(Toronto, Canada) Corus Entertainment Inc. (TSX: CJR.B; NYSE: CJR) announced its first quarter results today, highlighted by a dramatic increase in net income and strong ad sales results for both its Television and Radio divisions. The continued growth of Corus Television and Radio operations effectively offset the planned contraction of its Content division as the Company significantly reduced its production slate for the year in anticipation of weak customer demand. Net income for the quarter was $8.3 million, compared to $3.9 million, an increase of 113%. Earnings per share for the quarter were $0.19 compared to $0.09 last year. Consolidated revenue for the quarter was $158.1 million, down 9% from $174.7 million last year. On a pro forma* basis, revenues were down 3% from $163.4 million despite revenue growth in the Television and Radio divisions of 3% and 5% respectively. EBITDA* declined by 2% to $44.8 million from $45.7 million last year on an actual and pro forma basis. Cash flow per share for the quarter was $0.89 compared with $1.24 last year.
“The advertising recovery seems to be picking up momentum. We saw real growth in the first quarter and our outlook for the second quarter remains positive,” said John Cassaday, President and Chief Executive Officer of Corus Entertainment. “We think the ad recovery, coupled with our continued focus on cost reduction, will allow us to partially offset the necessary repositioning of Nelvana.”
Corus Television contributed quarterly revenue of $77.1 million, up 10% from $69.8 million last year. EBITDA grew to $31.0 million, up 27% from $24.5 million last year. On a pro forma basis, revenues increased 3% and EBITDA increased 18%. Television’s margins were 40% for the quarter, up from 35% last year. Advertising growth on core specialty television stations, including YTV and W Network were up 5% in the quarter over previous year.
Corus Radio also performed well in the quarter. Radio division revenues in the first quarter increased to $59.3 million from $55.6 million last year. National advertising sales grew 17% from the prior year pro forma. Radio revenues in Quebec were up 25% on a pro forma basis. EBITDA was $16.1 million, up 8% from $15.0 million last year. Radio margins were 27% for the quarter. On a pro forma basis, Radio revenues were up 6% and EBITDA grew by 8% compared to last year.
The planned decrease in Nelvana’s proprietary productions directly resulted in a revenue decline of 31% over the prior year pro forma. In spite of this reduction, the Content division broke even at EBITDA in the quarter with revenues of $22.7 million. The Production and Distribution business experienced a decrease in revenue of 40%. Fifty-three episodes were produced in the first quarter, compared to 85 episodes in the previous year. For the branded consumer products business, which now excludes Klutz, revenues increased 8% from the prior year while EBITDA was down 59% as additional funds were invested in marketing. The positive impact of Beyblade is not expected to be realized until later in the fiscal year.
“We consolidated our Television and Content divisions in the quarter and we are satisfied that this restructuring will deliver further efficiencies,” added Heather Shaw, Executive Chair of Corus Entertainment. “Our focus on the fundamentals – cash flow, customer demand, marketing and improved operating efficiencies – will all be enhanced by combining our management resources.”
Corus Entertainment is a Canadian-based media and entertainment company. Corus is a market leader in both specialty TV and Radio. Corus also owns Nelvana Limited, a leading international producer and distributor of children’s programming and products. The company’s other interests include publishing, television broadcasting and advertising services. A publicly traded company, Corus is listed on the Toronto (CJR.B) and New York (CJR) Exchanges. Corus’ Web site can be found at corusentertainment.com.
Supplemental earnings measures Non-GAAP earnings measures have been identified (*) the first time mentioned and include the following: * EBITDA is provided to assist investors in determining the ability of the Company to generate cash from operations to cover financial charges before income and expense items from investing activities, income taxes and items not considered to be in the ordinary course of business. It is also widely used for valuation purposes. A reconciliation of EBITDA and net income is provided in the consolidated statements of income and retained earnings. EBITDA is calculated as net income before minority interest, equity earnings from investees, income tax expense, restructuring charges, foreign exchange loss, other income, loss on sale of investments, interest, amortization and depreciation. A listing of these items is disclosed in the consolidated statements of income and retained earnings. These items are excluded in the determination of EBITDA as they are non-cash in nature, pre-tax, financing charges, income or expense from investing activities or are not considered to be in the ordinary course of business. EBITDA should not be considered in isolation of or as a substitute for (1) net income or loss, as an indicator of the Company’s operating performance, or (2) cash flows from operating, investing and financing activities, as a measure of the Company’s liquidity. * Pro forma information (including pro forma revenues; pro forma EBITDA and pro forma EBITDA margin) is provided to assist investors in comparing results between periods after giving effect to significant acquisitions and divestitures. In particular, results from the same period in fiscal 2002 have been adjusted to reflect operating results of all businesses reporting in the current period as if the businesses had been owned for the same number of days in the prior year. Pro forma information is provided on the basis of the Company’s reportable business segments (Television, Radio and Content) for revenues and EBITDA – the measure of profitability reviewed by the chief operating decision maker of these divisions, since there were acquisitions and/or dispositions in each of these divisions during fiscal 2002 or fiscal 2003.
Certain statements in this press release may constitute forward-looking statements and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Factors which could cause results or events to differ from current 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; and, changes in accounting standards. Consequently, all of the forward-looking statements made in this report are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us. 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
For further information, please contact:
President and Chief Executive Officer
Corus Entertainment Inc.
Senior Vice-President & Chief Financial Officer
Corus Entertainment Inc.
Vice President, Communications
Corus Entertainment Inc.
Full financial details are available on the Corus Entertainment Web site at www.corusentertainment.com under Financial Info