For immediate release
TVA GROUP REPORTS CONSOLIDATED RESULTS FOR SECOND QUARTER 2019.
Montreal, Canada – TVA Group Inc. (“TVA Group” or the “Corporation”) announced today that it recorded operating revenues in the amount of $146.0 million in the second quarter of 2019, a year-over-year increase of $5.8 million. The quarterly net loss attributable to shareholders was $6.2 million or $0.14 per share, compared with a net loss attributable to shareholders of $9.6 million or $0.22 per share in the same quarter of 2018.
Second quarter operating highlights:
- Consolidated adjusted EBITDA of $3,764,000, representing a $6,576,000 favourable variance from the same quarter of 2018.
- $1,912,000 negative adjusted EBITDA1 in the Broadcasting segment, a $6,220,000 favourable variance mainly attributable to the acquisition of the “Évasion” and “Zeste” channels, a 4.8% decrease in the negative adjusted EBITDA1 of the “TVA Sports” channel, and an increase in the adjusted EBITDA1 of the other specialty channels and TVA Network.
- $3,517,000 adjusted EBITDA1 in the Magazines segment representing a $709,000 favourable variance due mainly to savings generated by continuation of staff and expense rationalization plans introduced in recent quarters, partially offset by a decrease in operating revenues.
- $1,837,000 adjusted EBITDA1 in the Film Production & Audiovisual Services (“MELS”) segment, a $675,000 unfavourable variance owing primarily to a decrease in adjusted EBITDA1 from soundstage, mobile unit and equipment rental, partially offset by a decrease in negative adjusted EBITDA1 from visual effects, which registered increased volume compared with the same period of 2018.
- $322,000 adjusted EBITDA1 in the Corporation’s new Production & Distribution segment, which since April l, 2019 has included the businesses acquired through the acquisition of the companies in the Incendo group.
“We are satisfied with our results for the second quarter of our financial year. Unfortunately, given the many challenges we face, TVA Group had to make deep budget cuts during the quarter to reduce the operating expenses of its business segments. Those moves had a positive impact on our financial results, although their full benefits have yet to be realized.
“There was a significant decrease in the Broadcasting segment’s negative adjusted EBITDA1. Ongoing integration of the “Évasion” and “Zeste” channels into the segment continued to make a positive contribution to our specialty channel business, improving both our financial results and the range of our content offerings. Even though the Montreal Canadiens failed to advance to the first round of the Stanley Cup playoffs, “TVA Sports” registered a slight increase in market share and higher advertising revenues than in the same quarter of 2018.
“While our specialty channels performed well and posted growth, it must be kept in mind that they have been short changed for years on their fair market value. That is particularly true of “LCN” and “TVA Sports”. While “RDS”, owned by Bell, and “TVA Sports” are two comparable sports channels with the same audience share per subscriber, their subscription fees are far from comparable. Bell must acknowledge the issues facing our entire industry and recognize the fair value of our channels. Since the current system isn’t working, we will continue making our case to the regulatory and governmental authorities and calling for quick action to end this unfair treatment.
“TVA Group’s television market share increased 0.3 points to 40.5%. TVA Network carried seven of the top 10 programs in Quebec during the second quarter of 2019;2 once again, La Voix was a standout, holding on to the top spot with an average audience of more than 1.9 million,” commented France Lauzière, President and CEO of the Corporation.
“The Magazines segment’s operating revenues fell by 13.9%, reflecting the industry trend as well as discontinuation of some of its titles and reduced publication frequency for others. Despite the revenue decrease, we were able to increase our profit margin to more than 20% by taking initiatives to cut costs and improve operational efficiencies. Our brands continue to enjoy strong popularity. TVA Group held its position as the top publisher of French-language magazines in Quebec, according to the most recent Vividata survey,” added Ms. Lauzière.
“The Film Production & Audiovisual Services segment’s quarterly numbers were down year over year. While the acquisitions we made in recent quarters have generated increased volume and made a positive contribution to the segment, our soundstage and equipment rental business is suffering from the fact that Quebec’s tax credits are less generous than those of other provinces. As we have said on previous occasions, it is very important that the provincial government commit to maintaining and hopefully enhancing existing tax incentives if Quebec’s economy is to reap its share of the benefits generated by the film industry’s global growth. We expect MELS to be a growth driver for the Corporation going forward.
“Lastly, the new Production & Distribution segment made a positive contribution to our quarterly financial results. It will diversify our revenue streams and support the expansion of our international presence, particularly in English-language markets,” concluded Ms. Lauzière.
Adjusted EBITDA (previously adjusted operating income (loss))
In its analysis of operating results, the Corporation defines adjusted EBITDA as net income (loss) before depreciation and amortization, 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 2019 results on August 2, 2019, at 10:00 a.m. EDT. 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 2 to September 2, 2019 by dialling 1-877-293-8133 and the 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 and Production & Distribution segments), 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 www.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, 2018 and the “Risk Factors” section in the Corporation’s 2018 annual information form.
The forward-looking statements in this news release reflect the Corporation’s expectations as of August 1, 2019 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 production and audiovisual services, production and international distribution of television content, 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.
The condensed interim consolidated financial statements, with notes, and the interim Management’s Discussion and Analysis for the three-month and six-month periods ended June 30, 2019, can be consulted on the Corporation’s website at www.groupetva.ca.
Anick Dubois, CPA, CA