then be archived for 30 days. For media requests or interviews, please contact Nathalie St-Jean, Senior Advisor, Corporate Communications of TC Transcontinental, at 514 954-3581.

Profile

TC Transcontinental is a leader in flexible packaging in North America, and Canada’s largest printer. The Corporation is also a Canadian leader in its specialty media segments. For over 40 years, TC Transcontinental's mission has been to create products and services that allow businesses to attract, reach and retain their target customers.

Respect, teamwork, performance and innovation are strong values held by the Corporation and its employees. TC Transcontinental's commitment to its stakeholders is to pursue its business activities in a responsible manner.

Transcontinental Inc. (TSX: TCL.A TCL.B), known as TC Transcontinental, has over 9,000 employees, the majority of which are based in Canada, the United States and Latin America. TC Transcontinental had revenues of approximately C$2.0 billion for the fiscal year ended October 29, 2017. The Corporation has completed, on May 1, 2018, the transformational acquisition of Coveris Americas which generated approximately C$1.26 billion in revenues (US$966 million) for its fiscal year ended December 31, 2017. For more information, visit TC Transcontinental's website at www.tc.tc.

Forward-looking Statements

Our public communications often contain oral or written forward-looking statements which are based on the expectations of management and inherently subject to a certain number of risks and uncertainties, known and unknown. By their very nature, forward-looking statements are derived from both general and specific assumptions. The Corporation cautions against undue reliance on such statements since actual results or events may differ materially from the expectations expressed or implied in them. Forward-looking statements may include observations concerning the Corporation's objectives, strategy, anticipated financial results and business outlook. The Corporation's future performance may also be affected by a number of factors, many of which are beyond the Corporation's will or control. These factors include, but are not limited to, the economic situation in the world, structural changes in the industries in which the Corporation operates, the exchange rate, availability of capital, energy costs, competition, the Corporation's capacity to engage in strategic transactions and effectively integrate acquisitions into its activities without affecting its growth and its profitability, while achieving the expected synergies, the political, social, regulatory and legislative environment, in particular with regard to the environment and sustainable development, the safety of its packaging products used in the food industry, innovation of its offering, the protection of its intellectual property rights, concentration of its sales in certain segments, cybersecurity and data protection, recruiting and retaining qualified personnel in certain geographic areas and industry sectors, taxation, interest rate and net indebtedness level. The main risks, uncertainties and factors that could influence actual results are described in the Management's Discussion and Analysis (MD&A) for the fiscal year ended October 29, 2017 and in the latest Annual Information Form, and have been updated in the MD&A for the second quarter ended April 29, 2018.

Unless otherwise indicated by the Corporation, forward-looking statements do not take into account the potential impact of nonrecurring or other unusual items, nor of divestitures, business combinations, mergers or acquisitions which may be announced after the date of September 6, 2018.

The forward-looking statements in this press release are made pursuant to the “safe harbour” provisions of applicable Canadian securities legislation.

The forward-looking statements in this release are based on current expectations and information available as at September 6, 2018. Such forward-looking information may also be found in other documents filed with Canadian securities regulators or in other communications. The Corporation's management disclaims any intention or obligation to update or revise these statements unless otherwise required by the securities authorities.

For information:

Media  Nathalie St-Jean Senior Advisor, Corporate Communications TC Transcontinental Telephone: 514-954-3581 nathalie.st-jean@tc.tc www.tc.tc

Financial Community  Mathieu Hébert Director, Financial Analysis and Treasury TC Transcontinental Telephone: 514-954-4029 mathieu.hebert@tc.tc www.tc.tc

CONSOLIDATED STATEMENTS OF EARNINGS
Unaudited
			Three months ended							Nine months ended
				July 29,			July 30,				July 29,			July 30,
(in millions of Canadian dollars, unless otherwise indicated and per share data)				2018			2017				2018			2017
Revenues			$	757.9		$	477.7			$	1,794.3		$	1,480.0
Operating expenses			651.0			382.3				1,404.6			1,206.6
Restructuring and other costs (gains)			14.3			1.7				—			(6.0		)
Impairment of assets			2.9			—				6.6			2.5
Operating earnings before depreciation and amortization			89.7			93.7				383.1			276.9
Depreciation and amortization			50.1			25.5				121.0			78.5
Operating earnings			39.6			68.2				262.1			198.4
Net financial expenses			14.5			3.9				20.5			13.4
Earnings before share of net earnings in interests in joint ventures and income taxes			25.1			64.3				241.6			185.0
Share of net earnings in interests in joint ventures, net of related taxes			—			—				0.1			—
Income taxes			5.8			15.3				95.3			46.9
Net earnings			$	19.3		$	49.0			$	146.4		$	138.1
Net earnings per share - basic			$	0.22		$	0.64			$	1.81		$	1.79
Net earnings per share - diluted			$	0.22		$	0.64			$	1.81		$	1.78
Weighted average number of shares outstanding - basic (in millions)			87.6			77.4				80.7			77.3
Weighted average number of shares - diluted (in millions)			87.7			77.6				80.8			77.5
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Unaudited
			Three months ended							Nine months ended
				July 29,			July 30,				July 29,			July 30,
(in millions of Canadian dollars)				2018			2017				2018			2017
Net earnings			$	19.3		$	49.0			$	146.4		$	138.1
Other comprehensive income (loss)
Items that will be reclassified to net earnings
Net change related to cash flow hedges
Net change in the fair value of derivatives designated as cash flow hedges			(0.5		)	5.3				(0.5		)	4.4
Reclassification of the net change in the fair value of derivatives designated as
cash flow hedges in prior periods, recognized in net earnings during the period			0.2			0.3				(0.9		)	1.1
Related income taxes			(0.1		)	1.5				(0.4		)	1.5
			(0.2		)	4.1				(1.0		)	4.0
Cumulative translation differences
Net unrealized exchange gains (losses) on the translation of the financial
statements of foreign operations			16.8			(47.2		)		16.2			(36.9		)
Net gains (losses) on hedge of the net investment
in foreign operations			(4.9		)	6.0				(4.5		)	5.0
Related income taxes			(0.8		)	1.7				(0.7		)	1.4
			12.7			(42.9		)		12.4			(33.3		)
Items that will not be reclassified to net earnings
Changes related to defined benefit plans
Actuarial gains on defined benefit plans			8.7			2.4				8.8			21.0
Related income taxes			2.3			0.6				2.6			5.6
			6.4			1.8				6.2			15.4
Other comprehensive income (loss)			18.9			(37.0		)		17.6			(13.9		)
Comprehensive income			$	38.2		$	12.0			$	164.0		$	124.2

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Unaudited
														Accumulated
														other
			Share				Contributed				Retained			comprehensive			Total
(in millions of Canadian dollars)			capital				surplus				earnings			income (loss)			equity
Balance as at October 29, 2017		$	371.6			$	1.1			$	851.5		$	(5.5	)	$	1,218.7
Net earnings		—				—				146.4			—			146.4
Other comprehensive income		—				—				—			17.6			17.6
Shareholders' contributions and distributions to shareholders
Share redemptions		(2.9		)		—				(10.0		)	—			(12.9		)
Dividends		—				—				(50.1		)	—			(50.1		)
Issuance of shares, net of issuance costs		278.2				—				—			—			278.2
Balance as at July 29, 2018		$	646.9			$	1.1			$	937.8		$	12.1		$	1,597.9
Balance as at October 31, 2016		$	361.9			$	3.2			$	700.9		$	2.7		$	1,068.7
Net earnings		—				—				138.1			—			138.1
Other comprehensive loss		—				—				—			(13.9		)	(13.9		)
Shareholders' contributions and distributions to shareholders
Exercise of stock options		6.7				(1.3		)		—			—			5.4
Dividends		—				—				(45.3		)	—			(45.3		)
Balance as at July 30, 2017		$	368.6			$	1.9			$	793.7		$	(11.2	)	$	1,153.0

 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Unaudited
									As at			As at
									July 29,			October 29,
(in millions of Canadian dollars)									2018			2017
Current assets
Cash								$	27.7		$	247.1
Accounts receivable								484.7			380.6
Income taxes receivable								14.1			17.2
Inventories								311.8			116.9
Prepaid expenses and other current assets								27.6			18.4
								865.9			780.2
Property, plant and equipment and investment properties								871.7			500.8
Intangible assets								783.9			171.1
Goodwill								1,190.4			505.0
Investments in joint ventures								—			2.3
Deferred taxes								23.8			139.0
Other assets								38.3			38.3
								$	3,774.0		$	2,136.7
Current liabilities
Accounts payable and accrued liabilities								$	381.8		$	304.7
Provisions								3.5			6.4
Income taxes payable								12.8			9.5
Deferred revenues and deposits								18.3			44.7
Current portion of long-term debt								250.0			—
								666.4			365.3
Long-term debt								1,256.0			348.3
Deferred taxes								125.1			44.1
Provisions								2.7			1.3
Other liabilities								125.9			159.0
								2,176.1			918.0
Equity
Share capital								646.9			371.6
Contributed surplus								1.1			1.1
Retained earnings								937.8			851.5
Accumulated other comprehensive income (loss)								12.1			(5.5		)
								1,597.9			1,218.7
								$	3,774.0		$	2,136.7
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
		Three months ended						Nine months ended
		July 29,			July 30,				July 29,			July 30,
(in millions of Canadian dollars)		2018			2017 (1)				2018			2017 (1)
Operating activities
Net earnings	$	19.3		$	49.0			$	146.4		$	138.1
Adjustments to reconcile net earnings and cash flows from operating activities:
Impairment of assets		2.9		—				6.6			2.5
Depreciation and amortization		56.1		31.1				139.6			96.6
Financial expenses on long-term debt		15.0		4.4				23.8			13.1
Net losses (gains) on disposal of assets		(1.4	)	0.5				(5.6		)	(2.3		)
Net gains on business disposals		(2.3	)	(1.0		)		(37.5		)	(11.4		)
Income taxes		5.8		15.3				95.3			46.9
Net foreign exchange differences and other		(4.1	)	(0.7		)		7.0			1.1
Cash flows generated by operating activities before changes
in non-cash operating items and income taxes paid		91.3		98.6				375.6			284.6
Changes in non-cash operating items (2)		(7.2	)	(17.0		)		(116.4		)	(31.5		)
Income taxes paid		(7.0	)	(8.6		)		(36.0		)	(40.4		)
Cash flows from operating activities		77.1		73.0				223.2			212.7
Investing activities
Business combinations, net of acquired cash		(1,561.5	)	0.1				(1,616.3		)	(15.9		)
Business disposals		2.4		(0.8		)		35.0			24.4
Acquisitions of property, plant and equipment		(19.5	)	(7.7		)		(37.6		)	(24.5		)
Disposals of property, plant and equipment		4.4		—				25.0			7.0
Increase in intangible assets		(9.0	)	(3.7		)		(16.9		)	(13.9		)
Dividends received from joint ventures		—		—				3.4			—
Cash flows from investing activities		(1,583.2	)	(12.1		)		(1,607.4		)	(22.9		)
Financing activities
Increase in long-term debt, net of issuance costs		959.0		—				959.0			—
Reimbursement of long-term debt		(143.9	)	—				(162.8		)	(0.2		)
Net increase in credit facility, net of issuance costs		175.8		—				175.8			—
Financial expenses on long-term debt		(13.1	)	(5.2		)		(21.3		)	(13.4		)
Proceeds from issuance of shares in exchange for subscription receipts, net of issuance
costs		274.9		—				274.9			—
Exercise of stock options		—		—				—			5.4
Dividends		(18.4	)	(15.5		)		(50.1		)	(45.3		)
Share redemptions		—		—				(12.9		)	—
Cash flows from financing activities		1,234.3		(20.7		)		1,162.6			(53.5		)
Effect of exchange rate changes on cash denominated in foreign currencies		1.4		(0.8		)		2.2			(0.2		)
Net change in cash		(270.4	)	39.4				(219.4		)	136.1
Cash at beginning of period		298.1		113.4				247.1			16.7
Cash at end of period	$	27.7		$	152.8			$	27.7		$	152.8
Non-cash investing activities
Net change in capital asset acquisitions financed by accounts payable	$	—		$	1.2			$	(0.4	)	$	(0.2	)
(1) Certain comparative figures have been reclassified to conform to the presentation adopted in the current period.
(2) Includes the accelerated recognition of the deferred revenues opening balance as at October 29, 2017 as part of the transaction with Hearst for the nine-month period ended July 29, 2018 (Note 18).