MONTREAL, July 29, 2021 - TVA Group Inc. ("TVA Group" or the "Corporation") announced today that it recorded operating revenues totalling $159.4 million in the second quarter of 2021, a year-over-year increase of $55.6 million. Net income attributable to shareholders was $3.9 million or $0.09 per share, compared with a net loss attributable to shareholders of $2.7 million or $0.06 per share for the same quarter of 2020.
Second quarter operating highlights:
Consolidated adjusted EBITDA1 of $13,965,000, a $6,599,000 favourable variance from the same quarter of 2020.
$6,581,000 in adjusted EBITDA1 in the Broadcasting segment, a $3,111,000 favourable variance due to the increase in adjusted EBITDA1 at TVA Network, which posted growth in its advertising revenues, partially offset by higher negative adjusted EBITDA1 at "TVA Sports" due to the increased costs associated with sporting events broadcast by the channel, particularly the National Hockey League ("NHL") playoffs.
$3,913,000 in adjusted EBITDA1 in the Film Production & Audiovisual Services segment ("MELS"), a $3,406,000 favourable variance mainly due to increased profitability of soundstage, mobile and equipment rental activities, partially offset by the poorer performance of dubbing, subtitling and described video, as well as by the start-up of our virtual stage activities, which have not yet reached their full revenue potential.
$1,758,000 in adjusted EBITDA1 in the Magazines segment, a $1,132,000 unfavourable variance stemming from a resumption of activities amid reduced government support.
$1,618,000 in adjusted EBITDA1 in the Production & Distribution segment ("Incendo"), a $1,190,000 favourable variance generated primarily by the international distribution of films produced by Incendo.
1 See definition of adjusted EBITDA below.
"We are satisfied with the results for the second quarter of our financial year, which reflect resumption of activities in our various segments. For the second straight quarter, advertising revenues at TVA Network and our specialty channels were up over the previous quarter. Another encouraging sign of growth is that advertising revenues also rose compared with the same quarter of 2019, before the effects of the public health crisis. Our digital platforms, in particular TVA+ and TVA Nouvelles, continue to gain in popularity and thus contribute to our growth. Based on these positive factors, we can continue and increase our investments in content and continue to develop significant high-quality programming for the benefit of our viewers," said Pierre Karl Péladeau, acting President and CEO of TVA Group.
"With a consolidated market share of 42.6%2 for the second quarter of 2021, our shows are still among the most watched in Quebec and continued to perform strongly, particularly the variety show Star Académie, which attracted nearly 1.5 million viewers. "TVA Sports" recorded exceptional growth of 5.0%1 for the quarter, due primarily to the fact that the Montreal Canadiens qualified for the NHL playoffs. In fact, the four playoff rounds were among the top shows in Quebec, including some games in the finals that attracted an average audience of over 1.4 million1 viewers."
"In the Film Production & Audiovisual Services segment, our activities fully resumed in a safe work environment adapted to the public health measures. We're very pleased to have Paramount Pictures in our studios right now filming the mega-production Transformers and some of its outdoor scenes are also showcasing the city of Montreal. In addition, we recently announced construction of MELS 4, a $53 million investment that will add 160,000 square feet to our capacity and enhance our ability to attract more film shoots to our facilities and bring in more money from abroad, benefiting Quebec's economy, its cultural industry and cultural workers. Our virtual stage services are also growing in popularity, advancing the positioning and competitive advantage of MELS," continued Mr. Péladeau.
"Although activity grew in the Magazines segment this quarter, the reopening took place in a context of decreased government support, in terms of both the ad hoc assistance of the Canada Emergency Wage Subsidy and the regular program assistance from the Canada Periodicals Fund, which has modified its grant program. I emphasize once again that support for this highly subsidized industry that has been in significant decline for a number of years is essential to its survival. TVA Group continues to be a leader in the Magazines market, as confirmed yet again by the latest Vividata survey, which positions the Corporation as the top publisher of French-language monthly magazines in Quebec, with nearly 3.3 million2 cross-platform readers of its French-language monthlies.
"Our Production & Distribution activities continued at Incendo, which began international distribution of its first romantic comedies produced in 2020, fuelling quarterly growth in this segment. The growing popularity of streaming platforms also enabled the segment to increase its presence on this type of platforms. Incendo is continuing its 2021 production schedule with local productions and co-productions, the most recent of which is currently starting up in Australia. This business segment is helping diversify our revenue streams and expand our presence in English-language markets.
"In closing, I want to thank all our employees for their hard work and dedication to our reopening, enabling us to continue the Corporation's mission to inform and entertain Quebecers," concluded Mr. Péladeau.
1 Source: Numeris – Quebec Franco, April 1 to June 30, 2021 and 2020, Mo-Su, 2 a.m.–2 a.m., t2+
2 Source: Vividata, Spring 2021, Total Canada, 14+, January 1 to December 31, 2020
Update on the COVID-19 situation
Second quarter results must be viewed in the context of the COVID-19 pandemic, which continues to have major consequences for the economic environment in Canada and around the globe. Despite the constraints created by the pandemic, the Corporation has continued and will continue to maintain its operations, while safeguarding the health and safety of its employees and the public.
It is possible that the financial impacts of this crisis will continue to be felt in the coming quarters, including:
significant variability in our revenues and content costs related to live broadcasts of sporting events organized by professional leagues, as they resume their activities while cancelling some events and making significant changes to formats and broadcast schedules;
reduction in advertising revenues in markets or sectors still affected by the public health crisis, which will inevitably affect the Broadcasting and Magazines segments;
variance in the level of activity at MELS and in the Production & Distribution segment resulting from the stoppage or a slow and complex resumption of our content production and distribution activities due to factors such as the need to comply with health precautions and physical distancing rules on the set, the closing of borders with some countries, and production insurance challenges;
possible reduction in the publication frequency of some periodicals, which would affect revenues in the Magazines segment.
Because of the decrease in their revenues, some of the entities in the Corporation's various business segments qualified for the Canada Emergency Wage Subsidy, enabling the Corporation to mitigate some of the impacts of the crisis.
Given the uncertainty surrounding the duration of the pandemic and its potential repercussions, including the possible impact of another wave, 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, our strong balance sheet and the steps we have taken will enable us to continue to deliver positive cash flows.
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 other, 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.
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 emergency measures implemented 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, 2020 and the "Risk Factors" section in the Corporation's 2020 annual information form.
The forward-looking statements in this news release reflect the Corporation's expectations as of July 29, 2021 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.