Fourth quarter operating highlights:
$7,676,000 in consolidated adjusted EBITDA,1 a$21,002,000 unfavourable variance from the same quarter of 2021.$965,000 in adjusted EBITDA1 in the Broadcasting segment, a$19,399,000 unfavourable variance due to lower profitability at the "TVA Sports " channel, which had benefited from a favourable retroactive adjustment for the NHL 2020-2021 season in the fourth quarter of 2021, as well as decreased profitability of TVA Network, whose advertising revenues decreased 2.3%, combined with greater spending on content.$4,283,000 in adjusted EBITDA1 in the Film Production & Audiovisual Services segment ("MELS"), a$529,000 unfavourable variance caused by decreased profitability of media accessibility, visual effects and soundstage, mobile and equipment rental services, whereas postproduction posted an increase in profitability.$495,000 in adjusted EBITDA1 in the Magazines segment, a$1,424,000 unfavourable variance due mainly to lower revenues, particularly reduced government assistance, as well as lower advertising and subscription revenues.$1,752,000 in adjusted EBITDA1 in the Production & Distribution segment, a$205,000 favourable variance due to improved margins on distribution activities on streaming platforms and inCanada , combined with lower administrative expenses, while international distribution generated lower margins.
__________
1 See definition of adjusted EBITDA below.
"Fourth quarter results continued to be impacted by declining profitability across all our segments and in the various industries in which we operate," said
"Nevertheless, we have continued to make massive investments in content, which have also affected the profitability of our conventional network. This strategy strengthened our fall schedule and protected the market share of both TVA Network and our specialty channels, which grew their combined market share by 1.5 percentage points to 40.3%. Our major variety shows and original series continue to lead the ratings. Shows such as Chanteurs masqués, Révolution and our new daily program Indéfendable drew more than a million viewers.
"The current economic downturn is creating considerable uncertainty in the marketplace, as are the systemic factors I have already mentioned. As regards the latter, all levels of government must act before it is too late. We are saying this for the umpteenth time. No other industry faces competitors that have no accountability. The CRTC needs to address certain issues, particularly Radio-Canada's unfair behaviour in scooping up advertising dollars, which are our conventional network's only source of revenue, whereas the public broadcaster is heavily government subsidized. This creates a blatantly uneven playing field for private broadcasters. In addition, there is the highly prejudicial treatment of all our specialty channels by the distributor Bell TV. Unlike all other broadcasting distribution undertakings in
"Faced with these circumstances and the lack of regulatory and government intervention, which has long been evident and which we have repeatedly raised with public authorities, we are forced to take appropriate measures in order to restore our financial position and ensure
"In the Film Production & Audiovisual Services segment, the Corporation was affected by lower volume in a number of our businesses, with the exception of postproduction services, which continued to grow for a fourth consecutive quarter since the start of the year. Our soundstage, mobile and equipment rental services continued to suffer from the lack of foreign blockbuster productions, a situation that impacts the entire
"In the Magazines segment, results for all our titles were heavily affected by lower revenues, due particularly to a 20.5% decrease in government assistance, as well as 16.0% and 7.3% decreases in advertising and subscription revenues respectively. The government support from the
"Our Production & Distribution segment was able to finalize a number of sales of films produced by Incendo in
Fiscal 2022 results
For the fiscal year ended
The Broadcasting segment's decreased profitability was mainly due to TVA Network's 19.9% increase in operating expenses as a result of increased spending on content, which was reflected in all its programming. The specialty channels were affected, among other things, by a decrease in advertising revenues, which resulted in lower profitability, with the exception of "
MELS' adjusted EBITDA1 decreased, stemming mainly from lower profitability of soundstage, mobile and equipment rental activities, which had benefited in 2021 from the presence of Paramount Pictures' mega-production Transformers: Rise of the Beast in MELS' facilities. Visual effects services also declined as a result of lower volume of activities, whereas postproduction services continued to grow with a 146.8% increase in adjusted EBITDA.1
In the Magazines segment, adjusted EBITDA1 decreased, mainly due to a 23.6% decrease in government assistance received, combined with lower newsstand and subscription revenues, which has been affecting the segment for a number of years. Cost savings generated by this segment were not enough to offset revenue decreases.
Adjusted EBITDA1 in the Production & Distribution segment decreased, mainly due to lower gross margin related to international sales of films produced by Incendo. Over the past two years, the pandemic has had the effect of shifting the film production and delivery cycle. Therefore, most of the films produced in 2022 will be delivered in the next few months.
Consolidated revenues amounted to
__________ |
1 See definition of adjusted EBITDA below. |
COVID-19 pandemic
Since
Definition
Adjusted EBITDA
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 (income tax 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 audited consolidated financial statements and accompanying notes, and the annual Management's Discussion and Analysis, are available on the Corporation's website at www.groupetva.ca.
Consolidated statements of (loss) income
(unaudited)
(in thousands of Canadian dollars, except per-share amounts)
Three-month periods ended | Years ended | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Revenues | $ | 171,924 | $ | 171,901 | $ | 594,409 | $ | 622,834 |
Purchases of goods and services | 126,455 | 108,282 | 427,274 | 403,156 | ||||
Employee costs | 37,793 | 34,941 | 147,750 | 139,395 | ||||
Depreciation and amortization | 7,419 | 7,769 | 29,947 | 32,107 | ||||
Financial expenses | 647 | 619 | 1,305 | 2,674 | ||||
Operational restructuring costs and other | 748 | 4,488 | 930 | 4,670 | ||||
(Loss) income before (income tax recovery) income taxes and share of income of associates | (1,138) | 15,802 | (12,797) | 40,832 | ||||
(Income tax recovery) income taxes | (296) | 4,305 | (3,113) | 11,486 | ||||
Share of income of associates | (578) | (596) | (795) | (1,148) | ||||
Net (loss) income | $ | (264) | $ | 12,093 | $ | (8,889) | $ | 30,494 |
Net (loss) income attributable to: | ||||||||
Shareholders | $ | (264) | $ | 12,095 | $ | (8,869) | $ | 30,504 |
Non-controlling interest | – | (2) | (20) | (10) | ||||
Basic (loss) earnings per share attributable to shareholders |
$ |
(0.01) |
$ |
0.28 |
$ |
(0.21) |
$ |
0.71 |
Diluted (loss) earnings per share attributable to shareholders | (0.01) | 0.28 | (0.21) | 0.70 | ||||
Weighted average number of outstanding shares | 43,205,535 | 43,205,535 | 43,205,535 | 43,205,535 | ||||
Weighted average number of diluted shares | 43,205,535 | 43,338,622 | 43,205,535 | 43,326,877 |
Consolidated statements of comprehensive income
(unaudited)
(in thousands of Canadian dollars)
Three-month periods ended | Years ended | ||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Net (loss) income | $ | (264) | $ | 12,093 | $ | (8,889) | $ | 30,494 | |||
Other comprehensive income items that will not be reclassified to income: | |||||||||||
Defined benefit plans: | |||||||||||
Re-measurement gain | 1,281 | 6,318 | 31,281 | 50,818 | |||||||
Deferred income taxes | (290) | (1,667) | (8,290) | (13,467) | |||||||
991 | 4,651 | 22,991 | 37,351 | ||||||||
Comprehensive income | $ | 727 | $ | 16,744 | $ | 14,402 | $ | 67,845 | |||
Comprehensive income (loss) attributable to: | |||||||||||
Shareholders | $ | 727 | $ | 16,746 | $ | 14,122 | $ | 67,855 | |||
Non-controlling interest | – | (2) | (20) | (10) | |||||||
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 | $ | 108,175 | $ | (4,637) | $ | 1,220 | $ | 312,619 |
Net income (loss) | – | – | 30,504 | – | (10) | 30,494 | ||||||
Other comprehensive income | – | – | – | 37,351 | – | 37,351 | ||||||
Balance as at | 207,280 | 581 | 138,679 | 32,714 | 1,210 | 380,464 | ||||||
Net loss | – | – | (8,869) | – | (20) | (8,889) | ||||||
Dividends | – | – | – | – | (1,190) | (1,190) | ||||||
Other comprehensive income | – | – | – | 22,991 | – | 22,991 | ||||||
Balance as at | $ | 207,280 | $ | 581 | $ | 129,810 | $ | 55,705 | $ | – | $ | 393,376 |
Consolidated balance sheets
(unaudited)
(in thousands of Canadian dollars)
Assets | ||||
Current assets | ||||
Cash | $ | – | $ | 5,181 |
Accounts receivable | 175,174 | 210,814 | ||
Income taxes | 8,522 | 5,755 | ||
Audiovisual content | 135,038 | 108,530 | ||
Prepaid expenses | 4,400 | 3,866 | ||
323,134 | 334,146 | |||
Non-current assets | ||||
Audiovisual content | 88,225 | 72,541 | ||
Investments | 12,017 | 12,115 | ||
Property, plant and equipment | 157,784 | 160,288 | ||
Right-of-use assets | 7,599 | 9,084 | ||
Intangible assets | 14,671 | 20,559 | ||
21,696 | 21,696 | |||
Defined benefit plan asset | 45,111 | 21,309 | ||
Deferred income taxes | 5,833 | 9,353 | ||
352,936 | 326,945 | |||
Total assets | $ | 676,070 | $ | 661,091 |
Consolidated balance sheets (continued)
(unaudited)
(in thousands of Canadian dollars)
Liabilities and equity | |||||||
Current liabilities | |||||||
Bank overdraft | $ | 1,107 | $ | – | |||
Accounts payable, accrued liabilities and provisions | 114,174 | 139,149 | |||||
Content rights payable | 124,394 | 93,383 | |||||
Deferred revenues | 11,031 | 9,961 | |||||
Income taxes | 562 | 1,622 | |||||
Current portion of lease liabilities | 2,318 | 2,503 | |||||
Short-term debt | 8,961 | 11,980 | |||||
262,547 | 258,598 | ||||||
Non-current liabilities | |||||||
Lease liabilities | 6,453 | 7,857 | |||||
Other liabilities | 5,395 | 7,798 | |||||
Deferred income taxes | 8,299 | 6,374 | |||||
20,147 | 22,029 | ||||||
Equity | |||||||
Capital stock | 207,280 | 207,280 | |||||
Contributed surplus | 581 | 581 | |||||
Retained earnings | 129,810 | 138,679 | |||||
Accumulated other comprehensive income | 55,705 | 32,714 | |||||
Equity attributable to shareholders | 393,376 | 379,254 | |||||
Non-controlling interest | – | 1,210 | |||||
393,376 | 380,464 | ||||||
Total liabilities and equity | $ | 676,070 | $ | 661,091 | |||
Consolidated statements of cash flows
(unaudited)
(in thousands of Canadian dollars)
Three-month periods ended | Years ended | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Cash flows related to operating activities | ||||||||
Net (loss) income | $ | (264) | $ | 12,093 | $ | (8,889) | $ | 30,494 |
Adjustments for: | ||||||||
Depreciation and amortization | 7,419 | 7,769 | 29,947 | 32,107 | ||||
Share of income of associates | (578) | (596) | (795) | (1,148) | ||||
Deferred income taxes | 698 | 1,879 | (2,845) | 903 | ||||
Other | 791 | 7 | 1,452 | (48) | ||||
8,066 | 21,152 | 18,870 | 62,308 | |||||
Net change in non-cash balances related to operating items | 29,091 | 16,553 | 9,184 | (19,423) | ||||
Cash flows provided by operating activities | 37,157 | 37,705 | 28,054 | 42,885 | ||||
Cash flows related to investing activities | ||||||||
Additions to property, plant and equipment | (3,989) | (5,925) | (20,236) | (17,149) | ||||
Additions to intangible assets | (299) | (942) | (1,114) | (2,789) | ||||
Business acquisitions | − | − | (6,323) | (606) | ||||
Dividends to non-controlling shareholders | − | − | (1,150) | − | ||||
Other | − | − | 271 | 271 | ||||
Cash flows used in investing activities | (4,288) | (6,867) | (28,552) | (20,273) | ||||
Cash flows related to financing activities | ||||||||
Net change in bank overdraft | (7,513) | (5,587) | 1,107 | (1,699) | ||||
Net change in revolving credit facility | (24,729) | (21,842) | (3,019) | (15,137) | ||||
Repayment of lease liabilities | (627) | (741) | (2,718) | (3,255) | ||||
Other | − | − | (53) | (178) | ||||
Cash flows used in financing activities | (32,869) | (28,170) | (4,683) | (20,269) | ||||
Net change in cash | − | 2,668 | (5,181) | 2,343 | ||||
Cash at beginning of period | − | 2,513 | 5,181 | 2,838 | ||||
Cash at end of period | $ | − | $ | 5,181 | $ | − | $ | 5,181 |
Interest and taxes reflected as operating activities | ||||||||
Interest paid | $ | 728 | $ | 382 | $ | 1,766 | $ | 1,515 |
Income taxes (refunded net of payments) paid net of refunds | (189) | 3,483 | 3,559 | 21,740 |
Segmented information
(unaudited)
(in thousands of Canadian dollars)
Management made changes to the Corporation's management structure at the beginning of the year. As a result of those changes, the activities of the
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, virtual production and visual effects; - 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.
Segmented information (continued)
(unaudited)
(in thousands of Canadian dollars)
Three-month periods ended | Years ended | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Revenues | ||||||||
Broadcasting | $ | 138,550 | $ | 137,564 | $ | 479,458 | $ | 491,762 |
Film Production & Audiovisual Services | 19,925 | 21,985 | 74,914 | 86,021 | ||||
Magazines | 10,567 | 12,010 | 40,547 | 45,655 | ||||
Production & Distribution | 8,276 | 5,688 | 19,991 | 20,425 | ||||
Intersegment items | (5,394) | (5,346) | (20,501) | (21,029) | ||||
171,924 | 171,901 | 594,409 | 622,834 | |||||
Adjusted EBITDA(1) (negative adjusted EBITDA) | ||||||||
Broadcasting | 965 | 20,364 | (585) | 44,690 | ||||
Film Production & Audiovisual Services | 4,283 | 4,812 | 12,884 | 22,918 | ||||
Magazines | 495 | 1,919 | 3,803 | 7,488 | ||||
Production & Distribution | 1,752 | 1,547 | 2,865 | 5,068 | ||||
Intersegment items | 181 | 36 | 418 | 119 | ||||
7,676 | 28,678 | 19,385 | 80,283 | |||||
Depreciation and amortization | 7,419 | 7,769 | 29,947 | 32,107 | ||||
Financial expenses | 647 | 619 | 1,305 | 2,674 | ||||
Operational restructuring costs and other | 748 | 4,488 | 930 | 4,670 | ||||
(Loss) income before (income tax recovery) income taxes and share of income of associates | $ | (1,138) | $ | 15,802 | $ | (12,797) | $ | 40,832 |
(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 (net loss) before depreciation and amortization, financial expenses, operational restructuring costs and other, income taxes (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
© Canada Newswire, source