Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported its consolidated financial results for the first quarter of 2017 and announced a 22.2% increase in its quarterly dividend. Quebecor consolidates the financial results of its Quebecor Media Inc. (“Quebecor Media”) subsidiary, in which it holds an 81.1% interest.
First quarter 2017
- Revenues: $996.4 million, up $21.0 million (2.2%) from the same period of 2016.
- Adjusted operating income: $365.1 million, up $10.4 million (2.9%).
- Net loss attributable to shareholders: $0.2 million in the first quarter of 2017, compared with net income attributable to shareholders of $69.9 million ($0.57 per basic share) in the same period of 2016, an unfavourable variance of $70.1 million ($0.57 per basic share), including the $80.5 million unfavourable impact of losses and gains on embedded derivatives related to convertible debentures.
- Adjusted income from continuing operating activities: $70.9 million ($0.58 per basic share) in the first quarter of 2017, compared with $67.7 million ($0.55 per basic share) in the same period of 2016, an increase of $3.2 million ($0.03 per basic share) or 4.7%.
- Quarterly dividend on the Corporation’s Class A Multiple Voting Shares (“Class A Shares”) and Class B Subordinate Voting Shares (“Class B Shares”) increased 22.2% from $0.045 to $0.055 per share.
- Telecommunications segment grew its revenues by $27.4 million (3.5%) and its adjusted operating income by $18.4 million (5.1%) in the first quarter of 2017.
- Videotron Ltd. (“Videotron”) significantly increased its quarterly revenues from mobile telephony ($26.5 million or 22.8%), Internet access ($8.8 million or 3.6%), business solutions ($5.8 million or 22.7%), and the Club illico over-the-top video service (“Club illico”) ($1.3 million or 16.9%).
- Videotron’s average monthly revenue per user (“ARPU”) up $8.11 (5.7%) from $141.37 in the first quarter of 2016 to $149.48 in the first quarter of 2017.
- Net increase of 30,000 revenue-generating units1 (0.5%) in the first quarter of 2017, including 27,000 connections to the mobile telephony service, 15,300 subscriptions to the cable Internet access service and 9,800 memberships in Club illico.
Videotron, which is now positioned as one of the leading mobile carriers in Québec, posted another excellent performance. The steady uptrend in Videotron’s numbers has been driven by its high-growth products and services, led by mobile telephony, Internet access, business solutions and Club illico
During the 12-month period ended March 31, 2017, our mobile telephony service added 125,200 subscriber connections, a 15.7% increase, commented Manon Brouillette, President and Chief Executive Officer of Videotron.
Those gains were realized while we exhibited a significant growth of our mobile service’s ARPU to $52.64 in the first quarter of 2017, up 6.0% year over year. Videotron’s cable Internet access service increased its subscriber base by 50,000 or 3.2% in the 12-month period ended March 31, 2017, the largest 12‑month growth since 2013. Videotron Business Solutions also continued to grow, demonstrating the soundness of our strategic decision to invest in our data centres and Fibrenoire inc. We can now assemble and offer a full line of products and services for the benefit of our business customers in Québec.
Lastly, Videotron was ranked the most respected telecommunications company in Québec for the 12th consecutive year. Being part of the daily lives of millions of households and businesses across Québec that place their trust in us, we have built a strong relationship with our customers. We are gratified by our top ranking, which we owe to our 6,500 dedicated employees.
In the Media segment, the broadcasting business increased its revenues by $4.8 million or 4.5% and improved its adjusted operating income by $4.6 million, observed Julie Tremblay, President and Chief Executive Officer of Media Group.
The positive results reflect the impact of higher subscription revenues at TVA Sports, higher advertising revenues at TVA Network and TVA Sports, and cost reductions yielded by restructuring initiatives. It is the second consecutive quarter of year-over-year increases in advertising revenues for TVA Network, indicating the positive impact of our programming strategy, the value of our content and the effectiveness of our multiplatform offerings. However, the Media segment’s overall results were impacted by decreased revenues and adjusted operating income from film production and audiovisual services, which had unusually high volume in the first quarter of 2016. Meanwhile, cost‑cutting initiatives in the magazine publishing business paid off and mitigated the negative impact of the revenue decrease. We are continuing our efforts to reduce operating expenses and are working on a plan to promote our strongest mastheads in order to improve the profitability of the magazine business.
On the business development front, Quebecor’s Media Group formed a partnership with Tuango Inc. (“Tuango”), Québec’s largest online promotional network. Under the agreement, Quebecor’s Media Group will be able to sell advertising space in its media properties in exchange for goods and services, from which it will be able to derive revenues by reselling them on Tuango, Ms. Tremblay added.
In the Sports and Entertainment segment, Event Management Gestev inc. (“Gestev”) announced the acquisition of Wasabi atelier expérientiel on April 4, 2017. The transaction expands Gestev’s experiential marketing and sponsorship activation capabilities and extends its reach in the Montréal market.
Quebecor Media and Videotron have carried out a number of financial transactions since the end of 2016.
The redemption of Senior Notes and issuance of Notes at more advantageous interest rates will generate approximately $15.0 million in annual savings in interest on the debt, said Jean-François Pruneau, Senior Vice President and Chief Financial Officer of Quebecor.
In the first quarter, Quebecor’s net income was affected by an unfavourable variance related to convertible debentures, caused by the 9.9% increase in the price of Quebecor shares in the first three months of 2017.
The Board of Directors of Quebecor reviewed its dividend payment policy again. In view of the Corporation’s financial profile, including its capacity to generate cash flows and its strong balance sheet, the Board approved a 22.2% increase in the quarterly dividend on Class A and Class B shares from $0.045 to $0.055. Since the first quarter of 2015, the quarterly dividend has been hiked three times, adding up to a cumulative 120.0% increase for the Corporation’s shareholders.
We remain very upbeat about the Corporation’s cash flow growth prospects, said Jean‑François Pruneau.
The Corporation is reaping the benefits of its investments of recent years in activities with high growth and profitability potential and remains in an excellent position to create shareholder value, concluded Pierre Karl Péladeau.
1 The sum of subscriptions to the cable television, cable Internet access and Club illico services, plus subscriber connections to the cable and mobile telephony services.
For more details and to consult definitions of "adjusted operating income", "adjusted income from continuing operating activities" and "average monthly revenue per user", please refer to the attached PDF file for the complete version of the press release.
Senior Vice President and Chief Financial Officer
Quebecor Inc. and Quebecor Media Inc.
Vice President, Public Affairs
Quebecor Media Inc.