• Free cash flow of $156.0 million year-to-date
  • Landmark multi-year licensing agreements completed with Nickelodeon and Disney
  • Consolidated revenues down 5% for the quarter and 2% year-to-date
  • Consolidated segment profit down 14% for the quarter and 4% year-to-date
  • Net loss attributable to shareholders of $8.1 million for the quarter, which includes a non-cash program rights and film investments impairment charge of $51.8 million
  • Adjusted basic earnings per share of $0.36 per share, down 27% for the quarter

(July 15, 2015 – Toronto, Canada) Corus Entertainment Inc. (TSX: CJR.B) announced its third quarter financial results today.

“While our third quarter operating results were disappointing, we were pleased to deliver solid year-to-date free cash flow of $156 million,” said Doug Murphy, President and Chief Executive Officer of Corus Entertainment. “Over the next 18 months, our focus will be to fortify our brands and competitive position by leveraging our strategic investments in premium content across platforms and delivery systems.  We have already made significant progress, inking ground-breaking content and rights deals with Nickelodeon and Disney, and expanding our digital presence in Radio and Television, most recently with the launch of the first in our suite of innovative kids TV Everywhere apps, TreehouseGO.  We are confident that we are on the right track to deepen our engagement with audiences and evolve the company for future growth in a dynamic, consumer-centric marketplace.”

Financial Highlights   
  
   Three months ended Nine months ended
   May 31, May 31,
(unaudited – in thousands of Canadian dollars except per share amounts) 2015  2014 2015  2014
Revenues   
  Television  162,767   170,565  499,432   500,615
  Radio  40,354   43,476  122,284   130,844
    203,121   214,041  621,716   631,459
         
Segment profit(1)       
  Television  64,075   75,679  207,554   216,237
  Radio    9,457   11,678  28,504   35,985
  Corporate  (4,833)  (7,626)  (14,364)  (20,933)
    68,699   79,731  221,694   231,289
         
Net income (loss) attributable to shareholders  (8,109)  (30,325)  (42,989)  126,682
Adjusted net income attributable to shareholders(1) (2)  31,550   41,602  111,955   123,560
         
Basic earnings (loss) per share $ (0.09) $ (0.36) $ (0.50) $ 1.49
Adjusted basic earnings per share(1) (2) $  0.36 $  0.49 $  1.30 $ 1.46
Diluted earnings (loss) per share $ (0.09) $ (0.36) $ (0.50) $ 1.49
         
Free cash flow(1)  63,419   59,399  156,043   182,440
       
(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 2015 Report to Shareholders.  
(2) For the three months ended May 31, 2015, excludes intangible asset impairment charges of $51.8 million ($0.44 per share) and business acquisition, integration and restructuring charges of $2.7 million ($0.02 per share).  For the nine months ended May 31, 2015, excludes radio broadcast license and goodwill impairment charges of $130.0 million ($1.44 per share), intangible asset impairment charges of $51.8 million ($0.44 per share), business acquisition, integration and restructuring charges of $10.7 million ($0.09 per share), offset by a gain on distribution of investment of $17.0 million ($0.17 per share).  For the three months ended May 31, 2014, excludes radio broadcast license and goodwill impairment charges of $75.0 million ($0.85 per share), business acquisition, integration and restructuring costs of $0.6 million ($0.01 per share), capital asset impairment charges of $1.2 million ($0.01 per share) and a decrease in the purchase price obligation of $2.0 million ($0.02 per share). For the nine month period ended May 31, 2014, excludes the impact of $127.9 million ($1.51 per share) gain on remeasurement to fair value of the Company’s 50% interest in TELETOON which was held prior to consolidation on September 1, 2013, radio broadcast license and goodwill impairment charges of $83.0 million ($0.92 per share), capital asset impairment charges of $1.2 million ($0.01 per share), business acquisition, integration and restructuring costs of $41.2 million ($0.47 per share), an increase in the purchase price obligation of $3.3 million ($0.04 per share), and investment impairment related charges of $3.3 million ($0.04 per share).

 

Consolidated Results from Operations

Consolidated revenues for the three months ended May 31, 2015 were $203.1 million, down 5% from $214.0 million last year.  Consolidated segment profit was $68.7 million, down 14% from $79.7 million last year.  Net loss attributable to shareholders for the quarter was $8.1 million ($0.09 loss per share basic and diluted), compared to $30.3 million ($0.36 loss per share basic and diluted) last year.  Net loss attributable to shareholders for the third quarter includes intangible non-cash impairment charges of $51.8 million ($0.44 per share) and business acquisition, integration and restructuring costs of $2.7 million ($0.02 per share). Removing the impact of these items results in an adjusted net income attributable to shareholders of $31.6 million ($0.36 per share) in the quarter. Net income attributable to shareholders for the prior year quarter includes radio broadcast license and goodwill impairment charges of $75.0 million ($0.85 per share), capital asset impairment charges of $1.2 million ($0.01 per share), business acquisition, integration and restructuring costs of $0.6 million ($0.01 per share) and a decrease in the purchase price obligation of $2.0 million related to the acquisition of control of TELETOON ($0.02 per share).  Removing the impact of these items results in an adjusted net income attributable to shareholders of $41.6 million ($0.49 per share basic) for the prior year quarter.

Consolidated revenues for the nine months ended May 31, 2015 were $621.7 million, down 2% from $631.5 million last year. Consolidated segment profit was $221.7 million, down 4% from $231.3 million last year. Net loss attributable to shareholders for the nine months ended May 31, 2015 was $43.0 million ($0.50 loss per share basic and diluted) compared to net income attributable to shareholders of $126.7 million ($1.49 per share basic and diluted) last year.  Net loss attributable to shareholders for the nine months ended May 31, 2015 includes Radio broadcast license and goodwill impairment charges of $130.0 million ($1.44 per share), business acquisition, integration and restructuring costs of $10.7 million ($0.09 per share), and program right and film investment impairment charges of $51.8 million ($0.44 per share), offset by a gain on disposition of investment of $17.0 million ($0.17 per share).  Removing the impact of these items results in an adjusted net income attributable to shareholders of $112.0 million ($1.30 per share) for the current year-to-date.  Net income attributable to shareholders for the nine months ended May 31, 2014 includes a non-cash gain of $127.9 million ($1.51 per share) resulting from the remeasurement to fair value of the Company’s 50% interest in TELETOON which was held prior to consolidation on September 1, 2013, radio broadcast license and goodwill impairment charges of $83.0 million ($0.92 per share), capital asset impairment charges of $1.2 million ($0.01 per share), business acquisition, integration and restructuring costs of $41.2 million ($0.47 per share), an increase in the purchase price obligation of $3.3 million ($0.04 per share) and investment impairment related charges of $3.3 million ($0.04 per share).  Removing the impact of these items results in an adjusted net income attributable to shareholders of $123.6 million ($1.46 per share) for the prior year-to-date.

Operational Results – Highlights

Television

  • Specialty advertising revenues decreased 11% in Q3 2015 and 5% for the year-to-date
  • Subscriber revenues decreased 3% in Q3 2015, but increased 2% for the year-to-date
  • Merchandising, distribution and other revenues increased 15% in Q3 2015 and 9% for the year-to-date
  • Segment profit(1) decreased 15% in Q3 2015 and 4% for the year-to-date
  • Segment profit margin(1) of 39% in Q3 2015 and 42% for the year-to-date
  • Non-cash program rights and film investments impairment charges of $51.8 million in Q3 2015

Radio

  • Segment revenues decreased 7% in Q3 2015 and for the year-to-date
  • Segment profit(1) decreased 19% in Q3 2015 and 21% for the year-to-date
  • Segment profit margin(1) of 23% in Q3 2015 and for the year-to-date
  • Non-cash broadcast license and goodwill impairment charges of $130.0 million for the 2015 year-to-date

Corporate

  • Free cash flow of $156.0 million for the year-to-date
  • Free cash flow guidance remains unchanged at $180 million, refer to Outlook section of the Third Quarter 2015 Report to Shareholders

(1) Segment profit and segment profit margin do not have standardized meanings prescribed by IFRS.  The Company reports on segment profit and segment profit margin because they are key measures used to evaluate performance.  For definitions and explanations, see discussion under the Key Performance Indicators section of the 2015 Report to Shareholders.

Corus Entertainment Inc. reports in Canadian dollars.

The unaudited consolidated financial statements and accompanying notes for the three and nine months ended May 31, 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 July 15, 2015 at 2:00 p.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 1.416.641.6701 and for North America is 1.800.734.8582.  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, we disclaim 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 Inc.

Corus Entertainment Inc. is a Canadian-based media and entertainment company that creates, broadcasts and licenses 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 and animation software. Corus’ brands include YTV, TELETOON, ABC Spark, W Network, OWN: Oprah Winfrey Network (Canada), HBO Canada, Historia and Séries+, as well as Nelvana, Kids Can Press, Toon Boom and 39 radio stations including CKNW AM 980, Rock 101, Country 105, 630 CHED, Fresh Radio, JUMP! 106.9, Q107 and 102.1 the Edge. A publicly traded company, Corus is listed on the Toronto Stock Exchange (CJR.B). Experience Corus on the web at www.corusent.com.

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For further information, please contact:

 

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
Director, Communications
Corus Entertainment Inc.
416.479.6107