Transcontinental Inc is Canada’s largest printing company and a leader in flexible packaging in North America. It is also a leader in specialty media segments in Canada.

The company operates in the segments of printing (more than 42% of sales in 2020), packaging (55%) and media (3%). In 2014, Transcontinental diversified into the packaging sector. The company has offices in Canada, the United States, and Latin America. Transcontinental operates in North America through a large national printing network and 40 operating facilities, including 12 printing plants. Its media division is Canada’s largest publisher of French-language educational resources.

As the leading printing company in Canada, it offers a wide range of solutions. The company offers innovative solutions in both printing and packaging. It specializes in flexographic printing, the lamination of plastic films and offers printing solutions for flyers, newspapers, magazines and mass marketing products.

In addition, the company offers a wide range of innovative flexible packaging solutions. Some of its core markets are agriculture, beverages, confectionery and confectionery, cheese and dairy products, household and personal care, and pet food.

DISCLOSURE: Please note that links to merchants mentioned in this post may use an affiliate link. Using an affiliate link means that I may earn a commission at no cost to you whenever you purchase anything through that affiliate link.

Plant data

Sales growth & market presence

With 45 years of experience, Transcontinental has successfully served the evolving and changing needs of its customers. As a result, the company has switched its business. The company is investing in building a North American flexible packaging platform that has a diversified strategy and is making good progress in that direction.

Transcontinental is also developing its non-advertising special media offering for the business, finance and construction industries. The media sector now accounts for 3% of Transcontinental’s consolidated sales. Transcontinental is a leader in most of its industries. As a result, the company’s sales have become more balanced over the years.

In its printing segment, the company aims to gain market share by improving its efficiency and managing long-term contracts. Transcontinental aims to increase its revenue base from growth segments from just 23% in 2016 to over 80%.

Transcontinental caters to a diverse mix of customers, including retailers and publishers. Some of the best known names on its customer list are Loblaws, Metro, Sobeys, Home Depot, Walmart, Globe and Mail, Rogers, etc. The company has built strong customer relationships with major retailers over the years. Multi-year contracts as well as recurring orders for dealer-related services give the company cash flow transparency.

Transcontinental strives for growth through acquisitions as well as organic growth and has built an extensive packaging platform through several strategic acquisitions. The acquisition and successful integration of Coveris Americas strengthened the transcontinental market share in the flexible packaging sector. As the leading company for flexible packaging in North America, the company has increased its share of sales in this sector from 2% to 55% of consolidated sales in just five years. Transcontinental continues to benefit from its transformation towards flexible packaging.

Transcontinental’s packaging segment benefited from increased customer demand for packaging for food and everyday consumer goods in the US, Latin America and Canada amid the pandemic. The company’s sales have increased ~ 10% CAGR over the past three years. The company invested more than $ 10 million in its book printing platform last year to meet demand from North American customers. Transcontinental estimates revenue growth from industries such as in-store marketing products, book printing and pre-media services. The company expects organic growth of more than 2% in FY21.

Dividends

Transcontinental is a Canadian dividend aristocrat who has been paying and increasing its dividend for more than 25 years. It’s one of Canada’s top dividend growth stocks with a history of dividend growth. The company has had a dividend CAGR of ~ 10% annually for the past decade. The company last increased its dividend by 2.3% in 2020. Transcontinental has an attractive dividend yield of 4% and a reasonable payout ratio of 51%, which indicates sufficient scope for future growth. The company paid ~ $ 78 million in dividends last year and also has a share buyback program in place.

Its presence in related printing and packaging segments enables the company to explore new opportunities in cross-platform businesses. The acquisitions are also intended to provide shareholders with long-term growth. Since the transformation phase of recent years, Transcontinental has been able to achieve improved adjusted profitability.

The company generates enough money to use it for strategic acquisitions and transformation activities. In fact, the flyer business is the biggest cash cow. Transcontinental has demonstrated its ability to reduce debt rapidly. It has reduced its net debt, which had grown significantly with the Coveris Americas acquisition, by ~ $ 700 million since 2018.

Transcontinental’s cost reduction and operational efficiencies should mitigate the impact of declining volumes in the printing business. The company’s packaging business will also grow as most of its operations support the retail supply chain for groceries and everyday products.

The company realized more than $ 20 million in annual cost synergies in the first two years of acquiring Coveris and expects additional synergies in fiscal 2021. The company also expects to continue generating significant cash flows from all of its activities to support acquisitions and reduce debt. Transcontinental’s focus on promising markets, investments in advanced equipment and strategic acquisitions make the company good for future growth.

Transcontinental’s presence in related printing and packaging segments enables the company to explore new opportunities in cross-platform businesses. The acquisitions are also intended to provide shareholders with long-term growth. Since the transformation phase of recent years, Transcontinental has been able to achieve improved adjusted profitability.

Transcontinental (TCL.A) historical return
Create your own diagrams. Try Stock Rover now!

competition

The packaging industry is highly competitive. The company competes with large integrated packaging companies as well as other foreign competitors in the printing industry. The printing segment is suffering from stiff competition from the advent of the Internet. Postmedia Network Canada, Torstar Corp. are some of Transcontinental’s leading competitors.

The company has extensive know-how in the production and distribution of print and digital content. With longstanding industry ties, it is difficult for new entrants to question Transcontinental’s leading position in these markets. This gives Transcontinental a competitive advantage. The acquisition of Coveris Americas has also given the company a significant competitive advantage in the lucrative flexible packaging industry.

The printing segment is suffering from stiff competition from the advent of the Internet. Postmedia Network Canada, Torstar Corp. are some of Transcontinental’s leading competitors. The acquisition of Coveris Americas has given the company a significant competitive advantage in the lucrative flexible packaging industry.

Bottom line

Transcontinental has a solid track record of continuous improvement and build quality. The company is well positioned to grow organically in the packaging business and benefit from a gradually recovering printing business in a post-pandemic world.

It continues to grow organically thanks to improved profitability, operational efficiencies and better than expected synergies. The integration of Coveris Americas positions the company as the leader in flexible packaging in North America and has successfully built a flexible packaging platform. In addition, the company is to further strengthen its packaging portfolio through targeted acquisitions.

My portfolio has generated over 12% annual returns since 2009. It’s not since the beginning of the year or 2019 it’s from 2009 !!! That’s a constant return, which means that, following the rule of 72, I double my portfolio every 6 years.

My approach is simple, but you need key data that I cultivated using the Dividend Snapshot Screeners. No other investment services provide you with easily understandable data, but also actionable data. No hidden magic.

In fact, I’ve tried all of the investment services for dividend investors like an investment services crash test dummy. Just ask me and you’ll find out why I couldn’t use anything out there and that’s how the Dividend Snapshot Screeners were born!

LEAVE A REPLY

Please enter your comment!
Please enter your name here