Transcontinental Inc.

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

Thank you, Joëlle, and good morning, everyone. Welcome to Transcontinental's third quarter of fiscal year 2025 earnings call. Before we begin, please note that you can find on our website our quarterly report, including financial statements and related notes, as well as the slides supporting management's remarks. A replay of this conference call will also be available on our website shortly after the call. Please note that this conference call is intended for the financial community and media are in listen-only mode. You should contact Laurence Boussicot, Senior Advisor, Corporate Communications, for more information. We have with us today our President and Chief Executive Officer, Thomas Morin, and our Executive Vice President and Chief Financial Officer, Donald LeCavalier. As referenced on slide two, some of the financial measures discussed over the course of this conference call are non-IFRS. You can refer to the MD&A for a complete definition of reconciliation of these measures to IFRS. In addition, this conference call might also contain forward-looking statements. These statements are based on the current expectations of management and information available as of today. Forward-looking statements also involve numerous risks and uncertainties, known and unknown. The risk, uncertainties, and other factors that could influence actual results are described in the fiscal 2024 annual MD&A and in the latest annual information form. With that, I would like to turn the call over to our president and CEO, Thomas Morin.

Thank you, Yann, and good morning, everyone. Bonjour à toutes et à tous. First, I'm pleased to report a significant improvement in our adjusted earnings per share versus last year for the third quarter in a row. This is a direct result of our relentless execution of the program to improve our earnings per share and balance sheet we put in place almost two years ago now. In Q3, the packaging sector saw a revenue decrease, mainly due to the sale of our industrial packaging activities. and to a weaker than anticipated seasonality in some of our markets, despite a good start of the quarter. Thanks to our disciplined improvement initiatives and to our agility to quickly adjust our costs to slower demand, we were able to improve the sector's adjusted profit despite a less favorable product. Q3 was actually better than Q2 in terms of profits, contrary to the pattern we have normally seen in the past. We're now seeing a recovery in demand, and therefore expect to close fiscal year 2025 with organic profit growth. The retail services and printing sector had another strong quarter, with revenues up for the second consecutive quarter, while profitability was up for the fifth consecutive quarter. This solid performance was mostly due to the continued growth in our book printing activity. Aligned with our growth strategy and disciplined approach to capital allocation, we were active on the M&A front, with the acquisition of Middleton Group in late June and MiResident Graphics in early August. I am pleased with these acquisitions as they will significantly enhance our in-store marketing capabilities in Quebec and Western Canada. We are also growing our customer base and diversifying our offering with new product segments such as fleet and vehicle graphics, to name one amongst others. Also of note for the sector is the introduction of artificial intelligence to automate content production for flyers. Phase 1 of this project represented an investment of $2.5 million, including $1 million coming from ScaleAI, Canada's global innovation cluster in artificial intelligence. Our partners in this project, which was announced publicly on July 10, are EvadoLabs, Canada Entire, and KPDI Digital. The tools we are developing will allow our employees to work more efficiently and provide our customers with better speed to market and better tailored offering for consumers. The main development is complete and implementation has begun. This is another step in the reinvention of our retail services business. Phase 2 of the project is underway, so more to come on that. In summary, and looking ahead for the full fiscal year, Despite the main challenges, we're confident to achieve organic profit growth in both of our two main sectors for the second year in a row. Now over to you, Donald.

Thank you, Thomas, and good morning, everyone. Moving to slide five of the earnings call presentation. For the third quarter of 2025, we reported a 2.2% decrease in revenues versus the same quarter last year. This decrease was mainly caused by the sale of our industrial packaging operations. The lower top line in packaging was offset by solid growth in our book printing activities and a favorable FX impact. Regarding profitability, we delivered a consolidated adjusted EBITDA of $122.6 million, a $1.6 million increase compared to last year. This performance included $4.2 million in organic profit growth with improvement in each of our three sectors. Financial expense decreased by $4.6 million to $11 million, mainly due to our lower debt level following strong cash flow generation in the last 12 months, favorable FX impact, and from lower interest rates. Adjusted income tax decreased by $2.8 million at $14.2 million and represented an effective rate of 19.4%. This led to adjusted earnings per share improvement of 16.7%, going from $0.60 in Q3 last year to $0.70 in Q3 this year. A significant improvement for the third quarter in a row, as mentioned by Thomas. Now, moving to slide 6 for the sector review. In packaging, for the third quarter, we generated revenues of $391.2 million, a 6.3% decrease compared to last year. The decrease is mainly due to the sale of our industrial activities and as to lower volume and mix, partially offset by favorable exchange rate. In terms of profitability, adjusted EBITDA in packaging increased by 0.6% to $65.3 million. Excluding the sale of our industrial activities and favorable FX, the sector grew profits by close to 5% from our cost reduction efforts. This is a strong performance considering lower volume and a less favorable mix. EBITDA margin increased 110 basis points to 16.7% as we continue to be disciplined by adapting our cost structure to volumes. Moving to retail services and printing sector on slide seven, revenue increased by 4.5% to $261.2 million. This second consecutive quarter of growth was mainly due to an increase in our book printing activities as we continue to benefit from a weaker Canadian dollar and from the impact of a U.S. book printer outsourcing volume to our book platform. While we are very pleased with this performance of the segment, This year, some of this recent growth will not be recurring in the coming quarters. Adjusted EBITDA grew by 2.4% to $52 million, reflecting the high volume in our brick book printing activities. This is the fifth consecutive quarter of profitability improvement for the sector. Looking at media, Q3 performance was solid as the growth in the educational business more than offset the impact of the end of the SRO contract last year and the closing of Groupe Constructo in July. Corporate costs were slightly higher than last year due to the higher share base compensation. Now turning to cash flow. In line with normal seasonality, we saw working capital usage of $21.1 million in the third quarter of 2025, mainly due to the variation in payables and prepaid expense. Despite this working capital timing, we generated $77.8 million from operating activities. Our capex at $29.6 million were $1 million lower than last year and positions us well to finish the fiscal year in line with our target of $120 million. Our net debt ratio improved slightly to 1.68 times at the end of the third quarter of 2025 compared to 1.70 times three months ago. Our net debt ratio should continue to improve in Q4, as the significant cash flows we expect to generate from operation should finance our investments in CAPEX, as well as the acquisitions of MiraZ and Integratix. Our financial position continues to be solid, and we remain confident in our outlook. In packaging, despite weaker than anticipated volume in the third quarter, we expect to finish the year strong and grow organically the adjusted EBITDA for the full year 2025. In our retail services and printing sector, following a solid performance in the first nine months of the year, and despite a more challenging comparable in Q4, We are upgrading our outlook and are confident to increase adjusted EBITDA in fiscal 2025 compared to 2024.

On that note, we will now proceed with the question period.

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 téléphone à clavier. Thank you. One moment, please. Ladies and gentlemen, we will now conduct a question and answer session. If you have a question, please press star followed by the one on your touchtone phone. You will hear a tone acknowledging your request. Your questions will be pulled in the order they are received. Please ensure you lift the handset if you are using a speakerphone before pressing any keys. One moment, please, for your first question. Your first question comes from Amir Patel with CIBC Capital Markets. Your line is now open.

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

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

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

It's about $60 million combined. It's about $60 million so far.

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

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

And is the price stabilized here in Q4?

It's more or less in line with what we've seen so far. What's a bit unpredictable, Amir, is the mix. The mix obviously varies from one month to another. We don't expect to see significant price movements in Q4.

Because price, Amir, most of the price impact we see is concession that we had already gave to clients. Recall at the beginning of the year we said that Price will be lower, but volume should compensate. Then there's a mix, but the price impact should remain in 2.4.

Great. Thanks, Donald. That's all I had. I'll turn it over.

Thank you. Your next question comes from Adam Schein with National Bank Financial. Your line is now open.

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

Thank you, Adam, and good morning. Indeed, Q3 started strong when P7, our first month, was actually good. What happened in the rest of the quarter is we have a lot of segments which are on a stock, make-to-stock type of approach. based on call-offs from customers, and we saw the call-offs lower than the forecast they had given us in P8 and P9. Mainly in beverage, I remember I had this question from one of you. Beverage was lower than expected in the back end of the quarter. This is primarily due to slightly lower temperatures in the summer than we had in the previous years, and for the carbonated drinks, some inflation impact. Second thing that impacted Q3 was a delay in the protein and dairy business, which we see coming in strong in Q4. I'll come back to that. Meanwhile, we saw the volumes growing in LATAM as expected, as well as medical continuing to be strong. That's in a nutshell Q3. When we look towards Q4, to answer your question, Adam, we see coming strong the protein business. So there was a delay from Q3 to Q4. The average continues to be low, but that's the seasonality, which is as such. And Latin and medical continues to be strong.

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

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

Thank you for that. Okay. Have a good day. Thank you.

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

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

Yeah, our comment is regarding organic growth. Obviously, the few months with the acquisition will help, but our comment was for organic growth.

Right. Okay. Okay, that's great. Okay. And then just wondering if you can give an update on sort of your cost savings program and where you sit. I know you gave some color around the real estate sales, which sounds like maybe a Q1 26 item, but just in terms of the underlying cost savings, are you still sort of on track for what you've guided to in the past?

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

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

Yeah. Well, right now, I would say that Canada is the market where we're active. There's still opportunity out there in Canada. We're really happy with the two latest acquisitions, but we still see room for this business to grow, obviously, organically. We're really excited by the possibility of this business, but we're still focusing on the Canadian market for acquisition in ISM.

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

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

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

Maybe just for the macro, what was the latest question? There was Terry's macro and the overall book. Yeah, well, overall book, I will say to you that the third quarter book by far was the reason why we had organic growth in the retail and service sector. The other, ISM was good, but we were expecting more for ISM, but also including in ISM, we had direct mail, and direct mail was definitely impacted by the possibility of a strike. Some clients postponed some of their program regarding mailing, so that was something that affected us in the third quarter, but definitely the book business is the reason why we had organic growth. The flyer sector was down, and this is why also you see that The EBITDA was not, the growth in EBITDA was not as high as the growth on the top line because obviously book doesn't have the same margin as the renew business. So that's regarding your first question. Regarding tariff, we are affected as we speak. Obviously not at the level we thought we would be expected when the first tariff numbers came out back in January or February. But we still have some, you know, stuff that, raw material that we we buy in other countries either from the in the u.s mostly that affect us but i would say year to date it's about a million so it's not that material and regarding the macro uh are you talking more about the economy coming around uh yeah that's right donald well it's right now i won't comment on what can happen even on chari if you know i i can comment about what's behind us uh but regarding the you know i think our business on the printing side during recession as being good historically, but are to comment what will happen in the next year regarding the macroeconomics. And tariffs too.

And tariffs also, yes. But tariffs is really, I mean, it's not between Canada and the United States. It's really United States importing from European countries or Asian countries. There is no big impact between the two countries.

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

Thank you.

The next question comes from Mayor Yagi with Scotiabank. Your next question comes from Mayor Yagi with Scotiabank. Your line is now open.

Thank you for the first question. Hello everyone. I just wanted to just focus quickly on the packaging side. Your expectation was for the second half to see volume growth. I know you're still focused on Q4 to see volume growth, but is the volume that you were expecting to see in Q3 got pushed out to Q4, or the guidance now is just for Q4 to see volume growth? Thank you. I just wanted just a clarification on that.

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

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

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

And generally, that pipeline of potential new clients, how would you characterize its health? Is it improving? Where are the biggest opportunities? in your view?

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

And just, sorry, finally, just on that, Is it focused on specific industries where you're strong at, like let's say food and medical, or it's more broad-based?

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

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

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

And I believe, Maya, to continue on that, that when growth will come, obviously some costs will increase, but we have a much leaner structure that will allow to maybe give some of this cost saving to our clients, but now with a better structure, I think that should generate very good EBITDA.

Yeah, we're obviously much more competitive than we were.

Great. Merci beaucoup. Merci.

La prochaine question vient de Sean Stewart avec TD Cowen. Your next question comes from Sean Stewart with TD Cowen. Your line is now open.

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

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

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

I think for sure, and that's the good news, I think we've mentioned it, is that packaging has now become also very good at producing free cash flow. The turnaround has been done a couple of years ago. We will definitely need less CapEx in the coming years because we have invested a lot. We have capacity, and therefore I expect that packaging will still produce a lot of free cash flow. Retail and service sector is a very good cash flow business. Obviously, the switch to ISM is different. It's not the same level of margin, but through the years, we've been increasing the margin, and I definitely see opportunity to still increase the margins in the coming years, including the impact of acquisition where we can definitely be better. So that's positive for the EPS growth. Where you might see less of an impact is obviously our debt on the balance sheet was much higher a couple years ago, and the interest rate that we had to pay was higher. So, therefore, that plays a lot in the EPS growth we saw over the last two years. But we definitely have the balance sheet and the EBITDA opportunity to keep growing the EBITDA. Maybe not the same. I think we had a 14% kicker over the last two years. That might not be what's going to happen, but we're aiming for a 10% increase for sure.

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

Mesdames et messieurs, encore une fois, si vous avez des questions supplémentaires, veuillez s'il vous plaît appuyer sur les touches étoiles. Si vous utilisez la fonction main libre, veuillez décrocher le récepteur avant d'appuyer sur les touches. Ladies and gentlemen, if there are any additional questions at this time, please press star followed by the one. As a reminder, if you are using a speakerphone, please lift the answer before pressing any keys. La prochaine question vient de David McFadden avec Cormark Securities. Your next question comes from David McFadden with Cormark Securities. Your line is now open.

Great. A couple of questions on the retail services and printing segment. Clearly, the book printing was strong in the quarter. I was just wondering, what was the driver of that?

The driver, as I said in my opening comments, obviously, a large part of our book business is selling to the U.S. market. We took advantage in the last 12 months of the Canadian dollar was business. And as we said, we were able to get a business, strong sales with a printer in the U.S. that had a lot of book to print in a short period, and he outsourced to us, and we definitely benefited from that contract in the last three quarters, I will say. We had a great infrastructure in Quebec to support the American market. We see opportunity to grow this business, and the Canadian dollar is still at 135, so We're still confident about next year, but this specific contract has definitely a great impact over the last three quarters, and this is why I say it might not repeat in the next fiscal year.

Okay, so the fulfillment of that contract, is it basically complete at the end of Q3, Q4, that short-term contract?

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

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

Well, obviously, we push the team. We think we have opportunity, and as I say, $10 at $135 or $138 this morning is good for us. So we're really proactive to get new business. We're confident with the team, but those contracts sometimes take time to get.

Similar to what we had in the packaging, we have a business development team that is extremely active. primarily in the United States, as you said, Donald. So, yes, the fact that we could seize this opportunity is credit to this team, which has been at the right place at the right time, and will continue to be so.

Okay. And then when I look at the marketing and media solutions revenue, it was down. Is it down primarily due to flyers, or are there other factors in there?

Yes, it's down to flyers. We see this normal trend of volume decline in the flyers group. I think it's mid-single digit for the quarter.

That's no different than what we've experienced in the past.

Okay, because if you look at the nine months, the decline is down 14%, and as you said, it was down about 6% in Q3. I'm just wondering if the mid-single digit is the new rate here, and it's primarily driven by flyers, or If you can provide some context, that would be helpful.

Yeah, well, David, you know that over the years, we used to say that when we, for flyer business, during the PEDLSAC year, the decrease actually was more important for a few years. Then the radar in Quebec definitely helped us to stop this important decrease. But this is not a market for us that's growing overall. We see opportunity, you know, to maintain that market, but It's not a growth market for us. Radar will definitely open some new options for us. We're now in Quebec and BC. But overall, the flyer has been decreasing over the year, and this is why we've been adjusting our cost structure throughout the years to maintain the margin. So it's the same story. But having said that, that group overall with ISM getting bigger, you know, and this, like this quarter book being very strong, it's encouraging to see that we just produced two quarters in a row with organic growth for retail service and printing.

Okay. And then just on working capital, you know, there was so far for the nine months, this fairly big investment in working capital. I'm just kind of wondering where you expect to come out for fiscal 25.

Well, again, Q4, as we said in our opening remarks, should be good. This year, even third quarter, we're a little bit less good. We were more affected, I should say, this quarter. Less usage of factoring due to the change of some of our clients. More inventory also we have to protect regarding the tariffs, so we opened a little bit more to buy more material. But overall, we expect to have a good four-quarter regarding working capital.

So where do you think you might end up for the year? Would you still be looking at a pretty big investment, or do you think you could be more towards neutral?

Well, maybe to go more details with model, maybe Yann can help you, but I would say that we're confident that with the free cash flow we're going to generate, the working cap movement and negatively affected by the acquisition of ISM, we should be in a better position for debt to EBITDA at the end of the fiscal year compared to Q3. So, Yann can support you. a separate call regarding the models but that's that will be my comment regarding the working gap okay all right okay thank you all right thank you david mr lapointe there are no further questions at this time thank you everyone for joining us on the call today and we look forward to speaking to you soon

Merci de votre participation. Vous pouvez maintenant raccrocher. Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.