Astral reports strong first quarter results for Fiscal 2013

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Jan 10, 2013, 07:55 ET

7% increase in net earnings¹
5% increase in diluted EPS¹
4% increase in EBITDA²

MONTREAL, Jan. 10, 2013 /CNW Telbec/ - Astral Media Inc. (TSX: ACM.A ACM.B) today reported its financial results for the first quarter ended November 30, 2012, which saw continued growth in net earnings¹, EPS¹, EBITDA², revenues and cash flow from operations².

In the first quarter, consolidated net earnings¹ rose 7% to $59.6 million from $55.8 million for the same period last year, while diluted earnings per share¹ increased by 5% to $1.05 from $1.00 last year. EBITDA² grew 4% to $93.7 million from $90.4 million last year, while consolidated revenues totalled $274.5 million, an increase of 1% over the $271.1 million recorded last year for the same period. Cash flow from operations at $69.2 million is slightly above last year's figure of $69.0 million.

"I am very pleased with our Company's consolidated and segmented performance in the first quarter of Fiscal 2013, marking the single largest quarter in the Company's history" said Ian Greenberg, President and Chief Executive Officer. "Our relentless focus on delivering better value to advertisers and consumers combined with the discipline that defines Astral's decision-making approach provide us with the optimal strategy to reach our objectives and continue to deliver balanced growth across our diversified asset portfolio."

BELL-ASTRAL TRANSACTION³
On March 16, 2012, the Company announced that it entered into a definitive agreement with BCE Inc. ("Bell") for the sale of its business through the acquisition of all of its issued and outstanding shares. Following the October 18, 2012 decision of the CRTC to deny Bell's application to acquire the control of the Company, the Company and Bell announced on November 19, 2012 that they have amended the arrangement agreement signed on March 16, 2012 and submitted a new proposal to the CRTC for approval of Bell's acquisition of the Company.

As a result of the amendments made to the terms of the arrangement agreement: (i) the outside date for the closing of the transaction has been extended to June 1, 2013, with each of the Company and Bell having a further right to postpone it to July 31, 2013, (ii) Bell's regulatory covenants have been modified, and (iii) the Company's Board of directors has declared a cash dividend of $0.50 per share on its class A non-voting shares and class B subordinate voting shares, payable on February 1, 2013 to shareholders of record at the close of business on January 15, 2013. The consideration payable to the Company's shareholders remains unchanged under the amended arrangement agreement. The Bell-Astral Transaction is subject to closing conditions, including regulatory approvals from the CRTC and the Competition Bureau. There can be no assurance that the Bell-Astral Transaction will occur, or that it will occur on the terms and conditions currently contemplated.

SEGMENTED FINANCIAL AND OPERATIONAL HIGHLIGHTS

Television

Revenue growth of 2%;
EBITDA² growth of 5%;
EBITDA margin² of 39.3%, up from 38.2% for the same period last year.

Radio

Revenue growth of 1%;
EBITDA²growth of 1%;
EBITDA margin² of 31.3%, consistent with last year;
Prior to the beginning of the first quarter, rebranding of two stations in London and Winnipeg to the prestigious Virgin Radio brand, bringing the total of Astral Virgin Radio stations to seven;
On November 23, inauguration of Canada's largest private radio broadcasting centre with five Astral French- and English-language stations under the same roof in Montréal.

Out-of-Home

Revenue growth of 2%;
EBITDA² growth of 1%;
EBITDA margin² of 40.0%, consistent with last year;
In September, launch of a brand new network of 30 urban Digital Columns in the heart of downtown Montréal;
Announcement of the addition of 6 new Digital faces by February 2013 on Toronto's Gardiner Expressway, bringing Astral's popular national Digital Network to 49 faces.

Corporate

Over the course of the first quarter, the Company repaid $7.0 million of its long-term debt, bringing its Net Debt and leverage ratio just below $356.0 million and 1.1 respectively;
Astral announced in November a cash dividend of $0.50 per share on its class A non-voting shares and class B subordinate voting shares, payable on February 1, 2013.

The unaudited interim condensed consolidated financial statements and related notes and Management's Discussion and Analysis are available on the Company's website: astral.com.

There will be a conference call with analysts and media at 10:30 a.m. ET on Thursday, January 10, 2013. To access the conference call dial 1-800-731-5319. The conference call will also be broadcasted live and archived for a three-month period on the Astral website at astral.com.

Astral is one of Canada's largest media companies. It operates several of the country's most popular pay and specialty television, radio, out-of-home advertising and digital media properties. Astral plays a central role in community life across the country by offering diverse, rich and vibrant programming that meets the tastes and needs of consumers and advertisers. To learn more about Astral, visit astral.com.

This press release contains certain forward-looking statements concerning the future performance of the Company. These forward-looking statements are based on current expectations. We caution that all forward-looking information is inherently uncertain and actual results may differ materially from the assumptions, estimates or expectations reflected or contained in the forward-looking information, and that actual future performance will be affected by a number of factors, including technological change, economic conditions, regulatory change, competitive factors and changes in accounting rules or standards, many of which are beyond the Company's control. We disclaim any intention or obligation to update or revise any forward-looking statements.

1. Excluding Bell-Astral transaction costs. See "Additional IFRS and Non-IFRS Measures" in Appendix 1.
2. For more details, see "Additional IFRS and Non-IFRS Measures" in Appendix 1.
3. For more details, see the "Bell-Astral Transaction" section in the Management's Discussion and Analysis for the periods ended November 30, 2012 and 2011 and the press release issued by the Company on November 19, 2012.

ASTRAL MEDIA INC.
Interim Consolidated Statements of Earnings
for the three months ended
(in thousands of Canadian dollars except for per-share data)
(unaudited)


		November 30
			2012		2011

Revenues		$	274,465	$	271,100

Operating expenses			180,811		180,699
Depreciation of property, plant and equipment			6,931		7,506
Amortization of other intangible and non-current assets			2,363		1,962
Financial expense, net			2,836		3,953
Bell-Astral Transaction costs			660		-

Earnings before income taxes			80,864		76,980

Income tax expense			21,759		21,224

Net earnings		$	59,105	$	55,756

Earnings per share
	- Basic	$	1.06	$	1.01
	- Diluted	$	1.04	$	1.00

ASTRAL MEDIA INC.
Interim Consolidated Statements of Comprehensive Income
for the three months ended
(in thousands of Canadian dollars)
(unaudited)


		November 30
			2012		2011

Net earnings		$	59,105	$	55,756
Item that is never subsequently reclassified to statements of earnings
	Actuarial loss on employee future benefit plans, net of income tax recovery of $1.8 million and $2.4 million respectively		(4,830)		(6,772)
Item that may be subsequently reclassified to statements of earnings
	Change in fair value of derivatives designated as cash flow hedges, net of income tax expense (recovery) of ($0.2 million) and $0.1 million respectively		(663)		110

Other comprehensive loss			(5,493)		(6,662)
Comprehensive income		$	53,612	$	49,094

ASTRAL MEDIA INC.
Interim Consolidated Statements of Cash Flows
for the three months ended
(in thousands of Canadian dollars)
(unaudited)


			November 30,
				2012		2011

OPERATING ACTIVITIES
	Net earnings		$	59,105	$	55,756

	Non-cash items:
		Stock-based compensation costs		2,098		2,152
		Depreciation and amortization		9,294		9,468
		Imputed interest, net		288		259
		Amortization of deferred financing costs		281		205
		Deferred tax expense (recovery)		(1,902)		1,122

	Cash flows from operations			69,164		68,962

	Net change in non-cash operating items			(44,841)		(45,111)

Cash provided by operating activities				24,323		23,851

INVESTING ACTIVITIES
	Additions to property, plant and equipment			(9,708)		(5,574)
	Additions to other intangible and non-current assets			(999)		(952)
Cash used for investing activities				(10,707)		(6,526)

FINANCING ACTIVITIES
	Repayment of long-term debt			(7,000)		(10,000)
	Deferred financing costs			-		(2,011)
	Stock options exercised			1,702		3,110
	Shares repurchased			-		(7,757)
Cash used for financing activities				(5,298)		(16,658)
Net change in cash				8,318		667
Cash - beginning of period				20,892		22,653
Cash - end of period			$	29,210	$	23,320

ASTRAL MEDIA INC.
Interim Consolidated Balance Sheets as at
(in thousands of Canadian dollars)
(unaudited)


		November 30, 2012		August 31, 2012
ASSETS

Current
	Cash	$	29,210	$	20,892
	Accounts receivable		193,823		174,384
	Program and film rights		123,080		114,753
	Prepaid expenses and other current assets		41,861		29,007
			387,974		339,036

Program and film rights			52,588		51,208
Property, plant and equipment			209,824		210,035
Broadcast licences			1,631,307		1,631,307
Goodwill			118,489		118,489
Other intangible and non-current assets			63,178		64,750
Non-current financial assets			15,491		16,084
Deferred tax assets			40,530		34,582
		$	2,519,381	$	2,465,491

LIABILITIES

Current
	Accounts payable and accrued liabilities	$	150,184	$	141,729
	Provisions		3,208		5,319
	Income taxes payable		20,408		15,531
	Program and film rights payable		74,744		63,619
			248,544		226,198

Long-term debt			383,419		390,138
Deferred tax liabilities			133,422		131,377
Program and film rights payable			9,877		7,446
Provisions			6,305		6,717
Other non-current liabilities			80,935		76,556
Other non-current financial liabilities			9,351		8,466
			871,853		846,898

SHAREHOLDERS' EQUITY

Capital stock			783,133		778,548
Contributed surplus			19,199		20,445
Retained earnings			845,729		819,470
Accumulated other comprehensive income (loss)			(533)		130
			845,196		819,600
			1,647,528		1,618,593
		$	2,519,381	$	2,465,491

ASTRAL MEDIA INC.
Business Segments
for the three months ended November 30,
(in thousands of Canadian dollars)
(unaudited)


		2012		2011

REVENUES

Television	$	155,827	$	153,552
Radio		88,786		88,291
Out-of-Home		29,852		29,257

	$	274,465	$	271,100

EBITDA⁽¹⁾

Television	$	61,251	$	58,608
Radio		27,773		27,591
Out-of-Home		11,935		11,835
Corporate		(7,305)		(7,633)

	$	93,654	$	90,401

⁽¹⁾ See Appendix 1.

ASTRAL MEDIA INC.
Appendix 1
Additional IFRS and Non-IFRS Measures
for the periods ended November 30, 2012 and 2011
(unaudited)

In addition to discussing earnings measures in accordance with International Financial Reporting Standards ("IFRS"), this press release provides the following additional IFRS and non-IFRS measures which are also factors used by the Company's management and Board of Directors in monitoring and evaluating the performance of the Company and its business segments:

Additional IFRS Measure

Cash flow from operations is defined as cash provided by operating activities before the net change in non-cash operating items. This measure provides an indication of the Company's ability to generate cash flows without considering certain timing and other factors causing variations in non-cash operating items.

Non-IFRS Measures

EBITDA (earnings before interest, taxes, depreciation and amortization) is provided to assist investors in determining the ability of the Company to generate cash flow from operating activities and to cover financial charges. Other items such as Bell-Astral Transaction costs are also excluded from earnings in the determination of EBITDA as they are not considered to be in the ordinary course of business. EBITDA is also an indicator widely used for business valuation purposes. EBITDA margin is defined as the ratio obtained by dividing EBITDA by revenues. The following table reconciles IFRS measures disclosed in the unaudited interim consolidated statements of earnings for the periods ended November 30, 2012 and 2011 to EBITDA:

	November 30
(in thousands of $)	2012	2011
	("Fiscal 2013")	("Fiscal 2012")

Earnings before income taxes	80,864	76,980
Depreciation and amortization	9,294	9,468
Financial expense, net	2,836	3,953
Bell-Astral Transaction costs	660	-
EBITDA	93,654	90,401

Net earnings and diluted earnings per share before Bell-Astral Transaction costs. These measures provide an indication of the Company's ability to generate earnings from its ongoing operations, by excluding some items such as Bell-Astral Transaction costs as they are not considered to be in the ordinary course of business.

The following tables reconcile IFRS measures disclosed in the unaudited interim consolidated statements of earnings for the periods ended November 30 2012 and 2011 to net earnings and diluted earnings per share before Bell-Astral Transaction costs:

	November 30
(in thousands of $)	2012	2011

Net earnings	59,105	55,756
Bell-Astral Transaction costs, net of income taxes	484	-
Net earnings before Bell-Astral Transaction costs	59,589	55,756

	November 30
(in dollars)	2012	2011

Diluted earnings per share	1.04	1.00
Bell-Astral Transaction costs, net of income taxes	0.01	-
Diluted earnings per share before Bell-Astral Transaction costs	1.05	1.00

The above additional IFRS and non-IFRS measures do not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.

SOURCE: Astral Media Inc.