Corus Entertainment Announces Fiscal 2016 First Quarter Results

  • Consolidated revenues up 1% for the quarter
  • Consolidated segment profit up 3% for the quarter
  • Net income attributable to shareholders of $41.3 million ($0.47 per share basic) for the quarter
  • Adjusted basic earnings per share of $0.49 per share for the quarter
  • Consolidated segment profit margins of 42% for the quarter

TORONTO, Jan. 13, 2016 /CNW/ - Corus Entertainment Inc. (TSX: CJR.B) announced its first quarter financial results today.

"Our solid results for the first quarter underscores our commitment to deliver growth in fiscal 2016" said Doug Murphy, President and Chief Executive Officer, Corus Entertainment. "The launch of Disney Channel (Canada) and the optimization of our portfolio of Kids brands across platforms drove growth in subscriber, merchandising, production and distribution revenues during the quarter.  Our transformational acquisition of Shaw Media, announced this morning, will create a powerful combination of media assets that will give us the scale, brands, content and team to succeed in a rapidly evolving media landscape."

Financial Highlights 




Three months ended 


November 30, 

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

2015

2014

Revenues 




Television

183,718

181,490


Radio

44,600

45,621


228,318

227,111




Segment profit(1)




Television

88,035

83,779


Radio

12,803

12,820


Corporate

(4,960)

(3,323)


95,878

93,276




Net income attributable to shareholders 

41,320

51,906

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

42,484

51,906




Basic earnings per share 

$ 0.47

$ 0.60

Adjusted basic earnings per share(1) (2)

$ 0.49

$ 0.60

Diluted earnings per share 

$ 0.47

$ 0.60




Free cash flow(1)

34,537

33,382




(1) Adjusted net income attributable to shareholders, adjusted basic earnings per share, segment profit, and free cash flow do not have standardized meanings prescribed by IFRS. The Company reports on segment profit and free cash flow because they are key measures used to evaluate performance. For definitions and explanations, see discussion under the Key Performance Indicators section of the Fiscal 2016 Report to Shareholders.

(2) For the three months ended November 30, 2015, basic earnings per share has been adjusted to exclude business acquisition, integration and restructuring charges of $2.4 million ($0.03 per share) and to include amortization of Pay TV assets reclassified as held for disposal of $1.4 million ($0.01 per share).

 

Consolidated Results from Operations

Consolidated revenues for the three months ended November 30, 2015 were $228.3 million, up 1% from $227.1 million last year.  Consolidated segment profit was $95.9 million, up 3% from $93.3 million last year.  Net income attributable to shareholders for the quarter was $41.3 million ($0.47 per share basic and diluted), as compared to $51.9 million ($0.60 per share basic and diluted) last year.  Net income attributable to shareholders for the first quarter of fiscal 2016 includes business acquisition, integration and restructuring costs of $2.4 million ($0.03 per share), and excludes amortization of Pay Television assets reclassified as assets held for disposal of $1.4 million ($0.01 per share). Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $42.5 million ($0.49 per share basic) in the quarter.

For fiscal 2016, certain of Corus' Pay Television business' ("Pay TV") assets and liabilities have been reclassified as assets held for disposal effective November 19, 2015 as a consequence of meeting the definition of assets held for sale under International Financial Reporting Standard 5 – Non-current Assets Held for Sale and Discontinued Operations.  The Company's business activities are conducted through two operating segments, Television and Radio.  The disposal group, Pay TV, is not a separate operating segment, but it is included as part of the Television operating segment.  Accordingly, the disposal group, Pay TV, does not qualify for discontinued operations presentation and, as a result, its operating results remain in continuing operations in the consolidated statements of income and comprehensive income.  Further discussion is provided in note 18 of the Company's interim consolidated financial statements for the period ended November 30, 2015. 

Operational Results - Highlights

Television

  • Segment revenues increased 1% in Q1 2016
  • Specialty advertising revenues decreased 6% in Q1 2016
  • Subscriber revenues increased 2% in Q1 2016
  • Merchandising, distribution and other revenues increased 33% in Q1 2016
  • Segment profit(1) increased 5% in Q1 2016
  • Segment profit margin(1) of 48% in Q1 2016

Radio

  • Segment revenues decreased 2% in Q1 2016
  • Segment profit(1) in Q1 2016 was consistent with the prior year
  • Segment profit margin(1) of 29% in Q1 2016

Corporate

  • Net debt to segment profit ratio reduced to 2.6 times
  • Continued strong free cash flow of $34.5 million in Q1 2016 compared to $33.4 million in Q1 2015

 (1)    Segment profit, segment profit margin and free cash flow do not have standardized meanings prescribed by IFRS.  The Company reports on segment profit, segment profit margin and free cash flow because they are key measures used to evaluate performance.  For definitions and explanations, see discussion under the Key Performance Indicators section of the 2016 Report to Shareholders.

Corus Entertainment Inc. reports in Canadian dollars.

The unaudited consolidated financial statements and accompanying notes for the three months ended
November 30, 2015 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 13, 2016 at 9:00 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 1.416.641.6202 and for North America is 1.800.925.4693.  More information can be found on the Corus Entertainment website at www.corusent.com in the Investor Relations section.

Use of Non-GAAP Financial Measures

This press release includes the non-GAAP financial measures of adjusted net income, adjusted basic earnings per share and free cash flow that are not in accordance with, nor an alternate to, generally accepted accounting principles ("GAAP") and may be different from non-GAAP measures used by other companies.  In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles.

Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. 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-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, GAAP financial results.  A reconciliation of the Company's non-GAAP 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.

Caution Concerning Forward-Looking Statements

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 statements").  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 the 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 are forward-looking statements.  Although Corus believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties and undue reliance should not be placed on such statements.  Certain material factors or assumptions are applied in making forward-looking statements, including without limitation factors and assumptions regarding advertising, distribution, merchandise and subscription revenues, operating costs and tariffs, taxes and fees and actual results may differ materially from those expressed or implied in such statements.  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 such forward-looking statements may be found in our Annual Information Form.  Corus cautions that the foregoing list of important factors that may affect future results is not exhaustive.  When relying on our forward-looking statements to make decisions with respect to Corus, investors and other should carefully consider the foregoing factors and other uncertainties and potential events. Unless otherwise required by applicable securities laws, Corus disclaims any intention or obligation to publicly update or revise any forward-looking statements whether as a result of new information, events or circumstances that arise after the date thereof or otherwise.

About Corus Entertainment

Corus Entertainment Inc. is a Canadian-based integrated media and content company that creates, broadcasts, licenses and delivers content across a variety of platforms for audiences around the world. The company's portfolio of multimedia offerings encompasses specialty television and radio with additional assets in pay television, television broadcasting, children's book publishing, children's animation, animation software, and technology and media services. Corus' television brands include ABC Spark, Cartoon Network (Canada), CMT (Canada), Disney Channel (Canada), Disney Junior, Disney XD, Nickelodeon (Canada), OWN: Oprah Winfrey Network (Canada), Telelatino, TELETOON, Treehouse, W Network, YTV, Historia, La chaîne Disney, Séries+ and TÉLÉTOON. Its 39 radio brands include CKNW AM 980, Rock 101, Country 105, 630 CHED, Fresh Radio, JUMP! 106.9, Q107 and 102.1 the Edge. The company also owns Nelvana, an internationally renowned animation production company, Kids Can Press, Toon Boom and Quay Media Services. A publicly traded company, Corus is listed on the Toronto Stock Exchange (CJR.B). Experience Corus on the web 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)

2015

2015

ASSETS



Current



Cash and cash equivalents

42,170

37,422

Accounts receivable

212,747

164,600

Income taxes recoverable

12,439

Prepaid expenses and other

13,735

13,855

Assets held for disposal

165,814




Total current assets

434,466

228,316




Tax credits receivable

25,459

25,958

Intangibles, investments and other assets

168,082

60,589

Property, plant and equipment

136,344

139,140

Program and film rights

450,588

315,899

Film investments

41,558

36,549

Broadcast licenses

906,590

956,984

Goodwill

775,688

827,859

Deferred tax assets

37,995

40,815


2,976,770

2,632,109




LIABILITIES AND SHAREHOLDERS' EQUITY



Current



Accounts payable and accrued liabilities

240,768

210,971

Current portion of long-term debt

150,000

150,000

Income taxes payable

834

Provisions

9,436

8,930

Liabilities associated with assets held for disposal

63,472

Total current liabilities

464,510

369,901




Long-term debt

631,518

651,002

Other long-term liabilities

404,341

138,833

Deferred tax liabilities

238,507

252,462

Total liabilities

1,738,876

1,412,198




SHAREHOLDERS' EQUITY



Share capital

998,144

994,571

Contributed surplus

9,738

9,471

Retained earnings

207,574

191,182

Accumulated other comprehensive income

7,750

7,353

Total equity attributable to shareholders

1,223,206

1,202,577

Equity attributable to non-controlling interest

14,688

17,334

Total shareholders' equity

1,237,894

1,219,911


2,976,770

2,632,109

 

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)

2015

2014

Revenues

228,318

227,111

Direct cost of sales, general and administrative expenses

132,440

133,835

Depreciation and amortization

11,002

5,774

Interest expense

18,890

12,681

Business acquisition, integration and restructuring costs

2,361

Other expense (income), net

3,925

1,806




Income before income taxes

59,700

73,015

Income tax expense

16,877

19,833




Net income for the period

42,823

53,182




Net income attributable to:



Shareholders

41,320

51,906

Non-controlling interest

1,503

1,276


42,823

53,182




Earnings per share attributable to shareholders:




Basic

$ 0.47

$ 0.60


Diluted

$ 0.47

$ 0.60




Net income for the period

42,823

53,182

Other comprehensive income (loss), net of tax:



Items that may be reclassified subsequently to income:




Unrealized foreign currency translation adjustment

299

1,230


Unrealized change in fair value of available-for-sale investments

(116)

(310)


Unrealized change in fair value of cash flow hedges

214

(38)


397

882




Comprehensive income for the period

43,220

54,064




Comprehensive income attributable to:




Shareholders

41,717

52,788


Non-controlling interest

1,503

1,276


43,220

54,064

 

CORUS ENTERTAINMENT INC.


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY





























(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



At August 31, 2015

994,571

9,471

191,182

7,353

1,202,577

17,334

1,219,911


Comprehensive income

41,320

397

41,717

1,503

43,220


Dividends declared

(24,928)

(24,928)

(4,149)

(29,077)


Issuance of shares under dividend reinvestment plan

3,573

3,573

3,573


Share-based compensation expense

267

267

267


At November 30, 2015

998,144

9,738

207,574

7,750

1,223,206

14,688

1,237,894











At August 31, 2014

967,330

8,385

313,361

3,767

1,292,843

17,283

1,310,126


Comprehensive income

51,906

882

52,788

1,276

54,064


Dividends declared

(23,464)

(23,464)

(4,134)

(27,598)


Issuance of shares under stock option plan

1,711

(292)

1,419

1,419


Issuance of shares under dividend reinvestment plan

5,485

5,485

5,485


Share-based compensation expense

529

529

529


At November 30, 2014

974,526

8,622

341,803

4,649

1,329,600

14,425

1,344,025











 

CORUS ENTERTAINMENT INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS





Three months ended
November 30,

(unaudited - in thousands of Canadian dollars)

2015

2014

OPERATING ACTIVITIES



Net income for the period

42,823

53,182

Adjustments to reconcile net income to cash provided by operating activities:




Depreciation and amortization

11,002

5,774


Amortization of program and film rights

54,263

54,337


Amortization of film investments

3,331

6,921


Deferred income taxes

1,938

2,847


Share-based compensation expense

267

529


Imputed interest on long-term liabilities

10,451

3,496


Venture fund distribution gain

(533)


Other

198

482


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

(29,825)

(26,449)

Payment of program and film rights

(45,129)

(50,417)

Net additions to film investments

(9,827)

(13,815)

Cash provided by operating activities

38,959

36,887




INVESTING ACTIVITIES



Additions to property, plant and equipment

(2,703)

(2,823)

Consideration for assets held for disposal

21,100

Business combination

(2,476)

Venture fund distribution

1,684

Net cash flows for intangibles, investments and other assets

(2,663)

(15,161)

Other

(2,328)

(511)

Cash provided by (used) in investing activities

12,614

(18,495)




FINANCING ACTIVITIES



Increase (decrease) in bank loans

(19,999)

19,791

Issuance of shares under stock option plan

1,419

Dividends paid

(21,298)

(17,919)

Dividends paid to non-controlling interest

(4,149)

(4,134)

Other

(1,379)

(1,294)

Cash used in financing activities

(46,825)

(2,137)

Net change in cash and cash equivalents during the period

4,748

16,255

Cash and cash equivalents, beginning of the period

37,422

11,585

Cash and cash equivalents, end of the period

42,170

27,840

 

CORUS ENTERTAINMENT INC.

BUSINESS SEGMENT INFORMATION


(unaudited - in thousands of Canadian dollars)







Three months ended November 30, 2015



Television

Radio

Corporate

Consolidated

Revenues

183,718

44,600

228,318

Direct cost of sales, general and administrative expenses

95,683

31,797

4,960

132,440

Segment profit (loss)(1)

88,035

12,803

(4,960)

95,878

Depreciation and amortization




11,002

Interest expense




18,890

Business acquisition, integration and restructuring costs




2,361

Other expense, net




3,925

Income before income taxes




59,700







Three months ended November 30, 2014



Television

Radio

Corporate

Consolidated

Revenues

181,490

45,621

227,111

Direct cost of sales, general and administrative expenses

97,711

32,801

3,323

133,835

Segment profit (loss)(1)

83,779

12,820

(3,323)

93,276

Depreciation and amortization




5,774

Interest expense




12,681

Other expense, net




1,806

Income before income taxes




73,015

(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 2016 Report to Shareholders.

 

Revenues by type




Three months ended


November 30,

November 30,


2015

2014

Advertising

115,341

120,966

Subscriber fees

86,954

85,414

Merchandising, distribution and other

26,023

20,731


228,318

227,111

 

SOURCE Corus Entertainment Inc.

For further information: Doug Murphy, President and Chief Executive Officer, Corus Entertainment Inc., 416.479.6649; Tom Peddie, Executive Vice President and Chief Financial Officer, Corus Entertainment Inc., 416.479.6080; Sally Tindal, Vice President, Communications, Corus Entertainment Inc., 416.479.6107

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