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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture. Positive aspects include increased profitability, improved net debt ratio, and ISM growth. However, negative factors such as declining volumes in book printing, Canada Post disruptions, and no commitment to dividend increases balance the outlook. The Q&A reveals uncertainties in revenue targets and cost savings impact, tempering optimism. The stock price reaction is likely neutral, with slight positive and negative elements offsetting each other.
Net earnings per share Improved for the fourth consecutive quarter, resulting in a significant growth of 10.7% for fiscal year 2025.
Packaging sector's adjusted EBITDA Increased by 3.7% year-over-year for the full year, excluding the effect of the sale of industrial businesses. This was due to cost reduction initiatives and a favorable exchange rate.
Revenues for Q4 Reported at $732.4 million, a 2.3% decrease versus last year. The decline was caused by lower volume in the retail services and printing sector and the impact of the sale of industrial packaging operations, partially offset by recent acquisitions in ISM, higher volume in the packaging sector, and a positive exchange rate impact.
Adjusted EBITDA for Q4 Decreased by 3.2% to $137.6 million, mainly due to lower volume in the retail services and printing sector caused in part by the labor conflict at Canada Post.
Adjusted earnings per share for Q4 Improved by 3.8% to $0.82 compared to $0.78 for the same quarter last year, mainly due to improvement in profitability and lower share count.
Packaging sector's organic revenue growth for Q4 Increased by 2.8%, mainly due to volume, but was more than offset by the impact of the sale of industrial packaging activities in November 2024.
Packaging sector's adjusted EBITDA for Q4 Grew by 3.3% to $67.9 million, with margins increasing by 60 basis points to 16.4%.
Retail services and printing sector revenues for Q4 Decreased by 4.3% to $275.9 million, mainly due to lower volumes for flyer printing activities impacted by the Canada Post disruption.
Retail services and printing sector adjusted EBITDA for Q4 Decreased by $9.5 million or 14.9% to $54.1 million, mainly due to lower volumes for flyer printing activities impacted by the Canada Post disruption.
Cash flow from operating activities for Q4 Generated $172.5 million compared to $185 million in the previous year, with a positive working capital of $64.9 million offsetting a large portion of the working capital usage of the first 9 months of the year.
CapEx for Q4 Reported at $23.3 million, in line with last year, bringing the full year total close to $100 million, a $22 million reduction versus last year.
Net debt ratio Improved to 1.59x at the end of fiscal year 2025 compared to 1.68x 3 months ago.
Packaging sector's organic top line growth: Driven by higher volumes, adjusted EBITDA up 3.7% over the previous year when excluding the effect of the sale of industrial businesses.
Radar geographical footprint expansion: Exploring opportunities to expand Radar's geographical footprint in fiscal year 2026.
Newspaper printing business: 10-year extension of printing agreement with the Globe and Mail, maintaining a 40-year partnership.
ISM business growth: Acquisitions of Mirazed, Intergraphics, and Middleton bring ISM business close to $300 million in revenue.
Safety improvements: 39% reduction in accidents year-over-year, following a 9% reduction between 2023 and 2024.
Cost reduction initiatives: Contributed to Packaging sector's adjusted EBITDA growth despite weak demand.
Sale of Packaging business: Expected to close in Q1 2026, proceeds to be used for shareholder distribution and debt reduction.
Corporate cost alignment: Plans to align corporate costs with business size post-sale, with full impact expected in fiscal 2027.
Canada Post labor conflict: The labor conflict at Canada Post significantly impacted the retail services and printing sector in Q4 2025, leading to a 4.3% decrease in revenues and a 14.9% decrease in adjusted EBITDA. This disruption caused lower volumes for flyer printing activities.
Sale of packaging business: The sale of the packaging business, expected to close in Q1 2026, introduces uncertainty regarding the transition and potential operational adjustments. The company will need to align corporate costs with the reduced size of its business.
Lower volume in traditional activities: Lower volume is expected in traditional activities, including book printing, which had a strong fiscal 2025. This could impact overall revenue and profitability in fiscal 2026.
Economic and demand environment: Weak demand environment in 2025 affected the packaging sector, though partially mitigated by cost reduction initiatives and favorable exchange rates. This remains a potential risk for future performance.
Dependence on acquisitions for growth: Recent acquisitions in ISM contributed to revenue growth, but reliance on acquisitions may pose integration and operational risks.
Sale of Packaging Business: The sale of the Packaging business is expected to close in the first quarter of calendar 2026. Proceeds from the transaction will be used for a $20 per share distribution to shareholders and to reduce net debt. Post-transaction, the company expects a pro forma net debt of about 1.7x.
ISM Activities: Growth is expected in ISM activities both organically and through the impact of recent acquisitions.
Canada Post Labor Conflict Impact: The impact of the Canada Post labor conflict is expected to be limited to the first weeks of the first quarter of fiscal 2026.
Media Business: Growth is expected in the media business in fiscal 2026.
Corporate Costs: Corporate costs will be aligned with the size of the business, with a lower run rate expected in the second half of fiscal 2026 and full impact of cost reductions in fiscal 2027.
Traditional Activities: Lower volume is expected in traditional activities, including book printing, which had a strong fiscal 2025.
Adjusted EBITDA: Adjusted EBITDA is expected to remain stable in fiscal 2026 compared to 2025.
Capital Expenditures: CapEx for the remaining business is expected to be around $60 million in fiscal 2026.
Cash Taxes: Cash taxes are expected to be around $30 million in fiscal 2026.
Dividend Distribution: The company plans to use proceeds from the sale of its packaging assets for an approximately $20 per share distribution to shareholders.
The earnings call presents mixed signals. Positive aspects include a strong cash position, new partnerships, and growth in U.S. Vascular Access. However, declining gross margins, a decrease in EBITDA, and uncertainties in the U.S. Advanced Wound Care channel weigh negatively. The Q&A section highlights management's optimism and strategic plans but lacks clarity on key issues. Given these mixed factors, the stock price is likely to remain stable over the next two weeks, resulting in a neutral sentiment prediction.
The earnings call indicates a positive sentiment with a 6% sales increase and strong recurring software revenue growth. The slight decline in gross margin is attributed to product mix volatility. Q&A reveals strong demand and a robust backlog, with management confident in business prospects and maintaining a strong balance sheet. Despite concerns about margin sustainability and tariff impacts, the overall outlook is optimistic, supported by a special dividend and ongoing innovation. No significant negative factors were highlighted, suggesting a positive stock price movement.
The earnings call presents a mixed picture. Positive aspects include increased profitability, improved net debt ratio, and ISM growth. However, negative factors such as declining volumes in book printing, Canada Post disruptions, and no commitment to dividend increases balance the outlook. The Q&A reveals uncertainties in revenue targets and cost savings impact, tempering optimism. The stock price reaction is likely neutral, with slight positive and negative elements offsetting each other.
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