- Revenue increased 4% to $102.2
million in Q3 2021 vs $98.3
million in Q3 2020. YTD 2021 revenue grew to $339.9 million vs $332.7
million in YTD 2020.
- Net loss improved to $26.5
million in Q3 2021 vs a net loss of $221.7 million in Q3 2020. YTD 2021 net loss of
$18.5 million vs a net loss of
$240.0 million in YTD 2020. Q3 2021
and YTD 2021 net losses were mainly due to non-cash, non-operating
items related to the refinancing and a higher share price impacting
the fair value of embedded derivatives.
- Free Cash Flow was negative $3.3
million in Q3 2021, consistent with Q3 2020. YTD 2021
positive Free Cash Flow was consistent at $17.6 million vs YTD 2020.
- Adjusted EBITDA in Q3 2021 was $17.2
million vs $17.9 million in Q3
2020. YTD 2021 adjusted EBITDA increased to $63.9 million vs $63.1
million in YTD 2020.
- Consumer Products revenue grew 12% to $45.7 million in Q3 2021 vs $40.9 million in Q3 2020. YTD 2021 revenue was
$131.0 million vs $135.4 million in YTD 2020.
- WildBrain Spark revenue was $9.6
million in Q3 2021 vs $9.5
million in Q3 2020. YTD 2021 revenue was $34.1 million vs $55.8
million in YTD 2020.
- Refinanced Term Loan and Revolver on highly favourable terms,
extending maturities and removing the financial maintenance
covenant on the Term Loan.
HALIFAX, NS, May 11, 2021 /CNW/ - WildBrain Ltd. ("WildBrain"
or the "Company") (TSX: WILD), a global leader in kids and family
entertainment, today reported its Fiscal 2021 third quarter ("Q3
2021") and nine-month ("YTD 2021") results for the periods ended
March 31, 2021.
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Eric Ellenbogen, WildBrain CEO,
said: "Our content and brands continued to perform well in Q3,
driven by a robust production slate and strength in our consumer
products segment. WildBrain Spark saw further improvement in
advertising rates, as well as growing revenue in emerging areas of
direct ad sales, paid media and digital production. Looking
forward to Q4 2021, we will have results fully comparable to Q4 a
year ago, factoring in the impact of both COVID-19 and
'Made-for-Kids'. There will, of course, be seasonality across
the year; however, we expect WildBrain Spark's revenue to grow more
than 50% in the forthcoming quarter, over last year's Q4.
We're also realizing the strategic value of WildBrain Spark's
massive audience engagement and reach to secure comprehensive deals
with brand owners, leveraging our ability to exploit IP across
content, licensing and audience delivery. This includes a recently
announced multi-year partnership with the emoji company to launch
emojitown, a brand new digital-first series and consumer products
extension of the emoji brand. WildBrain Spark is co-producing
this series with the emoji company, and our licensing agency,
WildBrain CPLG, will represent the new IP globally, building on
their pre-existing strong relationship. WildBrain shares across
multiple revenue sources in this partnership, driven by our
360-degree integrated IP strategy. This is one of many such
holistic partnerships in our pipeline that will fuel growth across
our company with meaningful consumer products upside."
Aaron Ames, WildBrain CFO, added:
"During the quarter, we continued to both increase our pipeline and
sign long-term, quality agreements for our own IP as well as IP
from partners who want access to our unique strengths across
content, creative and our WildBrain Spark network. While these
deals take time to manifest in our results, they provide a strong
foundation for future growth with meaningful upside in consumer
products. This disciplined approach, of layering on strong
contracted, profitable partnerships, enabled us to refinance our
corporate debt on highly favourable terms in Q3, including removing
the financial maintenance covenant on our term loan and extending
the maturities on both the term loan and revolver. We are
continuing to enhance our financial flexibility to drive our
digital, content and brand priorities."
Q3 2021 Performance - Executing on Priorities
PRIORITIES
|
HIGHLIGHTS
|
Monetizing our
Large Audience on WildBrain Spark
|
•
|
WildBrain Spark
revenue increased 2% to $9.6 million in Q3 2021 vs $9.5 million in
Q3 2020, reflecting ongoing recovery in advertising
rates.
|
•
|
The build-out of our
proprietary data-analysis tools is driving growth in direct ad
sales, paid media and digital production. These nascent
revenues increased by 185% in Q3 2021 vs Q3
2020.
|
•
|
WildBrain Spark is
building its pipeline of commercial partnerships to create and
manage digital content and drive revenue across various business
units, as evidenced by the deal with the emoji®
company.
|
Grow Key
Brands
|
•
|
We signed multi-year
exclusive partnerships with SEGA and Netflix to produce a Netflix
Original series based on Sonic the Hedgehog under which we
participate across multiple revenue streams. Production has
begun on the new animated series, titled Sonic Prime, to
premiere worldwide in 2022.
|
•
|
WildBrain CPLG
expanded representation of the classic emoji® brand
across Europe including the UK, Germany and other territories,
which contributed to growing commissions in our agency
business. Building on our strong agency relationship, we
recently forged an expanded, multi-year content and licensing
partnership with the emoji® company to produce a brand
new digital-first series, emojitown®, for our
AVOD network exclusively managed by WildBrain Spark. WildBrain CPLG
will manage the global consumer products licensing program for
emojitown® and we will share across all revenue
sources for this new IP, including a meaningful share in
licensing.
|
Improve Cash Flow
and Balance Sheet
|
•
|
Free Cash Flow was
negative $3.3 million in Q3 2021 vs negative Free Cash Flow of $3.2
million in Q3 2020. YTD 2021 positive Free Cash Flow was
$17.6 million vs Free Cash Flow of $17.8 million YTD
2020.
|
•
|
Refinanced our
corporate debt with a new seven-year US$285.0 million senior
secured term loan ("Term Loan") and removed the financial
maintenance covenant. At the same time, we also entered into
a new five-year US$30.0 million revolving credit facility
("Revolver").
|
Q3 2021 Financial Highlights
Financial
Highlights
(in millions of
Cdn$)
|
Three Months
ended
March
31,
|
Nine Months
ended
March
31,
|
2021
|
2020
|
2021
|
2020
|
Revenue
|
$102.2
|
$98.3
|
$339.9
|
$332.7
|
Gross
Margin
|
$43.9
|
$44.4
|
$148.9
|
$148.3
|
Gross Margin
(%)
|
43%
|
45%
|
44%
|
45%
|
Adjusted EBITDA
attributable to WildBrain
|
$17.2
|
$17.9
|
$63.9
|
$63.1
|
Net Loss attributable
to WildBrain
|
$(26.5)
|
$(221.7)
|
$(18.5)
|
$(240.0)
|
Basic Loss per
Share
|
$(0.15)
|
$(1.30)
|
$(0.11)
|
$(1.58)
|
Free Cash
Flow
|
$(3.3)
|
$(3.2)
|
$17.6
|
$17.8
|
In Q3 2021, revenue grew 4% to $102.2
million compared with $98.3
million in the prior-year quarter, driven by strength in our
Consumer Products business. YTD 2021 revenue increased to
$339.9 million vs $332.7 million in YTD 2020.
Content Production and Distribution revenue was $35.6 million in Q3 2021 vs $36.4 million in Q3 2020, reflecting steady
growth from our robust production pipeline, offset by fluctuations
in timing of distribution deals. YTD 2021 revenue rose 33% to
$140.5 million vs $105.6 million in YTD 2020, driven by an
extensive slate of new Peanuts content as well as the large
distribution deal for the Peanuts library in Q2 2021 as part of an
expanded content partnership with Apple TV+.
WildBrain Spark saw improvement as advertising revenue continued
to improve from the impact of COVID-19 as well as YouTube's policy
changes made in early January 2020. Q3 2021 revenue increased
2% to $9.6 million in Q3 2021 vs
$9.5 million in Q3 2020. This
compared with declines of 60% and 36% in the first and second
quarters of Fiscal 2021 respectively, compared with the same
prior-year periods. We are also seeing the impact of the build-out
of our proprietary data-analysis tools in driving growth in other
AVOD revenue streams including in direct advertising sales, paid
media and digital production fees. These nascent revenues
increased by 185% in Q3 2021 vs Q3 2020. YTD 2021 revenue on
WildBrain Spark was $34.1 million vs
$55.8 million in YTD 2020.
Looking forward to Q4 2021, we will have results fully comparable
to Q4 a year ago, factoring in the impact of both COVID-19
and 'Made-for-Kids'. There will, of course, be seasonality
across the year; however, we expect WildBrain Spark's revenue to
grow more than 50% in the forthcoming quarter, over last year's
Q4.
Furthermore, WildBrain Spark is expanding cross-selling
opportunities with IP partners to drive revenue across
business units, such as our just-announced content and licensing
agreement with the emoji® company. In Q3
2021, WildBrain Spark garnered 8.2 billion views across its highly
engaged audience, compared with 10.3 billion in Q3 2020, reflecting
normalizing of industry viewing patterns. This amounted
to 50.0 billion minutes of videos watched on our AVOD
network compared with 59.1 billion in Q3 2020. Kids on our
platform spent six minutes and five seconds on average per view, up
6% from five minutes and 43 seconds in Q3 2020. Comparing to
normalized consumption patterns before the COVID-19 lockdowns,
views increased 22% to 28.5 billion and watch time increased 46% to
173.8 billion minutes on the WildBrain Spark network in YTD 2021 vs
YTD 2019. As we continue to roll out new proprietary and partner
content, we anticipate views will continue to increase, likely
exceeding COVID-19 peak consumption.
We are also continuing to refine our WildBrain Spark network to
build higher-value viewership. This means producing and promoting
premium content that monetizes across multiple WildBrain revenue
streams, such as distribution and consumer products.
Consumer Products revenue grew 12% to $45.7 million in Q3 2021 compared with
$40.9 million in Q3 2020. Higher
revenue in Q3 2021 was due to the strength of the Peanuts brand,
which experienced strong licensing royalties in such categories of
fleece apparel and pet products and services as well as increased
commissions from our agency WildBrain CPLG due to its broadening
client portfolio and licensing rights. For YTD 2021, revenue
was $131.0 million vs $135.4 million in the same prior-year period,
reflecting the impact of COVID-19 on the global retail
sector.
Q3 2021 Gross Margin was 43% vs 45% in Q3 2020, due to higher
Peanuts consumer products revenue which carries a lower gross
margin. YTD 2021 Gross Margin was steady at 44% vs 45% in YTD
2020, reflecting a strong slate of premium projects in our studio
and the Peanuts library deal in Q2 2021.
Free Cash Flow for Q3 2021 was negative $3.3 million, consistent with negative Free Cash
Flow of $3.2 million in Q3 2020,
which was primarily due to timing of working capital
settlements. In YTD 2021, we generated positive Free Cash
Flow of $17.6 million, consistent
with $17.8 million in YTD
2020.
Adjusted EBITDA was $17.2 million
in Q3 2021 consistent with $17.9
million in Q3 2020. In YTD 2021, adjusted EBITDA increased
to $63.9 million vs $63.1 million in YTD 2020.
Q3 2021 net loss improved to $26.5
million vs a net loss of $221.7
million in the same prior-year quarter. YTD 2021 saw net
loss of $18.5 million vs a net loss
of $240.0 million in the same
nine-month period in Fiscal 2020. Q3 2021 and YTD 2021 net
losses were primarily due to non-cash, non-operating items in the
current quarter of $3.5 million
related to the refinancing and the change in fair value of
embedded derivatives of $23.5 million
resulting from appreciation of the share price. Q3 2020 and YTD
2020 included a non-cash goodwill impairment charge of $184.5 million2 due to the impact on
advertising revenue from YouTube's policy changes as well as
potential impacts of global uncertainties from COVID-19.
During Q3 2021, we refinanced our corporate debt on attractive
terms, including removing the financial maintenance covenant on the
Term Loan, and extending maturities on both the Term Loan and
Revolver. The new US$285.0
million Term Loan will mature in March 2028 and bears interest at a rate of LIBOR
plus 4.25%. Net proceeds from the Term Loan were used to
repay the existing US$276.5 million
term facility maturing in December 2023. We also entered into
a new five-year US$30.0 million
Revolver with an interest rate of LIBOR plus 4.00%. This facility
replaced the existing undrawn US$30.0
million revolving credit facility and does not carry a
financial maintenance covenant, except when amounts are drawn and
outstanding.
1.
|
Free Cash Flow,
Gross Margin, Adjusted EBITDA and Adjusted EBITDA attributable to
WildBrain are non-GAAP financial measures. Free Cash Flow is
defined as operating cash flow less distributions to
non-controlling interests, changes in interim production financing,
cash interest paid on our long-term debt, bank indebtedness and
lease liabilities and principal repayments on our lease
liabilities. 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,
reorganization and development expenses, impairments,
equity-settled share-based compensation expense, and adjustments
for other identified charges. Adjusted EBITDA attributable to
WildBrain means Adjusted EBITDA excluding the portion of Adjusted
EBITDA attributable to non-controlling interests. Further details
on the definitions of and reconciliation to Free Cash Flow, Gross
Margin, Adjusted EBITDA and Adjusted EBITDA attributable to
WildBrain can be found in the "Non-GAAP Financial Measures" section
of the Company's Q3 2021 MD&A.
|
|
|
2.
|
The non-cash
goodwill impairment charge of $184.5 million excludes goodwill held
in the Company's Peanuts and Television cash generating units
(CGUs).
|
Q3 2021 Conference Call
The Company will hold a conference call on May 12, 2021 at 10:00 a.m.
ET to discuss the results.
To listen, call +1 (888) 231-8191 toll-free or +1 (647) 427-7450
internationally and reference conference ID 1670318. Please allow
10 minutes to be connected to the conference call. Replay
will be available after the call on +1 (855) 859-2056 toll free or
+1 (416) 849-0833, under passcode 1670318, until May 19, 2021.
The audio and transcript will also be archived on our website
approximately two days after the event.
For more information, please contact:
Investor Relations: Nancy Chan-Palmateer - Director,
Investor Relations, WildBrain
nancy.chanpalmateer@wildbrain.com
+1 416-977-7358
Media: Shaun Smith - Director,
Corporate & Trade Communications, WildBrain
shaun.smith@wildbrain.com
+1 416-977-7230
About WildBrain
At WildBrain we inspire imaginations to run wild, engaging kids
and families everywhere with great content across all media. With
approximately 13,000 half-hours of filmed entertainment in our
library – one of the world's most extensive – we are home to such
brands as Peanuts, Teletubbies, Strawberry Shortcake, Caillou,
Inspector Gadget, Johnny Test and
Degrassi. At our 75,000-square-foot state-of-the-art animation
studio in Vancouver, BC, we
produce such fan-favourite series as The Snoopy Show, Snoopy in
Space, Chip & Potato, Carmen
Sandiego, Go, Dog. Go! and more. Our shows are enjoyed
worldwide in more than 150 countries on over 500 streaming
platforms and telecasters, and our AVOD business – WildBrain Spark
– offers one of the largest networks of kids' channels on
YouTube, garnering billions of views per month from over 150
million subscribers. We also license consumer products and
location-based entertainment in every major territory for our own
properties as well as for our clients and content partners. Our
television group owns and operates four family entertainment
channels that are among the most viewed in Canada. WildBrain is headquartered in
Canada with offices worldwide and
trades on the Toronto Stock Exchange (TSX: WILD). Please visit us
at www.wildbrain.com.
Forward-Looking Statements
This press release contains "forward-looking statements" under
applicable securities laws with respect to the Company including,
without limitation, statements regarding the production,
distribution and licensing of a new animated series based on
Sonic the Hedgehog, productions in development, including
content and licensing partnerships with brands including
emojitown®, advertising rates and revenue of
WildBrain Spark, investments and acquisitions by the Company and
expected benefits from such investments and acquisitions, future
growth and financial and operating performance of WildBrain Spark,
impacts of YouTube's changes to targeted advertising
('Made-for-Kids'), the markets and industries in which the Company
and its subsidiaries operate, impacts of COVID-19 on the Company,
its business, and the markets and industries in which it operates,
the future financial and operating results of the Company
(including leverage), changes and expected developments in the
markets and industries in which the Company operates, and the
business strategies and operational activities of the Company and
its growth and long-term prospects. 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 availability of
investment and acquisition opportunities and at acceptable
valuations, the ability of the Company to execute and integrate
such acquisitions and investments, epidemics, pandemics or other
public health crises, including the current COVID-19 pandemic, the
magnitude and length of economic disruption as a result of the
worldwide COVID-19 pandemic, the reliance of the Company on the
Internet and other technologies to continue to conduct its
business, including the impact of 'Made-for-Kids', failure to meet
covenants under the senior credit facility of the Company, the
ability of the Company to execute on its business strategies, the
ability of the Company to realize expected operating cost savings,
consumer preferences, market factors, conditions in the AVOD,
entertainment and brands industries, the ability of the Company to
execute on production and licensing arrangements, 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. 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 WildBrain Ltd.