• 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

TORONTO, Jan.10, 2020 /PRNewswire/ - Corus Entertainment Inc. (TSX: CJR.B) announced its first quarter financial results today.

"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 Doug Murphy, President and Chief Executive Officer. "The strong momentum from last year continues as we invest to position Corus for the future, advancing our strategic initiatives to diversify our revenues and deliver our premium video content in more ways within Canada and around the world. Our data-driven selling approach is setting the new standard and providing innovative, client-centric solutions for our advertisers. Once again, our strong free cash flow enabled us to further reduce our bank debt and this, combined with our recently announced share buyback program and attractive dividend yield, is providing additional value to our shareholders."

Financial Highlights


Three months ended
November 30,

(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

$0.37

$0.28

Adjusted basic earnings per share (1) (3)

$0.38

$0.33

Diluted earnings per share

$0.37

$0.28

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 November 30, 2019 was impacted by the adoption of the new accounting standard, IFRS 16 - Leases, effective September 1, 2019. This has resulted in an increase in segment profit and free cash flow of approximately $3.4 million and $3.9 million, respectively, for the quarter. Further discussion of this can be found in the Impact of New Accounting Policies section of the First Quarter 2020 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, 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 November 30, 2019 were $467.9 million, consistent with $467.5 million last year, and consolidated segment profit was $184.1 million, a decrease of 4% from $191.6 million last year. Net income attributable to shareholders for the quarter ended November 30, 2019 was $78.1 million ($0.37 per share basic), as compared to $60.4 million ($0.28 per share basic) last year. Net income attributable to shareholders for the first quarter of fiscal 2020 includes integration, restructuring and other costs of $2.5 million ($0.01 per share, net of income taxes). Adjusting for the impact of this item results in an adjusted net income attributable to shareholders of $80.0 million ($0.38 per share basic) for the quarter. Net income attributable to shareholders for the prior year quarter includes integration, restructuring and other costs of $13.2 million ($0.05 per share, net of income taxes). 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) for the prior year quarter.

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 at August 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 through November 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.

 

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, 2019 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 10, 2020 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, 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 August 31, 2019 and the first quarter ended November 30, 2019 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 develops and delivers high quality brands and content across platforms for audiences around the world. Engaging audiences since 1999, the company's portfolio of multimedia offerings encompass 34 specialty television services, 39 radio stations, 15 conventional television stations, a suite of digital assets, animation software, technology and media services. Corus is an established creator of globally distributed content through Nelvana animation studio, Corus Studios, and children's book publishing house Kids Can Press. The company also owns innovative full-service social digital agency so.da, and lifestyle entertainment company Kin Canada. Corus' roster of premium brands includes Global Television, W Network, HGTV Canada, Food Network Canada, HISTORY®, Showcase, Adult Swim, National Geographic, Disney Channel Canada, YTV, Global News, Globalnews.ca, Q107, Country 105, and CFOX. Visit Corus at www.corusent.com.

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(unaudited - in thousands of Canadian dollars)

As at November 30,

As at August 31,

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

Goodwill

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


 

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)

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

$0.37

$0.28

Diluted

$0.37

$0.28


 

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, 2019

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 November 30, 2019

822,508

1,509,408

(688,565)

22,591

1,665,942

150,475

1,816,417











(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

—

—

—

9,396

9,396

—

9,396


IFRS 15 transitional adjustment

—

—

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



 

CORUS ENTERTAINMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS


Three months ended


November 30,

(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


 

CORUS ENTERTAINMENT INC.
BUSINESS SEGMENT INFORMATION


(unaudited - in thousands of Canadian dollars)





Three months ended November 30, 2019






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 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

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 November 30, 2019 was impacted by the adoption of the new accounting standard, IFRS 16 - Leases, effective September 1, 2019. This has resulted in an increase in segment profit and free cash flow of approximately $3.4 million and $3.9 million, respectively, for the quarter. Further discussion of this can be found in the Impact of New Accounting Policies section of the First Quarter 2020 Report to Shareholders.


 

REVENUES BY TYPE


Three months ended


November 30,

(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) 

November 30,

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

$0.37

$0.28

Adjustments, net of income tax:



Integration, restructuring and other costs

0.01

0.05

Adjusted basic earnings per share

$0.38

$0.33

 


Three months ended

(unaudited - in thousands of Canadian dollars)

November 30,

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 November 30, 2019 was impacted by the adoption of IFRS 16, effective September 1, 2019. This has resulted in an increase in free cash flow of approximately $3.9 million for the quarter. Further discussion of this can be found in the Impact of New Accounting Policies section of the First Quarter 2020 Report to Shareholders.



(2)

Strategic investments are comprised of investments in venture funds and associated companies

 


Three months ended

(unaudited - in thousands of Canadian dollars)

November 30,

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 September 1, 2019, the Company adopted IFRS 16. There has been no restatement of segment profit for the prior three quarters. Refer to Impact of New Accounting Policies section of the First Quarter 2020 Report to Shareholders for more information.

 

Cision View original content:http://www.prnewswire.com/news-releases/corus-entertainment-announces-fiscal-2020-first-quarter-results-300984785.html

SOURCE Corus Entertainment Inc.


Source: Corus Entertainment Inc.