- Cash flow from operations increased to $15.8 million for YTD 2019 vs $5.1 million YTD 2018.
- Distribution revenue (excluding WildBrain) grew sequentially by
51% to $20.7 million in Q3 2019, over
Q2 2019; and was $26.6 million in Q3
2018.
- WildBrain views grew by 15% to more than 8.7 billion in Q3 2019
vs a year ago. WildBrain revenue grew 4% to $14.9 million vs $14.4
million in Q3 2018.
- Consumer products-owned revenue grew 10% to $37.5 million in Q3 2019 vs $34.1 million a year ago, driven by
Peanuts.
- Revenue was $110.0 million for Q3
2019 vs $116.5 million in Q3
2018.
- Adjusted EBITDA was $20.1 million
in Q3 2019 vs $26.7 million in Q3
2018. Q3 2019 adjusted EBITDA was impacted by $5.0 million due to the sale in Q1 2019 of a
minority stake in Peanuts to Sony1.
- Net income before income taxes and the write-down was
$15.1 million in Q3 2019 vs a net
loss of $4.9 million a year
ago.
- Net loss for Q3 2019 was $18.4
million, or ($0.14) per share,
vs a net loss of $8.0 million, or
($0.06) per share in Q3 2018. Net
loss was impacted by a $34.2 million
write-down in Q3 2019 related to investment in film, licensed
television programs, acquired content, and intangible
assets.
- Post-quarter end, we announced an agreement to sell a building
in Toronto owned by the Company
for $12.0 million. Net proceeds will
be used for debt repayment.
- Search initiated for CEO successor.
HALIFAX, May 14, 2019 /CNW/ - DHX Media Ltd. (or the
"Company") (TSX: DHX; NASDAQ: DHXM) reported its third-quarter
("Q3 2019") and nine-month ("YTD 2019") results for Fiscal
2019, ended March 31, 2019.
Michael Donovan, CEO and
Executive Chairman, stated: "When I stepped back into the role of
CEO a year ago I had several priorities. These included: building
our premium content strategy; repositioning our assets to align
with current market opportunities; expanding WildBrain, our
industry-leading children's AVOD network; reducing debt; and
finding my successor. We have made significant progress on all
these fronts. Once the new CEO is appointed I look forward to
continuing on as Executive Chair."
Q3 2019 Performance – Executing on Strategic
Priorities
During Q3 2019, we continued to make progress on our strategic
priorities as highlighted below:
PRIORITIES
|
Highlights
|
Develop New,
and
Revitalize Classic
Brands with Content
on WildBrain
|
• Grew
WildBrain revenue by 4% to $14.9 million vs $14.4 million in Q3
2019 as we continued to monetize our own properties and a growing
number of third-party brands.
• Leveraging
our YouTube expertise to develop new revenue streams in production
and paid media services, which grew by 90% vs Q3 2018.
• Grew
WildBrain's online audience by 15% to more than 8.7 billion views
in Q3 2019 vs Q3 2018. This amounted to almost 42 billion
minutes of videos watched, up 9% from a year ago.
• Each month,
8% of unique users on YouTube watch videos on the WildBrain
network, which amounts to approximately 18% of kids users on
YouTube.
|
Develop Premium
Kids' Content to Drive
Franchise Brands
|
• Production
underway on new premium Peanuts content at our Vancouver
studio.
•
Producing Peanuts in Space: Secrets of Apollo 10, a new
documentary starring Ron Howard and Jeff Goldblum, and directed by
Morgan Neville, to celebrate the 50th anniversary of NASA's Apollo
10 mission. Launching this month on the Apple TV app.
|
Improve Cash
Flow
and Balance Sheet
|
• Generated
positive operating cash flow of $14.0 million in Q3
2019.
• Announced an
agreement to sell a building in Toronto owned by the Company for
$12.0 million, which is expected in June 2019. Net proceeds
will be used to pay down debt.
|
Q3 2019 Financial Highlights
Financial
Highlights2
(in millions of
Cdn$)
|
Three Months
ended
March
31,
|
Nine Months
ended
March
31,
|
|
2019
|
2018
|
2019
|
2018
|
Revenue
|
$110.0
|
$116.5
|
$331.0
|
$337.0
|
Gross
Margin
|
$47.3
|
$51.0
|
$138.8
|
$147.9
|
Gross Margin
(%)
|
43%
|
44%
|
42%
|
44%
|
Adjusted EBITDA
attributable to DHX Media1
|
$20.1
|
$26.7
|
$59.4
|
$81.5
|
Net Income
(Loss)
|
($11.8)
|
($6.4)
|
($20.3)
|
$12.4
|
Net Income (Loss)
attributable to DHX Media1
|
($18.4)
|
($8.0)
|
($38.7)
|
$7.6
|
Basic Earnings (Loss)
per Share
|
($0.14)
|
($0.06)
|
($0.29)
|
$0.06
|
Q3 2019 revenue was $110.0 million
compared with $116.5 million in the
prior-year quarter. YTD 2019 revenue was $331.0 million vs $337.0
million in the first nine months of 2018.
In Q3 2019, distribution revenue (excluding WildBrain) was
$20.7 million vs. $26.6 million in Q3 2018, reflecting a sequential
improvement of 51% from the last quarter as we realized on a
stronger pipeline in Q3.
WildBrain continued to grow its audience, with views rising 15%
to over 8.7 billion in Q3 2019. Revenue grew 4% to
$14.9 million in Q3 2019. The
moderation in revenue growth highlights that monetization continues
to lag behind expansion in views as the market on YouTube continues
to evolve. Initiatives to realize further value from WildBrain's
large user base was reflected in a 90% growth in revenue derived
from paid media and production services in Q3 2019, compared with a
year ago.
Gross Margin was 43% for Q3 2019, largely in line with the
margin of 44% in the same prior-year period, and slightly better
than the first-half of Fiscal 2019.
Adjusted EBITDA was $20.1 million
in Q3 2019 and $59.4 million YTD
2019, compared with $26.7 million in
Q3 2018 and $81.5 million YTD
2018. The decline was partly due to an increase in the
non-controlling interest in Peanuts, primarily related to the Sony
transaction, which reduced Adjusted EBITDA by $5.0 million in Q3 2019 and $13.5 million YTD 20191.
Q3 2019 saw net loss of $18.4
million vs a net loss of $8.0
million in the same quarter last year. The first nine
months of Fiscal 2019 recorded a net loss of $38.7 million compared with a net income of
$7.6 million YTD 2018. The
higher net losses in the current periods were primarily due to a
$34.2 million combined write-down in
Q3 2019 related to investment in film, licensed television
programs, acquired content, and intangible assets.
The Company's debt leverage ratio was 6.09x at Q3
20193. Subsequent to quarter-end, we announced an
agreement to sell a building in Toronto owned by the Company, for $12.0 million. The sale is expected to
close in June 2019, subject to
customary closing conditions, with net proceeds to be used to
further pay down debt.
Other Q3 2019 Business Highlights
Major streaming services and broadcasters worldwide continued to
turn to DHX Media for original programming. Nickelodeon signed
on for exclusive international rights for our new animated comedy,
Dorg Van Dango, to roll out
across 170+ territories. In the UK, CBBC has licensed Up in
the Air, our new live-action gymnastics series that begins
filming this spring.
We have also signed an agreement with Comcast in the US to debut
our new subscription-based video-on-demand service, called Kids
Room, on Xfinity X1 and Xfinity Flex. Launching this summer, Kids
Room will feature exclusively DHX Media kids' content and launch
with hundreds of episodes from our library.
Additionally, we signed distribution deals for DHX Media library
content in the quarter with Disney, iQiyi, the BBC, Turner
Broadcasting, The CW Network, Discovery, and ABC Australia, among
others.
The global appeal of Peanuts' merchandising and licensing
opportunities was evidenced in 85 new deals and 70 renewals
executed in Q3 2019, ranging from apparel and accessories to
kitchenware, including licensees such as Lands' End, Baskin Robbins and Tupperware. In addition,
Levi's rolled out an expanded line of Peanuts-branded products to
its stores globally and online for spring and summer
2019. Also this summer, a Peanuts Global Artist Collective
line of products will launch exclusively in 100 Macy's stores in
the US and online, featuring merchandise for adults and kids,
including denim jackets, hoodies, hats, onesies, water bottles and
skateboards.
Our TV channels in Canada
continued to see growing viewership this winter season, up 35% from
a year ago, in our core 2- to 11-year-old audience group. While
subscriber revenue remained steady at around 90% of total TV
revenue, revenue from advertising was up 160% to $1.3 million in Q3 2019 and 38% to $4.0 million YTD 2019 vs prior year.
1.
|
Q3 2018 Adjusted
EBITDA and net income attributable to DHX Media for the three- and
nine-months ended March 31, 2018 included the Company's 80%
interest in Peanuts Holdings LLC ("Peanuts"). In Q1 2019, the
Company sold a 39% minority stake in Peanuts to Sony Music
Entertainment (Japan) Inc. ("Sony"). Accordingly, Q3 2019 and YTD
2019 Adjusted EBITDA and net income attributable to DHX Media for
these periods, ended March 31, 2019, reflected the Company's 41%
interest in Peanuts.
|
|
|
2.
|
Gross Margin means
revenue less direct production costs and expense of film and
television programs produced (per the financial statements).
Adjusted EBITDA represents income of the Company before
amortization, finance income (expense), taxes, development
expenses, impairments, share-based compensation expense,
acquisition costs and adjustments for other identified charges. The
definitions of Gross Margin and Adjusted EBITDA are included in the
"Non-GAAP Financial Measures" section of the Company's Q3 2019
Management Discussion and Analysis.
|
|
|
3.
|
The net leverage
ratio calculation is based on the definition in the Company's
senior secured credit agreement available on SEDAR at
www.sedar.com.
|
Analyst and Investor Webcast and Conference Call
DHX Media Management will host a live webcast and presentation
with slides for analysts and investors at 8:00 a.m. ET on May 14,
2019, at the following address:
https://event.on24.com/wcc/r/1992213/DD305CAFB81A21EC9A0A2CBCDF8AFDCF.
To listen by phone only, please call +1(888) 231-8191 or +1(647)
427-7450 internationally, and reference conference ID 2478926.
Please allow 10 minutes to be connected to the conference
call. The presentation for the call will also be posted to the
Investor Relations section of our website, at:
http://www.dhxmedia.com/investors/.
Replay will be available after the call on +1 (855)
859-2056 or (416) 849-0833, under passcode 2478926, until
11:59 p.m. ET, May 21, 2019.
About DHX Media
DHX Media Ltd. (TSX: DHX, NASDAQ: DHXM) is a global children's
content and brands company, recognized for such high-profile
properties as Peanuts, Teletubbies, Strawberry Shortcake,
Caillou, Inspector Gadget, and the acclaimed Degrassi
franchise. One of the world's foremost producers of children's
shows, DHX Media owns the world's largest independent library of
children's content, at 13,000 half-hours. It licenses its content
to broadcasters and streaming services worldwide and generates
royalties through its global consumer products program. Through its
subsidiary, WildBrain, DHX Media operates one of the largest
networks of children's channels on YouTube. Headquartered in
Canada, DHX Media has offices
worldwide. Visit us at www.dhxmedia.com.
Disclaimer
This press release contains "forward-looking statements" under
applicable securities laws with respect to DHX Media including,
without limitation, statements regarding the search for a successor
CEO and continuation of the Executive Chair, the sale of a building
in Toronto owned by the Company
and the timing and expected use of proceeds of such sale, the
launch of Kids Room, new content and merchandise of the Company,
expansion of revenue streams and viewership on WildBrain, demand
for the Company's content, the strategic priorities of the Company,
the evolution of the market on YouTube, growth in viewership on the
Company's TV channels and the business strategies and operational
activities of the Company and expected results therefrom. Although
the Company believes that the expectations reflected in such
forward-looking statements are reasonable, such statements involve
risks and uncertainties and are based on information currently
available to the Company. Actual results or events may differ
materially from those expressed or implied by such forward-looking
statements. Factors that could cause actual results or events to
differ materially from current expectations, among other things,
include the ability of the Company to execute on its business
strategies and strategic initiatives, the ability of the Company to
execute on the sale of the building in Toronto, consumer preferences, market factors,
regulatory and contract risk, and risk factors discussed in
materials filed with applicable securities regulatory authorities
from time to time, including matters discussed under "Risk Factors"
in the Company's most recent Annual Information Form and annual
Management Discussion and Analysis, which also form part of the
Company's annual report on Form 40-F filed with the U.S. Securities
and Exchange Commission. These forward-looking statements are made
as of the date hereof, and the Company assumes no obligation to
update or revise them to reflect new events or circumstances,
except as required by law.
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SOURCE DHX Media Ltd.