• Consolidated revenues increased 2% for the quarter, driven by a 4% increase in Television advertising revenues
  • Consolidated segment profit(1) increased 8% for the quarter
  • Consolidated segment profit margin(1) of 41% for the quarter
  • Net income attributable to shareholders of $60.4(2) million ($0.28 per share basic) for the quarter
  • Adjusted basic earnings per share(1)(2)(3) of $0.33 per share for the quarter
  • Free cash flow(1) of $42.4 million for the quarter

TORONTO, Jan. 11, 2019 /PRNewswire/ - Corus Entertainment Inc. (TSX: CJR.B) announced its first quarter financial results today.

"Our first quarter results reflect disciplined execution of this year's operating plan and the continuing implementation of our longer term strategic priorities," said Doug Murphy, President and Chief Executive Officer. "We returned to growth in Television advertising revenue, driven primarily by a strong fall schedule and a significant improvement in television advertising demand. This revenue increase, coupled with an ongoing focus on expense control, resulted in considerable segment profit growth and margin improvement. The benefits of our revised capital allocation policy, when combined with our improved revenue and segment profit performance, has notably impacted our leverage metrics while increasing balance sheet strength and flexibility for the Company this quarter as we invest for future growth."

Financial Highlights




Three months ended


November 30,

(in thousands of Canadian dollars except per share amounts)

2018

2017

Revenues



Television

426,190

415,464

Radio

41,281

41,924


467,471

457,388

Segment profit (1)



Television

184,553

168,602

Radio

13,012

13,521

Corporate

(5,927)

(4,236)


191,638

177,887

Net income attributable to shareholders (2)

60,415

77,673

Adjusted net income attributable to shareholders (1) (2) (3)

70,111

78,885

Basic earnings per share (2)

$0.28

$0.38

Adjusted basic earnings per share (1) (2) (3)

$0.33

$0.38

Diluted earnings per share (2)

$0.28

$0.38

Free cash flow (1)

42,406

83,215

(1)

Segment profit, segment profit margin, adjusted net income attributable to shareholders, adjusted basic earnings per share, and free cash flow do not have standardized meanings prescribed by 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 2019 Report to Shareholders.

(2)

Net income attributable to shareholders as well as basic and diluted earnings per share for the quarter ended November 30, 2018 was impacted by a change in accounting estimate related to the useful life of the Company's television brand assets. Commencing September 1, 2018, the useful life of television brand assets was changed from indefinite life to lives ranging from three to 20 years. For the first quarter of fiscal 2019, this has resulted in an additional $34.9 million in amortization expense in the depreciation and amortization line within the Consolidated Statement of Income and Comprehensive Income, and reduced net income attributable to shareholders by $25.7 million ($0.12 per share basic). Further discussion of this can be found in the Impact of New Accounting Policies and Changes in Estimates section of the First Quarter 2019 Report to Shareholders.

(3)

Refer to page 10 of this press release for details of adjustments to arrive at adjusted net income attributable to shareholders and adjusted basic earnings per share.


 

Consolidated Results from Operations

Consolidated revenues for the three months ended November 30, 2018 were $467.5 million, up 2% from $457.4 million last year and consolidated segment profit was $191.6 million, an increase of 8% from $177.9 million last year. Net income attributable to shareholders for the quarter ended November 30, 2018 was $60.4 million ($0.28 per share basic), compared to $77.7 million ($0.38 per share basic) last year. Net income attributable to shareholders for the first quarter of fiscal 2019 includes business acquisition, integration and restructuring costs of $13.2 million ($0.05 per share). Adjusting for the impact of this item results in an adjusted net income attributable to shareholders of $70.1 million ($0.33 per share basic) in the quarter. Net income attributable to shareholders for the prior year quarter includes business acquisition, integration and restructuring costs of $1.6 million ($nil per share). Adjusting for the impact of this item results in an adjusted net income attributable to shareholders of $78.9 million ($0.38 per share basic) for the prior year quarter.

Consolidated net income attributable to shareholders as well as basic and diluted earnings per share for the quarter ended November 30, 2018 was impacted by a change in accounting estimates related to the useful life of the Company's television brands. Commencing September 1, 2018, the useful life of television brands was changed from indefinite life to lives ranging from three to 20 years. For the first quarter of fiscal 2019, this has resulted in an additional $34.9 million in amortization expense in the depreciation and amortization line within the Consolidated Statement of Income and Comprehensive Income, and reduced net income attributable to shareholders by $25.7 million ($0.12 per share basic). Further discussion of this can be found in the Impact of New Accounting Policies and Changes in Estimates section of the First Quarter 2019 Report to Shareholders.

Operational Results - Highlights for Q1 2019 

Television

  • Segment revenues increased 3%
  • Advertising revenues increased 4%
  • Subscriber revenues were flat
  • Merchandising, distribution and other revenues were up 3%
  • Segment profit(1) increased 9%
  • Segment profit margin(1) of 43%, compared to 41% in the prior year

Radio

  • Segment revenues decreased 2%
  • Segment profit(1) decreased 4%
  • Segment profit margin(1) of 32% was consistent with the prior year

Corporate

  • Free cash flow(1) of $42.4 million, down from $83.2 million in the prior year
  • Net debt to segment profit(1) leverage at 3.15 times, down from 3.28 times at August 31, 2018
  • Consolidated segment profit margin(1) of 41%, compared to 39% in the prior year

(1)

Segment profit, segment profit margin, and free cash flow 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 discussion under the Key Performance Indicators section of the First Quarter 2019 Report to Shareholders.

 

Corus Entertainment Inc. reports its financial results in Canadian dollars.

The unaudited interim condensed consolidated financial statements and accompanying notes for the three months ended November 30, 2018 and Management's Discussion and Analysis are available on the Company's website at www.corusent.com in the Investor Relations section.

A conference call with Corus senior management is scheduled for January 11, 2019 at 8:00 a.m. ET. While this call is directed at analysts and investors, members of the media are welcome to listen in. The dial-in number for the conference call for local and international callers is 1.647.427.7450 and for North America is 1.888.231.8191. More information can be found on the Corus Entertainment website at www.corusent.com in the Investor Relations section.

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 and free cash flow 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 August 31, 2018 and the first quarter ended November 30, 2018 and under the heading "Risk Factors" in our Annual Information Form. Corus cautions that the foregoing list of important assumptions and factors that may affect future results is not exhaustive. When relying on our forward-looking information to make decisions with respect to Corus, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Unless otherwise specified, all forward-looking information in this document speaks as of the date of this document. Unless otherwise required by applicable securities laws, Corus disclaims any intention or obligation to publicly update or revise any forward-looking information whether as a result of new information, events or circumstances that arise after the date thereof or otherwise.

About Corus Entertainment Inc.

Corus Entertainment Inc. (TSX: CJR.B) is a leading media and content company that creates and delivers high quality brands and content across platforms for audiences around the world. The company's portfolio of multimedia offerings encompasses 44 specialty television services, 39 radio stations, 15 conventional television stations, a global content business, digital assets, live events, children's book publishing, animation software, technology and media services. Corus' roster of premium brands include Global Television, W Network, OWN: Oprah Winfrey Network Canada, HGTV Canada, Food Network Canada, HISTORY®, Showcase, National Geographic, Q107, CKNW, Fresh Radio, Disney Channel Canada, YTV and Nickelodeon Canada. Visit Corus at www.corusent.com.

 

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION


As at November 30,

As at August 31,

(unaudited - in thousands of Canadian dollars)

2018

2018

ASSETS



Current



Cash and cash equivalents

70,667

94,801

Accounts receivable

512,087

388,751

Income taxes recoverable

3,305

Prepaid expenses and other assets

27,103

20,723

Total current assets

609,857

507,580

Tax credits receivable

22,349

18,047

Investments and other assets

98,986

82,213

Property, plant and equipment

224,069

231,192

Program rights

560,564

538,357

Film investments

43,871

43,424

Intangibles(1)

1,974,286

2,012,086

Goodwill

1,387,652

1,387,652

Deferred income tax assets

60,755

62,403


4,982,389

4,882,954

 

LIABILITIES AND EQUITY



Current



Accounts payable and accrued liabilities

451,747

405,762

Current portion of long-term debt

95,466

106,375

Provisions

13,218

11,175

Income taxes payable

18,454

Total current liabilities

578,885

523,312

 

Long-term debt

 

1,832,614

 

1,877,558

Other long-term liabilities

326,141

295,206

Provisions

11,949

7,801

Deferred income tax liabilities

493,494

502,274

Total liabilities

3,243,083

3,206,151

 

EQUITY



Share capital

2,330,477

2,330,477

Contributed surplus

12,164

12,119

Accumulated deficit

(804,657)

(856,668)

Accumulated other comprehensive income

45,768

36,460

Total equity attributable to shareholders

1,583,752

1,522,388

Equity attributable to non-controlling interest

155,554

154,415

Total equity

1,739,306

1,676,803


4,982,389

4,882,954

(1)

Net income attributable to shareholders as well as basic and diluted earnings per share for the quarter ended November 30, 2018 was impacted by a change in accounting estimate related to the useful life of the Company's television brand assets. Commencing September 1, 2018, the useful life of television brand assets was changed from indefinite life to lives ranging from three to 20 years. For the first quarter of fiscal 2019, this has resulted in an additional $34.9 million in amortization expense in the depreciation and amortization line within the Consolidated Statement of Income and Comprehensive Income, and reduced net income attributable to shareholders by $25.7 million ($0.12 per share basic). Further discussion of this can be found in the Impact of New Accounting Policies and Changes in Estimates section of the First Quarter 2019 Report to Shareholders.


 

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


Three months ended


November 30,

(unaudited - in thousands of Canadian dollars except per share amounts)

2018

2017

Revenues

467,471

457,388

Direct cost of sales, general and administrative expenses

275,833

279,501

Depreciation and amortization(1)

54,328

20,758

Interest expense

31,339

32,075

Business acquisition, integration and restructuring costs

13,181

1,608

Other expense, net

1,237

7,554

Income before income taxes

91,553

115,892

Income tax expense

24,777

30,885

Net income for the period

66,776

85,007

 

Other comprehensive income (loss), net of income taxes:



Items that may be reclassified subsequently to income:



Unrealized foreign currency translation adjustment

290

438

Unrealized change in fair value of cash flow hedges

(378)

(409)


(88)

29

Items that will not be reclassified to income:

 

2,326

 

(2,739)

Actuarial gain (loss) on employee post-employment benefits

Other comprehensive income (loss), net of income taxes

2,238

(2,710)

Comprehensive income for the period

69,014

82,297

Net income attributable to:



Shareholders

60,415

77,673

Non-controlling interest

6,361

7,334


66,776

85,007

Comprehensive income attributable to:



Shareholders

62,653

74,963

Non-controlling interest

6,361

7,334


69,014

82,297

Earnings per share attributable to shareholders:



Basic

$0.28

$0.38

Diluted

$0.28

$0.38

(1)

Net income attributable to shareholders as well as basic and diluted earnings per share for the quarter ended November 30, 2018 was impacted by a change in accounting estimate related to the useful life of the Company's television brand assets. Commencing September 1, 2018, the useful life of television brand assets was changed from indefinite life to lives ranging from three to 20 years. For the first quarter of fiscal 2019, this has resulted in an additional $34.9 million in amortization expense in the depreciation and amortization line within the Consolidated Statement of Income and Comprehensive Income, and reduced net income attributable to shareholders by $25.7 million ($0.12 per share basic). Further discussion of this can be found in the Impact of New Accounting Policies and Changes in Estimates section of the First Quarter 2019 Report to Shareholders.

 

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

 

 

 

(unaudited - in thousands of Canadian dollars)

Share
capital

 Contributed
surplus

Accumulated
deficit

Accumulated
other
comprehensive
income

Total equity attributable
to
shareholders

Non-
controlling interest

Total equity

As at August 31, 2018, as previously presented

2,330,477

12,119

(856,668)

36,460

1,522,388

154,415

1,676,803

IFRS 9 transitional adjustment (1)

9,396

9,396

9,396

IFRS 15 transitional adjustment (1)

1,985

1,985

1,985

Adjusted balance as at September 1, 2018

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 November 30, 2018

2,330,477

12,164

(804,657)

45,768

1,583,752

155,554

1,739,306

















 

 

 

(unaudited - in thousands of Canadian dollars)

Share capital

Contributed
surplus

Retained earnings

Accumulated
other comprehensive
income

Total equity attributable
to
shareholders

Non-
controlling
interest

Total equity

As at August 31, 2017

2,291,814

11,449

114,492

22,938

2,440,693

158,828

2,599,521

Comprehensive income (loss)

77,673

(2,710)

74,963

7,334

82,297

Dividends declared

(59,015)

(59,015)

(12,009)

(71,024)

Issuance of shares under dividend reinvestment plan

9,809

9,809

9,809

Issuance of shares under stock option plan

85

85

85

Actuarial loss on post- retirement benefit plans

(2,739)

2,739

Share-based compensation expense

188

188

188

As at November 30, 2017

2,301,708

11,637

130,411

22,967

2,466,723

154,153

2,620,876


(1)    

Refer to the Company's First Quarter 2019 Report to Shareholders for details on New Accounting Pronouncements Adopted in Fiscal 2019 in the Impact of New Accounting Policies and Changes in Estimates section.

 

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS


Three months ended


November 30,

(unaudited - in thousands of Canadian dollars)

2018

2017

OPERATING ACTIVITIES



Net income for the period

66,776

85,007

Adjustments to reconcile net income to cash flow from operations:



Amortization of program rights

129,570

133,383

Amortization of film investments

3,529

2,526

Depreciation and amortization(1)

54,328

20,758

Deferred income tax recovery

(9,347)

(169)

Share-based compensation expense

45

188

Imputed interest

10,594

11,867

Proceeds from termination of interest rate swap

24,644

Payment of program rights

(110,214)

(115,677)

Net spend on film investments

(10,663)

(8,748)

CRTC benefit payments

(861)

(1,987)

Other

(3,470)

426

Cash flow from operations

130,287

152,218

Net change in non-cash working capital balances related to operations

(84,916)

(66,541)

Cash provided by operating activities

45,371

85,677

INVESTING ACTIVITIES



Additions to property, plant and equipment

(2,569)

(1,581)

Proceeds from sale of property

3

545

Net cash flows for intangibles, investments and other assets

(399)

(906)

Cash used in investing activities

(2,965)

(1,942)

FINANCING ACTIVITIES



Decrease in bank loans

(57,009)

(26,562)

Deferred financing costs

(4,088)

Issuance of shares under stock option plan

85

Dividends paid

(49,048)

Dividends paid to non-controlling interest

(7,222)

(12,009)

Other

(2,309)

(2,344)

Cash used in financing activities

(66,540)

(93,966)

Net change in cash and cash equivalents during the period

(24,134)

(10,231)

Cash and cash equivalents, beginning of the period

94,801

93,701

Cash and cash equivalents, end of the period

70,667

83,470

(1)

Net income attributable to shareholders as well as basic and diluted earnings per share for the quarter ended November 30, 2018 was impacted by a change in accounting estimate related to the useful life of the Company's television brand assets. Commencing September 1, 2018, the useful life of television brand assets was changed from indefinite life to lives ranging from three to 20 years. For the first quarter of fiscal 2019, this has resulted in an additional $34.9 million in amortization expense in the depreciation and amortization line within the Consolidated Statement of Income and Comprehensive Income, and reduced net income attributable to shareholders by $25.7 million ($0.12 per share basic). Further discussion of this can be found in the Impact of New Accounting Policies and Changes in Estimates section of the First Quarter 2019 Report to Shareholders.

 

CORUS ENTERTAINMENT INC.
BUSINESS SEGMENT INFORMATION

 

(unaudited - in thousands of Canadian dollars)





Three months ended November 30, 2018






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

Business acquisition, integration and restructuring costs




13,181

Other expense, net




1,237

Income before income taxes




91,553






Three months ended November 30, 2017






Television

Radio

Corporate

Consolidated

Revenues

415,464

41,924

457,388

Direct cost of sales, general and administrative expenses

246,862

28,403

4,236

279,501

Segment profit (loss)(1)

168,602

13,521

(4,236)

177,887

Depreciation and amortization




20,758

Interest expense




32,075

Business acquisition, integration and restructuring costs




1,608

Other expense, net




7,554

Income before income taxes




115,892


(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 2019 Report to Shareholders.

 

REVENUES BY TYPE


Three months ended


November 30,

(unaudited - in thousands of Canadian dollars)

2018

2017

Advertising

321,335

312,211

Subscriber fees

126,684

126,255

Merchandising, distribution and other

19,452

18,922


467,471

457,388


 

NON-IFRS FINANCIAL MEASURES              


Three months ended

(unaudited - in thousands of Canadian dollars, except per share amounts)

November 30,

Adjusted Net Income Attributable to Shareholders

2018

2017

Net income attributable to shareholders

60,415

77,673

Adjustments, net of income tax:



Business acquisition, integration and restructuring costs

9,696

1,212

Adjusted net income attributable to shareholders

70,111

78,885

Basic earnings per share

$0.28

$0.38

Adjustments, net of income tax:



Business acquisition, integration and restructuring costs

$0.05

Adjusted basic earnings per share

$0.33

$0.38




Free Cash Flow



Cash provided by (used in):



Operating activities

45,371

85,677

Investing activities

(2,965)

(1,942)


42,406

83,735

Deduct: cash provided by business dispositions and strategic investments(1)

(520)

Free cash flow

42,406

83,215

(1) Strategic investments are comprised of investments in venture funds and associated companies.

 

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SOURCE Corus Entertainment Inc.


Source: Corus Entertainment Inc.