- Consolidated revenues increased slightly for the quarter
- Consolidated segment profit(1)(2) was down 4% for the quarter
- Consolidated segment profit margin(1) of 39% for the quarter
- Net income attributable to shareholders of
$78.1 million ($0.37 per share basic) for the quarter - Net debt to segment profit(1)(3) leverage of 3.08 times, due to the adoption of IFRS 16 - Leases that added
$156.6 million of lease liabilities to the net debt calculation, offset by bank loan repayments of$48.7 million in the quarter - Free cash flow(1)(2) of
$53.0 million for the quarter
"Our solid Q1 results demonstrate the benefits of Corus' diverse portfolio of businesses, with increased Television advertising revenues and double-digit revenue growth in our content business for the quarter," said
Financial Highlights
Three months ended | ||
(in thousands of Canadian dollars except per share amounts) | 2019 | 2018 |
Revenues | ||
Television | 429,951 | 426,190 |
Radio | 37,927 | 41,281 |
467,878 | 467,471 | |
Segment profit (1) (2) | ||
Television | 178,618 | 184,553 |
Radio | 12,028 | 13,012 |
Corporate | (6,531) | (5,927) |
184,115 | 191,638 | |
Net income attributable to shareholders | 78,116 | 60,415 |
Adjusted net income attributable to shareholders (1) (3) | 79,980 | 70,111 |
Basic earnings per share | ||
Adjusted basic earnings per share (1) (3) | ||
Diluted earnings per share | ||
Free cash flow (1)(2) | 53,048 | 42,406 |
(1) | Segment profit, segment profit margin, adjusted net income attributable to shareholders, adjusted basic earnings per share, free cash flow and net debt to segment profit do not have standardized meanings prescribed by International Financial Reporting Standards ("IFRS"). The Company believes these non-IFRS measures are frequently used as key measures to evaluate performance. For definitions, explanations and reconciliations see discussion under the Key Performance Indicators section of the First Quarter 2020 Report to Shareholders. |
(2) | Segment profit for the three months ended |
(3) | Refer to page 10 of this press release for details of adjustments to arrive at adjusted net income attributable to shareholders, adjusted basic earnings per share, and the calculation of net debt to segment profit. |
Consolidated Results from Operations
Consolidated revenues for the three months ended
Operational Results - Highlights for Q1 2020
Television
- Segment revenues were up 1% in Q1 2020
- Advertising revenues increased 1% in Q1 2020
- Subscriber revenues were down 2% in Q1 2020, but flat on a proforma basis when adjusted for the TLN disposal
- Merchandising, distribution and other revenues were up
$2.6 million (15%) in Q1 2020 - Segment profit(1) was down 3% in Q1 2020
- Segment profit margin(1) of 42% in Q1 2020 compared to 43% in the prior year
Radio
- Segment revenues decreased
$3.4 million in Q1 2020 - Segment profit(1) decreased
$1.0 million in Q1 2020 - Segment profit margin(1) of 32% in Q1 2020 was consistent with the prior year
Corporate
- Free cash flow(1) of
$53.0 million , up from$42.4 million in the prior year - Net debt to segment profit(1) leverage of 3.08 times at
November 30, 2019 , up from 2.82 times atAugust 31, 2019 , due to implementation of IFRS 16 - Leases that added$156.6 million to the net debt calculation, offset by bank loan repayments of$48.7 million in the quarter - Consolidated segment profit margin(1) of 39% in Q1 2020 compared to 41% in the prior year
- Normal course issuer bid accepted by TSX for share purchase and cancellation of up to 9,913,940 Class B Non-Voting Participating Shares during the period
November 12, 2019 throughNovember 11, 2020
(1) | Segment profit, segment profit margin, free cash flow and net debt to segment profit do not have standardized meanings prescribed by IFRS. The Company reports on these because they are key measures used to evaluate performance. For definitions and explanations, see the discussion under the Key Performance Indicators section of the First Quarter 2020 Report to Shareholders. |
The unaudited interim condensed consolidated financial statements and accompanying notes for the three months ended
A conference call with Corus senior management is scheduled for
Use of Non-IFRS Financial Measures
This press release includes the non-IFRS financial measures of adjusted net income attributable to shareholders, adjusted basic earnings per share, free cash flow and net debt to segment profit that are not in accordance with, nor an alternate to, generally accepted accounting principles ("IFRS") and may be different from non-IFRS measures used by other companies. In addition, these non-IFRS measures are not based on any comprehensive set of accounting rules or principles.
Non-IFRS financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS. They are limited in value because they exclude charges that have a material effect on the Company's reported results and, therefore, should not be relied upon as the sole financial measures to evaluate the Company's financial results. The non-IFRS financial measures are meant to supplement, and to be viewed in conjunction with, IFRS financial results. A reconciliation of the Company's non-IFRS measures is included in the Company's most recent Report to Shareholders which is available on Corus' website at www.corusent.com as well as on SEDAR at www.sedar.com.
Caution Concerning Forward-Looking Information
This press release contains forward-looking information and should be read subject to the following cautionary language:
To the extent any statements made in this report contain information that is not historical, these statements are forward-looking statements and may be forward-looking information within the meaning of applicable securities laws (collectively, "forward-looking information"). These forward-looking statements relate to, among other things, our objectives, goals, strategies, intentions, plans, estimates and outlook, including advertising, distribution, merchandise and subscription revenues, operating costs and tariffs, taxes and fees, and can generally be identified by the use of words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances may be considered forward-looking information. Although Corus believes that the expectations reflected in such forward-looking information are reasonable, such information involves assumptions and risks and uncertainties and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied with respect to the forward-looking information, including without limitation, factors and assumptions regarding the general market conditions and general outlook for the industry, interest rates, stability of the advertising, distribution, merchandise and subscription markets, operating and capital costs and tariffs, taxes and fees, our ability to source desirable content and our capital and operating results being consistent with our expectations. Actual results may differ materially from those expressed or implied in such information. Important factors that could cause actual results to differ materially from these expectations include, among other things: our ability to attract and retain advertising revenues; audience acceptance of our television programs and cable networks; our ability to recoup production costs, the availability of tax credits and the existence of co-production treaties; our ability to compete in any of the industries in which we do business; the opportunities (or lack thereof) that may be presented to and pursued by us; conditions in the entertainment, information and communications industries and technological developments therein; changes in laws or regulations or the interpretation or application of those laws and regulations; our ability to integrate and realize anticipated benefits from our acquisitions and to effectively manage our growth; our ability to successfully defend ourselves against litigation matters arising out of the ordinary course of business; and changes in accounting standards. Additional information about these factors and about the material assumptions underlying any forward-looking information may be found under the heading "Risks and Uncertainties" in the Management's Discussion and Analysis for the year ended
About
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(unaudited - in thousands of Canadian dollars) | As at | As at |
2019 | 2019 | |
ASSETS | ||
Current | ||
Cash and cash equivalents | 64,249 | 82,568 |
Accounts receivable | 458,068 | 372,828 |
Income taxes recoverable | — | 13,772 |
Prepaid expenses and other assets | 32,697 | 19,557 |
Total current assets | 555,014 | 488,725 |
Tax credits receivable | 29,638 | 25,035 |
Investments and other assets | 63,479 | 51,707 |
Property, plant and equipment | 358,477 | 225,927 |
Program rights | 603,127 | 507,913 |
Film investments | 55,026 | 53,336 |
Intangibles | 1,880,278 | 1,876,235 |
1,383,958 | 1,383,958 | |
Deferred income tax assets | 58,047 | 59,463 |
4,987,044 | 4,672,299 | |
LIABILITIES AND EQUITY | ||
Current | ||
Accounts payable and accrued liabilities | 521,694 | 429,483 |
Current portion of bank debt | 76,339 | 76,339 |
Provisions | 9,445 | 10,331 |
Income taxes payable | 3,461 | — |
Total current liabilities | 610,939 | 516,153 |
Bank debt | 1,607,756 | 1,655,406 |
Other long-term liabilities | 472,951 | 278,117 |
Provisions | 9,336 | 7,686 |
Deferred income tax liabilities | 469,645 | 472,700 |
Total liabilities | 3,170,627 | 2,930,062 |
EQUITY | ||
Share capital | 822,508 | 830,477 |
Contributed surplus | 1,509,408 | 1,512,818 |
Accumulated deficit | (688,565) | (758,757) |
Accumulated other comprehensive income | 22,591 | 12,187 |
Total equity attributable to shareholders | 1,665,942 | 1,596,725 |
Equity attributable to non-controlling interest | 150,475 | 145,512 |
Total equity | 1,816,417 | 1,742,237 |
4,987,044 | 4,672,299 |
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Three months ended | ||
(unaudited - in thousands of Canadian dollars except per share amounts) | 2019 | 2018 |
Revenues | 467,878 | 467,471 |
Direct cost of sales, general and administrative expenses | 283,763 | 275,833 |
Depreciation and amortization | 39,967 | 54,328 |
Interest expense | 28,823 | 31,339 |
Integration, restructuring and other costs | 2,534 | 13,181 |
Other expense (income), net | (2,063) | 1,237 |
Income before income taxes | 114,854 | 91,553 |
Income tax expense | 30,494 | 24,777 |
Net income for the period | 84,360 | 66,776 |
Other comprehensive income, net of income taxes: | ||
Items that may be reclassified subsequently to income: | ||
Unrealized change in fair value of cash flow hedges | 4,949 | (378) |
Unrealized foreign currency translation adjustment | (53) | 290 |
4,896 | (88) | |
Items that will not be reclassified to income: | ||
Unrealized change in fair value of financial assets | 5,508 | — |
Actuarial gain on post-retirement benefit plans | 4,756 | 2,326 |
10,264 | 2,326 | |
Other comprehensive income, net of income taxes | 15,160 | 2,238 |
Comprehensive income for the period | 99,520 | 69,014 |
Net income attributable to: | ||
Shareholders | 78,116 | 60,415 |
Non-controlling interest | 6,244 | 6,361 |
84,360 | 66,776 | |
Comprehensive income attributable to: | ||
Shareholders | 93,276 | 62,653 |
Non-controlling interest | 6,244 | 6,361 |
99,520 | 69,014 | |
Earnings per share attributable to shareholders: | ||
Basic | ||
Diluted |
CORUS ENTERTAINMENT INC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited - in thousands of Canadian dollars) | Share | Contributed | Accumulated | Accumulated | Total equity | Non- |
Total equity | |
As at | 830,477 | 1,512,818 | (758,757) | 12,187 | 1,596,725 | 145,512 | 1,742,237 | |
Comprehensive income | — | — | 78,116 | 15,160 | 93,276 | 6,244 | 99,520 | |
Dividends declared | — | — | (12,680) | — | (12,680) | (3,415) | (16,095) | |
Share repurchase under normal course issuer bid ("NCIB") | (2,655) | (1,215) | — | — | (3,870) | — | (3,870) | |
Share repurchase commitment under NCIB | (5,314) | (2,449) | — | — | (7,763) | — | (7,763) | |
Actuarial gain on post- retirement benefit plans | — | — | 4,756 | (4,756) | — | — | — | |
Share-based compensation expense | — | 254 | — | — | 254 | — | 254 | |
Equity funding | — | — | — | — | — | 2,134 | 2,134 | |
As at | 822,508 | 1,509,408 | (688,565) | 22,591 | 1,665,942 | 150,475 | 1,816,417 | |
(unaudited - in thousands of Canadian dollars) | Share | Contributed | Accumulated | Accumulated comprehensive | Total equity | Non- | Total equity | |
As at | 2,330,477 | 12,119 | (856,668) | 36,460 | 1,522,388 | 154,415 | 1,676,803 | |
IFRS 9 transitional adjustment | — | — | — | 9,396 | 9,396 | — | 9,396 | |
IFRS 15 transitional adjustment | — | — | 1,985 | — | 1,985 | — | 1,985 | |
Adjusted balance as at | 2,330,477 | 12,119 | (854,683) | 45,856 | 1,533,769 | 154,415 | 1,688,184 | |
Comprehensive income | — | — | 60,415 | 2,238 | 62,653 | 6,361 | 69,014 | |
Dividends declared | — | — | (12,715) | — | (12,715) | (5,222) | (17,937) | |
Actuarial gain on post- retirement benefit plans | — | — | 2,326 | (2,326) | — | — | — | |
Share-based compensation expense | — | 45 | — | — | 45 | — | 45 | |
As at | 2,330,477 | 12,164 | (804,657) | 45,768 | 1,583,752 | 155,554 | 1,739,306 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended | ||
(unaudited - in thousands of Canadian dollars) | 2019 | 2018 |
OPERATING ACTIVITIES | ||
Net income for the period | 84,360 | 66,776 |
Adjustments to reconcile net income to cash flow from operations: | ||
Amortization of program rights | 132,601 | 129,570 |
Amortization of film investments | 5,826 | 3,529 |
Depreciation and amortization | 39,967 | 54,328 |
Deferred income tax recovery | (5,979) | (9,347) |
Share-based compensation expense | 254 | 45 |
Imputed interest | 12,556 | 10,594 |
Payment of program rights | (119,192) | (110,214) |
Net spend on film investments | (15,522) | (10,663) |
CRTC benefit payments | (722) | (861) |
Other | (675) | (3,470) |
Cash flow from operations | 133,474 | 130,287 |
Net change in non-cash working capital balances related to operations | (76,002) | (84,916) |
Cash provided by operating activities | 57,472 | 45,371 |
INVESTING ACTIVITIES | ||
Additions to property, plant and equipment | (4,274) | (2,569) |
Proceeds from sale of property | 9 | 3 |
Equity funding by a non-controlling interest | 2,134 | — |
Net cash flows for intangibles, investments and other assets | (1,286) | (399) |
Cash used in investing activities | (3,417) | (2,965) |
FINANCING ACTIVITIES | ||
Decrease in bank loans | (48,674) | (57,009) |
Shares repurchased under NCIB | (3,296) | — |
Payments of lease liabilities | (3,884) | — |
Dividends paid | (12,718) | — |
Dividends paid to non-controlling interest | (3,415) | (7,222) |
Other | (387) | (2,309) |
Cash used in financing activities | (72,374) | (66,540) |
Net change in cash and cash equivalents during the period | (18,319) | (24,134) |
Cash and cash equivalents, beginning of the period | 82,568 | 94,801 |
Cash and cash equivalents, end of the period | 64,249 | 70,667 |
BUSINESS SEGMENT INFORMATION
(unaudited - in thousands of Canadian dollars) | ||||
Three months ended | ||||
Television | Radio | Corporate | Consolidated | |
Revenues | 429,951 | 37,927 | — | 467,878 |
Direct cost of sales, general and administrative expenses | 251,333 | 25,899 | 6,531 | 283,763 |
Segment profit (loss)(1)(2) | 178,618 | 12,028 | (6,531) | 184,115 |
Depreciation and amortization | 39,967 | |||
Interest expense | 28,823 | |||
Integration, restructuring and other costs | 2,534 | |||
Other income, net | (2,063) | |||
Income before income taxes | 114,854 | |||
Three months ended | ||||
Television | Radio | Corporate | Consolidated | |
Revenues | 426,190 | 41,281 | — | 467,471 |
Direct cost of sales, general and administrative expenses | 241,637 | 28,269 | 5,927 | 275,833 |
Segment profit (loss)(1) | 184,553 | 13,012 | (5,927) | 191,638 |
Depreciation and amortization | 54,328 | |||
Interest expense | 31,339 | |||
Integration, restructuring and other costs | 13,181 | |||
Other expense, net | 1,237 | |||
Income before income taxes | 91,553 |
(1) | Segment profit does not have a standardized meaning prescribed by IFRS. For definitions and explanations, see discussion under the Key Performance Indicators section of the First Quarter 2020 Report to Shareholders. |
(2) | Segment profit for the three months ended |
REVENUES BY TYPE
Three months ended | ||
(unaudited - in thousands of Canadian dollars) | 2019 | 2018 |
Advertising | 322,409 | 321,335 |
Subscriber fees | 123,669 | 126,684 |
Merchandising, distribution and other | 21,800 | 19,452 |
467,878 | 467,471 |
NON-IFRS FINANCIAL MEASURES
Three months ended | ||
(unaudited - in thousands of Canadian dollars, except per share amounts) | ||
Adjusted Net Income Attributable to Shareholders | 2019 | 2018 |
Net income attributable to shareholders | 78,116 | 60,415 |
Adjustments, net of income tax: | ||
Integration, restructuring and other costs | 1,864 | 9,696 |
Adjusted net income attributable to shareholders | 79,980 | 70,111 |
Basic earnings per share | ||
Adjustments, net of income tax: | ||
Integration, restructuring and other costs | 0.01 | 0.05 |
Adjusted basic earnings per share |
Three months ended | ||
(unaudited - in thousands of Canadian dollars) | ||
Free Cash Flow | 2019 | 2018 |
Cash provided by (used in): | ||
Operating activities (1) | 57,472 | 45,371 |
Investing activities | (3,417) | (2,965) |
Deduct: cash used in (provided by) business acquisitions, strategic investments and non- controlling interest (2) | 54,055 | 42,406 |
(1,007) | — | |
Free cash flow | 53,048 | 42,406 |
(1) | Free cash flow for the three months ended |
(2) | Strategic investments are comprised of investments in venture funds and associated companies |
Three months ended | ||
(unaudited - in thousands of Canadian dollars) | ||
Net Debt and Net Debt to Segment Profit | 2019 | 2018 |
Total bank loans, net of unamortized financing fees | 1,684,095 | 1,731,745 |
Lease liabilities | 156,556 | — |
Cash and cash equivalents | (64,249) | (82,568) |
Net debt | 1,776,402 | 1,649,177 |
Segment profit (denominator) (1) | 577,562 | 585,085 |
Net debt to segment profit | 3.08 | 2.82 |
(1) | Reflects aggregate amounts for the most recent four quarters, as detailed in the table in the "Quarterly Consolidated Financial Information" section of the First Quarter 2020 Report to Shareholders. Effective |
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