TVA Group reports $9.0 million net income attributable to shareholders in Q4 2018

MONTREAL, Feb. 28, 2019/CNW Telbec/ - TVA Group Inc. ("TVA Group", "TVA" or "the Corporation") announced today that it recorded net income attributable to shareholders in the amount of $9.0 million or $0.21 per share in the fourth quarter of 2018, compared with net income attributable to shareholders of $9.2 million or $0.21 per share in the same quarter of 2017.

Fourth quarter operating highlights:

• Consolidated adjusted EBITDA¹ of $25,024,000 representing a favourable variance of $2,056,000 (9.0%) from the same quarter of 2017.
• $16,464,000 adjusted EBITDA¹ in the Broadcasting & Production segment representing a favourable variance of $232,000, mainly because of an increase in adjusted EBITDA¹ from the specialty services reflecting unfavourable retroactive adjustments to operating revenues recorded in the fourth quarter of 2017, largely offset by a 37.0% decrease in TVA Network's adjusted EBITDA.¹
• $3,149,000 adjusted EBITDA¹ in the Magazines segment representing a favourable variance of $667,000 (26.9%) mainly because of the implementation of rationalization plans in recent quarters, partially offset by a decrease in operating revenues.
• $5,411,000 adjusted EBITDA¹ in the Film Production & Audiovisual Services ("MELS") segment, a $1,157,000 (27.2%) favourable variance essentially due to an increase in adjusted EBITDA¹ from soundstage and equipment rental and the increased profitability of postproduction activities. The positive factors were partially offset by lower volume of activities in visual effects, dubbing and subtitling.

"We are satisfied with our results for the last quarter of our financial year. Our operating expense reduction initiatives of recent quarters made up for the decline in operating revenues in the Broadcasting & Production and Magazines segments, which have both been hit by the decrease in advertising revenues. Meanwhile, MELS grew its operating revenues and adjusted EBITDA¹.

TVA Group's total market share increased by 0.2 points² to 36.6%² in the fourth quarter of 2018. The specialty channels grew their market share by 1.4 points² to 13.5%², including a 0.5 point² increase at "LCN".

We are very pleased to be able to close the acquisition of the "Évasion" and "Zeste" specialty services on February 13, 2019, following Canadian Radio‑television and Telecommunications Commission approval. The addition of these channels will enhance our television content offering for the benefit of our viewers and advertisers. On February 22, 2019, we also signed an agreement to acquire the companies in the Incendo group. The transaction is in keeping with our push to increase our revenues from other markets, step up our international development and expand our footprint, especially in English‑language markets," commented France Lauzière, President and CEO of the Corporation.

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¹ See definition of adjusted EBITDA below.
² Numeris – Quebec Franco, October 1 to December 31, 2018, Mo‑Su, 2am‑2am, t2+

"The various rationalization plans implemented in recent quarters enabled the Magazines segment to grow its adjusted EBITDA¹ and post a 15.1% profit margin. We are pressing ahead with our efforts to offset the drop in revenues by cutting costs and increasing operating efficiencies, while continuing to offer the rich and varied content that sustains the popularity of our brands. Once again, we are pleased to report that TVA held its position as the top publisher of French‑language magazines in Quebec with more than 3.7 million² readers,while our English‑language titles are read by more than 5.9 million² people," added Ms Lauzière.

"Lastly, the Film Production & Audiovisual Services segment's financial results improved in the fourth quarter of 2018, mainly because of the use of our soundstages and equipment by local and international producers, as well as additional volume from our acquisitions. MELS remains a growth driver for the Corporation and our rental and postproduction services are increasingly recognized and in demand," Ms. Lauzière concluded.

2018 financial year results

For the fiscal year ended December 31, 2018, the Corporation's consolidated adjusted EBITDA¹ was $50,383,000, compared with $66,381,000 in the previous year, a 24.1% decrease. There was a 34.9% unfavourable variance in adjusted EBITDA¹ in the Broadcasting & Production segment and an 18.1% decrease in the Magazines segment, due mainly to lower advertising revenues in both segments. The Film Production & Audiovisual Services segment grew its adjusted EBITDA¹ by 3.1%, mainly as a result of higher volume of activities and the increased profitability of soundstage and equipment rental and postproduction, which was partially offset by lower volume of activities in visual effects. The $14,632,000 unfavourable variance in the Broadcasting & Production segment's adjusted EBITDA¹ was caused mainly by a 33.4% decrease in TVA Network's adjusted EBITDA,¹ as well as a 24.9% increase in the "TVA Sports" channel's negative adjusted EBITDA,¹ partially offset by an 8.0% increase in the adjusted EBITDA¹ of the other specialty channels.

Consolidated operating revenues amounted to $551,910,000 in fiscal 2018 compared with $589,707,000 in the previous year, a 6.4% decrease. The Corporation recorded net income attributable to shareholders in the amount of $8,312,000, for earnings per share of $0.19, compared with a net loss attributable to shareholders of $15,951,000 for a loss of $0.37 per share in 2017.

In the third quarter of 2017, the Corporation had recognized a $29,993,000 non‑cash goodwill impairment charge in the Magazines segment, including $1,489,000 without any tax consequences, and a $12,412,000 non‑cash charge for impairment of intangible assets, including $3,103,000 without any tax consequences.

Definition

¹ Adjusted EBITDA (previously adjusted operating income (loss))

In its analysis of operating results, the Corporation defines adjusted EBITDA as net income (loss) before depreciation of property, plant and equipment, amortization of intangible assets, financial expenses, operational restructuring costs and others, impairment of goodwill and intangible assets, income taxes and share of income of associated corporations. Adjusted EBITDA 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 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.

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¹ See definition of adjusted EBITDA above.
² Source: Vividata, Winter 2019, Total Canada, 14+, October 1, 2017 to September 30, 2018.

Conference call for investors

TVA Group will hold a conference call to discuss its fourth quarter and full‑year 2018 results on March 1, 2019, at 10:00 a.m. EAST. There will be a question period reserved for financial analysts. To access the call, please dial 1‑877‑293‑8052, access code for participants 66581#. A tape recording of the call will be available from March 1 to April 1, 2019 by dialling 1‑877‑293‑8133, conference number 1242598#, access code for participants 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 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 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, 2018 and the "Risk Factors" section in the Corporation's 2018 annual information form.

The forward‑looking statements in this news release reflect the Corporation's expectations as of February 28, 2019 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

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‑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 audited consolidated financial statements, with notes, and the annual Management's Discussion and Analysis, can be consulted on the Corporation's website at www.groupetva.ca

TVA GROUP INC.
Segmented information

(unaudited)
(in thousands of Canadian dollars)

The Corporation's operations consist of the following segments:

• The Broadcasting & Production segment includes the operations of TVA Network (including the TVA Productions Inc. subsidiary and the TVA Nouvelles division), specialty services, the marketing of digital products associated with the various televisual brands, commercial production services and distribution of audiovisual products.
• The Magazines segment through its subsidiaries, notably TVA Publications Inc. and Les Publications Charron & Cie inc., publishes magazines in various fields including the arts, entertainment, television, fashion and decorating, markets digital products associated with the various magazine brands and provides custom publishing services.
• The Film Production & Audiovisual Services segment through its subsidiaries Mels Studios and Postproduction G.P. and Mels Dubbing Inc. provides soundstage, mobile unit and production equipment rental services, as well as dubbing, postproduction, visual effects and distribution services.

SOURCE TVA Group