TVA GROUP REPORTS $12.2 MILLION GROWTH IN ADJUSTED OPERATING INCOME IN THIRD QUARTER OF 2017.
Montreal, Canada – TVA Group Inc. (“TVA Group” or the “Corporation”) announced today that it recorded a net loss attributable to shareholders in the amount of $15.3 million or $0.35 per share in the third quarter of 2017, compared with a net loss attributable to shareholders of $32.5 million or $0.75 per share in the same quarter of 2016.
Third quarter operating highlights:
- Consolidated adjusted operating income1of $32,935,000, a favourable variance of $12,242,000 (+59.2%) from the same quarter of 2016.
- $19,902,000 adjusted operating income1 in the Broadcasting & Production segment, a favourable variance of $8,653,000 mainly because of an increase in the “TVA Sports” channel’s adjusted operating income1 resulting from, among other things, subscription revenue growth, as well as an increase in TVA Network’s adjusted operating income1 resulting from higher operating revenues.
- $3,189,000 adjusted operating income1 in the Magazines segment, an unfavourable variance of $2,523,000 mainly because of a decrease in operating revenues, which was partially offset by the savings generated by the rationalization plans implemented in recent quarters.
- $9,844,000 adjusted operating income1 in the Film Production & Audiovisual Services segment (“MELS”), a favourable variance of $6,112,000 essentially because of increased adjusted operating income1 from soundstage and equipment rental due to higher volume of activities.
- Non-cash impairment charge of $29,993,000 for goodwill and $12,412,000 for certain intangible assets in the Magazines segment, compared with a $40,100,000 non-cash goodwill impairment charge in the same quarter of 2016.
“We are satisfied with our third quarter of 2017 results, particularly in the Broadcasting & Production segment, which grew its advertising revenues for the fourth consecutive quarter, with more than 11% year-over-year increase for the segment as a whole, despite the fact that in the third quarter of 2016, TVA Sports broadcasted the games of the World Cup of Hockey tournament.
TVA Group’s total market share increased by 3.1 points to 37.1% in the third quarter of 2017 compared with 34.0% in the same period of 2016. “LCN” grew its market share by 1.1 points to 4.8% due to, among other things, its outstanding coverage of Hurricane Irma. TVA Network also increased its market share by 1.7 points to 24.0%. It carried 7 of the top 10 shows in Quebec, including La Voix Junior which attracted more than 1.8 million viewers,” commented France Lauzière, President and CEO of the Corporation.
“The decrease in the Magazines segment’s adjusted operating income and the continuing downward trend in the magazine industry’s operating revenues, particularly advertising revenues, led the Corporation to conclude that a $42.4 million non-cash charge for impairment of goodwill and of intangible assets had to be taken,” added Ms Lauzière.
“Lastly, the presence of many movie productions in Montreal and on our film soundstages combined with the demand for equipment rental services by these same productions contributed to the major growth in the Film Production & Audiovisual Services segment’s results for the last quarter compared to the same quarter last year. Moreover, we are very proud of the trust of many local and international producers who use our services, such as those related to the rental of soundstages and filming equipment, postproduction and visual effects activities, and other specific technical services to the industry,” concluded Ms. Lauzière.
Adjusted operating income (loss) (“Adjusted operating results”)
In its analysis of operating results, the Corporation defines adjusted operating income (loss) as net income (loss) before depreciation of property, plant and equipment, amortization of intangible assets, financial expenses, impairment of goodwill and of intangible assets, operational restructuring costs and others, income taxes and share of loss (income) of associated corporations. Adjusted operating income (loss) 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 operating income (loss) is also relevant because it is a significant component of the Corporation’s annual incentive compensation programs. The Corporation’s definition of adjusted operating income (loss) 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 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, 2016 and the “Risk Factors” section in the Corporation’s 2016 annual information form.
The forward-looking statements in this news release reflect the Corporation’s expectations as of November 3, 2017, 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 production companies. 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