Canlan Reports Second Quarter 2013 Financial Results and Continuation of Dividend Payment

- Quarter Highlighted by Significant Investment to Upgrade Facilities -

BURNABY, BC, Aug. 14, 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 six-month periods ended June 30, 2013.

Q2 2013 Key Financial Metrics

In thousands except share data	Q2 2013	Q2 2012	Change
Total revenue	$16,078	$16,109	-0.2%
EBITDA^1	$(362)	$332	-209%
Net earnings before taxes	$(2,331)	$(1,600)	-46%
Net earnings after taxes	$(1,765)	$(1,213)	-46%
Net earnings per share (FD)	$(0.13)	$(0.09)	-44%
	June 30, 2013	June 30, 2012
Total assets	$99,284	$100,499	-1.2%
Cash and cash equivalents	$5,067	$9,672	-48%
Total interest bearing debt	$38,633	$41,228	-6.3%

"Revenue growth at our US facilities, an increase in sponsorship revenue and continuing incremental growth at our multi-sport Sportsplex in Mississauga were offset by the impact of less availability of ice surface inventory for rent as we execute on a major planned investment at several facilities," said Joey St-Aubin, President and CEO of Canlan Ice Sports. "Our results for the quarter were also impacted by increased competitive pressure in the Greater Toronto Area for our summer leagues. We are focused on optimizing our product mix and promotions to drive league registrations for the upcoming Fall/Winter season. The Adult Safe Hockey League (ASHL), with more than 60,000 participants across North America, is a premier brand and we remain confident in the value proposition that it offers our customers."

"This summer, we are investing approximately $7 million in major capital projects to upgrade our facilities.  This will be the largest reinvestment of capital in our assets since 1995.   Furthermore, we incurred an additional $0.4 million in operating costs to repair and maintain our properties over the prior year." said Michael Gellard, CFO. "While this investment has a short-term impact on our results and cash balances, maintaining and improving our facilities is essential to our competitive position in the market and benefits our business over the long term."

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¹ Earnings before interest, taxes, depreciation and amortization (EBITDA) is 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.

Q2 2013 Operational and Financial Highlights

• Total revenue of $16.1 million remained steady with 2012;
• Increased repairs and maintenance costs coupled with partial closure of two facilities under significant renovation resulted in a loss before interest, taxes, depreciation and amortization of $0.4 million, compared to positive EBITDA of $0.3 million in 2012;
• Net loss was $1.8 million, or $0.13 per share, compared to net loss of $1.2 million, or $0.09 per share, in the prior year;
• Extensive re-investment in three of our existing facilities commenced at Les 4 Glaces in Quebec, Burnaby 8Rinks and Ice Sports Winnipeg. The planned renovations of $7.0 million consist of significant projects to improve plant and equipment efficiency and upgrade ice conditions and amenities to superior standards that meet or exceed customer expectations;
• Completed construction of a new outdoor sport court at Ice Sports Scarborough.

Dividend Policy
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 October 15, 2013 to shareholders of record at the close of business on September 27, 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 Q2 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.

Revenue of $16.1 million for the second quarter was consistent with the prior year. Internal programs and rentals generated $10.6 million of this total, which was also consistent with the prior year. Revenue was driven by incremental growth in our US facilities, contract ice rentals and sponsorship revenue, but was dampened by decreased youth and adult league revenue in Greater Toronto Area (GTA) markets, which was affected by price sensitivities and competition, as well as reduced sales at Burnaby 8Rinks in B.C. and Les 4 Glaces in Quebec, which were partially closed to undergo extensive renovations. Focus is being placed on product mix and promotions to leverage the ASHL brand and bolster league registrations for the upcoming Fall/Winter season.

On a six-month basis, Canlan generated revenue of $36.7 million, down 1.4% from $37.3 from 2012. The decrease in ice and field revenue was driven by the factors mentioned above, as well as by the termination of a 50-team satellite Fall/Winter ASHL league in Hamilton, Ontario 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 three of the GTA facilities, incremental revenue generated by the multi-sport Canlan Sportsplex, revenue growth in the US 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. Sponsorship revenue increased by $0.1 million for the quarter, or 34.7% compared to the prior year, due to sponsorship revenue generated from the NAC tournament.

On a quarterly basis, revenue from sports stores, space rental, vending and facility management fees remained consistent with the prior year. On a six-month basis, sports store revenue of $1.0 million also remained consistent with the prior year. Canlan operates sports stores in eight facilities that sell equipment, apparel and skate sharpening services. Six-month revenue from space rental, vending and management and consulting fees totaled $0.8 million, compared to $0.9 million in the prior year.

Food & beverage revenue for the second quarter was $2.7 million, down $0.2 million, or 7.5%, from 2012. For the six-month period, food & beverage revenue was $5.8 million, down $0.3 million, or 5.7%, from the previous year. The decrease was mainly due to reduced summer league traffic in Ontario and in the two facilities being renovated.

Total direct operating costs of $15.2 million for the quarter increased by $0.7 million, or 4.9% compared to the prior year, due to higher repair and maintenance costs, prizing and marketing costs incurred by the Tournament Division, and $0.1 million in expenses incurred to host the NAC event. The largest repair and maintenance project during the quarter was a $0.2 million parking lot improvement at the Scarborough facility. Total direct operating costs of $30.0 million for the six-month period increased by $0.4 million, or 1.2%, compared to 2012. The increase was mainly attributable to general wage increments, an increase in selling and customer service expenses, and the costs noted above.

Corporate general and administration costs for the quarter of $1.2 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 six-month period were $2.4 million, down 3.7% compared to the same period in 2012. Included in corporate general and administration are costs related to management support services to all Ice Sports facilities, including accounting, marketing, operations, IT support, human resources and costs related to the Partnership Solutions division.

Loss before interest, taxes, depreciation and amortization in the quarter was $0.4 million compared to EBITDA of $0.3 million a year ago. EBITDA for the six-month period ended June 30 was $4.3 million, which decreased $0.8 million, or 15.5%, from 2012.

Interest expense related to term debt and finance leases for the second quarter totaled $0.6 million, compared to $0.7 million in 2012, due to reduced debt levels. After recording depreciation of $1.4 million and income tax recovery of a $0.6 million, the net loss for the quarter was $1.8 million, or $0.13 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 totaled $1.2 million for the six-month period, compared to $1.3 million in the previous year. After recording depreciation of $2.7 million and income tax expense of $0.1 million, net earnings for the six-month period was $0.3 million, or $0.02 per share, compared to $0.7 million, or $0.05 per share, in 2012.

Total interest-bearing debt, which includes mortgages payable and capital leases, totaled $38.6 million at June 30, 2013, down $0.4 million from December 31, 2012. This decrease is a result of a combination of scheduled debt repayments and additional leases to finance ice resurfacing, plant, and kitchen equipment.

Canlan's financial statements and Management's Discussion & Analysis for the period ended June 30, 2013 will be available via SEDAR on or before August 14, 2013 and through the Company's website, www.icesports.com.

About Canlan
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.

Canlan Ice Sports Corp.
Michael F. Gellard
Senior Vice President & CFO
604-736-9152

TMX Equicom
Frank Condron
416-815-0700 ext. 233
[email protected]