Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported its consolidated financial results for the first quarter of 2020. Quebecor consolidates the financial results of its wholly owned Quebecor Media Inc. (“Quebecor Media”) subsidiary.
The Corporation has reviewed the nature and definition of one of its non‑standardized financial measures. 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.
First quarter 2020 highlights
- Revenues: $1.06 billion, up $28.2 million (2.7%) from the same period of 2019.
- Adjusted EBITDA $436.7 million, up $16.0 million (3.8%).
- Net income attributable to shareholders: $131.6 million ($0.52 per basic share) in the first quarter of 2020, compared with $189.0 million ($0.74 per basic share) in the same period of 2019, a decrease of $57.4 million ($0.22 per basic share), due in part to a $97.2 million gain on disposal of the activities of 4Degrees Colocation Inc. recorded in the first quarter of 2019.
- Adjusted income from continuing operating activities: $111.5 million ($0.44 per basic share) in the first quarter of 2020 compared with $111.4 million ($0.44 per basic share) in the same period of 2019.
- Cash flows from operations: $295.0 million, up $18.7 million (6.8%).
- The Telecommunications and Media segments grew their revenues by $34.0 million (4.0%) and $2.1 million (1.2%), and their adjusted EBITDA by $12.5 million (3.0%) and $2.9 million respectively in the first quarter of 2020.
- Videotron Ltd. (“Videotron”) significantly increased its revenues from customer equipment sales ($26.9 million or 54.7%) and mobile telephony ($18.8 million or 13.3%) in the first quarter of 2020.
- Videotron’s total average billing per unit (“ABPU”) was $49.87 in the first quarter of 2020 compared with $49.47 in the same period of 2019, a $0.40 (0.8%) increase. Mobile ABPU was $51.60 in the first quarter of 2020 compared with $52.50 in the same period of 2019, a $0.90 (‑1.7%) decrease due in part to the popularity of bring your own device (“BYOD”) plans.
- There was a net increase of 14,200 revenue‑generating units (“RGUs”) (0.2%) in the first quarter of 2020, including 39,300 connections (3.0%) to the mobile telephony service, 12,400 subscriptions (2.7%) to the Club illico over‑the‑top video service (“Club illico”) and 8,600 subscriptions (0.5%) to the cable Internet access service.
- In the first quarter of 2020, Videotron announced the official launch of its mobile network in Rimouski after several months of build‑out and testing in the Lower St. Lawrence region.
At a time when the world is facing an unprecedented situation because of the COVID‑19 pandemic, Quebecor has adapted quickly and continues providing Quebecers with essential telecommunications and news media services. We have taken a series of steps to help our customers stay connected, while protecting the health and safety of our employees, customers and the public. For example, we were the first to temporarily remove data caps on all Internet plans. To keep Quebecers informed of the latest developments in the crisis at all times, we have also unscrambled the LCN 24‑hour news channel.
The Corporation's adjusted EBITDA and cash flows from operations increased by 3.8% and 6.8% respectively in the first quarter of 2020. Despite the significant adverse impacts in some of our business segments since the beginning of the crisis, our telecommunications business remains very solid and is generating the majority of our cash flows. This important revenue stream, combined with our prudent management of operating costs and our strong balance sheet, with available liquidity of $1.8 billion, puts us in a strong position and enables us to support our hardest‑hit business units and our employees during this difficult period. To demonstrate our loyalty and gratitude to our employees, we have set up a $500,000 emergency fund to provide immediate financial relief to the Sports and Entertainment segment's employees, contributors and freelancers, who were the first to be affected by this situation. We have also set up a supplemental benefits program that tops up the government assistance programs to pay up to 95% of salary in some cases and provide increased security for all affected employees, Pierre Karl Péladeau added.
Videotron's network has successfully absorbed the substantial increase in traffic since the beginning of the crisis caused, among other things, by our customers’ growing communication and entertainment needs and the rise in telework, which has become practically essential to keep still‑operating businesses running, noted Jean‑François Pruneau, President and Chief Executive Officer of Videotron.
Our proactive management of network capacity, based on anticipating increases in data usage, has afforded us manoeuvring room during this period of heavy traffic. We have also stepped up our investment program in order to maintain that flexibility. The flawless performance of our network at this time clearly demonstrates the importance and soundness of our infrastructure-based investment model. It would be dangerous for it to be undermined.
Even though lockdown measures slowed installations at the beginning of the crisis, our Helix entertainment and home management platform has been a phenomenal success, accounting for more than 230,000 RGUs since its launch in August 2019. For its part, Fizz, our 100% digital mobile and Internet brand, has kept up a pace of growth that is remarkable, particularly in this period of crisis. These results clearly demonstrate that our platforms meet our customers’ changing needs. The resounding success of our mobile telephony services continued, as evidenced by the increase of 39,300 subscriber connections in the first quarter of 2020 and 176,200 (14.8%) during the 12‑month period ended March 31, 2020.
Innovation will always be at the heart of Videotron's strategy and we are constantly striving to provide the best possible customer experience to our growing subscriber base. We are pleased that we are now able to serve Rimouski residents as well, and to offer them the best products and services available on the market, Jean‑François Pruneau said.
I am also delighted by the distinctions Videotron received in the first quarter of 2020, including first place in the Technology and Telecommunications category in the BIP Recherche‑ICO awards for the most trusted organizations of the past decade, as determined by the Institut de la confiance dans les organisations (ICO). Videotron was also on Mediacorp Canada Inc.’s 2020 list of Montréal’s Top Employers, Jean‑François Pruneau concluded.
TVA Group Inc. (“TVA Group”) posted a $4.5 million favourable variance in consolidated adjusted EBITDA in the first quarter of 2020, noted France Lauzière, President and Chief Executive Officer of TVA Group.
While the COVID‑19 pandemic and the measures to prevent its spread have caused a significant slowdown in a number of activities, the impact of the crisis in the first quarter of 2020 was limited.
TVA Group’s total television market share increased significantly, by 2.1 points, to 40.4%. With a 1.1‑point gain, TVA Network continued growing its audience, as did the specialty channels, which posted a 1.0‑point increase, driven by a 2.2‑point surge by LCN, which rose to a record 6.9% market share and remained the most‑watched specialty channel in Quebec, concluded France Lauzière.
In May 2020, in line with our longstanding commitment to supporting Québec culture, we launched our new QUB musique streaming platform, designed and produced entirely in Québec and focused on Québec artists, said Pierre Karl Péladeau.
QUB musique can be accessed via a mobile app or on the Web. It offers an impressive world‑class catalogue of 50 million tracks, available on demand, as well as hundreds of playlists designed to meet Quebecers’ tastes and needs. In this time of crisis, it is more important than ever to support our artists, and there is no better way than to listen to Québec music. That is why we moved up the launch of QUB musique. We also plan to give Videotron’s mobile telephony customers the full benefit of the service by offering them an attractive reduction on the subscription fee.
Our roots in Québec society go deep. We are acutely aware of the myriad social and economic challenges Quebecers face today. To reduce the isolation of youths with difficulties and seniors in long‑term care facilities, we donated 1,000 smartphones with unlimited data plans. In partnership with the Government of Québec and Télé-Québec, we also broadcast the television event Une chance qu'on s’a on TVA channel, featuring a roster of artists who came together to raise $2.0 million for organizations working with seniors and victims of domestic violence. We also awarded four Pierre Péladeau Bursaries: $100,000 for the Boomerang project, which fights food waste, $50,000 for the Eyful project, which is developing glasses for people with visual impairments, $35,000 for the Aleo VR project, a virtual‑reality pedagogical tool, and $15,000 for the Évéa project, which leases second‑hand clothing for babies and small children. Finally, in association with the Fondation Chopin‑Péladeau, we are proud to contribute to important initiatives such as La tablée des chefs, which is helping Québec food banks at a time when they are in greater need than ever. All these efforts are in keeping with Quebecor’s longstanding philosophy of important social engagement, true to the legacy of our founder Pierre Péladeau, Pierre Karl Péladeau said.
As long as the uncertainty about the full extent and duration of the pandemic continues, we will monitor the impact of the crisis on an ongoing basis and take appropriate action, as needed. As well, as a major corporate citizen and Québec leader in telecommunications, news and entertainment, we will continue to play our role by supporting our employees, customers and business partners, and in making sure Quebecers continue to receive all the services they need. I sincerely thank our employees, and especially our customer‑facing staff and I salute their dedication to Quebecers at this difficult time, Pierre Karl Péladeau concluded.
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.