Montreal, May 11, 2020 /CNW Telbec/ - TVA Group Inc. ("TVA Group" or the "Corporation") announced today that it recorded operating revenues in the amount of $137.1 million in the first quarter of 2020, a year-over-year increase of $3.0 million. The quarterly net loss attributable to shareholders was $0.7 million or $0.02 per share, compared with a net loss attributable to shareholders of $6.7 million or $0.16 per share in the same quarter of 2019.
First quarter operating highlights
- Consolidated adjusted EBITDA1 of $8,507,000, representing a $4,540,000 favourable variance from the same quarter of 2019.
- $3,829,000 in adjusted EBITDA1 in the Broadcasting segment, a $1,349,000 (54.4%) favourable variance due primarily to the increase in adjusted EBITDA1 for the specialty channels, in particular "TVA Sports," where the costs reflect a significant decrease of sporting events broadcast on the channel, partially offset by the increase in negative adjusted EBITDA1 for TVA Network.
- $664,000 in adjusted EBITDA1 in the Magazines segment, a $717,000 unfavourable variance mainly because the decrease in operating revenues was greater than the savings generated by the continuation of staff and expense rationalization plans implemented in recent quarters.
- $3,172,000 in adjusted EBITDA1 in the Film Production & Audiovisual Services ("MELS") segment, a $3,066,000favourable variance caused primarily by an increase in profitability of soundstage, mobile and equipment rental services, whereas the segment's other activities recorded decreased profitability.
- $667,000 in adjusted EBITDA1 in the Production & Distribution segment, which since April 1, 2019 has included the businesses acquired through the acquisition of the companies in the Incendo group.
"Although the COVID-19 pandemic affecting us all right now had a limited impact on our first quarter 2020 results, the Corporation had to scale down a number of its operations considerably toward the end of the quarter in response to the Quebec government's directives. Among other impacts, the COVID-19 virus and the measures to prevent its spread have led to a significant reduction in advertising revenues, a significant decrease of sporting events broadcast on the "TVA Sports" specialty channel, a reduction in the publication frequency of some periodicals and the suspension of most of our content production activities. TVA Group has however continued to provide essential services in order to inform in addition to entertain the population, while putting in place internal measures to safeguard the health and safety of its employees and the public," commented France Lauzière, President of TVA Group.
1 See definition of adjusted EBITDA below.
"TVA Group's total market share increased by 2.1 points1 to 40.4% in Q1 2020. TVA Network grew its share by 1.1 points1 while the specialty channels' share increased 1.0 points1 as a result of strong 2.2-point1 growth at "LCN," which peaked at a 6.9%1 share, holding its position as Quebec's most-watched specialty channel. In that respect, we are very proud of and grateful for our employees' hard work, which has enabled us to continue providing essential services, particularly through our continuous news coverage," added Ms. Lauzière.
"While the Magazines segment's operating revenues continued their decline in the first quarter of 2020, exacerbated by the current situation, our efforts to reduce operating expenses, increase operational efficiencies and prioritize our strong brands yielded an 18.4% decrease in operating expenses on a comparable basis, thus enabling the segment to maintain a positive contribution to the Corporation's operating results. In fact, we are pleased to report that, according to the most recent Vividata survey, TVA Publications held its position as the top publisher of French-language magazines in Quebec with more than 3.6 million2 readers of its monthlies, while our English-language titles are read by nearly 5.5 million2 people," continued the President of TVA Group.
"The Film Production & Audiovisual Services segment's quarterly numbers were up significantly year-over-year, due primarily to the use of our soundstages and equipment by local and international producers, as well as by a major Disney production at our facilities for the filming of a remake of the well-known family comedy Home Alone.
The new Production & Distribution segment, which includes the operations of the companies in the Incendo group, has made a positive contribution to the Corporation's financial results since its acquisition. In addition to diversifying our revenue sources and expanding our presence internationally, particularly in English-language markets, the acquisition will allow us to take advantage of the anticipated strong demand for production of original content once the current crisis is resolved.
In closing, I want to express my gratitude to all of our employees at all of our business segments and across Quebec. They are the reason we have been able to continue to inform and entertain the people of Quebec," concluded Ms. Lauzière.
Update on the current context related to the COVID-19 pandemic
The positive first quarter results must however be viewed in the context of the COVID-19 pandemic, an unprecedented situation with major consequences for the Canadian population and the global economy. As an essential services provider, our priority is to continue our mission of informing and entertaining the public. In that respect, we have ensured that we maintain our ongoing news services, available to all via our various broadcasting platforms, and have provided free access to our specialty news channel "LCN." TVA Group has taken all the necessary steps to safeguard its employees' health and safety by delivering services remotely whenever possible, introducing social distancing measures in the workplace and adopting stringent sanitary measures at our facilities.
In this crisis context, we anticipate greater financial impacts over the coming quarters, which may include:
- significant reduction in advertising revenues, which will inevitably affect the Broadcasting and Magazines segments;
- increase in bad debts as a result of the difficult situation affecting some advertisers;
- suspension of all live broadcasting of sporting events held by professional leagues, which, whether postponed or not, could have a considerable impact on our content costs and revenues from such events;
- reduction in the publication frequency of some periodicals, which will affect revenues in the Magazines segment;
- suspension of most of our content production activities, which will have an impact on our MELS and Production & Distribution segments.
1 Source: Numeris – Quebec Franco, January 1 to March 31 2020, Mon-Sun, 2:00 – 2:00, All 2+.
2 Source: Vividata, Spring 2020, Total Canada, 14+, January 1 to December 31, 2019
With that in mind, on March 27, in order to adjust its cost structure for the lower volume of activities, the Corporation reduced the work hours of approximately 25% of its workforce, while providing affected employees with supplemental benefits to top up the government emergency relief programs and minimize the impact on them.
Given the uncertainty surrounding the duration of the pandemic and its potential impacts, we are currently unable to predict the overall effect it will have on our operating and financial results, however we believe that our current sound financial health, strong balance sheet and the steps we have taken will enable us to continue to deliver positive cash flow.
TVA Group continues to take steps on a daily basis to implement the action plans necessary to ensure the continuity of its business operations and the pursuit of its long-term strategies. Our management team is working to ensure sound management of the current crisis while planning for a gradual resumption of the Corporation's activities once government directives allow.
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 associates. Adjusted EBITDA as defined above is not a measure of results that is consistent with International Financial Reporting Standards ("IFRS"). It is not intended to be regarded as an alternative to other financial operating 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 first quarter 2020 results on May 12, 2020, at 2:30 p.m. EDT. There will be a question period reserved for financial analysts. To access the call, please dial 1-877-293-8052, followed by access code for participants 66581#. A tape recording of the call will be available from May 12 to June 12, 2020 by dialling 1-877-293-8133 followed by conference access code 66581# and recording access code 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, labour relation risks, and the risks related to public health emergencies, including COVID-19, as well as any urgent steps taken by government.
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, 2019 and the "Risk Factors" section in the Corporation's 2019 annual information form, as well as the update on risks and uncertainties in the Interim Management's Discussion and Analysis for the three-month period ended March 31, 2020.
The forward-looking statements in this news release reflect the Corporation's expectations as of May 11, 2020 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, international production and 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 consolidated financial statements, with notes, and the interim Management's Discussion and Analysis for the three-month period ended March 31, 2020, can be consulted on the Corporation's website at www.groupetva.ca.