First quarter operating highlights:
$23,977,000 in consolidated negative adjusted EBITDA1, a$14,256,000 unfavourable variance from the same quarter of 2022.$22,806,000 in negative adjusted EBITDA1 in the Broadcasting segment, a$7,338,000 unfavourable variance mainly due to a decrease in profitability at TVA Network, which increased its investments in content, and to a decrease in adjusted EBITDA at the news and entertainment specialty channels due to lower revenues. The variances were partially offset by a decrease in the loss for "TVA Sports " due to a combination of lower expenses and higher revenues.$555,000 in negative adjusted EBITDA1 in the Film Production & Audiovisual Services segment ("MELS"), a $4,399,000 unfavourable variance caused primarily by the decreased profitability of soundstage, mobile and equipment rental, whereas all other segment activities posted an increase in profitability.$367,000 in negative adjusted EBITDA1 in the Magazines segment, an$807,000 unfavourable variance due mainly to lower revenues, particularly reduced government assistance, as well as lower advertising and subscription revenues.$355,000 in negative adjusted EBITDA1 in the Production & Distribution segment, an unfavourable variance of $1,908,000 reflecting fewer deliveries of films produced by companies in the Incendo Group ("Incendo") during the period compared with the same period of 2022, when a number of new film sales were recognized.
_______________________ |
1 See definition of adjusted EBITDA below. |
"First quarter results continued to be impacted by declining profitability across all our segments. Even with the implementation of our restructuring plan, announced on
"Results in the Broadcasting segment reflect the impact of our continued investments in content, which inevitably affected the profitability of our over-the-air network. Although advertising revenues grew, driven by our TVA+ platform, where views and digital revenues for video-on-demand services increased 30% and 33% respectively, they remain uncertain due to current market conditions and were insufficient to support the level of investment required to compete with the Web giants and Radio-Canada, which is heavily government subsidized. We are forced to fight on an uneven playing field against players that capture a large share of the advertising revenues, further undermining
"Our strategy of increasing our content investment continues to protect our market share, both for TVA Network and for our specialty services. TVA Network had 4 of the top 5 shows in
"While the recent passage of Bill C-11 is a step in the right direction, we continue to urge governmental authorities to act quickly on the other outstanding issues before it is too late. For example, the CRTC must take urgent action to address Radio-Canada's unfair behaviour in scooping up advertising dollars, which are our over-the-air network's only source of revenues, as well as distributor Bell TV's highly prejudicial treatment of our specialty channels by continuing to pay below-market fees.
"In the Film Production & Audiovisual Services segment, the Corporation was particularly affected by a decrease in soundstage, mobile and equipment rental services, which continue to suffer from the lack of a foreign blockbuster. This is a very different situation from the same period of 2022, when
"In the Magazines segment, results for all our titles were heavily affected by lower revenues. The significant reduction in government assistance is of particular concern for this segment, which has been coping with a significant market decline for a number of years and for which the
"Our Production & Distribution segment reported a lower volume of activities for the first three months of the year, as it focused on finalizing films that began production in 2022. Incendo delivered its first series co-produced with
Definition
Adjusted EBITDA
In its analysis of operating results, the Corporation defines adjusted EBITDA as net income (loss) before depreciation and amortization, financial expenses (income), operational restructuring costs and other, income tax expense (recovery) 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
The forward-looking statements in this news release reflect the Corporation's expectations as of
The condensed consolidated Financial Statements, with notes, and the interim Management's Discussion and Analysis for the three-month period ended
Consolidated statements of loss
(unaudited)
(in thousands of Canadian dollars, except per-share amounts)
Three-month periods ended | |||||
Note | 2023 | 2022 | |||
Revenues | 2 | $ | 136,103 | $ | 144,497 |
Purchases of goods and services | 3 | 123,742 | 115,624 | ||
Employee costs | 36,338 | 38,594 | |||
Depreciation and amortization | 7,182 | 7,620 | |||
Financial (income) expenses | 4 | (118) | 500 | ||
Operational restructuring costs and other | 5 | 902 | 20 | ||
Loss before income tax recovery and share of income | (31,943) | (17,861) | |||
Income tax recovery | (8,319) | (4,597) | |||
Share of income of associates | (91) | (249) | |||
Net loss | $ | (23,533) | $ | (13,015) | |
Net (loss) income attributable to: | |||||
Shareholders | $ | (23,533) | $ | (13,016) | |
Non-controlling interest | – | 1 | |||
Basic and diluted loss per share attributable | $ | (0.54) | $ | (0.30) | |
Weighted average number of shares outstanding and diluted shares | 43,205,535 | 43,205,535 |
See accompanying notes to condensed consolidated financial statements. |
Consolidated statements of comprehensive loss
(unaudited)
(in thousands of Canadian dollars)
Three-month periods ended | |||||
Note | 2023 | 2022 | |||
Net loss | $ | (23,533) | $ | (13,015) | |
Other comprehensive items that will not be reclassified to loss: | |||||
Defined benefit plans: | |||||
Re-measurement gain | 8 | – | 14,500 | ||
Deferred income taxes | – | (3,800) | |||
– | 10,700 | ||||
Comprehensive loss | $ | (23,533) | $ | (2,315) | |
Comprehensive (loss) income attributable to: | |||||
Shareholders | $ | (23,533) | $ | (2,316) | |
Non-controlling interest | – | 1 |
See accompanying notes to condensed consolidated financial statements. |
Consolidated statements of equity
(unaudited)
(in thousands of Canadian dollars)
Equity attributable to shareholders | Equity | Total | ||||||||||
Capital | Contributed | Retained | Accumula- | |||||||||
Balance as at | $ | 207,280 | $ | 581 | $ | 138,679 | $ | 32,714 | $ | 1,210 | $ | 380,464 |
Net (loss) income | – | – | (13,016) | – | 1 | (13,015) | ||||||
Other comprehensive income | – | – | – | 10,700 | – | 10,700 | ||||||
Balance as at | 207,280 | 581 | 125,663 | 43,414 | 1,211 | 378,149 | ||||||
Net income (loss) | – | – | 4,147 | – | (21) | 4,126 | ||||||
Dividends | – | – | – | – | (1,190) | (1,190) | ||||||
Other comprehensive income | – | – | – | 12,291 | – | 12,291 | ||||||
Balance as at | 207,280 | 581 | 129,810 | 55,705 | – | 393,376 | ||||||
Net loss | – | – | (23,533) | – | – | (23,533) | ||||||
Balance as at | $ | 207,280 | $ | 581 | $ | 106,277 | $ | 55,705 | $ | – | $ | 369,843 |
See accompanying notes to condensed consolidated financial statements. |
Consolidated balance sheets
(unaudited)
(in thousands of Canadian dollars)
|
| |||
Assets | ||||
Current assets | ||||
Accounts receivable | $ | 160,532 | $ | 175,174 |
Income taxes | 19,103 | 8,522 | ||
Audiovisual content | 125,026 | 135,038 | ||
Prepaid expenses | 10,426 | 4,400 | ||
315,087 | 323,134 | |||
Non-current assets | ||||
Audiovisual content | 90,244 | 88,225 | ||
Investments | 12,108 | 12,017 | ||
Property, plant and equipment | 153,210 | 157,784 | ||
Right-of-use assets | 7,031 | 7,599 | ||
Intangible assets | 13,086 | 14,671 | ||
21,696 | 21,696 | |||
Defined benefit plan asset | 44,716 | 45,111 | ||
Deferred income taxes | 5,169 | 5,833 | ||
347,260 | 352,936 | |||
Total assets | $ | 662,347 | $ | 676,070 |
Consolidated balance sheets (continued)
(unaudited)
(in thousands of Canadian dollars)
Note |
|
| |||
Liabilities and equity | |||||
Current liabilities | |||||
Bank overdraft | $ | 3,213 | $ | 1,107 | |
Accounts payable, accrued liabilities and provisions | 113,319 | 114,174 | |||
Content rights payable | 143,996 | 124,394 | |||
Deferred revenues | 9,060 | 11,031 | |||
Income taxes | 561 | 562 | |||
Current portion of lease liabilities | 1,898 | 2,318 | |||
Short-term debt | – | 8,961 | |||
272,047 | 262,547 | ||||
Non-current liabilities | |||||
Lease liabilities | 6,025 | 6,453 | |||
Other liabilities | 5,743 | 5,395 | |||
Deferred income taxes | 8,689 | 8,299 | |||
20,457 | 20,147 | ||||
Equity | |||||
Capital stock | 6 | 207,280 | 207,280 | ||
Contributed surplus | 581 | 581 | |||
Retained earnings | 106,277 | 129,810 | |||
Accumulated other comprehensive income | 55,705 | 55,705 | |||
Equity | 369,843 | 393,376 | |||
Total liabilities and equity | $ | 662,347 | $ | 676,070 |
See accompanying notes to condensed consolidated financial statements. |
Consolidated statements of cash flows
(unaudited)
(in thousands of Canadian dollars)
Three-month periods ended | |||||
2023 | 2022 | ||||
Cash flows related to operating activities | |||||
Net loss | $ | (23,533) | $ | (13,015) | |
Adjustments for: | |||||
Depreciation and amortization | 7,182 | 7,620 | |||
Share of income of associates | (91) | (249) | |||
Deferred income taxes | 1,054 | (980) | |||
Other | 13 | 13 | |||
(15,375) | (6,611) | ||||
Net change in non-cash balances related to operating items | 24,937 | (3,991) | |||
Cash flows provided by (used in) operating activities | 9,562 | (10,602) | |||
Cash flows related to investing activities | |||||
Additions to property, plant and equipment | (1,667) | (5,196) | |||
Additions to intangible assets | (125) | (423) | |||
Cash flows used in investing activities | (1,792) | (5,619) | |||
Cash flows related to financing activities | |||||
Net change in bank overdraft | 2,106 | 1,574 | |||
Net change in revolving credit facility | (8,970) | 12,990 | |||
Repayment of lease liabilities | (853) | (796) | |||
Other | (53) | (53) | |||
Cash flows (used in) provided by financing activities | (7,770) | 13,715 | |||
Net change in cash | – | (2,506) | |||
Cash at beginning of period | – | 5,181 | |||
Cash at end of period | $ | – | $ | 2,675 | |
Interest and income taxes reflected as operating activities | |||||
Net interest paid | $ | 298 | $ | 294 | |
Income taxes paid | 1,209 | 3,817 |
See accompanying notes to condensed consolidated financial statements. |
Notes to condensed consolidated financial statements
Three-month periods ended
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)
TVA Group Inc. ("TVA Group" or the "Corporation") is governed by the
The Corporation's businesses experience significant seasonality due to, among other factors, seasonal advertising patterns, consumers' viewing, reading and listening habits, demand for production services from international and local producers, and demand for content from global broadcasters. Because the Corporation depends on the sale of advertising for a significant portion of its revenues, operating results are also sensitive to prevailing economic conditions, including changes in local, regional and national economic conditions, particularly as they may affect advertising spending. In view of the seasonal nature of some of the Corporation's activities, the results of operations for interim periods should not necessarily be considered indicative of full-year results.
Notes to condensed consolidated financial statements (continued)
Three-month periods ended
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)
1. Basis of presentation
These consolidated financial statements were prepared in accordance with the International Financial Reporting Standards ("IFRS") issued by the
These condensed consolidated financial statements were approved by the Corporation's Board of Directors on May 8, 2023.
Certain comparative figures for the three-month period ended
2. Revenues
Three-month periods ended | ||||
2023 | 2022 | |||
Advertising services | $ | 68,780 | $ | 66,468 |
Royalties | 33,309 | 34,253 | ||
Rental, postproduction and distribution services and other services rendered (1) | 20,709 | 29,801 | ||
Product sales (2) | 13,305 | 13,975 | ||
$ | 136,103 | $ | 144,497 |
(1) | Revenues from rental of soundstages, mobiles, equipment and rental space amounted to |
(2) | Revenues from product sales include newsstand and subscription sales of magazines and sales of audiovisual content. |
Notes to condensed consolidated financial statements (continued)
Three-month periods ended
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)
3. Purchases of goods and services
Three-month periods ended | ||||
2023 | 2022 | |||
Rights and audiovisual content costs | $ | 96,251 | $ | 88,403 |
Printing and distribution | 3,303 | 3,678 | ||
Services rendered by the parent corporation: | ||||
- Commissions on advertising sales | 6,129 | 6,632 | ||
- Other | 2,457 | 2,384 | ||
Building costs | 4,390 | 4,462 | ||
Marketing, advertising and promotion | 4,309 | 4,128 | ||
Other | 6,903 | 5,937 | ||
$ | 123,742 | $ | 115,624 |
4. Financial (income) expenses
Three-month periods ended | |||||
2023 | 2022 | ||||
Interest on debt | $ | 249 | $ | 191 | |
Amortization of financing costs | 13 | 13 | |||
Interest on lease liabilities | 102 | 119 | |||
Interest income related to defined benefit plans | (504) | (111) | |||
Foreign exchange loss | 92 | 196 | |||
Other | (70) | 92 | |||
$ | (118) | $ | 500 |
Notes to condensed consolidated financial statements (continued)
Three-month periods ended
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)
5. Operational restructuring costs and other
Three-month periods ended | ||||
2023 | 2022 | |||
Operational restructuring costs | $ | 902 | $ | 37 |
Other | – | (17) | ||
$ | 902 | $ | 20 |
Operational restructuring costs
For the three-month periods ended
Three-month periods ended | ||||
2023 | 2022 | |||
Broadcasting | $ | 585 | $ | 37 |
Film Production & Audiovisual Services | 174 | – | ||
Magazines | 111 | – | ||
Production & Distribution | 32 | – | ||
$ | 902 | $ | 37 |
Notes to condensed consolidated financial statements (continued)
Three-month periods ended
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)
6. Capital stock
(a) Authorized capital stock
An unlimited number of Class A common shares, participating, voting, without par value.
An unlimited number of Class B shares, participating, non-voting, without par value.
An unlimited number of preferred shares, non-participating, non-voting, with a par value of
(b) Issued and outstanding capital stock
|
| ||||
4,320,000 Class A common shares | $ | 72 | $ | 72 | |
38,885,535 Class B shares | 207,208 | 207,208 | |||
$ | 207,280 | $ | 207,280 |
7. Stock-based compensation and other stock-based payments
(a) Stock option plans
Outstanding options | ||||
Number | Weighted average | |||
Balance as at | 519,503 | $ | 2.29 | |
Cancelled | (30,000) | 1.40 | ||
Balance as at | 489,503 | $ | 2.34 | |
Vested options as at | 106,498 | $ | 3.23 | |
Quebecor | ||||
Balance as at | 244,216 | $ | 30.36 | |
Cancelled | (25,000) | 33.19 | ||
Balance as at | 219,216 | $ | 30.04 | |
Vested options as at | 47,330 | $ | 28.63 |
Notes to condensed consolidated financial statements (continued)
Three-month periods ended
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)
7. Stock-based compensation and other stock-based payments (continued)
(b) Deferred stock unit ("DSU") plan for directors
Outstanding units | ||||
Corporation stock units | ||||
Balance as at | 446,934 | |||
Granted | 16,499 | |||
Balance as at | 463,433 |
(c) Stock-based compensation expense
For the three-month period ended
8. Pension plans and postretirement benefits
The gain on remeasurement of defined benefit plans recognized in the consolidated statement of comprehensive loss for the three-month period ended
9. Segmented information
The Corporation's operations consist of the following segments:
- The Broadcasting segment, which includes the operations of TVA Network, specialty services, the marketing of digital products associated with the various televisual brands, and commercial production and custom publishing services, including those of its Communications Qolab inc. subsidiary;
- The Film Production & Audiovisual Services segment, which through its subsidiaries
Mels Studios andPostproduction G.P. and Mels Dubbing Inc. provides soundstage, mobile and production equipment rental services, as well as dubbing and described video ("media accessibility services"), postproduction and virtual production; - The Magazines segment, which through its
TVA Publications inc. subsidiary publishes magazines in various fields including the arts, entertainment, television, fashion and decorating, and markets digital products associated with the various magazine brands; - The Production & Distribution segment, which through the companies in the Incendo group and the
TVA Films division produces and distributes television shows, movies and television series for the world market.
Notes to condensed consolidated financial statements (continued)
Three-month periods ended
(Tabular amounts are expressed in thousands of Canadian dollars, except per share and per option amounts)
9. Segmented information (continued)
Three-month periods ended | ||||
2023 | 2022 | |||
Revenues | ||||
Broadcasting | $ | 116,010 | $ | 114,139 |
Film Production & Audiovisual Services | 14,272 | 19,351 | ||
Magazines | 8,647 | 9,661 | ||
Production & Distribution | 2,341 | 5,980 | ||
Intersegment items | (5,167) | (4,634) | ||
136,103 | 144,497 | |||
(Negative adjusted EBITDA) adjusted EBITDA (1) | ||||
Broadcasting | (22,806) | (15,468) | ||
Film Production & Audiovisual Services | (555) | 3,844 | ||
Magazines | (367) | 440 | ||
Production & Distribution | (355) | 1,553 | ||
Intersegment items | 106 | (90) | ||
(23,977) | (9,721) | |||
Depreciation and amortization | 7,182 | 7,620 | ||
Financial (income) expenses | (118) | 500 | ||
Operational restructuring costs and other | 902 | 20 | ||
Loss before income tax recovery and share of income of associates | $ | (31,943) | $ | (17,861) |
The above-noted intersegment items represent the elimination of normal course business transactions between the Corporation's business segments.
(1) | The Chief Executive Officer uses adjusted EBITDA as a measure of financial performance for assessing the performance of each of the Corporation's segments. Adjusted EBITDA is defined as net income (loss) before depreciation and amortization, financial (income) expenses, operational restructuring costs and other, income tax recovery and share of income of associates. Adjusted EBITDA as defined above is not a measure of results that is consistent with IFRS. |
SOURCE
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