Transcontinental Reports Earnings, New U.S. Print Customer

In its second-quarter earnings report, Canada's Transcontinental noted that a second customer is joining Hearst's San Francisco Chronicle at its new plant in Fremont, Calif.

San Jose-based alt-weekly publisher Metro Newspapers redesigned its flagship Metro, in Silicon Valley, in time to take advantage of the Fremont plant's possibilities. Among other things, the 83,000-distribution free weekly now sports a glossy cover.

Montreal-based Transcontinental also said business growth is driving development of its coldest-heatset hybrid platform for printing newspapers and ad inserts/circulars as part of its a $1.7 billion, 18-year contract with The Globe and Mail. Based on triplewide KBA Commander CT presses at multiple sites, the platform is expected to be operating before year's end.

The company's Q2 consolidated revenues came to $510 million, down 4% from the year-earlier figure. Excluding publication divestitures, plant closures, and the effects from paper and the exchange rate, however, revenues were rose 2%.

Adjusted operating income before amortization, which excludes unusual items, rose 18%, from to $91 million -- an increase attributed mainly to the full impact of rationalization implemented in fiscal 2009, more-productive equipment, and the contribution from printing the Chronicle. Citing resumed organic growth, Transcontinental said it increased adjusted operating income before amortization for the fourth consecutive quarter.

From a second-quarter 2009 loss of $144.3 million, net income showed a gain of $67 million in the quarter ended April 30, 2010, the difference owing primarily to impairment of goodwill and intangible assets and impairment of assets and restructuring costs in 2009, along with a gain on the sale of almost all the assets of the Direct Mail Group in the United States last April and the increase in adjusted operating income in 2010, according to the company.

Adjusted net income applicable to participating shares was up 14%, to $34.3 million.