$TCL-A.TO

Transcontinental Q2 Profit Falls 5.9% as Revenue Declines; Maintains 2026 Outlook

Transcontinental (TCL-A.TO) on Wednesday reported a 5.9% year-over-year drop in its fiscal second-quarter profit as lower revenue, higher financial expenses and reduced adjusted operating earnings weighed on overall profitability.The company's adjusted profit, excluding most one-time items, dropped to $16 million, or $0.19 per share, in the quarter ended April 26, down from $17 million, or $0.20, in the year-prior quarter. This decrease is mainly due to the increase in financial expenses and the decline in adjusted operating earnings before depreciation and amortization, partially mitigated by lower adjusted income taxes.Revenue fell 5%, to $269.2 from $283.3 million. The company attributed the drop to "lower volume in our two sectors, partially mitigated by our recent acquisitions and, to a lesser extent, the favourable exchange rate effect".In its outlook, the company said that the closing of the sale of its Packaging business represents a "key milestone". "This transaction allows us to focus our resources on our growth strategy, in particular in in-store marketing and educational publishing activities.For fiscal year 2026, the company anticipates lower volume in its traditional activities, including book printing which experienced very high growth in fiscal year 2025. This decrease should be partially offset by growth in its in-store marketing activities, including the positive impact of acquisitions. At the consolidated level, following the positive impact of cost reduction initiatives, the company expects adjusted operating earnings before depreciation and amortization from continuing operations for fiscal year 2026 to remain stable compared to fiscal year 2025.The company also declared a quarterly dividend of $0.05 per share payable on July 20, 2026, to shareholders of record at the close of business on June 29."Thanks to the initiatives implemented to increase profitability, we are on track for an improved financial performance in the second half of fiscal year 2026 and to meet our outlook of stable adjusted operating earnings before depreciation and amortization from continuing operations for fiscal year 2026 compared to fiscal year 2025," said chief executive Sam Bendavid,The shares of the company closed down $0.08 to $5.22 on Toronto the Toronto Stock Exchange.

Transcontinental Q2 Adjusted Net Earnings From Continuing Ops of $16.0M or $0.19 Per Share

Transcontinental Declares Quarterly dividend of $0.05 Per Share; Nationwide Rollout of raddar Planned For Week of June 15, 2026

Transcontinental Q2 Revenues of $269.2 Million

TC Transcontinental Also In Three-year Agreement with Glacier Media To Print the Victoria Times Colonist

TC Transcontinental Announces Expansion of Its Partnership with Postmedia Network Through 2030

TC Transcontinental Sells Its Warehouse in Boucherville, Quebec, to Placements Carrousel, For a Consideration of $34.9M

CIBC Provides its Q1/26 Forestry, Building Products & Packaging Preview

CIBC Capital Markets on Tuesday provided its "Q1/26 Forestry, Building Products & Packaging Preview" and said that heading into first quarter earnings season, it remains cautious on wood/building product equities as elevated mortgage rates are "likely to continue weighing on demand".It further said that while there was a level of optimism from some industry participants going into the key spring selling season, which kicked off in early February, there has been "little indication of a material pickup in demand"."Moreover, the onset of the conflict in the Middle East has further eroded consumer confidence, which was accompanied by a spike in mortgage rates (currently sitting ~30 bps higher than pre-war levels at 6.3%), further adding to homebuyer affordability challenges," said CIBCCIBC also said that it sees added inflationary pressures, including freight, diesel and resins, for several companies under its coverage, posing downside risk to Q2 consensus estimates."That being said, Canadian lumber companies should see moderating duties in the back half of the year, with the preliminary AR7 combined AD/CV "All Others" rate of 24.83% announced (vs. the current rate of 35.16%)," added CIBC.CIBC also said that CCL Industries (CCL-B.TO) remains its top pick across its Forestry, Building Products & Packaging coverage universe, given the difficult housing backdrop weighing on wood/building product equities.CIBC believes CCL's diversified global platform and end-market exposure should support "steady top-line growth over the cycle," supported by continued RFID growth and benefits from recent business wins and capital projects."With leverage of only 0.8x, CCL is well positioned to be opportunistic with M&A, buybacks and organic investments," added CIBC.It further said that, among its Paper & Packaging names, it also rates Transcontinental (TCL-A.TO) outperformer given the company's "strong FCF generation, margin improvement initiatives and further M&A prospects".Across its broader housing-related coverage, CIBC said it has an outperformer rating on ADENTRA (ADEN.TO) and Weyerhaeuser (WY)."While wood product prices have moved higher, our channel checks indicate that consensus estimates for wood products companies may be overly optimistic for the first quarter," said CIBC. "Further out, consensus still looks overly aggressive on most wood names for 2026/2027 given elevated mortgage rates, weak consumer confidence and potentially higher cost inflation."CIBC added that its largest adjustments are for Canfor (CFP.TO), West Fraser Timber (WFG.TO) and WY, where for the next two years, CIBC is reducing estimates by an average of 20%/12%, leaving its revised estimates for 2026/2027 approximately 26%/10% lower than consensus.CIBC lowered its price targets on Canfor from C$16 to C$15, Mercer International (MERC) from US$2.00 to US$1.75, Stella-Jones (SJ.TO) from C$102 to C$96, and West Fraser from C$108 to C$102, "largely reflecting weaker commodity price estimates.""While our expected total return for Mercer is notably higher, given limited share price liquidity and greater volatility in MERC's share price, we believe a much higher return is necessary on the micro-cap pulp equity to warrant a more constructive rating," added CIBC.CIBC increased its price targets on ADENTRA from C$42 to C$44 and Doman Building Materials Group (DBM.TO) from C$11.00 to C$11.50, "reflecting higher valuation multiples given continued M&A activity in the distributor space."CIBC said that it is also raising its price target on CCL from C$102 to C$103, on "improved confidence in the company's ability to quickly pass through rising input costs."Price: $86.25, Change: $-0.35, Percent Change: -0.40%