Transcontinental Inc.

Mesdames et messieurs, merci d'avoir patienté et bienvenue à la conférence téléphonique concernant les résultats du deuxième trimestre de l'Accensus 2022 de TC Transcontinental. Pendant la conférence, tous les participants seront en mode d'écoute seulement. Une période de questions suivra la présentation et des directives vous seront données à ce moment. Nous désirons vous rappeler que cette conférence est enregistrée aujourd'hui, le 8 juin 2022. Welcome to the TC Transcontinental second quarter of fiscal 2022 results conference call. During the presentation, all participants will be in listen-only mode. Afterwards, we will conduct the question and answer session, and instructions will be provided at that time. As a reminder, this conference is being recorded today, June 8, 2022. I'd like to turn the conference over to Yann Laplante, Director, Investor Relations. I would now like to give the floor to Yann Laplante, Director, relations with investors, Michel Lapointe, please go ahead.

Thank you, Julianne, and good afternoon, everyone. Welcome to PC Transcontinental's second quarter 2022 results conference call. Before we begin, please note that the press release, EMDNA, along with complete financial statements and related notes, as well as the slides supporting our prepared remarks, are all available on our website at pc.pc under the investor relations section. A replay of this conference call will also be available on our website after the call. We have with us today our President and Chief Executive Officer, Peter Bruce, and our Chief Financial Officer, Donald LeCavalier. Before I turn the call over to management, I would like to specify that this conference call is intended for the financial community. Media are in listen-only mode and should contact Nathalie Saint-Jean, Senior Advisor, Corporate Communications, for more information or interview requests. Please be reminded that some of the financial measures discussed over the course of this conference call are non-IFRS. You can refer to BMDNA for a complete definition and reconciliation of such 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 and they involve numerous risks and uncertainties, known and unknown. The risks, uncertainties, and other factors that could influence actual results are described in the fiscal 2021 annual MD&A and in the latest annual information form. With that, I would now like to turn the call over to our president and CEO, Peter Bruch.

Thanks, Yann. Good afternoon, and thanks for joining our call. First, from a safety perspective, we were pleased to see our 12-month rolling injury rate decrease by 7%. The team continues to assess manufacturing risks, train coworkers, and regularly communicate our commitment to an injury-free workplace. In terms of financial results, we were encouraged by the quarter. Following a disappointing Q1, where Omicron had a significant impact on our operations' ability to supply and manufacture efficiently, and where a lag in the pass-through of inflationary increases had a negative impact on packaging's financial performance, the team took actions to improve. Packaging's Q2 performance was solid. Benefiting from the team's work to ensure a secure supply of raw materials and open communication with customers during Q1 struggles, sales increased, with particularly strong growth in meat and cheese. Profit increased due to the volume growth, though this was partially offset by the lag in inflationary cost pass-throughs. To be clear, earnings increased each month, and the full benefit of inflationary cost pass-throughs will be seen in Q3. The R&D and commercial teams continue to progress and commercialize recycle-ready, both consumer recycled and compostable solutions. We continue to commercialize PCR shrink films across our beverage customer base, and recently closed the deal to supply FemCare packaging with PCR content to a major FMCG company. We can be proud of the solid growth achieved by our print business. That said, it was disappointing not to see it convert to the bottom line. As the in-store marketing business moved to absorb a 22% organic increase in sales, profit was affected by three elements. The team was behind in passing through raw material and freight increases. Second, the business experienced manufacturing inefficiencies related to onboarding new customers. And lastly, we grew indirect costs needed to absorb smoothly volume increases anticipated in H2. Having visited the ISM plant in May, I was pleased to see the team's actions to ensure costs have been passed through and to ensure volume growth in H2 is accretive. Confirming our ability to grow a newspaper and that flyers remain a vital part of advertising retail sales, we were pleased to finalize a deal to print two major Western Canadian newspapers and to profitably extend the significant agreement with a major retail cost customer. Our media business was in line with our expectations. The more time I spend with the team, the more impressed I am by the quality of our management. and the quality of learning tools we provide to teachers and students. This is a business we should grow, and the acquisition of Scolab further supports our customer offering by expanding our digital portfolio. In conclusion, I appreciate the work the team has done to address the issues we faced at the beginning of the year, as well as the actions we've taken to continue to improve. This gives me confidence that we're well positioned for the second half of the year. And now, I'll hand it over to Benna.