TVA Group Inc. (“TVA Group” or the “Corporation”) announced today that it recorded a net loss attributable to shareholders in the amount of $9.7 million or a loss of $0.22 per share in the second quarter of 2018, compared with a net loss attributable to shareholders of $1.9 million or a loss of $0.04 per share in the same quarter of 2017.
Second quarter operating highlights:
Consolidated negative adjusted EBITDA of $3,902,000 representing an unfavourable variance of $14,974,000 from the same quarter of 2017.
$8,345,000 negative adjusted EBITDA1 in theBroadcasting & Production segment representing an unfavourable variance of $13,421,000 due primarily to a 60% increase in the “TVA Sports” channel’s negative adjusted EBITDA1 and a 19% decrease in TVA Network’s adjusted EBITDA.1
$2,459,000 adjusted EBITDA1 in the Magazines segment representing an unfavourable variance of $1,506,000 due mainly to a decrease in operating revenues, which was only partially offset by savings generated by staff and expense rationalization plans implemented in recent quarters.
$1,984,000 adjusted EBITDA1 in the Film Production & Audiovisual Services segment (“MELS”) representing an unfavourable variance of $47,000 essentially due to lower volume of activities in visual effects, dubbing and subtitling services as well as in distribution services.
“Our financial results for the second quarter of 2018 were disappointing, especially in the Broadcasting & Production segment. Despite strong ratings for the NHL playoffs on ‘TVA Sports,’ the fact that the Montreal Canadiens failed to make the first round did negatively impact advertising revenues. TVA Network’s financial performance declined again with a 9% decrease in advertising revenues in Q2 2018. We have made moves to cut operating expenses but the full effect of those initiatives was not yet felt in the second quarter.
TVA Network’s market share was stable at 23.8% while our specialty channels increased their combined market share by 0.5 points, led by ‘LCN’ which jumped 1.2 points to 5.7%2”, commented France Lauzière, President of TVA Group.
“The Magazines segment’s operating revenues were down 15% as a result of the sale and fewer issues of some titles, and reduced advertising revenues across the industry. Despite the decrease, we were able to keep our profit margin above 12% by implementing a series of initiatives to cut costs and improve operational efficiencies. Our brands remain immensely popular and TVA has held its position as the number one publisher of French-language magazines in Quebec. Our English-language titles have 6.2 million readers and our French-language titles 2.9 million”, added Ms Lauzière.
“Lastly, the Film Production & Audiovisual Services segment’s quarterly financial results held steady year over year. While its financial numbers were stable during the last quarter, we expect MELS to be a growth driver for the Corporation going forward. Bookings for our film facilities are optimal for the coming months and our postproduction services are increasingly popular with local and foreign producers alike,” concluded Ms. Lauzière.
Adjusted EBITDA (previously adjusted operating income or loss)
In its analysis of operating results, the Corporation defines adjusted EBITDA as net income (loss) before depreciation of property, plant and equipment, amortization of intangible assets, financial expenses, operational restructuring costs and others, income taxes and share of income of associated corporations. Adjusted EBITDA as defined above is not a measure of results that is consistent with International Financial Reporting Standards (“IFRS”). Neither is it intended to be regarded as an alternative to other financial performance measures or to the statement of cash flows as a measure of liquidity. This measure should not be considered in isolation or as a substitute for other performance measures prepared in accordance with IFRS. This measure is used by management and the Board of Directors to evaluate the Corporation’s consolidated results and the results of its segments. This measure eliminates the significant level of impairment, depreciation and amortization of tangible and intangible assets and is unaffected by the capital structure or investment activities of the Corporation and its segments. Adjusted EBITDA is also relevant because it is a significant component of the Corporation’s annual incentive compensation programs. The Corporation’s definition of adjusted EBITDA may not be identical to similarly titled measures reported by other companies.
Conference call for investors
TVA Group will hold a conference call to discuss its second quarter 2018 results on August 3, 2018, at 10:00 a.m. EST. There will be a question period reserved for financial analysts. To access the call, please dial 1-877-293-8052, access code for participants 66581#. A tape recording of the call will be available from August 3 to September 3, 2018 by dialling 1-877-293-8133, conference number 1235042#, access code for participants 66581#.
Forward-looking information disclaimer
The statements in this news release that are not historical facts may be forward-looking statements and are subject to important known and unknown risks, uncertainties and assumptions which could cause the Corporation’s actual results for future periods to differ materially from those set forth in the forward-looking statements. Forward-looking statements generally can be identified by the use of the conditional, the use of forward-looking terminology such as “propose,” “will,” “expect,” “may,” “anticipate,” “intend,” “estimate,” “plan,” “foresee,” “believe” or the negative of these terms or variations of them or similar terminology. Certain factors that may cause actual results to differ from current expectations include seasonality, operational risks (including pricing actions by competitors and the risk of loss of key customers in the Film Production & Audiovisual Services segment), programming, content and production cost risks, credit risk, government regulation risks, government assistance risks, changes in economic conditions, fragmentation of the media landscape, risk related to the Corporation’s ability to adapt to fast-paced technological change and to new delivery and storage methods, and labour relation risks.
Investors and others are cautioned that the foregoing list of factors that may affect future results is not exhaustive and that undue reliance should not be placed on any forward-looking statements. For more information on the risks, uncertainties and assumptions that could cause the Corporation’s actual results to differ from current expectations, please refer to the Corporation’s public filings, available at www.sedar.com and http://groupetva.ca, including in particular the “Risks and Uncertainties” section of the Corporation’s annual Management’s Discussion and Analysis for the year ended December 31, 2017 and the “Risk Factors” section in the Corporation’s 2017 annual information form.
The forward-looking statements in this news release reflect the Corporation’s expectations as of August 2, 2018 and are subject to change after this date. The Corporation expressly disclaims any obligation or intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by the applicable securities laws.
TVA Group Inc., a subsidiary of Quebecor Media Inc., is a communications company engaged in the broadcasting, film and audiovisual production, and magazine publishing industries. TVA Group Inc. is North America’s largest broadcaster of French-language entertainment, information and public affairs programming and one of the largest private-sector producers of French-language content. It is also the largest publisher of French-language magazines and publishes some of the most popular English-language titles in Canada. The Corporation’s Class B shares are listed on the Toronto Stock Exchange under the ticker symbol TVA.B.
Denis Rozon, CPA, CA
Vice President and Chief Financial Officer