Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported its consolidated financial results for the second quarter of 2020. Quebecor consolidates the financial results of its wholly owned Quebecor Media Inc. (“Quebecor Media”) subsidiary.
The Corporation reviewed the nature and definition of one of its non‑standardized financial measures in the first quarter of 2020. As a result, “cash flows from segment operations” has been abandoned and replaced by the new “cash flows from operations” metric. This metric will henceforth be used to measure the cash flows generated by the operations of all the business segments, on a consolidated basis, in addition to the cash flows from operations generated by each segment.
Second quarter 2020 highlights
Revenues: $1.00 billion in the second quarter of 2020, down $53.1 million (‑5.0%) from the same period of 2019.
Adjusted EBITDA: $475.7 million, up $20.7 million (4.5%).
Net income attributable to shareholders: $174.9 million ($0.69 per basic share) in the second quarter of 2020, compared with $140.2 million ($0.55 per basic share) in the same period of 2019, an increase of $34.7 million ($0.14 per basic share).
Adjusted income from continuing operating activities: $144.9 million ($0.57 per basic share) in the second quarter of 2020, compared with $136.2 million ($0.53 per basic share) in the same period of 2019, an increase of $8.7 million ($0.04 per basic share) or 6.4%.
Cash flows from operations: $326.1 million, up $51.2 million (18.6%).
The Telecommunications segment grew its revenues by $14.7 million (1.7%) and its adjusted EBITDA by $13.6 million (3.0%) in the second quarter of 2020.
Videotron Ltd. (“Videotron”) significantly increased its revenues from customer equipment sales ($22.5 million or 43.8%) and mobile telephony ($13.3 million or 9.1%) in the second quarter of 2020.
Videotron’s total average billing per unit (“ABPU”) was $49.57 in the second quarter of 2020, compared with $50.20 in the same period of 2019, a $0.63 (‑1.3%) decrease. Mobile ABPU was $50.32 in the second quarter of 2020 compared with $52.56 in the same period of 2019, a $2.24 (‑4.3%) decrease due in part to the popularity of bring your own device (“BYOD”) plans and the various measures taken to support customers during the COVID‑19 pandemic.
There was a net increase of 16,700 revenue‑generating units (“RGUs”) (0.3%) in the second quarter of 2020, including 35,100 connections (2.6%) to the mobile telephony service and 17,200 subscriptions (1.0%) to the cable Internet access service.
The Media and Sports and Entertainment segments posted revenue decreases of $57.4 million (‑30.2%) and $15.4 million (‑37.3%) respectively and grew their adjusted EBITDA by $1.9 million (33.3%) and $4.3 million respectively in the second quarter of 2020.
In the difficult environment created by COVID‑19, Quebecor again demonstrated the excellence of its operational and financial management, with higher quarterly growth than the major national industry players. Despite substantial revenue declines at some business units, the Corporation continued to grow its customer base and increase its profitability while maintaining its financial strength, as evidenced by increases of 4.5% in adjusted EBITDA and 18.6% in cash flows from operations, combined with available liquidity totalling $1.8 billion at the end of the quarter.
As a provider of essential services and a leading corporate citizen, we pursue a mission of connecting, informing and entertaining the public that has never been more vital than in this unprecedented health crisis. We have worked tirelessly to continue providing essential telecommunications and news media services throughout Québec, while prioritizing the health and safety of our customers, the public and our employees. Quebecor also moved quickly to implement temporary measures to help customers adjust to this extraordinary and uncertain situation: we removed data caps on all Internet plans, cancelled roaming charges for our customers abroad and provided free access to our LCN all‑news channel. In addition, to support employees who find themselves without work during this crisis and protect their financial security, we are providing them with financial benefits in addition to the government assistance programs, added Pierre Karl Péladeau.
The much heavier‑than‑normal traffic on Videotron's network over the past few months has shown its robustness and hence the soundness of the investments made in recent years, demonstrating the importance of a stable regulatory environment that promotes investment, said Jean‑François Pruneau, President and Chief Executive Officer of Videotron.
In pursuit of our goal of connecting as many customers as possible to our network, we continue innovating and building out new infrastructure, including in the Charlevoix, Bas‑Saint‑Laurent, Memphrémagog and Montérégie regions, where we will offer residents high‑speed Internet services under the ‘Régions branchées’ component of the Ministry of the Economy and Innovation’s ‘Québec haut débit’ program. Meanwhile, the soaring demand for Videotron services that we are now seeing in Abitibi-Témiscamingue confirms the resounding success of our regional service roll-out strategy.
The popularity of our Helix home entertainment and management platform also continues to grow, with more than 350,000 RGUs since its launch in August 2019. As well, our mobile telephony, Internet and Club illico subscription video‑on‑demand (“Club illico”) services continued posting sustained growth, with increases of 173,000, 46,200 and 41,200 RGUs respectively over the past 12 months, said Jean‑François Pruneau.
As anticipated, TVA Group Inc.’s (“TVA Group”) second quarter 2020 results reflect the full‑quarter impact of the COVID‑19 pandemic, which hit our industry hard and forced us to significantly scale back our operations in order to comply with government directives, said France Lauzière, President and Chief Executive Officer of TVA Group.
The impact of the health crisis led to a significant decline in our advertising revenues, a large reduction in the number of sporting events broadcast by TVA Sports – including postponement of the National Hockey League playoffs until the third quarter of 2020 – and the suspension of most content-production activities.
TVA Group’s total market share continued to grow in the second quarter of 2020, rising 1.8 points to 42.3%. Given the unprecedented situation we are facing, I am particularly proud of the 10.6% peak recorded by the LCN all‑news specialty channel, which strengthened its position as Québec's most‑watched specialty channel with an exceptional 5.1‑point increase in the second quarter, added France Lauzière.
The acquisition of the Théâtre Capitole in Québec City, a unique, hundred‑year‑old, 1,300‑seat venue, which we announced on June 17, 2020, will enhance the Québec City entertainment scene. Expanding our complement of performance spaces positions us to create a diversified ecosystem for the benefit of promoters, artists and everyone who loves music and culture, explained Martin Tremblay, Chief Operating Officer of Quebecor's Sports and Entertainment Group.
We also successfully launched the new QUB music streaming platform, which showcases Québec artists, in May 2020. Supporting Québec culture is in our DNA and backing Québec artists during this health crisis is a priority for us, added Martin Tremblay.
At this time, as activities gradually resume in Québec and the economy is showing encouraging signs of recovery, we continue monitoring the situation closely and adjusting our action plans accordingly. In addition to enabling us to perform our role and protect our assets, our solid financial position allows us to properly evaluate, prioritize and continue prudently investing in strategies that will be profitable over the long term, thereby maintaining our position as an innovation leader. Finally, I want to underscore again the outstanding work of our employees. Over the past few months, they have valiantly risen to the challenges of the pandemic and provided the public with the unparalleled customer service for which we are known, concluded Pierre Karl Péladeau.
For more details and to consult definitions of "adjusted EBITDA", "adjusted income from continuing operating activities", "cash flows from operations", "average billing per unit" and "revenue-generating unit", please refer to the attached PDF file for the complete version of the press release.
Chief Financial Officer
Quebecor Inc. and Quebecor Media Inc.
Quebecor Inc. and Quebecor Media Inc.