Canlan Reports Continued Same Store Revenue Growth and Announces a 10% Increase of its Quarterly Dividend

Burnaby, British Columbia--(Newsfile Corp. - August 13, 2019) - Canlan Ice Sports Corp. (TSX: ICE) (the "Corporation") today reported its financial results for the second quarter ended June 30, 2019.

Same Store Analysis

On March 19, 2019, Canlan completed the purchase of an ice rink facility in Chicago, Illinois. The facility, called Ice Sports West Dundee, commenced operations as a Canlan facility in March 2019. On May 5, 2019, the Company's recreation facility located in Montreal, Quebec was closed and marketed for sale. This news release will refer to "same store" results, which excludes the results of these two facilities.

Overview of Q2 2019

• Same store revenue of $18.7 million increased by $0.7 million or 3.7% compared to 2018;

• Same store EBITDA of $0.7 million increased by $0.2 million compared to prior year but decreased by $0.2 million after excluding the effects of presentation changes related to adoption of IFRS 16 - Leases; and

• Swift progress is being made with the ramp-up of operations, including upgrades to the refrigeration plant and other equipment at the new Ice Sports West Dundee facility acquired in March 2019.

Three Months and Six Months Ended June 30, 2019 Results

		For the 3 months ended June 30						For the 6 months ended June 30
(in thousands)		2019			2018			2019			2018
Revenue	$	19,798		$	18,943		$	45,784		$	44,567
Operating expense before facility lease		17,791			16,648			34,772			32,920
Facility lease		-			471			-			758
		2,007			1,824			11,012			10,889
G&A expense		1,564			1,375			2,951			2,858
EBITDA1	$	443		$	449		$	8,061		$	8,031
EBITDA per share	$	0.03		$	0.03		$	0.60		$	0.60
Depreciation		2,033			1,725			4,024			3,450
Interest		677			502			1,260			1,018
Loss (gain) on held for trading financial liabilities		219			(8	)		706			(133	)
Loss (gain) on foreign exchange		21			(35	)		42			(45	)
Loss (gain) on sale of assets		8			-			(400	)		(4	)
Income tax expense (recovery)		(657	)		(458	)		524			802
Net earnings (loss)		($1,858	)		($1,277	)	$	1,905		$	2,943
Net earnings (loss) per share		($0.14	)		($0.10	)	$	0.14		$	0.22

 

Key Balance Sheet Figures (in thousands):
		June 30, 2019			December 31, 2018
Assets
Cash and cash equivalents	$	11,951		$	19,845
Property plant and equipment		104,023			99,582
Assets held-for-sale		13,317			596
Other assets		9,965			8,912
Total assets	$	139,256		$	128,935
Liabilities and Equity
Interest bearing debt	$	67,971		$	52,525
Accounts payable and accrued liabilities		11,844			12,567
Deferred revenue		8,157			12,881
Other liabilities		2,414			1,138
Total liabilities		90,386			79,111
Share capital and contributed surplus		63,652			63,652
Foreign currency translation reserve		2,566			3,775
Deficit		(17,348	)		(17,603	)
Total shareholders' equity		48,870			49,824
Total liabilities and equity	$	139,256		$	128,935

 

Second Quarter Results

(three months ended June 30, 2019 compared with three months ended June 30, 2018)

• Revenue of $19.8 million increased by $0.9 million or 4.5%; same store revenue of $18.7 million increased by $0.7 million or 3.7% compared to 2018. Increased registration in Canlan's tournament events and spring youth hockey leagues are the main contributors of the increase. The higher traffic into the facilities also resulted in food and beverage sales growth;

• Facility expenses of $17.8 million increased by $0.7 million or 3.9%; same store facility expenses, including the elimination of facility lease expenses due to the adoption of IFRS 16, increased by $0.8 million or 5.0% from prior year. Maintenance and customer service expenses were higher than 2018 but the increase was partially offset by lower utilities expense;

• EBITDA of $0.4 million remained steady with prior year. Same store EBITDA of $0.7 million increased by $0.2 million compared to prior year but decreased by $0.2 million after excluding the effects of presentation changes related to adoption of IFRS 16; and

• After recording $2.3 million of depreciation, interest, valuation loss on derivatives, foreign exchange differences, and income tax recovery, net loss for the period was $1.9 million compared to $1.3 million a year ago.

Six Months Ended June 30, 2019 Results

(six months ended June 30, 2019 compared with six months ended June 30, 2018)

• Total revenue of $45.8 million increased by $1.2 million or 2.7% compared to 2018; same store revenue of $43.4 million increased by $1.0 million or 2.4%;

• The Company's tournament division achieved strong growth in registrations in many of its events. In addition, adult and youth hockey leagues, soccer leagues, and sponsorship revenue also contributed to the revenue increase;

• Total direct operating expense of $34.8 million increased by $1.1 million or 3.2% from a year ago. Excluding the effects of the adoption of IFRS 16, same store facility expenses increased by $1.4 million or 4.5%;

• During the first half of 2019, the Company incurred $0.3 million to continue roof remediation projects that began in Q3 of 2018. These projects are expected to continue throughout the remainder of the year. Higher marketing expenses and costs to service growth of customer participation also contributed to the increase of facility expense;

• EBITDA of $8.1 million remained consistent with 2018. After excluding the effects of presentation changes related to adoption of IFRS 16, same store EBITDA decreased by $0.4 million or 4.6% compared to prior year; and

• After recording $6.2 million of depreciation, interest, valuation loss on derivatives, gain on sale of assets, foreign exchange differences, and income tax expense, net earnings for the period was $1.9 million compared to $2.9 million a year ago.

"We achieved healthy same store revenue growth of almost 4% for the second quarter through marketing efforts focused on adult and youth hockey leagues, plus new product offerings created by our tournament division," said Canlan's CEO, Joey St-Aubin. "In addition, steady progress has been made on many of the significant maintenance and capital improvement projects that were planned for 2019. We anticipate these projects will enhance facility amenities and enable further operating efficiencies."

"Our asset optimization program is progressing well," said Canlan's Executive VP, Michael Gellard. "Aside from the previously announced acquisition of the ice rink facility in West Dundee, Illinois and the intended sale of the ice rink facility in Brossard, Quebec, we are also pursuing the sale of our three-pad ice rink facility in Fort Wayne, Indiana with an independent party. This is a local investor group that intends to continue ice rink operations at this location. We anticipate these disposition transactions will be completed at or prior to the end of Q3 and the sale proceeds will be utilized for re-investment into existing assets and/or acquisition of accretive businesses to add to our portfolio."

Dividend Policy

Canlan's Board of Directors has approved the continuation of the Corporation's quarterly dividend policy and an increase to the quarterly dividend from $0.025 to $0.0275 per common share, a 10% increase. As such, the Board of Directors declared eligible dividends totaling $0.0275 per common share that will next be paid on October 15, 2019 to shareholders of record at the close of business September 30, 2019. Canlan's Board of Directors reviews the Corporation'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.

Filings

Canlan's financial statements and Management's Discussion & Analysis for the period ended June 30, 2019 will be available via SEDAR on or before August 14, 2019 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 recreation facilities in North America and currently own, lease and/or manage 21 facilities in Canada and the United States with 60 ice surfaces, as well as five indoor soccer fields, and 15 sport, volleyball, and basketball courts. To learn more about Canlan 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 news release 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 Corporation to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. When used in this news release, 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 news release. 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 Corporation's markets; competition; legislation and governmental regulation; and accounting policies and practices. The foregoing list of factors is not exhaustive.

For more information:

Canlan Ice Sports Corp.
Ivan Wu
CFO
604 736 9152

¹ Earnings before interest, taxes, depreciation and amortization (EBITDA) is often used as a measure of financial performance. However, EBITDA is not a term that has specific meaning in accordance with IFRS, and may be calculated differently by other companies. Canlan reconciles EBITDA to its net earnings.

Corporate Logo

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/46871