Mr. Jean Bedard reports
SPORTSCENE GROUP REPORTS ITS SECOND QUARTER RESULTS FOR FISCAL 2021
Sportscene Group Inc. has released its financial results for the second quarter ended Feb. 28, 2021.
"The strength of our growing retail sales, the support of various government assistance programs, the increasing appeal of our off-site dining offering and the implementation of liquidity preservation measures have allowed us to maintain our financial health and borrowing capacity," said Jean Bedard, president and chief executive officer. "As we wait for this health crisis to be behind us, we are dedicated to growing our off-site dining and retail activities and to continuously improve our business."
Financial performance for the second quarter ended Feb. 28, 2021
Because of the COVID-19 pandemic, which resulted in the slowdown of the restaurant, franchising and other segments, Sportscene's consolidated revenues decreased by 59.8 per cent from the equivalent quarter of the previous fiscal year to $13.9-million. Revenues from restaurant activities decreased by 85.8 per cent to $3.6-million, primarily from the complete closure of dining rooms during the majority of the quarter. Revenues from retail activities have grown by 68.5 per cent to reach $9.3-million. This growth is mainly due to the expansion of the distribution network with new grocery stores during the second half of 2020.
Consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (1) for the second quarter stood at $900,000, representing a reduction of 78.3 per cent. Despite the decline in consolidated revenues, the effect on the consolidated adjusted EBITDA (1) was partially mitigated by the support of various government aid programs, growing revenues from retail activities and significant efforts dedicated to reduce expenses. Adjusted EBITDA from restaurant activities was down 88.2 per cent to $400,000. Adjusted EBITDA from retail activities stood at $1.0-million, up from a negligible amount, which helped mitigate the effect of the decline in the profitability of franchising and other activities.
Sportscene ended the second quarter of fiscal 2021 with a net loss of $900,000 or 11 cents per share, compared with net income of $700,000 or nine cents per share in the equivalent quarter of the previous fiscal year.
Financial performance for the first semester ended Feb. 28, 2021
Sportscene's cumulative consolidated revenues decreased by 62.4 per cent from the first semester of the previous fiscal year to $27.5-million. The COVID-19 pandemic and associated public health measures imposed resulted in an important slowdown of the restaurant, franchising and other segments. However, revenues from retail activities have grown by 49.6 per cent because of the same reasons explained above.
The cumulative consolidated adjusted EBITDA (1) in the first semester was $2.8-million, representing a reduction of 69.3 per cent, and is explained by the same situation, which resulted in a lower consolidated adjusted EBITDA (1) in the second quarter.
Sportscene ended the first half of fiscal 2021 with a net loss of $1.4-million, or 16 cents per share (basic and diluted), compared with a net income of $2.4-million, or 29 cents per basic share (28 cents, diluted) in the equivalent period of the previous fiscal year.
Outlook
Recent evolution of the lockdown measures and their effect on the network of restaurants
During the 13-week period ended Feb. 28, 2021, revenues from corporate and joint venture restaurants were limited almost exclusively to off-site dining activities due to the sanitary measures in place. Since most franchisees operate in orange zones, they were able to benefit from on-site dinning revenues during a limited number of weeks in the quarter. Despite the gradual reopening of dining rooms allowed in certain regions of Quebec since Feb. 8, 2021, Sportscene's restaurant activities continue to be greatly disrupted and will continue to be for the next few quarters.
For several months, the company has been preparing the reopening of its dining rooms to ensure that the customer experience is as pleasant and safe as possible in this new operational context. It has notably implemented the best sanitary measures and, in line with its local sourcing strategy, has worked to improve the range and quality of wines, cocktails and desserts offered. Some structural challenges await the company, including the availability of employees, which it intends to address with a new recruitment campaign and by building on the strength of its employer brand.
Mitigation and diversification measures
Recent developments affecting the restaurant industry and the population as a whole will continue to have an impact on the company's operations in the short and medium term. Although the duration of the pandemic and its longer-term effect on the economy are still difficult to predict as of the date of this report, the company continues to work to ensure the optimization of its network and operations based on the eventual reopening of its restaurants. As a result of prudent management of expenses and cash flow, the total debt net of cash has remained at similar levels since the start of fiscal 2021.
Sportscene's diversification strategy has allowed the company to maintain a certain level of activity and revenues and mitigated the impact of the pandemic on its financial results. Considering the growing appeal of off-premise dining, important efforts will continue to be dedicated to the promotion of the La Cage-Chez vous at-home dining offering and to further expand the retail activities.
With the gradual reopening of dining rooms in certain of establishments, Sportscene is working to ensure that the sanitary measures in place exceed all requirements and continues to adapt its menu to this new operating context. These measures are aligned with Sportscene's constant pursuit to improve its customer and employee experience.
About Sportscene Group Inc.
Sportscene is a pioneer and leader in the ambiance restaurant niche in Quebec. Since 1984, it has been operating the La Cage-Brasserie Sportive restaurant chain, differentiated by its sporting ambiance and food made from fresh, local products. The La Cage banner enjoys a strong brand image and is present throughout the province, currently with 38 outlets. Sportscene is diversifying its restaurant activities, notably through its operation of P.F. Chang's, an Asian cuisine restaurant, and its catering business for special events, thus becoming a significant player in Quebec's restaurant industry. Besides its restaurant operations, Sportscene is active in the sale of La Cage and Moishes branded products in grocery stores, ready-to-eat meals, and ready-to-cook boxes.
(1)
Consolidated adjusted EBITDA corresponds to earnings before financial expenses, amortization, net loss (income) of joint ventures and income taxes from which other (gains) losses are excluded and to which the share of earnings before financial expenses, amortization and income tax of joint ventures is added.
For further information regarding the results and financial position of Sportscene, refer to the interim management report, as well as the interim condensed consolidated financial statements and accompanying notes for the 13- and 26-week periods ended Feb. 28, 2021, which are available on SEDAR.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands of dollars, except for earnings per share)
13-week periods ended 26-week periods ended
Feb. 28, Feb. 23, Feb. 28, Feb. 23,
2021 2020 2021 2020
Revenues $13,932 $34,678 $27,497 $73,051
Cost of sales 9,333 12,533 16,693 26,818
Selling and administrative expenses, excluding amortization 4,275 18,441 9,189 37,801
Other (gains) losses (1) (489) 173 (412) (310)
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Earnings before financial expenses, amortization, net loss
(income) of joint ventures and income tax 813 3,531 2,027 8,742
Amortization 1,462 2,432 2,953 4,845
Financial expenses 377 505 728 1,048
Net loss (income) of joint ventures 136 (358) 140 (410)
--------- --------- --------- ---------
1,975 2,579 3,821 5,483
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Income before income tax (1,162) 952 (1,794) 3,259
Income tax (recovery) expense (273) 220 (444) 819
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Net and comprehensive income (889) 732 (1,350) 2,440
========= ========= ========= =========
Net and comprehensive income (loss) attributable to
The company's shareholders (896) 741 (1,336) 2,444
Non-controlling interests 7 (9) (14) (4)
--------- --------- --------- ---------
Net and comprehensive income (889) 732 (1,350) 2,440
========= ========= ========= =========
Earnings per share (in dollars)
Basic (0.11) 0.09 (0.16) 0.29
Diluted (0.11) 0.09 (0.16) 0.28
(1) Other (gains) losses include gains/losses on the disposal of property, plant and equipment, loss on
impairment of non-current assets, gains on business combinations, and gain on disposal of investments
in joint ventures. For further details, see Note 7 accompanying the interim condensed consolidated
financial statements.
We seek Safe Harbor.
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