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CORUS ENTERTAINMENT ANNOUNCES FISCAL 2023 THIRD QUARTER RESULTS

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  • Consolidated revenue decreased 8% for the quarter and 7% for the year-to-date
  • Consolidated segment profit(1) decreased 22% for the quarter and 26% for the year-to-date
  • Consolidated segment profit margin(1) of 24% for the quarter and 25% for the year-to-date
  • Net loss attributable to shareholders of $495.1 million ($2.48 loss per share basic) for the quarter and $479.1 million ($2.40 loss per share basic) for the year-to-date, which includes non-cash impairment charges of $590.0 million related to goodwill, broadcast licences as well as trade mark and brand assets
  • Net debt to segment profit(1) of 3.85 times at May 31, 2023, up from 3.02 times at August 31, 2022
  • Free cash flow(1) of $26.0 million for the quarter and $75.2 million for the year-to-date

TORONTO, June 29, 2023 /PRNewswire/ – Corus Entertainment Inc. (TSX: CJR.B) announced its third quarter financial results today.

“The advertising recession which began last summer continues and has negatively impacted our revenues and third quarter results,” said Doug Murphy, President and Chief Executive Officer. “As we balance the near-term challenges, we are successfully evolving our business into a powerful multi-platform aggregator of premium video with leading cross platform monetization capabilities. Our impressive premium video content revealed at Corus’ recent sales upfront will be available for all audiences across Global, our specialty networks and streaming portfolio. We are intensely pursuing efficiencies and improved productivity with significant cost reductions as we streamline our operating model to position Corus for an inevitable improvement in the economy and create shareholder value over the longer term.”

Financial Highlights


Three months ended
May 31,

%

Nine months ended
May 31,

%

(in thousands of Canadian dollars except per share amounts)

2023

2022

Change

2023

2022

Change

Revenue







Television

371,159

404,130

(8 %)

1,094,236

1,178,538

(7 %)

Radio

26,176

29,328

(11 %)

78,161

80,454

(3 %)


397,335

433,458

(8 %)

1,172,397

1,258,992

(7 %)






Segment profit (loss) (1)







Television

96,028

127,518

(25 %)

290,806

399,127

(27 %)

Radio

4,112

5,667

(27 %)

10,484

11,538

(9 %)

Corporate

(3,235)

(9,457)

66 %

(13,558)

(23,211)

42 %


96,905

123,728

(22 %)

287,732

387,454

(26 %)






Segment profit margin (1)







Television

26 %

32 %


27 %

34 %


Radio

16 %

19 %


13 %

14 %


Consolidated

24 %

29 %


25 %

31 %







Net income (loss) attributable to shareholders

(495,073)

29,621


(479,136)

122,007


Adjusted net income attributable to shareholders (1)

18,042

30,159

(40 %)

37,628

124,054

(70 %)






Basic earnings (loss) per share

($2.48)

$0.14


($2.40)

$0.59


Adjusted basic earnings per share (1)

$0.09

$0.15


$0.19

$0.60


Diluted earnings (loss) per share

($2.48)

$0.14


($2.40)

$0.59







Free cash flow (1)

25,979

27,468

(5 %)

75,186

194,872

(61 %)



(1)

In addition to disclosing results in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), the Company also provides supplementary non-IFRS measures as a method of evaluating the Company’s performance and to provide a better understanding of how management views the Company’s performance. These non-IFRS or non-GAAP measures can include: segment profit (loss), segment profit margin, free cash flow, adjusted net income attributable to shareholders, adjusted basic earnings per share, net debt to segment profit, optimized advertising revenue and new platform revenue. These are not measurements in accordance with IFRS and should not be considered as an alternative to any other measure of performance under IFRS. Please see additional discussion and reconciliations under the Key Performance Indicators and Non-GAAP Financial Measures section of the Company’s Third Quarter 2023 Report to Shareholders.

Segment Revenue


Three months ended
May 31,

%

Nine months ended
May 31,

%

(in thousands of Canadian dollars)

2023

2022

Change

2023

2022

Change

Revenue

 

371,159



 

1,094,236



Television

404,130

(8 %)

1,178,538

(7 %)

Advertising

209,008

237,993

(12 %)

630,645

707,725

(11 %)

Subscriber

124,225

130,410

(5 %)

375,791

390,768

(4 %)

Distribution, production and other

37,926

35,727

6 %

87,800

80,045

10 %

Radio

26,176

29,328

(11 %)

78,161

80,454

(3 %)

Total Revenue

397,335

433,458

(8 %)

1,172,397

1,258,992

(7 %)






Optimized advertising revenue (1)

53 %

47 %

(1 %)

53 %

42 %

14 %

New platform revenue (1)

12 %

11 %

(6 %)

11 %

10 %

3 %

(1)

Optimized advertising revenue and new platform revenue do not have standardized meanings prescribed by IFRS. For definitions and explanations, see the discussion under the Key Performance Indicators and Non-GAAP Financial Measures section of the Third Quarter 2023 Report to Shareholders.

Operational Highlights 

Corus advanced its strategic priorities on multiple fronts. The Company expanded its premium digital video offerings for subscribers and advertisers, announced its Fall schedule and 2023/24 series line-up for Global TV, its Specialty networks and STACKTV, and highlighted its Canadian original content lineup for 2023/24. The Company advanced its capital allocation priorities through investments in the business to support future growth opportunities while continuing to navigate an uncertain macroeconomic environment.

  • Global TV announced its 2023/24 primetime lineup of new acquisitions and returns of major hit series. Global TV’s 2023/24 roster will deliver 17 hours of simulcast programming in primetime for 2023/24. Early Fall features the return of Survivor for Season 45 and I Can See Your Voice alongside new Global Original drama Robyn Hood. Global’s 2023/24 season welcomes back popular franchises FBI and NCIS, along with So Help Me Todd, Fire Country, Abbott Elementary and Ghosts, and introduces new dramas Matlock, Elsbeth, and Doc, and new comedy Poppa’s House.
  • Specialty portfolio and streaming platforms announced 2023/24 series lineup. Corus’ specialty drama networks and STACKTV will feature new Peacock Originals Ted, Based on a True Story and Apples Never Fall, and returning seasons of Bel Air, Dr. Death, and more. Corus’ unscripted and reality networks, and STACKTV will see the return of The Real Housewives of New York City, Fixer Upper: The Hotel, and new series The Unbelievable with Dan Aykroyd (wt), Beyond Skinwalker Ranch, and more.
  • Nelvana and Corus Studios deliver a diverse lineup of Canadian original content for 2023/24 across its brands. This includes a total of 25 new and returning series, with 11 titles from Corus Studios and eight from Nelvana. Corus Studios titles include Bryan’s All In (10×60), Pamela’s Garden of Eden (8×60), Scott’s Vacation House Rules (7×60), Rock Solid Builds (8×60), The Big Bake (14×60) and more. Nelvana’s titles include The Hardy Boys (8×60), Agent Binky: Pets of the Universe (10×30), Millie Magnificent (52×11), and more.

Financial Highlights

  • On June 29, 2023, Corus declared a dividend of $0.03 per Class B share and $0.02875 per Class A share, payable on August 15, 2023 to shareholders of record at July 31, 2023.
  • Free cash flow(1) of $26.0 million in Q3 and $75.2 million year-to-date compared to $27.5 million and $194.9 million year-to-date, respectively, in the same comparable prior year periods. The decrease in free cash flow(1) for the third quarter is attributable to an increase in cash used in investing activities of $1.5 million. The decrease in free cash flow(1) for the nine months ended May 31, 2023 is mainly attributable to a decrease in cash provided by operating activities of $75.7 million and cash provided by investing activities in the prior year’s nine months ended May 31, 2022, related to a $43.5 million non-recurring venture fund distribution.
  • Net debt to segment profit(1) was 3.85 times at May 31, 2023, up from 3.02 times at August 31, 2022. The main driver of the increase in this ratio is the decrease of segment profit(1) for the most recent four quarters.
  • As of May 31, 2023, the Company had $56.2 million of cash and cash equivalents and approximately $300.0 million available under its Revolving Facility, $197.5 million of which could be drawn.

(1)

Free cash flow, net debt to segment profit and 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 and Non-GAAP Financial Measures section of the Third Quarter 2023 Report to Shareholders and/or Management’s Discussion and Analysis in the Company’s Annual Report for the year ended August 31, 2022 (“2022 MD&A”).

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, 2023 and Management’s Discussion and Analysis are available on the Company’s website at www.corusent.com in the Investor Relations section and under the Company’s SEDAR profile at www.sedar.com.

A conference call with Corus senior management is scheduled for June 29, 2023 at 8:00 a.m. ET. While this call is directed at analysts and investors, members of the media are welcome to listen in. To instantly join the conference call by phone, please use the following URL to easily register and be connected to the conference call automatically: https://emportal.ink/3MHd8aP. You can also dial direct to be entered into the call by an Operator. The dial-in number for the conference call for local and international callers is 1.416.764.8650 and for North America is 1.888.664.6383. This call will be archived and available for replay in the Investor Relations section of the Corus website beginning June 29, 2023, at 11a.m.ET or accessible by telephone until July 6, 2023, at 1.888.390.0541 (toll free North America) or 416.764.8677 (local or international), using replay code 815361#. More information can be found on the Corus Entertainment website at www.corusent.com in the Investor Relations section.

Risks and Uncertainties

Significant risks and uncertainties affecting the Company and its business are discussed under the heading “Risks and Uncertainties” and “Seasonal Fluctuations” in the 2022 MD&A, as filed at www.sedar.com on October 24, 2022.

As discussed further in the 2022 MD&A, the Company’s operating performance is affected by general Canadian and worldwide economic conditions. Changes or volatility in domestic or international economic conditions, economic uncertainty or geopolitical conflict and tensions, including current ongoing factors that can create or exacerbate recessionary conditions, may affect discretionary consumer and business spending, including on advertising and marketing, resulting in changes to demand for Corus’ product and services offerings. The continued elevated consumer price index inflation also affects the Company’s business, operations and financial performance through disruption to supply chains, increased costs of programming, services and labour, reduced advertising demand or spending, or lower demand for the Company’s products and services, all of which may lead to decreased revenue or profitability. In addition, labour actions such as the Writer’s Guild of America strike have shut-down the majority of U.S. based scripted productions, which may impact the timing of premium content premieres and types of programming on the Company’s services in the coming months, which may negatively impact audience levels.

Other financial risks which may be related to or elevated by the foregoing include leverage risk related to the Company’s financial covenants and debt servicing payments, requirements and compliance under its credit facility, and impacts thereof; the volatility of the market price for the Company’s Class B Non-Voting Shares, which can be impacted by factors beyond the Company’s control and which can decline even if the Company’s operating results, underlying asset values or prospects have not changed; and risks related to the payment, amount or timing of dividends. Please see the 2022 MD&A for a full discussion of these and other risks and uncertainties.

Outlook

Currently, the Company expects its Television advertising revenue in the fourth quarter will decline moderately compared to the prior year, given continuing macroeconomic and other risk factors described above and in the 2022 MD&A. While the Company continues to expect improvement in the macro-environment over the medium term, visibility continues to be limited at this time.

Use of Non-GAAP Financial Measures

This press release includes the non-GAAP or non-IFRS financial measures of segment profit, segment profit margin, free cash flow, adjusted net income attributable to shareholders, adjusted basic earnings per share, net debt to segment profit, as well as supplementary financial measures not presented in the financial statements such as optimized advertising revenue, and new platform revenue. Non-GAAP or non-IFRS measures that are not in accordance with, nor an alternate to, generally accepted accounting principles (“GAAP”) and may be different from non-GAAP or non-IFRS 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 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-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, IFRS financial results. A reconciliation of the Company’s non GAAP measures is included in the Company’s most recent Report to Shareholders for the three and nine months ended May 31, 2023, 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”). This forward-looking information relates to, among other things, the Company’s objectives, goals, strategies, targets, intentions, plans, estimates and outlook, including the adoption and anticipated impact of the Company’s strategic plan, advertising and expectations of advertising trends for fiscal 2023, subscriber revenue and anticipated subscription trends, distribution, production and other revenue, the Company’s dividend policy and the payment of future dividends; the Company’s leverage target; the Company’s ability to manage retention and reputation risks related to its on-air talent; expectations regarding financial performance, including capital allocation strategy and capital structure management, 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” or the negatives of these terms 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 including: the impact of recessionary conditions and continuing supply chain constraints; the potential impact of new competition and industry mergers and acquisitions; changes to applicable tax, licensing and regulatory regimes; inflation and interest rates, stability of the advertising, subscription, production and distribution markets; changes to key suppliers or clients; operating and capital costs and tariffs, taxes and fees, the Company’s ability to source, produce or sell desirable content and the Company’s capital and operating results being consistent with its 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: the Company’s ability to attract, retain and manage fluctuations in advertising revenue; the Company’s ability to maintain relationships with key suppliers and clients and on anticipated financial terms and conditions; audience acceptance of the Company’s television programs and cable networks; the Company’s ability to manage retention and reputation risks related to its on-air talent; the Company’s ability to recoup production costs; the availability of tax credits; the availability of expected news, production and related credits, programs and funding; the existence of co-production treaties; the Company’s ability to compete in any of the industries in which it does business including with competitors which may not be regulated in the same way or to the same degree; the business and strategic opportunities (or lack thereof) that may be presented to and pursued by the Company; 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 including statements, decisions or positions by applicable regulators including, without limitation, the Canadian Radio-television and Telecommunications Commission (“CRTC”), Canadian Heritage and Innovation, Science and Economic Development Canada (“ISED”); changes to licensing status or conditions; unanticipated or un mitigatable programming costs; the Company’s ability to integrate and realize anticipated benefits from its acquisitions and to effectively manage its growth; the Company’s ability to successfully defend itself against litigation matters and complaints; failure to meet covenants under the Company’s senior credit facility, senior unsecured notes or other instruments or facilities; epidemics, pandemics or other public health and safety crises in Canada and globally, including COVID-19; physical and operational changes to the Company’s key facilities and infrastructure; cybersecurity threats or incidents to the Company or its key suppliers and vendors; 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 Company’s Management’s Discussion and Analysis for the year ended August 31, 2022 and under the heading “Risk Factors” in the Company’s Annual Information Form for the year ended August 31, 2022. Corus cautions that the foregoing list of important assumptions and factors that may affect future results is not exhaustive. When relying on the Company’s 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 and may be updated or amended from time to time. Except as 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 33 specialty television services, 39 radio stations, 15 conventional television stations, digital and streaming services, animation software, technology and media services. Corus is an internationally-renowned content creator and distributor through Nelvana, a world class animation studio expert in all formats and Corus Studios, a globally recognized producer of hit scripted and unscripted content. The company also owns full-service social digital agency so.da, lifestyle entertainment company Kin Canada, leading 2D animation software supplier Toon Boom and children’s book publishing house, Kids Can Press. Corus’ roster of premium brands includes Global Television, W Network, HGTV Canada, Food Network Canada, Magnolia Network Canada, The HISTORY® Channel, Showcase, Adult Swim, National Geographic, Disney Channel Canada, YTV, Global News, Globalnews.ca, Q107, Country 105, and CFOX, along with streaming platforms STACKTV, TELETOON+, the Global TV App and Curiouscast. Corus is the domestic advertising representative and an original content partner for Pluto TV, a Paramount Company, which is the leading free ad-supported streaming television (FAST) service. For more information visit www.corusent.com

CORUS ENTERTAINMENT INC.



INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION



 

 

(unaudited – in thousands of Canadian dollars)

As at May 31,

As at August 31,

2023

2022

ASSETS



Current



Cash and cash equivalents

56,173

54,912

Accounts receivable

349,666

311,015

Income taxes recoverable

10,975

17,180

Prepaid expenses and other assets

25,292

21,423

Total current assets

442,106

404,530

Tax credits receivable

53,162

32,744

Investments and other assets

60,022

63,931

Property, plant and equipment

273,145

294,026

Program rights

731,247

660,722

Film investments

66,971

59,122

Intangibles

1,304,831

1,620,796

Goodwill

21,099

316,308

Deferred income tax assets

48,021

50,301


3,000,604

3,502,480

 

LIABILITIES AND EQUITY



Current



Accounts payable and accrued liabilities

637,006

526,899

Current portion of long-term debt

14,097

15,574

Provisions

10,234

8,540

Total current liabilities

661,337

551,013

Long-term debt

1,236,885

1,246,076

Other long-term liabilities

372,853

376,570

Provisions

8,272

9,830

Deferred income tax liabilities

316,888

415,010

Total liabilities

2,596,235

2,598,499

 

EQUITY



Share capital

281,052

781,918

Contributed surplus

2,012,658

1,511,481

Accumulated deficit

(2,068,543)

(1,574,358)

Accumulated other comprehensive income

34,655

33,000

Total equity attributable to shareholders

259,822

752,041

Equity attributable to non-controlling interests

144,547

151,940

Total equity

404,369

903,981


3,000,604

3,502,480

CORUS ENTERTAINMENT INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)


Three months ended
May 31, 

Nine months ended
May 31, 

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

2023

2022

2023

2022

Revenue

397,335

433,458

1,172,397

1,258,992

Direct cost of sales, general and administrative expenses

300,430

309,730

884,665

871,538

Depreciation and amortization

40,178

39,952

120,594

117,080

Interest expense

33,278

28,514

102,401

79,795

Goodwill, broadcast licence and other asset impairment

590,000

590,000

Debt refinancing

(3,830)

(3,428)

Restructuring and other costs

10,580

4,169

15,546

6,223

Other expense (income), net

(1,997)

10,795

6,424

7,592

Income (loss) before income taxes

(575,134)

44,128

(547,233)

180,192

Income tax expense (recovery)

(83,982)

11,136

(75,760)

46,323

Net income (loss) for the period

(491,152)

32,992

(471,473)

133,869

 

Other comprehensive income (loss), net of income taxes





Items that may be reclassified subsequently to income (loss):





Unrealized change in fair value of cash flow hedges

461

1,506

1,755

5,007

Unrealized foreign currency translation adjustment

(143)

8

1,166

40


318

1,514

2,921

5,047

Items that will not be reclassified to income (loss):





Unrealized change in fair value of financial assets

(578)

(5,649)

(1,266)

5,019

Actuarial gain (loss) on post-retirement benefit plans

(578)

4,467

(31)

6,927


(1,156)

(1,182)

(1,297)

11,946

Other comprehensive income (loss), net of income taxes

(838)

332

1,624

16,993

Comprehensive income (loss) for the period

(491,990)

33,324

(469,849)

150,862






Net income (loss) attributable to:





Shareholders

(495,073)

29,621

(479,136)

122,007

Non-controlling interests

3,921

3,371

7,663

11,862


(491,152)

32,992

(471,473)

133,869






Comprehensive income (loss) attributable to:





Shareholders

(495,911)

29,953

(477,512)

139,000

Non-controlling interests

3,921

3,371

7,663

11,862


(491,990)

33,324

(469,849)

150,862






Earnings (loss) per share attributable to shareholders:





Basic

($2.48)

$0.14

($2.40)

$0.59

Diluted

($2.48)

$0.14

($2.40)

$0.59

CORUS ENTERTAINMENT INC.

INTERIM CONDENSED 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
interests

 

 

 

Total equity

As at August 31, 2022

781,918

1,511,481

(1,574,358)

33,000

752,041

151,940

903,981

Comprehensive income (loss)

(479,136)

1,624

(477,512)

7,663

(469,849)

Dividends declared

(17,490)

(17,490)

(15,750)

(33,240)

Reduction of stated capital

(500,000)

500,000

Change in fair value of put option
liability

 

 

 

(754)

 

 

(754)

 

65

 

(689)

Shares repurchased under normal
 course issuer bid (“NCIB”)

 

(3,089)

 

1,119

 

 

 

(1,970)

 

 

(1,970)

Reversal of automatic share
purchase commitment

 

2,223

 

(504)

 

 

 

1,719

 

 

1,719

Actuarial loss on post-retirement benefit
 plans

 

 

 

(31)

 

31

 

 

 

Share-based compensation expense

562

562

562

Reallocation of equity interest

3,226

3,226

(3,226)

Equity funding by a non-controlling
 interest

 

 

 

 

 

 

3,855

 

3,855

As at May 31, 2023

281,052

2,012,658

(2,068,543)

34,655

259,822

144,547

404,369

 

 

 

(unaudited – in thousands of Canadian dollars)

 

 

 

Share
capital

 

 

 

Contributed

surplus

 

 

 

Accumulated

deficit

 

 

Accumulated

other
comprehensive

income

 

 

 

Total equity
attributable to
shareholders

 

 

 

Non-
controlling
interests

 

 

 

Total equity

As at August 31, 2021

816,189

1,512,431

(1,282,897)

21,811

1,067,534

152,829

1,220,363

Comprehensive income

122,007

16,993

139,000

11,862

150,862

Dividends declared

(37,411)

(37,411)

(14,145)

(51,556)

Business acquisition

864

864

Change in fair value of put option
liability

 

 

 

(1,557)

 

 

(1,557)

 

(254)

 

(1,811)

Shares repurchased under normal 
course issuer bid

 

(21,127)

 

(2,852)

 

 

 

(23,979)

 

 

(23,979)

Share repurchase commitment
under NCIB

 

(4,231)

 

(316)

 

 

 

(4,547)

 

 

(4,547)

Actuarial gain on post-retirement benefit 
plans

 

 

 

6,927

 

(6,927)

 

 

 

Share-based compensation expense

935

935

935

Equity funding by a non-controlling
 interest

 

 

 

 

 

 

5,719

 

5,719

As at May 31, 2022

790,831

1,510,198

(1,192,931)

31,877

1,139,975

156,875

1,296,850

CORUS ENTERTAINMENT INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


Three months ended

Nine months ended



May 31,


May 31,

(unaudited – in thousands of Canadian dollars)

2023

2022

2023

2022

OPERATING ACTIVITIES





Net income (loss) for the period

(491,152)

32,992

(471,473)

133,869

Adjustments to reconcile net income (loss) to cash flow from operations:





Amortization of program rights

158,748

150,093

454,688

426,213

Amortization of film investments

12,195

12,051

22,704

19,135

Depreciation and amortization

40,178

39,952

120,594

117,080

Deferred income tax recovery

(91,630)

(4,861)

(100,189)

(7,342)

Goodwill, broadcast licence and other asset impairment

590,000

590,000

Share-based compensation expense

194

324

562

935

Imputed interest

13,675

11,827

45,031

34,967

Debt refinancing

(3,830)

(3,428)

Payment of program rights

(161,185)

(173,366)

(494,232)

(403,574)

Net spend on film investments

(18,674)

(11,803)

(54,949)

(39,397)

Other

1,015

10,882

1,156

5,826

Cash flow from operations

53,364

64,261

113,892

284,284

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

(23,554)

(34,463)

(28,559)

(123,284)

Cash provided by operating activities

29,810

29,798

85,333

161,000

 

INVESTING ACTIVITIES





Additions to property, plant and equipment

(3,548)

(2,819)

(8,921)

(8,866)

Proceeds from sale of property

396

736

125

Business combination, net of cash acquired

3,606

Venture fund distribution

43,478

Net cash flows for intangibles, investments and other assets

(679)

489

(2,033)

(1,729)

Cash provided by (used in) investing activities

(3,831)

(2,330)

(10,218)

36,614

 

FINANCING ACTIVITIES





Decrease in bank loans

(10,203)

(27,872)

(12,273)

(347,630)

Financing fees

(1,492)

(998)

(5,892)

Issuance of senior unsecured notes

250,000

Share repurchase under NCIB

(17,231)

(2,045)

(23,081)

Equity funding by a non-controlling interest

3,855

3,742

Payment of lease liabilities

(4,570)

(4,441)

(13,383)

(12,609)

Dividends paid

(5,979)

(12,415)

(29,944)

(37,411)

Dividends paid to non-controlling interests

(5,677)

(7,520)

(15,750)

(14,145)

Other

(1,229)

(254)

(3,316)

(2,580)

Cash used in financing activities

(27,658)

(71,225)

(73,854)

(189,606)

Net change in cash and cash equivalents during the period

(1,679)

(43,757)

1,261

8,008

Cash and cash equivalents, beginning of the period

57,852

95,450

54,912

43,685

Cash and cash equivalents, end of the period

56,173

51,693

56,173

51,693

CORUS ENTERTAINMENT INC.

BUSINESS SEGMENT INFORMATION

(unaudited – in thousands of Canadian dollars)

Three months ended May 31, 2023


Television

Radio

Corporate

Consolidated

Revenue

371,159

26,176

397,335

Direct cost of sales, general and administrative expenses

275,131

22,064

3,235

300,430

Segment profit (loss)(1)

96,028

4,112

(3,235)

96,905

Depreciation and amortization




40,178

Interest expense




33,278

Goodwill, broadcast licence and other asset impairment




590,000

Restructuring and other costs




10,580

Other income, net




(1,997)

Loss before income taxes




(575,134)

 

Three months ended May 31, 2022






Television

Radio

Corporate

Consolidated

Revenue

404,130

29,328

433,458

Direct cost of sales, general and administrative expenses

276,612

23,661

9,457

309,730

Segment profit (loss)(1)

127,518

5,667

(9,457)

123,728

Depreciation and amortization




39,952

Interest expense




28,514

Debt refinancing




(3,830)

Restructuring and other costs




4,169

Other expense, net




10,795

Income before income taxes




44,128

Nine months ended May 31, 2023






Television

Radio

Corporate

Consolidated

Revenue

1,094,236

78,161

1,172,397

Direct cost of sales, general and administrative expenses

803,430

67,677

13,558

884,665

Segment profit (loss)(1)

290,806

10,484

(13,558)

287,732

Depreciation and amortization




120,594

Interest expense




102,401

Goodwill, broadcast licence and other asset impairment




590,000

Restructuring and other costs




15,546

Other expense, net




6,424

Loss before income taxes




(547,233)

Nine months ended May 31, 2022






Television

Radio

Corporate

Consolidated

Revenue

1,178,538

80,454

1,258,992

Direct cost of sales, general and administrative expenses

779,411

68,916

23,211

871,538

Segment profit (loss)(1)

399,127

11,538

(23,211)

387,454

Depreciation and amortization




117,080

Interest expense




79,795

Debt refinancing




(3,428)

Restructuring and other costs




6,223

Other expense, net




7,592

Income before income taxes




180,192



(1)

Segment profit (loss) does not have a standardized meaning prescribed by IFRS. For definitions and explanations, see discussion under the Key Performance Indicators and Non-GAAP Financial Measures section of the Third Quarter 2023 Report to Shareholders.

REVENUE BY TYPE


Three months ended
May 31,


 Nine months ended
May 31,

(unaudited – in thousands of Canadian dollars)

2023

2022

2023

2022

Advertising

233,840

265,915

704,901

784,228

Subscriber

124,225

130,410

375,791

390,768

Distribution, production and other

39,270

37,133

91,705

83,996


397,335

433,458

1,172,397

1,258,992

NON-GAAP FINANCIAL MEASURES 

(unaudited – in thousands of Canadian dollars, except percentages)

Three months ended
May 31,

%

Nine months ended
May 31,

%

Optimized advertising revenue

2023

2022

Change

2023

2022

Change

Optimized advertising revenue (numerator)

111,121

112,677

(1 %)

336,466

294,880

14 %

Television advertising revenue (denominator)

209,008

237,993

(12 %)

630,645

707,725

(11 %)

Optimized advertising revenue percentage

53 %

47 %


53 %

42 %



Three months ended


Nine months ended



(unaudited – in thousands of Canadian dollars, except percentages)

May 31,

%

May 31,

%


New platform revenue

2023

2022

Change

2023

2022

Change

New platform revenue (numerator)

38,637

40,992

(6 %)

112,497

109,223

3 %

Television advertising revenue

209,008

 

237,993

 

(12 %)

 

630,645

707,725

 

(11 %)

Television subscriber revenue

124,225

130,410

(5 %)

375,791

390,768

(4 %)

Total Television advertising and subscriber revenue (denominator)

333,233

368,403

(10 %)

1,006,436

1,098,493

(8 %)

New platform revenue percentage

12 %

11 %


11 %

10 %


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

Three months ended
May 31,

 Nine months ended
May 31,

Adjusted Net Income Attributable to Shareholders

2023

2022

2023

2022

Net income (loss) attributable to shareholders

(495,073)

29,621

(479,136)

122,007

Adjustments, net of income tax:





Goodwill, broadcast licence and other asset impairment

504,953

504,953

Debt refinancing

(2,526)

(2,526)

Restructuring and other costs

8,162

3,064

11,811

4,573

Adjusted net income attributable to shareholders

18,042

30,159

37,628

124,054

Basic earnings (loss) per share

($2.48)

$0.14

($2.40)

$0.59

Adjustments, net of income tax:





Goodwill, broadcast licence and other asset impairment

$2.53

$2.53

Debt refinancing

($0.01)

($0.01)

Restructuring and other costs

$0.04

$0.02

$0.06

$0.02

Adjusted basic earnings per share

$0.09

$0.15

$0.19

$0.60

(unaudited – in thousands of Canadian dollars)

Three months ended
May 31,

Nine months ended
May 31,

Free Cash Flow

2023

2022

2023

2022

Cash provided by (used in):





Operating activities

29,810

29,798

85,333

161,000

Investing activities

(3,831)

(2,330)

(10,218)

36,614

 

Add (deduct): cash used in (provided by) business acquisitions and
 strategic investments (1)

25,979

27,468

75,115

197,614

71

(2,742)

Free cash flow

25,979

27,468

75,186

194,872

(1)

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

                                     

(unaudited – in thousands of Canadian dollars)

 As at May 31, 

  As at August 31,

Net Debt and Net Debt to Segment Profit

2023

2022

Total debt, net of unamortized financing fees and prepayment options

1,250,982

1,261,650

Lease liabilities

128,795

134,369

Cash and cash equivalents

(56,173)

(54,912)

Net debt (numerator)

1,323,604

1,341,107

Segment profit (denominator) (1)

343,921

443,643

Net debt to segment profit

3.85

3.02

(1)

Reflects aggregate amounts for the most recent four quarters, as detailed in the table in the Quarterly Consolidated Financial Information section of the Third Quarter 2023 Report to Shareholders.

SOURCE Corus Entertainment Inc.

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