- Investment in Facility Upgrade Projects Completed On Time and On
BURNABY, BC, Nov. 13, 2013 /CNW/ - Canlan Ice Sports Corp. (TSX: ICE), an industry-leading provider of recreational and multi-sport
facilities across North America, today announced its financial results
for the three- and nine-month periods ended September 30, 2013.
Q3 2013 Key Financial Metrics
In thousands except share data
Net loss before taxes
Net loss after taxes
Net loss per share (FD)
Sept. 30, 2013
Sept. 30, 2012
Cash and cash equivalents
Total interest bearing debt
Q3 2013 Operational and Financial Highlights
Completion of three major renovation projects at Burnaby 8Rinks, Ice
Sports Winnipeg and Les 4 Glaces. These facilities all returned to
normal operations in September 2013;
The approximate total capital investment of $6.8 million in the
renovation projects is expected to improve plant and equipment
efficiency and upgrade ice conditions and amenities to superior
standards that meet or exceed customer expectations. The capital
investment was financed with surplus cash on hand and a $5.0 million
Total revenue was $15.1 million compared to $15.2 million in 2012; the
major renovation projects resulted in reduced ice-pad inventory, which
resulted in decreased revenue by approximately $0.6 million for the
Q3 EBITDA broke even compared to $0.2 million in 2012 due to partial
closure of the three renovated facilities;
Net loss was $1.6 million or $0.12 per share, compared to a net loss of
$1.2 million or $0.09 per share, in the prior year
"The third quarter was highlighted by the completion of significant
upgrades at facilities in three of our major markets—Burnaby 8Rinks in
B.C., Les 4 Glaces in Quebec and Winnipeg Ice Sports. These facility
enhancements, which are valued at approximately $6.8 million, improved
plant and equipment efficiencies and upgraded ice conditions and
amenities to superior standards," said Joey St-Aubin, President and CEO
of Canlan Ice Sports. "By enhancing the on- and off-ice customer
experience to meet or exceed customer expectations, we believe we will
generate increased customer loyalty. Combined with our premier ASHL
brand, which has more than 60,000 participants across North America, we
expect these improved assets will give us a significant advantage as
competition for the consumer's discretionary recreation dollar
continues to grow in our major markets. While the cost of these
improvements and the partial closure of the three facilities had an
impact on our results for the quarter, we believe this investment will
support continued growth and improve our competitive position as we
continue to execute on our long-term business strategy."
1 Earnings before interest, taxes, depreciation and amortization (EBITDA)
are often used as a measure of financial performance. However, EBITDA
is a not a term that has specific meaning in accordance with IFRS, and
may be calculated differently by other companies.
"Revenue was stable during the summer period, which benefitted from
growth in contract rentals and sales from our new Canlan Sportsplex in
Mississauga, Ont., but was dampened by a decrease in ASHL registrations
in the Greater Toronto Area. Lower registration was due to increased
competition in the GTA, and the reduction of available capacity at the
three facilities undergoing renovation," said Michael Gellard, CFO.
"These facility upgrades represent the largest reinvestment of capital
in our assets since 1995, and the long-term benefits of this investment
are expected to be significant. The facilities returned to full
operational capacity in September in time for the Fall/Winter hockey
season. Our business cycle is highly seasonal, with 56% of total
revenues and virtually all of the operating profit being generated in
the first and last quarters."
Canlan's Board of Directors has approved the continuation of the
Company's quarterly dividend policy and declared eligible dividends
totaling $0.02 per common share that will next be paid on January 15,
2014 to shareholders of record at the close of business on December 30,
2013. Canlan's Board of Directors reviews the Company's dividend policy
on a quarterly basis. Canlan's dividend is designated as an "eligible"
dividend under the Income Tax Act (Canada) and any corresponding
provincial legislation. Under this legislation, individuals resident in
Canada may be entitled to enhanced dividend tax credits, which reduce
income tax otherwise payable.
Review of Q3 and YTD 2013 Financial Results
Canlan derives its revenue from the rental of its playing surfaces,
registrations for internal programming, food and beverage sales, sports
stores sales, tournament registrations, sponsorship, management and
other related fees.
Canlan reported consolidated revenue of $15.1 million for the
three-month period ended September 30, 2013, compared with the same
period in 2012, decreasing by $0.1 million, or 0.9%. Internal programs
and rentals generated $11.4 million of this total, which was also
consistent with the prior year. Revenue growth during the third quarter
was driven by contract rentals and soccer and volleyball sales
generated by the Canlan Sportsplex facility in Mississauga, Ont.,
opened in October 2012, but offset by decreased Spring/Summer Adult
Safe Hockey League (ASHL) revenue in Greater Toronto markets where
facilities have been challenged with price sensitivities and
competition for discretionary recreation spending. In addition, sales
were impacted at Burnaby 8Rinks in B.C., Les 4 Glaces in Quebec and Ice
Sports Winnipeg during the third quarter as these facilities required
partial closures so extensive renovations and enhancements could be
completed. The reduced inventory resulted in decreased revenue of
approximately $0.6 million in Q3. To mitigate this impact, the Company
placed additional focus on product mix and promotions.
On a nine-month basis, Canlan generated revenue of $51.8 million, down
$0.7 million, or 1.2%, compared to the prior year. The decrease in ice
and field revenue was driven by slower sales in the GTA and the partial
closure of the three facilities that underwent major renovation
projects. In the GTA, price sensitivity and competition has affected
youth 3-on-3 and ASHL registrations. This was compounded by the
termination of two satellite ASHL leagues due to a lack of available
ice at a third-party arena. These decreases were partially offset by an
increase in contract ice revenue in the GTA facilities, incremental
revenue generated by the Canlan Sportsplex, revenue growth in the U.S.
facilities and an increase in sponsorship revenue generated from the
ASHL North America Championships (NAC) tournament (held in Calgary in
May, 2013) which runs every second year.
Food & beverage revenue of $2.1 million for the quarter was down
$84,000, or 3.8%, compared to the prior year. For the nine-month
period, food & beverage revenue was $7.9 million, down $0.4 million, or
5.2%, from the previous period in 2012. The decrease was principally
due to reduced summer ASHL traffic in the GTA and in the three
facilities being renovated.
On a quarterly basis, revenue from sponsorship, tournament operations,
sports stores, space rental, vending and facility management fees of
$1.5 million remained relatively consistent with the prior year. On a
nine-month basis, sports store revenue of $1.5 million also remained
consistent with the prior year. Canlan operates sports stores in eight
facilities that sell equipment, apparel and skate sharpening services.
Tournament operations generated $2.0 million in the first nine months
of the year, which represents an increase of $0.1 million from the
prior year due an increase in the number of tournaments and higher
sponsorship revenue. Nine-month revenue from space rental, vending and
management and consulting fees totaled $1.1 million, down $0.1 million
from the prior year.
Total direct operating costs of $14.2 million for the quarter increased
by $0.2 million, or 1.5% compared to 2012. This increase was mainly
attributable to general wage increments, higher utilities costs in the
GTA resulting from hydro surcharges, and selling and marketing costs
incurred by Canlan Sportsplex. These decreases were partially offset by
decreased repair and maintenance expenses.
Total direct operating costs of $44.2 million for the nine-month period
increased by $0.6 million, or 1.3%, compared to 2012. The increase was
mainly attributable to general wage increments, an increase in selling
and customer service expenses and repairs and maintenance costs.
Selling and customer service costs for the nine-month period increased
due to incremental expenses incurred at Canlan Sportsplex and expenses
incurred to host the ASHL NAC event in May.
Corporate general and administration costs for the quarter of $0.9
million decreased by $0.1 million compared to 2012. This was due to
reduced consulting fees that were incurred in the prior year for
one-time projects. Corporate general and administration costs for the
nine-month period were $3.3 million, which represented a 6.8% decline
from the same period in 2012.
After G&A expenses, EBITDA for the nine-month period ended September 30,
2013 was $4.3 million, which decreased by $1.0 million, or 18.8%, from
the same period in 2012.
Interest expense related to term debt and finance leases for the third
quarter totaled $0.6 million consistent with the prior year. After
recording depreciation of $1.5 million and income tax recovery of $0.4
million, net loss for Q3 was $1.6 million, or $0.12 per share, compared
to a loss of $1.2 million, or $0.09 per share, a year ago. Total
interest expense related to term debt and finance leases for the
nine-month period totaled $1.8 million, compared to $1.9 million in the
previous year. After recording depreciation of $4.1 million and income
tax expense of $0.3 million, net loss for the nine-month period was
$1.3 million, or $0.10 per share, compared to $0.5 million, or $0.04
per share, in 2012.
As of September 30, 2013, the Company held cash and cash equivalents of
$7.8 million. Interest-bearing debt, which includes mortgages payable
and capital leases, totaled $41.1 million as of September 30, 2013, an
increase of $2.1 million from December 31, 2012.
Canlan's financial statements and Management's Discussion & Analysis for
the period ended September 30, 2013 will be available via SEDAR on or
before November 14, 2013 and through the Company's website, www.icesports.com.
Canlan Ice Sports Corp. is the North American leader in the development,
operations and ownership of multi-purpose recreation and entertainment
facilities. We are the largest private-sector owner and operator of
recreational ice sports facilities in North America and currently own
and/or manage 18 facilities in Canada and the United States with 55 ice
surfaces, as well as indoor soccer fields, curling rinks, ball hockey
and volleyball courts. To learn more please visit www.icesports.com.
Canlan Ice Sports Corp. is listed on the Toronto Stock Exchange under
the symbol "ICE."
Caution concerning forward-looking statements
Certain statements in this MD&A may constitute ''forward looking''
statements which involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or
achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward looking statements. When used in this MD&A, such statements may
use such words as ''may'', ''will'', ''expect'', ''believe'', ''plan''
and other similar terminology. These statements reflect management's
current expectations regarding future events and operating performance
and speak only as of the date of this MD&A. These forward looking
statements involve a number of risks and uncertainties. Some of the
factors that could cause actual results to differ materially from those
expressed in or underlying such forward looking statements are the
effects of, as well as changes in: international, national and local
business and economic conditions; political or economic instability in
the Company's markets; competition; legislation and governmental
regulation; and accounting policies and practices. The foregoing list
of factors is not exhaustive.
SOURCE: Canlan Ice Sports Corp.
For further information:
Canlan Ice Sports Corp.
Michael F. Gellard
Senior Vice President & CFO
416-815-0700 ext. 233