Welcome to the TC Transcontinental second quarter fiscal year 2026 results conference call. During the presentation, all participants will be in listen-only mode. Afterwards, we will conduct a question and answer session. Instructions will be provided at that time. As a reminder, this conference is being recorded today, June 4th, 2026. I would like to turn the conference over to Yan Lapointe, Senior Director, Investor Relations and Treasury. [Non-English content] Mr. Lapointe, please go ahead. Thank you, Joelle, and good morning, everyone on the call. Welcome to Transcontinental's second quarter 2026 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. We have with us today our Chief Executive Officer, Sam Bendavid, 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 definition and 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 risks, uncertainties, and other factors that could influence actual results are described in the fiscal 2025 annual MD&A and in the latest annual information form. With that, I will turn the call over to Sam. Thank you, Yan, and good morning, everyone. I am pleased to join you on this call, my first as CEO of TC Transcontinental, and I look forward to engaging with many of you in the weeks and months ahead. Over the past two months, I visited several of our facilities. What stands out from these visits is the strong energy and engagement across the organization, a solid foundation for what lies ahead. Recent developments have contributed to a sense of momentum across the company. Following the completion of the sale of our packaging business, and I want to congratulate our teams for a great job managing all aspects of this complex transaction successfully, our financial reporting structure has evolved. As of Q2, we're now reporting two sectors, the Retail Services and Printing Sector, and the Books & E ducation sector, which brings together TC Media and our book printing activities. Let me share a few observations on the momentum I'm seeing, starting with Retail Services and Printing. In our content and business intelligence group, artificial intelligence is transforming how we and our clients work together. By driving greater efficiency, deeper insights, and the more personalized solutions, AI strengthens the value we deliver. In our marketing and information group, the upcoming nationwide rollout of raddar marks a major milestone. raddar is a cost-effective mass media platform that pairs national scale. Roughly 11.6 million copies per week, reaching approximately three in four Canadians with local precision across 537 unique zones. This combination positions raddar as a compelling solution, not only for national retailers and brands, but also for small and medium-sized businesses and publishers. Early bookings are encouraging, and we expect a strong start mid-June. We value the quality of our partnership with Canada Post for the distribution of raddar, and we welcome the endorsement of collective agreements by postal workers announced on Monday. Our transformation will see raddar evolving into an increasingly tech-enabled platform, layering analytics and data-driven audience targeting, extending into omni-channel touchpoints, and applying AI-powered personalization to deliver the right message, the right audience with greater precision. In addition, the multi-year agreements we recently signed with Postmedia and Glacier Media, together with our ongoing cost optimization initiatives, should strengthen the financial performance beginning in the third quarter. In our In-Store Marketing and specialty group, the integration of our recent acquisitions is progressing well, expanding both our offering and customer portfolio. The additions of Mirazed and PDI Group have significantly strengthened our presence in Eastern Canada and enhanced our ability to serve national clients. Turning now to Books & E ducation sector. In our book printing group, we're facing a challenging year-over-year comparison against a large one-time contract last year. Even so, our sales team have secured several new customers and grown existing accounts, and we expect to deliver a solid year for the platform. In TC Books & Education, sales momentum should translate into a busy second half of the year. Our education technology efforts are also gaining recognition, most recently with accolades at the U.S. EdTech Awards. Thanks to the initiative we've put in place to improve profitability, we're on track to deliver a solid performance in the second half of the year. Adjusted operating earnings before depreciation and amortization from continuing operations are expected to remain stable relative to fiscal 2025. In conclusion, I am confident in our strategic direction, our momentum, and the strength of our teams. Donald, over to you. Thank you, Sam, and good morning, everyone. Please note that my comments this morning will focus on our continuing operations. Moving to slide five of the earnings call presentation. For the second quarter of fiscal 2026, revenues were 5% lower versus the same quarter last year, mainly as a result of lower volume in our traditional activities, partially mitigated by our recent acquisitions in ISM and also from a stronger U.S. dollar. Regarding profitability, consolidated adjusted EBITDA at $ 45.4 million was slightly lower than last year. The slight decline was mainly due to lower volume, partially offset by lower incentive compensation and administrative expense, the recent acquisitions, and also a favorable exchange rate. The lower incentive compensation and administrative expense are mainly related to the departure of executives and the timing of expenses. We don't expect a similar tailwind in the second half of the year. Looking ahead, financial performance is improving. With the recent contracts we announced and the impact of cost reduction initiatives, we expect stronger results in the second half of the fiscal year and remain confident in our outlook. Net financial expenses increased by $ 2.2 million- $9.9 million, mainly due to the impact of exchange rates, despite having a lower debt level following the sale of our packaging activities in March and strong cash flow generation in the last 12 months. Adjusted income tax decreased by $ 0.6 million- $ 4 million and represented an effective rate of 20%. This led to adjusted earnings per share from continuing operations at $ 0.19 compared to $ 0.20 in Q2 last year. Before turning to slide six for the sector review, I wanted to highlight the change we've made in our sectors following the sale of our packaging activities. The Books & E ducation sector now combines our book printing with our educational publishing activities as their products are similar in nature. Our Retail Services and Printing Sector serves retailers, brands, and newspaper publishers. Under the marketing and information group, we're combining flyers with our newspaper activities as they use the same platform. Regrouping our ISM activities with specialty products also makes sense as they are similar in nature. In the coming weeks, we will post on our website historical segmented information to help you with your models. On slide six, revenues for the Retail Services and Printing Sector decreased by 3.8% to $ 219.5 million. Adjusted EBITDA decreased by $ 8.2 million- $41.1 million. The decrease in revenues and adjusted EBITDA are mainly due to lower volumes for the flyer printing activities, partially mitigated by our recent acquisitions. We expect a stronger performance in the second half of the fiscal year following the impact of the multi-year agreements recently signed with Postmedia and Glacier Media, improved results from our ISM activities, and cost reduction initiatives. Moving to Books & E ducation sector on slide seven. As mentioned in our last call, this sector had a very solid performance in the second quarter of fiscal 2025. Despite a tough comparable, the sector delivered good results with revenues of $ 50.1 million, down from $ 55.9 million the same quarter last year. Adjusted EBITDA decreased by $ 0.5 million or 6.7% to $7 million. We expect a strong performance of the sector in the last six months of the fiscal year, in line with normal seasonality. Now turning to cash flow. In the second quarter of 2026, we had $56.3 million in negative working capital. The unfavorable change was mainly due to accounts payable and accrued liabilities. We expect some of the negative working cap to reverse in the second half of the year. Our CapEx, at $12.9 million, were in line with last year, and our target's to be around our guidance of $ 55 million-$ 60 million for the full year. Finally, we used the proceeds of the sale of our packaging activities for a special distribution of $20 per share to shareholders and also to reduce debt by around $330 million. Our net debt ratio at the end of the second quarter was 2.14 times. If we include the sale of our Boucherville warehouse at the end of April, our net debt ratio will be slightly under two times at the end of the second quarter of fiscal 2026. We expect the strong cash flows in the second half of the year to bring this ratio lower for year-end around 1.75 times, excluding potential acquisitions. Our financial position is solid. The board has approved yesterday a regular dividend for the new TC at $ 0.05 per share per quarter. On that note, we will now proceed with the question period. [Non-English content] Thank you. One moment, please. Ladies and gentlemen, we will now conduct a question and answer session. If you would like to ask a question, please press star followed by 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 key. One moment please, for your first question. Your first question comes from Sean Steuart with TD Cowen. Your line is now open. Thank you. Good morning, everyone. A couple of questions. I want to start with some of the agreements and initiatives you've announced recently, both the national Raddar rollout and the agreements with Postmedia and Glacier. I'm hoping you can provide some perspective on incremental sales contributions and margin contributions associated with those initiatives just so we can factor it into our forecast appropriately. Thank you. The national raddar rollout is too early to tell as the deployment is going to be mid-June. For us, it's hard for us to provide guidance and we cannot disclose the Postmedia and Glacier Media agreement in terms of what they're contributing. Okay. In terms of sales for your model for the new outsourcing, you can put north of $5 million for the rest of the year. It can be aligned with the rest of the margin for that business. Okay, thanks for that. Hoping you can give some updated perspective on cost inflation and pass-through mechanisms. I suppose for your company, ink and paper would be key elements of it. Can you provide some perspective on what you've seen on that front and your perspective on ability to preserve margins as you absorb that inflation? Sure. We've got some solid contracts on the paper and ink side. We don't expect any margin erosion due to the increase in raw material, so any increase would really be insignificant. Okay. That's all I have for now. Thanks very much, and congratulations, Sam, on the opportunity going forward. Thank you. [Non-English content] Your next question comes from Hamir Patel with CIBC Capital Markets. Your line is now open. Hi, good morning. Sam, could you give us some more visibility on how the various initiatives to reduce corporate costs are progressing and how far along you think you are in that process? Thanks, Hamir. They're progressing very well. We're well on track to establish our run rates with one caveat that we still have a transitional service agreement to render to ProAmpac. We will complete the plan within the next, let's say, 6- 12 months as the TSA tapers off. Great. Donald, any update on the other smaller real estate divestitures in the pipeline? I believe one was Saint-Hyacinthe and Tomah? Yeah, you're right. Both are still for sale. I'd say there's some movement on the one on the U.S. side, Tomah. That's not a big impact in terms of dollar, we're very proactive at that level. St-Hy, I would say it's a little bit quiet right now, so we'll adjust with the market. We just did a great deal for Boucherville where we're patient, and we're happy with the price we get. Sometimes it's better to wait a bit to make sure you receive the best price. Okay, fair enough. That's all I had. I'll turn it over. Thanks. [Non-English content] Adam Shine [Non-English content] National Bank Financial. Your next question comes from Adam Shine with National Bank Financial. Thanks a lot. Good morning. Your line is now open. Thanks a lot. Good morning. Sam, maybe starting with the flyers. This might be a bit moot, given that the nature of that business is going to transition quite a bit with the new national scale for raddar. Can you talk about what drove some of the step down in flyer volumes this quarter? You talked about new business initiatives on the book side. Can you talk about where that's coming from? I know there's been efforts, obviously some success last year, albeit temporarily, on the U.S. book printing side of the equation. I think you were also looking for opportunities, perhaps even in Europe, whether that touched on book and/or perhaps more on educational book publishing. If you could talk to how things are unfolding there. Just lastly, for you, Donald, if you could just maybe update us on what you think corporate costs will be this year, because obviously there were a lot of moving pieces in this Q2. Just curious if there's an update there. Thanks a lot. Great. Thanks for the question. Let me address first the volume for the retail flyer. This has been a trend we've been witnessing over the past few quarters, the decline in volume. Nothing new here, and this is something we've planned for. The solution that changes the economic model for us and for our customers is definitely the deployment of raddar. We're very happy to have done that, to have addressed that for the team. Hopefully that answers your question on the volume side. On the book side, plenty of initiatives by the teams. Number one, when we look at the increased business we get, this comes from comics and the increase in the comics volume we are receiving from our current customers and new customers. Number two, there are still opportunities as companies are looking at onshoring some of their printing. We're in discussion with many other publishers to be able to gain some new business there. Still early innings, but progressing. Okay. Thank you very much. Adam, for your model, I guess the year-to-date cost for corporate represents a better pro forma to use for the rest of the year. Some of the one-timer in Q2 will disappear, but also some of the positive noise we had in Q2 were negative noise in Q1. This is why, if you look at it right now, it's better to look at year-to-date. Obviously, there will be some cost-cutting, as Sam mentioned, but we will be more active on that side close to the rest of the year. Use the year-to-date for your model will be a better benchmark. Okay. Thank you very much. [Non-English content] Your next question comes from Drew McReynolds of RBC. Your line is now open. Yeah. Thanks very much. Two for me. Just on the educational publishing, not something necessarily that gets discussed each quarter, but obviously, now is more explicit in that second segment. Just wondering what your expectations are for this business, not just for fiscal 2026, but just what does the growth outlook look like when you look out a little further? And then second, good to see the tuck-in M&A on the ISM side. Just an update on that M&A environment and what your pipeline currently looks like. Thank you. Great. Thanks. Thank you. On the educational publishing side, as you probably know, the second half of the year is mostly where the activity happens. We expect a strong second half of the year. Longer term, what we see for this business is marginal growth, GDP-style growth on the publishing side. That's number one. Number two, you've mentioned the ISM acquisition. We're digesting the current ones we've done in the recent past. The integrations are going well, the synergies are delivering, and we're very happy that this enabled our platform to have national scale. We are looking and still looking to acquire in that space. The pipeline is good, but we will be selective of when and what we acquire to make sure this creates value for us. Okay. Thanks very much. [Non-English content] Your next question comes from Neven Josipovic with BMO Capital Markets. Your line is now open. Thank you. Good morning, guys. You have Neven on for Steve today. Just within the RSMP sector, can you provide some incremental detail on volumes and organic growth for the ISM business this quarter? As well as discuss your updated expectations for organic ISM growth for the full year. Yes. Thanks for the question. Q1 was negative organic growth, was a slow Q1. Q2 is relatively flat in terms of growth, and that for us turns the page into a strong Q3 and Q4 in terms of bookings and pipelines that we can see. Strong second half of the year for our ISM business organically. Okay, great. Then just nice to see the multi-year contracts with Postmedia and Glacier. Are you able to provide a bit more context on how this opportunity came about and whether you see similar opportunities currently being pursued? Yes. We have the most cost-efficient printing platform, definitely in Canada, probably in North America. It does make sense for everyone who prints and for every publisher to come to us and outsource. Obviously, they will save tremendous amount of money, and it's very profitable for us. We are well-positioned to capture smaller opportunities. There are some opportunities out there that are smaller in nature, and that we're going after them. That being said, there is nothing really for us much scale like the Postmedia or Glacier that we currently announced. Opportunities, yes, but smaller ones. Okay, great. Thank you. [Non-English content] David McFadgen. With Cormark Securities Inc. Your next question comes from David McFadgen with Cormark. Your line is now open. All right. Yeah, a couple of questions. Just on the Books & E ducation. I imagine that the vast majority of that organic decline in Q2 was the U.S. contract that you talk about. When do you expect to lap the impact of that? Hard to say the full impact. As Sam mentioned, we're glad that we were able to replace part of the business that we lost. It's not a business we lost actually, it's a one-time contract that we had last year. We were able to compensate part of it with good business, with margin business. Hard to say when we will be able to compensate, but part of the plan is to have a strong second half of the year for both book and education. We're catching as we speak, and very proactive, especially with the Canadian dollar being very weak as we speak. Okay. clearly you've won some new contracts then, right? Pardon me? Clearly you've won some new contracts then? To give you your optimism for the second half. Yes. Okay. Then on the Retail Services and Printing side, I'm just wondering, you say in your MD&A that decline is mainly due to lower volume and flyer printing, and just wondering when will we lap that one as well? Well, the flyer business as you know, it's mostly rest of Canada except Quebec and BC. That's the good news with the announcement that we will launch a national platform for raddar. As you may recall, that was our intention, to mitigate the decrease in flyer. Right now, part of the reason why we felt that decrease in past quarter is not because the product was not good. It's still an amazing product to bring people in stores. The cost of distribution and the cost of recycling was getting way higher for our clients. The good news with raddar is that we will be able to help our clients to reach even more clients with a cost probably similar to their current cost or even lower. That's the important thing about raddar right now. Hard to say what will be the outlook with raddar, but definitely a good news for Transcontinental in terms of stabilizing the distribution. Okay. All right. Okay, thanks. Thank you. [Non-English content] Ladies and gentlemen, if there are any additional questions at this time, please press star followed by the one. As a reminder, if you're using a speakerphone, please lift the handset before pressing any key. Your next question comes from Maher Yaghi with Scotiabank. Your line is now open. I wanted to ask you, just on capital allocation here going forward, you mentioned that you're heading towards two times net debt ratio. Can you give us maybe some benchmarks as to where do you think the business leverage ratios should be going forward on a steady state basis? Where do you think you're comfortable having it? Maybe also how much acquisition capital you can deploy on a yearly basis in retail business going forward on the M&A side? Just trying to figure out the pieces of the puzzle that will account for how you will distribute your cash that you're going to be generating going forward. Thank you. First, it's a new TC, but the new TC is like the old TC, so we will produce a lot of free cash flow in the future. That's part of the reason why we were confident and happy to announce a dividend payment yesterday. In terms of debt to EBITDA, I would say that we don't fix ourselves any targets, but obviously, apart from acquisition, we definitely prefer to be under two, and this is where we will finish by end of fiscal year. I would say any range between one and two is where we will be comfortable to do M&A. As I said in previous calls, when we did Coveris, we had no debt on the balance sheet, and we were quite happy to have no debt because we put a lot of debt at that time. It's not like we need to have debt on the balance sheet, but again, we're comfortable between one and two. As far as acquisition, right now, we can make acquisition. In the past, we leveraged ourselves up to three times to do acquisition. This is something that's possible. You can do the math regarding the size of acquisition. I will say the next 12 months, the size of acquisition, 12-24 months, it should be more aligned with acquisition we did in the past. Definitely something that we can do with our current balance sheet. Okay. When you step back and you look at the ISM market that you're trying to consolidate in Canada, what is your assessment about its growth opportunity as a whole, as a market segment in general, and does it allow you When you look back into the acquisitions you were doing in the U.S. on the packaging side, the view was that the market itself was growing with GDP, and that allowed you to take up the leverage a little bit higher as you can deleverage after the acquisition. In ISM, when you think about the organic growth of that market, can it be close to GDP or it's more closer to less than GDP as a segment group? Thanks for the question. A two-part answer. Number one, when we look at the ISM, now we should look at ISM and Visual Solutions, we do more than just the in-store within our business. We're more diversified on a broader offering. That being said, when we look at the ISM, it's a relatively flat market overall. That being said, our business is over-indexed with the grocers, that is a forecasted 3%-4%, 4.5% growth, probably more in line with the GDP growth, we intend to capitalize on those segments and those submarkets that are growing. Okay. When we hear you talk about you doing M&A in ISM, can you expand or are you specific in terms of in-store media can include also other media than printing, right? Are you still focused on the, I want to call it the paper way of advertising in stores, or can you eventually look at other media that you can deploy inside the store, for marketing purposes? Absolutely, it's not that we're looking at other media. We are doing other media, for example, screens that are deployed throughout the network of some of our partners where we produce the content, distribute the content as well. This is something we are very much looking forward to, that we're deploying and that we have a solution to propose. Okay. How big is that business for you right now? I assume it's very small in the whole scheme of things. Absolutely correct, versus the raddar business is still small and a growing piece. Obviously, we're very well positioned with the retailers and our other customers, to be able to offer a complete solution. That's what they're asking and that's what we're providing. Is there an intention to get into the hardware business of advertising in stores, electronic hardware? What do you mean? Can you please specify? Meaning we buy the hardware? Yeah, like you're in charge of installing the screens and everything. We do installs. We have install services. If the retailer requires it, we will provide that service. The purchasing of the hardware screens or devices is mostly a passthrough, but install services, we do provide. Okay. Thank you very much. Thank you. [Non-English content] Mr. Lapointe, there are no further questions at this time. Thank you, Joanne, and thank you, everyone, for joining us on the call today. Looking forward to speaking to you soon. [Non-English content] Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.