Quebecor Inc. Reports Consolidated Results for Second Quarter 2013
(firmenpresse) - MONTREAL, QUEBEC -- (Marketwired) -- 08/08/13 -- Quebecor Inc. ("Quebecor" or the "Corporation") (TSX: QBR.A)(TSX: QBR.B) today reported its consolidated financial results for the second quarter of 2013. Quebecor consolidates the financial results of its Quebecor Media Inc. ("Quebecor Media") subsidiary, in which it holds a 75.4% interest.
Second quarter 2013 highlights
"Quebecor continued its growth in the second quarter of 2013 with a 4.0% increase in operating income and a 14.8% increase in adjusted income from continuing operations," said Robert Depatie, President and Chief Executive Officer of Quebecor. "Despite the highly competitive business environment, Quebecor reported improved results, spearheaded by the Telecommunications segment's excellent numbers. Since the beginning of 2012, financial transactions that create value for shareholders have also contributed to the increase in adjusted income from continuing operations."
"Videotron posted strong results again in the second quarter of 2013, growing its revenues by 4.8% and its operating income by 7.7%," said Manon Brouillette, President and Chief Operating Officer of Videotron. "Once again, all of Videotron's core services generated revenue increases, particularly Internet access and mobile telephony. Average monthly revenue per user ("ARPU") continued to grow, climbing $6.49 (5.9%) to $117.24. During the second quarter of 2013, Videotron introduced the multiroom PVR, a new functionality that lets subscribers to illico TV new generation play back their favourite shows on any television set in the home. The second quarter results clearly demonstrate Videotron's ability to adapt to the competitive environment in which it operates. Videotron's success is rooted in its creativity in the marketing of new products, development of complementary revenue streams, ongoing alignment of its cost structure, and superior customer experience.
"When it comes to business expansion, we are very pleased with the 20-year agreement Videotron has reached with mobile carrier Rogers to build out and operate a shared LTE mobile network in Quebec and the Ottawa area. This unique agreement will benefit both companies as well as their customers."
"In the media sphere, Quebecor continued refocusing its operations by working to leverage its core business across all available platforms, including digital, and to develop new content that can be brought to all platforms," said Robert Depatie. "A new business unit, QMI Digital, has been created: it will be a centre of expertise in digital technology with a strong emphasis on research and development. Caroline Roy will become Vice President, Development and Strategy, of QMI Digital on August 26,2013. At the same time, Aldo Giampaolo, a top-level manager with extensive experience in the management of large-scale events and of major venues for sporting and cultural events, has been appointed President and Chief Executive Officer of Quebecor Media Entertainment & Sports Group. His expertise will be particularly useful for the development and management of the Quebec City Amphitheatre, now under construction.
"In connection with the refocusing of its operations, Quebecor also completed several strategic business acquisitions and disposals. Quebecor Media acquired Event Management Gestev Inc. ("Gestev"), a Quebec City sporting and cultural event manager, in the second quarter of 2013, while TVA Group Inc. ("TVA Group") announced the acquisition of Les Publications Charron & Cie inc., publisher of La Semaine magazine, and of Charron Editeur inc. in July 2013. Quebecor Media also sold its specialized Web sites Jobboom and Reseau Contact for a cash consideration of $65.0 million, subject to technology transfer conditions.
"Meanwhile, Quebecor had to introduce new rationalization and cost-containment initiatives in its traditional media business. In July 2013, Sun Media Corporation announced new restructuring measures that will entail the elimination of 360 positions, the closing of 8 publications and 3 free urban newspapers, and efforts to enhance operational efficiencies. The measures are expected to yield total annual savings of approximately $55.0 million. Sun Media Corporation intends to use the savings to support continued investment in and expansion of its newspapers and publications, particularly on digital platforms. TVA Group also announced a restructuring plan designed to maintain its leadership position in Quebec and safeguard the quality of its content. The plan includes the elimination of approximately 90 positions, or 4.5% of TVA Group's total workforce."
"On the financial front, Videotron and Quebecor Media closed new financing arrangements on June 17 and August 1, 2013: respectively an issuance of 5.625% Senior Notes with a 12-year term and a 7-year institutional loan at the U.S. London Interbank Offered Rate ("LIBOR") plus 2.5% (subject to a LIBOR floor)," said Jean-Francois Pruneau, Senior Vice President and Chief Financial Officer of Quebecor. "The opportunistic financing transactions carried out by Quebecor Media and Videotron in 2012 and since the beginning of 2013 are expected to yield annual debt interest savings in excess of $50.0 million."
In short, since the end of the first quarter of 2013, Quebecor has continued implementing its strategy with high-potential initiatives related to organizational restructuring, strategic investment, transformation of traditional media outlets and reduced financing costs. All these initiatives are consistent with the Corporation's long-term growth, business development and profitability objectives.
2013/2012 second quarter comparison
Revenues: $1.09 billion, an increase of $8.6 million (0.8%).
Operating income: $367.8 million, an increase of $14.2 million (4.0%).
Net loss attributable to shareholders: $45.1 million ($0.73 per basic share) in the second quarter of 2013, compared with net income attributable to shareholders in the amount of $65.5 million ($1.02 per basic share) in the same period of 2012, an unfavourable variance of $110.6 million ($1.75 per basic share).
Adjusted income from continuing operations: $52.9 million in the second quarter of 2013 ($0.85 per basic share) compared with $46.1 million ($0.73 per basic share) in the second quarter of 2012, an increase of $6.8 million ($0.12 per basic share).
2013/2012 year-to-date comparison
Revenues: Stable at $2.14 billion.
Operating income: $685.3 million, an increase of $13.5 million (2.0%).
Net loss attributable to shareholders: $9.5 million ($0.15 per basic share) in the first half of 2013, compared with net income attributable to shareholders of $136.9 million ($2.15 per basic share) in the same period of 2012, an unfavourable variance of $146.4 million ($2.30 per basic share).
Adjusted income from continuing operations: $84.5 million in the first half of 2013 ($1.36 per basic share) compared with $82.3 million ($1.30 per basic share) in the same period of 2012, an increase of $2.2 million ($0.06 per basic share).
Financing activities
The following financial transactions have been concluded since the end of the first quarter of 2013:
Dividends
On August 7, 2013, the Board of Directors of Quebecor declared a quarterly dividend of $0.05 per share on Class A Shares and Class B Shares (or $0.025 per share after the two-for-one stock split of Class A and Class B shares, effective August 14, 2013), payable on September 17, 2013 to shareholders of record at the close of business on August 23, 2013. This dividend is designated to be an eligible dividend, as provided under subsection 89(14) of the Canadian Income Tax Act and its provincial counterpart.
Normal course issuer bid
On August 7, 2013, the Board of Directors of Quebecor authorized the renewal of its normal course issuer bid for a maximum of 978,034 Class A shares, representing approximately 5% of issued and outstanding Class A shares, and for a maximum of 4,214,624 Class B shares, representing approximately 10% of the public float of Class B shares as of July 31, 2013.
The purchases will be made from August 13, 2013 to August 12, 2014 at prevailing market prices on the open market through the facilities of the TSX and will be made in accordance with the requirements of said Exchange. All shares purchased under the bid will be cancelled. As of July 31, 2013, 19,560,686 Class A shares and 42,360,696 Class B shares were issued and outstanding.
The average daily trading volume of the Class A and Class B shares of the Corporation from February 1, 2013 to July 31, 2013 was 512 Class A shares and 132,045 Class B shares. Consequently, the Corporation will be authorized to purchase a maximum of 1,000 Class A shares and 33,011 Class B shares during the same trading day pursuant to its normal course issuer bid.
The Corporation believes that the repurchase of these shares under this normal course issuer bid is in the best interest of the Corporation and its shareholders.
Under the normal course issuer bid that began on August 13, 2012, the Corporation did not purchase any Class A Shares and purchased 1,392,200 Class B Shares at a weighted average price of $39.1625 per share.
Shareholders may obtain a copy of the Notice filed with the TSX, without charge, by contacting the Office of the Secretary of the Corporation at 514 380-1994.
Detailed financial information
For a detailed analysis of Quebecor's second quarter 2013 results, please refer to the Management Discussion and Analysis and consolidated financial statements of Quebecor, available on the Corporation's website at or from the SEDAR filing service at .
Conference call for investors and webcast
Quebecor will hold a conference call to discuss its second quarter 2013 results on August 8, 2013, at 11:00 a.m. EDT. There will be a question period reserved for financial analysts. To access the conference call, please dial 1 877 293-8052, access code for participants 81457#. A tape recording of the call will be available from August 8 to September 14, 2013 by dialling 1 877 293-8133, conference number 1049253#, access code for participants 81457#. The conference call will also be broadcast live on Quebecor's website at . It is advisable to ensure the appropriate software is installed before accessing the call. Instructions and links to free player downloads are available at the Internet address shown above.
Cautionary statement regarding forward-looking statements
The statements in this press release that are not historical facts are forward-looking statements and are subject to significant known and unknown risks, uncertainties and assumptions that 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 may be identified by the use of the conditional or by forward-looking terminology such as the terms "plans," "expects," "may," "anticipates," "intends," "estimates," "projects," "seeks," "believes," or similar terms, variations of such terms or the negative of such terms. Certain factors that may cause actual results to differ from current expectations include seasonality (including seasonal fluctuations in customer orders), operating risk (including fluctuations in demand for Quebecor's products and pricing actions by competitors), insurance risk, risks associated with capital investment (including risks related to technological development and equipment availability and breakdown), environmental risks, risks associated with labour agreements, risks associated with commodities and energy prices (including fluctuations in the cost and availability of raw materials), credit risk, financial risks, debt risks, risks related to interest rate fluctuations, foreign exchange risks, risks associated with government acts and regulations, risks related to changes in tax legislation, and changes in the general political and economic environment. 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 Quebecor's actual results to differ from current expectations, please refer to Quebecor's public filings available at and including, in particular, the "Risks and Uncertainties" section of Quebecor's Management Discussion and Analysis for the year ended December 31, 2012.
The forward-looking statements in this press release reflect Quebecor's expectations as of August 8, 2013 and are subject to change after that date. Quebecor 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, except as required by applicable securities laws.
The Corporation
Quebecor Inc. (TSX: QBR.A)(TSX: QBR.B) is a holding company with a 75.4% interest in Quebecor Media Inc., one of Canada's largest media groups, with more than 16,000 employees. Quebecor Media Inc., through its subsidiary Videotron Ltd., is an integrated communications company engaged in cable television, interactive multimedia development, Internet access services, cable telephony and mobile telephony. Through Sun Media Corporation, Quebecor Media Inc. is the largest publisher of newspapers in Canada. It also operates Canoe.ca and its network of English- and French-language Internet properties in Canada. In the broadcasting segment, Quebecor Media Inc. operates, through TVA Group Inc., the number one French-language conventional television network in Quebec, a number of specialty channels, and, through Sun Media Corporation, the English-language SUN News channel. Another subsidiary of Quebecor Media Inc., Nurun Inc., is a major interactive technologies and communications agency with offices in Canada, the United States, Europe and Asia. Quebecor Media Inc. is also active in magazine publishing (TVA Publications Inc.), book publishing and distribution (Sogides Group Inc., CEC Publishing Inc.), the production, distribution and retailing of cultural products (Archambault Group Inc., TVA Films), video game development (BlooBuzz Studios Inc.), DVD, Blu-ray disc and video game rental and retailing (Le SuperClub Videotron ltee), the printing and distribution of community newspapers and flyers (Quebecor Media Printing Inc., Quebecor Media Network Inc.), outdoor advertising (Quebecor Media Out of Home), news content production and distribution (QMI Agency), and multiplatform advertising solutions (QMI Sales).
DEFINITIONS
Operating income
In its analysis of operating results, the Corporation defines operating income, as reconciled to net (loss) income under IFRS, as net (loss) income before amortization, financial expenses, (loss) gain on valuation and translation of financial instruments, charge for restructuring of operations, impairment of assets and other special items, charge for impairment of goodwill, (loss) gain on debt refinancing, income tax, and income from discontinued operations. Operating income as defined above is not a measure of results that is consistent with 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. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The Corporation uses operating income in order to assess the performance of its investment in Quebecor Media. The Corporation's management and Board of Directors use this measure in evaluating its consolidated results as well as the results of the Corporation's operating segments. This measure eliminates the significant level of impairment and amortization of tangible and intangible assets and is unaffected by the capital structure or investment activities of the Corporation and its segments.
Operating income is also relevant because it is a significant component of the Corporation's annual incentive compensation programs. A limitation of this measure, however, is that it does not reflect the periodic costs of tangible and intangible assets used in generating revenues in the Corporation's segments. The Corporation also uses other measures that do reflect such costs, such as cash flows from segment operations and free cash flows from continuing operating activities of the Quebecor Media subsidiary. In addition, measures like operating income are commonly used by the investment community to analyze and compare the performance of companies in the industries in which the Corporation is engaged. The Corporation's definition of operating income may not be the same as similarly titled measures reported by other companies.
Table 2 below provides a reconciliation of operating income with net (loss) income as disclosed in Quebecor's condensed consolidated financial statements.
Adjusted income from continuing operations
The Corporation defines adjusted income from continuing operations, as reconciled to net (loss) income attributable to shareholders under IFRS, as net (loss) income attributable to shareholders before (loss) gain on valuation and translation of financial instruments, charge for restructuring of operations, impairment of assets and other special items, charge for impairment of goodwill and (loss) gain on debt refinancing, net of income tax related to adjustments, net (loss) income attributable to non-controlling interests related to adjustments, and income from discontinued operations attributable to shareholders. Adjusted income from continuing operations, as defined above, is not a measure of results that is consistent with IFRS. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The Corporation's definition of adjusted income from continuing operations may not be identical to similarly titled measures reported by other companies.
Table 3 provides a reconciliation of adjusted income from continuing operations to the net (loss) income attributable to shareholders measure used in Quebecor's condensed consolidated financial statements.
Average Monthly Revenue per User
ARPU is an industry metric that the Corporation uses to measure its monthly cable television, Internet access, cable and mobile telephony revenues per average basic cable customer. ARPU is not a measurement that is consistent with IFRS and the Corporation's definition and calculation of ARPU may not be the same as identically titled measurements reported by other companies. The Corporation calculates ARPU by dividing its combined cable television, Internet access, and cable and mobile telephony revenues by the average number of basic customers during the applicable period, and then dividing the resulting amount by the number of months in the applicable period.
Contacts:
Jean-Francois Pruneau
Senior Vice President and Chief Financial Officer
Quebecor Inc. and Quebecor Media Inc.
514 380-4144
Martin Tremblay
Vice President, Public Affairs
Quebecor Media Inc.
514 380-1985
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