- Investment in Facility Upgrade Projects Completed On Time and On Budget -
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||Q3 2013||Q3 2012||Change|
|Net loss before taxes||$(2,049)||$(1,613)||(27%)|
|Net loss after taxes||$(1,606)||$(1,164)||(38%)|
|Net loss per share (FD)||$(0.12)||$(0.09)||(33%)|
|Sept. 30, 2013||Sept. 30, 2012|
|Cash and cash equivalents||$7,812||$10,661||(27%)|
|Total interest bearing debt||$41,097||$40,515||1%|
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 bank loan;
- 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 quarter;
- 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