Consolidated revenue decreased 16% for the quarter and 15% for the year-to-date Consolidated segment profit(1) decreased 30% for the quarter and 16% for the year-to-date Consolidated segment profit margin(1) of 20% for the quarter and 24% for the year-to-date Net loss attributable to shareholders of $769.9 million ($3.86 loss per share basic) for the quarter and $747.0 million ($3.74 loss per share basic) for the year-to-date, which includes non-cash impairment charges of $960.0 million related to goodwill, broadcast licences as well as trade mark and brand assets, and program rights Proforma net debt to segment profit(1) of 3.91 times at May 31, 2024, which excludes contributions to segment profit from a prior year business divestiture, was up from the proforma net debt to segment profit as at August 31, 2023 of 3.62 times Free cash flow(1) of $18.4 million for the quarter and $75.0 million for the year-to-date TORONTO, July 15, 2024 /CNW/ - Corus Entertainment Inc. (TSX:CJR) announced its third quarter financial results today. "The third quarter results reflect the ongoing impacts of a challenging advertising environment," said Troy Reeb, Co-Chief Executive Officer. "We have secured a top-notch Fall schedule to deploy across our traditional linear and streaming portfolio including STACKTV and the Global TV App. Our team is actively pursuing near term revenue opportunities, execution of our strategic rebranding initiatives for our top lifestyle services and swift implementation of efficiency measures." "As part of our mandate as co-CEOs, we are decisively reducing more costs and taking actions to right-size our business given the realities of our operating environment," said John Gossling, Co-Chief Executive Officer and Chief Financial Officer. "We have made difficult decisions to part with certain legacy assets and are identifying additional opportunities to streamline our business with the aim of improving profitability. We are also working with the Board to develop a comprehensive plan to strengthen the balance sheet and manage liabilities." Financial Highlights Three months ended Nine months ended May 31, % May 31, % (in thousands of Canadian dollars except per share amounts) 2024 2023 Change 2024 2023 Change Revenue Television 308,198 371,159 (17 %) 928,690 1,094,236 (15 %) Radio 23,606 26,176 (10 %) 72,555 78,161 (7 %) 331,804 397,335 (16 %) 1,001,245 1,172,397 (15 %) Segment profit (loss) (1) Television 68,412 96,028 (29 %) 249,073 290,806 (14 %) Radio 2,633 4,112 (36 %) 8,035 10,484 (23 %) Corporate (3,510) (3,235) (9 %) (15,979) (13,558) (18 %) 67,535 96,905 (30 %) 241,129 287,732 (16 %) Segment profit margin (1) Television 22 % 26 % 27 % 27 % Radio 11 % 16 % 11 % 13 % Consolidated 20 % 24 % 24 % 25 % Net loss attributable to shareholders (769,897) (495,073) (56 %) (746,966) (479,136) (56 %) Adjusted net income (loss) attributable to shareholders(1) (19,873) 18,042 (210 %) 15,430 37,628 (59 %) Earnings (loss) per share: Basic ($3.86) ($2.48) ($3.74) ($2.40) Diluted ($3.86) ($2.48) ($3.74) ($2.40) Adjusted basic(1) ($0.10) $0.09 $0.08 $0.19 Free cash flow (1) 18,440 25,979 (29 %) 75,010 75,186 — (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-Generally Accepted Accounting Principles ("GAAP") measures can include: segment profit (loss), segment profit margin, free cash flow, adjusted net income (loss) attributable to shareholders, adjusted basic earnings (loss) per share, net debt to segment profit, proforma net debt to segment profit 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 2024 Report to Shareholders. Segment Revenue Three months ended Nine months ended May 31, % May 31, % (in thousands of Canadian dollars) 2024 2023 Change 2024 2023 Change Revenue 308,198 928,690 Television 371,159 (17 %) 1,094,236 (15 %) Advertising 178,182 209,008 (15 %) 536,457 630,645 (15 %) Subscriber 116,914 124,225 (6 %) 352,449 375,791 (6 %) Distribution, production and other 13,102 37,926 (65 %) 39,784 87,800 (55 %) Radio 23,606 26,176 (10 %) 72,555 78,161 (7 %) Total Revenue 331,804 397,335 (16 %) 1,001,245 1,172,397 (15 %) New platform revenue percentage (1) 12 % 12 % (9 %) 12 % 11 % (6 %) (1) New platform revenue does not have a standardized meaning prescribed by IFRS. For definition and explanation, see the discussion under the Key Performance Indicators and Non-GAAP Financial Measures section of the Third Quarter 2024 Report to Shareholders. Operational Highlights Corus has appointed Co-CEOs Troy Reeb and John Gossling following the early retirement of Doug Murphy, former President and CEO. In addition, the Company unveiled its Fall schedule for Global TV and Corus' Specialty networks on traditional and streaming platforms, announced changes to its programming and trademark output arrangements, continued to implement cost savings initiatives and made bank debt repayments. The Company continues to navigate an uncertain macroeconomic and competitive environment. Global TV announces its 2024/2025 primetime lineup of new acquisitions and returns of major hit series. Global TV's roster will deliver 18.5 hours of simulcast programming in primetime this fall and introduces new dramas Matlock, Murder in a Small Town, and NCIS: Origins. The fall schedule also features the return of #1 show Survivor(1), #1 drama 9-1-1(1), and Elsbeth, along with popular franchises FBI and NCIS, and Top 10 ranked comedy Ghosts(1). Corus' Specialty networks and streaming platforms announce 2024/2025 series lineup. Corus' specialty drama networks and STACKTV will feature returning seasons of Bel Air, Ted, Based on a True Story, Outlander and The Way Home along with new Peacock Originals Untitled Steph Curry/Adam Pally Project (WT), Fight Night: The Million Dollar Heist and Lockerbie. Corus' unscripted and reality networks, and STACKTV will see the return of Celebrity IOU and The Secret of Skinwalker Ranch, and new series 100 Day Hotel Challenge (WT), Holy Marvels with Dennis Quaid, and more. (1) Source: Numeris Personal People Meter Data, Total Canada, Spring 2024 season (Jan 8-Jun 2/24) – Confirmed data, 3+ airings, Adults 25-54, Average Minute Audience(000), Canadian Conventional Commercial English national networks, and Connected TV com all others 'Total', excludes playoffs. Financial Highlights Free cash flow(1) of $18.4 million in Q3 and $75.0 million year-to-date compared to $26.0 million and $75.2 million, respectively, in the same comparable prior year periods. The decrease in free cash flow(1) for the third quarter and the year-to-date is mainly attributable to lower cash provided by operating activities. Net debt to segment profit(1) was 3.86 times as at May 31, 2024. Proforma net debt to segment profit(2) was 3.91 times at May 31, 2024, up from 3.62 times at August 31, 2023. This ratio increased as a result of the decline in segment profit(1) for the most recent four quarters exceeding the effect of the reduced net debt. In the third quarter of fiscal 2024, Corus paid down $4.6 million of debt and $36.1 million for the year-to-date. As of May 31, 2024, the Company had $67.2 million of cash and cash equivalents and $98.4 million available to be drawn under its $300.0 million Revolving Facility. On June 1, 2024, availability on the Revolving Facility decreased to $30.2 million as a result of the decrease in the maximum total debt to cash flow ratio required under the financial covenants on that date. (1) Free cash flow, segment profit (loss), net debt to segment profit and proforma net debt to 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 2024 Report to Shareholders and/or Management's Discussion and Analysis in the Company's Annual Report for the year ended August 31, 2023 ("2023 MD&A"). (2) Proforma net debt to segment profit ratio excludes contributions to segment profit from Toon Boom Animation Inc., which was sold in August 2023, for the most recent four quarters. 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, 2024 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.sedarplus.ca. A conference call with Corus senior management is scheduled for July 15, 2024 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/4c2c1Oh. 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 July 15, 2024, at 11 a.m.ET or accessible by telephone until July 22, 2024, at 1.888.390.0541 (toll-free North America) or 416.764.8677 (local or international), using replay code 246006#. 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 2023 MD&A, as filed at www.sedarplus.ca on October 30, 2023. As discussed further in the 2023 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. As previously identified, additional key factors that have and may continue to adversely impact the Company's ability to compete successfully and its financial results include, but are not limited to: industry-wide, continuing reduced advertising demand or spending on linear television; macroeconomic supply chain disruptions, which in turn impact advertising; ability to secure programming rights; changes to acquired programming costs and arrangements, which continue to increase; and continued inaction or slower action by Corus' federal broadcast regulator to revisit Canadian program spending requirements, which represent a significant portion of the Company's cost base. A more extensive discussion of risks and uncertainties that may affect the Company's business, operations and financial performance can be found in the 2023 Annual MD&A. Programming and trade mark output arrangements for HGTV, Food Network, Cooking Channel, Magnolia Network and OWN will not be renewed upon their expiry on December 31, 2024. The Company is currently undertaking a review of these channels and while some lifestyle channels may be retired, others are expected to be rebranded based on the strength of top-rated Canadian programs and foreign content supply. This is expected to impact revenue on the Company's services in calendar 2025, which may lead to decreased profitability. In addition, the Company has entered into the Credit Facility and issued the Senior Unsecured Notes, all of which contain certain financial covenants including with respect to the maintenance of certain leverage ratios. Management has taken and continues to take significant cost reduction actions and make appropriate investments in areas or assets which support sustainable profitability. Management also intends to actively pursue options for such amendments or relief, concurrent with such cost reduction actions and its regulatory advocacy. However, should the financial performance, specifically the impacts to profitability, continue to decline without successful mitigation and should there be no further changes or amendments to the foregoing financing arrangements, there is material risk that the Company will not meet its covenants under (i) the terms of the Credit Facility, anticipated to be in effect as at September 1, 2024, when the Company's leverage covenant decreases from 4.50 to 4.25 times, or; (ii) the Senior Unsecured Notes, as a result of cross default provisions. The Company's ability to mitigate the concerns above is dependent on its ability to continue to access financing and / or obtain relief from or amendments to terms with lenders or noteholders with respect to relevant financial covenants or repayment terms under such facilities. While the Company has been successful in obtaining requisite relief and amendments in the past, there can be no assurance it will be able to do so in the future. Other financial risks which may be related to or elevated by the foregoing include 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. Please see the 2023 MD&A for a full discussion of these and other risks and uncertainties. Outlook In the fourth quarter, we continue to expect lingering impacts from the lengthy disruption of advertising markets due to the U.S. writers' and actors' strikes, over-supply of premium digital video inventory from foreign competitors, and generally lower demand for linear advertising. As such, the Company expects year-over-year declines in Television advertising revenue in the fourth quarter of fiscal 2024 to be similar to the third quarter of fiscal 2024. Amortization of TV program rights is expected to decline in the quarter by approximately 20% on a year-over-year basis. The Company will continue with its implementation of additional cost reduction initiatives and expects general and administrative expenses to decline in the range of 10 to 15% for the fourth quarter compared to the prior year. While the Company continues to expect improvement in the macroeconomic environment in the medium term, visibility remains 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 (loss), segment profit margin, free cash flow, adjusted net income (loss) attributable to shareholders, adjusted basic earnings (loss) per share, net debt to segment profit, proforma net debt to segment profit, as well as supplementary financial measures not presented in the financial statements such as new platform revenue. Non-GAAP or non-IFRS measures 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, 2024, which is available on Corus' website at www.corusent.com as well as on SEDAR+ at www.sedarplus.ca. 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 2024 and 2025, 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 ...