MONTRÉAL, Aug. 10, 2023 /PRNewswire/ - Quebecor Inc. ("Quebecor" or "the Corporation") today reported its consolidated financial results for the second quarter of 2023. Quebecor consolidates the financial results of its wholly owned Quebecor Media Inc. ("Quebecor Media") subsidiary.
Second quarter 2023 highlights
- In the context of the acquisition of Freedom Mobile Inc. ("Freedom") on April 3, 2023, Quebecor recorded revenues of $1.40 billion, up $283.3 million (25.4%), adjusted EBITDA1 of $605.2 million, up $113.8 million (23.2%), and adjusted cash flows from operations2 of $455.3 million, up $94.3 million (26.1%) compared with the same period of 2022.
- The Telecommunications segment increased its revenues by $288.6 million (31.6%), its adjusted EBITDA by $120.1 million (24.6%), and its adjusted cash flows from operations by $92.3 million (25.0%), reflecting, among other things, the contribution of the Freedom acquisition.
- The Telecommunications segment's revenues from mobile services and equipment increased by $275.9 million (104.2%) due to the impact of the Freedom acquisition and growth in the revenues of Videotron Ltd. ("Videotron"), and its revenues from Internet access services increased by $17.0 million (5.6%).
- Organic growth added 24,600 revenue-generating units ("RGUs")3 (0.4%) during the quarter, including 49,100 subscriber connections (2.8%) in mobile telephony and 5,300 Internet access subscriptions (0.3%).
- Following the acquisition of Freedom, the Telecommunications segment now has 3,610,100 mobile telephony connections and 1,716,800 Internet access customers.
- TVA Group Inc. ("TVA Group") recorded an $8 .7 million (-5.9%) decrease in revenues and negative adjusted EBITDA of $3 .8 million, an unfavorable variance of $7 .1 million compared with the second quarter of 2022.
- The Sports and Entertainment segment's revenues increased by $3.8 million (8.4%) and there was a $1.7 million unfavourable variance in its adjusted EBITDA in the second quarter of 2023.
- Quebecor's consolidated net income attributable to shareholders: $174.1 million ( $0.75 per basic share), up $16.7 million ( $0.09 per basic share) or 10.6%.
- Adjusted income from continuing operating activities:4 $182 .3 million ( $0.79 per basic share), up $20 .6 million ( $0.11 per basic share) or 12.7%.
- On April 3, 2023, Videotron acquired Freedom from Shaw Communications Inc. ("Shaw"). Videotron paid $2 .07 billion in cash, net of cash acquired of $103 .2 million. As part of the transaction, Videotron assumed certain liabilities, mainly lease obligations. The consideration paid is subject to certain post-closing adjustments. The acquisition includes the Freedom brand's entire wireless and Internet customer base, as well as its owned infrastructure, spectrum and retail outlets. The transaction also includes a long-term undertaking by Shaw and Rogers Communications Inc. ("Rogers") to provide Videotron with transport services (including backhaul and backbone), roaming services and wholesale Internet services. Through the acquisition of Freedom, Videotron has entered the British Columbia and Alberta telecommunications markets and strengthened its position in the Ontario market.
- On April 3, 2023, Videotron entered into a new $2 .10 billion secured term credit facility with a syndicate of financial institutions to finance the acquisition of Freedom. The term credit facility consists of three tranches of equal size maturing in October 2024, April 2026 and April 2027, bearing interest at floating rates. On April 10, 2023, Videotron entered into a floating-to-fixed interest rate swap agreement in connection with the $700 .0 million tranche maturing in April 2027, fixing the interest rate at 5.203% based on Videotron's then leverage ratio.
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Comments by Pierre Karl Péladeau, President and Chief Executive Officer of Quebecor:
The acquisition of Freedom in April 2023 has positioned Quebecor as Canada's fourth national wireless provider. Our mobile network now reaches nearly 70% of Canada's population and we will be able to further expand our coverage by functioning as a mobile virtual network operator ("MVNO"). In just four months, we have lowered telecom prices across the country by increasing competition and delivered on the majority of the commitments we made to Canadians and to Innovation, Science and Economic Development Canada ("ISED Canada").
We have rapidly enhanced our product and service offerings and significantly upgraded Freedom's wireless network. On July 27, 2023, we proudly unveiled an ultra-competitive suite of wireless plans including true nationwide coverage. Now supported by a first class 5G network, our new plans enhance the customer experience in Ontario, British Columbia and Alberta .
Another important development was the Canadian Radio-television and Telecommunications Commission (CRTC) decision issued on July 24, 2023, which selected Quebecor's proposed rates for MVNO access to Rogers' network, enabling us to offer affordable and accessible plans in more Canadian regions.
Driven by the Freedom transaction, Quebecor delivered an outstanding financial performance in the second quarter of 2023 with increases of 25.4% in revenues, 23.2% in adjusted EBITDA and 26.1% in adjusted cash flows from operations. The Telecommunications segment reported increases of 31.6% in revenues, 24.6% in adjusted EBITDA and 25.0% in adjusted cash flows from operations, which rose to $461 .7 million.
Our Telecommunications segment's range of plans continued to attract more customers. Over the past twelve months, it has added 124,700 (7.5%) mobile telephony connections and 38,100 (2.4%) Internet access customers.
We now have a total of 3,610,100 subscriber connections to our mobile telephony service and 1,716,800 subscribers to our Internet access services nationwide and we are executing our development plan to increase market share and profitability. Our strong cash flows will also enable us to continue to invest in our networks and to enhance online services for our customers, building on the complementary strengths and successes of our Videotron, Freedom and Fizz brands.
TVA Group continued to be impacted by lower profitability across all of its businesses and all of the industries in which it operates, posting a $7 .1 million unfavourable variance in adjusted EBITDA. The restructuring plan announced on February 16, 2023 has not yet generated sufficient savings to offset the major impact of the decline in the advertising market, which is the sole source of revenue for over-the-air television stations, and the absence of foreign productions in the film production and audiovisual services segment. Unfortunately, there is no reason to believe the situation will improve in the short or medium term, in view of the conditions throughout the entire North American broadcasting industry. Only Radio-Canada is not subject to the profit imperative, which forces us to make difficult decisions to ensure the business's sustainability.
Despite the challenging environment, we continued to invest in content to protect our market share, both for TVA Network and the specialty channels. As a result, TVA Group's market share rose to 42.7%, up 0.4 points from the same period of 2022. TVA Network had four of the top five shows in Québec during the quarter. However, in order to be able to continue investing in programming and news content, it is imperative that we have a legislative and regulatory framework that applies to the web giants and requires them to contribute financially to Canada's broadcasting system. It is also critical to remove advertising from all of Radio-Canada's platforms. The public broadcaster is engaging in unfair competition with private broadcasters in the race for ratings and advertising revenue, despite the fact that it receives huge amounts of government funding to fulfil its mandate.
Over the past several months, we have clearly demonstrated our ability to execute, and our determination to achieve, our goal of fostering healthy competition in the wireless marketplace for the benefit of all Canadian consumers. With our solid track record and strong financial position, we are more committed than ever to our cross-Canada growth strategy and our goal of creating long-term value for all our stakeholders.
We look to the future with confidence because of our agility and rigour, as demonstrated by our operating costs, which are the lowest in the Canadian telecom industry. And it should be noted that, despite the acquisition of Freedom without any issuance of capital stock, Quebecor's debt leverage ratio remains among the lowest in the industry.
Non-IFRS Financial Measures
The Corporation uses financial measures not standardized under International Financial Reporting Standards ("IFRS"), such as adjusted EBITDA, adjusted income from continuing operating activities, adjusted cash flows from operations, free cash flows from continuing operating activities and consolidated net debt leverage ratio, and key performance indicators, including RGU. Beginning in the first quarter of 2023, the Corporation has elected to exclude subscriptions to over-the-top (OTT) video services and customers of third-party Internet access ("TPIA") providers from its RGUs, as they are not highly representative for the purpose of assessing the Corporation's performance. Definitions of the non-IFRS measures and key performance indicator used by the Corporation in this press release are provided in the "Definitions" section.
Financial tables
Table 1
Consolidated summary of income, cash flows and balance sheet
(in millions of Canadian dollars, except per basic share data)
Three months ended | Six months ended | ||||||||
2023 | 2022 | 2023 | 2022 | ||||||
Income | |||||||||
Revenues: | |||||||||
Telecommunications | $ | 1,201.2 | $ | 912.6 | $ | 2,126.2 | $ | 1,816.0 | |
Media | 180.3 | 188.1 | 351.1 | 369.9 | |||||
Sports and Entertainment | 48.8 | 45.0 | 97.3 | 79.1 | |||||
Inter-segment | (31.8) | (30.5) | (60.5) | (61.8) | |||||
1,398.5 | 1,115.2 | 2,514.1 | 2,203.2 | ||||||
Adjusted EBITDA (negative adjusted EBITDA): | |||||||||
Telecommunications | 607.6 | 487.5 | 1,081.8 | 947.5 | |||||
Media | (0.5) | 4.1 | (26.9) | (7.8) | |||||
Sports and Entertainment | 3.0 | 4.7 | 6.4 | 4.6 | |||||
Head Office | (4.9) | (4.9) | (13.3) | (10.8) | |||||
605.2 | 491.4 | 1,048.0 | 933.5 | ||||||
Depreciation and amortization | (250.6) | (191.6) | (439.1) | (386.3) | |||||
Financial expenses | (113.7) | (82.0) | (191.6) | (159.5) | |||||
Gain (loss) on valuation and translation of financial instruments | 1.6 | (2.1) | (9.7) | (9.4) | |||||
Restructuring, acquisition costs and other | (13.3) | (3.5) | (18.9) | (4.4) | |||||
Income taxes | (57.9) | (55.9) | (103.9) | (100.5) | |||||
Net income | $ | 171.3 | $ | 156.3 | $ | 284.8 | $ | 273.4 | |
Net income attributable to shareholders | 174.1 | 157.4 | 295.0 | 278.8 | |||||
Adjusted income from continuing operating activities | 182.3 | 161.7 | 318.3 | 290.4 | |||||
Per basic share: | |||||||||
Net income attributable to shareholders | 0.75 | 0.66 | 1.28 | 1.17 | |||||
Adjusted income from continuing operating activities | 0.79 | 0.68 | 1.38 | 1.22 | |||||
Table 1 (continued) | Three months ended | Six months ended | |||||||
2023 | 2022 | 2023 | 2022 | ||||||
Additions to property, plant and equipment and to | |||||||||
Telecommunications | $ | 145.9 | $ | 118.1 | $ | 240.6 | $ | 233.5 | |
Media | 2.2 | 10.9 | 3.2 | 20.1 | |||||
Sports and Entertainment | 1.7 | 0.8 | 2.6 | 1.6 | |||||
Head Office | 0.1 | 0.6 | 0.3 | 1.2 | |||||
149.9 | 130.4 | 246.7 | 256.4 | ||||||
Acquisition of spectrum licenses | - | - | 9.9 | - | |||||
Cash flows: | |||||||||
Adjusted cash flows from operations: | |||||||||
Telecommunications | 461.7 | 369.4 | 841.2 | 714.0 | |||||
Media | (2.7) | (6.8) | (30.1) | (27.9) | |||||
Sports and Entertainment | 1.3 | 3.9 | 3.8 | 3.0 | |||||
Head Office | (5.0) | (5.5) | (13.6) | (12.0) | |||||
455.3 | 361.0 | 801.3 | 677.1 | ||||||
Free cash flows from continuing operating activities 1 | 222.9 | 117.8 | 369.9 | 221.8 | |||||
Cash flows provided by operating activities | 358.4 | 241.7 | 630.3 | 469.4 | |||||
June 30, | Dec. 31, | ||||||||
Balance sheet | |||||||||
Cash and cash equivalents | $ | 26.8 | $ | 6.6 | |||||
Working capital | (431.1) | (724.7) | |||||||
Net assets related to derivative financial instruments | 124.0 | 520.3 | |||||||
Total assets | 12,635.3 | 10,625.3 | |||||||
Total long-term debt (including current portion) | 8,005.4 | 6,517.7 | |||||||
Lease liabilities (current and long term) | 400.3 | 186.2 | |||||||
Convertible debentures, including embedded derivatives | 169.7 | 160.0 | |||||||
Equity attributable to shareholders | 1,527.7 | 1,357.3 | |||||||
Equity | 1,643.5 | 1,483.5 | |||||||
Consolidated net debt leverage ratio 2 | 3.52x | 3.20x | |||||||
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1 See "Free cash flows from continuing operating activities" under "Definitions." |
2 See "Consolidated net debt leverage ratio" under "Definitions." |
2023/2022 second quarter comparison
Revenues: $1 .40 billion, a $283 .3 million (25.4%) increase.
- Revenues increased in Telecommunications ( $288.6 million or 31.6% of segment revenues), due to the impact of the Freedom acquisition and growth in mobile services and equipment and Internet access services, and in Sports and Entertainment ( $3.8 million or 8.4%).
- Revenues decreased in Media ( $7.8 million or -4.1%).
Adjusted EBITDA: $605 .2 million, a $113 .8 million (23.2%) increase.
- Adjusted EBITDA increased in Telecommunications ( $120.1 million or 24.6% of segment adjusted EBITDA), including Freedom's contribution.
- There was an unfavourable variance in Media ( $4.6 million ) and a decrease in Sports and Entertainment ( $1.7 million or -36.2%).
- The change in the fair value of Quebecor stock options and stock-price-based share units resulted in a $1.4 million unfavourable variance in the Corporation's stock-based compensation charge in the second quarter of 2023 compared with the same period of 2022.
Net income attributable to shareholders: $174 .1 million ( $0.75 per basic share) in the second quarter of 2023, compared with $157 .4 million ( $0.66 per basic share) in the same period of 2022, an increase of $16 .7 million ( $0.09 per basic share).
- The main favourable variances were:
- $113.8 million increase in adjusted EBITDA;
- $3.7 million favourable variance in gains and losses on valuation and translation of financial instruments, including $3.8 million without any tax consequences.
- The main unfavourable variances were:
- $59.0 million increase in the depreciation and amortization charge;
- $31.7 million increase related to financial expenses;
- $9.8 million unfavourable variance in the charge for restructuring, acquisition costs and other.
Adjusted income from continuing operating activities: $182 .3 million ( $0.79 per basic share) in the second quarter of 2023, compared with $161 .7 million ( $0.68 per basic share) in the same period of 2022, an increase of $20 .6 million ( $0.11 per basic share) or 12.7%.
Adjusted cash flows from operations: $455 .3 million, a $94 .3 million (26.1%) increase due primarily to the $113 .8 million increase in adjusted EBITDA, partially offset by a $19 .7 million increase in additions to intangible assets.
Cash flows provided by operating activities: $358 .4 million, a $116 .7 million (48.3%) increase due primarily to the increase in adjusted EBITDA, the favourable net change in non-cash balances related to operating activities and the decrease in current income taxes, partially offset by the increase in the cash portion of financial expenses and the unfavourable variance in the cash portion of restructuring, acquisition costs and other.
2023/2022 year-to-date comparison
Revenues: $2 .51 billion, a $310 .9 million (14.1%) increase.
- Revenues increased in Telecommunications ( $310.2 million or 17.1% of segment revenues), due to the impact of the Freedom acquisition and growth in mobile services and equipment and Internet access services, and in Sports and Entertainment ( $18.2 million or 23.0%).
- Revenues decreased in Media ( $18.8 million or -5.1%).
Adjusted EBITDA: $1 .05 billion, a $114 .5 million (12.3%) increase.
- Adjusted EBITDA increased in Telecommunications ( $134.3 million or 14.2% of segment adjusted EBITDA), including Freedom's contribution, and Sports and Entertainment ( $1.8 million or 39.1%).
- Adjusted EBITDA decreased in Media ( $19.1 million ) and there was an unfavourable variance at Head Office ( $2.5 million ).
- The change in the fair value of Quebecor stock options and stock-price-based share units resulted in a $5.0 million unfavourable variance in the Corporation's stock-based compensation charge in the first half of 2023 compared with the same period of 2022.
Net income attributable to shareholders: $295 .0 million ( $1.28 per basic share) in the first half of 2023, compared with $278 .8 million ( $1.17 per basic share) in the same period of 2022, an increase of $16 .2 million ( $0.11 per basic share).
- The main favourable variance was:
- $114.5 million increase in adjusted EBITDA.
- The main unfavourable variances were:
- $52.8 million increase in the depreciation and amortization charge;
- $32.1 million increase related to financial expenses;
- $14.5 million unfavourable variance in the charge for restructuring, acquisition costs and other.
Adjusted income from continuing operating activities: $318 .3 million ( $1.38 per basic share) in the first half of 2023, compared with $290 .4 million ( $1.22 per basic share) in the same period of 2022, an increase of $27 .9 million ( $0.16 per basic share) or 9.6%.
Adjusted cash flows from operations: $801 .3 million, a $124 .2 million (18.3%) increase due primarily to the $114 .5 million increase in adjusted EBITDA and a $25 .0 million decrease in additions to property, plant and equipment, partially offset by a $15 .3 million increase in additions to intangible assets.
Cash flows provided by operating activities: $630 .3 million, a $160 .9 million (34.3%) increase due primarily to the increase in adjusted EBITDA, the favourable net change in non-cash balances related to operating activities and the decrease in current income taxes, partially offset by the increase in the cash portion of financial expenses and the unfavourable variance in the cash portion of restructuring, acquisition costs and other.
Financing transactions
- On June 28, 2023, TVA Group entered into a new $20.0 million secured revolving credit facility repayable on demand. On the same date, TVA Group terminated its secured revolving credit facility in the amount of $75.0 million .
- On April 3, 2023, Videotron entered into a new $2.10 billion secured term credit facility with a syndicate of financial institutions to finance the acquisition of Freedom. The term credit facility consists of three tranches of equal size maturing in October 2024, April 2026 and April 2027, bearing interest at Bankers' acceptance rate, Secured Overnight Financing Rate (SOFR), Canadian prime rate or U.S. prime rate, plus a premium determined by Videotron's leverage ratio. On April 10, 2023, Videotron entered into a floating-to-fixed interest rate swap agreement in connection with the $700.0 million tranche maturing in April 2027, fixing the interest rate at 5.203% based on Videotron's then applicable leverage ratio. The swap became effective on May 4, 2023 and matures on April 3, 2027 .
Normal course issuer bid
On August 9, 2023, the Board of Directors of the Corporation authorized a normal course issuer bid for a maximum of 1,000,000 Class A Multiple Voting Shares ("Class A Shares"), representing approximately 1.3% of issued and outstanding Class A Shares, and for a maximum of 2,000,000 Class B Subordinate Voting Shares ("Class B Shares"), representing approximately 1.3% of issued and outstanding Class B Shares as of August 1, 2023. The purchases can be made from August 15, 2023 to August 14, 2024, at prevailing market prices on the open market through the facilities of the Toronto Stock Exchange or other alternative trading systems in Canada . All the repurchased shares will be cancelled. As of August 1, 2023, 76,970,888 Class A Shares and 153,965,202 Class B Shares were issued and outstanding.
The average daily trading volume of the Class A Shares and Class B Shares of the Corporation between February 1, 2023 and July 31, 2023 on the Toronto Stock Exchange was 4,244 Class A Shares and 539,941 Class B Shares. Consequently, the Corporation will be authorized to purchase a maximum of 1,061 Class A Shares and 134,985 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 interests of the Corporation and its shareholders.
The Corporation also announced that on or around August 11, 2023 it will enter into an automatic securities purchase plan ("the plan") with a designated broker whereby shares may be repurchased under the plan at times when such purchases would otherwise be prohibited pursuant to regulatory restrictions or self-imposed blackout periods. The plan received prior approval from the Toronto Stock Exchange. It will come into effect on August 15, 2023 and terminate on the same date as the normal course issuer bid.
Under the plan, before entering a self-imposed blackout period, the Corporation may, but is not required to, ask the designated broker to make purchases under the normal course issuer bid. Such purchases shall be made at the discretion of the designated broker, within parameters established by the Corporation prior to the blackout periods. Outside the blackout periods, purchases will be made at the discretion of the Corporation's management.
Between August 15, 2022 and August 1, 2023, of the 1,000,000 Class A Shares and 6,000,000 Class B Shares it was authorized to repurchase under its previous normal course issuer bid, the Corporation repurchased no Class A Shares and 2,668,500 Class B Shares at a weighted average price of $27 .35904 per share on the open market through the facilities of the TSX and alternative trading systems.
In the first half of 2023, the Corporation did not purchase and cancel any Class A and Class B Shares (in the same period of 2022, 4,202,951 Class B Shares were purchased and cancelled for a total cash consideration of $123 .1 million).
Dividends declared
On August 9, 2023, the Board of Directors of Quebecor declared a quarterly dividend of $0.30 per share on its Class A Shares and Class B Shares, payable on September 19, 2023 to shareholders of record at the close of business on August 25, 2023. This dividend is designated an eligible dividend, as provided under subsection 89(14) of the Canadian Income Tax Act and its provincial counterpart.
Convertible debentures
In accordance with the terms of the trust indenture governing the convertible debentures, the quarterly dividend declared on May 10, 2023 on Quebecor Class B Shares triggered an adjustment to the floor price and ceiling price then in effect. Accordingly, effective May 25, 2023, the conversion features of the convertible debentures are subject to an adjusted floor price of approximately $24.25 per share (that is, a maximum number of approximately 6,184,391 Class B Shares corresponding to a ratio of $150 .0 million to the adjusted floor price) and an adjusted ceiling price of approximately $30.32 per share (that is, a minimum number of approximately 4,947,513 Class B Shares corresponding to a ratio of $150 .0 million to the adjusted ceiling price).
600 MHz, 3500 MHz and 3800 MHz spectrum auction
In July 2023, Videotron contracted new unsecured on-demand credit facilities under which letters of credit were issued and submitted to ISED Canada as a pre-auction deposit, in respect to its application to participate in the 3800 MHz spectrum auction. The submission of these letters of credit did not have the effect of reducing the Corporation's net available liquid assets under the Corporation's current credit facilities. In accordance with the rules of confidentiality established by ISED Canada respecting restrictions on communications during the auction process, it is strictly forbidden for the Corporation to disclose the amount of these letters of credit. Videotron may withdraw the letters of credit at any time prior to the opening of the auction.
On January 26, 2023, Quebecor announced a $9 .9 million investment by Videotron in the acquisition of spectrum licences in the 600 MHz band in Manitoba and in the 3500 MHz band in Québec. The acquisition was made in the auction of residual spectrum licences that concluded on January 25, 2023 with the announcement by ISED Canada of the tentatively accepted bids. Videotron is thus increasing its wireless service capacity and continuing to pave the way for the expansion of its wireless infrastructure outside Québec.
Acquisition of Freedom
Through the acquisition of Freedom, Videotron has entered the British Columbia and Alberta telecommunications markets and strengthened its position in the Ontario market. This expansion of Videotron's wireless business outside of its traditional Québec footprint has improved its geographic diversification, with approximately 45% of mobile subscribers in Québec, 40% in Ontario and 15% in Western Canada, at June 30, 2023 .
As a result of the transaction, the number of Canadians reached by Videotron's mobile networks increased from 7.5 million (or 20% of the Canadian population) to more than 26 million (or 70% of the Canadian population), thereby significantly increasing its addressable market. In addition, entering new markets as a MVNO will enable Videotron to further improve its reach and offer its competitive services to even more potential users.
Three well-established mobile network operators that offer a full range of telecommunications services and have nationwide wireline and wireless networks are present in these markets. These mobile network operators, including two incumbent local exchange carriers ("ILECs") and one broadcast distribution undertaking ("BDU") have been in business for a long time, hold an array of spectrum licenses and have considerable operational and financial resources. Videotron's acquisition of Freedom creates a more competitive mobile telephony environment in the markets where Freedom operates. Since the closing of the Freedom acquisition, significant enhancements have been made to Freedom's offering, plans and network to improve the customer experience. These enhancements include the introduction of 5G services, seamless handoff and nationwide free roaming. Going forward, Videotron intends to bring further improvements to the Freedom offering by, among other things, introducing attractive multi-service bundles and improving online experience for users.
Prior to the acquisition by Videotron, Freedom customers did not yet have access to 5G services. In order to be able to offer a true 5G experience, Freedom required greater bandwidth in mid-band frequencies, such as the 3500 MHz band, which it did not have, but upon the closing of the acquisition, Videotron was able to rapidly deploy its holding of 3500 MHz spectrum licenses which it had acquired in 2021 in order to upgrade Freedom's infrastructure and offer 5G service to over 12 million Canadians in the Toronto, Vancouver, Calgary and Edmonton metropolitan areas along with select cities across Ontario, British Columbia and Alberta . Over time, Freedom will continue to roll out 5G to other markets. In addition, through the transaction, Videotron has acquired more than 90 MHz (and up to 135 MHz in some areas) of spectrum holdings in major markets in Ontario, British Columbia and Alberta, comprised of spectrum in the 600 MHz, 700 MHz, AWS-1, AWS-3 and 2500 MHz bands.
The Corporation anticipates that significant and recurring investments will be required in the new Canadian markets in order to, among other things, potentially acquire new spectrum licenses for the deployment of the latest technologies, expansion and maintenance of newly acquired mobile networks, support for the launch and penetration of new services, and to compete effectively with the ILECs and other current or potential competitors in these markets.
Detailed financial information
For a detailed analysis of Quebecor's second quarter 2023 results, please refer to the Management Discussion and Analysis and condensed consolidated financial statements of Quebecor, available on the Corporation's website at www.quebecor.com/en/investors/financial documentation and the SEDAR+ website at www.sedarplus.ca.
Conference call for investors and webcast
Quebecor will hold a conference call to discuss its second quarter 2023 results on August 10, 2023, 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 56951#. The conference call will also be broadcast live on Quebecor's website at www.quebecor.com/en/investors/conferences-and-annual-meeting. 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. Anyone unable to attend the conference call will be able to listen to a recording by dialing 1-877-293-8133, access code 56951#, recording access code 0113645#. The recording will be available until November 11, 2023.
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 the pricing of competitors' products and services), new competition and Quebecor's ability to retain its current customers and attract new ones, Quebecor's ability to penetrate new highly competitive markets and the accuracy of estimates of the size of potential markets, risks related to fragmentation of the advertising market, insurance risk, risks associated with capital investments (including risks related to technological development and equipment availability and breakdown), environmental risks, risks associated with cybersecurity and the protection of personal information, risks associated with service interruptions resulting from equipment breakdown, network failure, the threat of natural disaster, epidemics, pandemics or other public health crises, political instability is some countries, risks associated with emergency measures implemented by various governments, risks associated with labour agreements, 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.
In addition, there are risks associated with the acquisition of Freedom, including Quebecor's ability to successfully integrate Freedom's operations following the acquisition and to realize synergies, and potential unknown liabilities or costs associated with the acquisition of Freedom. As well, the anticipated benefits and effects of the acquisition of Freedom may not be realized in a timely manner or at all, and ongoing operating costs and capital expenditures could be different than anticipated. In addition, the outcome of litigation or other regulatory proceedings associated with the acquisition of Freedom could result in changes to the parameters of the transaction. Finally, the impacts of the significant and recurring investments that will be required in our new Freedom markets for development and expansion and to compete effectively with the ILECs and other current or potential competitors in these markets, including the fact that the post-acquisition Videotron business will continue to face the same risks that Videotron currently faces, but will also face increased risks relating to new geographies and markets;
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 www.sedarplus.ca and www.quebecor.com, including, in particular, the "Risks and Uncertainties" section of the Corporation's Management Discussion and Analysis for the year ended December 31, 2022.
The forward-looking statements in this press release reflect the Corporation's expectations as of August 10, 2023 and are subject to change after that 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, except as required by applicable securities laws.
About Quebecor
Quebecor, a Canadian leader in telecommunications, entertainment, news media and culture, is one of the best-performing integrated communications companies in the industry. Driven by their determination to deliver the best possible customer experience, all of Quebecor's subsidiaries and brands are differentiated by their high-quality, multiplatform, convergent products and services.
Quebecor (TSX: QBR.A, QBR.B) is headquartered in Québec and employs more than 10,000 people in Canada .
A family business founded in 1950, Quebecor is strongly committed to the community. Every year, it actively supports more than 400 organizations in the vital fields of culture, health, education, the environment, and entrepreneurship.
Visit our website: www.quebecor.com
Follow us on X: www.x.com/Quebecor
DEFINITIONS
Adjusted EBITDA
In its analysis of operating results, the Corporation defines adjusted EBITDA, as reconciled to net income under IFRS, as net income before depreciation and amortization, financial expenses, gain (loss) on valuation and translation of financial instruments, restructuring, acquisition costs and other, and income taxes. Adjusted EBITDA 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 IFRS financial 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 adjusted EBITDA in order to assess the performance of its investments. 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 depreciation/amortization of tangible and intangible assets and is unaffected by the capital structure or investment activities of the Corporation and its business segments.
Adjusted EBITDA is also relevant because it is a 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 adjusted cash flows from operations and free cash flows from continuing operating activities. The Corporation's definition of adjusted EBITDA may not be the same as similarly titled measures reported by other companies.
Table 2 provides a reconciliation of adjusted EBITDA to net income as disclosed in Quebecor's condensed consolidated financial statements.
Table 2
Reconciliation of the adjusted EBITDA measure used in this press release to the net income measure used in the condensed consolidated financial statements
(in millions of Canadian dollars)
Three months ended June 30 | Six months ended | ||||||||
2023 | 2022 | 2023 | 2022 | ||||||
Adjusted EBITDA (negative adjusted EBITDA): | |||||||||
Telecommunications | $ | 607.6 | $ | 487.5 | $ | 1,081.8 | $ | 947.5 | |
Media | (0.5) | 4.1 | (26.9) | (7.8) | |||||
Sports and Entertainment | 3.0 | 4.7 | 6.4 | 4.6 | |||||
Head Office | (4.9) | (4.9) | (13.3) | (10.8) | |||||
605.2 | 491.4 | 1,048.0 | 933.5 | ||||||
Depreciation and amortization | (250.6) | (191.6) | (439.1) | (386.3) | |||||
Financial expenses | (113.7) | (82.0) | (191.6) | (159.5) | |||||
Gain (loss) on valuation and translation of financial instruments | 1.6 | (2.1) | (9.7) | (9.4) | |||||
Restructuring, acquisition costs and other | (13.3) | (3.5) | (18.9) | (4.4) | |||||
Income taxes | (57.9) | (55.9) | (103.9) | (100.5) | |||||
Net income | $ | 171.3 | $ | 156.3 | $ | 284.8 | $ | 273.4 | |
Adjusted income from continuing operating activities
The Corporation defines adjusted income from continuing operating activities, as reconciled to net income attributable to shareholders under IFRS, as net income attributable to shareholders before the gain (loss) on valuation and translation of financial instruments, and restructuring, acquisition costs and other, net of income tax related to adjustments and net income attributable to non-controlling interest related to adjustments. Adjusted income from continuing operating activities, 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 uses adjusted income from continuing operating activities to analyze trends in the performance of its businesses. The above-listed items are excluded from the calculation of this measure because they impair the comparability of financial results. Adjusted income from continuing operating activities is more representative for forecasting income. The Corporation's definition of adjusted income from continuing operating activities may not be identical to similarly titled measures reported by other companies.
Table 3 provides a reconciliation of adjusted income from continuing operating activities to the net income attributable to shareholders' measure used in Quebecor's condensed consolidated financial statements.
Table 3
Reconciliation of the adjusted income from continuing operating activities measure used in this press release to the net income attributable to shareholders' measure used in the condensed consolidated financial statements
(in millions of Canadian dollars)
Three months ended | Six months ended | |||||||||
2023 | 2022 | 2023 | 2022 | |||||||
Adjusted income from continuing operating activities | $ | 182.3 | $ | 161.7 | $ | 318.3 | $ | 290.4 | ||
Gain (loss) on valuation and translation of financial instruments | 1.6 | (2.1) | (9.7) | (9.4) | ||||||
Restructuring, acquisition costs and other | (13.3) | (3.5) | (18.9) | (4.4) | ||||||
Income taxes related to adjustments1 | 3.5 | 1.3 | 5.1 | 2.2 | ||||||
Non controlling interest related to adjustments | - | - | 0.2 | - | ||||||
Net income attributable to shareholders | $ | 174.1 | $ | 157.4 | $ | 295.0 | $ | 278.8 | ||
1Includes impact of fluctuations in income tax applicable to adjusted items, either for statutory reasons or in connection with tax transactions. |
Adjusted cash flows from operations and free cash flows from continuing operating activities
Adjusted cash flows from operations
Adjusted cash flows from operations represents adjusted EBITDA, less additions to property, plant and equipment and to intangible assets (excluding licence acquisitions and renewals). Adjusted cash flows from operations represents funds available for interest and income tax payments, expenditures related to restructuring programs, business acquisitions, licence acquisitions and renewals, payment of dividends, repayment of long-term debt and lease liabilities, and share repurchases. Adjusted cash flows from operations is not a measure of liquidity that is consistent with IFRS. It is not intended to be regarded as an alternative to IFRS financial performance measures or to the statement of cash flows as a measure of liquidity. Adjusted cash flows from operations is used by the Corporation's management and Board of Directors to evaluate the cash flows generated by the operations of all of its segments, on a consolidated basis, in addition to the operating cash flows generated by each segment. Adjusted cash flows from operations is also relevant because it is a component of the Corporation's annual incentive compensation programs. The Corporation's definition of adjusted cash flows from operations may not be identical to similarly titled measures reported by other companies.
Free cash flows from continuing operating activities
Free cash flows from continuing operating activities represents cash flows provided by operating activities calculated in accordance with IFRS, less cash flows used for additions to property, plant and equipment and to intangible assets (excluding expenditures related to licence acquisitions and renewals), plus proceeds from disposal of assets. Free cash flows from continuing operating activities is used by the Corporation's management and Board of Directors to evaluate cash flows generated by the Corporation's operations. Free cash flows from continuing operating activities represents available funds for business acquisitions, licence acquisitions and renewals, payment of dividends, repayment of long-term debt and lease liabilities, and share repurchases. Free cash flows from continuing operating activities is not a measure of liquidity that is consistent with IFRS. It is not intended to be regarded as an alternative to IFRS financial performance measures or to the statement of cash flows as a measure of liquidity. The Corporation's definition of free cash flows from continuing operating activities may not be identical to similarly titled measures reported by other companies.
Tables 4 and 5 provide a reconciliation of adjusted cash flows from operations and free cash flows from continuing operating activities to cash flows provided by operating activities reported in the condensed consolidated financial statements.
Table 4
Adjusted cash flows from operations
(in millions of Canadian dollars)
Three months ended June 30 | Six months ended June 30 | ||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||
Adjusted EBITDA (negative adjusted EBITDA): | |||||||||||||||||||||
Telecommunications | $ | 607.6 | $ | 487.5 | $ | 1,081.8 | $ | 947.5 | |||||||||||||
Media | (0.5) | 4.1 | (26.9) | (7.8) | |||||||||||||||||
Sports and Entertainment | 3.0 | 4.7 | 6.4 | 4.6 | |||||||||||||||||
Head Office | (4.9) | (4.9) | (13.3) | (10.8) | |||||||||||||||||
605.2 | 491.4 | 1,048.0 | 933.5 | ||||||||||||||||||
Minus | |||||||||||||||||||||
Additions to property, plant and equipment:1 | |||||||||||||||||||||
Telecommunications | (107.3) | (100.2) | (182.2) | (193.4) | |||||||||||||||||
Media | 0.2 | (6.8) | (0.3) | (13.5) | |||||||||||||||||
Sports and Entertainment | (0.2) | (0.2) | (0.3) | (0.3) | |||||||||||||||||
Head Office | - | (0.3) | - | (0.6) | |||||||||||||||||
(107.3) | (107.5) | (182.8) | (207.8) | ||||||||||||||||||
Additions to intangible assets:2 | |||||||||||||||||||||
Telecommunications | (38.6) | (17.9) | (58.4) | (40.1) | |||||||||||||||||
Media | (2.4) | (4.1) | (2.9) | (6.6) | |||||||||||||||||
Sports and Entertainment | (1.5) | (0.6) | (2.3) | (1.3) | |||||||||||||||||
Head Office | (0.1) | (0.3) | (0.3) | (0.6) | |||||||||||||||||
(42.6) | (22.9) | (63.9) | (48.6) | ||||||||||||||||||
Adjusted cash flows from operations | |||||||||||||||||||||
Telecommunications | 461.7 | 369.4 | 841.2 | 714.0 | |||||||||||||||||
Media | (2.7) | (6.8) | (30.1) | (27.9) | |||||||||||||||||
Sports and Entertainment | 1.3 | 3.9 | 3.8 | 3.0 | |||||||||||||||||
Head Office | (5.0) | (5.5) | (13.6) | (12.0) | |||||||||||||||||
$ | 455.3 | $ | 361.0 | $ | 801.3 | $ | 677.1 | ||||||||||||||
1 Reconciliation to cash flows used for additions to property, plant and | Three months ended June 30 | Six months ended June 30 | |||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||
Additions to property, plant and equipment | $ | (107.3) | $ | (107.5) | $ | (182.8) | $ | (207.8) | |||||||||||||
Net variance in current operating items related to additions to property, plant | 8.8 | 3.3 | (5.2) | 8.3 | |||||||||||||||||
Cash flows used for additions to property, plant and equipment | $ | (98.5) | $ | (104.2) | $ | (188.0) | $ | (199.5) | |||||||||||||
2 Reconciliation to cash flows used for additions to intangible assets | Three months ended June 30 | Six months ended June 30 | |||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||
Additions to intangible assets | $ | (42.6) | $ | (22.9) | $ | (63.9) | $ | (48.6) | |||||||||||||
Net variance in current operating items related to additions to intangible | 5.1 | (0.9) | (9.3) | (5.0) | |||||||||||||||||
Cash flows used for licence acquisitions | - | - | (9.9) | - | |||||||||||||||||
Cash flows used for additions to intangible assets | $ | (37.5) | $ | (23.8) | $ | (83.1) | $ | (53.6) | |||||||||||||
Table 5
Free cash flows from continuing operating activities and cash flows provided by operating activities reported in the condensed consolidated financial statements
(in millions of Canadian dollars)
Three months ended | Six months ended | ||||||||||||||||
2023 |
2022 | 2023 | 2022 | ||||||||||||||
Adjusted cash flows from operations from Table 4 | $ | 455.3 | $ | 361.0 | $ | 801.3 | $ | 677.1 | |||||||||
Plus (minus) | |||||||||||||||||
Cash portion of financial expenses | (111.5) | (80.3) | (187.7) | (156.0) | |||||||||||||
Cash portion related to restructuring, acquisition | (13.8) | (2.9) | (20.3) | (3.8) | |||||||||||||
Current income taxes | (57.6) | (70.0) | (125.1) | (144.4) | |||||||||||||
Other | 2.0 | 1.2 | 2.3 | 2.7 | |||||||||||||
Net change in non-cash balances related to operating activities | (65.4) | (93.6) | (86.1) | (157.1) | |||||||||||||
Net variance in current operating items related to additions to property, plant and equipment (excluding government credits receivable for major capital projects) | 8.8 | 3.3 | (5.2) | 8.3 | |||||||||||||
Net variance in current operating items related to additions to intangible assets (excluding government credits receivable for major capital projects) | 5.1 | (0.9) | (9.3) | (5.0) | |||||||||||||
Free cash flows from continuing operating activities | 222.9 | 117.8 | 369.9 | 221.8 | |||||||||||||
Plus (minus) | |||||||||||||||||
Cash flows used for additions to property, plant and equipment | 98.5 | 104.2 | 188.0 | 199.5 | |||||||||||||
Cash flows used for additions to intangible assets (excluding expenditures related to licence acquisitions and renewals) | 37.5 | 23.8 | 73.2 | 53.6 | |||||||||||||
Proceeds from disposal of assets | (0.5) | (4.1) | (0.8) | (5.5) | |||||||||||||
Cash flows provided by continuing operating activities | $ | 358.4 | $ | 241.7 | $ | 630.3 | $ | 469.4 | |||||||||
Consolidated net debt leverage ratio
The consolidated net debt leverage ratio represents consolidated net debt, excluding convertible debentures, divided by the trailing 12-month adjusted EBITDA. Consolidated net debt, excluding convertible debentures, represents total long-term debt plus bank indebtedness, lease liabilities, the current portion of lease liabilities and liabilities related to derivative financial instruments, less assets related to derivative financial instruments and cash and cash equivalents. The consolidated net debt leverage ratio serves to evaluate the Corporation's financial leverage and is used by management and the Board of Directors in decisions on the Corporation's capital structure, including its financing strategy, and in managing debt maturity risks. The consolidated net debt leverage ratio excludes convertible debentures because, subject to certain conditions, those debentures can be repurchased at the Corporation's discretion by issuing Quebecor Class B Shares. Consolidated net debt leverage ratio is not a measure established in accordance with IFRS. It is not intended to be used as an alternative to IFRS measures or the balance sheet to evaluate its financial position. The Corporation's definition of consolidated net debt leverage ratio may not be identical to similarly titled measures reported by other companies.
Table 6 provides the calculation of consolidated net debt leverage ratio and the reconciliation to balance sheet items reported in Quebecor's condensed consolidated financial statements.
Table 6
Consolidated net debt leverage ratio
(in millions of Canadian dollars)
June 30 | Dec. 31, | ||||||||
Total long-term debt1 | $ | 8,005.4 | $ | 6,517.7 | |||||
Plus (minus) | |||||||||
Lease liabilities | 293.8 | 149.2 | |||||||
Current portion of lease liabilities | 106.5 | 37.0 | |||||||
Bank indebtedness | 10.1 | 10.1 | |||||||
Assets related to derivative financial instruments | (180.3) | (520.3) | |||||||
Liabilities related to derivative financial instruments | 56.3 | - | |||||||
Cash and cash equivalents | (26.8) | (6.6) | |||||||
Consolidated net debt excluding convertible debentures | 8,265.0 | 6,187.1 | |||||||
Divided by: | |||||||||
Trailing 12-month adjusted EBITDA2 | 2,347.0 | 1,934.5 | |||||||
Consolidated net debt leverage ratio2 | $ | 3.52x | $ | 3.20x | |||||
1Excluding changes in the fair value of long-term debt related to hedged interest rate risk and financing costs. |
2On a pro forma basis as at June 30 2023, using Freedom's trailing 12-month adjusted EBITDA. |
KEY PERFORMANCE INDICATOR
Revenue-generating unit
The Corporation uses RGU, an industry metric, as a key performance indicator. An RGU represents, as the case may be, subscriptions to the Internet access and television services, and subscriber connections to the mobile and wireline telephony services. RGU is not a measurement that is consistent with IFRS and the Corporation's definition and calculation of RGU may not be the same as identically titled measurements reported by other companies or published by public authorities.
QUEBECOR INC.
CONSOLIDATED STATEMENTS OF INCOME
(in millions of Canadian dollars, except for earnings per share data) | Three months ended | Six months ended | ||||||||
(unaudited) | June 30 | June 30 | ||||||||
2023 | 2022 | 2023 | 2022 | |||||||
Revenues | $ | 1,398.5 | $ | 1,115.2 | $ | 2,514.1 | $ | 2,203.2 | ||
Employee costs | 198.5 | 177.2 | 375.0 | 356.3 | ||||||
Purchase of goods and services | 594.8 | 446.6 | 1,091.1 | 913.4 | ||||||
Depreciation and amortization | 250.6 | 191.6 | 439.1 | 386.3 | ||||||
Financial expenses | 113.7 | 82.0 | 191.6 | 159.5 | ||||||
(Gain) loss on valuation and translation of financial instruments | (1.6) | 2.1 | 9.7 | 9.4 | ||||||
Restructuring, acquisition costs and other | 13.3 | 3.5 | 18.9 | 4.4 | ||||||
Income before income taxes | 229.2 | 212.2 | 388.7 | 373.9 | ||||||
Income taxes (recovery): | ||||||||||
Current | 57.6 | 70.0 | 125.1 | 144.4 | ||||||
Deferred | 0.3 | (14.1) | (21.2) | (43.9) | ||||||
57.9 | 55.9 | 103.9 | 100.5 | |||||||
Net income | $ | 171.3 | $ | 156.3 | $ | 284.8 | $ | 273.4 | ||
Net income (loss) attributable to | ||||||||||
Shareholders | $ | 174.1 | $ | 157.4 | $ | 295.0 | $ | 278.8 | ||
Non-controlling interests | (2.8) | (1.1) | (10.2) | (5.4) | ||||||
Earnings per share attributable to shareholders | ||||||||||
Basic | $ | 0.75 | $ | 0.66 | $ | 1.28 | $ | 1.17 | ||
Diluted | 0.73 | 0.66 | 1.28 | 1.17 | ||||||
Weighted average number of shares outstanding (in millions) | 230.9 | 236.7 | 230.9 | 237.9 | ||||||
Weighted average number of diluted shares (in millions) | 236.2 | 236.8 | 231.3 | 238.0 | ||||||
QUEBECOR INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions of Canadian dollars) | Three months ended | Six months ended | ||||||||
(unaudited) | June 30 | June 30 | ||||||||
2023 | 2022 | 2023 | 2022 | |||||||
Net income | $ | 171.3 | $ | 156.3 | $ | 284.8 | $ | 273.4 | ||
Other comprehensive income: | ||||||||||
Items that may be reclassified to income: | ||||||||||
Cash flow hedges: | ||||||||||
Gain (loss) on valuation of derivative financial instruments | 23.5 | 4.4 | 27.5 | (14.0) | ||||||
Deferred income taxes | (4.9) | (1.9) | (5.1) | 2.0 | ||||||
Loss on translation of investments in foreign associates | (9.3) | (0.7) | (9.7) | (5.0) | ||||||
Items that will not be reclassified to income: | ||||||||||
Defined benefit plans: | ||||||||||
Re-measurement gain | - | 109.2 | - | 217.2 | ||||||
Deferred income taxes | - | (29.2) | - | (57.8) | ||||||
Equity investment: | ||||||||||
(Loss) gain on revaluation of an equity investment | (5.4) | (1.1) | 1.4 | (1.3) | ||||||
Deferred income taxes | 0.7 | 0.2 | (0.1) | 0.2 | ||||||
4.6 | 80.9 | 14.0 | 141.3 | |||||||
Comprehensive income | $ | 175.9 | $ | 237.2 | $ | 298.8 | $ | 414.7 | ||
Comprehensive income attributable to | ||||||||||
Shareholders | $ | 178.7 | $ | 235.0 | $ | 309.0 | $ | 413.4 | ||
Non-controlling interests | (2.8) | 2.2 | (10.2) | 1.3 | ||||||
QUEBECOR INC.
SEGMENTED INFORMATION
(in millions of Canadian dollars) | ||||||||||||
(unaudited) | ||||||||||||
Three months ended June 30, 2023 | ||||||||||||
Sports | Head | |||||||||||
and | office | |||||||||||
Telecommuni- | Enter- | and Inter- | ||||||||||
cations | Media | tainment | segments | Total | ||||||||
Revenues | $ | 1,201.2 | $ | 180.3 | $ | 48.8 | $ | (31.8) | $ | 1,398.5 | ||
Employee costs | 125.6 | 54.2 | 11.8 | 6.9 | 198.5 | |||||||
Purchase of goods and services | 468.0 | 126.6 | 34.0 | (33.8) | 594.8 | |||||||
Adjusted EBITDA1 | 607.6 | (0.5) | 3.0 | (4.9) | 605.2 | |||||||
Depreciation and amortization | 250.6 | |||||||||||
Financial expenses | 113.7 | |||||||||||
Gain on valuation and translation of financial instruments | (1.6) | |||||||||||
Restructuring, acquisition costs and other | 13.3 | |||||||||||
Income before income taxes | $ | 229.2 | ||||||||||
Cash flows used for | ||||||||||||
Additions to property, plant and equipment2 | $ | 97.5 | $ | 0.8 | $ | 0.2 | $ | - | $ | 98.5 | ||
Additions to intangible assets | 35.9 | - | 1.5 | 0.1 | 37.5 | |||||||
Three months ended June 30, 2022 | ||||||||||||
Sports | Head | |||||||||||
and | office | |||||||||||
Telecommuni- | Enter- | and Inter- | ||||||||||
cations | Media | tainment | segments | Total | ||||||||
Revenues | $ | 912.6 | $ | 188.1 | $ | 45.0 | $ | (30.5) | $ | 1,115.2 | ||
Employee costs | 101.2 | 58.9 | 10.9 | 6.2 | 177.2 | |||||||
Purchase of goods and services | 323.9 | 125.1 | 29.4 | (31.8) | 446.6 | |||||||
Adjusted EBITDA1 | 487.5 | 4.1 | 4.7 | (4.9) | 491.4 | |||||||
Depreciation and amortization | 191.6 | |||||||||||
Financial expenses | 82.0 | |||||||||||
Loss on valuation and translation of financial instruments | 2.1 | |||||||||||
Restructuring, acquisition costs and other | 3.5 | |||||||||||
Income before income taxes | $ | 212.2 | ||||||||||
Cash flows used for | ||||||||||||
Additions to property, plant and equipment2 | $ | 96.4 | $ | 7.3 | $ | 0.2 | $ | 0.3 | $ | 104.2 | ||
Additions to intangible assets | 18.8 | 4.1 | 0.6 | 0.3 | 23.8 | |||||||
QUEBECOR INC.
SEGMENTED INFORMATION (continued)
(in millions of Canadian dollars) | ||||||||||||
(unaudited) | ||||||||||||
Six months ended June 30, 2023 | ||||||||||||
Sports | Head | |||||||||||
and | office | |||||||||||
Telecommuni- | Enter- | and Inter- | ||||||||||
cations | Media | tainment | segments | Total | ||||||||
Revenues | $ | 2,126.2 | $ | 351.1 | $ | 97.3 | $ | (60.5) | $ | 2,514.1 | ||
Employee costs | 223.5 | 110.8 | 23.4 | 17.3 | 375.0 | |||||||
Purchase of goods and services | 820.9 | 267.2 | 67.5 | (64.5) | 1,091.1 | |||||||
Adjusted EBITDA1 | 1,081.8 | (26.9) | 6.4 | (13.3) | 1,048.0 | |||||||
Depreciation and amortization | 439.1 | |||||||||||
Financial expenses | 191.6 | |||||||||||
Loss on valuation and translation of financial instruments | 9.7 | |||||||||||
Restructuring, acquisition costs and other | 18.9 | |||||||||||
Income before income taxes | $ | 388.7 | ||||||||||
Cash flows used for | ||||||||||||
Additions to property, plant and equipment2 | $ | 184.9 | $ | 2.8 | $ | 0.3 | $ | - | $ | 188.0 | ||
Additions to intangible assets | 80.0 | 0.5 | 2.3 | 0.3 | 83.1 | |||||||
Six months ended June 30, 2022 | ||||||||||||
Sports | Head | |||||||||||
and | office | |||||||||||
Telecommuni- | Enter - | and Inter- | ||||||||||
cations | Media | tainment | segments | Total | ||||||||
Revenues | $ | 1,816.0 | $ | 369.9 | $ | 79.1 | $ | (61.8) | $ | 2,203.2 | ||
Employee costs | 202.5 | 118.8 | 21.0 | 14.0 | 356.3 | |||||||
Purchase of goods and services | 666.0 | 258.9 | 53.5 | (65.0) | 913.4 | |||||||
Adjusted EBITDA1 | 947.5 | (7.8) | 4.6 | (10.8) | 933.5 | |||||||
Depreciation and amortization | 386.3 | |||||||||||
Financial expenses | 159.5 | |||||||||||
Loss on valuation and translation of financial instruments | 9.4 | |||||||||||
Restructuring, acquisition costs and other | 4.4 | |||||||||||
Income before income taxes | $ | 373.9 | ||||||||||
Cash flows used for | ||||||||||||
Additions to property, plant and equipment2 | $ | 185.6 | $ | 12.9 | $ | 0.3 | $ | 0.7 | $ | 199.5 | ||
Additions to intangible assets | 44.8 | 6.9 | 1.3 | 0.6 | 53.6 | |||||||
1 | The Chief Executive Officer uses adjusted EBITDA as the measure of profit to assess the performance of each segment. Adjusted EBITDA is a non-IFRS |
2 | Subsidies of $13.9 million and $33.9 million in the respective three-month and six-month periods ended June 30, 2023 ($46.1 million and $77.8 million in 2022) |
QUEBECOR INC.
CONSOLIDATED STATEMENTS OF EQUITY
(in millions of Canadian dollars) | ||||||||||||
(unaudited) | ||||||||||||
Equity attributable to shareholders | Equity | |||||||||||
Accumulated | attributable | |||||||||||
other com- | to non- | |||||||||||
Capital | Contributed | Retained | prehensive | controlling | Total | |||||||
stock | surplus | earnings | (loss) income | interests | equity | |||||||
Balance as of December 31, 2021 | $ | 965.2 | $ | 17.4 | $ | 292.3 | $ | (19.3) | $ | 123.2 | $ | 1,378.8 |
Net income (loss) | - | - | 278.8 | - | (5.4) | 273.4 | ||||||
Other comprehensive income | - | - | - | 134.6 | 6.7 | 141.3 | ||||||
Dividends | - | - | (142.7) | - | (0.2) | (142.9) | ||||||
Repurchase of Class B Shares | (24.8) | - | (98.3) | - | - | (123.1) | ||||||
Balance as of June 30, 2022 | 940.4 | 17.4 | 330.1 | 115.3 | 124.3 | 1,527.5 | ||||||
Net income | - | - | 320.9 | - | 2.4 | 323.3 | ||||||
Other comprehensive (loss) income | - | - | - | (113.5) | 0.6 | (112.9) | ||||||
Dividends | - | - | (139.4) | - | (1.1) | (140.5) | ||||||
Repurchase of Class B Shares | (24.2) | - | (89.7) | - | - | (113.9) | ||||||
Balance as of December 31, 2022 | 916.2 | 17.4 | 421.9 | 1.8 | 126.2 | 1,483.5 | ||||||
Net income (loss) | - | - | 295.0 | - | (10.2) | 284.8 | ||||||
Other comprehensive income | - | - | - | 14.0 | - | 14.0 | ||||||
Dividends | - | - | (138.6) | - | (0.2) | (138.8) | ||||||
Balance as of June 30, 2023 | $ | 916.2 | $ | 17.4 | $ | 578.3 | $ | 15.8 | $ | 115.8 | $ | 1,643.5 |
QUEBECOR INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions of Canadian dollars) | Three months ended | Six months ended | ||||||||
(unaudited) | June 30 | June 30 | ||||||||
2023 | 2022 | 2023 | 2022 | |||||||
Cash flows related to operating activities | ||||||||||
Net income | $ | 171.3 | $ | 156.3 | $ | 284.8 | $ | 273.4 | ||
Adjustments for: | ||||||||||
Depreciation of property, plant and equipment | 156.2 | 138.3 | 290.1 | 277.6 | ||||||
Amortization of intangible assets | 64.5 | 42.9 | 107.9 | 87.9 | ||||||
Depreciation of right-of-use assets | 29.9 | 10.4 | 41.1 | 20.8 | ||||||
(Gain) loss on valuation and translation of financial instruments | (1.6) | 2.1 | 9.7 | 9.4 | ||||||
(Gain) loss on disposal of other assets | (0.2) | 0.6 | (0.2) | 0.6 | ||||||
Amortization of financing costs | 2.2 | 1.7 | 3.9 | 3.5 | ||||||
Deferred income taxes | 0.3 | (14.1) | (21.2) | (43.9) | ||||||
Other | 1.2 | (2.9) | 0.3 | (2.8) | ||||||
423.8 | 335.3 | 716.4 | 626.5 | |||||||
Net change in non-cash balances related to operating activities | (65.4) | (93.6) | (86.1) | (157.1) | ||||||
Cash flows provided by operating activities | 358.4 | 241.7 | 630.3 | 469.4 | ||||||
Cash flows related to investing activities | ||||||||||
Additions to property, plant and equipment | (98.5) | (104.2) | (188.0) | (199.5) | ||||||
Deferred subsidies used to finance additions to property, | ||||||||||
plant and equipment | (13.9) | (46.1) | (33.9) | (77.8) | ||||||
(112.4) | (150.3) | (221.9) | (277.3) | |||||||
Additions to intangible assets | (37.5) | (23.8) | (83.1) | (53.6) | ||||||
Business acquisition | (2,067.8) | (3.8) | (2,067.8) | (3.8) | ||||||
Proceeds from disposals of assets | 0.5 | 4.1 | 0.8 | 5.5 | ||||||
Acquisitions of investments and other | (3.3) | (2.3) | (3.9) | (6.4) | ||||||
Cash flows used in investing activities | (2,220.5) | (176.1) | (2,375.9) | (335.6) | ||||||
Cash flows related to financing activities | ||||||||||
Net change in bank indebtedness | (24.2) | (3.6) | - | 21.6 | ||||||
Net change under revolving facilities, net of financing costs | (38.3) | 126.2 | 642.2 | 0.1 | ||||||
Issuance of long-term debt, net of financing costs | 2,092.5 | - | 2,092.5 | - | ||||||
Repayment of long-term debt | - | (0.3) | (1,138.1) | (0.7) | ||||||
Repayment of lease liabilities | (22.2) | (11.1) | (33.1) | (21.4) | ||||||
Settlement of hedging contracts | - | (0.8) | 307.2 | (0.8) | ||||||
Repurchase of Class B Shares | - | (97.1) | - | (123.1) | ||||||
Dividends | (138.6) | (142.7) | (138.6) | (142.7) | ||||||
Dividends paid to non-controlling interests | (0.1) | (0.1) | (0.2) | (0.2) | ||||||
Cash flows provided by (used in) financing activities | 1,869.1 | (129.5) | 1,731.9 | (267.2) | ||||||
Net change in cash, cash equivalents and restricted cash | 7.0 | (63.9) | (13.7) | (133.4) | ||||||
Cash, cash equivalents and restricted cash at beginning of period | 25.2 | 157.6 | 45.9 | 227.1 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 32.2 | $ | 93.7 | $ | 32.2 | $ | 93.7 | ||
Cash, cash equivalents and restricted cash consist of | ||||||||||
Cash | $ | 26.6 | $ | 9.1 | $ | 26.6 | $ | 9.1 | ||
Cash equivalents | 0.2 | - | 0.2 | - | ||||||
Restricted cash | 5.4 | 84.6 | 5.4 | 84.6 | ||||||
$ | 32.2 | $ | 93.7 | $ | 32.2 | $ | 93.7 | |||
Interest and taxes reflected as operating activities | ||||||||||
Cash interest payments | $ | 140.1 | $ | 128.4 | $ | 177.6 | $ | 154.5 | ||
Cash income tax payments (net of refunds) | 76.8 | 59.6 | 183.3 | 158.5 | ||||||
QUEBECOR INC.
CONSOLIDATED BALANCE SHEETS
(in millions of Canadian dollars) | |||||||
(unaudited) | June 30 | December 31 | |||||
2023 | 2022 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 26.8 | $ | 6.6 | |||
Restricted cash | 5.4 | 39.3 | |||||
Accounts receivable | 1,028.1 | 840.7 | |||||
Contract assets | 82.4 | 50.2 | |||||
Income taxes | 45.7 | 10.8 | |||||
Inventories | 426.9 | 406.2 | |||||
Derivative financial instruments | 124.4 | 320.8 | |||||
Other current assets | 210.9 | 135.5 | |||||
1,950.6 | 1,810.1 | ||||||
Non-current assets | |||||||
Property, plant and equipment | 3,514.2 | 2,897.6 | |||||
Intangible assets | 3,395.7 | 2,275.0 | |||||
Right-of-use assets | 361.6 | 155.4 | |||||
Goodwill | 2,726.0 | 2,726.0 | |||||
Derivative financial instruments | 55.9 | 199.5 | |||||
Deferred income taxes | 23.4 | 22.0 | |||||
Other assets | 607.9 | 539.7 | |||||
10,684.7 | 8,815.2 | ||||||
Total assets | $ | 12,635.3 | $ | 10,625.3 | |||
Liabilities and equity | |||||||
Current liabilities | |||||||
Bank indebtedness | $ | 10.1 | $ | 10.1 | |||
Accounts payable, accrued charges and provisions | 927.2 | 950.3 | |||||
Deferred revenue | 361.8 | 305.8 | |||||
Deferred subsidies | 5.4 | 39.3 | |||||
Income taxes | 26.2 | 31.2 | |||||
Convertible debentures | 150.0 | - | |||||
Current portion of long-term debt | 794.5 | 1,161.1 | |||||
Current portion of lease liabilities | 106.5 | 37.0 | |||||
2,381.7 | 2,534.8 | ||||||
Non-current liabilities | |||||||
Long-term debt | 7,168.0 | 5,317.7 | |||||
Derivative financial instruments | 56.3 | - | |||||
Convertible debentures | - | 150.0 | |||||
Lease liabilities | 293.8 | 149.2 | |||||
Deferred income taxes | 785.3 | 780.3 | |||||
Other liabilities | 306.7 | 209.8 | |||||
8,610.1 | 6,607.0 | ||||||
Equity | |||||||
Capital stock | 916.2 | 916.2 | |||||
Contributed surplus | 17.4 | 17.4 | |||||
Retained earnings | 578.3 | 421.9 | |||||
Accumulated other comprehensive income | 15.8 | 1.8 | |||||
Equity attributable to shareholders | 1,527.7 | 1,357.3 | |||||
Non-controlling interests | 115.8 | 126.2 | |||||
1,643.5 | 1,483.5 | ||||||
Total liabilities and equity | $ | 12,635.3 | $ | 10,625.3 | |||
SOURCE Québecor
