Strong revenue growth across the business driven by advertising revenue recovery and impressive streaming subscriber additions
- Consolidated revenues increased 15% for the quarter and decreased 1% year-to-date
- Consolidated segment profit(1) increased 17% for the quarter and 3% year-to-date
- Consolidated segment profit margin(1) of 32% for the quarter and 36% year-to-date
- Net income attributable to shareholders of $40.7 million ($0.20 per share basic) for the quarter and $152.6 million ($0.73 per share basic) year-to-date
- Net debt to segment profit(1) of 2.82 times at May 31, 2021, down from 3.18 times at August 31, 2020
- Free cash flow(1) of $64.7 million for the quarter and $216.8 million year-to-date
- Achieved recent milestone of over 600,000 paying subscribers on streaming platforms, more than doubled from the prior year
Corus Entertainment Inc. (TSX: CJR.B) announced its third quarter financial results today.
“Our third quarter marks a significant milestone for Corus, highlighted by strong operating execution with significant revenue and segment profit growth across all of our businesses,” said Doug Murphy, President and Chief Executive Officer. “We delivered impressive double-digit growth in Television and Radio advertising revenue, yet another quarter of robust paid streaming subscriber gains, and a fourth consecutive quarter of double-digit growth in our content revenue. Our unwavering focus is on advancing our strategic priorities and the merits of our operating and financial discipline is increasingly evident. Our fall schedule on Global TV is one of the strongest we have seen in many years. This quarter, we completed a highly successful refinancing and delivered strong free cash flow further strengthening our balance sheet and increasing our financial flexibility. We are confident that the strategic momentum at Corus is lasting and when coupled with meaningful progress on our long-term leverage goals will unlock additional value for our shareholders in the quarters and years ahead.”
Operational Highlights
Advertising revenues have sequentially improved from pandemic driven low in Q3 of the prior year:
- Television advertising revenues increased 22% in Q3, and decreased 2% on a year-to-date basis
- Subscriber revenues increased 2% in Q3 and 1% year-to-date as increases to paid subscriptions on streaming platforms offset linear subscriber declines
- Merchandising, distribution and other revenues increased 21% in Q3 and 15% year-to-date
- Radio segment revenues increased 31% in Q3 and decreased 14% on a year-to-date basis
The Company furthered its Strategic Priorities, unveiling its premium programming acquisitions and original content slate as well as announcing streaming subscriber metrics and new common audience segments for its optimized revenue offering:
- The Company announced its Global Television primetime and specialty networks’ programming lineup for 2021/22, as well as its slate of premium original content for production in 2021/22. Corus Studios unveiled a diverse slate of 23 lifestyle and factual reality series with 10 new series like Pamela Anderson’s Home Reno Project, Styled and Wall of Bakers and 13 returning hits such as Island of Bryan and Rust Valley Restorers. Nelvana greenlit five new and returning series including Super Wish and Agent Binky: Pets of the Universe.
- As of June 29, 2021, the Company has reached a new milestone of more than 600,000 paying subscribers to its STACKTV, Nick+ and other streaming platforms, an increase from more than 500,000 paying subscribers on April 9, 2021.
- In partnership with ThinkTV, the Company announced the addition of seven new industry-wide common advertising segments, bringing the total to 26. In addition, Corus has the ability to build virtually any custom segment for its clients.
Financial Position & Liquidity
- Free cash flow(1) of $64.7 million in Q3 and $216.8 million year-to-date compared to $90.8 million and $208.9 million, respectively, in the prior year. The decrease in free cash flow in the third quarter is principally attributable to the deferral of corporate income tax installments in the prior year, which resulted in a year-over-year increase in cash income taxes of $22.0 million, along with higher payments for program rights and a lower working capital contribution. The nine months ended May 31, 2021 benefited from CEWS receipts of $33.0 million, offset by the payment of deferred corporate income tax installments from fiscal 2020 of $17.2 million.
- On May 11, 2021, the Company issued $500.0 million in principal amount of 5.0% Senior Unsecured Notes due May 11, 2028 (the “Notes”). The net proceeds therefrom were used to repay amounts under the Company’s Term Credit Facility.
- Effective May 31, 2021, the Company’s credit agreement with a syndicate of banks was amended and restated. The principal amendments effected were to combine the Term Credit Facility tranches into one tranche and extend the maturity for the Term Credit Facility and Revolving Credit Facility to May 31, 2025.
- Net debt to segment profit(1) was 2.82 times at May 31, 2021, down from 3.18 times at August 31, 2020, principally due to repayment of bank loans of $602.2 million year-to-date, the issue of the Notes of $500.0 million which were added to net debt of as well as a higher cash position at the end of the quarter.
- As of May 31, 2021, the Company had $84.1 million of cash and cash equivalents and a committed $300 million revolving credit facility that remains undrawn.
Corus Entertainment Inc. reports its financial results in Canadian dollars.
The unaudited interim condensed consolidated financial statements and accompanying notes for the three and nine months ended May 31, 2021 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 June 29, 2021 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.
COVID-19 Update
All provinces and territories continue with mass vaccination programs at an accelerated pace to inoculate Canadians against COVID-19, with approximately 75% of adult Canadians having received at least one dose as of June 28, 2021. Current government forecasts indicate that all Canadians who want to be, will be fully immunized before the end of September 2021. Many provinces and territories have begun easing restrictions as infection rates decline considerably, but continue to closely monitor COVID-19 variants of concern that are more transmissible and carry increased health risks, which may lead to the reintroduction of emergency measures to counter any resurgence of COVID-19 cases. Disruptions caused by the imposition of emergency measures, particularly in the retail, tourism and entertainment sectors, would continue to negatively impact advertising revenues. There can be no certainty that inoculations will continue to reduce the impact of the COVID-19 pandemic on the Company’s business in the short to medium term.
The extent to which COVID-19 and any other pandemic or public health crisis impacts the Company’s business, affairs, operations, financial condition, liquidity, availability of credit and results of operations will depend on future developments that are highly uncertain and cannot be predicted with any meaningful precision, including new information which may emerge concerning the severity of the COVID-19 virus and the actions required to continue to contain the COVID-19 virus or remedy its impact, among others.
The Company’s financial priorities remain unchanged. Importantly, the Company remains committed to increasing its financial flexibility over the longer term. In this environment the Company believes it is prudent to conserve cash out of an abundance of caution. The Company is constantly evaluating the situation and monitoring any impacts or potential impacts to its business.
Use of Non-IFRS Financial Measures
This press release includes the non-IFRS financial measures of segment profit, segment profit margin, adjusted net income attributable to shareholders, adjusted basic earnings per share, free cash flow, net debt to segment profit, optimized revenues, and new platform revenues 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 press release 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 the adoption and anticipated impact of our new strategic plan, advertising and our expectations of advertising trends for fiscal 2021, 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”, including the adoption and anticipated impact of our new strategic 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, 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; failure to meet covenants under our senior credit facility; epidemics, pandemics or other public health crises, including the current outbreak of COVID-19 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, 2020 and the third quarter ended May 31, 2021 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.
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